EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 1 of 529 **ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts**  **79, 80, 85, 86, 600, 1036, 1037,**  **1039, 1042, 1048, 1054, 1065, and 1066**  **[EPA**

**– HQ** 

**– OAR** 

**– 2011** 

**– 0135; FRL_XXXX**  **- X]**  **RIN 2060 -**  **AQ86 Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and**  **Fuel Stand ards**  **AGENCY** : Environmental Protection Agency (EPA). **ACTION** : Final Rule. **SUMMARY** : This action establish es more stringent vehicle emissions standards and will reduce the sulfur content of gasoline beginning in 2017, as part of a systems approach to addressin g the impacts of motor vehicles and fuels on air quality and public health. The gasoline sulfur standard will make emission control sy stems more effective for both existing and new vehicles, and will enable more stringent vehicle emissions standards. The vehicle standards will reduce both tailpipe and evaporative emissions from passenger cars, light

- duty

trucks, medium

- duty

passenger vehicles, and some heavy

- duty vehicles. This will result in significant reductions in pollutants such as ozone, particulat e matter, and air toxics across the country and help state and local agencies in their efforts to attain and maintain health

- based National Ambient Air Quality Standards. Motor vehicles are an important source of exposure to air pollution both regionally and near roads. These vehicle standards are intended to harmonize with California’s Low Emission Vehicle program, thus creating a federal vehicle emissions program that will allow automakers to sell the same vehicles in all 50 states. The vehicle standards will be implemented over the same timeframe as the greenhouse gas/fuel efficiency standards for light

- duty vehicles (promulgated b y EPA and the National Highway Safet y Administration in 2012) , as part of a comprehensive approach toward regulating emissi ons from motor vehicles. **DATES** : This final rule is effective on **[Insert date 60 days after publication in the Federal Register]** 

. The incorporation by reference of certain publications listed in this regulation is approved b y the Director of the **Federal Re gister**  as of **[Insert date 60 days**  **after publication in the Federal Register]**  **. ADDRESSES**  : EPA has established a docket for this action under Docket ID No . EPA

– HQ

– OAR

–2011

– 0135. All documents in the docket are listed on the www.regulations.gov web site. 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 cop yri ghted material, is not placed on the Internet and will be publicly

avail able only

in hard copy

form

. Publicly

available docket materials areEO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 2 of 529 available either electronically in www.regulations.gov or in hard cop y at the Air and Radiation Docket and Information Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., NW, Wa shington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday , excluding legal holiday s. 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** : JoNell Iffland , Office of Transportation and Air Quality , Assessment and Standards Division (ASD) , Environmental Protection Agency , 2000 Traverwood Drive, Ann Arbor MI 48105; Telephone number: (734) 214

- 4 454 ; Fax number: ( 734) 214

- 4816; E

- mail address: iffland

. jonell @epa.gov. **SUPPLEMENTARY INFORMATION: I. General Information**  **A. Does this Action Apply to Me?** Entities potentially

affected by

this rule include gasoline refiners and importers, ethanol producers, ethanol denaturant producers, butane and pentane producers, gasoline additive manufacturers, transmix processors, terminals and fuel distributors, light

- duty vehicle manufacturers, independent commercial importers, alternative fuel converters, and manufacturers and co nverters of vehicles between 8,500 and 14,000 lbs gross vehicle weight rating (GVWR). Potentially

regulated categories include: Category NAI CS a Code SI C b Code Examples of Potentially Affected Entities Industry 324110 2911 Petroleum refineries (including importers) Industry 325110 2869 Butane and pentane manufacturers Industry 325193 2869 Ethyl alcohol manufacturing Industry 324110,

211112 2911,

1321 Ethanol denaturant manufacturers Industry 211112 1321 Natural gas liquids extraction and fractionatio n Industry 325199 2869 Other basic organic chemical manufacturing Industry 486910 4613 Natural gas liquids pipelines, refined petroleum products pipelines Industry 424690 5169 Chemical and allied products merchant wholesalers Industry 325199 2869 Manuf acturers of gasoline additives Industry 424710 5171 Petroleum bulk stations and terminals. Industry 493190 4226 Other warehousing and storage

- bulk petroleum storage Industry 336111, 3711 Li ght

- dut y vehicle and light

- dut y truckEO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 3 of 529 336112 manufacturers Ind ustry 811111, 811112, 811198 7538,

7533, 7534 Independent commercial importers Industry 335312,

336312, 336322, 336399, 811198 3621,

3714, 3519, 3599, 7534 Alternative fuel converters Industry 333618,

336120, 336211, 336312 3699,

3711, 3713, 3714 On

- highway heavy

- dut y engine & vehicle (>8,500 lbs GVWR) manufacturers
a North American Industry Classification System (NAICS). b Standard Industrial Classification (SIC). This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely

to be regulated b y this action. This table lists the types of entities that EPA is now aware could potentially be regulated b y this action. Other types of entities not listed in the table could also be regulated. To determine wheth er your activities are regulated by this action, you should carefully examine the applicability criteria in 40 CFR parts 79, 80, 85, 86, 600, 1036, 1065, and 106 6 and the referenced regulations. If you have any questions regarding the applicability of thi s action to a particular entity , consult the person listed in the preceding **FOR FURTHER INFORMATION CONTACT**  section. **B .**  **Did EPA Conduct a Peer Review before Issuing this Action**  **?** This regulatory

action was supported b y influential scientific information. T herefore, EPA conducted peer reviews in accordance with OMB’s Final In formation Quality Bulletin for Peer Review. EPA conducted several peer reviews in conne ction with data supporting the Tier 3 program, including new research on the effects of fuel prop erties changes (including sulfur effects) on exhaust and evaporative emissions of Tier 2 vehicles. The refinery

- by

- refinery cost model was also peer reviewed. The peer review reports are located in the docket for today 's action, as well as the agency 's r esponse to the peer review comments. **TABLE OF CONTENTS I.**  **EXECUTIVE SUMMARY AN D PROGRAM OVERVIEW**  **A. Introduction**  **B. Overview of the Tier 3 Program**  **1. Major Public Comments and Key Changes from the Proposal**  **2. Key Components of the Tier 3 Program** EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 4 of 529 **C. What Wi**  **ll the Impacts of the Standards Be? II.**  **WHY IS EPA TAKING TH IS ACTION?**  **A. Basis for Action under the Clean Air Act**  **1. Clean Air Act Section 202**  **2. Clean Air Act Section 211**  **B. Overview of Public Health Impacts of Motor Vehicles and Fuels**  **1. Ozone**  **2. Partic**  **ulate Matter 3.**  **Oxides of Nitrogen and Sulfur 4.**  **Carbon Monoxide 5.**  **Mobile Source Air Toxics 6.**  **Near -**  **Roadway Pollution 7.**  **Environmental Impacts of Motor Vehicles and Fuels III.**  **HOW WOULD THIS RULE REDUCE EMISSIONS AND**  **AIR POLLUTION?**  **A. Effects of the Vehic**  **le and Fuel Changes on Mobile Source Emissions 1.**  **How Do Vehicles Produce the Emissions Addressed in this Action? 2.**  **How Will the Changes to Gasoline Sulfur Content Affect Vehicle Emissions? B.**  **How Will Emissions Be Reduced? 1.**  **NO X**  **2. VOC**  **3. CO**  **4. Direct P**  **M 2.5**  **5. Air Toxics**  **6. SO**  **2 7.**  **Greenhouse Gases C.**  **How Will Air Pollution Be Reduced? 1.**  **Ozone 2.**  **Particulate Matter 3.**  **Nitrogen Dioxide 4.**  **Air Toxics**EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 5 of 529 **5. Visibility**  **6. Nitrogen and Sulfur Deposition**  **7. Environmental Justice**  **IV. VEHICLE EMISSIONS PR**  **OGRAM A.**  **T ier 3 Tailpipe Emission Standards for Light**  **- Duty Vehicles, Light**  **- Duty**  **Trucks, and Medium -**  **Duty Passenger Vehicles 1.**  **How the Tier 3 Program is Harmonized with the California LEV III Program**  **2. Summary of the Tier 3 FTP and SFTP Tailpipe Standards**  **3. FT**  **P Sta ndards**  **4. SFTP Standards**  **5. Feasibility of the NMOG+NO**  **X and PM Standards**  **6. Impact of Gasoline Sulfur Control on the Effectiveness of the Vehicle**  **Emission Standards 7.**  **Other Provisions B.**  **Tailpipe Emissions Standards for Heavy -**  **Duty Vehicles 1.**  **Overview and Scope of Vehicles Regulated**  **2. HDV Exhaust Emissions Standards**  **3. Supplemental FTP Standards for HDVs**  **4. HDV Emissions Averaging, Banking, and Trading**  **5. Feasibility of HDV Standards**  **6. Other HDV Provisions**  **C. Evaporative Emissions Standards**  **1. Tier 3 Eva**  **porative Emission Standards 2.**  **Program Structure and Implementation Flexibilities 3.**  **Technological Feasibility 4.**  **Heavy -**  **Duty Gasoline Vehicle (HDGV) Requirements 5.**  **Evaporative Emission Requirements for FFVs 6.**  **Test Procedures and Certification Test Fuel D**  **. Improvements to In**  **- Use Performance of Fuel Vapor Control Systems**  **1. Reasons for Adding a Leak Test Standard**  **2. Nature, Scope and Timing of Leak Standard** EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 6 of 529 **3. Leak Standard Test Procedure**  **4. Certification and Compliance**  **a. In**  **- Use Verification Program (IUVP)**  **Requirements for the Leak Standard E.**  **Onboard Diagnostic System Requirements 1.**  **Onboard Diagnostic (OBD) System Regulation Changes -**  **Timing 2.**  **Revisions to EPA OBD Regulatory Requirements 3.**  **Provisions for Emergency Vehicles 4.**  **Future Considerations F.**  **Em issions Test Fuel**  **1. Gasoline Emissions Test Fuel: Ethanol Content and Volatility**  **2. Other Gasoline Emissions Test Fuel Specifications**  **3. Flexible Fuel Vehicle Exhaust Emissions Test Fuel**  **4. Implementation Schedule**  **5. Implications of Emission Test Fuel Cha**  **nges on CAFE Standards, GHG Standards, and Fuel Economy Labels**  **6. Consideration of Test Fuel for Nonroad Engines and Highway Motorcycles**  **7. CNG and LPG Emissions Test Fuel Specifications**  **G. Small Business Provisions**  **1. Lead Time and Relaxed Interim Standa**  **rds 2.**  **Assigned Deterioration Factors 3.**  **Reduced Testing Burden and OBD Requirements 4.**  **Hardship Relief 5.**  **Eligibility for the Flexibilities H.**  **Compliance Provisions 1.**  **Exhaust Emission Test Procedures 2.**  **Reduced Test Burden 3.**  **Miscellaneous Provisions 4.**  **Manufacturer In -**  **Use Verification Program (IUVP) Requirements V.**  **FUEL PROGRAM A.**  **Overview 1.**  **Background**EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 7 of 529 **2. Summary of Final Tier 3 Fuel Program Standards**  **B. Annual Average Sulfur Standard**  **C. Per**  **- Gallon Sulfur Caps**  **1. Standards**  **2. Requirements for Gasoline A**  **dditives D.**  **Averaging, Banking, and Trading Program 1.**  **How Will the ABT Program Assist with Compliance? 2.**  **ABT Modeling 3.**  **Eligibility 4.**  **Credit Generation and Use 5.**  **Credit Trading Provisions 6.**  **ABT Provisions for Small Refiners and Small Volume Refinerie s**  **7. Deficit Carryforward**  **E. Additional Program Flexibilities**  **1. Regulatory Flexibility Provisions**  **2. Provisions for Refiners Facing Hardship Situations**  **F. Compliance Provisions**  **1. Registration, Reporting, and Recordkeeping Requirements**  **2. Sampling and Tes**  **ting Requirements 3.**  **Small Refiner Compliance 4.**  **Small Volume Refinery Compliance 5.**  **Attest Engagements, Violations, and Penalties 6.**  **Special Fuel Provisions and Exemptions G.**  **Standards for Oxygenates (Including Denatured Fuel Ethanol) and Certified Ethano**  **l Denaturants H.**  **Standards for Fuel Used in Flexible Fueled Vehicles I.**  **Sulfur Standards for Purity Butane and Purity Pentane Streams Blended into Gasoline**  **J. Standards for CNG and LPG**  **K. Refinery Air Permitting Interactions**  **1. Proposal**  **2. Updated Assessme**  **nt of Tier 3 Refinery Changes and Permitting Implications**EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 8 of 529 **3. Comments and Responses**  **L. Refinery Feasibility**  **1. Comments Received**  **2. Is it Feasible for Refiners to Comply with a 10 ppm Average Sulfur**  **Standard? 3.**  **Can Refiners Meet the January 1, 2017 Start Date?**  **M. Statutory Authority for Tier 3 Fuel Controls**  **1. Section 211(c)(1)(A)**  **2. Section 211(c)(1)(B)**  **3. Section 211(c)(2)(B)**  **4. Section 211(c)(2)(C)**  **VI. TECHNICAL AMENDMENTS**  **AND REGULATORY STREA MLINING**  **A. Fuel Program Amendments**  **1. Fuels Program Regulator** **y Streamlining 2.**  **Performance -**  **Based Measurement Systems (PBMS) 3.**  **Downstream Pentane Blending 4.**  **Acceptance of Top Tier Deposit Control Test Data 5.**  **Potential Broader Regulatory Streamlining Through Program Restructuring B.**  **Engine, Vehicle and Equipment Pr ograms Amendments**  **1. Fuel Economy Labeling**  **2. Removing Obsolete Regulatory Text**  **3. Motorcycle Driving Schedules**  **4. Updating Reference Procedures**  **VII. WHAT ARE THE COST IM**  **PACTS OF THE RULE? A.**  **Estimated Costs of the Vehicle Standards 1.**  **What Changes Have Be en Made to Vehicle Program Costs Since Proposal?**  **2. Summary of Vehicle Program Costs**  **B. Estimated Costs of the Fuel Program**  **1. Overview**  **2. Methodology**  **3. Fuel Program Costs** EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 9 of 529 **4. Other Cost Estimates**  **C. Summary of Program Costs**  **VIII. WHAT ARE THE ESTIMAT**  **ED BE NEFITS OF THE RULE?**  **A. Overview**  **B. Quantified Human Health Impacts**  **C. Monetized Benefits**  **D. What are the Limitations of the Benefits Analysis?**  **E. Illustrative Analysis of Estimated Monetized Impacts Associated with the Rule**  **in 2018 IX.**  **ALTERNATIVES ANALYSI S**  **A. Vehicle Emission Standards**  **1. Shorter NMOG+NO**  **X Standard Phase**  **- in**  **2. NMOG+NO**  **X Standards Phase**  **- in and Early Tier 3 Credits**  **3. NMOG+NO**  **X Standards**  **4. PM Standards**  **5. Higher Ethanol Content of Emissions Test Fuel**  **B. Fuel Sulfur Standards**  **1. Annual Average**  **Sulfur Standard 2.**  **Refinery Gate Sulfur Cap C.**  **Program Start Date X.**  **ECONOMIC IMPACT ANAL YSIS**  **A. Introduction**  **B. Vehicle Sales Impacts**  **C. Impacts on Petroleum Refinery Sector Production**  **D. Employment Impacts**  **1. Employment Impacts in the Auto Sector**  **2. Refi**  **nery Employment Impacts XI.**  **PUBLIC PARTICIPATION XII.**  **STATUTORY AND EXECUT IVE ORDER REVIEWS**  **A. Executive Order 12866: Regulatory Planning and Review and Executive**  **Order 13563: Improving Regulation and Regulatory Review B.**  **Paperwork Reduction Act**EO 12866 Review Draft Tier 3 Final Rule Preamble Redline for OMB

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Page 10 of 529 **C. Regulat**  **ory Flexibility Act 1.**  **Overview 2.**  **Background 3.**  **Reason for Today’s Rule 4.**  **Legal Basis for Agency Action 5.**  **Summary of Potentially Affected Small Entities 6.**  **Reporting, Recordkeeping, and Compliance 7.**  **Related Federal Rules 8.**  **Steps Taken to Minimize the Economic Impact on Small Entities**  **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 Environmenta l Health**  **Risks and Safety Risks H.**  **Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use**  **I. National Technology Transfer and Advancement Act**  **J. Executive Order 12898: Federal Actions to Address**  **Environmental Justice in Minority Populations and Low**  **- Income Populations**  **K. Congressional Review Act**  **XIII. STATUTORY PROVISIONS**  **AND LEGAL AUTHORITY** 

## I. **Executive Summary and Program**  **Overview A.**  **Introduction** In this action, EPA is finalizing a major program de signed to reduce air pollution from passenger cars and trucks. This program includes new standards for both vehicle emissions and the sulfur content of gasoline, considering the vehicle and its fuel as an integrated s ys tem. We refer to this program as the “Tier 3” vehicle and fuel standards. This rule is part of a comprehensive approach to address the impacts of motor vehicles on air quality

and public health. Over 149 million Americans are currentl y experiencing unhealth y l evels of air pollution, which are linked with respiratory andPage 11 of 529

cardiovascular problems and other adverse health impacts that lead to increased medication use, hospital admissions, emergency department visits, and premature mortality

. 1 Motor vehicles are a particularly important source o f exposure to air pollution, especially

in urban areas. By

201 8, we project that in man y areas that are not attaining health

- based ambient air quality standards (i.e., “ nonattainment areas ”) , passenger cars and light trucks will contribute 10

- 25 percent o f total nitrogen oxides (NO X ) emissions, 15

- 30 percent of total volatile organic compound (VOC) emissions, and 5

- 10 percent of total direct particulate matter (PM 2.5 ) emissions. 2 These compounds form ozone, PM, and other air pollutants, whose health and e nvironmental effects are described in more detail in Section II. Cars and light trucks also continue to be a significant contributor to air pollution directly near roads, with gasoline vehicles accounting for more than 50 percent of near

- road concentratio ns of some criteria and toxic pollutants. 3 More than 50 million people live, work, or go to school in close proximity to high

- traffic roadway s, and the average American spends more than one hour traveling along roads each day

. 4 , 5 Over 80 percent of daily trips use personal vehicles. 6 The standards set forth in this rule will significantly reduce levels of multiple air pollutants (such as ambient levels of ozone, PM, nitrogen dioxide (NO 2 ), and mobile source air toxics (MSATs)) across the country , with immediate benefits from the gasoline sulfur control standards starting in 2017. These reductions will help state and local agencies in their effort to attain and maintain health

- based National Ambient Air Quality Standards (NAAQS). Few other national strategies exist that will deliver the same magnitude of multi

- pollutant reductions and associated public health protection that is projected to result from the Tier 3 standards. Without this action to reduce nationwide motor vehicle emissions, areas wou ld have to adopt other , less cost

- effective measures to reduce emissions from other sources under their state or local authority

. In the absence of

1 The 149 million represents people living in O 3 , PM 2.5 , PM 10 , and SO 2 nonattainment areas. Data come fr om Summary Nonattainment Area Population Exposure Report, current as of December 5 , 201 3 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA

- HQ

- OAR

- 2011

- 0135. 2 Mobile source contributions derived from inventories developed for this rule

. For more information on these inventories see the Emissions Inventory Technical Support Document (TSD) for the final Tier 3 Rule, Docket ID No. EPA

- HQ

- OAR

- 20 11

- 01 35. 3 For example, see Fujita, E.M; Campbell, D.E.; Zielinska, B.; Arnott, W.P.; Chow , J.C. (2011) Concentrations of Air Toxics in Motor Vehicle

- Dominated Environments. Health Effects Institute Research Report 156. Available at http://www.healtheffects.org 4 U.S. Census Bureau (2011). Current Housing Reports, Series H150/09, American Housing Survey for the United States: 2009. U.S. Government Printing Office, Washington, DC. Available at http://www.census.gov/hhes/www/housing/ahs/ahs09/ahs09.html

. (Note that this survey includes estimates of homes within 300 feet of highways with f our or more lanes, railroads, and airports.) 5 Drago, R. (2011). Secondary activities in the 2006 American Time Use Survey. U.S. Bureau of Labor Statistics Working Paper 446. Available at http://www.bls.gov 6 Santos, A.; McGuckin, N, Yukiko Nakamoto, H. ; Gray, D.; Liss, S. (2011) Summary of Travel Trends: 2009 National Household Travel Survey. Federal Highway Administration report no FHWA

- PL

- 11

- 022. Available at http://nhts.ornl.gov/publications.shtml.Page 12 of 529

additional controls, certain areas would continue to have ambient ozone concentrations exceeding the NAAQS in the future. See Section III.C for more details. The Clean Air Act authorizes EPA to establish emissions standards for motor vehicles to address air pollution that may reasonably

be anticipated to endanger public health or welfare (section 202). EP A also has authority to establish fuel controls to address such air pollution (section 211). These statutory authorities are described in Section II.A. The vehicle and gasoline sulfur standards we are finalizing represent a “s ys tems approach” to reducin g vehicle exhaust and evaporative emissions by addressing the vehicle and fuel as a s ys tem. The s ys tems approach enables emission reductions that are both technologically

feasible and cost

- effective beyond what would be possible looking at vehicle and fuel standards in isolation. We first applied such an approach with our Tier 2 vehicle/gasoline sulfur standards (finalized in 2000). 7 We believe that a similar approach for the Tier 3 standards is a cost
- effective way to achieve substantial additional emiss ions reductions. The Tier 3 standards include new light

- and heav y - duty vehicle emission standards for exhaust emissions of VOC (specifically , non - methane organic gases, or NMOG), NO X , and PM, as well as new evaporative emissions standards. The fully p hased

- in standards for light

- dut y vehicle, light

- duty truck, and medium

- duty

passenger vehicle tailpipe emissions are an 80 percent reduction in fleet average NMOG+NO X compared to current standards, and a 70 percent reduction in per

- vehicle PM standards. The fully phased

- in Tier 3 heavy

- dut y vehicle tailpipe emissions standards for NMOG+NO X and PM are on the order of 60 percent lower than current standards. Finally , the fully

phased

- in evaporative emissions standards represent a 50 percent reduction from current standards. The vehicle emission standards, combined with the reduction of gasoline sulfur content from the current 30 parts per million (ppm) average down to a 10 ppm average, will result in dramatic emissions reductions for NO X , VOC, direct PM 2.5 , carbon monoxide (CO) and air toxics. For example, in 2030, when Tier 3 vehicles will make up the majority

of the fleet as w ell as vehicle miles traveled, NO X and VOC emissions from o n - highway

vehicles will be reduced b y about 21 percent , and CO emissions will be reduced b y about 24 percent. National e missions of many air toxics from on

- highway vehicles will also be reduced b y 10 to nearly 30 percent. Reductions will continue beyond 2030 as more of the fleet is composed of vehicles meeting the full y phase d

- in Tier 3 standards . For example, the Tier 3 program w ill reduce on

- highway emissions of NO X and VOC nearl y 31 percent b y 2050, when vehicles meeting the full y phased

- in Tier 3 standards will comprise almost the entire fleet.

7 65 FR 6698 (Febru ary 10, 2000)Page 13 of 529 Gasoline vehicles depend to a great degree on cataly tic converters to reduce levels of pollutants in their exhaust, including NMOG and NO X , as well as PM (specificall y, the volatile hydrocarbon fraction), CO, and most air toxics. The cataly tic converters become significantl y less e fficient when exposed to sulfur . The Tier 2 rulemaking required refiners to take steps to reduce sulfur levels in gasoline by approximately

90 percent, to an average of 30 ppm. As discussed in Section IV.A.6, subsequent research provides a compelling cas e that even this level of sulfur not only degrades the emission performance of vehicles on the road today , but also inhibits necessary further reductions in vehicle emissions performance to reach the Tier 3 standards. Thus, the 10 ppm average sulf ur standard for Tier 3 is significant in two way s: it enables vehicles designed to the Tier 3 tailpipe exhaust standards to meet these standards in

- use for the duration of their useful life, and it facilitates immediate emission reductions from all the ve hicles on the road at the time the fuel sulfur controls are implemented. EPA is not the first regulatory agency to recognize the need for lower

- sulfur gasoline. Agencies in Europe and Japan have already imposed gasoline sulfur caps of 10 ppm, and the Stat e of California is already averaging 10 ppm sulfur with a per gallon cap of 20 ppm. Other states are preempted b y the Clean Air Act from adopting new fuel programs to meet air quality objectives. Consequently , they

could not receive the air quality benef its of lower sulfur gasoline without federal action. This action is one aspect of a comprehensive national program regulating emissions from motor vehicles. EPA’s final rule for reducing greenhouse gas (GHG) emissions from light

- duty (LD) vehicles starti ng with model year (MY) 2017 (referred to here as the “2017 LD GHG” standards) is another aspect of this comprehensive program. 8 The Tier 3 program addresses interactions with the 2017 LD GHG rule in a manner that aligns implementation of the two actions, to achieve significant criteria pollutant and GHG emissions reductions while providing regulatory certainty and compliance efficiency . As vehicle manufacturers introduce new vehicle platforms for compliance with the GHG standards, they will be able to de sign them for compliance with the Tier 3 standards at the same time. The Tier 3 standards are also closel y coordinated with California’s Low Emission Vehicle (LEV ) III program to create a vehicle emissions program that will allow automakers to sell the same vehicles in all 50 states . (In December 2012 EPA approved a waiver of Clean Air Act preemption for the California Air Resources Board’s (CARB’s) LEV III program with compliance beginning in 2015. Twelve states adopted the LEV III program under Section 177 of the Clean Air Act. 9 ) We have worked closel y with individual vehicle manufacturers and their trade associations, who have emphasized the importance of a harmonized national program. Together, the Tier 3, 2017 LD GHG, and LEV III standards will pro vide significant

8 EPA’s GHG standards are part of a joint National Program with the National Highway Traffic Safety Administration, which also set coordinated standards for Corporate Average Fuel Economy (CAFE). 7 7 FR 62623 ( October 1 5 , 201 2 ). 9 These state s include Connecticut, Delaware, Maryland, Maine, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Washington, and Vermont.Page 14 of 529

reductions in GHGs, criteria pollutants and air toxics from motor vehicles while streamlining programs and enabling manufacturers to design a single vehicle for nationwide sales, thus reducing their costs of compliance. In this way , the T ier 3 program responds to the May 21, 2010 Presidential Memorandum that requested that EPA develop a comprehensive approach toward regulating motor vehicles, including consideration of non

- GHG emissions standards. 10 As part of the s ys tems approach to this p rogram, we have consider ed the ty pes of fuels on which vehicles will be operating in the future . In particular, the renewable fuels mandate that was revised by the Energy

Independence and Securit y Act (EISA) and is being implemented through the Renewable Fuel Standards program (RFS2) 11 is result ing in the use of significant amounts of ethanol

- blended gasoline. We are updating the specifications of the emissions test fuel with which vehicles demonstrate compliance with emissions standards, in order to better reflect the ethanol content and other properties of gasoline that is in use today and is expected in future years . S ection I provides an overview of the vehicle and fuel standards we are finalizing as well as the impacts of the standa rds. The public health issues and statutory requirements that have prompted this action are described in Section II, and our discussion of how the Tier 3 standards will reduce emissions and air pollution is presented in Section III. Details of the standards and how they will be implemented can be found in Sections IV through VI. Sections VII through X contain our discussion of the standards’ technological feasibility and cost s , benefits, and economic impacts. Sections XIthrough XIII address public participation, statutory and executive orders, and statutory provisions and legal authorit y under the Clean Air Act covered in this rulemaking. This final rule is based on extensive public input received in response to EPA’s Tier 3 proposal. The proposal was signed and posted on the EPA website on March 29, 2013, and published in the Federal Register on May 21, 2013. EPA held two public hearings in Philadelphia and Chicago in April 2013. In response to stakeholder requests, EPA extended the public comment period to July 1, 2013. We received more than 200,000 public comments. A broad range of stakeholders provided comments, including state and local governments, auto manufacturers, emissions control suppliers, refiners, fuel distributors and other s in the petroleum industry , renewable fuels providers, environmental organizations, consumer groups, labor groups, private citizens, and others. Some of the issues raised in comments included lead time and the program’s start date, the vehicle manufactur ers’ support for a 50

- state program harmonized with California, the need for and degree of gasoline sulfur control (including the level of the sulfur cap),

10 The Presidential Memorandum is found at: http://www.whitehouse.gov/the

- press - of fice/presidential

memorandum - regarding

- fuel

- efficiency

- standards. 11 75 FR 14670 (March 26, 2010)

.Page 15 of 529

the ethanol content of vehicle certification test fuel, and various details on the flexibilities and other program design features of both the vehicle and fuels standards. **B. Overview of the Tier 3 Program**  In the 14 ye ars since EPA established the Tier 2 Vehicle Program, manufacturers of light

- dut y vehicles and automotive technology suppliers have continued to develop a wide range of improved technologies capable of reducing vehicle emissions. The California LEV II program has been instrumental in the continuous technology improvements by

requiring year after ye ar reductions in fleet average h ydrocarbon lev els, in addition to requiring the introduction of advanced exhaust and evaporative emission controls in partial zero emission vehicles (PZEVs). This technolog ical progress has made it possible for manufacturers to achieve emission reductions well beyond the requirements of the Tier 2 program if gasoline sulfur levels are lowered further. As a result, in conjunction with lower gasoline sulfur standards, we are establishing new Tier 3 standards for exhaust emissions of NMOG, NO X , and PM, as well as for evap orative hydrocarbon emissions. These vehicle emissions standards will phase in beginning with MY 2017. The structure of the Tier 3 standards is very similar to th at of the existing Tier 2 program. As with the Tier 2 program, the standards will apply to all light

- duty

vehicles (LDVs, or passenger cars), light

- dut y trucks (LDT1s, LDT2s, LDT3s, and LDT4s) and Med ium

- Duty Passenger Vehicles ( MDPVs). We also are establishing separate but closely related standards for heav y - dut y vehicles up to 14,000 lbs Gros s Vehicle Weight Rating (GVWR). 12 We have concluded that the vehicle emissions standards, in conjunction with the reductions in fuel sulfur also required b y this action, are feasible across the fleet in the timeframe provided

. Auto manufacturers have str essed the importance of being able to design , produce , and sell a single fleet of vehicles in all 50 states that compl ies with both the Tier 3 and California LEV III program s , as well as the greenhouse gas (GHG) /Corporate Average Fuel Econom y (CAFE) programs in the same timeframe. To that end, we worked closel y with the California Air Resources Board and vehicle manufacturers to align the two programs as closely as possible

. This c onsistency among the federal and California programs means that manufacturers do not need to design unique versions of vehicles with different emission control hardware and calibrations for different geographic areas. This allow s manufacturers to avoid the additional costs of parallel design, development, calibration, and manufacturing. We also have designed the Tier 3 program to be implemented in the same timeframe as the GHG emissions and fuel econom y standards for model years 2017

- 2025. We expect that in response to these programs, manufacturers will be devel oping entirely new powertrains for most of their

12 These heavy

- duty vehicles were not included in the Tier 2 program but were subject to standards in a subsequent rule cover ing the heavy

- duty sector (66 FR 5002, January 18, 2001).Page 16 of 529

vehicles. Because the Tier 3 standards will phase in over the same timeframe, manufacturers are in a better position to simultaneously respond to all of these requirements. Overall, the final Tier 3 program is very similar to the program we proposed. As discussed below and throughout this preamble, the program phases in over several ye ars

– with the primary

vehicle emission standards starting in Model Year (MY) 2017 (2018 for heavier vehicles) and the gasol ine sulfur control provisions beginning in 2017. As discussed above, we received a large number and wide range of comments on the proposed rule. Several comments raise particularly significant issues concerning some fundamental components of the Tier 3 program, including when the vehicle

- related and fuel

- related requirements begin. We briefl y discuss these key issues in this section, and in more detail later in this preamble. The Summary and Anal ys is of Comments document provides our responses to the comments we received; it is located in the docket for this rulemaking and also on EPA’s website at www.epa.gov/otaq/tier3.htm. 1. Major Public Comments and Key Changes from the Proposal
a. Start Date and Lead Time Issues (1) Gasoline Sulfur Control Program Many stak eholders commented on the proposed 2017 start date of the Tier 3 program, with state and NGO organizations supporting finalizing the standards as proposed. Conversel y, refiners, importers, and others in the fuel industry commented that they believed the p roposed start date would not provide a sufficient amount of lead time to meet the requirements of the Tier 3 program, and that EPA has historically provided at least four ye ars of lead time in previous fuels rulemakings. These commenters noted that five years of lead time is needed to allow for necessary refinery changes to be made during a refinery ’s normal turnaround/shutdown schedule (these occur every four years, on average) and to allow adequate time for the permitting process. These commenters also stated that, given the proposed flexibility provisions for vehicles, that a 2017 fuel program start date was not truly needed to enable the vehicle technology . Further, these commenters stated that they believed insufficient lead time would drive up the c osts for regulated entities as they

would need to do unscheduled shutdowns to install and/or revamp equipment to meet the proposed standards. L astl y, they stated that the uncertaint y regarding the potential availability of credits would make meeting a 201 7 start date more challenging. As discussed in greater detail in Section V below, we are finalizing the proposed start date of January

1, 2017. W e understand refiners’ concerns, including their concerns over the necessary

capital investments and po tential off

- cycle turnarounds/shutdowns to make refinery

modifications for Tier 3

. In light of these concerns the agency is finalizing additional flexibilities beyond those already in the proposal and the agenc y is confidentPage 17 of 529

that the program being finalized today addresses these concerns. Considering all the flexibilit ies offered to regulated parties, there is, in effect, nearly 6 years of time to comply provided for those refineries that may need it. As discussed in Section V.D, we are finalizing a credit averaging, banking, and trading (ABT) program that wil l allow for a smooth transition from the Tier 2 to Tier 3 ABT programs (including provisions for earl y credit generation beginning in 2014). These earl y credit provisions, coupled with the ability

to carry over credits from Tier 2 into Tier 3 (an addition al flexibility being finalized today

that was not part of the proposal), will allow for earl y actions to reduce sulfur levels b y some refineries to be used to delay the need for actions at other refineries until 2020. This structure of the ABT program all ows refiners and importers the flexibility to choose the most economical compliance strategy

– investment in technology , use of credits, or both

– for meeting the Tier 3 average gasoline sulfur standard. In addition, approved small refiners and small volume refineries are given an additional three ye ars from the January 1, 2017, Tier 3 program start date to comply (January 1, 2020). We proposed that the Tier 2 ABT program would not only be separate from the Tier 3 ABT program, but that it would also end at the start of the Tier 3 program in 2017. The implications of this meant that an y Tier 2 credits generated after 2012 would run the risk of expiring before the end of their full five

- ye ar life if they were not used before January 1, 2017. Commenters requ ested that EPA consider allowing such Tier 2 “banked” credits to receive their full five

- ye ar life. This would eliminate any incentive refiners may

have to use these credits prior to the end of the Tier 2 program to raise their in

- use sulfur levels. The ABT program that we are finalizing today enables a seamless transition from Tier 2 to Tier 3, including an allowance for Tier 2 banked credits to be used for their full five

- ye ar life or through December 31, 2019, whichever is earlier. Not only does this provision effectivel y provide more lead time and flexibility for refiners and importers, but we believe these banked credits will help to provide certainty of the availability

of credits for refiners and importers who may want to rel y on them for complianc e. Finally , as discussed in Section V.E.2, we are also finalizing hardship provisions that allow refiners to petition for delayed compliance , on a case - by

- case basis , for situations of extreme hardship or extreme unforeseen circumstances. These provis ions, similar to those implemented in past fuel rulemakings , provide a safet y valve should all the other flexibilities provided prove insufficient. As part of these hardship provisions, we are finalizing the ability for refiners to carry

a deficit for up to 3 years, providing them with yet additional flexibility during the transition to Tier 3 should it prove necessary

. (2) Vehicle Emission Control Program There were no major concerns raised for the proposed MY 2017 start date for lighter light

- dut y vehicles, although commenters from the auto manufacturing industry raised concerns about the lead time we proposed for heavier light

- dut y vehicles. Specificall y, commenters pointed to Clean Air Act section 202(a)(3)(C) that, for vehiclesPage 18 of 529

over 6,000 lbs GVWR, requires that EPA emission standards provide at least four years of lead time and three ye ars of regulatory stability. In light of this statutory

requirement, in addition to the primary declining fleet average standards starting in MY 2018 for heavier vehicles, EPA proposed an alternative phase

- in schedule for any manufacturer that prefers a longer lead time and annual stability for these vehicles in lieu of the declining fleet average standards option. The commenters stated that the proposed a lternative pathway would be too difficult to take advantage of in comparison to the primary program and thereby

failed to comply

with the Clean Air Act. In considering these comments, EPA also considered that during the development of the Tier 3 program and in their comments, the same auto industry commenters consistently

urged EPA to design the Tier 3 program to harmonize with the California LEV III standards as closely and as earl y as possible. As discussed in detail below in Section IV.A, extensive dat a that EPA has generated or received continue to support the conclusion that the primary fleet

- average standards provide a compliance path that is feasible across the industry and that closel y harmonizes with LEV III. EPA believes that we have reasonabl y resolved these somewhat competing concerns

-- earl y harmonization vs. additional lead time

-- by finalizing the primary

declining fleet average standards as proposed while also finalizing revised alternative phase

- in compliance schedules (see Section IV.A. 2.c). In response to the comments on this topic, we have revised the alternative phase

- in schedules to reduce their associated burden for manufacturers, while still maintaining environmental benefits that are equivalent to the primary program. We also in clude provisions in the percent

- of

- sales phase

- in alternatives that allow manufacturers to exclude vehicle models that begin their 2019 model year production earl y in 2018, in order to provide four ye ars of lead time. b. Emissions Test Fuel In

- use gasoline has changed considerably since EPA last revised specifications for the test gasoline used in emissions testing of light

- and heav y - dut y vehicles. Perhaps most importantly , gasoline containing 10 percent ethanol by volume (E10) has replaced non - oxygenated gasoline (E0) across the country . As a result, we are updating federal emissions test fuel specifications to better match in

- use fuel. In the NPRM, EPA proposed that the specified gasoline for emissions testing be changed from E0 to E15 as a forward

- loo king approach . Since then, several factors have led EPA to reconsider that approach , including minimal proliferation on a national scale of stations offering E 15 and the complexities that E15 would introduce for long

- term harmonization with California’s use of E10 in their LEVIII program. We received comments from a broad set of stakeholders including the auto and oil industries, states, and NGOs with a general consensus that E15 would not be appropriate as the official test fuel at this time. Ethanol industry commenters supported E15 certification fuel, but provided no timeline by

which this blend level would be representative of in

- use fuel. InPage 19 of 529

light of the comments received and EPA’s assessment of the current and projected levels of ethanol in gasoline in use, we are finalizing E10 as the new emissions test fuel. In deciding to finalize E10 test fuel, EPA considered whether to change the volatility of the te st fuel, ty

picall y expressed as pounds per square inch (psi) Reid Vapor Pressure (RVP). As discussed in detail in Section IV.F, after considering technical and policy implications as well as stakeholder comments, we have concluded that the most appropriat e approach is to maintain an RVP of 9 psi for the E10 emissions test fuel at this time. EPA considered raising test fuel RVP to 10 psi, but decided to leave it unchanged at 9 psi based on what would have been the associated increase in stringency of the T ier 3 evaporative standard with 10 psi and the loss of regulatory harmon y on evaporative emissions with California’s LEV III program. As a result, after reassessing market trends and considering comments, EPA concludes that the most appropriate approach is to finalize an ethanol content of 10 percent and an RVP of 9 psi for emissions test gasoline. We will continue to monitor ethanol trends in the gasoline market, as discussed later in this preamble.
c. Gasoline Sulfur Caps As described in more detail in Section V.C. w e proposed two options for the Tier 3 per - gallon sulfur caps

— maintaining the Tier 2 refinery gate sulfur cap of 80 ppm (with a 95 ppm downstream sulfur cap ), and lowering to a 50 ppm refinery gate sulfur cap beginning January

1, 2020 ( with a 65 ppm downstream cap). We received comments supporting lower per

- gallon caps which noted potential environmental benefits, greater certaint y that vehicles would see lower and more uniform gasoline sulfur levels, and the ability to enable new vehicl e technologies requiring very low sulfur levels. Conversel y, comments received in support of maintaining the Tier 2 per

- gallon caps cited concerns on cost, flexibility

for turnarounds/unplanned shutdowns (due to refinery fires, natural disasters, etc.), and gasoline supply and/or price impacts. Analy sis performed since the time of the proposal found that a lower refinery gate cap would likel y result in higher costs to the fuels industry and a decreased ability

to handle off

- spec product (potentially impact ing gasoline supply and pricing), without any significant increase in the nationwide emissions reductions provided b y the Tier 3 program. Thus, in today ’s action we are retaining the Tier 2 per

- gallon sulfur caps. The 80 ppm refinery

gate cap will provid e refiners needed flexibility in allowing for naturally

- occurring fuel batch variability, as well as more certainty that they will be able to continue producing and distributing gasoline during turnarounds/upsets to avoid a total shutdown. It will also pr ovide more certaint y for transmix processors, additive manufacturers, and other downstream parties in producing gasoline. However, we do understand commenters’ concerns that retaining the Tier 2 sulfur caps might create regional differe nces in the benefits of the Tier 3 program. ThereforePage 20 of 529

we will continue to monitor in

- use sulfur levels and their impact on vehicle emissions to ascertain whether a future reduction in the per

- gallon cap may be necessary. d. Effect of Gasoline Sulfur on Tier 3 Vehicle Emissions The need for and level of gasoline sulfur control was a key issue raised in public comments. The petroleum industry raised concerns that there was insufficient basis for the proposed 10 ppm average sulfur level, while auto manufacturer s and emissions control equipment manufacturers stressed that the feasibility of the Tier 3 vehicle standards was dependent on near

- zero gasoline sulfur levels. This issue is discussed in detail below in Section IV.A.6. In sum, EPA believes that the rang e of studies conducted by EPA and others in recent years, along with the comments submitted by the auto industry and emissions control manufacturers during the comment period and more recentl y, strongl y reinforce our conclusion that the impact of gasoline sulfur poisoning on exhaust cataly st performance is significant. Sulfur is a well

- known cataly st poison. The nature of sulfur’s interactions with active cataly

tic materials is complex and varies with catal ys t composition, exhaust gas composition , and ex haust temperature. Thus, even if a manufacturer were able to certify a new vehicle to the new stringent standards, the manufacturer’s ability to maintain the emission performance of that vehicle in

- use is greatly jeopardized if the vehicle is being operat ed on gasoline sulfur levels greater than 10 ppm. Infact, d ue to the variation in actual vehicle operation, any amount of gasoline sulfur will deteriorate cataly st efficiency

. V ehicle manufacturers and suppliers , both individually and through their trad e associations, stressed the need for gasoline sulfur to be reduced to near zero levels in order for them to meet the proposed standards. However, we believe that a 10 ppm average sulfur level is sufficientl y low to enable compliance with the Tier 3 vehic le standards, and as described below and in Section V, reducing sulfur levels further would cause sulfur control costs to quickly escalate. Taken together, this information provides a compelling argument that the fleetwide Tier 3 vehicle standards are ac hievable only with a reduction of gasoline sulfur content from the current 30 ppm average down to a 10 ppm average.
e. SFTP (US06) PM Standard for Light

- Dut y Vehicles The final Tier 3 vehicle standards are largel y unchanged from their proposed levels. One change from the proposal is the PM emissions standards as measured on the US06 test cycle. The US06 cycle is part of the composite Supplemental Federal Test Procedure (SFTP) and simulates aggressive driving. The US06 PM standards are part of the suite of Tier 3 tailpipe standards that limit emissions under a wide range of common vehicle driving conditions. Newer emissions test data presented in the NPRM, as well as more recent additional test data submitted in public comments, show that a numericall y low er US06 PM standard is feasible and appropriately reflects the actual emissionsPage 21 of 529

performance achieved b y many vehicles in the fleet today while preventing increased emissions in the future. Taken together, the test results clearl y show that most current li ght

- dut y vehicles

– regardless of engine technology , emission control strategy , or vehicle size

– are performing at much lower US06 emission levels than previousl y documented. Based on these newer data, we believe that it is appropriate to finalize a num ericall y l ower US06 PM emission standard for LDVs, LDTs, and MDPVs, and to set a single standard for both lighter and heavier vehicles in this vehicle segment. In general, the final US06 PM standard for these vehicles begins to phase in at a level of 10 m g/mi in MYs 2017 and 2018, stepping down to a level of 6 mg/mi in MY2019. See Section IV.A.4.b for additional discussion of the US06 standards and how they will phase in. 2. Key Components of the Tier 3 Program
a. Tailpipe Standards for Light

- Dut y Vehicle, Light

- Duty Truck, and Medium

Duty Passenger Vehicle Tailpipe Emissions We are establishing a comprehensive program that include s new fleet

- average standards for the sum of NMOG and NO X tailpipe emissions (presented as NMOG+NO X ) a s well as new per

- vehicle stan dards for PM. 13 These standards, when applied in conjunction with reduced gasoline sulfur content, will result in very significant improvements in vehicle emissions from the levels of the Tier 2 program. For these pollutants, the standards are measured on test procedures that represent a range of vehicle operation, including the Federal Test Procedure (or FTP, simulating typical driving) and the Supplemental Federal Test Procedure (or SFTP, a composite test simulating higher ambient temperatures, higher ve hicle speeds, and quicker accelerations). In addition to the standards, we are extend ing the regulatory useful life period during which the standards appl y (see Section IV.A.7.b below) and making test fuel more representative of expected real

- world fuel ( see Section I.B. 2.e below). The final standards are in most cases identical to those of California’s LEVIII program, which provides the 50

- state harmonization strongly

supported by

the auto industry

. As proposed, the new Tier 3 FTP and SFTP NMOG+NO X standards are fleet

average standards, meaning that a manufacturer calculate s the average emissions of the vehicles it sells in each model year and compare s that average to the applicable standard for that model year. The manufacturer certif ies each of i ts vehicles to a per

- vehicle “bin” standard (see Section IV.A.2) and sales

- weight s these values to calculate its fleet

- average NMOG+NO X emissions for each model ye ar. Table I

- 1 summarizes the fleet averag e standards for NMOG+NO X evaluated over the FTP. The standards for light

- duty vehicles begin in MY 2017 at a level representing a 46 percent reduction from the Tier 2

13 A discussion of the reasons for combining NMOG and NO X for this purpose is in Section IV.A.3.a below
.Page 22 of 529

requirements. For the light

- duty fleet over 6000 lbs GVWR , and MDPVs , the standards app ly beginning in MY 2018. As shown, these fleet

- average standards decline during the first several ye ars of the program, becoming increasingl y stringent until ultimately reaching an 81 percent reduction when the transition is complete. The FTP NMOG+NO X pr ogram includes two separate sets of declining fleet

- average standards, with LDVs and small light trucks in one grouping and heavier light trucks and MDPVs in a second grouping, that converge at 30 milligram s per mile (mg/mi) in MY 2025 and later. As menti oned above, we are also providing alternative percent phase

- in schedules for this and the other light

- dut y standards. **Table I**  **- 1**  **Tier 3 LDV, LDT, and MDPV Fleet Average FTP NMOG+NO**  **X Standards (mg/mi)** 

Model Year 2017 a 2018 2019 2020 2021 2022 2023 2024 2025 and later LDV/LDT1 b 86 79 72 65 58 51 44 37 30 LDT2,3,4 and MDPV 101 92 83 74 65 56 47 38 30

a For LDV and LDTs above 6000 lbs GVWR and MDPVs , the fleet average standards apply beginning in MY 2018

. b These standards apply for a 150,000 mile useful life. Manufacturers can choose to certify some or all of their LDVs and LDT1s to a useful life of 120,000 miles. If a vehicle model is certified to the shorter useful life, a proportionally lower numeri cal fleet

- average standard applies , calculated by multiplying the respective 150,000 mile standard by 0.85 and rounding to the nearest mg. See Section IV.A.7. c . Similarly , as proposed, the NMOG+NO X standards measured over the SFTP are fleet

- average standards, declining from MY 2017 until MY 2025, as shown in Table I

- 2

. In this case, the same standards appl y to both lighter and heavier vehicles in the light

duty fleet . In MY 2025, the SFTP NMOG+NO X standard reach es its final fleet average level of 50 mg/mi. **Table I**  **- 2**  **Tier 3 LDV, LDT, and MDPV Fleet Average SFTP NMOG+NO**  **X Standards (mg/mi)** 

Model Year 2017 a 2018 2019 2020 2021 2022 2023 2024 2025 and later N MOG + NO X 103 97 90 83 77 70 63 57 50
a For LDVs and LDTs above 6000 lbs GVWR and MDPVs , the fleet average standards apply beginning in MY 2018. As proposed, m anufacturers can also earn credits if their fleet average NMOG+NO X performance is better than the applicable standard in any model year.Page 23 of 529

Credits that have been previously banked or obtained from other manufacturers can be used, or credits can be tra ded to other manufacturers

. M anufacturers would also be allowed to carry forward deficits in the ir credit balance. (S ee Section s IV.A.7. a and IV .A.7.m ). We are also establishing PM standards as part of th e Tier 3 program, for both the FTP and US06 cycles ( as described above, US06 is a component of the SFTP test). Research has demonstrated that the level of PM from gasoline light

- dut y vehicles is more significant than previously thought. 14 Although many vehicles today

are performing at or near the levels of the new standards, the data indicate that improvements, especiall y in high

- load fuel control and in the durability of engine components, are possible. Under t ypical driving, as simulated by the FTP, the PM emissions of most current
- technology

gasoline vehicles are fairly low at certification and in use, well below the Tier 2 PM standards. At the same time we see considerable variation in PM emissions among vehicles of various makes, models, and designs. As a result, as proposed, we are setting the new FTP PM standard at a level that will ensure that all new vehicles perform at the level already being achieved by well

- designed Tier 2 vehicles

. The PM standards appl y to each vehicle separately (i.e., not as a fleet average). Also, in contrast to the declining NMOG+NO X standards, the PM standard on the FTP for certification testing is 3 mg/mi for all vehicles and for all model years. As for the NMOG+NO X standards, for vehicles over 6000 lbs GVWR, the FTP PM standard appl ies beginning in MY 2018. Manufacturers can phase in their vehicle models as a percent of U.S. sales through MY 2022. Most vehic les are already performing at this stringent PM level, and the primary

intent of the standard is to bring all light

- dut y vehicles to the ty pical level of PM performance being demonstrated by many of today ’s vehicles

. As proposed, the Tier 3 program also includes a temporary in

- use FTP PM standard of 6 mg/mi for the testing of in

- use vehicles that appl ies during the percent phase

- in period onl y. This in

- use standard will address the in

- use variability and durability uncertainties that accompany the introduction of new technologies. Table I

- 3 presents the FTP certification and in

- use PM standards and the phase

- in percentages.

**Table I**  **- 3**  **Phase -**  **In for Tier 3**  **F TP**  **PM Standards 2017**  **a 2018**  **2019 2020**  **2021 2022 and**  **later Phase**  **- In**  (percent of U.S. sales) 20 b 20 40 70 100 100

14 Nam , E.; Fulper, C.; Warila, J.; Somers, J.; Michaels, H.; Baldauf, R.; Rykowski, R.; and Scarbro, C. (2008). Analysis of Particulate Matter Emissions f rom Light

- Duty Gasoline Vehicles in Kansas City, EPA420

- R

- 08

- 010. Assessment and Standards Division Office of Transportation and Air Quality U.S. Environmental Protection Agency Ann Arbor, MI, April 2008.Page 24 of 529

**Certification Standard (mg/mi)**  3 3 3 3 3 3 **In -**  **Use Standard (mg/mi)**  6 6 6 6 6 3

a For LDVs and LDTs above 6000 lbs GVWR and MDPVs , the FTP P M standards apply beginning in MY 2018. b Manufacturers comply in MY 2017 with 20 percent of their LDV and LDT fleet under 6,000 lbs GVWR, or a lt ernatively with 10 percent of their total LDV, LDT, and MDPV fleet. Finally , as discussed in Section I.B.1. e above, the Tier 3 program includes PM standards evaluated over the US06 driving cycle (the US06 is one part of the SFTP procedure) of 10 mg/mi through MY 2018 and of 6 mg/mi for 2019 and later model ye ars, for light

- dut y vehicles. As in the case of the F TP PM standards, the intent of the US06 PM standard is to bring the emission performance of all vehicles to that already being demonstrated b y many vehicles in the current light

- duty fleet. b. Heav y - Duty

Vehicle Tailpipe Emissions Standards As discussed in d etail in Section IV.B, we are setting Tier 3 exhaust emissions standards for complete heav y - dut y vehicles (HDVs) between 8,501 and 14,000 lb s GVWR. Vehicles in this GVWR range are often referred to as Class 2b (8,501

- 10,000 lb s ) and Class 3 (10,001

- 14,000 lb s ) vehicles, and are t ypicall y heavy

- dut y pickup trucks and work or shuttle vans. Most are built by companies with even larger light

- duty truck markets, and as such they frequentl y share major design characteristics and emissions control technologies w ith their LDT counterparts. However, in contrast to the largel y gasoline

- fueled LDT fleet, roughl y half of the heavy

- dut y pickup and van fleet in the U.S. is diesel

- fueled . This is an important consideration in setting emissions standards, as diesel engi ne emissions control strategies differ from those of gasoline engines. As proposed, the key

elements of the Tier 3 program for HDVs parallel those being adopted for passenger cars and LDTs, with adjustments in standard levels, emission test requirement s, and implementation schedules appropriate to this sector. These key elements include combined NMOG+NO X declining fleet average standard s , a phase

- in of PM standards, adoption of a new emissions test fuel for gasoline

- fueled vehicles, extension of the regulatory useful life to 150,000 miles or 15 years (whichever occurs first), and a first

- ever requirement for HDVs to meet standards over an SFTP drive cycle that address es real

- world driving modes not well

- represented by the FTP cycle s . We are adopting the Cla ss 2b and Class 3 fleet average NMOG+NO X standards shown in Table I

- 4 , as proposed . The standards become more stringent in successive model years from 2018 to 2022, with voluntary standards made available in 2016 and 2017, all of which are set at levels that match those of California’s LEV III program for these classes of vehicles. Each covered HDV sold by a manufacturer in each model year contribute s to this fleet average based on the mg/mi NMOG+NO X standard level of the “bin” declared for it by

the manu facturer , who chooses from a set of seven discrete Tier 3Page 25 of 529

bins specified in the regulations

. These bin standards then become the compliance standards for the vehicle over its useful life, with some adjustment provided for in

- use testing in the earl y mode l years of the program. As proposed, m anufacturers can also earn credits for fleet average NMOG+NO X levels below the standard in any model year. Tier 3 credits that were previously banked, obtained from other manufacturers, or transferred across the Class 2b/Class 3 categories c an be used to help demonstrate compliance. Unused credits expire after 5 model years. Manufacturers w ill also be allowed to carry forward deficits in their credit balance for up to 3 model years. **Table I**  **- 4**  **Tier 3 HDV Fleet Average**  **FT P**  **NMOG+NO X**  **Standards (mg/mi)**

Voluntary Required Program Model Year 2016 2017 2018 2019 2020 2021 2022 and later Class 2b 333 310 278 253 228 203 178 Class 3 548 508 451 400 349 298 247

We are adop ting the proposed FTP PM standards of 8 mg/mi and 10 mg/mi for Class 2b and Class 3 HDVs, respectively , phasing in as an increasing percentage of a manufacturer’s sales per year. We are adopting the same phase

- in schedule as for the light

- duty sector duri ng model years 2018

- 2019

- 2020

- 2021: 20

- 40

- 70

- 100 percent, respectivel y, and a more flexible but equivalent alternative PM phase

- in is also being adopted . Tier 3 HDVs w ill also be subject to CO and formaldeh yd e exhaust emissions standards that are more stringent than the existing standards

. Finally , we are setting first

- ever nationwide SFTP standards for HDVs to ensure a robust overall control program that precludes high off

- FTP cycle emissions by

having vehicle designers consider them in their choice of co mpliance strategies. As for light

duty vehicles, we are requiring that SFTP compliance be based on a weighted composite of measured emissions from testing over the FTP cycle, the SC03 cycle, and an aggressive driving cycle, with the latter tailored to various HDV sub

- categories: the US06 cycle for most HDVs, the highway portion of the US06 cycle for low power

- to
weight Class 2b HDVs, and the LA

- 92 (or “Unified”) cycle for Class 3 HDVs. The SFTP standards are the same as those adopted for California LEV II I vehicles, and appl y to NMOG+NO X , PM, and CO emissions. The HDV program outlined above and described in detail in Section IV.B is substantially

what we proposed. Commenters generall y supported the scope, stringency ,Page 26 of 529

and implementation phase

- in of this pr ogram. However, some industry commenters requested changes to some specific provisions of the proposal, and the program we are adopting reflects improvements we have made in response. These are: (1) a limited allowance for engine certification of Class 3 complete diesel vehicles to avoid a potential need for dual chassis

- and engine

- based certification and to better harmonize with LEV III, (2) relaxed interim in

- use testing standards to facilitate a smooth transition to the Tier 3 standards and to better harmonize with LEV III, (3) adoption of combined NMOG+NOx standards for the two highest (interim) bins, with a restriction placed on NOx levels in certification testing, to enhance the utility of these bins and to better harmonize with LEV III, and (4) a provision in the percent

- of

- sales phase

- in alternative to allow manufacturers to exclude vehicle models that begin their 2019 model year production earl y in 2018, in order to provide four years of lead time. Commenters also requested relaxed standards for testing at high altitudes and changes to the credits program structure for generation of earl y credits and use of LEV III

- based “vehicle emission credits”, but we did not adopt these for reasons explained in Section IV.B. Overall, we expect the Tier 3 pro gram we are adopting for HDVs to result in substantial reductions in harmful emissions from this large fleet of work trucks and vans. The f ully

- phased in Tier 3 standards levels for NMOG+NO X and PM are on the order of 60 percent lower than the current standards that took full effect in the 2009 model year.
c. Evaporative Emission Standards Gasoline vapor emissions from vehicle fuel sy stems occur when a vehicle is in operation, when it is parked, and when it is being refueled. These evaporative emissions, whi ch occur on a dail y basis from gasoline

- powered vehicles, are primarily functions of temperature, fuel vapor pressure, and activity. EPA first instituted evaporative emission standards in the earl y 1970s to address emissions when vehicles are parked after being driven. These are commonly referred to as hot soak plus diurnal emissions. Over the subsequent years the test procedures have been modified and improved and the standards have become more numerically stringent. We have addressed emissions which arose from new fuel sy stem designs by putting in place new requirements such as running loss emission standards and test procedure provisions to address permeation emissions. Subsequently

standards were put in place to control refueling emissions from all classes of gasoline

- powered motor vehicles up to 10,000 lbs GVWR. Evaporative and refueling emission control sy stems have been in place for most of these vehicles for many years . These controls have led to significant reductions , but evaporative and refueling emissions still cons titute 30

- 40 percent of the summer on

- highway mobile source h ydrocarbon inventory

. These fuel vapor emissions are ozone and PM precursors, and also contain air toxics such as benzene. To control evaporative emissions, EPA is establishing more stringent s tandards that will require covered vehicles to have essentially zero fuel vapor emissions in use. These include more stringent evaporative emissions standards, new test procedures, and a new fuel/evaporative s ys tem leak emission standard. The program also includesPage 27 of 529

refueling emission standards for all complete heavy

- dut y gasoline vehicles (HDGVs) over 10,000 lbs GVWR. EPA is including phase

- in flexibilities as well as credit and allowance programs. The standards, harmonized with California’s “zero evap” s tandards, are designed to allow for a use of common technology in vehicle models sold throughout the U.S. The level of the standard remains above zero to account for nonfuel background emissions from the vehicle hardware. Requirements to meet the Tier 3 e vaporative emission regulations phase in over a six model year period. We are finalizing three options for the 2017 model year, but after that the sales percentage requirements are 60 percent for MYs 2018 and 2019, 80 percent for model years 2020 and 2021 , and 100 percent for model years 2022 and later. In Table I

- 5 we present the Tier 3 evaporative hot soak plus diurnal emission standards by vehicle class. The standards are approximately a 50 percent red

uction from the existing standards. To enhance flexibility and reduce costs, EPA is finalizing provisions that allow manufacturers to generate allowances through earl y certifications (basically before the 2017 model year) and to demonstrate compliance usi ng averaging concepts. Manufacturers may

comply on average within each of the four vehicle categories, but not across these categories. EPA is not making an y changes to the existing light

- duty running loss or refueling emission standards, with the except ion of the certification test fuel requirement discussed in Section I. B.2 below.

**Table I**  **- 5**  **Tier 3 Evaporative Emission Standards (g/test)**  Vehicle Class Highest Hot Soak + Diurnal Level (over both 2

- day

and 3

- day

diurnal tests) LDV, LDT1 0.300 LDT2 0.400 LDT3, LDT4, MDPV 0.500 HDGVs 0.600 Flexible Fuel Vehicles (FFVs) must meet the same evaporative emission standards as non

- FFVs using Tier 3 emissions certification test fuel. However, FFVs must meet the r efueling emission standards using 10 psi RVP fuel to account for emissions resulting from commingling with non

- E85 blends that may be in the vehicle’s fuel tank. EPA is establishing the canister bleed emission test procedure and emission standard to help e nsure fuel vapor emissions are eliminated. Under this provision , manufacturers are required to measure diurnal emissions over the 2

- day diurnal test procedure from just the fuel tank and the evaporative emission canister and comply with a 0.020 gram per t est (g/test) standard for all LDVs, LDTs, and MDPVs, without averaging. The corresponding canister bleed test standard for HDGVs is 0.030 g/test. The Tier 3 evaporative emission standards will be phased in over a period of six model ye ars between MY 2017 and MY 2022, with the leak test phasing in beginning in 2018.Page 28 of 529 Data from in

- use evaporative emissions testing indicates that vapor leaks from vehicle fuel/evaporative sy stems are found in the fleet and that even very small leaks have the potential to make significant contributions to the mobile source VOC inventory

. To help address this issue, we are also add ing a new standard and test procedure to control vapor leaks from vehicle fuel and vapor control sy stems. The standard will prohibit leaks with a cumulative equivalent diameter of 0.02 inches or greater. We are add ing this simple and inexpensive test and emission standard to help ensure vehicles maintain zero fuel vapor emissions over their full useful life. New LDV, LDT, MDPV, and HDGV equal to or l ess than 14.000 lbs GVWR meeting the Tier 3 evaporative emission regulations are also required to meet the leak standard beginning in the 2018 model year. Manufacturers must comply with the leak standard phase

- in on the same percentage of sales schedule a s that for the Tier 3 evaporative emission standard s . Manufacturers will comply with the leak emission standard during certification and in use. T he leak emission standard does not appl y to HDGVs above 14,000 lbs GVWR. EPA is also establishing new refuel ing emission control requirements for all complete HDGVs equal to or less than 14,000 lbs GVWR (i.e., Class 2b/3 HDGVs), starting in the 2018 model year , and for all larger complete HDGVs b y the 2022 model ye ar . The existing refueling emission control req uirements appl y to complete Class 2b HDGVs, and EPA is extend ing those requirements to other complete HDGVs, since the fuel and evaporative control sy stems on these vehicles are very similar to those on their lighter

- weight Class 2b counterparts.

d. Onboard Diagnostic S ys tems (OBD) EPA and CARB both have OBD regulations applicable to the vehicle classes covered b y the T ier 3 emission standards. In the past the requirements have been very similar, so most manufacturers have met CARB OBD requirements and, as permitted in our regulations, EPA has generall y accepted compliance with CARB’s OBD requirements as satisfying EPA’s OBD requirements. Over the past several years CARB has upgraded its requirements to help improve the effectiveness of OBD in ensuring goo d in

- use exhaust and evaporative s ys tem emissions performance. We have reviewed these provisions and agree with CARB that these revisions will help to improve in

- use emissions performance, while at the same time harmonizing with the CARB program. Toward that end, we are adopt ing and incorporat ing by reference the current CARB OBD regulations , effective for the 2017 MY , with a few minor differences including phase

- in flexibility provisions and specific additions to enhance the implementation of the leak st andard. EPA is retain ing the provision that certifying with CARB’s program would permit manufacturers to seek a separate EPA certificate on that basis.Page 29 of 529 e. Emissions Test Fuel As described above, after reassessing market trends and considering comments, EPA is finalizing E10 as the ethanol blend level in emissions test gasoline for Tier 3 light

- duty and heavy

- duty

gasoline vehicles. We will continue to monitor the in

- use gasoline suppl y and based on such review may initiate rulemaking action to revise the s pecifications for emissions test fuel to include a higher ethanol blend level. EPA is also making additional changes that are consistent with CARB’s LEV III emissions test fuel specifications, including new specifications for octane, distillation temperat ures, aromatics, olefins, sulfur and benzene. (See Section IV.F below for a detailed discussion of all the revised emission test fuel parameters.) As discussed in Sections IV.A.7.d (tailpipe emission testing) and IV.C.5.b (evaporative emission testing), w e are requiring certification of all Tier 3 light

- dut y and chassis

- certified heavy

- duty gasoline vehicles on federal E10 test fuel. The new test fuel specifications will appl y to new vehicle certification, assembly line, and in

- use testing. With a chang e in the ethanol content of the test fuel, EPA also needed to consider whether a change is warranted in the volatility of the test fuel, t ypicall y expressed as pounds per square inch (psi) Reid Vapor Pressure (RVP). As discussed in detail in Section IV.F below, after considering several technical and policy implications as well as stakeholder comments, EPA has concluded that the most appropriate approach is to maintain an RVP of 9 psi for the E10 certification fuel at this time. In addition to finalizing a new E1 0 emissions test fuel, we are also finalizing detailed specifications for the E85 emissions test fuel used for flexible fuel vehicle (FFV) certification, as discussed in Section IV. F

. 3

. 15 This will resolve uncertainty and confusion in the certific ation of FFVs designed to operate on ethanol levels up to 83 percent. Furthermore, we allow vehicle manufacturers to request approval for an alternative certification fuel such as a high

- octane 30 percent ethanol by volume blend (E30) for vehicles that may be optimize d for such fuel. f. Fuel Standards Under the Tier 3 fuel program, gasoline must contain no more than 10 ppm sulfur on an annual average basis beginn ing January 1, 2017. Similar to the Tier 2 gasoline program, the Tier 3 program will apply to gasoline in the U.S. and the U.S. territories of Puerto Rico and the Virgin I slands, excluding California. The program will result in gasoline that contains, on average, two

- thirds less sulfur than it does today . In addition, following discussions with numerous refiners and other segments of the fuel market (e.g.,

15 Flexible fuel vehicles are currently required to meet emissions certification requirements using both E0 and E85 test fuels. However, there were no detailed regulatory specifications regarding the composition of E85 test fuels before those finalized today

.Page 30 of 529

pipelines, terminals, marketers, ethanol industry representatives, transmix processors, additive manufacturers , etc. ), the Tier 3 fuel program contains considerable flexibility to ease both ini tial and long

- term implementation of the program. The program that we are finalizing today

includes an averaging, banking, and trading (ABT) program that allow s refiners and importers to spread out their investments over nearl y a 6 year period through the use of an earl y credit program and then rel y on ongoing nationwide averaging to meet the 10 ppm sulfur standard. Inaddition there is a three

- ye ar delay for small refiners and “small volume refineries”. As a result of the early credit program, we anticipate considerable reductions in gasoline sulfur levels prior to 2017, with a complete transition to the 10 ppm average occurring b y J anuary 1, 2020. For more information on the gasoline sulfur program flexibilities, refer to Section V.E. Under today ’s Tier 3 gasoline sulfur program, we are maintaining the current 80 ppm refinery

gate and 95 ppm downstream per

- gallon caps. We also evaluated and sought comment on the potential of lowering the per

- gallon caps

. While there are advantages and disadvantages with each of the sulfur cap options that we proposed, we believe that retaining the current Tier 2 sulfur caps is prudent at this time, as explained in more detail in Section V.C. Further, the stringency of the 10 ppm annual average standard will result in reduced gasoline sulfur levels nationwide. Today ’s program requires that manufacturers of gasoline additives that are used downstream of the refinery at less than 1 volume percent must limit the sulfur contribution to the finished gasoline from the use of their additive to less than 3 ppm when the additive is used at the maximum recommended treatment rate (see Section V.C.2)

. This requirement will preclude the unnecessary use of high sulfur content additives in gasoline. The vehicle emissions standards finalized today are fuel

- neutral (i.e. , they are applicable regardless of the ty pe of fuel that the vehicle is designed to use). There currentl y are no sulfur standards for the fuel used in compressed natural gas (CNG) and liquid propane gas (LPG) vehicl es. We requested comment on whether it is necessary for EPA to establish sulfur standards for CNG and LPG to enable them meeting more stringent vehicle emissions standards. EPA is deferring finalizing in

- use sulfur requirements for CNG/LPG in this final rule to provide additional time to work with stakeholders to collect data on current CNG/LPG sulfur content, to determine whether additional control of in

- use CNG/LPG sulfur content is needed, and to evaluate the feasibility and costs associated with potential additional sulfur controls (see Section V.J). Given that the information provided suggests that CNG/LPG sulfur levels tend to be low already, the vehicle emissions standards finalized today will appl y to CNG/LPG vehicles in addition to vehicles fuele d on gasoline, diesel fuel, or an y other fuel. The sulfur content of highway

diesel fuel is already

required to meet a 15 ppm sulfur cap , which is sufficient for diesel fuel vehicles to meet the Tier 3 emissi ons standards. As the number of flex

- fuel vehicles (FFVs) in the in

- use fleet increases, it is becoming increasingl y i mportant that all fuels used in FFVs, not just gasoline, meet fuel quality standards. A lack of clarity regarding the standards that appl y to fuels used in FFVs could also act to impede the further expansion of ethanol blended fuels withPage 31 of 529

concentrations greater than 15 volume percent, which is important to satisfyingthe requirements of the RFS2 program. Hence, we sought comment on appropri ate regulatory

mechanism s to implement in

- use quality standards for E51

- 83 and E16

- 50 in the Tier 3 proposal. Additional work is needed on some issues that could not be accommodated within the timeline for this Tier 3 final rule. Therefore, we are choosi ng not to finalize these provisions at this time. We intend to finalize in

- use fuel quality standards for E51

- 83 and perhaps E16

- 50 as well in a follow

- up final rule. g. Regulatory

Streamlining and Technical Amendments T his action also includes a number of i tems to help streamline the in

- use fuels regulations at 40 CFR part s 79 and 80. The majority of these items involve clarifying vague or inconsistent language, removal or updating of outdated provisions, and decreas ing in frequency

and/or volume of report ing burden where data are no longer needed or are redundant with other EPA fuels programs. In general, we believe that these changes will reduce the burden on industry and allow the standards and resulting environmental benefits to be achiev ed as earl y as possible with no expected loss in environmental control. In some cases, these regulatory streamlining items are non

substantive amendments that correct minor errors or inconsistencies in the regulations. The regulatory

streamlining items th at we are finalizing for the in

- use fuels regulations are changes that we believe are straightforward and should be made quickl y. Th is action also includes a variet y of technical amendments to certification

related requirements for engine and vehicle em ission standards ; adjusting the fuel econom y label provisions to correspond to the new Tier 3 standards , remov ing obsolete regulatory

text , and making several minor corrections and clarifications. Please refer to Section VI for a complete discussion of t echnical amendments and regulatory

streamlining provisions and issues. **C. What W**  **ill the Impacts of the Standards Be?**  The final Tier 3 vehicle and fuel standards together will reduce dramatically emissions of NO X , VOC, PM 2.5 , and air toxics. The gasoline sulf ur standards, which will take effect in 2017, will provide large immediate reductions in emissions from existing gasoline vehicles and engines. NO X emissions are projected to be reduced by about 260,000 tons, or about 10 percent of emissions from on

- highway vehicles, in 2018, and these emission reductions will increase over time as newer vehicles become a larger percentage of the fleet. In 2030, when 70 percent of the miles travelled are projected to be from vehicles that meet the fully phased

- in Tie r 3 standards, we expect the NO X and VOC emissions to be reduced b y about 330,000 tons and 170,000 tons, respectivel y, or 25 percent and 16 percent of emissions from on

- highway vehicles compared to their 2030 levels without the Tier 3 program. Emissions o f CO are projected to decrease b y almost 3.5 million tons, or 24 percent of emissions from on

- highway vehicles. Emissions ofPage 32 of 529

many air toxics will also be reduced, including benzene, 1,3

- butadiene, acetaldehyde, formaldeh yde, acrolein and ethanol, with reductions projected to rang e from 10 to nearly 30 percent of national emissions from on

- highway vehicles. We expect these reductions to continue beyond 2030 as more of the fleet continues to turn over to Tier 3 vehicles; for example, by

2050, when ne arl y all of the fleet will have turned over to vehicles meeting the fully phased

- in Tier 3 standards, we estimate the Tier 3 program will reduce on

highway emissions of NO X and VOC nearl y 31 percent from the level of emissions projected without Tier 3 controls. 16 These reductions in emissions of NO X , VOC, PM 2.5 and air toxics from the Tier 3 standards are projected to lead to significant decreases in ambient concentrations of ozone, PM 2.5 and air toxics (including notable nationwide reductions in benzene concentrations) by

2030, and will immediately reduce ozone in 2017 when the sulfur controls take effect. Additional information on the emission and air quality impacts of the final Tier 3 program is presented in Sections III.B and C. Exposure to ambient concentrations of ozone, PM 2.5 , and air toxics is linked to adverse human health impacts such as premature deaths as well as other important public health and environmental effects (see Section II.B). The final Tier 3 standards are expected to reduc e these adverse impacts and yi eld significant benefits, including those we can monetize and those we are unable to quantify . We estimate that by 2030, the emission reductions of the Tier 3 standards will annually prevent between 660 and 1,500 PM

- related p remature deaths, between 110 and 500 ozone - related premature deaths, 81,000 work day s lost, 210,000 school absence days, and approximately 1.1 million minor restricted

- activity

day s. The estimated annual monetized health benefits of the Tier 3 standards i n 2030 (201 1 $) is between $ 7.4 and $ 19 billion, assuming a 3

- percent discount rate (or between $ 6.7 billion and $ 18 billion assuming a 7

- percent discount rate). We project the final fuel standards to cost on average 0.65 cent (i.e., less than a penny) per gallon of gasoline, and the final vehicle standards to have an average cost that increases in proportion to the increase in stringency during the phase

- in period, from $ 28 per vehicle in 2017 to $ 72 per vehicle in 2025, when the standards are fully phased in. We estimate the annual cost of the overall program in 2030 will be approximately $ 1.5 billion , and the 2030 benefits will be between 4.5 and 13 times the costs of the program. The estimated benefits in Table I

- 6 include all of the human health impacts we are able to quantify

and monetize at this time. However, the full complement of human health and welfare effects associated with PM, ozone and air toxics remain unquantified because of current limitations in methods and/or available data. As a result, the health benefits quantified in this section are likel y underestimates of the total benefits attributable to the final standards. See Sections VII and VIII for detailed descriptions of the costs and benefits of this action

.

16 To estimate the benefits of the final Tier 3 rule, we performed air quality modeling for the year 2030.Page 33 of 529

**Table I**  **- 6**  **Summary of Estimated**  **Annual Benef i**  **ts and Costs Associated with the Final**  **Tier 3 Program (Billions, 201 1**  **$) a**  **Description 2030**  Vehicle Program Costs Fuels Program Costs Total Estimated Costs b $0.76 $0.70 $1.5 Total Estimated Health Benefits c,d,e,f 3 percent discount rate 7 percent discount rate $7.4

- $19 $6.7

- $18 Annual Net Benefits (Total Benefits

– Total Costs) 3 percent discount rate 7 percent dis count rate $5.9

- $18 $5.2

- $17 Notes: a All estimates represent annual benefits and costs anticipated for the year 2030. Totals are rounded to two significant digits and may not sum due to rounding. b The calculation of annual costs does not require amortization of costs over time. Therefore, the estimates of annual cost do not include a discount rate or rate of return assumption (see Section VII of the preamble for more information on vehicle and fuel costs). c Total includes ozone and PM 2.5 estimated benefits. Range was developed by adding the estimate from the Bell et al., 2004 ozone premature mortality function to PM 2.5 - related premature mortality derived from the American Cancer Society cohort study ( Krewski et al., 200 9 ) for the low estimate and o zone premature mo rtality derived from the Levy et al., 2005 study to PM 2.5 - related premature mortality derived from the Six

- Cities ( Lepeule et al., 20 12 ) study for the high estimate. d Annual benefits analysis results reflect the use of a 3 percent and 7 p ercent discount rate in the valuation of premature mortality and nonfatal myocardial infarctions, consistent with EPA and OMB guidelines for preparing economic analyses. e Valuation of premature mortality based on long

- term PM exposure assumes discountin g over the SAB recommended 20

- year segmented lag structure described in the Regulatory Impact Analysis for the 20 12 PM National Ambient Air Quality Standards ( December, 2012 ). f Not all possible benefits are quantified and monetized in this analysis; the total monetized benefits presented here may therefore be underestimated. Potential benefit categories that have not been quantified and monetized, due to current limitations in methods and/or data availability, are listed in Table VIII

- 2. For example, we have not quantified a number of known or suspected health and welfare effects linked with reductions in ozone and PM (e.g., reductions in heart rate variability, reduced material damage to structures and cultural monuments, and reduced eutrophication in co astal areas). We are also unable to quantify health and welfare benefits associated with reductions in air toxics

. 

## II. **Why Is EP**

**A Ta**  **ki ng this**  **Action ?**  The Clean Air Act authorizes EPA to establish emissions standards for motor vehicles to address air pollution that may reasonably

be anticipated to endanger public health or welfare. EPA also has authority to establish fuel controls to address such air pollution. These statutory requirements are described in Section II.A. Emissions from motor vehicles and th eir fuels contribute to ambient levels of ozone, PM, NO 2 , sulfur dioxide (SO 2 ) and CO, which are all pollutants for which EPA has established health

- based NAAQS. These pollutants are linked with respiratory and/orPage 34 of 529

cardiovascular problems and other adverse health impacts leading to increased medication use, hospital admissions, emergency department visits, and premature mortality . Over 149 million people currently live in areas designated nonattainment for one or more of the current NAAQS for ozone , PM 2.5 , PM 10 , and SO 2 . 17 Motor vehicles also emit air toxics, and the most recent available data indicate that the majority

of Americans continue to be exposed to ambient concentrations of air toxics at levels which have the potential to cause adverse health eff ects, including cancer, immune sy stem damage, and neurological, reproductive, developmental, respiratory , and other health problems. 18 A more detailed discussion of the health and environmental effects of these pollutants is included in Section II.B. Cars and light trucks also continue to be a significant contributor to air pollution directly near roads, with gasoline vehicles accounting for more than 50 percent of near

road concentrations of some criteria and toxic pollutants. 19 More than 50 million peopl e live, work, or go to school in close proximity to high

- traffic roadway s, and the average American spends more than one hour traveling each day , with over 80 percent of daily trips occurring b y personal vehicle. 20 , 21 , 22 , 23 , 24 Exposure to traffic

- rel ated pollutants has been linked with adverse health impacts such as respiratory problems (particularl y in asthmatic children) and cardiovascular problems. In the absence of additional controls such as Tier 3 standards, many areas will continue to have ambient ozone and PM 2.5 concentrations exceeding the NAAQS in the future. States and local areas are required to adopt control measures to attain the NAAQS

17 Data come from Summary Nonattainment Area Population Exposure Report, current as of December 5 , 201 3 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA

- HQ

- OAR

2011

- 0135. 18 U.S. EPA. (2011) Summary of Results for the 2005 National

- Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf. 19 For example, see Fujita, E.M; Campbell, D.E.; Zielinska, B.; Arnott, W.P.; Chow , J.C. (2011) Concentrations of Air T oxics in Motor Vehicle

- Dominated Environments. Health Effects Institute Research Report 156. Available at http://www.healtheffects.org 20 Rowangould, G.M. (2013) A census of the US near

- roadway population: public health and environmental justice consider ations. Transportation Research Part D 25: 59

- 67. 21 U.S. Census Bureau ( 2011 ) . Current Housing Reports, Series H150/09, American Housing Survey for the United States: 2009. U.S. Government Printing Office, Washington, DC. Available at http://www.censu s.gov/hhes/www/housing/ahs/ahs09/ahs09.html 22 Drago, R. ( 2011 ) . Secondary activities in the 2006 American Time Use Survey. U.S. Bureau of Labor Statistics Working Paper 446. Available at http://www.bls.gov 23 U.S. Department of Transportation, Bureau of Transportation Statistics. (2003) National Household Travel Survey 2001 Highlights Report. Government Pr inting Office, Washington, DC. Available at http://www.bts.gov/publications/highlights_of_the_2001_national_household_travel_survey/ 24 Santos, A.; McGuck in, N, Yukiko Nakamoto, H.; Gray, D.; Liss, S. (2011) Summary of Travel Trends: 2009 National Household Travel Survey. Federal Highway Administration report no FHWA

- PL

- 11

- 022. Available at http://nhts.ornl.gov/publications.shtml

.Page 35 of 529

and, once attained, to demonstrate that control measures are in place sufficient to maintain the NAAQ S for ten years (and eight years later, a similar demonstration is required for another ten

- ye ar period). The Tier 3 standards w ill be a critical part of man y areas’ strategies to attain and maintain the NAAQS . Maintaining the NAAQS has been challenging for some areas in the past, particularly those where high population growth rates lead to significant annual increases in vehicle trips and vehicle miles traveled. Our air quality

modeling for this final rule , which is described in more detail in Section III.C, projects that in 201 8 a significant number of counties outside CA will be within 10 percent of the 2008 ozone NAAQS, in the absence of additional controls. These counties in particular w ill benefit from the Tier 3 standards as they work to ensure long

- term maintenance of the NAAQS. Section III provides more detail on how we expect this action w ill reduce motor vehicle emissions and ambient levels of pollution. We project that the Tier 3 program w ill meaningfull y reduc e ozone concentrations as earl y as 2017 (the first ye ar of the program), and even more significantl y in 2030. The estimated reductions are of significant enough magnitude to bring ozone levels in some counties from above the standard to below the standard , even without any additional controls. We also project that the Tier 3 standards w ill reduce ambient PM 2.5 concentrations. Without this action to reduce nationwide motor vehicle emissions, areas would have to adopt other measures to reduce emissions from other sources under their state or local authority . Few other measures exist for providing multi

- pollutant reductions of the same magnitude and cost

- effectiveness as those expec ted from the Tier 3 standards. Furthermore, most states do not have the authorit y to lower the sulfur in gasoline, which is needed to immediatel y reduce emissions from the existing fleet and also enable new vehicles to meet the Tier 3 emissions standards throughout their useful life. The projected reductions in ambient ozone an d PM 2.5 that w ill result from the Tier 3 standards w ill provide significant health benefits. We estimate that b y 2030, the standards w ill annuall y prevent between 660 and 1,500 PM

- rel ated premature deaths, between 110 and 500 ozone - related premature death s, 81,000 work day s lost, 210,000 school absence day s, and approximately 1.1 million minor restricted

- activity day s (see Section VIII for more details). This action will also reduce air toxics; for example, we project that in 2030, the Tier 3 standards wi ll decrease ambient benzene concentrations by 10

- 25 percent in some urban areas. Furthermore, the Tier 3 standards will reduce traffic

- associated pollution near major roads. EPA is finaliz ing Tier 3 vehicle and fuel standards as part of a comprehensive nationwide program for regulating all ty pes of air pollution from motor vehicles. EPA recentl y finalized standards to reduce GHG emissions from light

- dut y vehicles, startingPage 36 of 529

with model year 2017. 25 The Tier 3 standards in this final rule , which address no n GHGs, will be implemented on the same timeframe, thus allowing manufacturers to optimize their vehicle redesigns over both sets of standards. Furthermore, the Tier 3 vehicle and fuel standards are also closely aligned with California’s LEV III program, in such a way

that manufacturers will be able to design a single vehicle for nationwide sales. This reduces the cost of compliance for auto manufacturers. This Tier 3 rulemaking responds to the President’s request in his May 2010 memorandum for EPA to rev iew the adequacy of its existing non

- GHG standards for new motor vehicles and fuels, and to promulgate new standards, if necessary , as part of a comprehensive approach to regulating motor vehicles. 26 Based on our review, we have concluded that improved veh icle technology , combined with lower sulfur gasoline, make it feasible and cost

- effective to reduce emissions well below the current Tier 2 levels. These emission reductions are necessary to reduce air pollution that is (and projected to continue to be) at levels that endanger public health and welfare. **A. Basis for Action under the Clean Air Act**  1. Clean Air Act Section 202 We are setting motor vehicle emission standards under the authorit y of section 202 of the Clean Air Act. Section 202(a) provides EPA with general authority to prescribe vehicle standards, subject to any specific limitations elsewhere in the Act. EPA is setting standards for larger light

- duty trucks and MDPVs under the general authority of section 202(a)(1) and under section 202(a)(3), which requires that standards applicable to emissions of hydrocarbons, NO X , CO and PM from heavy

- dut y vehicles 27 reflect the greatest degree of emission reduction available for the model year to which such standards appl y, giving appropriate consideration to cos t, energy , and safety . In addition, section 202(k) provides EPA with authority to issue and revise regulations applicable to evaporative emissions of hydrocarbons from all gasoline

- fueled motor vehicles during: (1) operation, and (2) over 2 or more day s of nonuse; under ozone

- prone summertime conditions. Regulations under section 202(k) shall take effect as expeditiously as possible and shall require the greatest degree of emission reduction achievable by means reasonabl y expected to be available for produc tion during any model year to which the regulations appl y, giving appropriate consideration to fuel volatility , and to cost, energy ,

25 77 FR 62623 (October 15, 2012). 26 The Presidential Memorandum is found at: http://www.whitehouse.gov/the

- press - of fice/presidential

memorandum

- regarding

- fuel

- efficiency

- standards. 27 LDTs that have gross vehicle weight ratings above 6000 lbs and all MDPVs are considered ‘‘heavy

- duty vehicles’’ under the CAA. See section 202(b)(3)(C). For regulatory purposes, we generally refer to those LDTs which are above 6000 lbs GVWR and at or below 8500 lbs GVWR as ‘‘heavy light

- duty trucks’’ made up of LDT3s and LDT4s , and we have defined M DPVs primarily as vehicles between 8500 and 10000 lbs GVWR designed primarily for the transportation of persons

. See 40 CFR 86.1803

- 01Page 37 of 529

and safet y factors associated with the application of the appropriate technology. Further, section 206 and in particular s ection 206(d) of the Clean Air Act authorizes EPA to establish methods and procedures for testing whether a motor vehicle or motor vehicle engine conforms with section 202 requirements. 2. Clean Air Act Section 211 We are adopt ing gasoline sulfur controls pur suant to our authority under section 211(c)(1) of the CAA. This section allows EPA to establish a fuel control if at least one of the following two criteria is met: (1) The emission products of the fuel cause or contribute to air pollution which may reason abl y be anticipated to endanger public health or welfare; or (2) the emission products of the fuel will impair to a significant degree the performance of an y emissions control device or s ystem which is either in general use or which the Administrator finds has been developed to a point where in a reasonable time it will be in general use were the fuel control to be adopted. We are finalizing gasoline sulfur controls based on both of these criteria. Under the first criterion, we believe that gasoline with current levels of sulfur contributes to ambient levels of air pollution that endanger public health and welfare, as described in Section II.B. Under the second criterion, we believe that gasoline sulfur impairs the emissions control sy stems of vehicles, as discussed in Section III.A.2. **B. Overview of Public Health Impacts of Motor Vehicles and Fuels**  Motor vehicles emit pollutants that contribute to ambient concentration s of ozone, PM, NO 2, SO 2 , CO, and air toxics. Motor vehicles are significant contributo rs to emissions of VOC and NO X , which contribute to the formation of both ozone and PM 2.5 . Over 1 49 million people currentl y live in counties designated nonattainment for one or more of the NAAQS, and this figure does not include the people living in area s with a risk of exceeding the NAAQS in the future. 28 The majority of Americans continue to be exposed to ambient concentrations of air toxics at levels which have the potential to cause adverse health effects. 29 In addition, populations who live, work, or attend school near major roads experience elevated exposure concentrations to a wide range of air pollutants. 30 EPA has already adopted many emission control programs that are expected to reduce ambient pollution concentration s. As a result of these programs, the number of

28 Data come from Summary Nonattainment Area Population Exposure Report, current as of December 5, 2013 at: http://www.e pa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA

- HQ

- OAR

20 11

- 0 135. 29 U.S. EPA. (2011) Summary of Results for the 2005 National

- Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf. 30 Health Effects Institute Panel on the Health Effects of Traffic

- Related Air Pollution. (2010) Traffic

related air pollution: a critical review of the literature on emissions, exposure, and health effects. HEI Special Report 17. Available at http://www.healtheffects.org]Page 38 of 529

areas that continue to violate the ozone and PM 2.5 NAAQS or have high levels of air toxics is expected to continue to decrease. However, the baseline air quality modeling completed for this rule predicts that without additional controls there will continue to be a need for reductions in ozone, PM 2.5 and air toxics concentrations in some locations in the future. Section III.C of this preamble presents the air quality modeling results for this action

. 1. Ozone
a. Background Ground

- level ozon e pollution is ty pically formed through reactions involving VOC and NO X in the lower atmosphere in the presence of sunlight. These pollutants, often referred to as ozone precursors, are emitted by many t ypes of pollution sources, such as highway

and nonro ad motor vehicles and engines, power plants, chemical plants, refineries, makers of consumer and commercial products, industrial facilities, and smaller area sources. The science of ozone formation, transport, and accumulation is complex. Ground

- level oz one is produced and destroyed in a cyclical set of chemical reactions, many of which are sensitive to temperature and sunlight. When ambient temperatures and sunlight levels remain high for several day s and the air is relativel y stagnant, ozone and its pr ecursors can build up and result in more ozone than ty picall y occurs on a single high

- temperature day . Ozone and its precursors can be transported hundreds of miles downwind from precursor emissions, resulting in elevated ozone levels even in areas with l ow local VOC or NO X emissions. b. Health Effects of Ozone This section provides a summary of the health effects associated with exposure to ambient concentrations of ozone . 31 The information in this section is based on the information and conclusions in the F ebruary 2013 Integrated Science Assessment for Ozone (Ozone I SA) prepared b y EPA’s Office of Research and Development (ORD)

. 32 The Ozone I SA concludes that human exposures to ambient concentrations of ozone are associated with a number of adverse health ef fects and characterizes the weight of

31 Human exposure to ozone varies over time due to changes in ambient ozone concentration and because people move between locations which have notable different ozone concentrations. Also, the amount of ozone delivered to the lung is not only influenced by the ambient con centrations but also by the individuals breathing route and rate. 32 U.S. EPA. Integrated Science Assessment of Ozone and Related Photochemical Oxidants (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 10/076F, 2013. The ISA is available at http://cfpub.epa.gov/ncea/isa/recordisplay.cfm?deid=247492#DownloadPage 39 of 529

evidence for these health effects. 33 The discussion below highlights the Ozone I SA’s conclusions pertaining to health effects associated with both short

- term and long

- term periods of exposure to ozone. For short

- term exposure to ozone, the Ozone I SA concludes that respiratory effects, including lung function decrements, pulmonary inflammation, exacerbation of asthma, respiratory

- related hospital admissions, and mortality , are causally associated with ozone exposure. It also concludes that cardiovascular effects, including decreased cardiac function and increased vascular disease, and total mortality are likely to be causall y associated with short

- term exposure to ozone and that evidence is suggestive of a causal relati onship between central nervous s ys tem effects and short

- term exposure to ozone. For long

- term exposure to ozone, the Ozone I SA concludes that respiratory effects, including new onset asthma, pulmonary inflammation and injury , are likely to be a causall y related with ozone exposure. The Ozone I SA characterizes the evidence as suggestive of a causal relationship for associations between long

- term ozone exposure and cardiovascular effects, reproductive and developmental effects, central nervous sy stem effec ts and total mortality . The evidence is inadequate to infer a causal relationship between chronic ozone exposure and increased risk of lung cancer. Finally , interindividual variation in human responses to ozone exposure can result in some groups being at increased risk for detrimental effects in response to exposure. The Ozone I SA identified several groups that are at increased risk for ozone

- related health effects. These groups are people with asthma, children and older adults, individuals with reduced i ntake of certain nutrients (i.e., Vitamins C and E), outdoor workers, and individuals having certain genetic variants related to oxidative metabolism or inflammation. Ozone exposure during childhood can have lasting effects through adulthood. Such effects include altered function of the respiratory and immune sy stems. Children absorb higher doses (normalized to lung surface area) of ambient ozone, compared to adults, due to their increased time spent outdoors, higher ventilation rates relative to body size , and a tendency to breathe a greater fraction of air through the mouth. Children also have a higher asthma prevalence compared to adults. Additional children’s vulnerability

and susceptibility

factors are listed in Section XII.G.

33 The ISA evaluates evidence and draw s conclusions on the causal relationship between relevant pollutant exposures and health effects, assigning one of five “weight of evi dence” determinations: causal relationship, likely to be a causal relationship, suggestive of a causal relationship, inadequate to infer a causal relationship, and not likely to be a causal relationship. For more information on these levels of evidence, please refer to Table II in the Preamble of the ISA.Page 40 of 529 c. Current and Projected Con centration s of Ozone Concentrations that exceed the level of the ozone NAAQS occur in many parts of the country , including major population centers such as Atlanta, Baltimore, Chicago, Dallas, Houston, New York, Philadelphia, and Washington, D.C

. In addition, our modeling without the Tier 3 controls projects that in the future we will continue to have many countie s that will have ambient ozone concentrations above the level of the NAAQS (see Section III.C.1). States will need to meet the standard in the 2015

- 2032 time frame for the 2008 ozone NAAQS . The emission reductions and significant ambient ozone improvements from this rule, which will take effect starting in 2017, w ill be helpful to states as they

work to attain and maintain the ozone NAAQS. The primary

and secondary

NAAQS for ozone are 8

- hour standards with a level of 0.075 ppm. The most recent revision to the ozone standards was in 2008; the previous 8

- hour ozone standards, set in 1997, had a level of 0.08 ppm. In 2004, the U.S. EPA design ated nonattainment areas for the 1997 8

- hour ozone NAAQS. 34 , 35 As of December 5 , 201 3 , there were 39 ozone nonattainment areas for the 1997 ozone NAAQS composed of 2 16 full or partial counties w ith a total population of over 11 2 million. Nonattainment desi gnations for the 2008 ozone standard were finalized on April 30, 2012 and May 31, 2012. 36 As of December 5, 2013, there were 46 ozone nonattainment areas for the 2008 ozone NAAQS, composed of 227 full or partial counties, with a population of over 123 mill ion. As of December 5 , 201 3 , over 13 5 million people are living in ozone nonattainment areas. 37 States with ozone nonattainment areas are required to take action to bring those areas into attainment. The attainment date assigned to an ozone nonattainment area is based on the area’s classification. Most ozone nonattainment areas we re required to attain the 1997 8

- hour ozone NAAQS in the 2007 to 2013 time frame and then to maintain it thereafter. 38 The attainment dates for areas designated nonattainment f or the 2008 8

- hour ozone NAAQS are in the 2015 to 2032 timeframe, depending on the severit y of the problem in each area. In addition, EPA is currentl y working on a review of the

34 69 FR 23858 (April 30, 2004). 35 A nonattainment area is defined in the Clean Air Act (CAA) as an area that is violating an ambient standard or is contributing to a nearby area that is violating the s tandard. 36 77FR 30088 (May 21, 2012) and 77 FR 34221 (June 11, 2012)

. 37 The 13 5 million total is calculated by summing, without double counting, the 1997 and 2008 ozone nonattainment populations contained in the Summary Nonattainment Area Population Exposure report (http://www.epa.gov/oar/oaqps/greenbk/popexp.html). If there is a population associated with both the 1997 and 2008 nonattainment areas, and they are not the same, then the larger of the two populations is included in the sum. 38 The Los Angeles South Coast Air Basin 8

- hour ozone nonattainment area and the San Joaquin Valley Air Basin 8

- hour ozone nonattainment area are designated as E xtreme and will have to attain before June 15, 2024. The Sacramento, Coachella Valley , Western Mojave and Houston 8

- hour ozone nonattainment areas are designated as S evere and will have to attain by June 15, 2019.Page 41 of 529

ozone NAAQS. If EPA revises the ozone standards pursuant to that review, the attainment dates associated with areas designated nonattainment for that NAAQS would be 5 or more ye ars after the final rule is promulgated, depending on the severity of the problem in each area. EPA has already adopted many emission control programs that are expected to reduce ambient ozone levels. As a result of these and other federal, state and local programs, 8

- hour ozone levels are expected to improve in the future. However, even with the implementation of all current state and federal regulatio ns, there are projected to be counties violating the ozone NAAQS well into the future. Thus additional federal control programs, such as Tier 3, can assist areas with attainment dates in 201 8 and beyond in attaining the NAAQS as expeditiously as practicab le and may

relieve areas with already stringent local regulations from some of the burden associated with adopting additional local controls. 2. Particulate Matter
a. Background Particulate matter is a highly complex mixture of solid particles and liquid droplet s distributed among numerous atmospheric gases which interact with solid and liquid phases. Particles range in size from those smaller than 1 nanometer (10 - 9 meter) to over 100 micrometer (μm, or 10 - 6 meter) in diameter (for reference, a typi cal strand of human hair is 70 μ m in diameter and a grain of salt is about 100 μm). Atmospheric particles can be grouped into several classes according to their aerodynamic and ph ys ical sizes, including ultrafine particles (<0.1 μm), accumulation mode or ‘fine’ particle s (<1 to 3 μm), and coarse particles (>1 to 3 μm). 39 For regulatory purposes, fine particles are measured as PM 2.5 and inhalable or thoracic coarse particles are measured as PM 10

- 2.5 , corresponding to their size (diameter) range in micrometers. The EPA curr ently has standards that measure PM 2.5 and PM 10 . 40 Particles span man y sizes and shapes and may consist of hundreds of different chemicals. Particles are emitted directly from sources and are also formed through atmospheric chemical reactions; the former are often referred to as “primary” particles, and the latter as “secondary” particles. Particle concentration and composition varies b y time of year and location , and in addition to differences in source emissions, is affected

39 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F. Figure 3

- 1. 40 Regulatory definitions of PM size fractions, and information on reference and equivalent methods for measuring PM in ambient air, are provided in 40 CFR Parts 50, 53, and 58. With regard to national am bient air quality standards (NAAQS) which provide protection against health and welfare effects, the 24

- hour PM 10 standard provides protection against effects associated with short

- term exposure to thoracic coarse particles (i.e., PM 10

- 2.5 ).Page 42 of 529

by several weather

- related fa ctors, such as temperature, clouds, humidity , and wind. A further layer of complexity comes from particles’ ability to shift between solid/liquid and gaseous phases, which is influenced b y concentration and meteorology, especiall y temperature. Fine parti cles are produced primaril y b y combustion processes and b y transformations of gaseous emissions (e.g., sulfur oxides (SO X ), oxides of nitrogen, and volatile organic compounds (VOC)) in the atmosphere. The chemical and phy sical properties of PM 2.5 may

vary greatly

with time, region, meteorology , and source category . Thus, PM 2.5 may include a complex mixture of different components including sulfates, nitrates, organic compounds, elemental carbon and metal compounds. These particles can remain in the atmosphe re for day s to weeks and travel hundreds to thousands of kilometers. b. Health Effects of PM Scientific studies show ambient PM is associated with a broad range of health effects. These health effects are discussed in detail in the December 2009 Integrated S cience Assessment for Particulate Matter (PM ISA)

. 41 The PM IS A summarizes health effects evidence associated with both short

- and long

- term exposures to PM 2.5 , PM 10

- 2.5 , and ultrafine particles. The PM I SA concludes that human exposures to ambient PM 2.5 concentrations are associated with a number of adverse health effects and characterizes the weight of evidence for these health outcomes. 42 The discussion below highlights the PM I SA’s conclusions pertaining to health effects associated with both short

- an d long

term PM exposures. Further discussion of health effects associated with PM 2.5 can also be found in the rulemaking documents for the most recent review of the PM NAAQS completed in 2012

. 43 , 44 The EPA concludes that a causal relationship exists between both long

- and short

term exposures to PM 2.5 and premature mortality and cardiovascular effects and a likely causal relationship exists between long

- and short

- term PM 2.5 exposures and respiratory effects. Further, there is evidence suggestive of a causal relationship between long

- term

41 U.S. EPA. (2009). Integrated Science Asse ssment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F. 42 The causal framework draws upon the assessment and integration of evidence from across epidemiological, controlled human exposure, an d toxicological studies, and the related uncertainties that ultimately influence our understanding of the evidence. This framework employs a five

- level hierarchy that classifies the overall weight of evidence and causality using the following categorizati ons: causal relationship, likely to be causal relationship, suggestive of a causal relationship, inadequate to infer a causal relationship, and not likely to be a causal relationship ( U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter ( Final Report). U.S. Environmental Protection Agency, Wa shington, DC, EPA/600/R

- 08/139F, Ta

ble 1

– 3). 43 78 FR 3086 ( January 15, 201 3), pages 3103

- 3104. 44 77 FR 38890 ( June 29, 2012 ), pages 38906

- 38911.Page 43 of 529

PM 2.5 exposures and other health effects, including developmental and reproductive effects (e.g., low birth weight, infant mortality) and carcinogenic, mutagenic, and genotoxic effects (e.g., lung cancer mortality). 45 As summarized in the Final PM NAAQS rule, and discussed extensively in the 2009 PM I SA, the scientific evidence available since the completion of the 2006 PM NAAQS review significantly strengthens the link between long

- and short

- ter m exposure to PM 2.5 and premature mortality, while providing indications that the magnitude of the PM 2.5 - mortality

association with long

- term exposures may be larger than previously estimated. 46 , 47 The strongest evidence comes from recent studies investig ating long

- term exposure to PM 2.5 and cardiovascular

- related mortality . The evidence supporting a causal relationship between long

- term PM 2.5 exposure and mortality also includes consideration of new studies that demonstrated an improvement in community h ealth following reductions in ambient fine particles. 48 Several studies evaluated in the 2009 PM I SA have examined the association between cardiovascular effects and long

- term PM 2.5 exposures in multi

- city studies conducted in the U.S. and Europe. Whil e studies were not available in the 2006 PM NAAQS review with regard to long

- term exposure and cardiovascular

- related morbidity , studies published since then have provided new evidence linking long

- term exposure to PM 2.5 with an array of cardiovascular effects such as heart attacks, congestive heart failure, stroke, and mortality . This evidence is coherent with studies of short

- term exposure to PM 2.5 that have observed associations with a continuum of effects ranging from subtle changes in i ndicators of cardiovascular health to serious clinical events, such as increased hospitalizations and emergency department visits due to cardiovascular disease and cardiovascular mortality

. 49 As detailed in the 2009 PM I SA, e xtended anal ys es of studies ava ilable in the 2006 PM NAAQS review as well as epidemiological studies conducted in the U.S. and abroad published since then provide stronger evidence of respiratory

- related morbidity effects associated with long

- term PM 2.5 exposure. The strongest evid ence for respiratory

related effects is from studies that evaluated decrements in lung function growth (in children), increased respiratory s ymptoms, and asthma development. The strongest

45 These causal inferences are based not only o n the more expansive epidemiological evidence available in this review but also reflect considerat ion of important progress that has been made to advance our understanding of a number of potential biologic modes of action or pathways for PM

- related cardiov ascular and respiratory effects ( U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Wa shington, DC, EPA/600/R

- 08/139F, chapter 5). 46 78 FR 3103

- 3104 ( January 15, 2013 ). 47 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Wa shington, DC, EPA/600/R

- 08/139F, chapter 6 (Section 6.5) and chapter 7 (Section 7.6). 48 78 FR 3103 ( January 15, 201 3). 49 78 FR 3103 ( January 15, 201 3).Page 44 of 529

evidence from short

- term PM 2.5 exposure studies has been observed f or increased respiratory

- related emergency department visits and hospital admissions for chronic obstructive pulmonary

disease (COPD) and respiratory infections. 50 The body of scientific evidence detailed in the 2009 PM I SA is still limited with respect to associations between long

- term PM 2.5 exposures and developmental and reproductive effects as well as cancer, mutagenic, and genotoxic effects, but is somewhat expanded from the 2006 review . The strongest evidence for an association between PM 2.5 and developmental and reproductive effects comes from epidemiological studies of low b irth weight and infant mortality , especially due to respiratory

causes during the post
- neonatal period (i.e., 1 month to 12 months of age). 51 With regard to cancer effects, ‘‘[m]ultiple epidemiologic studies have shown a consistent positive association be tween PM 2.5 and lung cancer mortality , but studies have generall y not reported associations between PM 2.5 and lung cancer incidence.’’ 53 Specific groups within the general population are at increased risk for experiencing adverse health effects related t o PM exposures. 54 , 55 , 56 , 57 The evidence detailed in the 2009 PM ISA expands our understanding of previously identified at

- risk populations and lifestages (i.e., children, older adults, and individuals with pre

- existing heart and lung d isease) and supports the identification of additional at

- risk populations (e.g., persons with lower socioeconomic status, genetic differences). Additionally , there is emerging, though still limited, evidence for additional potentially at
- risk populations and lifestages , such as those with diabetes, people who are obese, pregnant women, and the developing fetus. 60 For PM 10

- 2.5 , the 2009 PM I S A conclude d that available evidence was suggestive of a causal relationship between short

- term exposures to PM 10

- 2.5 and cardiovascular effects (e.g., hospital admissions and ED visits, changes in cardiovascular function), respiratory

effects (e.g, ED visi ts and hospital admissions, increase in markers of

50 78 FR 3103

- 3104 ( January 15, 201 3). 51 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Wa shington, DC, EPA/600/R

- 08/139F, chapter 2 (section 2.3.1 and 2.3. 2) and chapter 7. 53 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Wa shington, DC, EPA/600/R

- 08/139F . pg 2

- 13 54 U.S. EPA. (2009). Integrated Scie nce Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F. Chapter 8 and Chapter 2. 55 77 FR 38890 ( June 29, 2012 )

. 56 78 FR 3104 ( January 15, 201 3)

. 57 U.S. E PA. (2011)

. Policy Assessment for the Review of the PM NAAQS. U.S. Environmental Protection Agency, Wa shington, DC, EPA/452/R

- 11

- 003. section 2.2.1. 60 U.S. EPA. (2009). Int egrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F. Chapter 8 and Chapter 2 (Section 2.4.1).Page 45 of 529

pulmonary

inflammation), and premature mortality

. Data we re inadequate to draw conclusions regarding the relationships between long

- term exposure to PM 10

- 2. 5 and various health effects. 61 , 62 , 63 For ultrafin e particles, the 2009 PM I SA conclude d that the evidence wa s suggestive of a causal relationship between short

- term exposures and cardiovascular effects, including changes in heart rh ythm and vasomotor function (the ability of blood vessels to expand and c ontract) . It also conclude d that there wa s evidence suggestive of a causal relationship between short

- term exposure to ultrafine particles and respiratory effects , including lung function and pulmonary inflammation, with limited and inconsistent evidence for increases in ED visits and hospital admissions . Data we re inadequate to draw conclusions regarding the relationship between short

- term exposure to ultrafine particle and additional health effects including premature mortality as well as long

- term expos ure to ultrafine particles and all health outcomes evaluated

. 64 , 65

c. Current and Projected Concentration s of PM 2.5 There are two primary NAAQS for PM 2.5 : an annual standard (12 .0 micrograms per cubic meter (μg/m 3 )) and a 24

- hour standard (35 μg/m 3 ) , and two secondary NAAQS for PM 2.5 : an annual standard (1 5 .0 μg/m 3 ) and a 24

- hour standard (35 μg/m 3 )

. The initial PM 2.5 standards were set in 1997 and revisions to the standards were finalized in 2006 and in December 2012. The December 2012 rule revised the level of the primary annual PM 2.5 standard from 15 .0 μg/m 3 to 12 .0 μg/m 3

. 66 There are man y areas of the country that are currently

in nonattainment for the annual and 24

- hour PM 2.5 NAAQS. Our modeling without the Tier 3 controls projects that in the future we will continue to have man y areas that will have ambient PM 2.5 concentrations above the level of the NAAQS (see Section III.C.2). States will need to meet the 2006 24

- hour standard s in the 2015

- 2019 timeframe and the 2012 primary annual standard in the 2021

- 2025 timeframe. The emission reductions and improvements in ambient PM 2.5 concentrations from this action , which w ill take effect starting in 2017, w ill be helpful to state s as they work to attain and maintain the PM 2.5 NAAQS.

61 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (F inal Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F. Section 2.3.4 and Table 2

- 6. 62 78 FR 3167

- 8 ( January 15, 201 3). 63 77 FR 38947

- 51 (June 29, 2012). 64 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F. Section 2.3.5 and Table 2

- 6. 65 78 FR 3121 ( January 15, 201 3). 66 U.S. EPA (2012). National Ambient Air Quality Standards for Particulate Matter. http://www.epa.gov/PM/2012/finalrule.pdf . 78 FR 3164Page 46 of 529 In 2005 the EPA designated 39 nonattainment areas for the 1997 PM 2.5 NAAQS. 67 As of December 5 , 201 3 , over 68 million people lived in the 24 areas that are still designated as nonattainment for the 199 7 annual PM 2.5 NAAQS. These PM 2.5 nonattainment areas are comprised of 135 full or partial counties. EPA anticipates making initial area designation decision s for the 2012 primary annual PM 2.5 NAAQS in December 2014, with those designations likely becomi ng effective in early 2015. 68 On November 13 , 2009 and February 3, 2011 , the EPA designat ed 32 nonattainment areas for the 2006 24

- hour PM 2.5 NAAQS. 69 As of December 5, 2013, 28 of these areas remain designated as nonattainment, and they are composed of 1 04 full or partial counties with a population of over 65 million. In total, there are currentl y 39 PM 2.5 nonattainment areas with a population of over 84 million people. 70 States with PM 2.5 nonattainment areas will be required to take action to bring tho se areas into attainment in the future. Designated nonattainment areas not currentl y attaining the 1997 annual PM 2.5 NAAQS are required to attain the NAAQS by 2015 and will be required to maintain the 1997 annual PM 2.5 NAAQS thereafter. The 2006 24

- hour PM 2.5 nonattainment areas are required to attain the 2006 24

- hour PM 2.5 NAAQS in the 201 5 to 2019 time frame and will be required to maintain the 2006 24

- hour PM 2.5 NAAQS thereafter. Areas to be designated nonattainment for the 2012 primary annual PM 2.5 NAAQS will likely be required to attain the 2012 NAAQS in the 202 1 to 2025 time frame. The Tier 3 standards finalized here begin taking effect in 2017. The EPA has already adopted many mobile source emission control programs that are expected to reduce ambient PM concentration s. As a result of these and other federal, state and local programs, the number of areas that fail to meet the PM 2.5 NAAQS in the future is expected to decrease. However, even with the implementation of all current state and federal regulations, there are projected to be counties violating the PM 2.5 NAAQS well into the future. Thus additional federal control programs, such as Tier 3, can assist areas with attainment dates in 2017 and beyond in attaining the NAAQS as expeditiously

as practicable and may

relieve areas with already stringent local regulations from some of the burden associated with adopting additional local controls. d. Current Concentrations of PM 10 In the December 2012 action in which the EPA promulgated the revised prim ary annual PM 2.5 NAAQS, the EPA also retained the existing primary and secondary

24

- hour

67 70 FR 19844 (April 14, 2005). 68 U.S. EPA (2012). Fact Sheet: Implementing the Standards. http://www.epa.gov/airquality/particlepollution/2012/decfsimp.pdf 69 7 4 FR 58688 (November 13, 2009) and 76 FR 6056 (February 3, 2011)

. 70 Data come from Summary Nonattainment Area Population Exposure Report, current as of July 3 1, 201 3 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA

- HQ

- OAR

- 2 0 11

- 0 135.Page 47 of 529

PM 10 standards at 150 μg/m 3

. As of December 5 , 20 13, over 11 million people live in the 4 0 areas that are designated as nonattainment for the PM 10 NAAQS. There are 3 3 full or partial counties that make up the PM 10 nonattainment areas. 3. Oxides of Nitrogen and Sulfur
a. Background Nitrogen dioxide (NO 2 ) is a member of the NO X family of gases. Most NO 2 is formed in the air through the oxidation of nitric oxide (NO) emitted when fuel is burned at a high temperature. Sulfur dioxide (SO 2 ), a member of the sulfur oxide (SO X ) famil y of gases, is formed from burning fuels containing sulfur (e.g., coal or oil derived), extracting gasoline from oil, or extracting metals from ore. SO 2 and NO 2 and their gas phase oxidation products can dissolve in water droplets and further oxidize to form sulfuric and nitric acid which react with ammonia to form sulfates and nitrates, both of which are important components of ambient PM. The health effects of ambient PM are discussed in Section II.B.2.b of this preamble. NO X and VOC are the two major precursors of ozone. The health effects of ozone are covered in Section II.B.2.1.b. b. Health Effects of NO 2 The most recent review of the health effec ts of oxides of nitrogen completed by the EPA can be found in the 2008 Integrated Science Assessment for Nitrogen Oxides (NO X ISA)

. 71 The EPA concluded that the findings of epidemiologic, controlled human exposure, and animal toxicological studies provide evidence that is sufficient to infer a likely causal relationship between respiratory effects and short

- term NO 2 exposure. The 2008 NO X ISA conclude d that the strongest evidence for such a relationship comes from epidemiologic studies of respiratory effec ts including increased respiratory sy mptoms, emergency

department visits, and hospital admissions. Based on both short

- and long

term exposure studies, the 2008 NO X ISA conclude d that individuals with preexisting pulmonary

conditions (e.g., asthma or COPD ), children , and older adults are potentially at greater risk of NO 2 - related respiratory effects. Based on findings from controlled human exposure studies , the 2008 NO X ISA also dr ew two broad conclusions regarding airway responsiveness following NO 2 expo sure. First, the NO X ISA conclude d that NO 2 exposure may

enhance the sensitivity

to allergen

- induced decrements in lung function and increase the allergen

- induced airway inflammatory

response following 30

- minute exposures of asthmatic adult s to NO 2 concentrations as low as 26 0 pp b

. Second, exposure to NO 2 has been found to enhance the inherent responsiveness of the airway to subsequent nonspecific challenges in controlled human exposure studies of healthy and

71 U.S. EPA (2008). Integrated Science Assessment for Oxides of Nitrogen

– Health Criteria (Final Report). EPA/600/R

- 08/071. Washington, DC: U.S.EPA.Page 48 of 529

asthmatic adult s. S mall but statistically significant increases in nonspecific airway hy perresponsiveness were reported for asthmatic adults following 30

- minute exposures to 200

- 300 ppb NO 2 and following 1

- hour exposures of asthmatics to 1 00 pp b NO 2 . Enhanced airway

responsiveness could have important clinical implications for asthmatics since transient increases in airway responsiveness following NO 2 exposure have the potential to increase s ymptoms and worsen asthma control. Together, the epidemiologic and experimental data sets form a plausible, c onsistent, and coherent description of a relationship between NO 2 exposures and an array of adverse health effects that range from the onset of respiratory s ymptoms to hospital admission. In evaluating a broader range of health effects, the 2008 NO X ISA concluded evidence was “suggestive but not sufficient to infer a causal relationship” between short

term NO 2 exposure and premature mortality and between long

- term NO 2 exposure and respiratory

effects. The latter was based largel y on associations observed between long

term NO 2 exposure and decreases in lung function growth in children. Furthermore, the 2008 NO X ISA concluded that evidence was “inadequate to infer the presence or absence of a causal relationship” between short

- term NO 2 exposure and cardiova scular effects as well as between long

- term NO 2 exposure and cardiovascular effects, reproductive and developmental effects, premature mortality, and cancer. 72 The conclusions for these health effect categories were informed b y uncertainties in the evidenc e base such as the independent effects of NO 2 exposure within the broader mixture of traffic

- related pollutants, limited evidence from experimental studies, and/or an overall limited literature base.
c. Health Effects of SO 2 In formation on the health effects of SO 2 can be found in the 2008 Integrated Science Assessment for Sulfur Oxides (SO 2 IS A)

. 73 Short

- term peaks of SO 2 have long been known to cause adverse respiratory health effects, particularl y among individuals with asthma. Inaddition to those with a sthma (both children and adults), potentially sensitive groups include all children and the elderly . During periods of elevated ventilation, asthmatics may experience s ymptomatic bronchoconstriction within minutes of exposure. Following an extensive evalu ation of health evidence from epidemiologic and laboratory

studies, the EPA concluded that there is a causal relationship between respiratory

health effects and short

- term exposure to SO 2 . Separately, based on an evaluation of the epidemiologic evidence o f associations between short

- term exposure to SO 2 and mortality , the EPA concluded that the overall evidence is suggestive of a causal relationship between short

- term exposure to SO 2 and mortality

.

72 U.S. EPA (2008). Integrated Science Assessment for Oxides of Nitrogen

– Health Criteria (Fina l Report). EPA/600/R

- 08/071. Washington, DC: U.S.EPA. 73 U.S. EPA. (2008). Integrated Science Assessment (ISA) for Sulfur Oxides

– Health Criteria (Final Report) . EPA/600/R

- 08/047F. Washington, DC: U.S. Environmental Protection Agency.Page 49 of 529 d. Current Concentration s of NO 2 The EPA most recentl y comple ted a review of the primary NAAQS for NO 2 in January 2010. There are two primary NAAQS for NO 2 : an annual standard (53 ppb) and a 1

- hour standard (100 ppb). The EPA promulgated area designations in the Federal Register on February

17, 2012. Inthis init ial round of designations, all areas of the country were designated as “unclassifiable/attainment” for the 2010 NO 2 NAAQS based on data from the existing air quality monitoring network. The EPA and state agencies are working to establish an expanded netwo rk of NO 2 monitors, expected to be deployed in the 2014

- 2017 time frame. Once three ye ars of air quality data have been collected from the expanded network, the EPA will be able to evaluate NO 2 air quality in additional locations

. 74 , 75

e. Current Concentration s of S O 2 The EPA most recentl y completed a review of the primary SO 2 NAAQS in June 2010. The current primary NAAQS for SO 2 is a 1

- hour standard of 75 ppb. The EPA finalized the initial area designations for 29 nonattainment areas in 16 states in a notic e published in the Federal Register on August 5, 2013. In this first round of designations, EPA only designated nonattainment areas that were violating the standard based on existing air quality

monitoring data provided b y the states. The Agency did not h ave sufficient information to designate an y area as “attainment” or make final decisions about areas for which additional modeling or monitoring is needed (78 FR 47191, August 5, 2013). EPA anticipates designating areas for the revised SO2 standard in mul tiple rounds

. 4. Carbon Monoxide Carbon monoxide (CO) is a colorless, odorless gas emitted from combustion processes. Nationally

and, particularl y in urban areas, the majority of CO emissions to ambient air come from mobile sources.
a. Health Effects of Carbon Monoxide In formation on the health effects of CO can be found in the January 2010 Integrated Science Assessment for Carbon Monoxide (CO I SA)

. 76 The CO ISA

74 U.S. EPA. (201 2 ). Fact Sheet

– Air Quality Designations for the 2010 Primary Nitrogen Dioxide (NO 2 ) National Ambient A ir Quality Standards. http://www.epa.gov/airquality/nitrogenoxides/designations/pdfs/20120120FS.pdf 75 U.S. Environmental Protection Agency (2013). Revisio n to Ambient Nitrogen Dioxide Monitoring Requirements. March 7, 2013. http://www.epa.gov/airquality/nitrogenoxides/pdfs/20130307fr.pdf 76 U.S. EPA, (2010). Integrated Science Assessment for Carbon Monoxide (Final Report). U.S. Environmental Protection Age ncy, Washington, DC, EPA/600/R

- 09/019F, 2010. Available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686.Page 50 of 52 9

concludes that ambient concentrations of CO are associated with a number of adverse health effects. 77 This section provides a summary of the health effects associated with exposure to ambient concentrations of CO. 78 Controlled human exposure studies of subjects with coronary artery disease show a decrease in the time to onset of exercise

- induced angina ( chest pain) and electrocardiogram changes following CO exposure. In addition, epidemiologic studies show associations between short

- term CO exposure and cardiovascular morbidity , particularl y increased emergency room visits and hospital admissions for coronary heart disease (including ischemic heart disease, myocardial infarction, and angina). Some epidemiologic evidence is also available for increased hospital admissions and emergency

room visits for congestive heart failure and cardiovascular disease as a whole. The CO IS A concludes that a causal relationship is likely to exist between short

- term exposures to CO and cardiovascular morbidity . It also concludes that available data are inadequate to conclude that a causal relationship exists between long

- term exposures to CO and cardiovascular morbidity

. Animal studies show various neurological effects with in

- utero CO exposure. Controlled human exposure studies report central nervous s ys tem and behavioral effects following low

- level CO exposures , altho ugh the findings have not been consistent across all studies . The CO IS A concludes the evidence is suggestive of a causal relationship with both short

- and long

- term exposure to CO and central nervous s ys tem effects. A number of studies cited in the CO IS A have evaluated the role of CO exposure in birth outcomes such as preterm birth or cardiac birth defects. The epidemiologic studies provide limited evidence of a CO

- induced effect on preterm births and birth defects, with weak evidence for a decrease in birth weight. Animal toxicological studies have found perinatal CO exposure to affect birth weight, as well as other developmental outcomes. The CO ISA concludes the evidence is suggestive of a causal relationship between long

- term exposures to CO and de velopmental effects and birth outcomes. Epidemiologic studies provide evidence of associations between ambient CO concentrations and respiratory morbidity

such as changes in pulmonary function, respiratory

s ymptoms, and hospital admissions. A limited numb er of epidemiologic studies considered copollutants such as ozone, SO 2 , and PM in two

- pollutant models and found that CO risk estimates were generall y robust, although this limited evidence makes

77 The ISA evaluates the health evidence associated with different health effects, assigning one of five “weight of evidence” determinat ions: causal relationship, likely to be a causal relationship, suggestive of a causal relationship, inadequate to infer a causal relationship, and not likely to be a causal relationship. For definitions of these levels of evidence, please refer to Sectio n 1.6 of the ISA. 78 Personal exposure includes contributions from many sources, and in many different environments. Total personal exposure to CO includes both ambient and nonambient components; and both components may contribute to adverse health effec ts.Page 51 of 529

it difficult to disentangle effects attributed to CO itself from those of the larger complex air pollution mixture. Controlled human exposure studies have not extensively evaluated the effect of CO on respiratory morbidity . Animal studies at levels of 50

- 100 ppm CO show preliminary

evidence of altered pulmonary v ascular remodeling and oxidative injury . The CO IS A concludes that the evidence is suggestive of a causal relationship between short

- term CO exposure and respiratory morbidity , and inadequate to conclude that a causal relationship exists between long

- term exposure and respiratory morbidity

. Finally , the CO IS A concludes that the epidemiologic evidence is suggestive of a causal relationship between short

- term concentrations of CO and mortality

. Epidemiologic studies provide evidence of an association between short

- term exposure to CO and mortality , but limited evidence is available to evaluate cause

- specific mortality outcomes associated with CO exposure. In addition, the attenuation of CO risk estimates which was often observed in copollutant models contributes to the uncertainty as to whether CO is acting alone or as an indicator for other combustion

- related pollutants. The CO IS A also concludes that there is not likely to be a causal relationship between relevant long

- term exposures to CO and mortality

. b. Current Concentration s of C O There are two NAAQS for C O: an 8

- hour standard (9 ppm ) and a 1

- hour standard (35 ppm ). The primary

NAAQS for C O w ere re tain ed in August 2011

. T here are currentl y no CO nonattainment areas ; as of September 27, 2010, all CO n onattainment areas were redesignated to maintenance areas . The designations were based on the existing community

- wide monitoring network. EPA is making changes to the ambient air monitoring requirements for CO. The new requirements are expected to resul t in approximately

52 CO monitors operating near roads within 52 urban areas by January 2015 (76 FR 54294, August 31, 2011). 5. Mobile Source Air Toxics Li ght

- dut y vehicle emissions contribute to ambient levels of air toxics known or suspected as human or animal carcinogens, or that have noncancer health effects. The population experiences an elevated risk of cancer and other noncancer health effects from exposure to the class of pollutants known collectively as “air toxics.” 79 These compounds include, but are not limited to, benzene, 1,3

- butadiene, formaldehyde, acetaldeh yde, acrolein, polycyclic organic matter, and naphthalene. These compounds were identified as national or regional risk drivers or contributors in the 2005 National

-

79 U.S. EPA. (2011) Summary of Results for the 2005 National

- Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf.Page 52 of 529

scale Air Toxics Assess ment and have significant inventory contributions from mobile sources. 80

a. Health Effects of Air Toxics i. Benzene The EPA’s Integrated Risk Information Sy stem ( IRI S ) database lists benzene as a known human carcinogen (causing leukemia) b y all routes of exposure, and concludes that exposure is associated with additional health effects, including genetic changes in both humans and animals and increased proliferation of bone marrow cells in mice. 81 , 82 , 83 EPA states in its IRI S database that data indicate a causal r elationship between benzene exposure and acute l ymphocy tic leukemia and suggest a relationship between benzene exposure and chronic non

- ly mphocy tic leukemia and chronic l ymphocy tic leukemia. EPA’s IRI S documentation for benzene also lists a range of 2.2 x 10 - 6 to 7.8 x 10 - 6 as the unit risk estimate (URE) for benzene. 84 , 85 The International Agency for Research on Carcinogens (IARC) has determined that benzene is a human carcinogen and the U.S. Department of Health and Human Services (DHHS) has characterized benzene as a known human carcinogen. 86 , 87 A number of adverse noncancer health effects including blood disorders, such as preleukemia and aplastic anemia, have also been associated with long

- term exposure to benzene. 88 , 89 The most sensitive noncancer eff ect observed in humans, based on current

80 U.S. EPA (2011) 2005 National

- Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata2005. 81 U.S. EPA. (2000). Integrated Risk Information System File for Benzene. This material is available electronically at: http://www.epa.gov/iris/subst/0276.htm

. 82 International Agency for Research on Cancer, IARC monograph s on the evaluation of carcinogenic risk of chemicals to humans, Volume 29, Some industrial chemicals and dyestuffs, International Agency for Research on Cancer, World Health Organization, Lyon, France 1982. 83 Irons, R.D.; Stillman, W.S.; Colagiovanni, D. B.; Henry, V.A. (1992). Synergistic action of the benzene metabolite hydroquinone on myelopoietic stimulating activity of granulocyte/macrophage colony

stimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691

- 3695. 84 A unit risk estimate is defined as the increase in the lifetime risk of an individual who is exposed for a lifetime to 1 μg/m3 benzene in air. 85 U.S. EPA. (2000). Integrated Risk Information System File for Benzene. This material is available electronically at: http://www.epa.gov/iris/subst/0276.htm

. 86 International Agency for Research on Cancer (IARC). (1987). Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 29, Supplement 7, Some industrial chemicals and dyestuffs, World Health Organization, Lyon, France. 87 U.S. Department of Health and Human Services National Toxicology Program. (2011). 12th Report on Carcinogens

. Available at: http://ntp.niehs.nih.gov/?objectid=03C9AF75

- E1BF

- FF40

- DBA9EC0928DF8B15. 88 Aksoy, M. (1989). Hematotoxicity and carcinogenicity of benzene. Environ. Health Perspect. 82: 193

- 197. 89 Goldstein, B.D. (1988). Benzene toxicity. Occupational medicine. State of the Art Reviews. 3: 541

- 554

.Page 53 of 529

data, is the depression of the absolute ly mphocy te count in blood. 90 , 91 EPA’s inhalation reference concentration (RfC) for benzene is 30 μg/m 3 . The RfC is based on suppressed absolute ly

mphocy te counts seen in human s under occupational exposure conditions. In addition, recent work, including studies sponsored by the Health Effects Institute, provides evidence that biochemical responses are occurring at lower levels of benzene exposure than previously known. 92 , 93 , 94 , 95 EPA’s IRI S program has not yet evaluated these new data. EPA does not currentl y have an acute reference concentration for benzene. The Agency

for Toxic Substances and Disease Registry (ATSDR) Minimal Risk L evel (MRL) for acute exposure to benzene is 29 μ g/m 3 for 1

- 14 day s exposure. 96 , 97

ii. Formaldehyde In 1991, EPA concluded that formaldeh yde is a carcinogen based on nasal tumors in animal bioassay s. 98 An Inhalation Unit Risk for cancer and a Reference Dose for oral noncancer effects were developed b y the Agen cy and posted on the IRIS database. Since that time, the National Toxicology Program (NTP) and International Agency for Research on Cancer (IARC) have concluded that formaldeh yde is a known human carcinogen. 99 , 100 , 101

90 Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko

- Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes. (1996). Hematotoxicity among Chinese workers heavily exposed to benzene. Am. J. Ind. Med. 29: 236

- 246. 91 U.S . E PA. (2002). Toxicological Revie w of Benzene (Noncancer Effects). Environmental Protection Agency , Integrated Risk Information System (IRIS), Research and Development, National Center for Environmental Assessment, Washington DC. This material is available electronically at http://www.epa.gov/iris/subst/0276.htm

. 92 Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.; Suramaya, R.; Songni an, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003). HEI Report 115, Validation & Evaluation of Biomarkers in Workers Exposed to Benzene in China. 93 Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Coh en, et al. (2002). Hematological changes among Chinese workers with a broad range of benzene exposures. Am. J. Industr. Med. 42: 275

- 285. 94 Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004). Hematotoxically in Workers Exposed to Low Levels of Benzene. Science 306: 1774

- 1776. 95 Turtletaub, K.W. and Mani, C. (2003). Benzene metabolism in rodents at doses relevant to human exposure from Urban Air. Research Reports Health Effect Inst. Report No.113. 96 U.S. Agency for Toxic Substances and Disea se Registry (ATSDR). (2007). Toxicological profile for benzene. Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. http://www.atsdr.cdc.gov/ToxProfiles/tp3.pdf. 97 A minimal risk level (MRL) is defined as an estimate of the da ily human exposure to a hazardous substance that is likely to be without appreciable risk of adverse noncancer health effects over a specified duration of exposure. 98 EPA. Integrated Risk Information System. Formaldehyde (CASRN 50

- 00

- 0) http://www.epa.gov/ iris/subst/0419/htm 99 National Toxicology Program, U.S. Department of Health and Human Services (HHS), 12th Report on Carcinogens, June 10, 2011 100 IARC Monographs on the Evaluation of Carcinogenic Risks to Humans Volume 88 (2006): Formaldehyde, 2

- Butoxyeth anol and 1

- tert
- Butoxypropan

- 2

- olPage 54 of 529 The conclusions b y IAR C and NTP reflect th e results of epidemiologic research published since 1991 in combination with previous animal, human and mechanistic evidence. Research conducted b y the National Cancer Institute reported an increased risk of nasophary

ngeal cancer and specific l ymphohemato poietic malignancies among workers exposed to formaldeh yde. 102 , 103 , 104 A National Institute of Occupational Safety and Health study of garment workers also reported increased risk of death due to leukemia among workers exposed to formaldehyde. 105 Extended follow

- up of a cohort of British chemical workers did not report evidence of an increase in nasophary ngeal or ly mphohematopoietic cancers, but a continuing statistically significant excess in lung cancers was reported. 106 Finally , a study of embalmers reported fo rmaldehyde exposures to be associated with an increased risk of m yeloid leukemia but not brain cancer. 107 Health effects of formaldehyde in addition to cancer were reviewed b y the Agency for Toxics Substances and Disease Registry in 1999 108 and supplemented in 2010, 109 and by

the World Health Organization. 110 These organizations reviewed the literature concerning effects on the eyes and respiratory s ys tem, the primary point of contact for inhaled formaldehyde, including sensory irritation of eyes and respiratory tract, pulmonary

function, nasal histopathology , and immune sy stem effects. In addition, research on reproductive and developmental effects and neurological effects were discussed.

101 IARC Mongraphs on the Evaluation of Carcinogenic Risks to Humans Volume 100F (2012): Formaldehyde 102 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2003. Mortality from lymphohematopoetic malignan cies among workers in formaldehyde industries. Journal of the National Cancer Institute 95: 1615

- 1623. 103 Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Blair, A. 2004. Mortality from solid cancers among workers in formaldehyde industries. American Journal of Epidemiology 159: 1117

- 1130. 104 Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, M. 2009. Mortality from lymphohematopoietic malignancies among workers in formaldehyde industries: T he National Cancer Institute cohort. J. National Cancer Inst. 101: 751

- 761. 105 Pinkerton, L. E. 2004. Mortality among a cohort of garment workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 193

- 200. 106 Coggon, D, EC Harris, J Poole, KT P almer. 2003. Extended follow

- up of a cohort of British chemical workers exposed to formaldehyde. J National Cancer Inst. 95:1608

- 1615. 107 Hauptmann, M,; Stewart P. A.; Lubin J. H.; Beane Freeman, L. E.; Hornung, R. W.; Herrick, R. F.; Hoover, R. N.; Fraumen i, J. F.; Hayes, R. B. 2009. Mortality from lymphohematopoietic malignancies and brain cancer among embalmers exposed to formaldehyde. Journal of the National Cancer Institute 101:1696

- 1708. 108 AT SDR. 1999. Toxicological Profile for Formaldehyde, U.S. Department of Health and Human Services (HHS), July 1999. 109 AT SDR. 2010. Addendum to theToxicological Profile for Formaldehyde

. U.S. Department of Health and Human Services (HHS), October 2010. 110 IPCS. 2002. Concise International Chemical Assessment Document 40 . Formaldehyde. World Health Organization.Page 55 of 529 EPA released a draft Toxicological Review of Formaldehyde

– Inhalation Assessment through the IRI S program for peer review by the National Research Council (NRC) and public comment in June 2010. 111 The draft assessment reviewed more recent research from animal and human studies on cancer and other health effects. The NRC rele ased their review report in April 2011. 112 The EPA is currentl y revising the draft assessment in response to this review.

iii. Acetaldehyde Acetaldeh yd e is classified in EPA’s IRI S database as a probable human carcinogen, based on nasal tumors in rats, and is c onsidered toxic by the inhalation, oral, and intravenous routes. 113 The URE in IRI S for acetaldehyde is 2.2 × 10 - 6 per μg/m 3

. 114 Acetaldeh yd e is reasonably anticipated to be a human carcinogen by the U.S. DHHS in the 12 th Report on Carcinogens and is classif ied as possibly

carcinogenic to humans (Group 2B) b y the IARC. 115 , 116 EPA is currently conducting a reassessment of cancer risk from inhalation exposure to acetaldeh yde. The primary

noncancer effects of exposure to acetaldehyde vapors include irritation of th e eyes, skin, and respiratory tract. 117 In short

- term (4 week) rat studies, degeneration of olfactory epithelium was observed at various concentration levels of acetaldeh yde exposure. 118 , 119 Data from these studies were used b y EPA to develop an inhalation ref

erence concentration of 9 μg/m 3 . Some asthmatics have been shown to be a

111 EPA (U.S. Environmental Protection Agency). 2010. Toxicological Review of Formaldehyde (CAS No. 50

- 00

- 0)

– Inhalation Assessment: In Support of Summary Information on the Integrated Risk Information Sy stem (IRI S). External Review Draft. EPA/635/R

- 10/002A. U.S. Environmental Protection Agency, Washington DC [online]. Available: http://cfpub.epa.gov/ncea/irs_drats/recordisplay.cfm?deid=223614 112 NRC (National Research Council). 2011. Review of the Environmental P rotection Agency’s Draft IRIS Assessment of Formaldehyde. Washington DC: National Academies Press. http://books.nap.edu/openbook.php?record_id=13142 113 U.S. EPA (1991). Integrated Risk Information System File of Acetaldehyde. Research and Development, Nat ional Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm

. 114 U.S. EPA (1991). Integrated Risk Information System File of Acetaldehyde. This material is available electr onically at http://www.epa.gov/iris/subst/0290.htm. 115 NTP. (2011). Report on Carcinogens, T we lfth Edition. Research Triangle Park, NC: U.S. Department of Health and Human Services, Public Health Service, National Toxicology Program. 499 pp. 116 Internationa l Agency for Research on Cancer (IARC). (1999). Re

- evaluation of some organic chemicals, hydrazine, and hydrogen peroxide. IARC Monographs on the Evaluation of Carcinogenic Risk of Chemical to Humans, Vol 71. Lyon, France. 117 U.S. EPA (1991). Integrated Risk Information System File of Acetaldehyde. This material is available electronically at http://www.epa.gov/iris/subst/0290.htm. 118 U.S. EPA. (2003). Integrated Risk Information System File of Acrolein. Research and Development, National Center for Envi ronmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0364.htm

. 119 Appleman, L.M., R.A. Woutersen, and V.J. Feron. (1982). Inhalation toxicity of acetaldehyde in rats. I. Ac ute and subacute studies . Toxicology. 23: 293

- 297.Page 56 of 529

sensitive subpopulation to decrements in functional expiratory volume (FEV1 test) and bronchoconstriction upon acetaldeh yde inhalation. 120 The agency is currently conducting a reasses sment of the health hazards from inhalation exposure to acetaldehyde.

iv. Acrolein EPA most recently

evaluated the toxicological and health effects literature related to acrolein in 2003 and concluded that the human carcinogenic potential of acrolein could not be determined because the available data were inadequate. No information was available on the carcinogenic effects of acrolein in humans and the animal data provided inadequate evidence of carcinogenicity. 121 The IARC determined in 1995 that acrolein w as not classifiable as to its carcinogenicity in humans. 122 Lesions to the lungs and upper respiratory tract of rats, rabbits, and hamsters have been observed after subchronic exposure to acrolein. 123 The Agency has developed an RfC for acrolein of 0.02 μg/m 3 and an RfD of 0.5 μg/kg

- day

. 124 EPA is considering updating the acrolein assessment with data that have become available since the 2003 assessment was completed. Acrolein is extremely

acrid and irritating to humans when inhaled, with acute exposure resul ting in upper respiratory tract irritation, mucus hy persecretion and congestion. The intense irritancy of this carbonyl has been demonstrated during controlled tests in human subjects, who suffer intolerable eye and nasal mucosal sensory reactions within minutes of exposure. 125 These data and additional studies regarding acute effects of human exposure to acrolein are summarized in EPA’s 2003 IRI S Human

120 Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, T. (1993) Aerosolized acetaldehyde induces histamine

- mediated bronchoconstriction in asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1): 940

- 943. 121 U.S. EPA. (2003). Integrated Risk Information System File of Acrolein. Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available at http://www.epa.gov/iris/subst/0364.htm

. 122 International Agency for Research on Cancer (I ARC). (1995). Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 63. Dry cleaning, some chlorinated solvents and other industrial chemicals, World Health Organization, Lyon, France. 123 U.S. EPA. (2003). Integrated Risk Information System File of Acrolein. Office of Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available at http://www.epa.gov/iris/subst/0364.htm. 124 U.S. EPA. (2003). Integrated Risk Information System File of Acrolein. Office of Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available at http://www.epa.gov/iris/subst/0364.htm. 125 U.S. EPA. (2003) Toxicological review of acrolein in support of s ummary information on Integrated Risk Information System (IRIS) National Center for Environmental Assessment, Washington, DC. EPA/635/R

- 03/003. p. 10. Available online at: http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf

.Page 57 of 529

Health Assessment for acrolein. 126 Studies in humans indicate that levels as low as 0.09 ppm (0.21 mg/m 3 ) for five minutes may elicit subjective complaints of eye irritation with increasing concentrations leading to more extensive eye, nose and respiratory sy mptoms. Acute exposures in animal studies report bronchial hy per - responsiveness. Based on animal data (more pronounced respiratory irritancy in mice with allergic airway disease in comparison to non

- diseased mice 127 ) and demonstration of similar effects in humans (e.g., reduction in respiratory rate), individuals with compromised respiratory function (e.g., emph ys ema, asthma) are expected to be at increased risk of developing adverse responses to strong respiratory irritants such as acrolein. EPA does not currently have an acute reference concentration for acrolein. The available health effect reference values for acrolein have been summarized by EPA and include an ATSDR MRL for acute exposure to acrolein of 7 μg/m 3 for 1

- 14 day s exposure; and Reference Exposure Level (REL) values from the California Office of Environmental Health Hazard Assessment (OEHHA) for one

- hour and 8

- hour exposures of 2.5 μg/m 3 and 0.7 μg/m 3 , respectivel y. 128

v. 1,3

-Butadiene EPA has characterized 1,3

- butadiene as carcinogenic to humans by inhalation. 129 , 130 The IARC has determined that 1,3

- butadiene is a human carcinogen and the U.S. DHHS h as characterized 1,3

- butadiene as a known human carcinogen. 131 , 132 , 133 There are numerous studies consistently demonstrating that 1,3

- butadiene is metabolized into genotoxic metabolites by experimental animals and humans. The specific mechanisms of 1,3

- butadie ne - induced carcinogenesis are unknown; however, the

126 U.S. EPA. (2003) Toxicologica l review of acrolein in support of summary information on Integrated Risk Information System (IRIS) National Center for Environmental Assessment, Washington, DC. EPA/635/R

- 03/003. Available online at: http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf

. 127 Morris JB, Symanowicz PT, Olsen JE, et al. (2003). Immediate sensory nerve

- mediated respiratory responses to irritants in healthy and allergic airway - diseased mice. J Appl Physiol 94(4):1563

- 1571. 128 U.S. EPA. (2009). Graphical Arrays of Chemical

- Specific Health Effect Reference Values for Inhalation Exposures (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 09/061, 2009. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=211003 129 U.S. EPA. (2002). Health Assessment of 1,3

- Butadiene. Office of Research and Development, National Center for Environmental Assessment, Washington Office, Washington, DC. Report No. EPA600

- P

- 98

- 001F. This document is available electronically at http://www.epa.gov/iris/supdocs/buta

- sup.pdf

. 130 U.S. EPA. (2002). “Full IRIS Summary for 1,3

- butadiene (CASRN 106

- 99

- 0)” Environmental Protection Agency, Integrated Risk Information System (IRIS), Research and Development, National Center for Environmental Assessment, Washington, DC http://www.epa.gov/iris/ subst/0139.htm. 131 International Agency for Research on Cancer (IARC). (1999). Monographs on the evaluation of carcinogenic risk of chemicals to humans, Volume 71, Re

- evaluation of some organic chemicals, hydrazine and hydrogen peroxide and Volume 97 (in p reparation), World Health Organization, Lyon, France. 132 International Agency for Research on Cancer (IARC). (2008). Monographs on the evaluation of carcinogenic risk of chemicals to humans, 1,3

- Butadiene, Ethylene Oxide and Vinyl Halides (Vinyl Fluoride, Vinyl Chloride and Vinyl Bromide) Volume 97, World Health Organization, Lyon, France. 133 NTP. (2011). Report on Carcinogens, T we lfth Edition. Research Triangle Park, NC: U.S. Department of Health and Human Services, Public Health Service, National Toxicolo gy Program. 499 pp.Page 58 of 529

scientific evidence strongly suggests that the carcinogenic effects are mediated by genotoxic metabolites. Animal data suggest that females may be more sensitive than males for cancer effects associated with 1,3

- butadiene exposure; there are insufficient data in humans from which to draw conclusions about sensitive subpopulations. The URE for 1,3

- butadiene is 3 × 10 - 5 per μg/m 3

. 134 1,3

- butadiene also causes a variety of reproductive and developmental effe cts in mice; no human data on these effects are available. The most sensitive effect was ovarian atrophy observed in a lifetime bioassay of female mice. 135 Based on this critical effect and the benchmark concentration methodology , an RfC for chronic health effects was calculated at 0.9 ppb (approximately 2 μg/m 3 ). vi. Ethanol EPA is planning to develop an assessment of the health effects of exposure to ethanol, a compound which is not currentl y listed on EPA’s IRI S database. Extensive health effects data are available for ingestion of ethanol, while data on inhalation exposure effects are sparse. In developing the assessment, EPA is evaluating pharmacokinetic models as a means of extrapolating across species (animal to human) and across exposure routes (oral t o inhalation) to better characterize the health hazards and dose

- response relationships for low levels of ethanol exposure in the environment.

vii. Polycyclic Organic Matter The term pol yc yclic organic matter (POM) defines a broad class of compounds that includ es the polycyclic aromatic hydrocarbon compounds (PAHs). One of these compounds, naphthalene, is discussed separately below. POM compounds are formed primarily from combustion and are present in the atmosphere in gas and particulate form. Cancer is the major concern from exposure to POM. Epidemiologic studies have reported an increase in lung cancer in humans exposed to diesel exhaust, coke oven emissions, roofing tar emissions, and cigarette smoke; all of these mixtures contain POM compounds. 136 , 137 Anima l studies have reported respiratory tract tumors from inhalation exposure to benzo[a]py

rene and alimentary

tract and liver tumors from oral exposure to

134 U.S. EPA. (2002). “Full IRIS Summary for 1,3

- butadiene (CASRN 106

- 99

- 0)” Environmental Protection Agency, Integrated Risk Information System (IRIS), Research and Development, National Center for Environmental Assessment, Washington, D C http://www.epa.gov/iris/subst/0139.htm. 135 Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996). Subchronic toxicity of 4

- vinylcyclohexene in rats and mice by inhalation. Fundam. Appl. Toxicol. 32:1

- 10. 136 Agency for Toxic Substances and Disease Registry (ATSDR). (1995). Toxicological profile for Polycyclic Aromatic Hydrocarbons (PAHs). Atlanta, GA: U.S. Department of Health and Human Services, Public Health Service. Available electronically at http://www.atsdr.cdc.gov/ToxProfiles/TP.asp?id=122&tid=25. 137 U.S. EPA (2002). Health Assessment Document for Diesel Engine Exhaust . EPA/600/8

- 90/057F Office of Research and Development, Washington DC. http://cfpub.epa.gov/ncea/cfm/recordisplay .cfm?deid=29060

.Page 59 of 529

benzo[a]py

rene. 138 In1997 EPA classified seven PAHs (benzo[a]py rene, benz[a]anthracene, chrysene, benzo[ b]fluoranthene, benzo[k]fluoranthene, dibenz[a,h]anthracene, and indeno[1,2,3

- cd]py rene) as Group B2, probable human carcinogens. 139 Since that time, studies have found that maternal exposures to PAHs in a population of pregnant women were associated with s everal adverse birth outcomes, including low birth weight and reduced length at birth, as well as impaired cognitive development in preschool children (3 ye ars of age). 140 , 141 These and similar studies are being evaluated as a part of the ongoing IR IS assessme nt of health effects associated with exposure to benzo[a]py

rene. viii. Naphthalene Naphthalene is found in small quantities in gasoline and diesel fuels. Naphthalene emissions have been measured in larger quantities in both gasoline and diesel exhaust compared with evaporative emissions from mobile sources, indicating it is primarily a product of combustion. Acute (short

- term) exposure of humans to naphthalene b y inhalation, ingestion, or dermal contact is associated with hemoly tic anemia and damage to the live r and the nervous sy stem. 142 Chronic (long term) exposure of workers and rodents to naphthalene has been reported to cause cataracts and retinal damage. 143 EPA released an external review draft of a reassessment of the inhalation carcinogenicity

of naphthale ne based on a number of recent animal carcinogenicity studies. 144 The draft reassessment completed external peer review. 145 Based on external

138 International Agency for Research on Cancer (IARC). (2012). Monographs on the Evaluation of the Carcinogenic Risk of Chemicals for Humans, Chemical Agents and Related Occupations. Vol. 100F. Lyo n, France. 139 U.S. EPA (1997). Integrated Risk Information System File of indeno(1,2,3

- cd)pyrene. Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/ncea/iris/subst/0457.htm. 140 Perera , F.P.; Rauh, V.; Tsai, W

- Y.; et al. (2002). Effect of transplacental exposure to environmental pollutants on birth outcomes in a multiethnic population. Environ Health Perspect. 111: 201

- 205. 141 Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang, D.; Diaz, D .; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney, P. (2006). Effect of prenatal exposure to airborne polycyclic aromatic hydrocarbons on neurodevelopment in the first 3 years of life among inner

- city children. Environ Health Perspect 114: 1287

- 1292. 142 U. S. EPA. 1998. Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm

. 143 U. S. EPA. 1998. Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk Information S ystem, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm

. 144 U. S. EPA. (1998). Toxicological Review of Naphthalene (Reassessment of the Inhalation Cancer Risk), Environmental Protection Agency, Integrated Risk Information System, Research and Development, National Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris /subst/0436.htm

.Page 60 of 529

peer review comments received, a revised draft assessment that considers all routes of exposure, as well as cancer and noncancer effects, is under development. The external review draft does not represent official agency opinion and was released solely for the purposes of external peer review and public comment. The National Toxicology Program listed naphthalene as "r easonabl y anticipated to be a human carcinogen" in 2004 on the basis of bioassay s reporting clear evidence of carcinogenicit y in rats and some evidence of carcinogenicity in mice. 146 California EPA has released a new risk assessment for naphthalene, and the IARC has reevaluated naphthalene and re

- classified it as Group 2B: possibly

carcinogenic to humans. 147 Naphthalene also causes a number of chronic non

- cancer effects in animals, including abnormal cell changes and growth in respiratory and nasal tissues. 148 The current EPA IRIS assessment includes noncancer data on h yperplasia and metaplasia in nasal tissue that form the basis of the inhalation RfC of 3 μg/m 3

. 149 The ATSDR MRL for acute exposure to naphthalene is 0.6 mg/kg/day.

ix. Other Air Toxics In addition t o the compounds described above, other compounds in gaseous hydrocarbon and PM emissions from motor vehicles will be affected b y this action

. Mobile source air toxic compounds that will potentially be impacted include ethylbenzene, propionaldehyde, toluen e, and xylene. Information regarding the health effects of these compounds can be found in EPA’s IRI S database. 150 b. Current Concentration s of Air Toxics The most recent available data indicate that the majority of Americans continue to be exposed to ambient concentrations of air toxics at levels which have the potential to cause adverse health effects. 151 Th e levels of air toxics to which people are exposed vary

145 Oak Ridge Institute for Science and Education. (2004). External Peer Review for the IRIS Reassessment of the Inhalation Carcinogenicity of Naphthalene. August 2004. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403

. 146 NT P . (2011). Report on Carcinogens, T we lfth Edition. Research Triangle Park, NC: U.S. Department of Health and Human Services, Public Health Service, National Toxicology Program. 499 pp. 147 International Agency for Research on Cancer (IARC). (2002). Monograp hs on the Evaluation of the Carcinogenic Risk of Chemicals for Humans. Vol. 82. Lyon, France. 148 U. S. EPA. (1998). Toxicological Review of Naphthalene, Environmental Protection Agency, Integrated Risk Information System, Research and Development, Nation al Center for Environmental Assessment, Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm 149 U.S. EPA. (1998). Toxicological Review of Naphthalene. Environmental Protection Agency, Integrated Risk Inform ation System (IRIS), Research and Development, National Center for Environmental Assessment, Washington, DC http://www.epa.gov/iris/subst/0436.htm. 150 U.S. EPA Integrated Risk Information System (IRIS) database is available at: www.epa.gov/iris 151 U.S. EP A. (2011) Summary of Results for the 2005 National

- Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf.Page 61 of 529

depending on where people live and work and the kinds of activities in which they engage, as disc ussed in detail in U.S. EPA’s most recent Mobile Source Air Toxics Rule. 152 According to the National Air Toxic Assessment (NATA) for 2005, 153 mobile sources were responsible for 43 percent of outdoor toxic emissions and over 50 percent of the cancer risk and noncancer hazard associated with primary emissions. Mobile sources are also large contributors to precursor emissions which react to form secondary concentrations of air toxics. Formaldehyde is the largest contributor to cancer risk of all 80 pollutants quantitatively assessed in the 2005 NATA. Mobile sources were responsible for over 40 percent of primary emissions of this pollutant in 2005, and are major contributors to formaldehyde precursor emissions. Benzene is also a large contributor to cancer risk, and mobile sources account for over 70 percent of ambient exposure. Over the ye ars, EPA has implemented a number of mobile source and fuel controls which have resulted in VOC reductions, which also reduced formaldeh yde, benzene and other air toxic e missions. 6. Near

- Roadway

Pollution Locations in close proximity to major roadway s generall y have elevated concentrations of man y air pollutants emitted from motor vehicles. Hundreds of such studies have been published in peer

- reviewed journals, concluding that concentrations of CO, NO, NO 2 , benzene, aldeh ydes, particulate matter, black carbon, and many other compounds are elevated in ambient air within approximately 300

- 600 meters (about 1,000

- 2,000 feet) of major roadway s. Highest concentrations of most po llutants emitted directly by motor vehicles are found at locations within 50 meters (about 165 feet) of the edge of a roadway ’s traffic lanes. A recent large

- scale review of air quality measurements in vicinity of major roadway s between 1978 and 2008 concluded that the pollutants with the steepest concentration gradients in vicinities of roadway s were CO, ultrafine particles, metals, elemental carbon (EC), NO, NO X , and several VOCs. 154 These pollutants showed a large reduction in concentrations within 100 me ters downwind of the roadway . Pollutants that showed more gradual reductions with distance from roadway s included benzene, NO 2 , PM 2.5 , and PM 10 . In the review article, results varied based on the method of statistical anal ys is used to determine the trend

. For pollutants with relatively high background concentrations relative to near

road concentrations, detecting concentration gradients can be difficult. For example, many aldehydes have high background concentrations as a result of photochemical

152 U. S. Environmental Protection Agency (2007). Control of Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR 8434, February 26, 2007. 153 U. S. EPA. (2011). 2005 National

- Scale Air Toxics Assessment. http://www.epa.gov/ttn/atw/nata2005/. 154 Karner, A.A.; Eisinger, D.S.; Niemeier, D.A. (2010). Near

- roadway air quality: synthesizing the findings from real

- wo rld data. Environ Sci Technol 44: 5334

- 5344.Page 62 of 529

breakdown of precursors from many different organic compounds. This can make detection of gradients around roadway s and other primary emission sources difficult. However, several studies have measured aldehydes in multiple weather conditions, and found higher co ncentrations of many carbonyls downwind of roadway s. 155 , 156 These findings suggest a substantial roadway source of these carbonyls. In the past 15 years, many studies have been published with results reporting that populations who live, work, or go to school near high

- traffic roadway s experience higher rates of numerous adverse health effects, compared to populations far away from major roads. 157 Inaddition, numerous studies have found adverse health effects associated with spending time in traffic, su ch as commuting or walking along high

- traffic roadway s. 158 , 159 , 160 , 161 The health outcomes with the strongest evidence linking them with traffic

- associated air pollutants are respiratory effects, particularly

in asthmatic children, and cardiovascular effects. Num erous reviews of this body of health literature have been published as well. In 2010, an expert panel of the Health Effects Institute (HEI) published a review of hundreds of exposure, epidemiology , and toxicology studies. 162 The panel rated how the evidenc e for each t ype of health outcome supported a conclusion of a causal association with traffic

- associated air pollution as either “sufficient,” “suggestive but not sufficient,” or “inadequate and insufficient.” The panel categorized evidence of a causal a ssociation for exacerbation of childhood asthma as “sufficient.” The panel categorized evidence of a causal association for new onset asthma as between “sufficient” and as “suggestive but not sufficient.” “Suggestive of a causal association” was how the panel categorized

155 Liu, W.; Zhang, J.; Kwon, J.l; et l. (2006). Concentrations and source characteristics of airborne carbonyl compounds measured outside urban residences. J Air Waste Manage Assoc 56: 1196

- 1204. 156 Cahill, T.M.; Charles, M.J.; Seaman, V.Y. (2010). Development and application of a sensitive method to determine concentrations of acrolein and other carbonyls in ambient air. Health Effects Institute Research Report 149. Available at http://dx.doi.org 157 In the widely

- used PubMe d database of health publications, between January 1, 1990 and August 18, 2011, 605 publications contained the keywords “traffic, pollution, epidemiology,” with approximately half the studies published after 2007. 158 Laden, F.; Hart, J.E.; Smith, T.J.; Davis, M.E.; Garshick, E. (2007) Cause

- specific mortality in the unionized U.S. trucking industry. Environmental Health Perspect 115:1192

- 1196. 159 Peters, A.; von Klot, S.; Heier, M.; Trentinaglia, I.; Hörmann, A.; Wichmann, H.E.; Löwel, H. (2004) Exposure t o traffic and the onset of myocardial infarction. New England J Med 351: 1721

- 1730. 160 Zanobetti, A.; Stone, P.H.; Spelzer, F.E.; Schwartz, J.D.; Coull, B.A.; Suh, H.H.; Nearling, B.D.; Mittleman, M.A.; Verrier, R.L.; Gold, D.R. (2009) T

- wave alternans, a ir pollution and traffic in high

- risk subjects. Am J Cardiol 104: 665

- 670. 161 Dubowsky Adar, S.; Adamkiewicz, G.; Gold, D.R.; Schwartz, J.; Coull, B.A.; Suh, H. (2007) Ambient and microenvironmental particles and exhaled nitric oxide before and after a gr oup bus trip. Environ Health Perspect 115: 507

- 512. 162 Health Effects Institute Panel on the Health Effects of Traffic

- Related Air Pollution. (2010). Traffic

related air pollution: a critical review of the literature on emissions, exposure, and health e ffects. HEI Special Report 17. Available at http://www.healtheffects.orgPage 63 of 529

evidence linking traffic

- associated air pollutants with exacerbation of adult respiratory sy mptoms and lung function decrement. It categorized as “inadequate and insufficient” evidence of a causal relationship between traffic

- related air pollution and health care utilization for respiratory problems, new onset adult asthma, chronic obstructive pulmonary

disease (COPD), nonasthmatic respiratory allergy , and cancer in adults and children. Other literature reviews have been published with c onclusions similar to the HEI panel’s. 163 , 164 , 165 Health outcomes with few publications suggest the possibility of other effects still lacking sufficient evidence to draw definitive conclusions. Among these outcomes with a small number of positive studies are neurological impacts (e.g., autism and reduced cognitive function) and reproductive outcomes (e.g., preterm birth, low birth weight). 166 , 167 , 168 , 169 In addition to health outcomes, particularl y cardiopulmonary effects, conclusions of numerous studies suggest mechanisms by which traffic

- related air pollution affects health. Numerous studies indicate that near

- roadway exposures may increase s ys temic inflammation, affecting organ s ys tems, including blood vessels and lungs. 170 , 171 , 172 , 173 Long

- term exposures in near

- road env ironments have been associated with inflammation

associated conditions, such as atherosclerosis and asthma. 174 , 175 , 176

163 Boothe, V.L.; Shendell, D.G. (2008). Potential health effects associated with residential proximity to freeways and primay roads: review of scientific literature, 1999

- 2006. J E nviron Health 70: 33

- 41. 164 Salam, M.T.; Islam, T.; Gilliland, F.D. (2008). Recent evidence for adverse effects of residential proximity to traffic sources on asthma. Curr Opin Pulm Med 14: 3

- 8. 165 Raaschou

-Nielsen, O.; Reynolds, P. (2006). Air pollution and childhood cancer: a review of the epidemiological literature. Int J Cancer 118: 2920

- 9. 166 Volk, H.E.; Hertz

- Picciotto, I.; Delwiche, L.; et al. (2011). Residential proximity to freeways and autism in the CHARGE study. Environ Health Perspect 119: 873

- 877. 167 Franco

- Suglia, S.; Gryparis, A.; Wright, R.O.; et al. (2007). Association of black carbon with cognition among children in a prospective birth cohort study. Am J Epidemiol. doi: 10.1093/aje/kwm308. [Online at http://dx.doi.org] 168 Power, M.C.; Weisskopf, M.G.; Alexeef, S.E.; et al. (2011). Traffic

- related air pollution and cognitive function in a cohort of older men. Environ Health Perspect 2011: 682

- 687. 169 Wu, J.; Wilhelm, M.; Chung, J.; et al. (2011). Comparing exposure assessment methods for traffic

related air pollution in and adverse pregnancy outcome study. Environ Res 111: 685

- 6692. 170 Riediker, M. (2007). Cardiovascular effects of fine particulate matter components in highway patrol officers. Inhal Toxicol 19: 99

- 105. doi: 10.1080/0 8958370701495238 Available at http://dx.doi.org 171 Alexeef, S.E.; Coull, B.A.; Gryparis, A.; et al. (2011). Medium

- term exposure to traffic

- related air pollution and markers of inflammation and endothelial function. Environ Health Perspect 119: 481

- 486. d oi:10.1289/ehp.1002560 Available at http://dx.doi.org 172 Eckel. S.P.; Berhane, K.; Salam, M.T.; et al. (2011). Traffic

- related pollution exposure and exhaled nitric oxide in the Children’s Health Study. Environ Health Perspect (IN PRESS). doi:10.1289/ehp. 1103516

. Available at http://dx.doi.org 173 Zhang, J.; McCreanor, J.E.; Cullinan, P.; et al. (2009). Health effects of real

- world exposure diesel exhaust in persons with asthma. Res Rep Health Effects Inst 138. [Online at http://www.healtheffects.org] 174 Ad ar, S.D.; Klein, R.; Klein, E.K.; et al. (2010). Air pollution and the microvasculatory: a cross

sectional assessment of in vivo retinal images in the population

- based Multi

- Ethnic Study ofPage 64 of 529 Several studies suggest that some factors may increase susceptibility

to the effects of traffic

- associated air pollution. Several studies have found stronger respiratory associations in children experiencing chronic social stress, such as in violent neighborhoods or in homes with high family stress. 177 , 178 , 179 The risks associated with residence, workplace, or schools near major roads are of potentially

high public health significance due to the large population in such locations. According to the 2009 American Housing Survey , over 22 million homes (17.0 percent of all U.S. housing units) were located within 300 feet of an airport, railroad, or hi ghway with four or more lanes. This corresponds to a population of more than 50 million U.S. residents in close proximity to high

- traffic roadway s or other transportation sources. Based on 2010 Census data, a 2013 publication estimated that 19 percent of the U.S. population (over 59 million people) lived within 500 meters of roads with at least 25,000 annual average daily traffic (AADT), while about 3.2 percent of the population lived within 100 meters (about 300 feet) of such roads. 180 Another 2013 study e stimated that 3.7 percent of the U.S. population (about 11.3 million people) lived within 150 meters (about 500 feet) of interstate highway s, or other freeway s and expressway s. 181 As discussed in Section III, on average, populations near major roads have hi gher fractions of minority

residents and lower socioeconomic status. Furthermore, on average, Americans spend more than an hour traveling each day , bringing nearl y all residents into a high

- exposure microenvironment for part of the day

. In light of these concerns , EPA has required and is working with states to ensure that air quality

monitors be placed near high

- traffic roadway s for determining NAAQS compliance for CO, NO 2 , and PM 2.5 ( in addition to those existing monitors located in neighborhoods and othe r locations farther away from pollution sources )

. Near

- roadway monitors for NO 2 begin operation between 2014 and 2017 in Core Based Statistical Areas (CBSAs) with population of at least 500,000 . Monitors for CO and PM 2.5 begin

Atherosclerosis. PLoS Med 7(11): E1000372. doi:10.1371/journa l.pmed.1000372

. Available at http://dx.doi.org 175 Kan, H.; Heiss, G.; Rose, K.M.; et al. (2008). Proxpective analysis of traffic exposure as a risk factor for incident coronary heart disease: the Atherosclerosis Risk in Communities (ARIC) study. Environ H ealth Perspect 116: 1463

- 1468. doi:10.1289/ehp.11290

. Available at http://dx.doi.org 176 McConnell, R.; Islam, T.; Shankardass, K.; et al. (2010). Childhood incident asthma and traffic

- related air pollution at home and school. Environ Health Perspect 1021

- 1026. 177 Islam, T.; Urban, R.; Gauderman, W.J.; et al. (2011). Parental stress increases the detrimental effect of traffic exposure on children’s lung function. Am J Respir Crit Care Med (In press) 178 Clougherty, J.E.; Levy, J.I.; Kubzansky, L.D.; et al. (2007). Synergistic effects of traffic

- related air pollution and exposure to violence on urban asthma etiology. Environ Health Perspect 115: 1140

- 1146. 179 Chen, E.; Schrier, H.M.; Strunk, R.C.; et al. (2008). Chronic traffic

- related air pollution and stres s interact to predict biologic and clinical outcomes in asthma. Environ Health Perspect 116: 970

- 5. 180 Rowangould, G.M. (2013) A census of the US near

- roadway population: public health and environmental justice considerations. Transportation Research Part D 25: 59

- 67. 181 Boehmer, T.K.; Foster, S.L.; Henry, J.R.; Woghiren

- Akinnifesi, E.L.; Yip, F.Y. (2013) Residential proximity to major highways

– United States, 2010. Morbidity and Mortality Weekly Report 62(3);46

- 50.Page 65 of 529

operation betwee n 2015 and 2017. These monitors will further our understanding of exposure in these locations. EPA continues to research near

- road air quality , including the t ypes of pollutants found in high concentrations near major roads and health problems associated with the mixture of pollutants near roads. 7. Environmental Impacts of Motor Vehicles and Fuels
a. Plant and Ecosy stem Effects of Ozone The welfare effects of ozone can be observed across a variet y of scales, i.e. subcellular , c ellular, leaf, whole plant, p opulation and ecos ys tem. Ozone effects that begin at small spatial scales, such as the leaf of an individual plant, when they occur at sufficient magnitudes (or to a sufficient degree) can result in effects being propagated along a continuum to larger and larger spatial scales. For example, effects at the individual plant level, such as altered rates of leaf gas exchange, growth and reproduction can , when widespread, result in broad changes in ecosy stems, such as productivity , carbon storage, water cyclin g, nutrient cycling, and community composition. Ozone can produce both acute and chronic injury in sensitive species depending on the concentration level and the duration of the exposure. 182 Inthose sensitive species, o zone effects also tend to accumulat e over the growing season of the plant, so that even low concentrations experienced for a longer duration have the potential to create chronic stress on vegetation. Ozone damage to sensitive species includes visible injury to leaves and impaired pho tosy

nthesis, both of which can lead to reduced plant growth and reproduction, resulting in reduced crop yi elds, forestry production, and use of sensitive ornamentals in landscaping. In addition, the impairment of photosy nthesis, the process by which the p lant makes carboh ydrates (its source of energy and food), can lead to a subsequent reduction in root growth and carboh ydrate storage below ground, resulting in other, more subtle plant and ecos ys tems impacts. These latter impacts include increased suscept ibility

of plants to insect attack, disease, harsh weather, interspecies competition and overall decreased plant vigor. The adverse effects of ozone on areas with sensitive species could potentiall y lead to species s hifts and loss from the affected ecosy stems,

182 O nly a small percentage of all the plant species growing within the U.S. (over 43,000 species have been catalogued in the USDA PLANTS database ) have been studied with respect to ozone sensitivity (U.S. EPA. Revie w of

the National Ambient Air Quality Standards for Ozone: Policy Assessment of Scientific and Technical Information. OAQPS Staff Paper. U.S. Environmental Protection Agency, Washington, DC, EPA

- 452/R

- 07

- 007, 2007. p .7

- 7)

. Thus, ozone im pacts could be occurring in areas where plant species sensitive to ozone have not yet been stu died or identified. In addition, the concentration at which ozone levels overwhelm a plant’s ability to detoxify or compensate for oxidant exposure varies ( U.S. EPA. Welfare Risk and Exposure Assessment for Ozone. Second External Review Draft. EPA

- 452/P

- 14

- 003a, 2014. Figure 6

- 2, p. 6

- 5). Thus, whether a plant is classified as sensitive or tolerant depends in part on the exposure levels being considered.Page 66 of 529

resulting in a loss or reduction in associated ecosystem goods and services. L astl y, visible ozone injury

to leaves can result in a loss of aesthetic value in areas of special scenic significance like national parks and wilderness areas. T he Integrated Science Assessment (I SA) for Ozone presents more detailed information on how ozone effects vegetation and ecosy stems. 183 The ISA concludes that ambient concentrations of ozone are associated with a number of adve rse welfare effects and characterizes the weight of evidence for different effects associated with ozone. 184 The I SA concludes that visible foliar injury effects on vegetation, reduced vegetation growth, reduced productivity in terrestrial ecos ys tems, reduc ed yi eld and quality of agricultural crops, and alteration of below

- ground biogeochemical cycles are causall y associated with exposure to ozone. It also concludes that reduced carbon sequestration in terrestrial ecos ys tems, alteration of terrestrial ecosy stem water cycling, and alteration of terrestrial community

composition are likely

to be caus all y associated with exposure to ozone. b. Visibility Visibility can be defined as the degree to which the atmosphere is transparent to visible light. 185 Visibil ity impairment is caused by light scattering and absorption by suspended particles and gases. Visibility is important because it has direct significance to people’s enjo ym ent of daily activities in all parts of the country . Individuals value good visibil ity for the well

- being it provides them directly , where they live and work, and in places where they

enjoy recreational opportunities. Visibility is also highl y valued in significant natural areas, such as national parks and wilderness areas, and special emphasis is given to protecting visibility in these areas. For more information on visibility see the final 2009 PM I SA. 186

183 U.S. EPA. Integrated Science Assessment of Ozone and Related Photochemical Oxidants (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 10/076F, 2013. The ISA is available at http://cfpub.epa.gov/ncea/isa/recordisplay.cfm? deid=247492#Download
184 The Ozone ISA evaluates the evidence associated with different ozone related hea lth and welfare effects, assigning one of five “weight of evidence” determinations: causal relationship, likely to be a causal relationship, suggestive of a causal relationship, inadequate to infer a causal relationship, and not likely to be a causal relationship. For more information on these levels of evidence, please refer to Table II of the ISA. 185 National Research Council, (1993). Protecting Visibility in National Parks and Wilderness Areas. National Academy of Sciences Committee on Haze in Natio nal Parks and Wilderness Areas. National Academy Press, Washington, DC. This book can be viewed on the National Academy Press Website at http://www.nap.edu/books/0309048443/html/ 186 U.S. EPA. (2009). Integrated Science Assessment for Particulate Matter (Final Report). U.S. Environmental Protection Agency, Washington, DC, EPA/600/R

- 08/139F.Page 67 of 529 EPA is working to address visibility impairment. In 1999 , EPA finalized the regional haze program to protect the visibility in Mandatory

Class I Federal areas. 187 There are 156 national parks, forests and wilderness areas categorized as Mandatory Class IFederal areas. 188 These areas are defined in CAA section 162 as those national parks exceeding 6,000 acres, wilderness areas and memori al parks exceeding 5,000 acres, and all international parks which were in existence on August 7, 1977. EPA has also concluded that PM 2.5 causes adverse effects on visibility in other areas that are not protected b y the Regional Haze Rule, depending on PM 2 .5 concentrations and other factors that control their visibility impact effectiveness such as dry chemical composition and relative humidity

(i.e., an indicator of the water composition of the particles). EPA revised the PM 2.5 standards in December 2012 and established a target level of protection that is expected to be met through attainment of the existing secondary standards for PM 2.5 . i. Current Visibility Levels As mentioned in Section II.B.2.c , millions of pe ople live in nonattainment areas for the PM 2.5 NAAQS. These populations, as well as large numbers of individuals who travel to these areas, are likely to experience visibility

impairment. In addition, while visibility trends have improved in mandatory cl ass Ifederal areas, the most recent data show that these areas continue to suffer from visibility impairment. In summary , visibility impairment is experienced throughout the U.S., in multi

- state regions, urban areas, and remote mandatory class I federal areas.
c. Atmospheric Deposition Wet and dry

deposition of ambient particulate matter delivers a complex mixture of metals (e.g., mercury , zinc, lead, nickel, aluminum, cadmium), organic compounds (e.g., pol yc yclic organic matter, dioxins, furans) and inorgan ic compounds (e.g., nitrate, sulfate) to terrestrial and aquatic ecosy stems. The chemical form of the compounds deposited depends on a variet y of factors including ambient conditions (e.g., temperature, humidity , oxidant levels) and the sources of the mat erial. Chemical and physical transformations of the compounds occur in the atmosphere as well as the media onto which they

deposit. These transformations in turn influence the fate, bioavailability and potential toxicity

of these compounds. Atmospheric deposition has been identified as a key component of the environmental and human health hazard posed by several pollutants including mercury , dioxin and PCBs. 189

187 64 FR 35714 (July 1, 1999). 188 62 FR 38680

- 38681 (July 18, 1997). 189 U.S. EPA. (2000). Deposition of Air Pollutants to the Great Waters: Third Report to Congress. Office of Air Quality Planning and Standards. EPA

- 453/R

- 00

- 0005.Page 68 of 529 Adverse impacts on water quality can occur when atmospheric contaminants deposit to the water surface or when material deposited on the land enters a waterbody through runoff. Potential impacts of atmospheric deposition to waterbodies include those related to both nutrient and toxic inputs. Adverse effects to human health and welfare can occur from the addition of excess nitrogen via atmospheric deposition. The nitrogen

nutrient enrichment contributes to toxic algae blooms and zones of depleted ox ygen, which can lead to fish kills, frequentl y in coastal waters. Deposition of heavy metals or other toxics may

lead to the human ingestion of contaminated fish, impairment of drinking water, damage to freshwater and marine ecos ys tem components, and limits to recreational uses. Several studies have been conducted in U.S. coastal waters and in the Great L akes Region in which the role of ambient PM deposition and runoff is investigated. 190 , 191 , 192 , 193 , 194 Atmospheric deposition of nitrogen and sulfur contributes to acidification, altering biogeochemistry

and affecting animal and plant life in terrestrial and aquati c ecos ys tems across the United States. The sensitivity of terrestrial and aquatic ecos ys tems to acidification from nitrogen and sulfur deposition is predominantly governed by geology

. Prolonged exposure to excess nitrogen and sulfur deposition in sensiti ve areas acidifies lakes, rivers and soils. Increased acidit y in surface waters creates inhospitable conditions for biota and affects the abundance and nutritional value of preferred prey species, threatening biodiversity and ecos ys tem function. Over tim e, acidifying deposition also removes essential nutrients from forest soils, depleting the capacity of soils to neutralize future acid loadings and negatively affecting forest sustainability

. Major effects include a decline in sensitive forest tree specie s, such as red spruce ( Picea rubens ) and sugar maple ( Acer saccharum ), and a loss of biodiversity of fishes, zooplankton, and macro invertebrates

. In addition to the role nitrogen deposition play s in acidification, nitrogen deposition also leads to nutrient enrichment and altered biogeochemical cycling. In aquatic s ys tems increased nitrogen can alter species assemblages and cause eutrophication. In terrestrial sy stems nitrogen loading can lead to loss of nitrogen sensitive lichen species, decreased biodiv ersit y of grasslands, meadows and other sensitive habitats, and increased potential for invasive species. For a broader explanation of the topics treated here, refer to the description in Section 6.3.2 of the RIA.

190 U.S. EPA. (2004). National Coastal Condition Report II. Office of Research and Development/ Office of Water. EPA

- 620/R

- 03/002. 191 Gao, Y., E.D. Nelson, M.P. Field, et al. (2002). Chara cterization of atmospheric trace elements on PM 2.5 particulate matter over the New York

-New Jersey harbor estuary. Atmos. Environ. 36: 1077

- 1086. 192 Kim , G., N. Hussain, J.R. Scudlark, and T.M. Church. (2000). Factors influencing the atmospheric deposi tional fluxes of stable Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65

- 79. 193 Lu, R., R.P. Turco, K. Stolzenbach, et al. (2003). Dry deposition of airborne trace metals on the Los Angeles Basin and adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11

- 1 to 11

- 24. 194 Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. (2002). Surficial sediment contamination in Lakes Erie and Ontario: A comparative analysis. J. Great Lakes Res. 28(3): 437

- 450.Page 69 of 529 Adverse impacts on soil chemistry and plant life have been observed for areas heavily influenced by

atmospheric deposition of nutrients, metals and acid species, resulting in species shifts, loss of biodiversity , forest decline, damage to forest productivity

and reductions in ecosy stem services. Potential impacts also include adverse effects to human health through ingestion of contaminated vegetation or livestock (as in the case for dioxin deposition), reduction in crop yield, and limited use of land due to contamination. Atmospheric depositio n of pollutants can reduce the aesthetic appeal of buildings and culturall y important articles through soiling, and can contribute directly (or in conjunction with other pollutants) to structural damage b y means of corrosion or erosion. Atmospheric deposi tion may affect materials principally by promoting and accelerating the corrosion of metals, by degrading paints, and by deteriorating building materials such as concrete and limestone. Particles contribute to these effects because of their electrol yt ic, hygroscopic, and acidic properties, and their ability to adsorb corrosive gases (principall y sulfur dioxide).Page 70 of 529 i. Current Nitrogen and Sulfur Deposition Over the past two decades, the EPA has undertaken numerous efforts to reduce nitrogen and sulfur depositi on across the U.S. Analy ses of long

- term monitoring data for the U.S. show that deposition of both nitrogen and sulfur compounds has decreased over the last 1 9 ye ars. 195 The data show that reductions were more substantial for sulfur compounds than for nitrogen compounds. In the eastern U.S., where data are most abundant, total sulfur deposition decreased b y about 44 percent between 1990 and 2007, while total nitrogen deposition decreased b y 25 percent over the same time frame. 196 These numbers are generated by the U.S. national monitoring network and they likel y underestimate nitrogen deposition because neither ammonia nor organic nitrogen is measured. Although total nitrogen and sulfur deposition has decreased over time, many areas continue to be negativel y impacted b y deposition. Deposition of inorganic nitrogen and sulfur species routinely measured in the U.S. between 2005 and 2007 were as high as 9.6 kilograms of nitrogen per hectare (kg N/ha) averaged over three years and 20.8 kilograms of sulfur per h ectare (kg S/ha) averaged over three years. 197 d. Environmental Effects of Air Toxics Emissions from producing, transporting and combusting fuel contribute to ambient levels of pollutants that contribute to adverse effects on vegetation. Volatile organic compounds, some of which are considered air toxics, have long been suspected to play a role in vegetation damage. 198 Inlaboratory experiments, a wide range of tolerance to VOCs has been observed. 199 Decreases in harvested seed pod weight have been reported for the more sensitive plants, and some studies have reported effects on seed germination, flowering and fruit ripening. Effects of individual VOCs or their role in conjunction with other stressors (e.g., acidification, drought, temperature extremes) have no t been well studied. In a recent study of a mixture of VOCs including ethanol and

195 U.S. EPA. (2013). U.S. EPA’ s Report on the Environment. Data accessed online November 25, 2013 at: http://cfpub.epa.gov/eroe/index.cfm? fuseaction=detail.viewInd&lv=list.listBySubTopic&r=216610&subto p=341&ch=46

. 196 U.S. EPA. (2012). U.S. EPA’s Report on the Environment. Data accesse d online February 15, 2012 at: http://cfpub.epa.gov/eroe/index.cfm? fuseaction=detail.viewPDF&ch=46&lShowInd=0&subtop=341&lv=li st.listByChapter&r=216610. 197 U.S. EPA. (2012). U.S. EPA's Report on the Environment. Data accessed online February 15, 2012 at: http://cfpub.epa.gov/eroe/index.cfm? fuseaction=detail.viewPDF&ch=46&lShowInd=0&subtop=341&lv=li st.listByChapter&r=216610. 198 U.S. EPA. (1991). Effects of organic chemicals in the atmosphere on terrestrial plants. EPA/600/3

- 91/001. 199 Cape JN, ID Leith, J Binnie, J Content, M Donkin, M Skewes, DN Price AR Brown, AD Sharpe. (2003). Effects of VOCs on herbaceous plants in an open

- top chamber experiment. Environ. Pollut. 124:341

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toluene on herbaceous plants, significant effects on seed production, leaf water content and photosy

nthetic efficiency

were reported for some plant species. 200 Research sugge sts an adverse impact of vehicle exhaust on plants, which has in some cases been attributed to aromatic compounds and in other cases to nitrogen oxides. 201 , 202 , 203 

## III. **How Wo**  **uld This**  **Rule Reduce Emissions and**  **Air Pollution?**  **A. Effects of the Vehicle and Fuel Changes o**  **n Mobile Source Emissions** The Tier 3 vehicle and fuel standards will significantly reduce the tailpipe and evaporative emissions of light

- and heav y - dut y vehicles in several ways, as described in this section. In addition, the gasoline sulfur standard wi ll reduce emissions of SO 2 from existing gasoline

- powered vehicles and equipment. As described in Section II, all of these emission reductions will in turn improve air quality nationwide and reduce the health effects associated with air pollution from mob ile sources. As with the Tier 2 program, EPA is implement ing closely

- coordinated requirements for both automakers and refiners in the same rulemaking action. The Tier 3 vehicle emission standards and gasoline sulfur standards represent a “s ys tems approach” to reducing vehicle

- related exhaust and evaporative emissions. By recognizing the relationships among the various sources of emissions addressed b y this action , we have been able to integrate the provisions into a single, coordinated program. 1. How Do Ve hicles Produce the Emissions Addressed in this Action ? The degree to which vehicles produce exhaust and evaporative emissions depends on the design and functionality of the engine and the associated exhaust and evaporative emission controls, in concert wi th the properties of the fuel on which the vehicle is operating. In the following paragraphs, we discuss how light

- and heav y - duty vehicles produce each of these t yp es of emissions, both from the tailpipe and from the fuel s ys tem.

200 Cape JN, ID Leith, J Binnie, J Content, M Donkin, M Skewes, DN Price AR Brown, AD Sharpe. (2003). Effects of VOCs on herbaceous plants in an open

- top chamber experiment. Environ. Pollut. 124:341

- 343. 201 Viskari E

- L. (2000). Epicuticular wax of Norway spruce needles as indicator of traffic pollutant deposition. Water, Air, and Soil Pollut. 121:327

- 337. 202 Ugrekhelidze D, F Korte, G Kvesitadze. (1997). Uptake and transformation of benzene and toluene by plant leaves. Ecotox. Environ. Safety 37:24

- 29. 203 Kammerbauer H, H Selinger, R Rommelt, A Ziegler

- Jons, D Knoppik, B Hoc k. (1987). Toxic components of motor vehicle emissions for the spruce Picea abies. Environ. Pollut. 48:235

- 243.Page 72 of 529 a. Tailpipe (Exhaust) Emi ssions The pollutants emitted at the vehicle’s tailpipe and their quantities depend on how the fuel is combusted in the engine and how the resulting gases are treated in the exhaust sy stem. Historically , much of tailpipe emission control has focused on hydrocarbon compounds (HC) and NO X . The portion of hydrocarbons that is methane is minimally

reactive in forming ozone. Thus, for emission control purposes, the focus is generall y on non - methane hydrocarbons (NMHC), which are also expressed as non

methane organic gases (NMOG) in order to account for oxygenates (usually ethanol) now usually present in the fuel. Tailpipe hydrocarbon emissions also include several toxic pollutants, including benzene, acetaldeh yde, and formaldeh yde. To varying degrees, the mass emissions of these pollutants are reduced along with other h ydrocarbons b y the catal yt ic converter and improved engine controls. Li ght

- and heav y - dut y gasoline vehicles also emit PM and CO. PM forms directly as a combustion product (as elemental carbon or soot) and indirectly as semi

volatile hydrocarbon compounds that form particles in the exhaust sy stem or soon after exiting the tailpipe. CO is a product of incomplete fuel combustion. When operating properl y, modern exhaust emission controls (centering on the catal yt ic convertor) can reduce much of the HC (including toxics), NO X and CO exiting the engine. However, tailpipe emissions are increased during periods of vehicle startup, as catal yt ic convertors must warm up to be effective; during subse quent operation due to the interference of sulfur in the gasoline; during high load operating events, as the catal ys t is overwhelmed or its operation is modified to protect against permanent damage; and as a vehicle ages, as the catal ys t degrades in perfor mance due to the effects of high temperature operation and contaminants in the fuel and lubricating oil. b. Evaporative Emissions Gasoline vehicles also produce vapors in the fuel tank and fuel s ys tem that can be released as evaporative emissions. These vap ors are primarily the lighter, more volatile hydrocarbon compounds in gasoline. As discussed in Section IV below, vehicle evaporative (“evap”) control sy stems are designed to block or capture vapors as they are generated. Vapors are generated in the vehi cle fuel tank and fuel s ys tem (and released to the atmosphere if not adequately controlled) as fuel heats up due to ambient temperature increase and/or vehicle operation. Fuel vapors are also released when they permeate through elastomers in the fuel sy st em , when they leak at connections or due to damaged components, and during refueling events. In general, the evap emission controls on current vehicles (and that will be improved under this action ) consist of a canister filled with activated charcoal a nd connected b y hoses to the fuel s ys tem. The hoses direct generated vapors to the canister,Page 73 of 529

which collects the vapors on the carbon and stores them until the sy stem experiences a “purge” event. During purge, the engine draws fresh air through the canist er, carrying vapors released b y the carbon to the engine to be combusted and restoring the capacity of the canister. Evaporative emissions occur when vapors are emitted to the atmosphere because the evap s ys tem is compromised, the carbon canister is overwhelmed, or vapors permeate or leak. As such, evaporative emission controls also involve proper material selection for fuel sy stem components, careful design of these components, and onboard diagnostics to check the system for failure. 2. How W ill the Chang es to Gasoline Sulfur Content Affect Vehicle Emissions? Gasoline vehicles rel y on highl y efficient aftertreatment catalysts to control tailpipe emissions of harmful pollutants like CO and NO X , as well as VOCs that include air toxics and precursor compound s to ozone and secondary PM in the atmosphere. These catal ys ts utilize finely

- dispersed precious metals that are susceptible to deactivation b y sulfur compounds in the exhaust. Studies have repeatedl y demonstrated that the presence of even a tiny amount of sulfur in fuel has a measurable impact on the ability of the catal ys t to control emissions, and that emission levels of most pollutants, especiall y NOx, are very sensitive to fuel sulfur. 204 , 205 Sulfur naturally

occurs in crude oil and is carried through the refining process into gasoline

. EPA’s Tier 2 rulemaking for light

- dut y vehicles, published in 2000, required refiners to reduce sulfur levels in gasoline to an average of 30 ppm , a reduction of about 90 percent from the in

- use baseline . At the time , there were indications that sulfur reductions below 30 ppm may provide additional emission benefits. However, the data was insufficient to quantify the benefits to the existing fleet, and the Tier 2 vehicle standards could be achieved without lowering sul fur below 30 ppm

. 206 As discussed in Section IV.A.6, subsequent research provides a compelling case that even this level of sulfur degrades the emission performance of vehicles on the road today and inhibits necessary

further reductions in vehicle emissions performance, which depend on optimum cataly st performance to reach emission targets. A study conducted by EPA and the auto industry in support of the Mobile Source Air Toxics (MSAT) rule found significant reductions in NO X , CO and total HC when nine Tier 2 vehicles were tested on ultra

- low sulfur fuel. 207 In particular, the study found a 32 percent de crease in NO X when sulfur was reduced from 32 ppm to 6 ppm (equivalent to a 25 percent

204 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

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- 00 2. 205 Durbin, T., “The Effect of Fuel Sulfur on NH3 and Other Emissions from 2000

- 2001 Model Year Vehicles”, May 2003. Published as Report E

- 60 by the Coordinating Research Council, Alpharetta, GA. 206 65 FR 6698 (February 10, 2000) 207 Regulatory Impact Analysis for the Control of Hazard ous Air Pollutants from Mobile Sources Final Rule, EPA 420

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decrease if sulfur levels were reduced from 30 to 10 ppm, assuming a lin ear effect)

. Another recent study b y Umicore showed reductions of 41 percent for NO X and 17 percent for hydrocarbons on a PZEV operating on fuel with 33 ppm and 3 ppm fuel (equivalent to reductions of 27 percent and 11 percent , respectively , if sulfur lev els were reduced from 30 to 10 ppm, assuming a linear effect). 208 A larger study of Tier 2 vehicles recentl y completed by EPA confirmed these results, showing significant reductions in FTP

- composite NO X (14 percent), CO (10 percent) and total HC (15 percent) on the 5 ppm fuel, relative to 28 ppm fuel (equivalent to 12 percent, 9 percent, and 13 percent reduction, respectivel y, if sulfur levels were reduced from 30 to 10 ppm, assuming a linear effect)

. 209 For NO X , the majority of overall reductions were drive n by large reductions on warmed

- up periods of the tes t cycle (Bag 2), which showed a 52 percent reduction using 5 ppm fuel relative t o 28 ppm fuel (equivalent to 45 percent reduction if sulfur levels were reduced from 30 to 10 ppm, assuming a linear effect) , consistent with the role of sulfur in catal ys t degradation discussed above. For additional details regarding these results, please see Section IV .A.6.c. Our application of these study results assumes a linear effect of sulfur level on catal ys t efficien cy

between the high and low sulfur test fuels. This is reasonable given that the mass flow rate of sulfur in exhaust gas changes in proportion to its concentration in the fuel, and that the chemical kinetics of adsorption of sulfur to the precious metal s ites is approximately first order

. Linearity of effect is also supported by past studies with multiple fuel sulfur levels such as the CRC E

- 60 and 200 0 AAM/AIAM/Oil Industry emission test program s . 210 , 211 Based on these analy ses , the benefits of the Tier 3 su lfur standard are significant in two way s: they

enable vehicles designed to the Tier 3 tailpipe exhaust standards to meet these standards for the duration of their useful life, and they facilitate immediate emission reductions from all the vehicles on the road at the time the sulfur controls are implemented. **B. How W**  **ill Emissions Be Reduced?**  The Tier 3 standards will reduce emissions of VOC, NO X (including NO 2 ), direct PM 2.5 , CO, SO 2 , and air toxics. The sulfur standards will reduce emissions from the on

-

208 Ball D., Clark D., Moser D. (2011) , Effects of Fuel Sulfur on FTP NOx Emissions from a PZEV 4 Cylinder Application. SAE 2011 World Congress Paper 2011

- 01

- 0300 209 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

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- 00 2. 210 Durbin, T., “The Effect of Fuel Sulfur on NH3 and Other Emissions from 2000

- 2001 Model Year Vehicles”, May 2003. Published as Report E

- 60 by the Coordin ating Research Council, Alpharetta, GA. 211 “AAM/AIAM/Oil Industry Low Sulfur & Oxygenate Test Program”, 2000, last accessed on 01/15/14 at the following URL: http://www.arb.ca.gov/fuel s/gasoline/carfg3/aam_prstn.pdf

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road fleet immediately

upon implementation in calendar ye ar 2017. The vehicle standards will begin to reduce emissions as the cleaner cars and trucks begin to enter the fleet in model year 2017 and model year 2018, respectivel y . The magnitude of reductio n will grow as more Tier 3 vehicles enter the fleet. We present emission reductions in calendar year 2018 to reflect the early reductions expected from the Tier 3 standards, and in calendar ye ar 2030 , when 70 percent of the miles travelled are from vehicl es that meet the fully phased

- in Tier 3 standards . Although 2030 is the farthest y ear that is feasible for air qualit y modeling, the full reduction of the vehicle program will be realized after 2030, when the fleet has fully turned over to vehicles that m eet the fully phased

- in Tier 3 standards; thus we present emission reductions projected in 2050 as well (see Chapter 7 of the RIA)

. Emission reductions are estimated on an annual basis, for all 50 U.S. states plus the District of Columbia, Puerto Rico an d the U.S. Virgin Islands. The reductions were estimated using a version of EPA’s MOVES model updated for this anal ys is, as described in detail in Chapter 7 of the RIA. This version of MOVES includes our most recent data on how vehicle emissions are aff ected by changes in sulfur, ethanol, RVP, and other fuel properties. We estimated emission reductions compared to a reference case that assumed renewable fuel volumes and ethanol blends based on the U.S. Energy Information Administration’s Annual Energy Outlook 2013 (AEO2013). 212 As described in Chapter 7 of the RIA, the reference and control scenarios based on AEO2013 reflect a mix of E10 , E15 , and E85 in both 2018 and 2030. The reference case assumed an average sulfur level of 30 ppm (10 ppm in California) and continuation of the Tier 2 vehicle program indefinitely , with the exception of California and Section 177 states that have adopted the LEV III program. The anal ys is described here account s for the following national onroad rules:

 Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements (65 FR 6698, February 10, 2000)

 Heav y - Duty

Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements (66 FR 5002, January 18, 2001)

 Mobile Source Air Toxics Rule (72 FR 84 28, February 26, 2007)

 Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program (75 FR 14670, March 26, 2010)

212 U.S. Energy Information Administration, Annual Energy Outlook (April 15, 2013)Page 76 of 529  Li ght

- Dut y Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Econom y Standards for 2012

- 2016 (75 FR 2 5324, May 7, 2010)

 Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium

- and Heav y - Duty Engines and Vehicles ( 76 FR 57106 , September 15, 201 1 )

 2017 and Later Model Year Light

- Dut y Vehicle Greenhouse Gas Emissions and Corporate Averag e Fuel Econom y Standards (77 FR 62623, October 15, 2012 ) The anal ys is also accounts for many other national rules and standards. In addition, the modeling accounts for state and local rules including California’s most recent L ow Emission Vehicle (LEV III) program adopted in California and twelve other states (also referred to as Section 177 states), 213 local fuel standards, Inspection/Maintenance programs, Stage II refueling controls, the National L ow Emission Vehicle Program (NLEV), and the S ection 177 stat es LEV and LEV II programs. See the Tier 3 emissions modeling TSD for more detail. A summary

of emission reductions projected to result from Tier 3, relative to the reference case, is shown in calendar ye ars 201 8 and 2030 for NO X , VOC, direct PM 2.5 , CO, S O 2 , and total air toxics in Table III

- 1 . For many pollutants, the immediate reductions in 201 8 are significant; for example, combined NO X and VOC emissions will be reduced b y over 300,000 tons. By 2030, combined NO X and VOC emissions will be reduced b y roughl y 500,000 tons, one quarter of the onroad inventory . Many of the modeled air toxics will be significantly reduced as well, including benzene, 1,3

- butadiene, acetaldeh yd e, acrolein and ethanol (rangin g from 10 to nearl y 30 percent of the national onroad inventory by 2030). The relative reduction in overall emissions will continue to increase beyond 2030 as more of the fleet continues to turn over to Tier 3 vehicles; for example, b y 2050, when nearl y a ll of the fleet will have turned over to vehicles meeting the fully phased

- in Tier 3 standards, we estimate the Tier 3 program will reduce onroad emissions of NO X and VOC nearly 31 percent from the level of emissions projected without Tier 3 controls. **Table III**  **- 1**  **Estimated Emission Reductions from the Tier 3 Standards**

**(Annual U.S. S**  **hort T**  **ons)** 20 18 2030 Tons % of Tons % of

213 These states include Connecticut, Delaware, Maryland, Maine, Massachusetts, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Washi ngton, and Vermont.Page 77 of 529 Onroad Inventory Onroad

Inventory NO X 264,369 10% 328,509 25% VOC 47,504 3% 16 7,591 16% CO 278,879 2% 3,458,041 24% Direct PM 2.5 130 0.1% 7,892 10% Benzene 1,916 6% 4,762 26% SO 2 14,813 56% 12,399 56% 1,3

- Butadiene 257 5% 677 29% Formaldeh yd e 513 2% 1,277 10% Acetaldeh yd e 600 3% 2,067 21% Acrolein 40 3% 127 15% Ethanol 2,70 4 2% 19,950 16% Reductions for each pollutant are discussed in the following sections, focusing on the contribution of program elements to the total reductions summarized above. 1. NO X The Tier 3 sulfur standards will significantly reduce NO X emissions imm ediately upon implementation of the program. As discussed above, recent research on the impact of sulfur on Tier 2 technology vehicles shows the potential for significant reductions in NO X emissions from the existing fleet of Tier 2 vehicles by lowering sulfur levels to 10 ppm. Prior research shows that NO X emissions will also be expected to decrease from the fleet of older (pre

- Tier 2) light

- dut y vehicles as well as heav y - duty gasoline vehicles, 214 although to a lesser extent than for Tier 2 vehicles. Table III

- 2 shows the reduction in NO X emissions, in annual short tons, projected in calendar ye ars 2018 and 2030. The reductions are split into those attributable to the introduction of low sulfur fuel i n the pre

- Tier 3 fleet (defined for this anal ys is as model ye ars prior to 2017); and reductions attributable to vehicle standards enabled by low sulfur fuel (model ye ar 2017 and later). As shown, upon implementation of the Tier 3 sulfur standards, total o nroad NO X emissions are projected to drop 10 percent. This is primarily due to large reductions from Tier 2 gasoline vehicles, which contribute about one - quarter of the NO X emissions from the on

- road fleet in 201 8 . The relative reduction grows as cleaner vehicles turn over into the fleet. By 2030, we project that the reduction in overall onroad NO X inventory will be 25 percent. **Table III**  **- 2**  **Projected NO X**  **Reductions from Tier 3 Program (Annual U.S. Tons) 2018**  **2030**

214 Rao, V. (2001) , Fuel Sulfur Effects on Exhaust Emissions: Recommendations for MOBILE6, EPA

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**Total reduction 264,369**  **328,509** Reduction from pre

- Tier 3 fleet due to sulfur standard 242,434 56,324 Reduction from Tier 3 fleet due to vehicle and sulfur standards 21,934 272,185

**Percent reduction in onroad NO**  **X emissions**  **10% 25%** 
2. VOC Table III

- 3 shows the reduction in VOC emissions, in annual short tons, projected in calendar ye ars 2018 and 2030 resulting from the Tier 3 standards. In 2018 , as with NO X , we project reductions from the pre

- Tier 3 fleet with the fuel standards. By 2030 , the reduction in overall onroad VOC emissions will be 16 percent, the majority of this from the vehicles meeting the full y phased

- in Tier 3 standards . The evaporative standards are projected to account for roughly o ne third of the overall vehicle program reduction in 2030. **Table III**  **- 3**  **Projected VOC Reductions from Tier 3 Program (Annual U.S. Tons) 2018**  **2030 Total reduction**  **47,504 167,591**  Reduction from pre

- Tier 3 fl eet due to sulfur standard 38,786 11,249 Reduction from Tier 3 fleet due to vehicle and sulfur standards 8,718 156,343

Exhaust 43,009 105,253 Evaporative 4,495 62,339 **Percent reduction in onroad VOC emissions**  **3% 16%** 
3. CO Table III

- 4 shows the reductions for CO, broken down by pre - and post

- Tier 3 in the manner described for NO X and VOC above. Incontrast to NOx and VOC, the immediate CO reductions in the onroad fleet from sulfur control in 2018 are sma ll, based on research showing that fuel sulfur level has a minimal impact on CO emissions from Tier 2 vehicles . The CO exhaust standards are projected to reduce onroad CO emissions by 24 percent in 2030. **Table III**  **- 4**  **Projected CO Reductions from Tier 3 Program (Annual U.S. Tons) 2018**  **2030 Total reduction**  **278,879 3,458,041** Page 79 of 529

Reduction from pre

- Tier 3 fleet due to sulfur standard 122,171 17,734 Reduction from Tier 3 fleet due to vehicle and sulfur standards 1 56,708 3,440,307

**Percent reduction in onroad CO emissions**  **2% 24%** 

4. Direct PM 2.5 Reductions in direct emissions of PM 2.5 are projected to result solely from the vehicle tailpipe standards, so meaningful reductions are realized mainly as the fleet turns ove r. By 2030, we project a reduction of about 7,900 tons annually , which represents approximately

10 percent of the onroad direct PM 2.5 inventory

. T he relative reduction in onroad emissions is projected to grow to 28 percent in 2050 , when nearl y all of the fleet will have turned over to vehicles meeting the fully phased

- in Tier 3 standards

. Reductions in NO X and VOC emissions will also reduce secondary PM formation, which is quantified as part of the air quality anal ys is described in Section III.C. 5. Air To xics Emissions of air toxics also will be reduced b y the sulfur, exhaust and evaporative standards. Air toxics are generall y a subset of compounds making up VOC, so the reduction trends tend to track the VOC reductions presented above , for most air toxic s. Table III

- 5 presents reductions for certain key air toxics, and Table III

- 6 presents reductions for the sum of 71 different toxic compounds. **Table III**  **- 5**  **Reductions for Certain Individual Compounds (Annual U.S. Tons)**

Tons Reduced in 201 8 % Reduction

in Onroad Emissions Tons Reduced

in 2030 % Reduction in

Onroad Emissions Benzene 1,916 6% 4,762 26% Acetaldeh yd e 600 3% 2,067 21% Formaldeh yd e 513 2% 1,277 10% 1,3

- Butadiene 257 5% 677 29% Acrolein 40 3% 127 15% Naphthalene 99 3% 269 15% Ethanol 2,704 2% 19,950 16% The totals shown in Table III

- 6 represent th e sum of 71 species including the toxics in Table III

- 5 , 15 polycyclic aromatic h ydrocarbon (PAH) compounds in gas and particle phase, and additional gaseous compounds such as toluene, x yl enes, sty rene,Page 80 of 529

hexane, 2,2,4

- trimethylpentane, n

- hexane, and propionaldehyde ( see Appendix 7A of the RIA). As shown, in 2030 , the overall onroad inventory of total toxics will be reduced b y 15 percent, with nearl y one half of the vehicle program reductions coming from the e vaporative standards. **Table III**  **- 6**  **Reductions in Total Mobile Source Air Toxics (Annual U.S. Tons) 2018**  **2030 Total reduction**  **15,583 64,558**  Reduction from pre

- Tier 3 fleet due to sulfur standard 11,981 3,51 7 Reduction from Tier 3 fleet due to vehicle and sulfur standards 3,602 61,041

Exhaust 13,340 34,595 Evaporative 2,243 29,963 **Percent reduction in onroad toxics emissions**  **3% 15%** 
6. SO 2 SO 2 emissions from mobile sources are a direct function of sulfur in the fuel, and reducing sulfur in gasoline w ill result in immediate reductions in SO 2 from the on and off

- road fleet. The reductions, shown in Table III

- 7 , are a function of the sulfur level and fuel consumption. This is reflected in the relative contribution of on

- road vehicles and off

- road equipment, where off

- road gasoline consumption accounts for approximately 5 percent of overall gasoline use. 215 **Table III**  **- 7**  **Projected SO 2**  **Reductions from Tier 3 Program (Annual U.S. Tons) 2018**  **2030 Total reduction**  **15,565 13,261**  Reduction from onroad vehicles due to sulfur standard 14,813 12,399
Reduction from off

- road equipment due to sulfur standard 752 862

**Percent reduc tion in**  **onroad SO 2**  **emissions 56%**  **56%**

215 U.S. Energy Information Administration , Annual Energy Outlook 2013 (April 15, 2013)Page 81 of 529 7. Greenhouse Gases Reductions in nitrous oxide (N 2 O) emissions and methane (CH 4 ) emissions, both potent greenhouse gas emissions, are projected for gasoline cars and trucks as a result of the sulfur and tailpipe s tandards. A study conducted by

the Universit y of California

Riverside found a 29 percent reduction in N 2 O emissions over the FTP when sulfur was reduced from 30 to 5 ppm, 216 while EPA research described in Section IV.A.6 on sulfur effects found a 26 percent reduction in CH 4 emissions when sulfur was reduced from 28 to 5 ppm

. 217 Several studies have established correlations between reductions in tailpipe NO X emissions and reductions in N 2 O from gasoline cars and trucks, 218 , 219 , 220 , 221 as well as correlations between reductions in tailpipe HC emissions and reductions in CH 4 . 222 , 223 Studies by

Winer, et al (2005) and Behrentz et al (2004) reported N 2 O: NO X ratio s of 0.06 and 0.095, respectively , and supported the application of N 2 O: NO X ratios to NO X emissions as a reason able method for estimating N 2 O emission inventories. CARB has also used N 2 O : NO X ratio to develop the N 2 O emissions inventories for the LEV III program, based on a regression anal ys is suggesting N 2 O : NO X ratio of 0.04, on average. 224 As detailed in Chapte r 7.3 of the RIA , the N 2 O reductions are estimated b y employing two different methodologies, resulting in a range of reductions. The first method applies the relationship between N 2 O and NO X from a regression model 225 to NO X inventories from both Tier 3 and pre - Tier 3 vehicles. The second method applies

216 Huai, et al. (2004) , Estimates of the e mission rates of nitrous oxide from light

- duty vehicles using different chassis dynamometer test cycles , Atmospheric Environment 6621

- 6629 217 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

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- 00 2, 218 Michaels, H. (1998) Emissions of Nitrous Oxide from Highway Mobile Sources , U.S. EPA EPA420

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- 009 219 Behrentz, et al. (2004), Measurements of nitrous oxide emissions from light

- duty motor vehicles: a pilot study , Atmospheric Environment 4291

- 4303 220 M effert, et. al (2000) Analysis of Nitrous Oxide Emissions from Light Duty Passenger Cars, SAE 2000

- 01

- 1952 221 Winer, et al. (2005) Estimates of Nitrous Oxide Emissions and the Effects of Catalyst Composition and Aging , State of California Air Resources Boar d 02

- 313 222 Meszler, D. (2004), Light Duty Vehicle Methane and Nitrous Oxide Emissions: Greenhouse Gas Im pacts , Study for Northeast States Center for a Clean Air Future 223 Graham, L. , Greenhouse Gas Emissions from 1997

- 2005 Model Year Light Duty Vehicles , E nvironment Canada ERMD Report #04

- 44 224 LEV III Moblie Source Emissions Inventory Technical Support Document

– Appendix T , January 2012, last accessed on 01/15/14 at the following URL: http://www.arb.ca.gov/regact/2012/leviiighg2012/levappt.pdf 225 U.S. EPA, 2014, Memorandum to Docket: Regression Analysis of Nitrous Oxide and Oxides of Nitrogen from Motor Vehicles

.Page 82 of 529

the regression of N 2 O and NO X only to Tier 3 vehicles and uses the UC Riverside sulfur results to estimate the N 2 O reductions from pre - Tier 3 vehicles. Using a 100

- ye ar global warming potential of 298 for N 2 O according to the 2007 IPCC AR4 , 226 the estimated N 2 O reduction is 2.2 million metric tons of carbon dioxide equivalent (MMTCO 2 e) in 2018 , growing to the range between 3.8 to 4.0 MMTCO 2 e in 2030. For 2018, there was an agreement between the two methodolog ies described above, resulting in a single estimate. MOVES can be used to directl y estimate CH 4 reductions from the sulfur and vehicle standards, estimating an additional 0.1 MMTCO 2 e reduction in 2018 , growing to 0.3 MMTCO2e in 2030. The total GHG reduc tion from the Tier 3 rule is 2.3 MMTCO 2 e in 2018 , and between 4.1 and 4.3 MMTCO 2 e in 2030. These reductions will be partially offset by CO 2 emissions associated with higher energy use required in the process of removing sulfur within the refinery

. As an extension of our refinery

- by

- refinery cost modeling described in Section VII.B., we calculated the CO 2 emission impacts of Tier 3 gasoline sulfur control. We estimated refinery

- specific changes in process energy and then applied emission factors that cor respond to those changes, on a refinery

- by

- refinery basis. As described in Chapter 4.5 of the RIA, the results showed an increase of up to 1.9 MMTCO 2 e in 2018 and 1.6 MMTCO 2 e in 2030 for all U.S. refineries complying with the lower sulfur standards assumi ng that the sulfur standards are full y phased

- in. In 2018 , the combined impact of CH 4 and N 2 O emission reductions from the vehicles and CO 2 emission increases from the refineries shows a slight net decrease on a CO 2 equivalent basis. While still small, this net decrease grows to a range between 2.5 to 2.7 MMTCO 2 e by 2030. We do not expect the Tier 3 vehicle standards to result in any discernible changes in vehicle CO 2 emissions or fuel economy . Emissions of the pollutants that are controlled by the Tier 3 program

– NMOG, NO X , and PM

– are not a function of the amount of fuel consumed, since manufacturers need to design their catal yt ic emission control sy stems to reduce these emissions regardless of their engine

- out levels. **C. How W**  **ill Air Pollution Be Red**  **uced?** Reductions in emissions of NO X , VOC, PM 2.5 and air toxics expected as a result of the Tier 3 standards are projected to lead to significant improvements in air quality

. The air qualit y modeling predicts significant improv ements in ozone concentrations due to the Tier 3 standards. Ambient PM 2.5 and NO 2 concentrations are also expected to

226 The global warming potentials (GWP) used in this rule are consistent with the 100

- year time frame values in the 2007 Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment Report (AR4). At this time, the 1996 IPCC Second Assessment Report (SAR) 100

- year GWP values are used in the official U.S. greenhouse gas inventory submission to the United Nations Framework Convention on Climate Ch ange (per the reporting requirements under that international convention, which were last updated in 2006). N 2 O has a 100

- year GWP of 298 and CH 4 has a 100

- year GWP of 25 according to the 2007 IPCC AR4

.Page 83 of 529

improve as a result of the Tier 3 program. Decreases in ambient concentrations of air toxics are projected with the Tier 3 standards, in cluding notable nationwide reductions in benzene concentrations. Our air quality modeling also predicts improvements in visibility and sulfur deposition, as well as substantial decreases in nitrogen deposition as a result of the Tier 3 standards. The res ults of our air quality modeling of the impacts of the Tier 3 rule are summarized in the following section. 1. Ozone The air qualit y modeling done for this action projects that in 201 8 , with all current and required controls in effect but excluding the emi ssions changes expected to occur as a result of the Tier 3 standards or an y other additional controls, at least 19 counties, with a projected population of over 37 million people, would have projected design values above the level of the 2008 8

- hour ozone standard of 75 ppb

. In 2030 the modeling projects that in the absence of Tier 3 standards or any other additional controls there w ill be 6 counties with a population of over 19 million people with projected design values above the level of the 2008 8

- hour ozone standard of 75 ppb

. An additional 37 million people will be living in the 43 counties that will be close to (within 10 percent of) the level of the ozone standard. Air quality modeling indicates that this action will meaningfully decrease ozone design value concentrations in many areas of the country , including those that are projected to be exceeding, or close to exceeding, the ozone standard. In 201 8 , the majority of the design value decreases are between 0.5 and 1.0 ppb. In 2030, the T ier 3 rule will result in larger decreases in ozone design values, with the majority of counties projecting decreases of between 0

. 5 and 1. 0 ppb, and over 2 5 0 more counties with decreases greater than 1. 0 ppb. Since the Tier 3 standards go into effect during the period when some areas are still working to attain the ozone NAAQS, the projected air qualit y changes will help st ate and local agencies in their effort to attain and maintain the ozone standard. 2. Particulate Matter The air qual ity

modeling conduc ted for this action projects that in 20 18 , with all current controls in effect but excluding the emissions changes expected to occur as a result of Tier 3 standards or an y other additional controls, at least 14 counties, with a projected population of over 20 million people, would have projected design values above the level of the annual standard of 12 μg/m 3 and at least 24 counties, with a projected population of over 18 million people, would have projected design values above the level of the 24

- hour standard of 35 μg/m 3. In 2030, the modeling projects that in the absence of Tier 3 standards or an y other additional controls there will be 1 3 counties, with a projected population of over 2 1 million people, with projected design values above the level of the annual standard of 12 μg/m 3 and 18 counties, with a projected population of over 12 million people, with projected design values above the level of the 24

- hour standard of 35 μg/m 3

. Since the Tier 3 standards go into effectPage 84 of 529

during the period when some areas are still working to attain the 2006 and 2012 PM 2.5 NAAQS, the projected air quality changes will be useful to state and local agencies in their effort to attain and maintain the PM 2.5 standard s . The Tier 3 standards will reduce 24

- hour and annual PM 2.5 design values due to projected tailpipe reductions in primary PM 2.5 , SO 2 , NO X and VOCs from reductions in fuel sulfur and engine controls

. In2018 the standards will have a small impact on annual PM 2.5 design values in the majority of modele d counties . However, in over 200 counties annual PM 2. 5 design values are projected to decrease by greater than 0.0 1 μg/m 3 . In 2030 annual PM 2.5 design values in the majority of modeled counties will decrease by between 0.01 and 0.05 μg/m 3 and in over 1 4 0 additional counties design values are projected to decrease b y greater than 0.05 μg/m 3

. Inaddition, in 2018 24

- hour PM 2.5 design values in over 200 counties are projected to decrease b y between 0.05 and 0.15 μg/m 3 and in 2030 24

- hour PM 2.5 design values in over 180 counties decrease b y at least 0. 15 μg/m 3

. 3. Nitrogen Dioxide Although our modeling indicates that b y 2030 the majority of the country will experience decreases of less than 0. 1 ppb in their annual NO 2 concentrations due to this rule , annual NO 2 concentrations are projected to decrease b y more than 0 .3 ppb in most urban areas. These emissions reductions would also likely decrease 1

- hour NO 2 concentrations and help any potential nonattainment areas to attain and maintain the standard. Additiona l information on the emissions reductions that are projected with this rule is available in Section 7.2.1 of the RIA. 4. Air Toxics Our modeling indicates that the impacts of final Tier 3 standards include notable nationwide reductions in benzene and ge nerall y s mall decreases in ambient concentrations of other air toxics, mainly in urban areas. Although reductions are greater in 2030 (when 70 percent of the miles travelled are from vehicles that meet the fully phased

- in Tier 3 standards ) than in 201 7 (the first year of the final program), our modeling projects there w ill be small immediate reductions in ambient concentrations of air toxics due to the Tier 3 sulfur controls. Furthermore, the full reduction of the vehicle program w ill be realized after 20 30, when the fleet has fully turned over to vehicles meeting the fully

phased

- in Tier 3 standards . Air toxics pollutants dominated by primary emissions (or a decay

product of a directly

emitted pollutant) , such as benzene, are impacted more than air toxic s that primarily result from photochemical transformation. Specificall y, in 2030, our modeling projects that the Tier 3 rule w ill decrease ambient benzene concentrations across much of the country on the order of 1 to 5 percent, with reductions ranging f rom 10 to 25 percent in some urban areas. Our modeling also shows reductions of 1,3

- butadiene and acrolein concentrations in 2030 ranging between 1 and 25 percent and 1 and 10 percent respectively , with 1,3

- butadiene decreases of at least 0.005 μg/m3 in urban areas. These toxics are national risk driversPage 85 of 529

and the reductions in ambient concentrations from this rule w ill result in reductions in risks from cancer and noncancer health effects. In some parts of the country (mainly urban areas), ethanol and for maldeh yde concentrations are projected to decrease on the order of 1 to 10 percent and 1 to 2.5 percent respectively in 2030 as a result of the Tier 3 rule. Decreases in ethanol concentrations are expected due to reductions in VOC as a result of the Tier 3 standards. Changes in ambient acetaldehyde concentrations are generall y less than 1 percent across the U.S., although the Tier 3 rule may decrease acetaldeh yde concentrations in some urban areas by 1 to 2.5 percent in 2030. Changes in ambient naphthalen e concentrations are generall y between 1 and 10 percent in 2030 with absolute decreases of up to 0.005 μg/m3

. Although the reductions in ambient air toxics concentrations expected from the Tier 3 standards are generally small, they

are projected to benefit the majority of the U.S. population. As shown in Table III

- 8 , over 75 percent of the total U.S. population is projected to experience a decrease in ambient benzene and 1,3

- butadiene concentrations of at least 1 percent. Over 60 percent of the U.S population is projected to experience at least a 1 percent decrease in ambient ethanol and acrolein concentrations, and over 35 percent would experience a similar decrease in ambient formaldehyde concentrations with the Tier 3 standards. **Table III**  **- 8**  **Percent of Total Population Experiencing Changes in Annual Ambient**  **Concentrations of Toxic Pollutants in 2030 as a Result of the Tier 3**  **Standards** Percent Change Benzene Acrolein 1,3

- Butadiene Formaldeh yd e Ethanol Acetaldeh yd e Naphthalene ≤
- 50 >
- 50 to ≤
- 25 >
- 25 to ≤
- 10 2.29% 0.75% 19.07% 10.74% >
- 10 to ≤
- 5 20.63% 12.72% 27.29% 5.39% 31.56% >
- 5 to ≤
- 2.5 27.50% 25.17% 15.37% 0.60% 24.08% 20.58% >
- 2.5 to ≤
- 1 28.60% 24.62% 18.33% 35.34% 34.10% 11.77% 14.98% >
- 1 to < 1 20.97% 36.74% 19 .93% 64.06% 36.43% 88.23% 22.14% ≥ 1 to < 2.5 ≥ 2.5 to < 5 ≥ 5 to < 10 ≥ 10 to < 25 ≥ 25 to < 50 ≥ 50 In addition, as described in Section 7.2.4.4.2 of the RIA, o ur modeling projects that acrolein concentrations would decrease to levels below the inhalation reference concentration for acrolein ( 0.02 μg/m3 ) for over 5 million people in 2030 , meaning that asPage 86 of 529

a result of the Tier 3 standards, 5 million fewer Americans will be exposed to ambient levels of acrolein high enough to present a potent ial for adverse health effects. 5. Visibility Air quality

modeling conducted for this final action was used to project visibility conditions in 137 mandatory class I federal areas across the U.S. The results show that i n 2030 all the modeled areas w ill continue to have annual average deciview levels above background and the Tier 3 rule w ill improve visibility in all these areas. 227 The average visibility at all modeled mandatory class I federal areas on the 20 percent wor st day s is projected to improve b y 0.02 deciviews, or 0.16 percent, in 2030. Section 7.2.5.5 of the RIA contains more detail on the visibility portion of the air qualit y modeling. 6. Nitrogen and Sulfur Deposition Our air qualit y modeling projects substantia l decreases in nitrogen deposition as a result of the Tier 3 standards. The standards w ill result in annual percent decreases of greater than 2.5 percent in most major urban areas and greater than 5 percent in a few areas. In addition, smaller decreases, in the 1 to 2.5 percent range, w ill occur over much of the rest of the country . The impacts of the Tier 3 standards on sulfur deposition are smaller, ranging from no change to decreases of over 2.5 percent in some areas. For maps of 2030 deposition impa cts and additional information on these impacts see Section 7.2.5.6 of the RIA. 7. Environmental Justice Environmental justice (EJ) is a principle asserting that all people deserve fair treatment and meaningful involvement with respect to environmental law s, regulations, and policies. EPA seeks to provide the same degree of protection from environmental health hazards for all people. As referenced below, numerous studies have found that some environmental hazards are more prevalent in areas with high population fractions of racial/ethnic minorities and people with low socioeconomic status (SES), as would be expected on the basis of those areas’ share of the general population. As discussed in Section II of this document, concentrations of many air pollutants are elevated near high

- traffic roadway s. If minority populations and low

- income

227 The level of visibility impairment in an area is b ased on the light

- extinction coefficient and a unitless visibility index, called a “deciview , ” which is used in the valuation of visibility. The deciview metric provides a scale for perceived visual changes over the entire range of conditions, from clear to hazy. Under many scenic conditions, the average person can generally perceive a change of one deciview . The higher the deciview value, the worse the visibility. Thus, an improvement in visibility is a decrease in deciview value.Page 87 of 529

populations disproportionately live near such roads, then an issue of EJ may be present. Such disparities may

be due to multiple factors. 228 People with low SES often live i n neighborhoods with multiple stressors and health risk factors, including reduced health insurance coverage rates, higher smoking and drug use rates, limited access to fresh food, visible neighborhood violence, and elevated rates of obesity

and some disea ses such as asthma, diabetes, and ischemic heart disease. Although questions remain, several studies find stronger associations between air pollution and health in locations with such chronic neighborhood stress, suggesting that populations in these areas may be more susceptible to the effects of air pollution. 229 , 230 , 231 , 232 Household

- level stressors such as parental smoking and relationship stress also may increase susceptibility

to the adverse effects of air pollution. 233 , 234 To address the existing conditions in areas near major roadways, in comparison with other locations, we reviewed existing scholarly literature examining the topic, and conducted our own evaluation of two national datasets: the U.S. Census Bureau’s American Housing Survey for calendar year 200 9 and the U.S. Department of Education’s database of school locations. Existing publications that address EJ issues generally report that populations living near major roadways (and other types of transportation infrastructure) tend to be composed of large r fractions of nonwhite residents. People living in neighborhoods near

228 Depro, B.; Timmins, C. (2008) Mobility and environmental equity: do housing choices determine exposure to air pollution? North Caroline State University Center for Environmental and Resource Economic Policy 229 Clougherty, J.E.; Kubzansky, L.D. (2009) A framework for examini ng social stress and susceptibility to air pollution in respiratory health. Environ Health Perspect 117: 1351

- 1358. Doi:10.1289/ehp.0900612 [Online at http://dx.doi.org] 230 Clougherty, J.E.; Levy, J.I.; Kubzansky, L.D.; Ryan, P.B.; Franco Suglia, S.; Jaco bson Canner, M.; Wright, R.J. (2007) Synergistic effects of traffic

- related air pollution and exposure to violence on urban asthma etiology. Environ Health Perspect 115: 1140

- 1146. doi:10.1289/ehp.9863 [Online at http://dx.doi.org] 231 Finkelstein, M.M.; Jerrett, M.; DeLuca, P.; Finkelstein, N.; Verma, D.K.; Chapman, K.; Sears, M.R. (2003) Relation between income, air pollution and mortality: a cohort study. Canadian Med Assn J 169: 397

- 402. 232 Shankardass, K.; McConnell, R.; Jerrett, M.; Milam, J.; Richardson, J.; Berhane, K. (2009) Parental stress increases the effect of traffic

- related air pollution on childhood asthma incidence. Proc Natl Acad Sci 106: 12406

- 12411. doi:10.1073/pnas.0812910106 [Online at http://dx.doi.org] 233 Lewis, A.S.; Sax, S.N.; Wa son, S.C.; Campleman, S.L (2011) Non

- chemical stressors and cumulative risk assessment: an overvie w of current initiatives and potential air pollutant interactions. Int J Environ Res Public Health 8: 2020

- 2073. Doi:10.3390/ijerph8062020 [Online at http ://dx.doi.org] 234 Rosa, M.J.; Jung, K.H.; Perzanowski, M.S.; Kelvin, E.A.; Darling, K.W.; Camann, D.E.; Chillrud, S.N.; Whyatt, R.M.; Kinney, P.L.; Perera, F.P.; Miller, R.L (2010) Prenatal exposure to polycyclic aromatic hydrocarbons, environmental tobacco smoke and asthma. Respir Med (In press). doi:10.1016/j.rmed.2010.11.022 [Online at http://dx.doi.org]Page 88 of 529

such sources of air pollution also tend to be lower in income than people living elsewhere. Numerous studies evaluating the demographics and socioeconomic status of populations or sch ools near roadway s have found that they include a greater percentage of minority

residents, as well as lower SES (indicated by variables such as median household income). Locations in these studies include L os Angeles, CA ; Seattle, WA ; Way ne Count y, MI ; O range Count y, FL ; and the State of California 235 , 236 , 237 , 238 , 239 , 240 More recentl y, three publications report nationwide anal ys es that compare the demographic patterns of people who do or do not live near major roadway s. 241 , 242 , 243 All three of these studies found that people living near major roadway s are more likely to be minorities or low in SES. They also found that the outcomes of their analy ses varied between regions within the U.S. However, onl y one such study looked at whether such conclusions were confounded b y living in a location with higher population density and how demographics differ between locations nationwide. In general, it found that higher density areas have higher proportions of low income and minority residents. We analyzed two national database s that allowed us to evaluate whether homes and schools were located near a major road. One database, the American Housing Survey (AHS), includes descriptive statistics of over 70,000 housing units across the nation. The study

is conducted every

two year s by

the U.S. Census Bureau. We anal yz ed data from the 2009 AHS. The second database we analyzed was the U.S. Department of Education’s Common Core of Data, which includes enrollment and location information for schools across the U.S.

235 Marshall, J.D. (2008) Environmental inequality: air pollution exposures in California’s South Coast Air Basin. 236 Su, J.G.; Larson, T.; Gould, T.; Co hen, M.; Buzzelli, M. (2010) Transboundary air pollution and environmental justice: Vancouver and Seattle compared. GeoJournal 57: 595

- 608. doi:10.1007/s10708

- 009

- 9269

- 6 [Online at http://dx.doi.org] 237 Chakraborty, J.; Zandbergen, P.A. (2007) Children at risk: measuring racial/ethnic disparities in potential exposure to air pollution at school and home. J Epidemiol Community Health 61: 1074

- 1079. doi: 10.1136/jech.2006.054130 [Online at http://dx.doi.org] 238 Green, R.S.; Smorodinsky, S.; Kim, J.J.; M cLaughlin, R.; Ostro, B. (2003) Proximity of California public schools to busy roads. Environ Health Perspect 112: 61

- 66. doi:10.1289/ehp.6566 [http://dx.doi.org] 239 Wu, Y; Batterman, S.A. (2006) Proximity of schools in Detroit, Michigan to automobile and truck traffic. J Exposure Sci & Environ Epidemiol. doi:10.1038/sj.jes.7500484 [Online at http://dx.doi.org] 240 Su, J.G.; Jerrett, M.; de Nazelle, A.; Wolch, J. (2011) Does exposure to air pollution in urban parks have socioeconomic, racial, or ethnic gradients? Environ Res 111: 319

- 328. 241 Rowangould, G.M. (2013) A census of the US near

- roadway population: public health and environmental justice considerations. Transportation Research Part D; 59

- 67. 242 Tian, N.; Xue, J.; Barzyk. T.M. (2013) Evaluatin g socioeconomic and racial differences in traffic

- related metrics in the United States using a GIS approach. J Exposure Sci Environ Epidemiol 23: 215

- 222. 243 Boehmer, T.K.; Foster, S.L.; Henry, J.R.; Woghiren

- Akinnifesi, E.L.; Yip, F.Y. (2013) Residential proximity to major highways

– United States, 2010. Morbidity and Mortality Weekly Report 62(3): 46

- 50.Page 89 of 529 In anal yz ing the 2 009 AHS, we focused on whether or not a housing unit was located within 300 feet of “4

- or - more lane highway , railroad, or airport.” 244 We anal yz ed whether there were differences between houses and householders in such locations and those not in them. 245 We i nclude d other variables, such as land use category , region of country , and housing t yp e. We found that ho m es with a nonwhite householder were 22

- 34 percent more likel y to be located within 300 feet of these large transportation facilities, while ho mes with a Hispanic householder were 17

- 33 percent more likely . Households near large transportation facilities were, on average, lower in income and educational attainment, more likely to be a rental propert y and located in an urban area. In examining schools n ear major roadway s, we examined the Common Core of Data (CCD) from the U.S. Department of Education, which includes information on all public elementary

and secondary

schools and school districts nationwide. 246 To determine school proximities to major roadw ay s, we used a geographic information sy stem (GI S) to map each school and roadway s based on the U.S. Census’s TIGER roadway file. 247 We found that minority students were overrepresented at schools within 200 meters of the largest roadway s, and that schools within 200 meters of the largest roadway s also had higher than expected numbers of students eligible for free or reduced

price lunches. For example, Black students represent 21.57 percent of students at schools located within 200 meters of a primary road, whereas Black students represent 16.62 percent of students in all U.S. schools. Hispanic students represent 30.13 percent of students at schools located within 200 meters of a primary road, whereas Hispanic students represent 21.93 percent of students in all U.S. schools. Overall, there is substantial evidence that people who live or attend school near major roadway s are more likely to be of a minority race, Hispanic ethnicity, and/or low SES. The emission reductions from this rule are projected to result in widespread air quality improvements, but the impact on pollution levels in close proximity to roadway s is expected to be most direct. Thus, this rule is likel y to help in mitigating th e disparity in racial, ethnic, and economically

- based exposures.

244 This variable primarily represents roadway proximity. According to the Central Intelligence Agency’s World Factbook, in 2010, the United States ha d 6,506,204 km or roadways, 224,792 km of railways, and 15,079 airports. H ighways thus represent the overwhelming majority of transportation facilities described by this factor in the AHS. 245 Bailey, C . (2011) Demographic and Social Patterns in H ousing Units Near Large Highways and other Transportation Sources . Memorandum to docket. 246 http://nces.ed.gov/ccd/ 247 Pedde, M.; Bailey, C. (2011) Identification of S chools within 200 M eters of U.S. P rimary and S econdary Roads. Memorandum to the docket.Page 90 of 529



## IV. **Ve hicle Emissions Pr**  **ogram** In the 14 ye ars since EPA finalized the Tier 2 Vehicle Program, manufacturers of light

- duty vehicles have continued to develop a wide r ange of improved technologies capable of reducing emissions, especiall y exhaust hydrocarbons, nitrogen oxides (NO X ), and particulate matter (PM) , and evaporative hydrocarbons . The California LEV II program has been instrumental in the auto industry ’s cont inuous technology improvements by

requiring year after ye ar reductions in fleet average exhaust hydrocarbon levels . In addition , California set performance standards that have resulted in the introduction of advanced exhaust and evaporative emission controls in partial zero emission vehicles (PZEVs). Overall, this progress in vehicle technology has made it possible for manufacturers to achieve emission reductions with a number of today ’s vehicles that go well beyond the requirements of the Tier 2 program. E xtensive data from existing Tier 2 (and California LEV II) vehicles presented in the NPRM and received since the proposal have demonstrated the potential for further significant reductions . For exhaust emissions, these opportunities include addressi ng : emissions produced at start

- up ; emissions under high

- speed, high

- load conditions ; the effects of sulfur in gasoline ; the effects of increased oil consumption ; and the effects of age on vehicle s and control sy stems. In addition, technologies now exist that have inherently low evaporative emission characteristics and demonstrate improved in

- use durability . Based on this body of data, we are adopting more stringent standards designed to reduce emissions, primarily exhaust non - methane organic gases (NMOG ), NO X , and PM and evaporative h ydrocarbon emissions from new vehicles. As discussed in detail below and in the final RIA, we have concluded that, in conjunction with the reductions in fuel sulfur also required in this action, the new vehicle emissions st andards are feasible , accounting for costs, across the fleet in the timeframe of the program . We believe that simultaneous reductions in fuel sulfur will be a key factor in enabling the entire fleet of vehicles subject to Tier 3 to meet the new emission s tandards in

- use, throughout the life of the vehicle s (see Section IV.A.6 below)

. We received a large number and wide range of comments on the proposed vehicle emission program, and we have carefull y considered all of them. (The Summary and Anal ys is of Comments document addresses the comments received; it is located in the docket for this rulemaking and also on EPA’s website at www.epa.gov/otaq/tier3.htm.) With very few exceptions, we are finalizing the Tier 3 vehicle emission program as proposed, includin g the levels of the new emission standards and the phase

- in schedules. In several cases, as discussed in detail below, the comments and/or newer technical information have resulted in adjustments to the proposed program, including when the requirements be gin, what fuel is used for vehicle compliance testing, and what the PM standard level is for testing underPage 91 of 529

aggressive driving conditions. The final Tier 3 vehicle provisions, like the proposal, also harmonize closely with California’s LEV III program. T his section describes in detail the program for reducing tailpipe and evaporative emissions from light

- duty vehicles (LDVs, or passenger cars), light

duty trucks (LDT1s, 2s, 3s, and 4s), Medium

- Duty Passenger Vehicles (MDPVs), and certain heav y - duty

vehicl es (HDVs). Sections IV.A and IV

. B discuss the tailpipe emission standards and time lines, and other provisions for new LDVs, LDTs, and MDPVs and for new heav y - dut y vehicles up to 14,000 lbs Gross Vehicle Weight Rating (GVWR). Section IV.C presents the ne w Tier 3 evaporative emissions standards and program and Section IV.D describes the new evaporative emissions leak test. Section IV.E presents improvements to the existing Onboard Diagnostics (OBD) provisions. In Section IV. F , we describe new provisions to update our federal certification fuel to better match today ’s in

- use fuel. We also discuss in this section the compliance flexibilities for small auto manufacturing companies and small

- volume manufacturers (IV. G ) as well as new testing and test procedure provisions and other compliance provisions (IV. H ). **A. Tier 3**  **Tailpipe Emission Standards for Light -** **Duty Vehicles, Light -**  **Duty Trucks, and Medium**  **- Duty Passenger Vehicles**  1. How the Tier 3 Program is Harmonized with the California LEV III Program In describing the Tier 3 program for light

- and heavy

- dut y vehicles in this preamble, we discuss how the provisions are consistent with the California Air Resources Board (CARB) LEV III program. 248 During the development of the proposed rule and in their comments, a uto m anufacturers stressed to us the importance of their being able to design and produce a single fleet of vehicles for all 50 states that simultaneously compl ies with requirements under the Tier 3 program and the LEV III program, as well as greenhouse gas/CAF E requirements they are facing in the same timeframe. To the extent that the federal and California programs are consistent, special versions of vehicles with different emission control hardware and calibrations for different geographic areas will be unne cessary . This will allow manufacturers to avoid the additional costs of parallel design, development, calibration, and manufacturing. Consistency among programs also eliminate s the need to supply aftermarket parts for repair of multiple versions of a veh icle. We believe that the most effective and efficient national program will

248 See California Low

- Emission Vehicles (LEV) & GHG 2012 regulations adopted by the State of California Air Resources Board, March 22, 2012, Resolution 12

- 21 incorporating by reference Resolution 12

- 11 , which was adopted January 26, 2012. Available at http ://www.arb.ca.gov/regact/2012/leviiighg2012/leviiighg2012.htm (last accessed December 2 , 201 3 ).Page 92 of 529

result from close coordination between CARB LEV III and federal Tier 3 program elements and their implementation. To that end, we worked closely with CARB and the vehicle manuf acturers, the latter both individually and through their trade associations, to align the two programs. The Tier 3 program is identical to LEV III in most major respects for light

- duty vehicles (and heav y - dut y vehicle s, as described in sections below). T he levels and the timing of the declining fleet

- average NMOG+NO X standards are identical to those in LEV III. T he Tier 3 emissions bins to which manufacturers will certify

individual vehicle models in order to comply with the fleet

- average standard s, are also identical to those in LEV III. Similarly , the light

- dut y Tier 3 FTP PM standards and percent phase

- in match those for LEV III through MY 2024. We note there are a few light

- dut y Tier 3 and LEV III provisions that are different, for reasons discussed below. For example, the LEV III program and the Tier 3 program have different light

- duty PM requirements late in the program (i.e., after MY 2024 (IV.A.3.b.)) , and the two programs have different final NMOG+NO X standards for small volume manufacturers (IV.G.1). As also discussed below, we are finalizing a revised SFTP (US06) PM standard, and CARB has commented that it plans to take similar action in near future. CARB also indicated in their comments that they intend to consider several additiona l actions to further align several minor aspects of LEV III with the Tier 3 program once Tier 3 is finalized. Be yond the provisions mentioned above , the differences between the programs are not major and most will ex ist only in the transitional years of the Tier 3 program. These additional differences result from the fact that the LEV III requirements begin slightly earlier and that a limited phase

- in of some provisions is necessary for a smooth transition to overall aligned programs. These temporary di fferences include the process for how early compliance credits are generated and used (e.g., Section IV.A.7.a); how quickl y manufacturers will need to move toward certifying all of their vehicle models to longer useful

- life values (e.g., Section IV .A.7. c ) and on the new test fuel (e.g., Section IV.A.7. d); and transitional emissions bins to facilitate the transition from Tier 2 to Tier 3 ( Section IV.A.7. n ). 2. Summary

of the Tier 3 FTP and SFTP Tailpipe Standards
a. Major Comments on and Significant Changes to the Proposal As mentioned above, we are finalizing most aspects of the comprehensive Tier 3 vehicle program as we proposed them. The levels of the FTP and SFTP standards for the key tailpipe pollutants of concern

-- the sum of NMOG and NO X emissions, expre ssed as NMOG+NO X , and PM

-- are the same as proposed (except for the numerically

lower final PM SFTP (US06) standard, as discussed below)

. In addition, the timing of the requirements remains the same as in the NPRM, startingPage 93 of 529

with MY2017 and MY2018 and pha sing in according to the same declining fleet

average schedule for the NMOG+NO X standards and the same percent

- of

- sales phase

- in schedule for the PM standards. We continue to believe that these elements form a robust framework for the Tier 3 vehicle progr am and closel y harmonize with the respective elements of California’s LEV III program. There are several important provisions of the light

- duty Tier 3 program that we have revised from the proposal, based on further consideration and information that we re ceived from commenters. We discuss each of these in detail later in this section and summarize them here.

 As described below in Section IV.A.2.c, each of the four primary Tier 3 emission standards has an associated alternative phase

- in option for heavier light

- dut y vehicles that a manufacturer can choose if it prefers a later start date (to provide 4 years of lead time) and a stable standard. 249 We proposed that a manufacturer choosing these options be required to apply the alternative phase

- in schedule to its entire light

- dut y fleet. In response to comments from automakers that this restriction would be unnecessarily

burdensome, we reconsidered this provision. For the reasons discussed below, we are allowing a manufacturer to appl y the alternative phase

- in schedules to only their heavier light

- dut y vehicles, instead of their entire light

- duty fleet. However, manufacturers have largel y indicated that they plan on adopting the primary program which is harmonized with LEV III.

 This Tier 3 rule provides an op portunity for EPA to reassess the degree to which the gasoline used for vehicle emissions testing and certification reflects in

- use gasoline around the country . In the case of ethanol content, we proposed that the emissions test fuel contain 15 percent ethanol (E15), anticipating a significant shift to higher ethanol content in use in the near future. For several reasons described below (Section IV .F.1), this shift in in

- use fuel is not materializing as quickly as expected, and E10 continues to be almost universal today . We received a near consensus among comments from stakeholders that E10 test fuel is more appropriate. We agree that E10 most appropriately reflects in

use gasoline around the country today and into the foreseeable future, and thus we are finalizing E10 for the test fuel. In addition, as discussed in Section IV.F.1, we are finalizing a fuel volatility specification for test fuel of 9 psi RVP, as proposed.

249 In this preamble, “heavier light

- duty vehicles” refers to LDVs and LDTs greater than 6,000 lbs GVWR and MDPVs, and “lighter light

- duty vehicles” refers to LDV s and LDTs up to 6,000 lbs GVWR.Page 94 of 529  We are finalizing a set of standards for PM as measured on the aggressive

- driving se gment of the SFTP test cycle (the US06 cycle) based on US06 PM test data that we published as part of the NPRM, along with more recent test data developed b y California. Our review of these data has led us to finalize numerically lower levels for the US06 PM standards than we proposed. The data presented in the NPRM as well as the data provided by California clearl y show that the proposed US06 PM standards were inappropriatel y high, that US06 PM emissions are not closel y related to vehicle weight, and that lower values for the standards would achieve the goal of the program to bring all vehicles in the light

- dut y fleet to the US06 PM levels that are being met b y man y vehicles today . Based on the body of available data, we are establishing 6 mg/mi as the l ong - term US06 PM standard. (This compares to the proposed standards of 10 and 20 mg/mi for lighter and heavier light

- dut y vehicles, respectivel y.) However, because there remains some uncertaint y about how manufacturers will achieve this level in the earl y ye ars of the program, we are setting the standard at 10 mg/mi for the earl y ye ars of the program, for MYs 2017 and 2018. Similarly , we are providing a less

- stringent standard of 10 mg/mi for testing of in

- use vehicles in recognition of the challenges of the requirements as vehicles age.

 In the Tier 3 program, as for vehicle emission control programs in the past, manufacturers are responsible for the emissions performance of the vehicle for a specified “useful life” of the vehicle. EPA proposed that vehicles meet the Tier 3 standards for 150,000 miles or 15 years, identical to the LEV III program’s approach. We proposed an option for lighter light

- dut y vehicles to certify to a shorter useful life of 120,000 miles or 10 (or 11, as applicable) ye ars, a s set in the Tier 2 program. We proposed that manufacturers certifying to the shorter useful life would need to meet numericall y lower NMOG+NO X standards (85 percent of the respective 150,000

- mile NMOG+NO X standards). We also proposed that a manufacturer choosing the shorter useful life for one vehicle model would need to use that useful life and associated standards for all of its lighter vehicles. Auto industry commenters stated that applying the provision across a manufacturer’s fleet would create an onerous compliance burden. We have reconsidered our proposed approach, and as discussed in Section IV.A.7.c below, we will allow a manufacturer to split its lighter light

- duty

fleet among models certified for either the 150,000 mile or 120,000 mile useful life and associated standards.

 Another area of substantial comment, primarily from the petroleum refining industry , questioned the technological need of auto manufacturers for lower in

- use sulfur levels in order to meet the Tier 3Page 95 of 529 vehicle emission stand ards. In contrast, auto manufacturers and emissions control sy stem manufacturers commented that lower sulfur gasoline is critical to meet the Tier 3 standards. After careful consideration of the comments, we continue to believe that the large body of dat a presented in the NPRM, supplemented by newer data that consistently

reinforces the earlier conclusions, strongl y supports our determination of the need for average in

- use gasoline sulfur levels to be at 10 ppm sulfur or lower for manufacturers to meet th e Tier 3 vehicle standards across their fleets for the useful life of the vehicles. See Section IV.A.6 below for a detailed discussion of the need for gasoline sulfur control. b. Structure of the Primary Tier 3 Tailpipe Standards As proposed, co mpliance with the standards is based on vehicle testing using test procedures that represent a range of vehicle operation, including the Federal Test Procedure (FTP) and the Supplemental Federal Test Procedure (SFTP). The Tier 3 FTP and SFTP NMOG+NO X stan dards are fleet

- average standards, meaning that the manufacturer calculate s the sales

- weighted average emissions of the vehicles it sells in each model year , accounting for an y Tier 3 emissions credits or deficits, and compare s that average to the applicab le standard for that model year. The fleet average standards for NMOG+NO X evaluated over the FTP are the same values as proposed and are summarized in Table IV

- 2 and discussed in detail below. For lighter light

- duty veh icles, the standards begin in MY 2017 at a level representing a 46 percent reduction from the current Tier 2 requirements for lighter vehicles and then become increasingl y stringent, culminating in an 81 percent reduction in MY 2025. The FTP NMOG+NO X program includes separate fleet average standards for heavier vehicles that begin in MY 2018 and then converge with the standards for lighter vehicles at 30 milligrams per mile (mg/mi) in MY 2025 and later , as proposed

. 250 , 251 Manufacturers will determine their fl eet average FTP NMOG+NO X emission values as we proposed, based on the per

- vehicle “bin standards” to which they certif y each vehicle model. M anufacturers will be free to certify vehicles to any of the bins, so long as the sales

- weighted average of the NMO G+NO X values from the selected bins meets the fleet average standard for that model ye ar. Table IV

- 1 presents the per

- vehicle bin standards. Similarly , the fleet average

250 The declining NMOG+NO X fleet

- average standards consist of one set of declining standards that applies to light

- duty

vehicles (LDVs) and small light trucks (LDT1s) and a second set of declining standards that applies to he avier light trucks (LDT2s, LDT3s. LDT4s), and MDPVs. 251 This preamble presents the new Tier 3 standards in terms of milligrams per mile (mg/mi) for convenience. Throughout the associated Tier 3 regulatory language we continue to present the standard s in te rms of grams per mile (g/mi) for consistency with earlier programs.Page 96 of 529

NMOG+NO X standards measured over the SFTP are summarized in Table IV

- 4 and discussed in detail below

. The SFTP NMOG+NO X fleet average standards decline from MY 2017 until MY 2025. In this case, the same standards apply to both lighter and heavier ve hicles. In MY 2025, the SFTP NMOG+NO X standard reach es its fully phased

- in fleet average level of 50 mg/mi. Also as proposed, the new Tier 3 PM standards apply to each vehicle separately . The PM standards are per

- vehicle cap standards and not fleet

- aver age standards . Also, in contrast to the declining NMOG+NO X standards, the PM standard on the FTP is a constant 3 mg/mi for all vehicles and for all model years , phasing in to an increasing percentage of vehicle sales beginning in MY 2017 for vehicles at o r below 6,000 lbs Gross Vehicle Weight Rating ( GVWR) and in MY 2018 for vehicles above 6,000 lbs GVWR. As discussed in Section IV.A.3.b above, b ased on data generated by EPA and CARB test programs, most current light

- duty vehicles are already performing at or below th e 3 mg/mi level. However, some vehicles are emitting above this level, due to such factors as excessive fueling during cold start and combustion chamber and fuel sy stem designs that are not optimized for low PM emissions. The intent of the 3 mg/mi standard is to bring all light

- duty vehicles to the PM level ty pical of that being demonstrated b y most light

duty vehicles today . To address the uncertainties that will accompany the introduction of new technologies, the program includes a separat e in

- use FTP PM standard of 6 mg/mi for the testing of in

- use vehicles during the phase

- in period, as proposed, as described in more detail below. As presented in Table IV

- 3 , for vehicles at or below 6000 lbs GVWR, the se FTP PM certification and in

- use standards phase in over several ye ars, beginning with a requirement that at least 20 percent of a company ’s U.S. sales of these vehicles compl y with the Tier 3 standards in MY 2017. We are also finalizing an option for a manufacturer to choose to certify 10 percent of its total light

- duty fleet sales

– including LDVs and LDT over 6,000 lbs GVWR and MDPVs

– to the Tier 3 FTP PM standards in MY 2017. Manufacturers would reach a 100 percent compliance requirement in MY 2021

. Finally , the Tier 3 program includes PM standards evaluated over the US06 cycle (a component of the SFTP test that captures higher speeds and accelerations). Based on emissions test data presented in the NPRM and additional data submitted in public co mments, and as presented in Table IV

- 5 and further discussed in Section IV .A.4.b below, we are establishing a single long

- term US06 PM standard of 6 mg/mi for both lighter and heavier vehicles, a level that is numericall y lower than what we proposed. However, because there remains some uncertainty about how manufacturers will decide to achieve this level in the earl y ye ars of the program, we are setting the standard through MY 2018 at 10 mg/mi. The US06 PM standard s ph ase in using the same 20

- 20

- 40

- 70

- 100 percent schedule , and on the same vehicles, as the new FTP PM standards . The 10 mg/mi standard applies in MYs 2017 and 2018 (at a percent

- of

- sales requirement of 20 percent, and the long

- term 6Page 97 of 529

mg/mi standard applies in MYs 2019 and later, increasing from 40 to 100 percent of sales. This US06 standard will apply to the same vehicle models that a manufacturer chooses to certify to the FTP PM standard during the percent phase

- in period. As in the case of the FTP PM standards, the intent of the standard is to bring the emission performance of all vehicles to that already being demonstrated by man y vehicles in the current light

- dut y fleet. As proposed, we include a separate in

- use US06 PM standard during in the middle ye ars of the program, but at a different numerical level and during different ye ars than proposed (as discussed in Section IV.A.4.b below). We did not propose new emissio n requirements for an y vehicle or fuel over the cold temperature test cycles (i.e., the 20 ° F cold carbon monoxide ( CO ) and non - methane h ydrocarbon (NMHC ) tests) , but requested comment on that decision. Only the automakers commented on this topic, agreeing with EPA’s approach of not changing its cold temperature requirements

. As indicate d in the proposal, we are not establishing an y new cold temperature requirements in this rule.
c. Alternate Phase

- In Schedules F or heavier light

- dut y vehicles (i.e., LDVs and LDTs greater than 6,000 lbs GVWR, plus MDPVs), EPA is also finalizing alternative phase

- in schedules for each of the four primary

vehicle emission standards: FTP NMOG+NO X , FTP PM, SFTP NMOG+NO X , and US06 PM. 252 These alternative phase

- ins are available if a manufacturer prefers stable standards and four ful l years of lead time, as specified in the Clean Air Act for heavier vehicles. We describe each of the alternative phase

- ins in more detail below, including several way s in which we have revised the proposed provisions. EPA received comment on the proposed alternative phase

- in provisions, primarily from automakers and their trade associations. These comments questioned whether the proposed structure of and restrictions on the use of the alternative phase

- ins were so onerous as to undul y restrict a manufacturer from choosing the alternative phase

- ins and their lead time and stability provisions as set forth in the Clean Air Act. The commenters criticized the proposed requir ement that a manufacturer using the alternative phase

- ins apply the alternative schedules to its entire light

- dut y fleet, both below and above 6,000 lbs GVWR. EPA had proposed this provision to minimize the complexity of compl yi ng with the alternative pha se - in if a manufacturer’s heavier and lighter light

- dut y vehicles had different compliance structures.

252 Tier 3 standards for CO and HCHO phase in with the NMOG+NOx standards, as applicable.Page 98 of 529 In consideration of these concerns, we have removed from the alternative phase

- in provisions the requirement that a manufacturer apply the alternative schedules to its entire light

- duty fleet including vehicles below 6,000 lbs GVWR. For the practical functioning of the program, the final rule requires that any manufacturer choosing to use the alternative phase

- in apply all four alternative phase

- in sche dules to its entire light

- dut y fleet above 6,000 lbs GVWR. We believe that the alternative phase

- ins allow manufacturers to comply with emission standards in a time frame that is clearl y feasible and fully compliant with the CAA requirements for lead time and regulatory stability . To the extent that manufacturers choose to use them, the alternative would result in overall emission reductions essentiall y identical to those of the primary program. The alternative phase

- in schedules would begin to apply to each vehicle for either MY 2019 or MY 2020, depending on exactly when the manufacturer begins production of the vehicle. (See Section 86.1811

- 17(b)(8)(i) for how we implement this provision.) For models that begin MY 2019 production after the fourth ann iversary

of the signing of this final rule, the alternative phase

- in would provide four full years of lead time and would first appl y for MY 2019. The phase

- in obligation would be calculated based onl y on those vehicles beginning production after the four

th anniversary

date. For models beginning production before that date, the alternative phase

- in would first apply for MY 2020, and the phase

- in percentage for MY 2020 would be based on the manufacturer’s entire fleet of heavier light

duty vehicles. Based on historical certification patterns, few models begin production before mid

- calendar

- ye ar, so we expect that the vast majority of MY 2019 vehicles will begin production after the 4

- ye ar anniversary and thus the alternative phase

- ins, if chosen, will ty pi call y apply beginning in MY 2019. At the time of certification for MY 2018, a manufacturer must declare whether it intends to apply the alternative phase

- in schedules to its heavier light

duty vehicles. A manufacturer choosing the alternative phase

- ins would be committed to this phase

- in approach for the duration of the phase

- ins, and could not later choose the fleet

- average approach for NMOG+ NO X standards. For all vehicles below 6,000 lbs GVWR, the primary program will apply , beginning in MY 2017. Fo r a manufacture’s vehicles subject to the alternative phase

- ins, there would be no new tailpipe emissions requirements beyond the Tier 2 program until the beginning of the alternative phase

- in schedules; that is, MY 2019 or 2020, as explained above. As dis cussed above, a manufacturer choosing the alternative phase

- in approach for its heavier light

- dut y vehicles would be required to use all four phase

ins together. The next paragraphs explain how each of the alternative phase

- ins requires an increasing perc ent of the manufacturer’s sales to comply with the alternative standards. Thus, until the end of the phase

- ins, some percent of a manufacturer’s affected vehicles will meet the new standard and the remainder of that year’s sales will not yet comply with T ier 3. For the practical functioning ofPage 99 of 529

the program, a manufacturer choosing the alternative phase

- ins would be required to comply

with exactly

the same segment of their fleet in each model year for all four alternative phase

- ins. For example, a manufacturer that complies with the 70 percent MY 2020 requirement for the FTP NMOG+NO X standard with a segment of its vehicle fleet must meet the 70 percent MY 2020 requirement for the FTP PM standard with the same set of vehicles. Vehicles covered b y the altern ative phase

- in programs would be considered “Final Tier 3” vehicles and thus would also need to comply with the Tier 3 certification fuel and full useful life provisions. For the FTP and SFTP NMOG+NO X alternative phase

- in schedules, once the phase

- in is complete for a segment of a manufacturer’s fleet, the standards continue for that set of vehicles through MY 2024, after which the full Tier 3 program applies regardless of the phase

- in strategy . Thus, the fleet

- average standards that decline through MY 2 024 do not apply for these vehicles. Although manufacturers would implement all four alternative phase

- in schedules together, as discussed above, each alternative phase

- in has unique characteristics. The following paragraphs explain the unique provision s of each.

(1) Alternative Phase

-

In Schedule for the FTP NMOG+NO X Standard Instead of the primary

FTP NMOG+ NO X declining fleet average standards, a manufacturer choosing the alternative phase

- ins would comply with a stable fleet average FTP NMOG+NO X standard of 30 mg/mi that would apply to an increasing percentage of a manufacturer’s combined sales of LDVs and LDTs above 6,000 lbs GVWR and MDPVs. This percent phase

- in would match the percentages in the primary PM percent phase

- in schedule, as discussed abov e

– specificall y, 40 percent of MY 2019 heavier light

- dut y vehicles (excluding those vehicles with production beginning before the 4

- ye ar anniversary), 70 percent of all of its heavier light

- duty vehicles in MY 2020, and 100 percent compliance in MY 2021 and later model years.

(2) Alternative Phase

-

In Schedule for the FTP PM Standard Instead of the primary

FTP PM percent phase

- in schedule, a manufacturer choosing the alternative phase

- ins would postpone the beginning of its FTP PM phase

- in for its LDVs and LD Ts above 6,000 lbs GVWR and MDPVs until MY 2019 or 2020 (depending on the dates production begins for its vehicle models, as discussed above). The manufacturer would then comply with the 3 mg/mi per

vehicle FTP PM standard (and the 6 mg/mi in

- use standard) on an increasing percentage of these vehicles, following the 40

- 70

- 100 percentage phase

- in of the primary PM program

-- specificall y, 40 percent of MY 2019 heavier light

- duty vehicles (excluding those vehicles with production beginning before the 4

- year anniversary), 70 percent of all of its heavier light

- duty vehicles in MY 2020, and 100 percent compliance in MY 2021 and later model years.Page 100 of 529 (3) Alternative Phase

-

In Schedule for the SFTP NMOG+NO X Standard As with the other alternative phase

- ins, instead o f the primary SFTP NMOG+ NO X declining fleet average standards, a manufacturer choosing the alternative phase

- ins would comply with a stable fleet average SFTP NMOG+NO X standard of 50 mg/mi that would apply to an increasing percentage of a manufacturer’s c ombined sales of LDVs and LDTs above 6000 lbs GVWR and MDPVs. This percent phase

- in again would match the percentages in the primary PM percent phase

- in schedule, as discussed above

– specificall y, 40 percent of MY 2019 heavier light

- dut y vehicles (excludi ng those vehicles with production beginning before the 4

- year anniversary), 70 percent of all of its heavier light

- dut y vehicles in MY 2020, and 100 percent compliance in MY 2021 and later model ye ars. (4) Alternative Phase

- In Schedule for the US06 PM Standard Finally , instead of the primary US06 PM percent phase

- in schedule , a manufacturer choosing the alternative phase

- ins would postpone the beginning of the US06 phase

- in for its LDVs and LDTs above 6,000 lbs GVWR and MDPVs until MY 2019 or 2020 (depending on the dates production begins for its vehicle models, as discussed above). The manufacturer would then comply with the 10 mg/mi US06 PM standard for 40 percent of MY 2019 heavier light

- dut y vehicles (excluding those vehicles with production beginning befo re the 4

- ye ar anniversary), 70 percent of all of its heavier light

- duty vehicles in MY 2020, with 100 percent compliance in MY 2021, and then 100 percent compliance with the 6 mg/mi standard in MY 2022 and later model years. The next sections describe in m ore detail the new Tier 3 standards, how they will be implemented over time, and the technological approaches that we believe are or will be available to manufacturers in order to comply

. 3. FTP Standards As summarized above, we are finalizing, largely as pro posed, new standards for the primary

pollutants of concern for this rule (NMOG, NO X , and PM) as measured on the FTP. The following paragraphs describe in more detail these FTP standards for NMOG+NO X and PM, as well as for carbon monoxide (CO) and formalde hyde (HCHO).Page 101 of 529 a. FTP NMOG+NO X Standards T he Tier 3 NMOG and NO X standards are expressed in terms of the sum of the two pollutants

-- NMOG+NO X in mg/mi. 253 We received no comments recommending a different approach. The California LEV III standards are also exp ressed as NMOG+NO X ; aligning Tier 3 with LEV III is an important element of facilitating a national program. EPA received a number of comments about how the proposed NMOG+ NO X standards transition from the existing Tier 2 standards, but there was little co mment recommending different levels of the standards themselves, especially later in the program. Based on our extensive evaluation of existing and emerging vehicle technologies (see Section IV.A.5) and the level of sulfur in gasoline that will be availab le during the implementation timeframe of this rule, and considering the comments we received, w e continue to believe that the fully phased

- in level for the fleet

- average FTP NMOG+NOx standard of 30 mg/mi is the most stringent level that we can reasonably establish . As discussed in Section s IV.A.5 and IV.A.6 below, when necessary

margins of compliance and the demonstrated effects of fuel sulfur on emissions performance are considered, th e 30 mg/mi standard is effectivel y very

close to zero. The 30 mg/mi T ier 3 NMOG+NO X standard is also consistent with the final LEV III standard. A key compliance mechanism adapted from the Tier 2 program is a “bin” structure for the FTP emission standards. For these purposes, a bin is a set of several standards that must b e complied with as a group. Thus , as proposed, each FTP Tier 3 bin has an NMOG+NO X standard and a PM standard, as well as CO and HCHO standards. We intend for the Tier 3 CO and HCHO standards to prevent new engine and emission control designs that resul t in increases in CO and HCHO emissions , compared to levels being achieved today . The standards are based on the comparable current LEV II and Tier 2 bin standards for these pollutants , which we believe are sufficiently

protective at this time

. There wer e no comments on the proposed CO and HCHO standards. The current standards are not technology

forcing, and we believe that this will continue to be the case as Tier 3 technologies are developed.

253 See California Low

- Emission Vehicles (LEV) & GHG 2012 regulations adopted by the State of California Air Resources Board, March 22, 2012, Resolution 12

- 21 incorporating by reference Resolution 12

- 11 , which was adopted January 26, 2012. Available at http://www.arb.ca.gov/regact/2012/leviiighg2012/leviiighg2012.htm (last accessed December 2 , 201 3 ).Page 102 of 529 Table IV

- 1 presents the bin structure for light

- dut y vehicle, light

- dut y truck, and MDPV FTP standards

. **Table IV**  **- 1**  **Tier 3 FT**  **P Standards for LDVs, LDTs and MDPVs (mg/mi)**  Bin NMOG+ NO X

(mg/mi) PM a

(mg/mi) CO

(g/mi) HCHO

(mg/mi) Bin 160 160 3 4.2 4 Bin 125 125 3 2.1 4 Bin 70 70 3 1.7 4 Bin 50 50 3 1.7 4 Bin 30 30 3 1.0 4 Bin 20 20 3 1.0 4 Bin 0 0 0 0 0

a In MYs 2017

- 20, the PM standard applies only to that segment of a manufacturer’s vehicles covered by the percent of sales phase

- in for that model year. Consistent with the Tier 2 principle of vehicle and fuel neutrality, the same Tier 3 standards apply

to all LDVs, LDTs, or MDPVs, regardless of the fuel they use , as proposed . That is, vehicles certi fied to operate on an y fuel (e.g., gasoline, diesel fuel, E85, CNG, LNG, hydrogen, and methanol) are all subject to the same standards. The Tier 3 NMOG+NO X standards as measured on the FTP will reduce the combined fleet

- average emissions graduall y from M Y 2017 through 2025, as shown in Table IV

- 2 below. Beginning in MY 2017, there are two separate sets of fleet

average standards for , first, LDVs and LDT1s and , second, all other LDTs (LDT2s, LDT3s, and L DT4s) and MDPVs . B oth fleet

- average standards decline annually , converging in MY 2025. These declining average standards are identical to CARB’s LEV III standards. 254 As proposed and as discussed above (Section IV.A.2.a), the declining fleet

average NMOG+N O X FTP standard s begin in MY 2017 for light

- duty vehicles and light

- duty trucks with a GVWR up to and including 6,000 lbs and in MY 2018 for light

- duty vehicles and light

- dut y trucks with a GVWR greater than 6,000 lbs and MDPVs . The standards apply to the heavier vehicles a year later to facilitate the transition to a 50

- state program for all manufacturers. During this transition period,

254 See California Low

- Emission Vehicles (LEV) & GHG 2012 regulations adopted by the State of California Air Resources Board, March 22, 2012, Resolution 12

- 21 incorporating by reference Resolution 12

- 11 , which was adopted January 26, 2012. Available at http: //www.arb.ca.gov/regact/2012/leviiighg2012/leviiighg2012.htm (last accessed January 14, 201 4 ).Page 103 of 529

as described above, there will be two fleet

- average NMOG+NO X standards for each model year, one for LDVs and LDT1s and one for all other LDTs (LDT2s, LDT3s, and LDT4s) and for MDPVs that decline essentially linearl y from MY 2017 through MY 2025 . At that point , the two fleet

- average standards converge and stabilize for all later model years at the same level, 30 mg/mi, as shown in Table IV

- 2

. **Table IV**  **- 2**  **Tier 3 LDV, LDT, and MDPV Fleet Average FTP NMOG+NO**  **X Standards (mg/mi)** 

Model Year 2017 a 2018 2019 2020 2021 2022 2023 2024 2025 and later LDV/LDT1 b 86 79 72 65 58 51 44 37 30 LDT2,3,4 and MDPV 101 92 83 74 65 56 47 38

a For LDVs and LDTs over 6,000 lbs GVWR and MDPVs , the fleet average standards appl y beginning in MY 2018. b These standards apply for a 150,000 mile u seful life. Manufacturers can choose to certify their LDVs and LDV1s to a useful life of 120,000 miles. If a vehicle model is certified to the shorter useful life, a proportionally lower numerical fleet average standard appl ies , calculated by multiplying the respective 150,000 mile standard by 0.85 and rounding to the nearest mg/mi

. See Section IV.A.7.c. As discussed above (Section IV.A.2.c), for LDVs and LDTs above 6,000 lbs GVWR and MDPVs, EPA is also providing an alternative phase

- in of the fleet

ave rage 30 mg/mi FTP NMOG+NO X standard

. b. FTP PM Standards We are establishing new FTP standards for PM emissions at the proposed levels

-- 3 mg/mi, with a temporary standard of 6 mg/mi for in

- use vehicle testing

-- as summarized in Table IV

- 3 below. These levels are intended to ensure that all new vehicles will perform at a level representing what is already being achieved b y well

- designed emission control technologies today

. Many commenters were either silent on or supportive of the proposed FTP PM standard levels. However, some commenters

– including CARB and several NGOs and auto industry

suppliers

-- supported a more stringent standard of 1 mg/mi, which the California LEV III program phases in beginn ing in MY 2025. After detailed consideration of these comments and information available at this time, we continue to believe that the PM standards that we are finalizing for the federal Tier 3 program are the most stringent technically feasible standards within the implementation timeframe of this rule . ( See Section 1.5.1 of the RIA .) We willPage 104 of 529

continue to work closel y with CARB in this area. Specificall y, our agencies will continue our parallel evaluations of how improved gravimetric PM measurement meth ods can reduce PM mass measurement variability at very low PM levels and how this relates to the evolving technological capabilities of automakers to reach very low PM levels with sufficient compliance margins. PM emissions over the FTP are generall y attributed to the cold start, when PM formation from combustion of the fuel is facilitated by the operating conditions, including a cold combustion chamber and fuel enrichment. During cold

- start operation , PM control is less effective , especiall y the oxidati on by the cataly

tic converter of semi

- volatile organic compounds from the lubricating oil. We believe that for vehicles that are not already at the Tier 3 levels, the new standard s can be achieved with improvements to the fuel controls during the cold start , without the need for an y new technology or hardware. We also expect that manufacturers will pay close attention to maintaining low PM emissions during the implementation of newer technologies like gasoline direct injection (GDI) and turbocharged engin es. Improvements in cold

- start exhaust cataly st performance for NMOG+NOx control will also reduce emissions of semi

- volatile organic PM. For these reasons, cold start PM levels are relatively independent of vehicle application and therefore we are finali zing a single FTP PM standard for all light

- duty vehicles , as proposed

. Unlike the NMOG+NO X FTP standard, it is not necessary for the FTP PM standard to phase in on a declin ing curve over time, since most manufacturers are already producing vehicles that meet the new standards . We are finalizing the proposed PM FTP percent

- of

- sales phase

- in during the first 5 years of the Tier 3 program in response to concerns expressed b y automakers about logistical, facilities, and compliance challenges with a standard in the range of 3 mg/mi in the earl y ye ars of the program. Beginning in MY 2017 (and in MY 2018 for LDVs and LDTs over 6,000 lbs GVWR and MDPVs ), manufacturers will need to comply with the PM standard with a minimum of 20 percent of their U.S. sales. As shown in Table IV

- 3 , the percentage of the manufacturer’s sales that need to compl y increase s each year, reaching 100 percent in MY 2021. In addition to this percent phase

- in, we are also establishing, as proposed, a separate PM standard of 6 mg/mi that will apply

onl y for in

- use testing of vehicles certified to the new standards, and only during the percent phase

- in period. Due to the MY 2018 start date for vehicles over 6,000 lbs GVWR, manufacturers that have few or no vehicle models over 6,000 lbs GVWR will be required to certify

a larger percentage of their total light

- duty sales in MY 2017 than full line manufacturers. While we believe that most manufacturers will likely choose a single large

- volume durability group to meet the 2017 requirements, we are also including an option that a manufacturer could use to comply with the MY 2017 PM requirements . Under this option, a manufacturer may choose to certify

10 percent of its total light

- duty vehicle sales in MY 2017 to the new PM standards, including light

- dut y vehicles over 6,000 lbs. This approach is consistent with thePage 105 of 529

CARB LEV III program, which requires that 10 percent of all light

- dut y vehicle sales meet the new PM standards in MY 2017. Becau se of the expected time and expense of performing emission tests on the improved PM test procedures, we are limit ing the number of tests using the new procedures that a manufacturer need s to perform at certification and during in

- use testing , as proposed

. Specificall y, manufacturers will only be required to test vehicles representing a minimum of 25 percent of a model’s durability test groups during certification each model year (and a minimum of 2 durability groups). 255 Manufacturers may select which durab ility groups to test, but will need to rotate the groups tested each year to eventuall y cover their whole fleet. Similarly, manufacturers performing in

- use testing under the In - Use Verification Program can limit their testing to 50 percent of their low

- and high

- mileage test vehicles. Again, manufacturers will need to rotate their vehicle models so that each model will be tested every

other year. Overall, we believe that the flexibility that these provisions provide will facilitate the expeditious impleme ntation of the Tier 3 program, with no significant impact on the benefits of the program. **Table IV**  **- 3**  **Summary of Tier 3**  **LDV, LDT, and MDPV FT**  **P Standards** Program Element Units Model Year Notes

2017 a 2018 2 019 2020 2021 2022 2023 + NMOG+NO X Standard (fleet average) mg/mi Per declining fleet average s (see Ta ble IV

- 2 ) b

PM Standards Phase

- in % 20 c 20 40 70 100 100 100

FTP Certification mg/mi 3 3 3 3 3 3 3 Note d
In

- use mg/mi 6 6 6 6 6 3 3 Note e a For LDVs and LDTs above 6,000 lbs GVWR and MDPVs , the FTP PM standards appl y beginning in MY 2018. b The percent phase

- in does not apply to the declining fleet average standards. c Manufacturers comply in MY 2017 with 20 percent of their LDV and LDT fleet under 6,000 lbs GVWR, or a lt ernatively with 10 percent of their total LDV, LDT, and MDPV fleet. d Manufacturers must test 25 percent of each model year’s durability groups, and a minimum of 2. e Manufacturers m

ust test 50 percent of their com bined low

- and high

- mileage in

- use vehicles.

255 Durability groups are a subset of engine families. Several engine families may have the same durability group.Page 106 of 529 As discussed in Section IV.A.2.c above, for LDVs and LDTs above 6 , 000 lbs GVWR and MDPVs , EPA is providing an alternative phase

- in of the 3 mg/mi FTP PM standard

. 4. SFTP Stand ards In addition to addressing vehicle emissions during ty pical driving, as addressed b y the FTP standards presented above, the Tier 3 program also addresses emissions during more severe driving conditions. Thus , we are finalizing NMOG+NO X and PM standards as measured on the SFTP. The SFTP (and specificall y the US06 component of the test) is designed to simulate , among other conditions, higher speeds and higher acceleration rates , and thus higher loads . As described below, most commenters were supportiv e of or silent on the proposed SFTP NMOG +NO X standards and the associated declining fleet

- average phase

- in schedule, but several commenters stated that the level of the standards should be more stringent than proposed. Based on our analy sis of the stringe ncy of the program, discussed in Section IV.A.5 below and in Chapter 1 of the RIA, we disagree that more stringent SFTP NMOG+ NO X standards are necessary or appropriate at this time, and we are finalizing the standards and phase

- in schedule as proposed. H owever, we are finalizing more stringent SFTP standards for PM, which focus on the US06 test component, based on newer data and public comments. These are also described below. The Tier 3 SFTP standards are necessary to address emissions during high

load conditions, when engines can go into a fuel “enrichment” mode and the engine’s controls may

temporarily

create a rich air/fuel mixture to protect exhaust components from thermal damage. Enrichment can increase emissions of NMOG+NO X and PM, primarily due t o the incomplete combustion that occurs under rich conditions and the diminished effectiveness of the catalyst in these circumstances. However, enrichment can be minimized or eliminated in current and future engines, where components can be thermally prot ected even under high

load conditions by

careful electronic management of the air/fuel mixture and the combustion process. We are finalizing these SFTP standards, as well as limitations on the amount of enrichment that drivers can command (see Section IV. A.4.c below ) to address this important source of vehicle emission. We are also finalizing an SFTP composite CO standard of 4.2 g/mi for all model years 2017 (or 2018 for LDVs and LDTs over 6000 lbs GVWR and MDPVs ) and later. This standard represents no e ffective change from the current Tier 2 SFTP CO standard, which we believe is already at a level that is sufficiently stringent.Page 107 of 529 a. SFTP NMOG+NO X Standards We are finalizing the Tier 3 SFTP NMOG+NO X standards and declining fleet

- average phase

- in schedule as proposed and as presented in Table IV

- 5 below

. Most commenters were generall y supportive of these standards or silent about them. However, several commenters stated that the proposed standards are too lenient, based on their evaluation of vehicle emission test data we presented in the NPRM. We have considered these comments and have reviewed the data from the NPRM. Our conclusion from that data continues to be that the SFTP NMOG+NOx emission levels th at we are finalizing ensure that manufacturers essentially eliminate fuel enrichment events and their emissions consequences, thereb y resulting in important emissions reductions. See Chapter 1 of the RIA for an anal ys is of this data. W e do not believe th at significant additional reductions would result from SFTP weighted NMOG+NO X standards more stringent than the 50 mg/mi fully phased

- in level. In addition, we believe that the 50 mg/mi standard will ensure that the SFTP performance of future vehicles with future technologies continues to be comparable to that of the current fleet. The SFTP emissions value for certification of gaseous pollutants will continue to be calculated as a weighted composite value of emissions on three cycles (0.35 x FTP + 0.28 x U S06 + 0.37 x SC03), as is done for the Tier 2 SFTP standards. To provide flexibility

in meeting the fleet

- average standards, manufacturers will, as proposed, determine the specific SFTP composite standard for each individual vehicle family and report that self

- selected standard and the measured emission performance. (These self

- selected standards are analogous to “family emission limits,” or “FELs,” used in other programs (e.g., heav y - duty highway engine standards).) For each famil y, a manufacturer will choose an y composite NMOG+NO X standard, up to 180 mg/mi, in even 10 mg/mi increments. The manufacturer will then calculate the sales

- weighted average of all the selected standards of the families across its fleet and compare that emissions value to the a pplicable fleet

- average standards for that model year. Table IV

- 4 presents the declining fleet

- average SFTP NMOG+NO X standards. As discussed in Section IV.A.2.c above, for LDVs and LDTs above 6,000 lbs GVWR and MDPVs, EPA is providing an alternative phase

- in of the 50 mg/mi SFTP NMOG+NO X standard. b. US06 PM Standards We are finalizing a single short

- term US06 PM standard of 10 mg/mi for MYs 2017 and 2018 (or only for MY 2018 for LDVs and LDTs over 6,00 0 lbs GVWR and MDPVs) and a single long

- term standard of 6 mg/mi for MY 2019 and later. These standards are numericall y lower than those we proposed, and less complex in their structure. As discussed below and in Chapter 1 of the RIA, a substantial body of more recent PM data from a variety of vehicles tested on thePage 108 of 529

US06 cycle has given us greater understanding of the feasible level of control of these emissions, both currently and in the timeframe of the Tier 3 standards, including what level of control we may reasonably

require for the light

- duty fleet

. The standards we are finalizing reflect this review. Much of the more recent data was developed late in the development of the NPRM and, although we made it available in the rulemaking docket to inform potential commenters, the proposed standards did not reflect consideration of the newer data. Since the NPRM, additional data from CARB have become available, and we have considered all of this information in finalizing the US06 PM standards. We believe that the full y phased

- in US06 PM standard of 6 mg/mi will achieve the goal that we presented in the NPRM

– to maintain the performance being achieved b y current well

- performing vehicles taking into account reasonable compliance margins. Comments from stake holders representing states, including CARB, and several NGOs urged EPA to finalize more stringent standards than those proposed, in some cases advocating for standards below 6 mg/mi. Conversel y, auto industry commenters generall y supported the proposed s tandards. We have concluded that the body of recent data clearl y shows that the long

- term 6 mg/mi standard, is the appropriate level to prevent any significant “backsliding” in US06 PM emissions as new vehicles and technologies enter the fleet. At the same time, the 6 mg/mi standard provides a reasonable compliance margin

-- about 50% above the average levels of current vehicles, which are averaging about 4 mg/mi. A long

- term standard numerically lower than 6 mg/mi would run counter to our intent to bri ng the emissions performance of all vehicles to that already being demonstrated b y man y vehicles in the current light

- duty fleet. We believe the long

term US06 PM standard we are finalizing is appropriate based on all of the information available at this time and will not hinder introduction of new technologies manufacturers may choose for compliance with the other Tier 3 standards or other rules. The short

- term, less

- stringent US06 standard of 10 mg/mi (applicable in MYs 2017 and 2018) responds to auto maker concerns about uncertainties stemming from simultaneous regulatory requirements and rapidly evolving exhaust and engine technologies in the coming ye ars. We recognize that vehicle control technologies for both criteria and GHG emissions are evolving and will continue to do so, including an expected expansion of gasoline direct injection (GDI) technologies (see IV.A.5.c and the RIA). Also, the transition to lower sulfur in

- use gasoline required b y this rule may create temporary additional challenges in consistently achieving lower US06 PM emissions (see IV.A.6 and the RIA). We believe that most manufacturers will implement similar if not identical emission control strategies to comply

(or, more often, to continue to comply with) with both the 10 mg/m i and the 6 mg/mi standards. In so doing, we expect them to use the temporary

additional compliance margin provided by the 10 mg/mi standard to reduce uncertainties about potential variability in performance (in use and, inPage 109 of 529

particular, later in vehicle li fe) during the earl y ye ars of developing and commercializing their control technologies. 256 The 10 mg/mi standard will expire after MY 2018, and the long

- term standard of 6 mg/mi will take effect. As the implementation of the program continues, we believe a limited degree of relief for testing of in

- use vehicles is appropriate. Manufacturers commented that because of the industry ’s general lack of experience with stringent PM standards, especially as the newl y - designed vehicles age, less stringent standards for in

- use testing would reduce near - term concerns about performance variability earl y in the program. We agree, and we are finalizing a separate standard of 10 mg/mi for in

- use vehicle testing for the intermediate ye ars of the program, MYs 2019 thro ugh MY 2023. This standard is numericall y lower than the proposed in

- use standards

-- again because of the availability

of improved US06 test data as described above

-- but the purpose of providing an in

- use standard remains the same. The in

- use standard, in conjunction with the short

- term 10 mg/mi standard represents a longer duration for the in

- use standard than we had proposed, again based on comments from the industry about their compliance concerns with new US06 standards. For MY 2024 and later, the re will be no separate in

- use standard and all vehicles will need to meet the long

- term standard at certification and in use. EPA proposed that different US06 PM standards apply to lighter and heavier vehicles. The newer US06 PM test data discussed abov e also make clear that the US06 PM performance of current vehicles is not closely related to vehicle weight, although the earlier data had indicated that this might be the case. Several commenters urged EPA to finalize a single standard for vehicles abov e and below 6,000 lbs GVWR based on the newer data. At the same time, auto manufacturers generall y supported the proposed vehicle weight distinction, asserting a higher degree of uncertaint y about the emission performance of their larger vehicles, especia lly in the earl y ye ars of the program and in light of simultaneous technology challenges. The newer data clearl y show that larger vehicles today are generall y achieving US06 PM levels very similar to smaller vehicles, and well below the proposed standards . We are not finalizing separate US06 standards for heavier and lighter vehicles because separate standards are unwarranted based on a review of the newer data. However, we believe that the short

- term 10 mg/mi standard, as well as the temporary

in

- use ve hicle testing standard, will significantly reduce

256 We note that the purpose of the percent phase

- in schedule for the FTP and US06 PM standards is to facilitate the expansion of manufacturers’ PM testing facilities, which have been relatively limited in their availability prior to these new emission standards. While effectively providing more time fo r technology development as well as for expansion of facilities, we believe that the PM standards are designed to be fully feasible in the early years of the program and do not themselves require the phase

- in relief, especially given the short

- term 10 mg/m i standard and the temporary relaxed in

- use testing standards.Page 110 of 529

manufacturer compliance uncertainties in the earl y years of the program for all vehicles, as discussed above. As with the FTP PM standards, manufacturers will comply with the US06 PM standards with the s ame increasing minimum percentage of their vehicles, as shown in Table IV.5. Also as with the FTP PM phase

- in, we are providing the option for a manufacturer to choose to certify 10 percent of its total light

- duty vehicle sales in MY 2017 to the new US06 PM standards, including light

- duty vehicles over 6,000 lbs GVWR. As discussed in Section IV.A.2.c above, for LDVs and LDTs more than 6 , 000 lbs GVWR and MDPVs , EPA is also providing an alternative phase

- in of the US06 PM standard s . All of the SFTP/US06 s tandards are shown in Table IV

- 4 and Table IV

- 5

. **Table IV**  **- 4**  **Tier 3 LD**  **V, LDT, and MDPV SFTP Composite Fle**  **et Average Standards**  Model Year 2017 a 2018 2019 2020 2021 2022 2023 2024 2025 and later NMOG + NO X (mg/mi) 103 97 90 83 77 70 63 57 50 CO (g/mi) 4.2 a

a For LDVs and LDTs above 6,000 lbs GVWR and MDPVs , the NMOG+NO X and CO standards apply beginning in MY 2018

.
**Table IV**  **- 5**  **Summary of LDV, LDT, and MDPV Tier 3**  **SFTP Standards** Program Element Units Model Year Notes
2017 a 2018 2019 2020 2021 2022 2023 2024+ NMOG+NO X Standard (fleet average) mg/mi P er declining fleet average for cars and trucks (see Table IV

- 4 ) b PM Standards Phase

- in % 20 c 20 40 70 100 100 100 100Page 111 of 529

US06 LDV, LDT, MDPV: Certification mg/mi 10 10 6 6 6 6 6
6 Note d LDV, LDT, MDPV: In

- Use 10 10 10 10 10

a For LDVs and LDTs above 6,000 lbs GVWR and MDPVs , the standards apply beginning in MY 2018

. b The percent phase

- in does not apply to the declining fleet average standards. c Manufacturers comply in MY 2017 with 20 percent of their LDV and LDT fleet under 6,000 lbs GVWR, or a lt ernatively with 10 percent of their total LDV, LDT, and MDPV fleet. d Manufacturers must test 25 percent of each model year’s durability groups, minimum of 2.

c. Enrichment L imitation for Spark

- Ignitio n Engines To prevent emissions that result from excessive enrichment from auxiliary emission control devices (AECD) that are substantially present during the SFTP cycles, we are finalizing limitations on the magnitude of enrichment that can be commanded, i ncluding enrichment episodes encountered during in

- use operation

. During conditions where enrichment is demonstrated to be present on the SFTP, the nominal air

- to
- fuel ratio c annot be richer at any time than the leanest air

- to
- fuel ratio required to obtai n maximum torque (lean best torque or LBT). An air

- to
- fuel ratio of LBT plus a tolerance of 4 percent additional enrichment will be allowed in actual vehicle testing to protect for an y in

- use variance in the air

- to
- fuel ratio from the nominal LBT air

- to
- f

uel determination, for such reasons as air or fuel distribution differences from production variances or aging. LBT is defined as the leanest air

- to
- fuel ratio required at a speed and load point with a fixed spark advance to make peak torque. Specifical ly , an increase in fuel will not result in an increase in torque while maintaining a fixed spark advance. LBT is determined b y s etting the spark advance to a setting that is less than or equal to the spark advance required for best torque (MBT) and mainta ining that spark advance when sweeping the air

- to
- fuel ratio. This fixed spark advance requirement is intended to prevent torque changes related to spark changes masking true LBT. One manufacturer commented that there is no universall y accepted definitio n or procedure to determine LBT so we should retain the Tier 2 LBT requirements. We believe that the proposed definition provides sufficient clarity and will generall y agree with most manufacturers’ internal definition of LBT. Additionall y, we are finaliz ing the flexibility

that m anufacturers may

request approval of an alternative LBT definition for a unique technology or control strategy . The Agency may determine that an enrichment amount is excessive or not necessary and therefore deem that the approach does not meet the air

- to
- fuel ratio requirements. Enrichment required for thermal protection will continue to be allowed upon demonstration of necessit y to the Agency, based upon temperature limitations of the engine or exhaust components. Manufacturers will be required to provide descriptions of all components requiring thermal protection, temperature limitationsPage 112 of 529

of the components, how the enrichment strategy will detect over

- temperature conditions and correct them, and a justification regarding wh y the enrichment is the minimum necessary

to protect the specific components. The Agency may determine that the enrichment is not justified or is not the minimum necessary based on the use of engineering judgment using industry

- reported thermal protection r equirements. A manufacturer commented that this requirement to report enrichment requirements for component protection for every application is burdensome and unnecessary . EPA believes that closer review of off

- cycle enrichment by

the agency , including enrichment for component protection, is necessary to ensure emissions are well controlled under all operating conditions. While this requirement may

in some cases require additional resources at certification, this information has generally been required to be maintained by manufactures to support use of enrichment as an auxiliary emission control device (AECD) and therefore should be an exercise of reporting existing records for most manufacturers. The requirements described in this section apply for v ehicles certified to any of the Tier 3 standards. 5. Feasibility

of the NMOG+NO X and PM Standards In the proposal, we concluded that all of the Tier 3 emissions standards are technologicall y feasible in the time frame of the program. The technical conclusion s we reached at that time have been further reinforced b y information we received in the public comments or has otherwise become available and placed in the docket for this rulemaking. After considering the comments received and with additional support ing information in Chapter 1 of the RIA, we conclude that the Tier 3 standards are feasible and reasonable, considering lead

- time provided and expected compliance costs

. For each of the emission standards, the lead time provided b y the program is more than s ufficient for all manufacturers to comply . First, manufacturers in many cases are already adopting compl yi ng technologies for reasons other than this rulemaking. For example, man y of the technologies that manufacturers have begun to develop for model ye ars as early as MY 2014 in response to the CARB LEV III FTP and SFTP NMOG+NO X standards for the California market will likely represent steps toward compliance with this national program. Similarly , manufacturers have been producing some limited vehicle of ferings since as earl y as MY 2000 that comply

with our final MY 2025 standards in response to the CARB PZEV requirements . In addition, as described above, our program incorporates a number of phase

- in provisions that will ease the transition to compliance , including time some manufacturers may need to install PM testing capability and to ramp up production on a national scale. This feasibility assessment is based on a variety ofPage 113 of 529

complementary

technical data, studies, and analy ses. As described below, the se include our anal ys is of the stringency of the standards as compared to current Tier 2 emission levels. We also discuss below our observation that manufacturers are currentl y certifying several vehicle models under the California LEV II program that cou ld likely

achieve the Tier 3 NMOG+NO X and PM standards or similar levels. EPA has assessed the emissions control challenges manufacturers will generall y face (e.g., cold start NMOG reductions and running (warmed

- up) NO X emissions under ty

pical and more ag gressive driving conditions) and the corresponding technologies that we expect to be available to manufacturers to meet these challenges. Our feasibility assessment accounts for the fact that the Tier 3 program will appl y to all types of new vehicles, ran ging from small cars to large pick

- up trucks and MDPVs and representing a wide diversity in applications and in specific engine designs. It is important to note that our primary assessment of the feasibility of engine and emission control technologies is based on the assumption that vehicles will be certified on gasoline with a fuel sulfur content of 10 ppm and operated on in

- use gasoline with an average of 10 ppm sulfur. 257 Therefore, our primary assessment does not incorporate the degradation of emission control sy stem caused by higher levels of sulfur content, as is discussed in Section IV. A. 6 below and further discussed in the RIA. This assessment reinforces the critical role of gasoline sulfur control in making it possible for EPA to establish emissio n standards at these very stringent levels. See Section IV.6 below for a full discussion of our current knowledge of the effects of gasoline sulfur on current Tier 2 vehicle emissions as well as our projections of how we expect that sulfur will affect compliance on vehicles with standards in the range of the Tier 3 standards . The projections are based on extensive EPA testing of Tier 2 vehicles as well as targeted evaluation of passenger cars and heavier trucks performing at or near the Tier 3 Bin 30 (30 mg/mi NMOG+NO X ) including manufacturer supplied data of a prototype Tier 3 light

duty truck as discussed in Section IV.6. Since there are multiple aspects to the Tier 3 program, it is necessary to consider technical feasibility in light of the different program requirements and their interactions with each other. In man y cases, manufacturers will be able to address more than one requirement with the same general technological approach (e.g., faster catal ys t light

- off can improve both FTP NMOG+NO X and PM emissions). At the same time, the feasibility assessment must consider that different technologies may

be needed on different ty pes of vehicle applications ( e.g ., cars versus trucks) and must consider the relative effectiveness of these technologies in

257 Our technology, feasibility, and cost assessments are also consistent with an assumption that certification fuel will contain 1 0 percent ethanol and will have other properties as specified in Section IV. F below

.Page 114 of 529

re ducing emissions for the full useful life of the vehicle while operating on expected in

- use fuel. For example, certain smaller vehicles with correspondingl y small engines may

be less challenged to meet FTP standards than larger vehicles with larger engine s. Conversely , these smaller vehicles may have more difficulty meeting the more aggressive SFTP requirements than vehicles with larger and more powerful engines. Additionally , the ability to meet the SFTP emission requirements can also be impacted b y the path taken to meet the FTP requirements (e.g., larger volume catal ys ts for US06 emissions control vs. smaller catal ys ts for improved FTP cold

- start emissions control). Throughout the following discussion, we address how these factors, individually and in interaction with each other, affect the feasibility of the final program.
a. FTP NMOG+NO X Standards The Tier 3 emission requirements include stringent NMOG+NO X standards on the FTP that will require new vehicle hardware in order to achieve the 30 mg/mi f leet average level in MY 2025. The ty pe of new hardware that will be required will vary depending on the specific application and emission challenges. Smaller vehicles with corresponding smaller engines will generall y need less new hardware while larger v ehicles may need additional hardware and improvements beyond what will be needed for the smaller vehicles. While some vehicles, especiall y larger light trucks, may

face higher costs in meeting the standards, it is important to remember that not every

vehi cle needs to meet the standard. The program has been structured to provide higher emission standard “bins” (see Table IV

- 1 above) to which manufacturers may

certify more challenged vehicles, so long as these vehicles are offset with vehicles certified in lower emission bins such that the fleet

- wide average meets the standard s . We believe that the availability of the less

- stringent bins will allow for the balancing of feasib ility and cost considerations of compliance strategies for all vehicles. In the T ier 2 program, manufacturers took advantage of this flexibility , especiall y in the earl y ye ars of the program. Then, as technologies improved and/or became less expensive and the need for averaging diminished, manufacturers began certifying all or most of their fleets to the average bin (Tier 2 Bin 5). We anticipate that manufacturers will follow a similar trend with the Tier 3 standards, rel yi ng on fleet averaging more significantly in the transitional years but certifying increasing numbers of their veh icles to the final fleet average standard of 30 mg/mi in the later ye ars of the program. In order to assess the technical feasibility of a 30 mg/mi NMOG+NO X national fleet average FTP standard, EPA conducted two supporting anal ys es. The initial analy s es performed were of the current Tier 2 and LEV II fleets. This provided a baseline for the current federal fleet emissions performance, as well as the emissions performance of the California LEV II fleet. The second consideration was a modal analy sis of ty pical vehicle emissions under certain operating conditions. In this way

EPA determined the specific emissions performance challenges that vehicle manufacturers will face in meeting the lower fleet averagePage 115 of 529

emission standards. Each of these consideratio ns is described in greater detail below. The current Tier 2 federal fleet is certified to an average of Tier 2 Bin 5, equivalent to 160 mg/mi NMOG+NO X . 258 As an example, f or MY 2009 when the Tier 2 program was full y implemented across all vehicle types , 92 percent of LDVs and LDT1s were certified to Tier 2 Bin 5 and 91 percent of LDT2s through LDT4s were certified to Tier 2 Bin 5. This trend has generally continued through MY 2013 as the most recent certification results indicate that manufacturers are continuing to certify primarily to Tier 2 Bin 5 standards for the federal fleet however there has been a shift to more certifications using the cleaner bins as discussed in the RIA. This is not an unexpected result as there is no motivation prior to implementation of the Tier 3 rulemaking for vehicle manufacturers to produce a federal fleet that over

complies with respect to the existing Tier 2 standards. By comparison, in the California fleet where compliance with the declining fleet average NMOG requirement and the “PZEV” program requires manufacturers to certify vehicles to cleaner levels, onl y 30 percent of the LDVs and LDT1s are certified to Tier 2 Bin 5 and 60 percent are certified to cleaner bins such as Tier 2 Bin 3 and 4 . The situation regarding the truck fleet in California is similarly stratified, with 37 percent of the LDT2s through LDT4s being certified to Tier 2 Bin 5 and 55 percent being certified to the cleaner Tier 2 Bin 3 and 4 . In man y cases identical vehicles are being certified to a lower standard in California and a higher standard federall y simply because there is no incentive to over perform to the federal standards . We note that vehicles certified to a lower standard in California are operated on gasoline with an average sulfur content of 10 ppm and thereb y are able to maintain their emissions performance in

- use. Based on these patterns of federal and California certification, EPA believes that much of the existing Tier 2 fleet could currentl y be certified to a lower federal fleet average immediatel y, with no significant feasibility concerns, if lower sulfur gasoline were made available nationwide. Regardless of the Tier 2 bin standards at which manufacturers choose to certify their vehicles, actual measured emissions performance of the se vehicles is ty picall y well below the numerical standards. This difference is referred to as “compliance margin” and is a result of manufacturers’ efforts to address all the sources of variability , including:

 Test

- to
- test variability (within one test site and lab

- to
- lab)

 Build variation expectations

258 The Tier 2 program does not combine NMOG and NO X emissions into one fleet

- average standard. The fleet

- average standard in that program is for NO X emissions alone. The NO X fleet

average requirement of .07 gm/mi is the same level as th e Bin 5 NO X standard.Page 116 of 529  Manufacturing tolerances and stack

- up

 Vehicle operation (for example: driving habits, ambient temperature, etc.)

 Fuel composition

 The effects of fuel sulfur on exhaust cataly sts and oxygen sensors

 The eff

ects of other fuel components, including ethanol and gasoline additives

 Oil consumption

 The impact of oil additives and oil ash on exhaust catal ys ts and ox ygen sensors For MY 2009 thru MY 2013 , the compliance margin for a Tier 2 Bin 5 vehicle averaged app roximately 60 percent. In other words, actual vehicle emissions performance was on average about 40 percent of a 160 mg/mi NMOG+NO X standard, or about 64 mg/mi. By comparison, for California

- certified vehicles, the average Super Ultra Low Emission Vehicl e (SULEV) compliance margin was somewhat less for the more stringent standards, approximately 50 percent. We believe that the recent California experience is a likely indicator of compliance margins that manufacturers will design for in order to comply wi th the Tier 3 FTP standards. Thus, a ty pical Tier 2 Bin 5 vehicle, performing at 40 percent of the current standard (i.e., at about 64 mg/mi) will need improvements sufficient to reach about 15 mg/mi (50 percent of a 30 mg/mi standard). To understand ho w the several currently

- used technologies described below could be used b y manufacturers to reach the stringent Tier 3

- NMOG+NO X standards, it is helpful to consider emissions formation in common modes of operation for gasoline engines, or modal anal ys is. 259 The primary challenge faced by manufacturers for producing Tier 3 compliant light

- dut y gasoline vehicle powertrains will be keeping warmed

- up running emissions at effectivel y zero emissions levels while reduc ing the emissions during cold

- start operation which, based on modal anal ys is of a gasoline

- powered vehicle being operated on the FTP cycle, occurs during about the first 50 seconds after engine start. Thus, we believe that to comply

with the Tier 3 FTP standards, manufacturers will focus on effective control of these cold

- start emissions while maintaining zero running emissions; this is only possible when sulfur levels in the fuel do not degrade catal ys t performance

.

259 A mo dal analysis provides a second

- by

- second view of the total amount of emissions over the entire cycle being considered.Page 117 of 529

As discussed below, light

- duty manufacturers are already applying several technologie s capable of significant reductions in these cold start emissions to vehicles currentl y on the road. During the anal ys is of current vehicles certified to the cleanest emission levels (Tier 2 Bin 2 and LEV II SULEV) it was noted that no large pick

- ups equ ipped with their application specific engines were performing at the 30 mg/mi NMOG+NO X level. We believe that these applications may be the most challenging due to the fact that the design criteria required to provide the utility aspect may

have direct i mpact on their ability to implement some of the technologies described in section IV.A.5.d below. Since these vehicles represent a substantial and important part of the light

- duty fleet, EPA performed a technical feasibility study directly targeting this class of vehicles. In order to assess the technical feasibility of a 30 mg/mi FTP NMOG+NO X standard, EPA purchased a 2011 Chevrolet Silverado heav y - light

- dut y (LDT4) pickup truck with a developmental goal of modifying the truck to achieve exhaust emissio n levels in compliance with the Tier 3 Bin 30 emissions standards including a reasonable compliance margin. The truck was equipped with a 5.3L V8 with General Motors’ “Active Fuel Management” cylinder deactivation sy stem. This particular truck was chosen as an example of a Tier 3 prototy pe in part because cylinder deactivation is a key technology

for light

- truck compliance with future GHG standards and in part because it achieved very low emissions in the OEM, Tier 2

- compliant configuration (certified to Tier 2 Bin 4). A protot ype exhaust sy stem was obtained from MECA consisting of high

- cell

- densit y (900 cpsi) thin

wall (2.5 mil), high

- PGM, close

- coupled Pd

- Rh catal ys ts with an additional under

body Pd

- Rh cataly st. The total catal ys t volume was approximately 116 in 3 with a specific PGM loading of 125 g/ft 3 and approximate loading ratio of 0:80:5 (Pt:Pd:Rh). Third

- party

(non

- OEM) EMS calibration tools were used to modify the powertrain calibration in an effort to improve cataly st light

- off performance. T he final test configuration used approximately 4 degrees of timing retard and approximately

200 rpm higher idle speed relative to the OEM configuration during and immediately

following cold

- start. The exhaust cataly st sy stem and HEGO sensors were bench ag ed to an equivalent 150,000 miles using standard EPA accelerated cataly st bench

- aging procedures. The truck was tested on California LEV III E10 certification fuel at 9 ppm gasoline sulfur levels. The EPA Tier 3 protot yp e Silverado achieved NMOG+NOx emiss ions of 18 mg/mi on the 9 ppm S fuel. The NMOG+NOx emissions were approximately 60% of the Bin 30 standard and thus are consistent with meeting the Tier 3 Bin 30 exhaust emissions standard with a moderate compliance margin. The technologies used on the prototy

pe Silverado to achieve these emission levels are common approaches used today

on smaller vehicles. They do not compromise any

of the design utility of this vehicle class and are some of the same approaches we expect manufacturers to use to meet the Tier 3 Bin 30 exhaust emissions standards

.Page 118 of 529 b. SFTP NMOG+NO X Standards The increase in the stringency of the SFTP NMOG+NO X standards, specificall y across the US06 cycle, will generally only require additional focus on fuel control of the engines and diligent i mplementation of new technologies that manufacturers are already introducing or are likely to introduce in response to the current and 2017 LD GHG emission standards. These include downsized gasoline direct injection (GDI) and turbocharged engines, which may also include improvements to the engine and emission control hardware to tolerate higher combustion and exhaust temperatures expected in these future GHG

- oriented engine designs when under higher loads . The upgraded materials or components will enable manufacturers to rely less on fuel enrichment during high

- speed/high

load operation to protect components from overheating. This fuel enrichment is currentl y the source of elevated VOC, NO X , and PM emissions seen in a subset of the current Tier 2 fleet. With respect to enrichment, the primary method available to manufacturers to protect the cataly st and other exhaust components from over

- temperature conditions has been changes to the fuel/air mixture by increasing the fuel fraction , but this is no longer the only tool available to manufacturers for this purpose. With the application of electronic throttle controls, variable valve timing, exhaust gas recirculation and other exhaust temperature influencing technologies on nearly every light

- dut y vehicle, the manufacturer has the ability to sy stematically

control the operation and combustion processes of the engine to minimize or altogether avoid areas and modes of operation where thermal issues can occur. While some of these solutions could in some cases r esult in a small and temporary reduction in vehicle performance (absolute power levels), we believe that it could be an effective way to reduce NMOG+NO X emissions over the SFTP test. Additionally , some components, especiall y catal ys ts, can experience acce lerated thermal deterioration that occurs when operating at higher temperatures for more time than expected under normal operation (e.g., trailer towing, mountain grades). Some upgrades of existing vehicle emission control technology , like catal ys t substrates and washcoats may be required to limit thermal deterioration and ensure vehicle emissions compliance throughout the useful life of the vehicle. Inorder to assess the technical feasibility of a 50 mg/mi NMOG+NO X national fleet average SFTP standard, EPA conducted an anal ys is of SFTP levels of Tier 2 and LEV II vehicles. The analysis was performed on the US06 results from current Tier 2 and LEV II vehicles tested in the in

- use verification program (IUVP) by manufacturers and submitted to EPA. This an aly sis provided a baseline for the current Tier 2 and LEV II fleet emissions performance, as well as the SFTP emissions performance capability of the cleanest vehicles meeting the Tier 3 FTP standards. The anal ys is concluded that most vehicles in the IUVP testing program are already capable of meeting the composite SFTP standard of 50 mg/mi when thePage 119 of 529

Tier 3 FTP standard levels are factored into the composite calculation. With the technological improvements already underway as discussed above, we believe al l MY 2017 and later vehicles will be able to comply with the SFTP standards, either directly or through the flexibility of the averaging, banking and trading program. For further information on the anal ys is see Chapter 1 of the RIA

. c. FTP and SFTP PM Standards As described above for NMOG+NO X over the SFTP, the increase in the stringency

of the FTP and SFTP PM standards will generall y also onl y require additional focus on fuel control of the engines and attention to PM emissions during the implementation of n ew technologies like gasoline direct injection (GDI) and turbocharged engines. Some upgrades of existing vehicle emission control technology

may be required to ensure vehicle emissions performance is maintained throughout the useful life of the vehicle. These upgrades may include improvements to the engine to control wear that could result in increased PM from oil consumption and selection of GDI s ys tems that will be capable of continuing to perform optimally

even as the sy stems age. We based our conclu sions about the ability of manufacturers to meet the PM standards largely

on the PM performance of the existing fleet, both on the FTP and SFTP. In the case of FTP testing of current vehicles, data on both low and high mileage light

- dut y vehicles demonstr ate that the majority of vehicles are currently achieving levels at or below the Tier 3 FTP PM standards. The testing results can be found in Chapter 1 of the RIA . A small number of vehicles are at or just over the Tier 3 FTP PM standard at low mileage and could require calibration changes and/or catal ys t changes to meet the new standards. It is our expectation that the same calibration and catalyst changes required to address NMOG will also provide the necessary PM control. Vehicles that currentl y have higher PM emissions over the FTP or SFTP at higher mileages will likely be required to control oil consumption and combustion chamber deposits. We also analyzed PM test data results on the US06 test cycle from Tier 2 vehicles. The data show that many v ehicles are already at or below the Tier 3 standards on the US06 test cycle . Vehicles that have high PM emission rates on the US06 will likely

need to control enrichment and oil consumption , particularly later in life. As described above for SFTP NMOG+NO X control, enrichment can be more accurately

managed through available electronic engine controls. The strategies for reducing oil consumption are similar to those described above for controlling oil consumption on the FTP. However, given the higher engi ne speeds experienced on the US06 and the increase in oil consumption that can accompany this kind of operation, manufacturers will most likely focus on oil sources stemming from the piston to cylinder interface and positive crankcase ventilation (PCV).Page 120 of 529 Manufacturers have informed us that they have already

reduced or are planning to reduce the oil consumption of their engines b y improved sealing of the paths of oil into the combustion chamber and improved piston

- to
- cylinder interfaces. Auto manufacturers have stated that they are already taking or considering these actions to address issues of customer satisfaction and cost of ownership. In addition, many vehicle manufacturers acknowledge the relationship between combustion chamber deposits and PM format ion and are activel y pursuing design changes to mitigate fuel impingement within the combustion chamber and its commensurate PM effects. Both ty pes of controls are being widely applied by manufacturers today

. d. Technologies Manufacturers are Likel y to Appl y Most of the technologies expected to be applied to light

- duty vehicles to meet the stringent Tier 3 standards will address the emissions control sy stem’s ability to reduce emission during cold start while maintaining zero or near zero running emissions

. The effectiveness of current vehicle emissions control sy stems at reducing cold start emissions depends in large part on the time it takes for the catal ys t to light off, which is ty picall y defined as the catal ys t reaching a temperature of 250 ° C. In orde r to improve cataly st light

- off, we expect that manufacturers will add technologies that provide heat from combustion more readily to the cataly st or improve the catal ys t efficiency at lower temperatures. These technologies include calibration changes, cataly st platinum group metals (PGM) loading and strategy , thermal management, close

- coupled catal ys ts, and secondary air injection, all which generall y improve emission performance of all pollutants. In some cases where the catal ys t light

- off and efficienc y are not enough to address the cold start NMOG emissions, hydrocarbon adsorbers may be applied to trap hydrocarbons until such time that the catal ys t is lit off. Note that with the exception of hydrocarbon adsorbers each of these technologies addresses N MOG, NO X , and PM performance. The technologies are described in greater detail below. Additional information on these technologies can also be found in Chapter 1 of the RIA.

 Engine Control Calibration Changes

– These include changes to retard spark and/o r adjust air/fuel mixtures such that more combustion heat is created during the cold start. Control changes may include injection strategies in GDI applications, unique cold

- start variable valve timing and lift, and other available engine parameters. Eng ine calibration changes can affect NMOG, NO X and PM emissions.

 Cataly st PGM Loading

– Additional PGM loading, increased loading of other active materials, and improved dispersion of PGM and other active materials in the catal ys t provide a greater number of sites available to catal yz e emissions and addresses NMOG, NO X and PM emissions. Cataly st PGM loading, when implemented in conjunction with lowPage 121 of 529 sulfur gasoline, will effectively eliminate NO X emissions under warmed

up conditions.

 Thermal Management

– This category of technologies includes all design attributes meant to conduct the combustion heat into the catal ys t with minimal cooling. This includes insulating the exhaust piping between the engine and the catal ys t, reducing the wetted area of the exhaust path, reducing the thermal mass of the exhaust sy stem, and/or using close

- coupled cataly sts (i.e., the catal ys ts are packaged as close as possible to the engine’s cylinder head to mitigate the cooling effects of longer exhaust piping). Thermal management technologies primaril y address NMOG emissions, but also affect NO X and PM emissions **.**

 Secondary

Air Injection

– By

injecting air directly

into the exhaust stream, close to the exhaust valve, combustion can be maintained within the exhaust, creating addition al heat by which to increase the catal ys t temperature. The air/fuel mixture must be adjusted to provide a richer exhaust gas for the secondary air to be effective. There can be a NOx emissions disbenefit to use of secondary air injection since it can impa ct the ability

of ox ygen storage components (OSC) within the catal ys t to take up excess ox ygen as necessary to promote NOx reduction reactions immediately

following cold start conditions.

 Hydrocarbon Adsorber

– Traps h ydrocarbons during a cold start until the catal ys t lights off, and then releases the hydrocarbons to be converted b y the catal ys t.

 Gasoline Sulfur

– The relative effectiveness for NMOG and NO X control of the exhaust

- cataly st related technologies is constrained b y gasoline fuel sulfur levels. Thus, reduced sulfur in gasoline is an enabling technology

to achieve the standards and maintain this performance during in

- use operation. We discuss the relationship between gasoline sulfur and emissions in greater detail in Section IV.6 below and in the RIA

. Several commenters indicated that large light

- duty trucks (e.g., pickups and full

- size sport utility

vehicles (SUVs) in the LDT3 and LDT4 categories) will be the most challenging light

- duty vehicles to bring into compliance with the Tier 3 NMOG+NO X standards at the 30 mg/mi corporate average emissions level. A similar challenge was addressed when large light

- duty trucks were brought into compliance with the Tier 2 standards over the past decade. Figure IV

- 1 provides a graphical representation of the effectiveness of Tier 3 technologies for large light

duty truck applications. A compliance margin is shown in both cases. Note that the graphical representation of the effectiveness of cataly st techn ologies on NO X andPage 122 of 529

NMOG when going from Tier 2 to Tier 3 levels also includes a reduction in gasoline sulfur levels from 30 ppm to 10 ppm.Page 123 of 529

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180

Tier 2 Bin 5 LDT3/4

w/30 ppm S Gasoline Tier 3 LDT3/4 w/10 ppm S Gasoline**N M** **O G** **+ N** **O x** **E m** **i s** **s o** **i n** **s (** **m g** **/ m** **i )** **@ 1** **2 0** **, 0** **0 0** **m i** **l e** **s**

NMOG+NOx Emissons of Tier 3 LD3/T4 NMOG+NOx Emissions of Tier 2 Bin 5 LDT3/4

60% Compliance Margin

20

- 40% Compliance Margin Tier 2 Bin 5 NMOG+NOx St andard

Tier 3 NMOG+NOx Standard
**Passive HC**  **Adsorber Thermal**  **Management Secondary**  **Air Injection**  67% Emissions

Reduction **Catalyst PGM**  **Loading**

**Figure IV**  **- 1**  **: Contribution of Tier 3 Technologies to Large Light -**  **Duty Truck Compliance**  **260**

260 The technologies and levels of control in this figure are based on a combination of confidential busi ness information submitted by auto manufacturers and suppliers, public data, and EPA staff engineering judgment.Page 124 of 529 6. Impact of Gasoline Sulfur Control on the Effectiveness of the Vehicle Emission Standards Inthis section , we discuss the impact of gasoline sulfur control on the feasibility of the Tier 3 vehicle emissions standards and on the exha ust emissions of the existing in

- use vehicle fleet. Section IV .A.6.a describes the chemistry and phy sics of the impacts of gasoline sulfur compounds on exhaust cataly sts. Sections IV .A.6. b, c and d summarize research on the impacts of gasoline sulfur on v ehicles utilizing various degrees of emission control technology , with Section IV.A.6. b summarizing historical studies on the impact of gasoline sulfur on vehicle emissions, Section IV.A.6. c describing impacts on Tier 2 vehicles and the existing light

- duty vehicle fleet, and Section IV.A.6. d describing impacts on vehicles using technology

consistent with what we expect to see in the future Tier 3 vehicle fleet. Section IV.A.6. e provides EPA’s assessment of the level of gasoline sulfur control necessary for light

- dut y vehicles to comply with Tier 3 exhaust emission standards. EPA’s primary

findings are:

• Reducing gasoline sulfur content to a 10 ppm average will provide immediate and significant exhaust emissions reductions to the current, in

- use fleet of l ight

- dut y vehicles.

• Reducing gasoline sulfur content to an average of 10 ppm will enable vehicle manufacturers to certify their entire product line s of new light

duty vehicles to the final Tier 3 Bin 30 fleet average standards. Without such sulfur control it would not be possible for vehicle manufacturers to reduce emissions sufficiently below Tier 2 levels to meet the new Tier 3 standards because it would require offsetting significantly higher exhaust emissions resulting from the higher sulfur levels

. EPA has not identified an y existing or developing technolog ies that would compensate for or offset the higher exhaust emissions resulting from higher fuel sulfur levels.
a. Gasoline Sulfur Impacts on Exhaust Catalysts Modern three

- way

catal ytic exhaust s ys tems utilize platinum group metals (PGM), metal oxides and other active materials to selectivel y oxidize organic compounds and carbon monoxide in the exhaust gases. These s ys tems simultaneously

reduce NOx when air

- to
- fuel ratio control operates in a con dition of relativel y low amplitude/high frequency oscillation about the stoichiometric point. Sulfur is a well

- known cataly st poison. There is a large body of work demonstrating sulfur inhibition of the emissions control performance of PGM three

- way exhau stPage 125 of 529

catal ys t sy stems. 261 , 262 , 263 , 264 , 265 , 266 , 267 , 268 , 269 , 270 The nature of sulfur interactions with washcoat materials, active catal yt ic materials and catal ys t substrates is complex and varies with cataly st composition, exhaust gas composition and exhaust temperature. The variation of these interactions with exhaust gas composition and temperature means that the operational history of a vehicle is an important factor; continuous light

- load operation, throttle tip

- in events and enrichment under high

- load conditions can all imp act sulfur interactions with the catal ys t. Sulfur from gasoline is oxidized during spark

- ignition engine combustion primarily to SO 2 and, to a much lesser extent, SO 3 - 2 . Sulfur oxides selectively chemicall y bind (chemisorb) with, and in some cases react with, active sites and coating materials within the catal ys t, thus inhibiting the intended cataly tic reactions. Sulfur oxides inhibit pollutant catal ys is chiefl y b y selective poisoning of active PGM, ceria sites, and the alumina washcoating material (see Figure IV

- 2 ). 271 The amount of sulfur retained by an exhaust catal ys t system is primarily a function of the concentration of sulfur oxides in the incoming exhaust gases, air

- to
- fuel ratio feedback and control by

the engine management sy stem , the operating temperature of the catal ys t and the active materials and coatings used within the catal ys t. In their supplemental comments to the Tier 3 proposal, API criticized the use of emissions data generated using ga soline with sulfur content outside of the range of 10 ppm to 30 ppm within EPA and other anal ys es of the impacts of

261 Beck, D.D., Sommers, J.W., DiMaggio, C.L. (1994). Impact of sulfur on model palladium

- only catalysts under simulated three

- way operation. App lied Catalysis B: Environmental 3 , 205

- 227. 262 Beck, D.D., Sommers, J.W. (1995). Impact of sulfur on the performance of vehicle aged palladium monoliths.” Applied Catalysis B: Environmental 6 , 185

- 200. 263 Beck, D.D., Sommers, J.W., DiMaggio, C.I. (1997). Axial characterization of oxygen storage capacity in close coupled lightoff and underfloor catalytic converters and impact of sulfur. Applied Catalysis B: Environmental 11 , 273

- 290. 264 Waqif, M., Bazin, P., Saur, O. Lavalley, J.C., Blanchard, G., Touret, O. (1997), Study of ceria sulfation. Applied Catalysis B: Environmental 11 , 193

- 205. 265 Bazin, P., Saur, O. Lavalley, J.C., Blanchard, G., Visciglio, V., Touret, O. (1997). “Influence of platinum on ceria sulfation.” Applied Catalysis B: Environmental 13 , 26 5

- 274. 266 Takei, Y., Kungasa, Y., Okada, M., Tanaka, T. Fujimoto, Y. (2000). Fuel Property Requirement for Advanced Technology Engines. SAE Technical Paper 2000

- 01

- 2019. 267 Takei, Y., Kungasa, Y., Okada, M., Tanaka, T. Fujimoto, Y. (2001). “Fuel properties for advanced engines.” Automotive Engineering International 109 12 , 117

- 120. 268 Kubsh, J.E., Anthony, J.W. (2007). The Potential for Achieving Low Hydrocarbon and NO X Exhaust Emissions from Large Light

- Duty Gasoline Vehicles. SAE Technical Paper 2007

- 01

- 1 261. 269 Shen, Y., Shuai, S., Wang, J. Xiao, J. (2008). Effects of Gasoline Fuel Properties on Engine Performance. SAE Technical Paper 2008

- 01

- 0628. 270 Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel Sulfur on FTP NO X Emissions from a PZEV 4 Cylinder Application. SAE Technical Paper 2011

- 01

- 0300. 271 Heck, R.M., Farrauto, R.J. (2002). Chapter 5: Catalyst Deactivation in Catalytic Air Pollution Control, 2 nd Edition. John Wiley and Sons, Inc.Page 126 of 529

gasoline sulfur on exhaust emissions from current in

- use (Tier 2) and future (Tier 3) light

- duty vehicles. Specific examples include:

 Comp arisons of exhaust emissions at 5 ppm and 28 ppm gasoline sulfur levels within the recent EPA study of emissions from Tier 2 vehicles 272

 Comparison of exhaust emissions of a SULEV vehicle at 8 ppm and 33 ppm gasoline sulfur levels within the Takei et al. stu dy273

 Comparison of exhaust emissions of a PZEV vehicle at 3 ppm and 33 ppm gasoline sulfur levels within the Ball et al. study

. 274 The relationship between changes in gasoline sulfur content and NOx, HC, NMHC and NMOG emissions is ty pically linear

. The l inearit y of sulfur impacts on NOx, NMHC and NMOG emissions is supported by past studies with multiple fuel sulfur levels all of which compare gasoline with differing sulfur levels that are below approximately

100 ppm (e.g., CRC E

- 60 and 2001 AAM/AIAM programs as well as comments on this rulemaking submitted by MECA )

. 275 , 276 , 277 An assumption of linearit y of the effect of gasoline sulfur level on catal ys t efficiency between an y two test fuels with differing sulfur levels is reasonable given that the mass flow rate of sulfur in exhaust gas changes in proportion to its concentration in the fuel, and that the chemistry

of adsorption of sulfur on the active catal ys t sites is an approximately

- first

- order chemisorption until all active sites within a catal yst reach an equil ibrium state relative to further input of sulfur compounds

. The relative l inearity of the effect of gasoline sulfur level on NMOG and NOx emissions allows exhaust emissions results generated within EPA and other studies of gasoline sulfur at levels immediately

above or below either 10 ppm or 30 ppm to be normalized to either 10 ppm sulfur (Tier 3 gasoline) or to 30 ppm sulfur (Tier 2 gasoline, which

272 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet, EPA

- 420

- R

- 1 4

- 00 2

. 273 Takei, Y., Kungasa, Y., Okada, M., Tanaka, T. Fujimoto, Y. (2000). Fuel Property Requirement for Advanced Technology Engines. SAE Technical Paper 2000

- 01

- 2019. 274 Ball, D., Clark, D., Moser, D. (201 1). Effects of Fuel Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder Application. SAE Technical Paper 2011

- 01

- 0300. 275 Coordinating Research Council. 2003. “The Effect of Fuel Sulfur on NH 3 and Other Emissions from 2000

- 2001 Model Year Vehicles.” CRC Pr oject No. E

- 60 Final Report. Accessed on the Internet on 12/4/2013 at the following URL: http://www.crcao.com/reports/recentstudies2003/E

60%20Final%20Report.pdf

. 276 All iance of Automobile Manufacturers

. 2001

. “ AAM

- AI AM Industry Low Sulfur Test Program .” 277 Manufacturers of Emission Controls Association. 2013. “The Impact of Gasoline Fuel Sulfur on Catalytic Emission Control Systems.”Page 127 of 529

are used in the anal ys is of the impacts of the Tier 3 gasoline standards on existing in

- use vehicles and future Tier 3 vehicles. In their supplemental comments to the Tier 3 proposal, API also commented that EPA did not show the sulfur impact on exhaust emissions at intermediate sulfur levels between 10 ppm and 30 ppm . In response, based on the relative l inearity of the effect of gasoline sulfur level on NMOG and NOx emissions allowing exhaust emissions to be estimated for gasoline sulfur levels between 10 and 30 ppm, data in EPA’s anal ys is shows increases NMOG+NOx emissions (as fuel sulfur increases) that become more severe (i.e., higher percentage increase in NMOG+NOx emissions) for vehicles with extremely low 278 exhaust emission (SULEV, PZEV, LEV III, Tier 3) as described in further detail in Sections IV.A.6.d and e.

100 Å Catalytic Site Deactivated by S ulfur Poisoning Active Catalytic Site

Alumina Wa shcoat Monolith Substrate

**Figure IV**  **- 2**  **Functional schematic showing selective poisoning of active catalytic sites by sulfur compounds. Adapted from Heck and Farrauto 2002**  **. 279** 

278 Vehicles that meet the cleanest emission standards by demonstrate very low cold start NMOG and NOx emissions and zero or near

- zero running NMOG and NOx emissions. 279 Heck, R.M., Farrauto, R.J. (2002). Chapter 5: Catalyst Deactivation in Catalytic Air Pollution Control, 2 nd Edition. John Wil ey and Sons, Inc.Page 128 of 529 Selective sulfur poisoning of platinum (Pt) and rhodium (Rh) is primarily from surface

- layer chemisorp tion. Sulfur poisoning of palladium (Pd) and ceria appears to be via chemisorption combined with formation of more stable metallic sulfur compounds, e.g. PdS and Ce 2 O 2 S, present in both surface and bulk form (i.e., below the surface layer)

. 280 , 281 , 282 , 283 Ceria, zirconia and other oxygen storage components (OSC) play

an important role that is crucial to NO X reduction over Rh as the engine air

- to
- fuel ratio oscillates about the stoichiometric closed

- loop control point. 284 Ceria sulfation interferes with OSC functio nality within the catal ys t and thus can have a detrimental impact on the catal ys t’s ability to effectivel y reduce NOx emissions. Water

- gas - shift reactions are important for NO X reduction over catal ys ts combining Pd and ceria. This reaction can be blocked by sulfur poisoning and may be responsible for observations of reduced NO X activit y over Pd/ceria catal ys ts even with exposure to fairl y low levels of sulfur (equivalent to 15 ppm in gasoline). 285 , 286 Pd is also of increased importance for meeting Tier 3 standards due to its unique application in the close

- coupled

- cataly st location required for vehicles certifying to very

stringent emission standards. Close

- coupling means that the exhaust cataly st is moved as close as possible to the engine’s exhaust ports w ithin the packaging constraints of an engine compartment. This ensures that the catal ys t reaches its minimal operational, or “light

- off” , temperature as quickl y as possible after the vehicle is started. It also means, however, that the exhaust catal ys t(s ) in the close

- coupled location(s) are subject to higher exhaust temperatures during fully

- warmed up operation. Pd is required in closed

- coupled catal ys ts due to its resistance to high

- temperature thermal sintering thereby maintaining sufficient durability of the emissions control system over the useful life of a vehicle. Sulfur removal from Pd requires rich operation at higher temperatures than required for sulfur removal from other PGM catal ys ts. 286 In ad dition to its interaction with catal ys t materials, sulfur can also react with the wash

- coating itself to form alumina sulfate, which in turn can block coating pores and reduce gaseous diffusion to active materials below the coating

280 Luo, T. Gorte, R.J. (2003). A Mechanistic Study of Sulfur Poisoning of the Water

- Gas

- Shift Reaction Over Pd/Ceria.” Catalysis Letters, 85, Issues 3

- 4, pg. 139

- 146. 281 Li

- Dun, A., Quan, D.Y. (1990). “Mechanism of sulfur poisoning of supp orted Pd(Pt)/Al 2 O 3 catalysts for H 2 - O 2 reaction.” Applied Catalysis 61 , Issue 1, pg. 219

- 234. 282 Waqif, M., Bazin, P., Saur, O. Lavalley, J.C., Blanchard, G., Touret, O. “Study of ceria sulfation.” Applied Catalysis B: Environmental 11 (1997) 193

- 205. 283 Bazin, P., Saur, O. Lavalley, J.C., Blanchard, G., Visciglio, V., Touret, O. “Influence of platinum on ceria sulfation.” Applied Catalysis B: Environmental 13 (1997) 265

- 274. 284 Heck, R.M., Farrauto, R.J. (2002). Chapter 6: Automotive Catalyst in Catalytic Ai r Pollution Control, 2 nd Edition. John Wiley and Sons, Inc..

. 285 Luo, T. Gorte, R.J. (2003) A Mechanistic Study of Sulfur Poisoning of the Water

- Gas

- Shift Reaction Over Pd/Ceria. Catalysis Letters, 85 , Issues 3

- 4, pg. 139

- 146. 286 Beck, D.D., Sommers, J.W. ( 1995) Impact of sulfur on the performance of vehicle aged palladium monoliths. Applied Catalysis B: Environmental 6 , 185

- 200.Page 129 of 529

surface (see Figure IV

- 2 ). 287 This may be a significant mechanism for the observed storage of sulfur compounds at light and moderate load operation with subsequent, rapid release as sulfate particulate matter emissions when high

- load, high

temperature conditions are encountered. 288 Operating the catal ys t at a sufficientl y high temperature under net reducing conditions (e.g., air

- to
- fuel equivalence that is net fuel

- rich of stoichiometry) can effectivel y release the sulfur oxides fro m catal ys t components. Thus, regular operation at sufficiently

high temperatures at net fuel

- rich air

- to
- fuel ratios can minimize the effects of fuel sulfur levels on cataly st active materials and cataly st efficiency ; however, it cannot completely eliminate the effects of sulfur poisoning. In current vehicles, desulfurization conditions occur ty pically at high loads when there is a degree of commanded enrichment (i.e., fuel enrichment commanded by the engine management sy stem primaril y for protection of e ngine and/or exhaust sy stem components). A study of Tier 2 vehicles in the in

- use fleet recently completed b y EPA 289 shows that emission levels immediately following high speed/load operation is still a function of fuel sulfur level for the gasoline used fo llowing desulfurization. If a vehicle operates on gasoline with less than 10 ppm sulfur, exhaust emissions stabilize over repeat FTP tests at emissions near those of the first FTP that follows the high speed/load operation and catal ys t desulfurization. I f the vehicle continues to operate on higher sulfur gasoline following desulfurization, exhaust emissions creep upward until a new equilibrium exhaust emissions level is established. This suggests that lower fuel sulfur levels achieve emission benefits un achievable b y catal ys t desulfurization procedures alone. Continued operation on gasoline with a 10 ppm average sulfur content or lower is necessary after catal ys t desulfurization in order to achieve emissions reductions with the current in

- use fleet. 290 F urthermore, regular operation at the high exhaust temperatures and rich air

- to
- fuel ratios necessary for catal ys t desulfurization is not desirable and may

not be possible for future Tier 3 vehicles for several reasons:

 Thermal sintering and resultant cata ly st degradation: The temperatures necessary

to release sulfur oxides are high enough to lead to thermal degradation of the catal ys t over time via thermal sintering of active materials. Sintering reduces the surface area

287 Beck, D.D., Sommers, J.W. (1995) Impact of sulfur on the performance of vehicle aged palladium monoliths. Applied Catalysis B: Environmental 6, 185

- 200. 288 Maricq, M. M. Chace, R.E., Xu, N., Podsiadlik, D.H. (2002). The Effects of the Catalytic Converter and Fuel Sulfur Level on Motor Vehicle Particulate Matter Emissions: Gasoline Vehicles.” Environmental Science and Technology, 36 , No. 2 pg. 276

- 282. 289 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet, EPA

- 420

- R

- 14

- 002. 290 See Preamble Section IV.A.6.c and Chapter 1 of the RIA (Section 1.2.3.2) for more details on this study and its r esults.Page 130 of 529 available to participate in react ions and thus reduces the overall effectiveness of the catalyst.

 Operational conditions: It is not alway s possible to maintain fuel

rich operational conditions and exhaust catal ys t temperatures that are high enough for sulfur removal because of cold weather, idle conditions and light

- load operation.

 In creased emissions: In order to achieve greater emission reductions across a fuller range of in

- use driving conditions, vehicle manufacturers’ use of commanded enrichment , which has been beneficial for sulf

ur removal , will be greatl y reduced or eliminated under Tier 3. Additionally , the fuel

- rich air

- to
- fuel ratios necessary for sulfur removal from active catal yt ic surfaces would result in increased PM, NMOG, CO and air toxic emissions, particularl y at the high

- temperature, high load conditions (e.g., US06 or comparable) necessary

for sulfur removal. Previously used levels of commanded enrichment (e.g., under Tier 2) would interfere with the strategies necessary

to comply

with more stringent Tier 3 SFTP exh aust emissions standards. There are also additional provisions within the Tier 3 standards that further restrict the use of US06 and off

- cycle commanded enrichment in an effort to reduce high

- load and off

- cycle PM, NMOG, CO and air toxic emissions. 291

 Expec ted changes to engine performance necessary to reduce fuel consumption and greenhouse gas emissions will improve the thermal efficiency of engines and may

result in reduced exhaust temperatures. b. Previous Studies of Gasoline Sulfur Impacts This section summ arizes studies to provide historical context regarding what is known about the direct impacts of gasoline sulfur on vehicle exhaust emissions. Reducing fuel sulfur levels has been the primary regulatory

mechanism EPA has used to minimize sulfur contaminati on of exhaust catal ys ts and to ensure optimum emissions performance over the useful life of a vehicle. The impact of gasoline sulfur on exhaust catal ys t sy stems has become even more important as vehicle emission standards have become more stringent. Stu dies have suggested a progressive increase in cataly st sensitivity to sulfur when standards increase in stringency

and emissions levels decrease. Emission standards under the programs

291 S ee §86.1811

- 17 (LD) within the Tier 3 regulations. Tier 3 restrictions to commanded enrichment are also discussed in further detail within section IV.A.4.c of this preamble.Page 131 of 529

that preceded the Tier 2 program (Tier 0, Tier 1 , and National LEV, or NLEV) were high enough that the impact of sulfur was considered of little importance. The Tier 2 program recognized the importance of sulfur and reduced the sulfur levels in the fuel from around 300 ppm to 30 ppm in conjunction with the new emission stand ards. 292 At that time, very little work had been done to evaluate the effect of further reductions in fuel sulfur, especially on in

- use vehicles that may have some degree of catal ys t deterioration due to real

- world operation or on vehicles with extremely lo w tailpipe emissions as described earlier

. In 2005, EPA and several automakers jointly conducted a research program, the Mobile Source Air Toxics (MSAT) Study that examined the effects of sulfur and other gasoline properties such as benzene and volatility on emissions from a fleet of nine Tier 2 compliant vehicles. 293 The study found significant reductions in NO X , CO and total hydrocarbons (HC) when the vehicles were tested on low sulfur fuel, relative to 32 ppm fuel. In particular, the study found a 48 pe rcent increase in NO X over the FTP when gasoline sulfur was increased from 6 ppm to 32 ppm. Given the preparatory

procedures related to catal yst clean

- out and loading used by these studies, these results may represent a “best case” scenario relative to wh at would be expected under more ty pical driving conditions. Nonetheless, these data suggested the effect of in

- use sulfur loading was largel y reversible for Tier 2 vehicles, and that there were likel y to be significant emission reductions possible with further reductions in gasoline sulfur level. More recentl y, EPA completed a comprehensive study on the effects of gasoline sulfur on the exhaust emissions of Tier 2 vehicles at low to moderate mileage levels. 294 Further details of this study are summarized i n Section IV.A.6.c of this preamble. In the NPRM, we summarized the limited data available regarding the impact of gasoline sulfur on the near

- zero exhaust emission vehicle technologies that will be necessary

for Tier 3 compl iance. Vehicles certified to California LEV II SU LEV and PZEV standards and f ederal Tier 2 Bin 2 standards achieve levels of exhaust emissions control consistent with the levels of control that will be necessary for Tier 3 compliance. While these vehicle s represent only a relatively

small subset (e.g., ty picall y small light

- duty

vehicles and light

- duty

trucks with limited GVWR or towing utility) of the broad range of vehicles that will need to comply with Tier 3 standards as part of a fleet

- wide average, data on these vehicles provide an

292 Tier 2 Regulatory Impact Analysis , EPA 420

- R

- 99

- 023, December 22, 1999, last accessed on the Internet on 12/04/2013 at the following URL: http://epa.gov/tier2 293 Chapter 6 of the Regulatory Impact Analysis for the Control of Hazardous Air Pollutants from Mobile Sources Final Rule, EPA 420

- R

- 07

- 002 , February 2007, last ac cessed on the Internet on 12/04/2013 at the following URL: http://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1004LNN.PDF

. 294 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet, EPA

- 420

- R

- 1 4

- 00 2

.Page 132 of 529

opportunity

to study the impact of gasoline sulfur on near

- zero exhaust emission technologies and is generally representative of technology that are expected to be used with mid

- size and smaller light

- dut y vehicles for Ti er 3 compliance . Vehicle testing b y To yota (Takei et al.) of LEV I, LEV II ULEV and protot ype SULEV vehicles showed larger percentage increases in NO X and HC emissions for SULEV vehicles as gasoline sulfur increased from 8 ppm to 30 ppm, as compared to other LEV vehicles they

tested

. 295 Ball et al. of Umicore Autocat USA, Inc. studied the impact of gasoline fuel sulfur levels of 3 ppm and 33 ppm on the emissions of a 2009 Chevrolet Malibu PZEV

. 296 Umicore’s testing of the Malibu PZEV vehicle showed a prono unced and progressive trend of increasing NO X emissions (referred to as “NO X creep”) when switching from a 3 ppm sulfur gasoline to repeated, back

to
- back FTP tests using 33 ppm sulfur gasoline. The PZEV Chevrolet Malibu, after being aged to an equivalent of 150,000 miles, demonstrated emissions at a level consistent with the Tier 3 Bin 30 NMOG+NO X standards when operated on 3 ppm sulfur fuel and for at least one FTP test after switching to 33 ppm certification fuel. Following operation over 2 FTP cycles o n 33 ppm sulfur fuel, NO X emissions alone were more than double the Tier 3 30 mg/mi NMOG+NO X standard. 270 This represents a 70% NO X increase between 3 ppm sulfur and 33 ppm sulfur gasolines, approximately

2

- 3 times of what has been previously reported for similar changes in fuel sulfur level for Tier 2 and older vehicles. 297 , 298 Both the Umicore and Toyota studies suggest that the emissions from vehicles using near

- zero exhaust emissions control technology simi lar to what is expected for compliance with the Tier 3 standards are more sensitive to changes in gasoline sulfur content at low (sub

- 30 ppm) sulfur concentrations than technology used to meet the higher Federal Tier 2 and California LEV II standards. T he Umicore and To yot a studies clearl y indicate that a progressive increase in catalyst sensitivity

to sulfur continue s as exhaust emissions decrease from levels required by f ederal Tier 2 and California LEV II emissions standards to the lower levels required by Tier 3 emissions standards. In addition, although vehicles with Tier 2 technology

have somewhat less sulfur sensitivity compared to future Tier 3 vehicles , there is still significant opportunity for further emissions reductions from the existing in

- us e fleet by reducing gasoline sulfur content from 30 ppm to 10 ppm. The results of recent testing demonstrating the potential for in

- use emissions reductions from further gasoline sulfur control are summarized in S ection IV.A.6.c.

295 Takei, Y., Kungasa, Y ., Okada, M., Tanaka, T. Fujimoto, Y. (2000). Fuel Property Requirement for Advanced Technology Engines. SAE Technical Paper 2000

- 01

- 2019. 296 Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder Applicat ion. SAE Technical Paper 2011

- 01

- 0300. 297 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

- 420

- R

- 1 4

- 00 2. 298 Shapiro, E. (2009). National Clean Gasoline

– An Investigation of Costs and Benefits

. Published by the Alliance of Automobile Manufacturers.Page 133 of 529

Recent data on the impac t of gasoline sulfur on vehicles with exhaust emission control technologies that we expect to be used with Tier 3 vehicles is summarized in Sections IV .A.6.d and e

. c. EPA Testing of Gasoline Sulfur Effects on Tier 2 Vehicles and the In

Use Fleet Both the MSA T 299 and Umicore 300 studies showed the emission reduction potential of lower sulfur fuel on Tier 2 and later technology vehicles over the FTP cycle. However, assessing the potential for reduction on the in

- use fleet requires understanding how sulfur exposure over time impacts emissions, and what the state of catal ys t sulfur loading is for the ty pical vehicle in the field. In response to these data needs, EPA conducted a new study to assess the emission reductions expected from the in

- use Tier 2 fleet with a r eduction in fuel sulfur level from current levels

. 301 Itwas designed to take into consideration what was known from prior studies on sulfur build

- up in catal ys ts over time and the effect of periodic regeneration events that may result from higher speed and load operation over the course of day

- to
- day

driving. The study sample described in this analy sis consisted of 93 cars and light trucks recruited from owners in southeast Michigan, covering model ye ars 2007

- 9 with approximately

20,000

- 40,000 odometer mi les. 302 The makes and models targeted for recruitment were chosen to be representative of high sales vehicles covering a range of ty

pes and sizes. Test fuels were two non

- ethanol gasolines with properties t ypical of certification test fuel, one at a sulfur level of 5 ppm and the other at 28 ppm. All emissions data was collected using the FTP cycle at a nominal temperature of 75 °F. Using the 28 ppm test fuel, emissions data were collected from vehicles in their as

- received state as well as following a high

- speed/load “clean

- out” procedure consisting of two back

- to
- back US06 cycles intended to reduce sulfur loading in the catal ys t. A statistical analy sis of this data showed highl y significant reductions in

299 Chapter 6 of the Regulatory Impact Analysis for the Control of Hazardous Air Pollutants from Mobile Sources Final Rule, EPA 420

- R

- 07

- 002, February 2007, last accessed on the Internet on 12/04/2013 at the follow ing URL: http://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1004LNN.PDF 300 Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder Application. SAE Technical Paper 2011

- 01

- 0300 301 The Effects of Ultra

- Lo w Sulfur Gas oline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

- 420

- R

- 1 4

- 00 2. 302 The NPRM modeling was based on analysis of 81 passenger cars and trucks. Since the NPRM, twelve additional Tier 2 vehicles were tested and included in the statistical analysi s described in the docketed final report, examining the effect of sulfur on emissions from Tier 2 vehicles. The analysis based on the complete set of 93 Tier 2 vehicles is reflected in the results presented in this section and the emissions modeling for F RM.Page 134 of 529

several pollutants including NO X and h ydrocarbons, demonstrating that sulfur loadings have a large effect on exhaust catal ys t performance, and that Tier 2 vehicles can achieve significant reductions based on removing, at least in part, the negative impact of the sulfur loading on catal ys t efficiency ( Table IV

- 6 ). For example, Bag 2 NO X emissions dropped 31 percent between the pre

- and post

cleanout tests on 28 ppm fuel.

**Table IV**  **- 6**  **Average Clean -**  **out Effect on I n**  **- use Emissions Using 28 ppm Test**  **Fuel a**  NO X (p

- value) THC

(p

- value) CO

(p

- value) NMHC

(p

- value) CH 4

(p

- value) PM

(p

- value) Bag 1

– – 6.0% (0.0151) – – 15.4% (< 0.0001) Bag 2 31.4%

(0.0003) 14.9%

(0.0118) – 18.7%

(0.0131) 14.4%

(0.0019) – Bag 3 35.4%

(<0.0001) 20.4%

(<0.0001) 21.5%

(0.0001) 27.7%

(<0.0001) 10.3%

(<0.0001) 24.5%

(<0.0001) FTP Composite 11.4%

(0.0002) 3.8%

(0.0249) 6.8%

(0.0107) 3.5%

(0.0498) 6.0%

(0.0011) 13.7%

(<0.0001) Bag 1

– Bag 3

– – 7.2% (0.0656) – – –

a The clean

- out effect is not significant at α = 0.10 when no reduction estimate is provided.Page 135 of 529 To assess the impact of lower sulfur fuel on in

- use emissions, further testing was conducted on a representative subset of vehicles on 28 ppm and 5 ppm fuel with accumulated mileage. A f irst step in this portion of the study was to assess the differences in the effectiveness of the clean

- out procedure under different fuel sulfur levels. Table IV

- 7 presents a comparison of emissions immediat ely following (<50 miles) the clean

- out procedures at the low vs. high sulfur level. These results show significant emission reductions for the 5 ppm fuel relative to the 28 ppm fuel immediately after this clean

- out; for example, Bag 2 NO X emissions were 34 percent lower on the 5 ppm fuel vs. the 28 ppm fuel. This indicates that the catal ys t is not fully

desulfurized, even after a clean out procedure, as long as there is sulfur in the fuel. This further indicates that current sulfur levels in gasoline co ntinue to have a long

- term, adverse effect on exhaust emissions control that is not fully removed by

intermittent clean

- out procedures that can occur in day

- to
- day operation of a vehicle and demonstrates that lowering sulfur levels to 10 ppm on average wil l significantly reduce the effects of sulfur impairment on emissions control technology

. **Table IV**  **- 7**  **: Percent Reduction in Exhaust Emissions When Going from 28 ppm to 5 ppm Sulfur Gasoline for the First Three**  **Repeat FTP Tests**

**Immediately Following Clean -**  **out** NO X (p

- value) THC

(p

- value) CO

(p

- value) NMHC

(p

- value) CH 4

(p

- value) PM a Bag 1 5.3%

(0.0513) 6.8%

(0.0053) 6.2%

(0.0083) 5.7%

(0.0276) 14.0%

(<0.0001) – Bag 2 34.4%

(0.0036) 33.9%

(<0.0001) – a 26.4%

( 0.0420) 49.4%

(<0.0001) – Bag 3 42.5%

(<0.0001) 36.9%

(<0.0001) 14.7%

(0.0041) 51.7%

(<0.0001) 28.5%

(<0.0001) – FTP Composite 15.0%

(0.0002) 13.3%

(<0.0001) 8.5%

(0.0050) 10.9%

(0.0012) 23.6%

(<0.0001) – Bag 1

– Bag 3

– a

– a

– a

– a

– a

– **a** Sulfur le vel not significant at α = 0.10.

To assess the overall in

- use reduction between high and low sulfur fuel, a mixed model analysis of all data as a function of fuel sulfur level and miles driven after cleanout was performed. This anal ys is found highl y significant reductions fo r several pollutants, as shown in Table IV

- 8 . Reductions for Bag 2 NO X were particularl y high, estimated at 52 percent between 28 ppm and 5 ppm overall. For all pollutants, the model fitting did not find a significant miles

- by

- sulfur interaction, suggesting the relative differences were not dependent on miles driven after clean

out.Page 136 of 529

**Table IV**  **- 8**  **Summary of Mixed Model Results for Emission Reductions When**

**Going from 28 ppm to 5 ppm Sulfur Gasoline**  NO X (p

- value) THC

(p

- value) CO

(p

- value) NMHC

(p

- value) CH 4

(p

- value) NO X+NMOG

(p

- value) PM a Bag 1 7.1%

(0.0216) 9.2%

(0.0002) 6.7%

(0.0131) 8.1%

(0.0017) 16.6%

(< 0.0001) N/A

– Bag 2 51.9%

(< 0.0001) 43.3%

(< 0.000 1) – a 42.7%

(0.0003) 51.8%

(< 0.0001) N/A

– Bag 3 47.8%

(< 0.0001) 40.2%

(< 0.0001) 15.9%

(0.0003) 54.7%

(< 0.0001) 29.2%

(< 0.0001) N/A

– FTP Composite 14.1%

(0.0008) 15.3%

(< 0.0001) 9.5%

(< 0.0001) 12.4%

(< 0.0001) 29.3%

(< 0.0001) 14.4%

(<.0001) – Bag 1

– Bag 3

– a 5.9% (0.0074) – a

– b

– b N/A

–

**a** Sulfur level not significant at α = 0.10. b Inconclusive because the mixed model did not converge.

Major findings from this study include:

 Largel y reversible sulfur loading is occurring in the in

- use fleet of Tier 2 vehicles and has a measureable effect on emissions of NO X , hydrocarbons, and other pollutants of interest.

 The effectiveness of high speed/load procedures in restoring catal ys t efficiency is limited when operating on highe r sulfur fuel.

 Reducing fuel sulfur levels from current levels to levels in the range of the Tier 3 gasoline sulfur standards is expected to achieve significant reductions in emissions of NO X , hydrocarbons, and other pollutants of interest in the current i n - use fleet.

 Assuming that the emissions impacts vs. gasoline sulfur content are approximately

linear , changing gasoline sulfur content from 30 ppm to 10 ppm would result in NMOG+NO x emissions decreasing from 52 mg/mi to 45 mg/mi, respectivel y (a 13% decre ase ), and NO x emissions decreasing from 19 mg/mi to 16 mg/mi, respectively (a 16% decrease ), for the vehicles in the study

.Page 137 of 529 T o evaluate the robustness of the statistical anal ys es assessing the overall in

use emissions reduction between operation on high and low sulfur fuel ( Table IV

- 8 ) , a series of sensitivity anal ys es were performed to assess the impacts on study results of measurements from low

- emitting vehicles and influential vehicles , as documented in detail in the report
. 303 The sensitivity anal ys es showed that the magnitude and the statistical significance of the results were not impacted and thus demonstrated that the results are statistically robust. We also subjected the design of the experiment and data anal ys i s to a contractor
- led independent peer

- review process in accordance with EPA’s peer review guidance. The results of the peer review 304 , 305 largely

supported the study

design, statistical anal ys es, and the conclusions from the program and raised only minor con cerns that have not changed the overall conclusions and have subsequently been addressed in the final version of the report

. 306 O verall, the reductions found in this study are in agreement with other low sulfur studies conducted on Tier 2 vehicles, namely MSAT and Umicore studies mentioned above, in terms of the magnitude of NO X and HC reductions when switching from 28 ppm to 5 ppm fuel

. 307 We have reviewed the results of the emission effects study performed b y SGS , which was included with API’s comments on the Tier 3 proposal , and have concluded that these results are also consistent with the findings of EPA’s Tier 2 in

- use study , specificall y that exhaust emissions performance is sensitive to fuel sulfur level. 308 The SGS study also suggests that negative ef

fects of exposure to a somewhat higher sulfur level (80 ppm in this case) are largely reversible for Tier 2 vehicles, meaning that reducing fuel sulfur levels nationwide will bring significant immediate benefits b y reducing emissions of the existing fleet. For further details regarding the Tier 2 In

- Use Gasoline Sulfur Effects Study , see the final report

. 309

303 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

- 420

- R

- 1 4

- 00 2. 304 Peer Review

of the Effects of Fuel Sulfur Level on Emissions from the In

- Use Tier 2 Vehicles , EPA

- HQ

- OAR

- 2011

- 0135

- 1847

. 305 EPA In

- Us e Sulfur Report

– Response to Peer

- Review Comments, EPA

- HQ

- OAR

- 2011

- 0135

- 1848. 306 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

- 420

- R

- 1 4

- 00 2. 307 Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel Sulf ur on FTP NO X Emissions from a PZEV 4 Cylinder Application. SAE Technical Paper 2011

- 01

- 0300. 308 American Petroleum Institute. 2013. Supplemental Comments of the American Petroleum Institute. Available in the docket for this final rule, docket no. EPA

- HQ

- O AR

- 2011

- 0135 309 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet, EPA

- 420

- R

- 1 4

- 00 2

. 310 The make and model of the tested vehicles are Honda Crosstour, Chevrolet Malibu, Chevrolet Silverado, Ford Focus and Subaru Outback.Page 138 of 529 As a follow

- on phase to the Tier 2 in

- use study , EPA analyzed five vehicles 310 certified to Tier 2 Bin 4, LEV II ULEV and LEV II SULEV exhaust emissions standards to assess the gasoline sulfur sensitivity of Tier 2 and California LEV II vehicles with emission levels approaching or comparable to the Tier 3 standards. The anal ys is found that these low

- emitting Tier 2 vehicles showed similar or greater sensitivity to fuel sulfur levels compared to the original Tier 2 test fleet

– for example, a 24 percent reduction in FTP composite NOx emissions when sulfur is reduced from 28 ppm to 5 ppm. 311 Test results d iscussed below in section IV .A.6.d also confirm that there is significantl y increased sensitivity of exhaust emissions to gasoline sulfur as vehicle technologies advance towards exhaust emissions approaching near

- zero emissions (e.g., Tier 3 Bin 50 and low er). The impact of fuel sulfur on vehicles with exhaust emission control technologies that we expect to be used with Tier 3 vehicles is summarized in the next two sections (Preamble IV.A.6.d and e). EPA believes that the studies by EPA and others describ ed in this section strongl y support our conclusion that reducing gasoline sulfur content to a 10 ppm average will result in significant exhaust emissions reductions from the current in

use fleet. However, some commenters have expressed concerns about the relevance and appropriateness of the data, as well as the conclusions drawn from them. The Summary and Anal ys is of Comments document, available in the docket for this rulemaking, provides our responses to those comments. d. Testing of Gasoline Sulfur Effects on Vehicles with Tier 3/LEV III Technology The Tier 3 fleet average exhaust emissions standards of 30 mg/mi NMOG+NOx will require large reductions of emissions across a broad range of light

- duty vehicles and trucks with differing degrees of utility . Prev ious studies of sulfur impacts on extremely low exhaust emission vehicles (e.g., To yot a, Umicore) were limited to mid

- size or smaller light

- dut y vehicles. There are currentl y no LDT3 or an y LDT4 vehicles certified at or below Federal Tier 2 Bin 3 or to th e California LEV II SULEV exhaust emission standards with the exception of a single h ybrid electric SUV . At the time of the Tier 3 NPRM, EPA was not aware of any existing data demonstrating the impact of changes in gasoline sulfur content on larger vehicl es with technology comparable to what would be expected for compliance with Tier 3 exhaust emission standards. In their supplemental comments to the Tier 3 proposal , API criticized EPA’s reliance on emissions data from older vehicles that were not conside red to be examples of future Tier

- 3

- like

310 The make and model of the tested vehicles are Honda Crosstour, Chevrolet Malibu, Chevrolet Silverado, Ford Focus and Subaru Outback. 311 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet , EPA

- 420

- R

- 1 4

- 00 2.Page 139 of 529

vehicles. In order to further evaluate this issue, the Agency initiated a test program at EPA’s National Vehicle and Fuel Emissions L aboratory (NVFEL) in Ann Arbor, Michigan. The Agency

obtained a heavy

- light

- duty truck and applied changes to the design and layout of the exhaust cataly st sy stem and to the calibration of the engine management s ys tem consistent with our engineering anal ys es of technology necessary to meet Tier 3 Bin 30 emissions with a 20 to 40% compl iance margin at 150,000 miles. EPA also requested that Umicore loan the Agency the vehicle tested in their study

to undergo further evaluation of gasoline sulfur impacts on exhaust emissions. In addition, Ford Motor Company completed testing of fuel sulf ur effects on a Tier 3/LEV III developmental heav y - light

- dut y truck and submitted a summary report of their findings as part of their supplemental comments to the Tier 3 NPRM. The results of these three test programs are summarized below.

i. Ford Motor Com

pany Tier 3 Sulfur Test Program Ford Motor Compan y recently completed testing of a heav y - light

- dut y truck (i.e., between 6000 and 8500 pounds GVWR) under development to meet the Tier 3 Bin 50 standards on two different fuel sulfur levels and submitted the resulting data to EPA as part of its supplemental comments. 312 , 313 The test results from this vehicle are particularl y i mportant when considering the following factors:

 These are the first detailed emissions data submitted by a vehicle manufacturer to the Agency demonstrating emissions of a heavy

light

- duty

- truck consistent with Tier 3 Bin 50 or lower emissions levels.

 The truck tested uses a version of Ford’s 2.0 L GTDI engine, an engine with high BMEP (approximately 23

- bar) that can allow significant engi ne displacement downsizing while maintaining the truck’s utility . This is a key enabling GHG reduction strategy anal yz ed b y EPA in the 2017

- 2025 GHG Final Rule. 314

312 Ford Motor Company. 2013. “Quality Changes Needed to Meet Tier 3 Emission Standards and Future Greenhouse Gas Requirements.” Attachment 2: “Tier 3 Sulfur Test Program

– Ford Motor Com pany Summary Report.” Available within EPA Docket for this final rule, EPA

- HQ

- 2011

- 0135. 313 Dominic DiCicco, Ford Motor Company. 2013. “Additional data as requested. RE: Ford Supplemental Comments on T ier 3.” Available within EPA Docket for this final rule, EPA

- HQ

2011

- 0135. 314 See 77 FR 62840

- 62862, October 15, 2012; and Joint Technical Support Document: Final Rulemaking for 2017

- 2025 Light

- Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards (EPA

- 420

- R

- 12

- 901), August 2012, Chapter 3.4.1.7

- 3.4.1.8 (pages 3

- 88

– 3

- 95).Page 140 of 529  The vehicle was specifically under development by

a vehicle manufacturer with an engineerin g target of meeting Tier 3 Bin 50 and LEV III ULEV50 exhaust emissions standards

. Turbocharged, downsized engines are key technologies within Ford’s strategy to reduce GHG emissions. 315 EPA expects that trucks with configurations similar to this developmenta l Ford Explorer (downsized engines with reduced GHG emissions and very low emissions of NMOG+NOx) will become increasingl y prevalent within the timeframe of the implementation of the Tier 3 regulations. The developmental truck used close

- coupling of both catal ys t substrates and relativel y high PGM loading (150 g/ft 3 ). Ford used accelerated aging of the catal ys ts and O 2 sensors to an equivalent of 150,000 miles (the Tier 3 full useful life). The developmental hardware and engine management calibration con figuration of this truck was designed to meet federal Tier 3 Bin 50 and California LEV III ULEV50 standards of 50 mg/mi NMOG+NOx at 150,000 miles. The emissions data submitted by Ford included NOx and NMHC emissions during operation on E10 California LEV III certification fuel at two different sulfur levels, 10 ppm and 26.5 ppm. Ford did not provide NMOG emissions data but there was sufficient information for EPA to calculate NMOG emissions from the provided NMHC data using calculations from Title 40 CFR § 1066.665. The truck demonstrated average FTP NMOG+NO x emissions of 37 mg/mi on the 10 ppm E10 California LEV III fuel, emissions that are consistent with compliance with Bin 50 and ULEV50 standards with a reasonable margin of compliance (emissions at ap proximately 70% of the standard). Retesting of the same vehicle on LEV3 E10 blended 316 to 26.5 ppm S resulted in average NMOG+NOx emissions of 53 mg/mi, 6% above the Tier 3 Bin 50 standard

. Ford found a high level of statistical significance with respect to the increase of emissions with increasing fuel sulfur. A ssuming a linear effect of sulfur on emissions performance , NMOG+NOx emissions would be approximately 56 mg/mi at 30 ppm sulfur, which is approximately 12% above the Bin 50 exhaust emissions standard. This also represents an increase in NMOG+NOx emissions of 53% with an approximate doubling of NOx emissions and a 13 % increase in NMOG for 30 ppm sulfur gasoline vs. 10 ppm sulfur gasoline.

315 Ford Motor Company, 2012. “Sustainability 2011/2012

– Improving Fuel Economy.” Accessed on the Internet on 11/21/2013 at: http://corporate.ford.com/microsites/sustainability

- report
- 2011

- 12/environment

- products

- plan

- economy . Available within EPA Docket for this final rule, EPA

- HQ

20 11

- 0135. 316 Ford used the same tert

- butyl sulfide fuel sulfur additives used within the EPA testing in IV.A.6.c and d.Page 141 of 529 The advanced technology Ford truck , which was shown to be cap able of complying with the Tier 3 Bin 50 standard with a reasonable margin of compliance on 10 ppm sulfur gasoline, in effect reverted to approximately L EV II ULEV exhaust emissions levels when tested on higher sulfur gasoline , equivalent to the previous l evel of emissions control to which earlier models of this vehicle were certified for MY 2013. The effect of increasing gasoline sulfur levels from 10 ppm to 30 ppm 317 on this vehicle essentially negated the entire benefit of the advances in emissions contro l technology that were applied by

the vehicle manufacturer to meet developmental goals for compliance with Tier 3 standards . This clearl y indicates, for this vehicle model using technology representative of what would be expected for compliance with Tier 3 Bin 50 and post 2017 GHG standards , reducing gasoline sulfur to 10 ppm is needed for the advances in technology to achieve their intended effectiveness in reducing NMOG+NOx emissions. The advances in vehicle technology

and the reduction in gasoline sulfur clearly are both needed to achieve the emissions reductions called for b y Tier 3.

ii. EPA Re

- test of Umicore 2009 Chevrolet Malibu PZEV Ball et al. of Umicore Autocat USA, Inc. previously studied the impact of gasoline fuel sulfur levels of 3 ppm and 33 pp m on the emissions of a 2009 Chevrolet Malibu PZEV. 318 In their supplemental comments, API commented that the composition of the two test fuels outside of sulfur content was not held constant and thus the exhaust emissions differences attributed to the dif ference in gasoline sulfur levels may

have been due to other fuel property differences. For example, the 3 ppm fuel used b y Ball et al. was nonox ygenated EEE Clear test fuel (essentially , Tier 2 Federal certification gasoline except with near

- zero sulfur) while the 33 ppm fuel was an ox ygenated California Phase 2 LEV II certification fuel. Thus it was not entirely

clear if the changes in NO x emissions observed between tests with the two fuels were significantly impacted b y fuel composition variables other than gasoline sulfur content. EPA obtained the same test vehicle from Umicore for retesting at the EPA NVFEL facility using the 5 ppm and 28 ppm sulfur E0 test fuels and vehicle test procedures used in EPA gasoline sulfur effects testing on Tier 2 vehicle s (see S ection IV

. 6

. b). In EPA’s retest of the 2009 Chevrolet Malibu PZEV , when sulfur was the only difference between the test fuels, the gasoline with higher sulfur resulted in significantl y higher increases in NOx emissions with increasing fuel sulfur content than was observed in the previous testing b y Ball et al. at Umicore. Assuming

317 Emissions at 30 ppm sulfur estimated assuming approximately linear emissions effects between 10, 26.5 and 30 ppm gasoline sulfur levels. 318 Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder Application. SAE Technical Paper 2011

- 01

- 0300. Available in the docket for this final rule.Page 142 of 529

emissions impacts vs. gasoline sulfur content are approximately linear, the original data from Ball et al. would have result ed in a predicted increase in NOx emissions of approximately

40% when increasing gasoline sulfur from 10 ppm to 30 ppm. The EPA re - testing of the same vehicle that controlled for other fuel composition differences resulted in a predicted increase in NOx emissions of 93% when increasing gasoline sul fur from 10 ppm to 30 ppm, with NOx emissions approximately

doubling from 22 g/mi to 43 g/mi, with no statistically significant difference in NMOG emissions and with an increase in NMOG+NOx emissions of 56%. The approximate doubling in NOx emissions with the Malibu PZEV between 10 ppm and 30 ppm sulfur was nearl y identical to the results found during testing of the Tier 3 Bin 50 developmental Ford Explorer discussed above . The results confirm that fuel compositional differences other than sulfur may have impacted exhaust emissions results in the Ball et al. study by underreporting a substantial portion of the effect of increased sulfur on NOx emissions. When controlling for other fuel composition differences, the resultant increase in NOx exhaust emission s due to increasing gasoline sulfur was more than double that observed in the original Ball et al. study. The observed increase in NMOG+NOx emissions during EPA testing of the Malibu PZEV was also comparable to results found with the developmental Tier 3 Bin 50 Ford Explorer

. There was also a much higher increase in NOx and NMOG+NOx emissions for both the Malibu PZEV and the Tier 3 Bin 50 Explorer with increased gasoline sulfur than was observed with Tier 2 vehicles in the EPA Tier 2 in

- use study

. (See a lso Chapter 1.2.4 of the RIA)

iii. EPA Prototype Tier 3 Heavy

- light

- duty Truck Test Program EPA purchased a 2011 Chevrolet Silverado heav y - light

- dut y (LDT4) pickup truck with a developmental goal of modifying the truck to achieve exhaust emissions consistent with compliance with the Tier 3 Bin 30 emissions standards. The truck was equipped with a 5.3LV8 with General Motors’ “Active Fuel Management” cylinder deactivation s ys tem. This particular truck was chosen in part because cylinder deactivation is a key technology for light

- truck compliance with future GHG standards and in part because it achieved very low emissions in its OEM, Tier 2

- compliant configuration (certified to Tier 2 Bin 4). A prototype exhaust sy stem was obtained from MECA consisting of high

- cell

- densit y (900 cpsi) thin

- wall (2.5 mil), high

- PGM, close

- coupled Pd

- Rh cataly sts with an additional under

- body

Pd

- Rh catalyst. The total catal ys t volume was approximately 116 in 3 with a specific PGM loading of 125 g/ft 3 and approximate loading ratio of 0:80:5 (Pt:Pd:Rh). Third

- party

(non

- OEM) EMS calibration tools were used to modify the powertrain calibration in an effort to improve cataly st light

- off performance. The final test configuration used approximately 4 degrees of timing retard and appro ximately

200 rpm higher idle speed relative to the OEM configuration during and immediately

following cold

- start. The exhaust cataly st sy stem and HEGOPage 143 of 529

sensors were bench aged to an equivalent 150,000 miles using standard EPA accelerated cataly st bench

- agi ng procedures. 320 The truck was tested on California LEV III E10 certification fuel at 9 and 29 ppm gasoline sulfur levels. The EPA Tier 3 protot yp e Silverado achieved NMOG+NOx emissions of 18 mg/mi on the 9 ppm S fuel. The NMOG+NOx emissions were approxim ately 60% of the Bin 30 standard and thus are consistent with meeting the Tier 3 Bin 30 exhaust emissions standard with a moderate compliance margin. NMOG+NOx emissions increased to 29 mg/mi on the 29 ppm S fuel and one out of four tests exceeded the Bin 30 exhaust emissions standards. NMOG+NOx emissions would be at 19 mg/mi and 30 mg/mi with 10 ppm and 30 ppm gasoline sulfur, respectivel y, assuming a linear effect of sulfur on emissions performance. This represents an increase in NMOG+NOx emissions of a pproximately

55%, comparable to increases observed with both the EPA

- tested Chevrolet Malibu PZEV and the developmental Tier 3 Bin 50 Ford Explorer. The impact of increased gasoline sulfur on NMOG+NOx emissions was due to comparable increases (on a percentage basis) in both NMOG and NOx emissions. This effect of gasoline sulfur on the Prototy

pe Silverado truck’s emissions differed from the sulfur impacts observed on the developmental Ford Explorer, which primarily affected NOx emissions, and the Malibu PZ EV, where the impact was entirel y on NOx emissions.
e. Gasoline Sulfur Level Necessary for New Light

- duty Vehicles to Achieve Tier 3 Exhaust Emissions Standards Meeting Tier 3 NMOG+NOx standards will require major reductions in exhaust emissions across the entire fleet of new light

- dut y vehicles. As discussed in previous sections, the Tier 3 p rogram will require reductions in fleet average NMOG+NO x emissions of over 80 percent for the entire fleet of light

- dut y vehicles and light

- dut y trucks. This signific ant level of fleet average emission reduction will require reductions from all parts of the fleet, including vehicles models with exhaust emissions currently

at or near the level of the full y phased

- in Tier 3 FTP NMOG+NOx fleet average standard of 30 mg/mi

. Compliance with the more stringent Tier 3 fleet average standards will require vehicle manufacturers to certify a significant amount of vehicles to bin standards that are below the Bin 30 fleet average standard to offset other vehicles that are certified to bin standards that remain somewhat above the Bin 30 fleet average even after significantly reducing their emissions. At the same time, the stringency

of the Tier 3 standards will push almost all vehicle models to be close to or below the Bin 30 fleet average standard . There are onl y 2 compliance bins

320 U.S. Code of Federal Regulations, Title 40 , §86.1823

– 08 “Durability demonstration procedures for exhaust emissions.”Page 144 of 529

below Bin 30 , i.e., Bin 20 and Bin 0, available to offset emissions of vehicles certifying above Bin 30. There is also very limited ability

for vehicle manufacturers to certify vehicles below the stringe nt Tier 3 fleet average exhaust emissions standard since Bin 20 and Bin 30 standards for individual vehicle certification test groups are approaching the engineering limits of what can be achieved for vehicle s using an internal combustion engine and Bin 0 can only be achieved b y electric

- onl y vehicle operation . The result is that there is a very limited ability to offset sales of vehicles certified above the 30 mg/mi fleet average emission standard. This means in general that vehicle model s currently with higher emissions will have to achieve significant emissions reductions to minimize the gap, if an y, between their certified bin levels under Tier 3 and the Tier 3 Bin 30 fleet average standard , and vehicle model s currently at or below Bin 30 will also hav e to achieve further emissions reductions under Tier 3 to offset the vehicles that remain certified to bin standards somewhat above Bin 30 l. The end result is a need for major reductions from all ty pes of vehicles in the light

- dut y fleet, including those above as well as most vehicles that are already near , at , or below the Tier 3 Bin 30 fleet average standard

. Achieving exhaust emissions reductions of over 80% for the fleet, with major reductions across all ty pes of light

- duty

vehicles and light

- duty

truc ks , will be a major technological challenge. Vehicles already have made significant advances in controlling cold start emissions and maximizing exhaust cataly st efficiency (e.g. , improving warm

- up and catal ys t light

- off after cold starts and maintaining v ery high catal ys t efficiency

once warmed up) in order to meet Tier 2 and LEV II emissions standards. There are no “low

- hanging fruit” remaining for additional NMOG+NOx reductions from light

- dut y vehicles from a technology perspective, meaning that vehicle manufacturers cannot merely change one aspect of emissions control and thereby achieve all of the required reductions. Instead , compliance with l ight

- duty Tier 3 exhaust emissions standards will require significant improvements in all areas of emissions control

– with further improvements in fuel

- sy stem management and mixture preparation during cold start, improvements in achieving catal ys t light

- off immediately after cold start , and improved catal ys t efficiency during stabilized, fully

- warmed

- up conditio ns. Manufacturers will need further improvements in each of these areas with nearl y every vehicle in order to comply with the fleet

- average Tier 3 standards. From a technology

perspective, the most likely control strategies will involve using exhaust cataly st technologies and powertrain calibration primarily focused on reducing cold

- start emissions of NMOG, and on reducing both cold

start and warmed

- up (running) emissions of NO X . An important part of this strategy , particularl y for larger vehicles havi ng greater difficult y achieving cold

start NMOG emissions control, will be to reduce NO X emissions to near

- zero levels. This will involve controlling engine

- out NOx emissions during cold start, shortening the cold start period prior to cataly st light

- off of NOx reduction reactions , and better controlling NOx emissions once the catal ys t is fully warmedPage 145 of 529

up. This is needed to allow a sufficient NMOG compliance margin so that vehicles can meet the combined NMOG+NO X emissions standards for their full useful li fe. While significant NMOG+NOx emissions reductions can be achieved from better control of cold start NMOG emissions, there are practical engineering limits to NMOG control for larger displacement vehicles (e.g. , large light

- dut y trucks with significant payl oad and trailer towing capabilities). This is based in part on the impact on NMOG emissions of the larger engine surface

- to
- volume ratio and resultant heat conduction from the combustion chamber during warm

- up. There are also tradeoffs between some col d

- start NMOG controls and cold

- start NOx control. For example, secondary

air injection and/or leaner fueling strategies improve catal ys t light

- off for NMOG after a cold

- start but also place OSC components in an oxidation state that limits potential for NOx reduction and thus often result in higher cold

- start NOx emissions. Some applications achieve lower NMOG+NOx emissions without the use of secondary air injection by

careful calibration, changes to the catal ys t formulation and balancing of catal yst HC and NOx activity . The EPA Prototy

pe Silverado and the developmental Ford Explorer are specific examples of this approach. Because of engineering limitations with large vehicles, heav y - light

- trucks and other vehicles with significant utility , we expect many applications will need close to 100% efficiency

in NOx control under fully warmed

- up conditions and very fast light

- off of NOx reduction reactions over the exhaust catal ys t almost immediately

after cold

- start for those applications. This will require significant improvements in catal yt ic and engine

- out NOx reduction compared with Tier 2 vehicles and will be especially important for heavier vehicles due to the challenges of achieving low NMOG. These technology

improvements

- improving warm

- up and catal ys t light

- off after cold starts and maintaining very high catal ys t efficiency

- - once warmed up

– all rely on 10 ppm average sulfur fuel to achieve the very significant emissions reductions required for the fleet to achieve the Tier 3 Bin 30 fleet average emissions standard . The evidence from the test results and specific vehicle examples discussed above clearl y i ndicate that leaving the gasoline sulfur level at 30 ppm would largel y negate the benefits of key technology improvements expected to be used fo r compliance with Tier 3 exhaust emissions standards

. W ithout the lower 10 ppm gasoline sulfur content , the Tier 3 exhaust fleet average emissions standards would not be achievable across the broad range of vehicles that must achieve significant exhaust e missions reductions

. One aspect of the need for sulfur levels of 10 ppm average stems from the fact that achieving the Tier 3 emission standards will require very careful control of the exhaust chemistry

and exhaust temperatures to ensure high catal ys t e fficiency

. The impact of sulfur on OSC components in the cataly st makes this a challenge even at relativel y low (10 ppm) gasoline sulfur levels. NO X conversion by exhaustPage 146 of 529

catal ys ts is strongl y influenced b y the OSC components like ceria. Ceria sulfation may play an important role in the large degradation of NO X emission control with increased fuel sulfur levels observed in the MSAT, Umicore and EPA Tier 2 In - Use Gasoline Sulfur Effects studies and the much more severe NOx emissions degradation observed in recent test data from PZEV and protot ype/developmental Tier 3/LEV III vehicles. 321 The importance of lower sulfur gasoline is also demonstrated by the fact that vehicles certified to California SULEV are ty pically certif ied to higher bins for the federal T ier 2 program. Light

- dut y vehicles certified to CARB SULEV and federal Tier 2 Bin 2 exhaust emission standards accounted for approximately 3.1 percent and 0.4 percent, respectively , of vehicle sales for MY2009. L ight

- dut y vehicles certified to SULEV under LE V II are more t ypically certified federally to Tier 2 Bin 3, Bin 4 or Bin 5, and vehicles certified to SULEV and Tier 2 Bins 3

- 5 comprised approximately 2.5 percent of sales for MY2009. In particular, nonhy brid vehicles certified in California as SULEV are not certified to federal Tier 2 Bin 2 emissions standards even though the numeric limits for NO X and NMOG are shared between the California LEV II and federal Tier 2 programs for SULEV and Bin 2. Confidential business information shared b y the auto c ompanies indicate that the primary reason is an inability

to demonstrate compliance with SULEV/Bin 2 emission standards after vehicles have operated in

- use on gasoline with greater than 10 ppm sulfur and with exposure to the higher sulfur gasoline sold nationwide. While vehicles certified to the LE V II SULEV and Tier 2 Bin 2 standards both demonstrate compliance using certification gasoline with 15

- 40 ppm sulfur content, in

- use compliance of SULEV vehicles in California occurs after significant, sustained operation on gasoline with an average of 10 ppm sulfur and a maximum cap of 30 ppm sulfur while federall y certified vehicles under the Tier 2 program operate on gasoline with an average of 20 ppm sulfur and a maximum cap of 80 ppm sulfur. Although the SULEV and Tier 2 Bin 2 standards are numerically equivalent, the increased sulfur exposure of in

- use vehicles certified under the federal Tier 2 program results in a need for a higher emissions compliance margin to take into account the impact of in

- use gasol ine sulfur on full useful life vehicle emissions. As a result, vehicles certified to California SULEV typicall y certify to emissions standards under the federal Tier 2 program that are 1

- 2 certification bins higher (e.g., SULEV certified federall y as Tier 2 Bin 3 or Bin 4) in order to ensure in

- use compliance with emissions standards out to the full useful life of the vehicle when operating on higher

- sulfur gasoline. There are currently

no LDTs larger than LDT2 with the exception of a single h ybrid electri c SUV certified to Tier 2 Bin 2 or SULEV emissions standards.

321 Heck, R.M., Farrauto, R.J. (2002). Chapter 6: Automotive Catalyst in Catalytic Air Pollution Control, 2 nd Edition. John Wile y and Sons, Inc.Page 147 of 529

We expect that additional catal ys t technologies, for example increasing cataly st surface area (volume or substrate cell density) and/or increased PGM loading, will need to be applied to larger vehicles in order to achieve the cataly st efficiencies necessary to comply

with the Tier 3 standards , and any sulfur impact on cataly st efficiency will have a larger impact on vehicles and trucks that rel y more on very high catal ys t efficiencies in order t o achieve very low emissions. The vehicle emissions data referenced in S ection IV.A.6.d represents the onl y known data on non - hy brid vehicles spanning a range from mid

- size LDVs to heavy

- light

- trucks at the very low criteria pollutant emissions levels that will be needed to comply with the Tier 3 exhaust emissions standards. The developmental Ford Explorer, Chevrolet Malibu PZEV and EPA prototy pe Chevrolet Silverado vehicles described in section IV.A.6.c also represent a range of different technology appro aches to both criteria pollution control and GHG reduction (e.g., use of secondary air vs. emphasizing cold

- start NOx control, use of engine downsizing via turbocharging vs. cylinder deactivation for GHG control, etc.) and represent a broad range of vehicl e applications and utility (mid

- size LDV, LDT3, LDT4). All of the vehicles with Tier 3/LEV III t echnology demonstrated greater than 50% increases in NMOG+NOx emissions when increasing gasoline sulfur from 10 ppm to 30 ppm. Two of the vehicles showed a do ubling of NOx emissions when increasing gasoline sulfur from 10 ppm to 30 ppm. Both of the heav y - light

- dut y trucks with specific engineering targets of meeting Tier 3 emissions were capable of meeting their targeted emission standards with a sufficient c ompliance margin on 10 ppm sulfur gasoline and could not meet their targeted emissions standards or could not achieve a reasonable compliance margin when tested with 30 ppm sulfur gasoline. The negative impact of gasoline sulfur on cataly tic activity

and the resultant loss of exhaust cataly st effectiveness to chemically reduce NO X and oxidize NMOG occur across all vehicle categories. However, the impact of gasoline sulfur on the effectiveness of exhaust catal ys ts to control NO X emissions in the fully

- warm ed

- up condition is particularly

of concern for larger vehicles (the largest LDVs and LDT3s, LDT4s, and MDPVs). Manufacturers face the most significant challenges in reducing cold

- start NMOG emissions for these vehicles. Because of the need to reach near

- zero NO X emissions levels in order to offset engineering limitations on further NMOG exhaust emissions control with these vehicles , an y significant degradation in NO X emissions control over the useful life of the vehicle w ould likely prevent some if not mo st larger vehicles from reaching a combined NMOG+NO X level low enough to compl y with the 30 mg/mi fleet

- average standard. An y degradation in catal ys t performance due to gasoline sulfur w ould reduce or eliminate the margin necessary to ensure in

- use compli ance with the Tier 3 emissions standards. Certifying to a useful life of 150,000 miles versus the current 120,000 miles will further add to manufacturers’ compliance challenge for Tier 3 large light trucks (See Section IV. A. 7. c below for more on the usefu l life requirements.) These vehicles represent a sufficiently large segment of light

- duty vehicle sales now and for the foreseeable future such that their emissions could notPage 148 of 529

be sufficientl y offset (and thus the fleet

- average standard could not be achieved) b y certifying other vehicles to bins below the fleet average standard

. As discussed above, achieving Tier 3 levels as an average across the light

duty fleet will require fleet wide reductions of approximately 80%. This will require significant reducti ons from all light duty vehicles , with the result that some models and ty

pes of vehicles will be at most somewhat above the Tier 3 level, and all other models will be at or somewhat below Tier 3 levels. Achieving these reductions presents a major technolo gy challenge. The required reductions are of a magnitude that EPA expects manufacturers to employ advances in technology

in all of the relevant areas of emissions control

– reducing engine

- out emissions, reducing the time to cataly st lightoff, improving e xhaust cataly st durability at 120,000 or 150,000 miles and improving efficiency of full y warmed up exhaust catal ys ts. All of these areas of emissions control need to be improved, and gasoline sulfur reduction to a 10 ppm average is a critical part of achi eving Tier 3 levels through these emissions control technology improvements. The use of 10 ppm average sulfur fuel is an essential part of achieving Tier 3 levels while appl yi ng an array of advancements in emissions control technology to the light

- dut y f

leet

. T he testing of Tier 2 and Tier 3 ty pe technology

vehicles, as well as other information , shows that sulfur has a very large impact on the effectiveness of the control technologies expected to be use d in Tier 3 vehicles. Without the reduction in sul fur to a 10 ppm average , the major technology improvements projected under Tier 3 would only result in a limited portion of the emissions reductions needed to achieve Tier 3 levels. For example, without the reduction in sulfur from a 30 ppm to 10 ppm aver age , the technology improvements would not come close to achieving Tier 3 levels . In some cases this may result in the same effectiveness as the current Tier 2 technology and achieve only approximately

Tier 2 levels of exhaust emissions control

. Achievin g Tier 3 levels without a reduction in sulfur to 10 ppm levels would only be possible if there were technology improvements significantl y above and beyond those discussed above. Theoreticall y, without reducing sulfur levels to 10 ppm average , emissions co ntrol technology improvements would need to provide upwards of twice as much, and in some cases significantly more than twice as much, emissions control effectiveness as the Tier 3 technology improvements discussed above in Section IV.A.6.d . EPA has not i dentified technology improvements that could provide such a large additional increase in emissions control effectiveness, across the light

- duty fleet, above and beyond that provided by the major improvements in technology discussed above, without any addit ional gasoline reductions in gasoline sulfur content. The impact of sulfur reduction on the effectiveness of the available technology improvements play s such a large role in achieving the Tier 3 levels that there would be no reasonable basis to expect that technology

would be available, at the 30 ppm sulfur level, to fill the emission control gap left from no sulfur reduction, and achieve the very significant fleetwidePage 149 of 529

reductions needed to meet the Tier 3 fleet average standards . In effect reducing sulfur from 30 ppm to 10 ppm has such a large impact on the ability of the technology

improvements to achieve Tier 3 emissions levels that absent these sulfur reductions there is not a suite of technology advancements available to fill the resulting gap in emiss ions reductions. We cannot identify a technology

path for vehicles that would achieve the Tier 3 Bin 30 average standard , across the fleet, with sulfur at 30 ppm levels, and as a result Tier 3 levels would not be technically feasible and achievable. Thi s analy sis also applies to gasoline sulfur levels between 1 0 and 3 0 ppm, e.g. , 20 ppm. The Tier 3 required emissions reductions are so large and widespread across the fleet, and the technology challenges are sufficiently high, especially for heavier vehic les, that the large increase in emissions that would occur from a higher average sulfur level compared to a 10 ppm average would lead to an inability for vehicle technologies to widely achieve Tier 3 levels as a fleet wide average in order to meet the Bin 30 fleet average standard. EPA acknowledges that some models in the light

- duty fleet, when viewed in isolation, may

be able to achieve Tier 3 levels at current sulfur levels of 30 ppm average. Under the Tier 3 fleet average standards, it is not sufficient for one or a few of a manufacturer’s vehicle models to meet Tier 3 levels because the manufacturer’s light

- duty vehicle fleet as a whole must achieve the Tier 3 30 mg/mi exhaust emissions standard as a fleet

- wide average. As discussed above, all vehicle models will need to achieve further reductions and be either below or no more than somewhat above Tier 3 levels to achieve the Tier 3 standard as a fleet wide average. Absent the reductions in sulfur levels to 10 ppm average, this is not achievable from a technology

perspective. As discussed in Section V. B , the average 10 ppm gasoline sulfur standard is feasible and is the level that appropriatel y balances costs with the emission reductions that it provides and enables. Not onl y will a 10 ppm sulfur standard enable vehicle manufacturers to certify their entire product line of vehicles to the Tier 3 fleet average standards, but reducing gasoline sulfur to 10 ppm will better enable these vehicles to maintain their emission performance in

- use over their ful l useful life. Higher sulfur levels would make it impossible for vehicle manufacturers to meet the Tier 3 standards, and would forego the very large immediate reductions from the existing fleet. Reducing the sulfur level below 10 ppm would further reduce vehicle emissions and allow the Tier 3 vehicle standards to be achieved more easily. However, we believe that a 10 ppm average standard is sufficient to allow vehicles to meet the Tier 3 standards. Further, as discussed in Sections V.B and IX.B there ar e significant challenges associated with reducing sulfur below 10 ppm.Page 150 of 529 7. Other Provisions
a. Earl y Credits The California LEV III program is scheduled to begin at least two model ye ars earlier than the federal Tier 3 program. 322 T he Tier 3 standards begin in MY 2017 for vehicles 6,000 lbs GVWR and less, and in MY 2018 for vehicles over 6,000 lbs GVWR. As a result, LEV III vehicles sold in California beginning in MY 2015 will be required to meet a lower fleet average NMOG+NO X level than the federal fleet will be meeting at that time. In addition, the California NMOG+NO X standards will further decline before Tier 3 begins, resulting in the gap growing between the current federal program and LEV III. We are finalizing an early credit program that with minor revi sions is as we proposed. We have designed the early credit provisions to accomplish three goals: (1) to e ncourage manufacturers to produce a cleaner federal fleet earlier than otherwise required; (2) to provide valuable flexibility to the manufacturers t o facilitate the significant “step down” from the current Tier 2 Bin 5 fleet average required in MY 2016 to the LEV III

- based declining fleet average in MY 2017; and (3) to create an overall Tier 3 program that although starts later, is equivalent in strin gency

to the LEV III program such that manufacturers will be able to produce a 50

- state fleet at the earliest opportunity

. Commenters were generall y supportive of or silent on the earl y credits program as proposed. The early credit program we are finali zing includes several distinct provisions. The first provision allow s manufacturers to generate earl y federal credits against the current Tier 2 Bin 5 requirement 323 in MYs 2015 and 2016 for vehicles under 6,000 lbs GVWR and MYs 2016 and 2017 for vehicles greater than 6,000 lbs GVWR. Early

credits will only

be available to manufacturers that comply under the primary

program (declining fleet average), not the alternative phase

- in approach (Section IV.A. 2.c above). In order to generate these credits, manufac turers sum the bin specific NMOG and NO X certification standards for each federall y certified Tier 2 vehicle and the bin NMOG+NO X standards for any vehicle certified under the Earl y Tier 3 provision described below and calculate an NMOG+ NO X fleet average for the entire manufacturers fleet sold in a model year . Credits are based on how far the fleet average is below the existing Tier 2 Bin 5

322 See California Low

- Emission Vehicles (LEV) & GHG 2012 regulations adopted by the State of California Air Resources Board, March 22, 2012, Resolution 12

- 21 incorporating by reference Resolution 12

- 11 , which was adopted January 26, 2012. Available at http://www.arb.ca.gov/regact/2012/leviiighg2012/leviiighg2012.htm (last accessed December 2 , 201 3 ). 323 Tier 2 standards are not set in the form of NMOG+NOx. The equivalent Tier 2 Bin 5 fleet average in NMOG+ NO X terms is equal to 160 mg/mi (9 0 mg/mi NMOG + 70 mg/mi NO X ).Page 151 of 529

requirement (160 mg/mi total of NMOG and NO X ). We expect that manufacturers will be able to achieve a fleetwide ave rage below the Tier 2 Bin 5 level by several means, such as certifying LEV III vehicles either under Tier 2 or as Early Tier 3 vehicles under Tier 3 (discussed in the next section) to bin levels lower than Tier 2 Bin 5. Our anal ys is, presented in Section IV.A.5 above and Chapter 1 of the RIA , shows that manufacturers could certify man y vehicles currentl y certified to Tier 2 Bin 5 to a lower bin

-- e.g., to Tier 2 Bin 3 or Bin 4

– by simply accepting a relativel y small reduction in compliance margin s. Many m anufacturers certify Tier 2 vehicles to Tier 2 Bin 5 but also certify the same vehicle to a cleaner emission standard under the LEV II program (e.g. ULEV) with only a compliance margin difference. We believe that th e earl y credit provision will help u s realize both our first and second goals presented above . For example, a manufacturer certifying their federal fleet to Tier 2 Bin 4 will earn 50 mg/mi of NMOG+ NO X credits per vehicle (i.e., 160 mg/mi minus 110 mg/mi) , which we believe will encourage manufacturers to certify a cleaner federal fleet and provide a reasonable opportunity for credit generation to facilitate the “step down” in stringency. At the same time , if we allowed manufacturers to generate excessive earl y credits , manufacturers might thereb y delay their compliance with the Tier 3 program, and thus the harmonization with LEV III, for several ye ars. This would be in direct conflict with our third goal of creating a program of equal stringency to the California program as earl y as possibl e. In order to address this concern , we proposed and are finalizing a provision limiting the application of the earl y Tier 3 credits to the following conditions:

 Earl y Tier 3 credits generated as described above could be used without limitation in MY 2017 on the portion of the fleet entering the Tier 3 program in that MY

.

 Credits used for compliance in MY 2018 and beyond will be capped at an amount equal to the lesser of the manufacturer’s federal credits as calculated above or the manufacturer’s LEV III c redits scaled up by the ratio of 50

- state sales to California and LEV III required states sales. This limitation account s for the fact that some LEV III credits may have begun to expire and will no longer be eligible as a basis for Tier 3 earl y credits. B y capping the available federal Tier 3 earl y credits , we believe that the two programs, LEV III and Tier 3 will be at parit y in terms of relative stringency starting in MY 2018. In addition, because the number of Tier 3 earl y credits that can be used is b ased on the number of LEV III credits that the manufacturer has generated, there may

be additional motivation for manufacturers to over

- perform in California during the initial model years , accelerating emission reduction benefits

.Page 152 of 529 Finally , we are adopting , as proposed, a limitation on the life of Tier 3 e arl y credit s to 5 years , with no discounting, consistent with the California LEV III program . b. Earl y Tier 3 Compliance We are finalizing, as proposed, the requirement that manufacturers begin the Tier 3 program in MY 2017 for vehicles up to 6,000 lbs GVWR and MY 2018 f or vehicles above 6,000 lbs GVWR under the primary phase

- in. The onl y proposed compliance approach available prior to MY 2017 was for manufacturers to continue to certify vehicles to the exis ting Tier 2 standards with the opportunity to earn earl y credits (see previous section) that could be used in MY 2017 and later. Several auto industry

commenters suggested additional provisions that could facilitate earlier harmonization between Tier 3 and LEV III and streamlining of development and certification of vehicle models. Specificall y, these commenters requested the ability

to have vehicles certified to the Tier 3 standards in MYs 2015 and 2016. They

commented that this would allow them to develo p, certify and sell a vehicle model for all 50 states, reducing the complexity of potentiall y different federal and California requirements in MYs 2015 and 2016. Additionally , commenters noted that the Tier 3 program provides more flexibility in the certi fication bin structure compared with the existing Tier 2, providing them additional opportunities to generate earl y credits. To address this concern, we are finalizing a provision to allow manufacturers to certify

to Tier 3 standards starting in MY 2015 as “Earl y Tier 3” vehicles. Manufacturers will have the option to certify their vehicle models to meet the Tier 3 emission requirements in MY 2015 and 2016 for all LDVs, LDTs, and MDPVs, which would have been required to begin in MY 2017 under the primary p rogram. As an example, a manufacturer choosing to certify a vehicle as Early

Tier 3 can bring the same vehicle models certified to LEV III standards 324 in MY 2015 or 2016 into the Earl y Tier 3 program b y meeting all the same requirements under the primary

T ier 3 schedule. There would not be a Tier 3 fleet average requirement for FTP or SFTP in MY 2015 or 2016 (and 2017 for vehicles over 6,000 lbs GVWR and up to 8,500 and MDPVs) if all the same vehicle models certified to LEV III are also certified as the Early Tier 3 vehicles meeting the same LEV III emission standards and also the Tier 3 additional requirements (high altitude, and cold CO and hydrocarbons). These Earl y Tier 3 vehicles would replace an y Tier 2 offering of the vehicle model consistent with the LEV III offering replacing the LEV II models. If a manufacturers chooses to certify only a portion of their LEV III vehicle models as Earl y Tier 3 vehicles in a given MY, they will be required to

324 Including LEV III SFTP requirementsPage 153 of 529

meet the LEV III fleet average requirements in that MY f or those models certified as Earl y Tier 3 vehicles. All vehicles models not certified as Earl y Tier 3 vehicles must meet all Tier 2 requirements.
c. Useful L ife The “useful life” of a vehicle is the period of time, in terms of years and miles, duri ng which a manufacturer is responsible for the vehicle’s emissions performance. For the Tier 3 program, we are finalizing several changes to the existing useful life provisions that are appropriate to the new Tier 3 standards described above. The auto m anufacturing industry has uniformly expressed the desire to produce and sell a single national vehicle fleet , including a general ability and willingness of the industry to certify their vehicles to a 150,000 mile, 15 year full useful life , as required b y the LEV III program. However, the CAA, written at a time when vehicles did not last as long as they do today , precludes EPA from requiring a useful life value longer than 120,000 mile s (and 10 or 11 year s , depending on vehicle category and weight) for lighter light

- dut y vehicles ( LDVs and LDTs up to 3,750 lbs loaded vehicle weight ( LVW ) and up to 6,000 lbs GVWR ( i.e., LDT1s) )

. For heavier light

- dut y vehicles (i.e., LDT2s, 3s, 4s, as well as MDPVs, representing a large fraction of the light

- dut y fleet) , this statutory restriction does not apply , and we are finalizing a 150,000 mile, 15 year useful life value , as proposed . For the lighter vehicles, we are continuing to appl y the 120,000 mile (and 10 or 11 ye ar, as applicable) useful life requirement from the Tier 2 program, also as proposed . For the se lighter vehicles, manufacturers are allowed to choose to certify to either useful life value in compl yi ng with the fleet average. 325 Inorder for the Tier 3 NMOG+NO X standards to represent the same level of stringency regardless of which useful life value manufacturers choose , we proposed and are finalizing proportionally

lower numerical values ( 85 percent of the NMOG+NO X 150,000 mile standards based on a data anal ys is in Chapter 1 of the RIA) for the decli ning fleet average FTP NMOG+NO X standards when a manufacturer chooses the 120,000 mile useful life . A manufacturer choosing the 120,000 mile useful life for an y vehicle must maintain separate 120,000 mile and 150,000 mile useful life fleet averages for pur

poses of FTP NMOG+NO X fleet average compliance. Credits generated towards the required fleet averages are not transferable between the two useful life fleet averages.

325 CARB has stated that they do not expect to accept vehicles certified under the federal Tier 3 program to a 120,000 mile useful life value for California certification, and thus for meeti ng California’s fleet average NMOG+NO X standards.Page 154 of 529 We proposed that a manufacturer that certifies an y vehicle model under the 120,000 mile provision be required to certify all their LDVs and LDT1s to the 120,000 mile useful life and associated numerically lower FTP NMOG+NO X fleet average standard. Comments from the auto industry expressed a concern that this approach would be inflexible to manufacturers’ needs and unnecessaril y burdensome. We have considered these comments, and we believe that the emission benefits of Tier 3 program will not be adversel y affected if manufacturers are allowed to certify

these lighter vehicles to the 120,000 mile useful life standards on a test group basis, and therefore we are finalizing this approach. Standards for all other pollutants 326 and all other test cycles such as SFTP remain the same regardless of whether manufacturers choose the 120,000 mile or the 150,000 mile useful life periods. For emission standards other than PM standards (e.g., NMOG+NO X standards), as proposed , manufacturers will be required to certify all vehicles to the 150,000 mile useful life beginning with the first model year that a veh icle model is certified to the FTP NMOG+NO X Bin 70 or lower (other than vehicles not yet required to meet a 150,000 mile useful life during the program phase in, and vehicles for which a manufacturer has the option and cho o se s to appl y the 120,000 mile use ful life value ) . This useful life requirement will apply as earl y as MY 2017. Beginning in MY 2020, all vehicles will need to certify to the 150,000 mile useful life for all emissions , regardless of NMOG+NO X certification bin, unless they are eligible fo r, and the manufacturer has chosen the 120,000 mile useful life and associated standards . (Note that the timing of the requirement to certify on the new test fuel follow s the same approach as for the useful life requirement for emission standards other th an PM standards (i.e., based on the first year a model is certified to FTP NMOG+NO X Bin 70 or below) as described in the next section .) For FTP and SFTP PM useful life requirements, manufacturers will be required to certify to 150,000 mile useful life for PM all vehicles that are included in the manufacturer’s phase

- in percentage meeting the new PM standards (other than eligible vehicles for which a manufacturer chooses to apply the 120,000 miles useful life value). d. Test Fuels for Exhaust Criteria Emission s Standards We recognize that test fuels are an important element of a national program. Vehicle manufacturers have emphasized in their comments the desire to reduce their test burden s by

producing one vehicle that is tested on a single test procedure and on a single test fuel and that meets both California and federal requirements. Although we have been able to reasonabl y align the Tier 3 program with the LEV III program in most key

respects, we recognize that the Tier 3 and LEV III test fuels are differ ent, and that there may still exist some differences in emissions

326 PM, CO, and HCHO

.Page 155 of 529

performance between vehicles tested on the two fuels. The largest difference between the two fuels is the Reid Vapor Pressure (RVP) , and other differences in distillation properties and aro matic levels also exist (largel y related to differences in actual in

- use fuel nationally and in California) . We are finalizing as proposed the requirement that manufacturers certify vehicles on the new Tier 3 E10 test fuels 327 beginning with the first model ye ar that a vehicle model is certified to the FTP NMOG+NO X Bin 70 or lower

. 328 This requirement may apply as earl y as MY 2017 for vehicles up to 6000 lbs GVWR and MY 2018 for vehicles greater than 6000 lbs GVWR. 329 This requirement also applies to vehicles c ertified at Bin 70 and lower that are brought into the Tier 3 program under the Earl y Tier 3 option described in IV .A.7. b above, with the exception of the specific provision allowing the use of LEV III fuels discussed below

. Beginning in MY 2020, all gaso line

- fueled models will need to certify

on the Tier 3 test fuel s for all exhaust emission requirements , regardless of their certification bin. 330 As discussed in Section IV.A.7. c above, manufacturers must also meet the 150,000 mile useful life requirements for NMOG+NO X standards for these same vehicles as they are certified to Bin 70 and lower. During the transition period from Tier 2 fuel to the new Tier 3 and LEV III E10 fuels, manufacturers have indicated that they face a substantial workload challeng e of developing and certifying each vehicle model to the two new fuels simultaneously

. We recognize this transitional challenge and are including an additional option. W e are finalizing as proposed an option that vehicles certified in MY s 2015 through 20 19 to California LEV III standards using California LEV III E10 certification test fuels and test procedures can be used for certifying to EPA Tier 2 or Tier 3 exhaust emission standards , including PM

. A manufacturer may submit LEV III test data on vehicl es tested using the new LEV III E10 fuels for Tier 2 or Tier 3 certifications. Consistent with existing Tier 2 policy , EPA may test vehicles certified to Tier 2 standards using LEV III test results on Tier 2 fuel for confirmatory

or in

- use exhaust testing . For vehicles certified in MY 2017 through 2019 to Tier 3 standards using LEV III E10 fuels, EPA will only use LEV III E10 fuels for confirmatory

and in

- use testing (except for high altitude or cold CO and hydrocarbons testing, as described below). Vehi cles certified to the provisions of Earl y Tier 3 (Section IV.A.7.b above) will be treated the same as Tier 3 vehicles certified in MY 2017. For example, for MY 2015 and 2016, EPA will consider

327 This includes fuels used for cold temperature and high altitude testing and durability requirements. See Section IV. F below

. 328 The lower Bins are Bin 0, Bin 20, Bin 30 and Bin 50. 329 Vehicles above 6000 lb GVWR choosing the alternative phase

- in schedules described in Section IV.A.2.c above generally would begin using the Tier 3 test fuels for MY2019. 330 Diesel fueled and alternative fueled vehicles will continue to test on the fuels u sed under the Tier 2 program except for E85 fueled vehicles, for which we are finalizing new test fuel specifications (see Section IV. F below).Page 156 of 529

Earl y Tier 3 vehicles to be part of the Tier 3 program for pur poses of fuel

- related testing obligations

. We will not accept test results using LEV II fuels for Tier 3 vehicle certification, including Early Tier 3 certifications, with the exception of the PZEV exhaust carry

- over provision described below. California does not have fuel specifications for high altitude testing or cold CO and hydrocarbon testing. For this reason, we are finalizing that for vehicles that manufacturers choose to certify using LEV III fuel and test procedures, manufacturers must use progr am - specific federal test fuels to comply with these federal

- onl y requirements (i.e. Tier 2 vehicles will use Tier 2 fuel and Tier 3 vehicles will use Tier 3 fuel). Similarly , high altitude and cold CO and hydrocarbon confirmatory and in

- use testing for th ese vehicles will be performed on the federal fuel that the manufacturer is required to use at certification as specified above regardless of whether LEV III or federal fuel is used for other testing

. We proposed the requirement that after MY 2019, all Tier 3 certification, confirmatory

and in

- use emission testing be required to use onl y the proposed Tier 3 E15 test fuel because it was believed to be a worse case fuel for emissions. Because we are finalizing Tier 3 E10 test fuels which are very similar as explained above to LEV III E10 test fuels, and not considered a worse case fuel, we are not finalizing the requirement for all testing to be performed on Tier 3 E10 test fuel. Instead, for c ertifications after MY 2019 , EPA will continue to allow LEV II I test results to be submitted for certification to Tier 3 standards, consistent with protocol under the Tier 2 program. H owever, if a manufacturer chooses to submit certification results for compliance with Tier 3 standards using the LEV III test fuel, then for confirmatory

and in

- use testing we will hold vehicles to the Tier 3 standards while using the Tier 3 fuel in addition to the LEV III test fuel; we will not allow new or carry - over certifications using LEV II or Tier 2 certification test fuels after MY 2019. CARB has indicated that they will accept Tier 3 test data (on federal certification test fuel s ) to obtain a California certificate as earl y as MY 2015. In this manner manufacturers should be able to avoid compliance testing on more than one fue l , since vehicles certified to Interim or Final Tier 3 status using federal certification test fuel s could also obtain LEV III certification

. Auto industry

commenters noted that the LEV III program provides an allowance for manufacturers to carry over PZEV

- certified vehicle exhaust data 331 from the LEV II program into LEV III compliance in MY 2015 through MY 2019. Thus, CARB allows these PZEV vehicles to use emission testing results using LEV II fuel (i.e. California Phase II test fuel) to meet the LEV III o bligations. The commenters suggested that EPA allow manufacturers to carry over such PZEV

331 California’s PZEV exhaust standards are the same as their SULEV standards and the Tier 3 Bin 30, and are certified to a 150,000 mile useful life.Page 157 of 529

150,000 mile useful life exhaust emission data to meet the Tier 3 standards. We agree that this approach is appropriate during the transition, and we are finalizing this provision for MY 2015 through MY 2019, including allowing Earl y Tier 3 compliance at the Bin 30 level as a combined NMOG + NOX standard. EPA will hold vehicles certified using this provision to the Tier 3 emission requirements when they

are tested o n the LEV II fuel for confirmatory and in

- use. Compliance testing of these vehicles for all other Tier 3 obligations (i.e., high

- altitude testing and Cold CO and hydrocarbons testing) must be performed using Tier 3 fuel, and these vehicles will be require d to meet the Tier 3 standards for Bin 30.
e. High Altitude Requirements FTP emission standards are historicall y designed to be applicable at all altitudes. Under Tier 2, the same FTP emission bin standards applied to vehicles tested at both low and high

- altitude. However, fundamental ph ys ical challenges exist at high altitude resulting in ty pically higher emissions during cold starts compared with starts at lower altitudes (i.e., sea level) , and these challenges become more pronounced as emission stan dards become more stringent . This expected increase in emissions is primarily due to the lower air density at higher altitudes. Due to the lower air density , the needed volume of the hot combustion exhaust required to quickl y heat the catal ys t in the fir st minute after a cold start is reduced. As a result, cataly st light

- off is delayed and cold start emissions can increase. Vehicles under the Tier 2 program typicall y have had sufficient compliance margins to absorb this increase in emissions during tes ting under high

- altitude conditions. However, given the extremely low standards we are finalizing in Tier 3, manufacturers will have less compliance margin with which to address the issue. Under the Tier 3 program, we expect that the emission control tec hnologies selected for low altitude performance will also provide very significant emission control at high altitude. 332 However, as explained above, unique emission challenges exist with operation at higher altitude , often requiring manufacturers to design their emission controls specificall y for higher altitude. We do not believe that the impact of the fairl y small fraction of overall U.S. driving that occurs in high altitude locations warrants a requirement for additional technologies to be applied speci ficall y for high

- altitude conditions. To avoid requiring manufacturers to use special high

- altitude emission control technologies, we are allowing manufacturers limited relief for certification testing at high altitude, as proposed. Specifically , for sea

- level certifications to Tier 3 Bins 20, 30, and 50, a manufacturer could comply with the next less

- stringent bin for testing at high

332 High

- altitude conditions means a test altitude of 1,620 meters (5,315 feet). Low altitude conditions means a test altitude less than 549 meters (1,800 feet).Page 158 of 529

altitude . For example, a manufacturer can certify to Bin 50 for testing at high altitude versus Bin 30 at sea level). Fo r vehicles certified at sea level to Bins 70 and 125, manufacturers can comply with standards 35 mg/mi higher (e.g., 105 mg/mi and 160 mg/mi, respectively . We are providing no high altitude relief for vehicles certified to Bin 160. This high altitude rel ief provision applies to all Final Tier 3 vehicles for the duration of the Tier 3 program. For intermediate altitudes that fall between the specified low and high altitude test conditions, the emission performance should continue to be representative of the controls implemented to meet standards at the required altitude test conditions, consistent with Tier 2 protocol. Any deviation in the use of these controls at the intermediate altitudes may be considered an AECD that must be reported b y the manufacture r and justified as not being a defeat device 333

. Table IV

- 9 presents the Tier 3 high altitude standards.

**Table IV**  **- 9**  **Tier 3 High Altitude Standards**  Bin Sea Level FTP Standard

(mg/mi NMOG+NO X ) Altitude FTP Standard (mg/mi NMOG+NO X ) Bin 160 160 160 Bin 125 125 160 Bin 70 70 105 Bin 50 50 70 Bin 30 30 50 Bin 20 20 30
f. Highway

Test Standards Sustained high

- speed operation can result in NO X emissions that may not be represented on either the FTP or SFTP cycles. Although we are not aware of any serious issues with this mode of operation with current Tier 2 vehicles, we are interested in preventing increases in these NO X emissions as manufacturers develop new or improved engin e and emission control technologies. For this reason, we are finalizing, as proposed, a provision that the Tier 3 FTP NMOG + NO X standards above also appl y on the Highway Fuel Economy

Test

333 §86.1809

- 12 Prohibition of defeat devicesPage 159 of 529

(HFET), which is performed as a part of GHG and Fuel Econom y comp liance testing. Thus, the Tier 3 FTP NMOG+NO X standard for the bin at which a manufacturer has chosen to certify a vehicle will also apply

on the HFET test. For example, if a manufacturer certifies a vehicle to Bin 70, the vehicle’s NMOG+NO X performance over the HFET could not exceed 70 mg/mi. Manufacturers will simply need to ensure that the same emission control strategies implemented for the FTP and SFTP cycles are also effective during the highway test cycle. We believe that this requirement will no t require manufacturers to take an y unique technological action, will not add technology costs, and will not add significantly to the certification burden. g. Interim 4,000 Mile SFTP Standards During the period of the declining NMOG+ NO X standards, we are fi nalizing the proposed requirement that interim Tier 3 vehicles meet 4,000 mile SFTP standards, consistent with the existing Tier 2 and LEV II program requirements. The 4,000 mile standards appl y to each vehicle model individually and to each component of the SFTP composite cycle. This approach is designed to prevent excessive emission levels from individual vehicle models being masked by the averaging of the manufacturer’s fleet emissions. Similarly , this approach also prevents poor performance on a sing le cycle of the SFTP

. We believe it is appropriate to require any individual Interim Tier 3 vehicle to at a minimum meet the existing requirements under the Tier 2 and LEV II programs. Table IV

- 10 belo w presents the 4,000 mile SFTP standards for interim Tier 3 vehicles. **Table IV**  **- 10**  **4,000 Mile SFTP Exhaust Standards for Interim Tier 3 Vehicles (grams/mile)**  Vehicle Category US06

NMOG+NO X US06

CO SC03

NMOG+NO X SC03

CO LDV/LDT1 0.14 8.0 0.20 2.7 LDT2 0.25 10.5 0.27 3.5 LDT3 0.4 10.5 0.31 3.5 LDT4 0.6 11.8 0.44 4.0

We believe that vehicles considered to be Final Tier 3 vehicles (i.e., they meet the Tier 3 PM requirements, specificall y the stringent SFTP PM standards) will have sufficientl y robust designs that the 4,000 mile SFTP standards will no longer be necessary and so will not apply to those vehicles . Additionally , once the program reaches the fully phased

- in fleet average composite standard of 50 mg/m i in 2025, high SFTP emissions even on a limited portion of a manufacturer’s fleetPage 160 of 529

should be effectivel y mitigated , and the 4,000 mile SFTP standards will no longer apply

. h. Phase

- in Schedule As proposed, the major provisions of the Tier 3 program phase in based on model year and on the emission levels to which manufacturers certify their vehicles. As described in Section IV.A.3, under the Tier 3 program, manufacturers are required to certify

each vehicle model to an FTP bin, which is then used to calculat e the NMOG+NO X fleet average of all of its Tier 3 vehicles. Manufacturers must also determine the SFTP levels of each model and calculate the NMOG+NO X fleet average for the SFTP requirements as described in Section IV.A.4. These separate FTP and SFTP fle et average calculations satisfy one aspect of certification under the Tier 3 program, specifically the standards associated with each model year. As described in Sections IV.A.7. c and IV.A.7. d above, the longer (150,000 mile) useful life value, as applicab le, and the new Tier 3 test fuel for exhaust testing will be implemented as manufacturers certif y vehicles to more stringent NMOG+NO X standards, with the threshold to implement both of these provisions being Bin 70. Beginning in MY 2017, any vehicle certi fied to Bin 70 or lower will be required to be certified on Tier 3 test fuel. In addition, any vehicle certified to Bin 70 or lower that is required to meet the longer 150,000 mile useful life will be required to do so at that point. Independent of the Ti er 3 test fuel phase in schedule, the 150,000 mile useful life for PM standards will be required when the vehicle is certified to the new Tier 3 PM standards as described below in the PM phase

- in schedules . Beginning in MY 2020 , all gasoline

- fueled vehicl es will be required to be certified for exhaust emissions on the Tier 3 test fuel, regardless of the ir certification bin or applicable useful life

. Manufacturers must also comply with more stringent PM standards on a percent phase

- in schedule. Compliance with the PM standards, which is consistent with the CARB LEV III program, is independent of the NMOG+NO X fleet average requirements described above. The PM emission standards for FTP and SFTP described in Section IV.A.3 and 4 respectivel y will be implemented as a percent phase

- in requirement as described below under a primary phase

- in schedule or under an optional phase

- in schedule. Vehicle models that a manufacturer certifie s to a Tier 3 NMOG+NO X bin, that meet the requirements of the PM phase

- in schedule , and that compl y with the other Tier 3 requirements (i.e., 150,000 mile useful life and Tier 3 test fuel, as applicable) will be considered “Final Tier 3” compliant vehicles. All other vehicles certified to Tier 3 bins but not yet meeting the PM and othe r Tier 3 requirements will be considered “Interim Tier 3” compliant vehicles. At the completion of the percent phase

- in period for PM (2021 for the primary PM phase

- in schedule and 2022 for the optional PM phase

- in schedule, as described below), 100 perce nt ofPage 161 of 529

vehicles will need to meet all of the Tier 3 requirements and will be considered Final Tier 3 vehicles. As proposed, f

or the PM requirements, each model ye ar manufacturers must meet either the primary PM percent phase

- in or the optional PM phase

- in as described in the following subsections. The primary percent PM phase

- in schedule is composed of fixed annual minimum phase

- in percentages that we expect most manufacturers to choose in order to compl y with the Tier 3 requirements. The optional PM pha se - in schedule provides additional flexibility for manufacturers with too few product offerings to allow for a sufficiently gradual transition into the Final Tier 3 requirements , as described below. In either case, Interim Tier 3 vehicles not yet meeting the Tier 3 PM standards must at a minimum meet the Tier 2 PM full useful life FTP PM standard of 10 mg/mi and the SFTP PM weighted composite standard of 70 mg/mi.

i. Primary PM Percent Phase

-In Schedule It is important to note that the percent phase

- in of the new Tier 3 PM standards and the declining fleet average NMOG+NO X standards that we are finalizing are separate and independent elements of the Tier 3 program. “Phase

- in” in the context of Tier 3 PM standards means the fraction of a manufacturer’s fleet that is required to meet the new Tier 3 PM standards in a given model year. We expect that manufacturer fleets may consist of a mix of vehicle model s certified to Tier 2, LEV II, LEV III and Tier 3 standards throughout the percent phase

- in period. As d iscussed above, vehicles originally certified to Tier 2, LEV II, and LEV III may be carried over into the Tier 3 program as Interim Tier 3 vehicles. A vehicle will be considered a Final Tier 3 vehicle when it is certified to one of the Tier 3 bins , meets the new Tier 3 PM standards for FTP (3mg/mi) and US06 (10 or 6 mg/mi), certifies to the 150,000 useful life value ( as applicable), and certifies on the new Tier 3 test fuel. Table IV

- 11 below presents the P M phase

- in schedule for Final Tier 3 vehicles.

**Table IV**  **- 11**  **PM Phase -**  **in Schedule for Final Tier 3 Vehicles Model Year**  **2017 2018**  **2019 2020**  **2021 2022**  **and later**  Manufacturer’s Fleet (%) 20 a 20 40 70 100 100Page 162 of 529

Veh icle Ty

pes ≤ 6,000 lbs GVWR All vehicles ≤ 8,500 lbs GVWR and MDPVs

a Manufacturers comply in MY 2017 with 20 percent of their LDV and LDT fleet under 6,000 lbs GVWR, or alternatively with 10 percent of their total LDV, LDT, and MDPV fleet Optional PM Phase

- in The P M percent

- of

- sales phase

- in schedule described above will allow manufacturers with multiple vehicle models to plan the phase

- in of those models based on anticipated volumes of each vehicle model. However, manufacturers certifying onl y a few vehicle models might not benefit from this schedule. This is because, in order to satisfy the phase

- in schedule percentages, they may have to over - compl y with the required percentages earlier than will a manufacturer with many vehicle models available for the phase

- in. For instance, a manufacturer with onl y two models that each equally account for 50 percent of their sales will be required to introduce (at least) one of the models in MY 2017 to meet the PM phase

- in requirement of 20 percent in the first year. Because it represent s 50 percent of the manufacturer’s sales, this model will then also meet the requirements for MY 2018 (20 percent) and MY 2019 (40 percent). To meet the MY 2020 requirement of 70 percent of sales, however, the manufacturer will need to introd uce the second Tier 3 vehicle that year. Thus the manufacturer will have introduced 100 percent of its Tier 3 models one year earlier than required of a manufacturer that is able to delay the final 30 percent of its fleet until MY 2021 (by

distributing it s models over the entire phase

- in period). To provide for more equivalent phasing in of the PM requirements among all manufacturers in the early years of the program, we are finalizing, as proposed, an optional “indexed” PM phase

- in schedule that can be us ed b y a manufacturer to meet its PM percent phase

- in requirements. A manufacturer that exceed s the phase

in requirements in an y gi ven year will be allowed to, in effect, offset some of the phase

- in requirements in a later model year. The optional phase

- i n schedule will be acceptable if it passes a mathematical test. The mathematical test is designed to provide manufacturers a benefit from certifying to the standards at higher volumes than they are obligated to under the normal phase

- in schedule, while en suring that significant numbers of vehicles are meeting the new Tier 3 requirements during each ye ar of the optional phase

- in schedule. In this approach, manufacturers weight the earlier years b y multiplying their percent phase

- in by the number of years p rior to MY 2022 (i.e., the second year of the 100 percent phase

- in requirement). The mathematical equation for appl yi ng the optional PM phase

- in is as follows:Page 163 of 529

(5 x APP2017) + (4 x APP2018) + (3 x APP2019) + (2 x APP2020) + (1 x APP2021) ≥540, where APP is the actual phase

- in percentage for the referenced model year. The sum of the calculation must be greater than or equal to 540, which is the result when the optional phase

- in equation is applied to the primary percent phase

in schedule (i.e., 5 x 20% + 4 x 20% + 3 x 40% + 2 x 70% + 1 x 100% = 540). Applying the optional PM phase

- in equation to the hy pothetical manufacturer in the example above, the manufactur er can postpone its model introductions by

one ye ar each, to MY 2018 and MY 2021. Its calculation is (5 x 0% + 4 x 50% + 3 x 50% + 2 x 50% + 1 x 100% = 550, and thus the phase

- in is acceptable. i. In

- use Standards i. NMOG + NO

X The Tier 3 emission standards will require a substantial migration of emission control technology historicall y used only on a small percent of the fleet and ty pically limited to smaller vehicles and engines. While we believe that these technologies can generally be used on an y vehicl e and are applicable to the entire fleet, manufacturers have less experience with the in

- use performance of these technologies across the fleet. For example, technologies that accelerate cataly st warm - up such as cataly st location close to the engine exhau st ports and other advanced thermal management approaches will be new to certain vehicle types, particularl y larger vehicles (i.e., LDT3/4s), which have historicall y not relied on these technologies to meet emission standards. As proposed, t o help manufa cturers address the lack of in

- use experience and associated challenges with the expanded introduction of these technologies , particularl y in the larger vehicles, we are finalizing temporaril y - relaxed in

- use NMOG+NO X standards that will apply to all vehicl es certified to Bins 70 and cleaner as Interim or Final Tier 3 vehicles. The in

- use standards will apply during the entire percent phase

- in period (i.e., through MY 2021). The in

- use standards are 40 percent less stringent than the certification standard s, providing a significant but reasonable temporary

cushion for the uncertainties associated with new technologies (or new applications of existing technologies) over the life of the vehicle s . The in

- use NMOG + NO X standards are shown in Table IV

- 12

.Page 164 of 529 **Table IV**  **- 12**  **FT P In**  **- Use Standards for Light Duty Vehicles and MDPVs**  **(mg/mi)** Bin NMOG+NO X

(mg/mi) Bin 160 160 Bin 125 125 Bin 70 98 Bin 50 70 Bin 30 42 B in 20 28

ii. PM As with the NMOG+NO X standards, the introduction of new emission control technologies or new applications of existing technologies (e.g., GDI, turbocharging, downsized engines) will create significant uncertainties for manufacturers about in

- use performance over the vehicle’s useful life. We are finalizing as proposed a temporary in

- use FTP standard for PM of 6 mg/mi for all light duty vehicles certified to the Tier 3 full useful life 3 mg/mi standard. Since the Tier 3 FTP PM standard has a percent phase

- in schedule spread over several years, starting in 2017 with full phase

- in completed in 2022, we are finalizing the requirement that the in

- use standard apply to all vehicles certified to the new PM standards during the entire percent phase

- in period (i.e., through MY 2021). We also proposed temporaril y - relaxed in

- use US06 PM standards. As described in Section IV.A.4.b above, we are finalizing an in

- use US06 PM standard of 10 mg/mi for the intermediate years of the program (MYs 2019 through 2023) in response to industry

concerns about emissions variability as the new standards become effective. j. FFVs Because of the ph ys ical and chemical differences in how emissions are generated and controlled between vehicles operating on different blends o f gasoline and ethanol, manufacturers of vehicles designed for high

- percentage blends of ethanol (usuall y called Flexible Fuel Vehicles, or FFVs) may face unique compliance challenges under the Tier 3 program. Historically , under the Tier 2 program, FFVs have only been required to meet all Tier 2 emission standards , FTP and SFTP, while operating on gasoline (E0) ; when operating on the alternative fuel (generally this means a blend that is nominally 85 percent ethanol, or E85), they have onl y been required to meet the FTP emission standards.Page 165 of 529 However, E85 use may

rise considerabl y in the future as ethanol use increases in response to the Renewable Fuels Standards (RFS). Thus, as the Tier 3 program is implemented, it is increasingl y important that FFVs maint ain their emission performance when operating on E85 across different operating conditions. We believe that at standard test conditions, requiring manufacturers to meet the Tier 3 standards on any blend of gasoline and ethanol will not be significantly mor e challenging technological ly than compliance on lower ethanol blends, including the E10 Tier 3 test fuel we are adopting. We are thus finalizing, as proposed, the requirement that in addition to complying with the Tier 3 requirements when operating on T ier 3 test fuel , FFVs also compl y with both the FTP and the SFTP emission standards when operating on E85. This include s the requirement to meet emission standards for both Tier 3 test fuel and E85 for the FTP, highway

test, and SFTP emission standards at standard test temperatures (i.e., 68 ° F to 86 ° F). Since FFVs can operate on an y blend of gasoline and ethanol (up to a nominal 85 percent ethanol), the emission requirements appl y to operation at all levels of the alternative fuel that can be achieved w ith commerciall y available fuels. However, for exhaust emission compliance demonstration purposes, we will test on Tier 3 test fuel and on fuel with the highest available ethanol content
. k. Credit for Direct Ozone Reduction (DOR) Technology Since the late 1990s, technologies have been commercialized with which vehicles can remove ozone from the air that flows over the vehicle’s coolant radiator. In such direct ozone reduction (DOR) technology , a cataly tic coating on the radiator is designed to convert ambi ent ozone into gaseous ox ygen, as a way of addressing the air quality concerns about ozone. Detailed technical anal ys es for the California LEV II and the federal Tier 2 programs showed that when properly designed these s ys tems can remove sufficient ozone from the air to be equivalent to a quantifiable reduction in tailpipe NMOG emissions. In the earlier programs, both California and EPA provided methodologies through which a manufacturer could demonstrate the capability and effectiveness of the ozone

- redu cing technology and be granted an NMOG credit. A small number of vehicle models with DOR applications received credit under the LEV II program; no manufacturer formally applied for credits under the federal Tier 2 program. Some manufacturers have expresse d an interest in the continued availability of a DOR credit as a part of their potential LEV III and Tier 3 compliance strategies. EPA believes that when a DOR s ys tem is shown to be effective in reducing ozone, a credit toward Tier 3 compliance is warrant ed. We are finalizing a provision, as proposed, that manufacturers following the California methodology for demonstrating effectiveness and calculating a appropriate credit for a DORPage 166 of 529

sy stem be granted a specific credit toward the NMOG portion of the NMOG+NO X standard. 334 As with the California program, such a credit may not exceed 5 mg/mi NMOG. l. Credit for Adopting a 150,000

- Mile Emissions Warrant y Under the Tier 3 standards , manufacturers are expected to design their emission control sy stems to continue t o operate effectivel y for a useful life of 150,000 miles (120,000 miles for some smaller vehicles). However, manufacturers are onl y required to replace failed emission control components or sy stems on customers’ vehicles for a limited time period, specifi ed in the Clean Air Act (80,000 miles/8 years for key

emission control components). EPA believes that voluntary extension of this warranty obligation b y manufacturers would provide additional emission reductions by

helping ensure that controls continue to operate effectively in actual operation through the full life of the vehicle. We are finalizing as proposed that a manufacturer providing its customers with a robust emission control sy stem warrant y of 15 years or 150,000 miles be eligible for a modest c redit of 5 mg/mi NMOG+NO X . 335 Because of the significant liability that manufacturers would be accepting, we do not expect that the use of this credit opportunity will be widespread. However, based on our modeling of the expected deterioration of the emiss ions of future Tier 3 vehicles absent repair/replacement of failed emission controls, we anticipate that the value to the environment of long emissions warranties in terms of reduced real

- world emissions would significantl y exceed the 5 mg/mi NMOG+NO X cred it. 336 We will use the same criteria for approving such a credit as does the parallel California program. 337 Thus, in addition to committing to customers that failing emission controls will be repaired or replaced for 15 years/150,000 miles, manufacturers wi ll also need to accept the liability that in the event that a specific emissions control device fails on greater than 4 percent of a vehicle model’s production, they will recall the entire production of that model for repair.
m. Averaging, Banking, and Trading of Credits We proposed and are finalizing an averaging, banking, and trading (ABT) program similar to those that have historicall y been a part of most EPA emission

334 EPA is incorporating the CARB DOR methodology by reference. 335 Manufacturers choosing to comply with the standards for a 120,000 mile useful life for their LDVs and LDT1s are not eligible for this extended warranty credit for those vehicles. 336 Beardsley, M, et al . (2013, February). Updates to MOVES for the Tier 3 NPRM. Memorandum to the docket. 337 EPA is incorporating the CARB extended emission warranty provisions by reference.Page 167 of 529

control programs. For the Tier 3 final rule, the ABT program is consistent with the oth er Tier 3 program elements, the heav y dut y exhaust emission standards and the evaporative emission standards programs, with the only exception being credit life during the longer phase in for the light duty program as described below

. The ABT program is i ntended to provide an opportunity for manufacturers to deploy their Tier 3 vehicle models more efficientl y, especially during the transition years, and to avoid excessive delay s in the necessary technological improvements across the fleet. We have designe d the Tier 3 ABT program to provide for credits to be generated b y certifying vehicles that perform better than the fleet

- average NMOG+NO X standards . These credits may be used within a compan y to offset vehicles that perform worse than the standards, they may be banked for later use , or they may be traded to other manufacturers. We are also finalizing limitations on the use of credits for the light

- dut y fleet. We proposed that Tier 3 credits expire after 5 model years following the model year they

are g enerated and solicited comment on the Tier 3 credit life. In communications regarding the proposed rule, representatives of the auto industry expressed to EPA that the value of the ABT program during the MY 2017

- 2025 phase

- in of the primary

program would be improved if credits had a longer credit life. 338 We determined that, with certain restrictions, Tier 3 credit life can be temporaril y extended with no adverse impacts on the overall emission reductions of the program. Specifically , we are finalizing a c redit life of 8 years for credits generated in MYs 2017

- 2022 for the FTP and SFTP NMOG+NO X fleet average standards for the primary program onl y. For the heavier light

- dut y vehicles, the 8

- ye ar credit life begins for credits generated in MY 2018. Note that, as proposed, credits generated under the Earl y Tier 3 Credit provision (Section IV.A.7.a) are limited to 5

- year life , and are not affected b y the longer credit life

. For credits generated in MYs 2023

- 2025, the credit life declines by one year of credit life annuall y, with credit life stabilizing at 5 years for credits generated in MYs 2025 and later. That is, credits generated in MY 2023 have a 7

- year life, in MY 2024 a 6

- ye ar life, and in MY 2025 and later a 5

- year life. However, while credits can be generated, banked, and used internally for the extended time periods, credits cannot be traded to other manufacturers after 5 years. After considering the views expressed by manufacturers as well as the implementation schedules of this Tier 3 rule and the 2017 light

- dut y GHG rule, we believe that the temporary up - to
- 8

- year credit life available to manufacturers during the phase

- in period provides substantial flexibility to address manufacturer uncertainties about future technology development and product p lanning during

338 Passavant, G. (January2014), Meetings with Chrysler

– Tier 3 NPRM Lead Time and ABT, Memorandum to Docket

.Page 168 of 529

implementation of the Tier 3 program. We also believe this longer credit life provision will alleviate most if not all concerns expressed by manufacturers with respect to the challenges they may encounter by

simultaneous impl ementation of the two programs. As proposed, we are finalizing a provision for a manufacturer to create a credit deficit, at certification or at the end of the production year, if its fleet average emissions exceed the standard. A manufacturer would be required to use a ll of its banked credits, if an y, before creating a credit deficit. A credit deficit would need to be resolved before the fourth model year after the deficit was created; that is, a manufacturer may

not maintain a credit deficit more than 3 consecutive mo del ye ars.
n. Tier 3 Transitional Emissions Bins During the development of the proposed rule and in their comments, manufacturers pointed out that they may continue to produce some vehicles as late as MY 2019 that could be certified to Tier 2 Bin 3 or Bin 4 standards. In order to provide manufacturers flexibility in meeting the fleet average standards and to further facilitate the transition, we will allow manufacturers to certify to the combined NMOG+NO X levels of these Tier 2 bins through MY 2019. We are finalizing two transitional Tier 3 bins, Bin 110 and Bin 85, that have FTP NMOG+NO X standards of 110 mg/mi and 85 mg/mi, respectivel y (i.e., the sum of the NMOG and NO X values from the Tier 2 bins) . T he associated FTP standards for CO, PM, and HCHO cor responding to these bins are identical to those for vehicles certified to the Tier 3 Bin 125. Tier 3 SFTP standards will apply to these vehicles, and these vehicles will be included in the Tier 3 PM percent phase

- in calculations.
o. Compliance Demonstratio n In general, we are finalizing requirements that manufacturers demonstrate compliance with the Tier 3 light

- duty vehicle emission standards in a very similar manner to existing Tier 2 vehicle compliance (see § 86.1860 of the regulatory language). However, for Tier 3 , manufacturers must calculate their compliance with the fleet average standards and percent phase

- in standards based on annual nationwide sales, including sales in California and Clean Air Act Section 177 states. We believe that this approach represents another step toward achieving the goal of an effectivel y nationwide program as earl y as possible, which has been a basic principle in EPA’s development of this program and broadl y supported b y vehicle manufacturers. We also believe that basing compliance on nationwide sales may reduce the need for manufacturers to project future sales and track past ye ars’ sales in a disaggregated way . Because the Tier 3 provisions become increasingly consistent with LEV III provisions as the Tier 3 program pha ses in, we believe thatPage 169 of 529

any disproportionate impacts of different mixes of vehicles in different states are unlikely to occur. This nationwide compliance calculation approach applies to vehicles as they become subject to the Tier 3 provisions, either the declining fleet

- average NMOG+NO X curves or the percent phase

- in PM standards. Were any manufacturer to choose to use the alternative FTP and SFTP phase

- ins, which are not a part of the LEV III program, the manufacturer would not include sales in Californ ia or in the Section 177 states in its compliance calculations. **B. Tailpipe Emissions Standards for Heavy**  **- Duty Vehicles**  1. Overview and Scope of Vehicles Regulated After considering the comments we received, w e are adopting the Tier 3 exhaust emissions stand ards that we proposed for chassis

- certified heavy

- duty vehicles (HDVs) be tween 85 01 and 14,000 lbs gross vehicle weight rating ( GVWR) . Vehicles in this GVWR range are o ften referred to as Class 2b (8 501

- 10,000 lbs) and Class 3 (10,001

- 14,000 lbs) vehicles , and are ty picall y full

- size pickup trucks and work vans certified as complete vehicles

. 339 Medium

- duty passenger vehicles (MDPVs), although in the Class 2b GVWR range, are subject to Tier 3 standards discussed in Section IV.A

. To a large extent, we are a lso adopting the Tier 3 certification testing and compliance provisions that we proposed for HDVs. There are, however, a number of improvements we are making in response to comments, as discussed in detail below. The Tier 3 program for HDVs w ill bring sub stantial reductions in harmful emissions from this large fleet of work trucks and vans, a fleet that is used extensively on every

part of the nation’s highway , rural, and urban roadway sy stem. The fully

- phased in Tier 3 standards levels for non - methane or ganic gas (NMOG ) plus oxides of nitrogen (NO X ), and for particulate matter ( PM ), are on the order of 60 percent lower than the current standards levels. We proposed to require that diesel

- fueled Class 2b and 3 complete vehicles, like their gasoline

- fueled counterparts, be certified to the Tier 3 standards on the chassis test ; we also proposed to include these vehicles in the Tier 3 HDV

339 40 CFR 86.1803

- 01 defines HDVs to also include motor vehicles at or below 8,500 lbs GVWR that have a vehicle curb weight of more than 6,000 lbs or a basic vehicle frontal area in excess of 45 square feet, and these vehicles will a lso be subject to the Tier 3 standards and other provisions applicable to Class 2b vehicles discussed in this section.Page 170 of 529

averaging, banking, and trading (ABT) program . Currently onl y gasoline

- fueled Class 2b/3 complete HDVs are required to cha ssis certify

. The International Council for Clean Transportation (I CCT) provided comments in support of this requirement, arguing that it is needed to stop manufacturers from making trucks marginall y above 8500 lbs GVWR to avoid light

- duty emission standards. The Truck and Engine Manufacturers Association (EMA) opposed mandatory chassis certification for any class of engines or vehicles over 8500 lbs GVWR, arguing that the existing flexibility is needed to minimize unnecessary

costs and certification burde ns. EMA commented that, at a minimum, EPA should maintain optional certification of diesel engines used in complete Class 3 vehicles. In their joint comments, the Alliance of Automobile Manufacturers and the Association of Global Automakers also requeste d that EPA retain the option for complete Class 3 diesel vehicles and engines, arguing that otherwise manufacturers may be required to dual certify vehicle models that include variants both under and over 14,000 lbs. We are sensitive to this issue but rema in concerned that the fleet average standard program we are finalizing would not work well if a major fleet component, such as complete Class 3 diesel trucks, can be left in or taken out of the fleet calculation based on what each manufacturer considers to be most advantageous. We believe the resulting competitive issues and uncertainties would be problematic, given the wide variance in gasoline/diesel HDV sales among the manufacturers, our provision for averaging across each manufacturers’ entire Class 2b /3 fleet, and the overwhelming preponderance of diesels in the Class 3 market. It would also create uncertainties in the Tier 3 environmental benefits, given the pronounced difference between these Tier 3 standards and the heav y - dut y diesel engine standards we set 13 years ago, which we expect to remain in effect for the foreseeable future. As a result, we are finalizing these provisions as proposed, except that we are providing that manufacturers, instead of certifying complete diesel Class 3 HDVs, may install diesel engines that have been engine

- certified for an y model ye ar that the engine family has less than half of its sales being installed in such non

chassis

- certified complete Class 3 vehicles. For example, if a company has a certified diesel engi ne family with 10,001 sales in MY 2020, up to 5,000 of those engines may

be installed in complete Class 3 HDVs that are not chassis

- certified for exhaust emissions. This provision is intended to help address manufacturers’ concern about dual certification , while at the same time ensuring a coherent fleetwide standards regimen in this vehicle class. It also better harmonizes with California’s low

- emission vehicle (LEV) III program which does not mandate chassis certification for diesel Class 3 vehicles. B y onl y allowing engine

- certified vehicles in the case of engines that are primarily produced for other purposes, we believe this approach adequately guards against potential abuse. In the case of complete diesel Class 3 HDVs produced by a company

other th an the engine certifier, the responsibility for ensuring the sales limit is not exceeded remains withPage 171 of 529

the vehicle manufacturer, who will need to coordinate with the engine supplier to ensure compliance. Manufacturers of incomplete HDVs that are sold to sec ondary manufacturers for subsequent completion (less than 10 percent of the Class 2b and 3 U.S. market) are also allowed under existing EPA regulations to certify via either the chassis or engine test, and those who choose to chassis

- certify in the future will be subject to Tier 3 requirements. We asked for comment on mandating chassis certification of incomplete Class 2b and 3 vehicles, n ot ing that California’s LEV III program includes such a requirement for Class 2b. Commenters expressed opposition to this extension of mandatory chassis certification, despite their general support for harmonization with LEV III; as a result, we are not mandating chassis certification for an y incomplete HDVs. The key elements of the Tier 3 program for HDVs parallel those for passenger cars and light

- duty trucks ( LDTs ) , with adjustments in standards levels, emissions test requirements, and implementation schedules, appropriate to this sector. These key

elements include :

 a combined NMOG+NO X declining fleet average standard beginning in 2018 and r eaching the final, fully phased

- in level in 2022,

 creation of a bin structure for standards, including standards for carbon monoxide (CO) and formaldeh yde,

 PM standards phasing in separately on a percent
- of

- sales basis ,

 changes to the test fuel for gasoline

- and ethanol

- fueled vehicles,

 extension of the regulatory useful life to 150,000 miles,

 a new requirement to meet standards over the supplemental federal test procedure ( SFTP ) that address es real

- world driving modes not well

- rep re sented by the federal test procedure (FTP) cycle alone, and

 special flexibility

provisions for small businesses and small volume manufacturers described in Section IV.G. As in the light

- dut y Tier 3 program, we have put a strong emphasis on coordinating H DV Tier 3 pro gram elements with California’s LEV III program for Class 2b and 3 vehicles, referred to in LEV III as medium

- duty vehicles (MDVs). The goal is to create a coordinated “national program” in which California would accept compliance with Tier 3 standards as sufficient to also satisfy L EV III requirements, thus allowing manufacturers to comply nationwide b y marketing a single vehicle fleet. As part of this effort, we proposed that manufacturers of Tier 3Page 172 of 529

HDVs calculate compliance with the fleet average standards and percent phase

- in standards based on annual nationwide sales, including sales in California and in states implementing California standards under Clean Air Act s ection 177

. Commenters expressed emphatic support for this approach and w e are finalizing it as a key element of the Tier 3 program. 2. HDV Exhaust Emissions Standards
a. Bin Standards M anufacturers will certify HDVs to Tier 3 requirements by having them meet the standards for NMOG+NOx, PM, CO and formaldeh yde for one of the bins lis ted in Table IV

- 13 . Manufacturers choose bins for their vehicles based on their product plans and corporate strategy for compliance with the fleet average standards discussed in Section IV.B .2.b, and onc e a vehicle’s bin is designated, those bin standards appl y throughout its useful life. Because the fleet average standards become more stringent over time, the bin mix w ill graduall y shift from higher to lower bins. As in the past, there are numericall y higher standards levels for Class 3 vehicles than for Class 2b vehicles, reflective of the added challenge in reducing per - mile emissions from large work trucks designed to carry and tow heavier loads. Also, the standards levels for both Class 2b and Cla ss 3 HDVs are significantly higher than those being adopted for light

- dut y trucks due to marked differences in vehicle size and capability , and to our requirement to test HDVs in a loaded condition (at the adjusted loaded vehicle weight ( ALVW ) ). By conduc ting emissions testing with loaded vehicles, the heav y - duty program ensures that emissions controls are effective when these vehicles are performing one of their core function s : hauling heav y loads. This is a key difference between the heav y duty and light
- dut y truck programs. The bin structure and standards levels are consistent with those in California’s LEV III program. We request ed comment on the usefulness of creating additional bins between Bin 0 and the next lowest bin in each vehicle class, as a means of encouraging clean technologies and adding flexibility , but commenters saw no need for these.

**Table IV**  **- 1**  **FT P Standards for HDVs**  NMOG+NO X (mg/mi) PM

(mg/mi) CO

(g/mi) Formaldeh yd e

(mg/mi) **Class 2b (8 501**  **- 10,000 lbs GVWR):**  Bin 395 (interim) 395 8 6.4 6 Bin 340 (interim) 340 8 6.4 6 Bin 250 250 8 6.4 6 Bin 200 200 8 4.2 6 Bin 170 170 8 4.2 6Page 173 of 529

Bin 150 150 8 3.2 6 Bin 0 0 0 0 0 **Class 3 (10,001 -**  **14,000 lbs GVWR):** Bin 630 (interim) 630 10 7.3 6 Bin 570 (interim) 570 10 7.3 6 B in 400 400 10 7.3 6 Bin 270 270 10 4.2 6 Bin 230 230 10 4.2 6 Bin 200 200 10 3.7 6 Bin 0 0 0 0 0 The NMOG +NO X standards levels for the highest bins in each class (Class 2b Bin 395 and Class 3 Bin 630) are equal to the sum of the current non
- methane hydrocarbon (NMHC) and NO X standards levels that took full effect in 2009, as well as to equivalent LEV standards in California’s LEV II program

. These bins are intended as carryover bins. That is, we expect them to be populated with vehicles that are desi gned to meet the current standards, and that are being phased out as new lower

- emitting vehicle designs phase in to satisfy the Tier 3 fleet average NMOG+NO X standard. We also consider the next highest bins (Class 2b Bin 340 and Class 3 Bin 570) to be car ryover bins, because they likewise can be readil y achieved b y vehicles designed for today’s EPA and California LEV II emissions programs. As the 2018

- 2022 phase

- in progresses, it w ill become increasingl y difficult to produce vehicles in these bins and sti ll meet the fleet average standard. Therefore vehicles in these bins (as well as some others not y et designed to meet Tier 3 PM standards described in Section IV.B.2.d) w ill be considered “interim Tier 3” vehicles, and the bins themselves w ill be consider ed “interim bins.” To facilitate their use in this carryover function, the interim bins do not require manufacturers to meet Tier 3 exhaust emissions standards on the SFTP, over the longer useful life, or with the new gasoline test fuel discussed in Sectio n IV. F , although testing on this fuel w ill be allowed. These requirements do appl y in all other bins. In the context of these relaxed requirements for the interim bins, we propose d two additional measures to help ensure these bins are focused on their fun ction of helping manufacturers transition to the long

- term Tier 3 emissions levels . First, we proposed that the interim bins would be available onl y in the phase

- in years of the program ; that is, through model year ( MY ) 2021, as is appropriate to their interim status. Second, vehicles in the interim bins would meet separate NMOG and NO X standards rather than combined NMOG+NO X standards

. The goal was to ensure that a manufacturer does not redesign or recalibrat e a vehicle model under combined NMOG+NO X Tie r 3 standards for such purposes as reducing fuel consumption, through means that result in higher NO X or NMOGPage 174 of 529

emissions than exhibited by today ’s vehicles, contrary to the intended carryover function of the interim bins. Industry commenters objected to bo th the proposed sunsetting of the interim bins and the proposed separate NOx and NMOG standards, arguing that they

overl y restrict manufacturer flexibility and work against harmonization with LEV III. However, commenters did not address EPA’s concern regarding increased NOx emissions at the interim bin levels. After considering the comments, we believe a modified approach to the interim bins can at least partly address the industry

concerns regarding harmonization while still precluding backsliding on NOx levels. We are finalizing the interim bins with combined NMOG+NOx standards as requested b y the commenters, but are adopting a restriction on deterioration

- adjusted NOx levels in certification testing, to the levels allowed under the current standards in 40 CFR 86.1816

- 08. These are 0.2 and 0.4 g/mi for Class 2b and Class 3, respectively

. This restriction will not apply to vehicles in use, and does not impose a parallel NMOG restriction. Given our continuing concerns about NOx increases that would be al lowed b y the combined standards at the interim bin levels, we believe that this approach and the associated certification burden are reasonable, noting that manufacturers already must obtain NOx test results in certifying to an NMOG+NOx standard, and the d iffering NOx and NMOG deterioration mechanisms will likely

dictate that they

be considered separately in obtaining deteriorated NMOG+NOx levels for certification. We believe that making the interim bins available indefinitely would run counter to their lim ited purpose as an aid to making the transition to Tier 3 emissions levels. Making these bins permanent would, we believe, necessitate that they take on other key

elements of the Tier 3 program such as longer useful life, SFTP compliance, and the use of T ier 3 test fuel. These requirements in turn would negate the usefulness of these bins in helping to carry over some pre - Tier 3 vehicle designs during the transition years in which the declining fleet average standard levels are high enough to accommodate their continued sale. By MY 2022, the fleetwide standard will be stringent enough to effectively eliminate the ability

of manufacturers to use interim bins while meeting the declining fleet average standard levels. We are therefore adopting the sunsettin g of the interim bins as proposed, making them available only through MY 2021. b. Fleet Average NMOG+NO X Standards As in the light

- dut y Tier 3 program, a key element of the program we are finalizing for HDVs is a fleet average NMOG+NO X standard that becomes m ore stringent in successive model years: in the case of HDVs, from 2018 to 2022. Each HDV sold by

a manufacturer in each model year contributes to this fleet average based on the mg/mi NMOG+NO X level of the bin declared for it by the manufacturer. Manufa cturers may also earn or use credits for fleet average NMOG+NO X levels below or above the standard in any model year, as described inPage 175 of 529

Section IV.B.4. As proposed, w e are adopting the separate Class 2b and Class 3 fleet average standards shown in Table IV

- 13 , though a manufacturer can effectivel y average the two fleet classes using credits (see Section IV.B.4). We believe this split

- curve approach is superior to a single phase

- in covering all HDVs because it recogniz es the different Class 2b/Class 3 fleet mixes among manufacturers and the differing challenge in meeting mg/mi standards for Class 3 vehicles compared to Class 2b vehicles, while still allowing for a corporate compliance strategy

based on a combined HDV fle et through the use of credits. We are adopting the proposed fleet average NMOG+NOx standards . These are consistent with those set for the LEV III MDV program in model years 2018 and later. As proposed, we are also adopting provisions allowin g m anufacturers to voluntarily

meet bin and fleet average standards in model years 2016 and 2017 that are consistent with the MDV LEV III standards in those years , for the purpose of generating credits that can be used later or traded to others. These voluntary standards are shown in Table IV

- 13 . This voluntary opt
- in program serves the important purpose of furthering consistency between the federal and California programs, such that manufacturers who wi sh to can produce a single vehicle fleet for sale nationwide, with the opportunity for reciprocal certification in affected model years. It further incentivizes pulling ahead of Tier 3 technologies, with resulting environmental benefits, by providing for earl y compliance credits in this nationwide fleet. Commenters expressed support for this harmonized array of HDV emissions standards. Manufacturers choosing to opt into this early compliance program could start in either model year 2016 or 2017. They wou ld have to meet the full complement of applicable bin standards and requirements for the bins they choose for their vehicles in meeting the 2016/2017 MY fleet average FTP NMOG+NO X standards, including SFTP standards in the bins that have SFTP standards. H owever, they

do not need to meet the Tier 3 PM FTP and SFTP standards discussed in Sections IV.B.2.d and IV.B.3.a, or the evaporative emissions standards discussed in Section IV.C, because these requirements phase in on a later schedule. We are not extend ing the voluntary compliance opportunity

to the 2015 model year , based on manufacturer comments indicating it would be of little value

. **Table IV**  **- 13**  **HDV Fleet Average NMOG+NO X**  **Standards (mg/mi)** Voluntary Requ ired Program Model Year 2016 2017 2018 2019 2020 2021 2022 and later Class 2b 333 310 278 253 228 203 178Page 176 of 529

Class 3 548 508 451 400 349 298 247

We believe that the voluntary program provisions w ill benefit the environment, the regulated industry , an d vehicle purchasers, because it has potential to accomplish earl y emissions reductions while maintaining the goal of a cost

effective, nationwide vehicle program in every model year going forward. Although manufacturers will be allowed to meet the fleet average NMOG+NO X standard through whatever combination of bin

- specific vehicles they choose, it is instructive to note that the fully phased in fleet average standard for model years 2022 and later w ill be the equivalent of a Class 2b fleet mix of 90 percent Bin 170 and 10 percent Bin 250 vehicles, and a Class 3 fleet mix of 90 percent Bin 230 and 10 percent Bin 400 vehicles. Therefore, it is appropriate to consider Bin 170 Class 2b vehicles and Bin 230 Class 3 vehicles to be representative of Tier 3

- compli ant HDVs in the long term.
c. Alternative NMOG+NO X Phase

- in We believe the fleet average phase

- in described above will be flexible, effective, and highl y compatible with manufacturers’ desire to market vehicles nationwide, because of its close alignment with California’s LEV III program for medium

- duty

vehicles. However, for any HDV manufacturers seeking four y ears of lead time and three ye ars of stability as specified in Clean Air Act section 202(a)(3)(C), we proposed an alternative compliance path. 340 This alternative approach was crafted to be equivalent to the NMOG+NO X declining fleet average in the above

- described LEV III

- harmonized alternative in every model year , except that the period for the voluntary program in the alternative approach would extend an extra model year

—through 2018. To ensure that this approach meets the Act’s stability requirement, instead of being structured around an annually declining fleet average standard, the alternative approach requires a manufacturer to demonstrate complianc e (including through use of credits) with a schedule of annuall y increasing percent

- of

- sales of HDVs certified to the fully phased in 178 mg/mi (Class 2b) and 247 mg/mi (Class 3) standards, as shown in Table IV

- 14

. We are adopting the alternative percent

- of

- sales phase

- in largel y as proposed, with limited changes described below.

340 For vehicles above 6 , 000 lbs GVWR, C lean A ir A ct section 202(a)(3)(C) requires EPA to provide manufacturers with a minimum of 4 years o f lead time before mandatory changes to any standard applicable to hydrocarbon , NO X , carbon monoxide, or PM can be implemented, and 3 years of stability between changes to any such standard.Page 177 of 529 **Table IV**  **- 14**  **Percent -**  **of**

**- Sales Alternative NMOG+NO**  **X Phase**  **- in**  Voluntary Required Program Model Year 2016 2017 2018 2019 a 2020 2021 2022 and later Class 2b 29% 39% 54% 65% 77% 88% 100% Class 3 21% 32% 47% 60% 73% 87% 100% a Special provisions apply to models with an early

- starting 2019 model year. T he availability

of emissions ave raging under our alternative phase

- in, discussed below, makes the two alternatives functionally equivalent, not just in the annual emissions reductions they achieve, but also in how manufacturers may design their mix of products t o meet the phase

- in standards. Commenters who disagreed with this assessment for HDVs did not provide their reasoning, beyond referring to similar comments they had on the parallel light

- dut y (above 6000 lbs GVWR) alternative phase

- in. However, that proposed alternative differs f rom the one we proposed for HDVs, and the elements in it that were found objectionable by the manufacturers are not in the HDV alternative. (See Section IV.A.3 for discussion of comments on the light

- dut y alternative.) Commenters objected that the propo sed percent

- of

- sales alternative has not been shown b y EPA to be feasible, or in fact is infeasible because it mandates the earl y phase

- in of low

- emitting vehicles certified to the final standards. Such comments miss the fact that, with ABT, every manufac turer can produce the same mix of vehicles in any

model year to compl y with either HDV phase

- in alternative, with the exception that MY 2018 is a voluntary phase

- in year under the alternative phase

- in and a required year under the LEV III

- harmonized phase

- in. The ABT provisions enable a manufacturer to adopt a fleet average compliance strategy while utilizing the percent

- of

- sales phase

- in that is identical to what would be required under the LEV III

- harmonized phase

- in’s fleet average standards. By no means are manufacturers forced to make only vehicles certified to the final standards. The percent
- of

- sales phase

- in is thereb y no more stringent than the LEV III

- harmonized phase

- in, and the feasibility anal ys is provided in Section IV.B.5, which expressly a ddresses the LEV III

- harmonized phase

- in, serves to demonstrate the feasibility of both alternatives. Some comments seem to assert that the percent

- of

- sales framework for the alternative was chosen by EPA to make this alternative so stringent (b y requiri ng some vehicles to meet final standards four years early) that no reasonable company would use it. This is incorrect, both in regard to its actual effect (which as explained above is not more stringent), and in regard to our intent. The percent

- of

-Page 178 of 529

sales framework for the alternative was proposed and is being adopted for the purpose of providing manufacturers with a phase

- in alternative that explicitly meets the applicable Clean Air Act stability requirement. We are making one change to the percent

- of

- sal es alternative, necessitated by the fact that this final rule is being signed in 2014, not 2013 as envisioned in the proposal. HDV models for which the 2019 model year begins before the fourth anniversary

of the signature date of this final rule may be ex cluded from the Tier 3 fleet average compliance calculations and all other Tier 3 requirements. These excluded vehicles would instead need to compl y with the applicable pre

- Tier 3 standards and requirements for the entire production of these models throughout the 2019 MY. This limited allowance ensures that the alternative meets EPA’s obligation for four ye ars of lead time under the Clean Air Act. It is similar to a phase

- in alternative we provided in the light

- dut y vehicle Tier 2 rule (see 65 FR 6747, F ebruary

10, 2000). Note that 40 CFR 86.1803

- 01 defines “model year” as “the manufacturer’s annual production period (as determined b y the Administrator) which includes January

1 of such calendar ye ar: Provided that if the manufacturer has no annual produc tion period, the term ‘ model year ’ shall mean the calendar ye ar.” Additional regulations pertaining to the definition of a model year are in 40 CFR 85, subpart X. This allowance remains optional within the percent

- of

- sales alternative

-- a manufacturer may voluntarily include these earl y - starting 2019 MY vehicles in the Tier 3 program, and in this case these vehicles would be treated no differently under the alternative than vehicles with a later

- starting 2019 MY, including with regard to whether manufactur ers choose to make them part of the “phase

- in” fleet (vehicles counting toward the phase

- in percentages) or the “phase

- out” fleet (vehicles not counting toward the phase

- in percentages). Although it is conceivable that manufacturers would commence an earl y start of the 2019 model year specificall y for the purpose of delaying Tier 3 obligations, we do not think this is likely , given the many important constraints and decisions that ty

pically factor into setting this date, and the fact that signature of this final rule is occurring relatively earl y in the calendar year, well before t ypi cal model year start dates. We believe this is a reasonable way to provide a viable percent
- of

- sales phase

- in alternative that has four years of lead time without making the 2 019 model year voluntary for all vehicles or putting new constraints on the timing of a manufacturer’s model year. To help ensure that the percent

- of

- sales alternative is fully

equivalent to the LEV III

- harmonized alternative in terms of fleet

- wide emissi ons control and technology

mix choices, we are including some additional provisions , as proposed

. First, the Tier 3 vehicles being phased in under the percent

- of

- sales alternative, in addition to meeting the fully phased

- in FTP NMOG+NO X standards, must al so meet all other FTP and (as described below) SFTP standards required b y the LEVPage 179 of 529

III

- harmonized alternative . These include the CO and formaldeh yd e FTP standards, the 150,000 mile (15 year) useful life requirement, exhaust emissions testing with the new t est fuel for gasoline

- and ethanol

- fueled vehicles discussed in Section IV

. F , and the NMOG+NO X and CO SFTP standards in Table IV

- 15 . The specific standards are those for the bins in these tables closest to the fully phased

- in NMOG+NO X standards: Bin 170 for Class 2b and Bin 230 for Class 3. (The PM and evaporative emissions standards phase in on separate schedules under both alternatives, as discussed in Sections IV.B.2.d and IV.C.) Second, we are making an ABT program available for the percent

- of

- sales alternative, structured like the one created for the LEV III

- harmonized alternative

. This involve s certifying the vehicles in a manufacturer’s HDV fleet to the bin standards, and demonstrating compliance with the fleet average standards for the LEV III

- harmonized alternative in each model year, including through the use of ABT credits as in the LEV III

- harmonized alternative . We are us ing the fleet average calculation method for purposes of ABT because, a s explained above, we have determined that making this demonstration is equivalent to demonstrating compliance with the percent

- of

- sales requirement, and we see no value in complicating the program wi th another set of calculations. However, we are establis hing one difference between the LEV III

harmonized and percent
- of

- sales alternative s with respect to ABT provisions. Unlike in the LE V III

- harmonized alternative , manufacturers w ill not have to certify all vehicles into bins in order to take advantage of the ABT provisions under the percent

- of

- sales alternative. Rather they could choose to certify

any “phase

out” vehicles (that is, those not counting toward the percent

- of

- sales phase

- in) to the pre - Tier 3 NMHC and NO X standards, provided these vehicles do not have family emission limits (FEL s) above those standards. These non

- Tier 3 vehicles w ill not be subject to the Tier 3 standards or other vehicle

- specific elements of the Tier 3 compliance program. There were no comments on these specific compliance and ABT provisions associated with the percent

- of

- sales alternative. d. Phase

- in of PM Standards Consistent with the light

- duty Tier 3 pro gram discussed in Section IV.A, we are phasing in the PM standards for HDVs as an increasing percentage of a manufacturer ’s production of chassis

- certified HDVs (co mbined Class 2b and 3) per year . In addition to concerns regarding the availability and required upgrades of test facilities used for both light

- duty and heavy

- duty

vehicle testing, manufacturers have expressed uncertainty about PM emissions with new engine and emissions control technologies entering the market as a result of new greenhouse gas ( GHG ) standards. Therefore we are adopting the same phase

- in schedule as for the light

duty sector in model years 2018

- 2 019

- 2020

- 2021: 20

- 40

- 70

- 100 percent, respectivel y. This w ill apply to HDVs certified under either NMOG+NO X phase

- in alternative. The California Air Resources Board (CARB) is phasing in the LEV IIIPage 180 of 529

PM standards for HDVs on the same schedule, except that LEV III w ill also involve a 10 percent PM phase

- in in the 2017 model year . W e ask ed for comment on our adding this to our voluntary program for 2017, but received no comments on it and are not including it in the Tier 3 program. For manufacturers choosing the declining fleet average NMOG+NO X compliance path, the PM phase

- in requirement for HDVs will be completely independent of the NMOG+NO X phase

- in, with no requirement that both phase

- ins be met on the same vehicles

. As a result, vehicles certified to an y of the bin standards for NMOG +NO X need not necessarily meet Tier 3 PM standards before the 2021 model year. Instead, the current 0.02 g/mi PM standard w ill apply for those vehicles not yet phased into the Tier 3 PM standards. We are requiring that manu facturers choosing the percent

- of

- sales phase

- in alternative for NMOG+NO X meet the PM phase

- in requirements with only those vehicles certified to the Tier 3 NMOG+NO X standard, except in the 201 9 and earlier model years when the standards, including the PM standards, are voluntary , and in the 2021 model year when the 100 percent PM phase

- in requirement exceeds the 87

- 88 percent NMOG+NO X phase

- in requirement. This is appropriate given the abilit y of manufacturers to build “phase

- out” vehicles ( those not counting toward the phase

- in percentages) under the percent

- of

- sales NMOG+NOx alternative that are certified entirely to pre
- Tier 3 standards while still participating in the Tier 3 ABT program, discussed above. We w il l consider an y vehicle under either compli ance path that is not certif ied to Tier 3 standards for PM and NMOG +NO X (as well as the other, concomitant Tier 3 standards and requirements such as the extended useful life), an “interim Tier 3” vehicle. This term also applies to vehicles certified in on e of the interim bins, as discussed above. Note that compliance with Tier 3 evaporative emissions requirements follow s a separate phase

- in schedule as described in Section IV.C . As a result, a vehicle in an exhaust emissions family that the manufacturer h as phased in to the new useful life and test fuel requirements may be in an evaporative emissions family that has not yet phased in th e Tier 3 useful life and test fuel for evaporative emissions compliance and testing.

i. Optional PM Phase

- in The percent

- of

- s ales phase

- in schedule for the PM standard, described above, w ill allow manufacturers with multiple vehicle models to determine and plan the phase

- in of those models based on anticipated sales volumes of each model. However, manufacturers certifying onl y a few vehicle models may not be able to take meaningful advantage of this schedule. This is becaus e their limited number of models may force them to over
- compl y to reach the required minimum percentages ,Page 181 of 529

compared to a manufacturer with many vehicle mode ls available from which to choose a phase

- in pathway

. For instance, a manufacturer with onl y two mo dels that each equally account for 50 percent of its sales would be required to introduce (at least) one of the models in MY 2018 to meet the phase

- in requirem ent of 20 percent in the first ye ar. At the 50 percent level, this model would then also meet the requirements for MY 2019 (40 percent). To meet the MY 2020 requirement of 70 percent of sales, however, the manufacturer would need to introduce the second T ier 3 vehicle that ye ar. Thus the manufacturer would have introduced 100 percent of its Tier 3 models one year earlier compared to a manufacturer that was able to delay the final 30 percent of its fleet until MY 2021 by distributing its redesign of models over the entire phase

- in period. To provide for more equal application of this benefit among all manufacturers in the early years of the program, we are adopting the proposed optional “indexed” phase

- in schedule that could be used b y a manufacturer to mee t the phase

- in requirements. A manufacturer that exceed s the phase

- in requirements in any given ye ar w ill be allowed to, in effect, offset some of the phase

- in requirements in a later model year. The optional phase

- in schedule w ill be acceptable if it pas ses a mathematical test. The mathematical test is designed to provide manufacturers a benefit from certifying to the standards at higher volumes than they are obligated to under the normal phase

- in schedule, while ensuring that the overall population of c omplying vehicles at the end of the phase

- in is roughl y the same as under the fixed percentage approach. In this alternative approach, manufacturers w ill weight Tier 3 PM

- compliant vehicles in the earlier years by multiplying their percent phase

- in by the number of years prior to MY 2022 ( that is , the second ye ar of the 100 percent phase

- in requirement). The mathematical equation for appl yi ng the optional phase

- in is as follows: (4 x APP2018) + (3 x APP 2019) + (2 x APP2020) + (1 x APP2021) ≥ 440, where APP is the actual phase

- in percentage for the referenced model ye ar. The sum of the calculation w ill need to be greater than or equal to 440, which is the result when the optional phase

- in equation is app lied to the primary percent phase

in schedule (4 x 20% + 3 x 40% + 2 x 70% + 1 x 100% = 440 ). Commenters supported this optional PM phase

- in approach. 3. Supplemental FTP Standards for HDVs Unlike passenger cars and light trucks, HDVs are not currentl y subje ct to SFTP standards. SFTP standards are intended to ensure vehicles have robust emissions control over a wide range of real

- world driving patterns not well

- covered by the FTP drive cycle. Even though HDVs are not ty picall y driven in the samePage 182 of 529

way as pass enger cars and LDTs, especially as they frequentl y carry or tow heav y loads, we believe some substantial portion of real world heav y - dut y pickup and van driving is not well

- represented on the FTP cycle. The goal in setting the SFTP standards levels is not to force manufacturers to add expensive new control hardware for off

- FTP cycle conditions, but rather to ensure a robust overall control program that precludes high off

- FTP cycle emissions by having vehicle designers consider them in their choice of compli ance strategies. High off

- FTP cycle emissions, even if encountered relativel y infrequently in real

world driving, could create a substantial inadequacy in the Tier 3 program, which aims to achieve very

low overall emissio ns in use. The SFTP provisions wi ll also help make the HDV program more consistent with the heav y - dut y engine program, which for several ye ars has included “not

- to
- exceed” provisions to control off

- cycle emissions. Therefore, in addition to the SFTP provisions, we are further limiting enrichment on spark ignition engines in all areas of operation unless absolutely necessary . a. SFTP NMOG+NO X , PM and CO Standards The SFTP standards levels are provided in Table IV

- 15 . These are consistent with those adopted in the LEV III program.

**Table IV**  **- 15**  **SFTP Standards for HDVs** Vehicles in FTP Bins: NMOG+NO X (mg/mi) PM

(mg/mi) CO

(g/mi) **Class 2b with hp**  **/GVWR ≤ 0.024 hp/lb:**  **a** FTP Bins 200, 250 550 7 22.0 FTP Bins 150, 170 350 7 12.0 **Class 2b:** FTP Bins 200, 250 800 10 22.0 FTP Bins 150, 170 450 10 12.0 **Class 3:** FTP Bins 270, 400 550 7 6.0 FTP Bins 200, 230 350 7 4.0
a These standards apply for vehi cles optionally tested using emissions from only the highway portion of the US06 cycle. We are linking Tier 3 SFTP implementation for HDVs directl y to the Tier 3 FTP phase

- in and bins for these vehicles. That is, an HDV certified to any of the Tier 3 FTP bin standards must meet the SFTP standards for that bin as well. However, because the FTP PM standard phase s in on a separate schedule, we will require that SFTP PM c ompliance be linked to the same schedule. That is, an HDV certified to the Tier 3 FTP P M standard must meet the applicable SFTP PMPage 183 of 529

standard as well. This approach recognizes the complementary nature of FTP and SFTP provisions and helps to ensure that Tier 3 emissions controls are robust in real world driving. CARB expressed support in its written comments for this approach to linking FTP and SFTP requirements and an intent to propose aligning LEV III with it once the Tier 3 program is finalized. There are no SFTP requirements for the interim Tier 3 bins in each class (Class 2b Bins 340 and 395 and Class 3 Bins 570 and 630), because these are essentially

carry - over bins from the previous standards to help facilitate the transition to Tier 3, and therefore are not intended to take on new requirements that might prompt a redesign . These implem entation provisions are consistent with the approach taken in the LEV III program, except that California applies more of the Tier 3 requirements for SFTP and extended useful life to vehicles in the interim bins. To help ensure a robust SFTP program that a chieves good control over a wide range of real world conditions, we propos ed to use a weighted

- average composite SFTP cycle, with NMOG+NO X emissions calculated from results of testing over three cycles: the US06, the FTP, and the SC03, weighting these resu lts by 0.28, 0.35, and 0.37, respectivel y. However, at proposal, we determined that the full US06 component of the composite cycle, along with the ALVW loaded test condition, would not be sufficientl y representative of real

- world driving for two groups of HDVs: those with low power

- to
- weight ratios and Class 3 vehicles. Therefore, as discussed in the proposal, SFTP testing of Class 2b vehicles with power

- to
- weight ratios at or below 0.024 hp/lb, may , at the manufacturer’s option replace the full US06 compo nent of the composite SFTP emissions with the test results from only

the second of the three emissions sampling bags in the US06 test, generall y referred to as the “highway” portion of the US06 . HDVs so tested will be subject to the correspondingl y lower SFTP standards levels shown in the table above. These vehicles will be driven during the test in the same way as the higher power

- to
- weight Class 2b vehicles (over the full US06 cycle) , using best effort (maximum power) if the vehicle cannot maintain the driving schedule. The large majorit y of Class 2b vehicles

-- those with pow er - to
- weight above 0.024 hp/lb

-- will be required to include emissions over the full US06 cycle in the composite SFTP. We believe that this approach provide s a robust but repeatabl e and reliable test for the full range of Class 2b vehicles, as the highway portion of the US06 retains broad coverage of vehicle speed/acceleration combinations measured in real

world driving. An y t esting conducted b y EPA would follow the manufacturer’s test path for the vehicle. For Class 3 vehicles, which range up to 14,000 lbs GVWR, we are also concerned that the full US06 cycle would not provide a representative drive cycle for SFTP testing. These vehicles are much larger than the light

- dut y vehicles that formed the basis for development of the US06 cycle, and loading them to ALVWPage 184 of 529

for the SFTP test yi elds a very heav y t est vehicle, not likely to be safel y driven in the real world in a manner that is ty pified b y this aggressive cycle. We believe that the LA

- 92 (or “Unified”) driving cycle developed by C ARB is more representative of Class 3 truck driving patterns and will produce more robust results for use in SFTP evaluations. Therefore we are adopting the proposed LA

- 92 cycle for use in place of the US06 component of the composite SFTP for Class 3 HDVs. HDVs do not have SC03 emissions requirements under the current HDV standards. Manufacturers of HDVs have indicated that they expect the SC03 emissions to be consistently lower than either the US06 o r the FTP emissions levels, and therefore the added SC03 testing burden may be unnecessary . We are therefore providing HDV manufacturers with the option to substitute the FTP emissions levels for the SC03 emissions results for purposes of compliance. How ever, we will retain the ability to determine the composite emissions using SC03 test results in confirmatory or in

- use testing. We received no adverse comments on this proposed approach. The set of composite SFTP cycles and standards we propos ed and are adopting for HDVs is consistent with the MDV LEV III program. We received no adverse comments on them, except with regard to in

- use testing as discussed in Section IV.B.6.a. b. Enrichment L imitation for Spark

- Ignition Engines To prevent emissions from excess ive enrichment in areas not full y encountered in the SFTP cycles, we propos ed and are adopting limitations in the frequency and magnitude of enrichment episodes for spark

- ignition HDVs. These limitations are identical to those for light

- dut y vehicles . Se e Section IV.A.4.c for discussion of the requirements and relevant comments received

. 4. HDV Emissions Averaging, Banking, and Trading This section describes how exhaust emissions credits may be earned and used . See Section V.C for similar provisions that ap ply for evaporative emissions. We are continuing the practice of allowing manufacturers to satisfy standards through the averaging of emissions, as well as through the banking of emissions credits for later use and the trading of credits with others. Ther e are a number of facets of th e Tier 3 ABT program for HDVs that are different from the existing program. First, instead of separate NMHC and NO X credits, manufacturers earn combined NMOG+NO X credits, consistent w ith the form of the standards. Second, manufacturers may accrue a deficit in their credit balance. Deficits incurred in a model year may be carried forward but a manufacturer will not bePage 185 of 529

permitted to have a negative overall HDV credit balance in more than 3 consecutive model years . Manufacturers w ill have to use an y new credits to offset an y shortfall before those credits can be traded or banked for additional model years. C redits not used within 5 years after they are earned will be forfeited. These 5/3

- ye ar credit/deficit life provisions are consistent with our light

- duty Tier 3 approach, the California LEV III program for MDVs, and EPA programs for controlling GHG emissions from light

- and heav y - dut y vehicles. Third, as part of our new require ment for chassis certification of complete diesel HDVs, we are allow ing the chassis

- certified diesel HDVs to participate in th e Tier 3 ABT program without restriction. Prior to Tier 3 they have not been allowed to earn or use ABT credits. We are not restricting or adjust ing credit exchange between diese l and gasoline

- fueled HDVs, consistent with our shift to combined NMOG+NO X standards that helps to ensure comparable stringency for these two engine ty pes, and consistent also with the LEV III MDV program. C redits earned b y a chassis

- certified Tier 3 HDV m ay be used to demonstrate compliance with NMOG+NO X standards for any other chassis

certified Tier 3 HDV, regardless of size and without adjustment. This effectively allows manufacturers to plan a comprehensive HDV compliance strategy for their entire Clas s 2b and Class 3 product offering, b y balancing credits so as to demonstrate compliance with the standards for both classes. Industry commenters argued that EPA should align the HDV credit provisions with the light

- duty program by

allowing earl y Tier 3 cre dits to be generated in MYs 2016 and 2017, calculated relative to the highest Class 2b and Class 3 bin NMOG+NOx levels (395 and 630 mg/mi, respectivel y), and capped at a level proportional to the California level in MY 2018. However, these highest bin lev els correspond to those of the existing HDV standards for NMHC and NOx, and are significantl y higher than the MY 2016 and 2017 LEV III levels. Thus vehicles designed to just meet the LEV III standards in these years could generate a large preliminary

numb er of credits under the industry ’s Tier 3 early credits proposal, credits they

would not earn in LEV III, thereb y potentially thwarting the harmonization of the two programs. Truncating that credit bank for each manufacturer in 2018 such that it is propor tional to their LEV III balance could perhaps, with additional restrictions on trading and banking, restore a harmonized credit status in that year. However, it constitutes an unnecessarily complex and uncertain pathway

to the same result as that achieved under EPA’s earl y opt
- in provisions. Commenters requested that we provide for the conversion of pre

- Tier 3 HDV credits for use in Tier 3. However, as discussed in the proposal, we are not including provisions for doing so

. We believe that by providing an earl y Tier 3 opt

in program for HDVs, capable of generating credits for two model y ears before the mandatory

standards take effect (even longer under the alternative percent

- of

- salesPage 186 of 529

phase

- in approach), we are giving ample opportunity for the manufacture rs to accumulate earl y credits. M anufacturers commented that the proposed fleet average compliance approach is incongruous with California’s LEV III method based on vehicle equivalent credits (VECs). Although expressing that they have no preference for the method since the stringency is equivalent , they

recommended that EPA foster harmonization by

providing a compliance option based on VECs. We believe that such an option would add unnecessary complexity to the Tier 3 program, and is made even more unnecessary by the intent expressed in C ARB’s written comments to propose a fleet average option for LEV III that i s identical to EPA’s approach. In the past we have set upper bounds , call ed family emission limit (FEL) caps, on how high emissions can be for credit

- using vehicles, regardless of how many credits might be available. Under our Tier 3 bin structure, we believe that exhaust emission FELcaps are no longer relevant for Tier 3 HDV s, as every vehicle must meet whatever standards appl y in the bin chosen for the vehicle b y the manufacturer. (The bin standard becomes the effective FEL.) Indeed, because credits and deficits are calculated based on the difference between a manufacturer ’s fleet average emissions and the fleet average standards for a given model ye ar, credits are not calculated for individual vehicle families at all. Thus the standard for NMOG +NO X in the highest a llowable bin serve s the purpose of the FEL caps in previou s programs. Consistent with our proposal, we are not creating an averaging program for the HDV SFTP program, because we believe that the bin structure and FTP

centered NMOG+NO X ABT program provide adequate flexibility for smooth program implementation, esp eciall y in light of our aim to have the FTP standards be the primary

technology

forcers. A separate ABT program for SFTP compliance would add substantial complexity with little benefit, and, by making it possible to demonstrate robust SFTP emissions control on a vehicle that lacks commensurate FTP control, could prove at odds with the primary goal of the supplemental test for HDVs. 5. Feasibility

of HDV Standards The feasibility

assessment, discussed in more detail in Chapter 1 of the RIA, recognizes that the Tier 3 program is composed of several new requirements for Class 2b and 3 heav y - duty vehicles, which include primarily large gasoline and diesel pick

- up trucks and vans with diverse application

- specific designs. These new exhaust emissions requirements i nclude stringent NMOG+NO X and PM standards for the FTP and the SFTP, that w ill as a whole require new emissions control strategies and hardware in order to achieve the standards. The type of new hardware that will be required will vary depending on the sp ecific application and emissions challenges. Additionally , gasoline and diesel vehicles will requirePage 187 of 529

different emissions control strategies and hardware. The level of stringency for the SFTP NMOG+NO X standards w ill generally onl y require additional preci se control of the engine parameters not necessitated in the past because of the lack of SFTP requirements. Similarly , the new PM standards on both the FTP and SFTP cycles will require more precise control of engine operation on gasoline vehicles while die sels already equipped with diesel particulate filters w ill require minimal changes. The new PM standards may also require that manufacturers consider the durability of their engines to the 150,000 miles useful life requirement with respect to engine wear resulting in increased oil consumption and potentially higher PM emissions. In order to assess the technical feasibility of NMOG+NO X national fleet average FTP standards of 178 mg/mi for Class 2b vehicles and 247 mg/mi for Class 3 vehicles, we conducted an anal ys is of certification data for the HDVs certified in the 2010 and 2011 MYs . For this final rule, we also reviewed certification records for 2012 and 2013 MY vehicles, and determined that these primaril y involve carryover engines and emission control hardware

. Therefore we did not update the NPRM analy sis however any new or updated certification results in the 2012 or 2013 MYs are included in the RIA chapter 1 discussion. This analy sis provided a baseline for the current HDV fleet emissions performan ce, as well as the emissions performance specific to the Class 2b and 3 vehicles. The emissions performance of each heav y - dut y vehicle class specific to gasoline and diesel is shown in Table IV

- 16 below. Itis important to note that the emissions results are onl y the 4000 mile test point results and do not incorporate any deterioration which manufacturers must account for when certifying to a full useful life standard. Designs limiting the deterioration of emission control hardware are critical to meeting the emission standards at the useful life of the Tier 3 program. Deterioration facto rs to adjust the values to the Tier 3 useful life standard of 150,000 miles were not available

. H owever , deterioratio n factors to adjust to 120,000 miles useful life , and their implications for performance at higher miles, are discussed in the RIA Chapter 1. The anal ys is also reflects the importance of the combined NMOG+NO X standard approach , where diesels and gasoline H DVs can balance their combined NMOG and NO X levels. Diesel vehicles in the analy sis produce very low NMHC emissions (NMOG is not reported for diesels) but higher NO X emissions, while gasoline vehicles have opposite performance. The combined standard all ows manufacturers to determine the proper balance of the unique emissions challenges of a diesel o r gasoline vehicle.

**Table IV**  **- 16**  **2010/11 Certification Test Results at 4 000**  **Miles**

NMHC NMOG NO X CO NMOG+N O X Gasoline Class 2b 0.050 0.052 0.041 1.648 0.092

Class 3 0.080 0.083 0.073 2.373 0.156 NMHC+NO XPage 188 of 529

Diesel Class 2b 0.037 0.138 0.195 0.174

Class 3 0.019 0.249 0.158 0.268 Combined Class 2b 0.043 0.026 0.0 89 0.922 0.133 Combined Class 3 0.050 0.041 0.161 1.265 0.212

Manufacturers t ypicall y certify their vehicles at emissions levels well below the numerical standards. This difference is referred to as “compliance margin” and is a result of manufacturers’ efforts to address all the sources of variability that could occur during the certification or in

- use testing processes and during in

- use operation. These sources of variability include: test

- to
- test variability , test location, build variation and manuf acturing tolerances, vehicle operation (for example: driving habits, ambient temperature, etc.), and the deleterious effects of sulfur and other oil and fuel contaminants. To meet the NMOG+NO X standard of 178 mg/mi for Class 2b and 247 mg/mi for Class 3 vehicles and establish a compliance margin for these sources of variability , manufacturers will need to reduce their emission levels considerabl y from the levels indicated in this data set, particularl y for diesel vehicles. However, as discussed above, the se emission results do not include the expected emissions deterioration which will be determined by manufacturers during development and certification testing. Therefore, manufacturers will need to further reduce emissions levels in anticipation of the un avoidable emissions deterioration that will occur during the useful life of the vehicle. Further, deterioration is a function of several factors, but it is predominantly due to emissions control hardware thermal exposure (high temperatures), which is ty pi call y a significant issue on vehicles used for performing work like Class 2b and 3 vehicles. We also expect that the 2011 heav y - dut y GHG rule will present new challenges to manufacturers’ emissions performance goals as vehicles begin to use new engines de signed to meet the new GHG requirements. 341 Some of these new technologies may

result in emissions challenges that are specific to certain operating conditions. For example, downsized gasoline engines will likely have improved FTP exhaust emissions but hav e increased challenge with the high

- load SFTP requirements. Diesel

- fueled vehicles may need to carefull y balance engine controls which reduce GHG emissions but can increase criteria emissions (NO X ). With regard to the ability of the heav y - duty fleet to me et the PM standards for the FTP and the SFTP, we based our conclusions on some testing of current

341 76 FR 57106 (September 15, 2011).Page 189 of 529

heav y - dut y gasoline vehicles ( HDGVs ) and the PM performance of the existing light

– duty fleet with similar engines. Testing of two HDGVs with the highest sale s volume (Ford F250 and Chevrolet Silverado 2500), albeit not aged to full useful life, confirmed that they

have similar PM emissions levels as the light

- dut y counterparts and therefore also meet the standards for both the Class 2b and Class 3 configuratio ns. Data from light

- duty gasoline vehicles with similar or common engines with their heav y - duty “sister” vehicle models demonstrates that these veh icles are currentl y meeting the Tier 3 FTP PM standards at the Tier 2 useful life mileage of 120,000 miles. Heav y - dut y diesel vehicles all are equipped with DPFs and have no challenges meeting the FTP or SFTP PM standards being set for Tier 3. The SFTP test data from the same two heav y - dut y vehicles described above indicates that gasoline vehicles can achieve the s tandards for SFTP NMOG+NO X and PM. Since heav y - duty vehicles are not currently required to compl y with any of the SFTP requirements, manufacturers have not focused on improving the emissions performance specificall y over the SFTP cycles (US06 , LA

- 92, and SC03). Therefore, although the limited testing results had a high degree of variability , several tests met the PM standards for the high power

- to
- weight Class 2b vehicles. Consistent with light

- duty , vehicles that are demonstrating high PM on the US0 6 will need to control enrichment and oil consumption from engine wear. Recently m anufacturers have already been implementing product changes to reduce oil consumption to address both customer satisfaction issues and to reduce cost of vehicle ownership. G iven the technologies likely to be applied to meet the HDV exhaust emissions standards, discussed below, we consider the lead time available before the standards take effect under all of the alternatives to be sufficient. HDV manufacturers are already ado pting some of the complying technologies, especially for their light

- duty

vehicles, and these can readil y be adapted for heav y - duty applications. In addition, manufacturers have already begun developing these technologies for HDVs, including diesels, in r esponse to California’s recently adopted LEV III MDV standards which begin to take effect in the 2015 model year. Finally , as described above in Sections IV.B.2, IV.B.3, and IV.B.4, our program incorporates a number of phase

- in and alternative compliance provisions that will ease the transition to final standards without disrupting heav y - duty pickup and van product redesign cycles. Among these is an alternative phase

- in that does not begin mandatory

standards until model year 2019. Comments we received on the proposed HDV standards did not specifically address our anal ys is of their technical feasibility . The Manufacturers of Emission Controls Association (MECA) outlined diesel and gasoline

- engine technologies that they expect will be used to achieve the T ier 3 standards cost

- effectivel y, generall y consistent with our draft RIA. Vehicle and engine industry commenters argued that the case we made for feasibility relied too heavil y on extending light

- dut y truck test data, supplemented b y testing of onl y two HDVs, neither of which were fully agedPage 190 of 529

or representative of future vehicles designed to meet our new GHG standards. However, commenters did not question the feasibility , durability , implementability , or effectiveness of the technologies we identified, or their ability to achieve the proposed standards. Instead, the focus of these comments was on statutory provisions for lead time and stability , and on how relaxed standards for in

- use testing and testing at high altitudes would help to implement the standards within the allotted lead time. These issues, including changes we are making in response to the comments, are addressed in Sections IV.B.2.c, IV.B.6.a, and IV.B.6.f.

i. Technologies Likely to be Applied The technologies expected to be applied to vehicles to meet the lower standards levels w ill address the emissions control sy stem’s abilit y to control emissions during cold start. Current vehicle emissions control sy stems depend on the time it takes for the cataly st to light

- off, which is ty picall y defined as the catal ys t reaching a temperature of 250 ° C. While the specific emissions challenge is somewhat different for gasoline engines than for diesel engines, achieving the necessary temperatures in the catal ys ts is a common challenge. In order to improve catal ys t light

- off, the manufacturers will likely add technologies that provide heat from combustion more readily to the catal ys t or improve the catal ys t efficiency at lower temperatures. These technologies could include calibration changes, thermal manag ement, close

- coupled catal ys ts, catal ys t Platinum Group Metal ( PGM ) loading, and possibl y secondary air injection. In some cases, where the cataly st light

- off response and efficiency are not enough to address the cold start emissions, hydrocarbon adsorber s may be applied to trap hydrocarbons until such time that the catal ys t is lit

- off. Note that with the exception of hydrocarbon adsorbers each of these technologies addresses both NMOG and NO X performance. Key potential technologies are described in greater detail below.

 Engine Control Calibration Changes

– These include changes to retard spark and/or adjust air/fuel mixtures such that more combustion heat is created during the cold start on gasoline engines. Diesel engines may use unique injection timin g strategies or other available engine control parameters. Engine calibration changes can affect NMOG, NO X and PM emissions.

 Thermal Management

– This technology includes all design attributes meant to conduct the combustion heat into the cataly st with min imal cooling on both gasoline and diesel engines. This includes insulating the exhaust piping between the engine and the catal ys t, reducing the wetted area of the exhaust path and/or reducing the thermal mass of the exhaust sy stem. Close

- coupling of cata ly sts (packaging the catal ys ts as close to the head of the engine as possible to mitigate the cooling effects of longer exhaust piping) can also be effective, but is more difficult to employ than in light

- duty applications because of durability concernsPage 191 of 529 wi th highly

loaded operation and the potential increase in fuel consumption to protect the catal ys t from high temperatures.

 Cataly st PGM Loading

– Additional PGM loading in the catal ys t provides a greater number of sites to catal yz e emissions and addresses N MOG, NO X and PM emissions.

 Selective Catal yt ic Reduction Optimization

– Diesel applications will continue to refine this NO X emissions control strategy through improved hardware design and implementation in vehicle applications. Additional engineering enh ancements in the control of the SCR sy stem and related processes will also help reduce emissions levels. 6. Other HDV Provisions
a. In

- Use Emissions The proposal requested comment on the need for relaxation of NMOG+NOx and PM standards for in

- use vehicle testing . The LEV III program includes these on an interim basis in the more stringent bins in both FTP and SFTP testing. However, in its written comments, CARB expressed the view that the technologies required for SFTP compliance are well

- established, and that sufficient lead time is provided such that interim in

- use standards for SFTP are not needed. As a result, CARB expressed an intent to propose aligning the LEV III program with the approach EPA proposed on this matter after the Tier 3 program is finalized. The manufacturers commented that relaxed interim in

- use standards are needed in the HDV sector, both for FTP and SFTP standards. The reasons cited were a need to harmonize with LEV III, the scarcity of data on which to establish standards that apply ove r the full useful life, the extension of that useful life to 150,000 miles, the need for manufacturers to address customer concerns with new products and technologies, uncertainties that accompany the new SFTP cycles and Part 1066 testing requirements (esp eciall y for PM), and the introduction of innovative technologies required to meet GHG standards in the same timeframe. After considering the comments we have concluded that relaxed interim in

use standards are appropriate for HDVs, both for FTP and SFTP te sting. We are adopting HDV in

- use standards levels that are identical to those adopted for LEV III, as shown in Table IV

- 13 . We consider these levels reasonable, in line with relaxed in

- use standards adopted in past programs, and helpful toward harmonization. We are not applying interim in

- use NMOG+NOx standards to the interim (two highest) bins for the FTP standards, because these bins are intended for carry - over of existing designs, and there should be little uncerta int y over their in

use emissions performance. Interim bin vehicles certified to the Tier 3 PM standards shall, however, be subject to the relaxed in

- use PM standards in the same way as for HDVs in other bins. Bin 0 standards are driven by specific zero

-Page 192 of 529

e missions technologies for which in

- use margins would not be appropriate, and so we are not setting in

- use standards for Bin 0. We are also adopting the general approach taken in LEV III of making these interim standards available during the phase

- in period (model years 2016

- 2022) for the first two model years that a test group is newl y certified to a Tier 3 NMOG+NOx or PM standard. Test groups subsequently recertified to a more stringent NMOG+NOx bin standard may begin the two year cycle over again. A tes t group that is first certified into a Tier 3 bin in model year 2022 or later may not take advantage of the relaxed interim in

- use standards. LEV III adopted somewhat different applicability

years, for the most part ending earlier, in model year 2020. Ho wever, we believe that the modest extension is appropriate to facilitate the Tier 3 phase

- in. If a vehicle test group is certified into a Tier 3 bin, but not yet to the Tier 3 PM standard, the in

- use standard for PM shall apply for the first two model years it is first certified to the PM standard. In order to better harmonize with LEV III, the availability

of these in

- use standards includes the voluntary model years. **Table IV**  **- 17**  **Interim In -**  **Use S tandards for HDVs** 

FTP (mg/mi) SFTP (mg/mi) NMOG+NO X PM NMOG+NO X PM **Class 2b:** Bin 395 (interim)

-- a 16

-- a

-- a Bin 340 (interim)

-- a 16

-- a

-- a Bin 250 370 16 770/1120 b 12/15 b Bin 200 300 16 770/1120 b 12/15 b Bin 170 250 16 490/630 b 12/15 b Bin 150 220 16 490/630 b 12/15 b Bin 0

-- a

-- a

-- a

-- a **Class 3:** Bin 630 (interim)

-- a 20

-- a

-- a Bin 570 (interim)

-- a 20

-- a

-- a Bin 400 600 20 770 12 Bin 270 400 20 770 12 Bin 230 340 20 490 12 Bin 200 300 20 490 12 Bin 0

-- a

-- a

-- a

-- a
a No relaxed interim in

- use standard

. b The lower value applies to low power - to
- we ight vehicles optionally certified using only the highway portion of the SFTP US06

.Page 193 of 529 b. HDV Useful L ife Currently the HDV regulatory

useful life, the period of use or time during which emissions standards apply , is 120,000 miles or 11 years, whichever occurs first (40 CFR 86.1805

- 4). For Tier 3 vehicle criteria emissions we are extend ing the useful life to 150,000 miles or 15 years, whichever occur s first. This change better reflect s the improvements in vehicle durability and longevit y that have occurred in the several years since the 120,000 mile useful life was established, and m aintain s consistency

with the LEV III MDV program and with our Tier 3 program for large LDTs, for which the same useful life period is being adopted

. T he new useful life requirement appl ies to Tier 3 HDVs in all bins except those designated as interim bins, consistent with the purpose of the interim bins to provide for lim ited carry

- over of pre

- Tier 3 vehicle designs during the phase

- in period. Although the percentage application in each year will therefore depend on each manufacturer’s fleet binnin g strategy , the declining NMOG+NO X fleet average standard will ensure a rob ust phase

- in of the new useful life requirement over the 2018

- 2022 model years, such that it is expected to be about 50 percent in 2018, and necessaril y reaches 100 percent b y 2022 when the interim bins are no longer available. For those manufacturers cho osing to certify to the voluntary standards, the new useful life will apply even earlier, in model year 2016 or 2017. For manufacturers choosing the alt ernative percent

- of

- sales NMOG+NO X alternative, the n ew useful life requirement applies to all HDVs counted toward the phase

- in requirement, resulting in a generall y equivalent useful life phase

- in rate to that of the LEV III

- harmonized alternative

. See Section IV.F.5 for further discussion of useful life requirements with regard to GHG standards. M anufa cturers may optionally

retain the 120,000 mile/11 ye ar useful life for PM on interim Tier 3 vehicles that are not phased in to the Tier 3 PM standards. We received no adverse comments on these useful life provisions.
c. Heav y - Duty

Alternative Fuel Vehicles A s in the light

- dut y program, manufacturers must demonstrate heav y - dut y flex ible fuel vehicle (FFV) and dual

- fuel vehicle compliance with both the FTP and the SFTP emissions standards when operating on both the conventional petroleum

derived fuel and the al ternative fuel. Dedicated alternative fuel vehicles must demonstrate compliance with both the FTP and SFTP emission standards while operating on the alternative fuel. For all of these vehicles, this includes the requirement to meet FTP emissions standard s when conducting fuel consumption and GHG emissions testing, and also to meet the FTP and highway test requirements at high altitudes (see Sections IV.B.6.e and f). Because FFVs can operate on various combinations of their conventional and alternative f uel, the emissions requirements apply to operation at any

mix of the fuels achievable in the fuel tank with commercially available fuels, including for compliance at highPage 194 of 529

altitudes, even though the required demonstration of compliance is limited to the conventional and alternative fuels designated for certification testing. We received no adverse comments on these provisions. d. Existing Provision to Waive HDV PM Testing EPA’s existing program includes a provision for manufacturers to waive measurement of PM e missions in non

- diesel heavy

- dut y vehicle emissions testing. As proposed, w e are eliminating this provision. We believe that the Tier 3 PM standards for these vehicles are of sufficient stringency that routine waiver of testing is not appropriate. The CARB LEV III program also reflects this view. We do not expect this change to be onerous for manufacturers, as the number of heav y duty vehicle families is not large. We received no adverse comments on this change.
e. Meeting HDV Standards in Fuel Consumpti on and GHG Emissions Testing As with the light

- dut y Tier 3 program, HDVs must meet the FTP bin standards when tested over both the cit y and highway test cycles. We do not believe this adds a very

significant test burden as vehicle emissions are already re quired to be measured when these tests are run for GHG and fuel consumption determinations. Nor do we believe that this requirement is design forcing. Rather, we are creating this requirement to ensure that test vehicle calibrations are not set by manufa cturers to minimize fuel consumption and GHG emissions, at the expense of causing high criteria pollutant emissions. Considering the additional work involved in measuring PM emissions and the reduced likelihood of high PM emissions on the highway test, we are not mandatin g that PM emissions testing be included in this requirement . We received no adverse comments on these proposed provisions. f. HDV Altitude Requirements As in the past, we intend that HDV Tier 3 standards result in emissions controls that are effective over a full range of operating altitudes. We proposed that HDVs be required to meet the FTP bin standards (but not the SFTP standards) at high altitudes, and expressed our expectation that compliance with the FTP standards would require neither the use of special hardware nor a djustment to the level of the standards

. The manufacturers argued in their comments that the reasons EPA cited in proposing relief at high altitudes for light

- dut y vehicles apply for HDVs as well, and requested that relax ed NMOG+NOx standards be adopted in the more stringent bins for testing of HDVs at high altitudes. Ford argued that the challenges could be even greater for HDVs because they are designed to operate at high altitudes withPage 195 of 529

heav y payl oads and towed trailers , and this may necessitate the locating of emissions sy stems farther from exhaust manifolds, thereby increasing cataly st lightoff delay s. Although we agree to a certain extent about the performance of gasoline

fueled HDVs at high altitudes and their similarity to LDVs, the comments did not alter our view that the compliance margins provided in the HDV FTP bin standards compared to what the control technologies can achieve, and the freedom manufacturers have to shift to the more stringent bins gradually as the program phases in, are adequate to account for these effects at altitude. The manufacturers provided no data to counter this view. We note that our adoption of relaxed interim in

- use standards for vehicles in these bins will be directionally helpful t o address any

remaining concerns by manufacturers regarding emissions at altitude (Section IV.B.6.a). This is because testing at high altitudes is often not required for certification (ty picall y manufacturers use an engineering anal ys is instead), and thus the relaxed in

- use standards will help to facilitate Tier 3 implementation for any HDV designs in which in

- use problems at high altitudes surface in the initial model years. **C. Evaporative Emissions Standards**  Gasoline vapor emissions from vehicle fuel sy stem s, which are a mixture of hydrocarbon compounds, occur when a vehicle is in operation, when it is parked, and when it is being refueled. E vaporative emissions which occur daily from gasoline

- powered vehicles are primaril y functions of a ir and fuel temperature, fuel vapor pressure, and vehicle driving . EPA first instituted evaporative emissions standards in the earl y 1970s to address h ydrocarbon emissions when vehicles are parked after being driven. These are commonl y referred to as hot soak and diurnal emissions. Over the subsequent years the test procedures have been modified and improved, the standards have been revised to be more stringent, and we have addressed emissions which arose from new fuel sy stem designs by establis hing new requirements such as running loss emission standards and test procedure provisions which address resting losses (e.g., permeation). Onboard refueling vapor recovery (ORVR) requirements for control of refueling emissions first began to phase

- in fo r light

- duty vehicles (LDVs) and light

- dut y trucks (LDTs) in the 1998 MY. These were later expanded to cover medium

- dut y passenger vehicles (MDPVs) and some heav y - dut y gasoline vehicles (HDGVs). Even though evaporative and refueling emission control sy s tems have been in place for most of these vehicles for man y ye ars, evaporative emissions still contribute 30

- 40 percent of the on

- road mobile source h ydrocarbon inventory. The rate of these emissions in grams/day (hot soak and diurnal), grams/mile (runnin g loss) or grams per gallon (refueling) depends on (1) the stringency of thePage 196 of 529

applicable emission standards, (2) ambient and fuel temperature, (3) fuel vapor pressure, and (4) the presence/ state of repair of the fuel/evaporative control sy stem. These f uel vapor emissions are ozone and PM precursors, and also contain air toxics such as benzene. Even though there are mature evaporative emission control programs in place, further h ydrocarbon emission reductions are needed and can be achieved from further evaporative emission controls on gasoline

- powered highway motor vehicles. This section discusses the vehicl e evaporative emission standards and related provisions for LDVs, LDTs, MDPVs, and HDGVs. The evaporative emissions program has six basic elements : (1) the earl y allowance program (MY 2015

- 2016), (2) the transitional program (MY 2017), (3) the Tier 3 evaporative emission phase

- in program (MY 2018

- 202 1 ), (4) the fully phased

- in standards (MY2022+), ( 5 ) requirements for HDGVs including ORVR for the 20 18MY, and ( 6 ) a leak standard and test procedure which become mandatory for Tier 3 vehicles in the 2018MY. As discussed below, we are finalizing more stringent standards that w ill apply

for the 2

- and 3

- day

evaporative emissions tests, a canister bleed t est procedure and emission standard, and a new certification test fuel specification

. 342 As discussed in section IV.D, we are also adding a fuel/vapor s ys tem leak standard and test procedure for LDVs, LDTs, and MDPVs. EPA is not changing any existing light

- duty running loss or refueling emission standards with the Tier 3 FRM , with the exception of the certification test fuel specification and the addition of a refueling emission controls for complete HDGVs over 10,000 lbs gross vehicle weight rating (GVWR). This section also describes phase

- in flexibilities, credit and allowance programs, and other issues related to evaporative emissions control. In this rule, the vehicle classifications, LDVs, LDTs, MDPVs, and HDGVs, remain unchanged from Tier 2 (see 40 CFR 86.1803

- 010) . For purposes of this discussion of the Tier 3 evaporative emissions program, the vehicle standards can be further placed in four categories: (1) “zero evaporative emission” PZEV vehicles certified b y CARB as part of the ZEV program, (2) vehicles certified b y C ARB to meet LEV III evaporative emission program requirements on CARB certification fuel (7 RVP E10) as early as 2014 MY , (3) vehicles meeting the Tier 3 evaporative emissions program requirements using the Tier 3 certification test fuel (9 RVP E1 0 ), and (4) transitional vehicles meeting existing EPA evaporative requirements on Tier 2 certification test fuel (9 RVP E0). 343 , 344 For ease of reference these four

342 Certification fuel provisi ons for evaporative and refueling emissions testing for flexible fuel vehicles (FFVs) are discussed separately below

. 343 We adopted the most recent vehicle evaporative emission standards for LDVs, LDTs, and MDPVs in 2007 (72 FR 8428, February 26, 2007). T he most recent standards for HDGVs were adopted in 2000 (66 FR 5165, January 18, 2001).Page 197 of 529

categories may

be referred to as PZEV evap, LEV III evap, Tier 3 evap, and Tier 2 /MSAT evap in this section. 345 1. Tier 3 Evaporative Emission Standards
a. Final Standards Th e Tier 3 program for evaporative emissions builds on previous EPA requirements as well as the evaporative emissions portion of CARB’s recent LEV III rule which start s mandatory phas e - in with the 2018 MY. The level of the standards, the timing of their implementation, and related provisions are designed in great measure to allow manufacturers to design, certify , and build one control sy stem for each evaporative/refuel ing family to meet CARB and EPA requirements so that these vehicles can be sold in all 50 states. Commenters supported this approach and no commenter opposed the stringency or timing of the evaporative emission standards and related test procedures. We bel ieve the program is appropriate since it will require new more stringent evaporative emissions control technology

in new vehicles and also achiev e improved in

- use s ys tem performance. Section IV.C.1.a.i

, which follows, descri bes the basic emission standard levels for LDVs, LDTs, MDPVs , and HDGVs. Section IV.C.1.a.ii , describes a new canister bleed standard and testing requirement for measuring emissions fr om the evaporative canister. Section IV .C.1.a.iii discusses the optional use of the CARB LEV III Option 1 evaporative emission standards during a transition period. Next, Section IV.C.1.a.iv discusses interim use of CARB PZEV zero evap dat a based on CARB Phase II fuel. Finally section IV.C.1.a.iv , discusses the ongoing requirement to meet running loss emission standards.

344 See S ection IV. F for a discussion of the final certification fuel provisions , including discussion of options for and implications of the certification test fuel h aving 10 percent ethanol. 345 “PZEV evap” as discussed here refers only to the evaporative emission and useful life requirements of the PZEV program, not the exhaust emission requirements.Page 198 of 529 i. Hot Soak Plus Diurnal Standards The Tier 3 hot soak plus diurnal emission standards are d esigned to bring into the broader motor vehicle fleet the “zero evap” technology used b y the manufacturers in their partial zero emission vehicles (PZEVs). Manufacturers developed this “zero evap” technology as part of their response to meeting the requir ements of the CARB Zero Emission Vehicle (ZEV) program. This program, which is in effect in 11 other states, allows manufacturers to meet their ZEV mandate percentages (totally or in

- part) by

the use of vehicles which among other characteristics have very low fuel vapor emissions. The hot soak plus diurnal emission standards we are adopting (presented in Table IV

- 18 ) are designed to be met with technology that limits Tier 3 vehicles to essenti ally

zero fuel vapor emissions . For the Tier 3 evaporative emissions program, we are not changing the basic 2

- and 3

- day evaporative emission test procedures other than the certification fuel requirements

. The level of the standards primaril y accommodate s what is often referred to as new vehicle background h ydrocarbon emissions. These emissions arise from the off

- gassing of volatile hydrocarbons from plastics, rubbers, and other poly mers found in new vehicles (e.g., new tires, interiors, seats, fuel sy st em components, paints, and adhesives). In the field these emissions decrease over time as the vehicle ages, but this cannot necessarily

be replicated in the time that manufacturers ty pically allocate for vehicle certification or with the techniques normal ly used for vehicle pre - conditioning

. Provisions related to vehicle pre

- conditioning before evaporative emissions certification testing are discussed further below. In the past EPA has set relatively uniform (but not identical) evaporative emission stand ards for LDVs and LDTs and somewhat higher values for MDPVs and HDGVs . The Tier 3 hot soak plus diurnal emission standards follow this approach, because in general the vehicles have higher levels of non

- fuel background emissions as they get larger. As described in more detail in Section IV .C.2.d below, EPA is finalizing a program that will allow manufacturers to demonstrate compliance with the hot soak plus diurnal evaporative emission standards using averaging concepts. A m anufacturer may

comply by averaging within each of the four vehicle categories but for the reasons discussed below, may not rel y on averaging across categories. The technical approaches to meeting the standards are discussed in Section IV .C.2

. **Table IV**  **- 18**  **Final Evaporative Emission Standards (g/test)**  **a,b,c** Vehicle Category

/Averaging Sets Highest Hot Soak + Diurnal Level (over both 2

- day

and 3

- day

diurnal tests) LDV, LDT1 0.300Page 199 of 529 LDT2 0.400 LDT3, LDT4, MDPV 0.500 HDGVs 0.600
a The standards are in grams of hydrocarbons as measured by flame ionization detector during the diurnal and hot soak emission tests in the enclosure known as the sealed housing for evaporative d etermination (SHED). b Note that the standards are the same for both tests; existing current standards are slightly different for the 2

- and 3

- day

tests
. c Vehicle categories are the same as in EPA’s Tier 2 final rule; see 65 FR 6698, February 10, 2000.

ii. C anister Bleed Emission Standard Inaddition to more stringent hot soak plus diurnal standards, EPA is finalizing a new canister bleed emission test procedure and standard as part of the Tier 3 program . The canister bleed test procedure is described in Se ction IV.C.6 below. EPA is adopting the canister bleed standard because it is an important tool in moving Tier 3 evaporative emissions control toward zero fuel vapor emissions. No commenter opposed the canister bleed standard or commented on the test procedure. The new test and standard align with the California LEV III requirements and help to ensure that near

- zero fuel vapor emissions are being emitted by

vehicles from the fuel tank through the evaporative emi ssion canister. M anufacturers will be required to measure diurnal emissions over the 2

- day diurnal test procedure from just the fuel tank and the evaporative emission canister using Tier 3 certification fuel and comply with a 0.020 g/test standard for all LDVs, LDTs, and MDPVs and 0.030 g/test for HDGVs. The feasibility of this standard is discussed in Section IV.C.3 below. The canister bleed test and standard drives canister design elements such as total gasoline working capacity , internal architecture, and the t yp e of carbon used. These are also key elements of canister design for the hot soak plus diurnal emission standards

. The canister bleed standard will be implemented differentl y than the hot soak plus diurnal standard. EPA is not applying the av eraging program to this new bleed test standard as compliance is relativel y straightforward and low in cost. Therefore, each evaporative/refueling emission family certified by

manufacturers will need to demonstrate compliance with their respective standard. As discussed below, the canister bleed standard will not apply at high altitude, but proportional control is expected. Since the performance of the canister is also evaluated in the hot soak plus diurnal evaporative emissions sealed housing for evapor ative determination (SHED) test the canister bleed emission standard will not be included in the In - Use Verification Program of under 40 CFR 86.1845 through 1853, but it must be met in use. We will not have canister bleed specific family criteria for cert ification but the test will have to be completed and the standard met for each evaporative/refueling family including potentially

twice if there are two canisters used. A deterioration factor will not be required, but the manufacturer must certify that th e standard will be met for the full useful life. A s mentioned above, thePage 200 of 529

standard will have to be met in

- use and could be evaluated in EPA confirmatory testing. The canister bleed standard will have to be met using the same fuels and test procedures used for the hot soak plus diurnal standards. We will accept results on either CARB or EPA test fuels/test temperatures for the canister bleed test provided the same are used for the hot soak plus diurnal test.

iii. Hot Soak Plus Diurnal Standard with the Fuel System Rig Test As part of its LEV III program, CARB has included an alternative set of evaporative emission standards, referred to as Option 1 standards. These are shown in Table IV

- 19

. **Table IV**  **- 19**  **CARB Option 1 Evaporative Emission Standards**
Vehicle Category Highest Hot Soak + Diurnal Level (over both 2

- and 3

- day diurnal tests) (g/test) Running Loss (g/mile) Vehicle SHED Rig

SHED Passenger Car 0.350 0.0 0.05
LDT < 6,000 lbs GVWR 0.500 0.0 0.05 All other vehicles > 6,000 lbs GVWR 0.750 0.0 0.05 The Option 1 standards include evaporative emission standards (hot soak plus diurnal) that are slightly higher numericall y than our final standards. Vehicles certified under this option may not use averaging in the CARB LEV III program because they

basically represent the same evaporative emission standards as exist for PZEVs under CARBs ZEV program wherein averaging is not permitted. Option 1 also includes an additional SHED test of the vehicle fuel s ys tem (rig test) that pre dates development of the canister bleed emission standard. The rig SHED test is discussed in Section IV.C.6. From a practical perspective, this test is more difficult to conduct than th e bleed test discussed above and is intended to force manufacturers to demonstrate at certification that their stand alone (not in chassis) fuel/vapor control s ys tem designs have < 54 mg fuel vapor emissions. 346 While one commenter was in favor of permanent ly including Option 1 in the EPA final rule

346 Any value < 54mg rounds down to zero under the regulations.Page 201 of 529

based on what it viewed to be favorable pre

- production engineering design features of the rig SHED test, EPA is including Option 1 only as interim compliance alternative for a limited period of time but not as a permanent option in the Tier 3 evaporative emission program. While we see the value to vehicle manufacturers of the rig SHED test as an engineering design and development tool, by its very nature, the rig SHED test and standard is not implementable as an e nforceable standard because a fuel sy stem cannot be removed from a vehicle and reconstructed in a SHED for testing without compromising its fundamental structural and mechanical integrity

as it existed on the vehicle. We believe that the hot soak plus di urnal SHED test and standard and the canister bleed test and standard will accomplish the objective of keeping fuel vapor emissions to a minimum while doing so in an enforceable manner

. EPA believes most manufacturers will prefer to certify to the avera ging based standards in Table IV

- 1 (similar in stringency and program construct to CARB Option 2). However, because some manufacturers may have vehicle models meeting the CARB Option 1 standards and emission requirements now or in the near future, EPA wil l allow compliance with the CARB Option 1 standards as an acceptable interim alternative to compliance with the Tier 3 evaporative emission standards if the model is certified b y CARB to LEV III requirements b efore the 2017 MY. T hese vehicles could then b e certified using carryover provisions through the 20 21 MY as part of the evaporative emissions phase

- in described below

. This is two model years longer than in the proposal, but this extension is reasonable given the life cycle of most fuel/vapor control sy stems and the goal of aligning with the LEV III program for a national program where possible. 347 As noted in the following sections, vehicles certified under this provision will count toward the phase

- in percentage requirements and could earn allowances as discussed below, but the vehicles will not be eligible to earn or use credits for the evaporative emissions averaging program. Carryover vehicles will have to meet the EPA leak standard and the high altitude emission standard to be counted toward the sales percentage requirements for 2018 and later model years.

iv. Interim Carryover of PZEV Evap Data for Tier 3 Certification To earn credits toward compliance with the CARB Zero Evaporative Emissions (ZEV) program requirements, man y m anufacturers have cert ified LDVs and LDTs to 150,000 mile useful life emission standards similar to those found in Table IV

- 19 . These vehicles have used CARB Phase II fuel (E0) and met the rig SHED test requirement in lieu of the c anister bleed standard, but otherwise have employed the same basic technology EPA expects for the LEV III and Tier 3

347 EPA is incorporat ing by reference the CARB Option 1 test procedures and emission standards for this interim period

.Page 202 of 529

programs. EPA is permitting data generated from certification of these vehicles in the 2015 and 2016 MYs to be used for Tier 3 evaporative emissions purposes through the 2021 MY.

v. Running Loss Emission Standards EPA has required vehicles to meet running loss emission standards since the 199 6 model year . These requirements, which are specified in 40 CFR §86.134

- 96, apply to all gasoline

- powe red highway motor vehicles. EPA is not chang ing either the test procedures or emission standard for the running loss test. However, the change in certification test fuel will apply to testing for such standards . This is appropriate based on the rational e for implementing a certification fuel change and is necessary since the running loss test is part of the overall test sequence for the 3

- day hot soak plus diurnal test. EPA does not anticipate that the change in certification test fuel will impact the s tringency of the running loss test and standards or the manufacturers’ abilit y to comply as part of Tier 3. b. High

- Altitude Requirements Prior to this rule, the most recent vehicle evaporative emission standards were adopted in 2007. 348 The new standards ado pted in 2007 apply onl y to testing under low

- altitude conditions. 349 Inth e 2007 r ule, we decided to continue to apply the previous “Tier 2” standards for testing under high

- altitude conditions. This was necessary to achieve an equivalent level of overall stringency for high

- altitude testing , account ing for the various effects of altitude and lower atmospheric pressure on vapor generation rates, canister loading and purging dynamics, and other aspects of controlling evaporative emissions due primaril y to lo wer air density and vapor concentrations at altitude . While it is important for vehicles to have effective emission controls at high altitudes, we do not want the high

- altitude standards and test procedures to dictate the fundamental design of the Tier 3 evaporative emission control sy stems since the high altitude vehicle population is only about five percent of the national total. Therefore, we believe it is appropriate to address this goal by

applying the current 2

- day low altitude evaporative emission standards and requirements for high

- altitude testing. 350 The vehicle categories for the high altitude standards in this rule are the same as for the low altitude standards.

348 See 72 FR 8428 (February 26, 2007). 349 Low altitude conditions means a test altitude less than 549 meters (1,800 feet). High

- altitude conditio ns means a test altitude of 1,620 meters (5,315 feet) plus or minus 100 meters (328 feet) or equivalent observed barometric test conditions of 83.3 kPa (24.2 inches Hg) plus or minus 1kPA (0.30 inches Hg) See 40 CFR 86.1803

- 01.

. 350 See Control of Air Pol lution from New Motor Vehicles: Heavy

- Duty Engine and Vehicle Standards and Highway Diesel Fuel Sulfur Control Requirements 66 FR 5002, January 18, 2001and Control of Hazardous Air Pollutants from Mobile Sources, 72 FR 8428, February 26, 2007.Page 203 of 529

The standards are presented below in Table IV

- 20 . This will both reduce evaporative emissions at high altitude and again create a requirement to confirm that emission controls function effectively at high altitude without forcing manufacturers to appl y al titude

- specific technologies. T he leak standard presented in Section IV .D below will apply equall y at low and high altitude testing as compliance is not dependent on air density and vapor concentrations

.
**Table IV**  **- 20**  **Final High**  **- Altitude Evapora**  **tive Emission Standards (g/test)** Vehicle Category Highest Hot Soak + Diurnal Level (over both 2

- day

and 3

- day

tests)(g/test) LDV, LDT1 0.65 LDT2 0.85 LDT3, LDT4 1.15 MDPV 1.25 HDGVs < 14,000 lbs GVWR 1.75 HDGVs > 14,000 lbs GVWR 2.3
A few addition al points should be noted about our Tier 3 high altitude evaporative emissions control program. First, EPA does not expect manufacturers to produce vehicles with high

- altitude onl y evaporative control s ys tems. Given the nature of evaporative emission control technology, there should be emission reductions at high altitude proportional to those achieved at lower altitudes. We are not applying the canister bleed test and emission standard at high altitude, but we expect similar emission reductions to those which will occur at low altitude. These vehicles will have to meet the canister bleed emission standard at low altitude and canister bleed emission reductions at high altitude should be proportional as is the case with the low altitude hot soak plus diurn al standards. Any adjustment to meet the standard at high altitude to account for canister adsorption and desorption effects of higher altitudes would result in fundamentally the same technology with an increase in the testing burden but not necessarily m ore emissions control. Therefore, we believe the low

- altitude canister bleed test is sufficient for achieving the level of emission control for operation in both low

- altitude and high

- altitude conditions. Second, for vehicles certified with FELs above or below the applicable standard for testing at low altitude, the same differential will apply to the FEL s for high

- altitude. For example, if an LDV was certified with an FEL of 0.400 g instead of the 0.300 g standard, the high

- altitude FEL will be 0.75 g (0 .65g+0.10g). This high

- altitude FEL will not be used for an y emission

- credit calculations, but it will be used as the emission standard for compliance purposes. Third, gasoline RVP for certification test fuel will be set at 7.8 RVP with 1 0 percent ethano l, as specified in Section IV.F. Finall y, we are finalizing a minor adjustment to the high altitude test procedures. The existing 2

- and 3

- day test procedures appl y equally at low and highPage 204 of 529

altitude. We are keep ing th e same basic requirement but will allow for a downward adjustment of 5 °F in the temperatures related to the running loss test within the 3

- day test cycle. Thus, the applicable ambient temperatures at §86.134

- 96 (f) and (g) will be 90±5 °F instead of 95±5 °F for high altitude testing , and the e ntire fuel temperature profile from §86.129

- 94(d) shifts down by 5°F. EPA believes this is appropriate given the differences in atmospheric conditions at low versus high altitude and will still result in equivalent control of running loss emissions at higher altitudes. EPA r equest ed comment on the alternative approach of keeping test temperatures the same, but omitting the 3

- day test cycle for testing at high altitude. This was supported b y one set of commenters, but at this time EPA does not have the dat a needed to drop such a fundamental test requirement. As mentioned above, emission data from vehicles meeting the current CARB PZEV zero evap and CARB LEV III Option 1 requirements could be used to qualify that vehicle to meet the Tier 3 evaporative emiss ion regulations for the 2017

- 20 21 MYs. To qualify for a federal certificate, the vehicle will also have to meet the Tier 3 high altitude evaporative emission requirements. CARB does not require vehicles to meet EPA high altitude requirements, so for thes e vehicles we are giving the manufacturers the option to certify either by providing SHED test data or based on an engineering demonstration using data and anal ys is and the application of good engineering judgment. For the 2015

- 2017MYs, manufacturers can use data based on either Tier 2 or Tier 3 test fuel. Beginning in the 2018 model ye ar, for Tier 3 vehicle certification to the high altitude standard, the data must be based on Tier 3 fuel.
c. Useful L ife Trends indicate that vehicle lifetimes are increas ing. It is important that emission control sy stems be designed to meet requirements while vehicles are in use. As discussed in Section IV.A.7 and IV.B.6 of this preamble , along with the new emission standards, we are finalizing a longer useful life of 15 0,000 miles/15 ye ars, whichever comes first, for LDTs up to 6,000 lbs GVWR but over 3,750 lbs loaded vehicle weight (LVW) (LDT2s), all LDTs over 6,000 lbs GVWR (LDT3/4), MDPVs, and HDGVs. The longer useful life will apply to all certifications to the Tier 3 evaporative emission standards (see Table IV

- 18 and Table IV

- 19 above)

. For an evaporative/ refueling famil y certified to 150,000 miles/15 year useful life for evaporative emissions this useful life will also apply to the hot soak plus diurnal, running loss, canister bleed, fuel s ys tem rig, refueling, leak, and high altitude standards. All of these standards impact the fuel and vapor control s ys tems and it is te chnologicall y consistent to require the same useful life for these standards because they all rel y on the mechanical integrity, durability, and operational performance of the same components in the evaporative emissions control sy stem. Due to limitations in the CAA, for LDVs and for LDTs up to 6,000 lbs GVWR and at or below 3,750 lbs LVW (LDT1s), we are keeping the current usefulPage 205 of 529

life of 120,000 miles/10 years unless, as described in Section IV.A.7 , a manufacturer elects alternative exhaust emission requi rements that are associated with 150,000 mile/15 year useful life for these vehicles. For manufacturers that select those optional standards, the useful life of 150,000 miles/15 y ears will apply for all Tier 3 evaporative emission requirements as listed i n the previous paragraph. During the early , transition , and phase

- in program periods and until the final ye ar of the allowed phase

- in period for the Tier 3 evaporative emission program (MY 2015

- 202 1 ) the differences between the exhaust and evaporative em ission phase

- in programs presents the possibility that in some cases a manufacturer could certify a model to the Tier 3 exhaust requirements (or CARB equivalents) but not necessarily

to the Tier 3 evaporative emission requirements. 351 In those situations, the final rule provides that a famil y could have a 150,000 miles/15 years useful life for exhaust emissions but maintain the current useful life for all of the evaporative and refueling emission standards since the vehicle does not yet meet Tier 3 evaporati ve emission requirements

. D uring the phase

- in period, if a family is certified to the Tier 3 evaporative emission requirements but not yet certified for Tier 3 exhaust emission requirements, then the useful life could be 150,000 miles/15 years for evaporative and refueling emissions standards but the existing useful life for exhaust emissions

. However, b y the 2022 MY the useful life for all of these requirements will be 150,000 miles/15 years for LDT2/3/4s, MDPVs, and HDGVs since b y that model year all v ehicles must be certified using Tier 3 certification fuel and test procedures and meet Tier 3 evaporative emission standards or CARB equivalents

. 352 OBD regulations call for the sy stems to operate effectivel y over the useful life of the vehicle. We are not chang ing that requirement, but rather want to clarify that during the earl y , transition , and phase

- in ye ars of the p rogram (MY 2015

- 202 1 ), all of the OBD monitoring requirements have the same useful life as that for the exhaust emission standard except for the evaporative s ys tem leak monitoring requirement which has the same as that required for the evaporative and refueling emission standards control sy stems.

351 By the 202 2 MY, all Tier 3 evaporative system emissions certifications must use Tier 3 certification test fuel and test procedures or equivalent CARB test procedures, certification and emission standards . This affects evaporative (hot soak plus diurnal), running l oss , and canister bleed emission standards certification. Refueling, spit back and leak standards are only to be met using Federal certification test fuel. 352 The only exception here will be for vehicles not meeting Tier 3 evaporative emission requirement s in the 2022 MY as a result of the use of previously earned allowances.Page 206 of 529 d. What Requirements Must a Vehicle Meet to Qualify as a Tier 3 Vehicle for Evaporative Emissions? As mentioned above, there are three different revised or new evaporative emision requirements applicable to Tier 3 vehicles. These are the hot soak plus diurnal standards, the canister bleed standard, and the leak standard. In addition the refueling, runni ng loss, and spit back standards are unchanged but will have to be met on Tier 3 certification fuel. Compliance with these requirements is potentially complicated b y the fact that the CARB ZEV and LEVIII programs will bring zero evap technology

into the m arket place before or at the same time that Tier 3 implementation begins but with test fuel and test procedure differences. In order to qualify as a Tier 3 vehicle for evaporative emission purposes the vehicle must meet all applicable requirements on the s pecified fuel . Unless otherwise specified (e.g., HDGV refueling spit back), if a vehicle does not meet all evaporative emission program requirements, including both the applicable standards and test fuel then it does not qualify

as a Ti er 3 vehicle for evaporative emission purposes. Table IV

- 4, below summarizes the requirements that vehicles in various categories must meet to qualify as a Tier 3 vehicle for evaporative emission purposes as a function of model ye ar. The entries in the cel ls of the table specify the required test fuel. The table is for reference of the reader in reviewing subsequent sections of this preamble. Refer to the regulatory

text for specific requirements for the various programs. **Table IV**  **- 21**  **Requirements for Vehicle to Qualify for Tier 3 Evaporative**

**Emissions Program and Test Fuel Requirements** Model Year Program/ Zero Evap Stds HS+DI/

Runnin g Loss Rig Caniste r

Bleed Leak

(except H H DGV) * High

Altitude & Refuel ing/ Spit back ** MY 2017 TRANSI TI ON PROGRAM 2017 Percentage

- PZEV zero evap (carryover) CA Ph. 2 CA Ph. 2 N/A N/A EPA Tier 2 or Tier 3

2017 Percentage

- LE V III Opt. 1 CA Ph. 3 CA Ph. 3 N/A N/A EPA Tier 3

2017 Percentage

- LE V III Opt.2 CA Ph. 3 N/A CA Ph. 3 N/A EPA Tier 3

2017 Percentage

- Tier 3 Tier 3 N/A EPA Tier 3 N/A EPA Tier 3 2017 PZEV zero evap onl y CA Ph. 2 CA Ph. N/A N/A EPA Tier 2 or / Tier 3Page 207 of 529 (carryover) 2 2017 20/20

- PZEV evap (carryover) CA Ph. 2 CA Ph. 2 N/A EPA Tier

3 EPA Tier 2

or / Tier 3

2017 20/20

- LEV III Opt. 1 CA Ph. 3 CA Ph. 3 N/A EPA Tier

3 EPA Tier 3

2017 20/20

- LEV III Opt. 2 CA Ph. 3 N/A CA Ph. 3 EPA Tier

3 EPA Tier 3

2017 20/20

- Tier 3 Tier 3 N/A EPA Tier 3 EPA Tier

3 EPA Tier 3 MY 2018

- 2021 PHASE

- INPROGRAM 2018

- 20 19 PZEV zero evap (carryover) CA Ph. 2 CA Ph. 2 N/A EPA Tier

2 or Tier 3 EPA Tier 2

or Tier 3 2018

- 2021 LEV III Opt.1 CA Ph. 3 CA Ph. 3 N/A EPA Tier

3 EPA Tier 3

2018

- 2021 LEV III Opt. 2 CA Ph. 3 N/A CA Ph. 3 EPA Tier

3 EPA Tier 3 2018

- 2021 Tier 3 Tier 3 N/A EPA Tier 3 EPA Tier

3 EPA Tier 3 MY 2022+ FULLY PHASED

- IN PROGRAM 2022+ LEV III Opt. 2 CA Ph. 3 N/A CA Ph. 3 EPA Tier

3 EPA Tier 3 2022+ Tier 3 Tier 3 N/A EPA Tier 3 EPA Tier

3 EPA Tier 3 * LHDGVs are heavy

- duty gasoline vehicles with a GVWR equal to or le ss than 14,000 lbs; HHDGVs are heavy

- duty gasoline vehicles with a GVWR in excess of 14,000 lbs. ** Incomplete HDGVs without ORVR may defer demonstrating compliance with the spit back requirement on Tier 3 fuel until the 2022 MY.

2. Program Structure and Implementation Flexibilities
a. Percentage Phase

- In Requirements As proposed, the final Tier 3 evaporative emission standards will be phased in over a period of six MYs 2017

- 2022. Manufacturers supported the proposed phase

- in schedule and there were no issu es raised with regard to lead time for any vehicle class. As discussed below, there will be three options for the 2017 MY. For the 2018

- 2019 MYs, the requirement will apply to 60 percent of aPage 208 of 529

manufacturer’s nationwide sales of all LDVs, LDTs, MDPVs, and HDGVs (including vehicles sold in California and the section 177 states) . This will increase to 80 percent for MYs 2020 and 2021 and b y MY 2022 it will apply to 100 percent of sales in these four categories. Beginning in MY 2018 any vehicle included in the percentage p hase

- in , except vehicles that had earned allowances , will have to meet the leak standard discussed in section IV.D

. Evaporative emission requirements for the MY 2017 apply onl y to LDVs, LDT1s, and LDT2s as defined in 40 CFR §86.1803

- 01. T o be consistent with the start date for Tier 3 exhaust standards, phase

- in requirements will not include vehicles over 6,000 lbs GVWR until the 2018 MY. The manufacturers will have three options. The first, which we are calling the “primary” or “percenta ge” option, require s that a value equal to 40 percent of a manufacturer’ s LDVs, LDT1s, and LDT2s sold outside of California and the states that have adopted the CARB ZEV or LEV III programs must meet the Tier 3 evaporative emission requirements on average . The 40 percent is calculated based on vehicles at or below 6,000 lbs GVWR but compliance can be based on vehicles regardless of their GVWR. The second which we are calling the “PZEV zero evap only” option, require s a manufacturer to sell all of the LDVs , LDT1s, and LDT2s certified with CARB as meeting the PZEV evaporative emission requirements (zero evap) in MY 2017 throughout all of the U.S. and not to offer for sale any non

- PZEV zero evap version of those specific vehicle models/ configurations in any state whose vehicles are covered b y the Tier 3 evaporative emission standards. Thus, this will apply to sales in any state except for California and states that have adopted the CARB ZEV or LEV III programs under section 177 of the Clean Air Act. Under this second option, no tracking of sales or end of ye ar compliance calculation will be required. Some manufacturers may find this option attractive, as they have more limited product offerings and find tracking of production and sales more difficult. The third option, which we are terming the 20/20 option, requires that 20 percent of a manufacturer’s LDVs, LDT1s, and LDT2s (e.g., equal to or less than 6,000 lbs GVWR) sold outside of California and the states that have adopted the CARB ZEV or LEV III program s meet the Tier 3 evaporative emission requirements on average and that this 20 percent or another 20 percent of vehicles in the three groups listed above meet the leak standard discussed in section IV.D. Each percentage requirement must be met, (i.e., th ere is no flexibility to permit meeting shortfalls of the hot soak plus diurnal or leak standard percentages with higher values from the leak standard category). However, as was the case with the 40 percent option above, compliance can be based on ve hicles regardless of their GVWR. The third option was supported b y several commenters as a means to address 2017 MY transition issue s related to phase

- out of current products and phase

- in of future products. EPA believes that for these vehicles the leak standard will provide emission reduction benefits comparable in magnitude to the Tier 3 evaporative emission standards. Thus, under this approach, the manufacturers’ product transition concerns c an be addressed while achieving the overall evaporative emis sionPage 209 of 529

reductions from 2017 MY vehicles. It should be noted that these vehicles must also meet the 0.020 ” evaporative sy stem leak monitoring requirement which also takes effect in the 2017 model year. As discussed below, beginning in the 2018 MY, to be counted toward the percentages needed to meet the Tier 3 phase

- in percentages (e.g., 60% in 2018 and 2019 MYs) a Tier 3 compliant vehicle must also meet the leak standard. At the time of certification, manufacturers will identify which families will be in cluded in their Tier 3 evaporative emission percentage calculations (this could be families above or below the individual Tier 3 evaporative emission standards for the given class of vehicles ( Table IV

- 18 ) as w ell as vehicles meeting CARB’s PZEV zero evap or LEV III Option 1 standards ( Table IV

- 19 ) and could also include earned allowances as discussed below. The manufacturers will use projected sales information for these families plus allowances as desired and available, to show how they expect to meet the phase

- in percentage requirements for the model ye ar of interest. At the end of the model year reconciliation the manufacturers will be expected to show that the percentages were met . If the percentages are not met, the manufacturers will either use additional allowances and/ or bring more vehicle families /vehicles into the calculation until the sales percentage is met

. This step is being required because the ini tial demonstration of compliance with the fixed percentage at certification is based on projected sales. If the manufacturers did not have to demonstrate that the fixed percentages were met, the percentage would then be a goal and not a requirement and the re would be no means to capture the emission reduction shortfalls. This step is unique to the evaporative emission program relative to the NMOG+NOx and PM programs because the evaporative program involves both fixed percentages and ABT. The NMOG+NOx progr am involves ABT but does not involve fixed percentages and the PM program involves fixed percentages but does not involve ABT. The additional vehicles added to meet the percentage could onl y be meeting the Tier 2 hot soak plus diurnal requirements. In this case, use the larger of the 2

- or 3

- day

hot soak plus diurnal certification emission levels. Adding these vehicle families/vehicles into the calculations (discussed below) may result in a credit deficit for that model year for a given avera ging set. A manufacturer could not have an unresolved deficit for more than three consecutive model years as discussed below. The deficit would have to be eliminated with positive credits not later than the ABT calculation and credit reconciliation which occurs after the fourth model year. As discussed above for exhaust emissions, while unlikely , it is possible that a manufacturer could in its annual certification preview meeting with EPA, indicate that its technology

mix is such that it will have a cre dit deficit when the sales percentages requirement is met. This could occur if the fleet average evaporative emission value for Tier 3 vehicles did not meet the Tier 3 hot soak plus diurnalPage 210 of 529

standard for the Tier 3 vehicles in any given averaging set. Also , a manufacturer could have a deficit from a previous model. In these situations, certifying with a projected or actual deficit would require EPA approval after submission of a plan from the manufacturer which explains how it will eliminate the deficit wi thin the model years permitted. Even if a manufacturer had projected or actual deficits for two or three consecutive model years, all accrued deficits would have to be eliminated by

the reconciliation which occurs after the fourth model year. Within this plan, which would have to be submitted and approved at each annual certification preview meeting, EPA would expect to see progress toward compliance as indicated by such factors as improved emissions performance for future test groups, a substantiated tren d toward a more favorable fleet technology sales mix, no backsliding in projected fleet average values, and perhaps other situation specific criteria. Requiring a showing at the time of certification based on projected sales requires due diligence b y th e manufacturers and EPA, but the Tier 3 evaporative emissions program allows for fleet averaging, so a validation or “truing up” of these sales projections after the end of the model ye ar is necessary for determining compliance with the requirements of the standard. This is discussed in Section IV .C.2.d. iii

. As discussed further below, validated sales information will also be used for earning earl y allowances and to show compliance with the alternative phase

- in schedule approach. For these purposes, v ehicles included in the phase

- in percentage could be: (1) families which certified to PZEV zero evap or CARB LEV III Option 1 requirements in MYs 2015 and 2016, (2) families certified to meet Tier 3 evaporative emission requirements, (3) an y vehicle family certified to the CARB LEV III Option 2 hot soak plus diurnal evaporative emission standards, and ( 4 ) vehicles from the earl y allowance program. To qualify as a Tier 3 certification for evaporative emission purposes, an y new evaporative/refueling emission family certifications will have to meet the EPA Tier 3 certification requirements for both test procedure and certification test fuel for the evaporative (hot soak plus diurnal and canister bleed, running loss), refueling , and spit back emission standards . The leak standard will apply

in the 2018 and later MY s to all Tier 3 vehicles except HHDGVs and those from the earl y allowance program . Furthermore, assuming the EPA provisions related to carryover of emissions data are met, 2015

- 2016 MY CARB PZEV zero evap evaporative emissions certifications could be carried over until the end of the 2019 MY and included as compliant vehicles within the Tier 3 program if they

m e et the other applicable Tier 3 requirements

. The same is true for CARB LEVIII Option 1 cert ification, except carryover would be permitted through the 2021 MY if they

meet the other Tier 3 requirements. See Table IV

- 4 for more detail on the program options and fuel requirements by model year . The phase

- in p ercentages for MYs 2017 through 2022 reflect a percentage phase

- in concept applied successfull y b y EPA in previous rules involvingPage 211 of 529

evaporative and refueling emissions control. The phase

- in provides an appropriate balance between the needed emission reduct ions and time for the manufacturers to make an orderl y transition to the new technology on such a broad scale. The higher initial percentage here is appropriate because the expected evaporative emission control technology

is already

being used to varying degrees b y 12 manufacturers on over 50 vehicle models today and is projected to gain even deeper penetration by 2017 due to the partial zero emission vehicles (PZEV) option within the CARB ZEV program. 353 b. Alternative Phase

- in Percentage Scheme As part of program flexibility , we are allow ing manufacturers to demonstrate compliance with the phase

- in percentage requirements of the evaporative emissions program by using a manufacturer

- determined alternative phase

- in percentage scheme. Th e alternative p hase

- in percentage provisions allow manufacturers to use a phase

- in more consistent with product plans such as beginning with a lower percentage (s) than required under the primary phase

- in during the earl y ye ars or to benefit from producing and selling mo re than the minimum percentage of compliant vehicles early . This flexibility could also be helpful in the event that a manufacturer elects to put some vehicles on different phase

- in schedule s for meeting Tier 3 exhaust and evaporative emission standards. As explained further below, with some limitations, allowances could be used toward compliance with the alternative phase

- in scheme values for any given model ye ar . This approach, which was widely supported in comments by the manufacturers, would be availa ble beginning in the 2017 MY for all manufacturers, except for an y manufacturer which used the “PZEV zero evap onl y” nationwide option for the 2017 MY for whom the approach would be available beginning in 2018 MY. Vehicle and fuel eligibility requirements for the program are summarized in Table IV

- 22 . Refer to the regulatory text for specific requirements. **Table IV**  **- 22**  **V ehicle**  **Q ualifications for**  **2017 -**  **2022MY A lternat**  **ive P**  **hase -**  **in**

**Percentage S**  **chemes & T**  **est Fuel Requirements** Model Year Program

Zero Evap Stds. HS+DI /

Running Loss Rig Canister

Bleed Leak

(except H HDGV) * High

Altitude & Refueling/ Spit back ** 2017 PZEV evap

(carryover) CA Ph. 2 CA Ph. 2 N/A N/A EPA T ier 2 or Tier 3

353 See http://driveclean.ca.gov/searchresults_by_smog.php?smog_slider_value=9&x=12&y=12 , (last accessed on December 6, 2013 )

.Page 212 of 529

2017 LEV III

Opt. 1 CA Ph. 3 CA Ph. 3 N/A N/A EPA Tier 3 2017 LEV III

Opt. 2 CA Ph. 3 N/A CA Ph. 3 N/A EPA Tier 3 2017 Tier 3 Tier 3 N/A EPA Tier 3 N/A EPA Tier 3 2018

- 20 19 PZEV evap

(carryover) CA P h. 2 CA Ph. 2 N/A EPA Tier 2

or Tier 3 EPA Tier 2

or Tier 3 2018

- 2021 LEV III

Opt. 1 CA Ph. 3 CA Ph. 3 N/A EPA Tier 3 EPA Tier 3 2018

- 202 2 LEV III

Opt. 2 CA Ph. 3 N/A CA Ph. 3 EPA Tier 3 EPA Tier 3 2018

- 202 2 Tier 3 Tier 3 N/A EPA Tie r 3 EPA Tier 3 EPA Tier 3 * LHDGVs are heavy

- duty gasoline vehicles with a GVWR equal to or less than 14,000 lbs; HHDGVs are heavy

- duty gasoline vehicles with a GVWR in excess of 14,000 lbs. ** Incomplete HDGVs without ORVR may defer demonstrating compliance with the spit back requirement on Tier 3 fuel until the 2022 MY. Under this approach, before the 201 7 MY (2018MY for a manufacturer which used the “PZEV zero evap onl y” nationwide option for the 2017 MY) , a manufacturer will present a plan to EPA whi ch demonstrates that the sum of the product s of a weighting factor and the percentages of their U.S. vehicle sales for each model ye ar from 201 7 (2018) through 2022 is greater than or equal to 1 280 if the program started in the 2017 MY (or 1040 if the program started in the 2018 MY) . The 1280 and 1040 numerical value s are equal to the sum of the product of the weighting factors and the percentage requirements for MY 201 7 or 2018 start dates, respectivel y, as applicable through MY 2022 . These are calculate d in the following manner: [ (6)(2017MY%)+ (5)(2018MY%) +4(2019MY%)+ 3(2020MY%) +2(2021MY%) +(1)(2022MY%)]. The 2017 MY portion of the calculation would not be included if the manufacturer used the “PZEV zero evap only” nationwide option and thus started the alternative phase

- in scheme in the 2018 MY. Under the regulations, EPA has the authority to question elements of the plan and to seek clarifications and potential changes as needed. EPA could disapprove the plan and potentially not allow the use of an alternative phase

- in scheme for the model ye ar of interest if the manufacturer does not present a viable explanation and rationale as to how the required numerical sum for the phase

- in would be achieved. EPA also sought comment on including the 20 percent value hot soak plus diurnal value from the 20/20 option described above for 2017MY in this calculation. Manufacturers generall y supported including the 2017 MY in the calculation but did not clearl y state whether the 40 percent or 20/20 option approach o r both were supported. EPA has decided to include both options for the 2017MY in the alternative phase

- in percentage scheme; 40 percent as described above or 20Page 213 of 529

percent, with the stipulation that any vehicle used to meet the 20 percent requirement in the 2017MY would also have to meet the OBD evaporative leak monitoring requirements and the leak standard. In other words, the flexibility of using different vehicles as allowed for the 20/20 option in the primary phase

- in scheme is not included in the altern ative phase

- in. In cluding this restriction avoids the complexity

that would be added if two different sets of vehicles were allowed to meet the two elements of the 20/20 option for the 2017 MY, as in the primary phase

- in (e.g., expanding the calculat ion and tracking requirements and incorporating leak standard compliance and OBD evaporative s ys tem monitoring as part of the alternative phase

- in scheme). If a manufacturer’s hot soak plus diurnal value exceeded 20 percent then that larger value could be used in the alternative phase

- in calculation. However, the leak standard value cannot be less than 20 percent and for the first 20 percent the hot soak plus diurnal and the leak must be on the same vehicle and that vehicle must meet the 0.020”OBD evaporative s ystem leak monitoring requirement. Compliance would be calculated in the following manner: [ (6)(2017MY%)+ (5)(2018MY%)+ (2019MY%)+3(2020MY%) + 2(2021MY%) +(1)(2022MY%)] . If choosing the 20/20 option approach for MY 2017, the value to be met or exce eded in the alternative phase

- in would be 1160 which is based on substituting the required phase

- in percentages for MYs 2017

- 2022 in the equation. Under this option as above, before the 2017 MY, the manufacturer would have to submit a plan to EPA which de monstrates that the sum of the product s of a weighting factor and the percentage s of their U.S. vehicle sales for each model ye ar from 201 7 through 2022 is greater than or equal to 1 160. A manufacturer that over complies with the targets (i.e., 1040, 1160 , 1280) may not trade the excess to another manufacturer. Also, a manufacturer must include all of its affected products in program, not just specific vehicle categories or subcategories. A manufacturer’s alternative phase

- in plan must be approved by EP A prior to the start of production for a given model ye ar and will have to be reviewed with EPA each subsequent model year to confirm that the manufacturer’s target percentages are being met. This would be expected to occur at the annual certification pre view meeting. Manufacturers not meeting their target goals must present revised plans for EPA approval to show how the target percentages and equivalent emission standards will be met. Manufacturers using the alternative phase

- in percentage scheme must st ill show compliance with the hot soak plus diurnal standards in each year as discussed in Section IV.C.2.d. iii even if they fall short of their individual target goal percentages for a given ye ar. EPA is not requiring that manufacturers include Tier 2 veh icles in the calculation for a given model year if they

fall short of projections (e.g., if a manufacturer projects 25% in a given model ye ar but only achieves 22%) because it will have to be made up in a subsequent year using a lower multiplier.Page 214 of 529 c. Allowance Program We are finalizing incentives for earl y introduction of vehicles compliant with the Tier 3 evaporative emission regulations. Manufacturers c an take advantage of these incentives prior to MY 2018 by selling vehicles that meet the Tier 3 evaporative emission regulations earlier than required or in greater numbers than required. Vehicle eligibility requirements for the allowance program are summarized in Table IV

- 23 . Refer to the regulatory text for speci fic provisions.

**Table IV**  **- 23**  **Vehicle Eligibility to Earn Allowances & Test Fuel Requirements** Model Year & Program Vehicle

Category HS+DI /

Running Loss Rig Canister

Bleed High

Altitude & Refueling /Spitback * EVAPORATIVE EMISSIONS 2015

- 2016 PZEV zero evap carryover LDV ,

LDT CA Ph.

2 CA

Ph. 2 N/A EPA Tier

2 / Tier 3

2015

- 2016 LEV III Option 1 LDV,

LDT CA Ph.

3 CA

Ph. 3 N/A EPA Tier

2 / Tier 3 2015

- 2016 LEV III Option 2 Al l CA Ph. 3 N/A CA Ph.

3 EPA Tier

2 / Tier 3 2015

- 2016 Tier 3 All Tier 3 N/A Tier 3 EPA Tier 3 2017
“ PZEV evap only” c arryover LDT 3&4 CA Ph. 2 CA

Ph. 2 N/A EPA Tier

2 / Tier 3

2017 “Percentage ” option

- LEV III Option 1 LDT3 &4

MDPV, HDGV CA Ph.

3 CA

P h. 3 N/A EPA Tier

3

2017 “Percentage ” option LEV III

- Option 2 LDT3 /4

MDPV, HDGV CA Ph.

3 CA

Ph. 3 CA Ph. 3 EPA Tier

3

2017 LDT3 /4 Tier 3 EPA EPA EPA Tier 3Page 215 of 529

“Percentage ” option Tier 3 MDPV,

HDGV Tier 3 Tier 3

2017 “20/20” and all MY alt p hase

- in schemes Not

available --- --- --- ---

2018+ LDV, LDT, MDPV & HDGV Not

available

ORVR *** 2015

- 2017 Earl y ORVR Complete

HDGV> 10,000 but < 14,000 lb s. GVWR --- --- --- EPA Tier 2 / Tier 3

2015

- 20 21 Earl y ORVR Complete

HDGV> 1 4 ,000 lb s. GVWR EPA Tier 2 / Tier 3

2015

- 20 21 ORVR In comple

te HDGV > 8 , 5 00 lb s. GVWR EPA Tier 2 / Tier 3

* LHDGVs are heavy

- duty gasoline v ehicles with a GVWR equal to or less than 14,000 lbs; HHDGVs are heavy

- duty gasoline vehicles with a GVWR in excess of 14,000 lbs. ** Incomplete HDGVs without ORVR may defer demonstrating compliance with the spit back requirement on Tier 3 fuel until the 2 022 MY. *** All ORVR certifications must use Tier 3 fuel by the 2022 model year
As described below, manufacturers c an earn “allowances” for selling an y vehicle meeting the Tier 3 evaporative emission program requirements as specified in Table IV

- 21 earlier than required. The vehicles may be LDVs, LDTs, MDPVs, or HDGVs. Specificall y , the allowance program include s the following: (1) for MYs 2015 and 2016, an y LDVs and an y LDTs meeti ng the Tier 3 evaporativePage 216 of 529

emission program requirements as specified in Table IV

- 21 which are sold outside of California and the states that have adopted CARB’s ZEV or LEV III programs, (2) for MYs 2015

- 2017, any MDPV or HDGV meeting the Tier 3 evaporative emission program requirements as specified in Table IV

- 21 earl y and sold in any state, (3) for MY 2017, any L DT3/4 meeting the Tier 3 eva porative emission program requirements as specified in Table IV

- 21 and sold outside of California and the states that have adopted CARB’s LEV III or ZEV programs, and (4) for MYs 2015

- 2017, an y c omplete or incomplete HDGV with a GVWR greater than 10,00 0 lbs meeting the EPA refueling emissions regulations and sold outside of California and the states that have adopted CARB’s LEV III program. EPA asked for comment on extending the ORVR requirement to all HDGVs, complete and incomplete. As discussed in section IV.C.4.b, we are extending ORVR to all complete vehicles over 14,000 lbs GVWR, but are not including incomplete vehicles over 8,500 lbs GVWR in the ORVR requirement at this time. However, we are permitting complete vehicles over 14,000 lbs GVWR and incomplete HDGVs meeting the refueling emission standard to earn allowances through the 2021 MY. Any

complete or incomplete HDGV eligible to earn allowances for the model years and areas discussed a bove will earn them at a 1:1 rate for refueling emissions compliance purposes and at a 2:1 rate for Tier 3 evaporative emissions purposes because the refueling emission reductions are much larger. Furthermore, f

or the 2017 MY , manufacturers choosing EPA’ s “percentage” option (see Section IV.C.2.a) could earn allowances for sales of LDT3s, LDT4s, MDPVs, and HDGVs that meet the CARB LEV III or Tier 3 evaporative emission standards and related requirements assuming their LDV, LDT1/2 sales meet the 40 percent requirement. Similarly , manufacturers choosing EPA’s “PZEV zero evap only” option could earn allowances in MY 2017 for LDT3/4s, MDPVs, and HDGVs that meet the “PZEV zero evap” evaporative emission standards , CARB LEV III, or EPA Tier 3 evaporative emiss ion standards and related requirements. EPA has decided not to include allowances for the 2017MY for any manufacturer using the 20/20 option since it would involve identifying not only the vehicles exceeding the 20 percent for the Tier 3 evaporative emiss ion requirements but also the vehicles exceeding the 20 percent for the leak standard and these may be different vehicles. For both the “percentage” and “PZEV zero evap onl y” options for the 2017 model ye ar, to avoid double counting, the allowances will b e earned only for those vehicles sold outside of California and the states that have adopted CARB’s LEV III/ZEV program requirements. To qualify

as a Tier 3 vehicle for evaporative emission allowance purposes the vehicle must meet the requirements summarized in Table IV

- 21

. Manufacturers will earn one allowance for each qualifying vehicle sold. Manufacturers can use these allowances in MY 2017 through 2022 to help demonstrate compliance with the phase

- in per centage requirements and fleet average evaporative emission standards for those ye ars. Since credits and allowances serve primarily the same purpose and allowing for splits of allowances/credits greatly complicates programPage 217 of 529

implementation, the final rule p rovides that manufacturers c an onl y earn allowances in MYs 2015

- 2016 for any LDVs and LDT1/2s meeting the Tier 3 evaporative emission regulations which are sold outside of California and the states that have adopted CARB’s ZEV or LEV III programs and for . MYs 2015

- 2017 for any qualifying LDT3 /4 , MDPV, and HDGV. 354 Allowances will be used in the compliance determination in the following manner. Vehicles qualifyingfor allowances c an be used in the fleet average evaporative emission standard calculation for any year during the phase

- in. This appl ies to the primary

phase

- in and alternative phase

- in programs. Allowance vehicles will be entered into the compliance calculation with an emission value equivalent to the evaporative emission standard for their vehicle category from Table IV

- 18 even if it was certified to CARB PZ EV zero evap or LEV III Option 1 standards ( Table IV

- 19 ) . For the percent phase

- in requirement in either the primary or alternative phase

- in schemes, allowance vehicles will count for one vehicle for each allowance used within their vehicle category. For the primary scheme this will be counted as one vehicle, but for the alternative phase

- in option the va lue will be multiplied by

the weighting factor ( 6 for 2017, 5 for 2018, 4 for 2019, 3 for 2020, etc). Within the alternative phase

- in scheme the manufacturer will be limited to using these earl y allowances for no more than 10 percentage points of the phase

- in requirements in an y given model year (e.g., MYs 201 7

- 2022). EPA believes this limitation is appropriate since early use in the alternative phase

- in scheme is multiplied and e arly

introduction of “zero evap” technology should be encouraged, but not nec essaril y at the expense of its widespread use across the various vehicle categories as the phase

- in progresses. The allowances are designed primarily to facilitate manufacturer transition during the program phase

- in. As such, they may not be traded betwe en manufacturers and unused allowances will expire after the 2022 MY. An example here may

be helpful in demonstrating how allowances will work. Take a hy

pothetical manufacturer who earned a total of 10,000 allowances in MYs 2015 and 2016 and sells 100,000 units per year. In MY 2018, the manufacturer will have a phase

- in requirement of 60 percent or 60,000 vehicles. For the primary

phase

- in option the manufacturer could use part or all of its allowances in 2018 without restriction . For the alternative phase

- in scheme assume the manufacturer set its alternative phase

- in value at 60 percent for the 2018 MY. T he final regulations limit the use of allowances to 10 percentage points of the 60 percent or in this case 10,000 vehicles out of 60,000 . Witho ut a multiplier this will require the use of all 10,000 allowances in 2018, but with the multiplier of 5 for

354 LDVs and LDT1/2 sold in California and states which have adopted the LEV III or ZEV programs cannot generate allowances because these programs will already require zero evap technology vehicles in those states in MYs 2015

- 2016.Page 218 of 529

MY 2018 only

2,000 allowances are needed to reach the 10 percentage point maximum. Using a similar calculus, the manufacturer could use another 10 percentage points in MY 2019, but it will require 2,500 allowances to reach this level since the multiplier is 4 assuming sales remain at 100,000 units per year . The number of allowances to reach the 10 percentage point level will increase each year as th e multiplier decrease s . d. Evaporative Emissions Averaging, B anking, and Trading i. Introduction Throughout EPA’s programs for mobile source emission controls, we have often included emission averaging programs for exhaust emissions. An emission averaging progr am is an important factor we take into consideration in setting emission standards under the Clean Air Act. An emission averaging program can reduce the cost and improve the technological feasibility of achieving standards, helping to ensure the standards achieve the greatest achievable reductions, considering cost and other relevant factors, in a time frame that is earlier than might otherwise be possible. Manufacturers gain flexibility in product planning and the opportunity

for a more cost

- effective introduction of product lines meeting a new standard. Emission averaging programs also create an incentive for the early introduction of new technology , which allows certain emission families to act as leaders for new technology . This can help provide valu able information to manufacturers on the technology before they

apply the technology

throughout their product line. These programs generally involve averaging and banking, and sometimes trading (ABT). Averaging allows a manufacturer to certify one or mor e families at emission levels above the applicable emission standards as long as the increased emissions are offset by

one or more families certified below the applicable standards. These are referred to as individual family emission limits (FEL s). The o ver - compl yi ng families generate credits that are used by the under

- complying families. Compliance is determined on a total mass emissions basis to account for differences in production volume, and on other factors as necessary such as useful life . The av erage of all emissions for a particular manufacturer’s production within a vehicle category

must be at or below the level of the applicable emission standards. Banking allows a manufacturer to generate emission credits and bank them for future use in its own averaging program in later years. Trading allows a manufacturer to sell credits or obtain credits from another manufacturer. EPA proposed and is finalizing an emissions ABT program for the Tier 3 hot soak plus diurnal evaporative emissions standards. The evaporative emissions ABT program is generally structured and operates the same as that for exhaust emissions as discussed in Section IV.A.7.m. The major difference is the added requirement to reconcile compliance with the fixed percentage requirement asPage 219 of 529

discussed in detail in Section IV.C.2.a. Also, there is a five year credit life for evaporative emissions as opposed to the longer interim values for NMOG+NOx FTP and SFTP credits. This is the EPA’s first averaging ty pe program for evaporative emiss ions from light

- dut y or heav y - duty vehicles. It does not apply to the canister bleed standard or the leak standard because it is the low altitude “zero evap” hot soak plus diurnal standard which will drive the fundamental approach used to compl y with all of these requirements. We sought comment on the value of including trading in the program. The comments from the Alliance of Automobile Manufacturers and the Association of Global Automakers very generally supported the inclusion of trading but provided no detail. Upon follow

- up from EPA no manufacturer provided an y further explanation on the need for the program or how they might use it. 355 In past similar programs for exhaust emissions there have been onl y a few trades , but i ncorporating trading within the program adds a degree of flexibility if a manufacturer finds itself in a credit deficit situation. Thus, we have decided to include trading, but credit trades are limited based on the same averaging set restrictions as discussed below for averaging an d banking. The evaporative emissions AB T program will start with the 2017 MY for the percentage and 20/20 option s . Prior to the 2017 MY and for other options as discussed in Section IV.C.2.b, manufacturers may earn allowances. The programs will cont inue for the 2018 MY and beyond for all manufacturers regardless of their 2017 MY option and will not sunset, as does the allowance program. Vehicles generating ABT credits in the 2017 MY or later will not be permitted to also generate allowances as this would be double counting. A key element of an averaging program is the identification of the averaging sets. This establishes the basis within which evaporative emission families can be averaged for purposes of compliance as well as credit and deficit det erminations. As proposed, w e are finalizing four averaging sets and the applicable emission standard for each of the averaging sets as shown in Table IV

- 18 . Except as noted in S ection IV .C.2.d.2 below , credit exchanges between averaging sets will not be permitted. Participation in ABT is voluntary since a manufacturer could elect to certify each family within the averaging set to its individual standard as if there w ere no averaging program. An evaporative e mission ABT calculation and assessment involves two distinct steps. The first is the determination of the credit/deficit status of each family relative to its applicable standard from Table IV

- 18 . The second is the role

355 See Alliance of Automobile Manufacturers and Association of Global Automakers comments on the NPRM ( date d July 1, 2013 ) and Passavant, G. (June 2013 ) EPA and Auto Industry Meeting Related to Tier 3 Evap and OBD NPRM. Memorandum to the docket

.Page 220 of 529

of ABT calculations in the overall compliance demonstration which is discussed in Section IV.C.2.d

.

ii. Family Emission Limits A manufacturer choosing to participate in the evaporative emissions ABT program will certify

each emission family

to an F EL that applies for the hot soak plus diurnal standard for low altitude testing . The FEL selected b y the manufacturer becomes the emission standard for that emission family

. E mission credits (or deficits) are based on the difference between the emission standard that applies (b y vehicle category) and the FEL. The vehicles will have to meet the FEL for all emission testing. As mentioned in Section IV.C.1.b., above, for vehicles certified with FELs above or below the applicable standard for testing at low altitude, the same differential will apply to the FELs for high

- altitude. This high

altitude FEL will not be used for an y emission

- credit calculations, but it will be used as the emission standard for compliance purposes. The final rule provides that th e FELs selected b y the manufacturer must be selected at 0.025 g/test increments above or below the applicable Tier 3 evaporative emission standards for each vehicle category

. For example, for LDVs the increments for the FELs would be +/

- 0.025 from 0.300 g/test (e.g., 0.225, 0.250, 0.275, 0,300, 0.325, 0.350, 0.375 ... 0.500). The FEL is used in the compliance demonstration not the certified level. The certified level must be below the FEL, but the FEL could be a higher value than the closest increment value. For example, a certified value of 0.235 g/test could support an FELof 0.250 g/test or any other higher increment value. One commenter asked that the gradation be finer than 0.025 g/test, but EPA believes this is the appropriate increment, since the standard itself is the sum of two values and rounding of the measured values is involved. FELs are capped such that they cannot be set any

higher than 0.500 g/test for LDVs, 0.650 g/test for LDT1s and LDT2s, 0.900 g/test for LDT3s and LDT4s, 1.000 g/test f

or MDPVs, 1.4 g/test for HDGVs at or below 14,000 lbs GVWR, and 1.9 g/test for those above 14,000 lbs GVWR, respectivel y. These FEL caps are the 3

- day hot soak plus diurnal emission standards applicable under EPA’s existing regulations. While we asked fo r input on these FEL caps and vehicle groupings, no party provided comment

. Total e vaporative emission credits (or deficits) under the Tier 3 hot soak plus diurnal ABT program will be calculated differently in the 2017 model year and the 2018 and later mod el years. For 2017 calculations will be based on sales in the U.S. excluding California and the section 177 states which have adopted the LEV III/ZEV programs. For 2018 and later model ye ars it will be based on all 50 states. Calculations will use the fo llowing equation: Credits = (fleet average standard

– fleet average FEL) × “U.S. sales”. The “fleet average standard” term here is the applicable Tier 3 hot soak plus diurnal standard for the vehicle category from TablePage 221 of 529

IV

- 18 . The sales number used in the 2018 and later MY calculation will be the number of vehicles of the evaporative emission families in that category sold in the U.S. which are subject to the Tier 3 evaporative emission standards. Emission c redits banked under the evaporative emission ABT program will have a five year credit life and will not be discounted. This means the credits will maintain their full value through the fifth model year after the model year in which they are generated. At the beginning of the sixth model year after they are generated, the credits will expire and c annot be used by the manufacturer. We are limit ing credit life so there is a reasonable overlap between credit generating and credit using vehicles. As mentione d above, for purposes of the compliance calculation, allowance vehicles will have an FE L equivalent to the EPA emission standard ( Table IV

- 18 ) for their respective vehicle category

.

iii. Compliance Demonstration Demonstration of compliance with the evaporative emissions standards is done after the end of each model year. There are two steps. In the first step, as discussed above, manufacturers must show compliance with the applicable phase

- in perc entages from the primary phase

- in scheme (i.e., 40, 60, 80, and 100), the 20/20 option for MY 2017, or an alternative phase

- in percentage scheme. It is sales from these families together with their respective FELs which will be used to make the demonstrat ion of compliance with the emission standard on average within each vehicle averaging set. Compliant vehicle ty pes for these purposes are the same as described in Section IV.C.1.c above for projected sales. If the required sales percentages are not met b y direct sales or allowances, non

- Tier 3 vehicles would have to be identified to make up the shortfall in this calculation but would not be subject to the canister bleed or leak standard requirements

. Inthe second step, using the FELs , manufacturers cal culate the sales

weighted average emission levels within each of the four vehicle categories using sales for each family

. 356 Manufacturers are allowed to use credits only within a defined averaging set. The averaging sets are: (1) LDVs and LDT1s, (2) LDT2s , (3) LDT3s, LDT4s, and MDPVs, and (4) HDGVs. These sales

- weighted calculated values must be at or below the emission standard for that vehicle category as shown in Table IV

- 18 , (unless credits from ABT are us ed ) . If the difference between the standard and the sales

- weighted average FEL is a positive value this could generate banked credit available for future use. If the difference between the standard and the sales

- weighted average FEL is a negative value this would be a credit deficit which could be covered by previously

banked credits . Credit deficits will be

356 For MY 2017 calculations will be based on sales in the U.S. excluding California and the section 177 states which have adopted the LEV III/ZEV programs. For 2018 and later model years it will be based on all 50 states.Page 222 of 529

allowed to be carried forward through negative banking . However, manufacturers are required to make up any deficit s within the three subsequent mod el ye ars with credits from vehicles in the same averaging set , except as described below. That is, after calculations for the fourth model year are complete, all previous deficits from the preceding model years will have to be resolved by credits generate d by

the manufacturer or acquired through trading from vehicles within the same averaging set. As an illustration, a credit deficit accumulated in MY 2017 would have to be eliminated not later than the time that the 2020 MY ABT calculation is submitted to EPA. In no case will a manufacturer be permitted to carry a deficit (negative credit balance) for more than three consecutive model ye ars. Using a similar illustration, all credit deficits accumulated in MYs 2017, 2018, and 2019 would have to be eliminat ed not later than the time that the 2020 MY ABT calculation is submitted to EPA. As discussed above, manufacturers are required to identify and include in the calculations for each of the four averaging sets, vehicle families from each of the vehicle cat egories ( see Table IV

- 18 ) until the total annual nationwide sales in the given model year equals or exceeds the prescribed percentages. This could include non

- Tier 3 vehicles. If the inclusion of non

- Tier 3 v ehicles results in an exceedance of the hot soak plus diurnal emission standard for that category of vehicles, the credit deficit would have to be made up in a subsequent model year. Credits from banking and trading can be used to cover deficits at any ti me within the appropriate averaging set. Allowances c an also be used to demonstrate compliance with the percentage phase

- in requirements and the vehicle category average emission standard. For purposes of the percentage phase

- in requirements , vehicles which have earned allowances are counted as compliant in the percentage calculation. For purposes of the calculations for compliance with the emission standard, allowance vehicles enter into the evaporative emissions compliance calculation as having an e mission rate equivalent to the standard for that category of vehicle. Thus, allowance vehicles can help in demonstrating compliance with the percentage phase

- in requirement (up to ten percentage points per model year in the alternative phase

- in scheme ) an d can help in reducing deficits since their calculation value is equivalent to the level of the standard. As presented in detail above, during the 2017

- 20 21 MYs EPA is allowing manufacturers limited flexibility to meet the percentage phase

- in requireme nts using carryover certification data from vehicles certified to CARB PZEV zero evap and CARB LEV III Option 1 standards in the 2015 or 2016 model years. These vehicles may

have certification values slightl y higher than those of EPA’s Tier 3 program for the given vehicle and vehicle category . Since the emission standard values in Table IV

- 18 and Table IV

- 19 are very similar for any

given vehicle category , for purpo ses of simplification during the phase in, EPA in the final rule provides that an y CARB PZEV zero evap or CARB LEV III Option 1 vehicles usedPage 223 of 529

in the 2017

- 20 21 MY s emission standard compliance determination be entered into the calculation with the emission l evel equivalent to the Tier 3 vehicle category in which the vehicle model would otherwise fit. However, we are not allowing manufacturers to generate emission credits for families certified with EPA based on carryover CARB PZEV zero evap or CARB LEV III O ption 1 evaporative emissions data as provided for in Table IV

- 19 . We are not includ ing these vehicles in the AB T program since the programs are not directl y comparable, and the structure of the current CARB ZEV program, which is the genesis of most PZEV zero evap offerings, allows for a different number of PZEV sales as a function of manufacturer size and CARB LEV III Option 1 does not permit averaging. As mentioned above, we are limit ing use of credits to only within a defined averaging set. Cost effective technology is available to meet the hot soak plus diurnal emission standards on average within each of the vehicle categories in the averaging sets, especially since the standards are designed to accomm odate nonfuel hydrocarbon background emissions. Thus, further flexibility is not needed. Moreover, we are constrain ing averaging to within these sets because of equity issues for the manufacturers. We are concerned that in the absence of such constraints the four or five manufacturers with a wide variety of product offerings in most or all of these categories would have a competitive advantage over the majority of manufacturers which have more limited product lines. This effect could be even more pronoun ced if the number of evaporative families is considered, since larger more diverse manufacturers have more models and thus more evaporative families. Nonetheless, m anufacturer use of credits from different averaging sets to demonstrate compliance is perm itted in limited cases. As noted above, if a manufacturer has a credit deficit at the end of a model year in a given averaging set, they will have to use credits from the same averaging set during the next three model ye ars to make up the deficit. Howeve r, if a deficit still exists at the end of the third year (i.e., the deficit has existed for three consecutive model years) , we are incorporating provisions to permit a manufacturer to use banked or traded credits from a different averaging set to cover the remaining deficit in the fourth model year’s ABT calculation, with the following limitations. Manufacturers are able to use credits from the LDV and LDT1 averaging set to address remaining deficits in the LDT2 averaging set, and vice versa. Furthermor e, manufacturers are permitted to use credits from the LDT3, LDT4, and MDPV averaging set to address remaining deficits in the HDGV averaging set, and vice versa. No other use of credit exchanges across different averaging sets is allowed. These restric tions are being finalized because of equity concerns caused by

the different nature and size of various manufacturer product lines. For both the percentage phase

- in and sales

- weighted average calculation steps above, we are bas ing the calculation on nati onwide sales (excluding California and the section 177 states which have adopted the LEVIII/ZEV programs) in thePage 224 of 529

2017 MY since the anti

- backsliding provisions of the LEV III evaporative emissions program are in place through the 2017 MY . The program uses annual nationwide sales beginning in the 2018 MY. We believe this approach is consistent with the manufacturers’ plans for 50

- state vehicles. A program design which enable s a nationwide program has been an important premise of this rulemaking

. Furthermo re, this is simpler for the manufacturers and for EPA since it relieves the need to project future model year sales or track past model year sales at a disaggregated level. We recognize that decisions by the manufacturers on a national fleet versus a bifurcated approach such as exists today (California and the section 177 states which have adopted the LEVIII/ZEV programs separate from the rest of U.S. sales) may not yet have been made. The CARB LEV III and EPA phase

- in requirements are identical beginnin g in 2018, so EPA sees little need for concern that a nationwide

- based accounting approach could lead to disproportionate state by state impacts or the encouragement of practices which would lead to any particular state or area not receiving the anticipate d emission reductions with this nationwide approach to the calculation. As discussed above, manufacturers not meeting the percentage phase

- in requirements will need to include non

- Tier 3 vehicles in the count and include their emissions in the overall ca lculation of compliance with the hot soak plus diurnal standard and resolve shortfalls in compliance with the emission standard with future reductions, earned allowances, or credits. These non

- Tier 3 vehicles would not be subject to leak standard or cani ster bleed standard requirements. The additional vehicles could onl y be meeting the Tier 2 hot soak plus diurnal requirements and adding these vehicle families/vehicles into the calculation may result in a credit deficit. A manufacturer could not have an unresolved deficit for more than three model years as discussed below. The deficit would have to be eliminated with positive credits not later than the ABT calculation and credit reconciliation which occurs after the fourth model year. Resolving this sal es percentage shortfall problem becomes a bit more complicated for the 2017 MY 20 /20 option because it require s that 20 percent of vehicles meet the Tier 3 evaporative emission requirements and that 20 percent meet the leak standard. These may or may not be the same vehicles

. As a means to resolve this potential problem, EPA is requiring that any shortfall of either of the 20 percent values (Tier 3 evaporative or leak standard) for the 2017 MY be covered b y allowances or b y future sales of vehicles meetin g the Tier 3 evaporative emission requirements in excess of the evaporative emission percentage sales requirement for that MY or some combination of MYs. For example, if a manufacturer w as five percentage points short of either the 20 percentage points for the hot soak plus diurnal or the 20 percentage points for the leak standard in the 2017 MY, then it will have to accelerate sales of vehicles meeting Tier 3 evaporative emission requirements in the 2018

- 2021 MYs to cover the 5 percentage points (e.g., 65 percent in 2018 instead of 60 percent or 63 percent in 2018 MY and 62 percent inPage 225 of 529

the 2019 MY, etc.). These vehicles as Tier 3 vehicles in MY 2018 or later would also have to meet the leak standard.
e. Small Volume Manufacturers As flex ibility , we are establishing provisions for small volume manufacturer s and for those small business manufacturers and operationally independent small volume manufacturers with average annual nationwide sales of 5,000 units or less

. 357 These manufacturers wo uld be permitted to delay meeting the Tier 3 evaporative emission standards, including the requirement to use EPA certification test fuel, until the 2022 MY

. See pages 29892 and 2999 8

- 2999 9 of the preamble to the NPRM and Section IV.G.5 below for a discuss ion of the 5,000 vehicle threshold. This include s the hot soak plus diurnal standards, the canister bleed emission standard, and the leak standard. In the interim, these vehicles must meet the existing evaporative and refueling emission standards. The in itial determination of whether a manufacturer is under the 5,000 unit threshold will be based on the three ye ar average of actual nationwide sales for MYs 2012

- 2014. This allowance would not be affected if a qualifying manufacturer’s nationwide sales late r exceed that value before 2022. Similarly , new market entrants (not in the market in the 2012 MY) with projected sales of less than 5,000 units could be covered b y the small volume manufacturer provisions. However, in this case if actual running average nationwide sales exceed 5,000 units per year in an y three consecutive model ye ars they will have to meet the Tier 3 evaporative requirements in the third model year thereafter. For example, if a new market entrant in 2015 project s nationwide production o f 4,000 units per year and the average of actual values in 2015

- 2017 exceed s 5,000 units per ye ar they will have to meet Tier 3 evaporative requirements by the 2020 MY. 3. Technological Feasibility Evaporative/refueling emission control sy stems are an integr al part of the overall vehicle engine and fuel sy stem. EPA is establishing two revised and three new standards in this rule (2

- /3

- day hot soak plus diurnal standards, high altitude standards canister bleed standards, fuel rig SHED standard, leak standard) and a new test fuel which applies to these standards as well as the current running loss, refueling, and spit back emission standards. Hot soak plus diurnal emissions are fuel vapors which arise from the fuel sy stem when it is parked immediately after o peration (hot soak) and during daily ambient heating and cooling or b y means of permeation when the vehicle is at rest. Control of hot soak plus diurnal emissions is primarily achieved by

routing fuel

357 See 40 CFR§86.1838

- 01(d).Page 226 of 529

vapors to a canister filled with activated carbon. Th ese vapors are stored on the carbon and purged in the engine during vehicle operation. Hot soak plus diurnal emission rates vary

with fuel vapor pressure, temperature, and fuel sy stem design. Permeation emissions have been reduced b y improving fuel tank and fuel line materials. Permeation emissions are sensitive to the gasoline ethanol content. While EPA has required ethanol in the fuel used for assessing evaporative sy stem durability since 2004, Tier 3 is the first rule to require the certification test fuel for gasoline

- fueled vehicles to include ethanol (E10). C anister bleed emissions are fuel vapor s which diffuse from the canister vent as a result of the normal redistribution of vapors within the activated carbon while the vehicle is at rest. The em ission rate depends on the tank volume, its fill quantity , the size and architecture of the canister and the characteristics of the carbon itself. While the biggest effect of this vapor re distribution is a uniform vapor concentration within the canister, it can also cause vapors to escape through the canister vent even without continued canister loading resulting from fuel tank heating. Vapor leaks in the vehicle fuel/evaporative s ys tem can arise from micro

cracks or other flaws in various fuel/evaporati ve sy stem component structures or welds, problems with component installations, and more generall y from connections between components and fuel lines and vapor lines. Control of leaks is especiall y important to achieving full useful life emission control s ys tem performance. In Tier 3, the emissions test fuel is changing from 9 RVP E0 to 9 RVP E10. EPA does not expect the change in emissions test fuel to affect refueling, spit back, or running loss compliance technology or strategies. While these elements of the evaporative/refueling program are separate requirements for compliance purposes, the integrated nature of the design and operation of the evaporative/ refueling control s ys tems and the vehicle engine/fuel sy stems often leads to co

- benefits when technology is added or upgraded. In some cases technology

to meet one of the new or revised evaporative emission requirements will either help in efforts to meet other evaporative type requirements or enhance durability . For example, technology used to addre ss the canister bleed standard will also reduce hot soak plus diurnal emissions and technology to meet the leak standard will reduce hot soak plus diurnal emissions and enhance durability

. Based on review of current certification data and the documentation in current professional literature, there is no doubt that the technology is available toPage 227 of 529

meet the final evaporative emission standards described in this rule. 358 There are at least 50 vehicle models which met the requirements in 2013. 359 There are many tec hnologies manufacturers can consider which will reduce emissions and enhance durability . Manufacturer compliance options and cost considerations are also addressed b y the phase

- in flexibilities and as the ABT program. In the NPRM we described a variety of technology

approaches and calibrations which manufacturers could use to meet the Tier 3 evaporative emission requirements. No comments were provided on the stringency of the standards, the technologies, the feasibility of the standards, or the costs of c ompliance. Nonetheless, we updated our technology anal ys is in light of new certification data and vehicle technology

projections. As in the analy sis supporting the NPRM, we identified technologies on the basis of their control effectiveness and cost to i mplement. Not every

model will use every

technology

described below. Rather we expect manufacturers to apply the technologies needed on an y given model to meet the compliance target level. The technologies could be broadl y grouped into two segments. The first are those expected to see widespread use based on their effectiveness and cost to implement. The second are those which are in relatively widespread use today , but could be optimized if necessary to achieve further reductions. In man y cases the re ductions available from this second group are relativel y small and the costs are slightl y higher than for the other strategies. The anticipated control technologies to compl y with the hot soak plus diurnal , canister bleed/rig, and leak standards are described briefl y below and are grouped in these two basic segments. A more detailed anal ys is for each vehicle category is found in Chapter 1 of the Regulatory Impact Analy sis (RIA).
a. Technologies expected to see widespread use: Engine/fuel sy stem conversio n: As projected in our RIA for the 2017

- 2025 light

duty GHG emissions final rule, EPA projects a significant movement from port fuel injection (PFI) engines to gasoline direct injection (GDI) engines. This ranges from 60

- 100 percent of products for all cat egories except gasoline

- powered trucks over 14,000 lbs GVWR. This reduces air induction s ys tems emissions by 90 percent. Air Induction Sy stem (AIS) Scrubber: For vehicles/engine models not converted to GDI, EPA projects the use of an AI S scrubber as is now used on some PZEV models. These would reduce air induction s ys tem emissions by 85 percent. Canister honeycomb: This is a lower gasoline working capacit y activated carbon device designed to load and purge very easil y and quickly. This device reduces

358 Pa ssavant, G. (December 2013). Assessment of 2013 MY Evaporative Emission Results. Memorandum to the docket. 359 See Chapter 1 of the RIA for more detail.Page 228 of 529

can ister bleed emissions by 90 percent but also provides control for the hot soak plus diurnal test. Reduce leaks from connections and improve seals and o

- rings: Vapor leaks from connections and the emission rates from these leaks is exacerbated if poor s ealing techniques or low grade seal materials are use in connectors such as o

- rings. Reducing connections in the fuel and evaporative sy stems and improving techniques and materials would reduce these emissions by 90 percent. This would reduce hot soak plus diurnal emissions, improve durability , and help to assure compliance with the leak standard. Move parts into the fuel tank: Another means to reduce leak

- related vapor emissions is to move fuel evaporative s ys tem parts which are external to the fuel tank t o the inside. Emissions from these parts would be completel y eliminated. This would reduce hot soak plus diurnal emissions, improve durability, and help to assure compliance with the leak standard. OBD evaporative s ys tem leak monitoring: Beginning in the 2 017 model year, the OBD s ys tem will need to be able to find, confirm, and signal a leak in the evaporative s ys tem of 0.020” cumulative diameter or greater. This is currently done on most vehicles less than 14,000 lbs GVWR as a result of the manufacturers’ response to meeting CARB requirements, but will be mandatory under EPA regulations. b. Technologies expected to be optimized if necessary to achieve further reductions: In the NPRM, EPA discussed a number of other technologies with the demonstrated pote ntial to further reduce evaporative emissions. These included: (1) upgrading the activated carbon canister and optimizing purge calibrations (especially

for larger displacement engines), (2) upgrading fuel line materials to reduce permeation, (3) improving the fuel tank barrier layer to reduce permeation, (4) improving fuel tank manufacturing processes to reduce tank seam permeation emissions, (5) upgrading the fuel tank fill tube material to reduce permeation, and (6) improving the security of the fill tub e connection to the fuel tank. While each of these approaches reduces evaporative emissions, they are to large degrees in use today . Thus their further application may be limited to specific situations. It is worth noting, that the use of these technologi es has contributed to the relatively large compliance margins under the existing hot soak plus diurnal standards. The reductions required and cost of compliance for any given vehicle model will depend on its current certification level and the ty pe of ev aporative emission control technology

applied. The baseline emission values for 2

- day hot soak plus diurnal evaporative emission certification for current models range from 0.42

- 0.96 grams per test (g/test). Achieving the desired compliance targets (at le ast 25 percentPage 229 of 529

below the Tier 3 standard) would require reductions ranging from 0.12 g/test for LDT2s to 0.51 g/test for HDGVs. 360 EPA estimates 2025MY costs in the range of $9

- 15 per vehicle with a fuel cost savings of about $2 over the vehicle life. The application of the technologies expected to see widespread use under Tier 3 will create the margins need for compliance and in some cases create excess reductions which could be used to generate credits for ABT. 4. Heav y - Duty

Gasoline Vehicle (HDGV) Requireme nts
a. Background on HDGV HDGVs are gasoline

- powered vehicles with either a GVWR of greater than 8,500 lbs, or a vehicle curb weight of more than 6,000 lbs, or a basic vehicle frontal area in excess of 45 square feet. 361 HDGVs are predominantly but not exclus ively commercial vehicles, mostly trucks and other work ty pe vehicles built on a truck chassis. EPA often discusses HDGVs in three basic categories for regulatory purposes according to their GVWR class. These are Class 2b (8,501

- 10,000 lbs GVWR), Class 3 (10,001

- 14,000 lbs GVWR), and Class 4 and above (over 14,000 lbs GVWR). These are further sub

- categorized into complete and incomplete vehicles. 362 Class 2b HDGVs are mostl y produced by the manufacturers as complete vehicles and are very similar to lower GVWR LDTs of the same basic model sold by

the manufacturers. Class 3 HDGVs are also built from LDT chassis with fuel sy stem designs that are similar to their Class 2b and LDT counterparts, but these are on some occasions sent to secondary manufacturers as i ncomplete vehicles to attach a load carrying device or container. EPA estimates that more than 95 percent of Class 2b/3 vehicles are complete when they leave the original equipment manufacturer (OEM). Class 4 and above HDGVs are built on a more tradition al heav y - truck chassis and in most cases leave the OEM as an incomplete vehicle. For Class 2b/3 vehicles, it is common to certify the vehicle for emissions purposes (exhaust, evaporative, etc) as a full chassis, while for Class 4 and above the vehicle is certified as a chassis for evaporative emissions while the engine is dynamometer certified for exhaust emissions. HDGVs have been subject to evaporative emission standards since the mid 1980s. Recently , the timing of the standards has lagged requirements for LDVs and

360 Passavant, G. (December 2013). Assessment of 2013 MY Evaporative Emission Results. Memorandum to the do cket. 361 MDPVs also meet the definition of HDVs, but they are classified separately for evaporative and refueling emission purposes. See 40 CFR 86.1803

- 01. 362 Heavy

- duty

v ehicles may be complete or incomplete

. A complete HDGV is one that has the p rimary load carrying device or container (or equivalent equipment) attached, normally by the vehicle OEM. An incomplete vehicle is one that does not have the primary load carrying device or container (or equivalent equipment) when it leaves control of the manufacturer of the engine

.Page 230 of 529

LDTs b y s everal years, but the standards are of comparable stringency when vehicle size and fuel tank volume are considered. The most recent 2/3 day hot soak plus diurnal standards for HDGVs took effect in 2008. Refueling control requirement s apply to complete Class 2b vehicles only . These requirements phased

- in over the period from 2004

- 2006. b. HDGV Evaporative Emission Control Requirements As discussed above, EPA is includ ing HDGVs within the Tier 3 evaporative emissions program. The hot soak plus diurnal and canister bleed test emission standards that will apply

to these HDGVs are presented in Table IV

- 18 and

- Table IV

- 19 and the high altitude standard is presented in Table IV

- 20 . These vehicles will be included in the averaging calculation beginning in the 2018 MY and will be eligible for creating and using allowances and credits. Furthermore, for the rea sons discussed below, EPA is requiring that all complete HDGVs regardless of their GVWR be required to meet the refueling emission standard s and use the test procedures currently required for LDVs and LDTs and complete Class 2b vehicles. (See §86.1813

- 17). In their comments, manufacturers expressed concern about the amount of gasoline used in the development and certification of refueling emission control sy stems for HDGVs (due to the larger fuel tanks). To address this concern, EPA will permit manufactur ers to certify

using two separate processes for vehicles with tanks of 40 gallons or larger. The first will be the engineering evaluation of canister and purge data from lighter weight HDGVs certified in the SHED to show that similar or scaled

- up s ys tems o n heavier HDGVs have the purge volume and canister working capacity to pass the refueling standard. This could include a comparison of control sy stem design elements such as canister shape, canister internal architecture, total canister volume, and total gasoline working capacity as well as purge air volume over the Federal Test Procedure. This would be subject to the application of good engineering judgment. The second is application of the provisions of 40 CFR 86.153

- 98 (a) through (b)(1) on a bench set up for a tank of the appropriate volume in lieu of a vehicle test to show the efficacy of the fill neck seal. Such a test could be conducted in a conventional SHED. The ORVR requirement applies to complete Class 3 vehicles b y the 2018MY and all other complete HDGVs b y the 2022MY

. EPA proposed these requirements for Class 3 HDGVs and asked for comment on extending the requirements to all HDGVs. The manufacturers expressly commented that HDGV ORVR requirements should be limited to complete HDGVs. 363 There are only four

363 See comments of Alliance of Automobile Manufacturers and Association of Global Automakers in the public docket at EPA

- HQ

- OAR

- 2 011

- 0135

- 4451.Page 231 of 529

manufacturers of HDGVs. Of these, three offer complete products in the Class 3 weight range and none offer complete products in the Class 4 and above weight range. As mentioned above, Class 3 vehicles have largel y the same vehicle chassis an d fuel s ys tem configurations as Class 2b vehicles. The manufacturers of complete Class 2b vehicles indicated to the CARB and EPA that they carry across their Class 2b fuel evaporative control sy stem designs onto Class 3 and this includes the onboard refuel ing vapor recovery (ORVR) s ys tem used for control of refueling emissions. Thus, applying refueling emission controls to complete Class 3 vehicles adds no cost and has little additional emission reduction benefit. However, it does set a requirement to continue these controls in future model years. There are no complete Class 4 and above HDGVs and neither manufacturer who certifies incomplete HDGVs above 14,000 lbs GVWR objected to establishing an ORVR requirement for complete HDGVs. 364 This sector is made o f incomplete HDGV chassis and diesel

- powered products. However, setting a requirement for potential future Class 4 and above designs establishes certainty for manufacturers but brings no near term cost burden or emission reductions. In complete HDGVs make up 15

- 20 percent of all HDGV sales. Of this, approximately

80 percent are Class 2b/3 and 20 percent are Class 4 and above. EPA is not extending the refueling emission control requirement to incomplete HDGVs at this time. The control s ys tem designs would be essentiall y the same as on complete HDGVs, but manufacturers have indicated to EPA that they would have to establish additional measures to ensure that the steps taken to complete the vehicle b y the secondary manufacturer do not compromise the integrity and safet y of the fuel/evaporative control sy stem (including ORVR) and that the ORVR sy stem continues to perform properl y with regard to emissions control. While there are relativel y few of these vehicles, their contributions to the inventory are larger than might be expected due to their lower fuel economy . Given these contributions, EPA may consider proposing to appl y ORVR to incomplete HDGVs in a future action. EPA is also including a provision that manufacturers be permitted to comply with the refue ling emission standard as earl y as the 2015 MY to earn on a one

- to
one basis allowances which could be used to phase

- in the Class 3 refueling emission control requirement or as an allowance on a 2:1 basis under the Tier 3 evaporative emission program. EPA believes this is appropriate since the expected daily average reduction in vehicle refueling emissions for this class of vehicles is large relative to the reduction in evaporative emissions expected under Tier 3. This would also apply

to an y i ncomplete H DGV a manufacturer voluntaril y certified to

364 Passavant, G., (September 2013). EPA and General Motors Meeting on Issues Related to Tier 3 NPRM and (September 2013). EPA and Ford Meeting on Issues Related to Tier 3 NPRM. Memorandums to the docket.Page 232 of 529

the refueling emission standards. An y certifications, including those done earl y, must use EPA Tier 3 test procedures and certification test fuels or CARB LEV III equivalents

. c. Other Program Elements for HDGVs In the NPRM, EPA sought comment on several provisions related to Tier 3 certification test fuel and evaporative emission control requirements. First, EPA sought comment on whether heav y - duty gasoline engines (HDGEs) not subject to new Tier 3 exhaust em ission standards (those certified for exhaust emissions using an engine dynamometer) which are used in HDGVs subject to Tier 3 evaporative emission standards should certify for exhaust emissions on Tier 3 emissions test fuel. 365 Manufacturers responded by asking that the use of Tier 3 fuel for HDGE exhaust emissions certification be voluntary , but agreed that the use of Tier 3 certification fuel would not change the stringency of the current dy namometer
- based emission standards or the costs of compliance. Based on consultations with manufacturers, EPA has decided to require that all HDGEs be certified on Tier 3 fuel by the 2022MY. 366 To provide flexibility for very unique applications or circumstances, EPA will allow up to five percent of a manufacturer ’ s dy

n amometer
- certified HDGE sales in any given model year to be certified using Tier 2 certification fuel. This flexibility is limited to certification based on carryover data beginning in the 2022MY. Second, as discussed in Section IV.F.5 for light
- duty ve hicles, we are committed to the principle of ensuring that any change in test fuel for heavy

- dut y gasoline vehicles/ engines will not affect the stringency of either the fuel consumption or GHG emissions standards. As part of the separate rulemaking discus sed in Section IV.F.5, we expect to establish the appropriate test procedure adjustment for HD engine fuel consumption standards and to determine the need for any test procedure adjustment for GHG emissions standards based on the change in certification te st fuels. Third, to simplify

the evaporative emission regulations for HDGVs and to bring them more in line with the current structure of the product offerings in this sector, we are finalizing provisions to permit evaporative emissions certification by

365 EPA also sought comment on whether to require HDGVs to use Tier 3 emissions test fuel for evaporative emissions standards even if we did not adopt the proposed Tier 3 evaporative emission standards and whether to allow Class 4 and above HDGVs to earn allow ances or credits if EPA did not ad opt the Tier 3 standards for these vehicles. These have been superseded by our decision to apply the Tier 3 evaporative emission standards to all HDGVs as described above. 366 Passavant, G. (September 2013). EPA and General Motors Meeting on Issues Relate d to Tier 3 NPRM and (September 2013). EPA and Ford Meeting on Issues Related to Tier 3 NPRM. Memorandums to the docket.Page 233 of 529

en gineering anal ys is for vehicles above 14,000 lbs GVWR (instead of above 26,000 lbs GVWR as permitted in the existing regulations). We are also finalizing regulatory

language to clarify

how these provisions are to be implemented. This applies to the hot so ak plus diurnal, running loss, and canister bleed standards. These HDGVs will remain subject to the emission standards when tested using the specified procedures. This is the same cut point allowed by CARB and will allow for one certification method. E ven though it was supported by one commenter, we are not including specific provisions for design

- based certification for HDGVs over 14,000 lbs GVWR. EPA believes that the option to certify using engineering anal ys is and data serves the same purpose. Fourth, we are finalizing a revised description of evaporative emission families that does not reference sealing methods for carburetors or air cleaners as this technology

is now obsolete for HDGEs

. Fifth, EPA is finalizing regulatory language permitting HDGVs over 14,000 lbs GVWR to be grouped with those between 10,001 and 14,000 lbs GVWR for purposes of compl yi ng with evaporative and refueling emission control standards and related provisions. In these cases, we require these HDGVs to meet all the requirements applicable to the group in which they are being in cluded (e.g., useful life, OBD, etc.). Finally , the regulations at 40 CFR part 86 , subpart M, describe how to test heav y - dut y vehicles above 14,000 lbs GVWR to demonstrate compliance with evaporative emission standards. Most of these provisions are identi cal to those that apply under 40 CFR part 86, subpart B. We are eliminating subpart M and replacing it with a simple instruction to test these heav y - dut y vehicles using the procedures of subpart B, with a small number of appropriate modifications noted as exceptions to the light

- duty test procedures. Rel yi ng on references to subpart B instead of largel y cop yi ng them into subpart M eliminate s many pages of unnecessary regulatory

text and make s it easier to maintain a consistent set of requirements. Changin g a provision in subpart B in the future will automatically apply for evaporative testing of both light

- duty and heav y - dut y vehicles unless otherwise provided in the particular rulemaking

. In response to comments received, we are specifying that heavy

- duty vehicles above 14,000 lbs GVWR must use the same drive schedules and test fuels that apply for light

- dut y vehicles. Subpart M already allows light

- dut y drive schedules and certification test fuels as an alternative to using those for heavy

- dut y vehicle s, and most if not all manufacturers of these vehicles already use the light

duty drive schedules, which facilitates testing simplicity and coordination of design parameters with light

- duty vehicles. The heavy

- duty drive schedule generally involves less driving, which makes this the more stringent test option for designing purge. Omitting this more stringent option therefore does not change the effective stringency

of the applicable standards.Page 234 of 529 With these changes from the proposed rule, there are only two aspects of testing that are different for heav y - dut y vehicles above 14,000 lbs GVWR. First, the regulation s specify

that the exhaust emission measurements are not required for the driving portion of the test between canister pre

- conditioning and diurnal testing. Exhaust emission standards in this vehicle size range appl y based on engine testing only . Second, wider engine speed tolerances apply . This is captured in part 1066 by specifying wider engine speed tolerances for any testing that does not requi re exhaust emission measurements since the greater allowance has no effect on emissions measurements . This applies, for example, for pre

- conditioning drives for light

- duty vehicles, and it also applies for pre - conditioning related to evaporative emissions of heav y - dut y vehicles above 14,000 lbs GVWR. There are some differences in the existing test provisions i n subparts B and M that we are not preserving. Some of these differences arose from changes to subpart B that were inadvertently not carried over t o subpart M. In other cases, there may have been an intentional distinction that no longer applies (such as provisions related to slippage on twin

- roll dy namometers )

. Also, we are not retaining distinctions in Subpart M related to procedures for determin ing road load settings and for operating manual or automatic transmissions. Additional differences we are not preserving include gas divider specifications, SHED and dy namometer calibration procedures, and some provisions for alternative canister loading and vehicle pre

- conditioning. We are also restoring the content of paragraphs §86.1235(b) through (i) related to dynamometer operating procedures, which were inadvertently removed in an earlier rulemaking. 5. Evaporative Emission Requirements for FFVs A flexible fuel vehicle (FFV) as defined in 40 CFR 86.1301

- 01 means an y motor vehicle engineered and designed to be operated on a petroleum fuel and on a methanol or ethanol fuel or an y mixture of the petroleum fuel and methanol or ethanol. Man y manufacturers have one or more FFVs in their product offerings. These include man y different LDV and LDT vehicle chassis styles including passenger cars, mini

- vans, pick

- ups, sport utility vehicles and even a few HDGVs. The EPA regulations implementing the FFV pro visions for ethanol FFVs, including those in 40 CFR 86.1811

- 04 and 86.1811

- 09, have been applied primarily for FFVs capable of operating on gasoline/ethanol mixtures up to E85. As a matter of policy , EPA has not required certification testing for evaporat ive and refueling emissions on the full range of E0

- E85 fuel blends, but instead has allowed the option to use a blend created when Tier 2 fuel (9 RVP E0) is splash blended with ethanol to a 10 percent gasoline/ethanol blend. This simulates what often occ urs in the vehicle fuel tank when Tier 2 fuel (9 RVP E0) is dispensed into a tank containing mostly

E85. This yields a blend which has a Reid vapor pressure of about 10 psi. Nearl y all manufacturers have certified using this option. ThePage 235 of 529

California ARB L EV III program has no special evaporative or refueling emission test fuel requirements for FFVs. In the Tier 3 NPRM, EPA proposed to revise the certification test fuel for evaporative emissions, to revise the hot soak plus diurnal emission standard, and t o add a canister bleed emission standard and a leak standard. These standards apply to FFVs and non

- FFVs. EPA proposed to revise the ethanol content of the certification test fuel for refueling emissions but did not otherwise propose to change the fuel va

por pressure, the level of the refueling emission standard or the test procedure. Furthermore, in the NPRM, EPA sought comment on leaving unchanged the basic approach to FFV certification test fuel for Tier 3 evaporative and refueling emissions, except th at the certification test fuel would be 9 RVP E0 splash blended with E15 such that the blend would have a 10 psi vapor pressure, i.e., the RVP of the evaporative emissions test fuel used by nearl y all manufacturers. Manufacturers commented that the Tier 3 certification test fuel should be the same for FFVs and non

- FFVs and that carryover should be permitted from Tier 2 to Tier 3. EPA met with several manufacturers to clarify their comments and to discuss issues affecting the evaporative and refueling emis sions certification fuel for FFVs. 367 For FFVs, EPA has several factors to consider for evaporative and refueling emission certification test fuel. First, EPA is finalizing a 9 RVP E10 certification test fuel for non

- FFVs for evaporative and refueling emiss ions. This is consistent with our broader policy

objective to allow the manufacturers to sell the same vehicles in all 50 states. Second, 10 psi RVP certification test fuel for the Tier 3 evaporative emission standards for FFVs could result in more evaporative emission reductions than a 9 psi RVP test fuel, but this would be counter to the broader policy objective regarding a national program since CARB has no separate FFV evaporative emission standards and likel y would affect the stringency of the final e vaporative emission standards. Specifically , finalizing 10 psi RVP certification test fuel for the Tier 3 evaporative emission standards as applied to FFVs would increase the stringency

of the evaporative emission standards for FFVs both compared to the T ier 3 evaporative emission standards with 9 psi RVP test fuel for non - FFVs and compared to the Tier 2/MSAT evaporative emission standards with 10 psi RVP test fuel for FFVs. Third, we are not changing the level of the refueling emission standard ( though we are adding ethanol to the test fuel and extending ORVR to complete Class 3 HDGVs) and we did not examine how a potential change from the existing 10 psi RVP test fuel for FFV refueling would affect in

- use emission reductions or the stringency of the refueling standard for FFVs. A change in the test fuel vapor pressure likely would likely

lead to a change in the stringency

367 Passavant, G. (September, 2013). EPA, GM, Ford, and Chrysler Meeting on Tier 3 Certification Fuel for Evaporative and Refueling Emiss ion Standards for FFVs. Memorandum to the docket.Page 236 of 529

of the refueling emission standard as they are now applied to FFVs. Retaining the current requirements for refueling emissi ons for FFVs does not affect the national program since CARB currently follows Federal Test Procedures and test fuels for ORVR. Balancing all of these factors, EPA is adopting a bifurcated scheme for evaporative and refueling emission certification for Tier 3. Evaporative emission requirements for the hot soak plus diurnal, canister bleed, running loss, spit back, and leak standards will be based on Tier 3 certification fuel (9 RVP E10) for FFVs. This will permit reciprocity between the LEVIII and Tie r 3 evaporative emission standards programs and subject the manufacturers to only one set of evaporative emission tests for FFVs and non

- FFVs. However, for the refueling emission standard, EPA is retaining the 10 psi certification test fuel requirement fo r FFVs because the worst case in

- use RVP conditions when E0 and E85 are commingled will still be possible. In current s ys tems, the fuel vapor pressure in the refueling emission test drives the total gasoline working capacity of the activated carbon canist er that is necessary

in the integrated evaporative/refueling control s ys tem. Although a 10 psi RVP certification fuel for evaporative emissions control could be viewed as more stringent, we believe that keeping the fuel vapor pressure at 10 psi in the ref ueling test, which is what was proposed for comment, will help to assure that the in

- use emission reduction benefits of current evaporative s ys tems on FFVs are retained. We expect that total canister gasoline working capacities will still be driven by the 10 psi RVP fuel used in the refueling test and therefore the higher in

use RVP conditions which impact evaporative emissions will still be addressed. EPA is specifying a 10 RVP E10 test fuel specification for FFV refueling emissions certification. Howev er, as a compliance alternative EPA will continue to permit certification based on in vehicle fuel tank blending of two different fuels (i.e., vehicle fuel tank filled to 10 percent of capacity with E85 and then refueled to at least 95 percent of capacity with (9 RVP E0). Either of these approaches will also meet CARB certification test fuel requirements as the test fuel vapor pressure would be higher than with EPA’s 9 RVP E10 or CARB’s 7 RVP E10 test fuel. In addition, we are not changing existing require ments that all IUVP testing for evaporative and refueling tests are done on the non

- FFV fuel (i.e., Tier 2 IU VP vehicles are tested on 9 RVP E0 and Tier 3 IUVP vehicles are tested on 9 RVP E10. In their comments on the Tier 3 NPRM, manufacturers asked that EPA allow carryover of certification emission data from Tier 2 to Tier 3. Since the regulatory

approach for refueling emissions is basically the same as what is currentl y being used b y the manufacturers, we believe there should be opportunity for carryov er of refueling emission data under the current regulatory program. Manufacturers also expressed concern that the refueling emission standard would require them to keep a 10 RVP E10 or 9 RVP E0 test fuel solely for refueling emission standard certificatio n purposes. To help address this concern, in certification testing , EPA would consider approving other refueling test fuel blendsPage 237 of 529

with 10 percent ethanol and 10 psi such as a refueling event where a tank is filled initially with 10 percent E85 and during refueling test is filled with 90 percent 9 RVP E0. EPA would also permit manufacturers the option to seek EPA approval to certify by attestation using alternative procedures or through engineering analy sis based on similar evaporative/refueling emission sy stem configurations and emission test results and data on similar vehicles showing that the vehicle could pass the refueling emission standard and meet the requirements in use on 10 psi RVP E10 fuel. They

would remain subject to confirmatory testing on 10 RVP E10. Both of these options could only

be implemented with approval of the Administrator. 6. Test Procedures and Certification Test Fuel
a. Review and Update of Testing Requirements EPA adopted the current test requirements for controlling evaporative emissions in 1993. 368 Those changes included: (1) diurnal testing based on heating and cooling the ambient air in the SHED 369 instead of forcing fuel temperatures through a specified temperature excursion; (2) repeated 24

- hour diurnal measurements to capture both permeation and diurnal emissions; (3) high

temperature hot soak testing; (4) high

- temperature running

- loss measurements with a separate standard, including controlled fuel temperatures according to a fuel

temperature profile developed for the vehicle ; and (5) canister preconditioning to ensure that vehicles could effectivel y create canister capacity to prepare for several day s of non

- driving. These test procedures are generall y referred to as “enhanced evap” testing. EPA adopted these “enhanced evap” test procedures in coordination with CARB. The test requirements include two separate test sequences to demonstrate the effectiveness of evaporative emission controls. The “ 2

- d ay sequence” involves canister loading to two

- gram breakthrough, followed b y driving for the exhaust test (about 31 minutes), a hot soak test, and two day s of cycled ambient temperatures. The “ 3

- day

sequence” involves canister loading with 50 percent more vapor than needed to reach breakthrough, followed by driving for the exhaust test, driving for the running loss test (about 97 minutes total), a high

- temperature hot

- soak test, and three day s of cycled ambient temperature. The 2

- day

sequence was intended primaril y to insure a purge strategy which would create enough canister capac ity to capture two day s of diurnal emissions after limited driving. The two

- day measurement period is also effective for requiring control of permeation and other fugitive emissions. The 3

- day sequence

368 58 FR 16002 (March 24, 1993)

. 369 SHED is the Federal Register acronym for sealed housing for evaporative determination. The SHED is the enclosure in which the evaporative emissions are captured before mea surement.Page 238 of 529

was intended to establish a design benchmark for ach ieving adequate canister storage capacit y to allow for several days of parking on hot summer days, in addition to requiring vehicle designs that prevent emissions during high

temperature driving and shutdown conditions. After adopting these evaporative te st procedures, we set new standards for refueling emissions control which called for onboard refueling vapor recovery (ORVR). 370 Manufacturers have t ypicall y designed their ORVR systems to be integrated with their evaporative controls, using a single caniste r and purge strategy to manage all fuel vapors vented from the fuel tank. Due to the magnitude of the refueling emission load and the manner in which the load rates affect activated carbon capture efficiency, it has become clear that ORVR testing with the se integrated s ys tems serves as the benchmark for achieving adequate canister storage capacity

. In the nearly

20 years since adopting these test procedures, manufacturers have made great strides in developing designs and technologies to manage canister l oading and purging and to reduce permeation emissions. Except as discussed below, we are not chang ing the test procedures for demonstrating compliance with the Tier 3 emission standards. As described above, we are adopt ing a new standard based on measured values over a canister bleed test, and a fuel s ys tem rig test. These are intended to measure onl y fuel vapors which diffuse from the evaporative canister or permeate/leak from a fuel s ys tem . CARB developed th ese procedure s as a means for se tting standard s that are not affected by nonfuel background emissions. Th e canister bleed test procedure is a variation of the established two

day test sequence. The canister is preconditioned by purging and loading to breakthrough, then attached to an appropriate tes t vehicle for driving over the duty cycle for the exhaust test. The canister is then attached to a fuel tank for measurement. After a stabilization period, the tank and canister undergo two day s of temperature cycling. Canister emissions are measured us ing a flame ionization detector (FID), with a conventional SHED approach or b y collecting emissions in a bag and measuring the mass. Rather than repeating CARB’s regulations, we are incorporat ing those regulations by reference into the CFR. 371 This will av oid the possibility

of complications related to minor differences that may occur with separate test procedures. The fuel s ys tem rig test is a bench test where a complete

370 59 FR 16262 (April 6, 1994). 371 For a description of the canister bleed test procedure (BETP), see pp.III

- 51 to III

- 55 of http://www.arb.ca.gov/db/search/search_result.htm?cx=006180681887686055858%3Abew1c4wl8hc &cof=FORID%3A11&q=BETP&siteurl=http%3A%2F%2Fwww.arb.ca.gov%2Fhomepage.htm (last accessed on January 13, 2014).Page 239 of 529

vehicle fuel s ys tem (without the vehicle chassis) is constructed in the SHED and evaluated over the 3

- day

cycle in both a “wet” and “dry” state. 372 CARB adopted the fuel sy stem “rig test” as an optional approach to demonstrate control of evaporative emissions without the effects of the nonfuel hydrocarbon emissions that are seen in testing the whole vehicle in the SHED. We generall y expect manufacturers to compl y with the EPA requirements which include the canister bleed test and emission standard instead of CARB LEV III Option 1 which includes the rig test and emission standard. However, s ince we are accept ing PZEV zero evap and CARB LEV III Option 1 certifications for the 2017

- 2018MYs and 2017

- 2021 MYs, respectivel y , we are also incorporat ing by reference CARB’s rig test into the CFR to accommodate those manufacturers that do in fact rely on this approach. Also, as discussed further below, we are adopt ing a new leak test procedure which will be used to measure leak rates for the leak standard. The leak test standard test procedure is contained in the regulatory text. Manufacturers have r aised a pair of related concerns regarding the current test procedures. First, h ybrid vehicles and new engine designs for meeting fuel econom y standards and CO 2 emission standards increase the challenge of maintaining an adequate purge volume to prepare v ehicles for the diurnal test. For hy brid vehicles this is related to the amount of time the engine is running. For other technologies this is related to the trend toward decreasing available vacuum in the intake manifold, which is the principal means of drawing purge air through the canister. Second, preconditioning the canister b y l oading to breakthrough serves as a disincentive for some control strategies that might otherwise be effective at reducing emissions, such as designs involving greater caniste r capacit y or better containment of fuel vapors inside the fuel tank. In addition, we have learned from studying in

- use emissions and in

- use driving behaviors and usage patterns that it is not uncommon for vehicles to go for an extended period with little or no opportunity

to purge the canister. In the NPRM, w e request ed comment on an optional adjustment to the test procedure intended to address these three concerns. In this alternative, for designs involving pressurized tanks, manufacturers would determi ne an alternative vapor load to precondition the canister before the exhaust test. I f, for example, a fuel sy stem is designed to stay sealed up to 1 psi and to vent vapors to the canister if rising temperatures trigger a pressure

- relief valve, the manufac turer could quantify the actual vapor load to the canister during three consecutive day s of cycling

372 See http:www.arb.ca.gov/msprog/macs/mac0503/mac0503.pdf for a description of the rig test standard and test procedure (last accessed on January 13, 2014).Page 240 of 529

through diurnal test temperatures. This three

- day vapor load would be the amount of fuel vapor used to precondition the canister (loaded at the established rate of 15 grams per hour). This canister loading may also involve butane instead of fuel vapor, but we would likely require a greater mass of butane to account for the fact that it is easier to remove the butane from the activated carbon in the canister . This approach would be flexible to accommodate an y design target for pressurizing fuel tanks. Canister preconditioning for the ORVR test (for integrated and nonintegrated s ys tems) would remain unchanged. EPA sees merit in further consideration of such test procedure flexibilities, but auto manufacturers did not provide support these concepts in their comments and we are not adopting the proposed optional adjustment. b. Test Fuel for Certification EPA is chang ing the certification test fuel specifications as described in Section IV.F. Here we discuss some implications for evaporative and refueling emissions testing beyond those discussed above for FFVs . We are revis ing the certification test fuel specification in conjunction with the Tier 3 standards, principally

to include ethanol and reduce sulfur such that the test fuel better aligns with the current and projected in

- use fuel. Although we received unsolicited comment asking that we set durability test fuel specifications for evaporative and refueling emission control sy stems to be the same as those for the certification test fuel (9 RVP E10 in this final rule), we are not changing durability fuel specifications in this rule other than to remove minimum sulfur content requirements. In particular, we are not changing the existing requirement that “ an y mileage accumulation method for evaporative emissions must employ gasoline fuel for the entire mileage accumulation period which contains ethanol in, at least, the highest concentration permissible in gasol ine under federal law and that is commerciall y available in any state in the United States ”

. See §§ 86.1824

- 08(f)(1) and 86.113

- 04(a)(3)(i). EPA believes this is prudent policy to ensure that emission control sy stems are designed for the fuels with the p otential to adversel y affect durability and there is no reason to change the existing approach especiall y since E15 fuel is now legall y permissible and commercially available for appropriate vehicles and there is potential for its market penetration to inc rease in the future. Any bench aging using E15 fuel must simulate the effects of alcohol in

- use fuels on evaporative emission sy stem components. Since there are already vehicles in the market which employ the technology needed to meet the new hot soak plus diurnal requirements, EPA is taking a flexible approach to the phase

- in of the certification test fuel. This is summarized in Table IV

- 21

. To accommodate vehicles already designed to meet CARB PZEV zero e vap evaporative emission requirements, EPA’s phase

- in provides that PZEV zero evap vehicles which qualify

for carryover can use CARB Phase 2 fuel for evaporativePage 241 of 529

emissions (hot soak plus diurnal and running loss standards) and rig test certification for M Ys 2015

- 2019. For CARB PZEV zero evap vehicles, high altitude, refueling, and spit back standard certification may use either EPA Tier 2 or Tier 3 fuel in MYs 2015

- 2019. In the 2018 and later MYs they must use Tier 3 test fuel for the leak standard. B eginning in the 2017 MY, the use of PZEV zero evap data is limited to carryover of data from 2015 or 2016 MY certifications. Those using CARB LEVIII Option 1 can use CARB Phase 3 fuel for evaporative emissions (hot soak plus diurnal and running loss standards) and rig test certification for MYs 2015

- 2021. For CARB Option 1, high altitude, refueling, and spit back standard certification must may use Tier 2 or Tier 3 fuel in MYs 20 15

- 2016 but in the 2017 and later MYs all LEV III option 1 certifications for the high altitude, refueling, spit back, and leak standards must use EPA Tier 3 fuel. CARB LEV III Option 2 evaporative emission vehicles may use CARB Phase 3 fuel to meet evapo rative (hot soak plus diurnal and running loss standards) and canister bleed standards beginning in 2015MY and following. High altitude, refueling, and spit back may use Tier 2 or Tier 3 fuel in model years 2015 and 2016. For 2017 and later model years C ARB LEV III option 2 evaporative families must use Tier 3 test fuel for h igh altitude, refueling, spit back, and leak standard certifications

. Tier 3 evaporative emission vehicles mus t use Tier 3 fuel to meet evaporative emission (hot soak plus diurnal and running loss standards), high altitude, canister bleed, and refueling/spit back emission standards beginning in the 2015MY and following. Beginning in the 2018 MY, Tier 3 vehicles must use Tier 3 emission test fuel to demonstrate compliance with the leak standard requirements. 373 When the program is fully phased

- in, any Tier 3 evaporative emission certification will have to use Tier 3 certification test fuel and test proce dures or CARB equivalent test procedures and fuels . This could be done as earl y as the 2015 MY and will be required for all vehicle models by the 202 2 MY. 374 As indicated above and in Table IV

- 21 , w e are further applying th e new test fuel at the same time to ORVR testing. Therefore, beginning in the 2017 MY if manufacturers do any new testing to demonstrate compliance with the Tier 3 evaporative emission standards (using Tier 3 or LEV III fuel) , they will need to submit tes t data to demonstrate compliance with the refueling emission standards using the new

373 This provision applies in 2017 MY for vehicles meeting the Tier 3 requirements using the 20/20 op tion and does not apply to HDGVs with a GVWR greater than 14,000 lbs. Incomplete HDGVs have until the 2022 MY to meet the spit back standard. 374 The only exception here would be if a vehicle uses allowances in the 2022 mo del year to meet the Tier 3 evap orative emission requirements.Page 242 of 529

certification test fuel as well as the leak (when applicable), spit back, canister bleed, running loss, and high altitude emission stan dards. Any family that is not yet captured within the Tier 3 phase

- in percentage may remain on Tier 2 certification fuel through the 20 21 MY. By the 202 2 MY all evaporative and refueling emission certifications will have to be on EPA test procedures and certification fuels or CARB equivalents as identified in the regulations

. Policies regarding test procedures and test fuels for EPA confirmatory and o ther post certification testing are discussed in Section IV.C.6.e below. Finally , we are including provisions to allow any vehicle certified to the refueling spit back standard separatel y (mostl y incomplete HDGVs) to continue to do so using Tier 2 current certification fuel until the 2022 MY even if its evaporative emissions are certified on Tier 3 certification fuel. This is reasonable since the fill quality

of the vehicle and eliminating spit back are not necessarily related to the ethanol or sulfur conte nt of the gasoline. The manufacturers must meet this requirement through testing, as the engineering evaluation flexibility available for HDGVs over 14,000 lbs GVWR does not apply to this standard.
c. Correction for Ethanol Portion of the SHED Measurement Another issue related to adding ethanol to the certification test fuel relates to the emission measurement in the SHED. Emissions are detected by flame ionization detectors (FID), which are less responsive to ethanol than gasoline. This effect causes und er - reporting from the ethanol portion of the fuel vapor. Fuel

related emissions from the vehicle may be slightl y more weighted toward ethanol than gasoline, depending on how the different fuel constituents permeate through various fuel

- sy stem materials, how they evaporate from the bulk fuel in the tank at varying temperatures, and how they adsorb onto and desorb from the activated carbon in the canister. We proposed to address this issue by the use of a prescribed correction factor. Under this approach manufacturers would simply multiply their SHED measurement results by a fixed value to adjust upward for the difference in the FID response to ethanol. Data available to EPA at the time of the NPRM suggest ed that a value of approximately 1.1 would be appropriate for E15. 375 For an E10 certification fuel, California ARB finalized a value of 1.08. In their comments, the manufacturers supported the use of a correction factor, but stipulated that the value put forth b y EPA was too large and they should be give n the option to measure the ethanol fraction of the vapor in the SHED through procedures and instrumental approaches prescribed in the regulations (see 40 CFR1065.269 , 1065 .369 , and 1065. 805) instead of using a fixed correction value. Two manufacturers pro vided data based on testing with E10 test fuel which

375 Moulis, C. ( 2012, January). SHED FID Responses for Ethanol. Memorandum to the docket.Page 243 of 529

generall y showed lower ethanol fractions than represented b y the 1.1 value proposed b y EPA for hot soak plus diurnal emissions, and uniformly showed very low ethanol fractions for refueling measurements. 376 EPA has reviewed the data provided b y the manufacturers and has considered their comment that they should be given the option to measure the ethanol fraction and adjust the SHED results rather than be required to use a fixed correction factor. Based on these considerations, EPA is establishing the following approach with regard to ethanol corrections. First, EPA will permit measurement or the use of a fixed correction factor on an evaporative family by evaporative family basis. However, once the manufacturer selects an approach for an y given evaporative famil y , that approach must be used in all subsequent testing of all vehicles certified using that data including carry over. For example, if a manufacturer chooses to m easure the ethanol fraction for purposes of certification of a test group in a given model year, that same method must be used in any manufacturer confirmatory testing as well as IUVP or IUCP testing of all vehicles in that test group. Alternatively , if a manufacturer uses the fixed correction factor in certification it must also use it for all evaporative emission tests covered by the requirement for a given test group and for all follow on testing. Second, the decision on measurement or correction facto r must be uniform on a test group basis for all evaporative emission standards covered b y the correction requirement. In this case this includes hot soak, diurnal, high altitude, running loss, and rig test measurements. Third, in terms of a fixed correcti on factor, EPA believes that the 1.08 value adopted b y California is consistent with the data and is specifying that value for hot soak plus diurnal (low and high altitude) , running loss, and rig test measurement corrections for an y testing conducted with 10 percent ethanol. Based on the data provided b y the manufacturers, EPA is not requiring a fixed correction value or measurement for refueling, spit back, or canister bleed measurements for testing conducted with 10 percent ethanol. This aligns with the expectation that ethanol concentrations will be very low with FID

- based measurements and that mass - based measurements will capture an y ethanol adequatel y without a need for correction. Finall y, EPA will use the method selected b y the manufacturer in any c onfirmatory

or surveillance testing. However, since corrections will alway s be zero or greater, no correction is needed to make a failure determination if the FID value exceeds the emission standard or FEL. With regard to the 1.08, EPA remains open to future revisions to this value, in coordination with CARB, if a fuller data set representative of various vehicle models, SHED FID ethanol response values, FID designs (analog vs. digital), ethanol calculation approaches (photo acoustic and impinger), and te st sites demonstrates that a different value would be technically

376 Passavant, G. (2013, October). Manufacturer Data on Ethanol Measurements in the SHED. Memorandum to the docket.Page 244 of 529

appropriate and adequately conservative relative to the direct measurement methods permitted in 40CFR1065. For higher ethanol blends (such as E85), the regulation already specifies measure ment and calculation procedures to adjust for this effect. We are not making an y changes to these procedures. d. Vehicle Preconditioning for Nonfuel Hydrocarbon Emissions for the Tier 3 Evaporative Emission Standards The Tier 3 hot soak plus diurnal, leak, a nd canister bleed emission standards taken together are expected to bring about the widespread use of technology which effectivel y eliminates fuel vapor emissions. The fuel rig, canister bleed , and leak standards are not influenced b y nonfuel h ydrocarbon emissions from the vehicle. Nonfuel h ydrocarbon emissions from the vehicle are measured as part of SHED emission testing, and are indistinguishable from fuel hydrocarbons when a FID is used to measure the concentration. The level of these nonfuel h ydrocar bon emissions vary

by vehicle and component design and material. These emissions arise from paint, adhesives, plastics, fuel/vapor lines, tires, and other rubber or poly mer components and are generally greater with larger size vehicles. These nonfuel h ydr ocarbon emissions are usuall y highest with newly manufactured vehicles and decrease relatively quickl y over time. Currently , manufacturers normally conduct some preconditioning to reduce or eliminate the effects of these nonfuel h ydrocarbon emissions on evaporative emissions measurements in the SHED. In the past, this practice has not been addressed through regulatory provisions. However, given the stringent level of the Tier 3 hot soak plus diurnal evaporative emission standards, and that nonfuel hydro carbon emissions are expected to be a significant portion of the hydrocarbon emissions measured in the SHED, EPA believes that some sort of preconditioning before certification testing is appropriate and that a regulatory provision addressing this practice is warranted. Providing some recognition of and allowance for this practice will help to create the proper balance between necessary and proper preconditioning to address high nonfuel h ydrocarbon emissions and excessive preconditioning which could underm ine the intent of the hot soak plus diurnal emission standard (~ 50 mg or less of fuel evaporative emissions). EPA believes the goal of evaporative emissions preconditioning should be to get nonfuel hydrocarbon emissions to what we call vehicle background levels. A working definition of vehicle background level might be the level which will occur naturally twelve months after production. A provision in the regulations which addresses preconditioning reduces ambiguity for the manufacturers and could reduce or eliminate any

uncertainty in the true meaning of certification test results. Manufacturer activity

with regard to preconditioning often involves two practices. First, manufacturers in some cases “bake” their test vehicles atPage 245 of 529

temperatures of 50 ° C or higher for periods of up to ten or more day s to accelerate the off

- gassing of these nonfuel hydrocarbon emissions before testing is conducted. While this practice is common, there is no standardized method or protocol for this preconditioning prior to new vehicle certification testing. For example, some manufacturers bake for a set period of time in a climate chamber while others bake in the climate chamber and periodicall y measure nonfuel background in a SHED until an acceptable or stable level of nonfue l hydrocarbon emissions is achieved. Second, manufacturers often remove, modify , or clean certain components which are the largest source of nonfuel h ydrocarbon emissions. Preconditioning could also include measures to eliminate minor fuel drips, spills, or other fuel remnants which occur as a result of vehicle preparation for testing. We are not specifying standardized pre

- conditioning practices or protocols with regard to addressing nonfuel hydrocarbon emissions before evaporative emission certification testing. However, we are finalizing general provisions in four areas. First, we specify

in the regulations that preconditioning for the purpose of addressing nonfuel h ydrocarbon emissions is permitted. Second, we specify that any preconditioning is voluntary . Third, we specify that if preconditioning is conducted, the details must be specified to EPA before certification testing, (i.e., at the time of the pre

- certification planning meeting). The goal of this preconditioning should be to get nonfuel hydrocarbon emissions to vehicle background levels as discussed above. The specifics to be discussed with EPA could include details on vehicle baking practices such the temperature and time duration in the climate chamber and practices conducted as an altern ative or complement to vehicle baking such as installing used tires (drive and spare) on certification vehicles, and allowing the windshield washer tank to be filled only with water. EPA’s goal in these discussions is to gain certainty that manufacturers are not preconditioning vehicles so severel y that they create a level of nonfuel h ydrocarbons that is artificially low and would not occur in use and thereb y creating a false additional compliance margin for fuel hydrocarbons in the certification test. Fo urth, except as discussed below we are providing in the regulations that no pre - conditioning is permitted for testing of an y vehicle aged more than twelve months from its date of manufacture. This restriction for vehicles older than 12 months include s certification, confirmatory

and in

- use testing for any vehicle certified to the Tier 3 evaporative emission standards. For these vehicles, nonfuel hydrocarbon emissions will presumabl y be reduced to a stable level due to natural off gassing which begins afte r the vehicle is manufactured. Emissions from any replacement parts or other vehicle maintenance will presumabl y be encompassed within the margin below the standard created b y this natural off

- gassing. EPA received several comments concerning the propos ed restriction on pre - conditioning of vehicles older than 12 months from the date of manufacture. The Alliance of Automobile Manufacturers and the Association of Global Automakers a sk ed that baking be permitted if such a vehicle is found to have identifiab le contamination due to causes such as a fuel spill, refrigerant leak, orPage 246 of 529

washer fluid leak and that the manufacturer be given the option to age the tires (tires only) from an y vehicle where the tires are less than twelve months from manufacture as indicat ed on the sidewall. CARB asked that EPA only allow the use of an aged spare tire in any testing and not spare tire removal. EPA generally agrees with these commenters and is finalizing provisions for limited flexibility subject to EPA approval

. Under these provisions manufacturers may be permitted to clean an y spills or leaks but not to bake the entire vehicle. Baking of tires less than 12 months old may

also be permitted with EPA prior approval. Vehicles must be tested with a spare tire in place since emissions from the spare tire were considered as the standard was developed. Manufacturers may exchange a new spare tire for one that is baked or aged. Finally , one manufacturer indicated that there may be circumstances where th e base chassis for a certification vehicle was used in previous certification but that this base chassis was modified for a new model year and cleaned, reconfigured, and recertified with new components which affect background emissions. 377 While EPA believes this would be a rare occurrence, regulatory

provisions in this rule allow EPA to approve additional pre

- conditioning for vehicles in this situation upon manufacturer request and justification.
e. Reciprocit y with CARB Over the past 15 ye ars EPA’s “enhanced e vap” test procedures have been based on testing with 9 pound per square inch (psi) RVP gasoline with test temperatures representing a summer day with peak temperatures of about 96 °F. CARB adopted the same basic procedures, but specified that testing should occur with 7 psi RVP gasoline at temperatures of up to 105 °F. EPA and CARB agreed that certification could be based on testing with either EPA or CARB conditions and that these provided equivalent stringency for purposes of evaporative control sy stem design. However, the provision allowing for this equivalence of test data preserved EPA’s ability

to also test with either EPA or CARB temperature conditions and related test fuels . CARB alway s specified EPA test conditions for refueling as they

were de emed worst case. CARB recentl y change d their certification test fuel to a 7 RVP gasoline with 10 percent ethanol and as discussed in Section IV .F , we are chang ing the Federal certification test fuel specification to a 9 RVP gasoline with 1 0 percent ethano l. During the development of this FRM we carefully considered the practice of CARB/EPA reciprocity with regard to certification test fuels, hot soak plus diurnal test procedures, running loss test procedures, and emission test results when it comes to ev aporative emissions certification. Based on these considerations and the alignment of the ethanol content for the EPA and CARB certification fuels, we

377 See public comment EPA

- HQ

- OAR

- 2011

- 0135

- 4299 and Passavant, G. (2013, October). VW E

mail to EPA Regarding Vehicle Preconditioning. Memorandum to the docket.Page 247 of 529

have decided to retain our current approach with regard to CARB/EPA reciprocity for evaporative and refu eling emissions. EPA and CARB have agreed to continue accepting emission test data on each other’s test fuels and temperature conditions for certification such that a uniform national program for certification test fuel will be able to exist. For model ye ars during the evaporative emissions standard phase

in discussed above (ending after the 20 21 MY), EPA will conduct any post certification testing on any vehicle in the Tier 3 program manufactured in the 2015

- 2021 MYs using the fuel and temperatures used b y the manufacturer for certification. This approach covers families certified using carry over PZEV evaporative emissions data (through the 2019 MY) and LEV III Option 1 certifications (through the 2021MY). Our program flexibility in the area of test fuels for hot soak plus diurnal, running loss and SHED rig/canister bleed emission standards is summarized in Table IV

- 24 . After the 2021 model year , EPA will retain the option to test on either set of t emperatures/fuels. This applies to all evaporative emission standards (hot soak plus diurnal, running loss, and canister bleed)

. For the other emission standards (refueling, leak, spit back, and high altitude hot soak plus diurnal) EPA will use the test fuel used by the manufacturer through the 2019 model year. For the 2020 model year and later we may use Tier 3 fuel or California Phase 3 if its use is permitted for certification. Please refer to the regulatory

text for specific pr ovisions. EPA will review all Tier 3 program evaporative emissions data. I f the data shows that the EPA and CARB based test requirements give full y equivalent results, in the future we may revise our regulations so that a vehicle is alway s tested on the f uel used for its initial certification. Table IV

- 24 Tier 3 Evaporative Emissions Program Options and Test Fuels Vehicle Program Start

MY Program Standards Cert Fuel EPA test fuel for c onfirmatory , surveillance & IUVP End MY for Use in Tier 3 PZEV zero evap . 2015 Hot soak +

diurnal, running loss & SHED rig CA Ph. 2 Fuel used b y the manufacturer After 2019MY

LEV III Opt. 1 2015 Hot soak +

diurnal, running loss & SHED rig CA Ph. 3 CA Phase 3 through 2019 MY, after EPA may use Tier 3 or CA Phase 3 After 2021MY

LEV III Opt. 2 2015 Hot soak +

diurnal, running CA Ph. 3 CA Phase 3 through 2019 MY, after EPA may use Tier 3 or CA Phase 3 N/APage 248 of 529 loss & c anister bleed Tier 3 2015 Hot soak +

diurnal, running loss & c anister bleed Tier 3 Tier 3 N/A

As shown in Table IV

- 21 , to qualify as a Tier 3 vehicle for evaporative emission purposes vehicles must meet the hot soak + diurnal, high altitude, rig/canister bleed, running loss, refueling, and spit back standards . The leak standard applies beginning in the 2018MY and the SHED rig/ canister bleed tests are program specific.
Generally , a vehicle test group using Tier 3 certification fuel and test procedures for meeting the various evaporative and refueling emission standards will qualify

for inclusion in the Tier 3 evaporative emission standards phase

- in. However, EPA recognizes that the California and federal evaporative emission standard programs are starting from different bases and that the transition provisions are different in some way s. For example, the EPA program starts in the 2017 MY but after that has the same basic program construct as CARB in 2018. However, prior to the 2017 MY , CARB has a ZEV program provision which will continue to bring zero evap technology into the fleet before the 2017 MY and CARB also allows early

L EV III Option 1 and Option 2 evaporative emission certifications . To capitalize on this technology and to fa cilitate transition, we are finalizing provisions that any CARB evaporative emission test data from MYs 2015 and 2016 PZEV zero evap certifications (hot soak plus diurnal and running loss) c an be used in federal certification for those evaporative familie s through the 2019 MY

. Similarly , we are finalizing provisions that CARB LEV III Option 1 certifications (hot soak plus diurnal and running loss) c an be used in federal certification for those evaporative families through the 2021 MY

. Assuming the vehicl e test groups also meet the Tier 3 high altitude evaporative emission standards, the refueling emission standard, the spit back standard, and the leak standard when applicable, they could be included in the percentage phase

- in calculations as Tier 3 ve hicles. If the vehicles do not meet the Tier 3 evaporative emission requirements manufacturers could potentially sell them nationwide, but they could not be included as Tier 3 compliant vehicles in the percentage phase

- in calculation. Table IV

- 21 provides a concise summary of the requirements a vehicle must meet to qualify

as a Tier 3 vehicle during the program’s earl y, transition, and phase

- in periods.Page 249 of 529 EPA propose d a similar provision for a manufacturer wh o elects to use the CARB test procedures and test fuels to meet the refueling emission standard. However, no manufacturer indicated interest in their comments and we have decided not to include reciprocity for this provision in the Tier 3 program. Whi le experimental data based on field bench testing suggests that the CARB test fuel RVP and dispensed temperature together would give the same results as the EPA test fuel RVP and dispensed temperature there are no vehicle test data in the record at this time. CARB has always accepted refueling and spit back certification on EPA test fuel and will continue to do so in the future. This provision would have added another layer of complexity to the program and was not necessary since the refueling and evapor ative tests are done separatel y. f. Evaporative and Refueling Emission Standards for Various Fuels The evaporative and refueling emission standards apply in different way s to different fuels. First, with regard to the evaporative emission standards, C lean Air Act section 202(k) specifies that gasoline

- fueled vehicles must be certified to evaporative emission standards . Section 202(a) authorizes EPA to establish evaporative emission standards for other fuels

. Today evaporative emission standards appl y to LDVs, LDTs, MDPVs, and HDVs fueled by gasoline methanol, ethanol, natural gas, and liquified petroleum gas (LPG). For the refueling emission standard the situation is quite different. S ection 202(a)(6) of the Clean Air Act specifies that the refueling emission standards apply to all LDVs regardless of the fuel used. Section 202(a) of the Clean Air Act authorizes EPA to establish emission standards for other fuels and classes of vehicles

. Prior to the Tier 3 final rule, the refueling emission standards applied to all vehicles less than 10,000 lbs GVWR regardless of the fuel used. Inthe NPRM, EPA requested comment on appl yi ng the refueling standards to all vehicles regardless of fuel used . This would include all volatile fuels. 378 The evaporative standards apply today to all volatile fuels 379 (except for diesel ) and we asked for comment on explicitly including dedicated ethanol as well as fuel

- cell vehicles, and electric vehicles . EPA also requested comment on applying the refueling and evaporative standards onl y to vehicles using volatile liquid fuels instead of all volatile fuels. EPA receiv ed four comments on this issue. One commenter expressed the view that evaporative requirements should be expanded to apply to volatile liquid fuels plus liquified petroleum gas (LPG) and liquified natural gas (LNG) while the

378 A volatile fuel is a volatile liquid fuel or any fuel that is a gas at atmospheric pressure; gasoline, methanol, ethanol, natural gas, and LPG are volatile fuels. 379 A volatile liquid fuel is a fuel that is liquid at atmospheric pressure and has a Reid Vapor Pressure higher than 2.0 pounds per square inch

– gasoline, ethanol, and methanol.Page 250 of 529

three other commenters did not see the need to apply the requirements to any gaseous fueled vehicle or other vehicle using a non

- volatile liquid fuel because these vehicle fuel s ys tems are sealed and rarely vent during normal operation or never vent at all. A s is discussed further in the Summary and Anal ysis of comments, based on the comments , the fuel properties, and current industry fuel sy stem design practices, EPA has decided to retain the requirement that the evaporative and refueling emission standards apply to vehicles using an y volatile fuel. For gaseous fueled vehicles (LPG and LNG/CNG vehicles), onl y the Tier 3 3

- day hot soak plus diurnal and running loss standards a pply

. For the other volatile fuels all of the Tier 3 evaporative emission standards appl y. For the refueling emission standard the requirements appl y to all complete vehicles less than 10,000 lbs GVWR regardless of the fuel used. This is not being changed, except that the requirement will not apply to diesel

- powered LDTs and HDVs vehicles. For vehicles over 10,000 lbs GVWR, the refueling emission standards will apply only to complete vehicles. This includes LPG, CNG, L NG, and dedicated ethanol or methanol vehicles. While the test procedures for these standards would apply , EPA is including regulatory provisions to permit manufacturers to certify based on related data, engineering anal ys is, and compliance with published consensus standards. We are not applying these requirements to electric or fuel cell vehicles. For vehicles equal to or less than 8,500 lbs GVWR, the Tier 3 evaporative and refueling emission standards for alternative fuel vehicles appl y to each vehi cle of a vehicle evaporative/refueling famil y as the family is included in the manufacturer’s phase

- in for the Tier 3 evaporative emission standards. For vehicles over 8,500 lbs GVWR, the application of the Tier 3 evaporative emission standards depends on the Job 1(first build) date for the vehicle evaporative famil y. If the Job 1 date for a vehicle model is before the fourth anniversary date of the signature of the rule then the Tier 3 evaporative emission standards do not appl y until the next model year. If the Job 1 date is after the fourth anniversary date, the Tier 3 evaporative emission standards appl y in that model year. This determines when the vehicle is to be included in the denominator of the percentage phase

- in calculation. The refueling emiss ion standard applies onl y to complete vehicles and we are applying the same phase

- in requirements as for complete HDGVs. For complete vehicles between 10,000 and 14,000 lbs GVWR the refueling emission standard applies in the 2018 model year. For complete v ehicles with a GVWR in excess of 14,000 lbs GVWR, compliance is required in the 2022 model year. Finally , for all small businesses, the Tier 3 evaporative and refueling emission standards do not apply until the 2022 model year. g. Other Changes and Future Considerations T his rulemaking include d consideration of several amendments or clarifications to existing requirements related to evaporative emissions. As part ofPage 251 of 529

this process, EPA has concluded that the following provisions warrant adjustment, clarification, or correction:

 Even though the evaporative emission standards in 40 CFR part 86 appl y t o the same engines and vehicles that must meet exhaust emission standards, we require a separate certificate for complying with evaporative and refuel ing emission standards. An important related point to note is that the evaporative and refueling emission standards alway s appl y to the vehicle, while the exhaust emission standards may appl y t o either the engine or the vehicle. Since we plan to apply ev aporative/refueling/leak standard and the recentl y adopted greenhouse gas standards to vehicle manufacturers, we believe it will be advantageous to have the regulations related to their certification requirements written together as much as possible to red uce burden and increase efficiency

. Therefore, for 2015 and later model ye ars, we are moving the emission standards and certification requirements for HDGVs from 40 CFR part 86 to the new 40 CFR part 1037, which was originall y used for greenhouse gas standards for heavy

- dut y highway vehicles. This is not intended to change the requirements that apply to these vehicles, except as noted in this section.

 Section 86.1810

- 01 contains specifications addressing whether diesel fuel vehicles can be waived from demonstrating compliance with the refueling emission standard through testing. In the existing regulation the potential for a waiver from testing depend ed on the diesel fuel having an RVP equal to or less than 1psi and the fuel tank having a temperature wh ich does not exceed 130°F. We have examined this provision and are withdraw ing the fuel temperature limit specification. Short of fuel spillage in the SHED, EPA sees no likelihood that a diesel fueled vehicle with RVP less than 1 psi could fail the refueli ng emission standard even at fuel tank temperatures above 130°F. This is due to the inherently low vapor pressure of diesel at these temperatures and the likelihood that vapor shrinkage conditions will occur in the fuel tank during refueling since the disp ensed fuel will be much cooler than the tank fuel.

 When adopting the most recent prior set of evaporative emission regulatory change s we did not carry through the changes applying evaporative emission standards to vehicles using methanol

- fueled compressio n - ignition engines. Th is final rule correct s this oversight.

 We are finalizing provisions to address which standards appl y when an auxiliary (nonroad) engine is installed in a motor vehicle, which is currentl y not directly

addressed in the highway regulat ion. The approach require s testing complete vehicles with any auxiliary engines (and the corresponding fuel

- sy stem components). Incomplete vehicles are to be tested without the auxiliary engines, but any

such engines and the corresponding fuel

- sy stemPage 252 of 529 components will need to meet the standards that apply under our nonroad program as specified in 40 CFR part 1060.

 We are remov ing the option for secondary vehicle manufacturers to use a larger fuel tank capacity than is specified b y the certifying manufacture r without re

- certifying the vehicle. Secondary vehicle manufacturers needing a greater fuel tank capacity must either work with the certifying manufacturer to include the larger tank, or go through the effort to re

- certify the vehicle. T his provision has not been used and is better handled as part of certification rather than managing a separate process. We are including corresponding changes to the emission control information label.

 We are revising the provisions for setting the vehicle air conditionin g controls during the running loss portion of the evaporative emissions test cycle to simply

reference the specifications for exhaust emission testing described in 40 CFR part 1066. This allows test labs to use a uniform set of test procedures for setting up test vehicles. This change is expected to have no effect on the stringency of the running loss test.

 EPA regulations at §86.1824

- 01 permit manufacturers to develop their full

useful life deterioration factors for evaporative and refueling emission stan dards based on the use of good engineering judgment. These factors are additive in nature, and when added to the “undeteriorated low mileage” test value the sum must be less than the applicable emission standard or FEL. Manufacturers usuall y certify such that this summed value falls below the emission standard or FEL enough to provide a margin for in

- use compliance and to address variability and other uncertainty. R egulations (at §86.1824

- 08) require that evaporative emissions durability assessments must employ gasoline fuel for the entire mileage accumulation period which contains ethanol in, at least, the highest concentration permissible in gasoline under federal law and that is commercially available in any

state in the United States (currently

E15). In their comments the Alliance of Automobile Manufacturers and the Association of Global Automakers asked to be able to use evaporative emissions deterioration factors from Tier 2/LEVII assessments even if the assessed or measured full life emission value used to determine the deterioration factor from the Tier 2/LEV II 2 testing is above the Tier 3/LEV III emission standard for the vehicle category of interest. (This situation, which is often referred to as line crossing, is not prohibited in the EPA regul ation.) 380 Thus, EPA is permitting the use of this data but requires that: (1) the manufacturers use good engineering judgment in the

380 . Passavant, G. (December 201 3) Background Information on Background Information: Carryover of Emissions Data and Line Crossing. Memorandum to the docket.Page 253 of 529 testing used to develop their deterioration factors and the assessment and application of this data in developing deterior ation factors , (2) the manufacturers use the evaporative/refueling emissions test fuel as stipulated in the regulations for Tier 3, and (3) the addition of the deterioration factor to the low mileage test result does not result in an exceedance of the emis sion standard or the FEL cap for that category of vehicles. **D. Improvements to In**  **- Use Performance of Fuel Vapor Control Systems**  1. Reasons for Adding a Leak Test Standard As emission standards approach zero, as in the “zero evap” standards discussed above, in

- u se performance becomes critical for vehicles to meet the standards over their useful life periods and provide the expected emission reductions. Fuel vapor control sy stem leaks are not a new problem, in fact it was one of the main reasons for replacing the canister method for assessing evaporative emissions with the enclosure (SHED test) method used today

. 381 However, as emission standards have become more stringent, test procedures have improved, and vehicle lifetimes have increased, an y m alfunction or deterioration in the sy stem causes significant emissions increases. Even a small leak can cause large amounts of HC vapor. Therefore, the prevalence of leaks in the fleet can have a significant effect on the average evaporative emissions overall. As discussed in detail in the NPRM, recent laboratory and field data 382 show very high emissions from vehicles with liquid/vapor leaks. Field studies have indicated approximately

10 percent of overall fleet have significantl y elevated evaporative emissions. The studies s how that this frequency increases as vehicles age. The Coordinating Research Council (CRC) E

- 77 programs randomly recruited sixteen vehicles and almost half had some ty pe of leak. Emissions related to these leaks grew in magnitude over the course of the pr ogram which lasted a few years. In addition, the EPA recently completed a test program to gather information on

381 Rarick.T, “Evaporative Emission Enclosure (SHED) Procedure Analysis of Surveillance Program Data,” Evap 75

- 2, Jun e 1975 and “Investigation and Assessment of Light

- Duty Vehicle Evaporative Emission Sources and Control,” EPA

- 460/3

- 76

- 014, June, 1976. 382 CRC E

- 77 reports: Haskew, H., Liberty, T. (2008). Vehicle Evaporative Emission Mechanisms: A Pilot study, CRC Project E

- 77; Haskew, H., Liberty, T. (2010), Enhanced Evaporative Emission Vehicles (CRC E

- 77

- 2); Haskew , H., Liberty, T. (2010), Evaporative Emissions from In

- Use Vehicles: Test Fleet Expansion (CRC E

- 77

- 2b); Haskew, H., Liberty, T. (2010), Study to Determine E vaporative Emission Breakdown, Including Permeation Effects and Diurnal Emissions Using E20 Fuels on Aging Enhanced Evaporative Emissions Certified Vehicles, CRC E

- 77

- 2c; DeFries, T., Lindner, J., Kishan, S., Palacios, C. (2011), Investigation of Technique s for High Evaporative Emissions Vehicle Detection: Denver Summer 2008 Pilot Study at Lipan Street Station; DeFries, T., Palacios, C., Weatherby, M., Stanard, A., Kishan, S.(2013) Estimated Summer Hot

- Soak Distributions for Denver’s Ken Caryl I/M Station F leet.Page 254 of 529

running loss emissions with implanted leaks of varying sizes, locations and fuel volatility

. 383 Data from this study is n ot included in the modeling anal ys is for this final rule , but the results show that there are significant emissions from leaks while driving as the fuel tank temperature rises. Therefore the reductions from the future prevention of leaks wi ll be larger than our current estimates. Th ese data led EPA to examine the OBD

- based evaporative s ys tem leak data available from I/M programs from several states to more accuratel y gauge the rate of leaks above the 0.020” monitoring threshold met by most manufacturers as a result of CARB’s 2004 model ye ar OBD II requirements. 384 . Th ese are important data because even a vehicle with a fuel/evaporative s ys tem leak as small as 0.020” would be expected to fail the Tier 3 evaporative emission standard in a SHED test and in fact emit 4

- 5 times above the Tier 3 emission standard on a dail y basis due to the number of vehicle trips per day

. We examined data for vehicles meeting CARB’s OBDII evaporative emission leak monitoring requirements as well as either th e CARB/EPA enhanced evaporative emission or Tier2/LEV II evaporative emission standards. Since the data w ere gathered b y the states under different protocols and time periods, the content of the data sets is not identical. To provide some degree of uniformity in our anal ys is, we examined the data for model years 200 0 and later, but within each state we onl y looked at calendar ye ars of data beginning after the initial state I/M exemption period had passed (2

- 6 calendar years depending on the state). Thus the anal ys is focused on I/M OBD information for calendar ye ars 2004

- 2012

. Examined together, the data generall y indicate the following

.

 For all our States anal yz ed, the trend lines show that between 2

– 4 percent of the vehicles entering the I/M program (at about 2 years old) have a “not ready” evaporative monitor. The percentage increased to between 8

– 11 percent as the vehicle aged to 8 years old with a rate increase of approximately

1 percent per year as the vehicle ages

.

 The model ye ars and time periods analyzed for the four States shows approximately

0.7

- 2.5 percent of vehicles overall with a “ready” evap monitor had one or more stored evap DTCs, indicating a potential evaporative emissions

- related problem as defined in the OBD regulations.

383 Kishan, S., Sabisch, M., Stewart, J., Glinsky, G. (2014) Running Loss Testing with Implanted Leaks. 384 Weatherby, M., Sabisch, M., Kishan, S. (2014) Analysis of Evaporative On

- Board Diagnostic (OBD) Readiness and DTCs Using I/M Data. Note: the data wa s presented in a docket memo for NPRM \ and is now part of a peer reviewed report.Page 255 of 529  A further review of the data shows that , overall, in the three States with an enforced OBD program approximately 0.7

– 1.6 percent of vehicles with a “ready” evap monitor had one or more stored evaporative emissions related DTCs. The fourth Stat e, which does not enforce the OBD test, had a higher percentage (2.5 percent) of evap monitor “ready” vehicles that had stored evap related DTCs.

 For the same model years and time periods anal yz ed for the three States with enforced OBD programs, EPA esti mates about 0.5 percent of vehicles with a “ready” evap monitor evaluated at four ye ars old in an I/M program had a stored DTC. This rate increased at a rate of about 0.15 percent per ye ar and was about 1. 1 percent for vehicles at 8 years old. For the fo urth state, which does not enforce OBD evaporative results, EPA estimates about 1.4 percent of vehicles evaluated at four years old had a stored DTC. This rate increased at a rate of about 0.5 percent per ye ar and was about 3. 5 percent for vehicles at 8 years old.

 Analyzing each state’s data for specific evaporative DTCs, over 50 percent of all evaporative codes were for evaporative s ys tem leaks. The second most common category

(15

- 20 percent) involved some sort o f error in the operation of the purge fl ow control which could also contribute to evaporative leaks.

 The monitor “ready” rates are relativel y uniform for all States anal yz ed, but the percentage of evaporative emissions related MILs illuminated and the percentage of evaporative sy stem leak relat ed DTCs were larger in the fourth State . EPA believes this is the case because OBD is advisory only in this State ’ s I/M program, meaning that a vehicle could pass it s I/M requirement with a M IL illuminated and not have to repair it. In considering this i nformation for the fleet as a whole, a few other factors must be considered. First, a vehicle can pass it s I/M requirements (based on provisions of individual State I/M programs) with the evaporative emissions monitor “not ready”. Second, the vehicle can pass with a pending DTC. Third, it is not uncommon for vehicle repair related to an OBD MIL to occur just before I/M visits. Based on factors such as these, the values presented above are likel y to be conservative on a fleet average basis. Beyond this, as discussed in the NPRM, earlier research conducted by EPA and the state of Colorado indicated that OBD is not designed to catch every evaporative s ys tem leak and sometimes misses leaks it should have found but did not for various reasons (some determine d and somePage 256 of 529

unknown). 385 This suggests that overall leak prevalence is higher than indicated by the OBD data alone. Estimating a nationwide fleet average leak rate is possible with the limited data available if some informed assumptions are made. Onl y about 24.5 percent of vehicles in the U

. S

. are in I/M areas and of these only 20.8 percentage points (~4/5) are in areas which rel y on OBD as part of the pass/fail protocol. There is at present no data on the prevalence of evaporative s ys tem leaks for vehicle s in areas without I/M. However, based on th ese data it reasonable to assume that the rates in these areas are no less than for areas with I/M (where I/M mandates repair) and are likel y similar to or larger than those for the one state analy zed where O BD is advisory only . Under those assumptions, the average leak rate across the country is much higher than for I/M areas alone. For example, if one considers data from the eight ye ar age point in the I/M data for states which require repair, the leak pre valence rate is about 1.4 percent and in the state where OBD is advisory it is 3.5 percent. Weighted b y the fleet percentages given above, this indicates a leak rate of about 3.0 percent in the fleet for the eight year age point. This is a conservative es timate based on historic evaporative I/M data 386

. The propensit y for leaks in the vehicle fleet has the potential to reduce the benefits of the Tier 3 evaporative emission standards substantially . I f on any given day , as few as 3 percent of Tier 3 vehicles h ave a leak(s) of 0.020 inches or greater this will cause in

- use emissions equivalent to essentially all of the projected emission reductions from the Tier 3 evaporative emission standards on that day

. 387 Th e leak standard we are adopting will help technolo gy to meet the Tier 3 evaporative emission standards and to improve in use durability . These technology measures (see Section IV.C .3 ) coupled with the upgrade to the OBD evaporative emissions certification and monitoring requirement s to signal problems at smaller threshold diameters (discussed in Section IV. E below) and additions to the IUVP program focused on testing a larger sample of vehicles for fuel/evaporative sy stem leaks in IUVP than for evaporative emission standards alone will help to ensure improved in

- use performance of evaporative emission control sy stems
. Based on the above discussion, there needs to be an increased focus on evaporative emissions durability . Nevertheless, th ere is no question of the value of OBD leak monitoring for evaporative sy stems, especiall y when owners complete

385 Eastern Research Group (2013) Evaluation of the Effectiveness of On

- Board Diagnostic (OBD) Sy stems in Identifying Fuel Vapor Losses from Light

- Duty Vehicles. 386 USEPA (201 4 ), “ Development of Evaporative Emissions Calculations for Tier 3 FRM” memorandum to the Tier 3 docket

. 387 See EPA memorandum: “Initial Comparison of Emission Rates from Vehicles with Fuel/Vapor Sy stem Leaks to Tier 3 Evaporative Emission Reductio ns, December, 2013.”Page 257 of 529

needed repairs in response to the DTCs set

. The I/ M OBD statistics and associated in

- use leak values discussed above would be higher without OBD evaporative sy stem leak monitoring. However, th ese data sugg est that EPA OBD regulations in place for 2004 and later model year vehicles will not alone be sufficient to address concerns regarding the emission effects of vapor leaks from the fuel and evaporative control s ys tems. 388 In the NPRM, EPA included a subst antial discussion of the work we conducted on high evaporative emission rates and our rationale for the need for a leak standard to help address these concerns. No commenter challenged the data or the premises for our conclusion that a leak standard was n eeded. Manufacturers asked that the leak standard be phased

- in with the Tier 3 evaporative emission standards and that use of upgraded OBDII evaporative sy stem monitoring capability be included as part of the in

- use verification program (IUVP) provisions. Both elements are contained in this final rule. CARB fully supported the proposed leak standard and test procedure and indicated its intent to adopt such provisions after the Tier 3 FRM is adopted. 2. Nature, Scope and Timing of Leak Standard The evapor ative emission standards in this FRM will help to promote widespread use of improved technology and materials which will reduce evaporative emissions in

- use. The new requirement for a leak standard and test procedure will help to ensure the durability of T ier 3 evaporative emission control sy stems nationwide. As discussed in the technological feasibility discussion in Section IV.C above, the actions of manufacturers to meet the Tier 3 evaporative emission standards are expected to address fuel/evaporative sy stem design features which currently

have a greater propensit y for developing leaks and thus improve in

- use durability

for evaporative control s ys tems compared to vehicles meeting previous evaporative emission standards. The leak standard will provide added assurance that as the manufacturers design for “zero evap” standards they also design the s ys tems to avoid leaks over the full useful life. Based on the information described above concerning evaporative emissions in

- use, we believe a leak standard is necessary to ensure that vehicles meeting Tier 3 evaporative emission requirements not have evaporative emissions in excess of the Tier 3 standards for their full useful life . Toward that end, we are finalizing a leak standard to be met both at new veh icle certification and in use for IUVP

388 Existing OBD regulations specify that if the fuel tank volume exceeds 25 gallons then the manufacturer may seek a larger leak detection orifice value. If a manufacturer seeks and is granted a larger value for OBD leak detection pur poses, then that same numerical value becomes the leak standard value. We do not expect this value to exceed 0.040 inches.Page 258 of 529

testing . The leak standard will apply beginning in the 2017 MY to vehicles in the 20/20 option for that year and in the 2018 MY and later model years to an y vehicle certified to the Tier 3 evaporative emission standar ds or a CARB carryover vehicle counted toward the sales percentage phase

- in requirements discussed in Section IV

. C , including LDVs, LDTs, MDPVs, and complete HDGVs up to 14,000 lbs GVWR. The standard will be applicable for the same useful life period as f or the evaporative emission standards that appl y to the vehicle. The standard will apply to vehicles using volatile fuel (e.g., gasoline, FFV, and methanol fuel vehicles, but not diesel or CNG vehicles). To be compatible with CARB OBD requirements being m et b y most manufacturers and the OBD requirements included in this notice, we are specifying that the leak standard be expressed in the form of a cumulative equivalent orifice diameter. We are finalizing a value of 0.02 inches. 389 The standard basicall y re quires that the cumulative equivalent diameter of any orifices or “leaks” in the sy stem not exceed 0.02 inches. This is consistent with California OBD requirements (and those being finalized in this rule as well) that the OBD s ys tem be capable of identifyi ng leaks in the fuel/evaporative s ys tem of a cumulative equivalent diameter of 0.020 inches EPA believes a standard at this level is feasible since earlier testing programs identified vehicles with essentially no leaks and it is essentially equivalent to that required for CARB OBD evaporative sy stem leak monitoring. We are finalizing a leak standard of 0.02 inches which with rounding is a bit less stringent than the 0.020 inch OBD evaporative s ystem leak monitoring requirement. EPA believes this level of precision is sufficient to accomplish the air quality objective and yet provides some compliance margin between the standard and the monitor requirement such as is reflected through multipliers for the exhaust emission standards established for other OBD monitors

. T he leak standard will be specified to one significant digit (e.g., 0.02 inches) but will have to be measured and reported to at least two significant digits. The leak standard will apply at the time of certification as well as during confirmat ory

and in

- use verification program testing. We do not expect that new vehicles being certified will have a leak problem, and since a vehicle with a leak would likely

fail the evaporative emissions SHED test, there is little value in mandating a leak test at certification. Thus, EPA will permit a manufacturer to attest to compliance with the leak standard at certification. To implement the leak standard within the existing regulatory structure a few minor rule changes are being made . First, existing EPA regulations such as

389 Existing OBD regulations specify that if the fuel tank volume exceeds 25 gallons then the manufacturer may seek a larger leak det ection orifice value. If a manufacturer seeks and is granted a larger value for OBD leak detection purposes, then that same numerical value becomes the leak standard value. We do not expect this value to exceed 0.040 inches.Page 259 of 529

those at §86.098

- 24, specify criteria for evaporative/refueling emission families. EPA believes this basic structure is appropriate for the leak standard, with the additional criteria that vehicles in the same evaporative/refueling fam ily must use the same basic approach to OBD leak detection. Significantl y different volume fuel tanks would likely

also be a famil y determinant, but we believe this is already covered b y the evaporative/ refueling family criteria. Second, since the leak st andard is a pass/fail requirement and not an emission rate, there is no requirement for the application of a deterioration factor. Third, EPA require s that the manufacturers recommend two or more leak test point s for each test group. One of these point s should be near the canister/purge valve (ideall y in the vapor line between the canister/purge valve and the fuel tank) and the other in the gas cap/fill pipe area. Three points are required for vehicles with two separate evaporative and refueling canist ers such as non

- integrated ORVR sy stems which employ two activated carbon canisters and four points are required for vehicles with dual fuel tanks and two separate evaporative/refueling control sy stems. EPA believes that linking the timing of the leak stan dard to the beginning of the phase

- in of the Tier 3 evaporative emission standards in the 2018 model year provides adequate lead time and is consistent with the technical rationale supporting the feasibility

of the Tier 3 evaporative emission standard. 3. Leak Standard Test Procedure The fundamental concepts underlying fuel/evaporative sy stem leak test are not new to the manufacturers. There is already a simple leak check in 40 CFR 86.608

- 98(a) (1) (xii)(A) and in the past at least three states included a fuel/evaporative s ys tem pressure leak test in I/M programs. More importantly , all LDVs, LDTs, MDPVs and HDGVs manufactured today have the onboard capability to run a pressure or vacuum leak based check on the vehicle’s evaporative emission sy stem as part of OBD evaporative s ys tem leak monitoring. These s ys tems employ

either positive or negative pressure leak detection pumps or operate based on natural vacuum for negative pressure leak detection. EPA is finalizing a test based on a similar concept of pl acing the s ys tem under a slight positive pressure (but from an external source), measuring the flow needed to maintain that pressure in the fuel/evaporative control sy stem, and converting that flow rate to an equivalent orifice diameter. With regard to the test procedure we will first discuss where the leak test can occur in the FTP test sequence. We will then discuss how the test is to be conducted. EPA proposed this test procedure as part of the NPRM and discussed it extensively in the preamble to th e proposed rule, and provided a full draft of the Recommended Practice for comment as anPage 260 of 529

Appendix to the RIA. No comments were received. We are finalizing this test procedure as proposed. 390 First , when conducted, the leak test should be completed immediately following the first two preconditioning steps within the FTP sequence (see Figure B96

- 10 in 40 CFR 86.130

- 96). Thus, the vehicle preconditioning steps for the leak test are : (1) fill the vehicle fuel tank to 40 percent of capacity using the appropriate certification test fuel and then (2) let the vehicle soak for a minimum of a six hour period at a temperature in the range of 68

- 86 °F. EPA requires that the test be conducted with 9 RVP E1 0 test fuel for both certification and IUVP. 391 After preconditi oning is complete, the leak test is conducted and the test sequence proceed s as prescribed in subpart B or testing is terminated if the purpose is only to conduct leak testing. EPA believes this modest level of preconditioning is sufficient to create stan dard conditions which enable repeatable and reliable measurement results. Preconditioning c annot include any prescreening for leaks nor will any tightening of fittings or connections be permitted. After preconditioning is complete, manufacturers then run the leak test. To fully complete testing on a vehicle, two or more test points are required depending on the fuel evaporative system configuration. All points must pass for the vehicle test to be a pass. As discussed above, one of these points should be near the canister/purge valve (ideally in the vapor line between the canister/purge valve and the fuel tank) and the other in the gas cap/fill pipe area. Three points are required for vehicles with two separate evaporative and refueling canisters such as non integrated ORVR s ys tems which employ two activated carbon canisters and four points are required for vehicles with dual fuel tanks and two separate evaporative/refueling control sy stems such as dual tank LDTs . If the fuel/ evaporative s ys tem has an e mbedded evaporative sy stem test port then that point can be used. Al so , a manufacturer can develop a test rig such as a “fill pipe extension” which screw s into the fill pipe opening using cap threads at one end and on the other end ha s threads to screw th e fill pipe vehicle cap in place. Within this extension there must be an access port for the leak test equipment to be attached. Thus, the full sy stem could be tested without any direct intrusion or the need for a separate gas cap assessment. The manufa cturer must specify the test point s at the time of the pre

- certification meeting. If the manufacturer select s an entry point which requir es the fuel cap to be removed, then the cap will have to undergo a

390 Smith, P. and Passavant, G. , “ Recommended Test Procedure and Supporting Testing Data for the Evaporative Emissions Leak Test ”, December 201 3. 391 This is the same preconditioning that is called for in existing 40 CFR 86 subpart B for exhaust, evaporative, and refueling emissions testi ng . EPA will consider permitting the leak standard to be evaluated using CARB LEV III test fuel if CARB ultimately adopts this requirement.Page 261 of 529

separate test as is now done in many I/M stations. 392 Inthis case, tests from both points combined must pass the standard. Manufacturers commented that only one test point was needed, but when asked b y EPA they offered no data to counter that provided b y EPA in the NPRM which showed the potential for diffe rent results at different test point locations for the same vehicle. The procedure is conducted as follows:

 Calibrate the testing apparatus and otherwise verify testing apparatus is ready and able to complete the procedure

 Seal fuel s ys tem so as to press ure test entire s ys tem (purge valve, cap, etc.)

 Attach test apparatus to vehicle’s fuel sy stem at selected test point

 Pressurize fuel sy stem with nitrogen or another inert gas to at least 2.4 kilopascals (kPa)

 Allow flow and pressure to stabilize in acc ordance with specification provided in the regulatory text

 Calculate effective leak orifice diameter from measured output flow rate and temperature and pressure data or use apparatus with built in computer providing an equivalent digital readout. Calculate to the nearest 0.01 inch.

 Calculated effective orifice diameter must be less than or equal to the standard

 If leak test is conducted at the fuel cap opening then the manufacturer must also show evidence that the vehicle’s fuel cap is performing properly

. 393

 Use two or more separate test points , near the evaporative canister/purge valve and the other near the fuel cap are required. This is especially

392 For related information see “IM240 & Evap Technical Guidance”, EPA 420

- R

- 00

- 007, April , 2000. 393 Such tests are do ne routinely in I/M stations using a commercially available apparatus. The gas cap leak rate may be determined by pressure loss measurement, direct flow measurement, or flow comparison methods and shall be compared to a pass/fail flow rate standard of 60 c ubic centimeters per minute of air at 30 inches of water column. The flow rate methods are referenced to standard conditions of 70 °F and 1 atm.Page 262 of 529 important if the fuel cap/fill neck area is isolated from the rest of the fuel/evaporative s ys tem as a r esult of the 40 percent fill or if dual tanks are not otherwise connected through vapor lines.

 Tests can be void if the test apparatus fails, becomes disconnected, fails to maintain a stable flow rate or pressure, or the test was stopped before completion due to safet y considerations or some other relevant vehicle issue.

 Leak tests at all points (2 or more depending on the fuel tank/evaporative s ys tem configuration) must pass for a vehicle to pass. This includes performance within specification for the fuel cap if it is removed for testing. The test procedure presented above is based on current fuel s ys tem designs. In the future, it is reasonable to expect changes in designs of the fuel s ys tems such that the procedure above may need adjustment. EPA wil l monitor these fuel sy stem changes and modify

the test procedure provisions as needed. Furthermore, existing EPA regulations (see §1065.10(c)) contain provisions which provide the opportunity

for manufacturers to seek approval for special or alternate te st procedures if from a practical perspective their s ys tems cannot be evaluated under EPA requirements or they have an approach deemed equivalent or better. Any such special or alternative procedures must be reported under §86.004

- 21(b)(9). 4. Certification and Compliance As part of the Compliance Assistance Program (CAP 2000) in

- use verification program (IUVP) 394 the manufacturers began testing the evaporative emissions performance of small samples of in

- use vehicles owned and used by the public. These regulations can be found at 40 CFR 86 1845

- 01, and 1845

- 04. In 2000, EPA extended this requirement to cover chassis

- certified HDVs, which for these purposes are basically all HDGVs up to 14,000 lbs GVWR. 395 The in

- use testing for evaporative emissions started in 2004 for 2001 MY LDVs, LDTs, and MDPVs and in 2008 for 2007 MY chassis certified HDGVs. Current IUVP data for evaporative emissions (including LDVs, LDTs, MDPVs, and HDGVs up to 14,000 lbs GVWR) covers about 1800 vehicle tests. Th ese data show that wh en evaluated in the laboratory

using certification test procedures, the vast majority (over 95 percent) of the vehicles pass the evaporative emission standards to which they were certified. While this information is indicative of good in

- use performance, i t has limitations. First, the test results are for small sample sizes. For the approximately

394 See 64 FR 23906 (May 4, 1999). 395 See 65 FR 59922

- 59924 (October 6, 2000).Page 263 of 529

150 million LDVs, LDTs, MDPVs, and chassis

- certified HDGVs produced between 2001 (the start of the IUVP program) and 2010 (latest available data), onl y about 0.0 01 percent of vehicles were tested. Second, the IUVP regulations place limits on the age/mileage for vehicle testing. Each model year is tested in two “batches,” nominally

at the one and four year age points. One year old vehicles must have at least 10 ,000 miles and four year old vehicles must have at least 50,000 miles with at least one within the higher mileage group having an odometer reading of at least 75 percent of useful life (90,000 miles for most Tier 2 vehicles). With the even longer useful l ife periods under Tier 3, attention to in

- use durability for evaporative sy stems becomes even more important. Including the leak standard within the IU VP protocol, as structured in the discussion below, will provide better information to EPA and manufacturers concerning evaporative s ys tem performance and help to focus manufacturer efforts on using designs and hardware with full useful life durabilit y in mind.

a. In

- Use Verification Program (IUVP) Requirements for the Leak Standard i. Introduction We believe it is important to identify leaks since vehicles with leaks are expected to have dail y emission rates above the Tier 3 evaporative emissions standards , and the recent laboratory and field data 382 suggest a p ropensity for the diameter of vehicle leak orifice to get larger over time and thus to have even higher emissions. This is also important because evaporative leak emissions occur virtually every day whether the vehicle is driven or not. Thus identifying po tential leak problems is important to capturing the emission benefits of the Tier 3 evaporative emission requirements. Toward that end, EPA is includ ing assessment of compliance with the leak standard within the IUVP program. In developing the proposed ru le, w e considered expanding the evaporative emission testing portion of the IUVP program as a means to assess leaks, but we decided to focus on the leak standard because it is less burdensome than a full evaporative emissions SHED test and is a cost effect ive step toward assessing man y aspects of evaporative emissions performance in

- use . EPA believes adding a leak test requirement does not create an unreasonable burden. The test procedure described above is simple to run, inexpensive to conduct in terms o f equipment and labor, and can be completed relativel y quickl y compared to an evaporative emissions test. However, we are retaining the evaporative emissions testing requirements currentl y in IUVP to monitor broader evaporative control sy stem effectivenes s (e.g., purge, canister control efficiency , permeation).Page 264 of 529 ii. IUVP Test Requirements We are requiring that the leak test be conducted for each and every vehicle assessed in IUVP for exhaust emissions under 40 CFR 86.1845

- 04. This will begin for 2017 MY vehi cles meeting the leak standard under the 20/20 option and more fully in the 2018 MY certifications for all test groups meeting the new leak standard. Th e leak test IUVP requirement include s the low and high mileage tests for an y exhaust vehicle evaluated for exhaust emissions plus a requirement that there be at least one representative of each evaporative/refueling/leak family evaluated at each mileage/ye ar point. We are finalizing this approach to implementing IUVP for the leak standard in lieu of creati ng a new set of requirements which would require another set of vehicles to be procured for testing. We are not includ ing the leak test with any evaporative emissions test in IUVP, since a leak will be evident in the results of the evaporative emissions te st. The existing IUVP regulations at §86.1845

- 04, Table S04

- 07, call for test sample sizes on a sliding scale based on annual vehicle sales b y test group. This can vary from zero for very

small sales test groups to six vehicles for test groups with sales e xceeding 250,000. There are more exhaust emission test groups than there are evaporative/refueling tes t families and exhaust emission test groups may cover one or more of the same evaporative/refueling/leak families, so we expect to receive multiple leak test results for most evaporative/ refueling/leak families. This will expand the amount of IUVP data we receive in this important area and improve our ability to assess the overall leak performance for a given evaporative/refueling/leak family and the fle et as a whole. As discussed above, EPA believes that the fuel and evaporative control sy stem leaks are heavil y influenced b y age as well as design and other factors. EPA asked comment on extending the age point for leak testing for IUVP beyond the four year point to better assess this effect. However, in the past, manufacturers have expressed concern about the implications of testing older vehicles and about finding vehicles still within their warranty and recall liability

periods. EPA believes further c onsideration of longer year test points is merited for exhaust, evaporative, refueling and leak tests but because such a change could potentially affect all four tests we have decided to defer that action to a broader IUVP program review. Extending the ti me point for the leak test alone would create a different programmatic test burden in terms of more vehicle procurements than the program laid out above.

iii. Assessment of IUVP Leak Emission Standard Test Results The existing regulations contain provisions addressing follow

- on testing requirements for exhaust emissions for vehicles which fail to meet various performance thresholds within IUVP (see 40 CFR 86.1846

- 01). As mentioned above, we expect that it will be common to get more than one leak test result overPage 265 of 529

the course of each model year’s mileage testing point for each evaporative/ refueling/leak family

as a result of the requirement to assess leaks with each exhaust IU VP test. However, the leak standard is basicall y pass/fail at 0.02 inches and it is diffic ult to establish a threshold criteria for a pass/fail standard such as has been done for exhaust emissions where there is a multiplier applied to the level of the individual exhaust emission standard. Given the importance of the leak standard in assuring i n - use evaporative emissions control, we are finalizing a set of criteria for assessing leak standard results from IUVP. These criteria can be summarized as follows for each low and high mileage test point for each model year tested:

 lf 50 percent or more of all vehicles evaluated in an evaporative/refueling/leak emission family

for any given model ye ar pass the leak standard, testing is complete. This applies to cumulative testing for that family throughout the model year for that mileage group. This is c onsistent with the exhaust emission requirements for IUVP and EPA believes it is reasonable since vehicles are tested in the “as received” condition from consumers.

 If only

one representative of the evaporative/refueling/leak family is tested in a mileage group for that model year’s vehicles and it passes the leak standard testing is complete. If that vehicle does not pass the leak standard a manufacturer may

test an additional vehicle to achieve the 50 percent rate.

 If an evaporative/refueling/leak emissio n family fails to achieve the 50 percent rate, it is presumed that the family will enter into In

- Use Confirmatory Testing Program (IUCP). Before IUCP begins, the manufacturer may ask for engineering anal ys is discussions with EPA to evaluate and understand the technical reasons for the testing outcomes and the implications for the broader fleet. Technical information for these discussions could include but will not be limited to detailed system design, calibration, and operating information, technical expl anations as to why the individual vehicles tested failed the leak standard, and comparisons to other similar families from the same manufacturer. Relevant information from the manufacturer such as data or other information on owner complaints, technical se rvice bulletins, service campaigns, special policy warrant y programs, warrant y repair data, state I/M data, and data available from other manufacturer specific programs or initiatives could help inform understanding of implications for the broader fleet. As part of this process a manufacturer could elect to provide evaporative emissions SHED test data on the individual vehicle(s) that did not pass the leak standard during IUVP. With an adequate technical basis, the outcome of this engineering anal ys is dis cussion could result in an EPA decision not to require IUCP testing.Page 266 of 529 We will operate within the basic structure of the IUCP program in the existing regulations. Prior to commencing IUCP testing the manufacturer, after consultation with EPA submits a written plan describing the details of the vehicle procurement, maintenance, and testing procedures. This plan could include inclusion of a hot soak plus diurnal SHED test to supplement leak test results. EPA must approve this plan before testing begins. As p rescribed in the IUCP regulations for exhaust, if five vehicles are tested and all pass the leak standard then testing will be complete. If all five vehicles d o not pass, then five more are tested. More vehicles can be tested at the manufacturer’s discre tion but all testing must be completed within the time period specified in the regulations. EPA and the manufacturer then enter into discussions regarding interpretation, technical understanding, and compliance/enforcement implications of the test results , if any

.

iv. Optional Test Procedure Approach for IUVP/IUCP With the implementation of the OBD regulation changes in Section IV. E below regarding evaporative sy stem leak rate monitoring , EPA is finalizing an optional approach to a portion of the leak test procedure

. This optional testing approach is included in the IUVP/IUCP testing program for the leak standard, but will not be used for certification testing for the leak standard. EPA can also use this procedure for conducting compliance assessments. Unde r this optional approach manufacturers will be able to rel y upon the operation of their OBD evaporative sy stem leak detection hardware and operating protocols in lieu of running the stand alone in

- use leak test to check for the presence of a 0.02 inch leak in the fuel/evaporative s ys tem. Quite simply , if a vehicle is brought in for IUVP or IUCP testing and a scan tool query

of the onboard computer indicates that the vehicle ha s successfully completed a full OBD

- based evaporative s ys tem leak monitoring check within the last 750 miles and no evaporative s ys tem leak problems for an y diameter above 0.020 inches are indicated (no pending or confirmed diagnostic trouble code ( s ) P0440, P0442, P0446, P0455, P0456, or P0457), the vehicle would be deemed to have met and passed the leak standard test requirement. However, if the s ystem ha s not successfull y completed a full OBD

- based evaporative s ys tem leak check within 750 miles with no problem indicated then the manufacturer will have the option to run its OBD

- based ev aporative s ys tem leak check in the laboratory after prescribed preconditioning. This OBD

- based approach is sometimes used in auto manufacturer dealerships and repair facilities to diagnose and fix evaporative sy stem leaks found by

the OBD sy stem. If the vehicle completes the full OBD

based leak test in the laboratory then the vehicle’s pass/fail results for the 0.02 inch cumulative equivalent diameter orifice will be based on the OBD test result. This optional protocol c an apply to every leak standard te st after certification unless not approved b y EPA for IUCP under 40 CFR 1846.01(i). Replicate tests will not be required or allowed but void tests could be repeated.Page 267 of 529 Furthermore, EPA will permit the manufacturer to run the stand alone EPA leak test in se veral situations. First, manufacturers c an conduct the stand alone test to confirm that a problem identified by the OBD

- based evaporative s ys tem monitoring leak check is a leak and not a problem with the OBD leak monitor itself. Second, a manufacturer c an run the stand alone EPA leak test to confirm that the leak value identified b y the OBD sy stem is truly above the level of the leak standard. Third, it can be used for vehicles which have not successfully completed a full OBD

- based evaporative sy stem leak monitoring check within the last 750 miles. Fourth, it c an be used to confirm that a DTC set within the last 750 miles actuall y indicat es the presence of a leak(s) greater than the standard. However, if a manufacturer elect s to use only OBD

- based evaporative s ys tem leak based monitoring in its IUVP testing; these results will be the basis for decisions regarding IUCP. As required in the existing IUVP regulations, all test data whether OBD based or based on EPA’s stand alone test procedure must be reporte d to EPA. There may be some advantages to this option since it employ s a pressure/vacuum approach manufacturers understand and creates positive/negative pressures manufacturers have accommodated within their fuel/evaporative sy stem. One potential downside is that under current designs vehicle engines will have to be operating to create the pressure or vacuum and because the engine is operating this will require the OBD

- based leak test to be stand alone after the preconditioning sequence is complete. This will be more challenging for natural vacuum leak detection sy stems unless extended driving is involved to create the fuel sy stem heat needed for a natural vacuum event or this is done through a climate chamber or SHED based diurnal heat build. Allowing for this approach raises at least two implementation questions. The first is related to the value of conducting the OBD

- based test for a vehicle with a confirmed or pending leak DTC already set in the computer and/or an MIL indicated. In this case, EPA will permit the manufacturer to run the OBD

- based leak test and/or the stand alone EPA leak test or concede that the vehicle will not pass the leak standard and count the result. Second is the question of gas caps. This is among the most common codes found in OBD records and is often related to operator error such as not tightening the gas cap properly . Codes of this nature have no value in this leak assessment, so a manufacturer will be permitted to correct the problem before testing and clear this OBD code b efore testing or run the stand alone EPA leak test.Page 268 of 529

**E. Onboard Diagnostic System Requirements**  1. Onboard Diagnostic (OBD) Sy stem Regulation Changes

- Timing EPA first adopted OBD requirements for 1994 and later model year LDVs and LDTs. While EPA has extended its requirements from LDVs and LDTs to larger and heavier vehicles, 396 EPA’s last broad upgrade to its basic OBD regulation was in the 2005 timeframe. Since that time, CARB has adopted and the manufacturers have implemented a number of additional provisions to enhance the effectiveness of their OBD programs. These provisions include new requirements for OBD evaporative s ys tem leak detection as well as provisions to help insure that sy stems are built and operate as designed over their full useful life, give r eliable results (find and signal only true deficiencies), and operate frequently during in use operation. It is permitted in existing EPA regulations and is common practice for the industry

to certify their OBD s ys tems with CARB and for EPA to accept CARB OBD certifications as satisfying EPA requirements. EPA is continu ing that practice and we are up dating our regulations to be consistent with the latest CARB regulations. EPA proposed to adopt, with a few adjustments, the CARB regulatory requirements relat ed to OBD II (see California Code of Regulations (CCR) §1968.2 dated May

18, 2010) . We received comment from CARB that since our NPRM was issued, they

were s completing an update of their OBD II regulations and that EPA should adopt these provis ions in lieu of the May 18, 2010 provisions. 397 We have reviewed these updates and concur with the commenters, so we are adopting the provisions officially

approved b y CARBs Office of Administrative Law on July 31, 2013. We are also adding provisions and co ntinuing the exceptions as discussed below. The changes we are adopting do not include any changes to requirements for engines used in vehicles over 14,000 lbs GVWR or to vehicles over 14,000 lbs GVWR , except for HDGVs optionally certified using chassis p rocedures. To be consistent with the manner in which the Tier 3 exhaust emission standards are being implemented for the heavy

- dut y vehicles between 8,501 and 14,000 lbs GVWR, the OBD requirements will be based on the Job 1 (first production) date for the vehicle/engine model. If the vehicle/engine model Job 1 date is before the fourth anniversary

date of the signature of the Tier 3 rule the requirements will not be mandatory

in that model year. If the Job 1 date is on or after the fourth anniversary of the signature date of the Tier 3 rule the OBD requirements will appl y in that model year. The Tier 3 OBD requirements will apply to all 8,501

- 14,000 lb HDVs

396 EPA’s OBD regulations for LDVs, LDTs, and MDPVs, are found at 40 CFR 86.1806

- 05. EPA has also adopted OBD requirements for incompletes and heavier vehicles (greater than 14,000 lbs GVWR) (see 74 FR 8324, February 24, 2009 and 40 CFR 86.010

- 18). 397 The latest update of CARB’s OBD regulations was adopted on July 31, 2013. See section 1968.2 at http://www.arb.ca.gov/msprog/obdprog/obdregs.htm /Page 269 of 529

in the 2020 model year. To be consistent with the manner in which the Tier 3 exhaust emission standards We are taking this approach to OBD for three basic reasons. First, this is consistent with the goal of a national program and one vehicle technology for all 50 states. Second, compliance with the current CARB OBDII requirements is now demonstrat ed technology , compliance with these requirements is common within the industry

today , and we expect that to continue in the future with the 2013 CARB changes . Thus, the added burden is minimal since essentiall y all manufacturers certify

their CARB OBD s y stems nationwide with EPA

. Third , the latest OBD sy stems run frequentl y on in

- use vehicles to identify potential exhaust and evaporative s ys tem performance problems, so adopting these provisions will create the opportunit y for OBD to serve a more prominent role in ensuring the Tier 3 emission standards are met in

- use. Alignment with the existing CARB OBD II requirements will be required by the 2017 M Y, except as discussed below. Manufacturers requested a phase

- in compliance approach in lieu of a fixed compliance date, but no specific justification was provided b y the commenters and EPA could not establish a need for this accommodation since the most recent changes to CARB OBDII regulations (2013) did not meaningfull y affect provisions regarding vehicle s/engines under 14,000 lbs GVWR which have been in place since 2006. LDVs, LDTs, MDPVs and vehicles under 14,000 lbs GVWR already comply with CARB OBDII requirements and use the CARB certification as the basis for EPA certification. . There is an important link between OBD provisions related to evaporative emission control sy stem leak monitoring and the leak standard. They each provide an important incentive to design fuel/evaporative sy stems with fewer propensities to develop leaks in use but each addres ses the issue from a different perspective. The distinction is that the leak standard prohibits leaks of greater than 0.02 inches cumulative equivalent diameter, while the OBD evaporative s ys tem leak monitoring provision require s that the OBD sy stem find l eaks larger than 0.020 inches cumulative equivalent orifice diameter and notify the owner, but with no explicit requirement to repair the problem. Thus adopting a 0.020 inch cumulative equivalent orifice diameter align s these two programs and, as discussed above , facilitates the use of OBD evaporative s ys tem leak monitoring hardware/strategy as an optional leak detection test procedure for in

- use testing. With regard to OBD evaporative s ys tem leak detection, EPA received comment that we should permit a pha se - in for compliance with the 0.020” evaporative s ys tem leak monitoring requirement. Even though the 0.020” leak monitoring requirement has been in place since the 2004MY for CARB OBDII, and essentially

manufacturers have met it for years, the existing EP A regulation actuall y only requires monitoring at the 0.040” threshold level. After considering the comments received, EPA is permitting a limited and minimal phase

- in for thePage 270 of 529

0.020” leak detection criterion for the OBD evaporative s ys tem monitoring requi rement. We are permitting this phase

- in, because a few vehicle models still only meet the 0.040” monitoring threshold in their Federal configuration and complying with the 0.020” CARB OBD II requirement entails validating performance in high altitude and c old weather regimes not seen in California. Thus, the 0.020” requirement would be new for those few models currently certified only to the EPA evaporative leak monitoring requirement. We are, therefore, implementing the following phase

- in provision for the 0.020” leak detection criterion for the OBD evaporative s ys tem monitoring requirement. First, if a vehicle model meets the 0.020”requirement in the 2016 model year it is not eligible for the phase

- in provision. No backsliding is permitted. Second, fo r manufacturers with models not meeting the CARB OBDII evaporative sy stem leak monitoring requirement in the 2016 MY(see 13 CCR 1968.2(e)(4)), they will be permitted to delay product

- wide compliance with the 0.020” leak provision of the evaporative sy stem monitoring requirements until the 2018 model year b y engaging in a voluntary earl y phase

- in. This phase

- in would begin in the 2016 model year and conclude in the 2018 model year at a 100 percent implementation rate. For example, a manufacturer could delay attaining 100 percent compliance with the OBD evaporative s ys tem leak monitoring requirement until the 2018 model year by complying in the 2016 model year using a percentage which is at least as large as the delay for the 2017 model year (e.g., 40% in 2016 MY, 60% in 2017MY, and 100% in 2018MY). 2. Revisions to EPA OBD Regulatory Requirements As discussed above, we are updat ing our OBD regulations to be consistent with current California OBD II requirements

. We are incorporat ing by reference section 1968.2 of the California Code of Regulations as adopted July 31, 2013 (13 CCR 1968.2) . This include s paragraphs (c) through (j) in their entirety. These paragraphs are entitled: (c) Definitions, (d) General R equirements, (e) Monitoring R equirements for G asoline/ S park I gnited E ngines, (f) Monitoring R equirements for D iesel/ C ompression I gnition E ngines, (g) Standardization R equirements, (h) Monitoring S ys tem D emonstration R equirements for C ertification, (i) Certification D ocumentation, (j) Production V ehicle E valuatio n T esting. The substance of many of these provisions is already contained in existing EPA OBD requirements for LDVs, LDTs, MDPVs, and complete HDGVs less than 14,000 lbs GVWR. 398 399 EPA will continue to accept certifications with CARB OBD requirements as satisfying EPA OBD requirements.

398 MDVs in the CARB regulations basically incorporate MDPVs and complete HDGV less than 14,000 lbs GVWR as defined by EPA. 399 We are not chang ing th e requirement for incompletes and vehicles with a GVWR above 14,000 lbs.Page 271 of 529 The most noteworthy

changes we are finalizing are summarized below. The CCR below is the California Code of Regulations cite for each pertinent provision.

 EPA is add ing a 0.020 inches leak detection monitoring threshold upstream of the purge valve for all 4 vehicle categories LDV, LDT, MDPV, and complete HDGVs up to 14,000 lbs GVWR except for those with fuel tanks larger than 25 gallons capacity (see 13 CCR 1968.2(e)). OBD leak monitoring sy stems will have to identify , st ore, and if required signal an y leak(s) equal to or greater than 0.020 inches cumulative equivalent diameter. This will thus include diagnostic trouble codes (DTC) P0440, P0442, P0446, P0455, P0456, and P0457.

 EPA is incorporat ing by reference the full array

of rate based monitoring requirements (see 13 CCR1968.2 (d) (3)

- (6) ). Meeting the rate based monitoring requirements will help to insure that, even with enable criteria, the exhaust and evaporative sy stem monitors run frequentl y enough that on average a problem would be identified and signaled to the owner in operation within two weeks. This will help to improve the fraction of time monitors are ready to find a potential problem.

 EPA is incorporat ing by reference provisions regarding monitoring sy stem d emonstration requirements for certification. We are incorporating by reference CARB provisions in this area and accept ing submissions to CARB for purposes of compliance demonstration (see 13 CCR 1968.2(h)). Adopting current CARB monitoring sy stem demonstr ation requirements assures that monitoring systems operate as designed when installed on certification vehicles.

 EPA is incorporat ing by reference the CARB production vehicle evaluation data program. This program requires manufacturers to demonstrate that the OBD s ys tem functions as designed and certified when installed on production vehicles. (See 13 CCR 1968.2(j))

. In addition, we are add ing two new requirements , and retain ing three minor exceptions. Each of these actions is described separatel y below.

 We are adding the requirement that before certification a manufacturer must demonstrate the ability

of its OBD leak monitoring s ys tem to detect and report a 0.020 inch leak in the fuel/evaporative s ystem. Current CARB protocols within 13 CCR 1968.2(h)(3) d o not require this demonstration as part of certification. This requirement help s to ensure the OBD s ys tem’s capability to function as designed and the OBD

- based evaporative s ys tem leak monitoring hardware to be used as an optional test procedure for IUVP te sting for the leak standard. This requirement be ing added for the same vehicles that are subject to monitoring sy stem demonstration requirementsPage 272 of 529 for certification under CARB OBD regulations under 1968.2(h)(3)

. 400 EPA test procedures are contained in 40C FR 86.1806

- 17(b)

. In the spirit of aligning CARB and EPA OBD provisions, if CARB ultimately adopts this demonstration requirement and CARB’s test procedure provisions fulfill the purpose of the EPA requirement, EPA will strongly consider proposing to adop t the CARB test procedures in lieu of those in 40 CFR 86.1806

- 17(b). This requirement applies to any vehicle test group certified to the OBD 0.020” evaporative s ys tem leak monitoring requirement. Since the regulation requires only

a relative few test gro ups each model ye ar per manufacturer, we will permit the manufacturers either to meet the requirement for the remainder of its test groups on production vehicles of a previous model year which used the identical monitoring hardware and strategies or to certify

by attestation that each of their remaining test groups meets the requirement based on development , calibration, and other information. If a manufacturer chooses to certify by attestation for some test groups for a given model year, the regulations are structured such that over several model ye ars a manufacturer would evaluate through testing all test groups as new groups are selected in subsequent model y ears.

 For the OBD evaporative sy stem leak monitoring requirement, EPA is establishing a require ment for a scan tool readable function (a new In foT ype $14 in Service $09 of SAE J1979DA ) which c an be used to obtain the distance traveled since the OBD leak monitoring diagnostic was last completed successfully , i.e., the sy stem passed or failed (identif ied any leak above 0.020 inches) during that monitoring event (unless it is otherwise already required in other OBD s ys tem modes). The purpose of this requirement is to facilitate implementation of the leak standard within IU VP, by permitting the use of OBD evaporative sy stem monitoring results as a tool to make pass/fail determinations during IUVP. As discussed in section IV.D above, if a vehicle successfull y completed an evaporative sy stem leak monitoring within the most recent 750 miles then the manuf acturer could use this result for its IUVP requirement for the leak standard. EPA asked for comment on how best to implement this requirement within the OBD s ys tem, in what model year(s) it should be required and to which vehicle classes it should apply

. Manufacturers supported this requirement, and suggested a lower cost approach which we are adopting in the final rule. Rather than requiring that the distance and monitoring results be stored in NVRAM to avoid false

400 Passavant,G. (January, 2014). “Development of 0.020” Evaporative Leak Monitoring System Demonstration Requirement Test Procedure”. Memorandum to the docket.Page 273 of 529 results based on a user induced code cl ear or battery disconnect, the manufacturers suggested that the “distance since evap monitoring decision” In foT ype be reset to the maximum value ($FFFF/65,535km) when codes are cleared or after a reprogramming event (e.g., battery disconnect). The In foT yp e would be reset to zero km when an evaporative monitoring pass/fail decision is later made, allowing the mileage to be read directly at IU VP. In the usual situation where no user induced code clear or reprogramming event (e.g., battery disconnect) occurr ed, the mileage since the last decision could be read directl y. In either circumstance, the presence of an evaporative s ys tem leak related DTC (P0440, P0442, P0446, P0455, P0456, and P0457 or manufacturer specific equivalent DTC) will indicate a failure an d the lack of such a DTC will indicate a pass. The mileage and the pass/fail results will then be taken together for purposes of the 750 mile option in the IUVP assessment for the leak standard. 401 This requirement applies to all vehicle categories subject to the leak test including LDVs, LDTs, MDPVs, and complete HDGVs less than 14,000 lbs GVWR. Manufacturers commented that this requirement should appl y only to vehicles/test groups meeting the leak standard. Since the leak standard phases

- in between 2018 and 2022 model years (2017 for manufacturers using the 20/20 evaporative emission option), a manufacturer may phase

- in compliance with this requirement as well.

 The minor exceptions which are contained in EPA’s existing OBD regulations are to be continued. Compliance with 13 CCR 1968.2(d)(1.4), pertaining to tampering protection is not required. Also, the deficiency provisions of 13 CCR 1968.2(k) are not be ing adopted. In addition, demonstration of compliance with 13 CCR 1968.2(e)(15.2.1)(C), to the extent i t applies to the verification of proper alignment between the camshaft and crankshaft, will apply onl y to vehicles equipped with variable valve timing. For all model years, the deficiency provisions of paragraph (i) of the existing EPA regulations apply on ly to alternative fuel vehicle/engine manufacturers selecting this paragraph for demonstrating compliance. T hese changes, taken together will improve the performance, reliability , general utility , and effectiveness of OBD s ys tems for Tier 3 exhaust and eva porative emission controls. Furthermore, these changes create the opportunity for OBD evaporative s ys tem leak monitoring s ys tems to serve a more prominent role in ensuring compliance with the leak standard. EPA believes that they c an be implemented for m inimal cost since most manufacturers are meeting them today

401 Passavant, G. (January , 2014). “Manufacturer Input on Distance Since Last Evaporative Monitoring Decision”. Memorandum to the docket.Page 274 of 529

and will have to for LEV III vehicles. The provisions we are incorporating by reference give manufacturers the flexibility to seek a revis ion to the emission threshold for a malfunction on any di agnostic required if the most reliable monitoring method developed requires a higher threshold to prevent significant errors of commission in detecting a malfunction. 402 Any decision on a potential exception would be preceded b y a consultation between EPA and CARB. As discussed below, the OBD requirements will apply to small entities in the 2022 model year, if they choose to take advantage of one of the revised implementation schedules for small volume manufacturers and small businesses

. However, as is the case for larger manufacturers, no backsliding is permitted meaning that if they

voluntarily

meet the OBD requirements on their Federal configurations in the 2016 model year as a result of compliance with CARB regulations they

must continue to meet the req uirements on the Federal configurations in the 2017 and later model ye ars. Small alternative fuel converters will still be able to meet the OBD requirements using the provisions of 40 CFR 85 Subpart F. Finally , it should be noted that as CARB updates its OBD regulations in the future EPA will consider these changes and propose to adopt them or incorporate them by

reference, if appropriate. 3. Provision s for Emergency Vehicles It is common for emergency vehicles such as law enforcement, medical response, and f

ire protection vehicles operated by government entities to be derived from similar publicly

available vehicle configurations. However, these vehicles often have chassis configurations, auxiliary equipment packages, and performance requirements different f

rom the standard publicl y available configurations. These emergency

response vehicles ty

pically meet the various EPA emission standards based on the engineering calibrations and emission control hardware used in the publicly available configuration. OBD r equirements also apply to these vehicles and occasionall y their unique design and/or operating characteristics may prevent them from meeting one or more of the various OBD requirements. In comments on the NPRM, one manufacturer raised a concern that EPA’s proposed adoption of the current CARB OBDII requirements for the 2017 model ye ar would create a compliance problem for two of their law enforcement vehicle configurations. These two vehicle configurations cannot meet one element of the current CARB OBDII requirements (CCR §1968.2 (e)(6.2.1)(C)) without compromising the performance expected b y law enforcement personnel. 403 To address this issue CARB provided these vehicles an exemption from this provision,

402 See 13 CCR 1968.2 (e)(17). 403 See Ford Motor Company comments on the Tier 3 NPRM at EPA

- HQ

- OAR

- 2011

- 0135

- 4349

.Page 275 of 529

by permitting it to meet Federal requirements as pe rmitted by the California Vehicle Code. This solved the problem because the CARB OBD II provision of interest did not exist within the Federal OBD requirements at that time. This raises both a near term and a broader policy issue related to emergency vehi cles . First, we are incorporating a definition for emergency vehicle that is specific to the Tier OBD requirements. 404 Second, , with regard to the two law enforcement vehicle configurations identified b y the manufacturer , EPA has reviewed the manufacturer ’ s technical information and agrees with CARB’s previous assessment. 405 Thus, EPA will grant the manufacturer a three model year exemption from the requirement as requested by the manufacturer (MY2017

- 2019 inclusive). Specificall y, we are delaying the need to comply with the requirements of CCR §1968.2 (e)(6.2.1)(C)

- incorporated b y reference b y EPA

- until the 2020MY for an y emergency vehicle which does not meet the requirement in the 2016 model year. This specificall y applies to the two test groups identified by the commenter. Second, in a broader context, there is a need to address the potential future need for a deficiency or an exemption for emergency response vehicles. If CARB grants a deficiency for emergency

response vehicles under CCR §1968.2(k) we wou ld expect this to be done in consultation with EPA. Furthermore, we are incorporating provisions to address a potential situation where an emergency vehicle needs a deficiency (a temporary or permanent allowance for manufacturers to be non

- compliant with a specific requirement of the OBD regulations as long as certain requirements are met) or exemption which is not addressed b y CARB under CCR §1968.2(k). EPA is adopting a provision which authorizes us to address these circumstances based on an application from the manufacturer. Under this provision, EPA may

approve a request for a deficiency or in extreme circumstances a temporary

or potentially

permanent exemption from a given OBD requirement. In considering decisions to approve/disapprove this request, EPA will consider the provisions of CCR §1968.2 (k)(1) plus engineering information and vehicle emission and performance data provided b y the manufacturer which demonstrates significant vehicle engineering or s ys tem performance issues (e.g., vehicle speed, , acceleration, handling, safety , fuel econom y, cost) related to compl yi ng with the OBD requirements.

404 For the Tier 3 OBD requirem ents , emergency vehicle means a motor vehicle manufactured primarily for use as an ambulance or combination ambulance

- hearse or for use by the United States Government or a State or local government for fire protection or law enforcement.
405 Passavant , G , (J anuary, 201 4 ). Information Related to CARB AFRIM OBD Requirements for Emergency Vehicles . Memorandum to the docket.Page 276 of 529 4. Future Considerations EPA and CARB coordinate closel y on OBD II requirements. When changes to the requirements occur, CARB provisions often precede those from EPA. Since LEV III begins before Tier 3, EPA expects that CARB will revise an y OBD II requirements related to the LEV III before EPA would do so for Tier 3. EPA expects to work with CARB on an y potential changes to OBD II requirements related t o LEV III and to consider proposing such changes in a future action since we expect great commonality between Tier 3 and LEV III exhaust and evaporative emission control sy stems. Two presentations related to CARB’s initial thinking for LEV III related OBDI I revisions are available in the docket. 406 Inthe interim, for any Tier 3 exhaust emission bin which does not have a corresponding bin value in the Tier 2 program, the threshold for the exhaust emission malfunction criteria is that of the next higher bin in the Tier 2 regulation as prescribed for the latest model ye ar in CCR 1968.2(e)(1)

- (3)

. In the NPRM, EPA discussed the basics of evaporative emission control technology

and laid out concerns regarding the loss of evaporative and refueling emission contro l which occurs if a canister is not purged. This can potentially occur if the purge hardware fails or if the flow of purge air through the canister is impeded by

foreign matter collecting at the inlet port or on the carbon itself, canister poisoning due t o fuel or water intrusion, or activated carbon breakdown from phenomena such as road vibration. Failure of purge hardware is already covered b y OBD and a recent study indicates that this is a relatively rare evaporative s ys tem problem. 407 Failure of the acti vated carbon to purge due to problems such as those mentioned above are not covered b y OBD. EPA is undertaking a study to better characterize the causes and frequency of such potential problems, and may

propose in a future rulemaking an OBD

- based monitori ng requirement related to activated carbon/canister capture should the study indicate a significant frequency

of loss of canister efficiency in

- use and loss in emissions control relative to other evaporative s ys tem failure modes. In the NPRM we also asked for comment on several other issues related to the role of OBD in future technology fuel/evaporative control sy stems. This included pursuing a monitoring threshold less than the 0.020” cumulative diameter that we are finalizing in this notice for non

- pr essurized and pressurized fuel sy stems. We asked about the feasibility and cost of requiring the OBD leak detection monitoring s ys tem to detect and signal the presence of a smaller diameter

406 McCarthy , M

. , “CARB Light

- duty OBD Regulation Update”, SAE 2012 Onboard Diagnostics Symposium, Nov 2012 and Remenus , M

. , “CARB Light

- duty OBD Regulation Update”, SAE 2013 Onboard Diagnostics Symposium, September 2013. 407 Weatherby, M., Sabisch, M., Kishan, S. (2014) Analysis of Evaporative On

- Board Diagnostic (OBD) Readiness and DTCs Using I/M Data.Page 277 of 529

orifice, such as 0.010 inch upstream of the purge valve for a pres surized s ystem with a designed in

- use operating pressure threshold in excess of 0.36 psi (10 inches water). Also, for the pressurized sy stem, we asked for comment on a potential provision to require that the fuel tank vent to the canister at key off if th e OBD sy stem identifies a leak. In their comments manufacturers indicated concerns about the need for such provisions or their value in reducing emissions relative to current requirements. EPA believes both of these provisions merit further investigation , but at the present time we lack the data to assess the feasibility and emission reduction benefits associated with each approach and so are not taking action on them. **F. Finally, in the NPRM we sought input on whether**  **the operation of a vacuum pump or simil**  **ar device used to assist or supplement vehicle engine vacuum purge or any device otherwise used to enhance or**  **control purge flows, rates, or schedules should be required to be monitored as part of OBD.**  **In their comments the manufacturers indicated their v**  **iew that this would be covered by current OBD provisions, and we are not taking further actions.**  **Emissions Test Fuel** In

- use gasoline has changed considerably since EPA last revised specifications for the gasoline used in emissions testing of light

- and h eav y - duty vehicles

. S ulfur and benzene levels have been reduced and, perhaps most importantly , gasoline containing 10 percent ethanol by volume (E10) has replaced non - oxygenated gasoline (E0) across the country . This trend has had second

- order effects on other gasoline properties. In

- use fuel is projected to continue to change as refiners adjust their gasoline production to reflect the renewable fuel volumes required under the RFS2 program , as well as further sulfur reduction under the Tier 3 rule

. 408 As a result, we are updat ing federal emission test fuel specifications to better match in

- use fuel. The revised test fuel specifications apply for exhaust emissions testing, fuel economy /greenhouse gas testing, and emissions testing for non - exhaust emissions ( with some exceptions discussed elsewhere in this preamble, e.g., for refueling tests in flex

- fuel vehicles ). The revised gasoline specifications, found at §1065.710 and discussed below, appl y t o emissions testing of light

- duty cars and trucks as well as heav y - dut y gasoline vehicles certified on the chassis test, where the vehicles are certified to the Tier 3 standards. 409

408 See 78 F R 49794 (August 15, 2013) for the latest renewable fuel requirements under the RFS2 program. 409 As discussed elsewhere in Section IV , we are also generally requiring the use of Tier 3 test fuel in conducting exhaust, evaporative, and refueling emissions testing of heavy

- duty gasoline engines certified on an engine dynamometer. These could include engines installed in incomplete Class 2b and Class 3 vehicles and engines used in vehicles above 14,000 lb GVWR.Page 278 of 529 1. Gasoline Emissions Test Fuel: Ethanol Content and Volatility
a. Emission Test Fuel Ethanol Content In the NPRM, EPA proposed that the emiss ions test gasoline be changed from E0 to E15 as a forward

- looking position based on indications following the 2011 E15 waiver decision that the market would move in that direction. 410 Since the time when we developed the proposal, several relevant factors h ave led EPA to reconsider that position, including limited proliferation on a national scale of stations offering E15 and the complexities E15 test fuel would introduce for long

term harmonization of the Tier 3 vehicle emission regulations with Cal ifornia’s LEV III program (which uses E10 for emissions testing). We received comments supporting use of E10 as emissions test fuel from the automotive and oil industries, as well as states and NGOs citing the fact that this was most representative of curre nt market conditions. Other stakeholders involved in fuel marketing and distribution cited significant infrastructure cost and liability concerns in making E15 widely available at existing stations. Ethanol industry commenters generall y supported E15 certification fuel as proposed, but provided no specific timeline on which this blend level would become representative of in

- use fuel. The most recent survey s of the market show that E10 now comprises nearl y 100% of in

- use gasoline, with very small amounts of E0 and E15 being sold in limited areas where there is specific interest. 411 Based on this information and considering comments, EPA is finalizing E10 as the ethanol blend level in emissions test gasoline for Tier 3 light

- duty and heavy

- dut y gasoline vehi cles. We will continue to monitor the in

- use gasoline suppl y and based on such review may initiate rulemaking action to revise the specifications for emissions test fuel to include a higher ethanol blend level. As discussed above in Sections IV.A.7. d (tailpipe emission testing) and IV .C. 5 .b (evaporative emission testing), we are requiring all light

- duty and chassis

certified heav y - dut y gasoline vehicles to be certified to Tier 3 standards on federal E10 test fuel. As described in those sections, EPA will accept emission certification test results performed according to CARB’s LEVIII procedures including CARB’s

410 EPA issued a waiver allowing E15 to be introduced into commerce for use in MY 2001 and newer light

- duty motor vehicles. On July 25, 2011, EPA finalized regulations to mitigate the potential for misfueling of vehicles, engines, and equipment not covered by the E15 waiver, i.e., MY 2000 and older light

- duty motor vehicles, all heavy

- duty gasoline vehicles and engines, motorcycles, and all gasoline

- powered nonroad products (which includes boats). 410 Two of the required mitigation measures are a label for fuel pumps that dispense E15 to alert consumers to the appropriate and lawful use of the fuel and a prohibition on the use of E15 by consumers in vehicles not covered by the waiver, excluding flexible fuel vehicles (FFVs). For more details, see 76 FR 44406 (July 25, 2011). 411 More detail on fuel survey data i s available in Chapter 3 of the Regulatory Impact Analysis.Page 279 of 529

E10 test fuel . Confirmatory and i n - use exhaust or evaporative testing of vehicles certified on CARB’s E10 test fuel will be performed using that same test fuel through MY 2019. After MY 2019, EPA will continue the practice of accepting emission data at certification on the LEVIII test fuel; however confirmatory and in

use testing may

be performed using Tier 3 E10 test fuel at the discretion of the Agency

. b. Certification Fuel Volatility (RVP) Specification In deciding to finalize E10 as the emissions test fuel it is appropriate to consider whether a change in the volatility of the test fuel is warranted, t ypi cally expressed as in pounds per squ are inch (psi) Reid Vapor Pressure (RVP) or dry vapor pressure equivalent (DVPE). The Clean Air Act (Section 211(h)(1)) sets a national limit on summertime RVP in northern conventional gasoline areas of 9.0 psi to control ozone pollution. However, Congre ss included a waiver allowance (Section 211(h)(4)) granting an additional 1 psi RVP to 10% ethanol blends, meaning that E10 could have an RVP up to 10 psi in these conventional gasoline areas unless specifically

prohibited by

state or local rules. Under S ection 211(h)(4), E15 is not covered b y the waiver and thus is restricted to 9 psi nationwide. The automakers submitted comments that recommended leaving the RVP of emissions test fuel at 9 psi on the basis that raising the specification to 10 psi would in crease the stringency

of the proposed evaporative emission standards significantl y. We agree that the resulting increased vapor generation rates during the refueling test would increase emissions (by about 10 percent and during the hot soak, diurnal, cani ster bleed, and running loss tests by as much as 25 percent in total )

. While the likely

increase in canister volume in response to higher certification fuel RVP would not be difficult for automakers to accommodate in most cases, there are additional uncer tainties regarding cost and feasibility of strategies for removing the larger vapor loads from the canister during vehicle operation (vapor “purging”)

. Some vehicles have adequate engine vacuum available to accomplish the increased vapor purge, while othe rs may require new or innovative approaches to increase purge volume or efficiency ( as discussed in the evaporative emissions technology discussion in Section IV.C.3)

. Several other commenters, such as NGOs and environmental groups, supported setting cer

tification gasoline RVP to 10 psi to be representative of the worst
- case volatility

vehicles may

see in the market, making the test procedure more stringent than in the proposed program and further reducing evaporative emissions. Raising the certificatio n test fuel RVP to 10 psi would also impact the equivalency

of CARB and EPA hot soak plus diurnal evaporative emission test procedures . (California requires the use of 7 psi RVP test fuel, which, in conjunction with higher test temperatures, produces equ ivalent results to the federalPage 280 of 529

test procedures using 9 psi fuel.) If we were to adopt 10 psi test fuel, we would likely need to develop and adopt new test procedure adjustments in order to maintain the equivalency of CARB and EPA evaporative procedures (a nd allow reciprocal acceptance of test data generated under either agency ’s program). In addition, the 1 psi RVP waiver for E10 does not apply to gasoline with higher ethanol levels; for example, under current regulations E15 is subject to an RVP l imit of 9 psi. I f EPA had adopted 10 psi test fuel in this rule and if gasoline with higher ethanol levels than E10 were to become commonly used nationwide, maintaining alignment with in

- use fuel could necessitate a change in emissions test fuel back to 9 psi. A review of 2011 gasoline batch data submitted to EPA shows that just under half of summertime gasoline was conventional gasoline at 10 psi RVP. An additional third was RFG at approximately 7 psi RVP, with the remainder having intermediate RVPs un der local volatility control programs. A volume

- weighted average of th ese data is approximately 8.7 psi RVP. Thus, an emissions test gasoline volatility

at 9 psi aligns well with the average nationwide in

- use RVP today . In addition, virtually all of the areas that have elevated summertime ozone levels where excess evaporative VOC emissions would be of greatest concern already control in

- use gasoline RVP to levels less than 9 psi. Furthermore, under section 211(a)(5), governors can request that the 1 p si waiver for E10 not apply in their state if it causes an emissions increase that contributes to air pollution. Any state exercising this authority would have in

- use E10 RVP levels limited to 9 psi. After considering these technical and policy issues in the context of the information available and comments received, we conclude that the most appropriate approach is to set an RVP of 9 psi for Tier 3 emissions test fuel.
c. Durability

Test Fuel EPA’s motor vehicle emissions standards ty pically require a lev el of performance over a specified test procedure, with emissions measured while the engine or the vehicle is operated using the specified test fuel and operated in a specified manner. The test fuel specifications ty pically appl y for all emissions testing used to determine compliance with the standard, including emissions testing to obtain a certificate of conformity , as well as compliance testing for newly produced or in

- use engines or vehicles. While this test fuel is sometimes referred to as “certification fuel,” the test fuel specifications are not limited to certification related emissions testing, but also apply to compliance related emissions testing after the certificate of conformity has been issued. The certification process also ty picall y invol ves a process to ensure that the emissions controls sy stem is durable over the regulatory

useful life of the vehicle or engine. This can involve long

- term or accelerated aging of a vehicle or engine prior to emissions testing. The fuel used for such agin g is commonly referred to as service accumulation or durability fuel,Page 281 of 529

and in many

cases is specified as commercial gasoline that will be generally available through retail outlets (§86.113

- 04(a)(3)), or in some cases may be specified as gasoline which cont ains ethanol in, at least, the highest concentration permissible in gasoline under federal law and that is commerciall y available in an y state in the United States, such as for durability aging of evaporative emissions sy stem (§86.1824

- 08(f)). EPA is not changing the specifications for fuel used during durability

related aging that is part of the certification process. The regulatory changes in this final rule only appl y to the test fuel used during emissions testing, both for purposes of certification an d for later compliance related testing. We are not chang ing the exhaust or evaporative durability fuel requirements outlined in the provisions of §86.113

- 04(a)(3), except to remove the minimum sulfur content (15 ppm) specified at §86.113

- 04(a)(3)(i). Thos e provisions require that “ [u] nless otherwise approved b y the Administrator, unleaded gasoline representative of commercial gasoline that will be generall y available through retail outlets must be used in service accumulation.” We expect that manufacturer s will use service accumulation fuels that are generall y representative of the national average in

- use fuels (or worst case for durability) during the model ye ar which is being certified, including, for example, the ethanol content (for exhaust emissions), sulfur level, and fuel additive package. For exhaust emission bench aging durability programs as allowed under the provisions of §86.1823

- 08(d) and (e), the bench aging program should be designed using good engineering judgment to account for the effects of in

- use fuels on exhaust emissions, including the effects of future in

- use fuels on cataly tic converters, oxygen sensors, fuel injectors, and other emission

- related components. For evaporative emissions, durability fuel requirements are the same as fo r exhaust emissions (as outlined above), plus an additional requirement in the provisions of §86.1824

- 08(f), that the service accumulation fuel “contains ethanol in, at least, the highest concentration permissible in gasoline under federal law and that is commercially

available in any

state in the United States. Unless otherwise approved b y the Administrator, the manufacturer must determine the appropriate ethanol concentration b y selecting the highest legal concentration commercially available during the calendar year before the one in which the manufacturer begins its mileage accumulation.” Thus, we expect that E15 service accumulation fuel will be used for whole vehicle evaporative durability programs. Similarly , evaporative bench aging durability

programs allowed under the provisions of §86.1824

- 08(d) and (e), should be designed using good engineering judgment to account for the durability effects of in

- use fuels on evaporative emissions, bleed emissions, and leakage emissions.Page 282 of 529 2. Other Gasoline Emissio ns Test Fuel Specifications Where possible, we are changing test fuel specifications to be consistent with CARB’s LEV III gasoline test fuel specifications. 412 Inaddition to the ethanol and volatility

specifications discussed above, b elow is an overview of some of the key changes. Table IV

- 25 provides a summary of the new test fuel properties. For more information on how we arrived at the test fuel property ranges and ASTM test methods, refer to Chapter 3 of the R IA.

 Octane

- lowering gasoline octane to around 87 (R+M)/2 to be representative of in

- use fuel, i.e., regular

- grade E10 gasoline. Manufacturers can continue to use high

- octane gasoline for testing of premium

- required 413 vehicles and engines as well as f or testing unrelated to exhaust emissions. Historically , the high octane rating of test fuel has not had an y real emissions implications. However, as manufacturers begin introducing new advanced vehicle technologies (e.g., turbocharged

/ downsized), this m ay

no longer be the case. For those vehicles where operation on high

- octane gasoline is required by the manufacturer, we are allowing the manufacturer to test on a fuel with a minimum octane rating of 91 (R+M)/2 (in lieu of the 87 (R+M)/2 specified for ge neral test fuel). According to the regulations found at §1065.710(d), vehicles or engines are considered to require premium fuel if they

are designed specificall y for operation on high

- octane fuel and the manufacturer requires the use of premium gasoline as part of their warrant y as indicated in the owner’s manual. Cases where premium gasoline is not required but is recommended to improve performance would not qualify as a vehicle or engine that requires the use of premium fuel. For qualifying vehicles and engines, all emission tests must use the specified high

- octane fuel. For vehicles and engines certified on high

- octane gasoline, all EPA confirmatory and in

- use testing would also be conducted on high

- octane gasoline. All other test fuel specification s are the same as those described in Table IV

- 25

.

 Distillation Temperatures

- adjusting gasoline distillation temperatures to better reflect in

- use E10 gasoline. This includes minor T10, T90 and FBP adjustme nts based on AAM fuel survey s and refinery batch data. These data show that T50 varies widel y in in

- use fuel, from around 150°F to 220°F. Adopting a wide specification range for test fuel may have undesirable effects on consistency of results between fac ilities and over time. Therefore, we have chosen a range of 190

- 210°F to maintain

412 LEV III test procedures, including a description of test fuel, can be found at 13 CCR 1961.2

. 413 Premium

- required defined at §1065.710(d).Page 283 of 529 some overlap with CARB’s specification of 205

- 215°F but extending somewhat lower to better capture federal in

- use fuel. For more information on how we arrived at the distil lation temperatures in Table IV

- 25 , refer to Chapter 3 of the RIA.

 Sulfur

- lowering the sulfur content of test fuel to 8

- 11 ppm to be consistent with our new Tier 3 gasoline sulfur standards. Th e 10 ppm annual average sulfur standard for in

- use gasoline standard is expected to result in two

- thirds less sulfur nationwide so it is appropriate to lower the gasoline test fuel specification in concert.

 Benzene

- setting a benzene test fuel specificati on of 0. 5

- 0. 7 volume percent to represent in

- use fuel under the MSAT2 regulations. 414 The MSAT2 standards, which took effect January 1, 2011, limit the gasoline pool to 0.62 volume percent benzene on average.

 Total Aromatics

- lowering the range of arom atics content in the test fuel to better match today ’s in

- use E10 gasoline, and narrowing the range to limit variability

of results. Data from recent gasoline batch data as well as AAM survey s support a specification of 22

- 26 volume percent. 415

 Distributi on of Aromatics

– in addition to total aromatics and benzene, the updated test fuel requirements place boundaries on the distribution of aromatics by

carbon number (i.e., prescribed volume percent ranges for each of C7, C8, C9, and C10+ hydrocarbons). The re is evidence that the heaviest aromatics in gasoline contribute disproportionately to PM emissions, so compliance with emission standards should be demonstrated on fuel with a composition representative of in

- use gasoline. For more information on the aromatics specifications, refer to Chapter 3 of the RIA.

 Olefins

- adjusting the olefins specification to a range of 4

- 10 volume percent to better match in

- use E10 gasoline

.

 Other Specifications

- adding distillation residue, total content of oxyg enates other than ethanol, copper corrosion, solvent

- washed gum, and oxidation stability

specifications to better control other performance properties of test fuel. These specifications are consistent with ASTM’s D4814 gasoline specifications and CARB’s L EV III test fuel requirements.

414 72 FR 8434 (February 26, 2007). 415 More details on fuel property analysis are available in Chapter 3 of the RIA.Page 284 of 529  Updates to Gasoline Test Methods

– updating some of the gasoline test methods previously specified in §86.113 with more appropriate, easier to use, or more precise test methods for ethanol

- blended gasoline. Key changes inclu de replacement of ASTM D323 with ASTM D5191 for measuring vapor pressure; replacement of ASTM D1319 with ASTM D5769 for measuring aromatics and benzene; and replacement of ASTM D1266 with three alternative ASTM test methods (D2622, D5453 or D7039) for meas uring sulfur.Page 285 of 529 **Table IV**  **- 25**  **. Gasoline Emissions Test Fuel**  **Properties**

Property Unit SPECIFICATION Reference Procedure a General Testing Low

Temperature Testing High Altitude

Testing Antiknock I ndex (R+M)/2

- 87.0

- 88. 4 b 87.0 Minimum AS TM D2699 and

D2700 Sensitivity (R

- M)

- 7.5 Minimum AS TM D2699 and D2700 Dry Vapor Pressure Equivalent (

DVPE) c , d kPa (psi) 60.0

- 63.4 ( 8.7

- 9.2) 77.2

- 81.4

(11.2

- 11.8) 52.4

- 55.2

(7.6

- 8.0) AS TM D5191 Distillation e

10% evaporated ° C ( ° F) 49

- 60 (120

- 140) 43

- 54

(110

- 130) 49

- 60

(120

- 140)
AS TM D86 50% evaporated ° C ( ° F) 88

- 99 (190

- 210) 90% evaporated ° C ( ° F) 157

- 168 (315

- 335) Evaporated final boiling

point ° C ( ° F) 193

- 216 (380

- 420 ) Residue mil liliter 2.0 Maximum Total Aromatic Hydrocarbons volume % 21.0

- 25.0

AS TM D5769 C6 Aromatics (benzene) volume % 0.5

- 0.7 C7 Aromatics (toluene) volume % 5.2

- 6.4 C8 Aromatics volume % 5.2

- 6.4 C9 Aromatics volume % 5.2

- 6.4 C10+ Aromatics volume % 4. 4

- 5.6 Olefins 5 mass % 4.0

- 10.0 AS TM D6550 Ethanol blended volume % 9.6

- 10.0 See §1065.710(b)(3) Ethanol confirmatory f volume % 9.4

- 10.2 AS TM D4815 or D5599 Total Content of Oxygenates Other than Ethanol f volume % 0.1 Maximum AS TM D4815 or D5599 Sulfur mg/kg 8.0

- 11.0 AS TM D2622, D5453 or D7039 Lead g/l iter 0.0026 Maximum AS TM D3237 Phosphorus g/l iter 0.0013 Maximum AS TM D3231 Copper Corrosion

- No. 1 Maximum AS TM D130 Solvent

- Washed Gum Content mg/ 100 milli l iter 3.0 Maximum AS T M D381 Oxidation Stability minute 1 000 Minimum AS TM D525
aAS TM procedures are incorporated by reference in §1065.1010. See §1065.701(d) for other allowed procedures. b Octane specifications apply only for testing related to exhaust emissions . F or engines or vehicles that require the use of premium fuel, as described in paragraph (d) of this section, the adjusted specification for antiknock index is a minimum value of 91.0 ; n o maximum value applies. All other specifications apply for this hi gh

- octane fuel. c C alculate dry vapor pressure equivalent, DVPE , based on the measured total vapor pressure, p T , using the followi ng equation: DVPE (kP a) = 0.956 ∙ p T - 2.39 (or DVPE (psi) = 0.956 ∙ p T – 0.347. DVPE is intended to be equivalent toPage 286 of 529 Reid Vapor Pressure using a different test method. dParenthetical values are shown for informational purposes only. e The re ference procedure prescribes measurement of olefin concentration in mass %. Multiply this result by 0.857 and round to the first decimal place to determine the olefin concentration in volume %. f The re ference procedure prescribes concentration measurement s for ethanol and other oxygenates in mass %. Convert results to volume % as specified in Section 14.3 of ASTM D4815.
As mentioned earlier, we will continue to allow manufacturers to test vehicles on premium

- grade gasoline should the vehicles require it. In ad dition, s ince we cannot predict all future changes in gasoline vehicle technologies and in

use fuels, we will allow vehicle manufacturers to specify an alternative test fuel under certain situations. Under this provision , if manufacturers were to design v ehicles that required operation on a higher octane, higher ethanol content gasoline (e.g., dedicated E30 vehicles or FFVs optimized to run on E30 or higher ethanol blends), under 40 CFR 1065.701(c), they can petition the Administrator for approval of a higher octane, higher ethanol content test fuel if they can demonstrate that such a fuel would be used by the operator and would be readily available nationwide, vehicles would not operate appropriately on other available fuels, and such a fuel would result i n equivalent emissions performance. For vehicles certified on high

- octane, high

- ethanol gasoline, all EPA confirmatory and in

- use testing would also be conducted on high

- octane, high

- ethanol gasoline. This could help manufacturers who wish to raise compr ession ratios to improve vehicle efficiency as a step toward complying with the 2017 and later light

- dut y greenhouse gas and CAFE standards. This in turn could help provide a market incentive to increase ethanol use beyond E10 and enhance the environmenta l performance of ethanol as a transportation fuel b y using it to enable more fuel efficient engines. We received comments in general support of allowing certification on higher octane fuels if the vehicles require it, although some commenters believe that the criteria EPA is specifyingfor such an allowance are too severe. We have considered these comments, and as discussed in the Summary and Anal ys is of Comments document, we continue to believe that our approach is appropriate, and we are finalizing these provisions as proposed. 3. Flexible Fuel Vehicle Exhaust Emissions Test Fuel We are also finalizing specifications for the fuel used in flexible fuel vehicles (FFV) exhaust emissions testing including certification testing. EPA is establishing speci fications for FFV test fuel to resolve confusion and inconsistency among FFV manufacturers in carrying out their certification and other testing requirements and to ensure that FFV emissions are appropriatel y controlled over the range of in

- use fuels

. Th e FFV exhaust emissions test fuel specific ations will phase in on the s ame schedule as the E10 standard gasoline test fuel specifications for light

- and heav y - dut y gas oline vehicles (described in Section IV.F.4 ). T hese FFV exhaust emissions test fuel specifications may be used voluntaril y prior toPage 287 of 529

when they

are required to be used. The base fuel stock used to formulate FFV exhaust emissions test fuel must comply with the specifications finalized today for the stand ard E10 emissions test fuel as described in preamble Sections IV.F.1 and 2. This practice avoids the need to specify the ranges for a number of fuel parameters as we have done for gasoline test fuel in Table IV

- 25 and helps to minimize the number of test fuels that a vehicle manufacturer must store. D enatured fuel ethano l (DFE) that meets the specifications discussed in preamble Section V.G. must be blended into this base fuel stock to attain an ethanol content of 80 to 83 volume percent in the finished test fuel. C omm ercial grade normal butane can be added as a volatility

trimmer to meet a 6.0 to 6.5 psi RVP specification for the finished test fuel

. 416 As an alternative to the use of DFE to manufact ure FFV test fuel, neat (undenatured) fuel grade ethanol c an be used. A s an alt ernative to using a finished E10 standard gasoline test fuel in the manufacture of FFV tes t fuel, the gasoline blendstock used b y the fuel provider to produce a compliant E10 t est fuel c an also be used to manufacture the FFV test fuel. This would allow ethanol to be blended only once to produce FFV test fuel. In such cases, a sample of the subject gasoline blendstock must be tested after the addition of ethanol to produce a finished standard E10 gasoline test fuel to demonstrate that the blend meets all of the requirements for standard gasoline test fuel described in Section IV.F. The public comments were support ive of EPA establishing specifications for FFV exhaust emissions test fuel. However, some commenters stated that the ethanol content and RVP specifications for FFV exhaust emissions test fuel should be based on t ypical values for in

- use E85. 417 Automobile manufacturers commented that EPA should wait to finalize FFV test fuel specifications until a review of in

- use E51

- 83 fuel quality can be completed in later 2013. They stated that this would allow the FFV test fuel specifications to be representative of the change to in

- use “E85” composition since ASTM reduced the minimum ethanol concentration from 68 to 51 volume percent. Substantial publicly

available literature exists to demonstrate that the ethanol content of fuel used in FFVs has a significant effect on vehicle emissions. The effect of ethanol content on FFV emissions becomes more pronounced with increasing ethanol concentration. The current ASTM specification for E85 provides that the ethanol content of E85 may vary from 51 to 83 volume percent depe nding

416 The specifications for commercial grade butane are contained in 40 CFR 80.82. 417 The term “E85” has historically been used to describe an ethanol blend for use in FFVs with a maximum ethanol content of 83 volume percent and satisfying other fuel parameter specifications established by ASTM International. ASTM D5798

- 1 3 , “Standard Specification for Ethanol Fuel Blends for Flexible

- Fuel Automotive Spark

- Ignition Engines”.Page 288 of 529

on climactic conditions. 418 C onsistent with our long standing policy regarding the exhaust emissions testing of FFVs, we continue to believe that FFVs must comply with all emissions control requirements while using any fuel that they have the potenti al to operate on in

- use. This ensures vehicles are designed and calibrated for emissions performance across the full range of potential in

- use fuel formulations. FFVs are required to have exhaust emissions certification testing conducted using both E10 and FFV exhaust emissions test fuel to account for the effect on emissions of the full range of potential ethanol blend formulations. To ensure that FFV certification testing adequately accounts for in

- use emissions performance, we are finalizing the ethanol content of FFV exhaust emissions test fuel at 81

- 83 volume percent as proposed. Exhaust emissions testing conducted using a fuel containing 81

- 83 volume percent ethanol will provide results that represent the effect of ethanol on FFV emissions perform ance when this effect is most pronounced. The complimentary

emissions certification testing required for FFVs on E10 will ensure that the effect on FFV emissions from the full range of potential in

- use ethanol concentrations is represented. Given the nee d to ensure that FFV emissions certification testing is representative of the full range of potential in

- use ethanol blends, it would be inappropriate to set the required ethanol concentration for FFV emissions test fuel based on ty pical in

- use levels as s uggested b y some of the commenters. Similarly , the RVP of FFV exhaust emissions test fuel must assure emissions performance over the range of in

- use fuels. When ethanol and gasoline are blended to produce high level ethanol blends, the RVP can be and often is very low. As a result, ASTM instituted a minimum RVP for E51

- 83 of 5.5 psi. Given that low volatility

fuels can make the control of cold start emissions more challenging, we are finalizing the RVP of FFV exhaust emissions test to be near the minimum RVP that will be encountered in

- use. The 6.0 to 6.5 RVP specification finalized today

will help to ensure that FFVs are designed and calibrated to maintain their exhaust emissions performance across the range of in

- use fuels. The levels of other fuel p arameters for in

- use E51

- 83 are determined b y the levels of these parameters present in the gasoline blendstock used as diluted by the addition of ethanol. Therefore, we believe that requiring that the levels of these other fuel parameters present in FFV exhaust emissions test fuel be determined by the dilution of the levels present in standard gasoline emissions test fuel appropriatel y reflects their potential effect on emissions performance. Given the considerations discussed above in determining the FF V exhaust emissions test fuel specifications finalized today , we do not believe that there would be a substantial

418 ASTM International D5798

- 1 3 , “Standard Specification for Ethanol Fuel Blends for Flexible

Fuel Automotive Spark

- Ignition Engines”.Page 289 of 529

benefit in waiting for the completion of the E51

- 83 fuel quality survey currently underway to finalize FFV test fuel specifications. As disc ussed in preamble Section V.H., the Agency is also considering finalizing the in

- use fuel quality standards for higher level ethanol blends on which we sought comment in the NPRM. These standards included an in

- use RVP standard of 9.0 psi matching that of conventional gasoline. They also contained provisions to allow the production of high

- level ethanol blends for use in FFVs from natural gasoline and other higher volatility components. Were we to finalize these in

- use standards, we would also consider r aising the RVP for the FFV exhaust emissions test fuel. We are revising the definition of “alcohol” in 40 CFR part 600 to align with the change in the ASTM specification for in

- use fuels. Under the revised regulation, we consider an alcohol

- fueled vehicle to be one that is designed to operate exclusively

on a fuel containing 51 percent or more ethanol or other alcohol by volume. This is not intended to change the applicability , procedures, or requirements for the fuel econom y provisions in 40 CFR part 600

. 4. Implementation Schedule As described earlier in this Section IV, we are establishing Tier 3 exhaust and evaporative emission standards. The changes in the specifications for test fuel apply to vehicles certified to these new standards. The program is designed to transition to the new test fuel during the first few years as the Tier 3 standards are phasing in. T esting requirement with the new Tier 3 test fuel start s with light

- duty vehicles certified to Tier 3 bin standards at or below Bin 70, and heav y - duty vehicles certified to Tier 3 bin standards at or below Bin 250 (for Class 2b) and Bin 4 00 (for Class 3). For light

- duty vehicles, Table IV

- 26 below describes the implementation schedule of the new Tier 3 gasoline test fuels for each of the program elements in addition to the all the gasoline test fuel options available during the transition period. Table IV

- 3 below similarly describes the heavy

- dut y gasoline vehicle test fuel implementation schedule and gasoline test fuel options. The new Tier 3 PM requirements for both light

- duty vehicles and heavy

duty vehicles which phase

- in independent of other vehicle exhaust emission requirements must be met using the certification test fuel for meeting the NMOG+NO X standards

. Starting with model years 2020 for light

- dut y and 2022 for heav y - dut y, all manufacturers will use the new test fuel for all exhaust emission testing (with the exception of s mall v olume m anufacturers and small businesses, which can de lay using the new test fuel for all vehicles until model year 2022). Manufacturers also need to compl y with cold temperature CO and NMHC standards using the new test fuel for an y models that use the new test fuel for meeting the light

- dut y Tier 3 exhaust emission standards as indicated in the tables below . These same tests willPage 290 of 529

also provide the basis for meeting GHG requirements under 40 CFR part 86 and fuel econom y requirements under 40 CFR part 600, as described in the following section.

**Table IV**  **- 26**  **. Exhaust Emissions**  **Gasoline Test Fuels for L**  **DVs, LDTs, and**  **MDPVs Emission Compliance**  **Program Test purpose:**  **demonstration of compliance to the**  **emissions standards:**  **Test Cycles**

**FTP City/ HWFE/SFTP Cold CO**  **and NMHC**  **High**

**Altitude**

Tier 2 Certification (1)(2)(3)(4) ( 1 ) ( 1 ) Confirmatory and In

- use Certification fuel

and/or (1)* ( 1 ) ( 1 ) Tier 3 Early Certification (1)**(2)***(3)(4) (1)* * (3) (1)* * (3) 2015 to 2017 Confirmatory and In

- use C ertification fuel (1)* * (3) (1)* * (3) Tier 3 phase

- in Certification (1)**(2)***(3)(4) (1)* * (3) (1)* * (3) 2017 to 2019 Confirmatory and In

- use C ertification fuel (1)* * (3) (1)* * (3) Tier 3 complete Certification (3)(4) ( 3 ) ( 3 ) 202 0+ Confirmatory and In

- use Certification fuel

and/or (3)* ( 3 ) ( 3 ) Fuels: (1) Tier 2 (2) LEV II (3) Tier 3 E10 (4) LEV III E10 *EPA accepts the use of California certification fuels (or Tier 3 E10 for Tier 2 certification) but manufacturer must comply on the program specific Federal fuel. EPA may perform or require manufacturer testing on the Federal fuel. **Fuel (1) onl y allowed for Bins 160, 125, 110, 85. *** Fuel (2) onl y allowed for carryover SULEV 150k exhaust.Page 291 of 529

**Table IV**  **- 27**  **. Exhaust**  **Emissions Gasoline**  **Test Fuels for Heavy Duty Vehicles**  **Emission Compliance Program**  **Test purpose: demonstration of**  **compliance to the emissions**  **standards: Test Cycles** 

**FTP City/ HWFE/SFTP High**  **Altitude** Pre

- Tier 3 Certi fication (1)(2)(3)(4) ( 1 ) Confirmatory and In

- use Certification fuel

and/or (1)* ( 1 ) Tier 3 Early Certification (1)** (3)(4) (1)* * (3) 2016 to 2017 Confirmatory and In

- use C ertification fuel (1)* * (3) Tier 3 phase

- in Certificati on (1)** (3)(4) (1)* * (3) 2018 to 2021 Confirmatory and In

- use C ertification fuel (1)* * (3) Tier 3 complete Certification (3)(4) ( 3 ) 2022+ Confirmatory and In

- use Certification fuel

and/or (3)* ( 3 ) Fuels: (1) Tier 2 (2) LEV II (3) Tier 3 E10 (4) LEV III E10 *EPA accepts the use of California certification fuels (or Tier 3 E10 for Tier 2 certification) but manufacturer must comply on the program specific Federal fuel. EPA may perform or require manufacturer testing on the Federa l fuel. **Fuel (1) onl y allowed for Bins 340, 395, 570, 630. Additionally , heav y - duty gasoline engines (HDGEs) not subject to new Tier 3 exhaust emission standards (those certified for exhaust emissions us ing an engine dy namometer) are required to be certified on Tier 3 fuel by MY 2022 . Further discussion can be found in Section IV.C.4.c. For e vaporative emission testing , manufacturers will need to use the new test fuel for an y models that are to be certified to the Tier 3 evaporative emission standards . To the extent that these models are different than those used for exhaust emission testing with the new test fuel, manufacturers will need to do additional testing to demonstrate compliance with all applicable standards. They may alternativel y use the new test fuel earlier than the regulations specify to avoid additional testing. We further require that manufacturers submit certification data based on the new test fuel to demonstrate compliance with refueling emission standards for an y vehicles that ar e certified to the Tier 3 evaporative emission standards.Page 292 of 529 5. Implications o f Emission Test Fuel Changes o n CAFE Standards, GHG Standards, and Fuel Economy L abels
a. Test Fuel Under regulations in 40 CFR part 600, vehicles use the same test fuel in emission test ing conducted for CAFE standards, greenhouse gas (GHG) emissions, and the fuel econom y label as that used for emission testing for criteria pollutants. This includes the test fuel used for testing on all five cycles (FTP, highway fuel econom y test (HFET), US06, SC03, and Cold FTP). In the Tier 3 NPRM, EPA proposed a change in emissions test fuel used to determine compliance with criteria pollutant standards and this test fuel change would also apply to CAFE and GHG standards and the fuel economy label su ch that a common test fuel under 40 CFR part 600 was retained. At the same time, EPA indicated its commitment to the principle that the change in test fuel would not affect the stringency of the CAFE or GHG standards and that the labeling calculations wou ld be updated in a future action to reflect the change in test fuel properties. The NPRM indicated that more data and time w ere needed to assess the effects on stringency

and implementation of these programs. While EPA’s initial review of available data suggested that the change in test fuel would not impact the GHG standards, more time and data w ere needed to confirm this initial view regarding the GHG standards and to determine what adjustments if any would need to be made to the CAFE program and fue l economy label calculation procedures to account for the change in test fuel. EPA indicated we would defer action on appropriate adjustments, if any , for the GHG and CAFE programs until data w ere available to assess how the difference in the fuel prope rties (Tier 3 fuel compared to Tier 2 fuel) would impact the stringency of the CAFE and GHG standards for Tier 3 technology

vehicles and the calculations for the fuel econom y label. EPA indicated that any adjustments or changes in the regulatory text would be done through a future action. Manufacturers commented that EPA should take action on the necessary adjustments to compliance calculations as part of the Tier 3 final rule. The methodologies for addressing some elements of the changes in fuel propertie s such as the difference in energy densit y are already addressed in the regulation. One key element, the “R” factor found in the equation of 40 CFR 600.113

- 12(h)(1) is intended to capture inefficiencies and differences in how vehicles respond to changes i n the energy

content of the fuel. This factor is empiricall y based, developed using vehicle test data. This value is presently set at 0.6 and is shown in the denominator of the aforementioned equation. While there has been some data evaluated to assess the impact of changing the emission test fuel on the “R” factor, EPA did not propose a value in the NPRM and specificall y stated that we would continue to investigate this issue and if necessary address it as part of a future action, as opposed to changing it in the Tier 3 final rule. Furthermore, as discussedPage 293 of 529

above, there is a need for more data to full y understand how other changes in certification fuel for Tier 3, such as the octane specification, may affect the stringency

of the CAFE and GHG standards which were based on Tier 2 emission fuel, as well as an y implications for the fuel economy label. These potential effects are best understood using emission data generated on Tier 3/LEV III vehicles tested on both Tier 3 and Tier 2 test fuel. In addition, the manufacturers commented that even with the use of “anal yt icall y derived data” as permitted under current EPA regulations and guidance 419 , EPA should finalize an appropriate test procedure adjustment in the Tier 3 rulemaking, including adoption of an “ R ” factor of 1.0, and should allow manufacturers the option of using Tier 2 fuel for CAFE, GHG, and fuel economy labeling at least through MY2019 to provide time for adjusting to the new test fuel

. In the NPRM, EPA indicated that we would not be changing the “R” factor or implementing other adjustments or changes in the regulatory text in the FRM. In follow

- up meetings with the manufacturers, we expressed a willingness to consider permitting GHG and CAFE to continue on Tier 2 fuel until the future rulemaking action to address the “R” factor and other potential changes was complete and in effect. The manufacturers responded that under this approach the existing regulations would require a significant amount of additional emission testing for any model certifi ed to the Tier 3/LEVIII exhaust emission standards before the future rulemaking is completed and in effect. 420 This is because Tier 3 test fuels would be used in emission data vehicles (EDVs) evaluated for compliance with Tier 3 criteria pollutant standards , but these same EDVs would also have to be tested on Tier 2 fuel for GHG, fuel econom y label, and CAFE program data purposes. Also, while Tier 2 fuel would apply to EDVs and fuel economy data vehicles (FEDVs) evaluated for fuel economy label, CAFE program data values, and compliance with GHG standards, these same FEDVs would have to be retested on Tier 3 fuel to show compliance with the Tier 3 criteria pollutant standards. This additional testing would also extend to in

- use verification program (IUVP) te sting under 40 CFR §86.1845 through §86.1853. In response to the concerns expressed by the manufacturers, EPA has identified five interim changes to existing regulations to both clarify testing requirements and to provide the manufacturers a reasonable opp ortunity to continue to test for CAFE, GHG, and labeling purposes on Tier 2 test fuels for each EDV and FEDV until such time as EPA determines appropriate adjustments, if any , related to a change to Tier 3 test fuels. EPA believes these changes can be

419 See 40 CFR §600.006

- 08(e) and EPA guidance letter CD 12

- 03, February 27, 2012 and CCD

- 04

- 06, March 11, 2004, available at http://iaspub.epa.gov/o taqpub/. 420 This could start as early as the 2015 MY w hen the LEV III program begins to phase

- in.Page 294 of 529

imp lemented without impacting the integrity of the testing conducted for the criteria pollutant, CAFE, and GHG standards or values generated for determination of fuel econom y labels. It is very important to note that the emission test data generated by these early

Tier 3/LEVIII vehicles covering both Tier 2 and Tier 3 test fuel will provide data needed to assess the “R” value and the impact of the fuel change on the stringency

of the CAFE and GHG standards, and the calculations for the fuel econom y l abeling program. Th ese data will be instrumental in developing any appropriate adjustments to maintain equivalent stringency for the CAFE and GHG standards and to update the fuel economy labeling calculations, as needed. At the present time, EPA expects to have the needed data in earl y to mid 2015 and will then be in a position to conduct a thorough assessment of the impacts of different emission test fuels on Tier 3/LEV III vehicles and develop an y appropriate adjustments and changes, in consultation an d coordination with NHTSA. These interim changes which are presented below and shown in Table IV

- 28 , appl y onl y to vehicles certified to the Tier 3 and/or LEV III exhaust emission standard s in the model years before the future action mentioned above takes effect. These are reflected in 40 CFR 80.600.113

. 1. For an y given EDV or FEDV, our regulations will require that testing related to CAFE and GHG standards and the fuel econom y label mus t still be done on Tier 2 fuel even if criteria pollutant testing is done on Tier 3 or LEV III fuel. The “R” value used in the fuel economy equation would remain at 0.6 until any change is made in a future rulemaking. 2. The requirement continues that FE DVs are expected to meet the criteria pollutant emission standards. As a flexibility , rather than requiring FEDVs to retest on Tier 3 fuel to show that they pass the criteria pollutant emission standards, we are providing in the regulations that FEDVs may meet these standards using Tier 2 fuel on each of the five cycles (as applicable) or be subject to retesting and passing on Tier 3 fuel if they

do not meet requirements on Tier 2 fuel or otherwise do not comply with 40 CFR 86.1835

- 01(b) and 40 CFR 600.008 (b). In these circumstances, assuming a retested vehicle meets criteria pollutant standards on Tier 3 fuel, the emissions results on the Tier 2 fuel will still be used for CAFE, GHG, and fuel econom y labeling purposes. Retesting on Tier 3 fuel is only required for those cycles where the FEDV did not meet the criteria pollutant standards on Tier 2 fuel. 3. As a flexibility , if EDV testing is conducted on Tier 3/LEV III fuel for criteria pollutants (all 5 cycles), then we are requiring the EDV testing to be conducted on Tier 2 fuel for only 2 cycles (FTP and HFET) for GHG and CAFE purposes. These emission results on Tier 2 fuel are expected to meet the Tier 3 criteria pollutant standards. Our regulations then require manufacturers to use these EDV Tier 2 fuel test results (FTP and HFET) for the CAFE, and GHG standards. The EDV Tier 2 fuel test results (FTP and HFET) would also be used forPage 295 of 529

fuel econom y label calculations except in rare cases where the EDV does not pass the litmus test or if the manufacture r voluntarily elects to use the vehicle specific 5

- cycle method to determine fuel economy label values. In those two cases, the EDV would need to be tested on Tier 2 test fuel on each of the five cycles. 4. As a flexibility , during the interim model years , manufacturers may use either Tier 2 or Tier 3/LEVIII test fuel emission results to conduct the litmus evaluations for fuel economy labeling under 40 CFR 600.115

- 11. All emission results for the five tests involved used must be from the same test fuel. EPA believes this is appropriate since the litmus evaluation is based on a comparison of the percent differences of 2 and 5 cycle values rather than absolute differences in the values. If a manufacturer chooses to conduct the litmus evaluation using LEVIII fuel, the cold FTP test must still use Tier 3 fuel. In the situation where the manufacturer uses Tier 3/LEV III test fuel for the litmus test the R

- factor will be 0.6. EPA will provide guidance on determining the values for the other fuel quality parame ters needed for the fuel economy calculations when Tier 3/LEVIII fuel is used. 5. Exhaust emission testing for IUVP for GHGs shall be conducted using the same test fuel as used for criteria pollutant certification, unless the manufacturer uniformly elect s to conduct its IUVP GHG testing on Tier 2 fuel. This relieves the need to conduct IUVP testing for criteria pollutants on Tier 3 fuel and GHG testing on Tier 2 fuel. EPA believes this is an acceptable interim regulatory flexibility , since the IUVP testi ng for GHGs does not involve the IUCP provisions of 40 CFR 86.1846

- 01.

Table IV

- 28 : Interim Testing Requirements for EDVs and FEDVs on Tier 3 and Tier 2 Test Fuel

Criteria Pollutant (EDVs) GHG/Label/CAF E Li tmus IU VP

(EDVs and FEDVs) (Tier 2 fuel) Calculation Tests/Cycles 5

- cycle 5

- cycle 2

- cycle (CAFE/GHG/label) 5

- cycle Criteria Pollutant GHG * (label) Test fuel requirements Tier 3

fuel or other transition option ** Tier 2

fuel Tier 2 fuel Tier 3 fuel Tier 2 or

Tier 3 fuel Tier 3

fuel Tier 2

fuelPage 296 of 529

FTP X X X Show criteria pollutant standards are met using Tier 2 fuel or must retest on Tier 3 fuel Use 5

-

cycle Tier 3 fuel or Tier 2 fuel test results X X

HFET X X X X X US06 X X X SC03 X X Cold FTP X X
* Manufacturer may uniformly elect to use Tier 2 fuel results to meet the IUVP GHG requirements or rely on Tier 3 results. ** **California Phase 2 fuel is only permitted for GHG/Label/CAF E**  **and Litmus assessments for vehicles certified for criteria**  **pollutants in the Tier 3 program using carryover data from CARB LEV II certifications such as SULEVs and PZEVs .**  Manufacturers may

use LEVIII fuel (California Phase 3) in lieu o f Tier 3 fuel, but an y cold FTP testing must be done using Tier 3 Col d FTP fuel. LEV III fuel is 7 RVP E10, Tier 3 fuel is 9 RVP E10, and Tier 2 fuel is 9 RVP E0. Manufacturers have presented two points of view with regard to when the potential new requirements (including a revised “R” factor and other possible test p rocedure changes/adjustments related to CAFE, GHG, and fuel econom y labeling) should take effect once the future rulemaking action mentioned above is complete. Some have stated that use of the new provisions should be available for use as soon as possible after the rule is completed. This would minimize the need for any future duplicate testing and put manufacturers on course for fully aligning with the new requirements quickl y. Others have asked that there be lead time provided before the application of the new requirements becomes mandatory . The manufacturers have expressed concern that the use of the new requirements more quickl y by one manufacturer versus another could create a competitive imbalance. At the same time, manufacturers do not necess aril y want to be forced to certify all products to the new requirements b y a cut
- off date (e.g., 2020 model year) without EPA consideration of phase

- in or phase

- out provisions and data carryover. EPA understands the manufacturers’ various issues and conce rns in this area. Based on the information available at this time, EPA is expecting to allow the optional use of an y future adjustments for compliance calculation and labeling purposes as soon as the future rule mentioned above becomes effective. Further more, we expect that the mandatory use of any

such new adjustments with all Tier 3 certifications would be required for the 2020 MY. These initial timing projections are subject to revision based on timing of the completion of the future action and the data and record developed in that future rulemaking.Page 297 of 529 b. Useful L ife for GHG Standards As stated above, EPA is committed to retaining equivalent stringency for GHG emissions compliance beginning in MY 2017. We need more emissions test data to better understand the GHG emission impacts of Tier 3 fuel in Tier 3 technology

vehicles. However, we believe that certifying a vehicle to a longer u seful life for an y emission constituent would have only a beneficial effect on emissions. To address potential concerns about changes in the stringency of the GHG standards resulting from a longer useful life, we are not requiring a longer useful life for GHG emission standards , although manufacturers can optionally certify GHG emissions to a 150,000 mile, 15 year useful life. 6. Consideration of Test Fuel for Nonroad Engines and Highway Motorcycle s As described earlier in Section IV.F ., we are adopting new specifications for the gasoline emissions test fuel used for testing highway vehicles subject to the Tier 3 standards. Earlier in the development of this rulemaking, EPA also considered changing the test fuel specifications f or other categories of engines, vehicles, equipment, and fuel s ys tem components that use gasoline. These include a wide range of applications, including small nonroad engines used in lawn and garden applications, recreational vehicles such as ATVs and sno wmobiles, recreational marine applications, and highway motorcycles. While engines in some of these categories employ

advanced technologies similar to light

- duty vehicles and trucks, the vast majority

of these engines employ

much simpler designs, with many of the engines being carbureted with no electronic controls. Because of the lower level of technology , emissions from these engines are potentially much more sensitive to changes in fuel quality

. EPA is not applying the new emissions test fuel specifications to these other categories of engines, vehicles, equipment, and fuel sy stem components. In discussing the potential change in test fuel specifications with the large number of businesses potentially

impacted by

such a change, many

companies supported such a change. However, a number of manufacturers raised concerns about the level of ethanol in the new fuel, the cost of recertifying emission families on the new fuel, the impact on nationwide product offerings, and the cost impact of compl yi ng with th e existing standards on the new test fuel. EPA believes it is important that the test fuel for these other categories reflect real

- world fuel qualities but has elected to defer moving forward now pending additional analy sis of the impacts of changing the test fuel specifications for the wide range of engines, vehicles, equipment and fuel sy stem components that could be impacted. These impacts include the impact on the emissions standards, as well as the other issues raised b y the manufacturers. EPA plans to explore such a change in a separate future action.Page 298 of 529 While we are not changing the test fuel specifications for these other types of vehicles and engines, we are updating the reference standards associated with specific parameters and making minor adju stments to calculation methods. For certified engines and vehicles that have already been using the test fuel specified in §1065.710, we are clarifyingthat the RVP is calculated using the same equation described above for the new fuel specified for Tier 3 vehicles. We are also taking the opportunity

to align and update test methods for the various gasoline test fuels in 40 CFR part 86. Specifically , we are revising §86.113 and §86.213 to (1) use both ASTM D2699 and ASTM D2700 for octane measurements inv olving both research and motor octane specifications (including octane sensitivity), (2) use ASTM D2622 for all sulfur measurements, which is widely used and provides superior results compared with the methods that have been referenced in the regulations, (3) use ASTM D5191 for measuring fuel volatility , including the calculation described above. We are also updating the regulations to reference a newer version of the following currentl y referenced procedures: ASTM D86, ASTM D1319 ASTM D2699, ASTM D3231, and ASTM D3237. All these changes and updates align with fuel specifications in 40 CFR part 1065. 7. CNG and LPG Emissions Test Fuel Specifications There are currently

no sulfur specifications for the test fuel used for certifying natural gas (CNG) vehicles. There is also no sulfur specification in §86.113 for the test fuel used for certifying liquefied petroleum gas (LPG) light duty vehicles. The LPG certification test fuel for heav y - dut y highway engines and for nonroad engines in §1065.720 includes an 80 p p m maximum sulfur specification. We request ed comment on the appropriateness of changing §86.113 to ref erence 40 CFR part 1065 for all natural gas and LPG test fuels. We further request ed comment on amending these specifications to better reflect in

- use fuel characteristics, and in particular on the appropriateness of aligning the sulfur specifications with those that apply for gasoline test fuel. We noted that c hanging the sulfur specifications would depend on establishing that the new specification is consistent with the range of properties expected from in

- use fuels. The Alliance of Automobile Manufacturers (the Alliance) stated that EPA should adopt a 10 ppm maximum sulfur specification for CNG and LPG vehicle certification test fuels. They also stated that §86.113 should reference part 1065 for CNG and LPG test fuels (for light and heavy dut y vehicles). The American Petroleum Institute (API), the Association of Fuel and Petrochemical Manufacturers (AFPM), and several individual refiners stated that EPA should not establish new sulfur standards for CNG and LPG vehicle certification test fuels until additional data are available on the sulfur content of in

- use CNG/LPG fuels. The National Propane Gas Association (NPGA) stated that they are opposed t o a change in the sulfur specifications for LPG vehicle certification test fuels given that they are unaware of an y issue that would warrant such a change.Page 299 of 529 As discussed in Section V.J. of today ’s preamble, additional time is needed for EPA to work with in dustry to collect data on current CNG/LPG sulfur content, to determine whether additional control of in

- use CNG/LPG sulfur content is needed, and to evaluate the feasibility and costs associated with potential additional sulfur controls. Therefore, we are deferring finalizing in

- use quality and certification test fuel specifications for CNG and LPG at this time. **G. Small**  **Business Provisions** We are adopting special flexibility provisions for small businesses that are subject to the Tier 3 emission s standards. Such businesses are t ypically vehicle manufacturers, independent commercial importers (I CI s) , or alternative fuel vehicle converters. We are also providing Tier 3 flexibility to companies that, though they may not meet the eligibility

requirements for sm all businesses, sell less than 5,000 vehicles per ye ar in the United States, and thus qualify as small volume manufacturers (SVMs). These companies and small businesses ty pically face similar challenges in implementing new EPA vehicle standards

. As in pre vious vehicle emissions rulemakings in which we have provided such flexibilities , our reason for doing so is that these entities generall y have more implementation difficulty than larger companies

. Small compan ies generally have more limited resources to carry out necessary research and development ; they can be a lower priority

for emission control technology suppliers than larger companies; they have lower vehicle production volume s over which to spread compliance costs ; and they have a limited diversity of product lines, which limits their ability to take advantage of the phase

- in and averaging provisions that are major elements of the Tier 3 program

. We proposed small business provisions largel y based on the recommendations of the Small Business Advocacy Review (SBAR) Panel , described in Section XIII.C of the Notice of Proposed Rulemaking (NPRM)

. We proposed provisions for additional lead time , reduced testing requirements, and opportunities for hardship relief to help small entities to leverage technolo gical developments by

other s and to spread the availability of needed engineering , supplier, and capital resources. Based on the comments we received, we have improved on the proposed provisions in the final rule as described in detail below. 1. Lead Time an d Relaxed Interim Standards We propos ed that small businesses and SVMs be allowed to postpone compliance with the standards and other Tier 3 requirements, including use of the new certification test fuel, until model year (MY) 2022. For MY 2022 and later, they would be subject to the same Tier 3 requirements as other manufacturers, including the declining fleet average NMOG+NOx standard s and the fully phased in 30 mg/mi FTP standard for MYs 2025 and later. We requested comment onPage 300 of 529

adopting relaxed FTP NMOG +NOx standards for small companies in the light

- duty market segment, noting that LE V III provides light

- duty SVMs with relaxed FTP NMOG+NOx standard s of 125 and 70 mg/mi in MYs 2022 and 2025 , respectivel y . We did not receive comments from non

- SVM small bus inesses subject to the Tier 3 vehicle standards about our proposed small entity phase

- in provisions. However, we received comments from SVMs, as well as the Alliance of Automobile Manufacturers and the Association of Global Automakers, arguing that the proposed phase

- in did not provide adequate lead time relief for SVMs, and that the long

- term Tier 3 standards for light

- dut y vehicles are not technologically feasible for SVMs. They highlighted the ability of large manufacturers to offset high emissions fro m high

- performance, luxury models by

averaging with their low

emitting models, while competing SVM products must be designed to actually achieve low emissions while still meeting customers’ performance expectations. Their limited production can also resul t in emission control technology suppliers placing a lower priority

on SVM orders than on those of larger, high

- volume manufacturers. Because of these factors, SVMs suggested that their companies meet a slightly more stringent NMOG+NO X standard (125 mg/mi ) than what we proposed for SVMs in the earl y ye ars of the program, and a permanentl y relaxed standard of 51 mg/mi beginning in MY 2022. Ferrari suggested a compliance schedule for SVMs similar to the California LEV III program, with either a permanently relaxed standard (matching the California LEV III 70 mg/mi long

- term standard) or a delay until MY 2030 to meet the primary 30 mg/mi Tier 3 standard (when they suggest that SVMs could potentially compl y). CARB comments supported Tier 3 adoption of its LE V III provisions for SVMs, including the long

- term 70 mg/mi standard beginning in MY 2025. VNG, a natural gas fuel network provider, commented that gaseous - fuel small

- volume test groups should be given extended phase

- in opportunities identical to those proposed for SVMs, regardless of compan y size. As justification, VNG pointed to challenges unique to converting vehicles to operate on natural gas: thermal management of direct injection fueling and engine oil sy stems, adaptation of gasoline direct injectio n (GDI) controls to natural gas port fuel injection, and improvement of turbocharger response times. After considering the comments, we agree with SVMs that their unique logistical and technological challenges, especially in the later years of the primary FTP NMOG+NOx standards phase

- in schedule, warrant a significant period of relaxed standards for these manufacturers. However, we have found no fundamental reason wh y, given sufficient lead time, all manufacturers, regardless of compan y size and vehicle c haracteristics, will not be able to meet the Tier 3 standards. Thus, we are finalizing an optional program for SVMs, available to non

SVM small businesses as well, under which they can choose an alternative 3

- stage FTP NMOG+NOx fleet average standard phas e - in schedule: an initial standard ofPage 301 of 529

125 mg/mi for MYs 2017 through 2021, a more stringent standard of 51 mg/mi for MYs 2022 through 2027, and the final Tier 3 standard of 30 mg/mi thereafter. Because companies choosing this 3

- stage compliance option are certifying to Tier 3 bin standards in MY 2017, we are requiring that other exhaust emissions standards, including SFTP and PM standards, apply for their vehicles as well, to the same degree and on the same schedule as for other manufacturers. Applicati on of evaporative emissions and onboard diagnostics (OBD) standards, on the other hand, is not affected b y choice of the 3

- stage compliance option for the FTP NMOG+NOx standards, and small companies may separately choose to delay compliance with evaporativ e emissions and OBD standards (except as noted in Section IV.G.3) until MY 2022, as proposed. In addition, small companies choosing the 3

- stage compliance option may delay the longer useful life and new test fuel requirements for exhaust emissions standards until MY 2022 to align these changes with the 3

- stage schedule. This option would not preclude use of other applicable small entity

flexibility

provisions discussed in this subsection. Although we are adopting this revised implementation schedule for S VMs and small businesses, we believe the proposed approach of allowing postponement of Tier 3 compliance until MY 2022 may be useful for small companies needing more lead time to begin certifying Tier 3 vehicles. Therefore we are finalizing the proposed a

pproach as an additional but separate option for such companies, including SVMs , I CI s , and alternative fu el vehicle converters . Furthermore, because the optional 3

- stage SVM implementation schedule, and the record of comments that prompted it, are specifi c to the light

- duty sector, we are not extending it to heav y - duty vehicles and instead are finalizing only the proposed approach of allowing postponement of Tier 3 compliance until MY 2022 for any SVMs and small businesses in the heav y - dut y sector. Compani es that take advantage of one of the SVM and small business implementation schedule provisions in either the light

- dut y or heav y - dut y s ector are not allowed to generate or use Tier 3 exhaust emissions credits in that sector while or before they

are subject to significantl y less stringent standards than other manufacturers. That is, they cannot earn or use Tier 3 exhaust emissions credits before MY 2022 under the 3

- stage light

- dut y SVM revised implementation schedule, and they

also cannot do so before MY 20 22 if they are using the postponed compliance schedule that we proposed , unless they choose to end their use of these SVM implementation options earlier than MY 2022

. We disagree with VNG’s assessment that small

- volume test groups of large manufacturers s hould have until 2022 to comply with Tier 3. The technical challenges outlined b y VNG have to do with converting gasoline vehicles to run reliably and durably

on natural gas. Although these conversion challenges may be exacerbated for the new generation of turbocharged GDI vehicles, we have no evidence or comments from a vehicle manufacturer indicating that meeting Tier 3Page 302 of 529

standards is significantly

more difficult for natural gas vehicles than for gasoline vehicles. Note that we are providing some relief for small volume test groups in the form of assigned deterioration factors (discussed below), but not because of feasibility concerns. Rather, we believe that assigned deterioration factors provide a sufficient alternative to the extensive process of deve loping a unique factor for each low

- volume vehicle model. We find no justification to delay compliance with Tier 3 standards for larger manufacturers’ low

- volume models as requested by VNG. 2. Assigned Deterioration Factors In Tier 3 as in past programs, m anufacturers must demonstrate compliance with emission s standards throughout the vehicle’s useful life. This is generally done by testing vehicles at low mileage and then applying a deterioration factor to the measured emission s levels. The deterioration f actors are determined b y testing emission s control sy stems before and after an aging process

. In the past we have allowed small entities to use deterioration factors assigned b y EPA instead of performing the extended testing , and we proposed to do so agai n for demonstrating compliance with Tier 3 exhaust and evaporative emission s standards. We did not propose specific assigned deterioration factors, but noted that the proposed delay in the small entity

compliance schedule to MY 2022 would allow sufficient deterioration data from large manufacturers to accumulate for timely develop ment of these factors. We are adopting the assigned deterioration factor provisions for small businesses and SVMs (as well as for small volume test groups), as proposed. Commente rs expressed support, and asked that the Agency commit itself to keeping these factors up to date as durability data accumulates. In response, we can state that we are committed to periodicall y updating and publishing these assigned deterioration factors. Given that SVMs will be allowed to use the revised implementation schedule described above, starting in MY 2017, it becomes necessary to consider assigned deterioration factors in stages. Because there may not be a sufficient base of accumulated durabil ity data on Tier 3 vehicles by MY 2017, we expect that the current set of assigned factors based on Tier 2 vehicles may continue in place for some time, noting that the MY 2017

- 2021 SVM fleet average of 125 mg/mi is not too much different from the average of today ’s Tier 2 vehicle emissions. By

MY 2022, when the SVM NMOG+NOx fleet average standard drops to 51 mg/mile, we expect to have new assigned factors available. We note that small businesses and SVMs may also, with advance EPA approval, use deterioration factors developed b y another manufacturer (40 CFR 86.1826

- 01(b)).Page 303 of 529 3. Reduced Testing Burden and OBD Requirements Under our existing regulations, manufacturers must perform in

- use testing on their vehicles and demonstrate that their in

- use vehicles compl y with the emission s standards. The se regulations provide for reduced levels of testing for small companies with annual sales under 15,000 , and for no in

- use testing for those with annual sales up to 5,000

. We received no adverse comments on our prop os al to continue this approach in Tier 3, and are retaining it. As described in Section s IV .A and IV.B , we are requiring manufacturers to test for PM emissions from vehicles of all fuel ty pe s , a change from previous practice in which non

- diesel vehicles co uld be waived from PM testing. However, we propos ed and have decided to continue the PM testing waiver in T ier 3 for small businesses and SVMs . In lieu of testing, these companies are required to make a statement of compliance with the Tier 3 PM standard s , and their vehicles are still subject to the standards . We may however measure PM emissions to determine compliance in EPA confirmatory or in

- use testing. We propos ed to apply

CARB’s OBD requirements to Tier 3 vehicles, except that small alternative fue l vehicle converters would be allowed to instead meet our existing OBD requirements (40 CFR 86.1806

- 05) . The natural gas fuel network provider VNG objected that the proposed exception disadvantages larger vehicle manufacturers and should be made equally available to all vehicle manufacturers’ small volume test groups. We expect that larger manufacturers wishing to produce alternative fuel vehicles will be familiar with CARB’s OBD requirements and well

positioned to implement these requirements in Tier 3. We note that larger OEMs themselves did not request to be covered b y an extension of this provision. We are finalizing the exception to the Tier 3 OBD requirements as proposed. Note that the optional delay in Tier 3 implementation until MY 2022 that is available to small businesses, discussed above, includes a delay in the Tier 3 OBD requirement to MY 2022, as proposed, except that vehicles already meeting this requirement in MY 2017 must continue to do so in subsequent years. We are also adopting this Tier 3 OBD delay to MY 2022 for small companies taking advantage of the revised light

- duty 3

- stage implementation schedule discussed above, even though other Tier 3 requirements start for them in MY 2017, in order to avoid overburdening these manufacturer s with multiple sets of new OBD design constraints. 4. Hardship Relief We propos ed and are adopting provisions for small businesses and SVMs in hardship situations to apply for additional time to meet the Tier 3 standards

. Such appeals will need to include e vidence that the noncompliance would occur despite the manufacturer's best efforts to comply , and that severe economic hardship wouldPage 304 of 529

occur if the relief is not granted, though the company need not show that its solvency will be in jeopardy

without the rel ief. (This showing is required in other EPA programs granting hardship relief under 40 CFR 1068.250.) The duration of relief will be established on a case

- by

- case basis for Tier 3 and is not being limited by regulation. Commenters supported these propos ed provisions, within the context of a revised approach to SVM lead time, discussed above. 5. Eligibility

for the Flexibilities As proposed, we are using the federal Small Business Administration (SBA) criteria to define s mall businesses eligible for the spec ial provisions. SBA defines small business vehicle manufacturer s as those with less than 1,000 employees , and small business IC Is and alternative fuel vehicle converters are evaluated using SBA criteria based on annual revenues. See Section IV.H.3 for a discussion of additional provisions that apply

specificall y to I CI s. Also, as proposed, we are defining SVMs in 40 CFR 86.1838

- 01 for purposes of Tier 3 as compan ies with nationwide annual U.S. sales volumes at or below 5,000 vehicles, though the 15,000 v ehicle threshold used in Tier 2 continues to apply in a few regulatory

provisions that Tier 3 changes are not impacting. Eligibility will be evaluated using an average of 2012

- 2014 MY sales. For companies with no 2012 MY sales, projected sales may be use d, but their eligibility will be re

- evaluated thereafter using a three

- ye ar running average. VNG commented that the proposed 5,000 vehicle threshold could potentially

limit the ability

(or willingness) of natural gas SVMs to scale up production by

forcing a tradeoff between sales and regulatory burden, pointing also to the fact that 15,000 vehicles is only 0.1% of annual light

- dut y vehicle sales. We do not believe that the SVM relief provisions are so advantageous as to cause self

limiting of sales, except possibly in the unlikel y case of a compan y very near the threshold. Even if this were to happen, moving the threshold to 15,000 would not prevent the same dynamic from happening at that sales level. Furthermore, our use of a three

- ye ar average of sales for determining SVM eligibility protects the SVMs from being penalized for having an especially good year not reflective of its long

term growth trend. See the MY 2017 and later light

- duty GHG final rule for a discussion of our basis for adopting the 5,00 0 vehicle threshold (77 FR 62793, October 15, 2012). We request ed comment on extending eligibility for the Tier 3 SVM provisions to small manufacturers that are owned by large manufacturers but are able to demonstrate that they are operationally

independent. We established such a provision in the light

- duty greenhouse gas (GHG) program , and CARB did so in LEV III

. Comments from CARB and Ferrari supported this extension. No commenters opposed it; however, Advanced Biofuels USA recommended caution to avoid advantaging SVMs capable of leveraging parent compan y resources to drasticall y increase U.S. market share within 2

- 3 years. Given the establishment of this provision in our GHG program, and the value of this extension forPage 305 of 529

harmonization with LEV III, we are adopting this change into Tier 3 using the same eligibility criteria as in our GHG program, set forth in 40 CFR 86.1838

- 01(d). We believe these criteria are sufficiently strict and objective to address the concerns expressed by

Advanced Biofuels USA. T o qualify

as SVMs in either the light

- dut y or heavy

- dut y Tier 3 programs, the compan y’s total sales of vehicles subject to standards under Part 86 Subpart S count toward the vehicle sales limit, including both light

- and heav y - dut y vehicles. Companies so qualified may take advantage of SVM provisions in both sectors. **H. Compliance Provisions**  1. Exhaust Emission Test Procedures We are finalizing most of the amendments we proposed to 40 CFR part 1066 as part of the effort to migrate test requirements from 40 CFR part 86. We began this process a couple of years ago when we established part 1066, but we applied these test procedures only to certain vehicles above 14,000 lbs gross vehicle weight rating ( GVWR) for the purpose of measuring greenhouse gas emissions (76 FR 57470, September 15, 2011). This final rule extends these procedures, with some amendments, to vehicles at or below 14,000 lbs GVWR for measurement of both criteria pollutants and greenhouse gas emissions. The procedures in part 1066 cover the same re quirements that have been included in 40 CFR part 86, but include more detailed specifications for how to measure exhaust emissions using a chassis dy namometer. They

also reference large portions of 40 CFR part 1065 to align test specifications that appl y equally to engine

- based and vehicle

- based testing, such as CVS and anal yz er specifications, calibrations, test fuels, calculations, and definitions of many

terms. Overall, the part 1066 procedures represent a modernization of the part 86 procedures rathe r than fundamentall y different procedures. Until this rule, testing requirements related to chassis dy namometers have relied on a combination of regulatory provisions, EPA guidance documents, and extensive learning from industry experience that has led to a good understanding of best practices for operating a vehicle in the laboratory to measure emissions. The revisions we are finalizing capture this range of material, integrating and organizing these specifications and procedures to include a complete set of provisions to ensure that emission measurements are accurate and repeatable. This final rule includes the following revisions to part 1066: • Clarification of regulatory requirements. • Migration of mass

- based emission calculations from part 86 to part 1066. • Introduction of a new NMOG calculation.Page 306 of 529 • Revision of 40 CFR part 1066, subpart B, to increase the specificity with which part 1065 references are made as they pertain to testing equipment, test fluids, test gases, and calibration standards. • Addi tion of coastdown procedures for light

- dut y vehicles. • Reordering of the test sequence with respect to vehicle preparation and running a test. • Specifying part 1065 procedures for PM measurement, including certain deviations from part 1065 for chassis te sting. • Insertion of detailed test specifications for vehicles certified under 40 CFR part 86, subpart S. • Addition of provisions related to testing with four

- wheel drive dy namometers, as described below. • Correction of t ypographical errors. We are fina lizing the use of part 1065 for PM measurement with slight adjustments to the dilution air temperature, minimum dilution ratio, and background measurement requirements. By controlling the parameters that affect PM formation (dilution air temperature, dilut ion factor, sample residence time, filter face temperature, and filter face velocity), the procedures will reduce lab

- to
- lab and test

to
- test variability

. The regulations being finalized will provide alternative approaches to sample PM onto different combi nations of filters. One option is to collect a sample for phases 1 and 2 of the FTP on a single filter, and collect a sample for phases 2 and 3 of the FTP onto a second filter. Another option is to collect a sample for phases 1, 2, and 3 on a single filt er. A final option is to sample PM emissions from two full UDDS cycles; however manufacturers choosing this option must still run a separate three

- bag test for evaporative emission testing. We will continue to allow sampling under the traditional FTP meth odology of a bag or filter per test phase (3 phases in total) instead of these new methods. We are also finalizing new PM sampling and calculation methods as proposed. We are revising the chassis dy namometer specifications in part 1066 by removing the maxi mum roll diameter and b y requiring speed and force measurements at a minimum frequency of 10 hertz (Hz). Some manufacturers may be interested in testing with nonstandard dy namometer configurations, such as new flat

- track dyn amometers or old twin

- roll dy nam ometers. We may

approve the use of these and other nonstandard dynamometer configurations as alternative procedures under 40 CFR 1065.10(c)(7).Page 307 of 529 We proposed that EPA may test vehicles with the capability of all

- wheel drive operation with dy

namometers operat ing in either two

- wheel drive or four

wheel drive mode, regardless of the ty pe of dy namometer that the manufacturer used for certifying the vehicle. However, the final regulations specify that we will conduct our testing using the same drive mode as the m anufacturer. Vehicle manufacturers commented that differences in test results between a vehicle tested on a two
- wheel drive and a four

- wheel drive dynamometer might be due to differences in dynamometer characteristics more than in vehicle operation. Results of a government

- industry study that tested vehicles on both two

- wheel and four

wheel drive dyn amometers indicated fuel economy differences in the range of ±4%, although the study was inconclusive with respect to the cause of the differences. 421 Based on the results of this study , we will continue to test vehicles during confirmatory

tests using the manufacturer’s dy namometer configuration for that vehicle, and that test will be the official certification result. We are, however, finalizing revisions to 40 CFR 1066.410(g) to clarify that we may

also test the manufacturer’s vehicle in a different dynamometer configuration than what was used for certification testing for information

- gathering purposes. If we decide to perform this testing, we will depend o n the manufacturer to cooperate in reconfiguring the test vehicle for our testing. We will continue to investigate the effects of four

- wheel drive dy namometers on emission results and will not rule out possible future test procedure changes that might req uire certification of, or allow EPA to perform confirmatory testing on, any

vehicle on a four

- wheel drive dy namometer. In their comments to this rulemaking, vehicle manufacturers stressed the importance to them that EPA use the same test procedures that th ey used for their certification testing when we perform confirmatory testing on their vehicles. Although the manufacturers did not explain the reasons for their comment, w e presume that the manufacturers’ concern relates to situations where EPA test proce dures would lead to higher emission levels than those resulting from a slightly different test procedure used by a manufacturer. If so, the concern is misplaced. The purpose of EPA’s test procedure flexibility provisions is not to allow manufacturers to use test procedures as a tool to enable compliance with the standards

– in other words, to demonstrate compliance for engines that in the absence of the regulatory test procedure flexibility would not meet the standard. Rather, the purpose is to reduce th e burden of testing. We go through the rulemaking process to establish the specified default test procedures as a means of creating an objective measure of compliance with emission standards. Where we also include alternative procedures, they generall y are not intended to change the conclusions from the rulemaking related to the stringency of the emission standards,

421 “ Four Wheel Drive Dynamometer Meeting with the Alliance of Automobile Manufacturers and the Global Automakers,” EPA Memo from Chris Laroo, November 13, 201 3.Page 308 of 529

or to lead to a different conclusion regarding compliance relative to the specified test procedures. EPA has addressed this issue previously for engine testing in §1065.10(a), where we note that we condition the allow ance to use alternate procedures on the provision that they would “ not affect your ability to show that yo ur engines compl y with the applicable emission standards. ” We note furth er that this provision “ generall y requires emission levels to be far enough below the applicable emission standards so that an y errors caused b y greater imprecision or inaccuracy

do not affect your ability to state unconditionally

that the engines meet all applicable emission standards. ” In a related context, §1065.10(c)(1) explains that the intent of the test procedures is “to produce emission measurements equivalent to those that would result from measuring emissions during in

- use operation ”. This provi sion, which also applies for vehicle testing, envisions a process in which both the manufacturer and EPA can apply

their engineering judgment to improve the representativeness of the testing. It would be appropriate for a manufacturer to ask EPA to modify our test procedures if the manufacturer believed EPA’s test procedures would lead to results that were unrepresentative of in

- use operation. However, it would not be appropriate to ask us to modify our test procedures to make them less representative of in

- use operation. The proposed rule included discussion of SIunits as part of emission measurement procedures. At this time we are not converting emission standards to SIunits. Note however that like part 86, part 1066 relies extensively on calculation s involving phy sical parameters to calculate emission rates and perform various calibrations and verifications. As already reflected in part 1066, manufacturers have used a variety of units to perform these calculations. We would expect that dy

namometers and other laboratory equipment are all capable of operating in SIunits even if current practice in some laboratories is to use other units. Moving toward standardized units for calculations will allow us to more carefully and appropriately

specify precisio n values for various measured and calculated parameters. This will also simplify calculations, facilitate review of results from different laboratories, and help with communications regarding an y round robin testing that might occur. As proposed, we will p hase in the part 1066 test procedures for certifying all sizes of chassis

- tested vehicles. All aspects of part 1066 related to PM testing must be met at the start of MY 2017 for vehicles certified to the PM standards. All other aspects of part 1066 must be met starting with the certification of MY 2022 vehicles. Manufacturers may begin using the part 1066 procedures before these deadlines, including step

- wise changes to migrate graduall y to part 1066 procedures. The regulations will require that good engi neering judgment be used during this transition to ensure that the effective stringency of the standards is not changed. We recognize that individual differences between part 86 and part 1066 test procedures may

have a slight upward or downward impact on measuredPage 309 of 529

emissions, even though the combined overall impact will be negligible. Thus, during the migration, care must be taken to avoid applying an unbalanced mix of changes that could bias emissions. As described in Section IV.D, we are finalizing new te st fuel specifications for E10 gasoline test fuel in 40 CFR part 1065. The test fuels specified for natural gas and liquefied petroleum gas, while not used for very man y engine families, are currentl y following different specifications under 40 CFR part 86 and part 1065. We intend to revisit these fuel specifications in the future in the hope of adopting single, comprehensive fuel specifications for natural gas and liquefied petroleum gas that properl y represent in

- use fuels for highway and nonroad applicat ions. The proposal also included various technical amendments to 40 CFR part 1065, which we are finalizing largel y as proposed. See the Summary and Analysis of Comments for a discussion of changes we have made in response to comments. Of particular note is the revision to subpart F specific to preconditioning engines with exhaust aftertreatment devices. We are also adopting test procedures for unregulated pollutants such as semi

- volatile compounds (PAHs, etc.). These technical amendments, which have no effect on the stringency of any emission standards, include several minor changes to clarify regulatory requirements, align with chassis

- testing procedures where appropriate, and correct t ypographical errors. 2. Reduced Test Burden We are updating the regulatory provisions that allow manufacturers to omit testing for certification, in

- use testing, and selective enforcement audits in certain circumstances. Sections IV.A.3, IV.B.6, and IV. G .3 describe how this applies for demonstrating that vehicles meet the T ier 3 PM standards. We are also allowing manufacturers to omit PM measurements for fuel econom y and GHG emissions testing that goes beyond the testing needed for certifying vehicles to the Tier 3 standards. Requiring such measurement would add a signific ant burden with very limited additional assurance that vehicles adequately control PM. We are also allowing manufacturers to ask us to omit PM and formaldehyde measurement for selective enforcement audits. I f there is a concern that any t yp e of vehicle w ould not meet the Tier 3 PM or formaldeh yd e standards, we will not approve a manufacturer’s request to omit measurement of these emissions during a selective enforcement audit. The existing regulations have allow ed for waived formaldeh yde testing for gasol ine

- and diesel

- fueled vehicles. The Tier 3 NMOG+NO X emission standards are stringent enough that it is unlikely that vehicles will comply with the NMOG+NO X standards while exceeding the formaldeh yde standards. We are therefore continuing this waiver pra ctice, such that manufacturers of Tier 3 vehicles do not need to submit formaldehyde data for certification.Page 310 of 529 3. Miscellaneous Provisions The following additional certification and compliance provisions are included in the final rule:

 The certification practic e for assigned deterioration factors that are available for both small volume manufacturers and small volume test groups has matured significantly since it was first adopted. We are revising §86.1826 to more carefull y reflect the current practice. For ex ample, the existing regulations specified that manufacturers with sales volumes between 300 and 15,000 units per year should propose their own deterioration factors based on engineering analy sis of emission data from other families. We believe it is best for EPA to develop a set of assigned deterioration factors that can apply to all small volume manufacturers and small volume test groups. The revised regulation accordingl y spells out a process for EPA to use available information to establish assigned d eterioration factors that can be used for an y number of manufacturers and test groups.

 The regulations in 40 CFR part 86 rel y on rounding procedures specified in ASTM E29. This standard is revised periodically . The newer versions are not likel y to change in a way that affects the regulation, but the updates make it difficult to maintain a coordinated reference to the current protocol. We are addressing this by specifyingthat the rounding protocol described in 40 CFR 1065.20(e) applies, unless specified otherwise. We are not changing all the references in part 86; rather, we are defining “round” in subparts A and S to have the meaning given in 40 CFR part 1065 so that all new regulatory text would rel y on this new description. The rounding specifications in 40 CFR part 1065 are intended to be identical to those in the latest versions of ASTM E29 and NI ST SP811. For example, this now includes procedures for nonstandard rounding, such as rounding to the nearest 25 units, or the nearest 0.05, where that is appropriate.

 Independent Commercial Importers (ICIs) are companies that import specialized vehicles into the U.S. and are subject to EPA requirements specified in 40 CFR p art 85, s ubpart P. The standards that appl y to the imported vehicles depend in part on the vehicle’s model year. Therefore, vehicles imported by I CI s in the future will eventually be subject to the Tier 3 standards. Because all existing ICIs are small businesses , the Tier 3 standards generall y do not apply until 2022 at the earliest. In addition, the certification practices for I CI s have matured significantl y since they

were first adopted. EPA is adopting two changes to update how the regulations affect I CI s. First, we are adopting a require ment for IC Is to use electric dynamometers whenPage 311 of 529 running exhaust emission tests. Electric dynamometers have been required for man y ye ars for vehicle manufacturers , and EPA believes it is time to require that I CI s use such test equipment. In cases where an IC I can demonstrate that they will incur a substantial increase in compliance costs, the regulations include a provision allowing EPA to approve requests on a case
- by

- case basis to allow testing on other typ es of dy namometers until the I CIis able to use an electric dy namometer meeting current spec ifications . Second, we are adopting an allowance for ICIs to use a specific set of reduced testing procedures for up to 300 vehicles each ye ar that have been modified to a U.S.

- certified configuration. This has been allowed for ICIs since 1999 and was ap proved under EPA’s authority to establish equivalent alternate test procedures. 422 In stead of running a full set of emission tests, the reduced

- testing requirements allow I CI s to run an FTP for exhaust emissions, a highway

fuel economy

test, and the hot so ak test and the one - hour diurnal emission test that applied prior to the evaporative emission test procedures that involve 24

- hour cycling of ambient temperatures . We do not believe the se changes will have an y significant cost impacts on I CI s. Most I CI s have electric dy namometers or can upgrade for a relativel y s mall cost. The reduced testing burden provisions keep the cost of testing low, compared to the cost of running a full set of emission tests that would otherwise be required.

 We are adopting CARB ’s onboard diagnostic requirements for light

duty vehicles, light

- dut y trucks, and heav y - dut y vehicles at or below 14,000 lbs GVWR , as described in Section IV.C.5.d. We currentl y allow for this as an option, and almost all manufacturers do this already to avoid certifying multiple sy stems. Now that we are adopting evaporative provisions that are largel y based on California’s regulatory specifications and we are making efforts to adopt a single, national regulatory

program, we believe this is an appropriat e step. These changes appl y starting in MY 2017 for vehicles subject to Tier 3 standards. In the case of alternative fuel conversions, we continue to apply the requirements of 40 CFR 86.1806

- 05. 4. Manufacturer In

- Use Verification Program (IUVP) Requirement s The fuel on which an in

- use vehicle will be operated and tested is considered an integral part of the vehicle ’s emission control sy stem design. The Tier 2 program recognized that to achieve the desired emission reductions, vehicles must operate on the s ame fuel that the emission control sy stem was originally

422 See 40 CFR 86.106

- 96(a) and Enclosure 2 to EPA Guidance letter CCD

- 02

- 04, February 6, 2002.Page 312 of 529

designed to encounter in

- use and during testing. In the Tier 2 program, we acknowledged that during the transition of the in

- use fuel from sulfur levels of 300 ppm to 30 ppm average level, vehicles designed for 30 ppm could encounter in

- use sulfur levels well above the level for which their emission control sy stems were designed. To address this issue, we allowed manufacturers, with agency approval, to perform specific preconditioning test procedure s during the IUVP testing to ensure that potential exposure to high sulfur fuel would not impact the emission test results. These procedures included specific drive cycles or maneuvers not regularl y encountered during normal in

- use operation that would re sult in removal of sulfur contamination from the emission control sy stem. Consistent with the Tier 2 program, EPA continues to recognize the importance of the fuel to the emission control sy stem design, particularl y on Tier 3 vehicles designed to meet th e most stringent emission levels of the program (i.e., Bin 70 and cleaner). Under the requirements of this final rule, in

- use fuel will transition from an average sulfur level of 30 ppm to a new average level of 10 ppm. The se sulfur requirements are avera ge standards. Thus, even after the transition to the 10 pm average sulfur level, vehicles may still encounter sulfur levels during in

use operation that are above 10 ppm , and as high as the 95 ppm cap, which could adversel y impact the emission control sys tem. Tier 3 vehicles tested by manufacturers in IUVP that have been exposed to such sulfur levels could experience sulfur

- related impacts, which in turn could cause the vehicle to temporaril y exceed emission standards. To address the potential emission impact on Tier 3 vehicles from exposure to higher sulfur levels, we are modifying the IUVP testing process based in part on what was allowed under the Tier 2 program. Tier 3 vehicles tested in the IUVP are to be tested initially

without allowing an y sulfur cleanout procedure, such as a US06 test run prior to the FTP or Highway Fuel Economy

(HFET) tests. If a vehicle fails the NMOG+NO X standard for the FTP or HFET cycle during the initial round of testing, manufacturers may perform a sulfur cleanout proced ure before repeating the FTP or HFET , consisting of up to two US06 cycles. The measured US06 cycle and a preconditioning US06 cycle, if performed as part of the initial measured tests would serve as the cleanout procedure and therefore no additional US06 cycles would be allowed. Alternative sulfur cleanout procedures would require EPA approval. Following the sulfur cleanout procedure, the manufacturer will prep and soak the vehicles and then repeat the FTP and HFET tests. M anufacturer s choosing to perfor m the sulfur cleanout procedure would need to submit evidence that the vehicle encountered high sulfur levels in the fuel just prior to emission testing. This would need to include an anal ys is of a fuel sample from the vehicle fuel sy stem as received from in

- use operation just prior to testing. If the fuel sample indicated that the vehicle had been operating on fuel containing 15 ppm or higher sulfur levels, only the emission results of the tests following the cleanout procedure would be used to determine emission compliance and whether to enter the in

- use compliance program (IUCP). We intend to monitor the emission resultsPage 313 of 529

of in

- use testing and sulfur

- related test failures to determine if further reductions in the sulfur cap are required to ensure that T ier 3 vehicles are meeting the standards under in

- use driving conditions. The changes to the IUVP testing described above apply for light

- dut y vehicles , light

- dut y trucks, and MDPVs. The se changes are not applicable to heav y - dut y vehicles tested in the IUVP program. Also, as described in Section IV .D, we are incorporating leak testing into the IUVP test protocol.


## V. **Fuel Pr ogram**  Under today ’s Tier 3 program, we are finalizing reductions in gasoline sulfur levels nationwide. These standards will help reduce current levels of sulfur that contribute to ambient levels of air pollution that endanger public health and welfare . It will also help prevent the significant impairment of the emission control sy stems expected to be used in Tier 3 technology , significantl y improve the efficiency of emissions control sy stems currentl y in use, and continue prevention of the substantial adverse effects of sulfur levels on the performance of vehicle emissions control sy stems. **A. Overview**  1. Background
a. History

of Gasoline Su lfur Control Sulfur is naturally

occurring in crude oil. Crude oil containing higher concentrations of sulfur (i.e., greater than 0.5 percent) is called “sour” and crude containing lower sulfur concentrations (e.g., West Texas Intermediate) is referred to as “sweet.” Regardless of the concentration, because sulfur is naturall y occurring in crude oil, it is also naturally occurring in gasoline. As discussed in Section IV.A, sulfur impairs the performance of today ’s vehicle emission control technologies (i .e., precious metal catalytic converters), reducing the emission benefits of current and advanced vehicles. As explained below, in 2000 EPA took action to reduce gasoline sulfur levels under what is known as the Tier 2 Program 423 and we are taking further a ction with today ’s Tier 3 Program. Tier 2 was a major, comprehensive program designed to reduce emissions from passenger cars, light trucks, and large passenger vehicles (including sport utility vehicles, minivans, vans, and pick

- up trucks) and the sulfur content of

423 67 FR 6698 (February 10, 2000).Page 314 of 529

gasoline. Under this program, automakers were required to manufacture low

emission vehicles when operated on low

- sulfur gasoline, and refiners were required to produce low

- sulfur gasoline nationwide. Required reductions in gasoline sulfur un der the Tier 2 program began in 2004 with refinery

and importer caps of 300 ppm and a corporate average cap of 120 ppm. For most refiners and importers, compliance with the final sulfur standards (30 annual average and 80 per

- gallon cap) was required begi nning in 2006. The Tier 2 program was fully implemented on January 1, 2011 ( the ultra

low sulfur diesel program allowed for some extensions of the Tier 2 gasoline program flexibility

provisions) . The Tier 2 gasoline sulfur program also included an avera ging, banking, and trading (ABT ) program that allowed companies to generate credits for implementing the required changes earlier than their required start date, and allowed ongoing flexibility to meet the 30 average sulfur standard. At full implementation , the Tier 2 program (treating vehicles and fuels as a sy stem) required passenger vehicles to be over 77 percent cleaner and gasoline sulfur to be reduced b y up to 90 percent from pre

- program levels. b. Need for Additional Gasoline Sulfur Control The authorit y under which we are lowering the existing gasoline sulfur standards comes from Clean Air Act section 211(c)(1). This is because emission products of gasoline with current levels of sulfur cause or contribute to air pollution which may

reasonabl y be antic ipated to endanger public health or welfare , and because emission products of gasoline with current levels of sulfur will impair to a significant degree the emissions control device or sy stems on the vehicles subject to today ’s final Tier 3 standards. For more on our legal authority to set gasoline sulfur standards, refer to Section V. M

. As explained in Section IV.A, robust data from many sources show that gasoline sulfur at current levels (i.e., around 30 ppm on average ) continues to degrade vehicle catal yt ic converter performance during normal operation. NOx emissions are the most significantly affected by

this degradation. T he NMOG+NO X vehicle emission standards, representing an 80 percent reduction from current Tier 2 standards, will not be possible w ithout the gasoline sulfur controls we are finalizing today

. Today ’s 10 ppm sulfur standard should enable vehicle manufacturers to certify their entire product line of vehicles to the final Tier 3 fleet average standards. Tier 3 vehicles must achieve ess entiall y zero warmed

- up NO X emissions to comply and must maintain this performance for up to 150,000 miles. An increase in emissions of only a few milligrams per mile due to sulfur could make compliance impossible for some vehicles. The standards are pro jected to be especiall y challenging for larger SUVs and pick

- up trucks. Based on testing of these vehicles, as shown in Section IV.A, reducing gasoline sulfur to 10 ppm should enable these vehicles to maintain their emission performance in

- use overPage 315 of 529

their useful life. Lowering gasoline sulfur will also help reduce emissions of pollutants that endanger public health and welfare from vehicles already on the road today

. As also discussed above in Section IV.A , we have tested a wide range of vehicles to bette r understand the impact that even lower gasoline sulfur could have on emissions. Our test data showed significant NO X and VOC reductions when vehicles were tested on low sulfur gasoline. As also explained in more detail in Section III.B, lowering average gasoline sulfur from 30 to 10 ppm will result in approximately 260,000 less tons of NO X and 50,000 less tons of VOC almost immediately as the Tier 3 gasoline sulfur standards take effect. 2. Summary

of Final Tier 3 Fuel Program Standards The major elements of the fuel program being finalized today are summarized below. Please refer to sections V.B through V.J for more discussion on each of the elements summarized here.
a. Annual Average Sulfur Standard Under today ’s final Tier 3 fuel program, gasoline and any ethanol

- gasoline blend will be required to have a sulfur level of 10 ppm or less on an annual average basis beginning January

1, 2017. The 10 ppm average will appl y to a refiner or importer’s annual gasoline production. Similar to the Tier 2 gasoline program, the Tier 3 program applies to gasoline in the United States and the U.S. territories of Puerto Rico and the Virgin I slands, excluding California. Please see Section V.B for a more detailed discussion of the annual average sulfur standard. b. Per

- Ga llon Sulfur Caps Refiners and importers will continue to be subject to refinery gate per
- gallon sulfur caps of 80 ppm. Similarly , g asoline downstream of the refinery gate ( e.g ., at terminals, retail stations, etc.) will continue to be subject to a 95 ppm per - gallon sulfur cap . We are also committing to continue to evaluate if reductions in the per

gallon sulfur caps are warranted. A more detailed discussion on our decision to continue the current 80 and 95 ppm per - gallon sulfur caps, and elements of an in

- use study , can be found below in Section V.C.
c. Small Refiner and Small Volume Refinery Provisions As described in further detail in Section V.E.1, approved gasoline small refiners and small volume refineries must produce gasoline meeting the 10 ppm annual average sulfur standard beginning January 1, 2020. Small refiners and small volume refineries who meet the 10 ppm sulfur standard prior to this date may generate credits for earl y Tier 3 program compliance.Page 316 of 529 d. Averaging, Banking, and Trading (ABT) Program Se ction V.D discusses our averaging, banking, and trading ( ABT ) program . R efiners and importers may c ontinue to generate credits for reductions in their gasoline sulfur levels below the current (Tier 2) 30 ppm average gasoline sulfur standard throu gh December 31, 2016; and for reductions below the new 10 ppm average standard beginning January 1, 2017. These credits can be used for compliance with either the Tier 2 standard through 2016 or the Tier 3 standard beginning in 2017. The Tier 3 ABT program will have similar credit use provisions as the Tier 2 ABT program. These provisions include: five

- ye ar credit life from the ye ar of generation; two

- trade limit for inter

- company trading ; and the ability

to use credits internall y, bank for future use, or trade to other refiners/importers. Although credits generated prior to January 1, 2017 will be valid for five years or until December 31, 2019, whichever is earlier.
e. Gasoline Additive Cap As discussed further in Section V.C., manufacturers of gasoline additives that are used downstream of the refinery at less than 1 .0 volume percent will be required to limit the sulfur co ntribution to the finishe d gasoline from the use of the additive to less than 3 ppm when the additive is used at the maximum recommended treatment rate. For each batch of additive produced, the manufacturer must retain sulfur test records for 5 years , and must make these records available to EPA upon request. Parties that introduce additives to gasoline at over 1.0 volume percent will be required to satisfy

all of the obligations of a refiner and fuel manufacturer , including demonstration that the finished blend meets the ap plicable sulfur specification. f. Requirements for Denatured Fuel Ethanol and Other Gasoline Ox ygenates Today ’s rule finalizes a 10 ppm sulfur cap for denatured fuel ethanol (DFE). While DFE is the predominant gasoline ox ygenate currently in use, these standards also apply

to other gasoline oxygenates. Today ’s rule finalizes a 3.0 volume percent limit on ethanol denaturant concentration. We are adopting the current ASTM International specifications that only natural gasoline, gasoline ble ndstocks, or gasoline may

be used as denaturants for DFE

. 424 As discussed in the Summary and Anal ys is of Comments, we believe it is not necessary to finalize the proposed additional limits on the potential denaturants that may be used at this time

. We are

424 ASTM D4806

- 13a, “Standard Specification for Denatured Fuel Ethanol for Blending with Gasoline for Use as Automotive Spark

- I gnition Engine Fuel”.Page 317 of 529

also finalizing regulatory text to state that DFE must be composed solely of carbon, hydrogen, oxygen, and sulfur. Testi ng, recordkeeping, and reporting obligations are also being finalized to implement these new standards as discussed in Section V.G. Sulfur testing using approved anal yt ical methods or volumetric blending records and denaturant product transfer documents ( PTDs) can be used b y manufacturers/importers of DFE in demonstrating compliance with the 10 pp m sulfur cap for DFE finalized today

. g. Fuel Used in Flexible Fuel Vehicles As discussed in S ection V.H., we are deferring finaliz ing additional fuel quality requirements for E16

- 50 and E51

- 83 at this time. We continue to believe in the importance of implementing additional fuel quality standards for higher

- level ethanol blends and will continue to work with stakeholders in their development following the publication of this final rule. h. Standards for Butane and Pentane As discussed further in Section V.I, we are finalizing a 10 ppm sulfur cap for butane blended into gasoline effective January 1, 2017. This is consistent with the Tier 3 10 ppm refinery average s ulfur specification finalized today . In addition, as discussed below in Section VI .A.4, we are also finalizing provisions to allow pentane to be blended into gasoline downstream of the refinery . These provisions are similar to the existing provisions for butane blending. This allowance will become effective [INSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER]; a 30 ppm sulfur cap will apply to pentane blended into gasoline (consistent with the existing sulfur cap for butane under the Tier 2 pr ogram) until December 31, 2016, after which a 10 ppm sulfur cap will apply

. i. CNG/LPG As discussed below in Section V.J, we are deferring establishing in

- use sulfur requirements for compressed natural gas ( CNG ) and liquid propane gas ( LP G ) to provide additio nal time to work with stakeholders to collect data on current CNG/LPG sulfur content ; to determine whether additional control of in

- use CNG/LPG sulfur content is needed ; and to evaluate the feasibility and costs associated with potential additional sulfur controls. **B. Annual Average Sulfur Standard**  Under today ’s final Tier 3 fuel program, gasoline and any ethanol

- gasoline blend will be required to have a sulfur level of 10 ppm or less on an annual average basis beginning January

1, 2017. The 10 ppm average will appl y to a refiner or importer’s annual gasoline production. Similar to the Tier 2 gasoline program, the Tier 3 program applies to gasoline in the United States and the U.S. territories ofPage 318 of 529

Puerto Rico and the Virgin I slands, excluding California. We are finalizing the 10 ppm average sulfur standard both to enable the new vehicle fleet to m eet the Tier 3 vehicle standards being finalized today pursuant to CAA section 211(c)(1)(B) , and to reduce emissions from the existing in

- use vehicle fleet that endanger public health and welfare pursuant to section 211(c)(1)(A) of the Clean Air Act (CAA)

. We received numerous comments both in support of and against the proposed 10 ppm annual average sulfur standard. Commenters opposing the standard believe that 10 ppm is too low and/or is not needed to enable Tier 3 vehicle technologies. Some commenters suggested that EPA should consider setting a less stringent sulfur standard than the proposed 10 ppm annual average (detailed information regarding the comments can be found in the Summary and Analy sis of Comments document, which is located in the docket for this rulemaking). We believe that a 10 ppm annual average standard will help reduce current levels of sulfur that contribute to ambient levels of air pollution that endanger public health and welfare. It will also help prevent the significant impairm ent of the emission control sy stems expected to be used in Tier 3 technology , significantly

improve the efficiency

of emissions control sy stems currentl y in use, and continue prevention of the substantial adverse effects of sulfur levels on the performance of vehicle emissions control sy stems. This level is also feasible, and is the level that appropriately balances costs with the emission reductions that it provides and enables. As discussed in Section IV.A.6., and further in Chapter 5 of the RIA, we be lieve that a standard of 10 ppm is appropriate, and when combined with the advances in emissions control technologies will be sufficient to meet the Tier 3 emissions standards. The feasibility of the 30 mg/mi NMOG+NOx fleet average depends on exhaust cata ly st sy stems that require gasoline with average sulfur levels of 10 ppm or less. Further, annual average sulfur levels greater than 10 ppm would significantl y impair the emission control technology that we expect will be used to meet the Tier 3 standards and to ensure in

- use compliance over a vehicle’s useful life. This is particularl y a concern for some larger vehicles that will need to reduce NOx to near

- zero levels, due to greater difficulty i n reducing cold

- start NMOG, in order to meet a combined NMOG +NOx standard. As discussed in Section IV.A.6, increasing gasoline sulfur from 10 ppm to 20 ppm or 30 ppm would make it impossible for vehicle manufacturers to meet the Tier 3 standards. Achieving Tier 3 standards would require offsetting the resultant h igher emissions but EPA is not aware of existing technology or developing technology that could address these higher emissions when taking into consideration the entire vehicle fleet. In creasing gasoline sulfur from 10 ppm to 20 ppm or 30 ppm would also f orego the very

large immediate reductions from the existing fleet. We also do not believe a sulfur standard lower than 10 ppm is necessary to enable vehicles to meet the Tier 3 standards. As also discussed in Section IV.A, reducing sulfur below 10 ppm wo uld further reduce vehicle emissions and allow thePage 319 of 529

Tier 3 vehicle standards to be achieved more easily . However, we believe that a 10 ppm average standard is sufficient to allow vehicles to meet the Tier 3 standards. Furthermore, as discussed below, ther e are significant challenges associated with reducing sulfur below 10 ppm. As explained in Section IV.A, sulfur in fuel oxidizes in the exhaust and coats the sites where chemical reactions can take place on the precious metal catal ys ts used in vehicles to reduce emissions of VOC, NO X , PM, CO, and toxics. Accordingl y, an y sulfur in gasoline causes vehicle emissions to increase. Sulfur can be burned off the cataly st during high

- temperature, rich operation of the vehicle (i.e., aggressive driving conditio ns), but as long as there is an y sulfur in the fuel, exhaust emissions will increase. Because an y amount of sulfur in the fuel can have this effect, th e lower the sulfur the better. Refiners experience the same phenomenon with precious metal catal ys ts us ed in the reformer and isomerization units at their refineries. 425 To protect the precious metal catal ys ts in these units, refiners reduce the sulfur in the feed to these units to 1 ppm or below. Thus, it is technicall y possible for refiners to reduce thei r gasoline sulfur levels to virtually zero. While refiners did not have reason to reduce the sulfur in FCC gasoline until Tier 2 required such reductions, some refiners have achieved reductions in this stream at some of their refineries for other reasons such as : 1) protecting the FCC catal ys t from the contaminants in the gas oil feed, 2) reducing stack emissions from the regenerator of the FCC unit, and most importantly 3) increasing gasoline yields from the FCC unit. For most refineries, FCC gasoline ac counts for about one

- third of gasoline and before Tier 2 was the source of over 95 percent of the sulfur in gasoline. Under Tier 2, most refiners significantly desulfurized FCC gasoline to around 70 to 80 ppm, yet FCC gasoline continues to contribute the majority of sulfur in gasoline today

. An annual average sulfur level of 10 ppm will achieve very large immediate reductions from the existing fleet, as discussed in Section s III and IV

. Because an y sulfur in gasoline will continue to impair vehicle cataly st performance, reducing sulfur levels to zero would maximize vehicle emission reductions. However, there are two reasons wh y we believe a 10 ppm average sulfur standard is sufficient and further reductions (e.g., 10 ppm cap or 5 ppm average) are not nece ssary at this time. First, our anal ys is shows that a 10 ppm annual average is sufficient to enable vehicles to reach the Tier 3 standards. Consequently , while reducing sulfur levels further would continue to yield reductions from the in

- use fleet, they w ould not be necessary to enable the new Tier 3 vehicle standards to be met. Second, while sulfur levels would continue to reduce emissions from the existing fleet, reducing sulfur further below 10 ppm becomes increasingly difficult and costly . FCC

425 Together, the streams from the reformer and isomerization units account for approximately one

third of gasoline.Page 320 of 529

naphth a is very

rich in high

- octane olefins. As the severity of desulfurization increases, more olefins are saturated, further sacrificing the octane value of this stream and further increasing h ydrogen consumption. Making up for this lost octane represents a significant portion of the sulfur control costs. Furthermore , as desulfurization severity

increases, there is an increase in the amount of sulfur removed (in the form of hydrogen sulfide) which recombines with the olefins in the FCC naphtha, thus offsetti ng the principal desulfurization reactions. There are means to deal with the recombination reactions, but they result in even greater capital investments. In addition , while FCC gasoline contributes the majority of sulfur to the finished gasoline, as the sulfur level drops below 10 ppm, the sulfur level of the various other gasoline streams within the refinery also become important. Any

necessary

treatment of these additional streams increases both capital and operating costs. U.S. refineries are curre ntly in different positions, both technicall y and financiall y. In general, they are configured to handle the different crude oils they process and turn them into a widel y varyi ng product slate to match available markets. Those processing heavier, sour cr udes may have a more challenging time reducing gasoline sulfur under the Tier 3 program. Also, those with higher sulfur levels in other refinery

streams may have a more difficult time desulfurizing gasoline. Perhaps most important, U.S. refineries vary greatly in size (atmospheric crude capacities range from less than 5,000 to more than 500,000 barrels per day) and thus have different economies of scale for adding capital to their refineries. Therefore , it can be less costly per gallon for some larger refineries to get down to 10 ppm than for smaller refineries, as discussed in Chapter 5 of the RIA. As a result, with a 10 ppm average standard, the flexibility afforded by

the ABT program helps those refineries with very high costs. They

have the o ption of staying above 10 ppm if they

can acquire credits from other refineries that were able to lower their sulfur level below 10 ppm. However, if the gasoline sulfur standard were lower , this would essentially

end the ability

of refiners to average sul fur reductions across their refineries. There simply would not be enough opportunity to generate credits at levels much below 10 ppm. As discussed further in Chapter 5 of the RIA, we assessed the potential costs of an annual average standard lower than 10 ppm (e.g., 5 ppm). Our anal ys is shows that sulfur control costs for refineries to meet a standard below 10 ppm could be on the order of two times more costl y per ppm - gallon of gasoline sulfur reduced. In addition, a standard below 10 ppm could be cost

- prohibitive for more challenged refineries. Further, such a standard would also introduce additional costs to address the contribution to gasoline sulfur from gasoline additives, transmix, ethanol denaturants, and contamination in the distribution sy stem
. Therefore, we believe that the 10 ppm annual average standard will help reduce current levels of sulfur that contribute to ambient levels of air pollution that endanger public health and welfare. It will also help prevent significant impairmentPage 321 of 529

of the emission control sy stems expected to be used in Tier 3 technology , significantl y improve the efficiency of emissions control systems currentl y in use, and continue prevention of the substantial adverse effects of sulfur on the performance of vehicle emiss ions control sy stems. The level is also feasible (especially

considering its associated ABT provisions, described in Section V.D), and is the point which appropriatel y balances costs with the emission reductions that it provides and enables.

**C. Per**  **- Gal**  **lon Sulfur Caps** 1. Standards The final Tier 3 program is composed of a 10 ppm refinery annual average sulfur standard (discussed above in Section V.B ) with an 80 ppm per - gallon cap at the refinery

gate and a 95 ppm per

- gallon cap downstream ; these per

- gallon caps currentl y exist under the Tier 2 program. We believe this is the most prudent approach for lowering in

- use sulfur while maintaining flexibility considering cost and other factors. These per

- gallon caps are important in the context of an average sulf ur standard to provide an upper limit on the sulfur concentration that vehicles must be designed to tolerate. T he caps also limit downstream sulfur contamination and enable the enforcement of the gasoline sulfur standard in

- use. Our 10 ppm average standard with higher per

- gallon caps compares to a 10 ppm cap standard in much of Europe, Japan , and Korea. In addition to the gasoline standards we are finalizing today , we are also finalizing caps on the sulfur content of gasoline additives, to limit their contribution to the overall in

- use gasoline sulfur level.
a. What We Proposed We proposed two options for the per

- gallon sulfur caps

— maintaining the Tier 2 80 ppm refinery

gate sulfur and 95 ppm downstream sulfur cap s and, beginning January

1, 2020, lowering t o 50 ppm refinery gate and 65 ppm downstream caps

. The 50 ppm refinery gate cap was proposed to take effect on January 1, 2020 , as this is the date when the small refiner, small volume refinery , and earl y credit use provisions would expire ; and also to av oid forcing additional refinery investments during the earl y credit usage period. We also requested comment on lowering the caps to 20 ppm at the refinery gate and 25 ppm downstream. We received comments on both of the proposed per

- gallon cap options of 8 0/95 ppm and 50/65 ppm, as well as comments on finalizing lower caps of 20/25 ppm and a 20 ppm overall cap. Comments supporting lower caps noted potential environmental benefits, greater certainty that vehicles would see lower and more uniform gasoline su lfur levels, and enabling new vehicle technologies that requirePage 322 of 529

very low sulfur levels. Comments in support of maintaining the current Tier 2 caps cited concerns on cost, flexibility for turnarounds/unplanned shut downs (due to refinery fire, natural disa ster, etc.), and potential impacts on gasoline supply and pricing. Detailed information regarding the comments we received on the per

gallon sulfur caps is provided in the Summary and Analy sis of Comments document, which is available in the rulemaking rec ord. b. Final Refinery

Gate Sulfur Cap In today ’s action, we are retaining the 80 ppm refinery gate cap. The refinery gate cap provides flexibility for batch

- to
- batch variabilit y that naturally occurs at a refinery

due to the varying ty

pes of crude that refi neries process, variations in unit operations, and variations in product mix. It further provides for flexibility during unit turnarounds, and unplanned upsets (e.g., refinery fires, natural disasters, etc.), to avoid a complete refinery shutdown. A lowe r cap could create situations where refiners would need to store more off

- spec gasoline for future processing. However, if a refinery does not have adequate tankage for storing this product, and/or if its processing units are not large enough to “catch up ” in refining off

- spec product, it could result in significant impacts to fuel pricing or supply . For a refiner that produces multiple products, any potential supply

impacts could also impact other fuel markets (e.g., diesel, jet fuel, etc.). Additionall y, the refinery gate cap is a “hard” limit

— a refinery ’s actual production has to be well below this limit to account for in

- use testing tolerances, safet y margins, and an y additives that a refiner may

need to add prior to the fuel leaving the refinery . An 80 ppm refinery gate cap will provide refiners needed flexibility , and more certainty that they will be able to continue producing and distributing at least some gasoline during turnarounds/upsets to avoid a total shutdown. It will further provide more c ertaint y for transmix processors, additive manufacturers and other downstream parties. As described below in Section VII, we believe that most refineries would not have significant costs as a result of the Tier 3 program because they will be able to meet the 10 ppm average sulfur standard largel y through revamps and operational changes at their facilities, rather than installing grassroots units. Lowering to a cap of 50 ppm would directionally increase the costs of the Tier 3 program. The American Petrole um Institute (API) provided a detailed study with their comments 426 quantifying the additional costs associated with successively more stringent per

- gallon caps. While we do not agree with the study’s overall cost anal ys is, we do agree that with a refinery gate cap of 50 ppm, a number of refiners would incur higher capital costs due to the decreased ability to handle off

- spec

426 “ Economic and Supply Impacts of a Reduced Cap on Gasoline Sulfur Content ; Prepared for the American Petroleum Inst itute ”; Turner, Mason & Company. Document number: EPA

- HQ

- OAR

2011

- 0135

- 4285 ; API

- AFPM Attachment 13.Page 323 of 529

product with a lower refinery gate cap. As refiners must ensure that they can continue to produce saleable product and meet demand in the event of an upset or an off

- spec batch of fuel, the need for installation of additional tankage and/or increased refinery

processing capability

would be greater with a 50 ppm refinery gate cap. While at the time of the proposal we believed that a cap of 50 ppm would have little cost impact, our more recent anal ys is shows that a 50 ppm cap would increase the cost of the Tier 3 gasoline sulfur standards b y approximately 10 percent (see RIA Chapter 5.2.2.4 )

. At the same time, the more stringent cap with its associated increase in cost would be unlikely to provide significant additional emission benefits nationwide. As discussed previously in Sections III and IV above , the emissions benefits associated with the Tier 3 program are mainly driven by the red uction in the average sulfur content of gasoline from 30 to 10 ppm , since vehicle emissions are proportional to the sulfur content of the fuel. Changes in the cap would not affect this. In the context of the final ABT provisions, a higher cap does allow for increases in emissions on a temporal basis as one batch of fuel is allowed to have higher sulfur levels. However, this is then offset by reductions in emissions from batches of fuel that are then required to be below the 10 ppm av era g e standard. Simi larly , the final ABT provisions allow for the possibility that the fuel from different refineries will cause varying emission reductions as one refinery ’s higher average sulfur levels would lead to less emission reductions in

use. However, this is then of fset b y greater reductions in emissions due to the fuel produced b y refineries with sulfur levels below the average standard. Based on our cost analy sis, which is discussed below in Section VII.B., we project nearl y 40% of the gasoline pool would be at 5 p pm, about 45% at 10 ppm and the remaining approximately 15% at levels higher than 10 ppm. The sulfur level for this 15% in our anal ys is ranges from 11 ppm all the way up to 70 ppm. However, as discussed in Section VII.B., these high sulfur levels are mor e a function of the limitations of our anal ys is where we could only model these refineries as remaining at their current Tier 2 sulfur levels. We anticipate that in most (if not all) cases refineries will make operational changes and/or investments in ord er to reduce their credit burden and reduce their compliance costs. This anticipation, along with the fact that a 10 ppm average standard b y definition limits the amount of gasoline that can remain at higher sulfur levels (regardless of the cap) , means th at we anticipate most refineries, including those using credit s, w ill still average less than 20 or 30 ppm in their phy sical gasoline production

. Nevertheless, the final ABT program does allow for the possibility (regardless of the cap) that were this higher sulfur fuel to be concentrated in any certain geographical area, it would not receive the full emission reductions from the Tier 3 program. We have considered the potential for areas to consistently receive fuel that might be predominantly higher than the 10 ppm average. Because refineries generating credits and using credits are interspersed across the country , and because most areas receive a considerable portion of their fuel by pipeline, barge, rail, or truck from refineries in other areas, we exp ect the variation in average sulfur levelsPage 324 of 529

across the country

to be too limited to warrant lowering the per

- gallon cap to 50 ppm. Given the stringency of the 10 ppm average standard, we predict that in

- use sulfur levels will generally be well below 50 ppm

. Further reductions in the refinery gate cap are also not needed to enable the vehicle emissions standards, as the vehicle standards are a function of the 10 ppm annual average sulfur standard. While vehicle manufacturers have expressed concerns about the potential impacts on emissions performance if individual vehicles are exposed to gasoline above 10 ppm due to higher per

- gallon caps and/or credit usage 427 , we believe that vehicles will see sulfur levels closer to the 10 ppm average rather than the 80 ppm cap due to the fact that the 10 ppm average will drive reductions in gasoline sulfur levels. Thus, we believe it is prudent at this time to retain an 80 ppm refinery gate cap. However, we are committing to monitor and further evaluate in

- use sulfur levels and their impact on vehicle emissions. If it is warranted, we will reassess the sulfur cap level and the need for potential future regulatory action. Such ongoing evaluation will include analy ses of: in

- use fuel survey s; batch data that refineri es are required to submit; and the sulfur credit market. It will also include the evaluation of an y issues or concerns that might arise during implementation of the program. Finally , we will also carry out an ongoing evaluation of data s ubmitted by the vehicle manufacturers on the performance of their Tier 3 vehicles in

- use.
c. Downstream Sulfur Cap W ith regard to the downstream sulfur cap, w e believe that maintaining a 15 ppm differential between the refinery gate sulfur cap and the downs tream sulfur cap w ill provide pipeline operators, transmix processors, and gasoline additive users the same flexibility

as was provided under the Tier 2 program

. As was the case under the Tier 2 program, allowing a 15 ppm differential is needed to ensure adequate flexibility in accommodating gasoline produced from transmix, instances of contamination during distribution, and for the use of necessary (sulfur

- containing) additives. In rare circumstances when the sulfur contribution from all these sources are coincidently

at their maximum levels, a very limited number of batches of gasoline at the 95 ppm downstream sulfur cap may be present in the distribution sy stem. However, we expect that this will not have a substantial impact on the average sulfur content of in

- use gasoline. Comments received on this issue were generall y in support of maintaining the 15 ppm delta. Pipeline operators are currentl y allowed to blend limited volumes of transmix into gasoline in their sy stems provided that the resulting gaso line meets all

427 Alliance of Automobile Manufacturers (2011, October 6). Letter to EPA Administrator, Lisa Jackson.Page 325 of 529

fuel quality

specifications and the endpoint of the blended gasoline does not exceed 437 ° F. 428 This enables pipeline operators to avoid the installation of additional transmix storage and loading equipment at a number of remote locations to facilitate shipping small volumes of transmix to processing facilities by truck. Currently transmix processors must produce gasoline sufficientl y below the 95 ppm downstream sulfur cap to accommodate any downstream sulfur increases from the use of gasolin e additives and contamination from further distribution. The sulfur content of the gasoline produced b y transmix processors is determined by the sulfur content of the transmix they receive, which in turn is primarily a function of the sulfur content of g asoline and jet fuel components in the transmix. 429 Transmix processors do not handle sufficient volumes to support the installation of currentl y available desulfurization units. 430 d. Accounting for Ethanol Blending in the Determination of Compliance with Gas oline Sulfur Requirements In demonstrating compliance with the gasoline sulfur standards finalized today , gasoline refiners and importers may adjust the sulfur levels in the gasoline and blendstocks for ox yg enate blending (BOBs) that they produce/import to account for the downstream addition of ethanol. We proposed that the sulfur content of denatured fuel ethanol (DFE) used for downstream blending w ould be assumed to be 10 ppm in making such demonstrations of comp liance . Refiners commented that refin ers and importers should be allowed to either use the actual sulfur value of the DFE or conduct laboratory hand blends of a representative sample of DFE to determine the effect on the sulfur content of the blended fuel from the addition of DFE. We agree that refiners and importers should be allowed to use the actual sulfur content of DFE when a sulfur test result is available and when the refiner can demonstrate that the test result was derived from a representative sample of the DFE that was blended with the gasoline or BOB . The sulfur content of in

- use DFE will ty pically be lower than the 10 ppm sulfur cap finalized today

for DFE. We assumed that DFE would have an average sulfur content of 5 ppm in conducting the refinery anal ys is to support this rule. Therefore, today ’s final rule requir es that in determining their compliance with today ’s sulfur

428 The requirements for transmix blenders are containe d in 40 CFR 80.84(d). 437 °F is the maximum endpoint allowed for gasoline in ASTM D4814. 429 Transmix is a by

- product of the multi

- product pipeline distribution system. 40 CFR 80.84(a) defines transmix pipeline interface that does not meet the specificat ions for a fuel that can be used or sold, and that is composed solely of any combination of: previously certified gasoline (including previously certified gasoline blendstocks that become gasoline solely upon the addition of an oxygenate); distillate fuel; or gasoline blendstocks that are suitable for use as a blendstock without further processing. 430 Transmix processors produce ~0.1 percent of the gasoline consumed in the U.S.Page 326 of 529

s tandards, refiners and importers must either use the actual sulfur content of the DFE established through testing of the DFE actually blended or assume a 5 pp m sulfur content for the DFE added downstream . To prevent potential bias, a refiner or importer must choose to use only one method during each annual compliance period. 2. Requirements for Gasoline Additives Today ’s action finalizes the requirement that manufacturers of gasoline additives used downstream of the refinery at less than 1 volume percent must limit the sulfur contribution to the finished gasoline from the use of their additive to no more than 3 ppm when the additive is used at the maximum recomme nded treatment rate. The additive manufacturer will be required to maintain records of its additive production quality control activities which demonstrate that the sulfur content of additive production batches is such that when the additive is used at it s maximum recommended treatment rate it will add no more than 3 ppm to sulfur content of the finished gasoline

. We received comments in support of our proposed requirements (these comments can be found in the docket to this rulemaking, and are summarized in the Summary and Anal ys is of Comments document, which is also located in the docket). An environmental organization commented that the sulfur contribution from additives can have a material effect on emissions performance given the level of vehicle emis sions control that is being finalized today . We also received comments from gasoline additive manufactures were in favor of the proposed controls. The requirements finalized today are designed to prevent the potential dumping of high sulfur materials into gasoline under the guise of the a ddition of gasoline additives. We continue to believe that all current gasoline additives contribute less than 3 ppm to the sulfur content of the finished fuel when used at the maxi mum recommended treatment rate (with 3 ppm being the extreme). N ormal additive production quality control practices already have had to consider the sulfur contribution of the additive to finished gasoline as a result of the Tier 2 gasoline sulfur requirements

. The maximum recommended treatm ent rate is already stated on product transfer document or packaging for the additive. Additive manufacturers are to retain production quality control r ecords for 5 years and make these available to EPA upon request. Therefore, the requirements finalized today will not constrain the use of genuine gasoline additives or result in significant additional costs to gasoline additive manufacturers. Parties that introduce additives to gasoline at over 1.0 volume percent are required to satisfy all of the obligations of a refiner and fuel manufacturer including demonstration that the finished blend meets the ap plicable sulfur specification. We also received comments from an environmental organization requesting that EPA promulgate limits on the combined sulfur co ntribution for all additives blended into a batch of gasoline in addition to controlling the sulfur contributionPage 327 of 529

from individual additives. We believe that such additional controls are not necessary , would add an unwarranted additional compliance burden, and could interfere with the use of necessary downstream additives. Certain additives that provide critical fuel performance characteristics (e.g., c orrosion control, demulsifiers) contain sulfur

- containing compounds as an essential functional component. Such additives are used to remedy specific instances of gasoline quality problems, and their treatment rate is governed by the desire to limit the added cost from their use. **D. Averaging, Banking, and Trading Program**  In today ’s rule , we are finalizing an AB T program that will reduce the compliance cost s and promote the feasibility of the Tier 3 gasoline sulfur program , because it will allow refiners and importers to choose the most economical compliance strategy

( i.e., investment in technology, credits, or b oth) to meet the 10 ppm average sulfur standard. In response to comments received on our proposal, we have simplified and added flexibility to the ABT program. The ABT program allows refiners and importers to continue to generate credits for overcomplian ce with the current Tier 2 30 ppm average gasoline sulfur standard through 2016, and the new 10 ppm average standard beginning in 2017. (Small refiners and small volume refineries have a January 1, 2020 compliance date, as described below.) These credits can be used for compliance with either the Tier 2 standard through 2016 or the Tier 3 standard beginning in 2017. Credits can also be banked for future use or transferred to other refinerie s for compliance with the average sulfur standard. In addition, we are allowing refiners and importers to also use any valid credits banked from 2012 and 2013 under the Tier 2 program toward compliance with either the Tier 2 or Tier 3 sulfur programs

. We believe these provisions will provide a seamless transition from Tier 2 to the Tier 3 program. 1. How W ill the ABT Program Assist with Compliance? T he Tier 3 ABT program allows refiners and importers the flexibility to: 1) have varying gasoline sulfur levels for their batches of fuel as long as they meet the 10 ppm average over the course of the ye ar; 2) use credits generated at one of its refineries to offset higher sulfur gasoline produced at another of its refineries; 3) bank generated credits for future use; and 4) participate in trading (via buying and/or selling ) of credits from another refiner to help lower costs. The ABT program allows for the generation of credits by refiner s and importers for over

compliance with the 10 ppm sulfur standard (on a refinery /facility basis) , and for the transfer of these credits to other refiner s (for use a refinery) to reduce or eliminate their need to make cap ital investments to meet the 10 ppm standard. The ABT program w ill provide refiners and importers with multiple approaches to compliance, and each c an choose the approach that best minimizes their costs.Page 328 of 529 2. ABT Modeling For the proposed rule, we modeled the effects of an ABT program on refinery compliance

. O ur modeling determined the lowest cost approach on a refinery

- by

- refinery

basis under two scenarios: the first, in whic h every refinery has the opportunity

to make credit transfers with every other refinery

in the nation, and a more limited scenario in which credit transfers would only occur within companies that own more than one refinery

. In developing today ’s final program, we also analyzed the Tier 2 credit market and found that, currentl y, Tier 2 sulfur credits are both transferred within companies (intra

- company) and traded between companies ( inter

- compan y). As discussed in Chapter 4.3 of the RIA, in 2012 approximate ly 56% of the Tier 2 credit transactions were inter

- company trades. The remaining 44% were intra

- company trades. This anal ys is shows that there is a functioning, well

- established gasoline sulfur credit trading market. There does not appear to be an y hin drance to credit trading currently

or in the future. W e anticipate that a significant number of refineries w ill take advantage of the opportunity to generate or use credits, thus lowering their compliance burden for the Tier 3 program. For a more complet e discussion of our anal ys is of credit trading and the associated cost impacts of the ABT program, refer to Chapter 4. 3 of the RIA. 3. Eligibility Consistent with our proposal, under today ’s final program, s ulfur credits may be generated by

both U.S. refine rs and importers of gasoline into the U.S. only for gasoline that is subject to the sulfur requirements as described in the regulations at §80.1603. This excludes gasoline produced or imported for use in California (“California gasoline”) and gasoline des ignated for export , but includes gasoline produced b y California refineries for use outside the state. We sought comment in the proposed rule on whether or not to include California. All comments received on this issue were against the inclusion of such gasoline in the ABT program, largel y because it would cause additional burden but provide no appreciable credits to the market to justify

the additional compliance burden (such as batch reporting). We agree with these comments, and are finalizing the prov ision that California gasoline and gasoline for export will not be included in the ABT program. In order to exclude exported gasoline and California gasoline, refiners must keep records to demonstrate that the excluded gasoline was designated for export o r as California gasoline, and was actually exported or used in California. While under existing fuel programs (e.g., MSAT2), we precluded importers from generating “ earl y” credits (credits generated before a program start date), we are allowing importers t o generate earl y credits in the Tier 3 ABT program, consistent with our proposal. Importers were previously precluded from generating earl y credits because they generall y did not need additional lead time to complyPage 329 of 529

with our fuel standards (as they most li kely would not be investing in new refining technologies ) and we also thought it would be difficult for them to establish representative baselines from which early credits could be generated. However, earl y credit baselines are not a part of the Tier 3 pr ogram , as discussed above . In addition, commenters noted that while importers may not necessarily

have to take actions to desulfurize fuel like domestic refiners do, these parties may have to pay premiums on obtaining lower sulfur fuel, thus their efforts to provide lower sulfur fuel should also be able to generate earl y credits. Thus, we are finalizing provisions allow ing importers to generate earl y credits for sending over

- compliant gasoline to the United States prior to January 1, 2017

. We proposed t o limit credit generation to refiners and importers. Under the Tier 2 gasoline program, we allow refiners who produce gasoline b y combining blendstocks together or adding blendstocks to previously certified gasoline (refiner

blenders) to participate in th e in the sulfur ABT program, but do not allow butane blenders who compl y with the reduced sampling, testing, and reporting requirements to participate in the sulfur ABT program. 431 We are extending these provisions to butane and pentane blenders under the Tier 3 program. 432 Under today ’s rule, an y refiner who uses the reduced sampling, testing, and reporting provisions for blending butane or pentane into gasoline will not be allowed to generate credits. Refiner

- blenders who comply with the full suite of sampling, testing, and reporting requirements will, however, be allowed to generate credits. We received several comments from ethanol producers and Growth Energy (representing ethanol producers), who commented that DFE should be subject to an annual average sulfur standard and that ethanol producers should be able to participate in the ABT program that is available to refiners and importers of gasoline. These commenters stated that preventing them from participating in the ABT program would provide refiners with pathway s to allow delayed adop tion of cleaner fuel standards at their expense. Some ethanol producers commented that they should be allowed to participate in the ABT program as a means of offsetting the additional cost of the proposed per

- batch sulfur testing and reporting requirements. We also received comments from refiners stating that c redit generation should be permitted only for refiners and importers

. As in existing EPA fuel programs, we continue to believe that it is not appropriate expand the ABT provisions to cover ethanol producers and oxygenate blenders for several reasons. First, expanding the ABT program beyond refiners and importers could greatly increase the number of parties participating thereb y potentially

complicating EPA compli ance assurance activities while having little

431 The provisions for butane blenders are located in 40 CFR 80.82. 432 See Section V .I. for a discussion of the requirements for pentane blenders.Page 330 of 529

overall impact on the sulfur credit pool. Second, the current ABT program under the Tier 2 gasoline sulfur program, which is limited to gasoline refiners and importers, has functioned effectivel y with few comp liance irregularities. Third, e xperience with the unleaded gasoline program suggests widespread abuse and fraud when credits have been allowed to be generated or sold by parties other than refiners or importers subject to the regulations

. Fourth, it woul d require a considerabl y more complicated compliance structure, including the application of all refiner responsibilities to ethanol producers and blenders. Fifth, there is no need for DFE producers to generate credits in order to recoup the value for any lower sulfur content of their product. The value of any lower sulfur content will be reflected in the market price of DFE, similar to the octane value to refiners. Sixth, the sulfur ABT provisions were included to ease the burden of compliance for refin ers who have to make capital changes to their facilities to meet today ’s more stringent sulfur standards. In addition to reducing the cost of today ’s gasoline sulfur program, the ABT provisions allow for an earlier effective date of the sulfur standards than would otherwise be possible. Such considerations are not applicable to ethanol producers since capital expenditures for desulfurization equipment or other equipment will not be needed at their facilities to comply with the sulfur standards finalized t oday. 433 Finally , o vercompliance with the per

- gallon sulfur cap for DFE is not a valid basis for credit generation . We expect that in all cases , the DFE sulfur level w ill be below the cap. To allow credit generation for these parties , we would need to se t an additional annual average sulfur standard for DFE at some level below 10 ppm and allow credits to be generated for overcompliance with that standard. Accordingl y, we do not believe it is appropriate to allow ethanol producers or blenders to generate sulfur credits under the Tier 3 gasoline sulfur program , and as such, we are not finalizing such a provision

. The Tier 3 rule prohibits any

person downstream of the refinery or importer that produced or imported gasoline, CBOB, or RBOB who adds oxygenate to such product from including the volume and sulfur content of the ox ygenate in an y compliance calculations for credit generation. 4. Credit Generation and Use Under the Tier 3 ABT program, the credit generation provisions are nearly the same as those under the Tier 2 program

. In essence, the Tier 2 program simply continues with a lower standard below which credits are generated. Refiners and importers are allowed to average within and across companies to meet the standard in the most cost

- effective manner possible , including generating and using credits

. For Tier 3, refiners and importers can generate credits for overcomplying with the 10 ppm standard on a volume

- weighted annual average basis beginning January 1, 2017. C redit generation periods remain 12 months long and continue to be

433 The requirements for ethanol producers finalized today are discussed in Section V.G.4.Page 331 of 529

sy nchronized with annual compliance demonstration periods. The final Tier 3 ABT program provisions for approved small refiner s and small volume refineries are discussed below in Section V.D. 6. Consistent with our proposal, and t o encourage early gasoline desulfurization and give the refining industry flexibility

to stagger their investments over time, we are also finalizing provisions to allow refiners and importers to generate credits prior to January 1, 2017 (i.e., early

cr edits). We proposed an earl y credit program for overcompl iance with the current Tier 2 30 ppm gasoline sulfur standard from January 1, 2014 through December 31, 2016 . These earl y credits were proposed to have a credit life of three ye ars, and could be use d through December 31, 2019

. We also proposed that r efiners and importers who generated earl y credits would then have to designate them at the end of the compliance ye ar as either Tier 2 credits or Tier 3 early credits, and the credits would have to be us ed in accordance with the designation. We received several comments on our earl y credit provisions. Some commenters stated that the requirement to designate credits as either Tier 2 or Tier 3 would not provide refiners and importers the intended amount of flexibility , as they may not necessarily

be able to predict if they

will need to use those early credits for either Tier 2 or Tier 3 compliance. Further, commenters were concerned that if more refiners than anticipated opt to bank the credits for possibl e future use at their own refineries, it could result in less credits being made available to the market. We also received comments both in support of and against the proposed three

- ye ar credit life. Some commenters stated that they believed that all cre dits should have a five

- year life to provide maximum flexibility and more certainty

on the availability

of credits; while other commenters supported the three

- ye ar credit life limit, because it would coincide with the end of the small refiner/small refinery provisions thus providing more certainty of the benefits of the Tier 3 program. Finally , while not proposed, we received many comments requesting that EPA clarify what would become of “banked” Tier 2 credits (Tier 2 credits generated in 2012 and/or 2013 that were not used before the end of their five

- ye ar credit life and would have expired when the Tier 3 program began, under the terms of the proposed ABT program). Commenters further stated that these credits should not expire, but rather should be allo wed to receive their full five

- ye ar credit life, as they represent actual reductions in refinery sulfur levels. As discussed above, we are finalizing a more flexible approach to the ABT program than what we proposed. We believe this will provide for a mor e seamless transition from the Tier 2 to the Tier 3 credit programs and more certainty on credit availability

. Consistent with our proposal, refiners and importers may begin generating earl y credits on January 1, 2014, and continue through December 31, 201 6. ThesePage 332 of 529

credits will be generated on an annual average basi s, from a demonstration that the refiner or importer’s annual average gasoline sulfur level is below the current Tier 2 30 ppm annual average sulfur standard. We believe this simple early credi t approach is possible because U.S. gasoline was averaging around 30 ppm as we started developing the Tier 3 program, based on compliance data. Since refiners and importers would need to continue to comply with the existing Tier 2 sulfur standards during the early credit period , absent Tier 3, they would need to maintain this level of performance on an industry average basis. Accordingl y, an y additional gasoline sulfur reductions beyond 30 ppm will be attributed to the proposed Tier 3 program. In respon se to comments received, we are not requiring that credits be designated as either Tier 2 or Tier 3 and onl y used for the program for which they were designated. Refiners and importers may use earl y credits either for ongoing compliance with the Tier 2 program, or bank them for future compliance with the Tier 3 program (within the limits of the credit life restrictions). Essentially , the Tier 2 credit generation provisions simply continue, and any

banked credits generated in 2014 through 2016 that were no t used for compliance with the Tier 2 standards would be carried over for use in complying with Tier 3. We believe that this will allow for more certainty

of credit availability

before refiners must make their Tier 3 investment decisions, thus reducing th e cost of the program. It will also avoid any incentive for refiners to use up banked Tier 2 credits prior to 2017 causing increased in

- use sulfur levels and emissions. Based on our analy sis of the Tier 2 credit market for 2012, we believe that there will be a balance of 2012 banked credits equivalent to approximately two months of compliance, and we anticipate a similar amount (perhaps more) for 2013. Although we did not propose to allow for banked 2012 and 2013 Tier 2 credits to be used for compliance w ith the Tier 3 program, we are finalizing this provision for a number of reasons. First, the Tier 2 banked credits represent real reductions

— refiners and importers are currently generating these credits for overcompliance with the Tier 2 gasoline sulfur s tandard. Second, allowing these banked credits to receive their full five

- year credit life will provide more assurance of the credit availability

for trading for those who need them to comply with Tier 3 without a large capital investment. As previously explained, this will allow for more certainty of credits available far before making Tier 3 investment decisions, thus reducing the cost of the program. A lack of certainty in the credit trading market could lead to refiners banking more credits than usua l for their own use rather than allowing these credits to be available in the market for trading. As shown in Chapter 4.3 of the RIA, refiners tend to hold credits as an insurance policy until they

approach the end of their credit life. If credit

- generat ing refiners continue with this approach, credits generated in 2012 and 2013 will likely be available for purchase in 2017 and 2018 for those refiners that may want to rel y on them for compliance (along with additional earl y credits generated in 2014 throu gh 2016). Finall y, as we anticipate that these credits will be equal to about four months of compliance, the allowancePage 333 of 529

of 2012 and 2013 banked Tier 2 credits makes for a more flexible program by effectivel y allowing for a small amount of additional lead t ime without adversel y affecting the overall benefits of the Tier 3 program. As discussed previously , this will avoid any

incentive for refiners to use up banked Tier 2 credits prior to 2017 causing increased in

- use sulfur levels and emissions. We believe these provisions will allow the Tier 3 program to begin on January 1, 2017, with more certainty regarding the availability of credits for those refiners needing (or choosing) to defer investment to better align with their existing turnaround/shutdown sched ules. All credits generated before January 1, 2017 will be valid for five ye ars or until December 31, 2019, whichever is earlier

— no earl y credits may

be used for compliance beginning January 1, 2020. Thus, banked Tier 2 credits generated in 2012 and 2013 will receive their full five

- ye ar life and will not expire at the start of the Tier 3 program. However, credits generated in 2015 and 2016 that are unused as of December 31, 2019 will expire and become invalid. We believe that structuring the early

credi t program this way

will offer considerable flexibility to refiners phasing in Tier 3 gasoline sulfur controls , while still placing a date at which point the intended sulfur program will be full y implemented and enforceable

— January 1, 2020 (the same date sm all refiners and small refineries must begin complying with the 10 ppm sulfur standard)

. This will also provide a date certain to give auto manufacturers greater confidence for the design of their vehicles that all vehicles in

- use are running on 10 ppm av erage fuel. Otherwise, it is possible that the greater ease of generating early credits relative to 30 ppm sulfur (as opposed to 10 ppm in 2017 and beyond) w ould allow higher sulfur levels to continue well beyond 2019. Consistent with our proposal, all cr edits generated beginning January 1, 2017 will be for overcompliance with the Tier 3 10 ppm annual average sulfur standard, and will have a five

- ye ar credit life. We believe five ye ar s will gi ve refiners and importers sufficient time to use credits generated in previous years while still placing limitations on credit life to help with enforcement. Five years is consistent with the Tier 2 ABT program, as well as the current credit life and recordkeeping provisions for other 40 CFR part 80 fuels programs, and coincides with the applicable statute of limitations for violations by parties who generate invalid credits

. C redits must be used within five years from the year they were generated (regardl ess of when/if they are traded), otherwise they will expire an d become invalid. For example, credits generated in 2017 can be applied towards 2018

- 2022 compliance, as well as 2017 compliance. After March 31 , 2023 (when reports for the 2022 annual compliance period will be due) , credits generated in 2017 will expire and become invalid. Similarly , credits generated in 2018 can be applied towards 2019

- 2023 compliance, as well as 2018 compliance. After March 31 , 2024, credits generated in 2018 expire, and so on and so forth.Page 334 of 529 5. Credit Trading Provisions We are also final izing provisions for credit trading in Tier 3 that are identical to those under the current Tier 2 program. As in that program, i t is possible that sulfur credits could be generated b y one part y, subsequently transferred or used in good faith by another, and later found to have been calculated or created improperly

or otherwise determined to be invalid. As in the current Tier 2 program as well as other 40 CFR part 80 fuel programs, i f this occurs, we are requiring that both the seller and purchaser will h ave to adjust their sulfur calculations to reflect the proper credits and either party (or both) could be determined to be in violation of the standards and other requirements if the adjusted calculations demonstrate noncompliance with the 10 ppm standard. S ulfur credits must be transferred directl y from the refiner or importer generating them to the party using them for compliance purposes. This ensures that the parties purchasing them are better able to assess the likelihood that the credits are valid. A s proposed, we are also finalizing an exception for the case where a credit generator transfers credits to a refiner or importer who inadvertentl y cannot use all the credits. In this case, the credits c an be transferred a second time to another refiner o r importer. After the second trade, the credits must be used or they will expire . Allowing a maximum of two trades is consistent with other recent fuel programs and we believe it is sufficiently flexible while still preserving adequate means for enforcem ent. While some commenters stated that they believe the two

trade maximum is not necessary given the fact that credits are onl y being traded within a small part of industry , we believe that unlimited trading could result in an unenforceable program and po tentially lead to problems with invalid credit trading. Given the widespread use of credit trading between different companies under the Tier 2 program despite this provision, there appears to already be sufficient flexibility in the program. We received comments requesting that we clarify that intra

- compan y trading will continue to be unlimited as it is in the existing Tier 2 ABT program. Intra

- company trading will in fact remain unlimited, and we have added language to the final Tier 3 regulations to c larify this. There are currently

no prohibitions against brokers facilitating the transfer of credits from one party to another. An y person can act as a credit broker, regardless of whether such person is a refiner or importer, as long as the title to the credits is transferred directly from the generating refiner or importer to the using refiner or importer. This prohibition on outside parties taking ownership of credits was promulgated in response to problems encountered during implementation of the unl eaded gasoline program , and has since been extended to subsequent fuels rulemakings. We continue to believe that m aintaining this prohibition will allow for maximum program enforceability and consistency

with all of our other ABT programs for mobile sourc es and their fuels.Page 335 of 529 6. ABT Provisions for Small Refiners and Small Volume Refineries Consistent with our proposal, approved small refiners and small volume refineries must comply

with the 10 ppm annual average standard by January 1, 2020 , which allows for an additional three ye ars for compliance . This is the primary form of relief offered to small refiners and small volume refineries under the Tier 3 gasoline sulfur program (discussed further in Section V.E, below)

. Approved small refiners and small volume refineries may continue to generate credits for overcompl yi ng with the 30 ppm Tier 2 standard before January 1, 2020. Prior to January

1, 2017, c redits generated b y small refiners and small volume refineries can be traded/sold to non

- small refiners for u se b y December 31, 2019, and the credit revenues could be used to help offset their Tier 3 investments. When the Tier 3 program begins on January 1, 2017, small refiners and small volume refineries may continue to generate credits for overcompliance with the 30 ppm sulfur standard (as they will still be subject to the Tier 2 standards through December 1, 2019), or they may generate credits for overcompliance with the Tier 3 10 ppm sulfur standard. We are finalizing that small refiners and small volume refi neries must designate their credits as being generated for either the Tier 2 or Tier 3 ABT program, as proposed. Credits designated and generated as Tier 2 credits may

onl y be traded with other small refiners and small volume refineries (and these credits may

only be used for compliance through December 31, 2019). However, credits designated and generated as Tier 3 credits may be traded with non - small refiners as well. Additionally , from January 1, 2017 through December 31, 2019, if a small refiner’s annual average sulfur level is below 10 ppm, they may elect to split the designation and generation of credits between both the 10 ppm and 30 ppm standards (without double

- counting). For example, in 2017, a small refiner with an annual gasoline sulfur averag e of 8 ppm could generate 20 ppm

- volume Tier 2 credits (30 ppm

- 10 ppm) that could be used by other small refiners and small volume refineries, or banked by the refinery

for future Tier 2 compliance. This small refiner would also generate 2 ppm

- volume Tier 3 credits (10 ppm

- 8 ppm) that could be sold to refiners and importers subject to Tier 3, or banked b y the refiner for future Tier 3 compliance. 7. Deficit Carry forward Under the final Tier 3 sulfur program, we are finalizing deficit carryforward provisions similar to the existing Tier 2 program, whereb y an individual refinery that does not meet the 10 ppm standard in a given year may carry a credit deficit forward for 1 ye ar. Under this deficit carryforward allowance, the refinery will have to make up the c redit deficit and come into compliance with the Tier 3 sulfur standard the next calendar year. We received comments expressing concern that it will be more challenging for refineries to make up their credit deficit in one year with a 10 ppm sulfur standard, and requesting that the deficit carryforward allowance be extended to two or three ye ars. We disagree with these commentsPage 336 of 529

primarily because of concerns with the enforceability of allowing for a deficit beyond one year. In addition, we believe that an extended deficit carryforward will further delay

Tier 3 sulfur reductions. While we acknowledge that there might be an increased hurdle for some refiners to make up their own credit shortfall, we believe the ABT program provides ample opportunity to pur chase credits from others. However, in recognition of unanticipated circumstances, such as where credits are unavailable or are prohibitivel y expensive such that the refiner could not make up the deficit in one year, the Tier 3 hardship provisions provide EPA with the authority

to allow for extended deficit carryforward, if a refiner’s hardship petition demonstrates that it meets the criteria. Thus, we are finalizing that a refiner could carry

a deficit forward for up to 3 ye ars onl y in cases of hardship situations, as described below in Section V.E.2. **E. Additional Program Flexibilities**  1. Regulatory

Flexibility

Provisions
a. Small Business Regulatory Flexibility

Provisions W e are finalizing several regulatory flexibility provisions for small entities in the fuels industry

to reduce the burden that the Tier 3 program could have on them. As in previous fuel rulemakings, our justification for including provisions specific to small businesses is that these entities generall y have a greater degree of difficulty in compl yi ng with the standards compared to other entities. In developing the Tier 3 gasoline sulfur program, we evaluated the environmental need as well as the technical and financial ability of refiners and others in the fuel industry to meet the sulfur standards as expeditiously as possible. We believe it is necessary and feasible for the vast majority of the program to be implemented in the established time frame to achieve the air quality benefits as soon as possible. Based on information available from sm all refiners and others (as discussed further in the Regulatory Flexibility

Analy sis description in Section XII.C) , we believe that the category of entities classified as small generally face unique circumstances with regard to compliance with environmental programs, compared to larger entities. Thus, as discussed below, we are finalizing several regulatory

flexibility

provisions for small refiners to reduce the burden that the Tier 3 program could have on them. Small entities as a category generally lack the resources that are available to larger companies to raise capital for investing in a new regulatory program, such as shifting of internal funds, securing of financing, or selling of assets. Small entities are also likel y to have more difficult y in competing for any needed engineering and construction resources. This is because the magnitude of their projects tends to be both smaller and less profitable for the contracted firms. As such, we are including provisions in today ’s rule that would provide a ssistance for small entities in meetingPage 337 of 529

the 10 ppm sulfur standards. This proposed approach would allow the overall program to begin as earl y as possible; achieving the air quality benefits of the program as soon as possible, while helping to ensure that small entities have adequate time to raise capital for new fuel desulfurization equipment or to make any other needed changes. We also believe that small business regulatory flexibilities c an provide these entities with additional help and/or time to accumulate capital internally or to secure capital financing from lenders, and could spread out the availability

of any needed engineering and construction resources in a manner that they are available by

the time they

are needed

. i. Delayed Standards for Small R efiners We are finalizing a compliance date of January 1, 2020 for small refiners, allowing small refiners to postpone compliance with the Tier 3 program for up to three ye ars. Small refiners will have from January 1, 2017 through December 31, 2019 to continue production of gasoline with an average sulfur level of 30 ppm (per the Tier 2 gasoline sulfur program). This delayed compliance schedule for small refiners is not intended as an opportunity for those refiners to increase their production of gasoline with sulfur levels greater than 10 ppm , but rather w ill help small refiners with compliance with the program. Since the compliance costs for their competitors may rise during these three years and since their gasoline will be sold into the same fungible market, this delay will not only provide them more lead time, but also financial support towards later compliance. Compliance with the 10 ppm annual average sulfur standard will begin on January 1, 2020 for small refiners

. Further, as discussed in greate r detail in Section V.D.5, a small refiner would be allowed to continue using Tier 2 gasoline sulfur credits through December 31, 2019 to meet their refinery average 30 ppm sulfur standard. ii. Refinery Gate and Downstream Caps During the Small Business Regulatory Enforcement Fairness Act (SBREFA) Panel process, small refiners raised the concern that a refinery gate cap of 20 ppm could cause problems during a refinery turnaround or an upset because a cap of this level could result in a refiner not being able to produce saleable gasoline. The Panel likewise had concerns that a downstream cap of 25 ppm may cause problems for small downstream entities such as transmix processors and gasoline additive manufacturers. They stated it would not be feasible for transmi x processors to install desulfurization equipment to produce gasoline that meets a 25 ppm sulfur cap. They

also stated that such a low sulfur cap could preclude certain necessary gasoline additives from the market whose activity depends on sulfur containi ng components. Thus, the Panel recommended that EPA assess and request comment on retaining the current Tier 2 refinery gate and downstream caps of 80 and 95 ppm, respectively , to help provide maximum flexibility and avoid sy stem upsets for the entire re fining and distribution sy stem. Further, the Small Business Administration (SBA) and Office of Management and Budget (OMB)Page 338 of 529

Panel members recommended that EPA propose retaining the 80 ppm and 95 ppm caps. The Panel also recommended that, if EPA were to propose caps lower than 80 and 95 ppm, the Agency

request comment on additional refinery gate and downstream caps that are above 20/25 ppm but below 80/95 ppm. As discussed above , we proposed options to maintain the current 80/95 ppm caps or to lower them t o 50/65 ppm and sought comment on a refinery gate cap of 20 ppm with a downstream cap of 25 ppm. We are retaining the current 80/95 ppm per

- gallon sulfur caps in today ’s final rule . For more information on today ’s final per - gallon sulfur cap provisions and related comments , refer to Section V. C of this preamble and Chapter 5 of the Summary and Anal ys is of Comments document

.

b. Small Volume Refinery Provisions Consistent with our proposal, we are finalizing a compliance date of January 1, 2020 for small volume refineries. Approved small volume refineries will receive a three

- year delay (January 1, 2017 through December 31, 2019) in meeting the 10 ppm average gasoline sulfur standard, similar to the small refiner delay

. During the development of the Tier 3 r ulemaking and throughout the SBREFA process, it became evident that some refineries may experience higher compliance costs on a per - gallon basis than other refineries, and in some cases considerabl y higher. These are refineries owned b y a refiner/compan y that would not meet the SBA definition of a small business. In an oversupplied gasoline market, these refineries may have difficulty justifying capital investments to comply with new standard s . In recognition of this concern under the RFS program, Congre ss granted all refineries with a crude oil throughput of less than or equal to 75,000 barrels per calendar day (bpcd) additional time to comply

. Consistent with this allowance , we are including delayed Tier 3 sulfur standards for approved small volume ref ineries. Overall, we believe that these small refineries are disproportionally impacted when it comes to their cost of compliance and ability to rationalize the investment costs in today ’s gasoline market. Giving these refineries additional lead time wil l allow more time to invest in desulfurization technology , take advantage of advancements in technology , develop confidence in a Tier 3 credit market as a means of compliance, and avoid competition for capital, engineering, and construction resources with the larger refineries. Credit generation opportunities for approved small volume refineries are identical to those for small refiners , as described above in Section V.D

. A refiner must apply and be approved for small volume refinery status. We are fina lizing a small volume refinery net crude throughput of less than or equal to 75,000 bpcd, based on the highest crude throughput for the 2012 calendar year. We received comment suggesting that a higher crude throughput (e.g., 90,000 bpcd) would be more app ropriate , as the refining industry has changed since Congress set the 75,000 bpcd throughput limit for small refineries in the RFS program

. InPage 339 of 529

anal yz ing various crude throughput maximums between 75,000 and 90,000 bpcd, we do not believe it is appropriate or necessary to increase the threshold beyond what was previously

set by Congress. The 75,000 bpcd limit set by Congress was to recognize those refineries that would have difficulty with compliance with a rulemaking (from both a cost and feasibility standpoint), raising this limit would go beyond Congress’ intent. 2. Provisions for Refiners Facing Hardship Situations W e are finalizing hardship provisions that are intended to accommodate a refiner’s inability

to comply

with the 10 ppm sulfur standard at the st art of the Tier 3 program, and to deal with unforeseen circumstances that may occur at any

point during the program. These provisions , which are similar to those in existing fuels programs, are available to all refiners, small and non

- small, though relief will be granted on a case

- by

- case basis following a showing of certain requirements; primarily that compliance through the use of credits is not feasible. Any hardship waiver granted will not be a total waiver of compliance; rather, a hardship waiver wil l consist of short

- term relief that will allow a refiner facing a hardship situation to, for example, receive additional time to comply . EPA will determine appropriate hardship relief based on the nature and degree of the hardship, as presented by the ref iner in its hardship application, and on our assessment of the credit market at that time

. Further, as discussed above in Section V.D.7, hardship waivers could grant relief in the form of additional deficit carryforward for up to three ye ars, depending o n the level of hardship and the status of the credit market. A detailed description of the requirements for applying for a hardship waiver is located in the regulations at 40 CFR 80.1625. We do not anticipate a great need for hardship relief, given the fl exibilities offered as part of the Tier 3 program and an expected robust credit trading market. Nevertheless, we are finalizing hardship provisions in this action as a failsafe for unforeseen circumstances, or should credits become scarce or prohibitively expensive.
a. Temporary

Waivers Based on Unforeseen Circumstances We are finalizing a provision to allow for temporary waivers based on unforeseen circumstances. EPA would, at our discretion, permit a refiner to seek a temporary

waiver from the Tier 3 sulfur standards under certain rare circumstances. This waiver provision is intended to provide refiners relief in unanticipated circumstances

- such as a refinery fire or a natural disaster (i.e., force majeure )

- that cannot be reasonabl y foreseen now or in the near future. Under this provision, a refiner c an seek a hardship waiver for relief if it c an demonstrate that the magnitude of the impact i s so severe as to require such an extension. A refiner would need to show that: (1) the waiver is in the public interest; (2) the nonconformity is unavoidable; (3) it will meet the proposed Tier 3 standards asPage 340 of 529

expeditiously

as possible; (4) it will make up the air quality detriment associated with the nonconforming gasoline, where practicable; and (5) it will pay t o the U.S. Treasury an amount equal to the economic benefit of the nonconformity less the amount expended to make up the air quality detriment. These conditions are similar to those in existing fuels regulations, and are necessary and appropriate to ensur e that any waivers granted would be limited in scope. S uch a request will be based on the refiner’s inability to produce compliant gasoline at the affected facility due to extreme and unusual circumstances outside the refiner’s control that could not have been avoided through the exercise of due diligence. The hardship request will also need to show that other avenues for mitigating the problem, such as the purchase of credits toward compliance under the ABT program provisions, have been pursued and yet wer e insufficient or unavailable. In light of other flexibilities , including the ABT program, we expect that the need for such requests will be rare. b. Temporary

Waivers Based on Extreme Hardship Circumstances In addition to the provision for short

- term relief in extreme unforeseen circumstances, we are also finalizing a hardship provision where a refiner may receive a hardship waiver based on severe economic or phy sical lead time limitations of the refinery to compl y with the Tier 3 standards at the start of the program. A refiner seeking such hardship relief under this provision must demonstrate that these criteria were met. In addition to showing that unusual circumstances exist that impose extreme hardship in meeting the Tier 3 standards, the refi ner will need to show that: (1) it has made best efforts to compl y, including through the purchase of credits; (2) the relief granted under this provision is in the public interest; (3) the environmental impact is acceptable; and (4) it has active plans to meet the requirements as expeditiously as possible. We expect that hardship relief requests under this provision will mostly be applicable at the beginning of the Tier 3 program, when refiners are making their investments to comply . If hardship relief under these circumstances is approved, we expect to impose appropriate conditions to ensure that the refiner is making best efforts to achieve compliance offsetting an y loss of emission control from the program. We believe that providing short

- term relief to those refiners that need additional time due to hardship circumstances will help to facilitate the adoption of the overall Tier 3 program for the majority of the industry . However, we do not intend for hardship waiver provisions to encourage refiners to delay planning and investments they

would otherwise make. Again, because of the flexibilities of the overall Tier 3 program, especially the ABT program, we expect the need for additional relief to be rare.Page 341 of 529

**F. Compliance Provisions**  This section describes the compliance provisions of today ’s program. For the most part, the Tier 3 sulfur standards simply reflect a lowering of the current Tier 2 sulfur standards. Thus, we are retain ing most of the same compliance provisions as the current Tier 2 program, with exceptions as noted. However, we also propos ed and sought comment on several fuel program regulatory streamlining measures, including a broader program redesign to streamline the reformulated gasoline and anti

- dumping regulations. 434 As discussed below, s ome of these streamlining measures will also impact the Tier 3 sulfur compliance provisions. 1. Registration, Reporting, and Recordkeeping Requirements Registration, recordkeeping, and reporting are necessary to track compliance with the Tier 3 standards and the ABT program.
a. Registration Requirements R efiners, importers, and anyone acting as a refiner (e.g., a terminal with blending or other refining operations) who expects to produce or import gasoline must register each of its facilities with EPA by Jun e 1, 2016, or six months prior to producing gasoline meeting the Tier 3 standards and/or participating in the credit program. Manufacturers of denaturants that are designated as suitable for use in the manufacture of DFE that meets federal requirements mu st also register each of their facilities with EPA by

June 1, 2016, or six months pri or to producing denaturant that is so designated. 435 Manufacturers of pentane designated as suitable for use by blenders into previousl y certified gasoline (PCG) subject to the Tier 2 program must register each of their facilities with EPA prior to manufacturing pentane for such downstream blending. 436 Manufacturers of pentane for use b y blenders of pentane into PCG subject to the Tier 3 program must register each of their fa cilities with EPA by

June 1, 2016, or six months pri or to producing such pentane. After the Tier 3 program begins on January 1, 2017, an y non - registered parties must register at least three months prior to producing gasoline , participating in the credit m arket , producing denaturant designated as suitable for use in the manufacture of DFE that meets federal requirements, or producing pentane for downstream blending into PCG under the Tier 3 program. Consistent with the existing registration

434 For more information on Part 80 regulatory streamlining options, refer to Section VI. 435 As discussed i n section V.I. of this preamble, the use of denaturants that are so designated enables DFE manufacturers to use streamlined provisions to demonstrate compliance with the Tier 3 sulfur requirements for DFE. 436 The provisions for downstream blending of pentan e into gasoline described in section VI.A.3. will become effective 60 days after the publication of this rule and may be used for gasoline subject to the Tier 2 program requirements as well as gasoline subject to the Tier 3 program requirements.Page 342 of 529

requirements fo r butane blenders, pentane blenders must comply with the fuel registration requirements under the fuel and fuel additives registration program of 40 CFR part 79. Most refiners, importers, and ethanol producers and some ethanol denaturant manufacturers are currentl y registered with EPA under other 40 CFR part 80 fuels programs. All manufacturers of gasoline additives for use in highway vehicles are already required to be registered with EPA under 40 CFR part 79 fuel and fuel additives program. Parties who are already registered do not have to register again. T he same basic forms currentl y being used for existing fuels programs will be used for Tier 3 registration . These forms are well known in the regulated community

and are simple to fill out. Upon receipt of a completed registration form, EPA will issue a unique 4

- digit compan y identification number and a unique 5

- digit facility

identification number. As with existing fuels programs, these numbers will be required for all reports sent to EPA and for PTD s. Registrations do not expire and do not have to be renewed; however, registered parties are responsible for notifying us of any change to their company or facility information. An entity ’s registration must include a corporate name and address (including the name, telephone number, and e

- mail address of a corporate contact person ); and, for each facility operated b y the entity:

 Ty pe of facility

(e.g., refinery , import facilit y, pipeline, terminal, transmix facility , etc.)

 Facilit y name

 Phy sical location

 N ame, telephone number, and e

- mail address of a corporate contact person b. Reporting Requirements R efiners and importers must submit annual reports demonstrating their compliance with the Tier 3 standards , and on the generation, use, and transfer of sulfur cr edits at each of its refineries or import facilities. Similar to our other sulfur programs, refiners and importers must submit data on individual batches of gasoline (including batch volume and sulfur content). Based on our experience with existing gasol ine and sulfur

- based programs, we believe that requiring annual reports and individual sulfur batch data provide s an effective means of monitoring compliance with the standards and the credit program.Page 343 of 529 Producers and importers of blender grade pentane for us e b y pentane blenders must also submit annual reports that include data on individual batches demonstrating compliance with the quality requirements for blender grade pentane and batch volume. We proposed that producers and importers of DFE and other oxygenates would be required to submit an annual report that includes the total volume of DFE/ox ygenate produced and an attestation that all batches met the proposed fuel quality requirements

. We continue to believe that such annual reports are important enf orcement and compliance assurance mechanism and thus are finalizing the proposed annual reporting requirements for ox ygenate producers and importers. Tier 3 reports will be due annually on March 31 , on forms as required by EPA

. c. Recordkeeping Requirement s Similar to current EPA fuels programs, refiners and importers must retain all records that demonstrate compliance with the Tier 3 program, including the ABT program. M anufacturers of DFE and other ox ygenates must keep records for five ye ars on individu al batches of DFE/oxygenate (including batch volume,, denaturant concentration , and sulfur test results or other records to demonstrate compliance with the Tier 3 sulfur requirements as applicable). 437 Manufacturers of ethanol denaturant that is designated a s suitable for use in the manufacture of DFE that meets federal requirements must keep records on individual batches of such denaturant including batch volume, and sulfur content. Manufacturers of pentane that is designated as suitable for use for blendi ng into PCG must keep records on individual batches of such pentane including batch volume, sulfur content, benzene content, olefin content, aromatic content, C6 and higher h ydrocarbon content, and purity as applicable. Manufacturers of gasoline additives for use in highway vehicles must keep records on individual batches of such additives including batch volume and additive production quality

control activities which demonstrate that the sulfur content of additive production batches complies with the T ier 3 sulfur requirements. We

437 As disc ussed in section V.G. of this preamble, DFE manufacturers may demonstrate compliance with Tier 3 sulfur requirements either by testing each batch or mathematically using volumetric blend records and product transfer documents from the denaturants used prov ided such denaturants are from a registered denaturant producer.Page 344 of 529

expect that such records would include the results of periodic sulfur testing but not necessarily

testing on each production batch. All parties in the gasoline , DFE, ethanol denaturant, pentane, and gasoline additive producti on and distribution sy stem subject to the Tier 3 sulfur program are also required to keep records of all PTDs and records of an y qualit y assurance programs. Records must be retained for five years. For credit transactions, records must be retained for fi ve years from the usage date. Records must be made available to EPA on request ; if electronic records are kept, hard copies must be made available upon request. In formation submitted to EPA may be claimed as confidential business information (CBI). Parti es making such a claim must follow all reporting guidance and clearly

mark the information being claimed as proprietary . EPA will treat information covered b y s uch a claim in accordance with the regulations at 40 CFR part 2 and other Agency

procedures for handling proprietary information. 2. Sampling and Testing Requirements Under the Tier 2 program, a sulfur concentration must be determined for every batch of gasoline. We are retain ing th is requirement under the Tier 3 program . As with the existing Tier 2 program, this every

- batch testing requirement will be required to occur prior to the batch leaving the refinery . We are also retain ing the Tier 2 sampling, testing, and sample retention requirements in today ’s final rule

. Additionally , as discussed below in Section VI , we have included performance based measurement standards that will allow refiners to use alternate test methods for measuring sulfur if they so choose

. We proposed that m anufacturers of DFE would be required to test each individual batch of DFE for its sulfur content. In response to comments, we are finalizing an alternative means for DFE manufacturers to demonstrate compliance with the Tier 3 sulfur requirements in addition to per batch testing. 438 We anticipate that DFE manufacturers will ty picall y use this alternative means in the place of per batch sulfur testing. As discussed above, manufacturers of additives for use in highway gasoline vehicles must maintain records of additive production quality control activities which demonstrate that the sulfur content of additive production batches complies with the Tier 3 sulfur requirements. We expect that periodic sulfur testing will be needed to compl y with this requirement but not necessaril y testing on each additive production batch. Manufa cturers of pentane that is designated as suitable for use

438 The alternative means of demonstrating compliance with the Tier 3 sulfur requirements for DFE manufacturers is discussed in section V.G. of this preamblePage 345 of 529

by blenders into PCG must test every batch to demonstrate compliance with the requirements sulfur content, benzene content, olefin content, aromatic content, C6 and higher h ydrocarbon content, and p urit y as applicable. Blenders of pentane into gasoline must conduct periodic sampling and testing of the pentane they receive from each separate pentane supplier to demonstrate that the pentaene is compliant with the applicable compositional requirements. 3. Small Refiner Compliance To qualify

for small refiner status under the Tier 3 program, a refiner must apply by June 1, 2016 . As with our other existing EPA fuels programs, we are continuing to use the Small Business Administration definition of a small r efiner: 1,500 employees (company

- wide). To qualify for small refiner status under Tier 3, a small refiner must also meet the following additional criteria:

 The refiner must have produced gasoline from crude oil during the 201 2 calendar year.

 The refiner must have owned and operated the refinery during the period from January

1, 201 2 through December 31, 201 2 . New owners that purchased a refinery

after that date will have do ne so with full knowledge of the proposed Tier 3 regulations, and should have plann ed to comply

along with their purchase decisions. As with existing fuel programs, a refiner that restarts a refinery in the future may

be eligible for small refiner status. Thus, a refiner restarting a refinery that was shut down or non

- operational durin g calendar ye ar 201 2 can appl y for small refiner status. In such cases, we will judge eligibility under the employ ment and crude oil capacity criteria based on the most recent 12 consecutive months prior to the application, unless we conclude from data provided b y the refiner that another period of time is more appropriate. However, this is limited to a company that owned the refinery at the time that it was shut down. New purchasers will not be eligible for small refiner status for the same reasons desc ribed above.

 The refiner must have had 1,500 employees or less based on the average number of emplo ye es for all pay periods from January

1, 201 2 through December 31, 201 2 for all subsidiaries, parent companies (i.e., any compan y or companies with controlli ng interest), and joint ventures.

 The refiner must have had a crude oil capacity less than or equal to 155,000 bpcd during the 201 2 calendar year. A refiner appl yi ng for small refiner status must apply and provide EPA with several t ypes of information, as specified in the regulations, b y June 1, 2016 . All refiners seeking small refiner status under this program must apply for small refinerPage 346 of 529

status, regardless of whether the refiner has been approved for small refiner status under another fuel program. As w ith applications for relief under other rules, applications for small refiner status under this final rule that are later found to contain false or inaccurate information will be void ab initio

. Requirements for small refiner status applications:

 The total crude oil capacity as reported to the Energy Information Administration (EIA) of the U.S. Department of Energy (DOE) for the most recent 12 months of operation. This include s the capacity of all refineries controlled b y a refiner and b y all subsidiaries and parent companies and joint ventures. We will presume that the information submitted to EIA is correct. (In cases where a company disagreed with this information, the company may petition EPA with appropriate data to correct the record when the compan y submitted its application for small refiner status. EPA will accept such alternate data at its discretion.)

 The name and address of each compan y location where employees worked during the 201 2 calendar year; and the number of emplo ye es at each location during this time period. This include s the locations and number of employees working at all subsidiaries , parent companies , and joint ventures.

 In the case of a refiner who reactivates a refinery that was either shutdown or non

- operational from January 1, 2 01 2 through December 31, 201 2 , the name and address of each company location where employees worked since the refiner reactivated the refinery and the average number of employees at each location for each calendar year since the refiner reactivated the ref inery

.

 The ty

pe of business activities carried out at each location.

 Contact information for a corporate contact person, including: name, mailing address, phone and fax numbers, e

- mail address.

 A letter signed b y the president, chief operating officer, or chief executive officer of the company (or a designee) stating that the information contained in the application is true to the best of his/her knowledge and that the company owned the refinery

as of January

1, 201 2

. An approved small refiner that exceeds the emplo yee count or crude capacity criteria due to merger with, acquisition by, or the acquisition of another entity will lose its small refiner status. In situations where a small refiner loses its small refiner status due to merger with a non

- small re finer, acquisition of anotherPage 347 of 529

refiner, or acquisition by

another refiner, we are finalizing provisions that are similar to those in our existing fuels programs to allow up to an additional 30 months of lead time to comply with the Tier 3 program after the disqualifying event , but no later than December 31, 2019

. 439 Th is 30 months of additional lead time will only

apply to refineries that were previously subject to small refiner relief, as we believe there will be no adverse environmental impact because of th e pre existing relief provisions that applied to the small refiner. A refiner will also lose its small refiner status if it ceases to process crude oil. Our intent has been, and continues to be, limiting the small refiner relief provisions to a small subs et of refiners that are challenged, as discussed above. However, it is also our intent to avoid stifling normal business growth. Therefore, an approved small refiner who exceeds the employee count or crude oil capacity criteria through normal business pr actices may retain its small refiner status. Further, in the sole case of a merger between two approved small refiners , such refiners will be permitted to retain their individual small refiner status. Additional financial resources would not ty picall y be provided in the case of a merger between two small refiners. Small refiner status for the two entities of the merger would not be affected; hence the original compliance plans of the two refiners should not be impacted. Moreover, no environmental detrim ent will result from the two small refiners maintaining their small refiner status within the merged entity as they would have likel y maintained their small refiner status had the merger not occurred. 4. Small Volume Refinery Compliance In the case of small v olume refineries, the application process for qualification is similar to that of a small refiner. A refiner that is both a small refiner and owns a small volume refinery need not apply

for small volume refinery status; the small refiner application is al l that is needed. Small refineries must have a net crude throughput threshold of no more than 75,000 bpcd based on the highest throughput in calendar years 2011 or 2012 as the basis for receiving small volume refinery status. R efiners must include the fol lowing in their applications for small volume refinery status :

 Proof that the refiner produced gasoline from crude oil during the 201 2 calendar year.

 Proof that the refiner owned and operated the refinery during the period from January

1, 201 2 through Dece mber 31, 201 2

.

439 See, for example, 69 FR 39051 (June 29, 2004).Page 348 of 529  The refinery ’s total crude throughput as reported to EIA for each of calendar years 201 1 and 201 2 . Again, we will presume that the information submitted to EIA is correct. In cases where a refiner disagrees with this information, the refin er may petition EPA with appropriate data to correct the record when the refiner submits its application for small volume refinery status. EPA will accept such alternate data at its discretion.

 Contact information for a corporate contact person, including : name, mailing address, phone and fax numbers, e

- mail address.

 A letter signed b y the president, chief operating officer, or chief executive officer of the company (or a designee) stating that the information contained in the application is true to the be st of his/her knowledge and that the company owned the refinery

as of January

1, 201 2

. 5. Attest Engagements, Violations, and Penalties In today ’s final rule w e are retain ing the existing Tier 2 requirements for attest engagements for generation of both earl y and standard credits, use of credits, and compliance with the proposed program, using the procedures currentl y used in existing EPA fuels programs for attest engagements. The violation and penalty provisions applicable to today ’s Tier 3 program will be v ery similar to the provisions currentl y in effect in other gasoline programs as well. 6. Special Fuel Provisions and Exemptions The following paragraphs discuss several provisions and exemptions from the Tier 3 gasoline sulfur standards in special circumstanc es.
a. Gasoline Used in Military Applications In both our diesel fuel program and the Tier 2 gasoline sulfur program , we provided an exemption for fuel used in tactical military vehicles and nonroad engines and equipment with a national security exemption (NS E) from the vehicle and engine emissions standards. Due to national security considerations, some of EPA’s existing regulations allow the military to request and receive NSEs for vehicles, engines, and equipment from emissions regulations if the operation al requirements for such vehicles, engines, or equipment warrant such an exemption. Fuel used in these applications is also exempt if it is used in tactical military vehicles, engines, or equipment that are not covered by an NSE but, for national securit y reasons (such as the need to be ready for immediate deploy ment overseas), need to be fueled on the same fuel as those with an NSE. We are including this exemption in the Tier 3 gasoline program.Page 349 of 529 b. Gasoline Used in Research, Development, and Testing Similar to existing EPA fuels programs, we are finalizing provisions to allow for requests for an exemption from the Tier 3 standards for gasoline used for research, development, and testing purposes (“R & D exemption”). We recognize that there may

be legitimat e research programs that require the use of gasoline with sulfur levels greater than those allowed under the Tier 3 program. Thus, we are including provisions for obtaining an exemption from the prohibition against persons producing, distributing, transpo rting, storing, selling, or dispensing gasoline that does not meet the Tier 3 gasoline sulfur standards, where such fuel is necessary to conduct a research, development, or testing program. Parties seeking an R & D exemption must submit an application for exemption to EPA that describes the purpose and scope of the program, and the reasons wh y the noncompliant gasoline is necessary . Upon presentation of the required information, an exemption may be granted at the discretion of EPA, with the condition that EPA can withdraw the exemption in the event the Agency determines the exemption is not justified. In addition, an exemption based on false or inaccurate information will be considered void ab initio . Gasoline subject to an exemption will be exempt from c ertain provisions of this rule, including the sulfur standards, provided certain requirements are met. These requirements include the segregation of the exempt gasoline from non

- exempt gasoline, identification of the exempt gasoline on PTDs, and pump labe ling.
c. Gasoline for Export Gasoline produced for export, and that is actuall y exported for use in a foreign country , will be considered exempt from the fuel content standards and other requirements of the Tier 3 gasoline sulfur program

. In order to exclude exported gasoline, refiners must retain records to demonstrate that the gasoline was exported. Such gasoline must be designated b y the refiner , and the PTD must state that the gasoline is for “export only” ; otherwise, the gasoline will be considered as i ntended for use in the U.S. and subject to the Tier 3 standards . Gasoline intended for export must be segregated from all gasoline intended for use in the U.S. Distributing or dispensing such fuel for domestic use will be illegal. d. Other Special Provision s and Exemptions Additionally , in existing EPA fuels programs we have included exemptions for racing fuel and for fuel used in the U.S. territories of Guam, American Samoa, and the Northern Mariana Islands ; we are finalizing such exemptions for th e Tier 3 program as well

.Page 350 of 529

**G. Standards for**  **Oxygenates (Including Denatured F**  **uel Ethanol ) and**  **Certified Ethanol Denaturants** The following discussion is focused on the standards finalized today for denatured fuel ethanol (DFE) because DFE is the predominant gasoline oxy genate currentl y in

- use. 440 These standards also appl y to other gasoline ox ygenates. 441 1. Sulfur Standard The Tier 2 gasoline requirements include the prohibition on blending gasoli ne with DFE that has sulfur content higher than 30 ppm. 442 This r equirement refle cts the 30 ppm refinery gasoline average sulfur requirement under the Tier 2 program . Consistent with the approach under the Tier 2 program and our proposed 10 ppm refinery

average sulfur standard for gasoline under the Tier 3 program , we propose d that pr oducer s of DFE for use by oxygenate blenders would be required to meet a 10 ppm sulfur cap beginning January 1, 2017

. We proposed requiring DFE producers to test each batch of DFE to demonstrate compliance with the sulfur content standard, and to retain and provide batch reports to EPA. The Renewable Fuels Association (RFA) commented that if EPA were to accept current industry

practices used to assure that DFE is compliant with the state of California’s 10 ppm sulfur cap for DFE in place of per

- batch s ulfur testing and reporting there would be no additional burden to ethanol producers in meeting a 10 ppm sulfur cap. 443 In2002, RFA conducted an industry survey that demonstrated DFE manufacturers were meeting California ’s 10 ppm maximum sulfur content requirement. Since then, RFA has recommended to the ethanol industry that all DFE meet this California requirement and indicated that ethanol producers are adhering to this recommendation. Other commenters also stated that DFE manufacturers have been produc ing DFE that complies with California specifications because of logistical difficulties in segregating ethanol destined for California from other destinations. An environmental organization commented that the proposed 10 ppm sulfur cap for DFE was necessary to ensure that the Tier 3 program benefits are actually realized. Refiners commented that requiring DFE to meet a 10 ppm sulfur cap was essential to facilitating their compliance with the Tier 3 gasoline sulfur

440 An importer of biofuels commented that EPA s hould clarify that the standards for DFE will apply to importers as well as domestic producers. The regulatio ns finalized today specifically state that the standards for denatured fuel ethanol ap ply to importers are will as domestic producers of DFE. 441 Public comments supported our proposal to apply the same standards to all gasoline oxygenates. 442 40 CFR 80.385(e). 443 RFA requested regulatory relief from the proposed batch testing and reporting requirements as discussed in preamble Section V.G.4.Page 351 of 529

requirements. In demonstrating compliance with the 10 ppm average gasoline sulfur standard finalized today , gasoline refiners and importers may adjust the sulfur levels in the gasoline and BOBs that they produce/import to account for the downstream addition of ethanol. 444 Therefore, the sulfur lev el of DFE has a direct effect on the extent of the desulfurization measures that a refiner/importer will have to undertake to compl y with the gasoline sulfur standards finalized today. A refiner commented that i f the sulfur standard for DFE was left at it s current level of 30 ppm, greater capital inves tments would be needed to adjust and lower the sulfur content of other gasoline blending streams to preve nt violation of the ultimate 10 ppm annual average standard

. Some ethanol producers and Growth Energy ( representing ethanol producers) commented that DFE should be subject to an annual average sulfur standard and be able to participate in the averaging banking and trading (ABT) program that is available to refiners and importers of gasoline. Some ethanol p roducers commented that they should be allowed to participate in the ABT program as a means of offsetting the additional cost of the proposed per

- batch sulfur testing and reporting requirements. EPA believes that requiring DFE to compl y with a 10 ppm sulfur cap is the most appropriate means of ensuring that finished gasoline blends attain the sulfur control goals of the Tier 3 program. Therefore, today ’s rule finalizes a 10 ppm sulfur cap for DFE. Becaus e essentiall y all (if not all) DFE already m eets Cal ifornia’s 10 ppm sul fur standard , EPA believes that the implementation of a federal 10 ppm sulfur cap for DFE would not result in a significant incre ased burden for ethanol producers. 445 Neat ethanol produced with standard quality control practices should h ave negligible sulfur content. Denaturants with sufficiently

low

- sulfur content to facilitate compliance with the 10 ppm sulfur cap for DFE are widel y available. Allowing DFE to exceed 10 ppm would result in the use of higher

- sulfur denaturants, thereby increasing gasoline refiner capital costs to install desulfurization equipment. As discussed in Section V.D.3 of this preamble, there are several reasons why we do not believe that it is appropriate to expand the ABT provisions to include ethanol producer s and importers. Furthermore, as discussed in Section V.G.4, sulfur testing on each batch of DFE will not be required provided that the DFE producer or importer demonstrates compliance with the 10 ppm sulfur cap for DFE with volumetric blending records, whereas an average standard would require testing of every batch. We anticipate that DFE producers

444 Accounting for the effect of oxygenate added downstream of the refinery or import facility in demonstrating compliance with the average gasoline sulfur standard is addressed in regulations finalized today at §80.1603 (d) . See Section V.C. in today’s preamble regarding the sulfur level in DFE that must be used by refiners and importers in making this compliance determination

. 445 The potential for additional burden associated with demonstrating compliance with a 10 ppm sulfur cap is discussed in Section V.G.4.Page 352 of 529

and importers will ty

pically choose to demonstrate compliance with the 10 ppm sulfur cap using volumetric blending records rather than per

- batch sulfur testi ng. Therefore, we do not anticipate that DFE producers and importers will need to install additional sulfur testing equipment as a result of today’s rule. Hence, there is no need to extend the flexibility of meeting an annual average sulfur standard and participation in the ABT program to ethanol producers and importers to help facilitate their compliance as exists for gasoline refiners. 446 Comments were supportive of the proposed January 1, 2017 implementation date for standards applicable to DFE. Today ’s action requires that importers and manufacturers of DFE comply with the standards finalized today beginning January 1, 2017. 2. L imitation on the Ty pe of Ethanol Denaturant To limit the variability

in DFE composition and the associated potential impact on vehicle emissions, we proposed to allow the use of onl y certified gasoline, gasoline blendstocks for ox ygenate blending (BOBs), and natural gasoline as denaturants. C ommenters stated that it would be unnecessary to place additional limits on the ty

pe s of denaturants that could be used beyond those in the ASTM specification for DFE. Groups representing refiners stated that EPA had not presented data to support that additional limitations on the ty pes of denaturants that can be used (or the allowed con centrations at which they may be used) are needed beyond those adopted by

ASTM and the State of California to address concerns about the potential adverse impacts on vehicle emissions performance. The ASTM specification for DFE requires that the only denaturants that can be used are gasoline, gasoline blendstocks, and natural gasoline. The State of California incorporated the ASTM limits on allowable denaturants into its regulations for DFE by reference. 447 Thus, both ASTM and the State of California allow the use of gasoline blendstocks other than BOBs as denaturants. One refiner stated that DFE producers have used refinery gasoline blendstocks such as “light straight run” and “light naphtha” as denaturants and that removing this flexibility would increas e DFE production costs

. They noted that access to this flexibility could become more important under a 10 ppm sulfur cap for DFE. Inaddition to needing to preserve the flexibility

to use a range of gasoline blendstocks, ethanol manufacturers stated that EPA should consider the possibility of approving denaturants that are not currentl y allowed under the ASTM specification for DFE. One refiner stated that

446 See Section V.D.3. of this preamble for additional discussion of why we are not extending the sulfur averaging, banking, and trading program to cover DFE manufacturers. 447 The California Code of Regulations references ASTM D 4806

- 99 which limits the allowed denaturants to gasoline, gasoline components, and natural gasoline.Page 353 of 529

ASTM is the appropriate technical forum for the consideration of adding new allowable denaturants. E PA continues to believe that it is appropriate to implement additional controls to address the potential impact of fuel components in denaturants other than sulfur on vehicle emissions. However, we agree with the comments that it is not appropriate to imp lement additional controls on the ty pes of denaturants that may be used beyond those currently adopted by

ASTM and the State of California at this time. Therefore, in response to comments, today ’s rule includes the requirement that onl y gasoline, gasoline blendstocks, and natural gasoline may be used to denature DFE. 448 This requirement is essentially the same as the current ASTM and State of California specifications for the ty pe of denaturants that may be used. We will continue to monitor the potential n eed for additional controls on ethanol denaturants , and may revisit this issue in the context of setting in

- use quality specifications for E85 in the future. 449 We will also continue to monitor the need for additional denaturants, and when appropriate EP A may undertake a future rulemaking to consider allowing their use. As discussed in Section V.G.4, in order for DFE producers and importers to take advantage of streamlined provisions for demonstrating compliance with the 10 ppm sulfur cap for DFE, they mu st only

use denaturants from registered producers that have been demonstrated as meeting EPA compositional requirements. Denaturants from unregistered denaturant producers may be used by

DFE producers provided that they

test each batch of DFE to demonstrate compliance with the 10 ppm sulfur cap for DFE. 3. L imitation on Ethanol Denaturant Concentration To further limit the potential impact on vehicle emissions of fuel parameters in ethanol denaturants other than sulfur, we proposed to limit denaturant con centration in DFE to a maximum of 2 volume percent, which translates to 2.5 volume percent considering rounding. We also requested comment on alternatel y adopting the additional fuel specifications currently in force for DFE in the State of California. While California allows a maximum denaturant content of 5 volume percent consistent with the industry consensus ASTM International ( ASTM) specification for DFE , they also have maximum specifications for benzene, olefins, and aromatics as well as sulfur. 451

448 Finished gasoline used as denaturant must be compliant with the applicable EPA requirements. 449 See Section V.H. for a discuss ion of potential FFV in

- use fuel quality requirements. 451 California Code of Regulations 13 CCR section 2262.9. ASTM International D4806

- 13a, “Standard Specification for Denatured Fuel Ethanol for Bl ending with Gasolines for Use as Automotive Spark

- Ignition Engine Fuel”.Page 354 of 529 A number of refiners and ethanol manufacturers stated that it was unnecessary

to limit denaturant concentration beyond the 5 volum e percent specified b y ASTM. Ethanol manufacturers stated that the RFS2 program requirement th at DFE contain no more than 2 volume percent denaturant for Renewable Identification Number ( RI N ) generation purposes already provides a strong incentive to keep denaturant concentration under 2 percent

. 453 However, they stated that the flexibility to have a slightly

higher denaturant content can be important to ethanol producers. One ethanol producer stated that the proposed maximum 2 volume percent cap on denaturant concentration would provide insufficient tolerance given that the Alcohol and Tobacco Tax and Trade Bureau requires a 1.96 percent minimum denaturant concentration

. 454 They stated that EPA should provide a more reasonable tol erance t o avoid inadvertent compliance issues. A number of refiners stated that the current 5 volume percent maximum on denaturant concentration established by ASTM would limit concerns regarding components other than sulfur so that they would be unlikely

to impact vehicle emissions performance. One refiner stated that EPA should adopt the entire California specifications for DFE in order to address concerns about potential emissions impacts of fuel components in denaturants other than sulfur. They stated that this would not impose an additional burden on DFE producers since logistical difficulties in segregating ethanol destined for California from other destinations has already caused producers to DFE to California specifications. Since we are not finalizing benzene, olefin, or aromatics specifications for ethanol denaturants like California, we continue to believe that it is appropriate to implement a more stringent limit on maximum denaturant concentration to address concerns about the potential impact on vehicle emissions of fu el parameters in ethanol denaturants other than sulfur. Setting a more stringent limit on denaturant concentration will ensure that harmful components such as benzene potentially present in ethanol denaturants are adequatel y diluted in the finished fuel b lend. We agree with comments that it is appropriate to provide additional flexibility for the allowable denaturant levels that may be used. Therefore, we are finalizing a 3.0 volume percent maximum on ethanol denaturant concentration. This approach prov ides sufficient flexibility to DFE producers while avoiding the need to impose additional testing burdens on denaturant and DFE producers (e.g., for benzene and

453 This RFS2 program p rovision is covered under the definition of renewable fuel/ethanol in 40 CFR 80.1401. The volume of denaturant used in excess of 2 volume percent must be subtracted from the total volume of DFE for RIN generation purposes. 454 Alcohol and Tobacco Tax and Tr ade Bureau formulas require a minimum of two parts of approved denaturant to 100 parts of ethanol with a minimum of 195 proof ethanol.: 27 CFR Subpart X, Distilled Spirits for Fuel Use; ASTM International D4806

- 13a, “Standard Specification for Denatured F uel Ethanol for Blending with Gasolines for Use as Automotive Spark

- Ignition Engine Fuel”.Page 355 of 529

aromatics). We may consider whether additional controls may be needed for mid

level ethan ol blends and E85 in a later action. 4. Demonstration of Compliance with the Sulf ur Requirements and Requirements for Certified Ethanol Denaturants To demonstrate compliance with the 10 ppm sulfur cap finalized today , we proposed that producers and importers of DFE would be required to test the sulfur content of each batch of DFE they produce. We also proposed that DFE producers would be required to provide batch records to EPA on an annual basis. We requested comment on whether to require producers of denaturants for use in DFE to register with EPA and to demonstrate compliance with a maximum sulfur specification based on the anticipated dilution with ethanol. Refiners stated that producers of DFE should be subject to requirements similar to those for gasoline refiners including batch sampling. However, refiners stated there would be no added value in requiring batch reports from DFE producers. Ethanol producers current ly use certificates of sulfur anal ys is from denaturant producers and volumetric DFE blending records to assure themselves that when a sample of DFE is tested b y the State of California that it will be found to be compliant with a 10 ppm sulfur cap. 458 They stated that EPA should accept such records to demonstrate compliance with the federal 10 ppm sulfur cap for DFE in place of per

- batch sulfur testing on DFE. Under this approach, ethanol producers would maintain records regarding the denaturant sulfur content and the cal culations used to determine the sulfur content of the finished DFE

. Because the sulfur content of neat (un

- denatured) ethanol manufactured using indu stry standard quality control practices should be negligible, the sulfur content of DFE is effectively determined b y the sulfur content of denaturant used. 459 Ethanol producers stated that they would also perform standard qualit y assurance activities includ ing sampling incoming shipments of denaturant for sulfur c ontent on a periodic basis. Ethanol producers stated that many DFE production facilities do not have on site sulfur testing equipment and the installation of such equipment would represent a subst antial burden to DFE producers. Ethanol producers stated that they had worked with denaturant producers to ensure access to a low

- sulfur stream of denaturants, and that it is common business practice for denaturant producers to provide them with informati on on the sulfur content of their product. Ethanol

458 The State of California does not rely on industry testing and recordkeeping to help establish compliance with their sulfur requirements for DFE, instead choosing to focus on direct testing that they conduct. EPA relies on the review of industry records including those associated with tesing conducted by industry as well as direct testing conducted by EPA for compliance assurance. 459 Ethanol manufacture r s conduct periodic sulfate testing on neat ethanol to ensure that sulfur contamination from the manufacturing process is negligible.Page 356 of 529

producers stated that sulfur test r esults from the ASTM Inter
- laboratory Crosscheck Program (ILCP) for DFE illustrate that batch reporting for DFE is unnecessary

. They noted that the ILCP data shows DFE ty pically has sulfur content of 1 to 5 ppm. Ethanol producers stated that requiring denaturant manufacturers to register with EPA would limit the number of denaturant suppliers willing to supply the ethano l industry

. They

stated that i t is inappropriate to require a natural gasoline producer to register in order to supply product for DFE, because they are not required to register in order to supply the same product to a gas oline blender. EPA agrees that is appropriate to finalize requirements for the de monstration of compliance with the 10 ppm sulfur cap for DFE that are based on current industry

practices rather than requiring sulfur testing on each batch of DFE. 460 We agree that that potential contribution to the sulfur content of DFE other than from th e addition of denaturants can be adequately addressed by

the retention of production quality

control records by

the ethanol manufacturer. We agree that it is most appropriate to place the primary focus of compliance assurance on the denaturant manufacture rs given the denaturant ty pically contributes the majority

of the sulfur to the finished DFE. Therefore, we are finalizing s treamlined provisions that DFE producers and importers may use in demonstrating compliance with the 10 ppm sulfur cap for DFE as an alternative to testing each batch of DFE for its sulfur content. These streamlined provisions are based on the use of denaturant batch sulfur testing conducted b y denaturant producers who have registered with EPA and certified the denaturant they produce as meeting EPA requirements

. 461 Uncertified d enaturants from unregistered denaturant producers may be used by DFE producers provided that they test each batch of DFE to demonstrate compliance with the 10 ppm sulfur cap for DFE. 462 DFE manufacturers that use denaturants that have been certified and designated on the denaturant product transfer document (PTD) as suitable for use in the manufacture of DFE that meets federal requirements will be able use PTDs for the denaturants used and volumetric blending reco rds which show that the denaturant was added at 3.0 volume percent or less in demonstrating compliance

460 Per

- batch sulfur testing for other potential oxygenates will be required to demonstrate compliance with the 10 ppm sulfur cap. EPA may consider amending the requirements for other potential oxygenates in a later rulemaking based on additional information that we might receive. 461 Certified denaturant producers and importers will be required to register with EPA as a certified denaturant producer or importer by Nov ember 1, 2016, or 60 days before introducing certified denaturant into commerce, whichever is earlier. 462 The limitation on the types of denaturants that may be used and the maximum concentration at which a denaturant may be used discussed in Section V.G.2 and 3 would apply regardless of whether a denaturant from a registered or non

- registered denaturant manufacture are used.Page 357 of 529

with the 10 ppm sulfur cap for DFE in lieu of per

- batch sulfur testing of DFE. T he sulfur content of “neat” ( i.e. un - denatured) ethanol may be assumed to be negligible for the purposes of demonstration of compliance using volumetric blending records provide d that the DFE manufacturer maintains quality control records that demonstrate this assumption is justified. Today ’s rule also requires that DFE manu facturers conduct quality assurance to demonstrate affirmative defenses to presumptive liab ility

. 463 Producers and importers of DFE must initiate a PTD to accompan y each batch of DFE which states that it meets federal standards. Denaturant manufacturers are accustomed to providing certificates of sulfur anal ys is to DFE manufacturers. Therefore, we believe that the requirements finalized today

for denaturant manufacturers to conduct per

- batch sulfur testing, initiate a product transfer document stating that denaturant is suitable for use in manufacturing DFE that meets federal requirements, retain records, and register with EPA will not represent a substantial new burden. DFE manufacturers who use the math ematical method to demonstrate compliance with DFE sulfur requirements must only use certified denaturants from registered denaturant manufacturers. Registering with EPA will be a one

- time act, as will be the necessary modifications to denaturant product transfer documents. Thus, the requirement to register with EPA should not be a serious impediment for a manufacturer to enter the denaturant supply market. We believe that it is necessary to require denaturant manufacturers to register with EPA in order to facilitate compliance oversight. EPA needs to be able identify

all manufacturers of denaturants in order to periodically audit their records, and to recognize potential denaturants in the system that are incorrectly designated as a certified denaturant appropriate for use in manufacturing DFE that meets federal sulfur requirements. Denaturant manufacturers that supply their product to refiners for use in the manufacture of gasoline are not required to register with EPA because, unlike the DFE manufact urers, refiners are responsible for testing the final gasoline they produce. As is current practice today , we anticipate that ethanol manufacturers will negotiate the specific sulfur level they require from denaturant manufacturers to facilitate compliance with the 10 ppm sulfur cap for DFE taking into consideration what level of compliance margin a given manufacturer feels is necessary . We believe that it is appropriate to allow this practice to continue. We understand that ethanol manufacturers currentl y require denaturant manufacturers to provide a product with a sulfur content of 120 ppm or less in order to ensure that DFE that contains 5 volume percent denaturant can compl y with California’s 10 ppm sulfur cap for DFE. Thus, we expect that denaturant manufacturers will not need to

463 Such quality assurance practices include periodic calibration of the denaturant blending equipment to ensure that denaturants are n ot added in excess of 3.0 volume percent.Page 358 of 529

change the sulfur content of the denaturant they manufacture in order to comply with the requirements finalized today

. Manufacturers of certified denaturants used b y DFE producers that employ the volumetric blending record me thod in demonstrating compliance with the sulfur requirem ents for DFE must retain per batch sulfur test data on the denaturants they produce to demonstrate that the sulfur content of the denaturant will not cause the sulfur content of DFE to exceed 10 ppm when added to neat ethanol at 3.0 volume p ercent. The sulfur content of the certified denaturant must be stated on the PTD and must be no greater that 330 ppm. Any sample of denaturant which is designated as appropriate for use in manufacturing DFE that meets federal requirements, that is found by EPA to have sulfur content above 330 ppm will be deemed to be noncompliant, and the denaturant manufactur er may be liable for the associated penalties. A denaturant with a sulfur content of 330 ppm when used at 3.0 volume percent would result in a sulfur content of the finished DFE of 10 ppm. Certified denaturant manufacturers may represent the denaturant they produce as having a sulfur content of less then 330 ppm on the PTD. In such cases, the denaturant batch must not exceed the sulfur content stated on the PTD. We continue to believe that annual reports from ox ygen ate producers are important enforcement and compliance assurance tool. Therefore, we are finalizing the requirement that producers and importers of DFE and other ox ygenates must register with EPA as and ox ygen ate producer or importer and submit annual report s to EPA that include the total volume of DFE/ox ygenate produced and an attestation that all batches met the proposed fuel quality re quirements

. 464 5. Additional Requirements for Denatured Fuel Ethanol, Ethanol Denaturants, and Other Gasoline Ox ygenates We are finalizing regulatory text to clarify

that DFE and other gasoline oxygenates must be composed solely of carbon, hydrogen, oxygen, n itrogen, and sulfur. Manufacturers of denaturants that are designated as suitable for use in the manufacture of DFE that meets federal requirements will also be required to attest that the denaturant is composed solely of carbon, hydrogen, oxygen, nitroge n, and sulfur. Producers and importers of gasoline oxygenates, producers and importers of denaturants designated as suitable for manufacturing DFE meeting federal sulfur

464 Oxygenate producers and importers will be required to register with EPA as an oxygenate producer or importer by November 1, 2016, or 60 days before introducing certified denaturant into commerce, whichever is earlier.Page 359 of 529

requirements, fuel distributors, and ox ygenate blenders will be required to maintain the applicable records for 5 years and provide them to EPA upon request. **H. Standards for Fuel Used in Flexible Fueled Vehicles**  Flexible fuel vehicles ( FFVs ) are vehicles that are capable of operating on both gasoline and gas oline blends containing up to 8 3 volume p ercent ethanol. Ethanol fuel blends that contain from 51 and 83 volume percent ethanol (E51

- 83) have historicall y been referred to as “E85” in reference to the maximum allowed content of denatured ethanol assuming a 2 percent denaturant concentr ation. 465 Fuel blends that contain from 16 to 50 percent ethanol (E16

- 50) are sometimes referred to as mid

- level ethanol blends. Both E51

- 83 and E16

- 50 are currently used only in FFVs. Whether FFVs are operating on clear gasoline (E0), E85, or an y level of ethanol in between, to maintain emission performance the vehicles still need fuel that meet s certain quality specifications, such as the 10 ppm average g asoline sulfur standard finalized today . We anticipate that the use of higher level ethanol blends in FFVs will continue to increase in the future as the RFS program continues to be implemented . Significant public and private initiatives are also currentl y underway to expand the use of ethanol blender pumps that dispense a variety of ethanol blends for u se in FFVs. 466 Therefore it is becoming increasingl y important that all fuels used in FFVs, not just gasoline, meet fuel quality standards. The lack of separate fuel quality standards that apply to fuels used in FFVs could act to impede the further expansi on of ethanol blended fuels, which is important to satisfying the requirements of the RFS program. For these reasons, we believe it is important that our gasoline quality

standards for not just sulfur, but also benzene, Reid Vapor Pressure (RVP), detergen cy , and compliance with the interpretive rule defining the phrase “substantiall y similar” in CAA section 211(f)(1) 467 (i.e., contain only carbon, hydrogen, oxygen, nitrogen, and sulfur) app ly to any fuel used in an FFV. Our variou s standards for gasoline cur rently apply

to any fuel sold for use in motor vehicles, which is commonly or commercially

known or sold as gasoline. In the fuel and fuel additive registration program, the gasoline family includes fuels composed of at least 50 percent clear gasoline b y volume. 468 As a result , our

465 Industry consensus standards for E51

- 83 are described in ASTM International D5798

- 1 3 , “Standard Specification for Ethanol Fuel Blends for Flexible

- Fuel Automotive Spark

- Ignition Engines ”. 466 The U.S. Department of Agriculture (USDA) has a program to assist in the funding for the installation of as many as 10,000 ethanol blender pumps over the next 15 years in rural areas. Grow th Energy has a “Blend Your Own Ethanol” program to encourage the installation of ethanol blender pumps. 467 73 FR 22277, 22281 (April 25, 2008). 468 40 CFR 79.56(e)(1)(i).Page 360 of 529

gasoline standards currently appl y to E16

- 5 0 ethanol blends. However, additional regulatory

provisions could be useful to facilitate compliance assurance if we are to continue to treat such mid

- level ethanol blends as gasoline. The existing requirement that E51

- 83 must be substantially similar (sub

sim) to the vehicle certification test fuel has provided a limited measure of control over in

- use E51

- 83 fuel quality . The finalization of specifications for FFV exhaust emission te st fuel in today’s action will provide improved clarity regarding what constitutes sub

- sim for in

- use E51

- 83. However, these specifications are not sufficient to provide clarity as to what is considered sub

- sim for E51

- 83. For example, E51

- 83 manufacture d using only gasoline, gasoline blendstocks for oxygenate blending (BOBs), a limited volume of butane that meets the standards for downstream blending into gasoline, and denatured fuel ethanol that meets the standards finalized today would clearl y be sub

- s im. However, use of natural gasoline may

or may not result in an E51

- 83 blend that is sub

- sim. In addition to the need for additional clarity regarding what constitutes sub

- sim for E51

- 83, standards for sulfur, benzene, and RVP are needed to ensure fuel quality supports the attainment of our environmental goals. At proposal, we sought comment on appropriate regulatory mechanism s to implement in

- use quality standards for E51

- 83 and E16

- 50. We requested specific comment on possible approaches, including dr aft regulations, which were described in detail in a memorandum to the dock et
. 469 The draft regulations contained fuel quality specifications for E51

- 83 and two options that E51

- 83 manufacturers could use to demonstrate compliance. We sought comment on whe ther the Agency should continue to treat E16

- 50 as gasoline and on the need to clarify existing regulations on the mean ing of gasoline as an y fuel that contains 50 percent or more gasoline. Given that E16

- 50 can onl y be used in FFVs, we also sought comment on whether to amend the regulations to treat E16

- 50 as an alternative fuel. If EPA were to treat E16

- 50 as an alternative fuel rather than gasoline, we sought comment on whether we should take the same approa ch for E16

- 50 as detailed in the draft regulations for E51

- 83 with respect to sulfur, benzene, RVP standards, and substantially

similar requi rements under CAA section 211(f). We received comments in support of and against our proposal. The vast majority of comments supported the need for EPA to pr omulgate in

- use quality standards for these higher level ethanol blends. We also received a number of detailed productive comments on the draft regulations. A number of stakeholders also expressed their willingness to work with EPA to provide supplementa ry information on issues that were not addressed at proposal and not contained in their

469 Possible Approach to Fuel Quality Standards for Fuel Used in Flexible

- Fuel Automotive Spark

Ignition Vehicles (FFVs), Memorandum to the docket , Jeff Herzog, April 2013

.Page 361 of 529

comments. At this time, we acknowledge that additional work is needed on some issues and we note that such work could not be accommodated within the timeline for this Tier 3 final rule. Therefore, we are deferring final action on these provisions at this time. We will continue to work with stakeholders in developing in

- use fuel qualit y standards for higher level ethanol blends following the publication of this final r

ule. Subsequently , we may issue a supplementary proposal prior to issuing a final rule if the additional information we receive from stakeholders warrants such an action. **I. Sulfur**  **Standards for Purity**  **Butane and Purity**  **Pentane Streams Blended**  **into Gasoline** Under the Tier 2 gasoline program, “purity” butane blended into gasoline downstream of the refinery is subject to a 30 ppm sulfur cap and other specifications regarding its composition. 470 This is consistent with the 30 ppm refinery average sulfur standard under the Tier 2 program. Today ’s action finalizes the proposed 10 ppm sulfur cap for purit y butane blended into gasoline effective January 1, 2017. This is consistent with the Tier 3 10 ppm refinery average sulfur specification finalized today

. As discu ssed in Section VI.A.4 in today ’s preamble, we are finalizing provisions to allow “purity” pentane to be blended into gasoline downstream of the refinery that are similar to the existing provisions for butane blending. This allowance will become effective [I NSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER]. Until December 31, 2016, a 30 ppm sulfur cap will apply to purit y pentane blended into gasoline consistent with the existing sulfur cap for purity butane under the Tier 2 program. 471 Beginn ing January 1, 2017, a 10 ppm sulfur cap will appl y to purity pentane blended into gasoline consistent with the butane sulfur standard finalized today

. Butane blenders commented that a significant fraction of butane and pentane might be expected to have su lfur content in excess of 10 ppm after the Tier 3 gasoline sulfur requirements become effective. To maintain a stable and adequate supply of butane and pentane for downstream RVP trimming, butane blenders requested that EPA adopt a 10 ppm sulfur average c ap with a 30 ppm sulfur cap. 472

470 40 CFR 80.82. 471 Other requirements regarding the composition of purity pentane will also apply that are similar to those for purity butane. 472 RVP trimming refers to the practice of adding a limited amount of butane/pentane to previously certified gasoline at a terminal so that the finished gasoline is closer to the maximum applicable volatility standard (summer or winter) than can be attained at the refinery level.Page 362 of 529 Butane and pentane have an inherentl y low sulfur content that can be made to meet a 10 ppm sulfur cap with relativel y mild desulfurization techniques. We anticipate that butane and pentane suppliers will desulfurize these b lendstocks to well below 10 ppm sulfur as part of their response to the Tier 3 gasoline sulfur requirements. Therefore, we believe that allowing butane and pentane used for RVP trimming to exceed a 10 ppm sulfur cap would needlessl y complicate compliance assurance and defer some of benefits of the Tier 3 sulfur requirements. **J. Standards for**  **CNG and**  **LPG** The vehicle emissions standards finalized today are fuel neutral (i.e., they are applicable regardless of the ty pe of fuel that the vehicle is designed to use ). There currently

are no sulfur standards for the fuel used in compressed natural gas (CNG) and liquid propane gas (LPG) vehicles. We requested comment on whether it is necessary

for EPA to establish sulfur standards for CNG and LPG to enable them meeti ng more stringent vehicle emissions standards, and whether a 15 ppm sulfur cap similar to that established for highway diesel fuel would be appropriate. Comment was also requested on whether and how to address the sulfur contribution from odorants and oth er additives used in CNG and LPG. We received comments in support of and against EPA establishing sulfur standards for CNG and LPG and whether such standards are necessary to enable CNG and LPG vehicles to meet the vehicle emissions standards finalized to day

. 473 In addition, some commenters stated that EPA should not establish new sulfur standards for in

- use CNG and LPG fuels until additional data is available on current sulfur levels, and the feasibility / costs associated with potential additional sulfur co ntrols have been evaluated. EPA is deferring finalizing in

- use sulfur requirements for CNG/LPG in this final rule to provide additional time to work with stakeholders to collect data on current CNG/LPG sulfur content, to determine whether additional control of in

- use CNG/LPG sulfur content is needed, and to evaluate the feasibility and costs associated with potential additional sulfur controls. Given that the information currentl y available suggests already low sulfur levels in CNG/LPG, the vehicle emis sions standards finalized today will appl y to CNG/LPG vehicles in addition to vehicles fueled on gasoline, diesel fuel, or an y other fuel. 474

473 See Chapter 5.8. in the Summary and Analysis of Comments Document that accompanies this rule. 474 Several commenters provided i nformation on CNG and LPG sulfur levels as discussed in the Summary and Analysis of Comments associated with this rule.Page 363 of 529

**K. Refinery Air Permitting Interactions**  EPA recognized when it proposed the Tier 3 fuel program that it is important to the success of the Tier 3 fuel program that refineries be able to obtain air permits, if needed, in time to complete the modifications necessary to comply with the proposed gasoline sulfur program. Accordingl y, to help inform the public and obtain comm ent on this topic, a section of the preamble to the proposed rule presented background information on air permitting requirements and programs. That information is not repeated in full here

. Based on our preliminary assessment of the proposed rule’s impli cations for needed refinery modifications, we estimated at the time of our proposal that only a small percentage of refineries would likely need to make modifications that would trigger a requirement to obtain air permits

. Moreover , we anticipate d that the se permit applications would be processed quickly enough that air permitting would not be a significant obstacle to timely compliance with the proposed gasoline sulfur program. We continue to anticipate that there will be no such obstacle. Based on our fi nal assessment, which takes into consideration updated information on current refinery configurations and operations and refineries’ future plans as well as the requirements and flexibilities in the final Tier 3 fuel program , we believe that under the fina l Tier 3 gasoline sulfur standard from a low of four to a high of nine refineries would need major source NSR permits, which includes nonattainment New Source Review (NSR) and/ or Prevention of Significant Deterioration (PSD) permits. This estimate equates to approximately four to eight percent of the 108 refineries projected to sell gasoline that will be subject to the Tier 3 standards . The number of refineries needing major source NSR permits could be even lower if refineries apply emission controls to r educe emissions increases below the significance level s applicable to affected pollutants or if they “net out” of NSR for the affected pollutants

. As stated above, EPA continues to anticipate that permit applications associated with refinery changes neede d to comply with the Tier 3 fuel program will be processed quickl y enough that air permitting will not be a significant obstacle to timely compliance with the gasoline sulfur program

. 1. Proposal In the proposed rule , we stated our anticipation that the ty pe s of changes (both phy sical and operational) that would occur at most refineries would not result in sufficient emissions increases to require major NSR permits as a prerequisite for completing the needed changes for several reasons: because the emissions increase or the net emissions increase is naturall y less than the significant level, because the refinery installs control technologies on project

- affected units to further limit the emissions increase , and/or because the refinery “nets out” all or part of the emissions increase.Page 364 of 529 However, we anticipate d that a small number of refineries had the potential to experience emissions increases to meet the proposed gasoline sulfur standard that are large enough to trigger major NSR (Nonattainment NSR and/or PSD). This small number of refineries would have to obtain a major NSR preconstruction permit prior to making these necessary process changes. For any required major NSR permits, the associated control technology requirements (BACT and/or LAER) would appl y on ly to new or modified units associated with the project and not to units at the refinery that are not affected by

the project. We did not anticipate that the time frames required for the small number of affected refineries to obtain any needed NSR and/or PSD permits would present an obstacle to timely compliance with the proposed Tier 3 gasoline sulfur requirements. In the proposal we also discussed a number of concepts that might facilitate more expeditious permitting where it is required as a result of refinery changes needed to meet the new requirements. That discussion was based primarily on concepts that had arisen during the earlier Tier 2 fuel program. That discussion is not repeated here. We invited public comment on those concepts. 2. Updated Ass essment of Tier 3 Refinery Changes and Permitting Implications EPA has updated our refinery

- by

- refinery assessment of the phy sical and operational changes that are likel y to be needed to allow each active refinery in the U.S. to produce gasoline that compl ies with the final Tier 3 fuel specifications

. We have also assessed the likely effects of those changes on refinery emissions. This updated assessment is described in more detail in the final RIA. Using this updated assessment, we were able to update o ur understanding of the potential scope of the major N SR permitting requirements refiners might face under the final Tier 3 program. In general, our assessment indicates that only a small number of refineries will likely

need to make modifications of a ty pe and size that would trigger the need for a PSD or n onattainment NSR permit. In our updated anal ys is, we adjusted the anal ys is to reflect the existence of a nationwide average, banking, and trading (ABT) program and refined our estimates regarding the p hy sical and operational changes that will be required at each refinery ( as described in the final RIA). The modifications at a given refinery could include revamps to existing FCC pre

- or post
- treatment unit(s) or the installation of a new grassroots post
- treatment unit for sulfur reduction

. Based on the updated project ions of refinery

- specific changes, we re - estimated the increased demand for energy (i.e., fuel to generate process heat, steam , and electricit y), h ydrogen, and sulfur recovery

associated wi th meeting the final Tier 3 standards . Having received no comments suggesting that they should be changed, we re

- applied the representative industry

emission factors for NAAQS pollutants, their precursors, and GHGs for each emitting process and combined them with estimates ofPage 365 of 529

incremental activity

to estimate the emissions changes at each equipment unit (or group of similar units) at each refinery

. We determined upper and lower bounds for emissions increases resulting from changes necessary

to meet the fi nal Tier 3 gasoline sulfur specification. We did not have sufficient detailed information to predict which refineries would find it most profitable to generate additional electrical power and hydrogen on site rather than purchasing these inputs from exte rnal suppliers. If a refinery generates these additional inputs internally on site, the additional emissions would count towards the significant emissions rates and could affect the need for a major NSR permit. To account for these variables, we evaluate d a high and a low case for each identified scenario. Under the high case, we assumed 100 percent internal generation of the additional electrical power and hydrogen, and under the low case, 100 percent external generation of the same. We expect refineri es to actually be somewhere between these two extreme cases in the future. For the identified high and low cases, we compared the emissions increase for each pollutant at each refinery to the significant emissions increase threshold for that pollutant, taking into consideration the current attainment status for each pollutant where the refinery is located. An important aspect of our anal ys is is that we assumed that refineries would not install new emission controls on affected units for the purpose of st aying below the significant emissions increase threshold and thereb y not triggering major NSR. In particular, we did not assume that selective cataly tic reduction (SCR) to control NO X emissions would be applied to new or modified fuel combustion units. T his is an important assumption that tends to result in overestimates of the number of major NSR permits needed for NAAQS

- related pollutants. In reality , applyingnew emission controls would be an option that refineries may employ to legally avoid major NS R permitting. We also did not assume that refineries would “net out” of NSR by taking credit for any

emissions reductions occurring within a contemporaneous timeframe, including an y new emissions reduction projects initiated specificall y for the purpose o f “netting out.” This anal ys is resulted in a prediction of whether a PSD and/or a Nonattainment NSR permit would be needed for each refinery

and the pollutants that would have to be addressed in those permits, under each of the two scenarios. Onl y the re sults for the high case are presented here. More detailed results as well as the underl yi ng methodology used in the permitting anal ys is are described in the final RIA for this rulemaking. In general terms, w e found that for the low case onl y about one

- ha lf the number of refineries were estimated to trigger major NSR as were estimated for the high case. We found that under the high case, nine refineries appeared likel y to have significant emissions increases for one or more pollutants and thus would trigg erPage 366 of 529

major NSR. 475 This estimate equates to approximately eight percent of the 108 refineries projected to sell gasoline that will be subject to the Tier 3 standards

. Of these nine refineries, we predicted that three refineries would need major source permits for NAAQS

- related pollutants and their precursors (PSD and/or Nonattainment NSR) and for GHGs (results for GHG are discussed below). Thus, we believe that under the final Tier 3 program only about three refineries may need major NSR air permits to addres s NAAQS pollutants. This number could be lower if those refineries appl y pollution controls, such as SCR for NO X , to sufficiently reduce the emissions increases to levels that are below the applicable pollutant significance level, or if the refineries can achieve emissions reductions elsewhere at the facility

to “net out” of major NSR. For refineries that are required to obtain a major NSR permit for NAAQS pollutants, the permitting process is expected to normally take about 9 to 12 months once the permitting authority has received a complete application. All three refineries just described as potentially needing NSR permits for NAAQS pollutants are also projected to need PSD permits for GHGs. In addition to these three refineries, we estimated that six o ther refineries may require a PSD permit addressing onl y GHG emissions from new or modified equipment that is part of the project. For these nine refineries, BACT would have to be applied for GHG emissions, which we expect in most cases would mean that ne w or modified fuel

- burning equipment would have to be designed for good energy efficiency . We expect that the ty

pes of equipment and process technologies that refiners are likely to modify or add to meet the final Tier 3 standards will generall y be suffic ient to satisfy BACT requirements for GHG emissions in terms of achievab ility , cost
effective ness , and energy

- efficien cy even absent the requirement to obtain a permit, meaning that having to demonstrat e that BACT is in place would not necessitate any s hift in project design or cause increase d costs. This expectation is based on the fact that there are strong economic incentives for refiners to design and purchase the most energy

- efficient process equipment to minimize the cost of production. For examp le, some of the new or modified equipment expected to be involved in refinery projects designed to meet the final Tier 3 standards are fuel combustion units (e.g., process heaters). Because fuel cost (direct cost in the case of purchased natural gas and o pportunity cost in the case of refinery

- generated fuel gas) represents a significant component of total operating cost for such units, refineries will strive to maximize energy efficiency

based on available technologies as part of their project design.

475 Because state requirements regarding minor NSR permitting vary and we do not expect minor NSR permitting programs to be a significant challenge for refinery modification projects, we did not attempt to estimate how

many of the remaining refineries might need to obtain minor NSR permits.Page 367 of 529 In 2010, EPA issued a white paper on available and emerging technologies for reducing GHGs from the petroleum refining industry

. 476 This white paper addresses the t yp es of equipment expected to be involved in projects designed to meet the final Tier 3 fuel s tandards, including process heaters/boilers, h ydrogen plants, and sulfur recovery units. The identified GHG control technologies for these ty pes of units predominately involve opportunities for energy efficiency

. Consistent with the findings reported in the white paper, our experience to date with GHG permitting at refineries and other similar sources supports the application of energy efficient design and operation of affected units for meeting BACT requirements , and we do not expect that in the time frame associated with Tier 3

- related projects, add

- on controls would be required. For EPA

- issued permits and permits issued by state or local agencies under delegation, consultation with other federal agencies under the Endangered Species Act and considerati on of environmental justice will also be required. Significantly , no air quality

modeling of GHGs will be required, and thus there would be no need to obtain extensive input information on meteorology and emissions from other nearb y sources. Given these differences, we expect that the timeline for obtaining a permit only

for GHG emissions should be shorter by several months than the timeline for a permit that addresses NAAQS pollutants. On March 22, 2012, the President issued Executive Order 13604 (EO 136 04), Improving Performance of Federal Permitting and Review of Infrastructure Projects. EO 13604 states that federal permitting and review processes must provide a transparent, consistent, and predictable path for both project sponsors and affected communi ties , and that a number of described elements must be incorporated into routine agency

practices to provide improvements in the performance of federal permitting processes. Under the EO, EPA has adopted a plan identifying th e permitting and review process es that EPA views as most critical to significantl y reduc e the aggregate time required to make permitting and review decisions on infrastructure projects while improving outcomes for communities and the environment, and describing specific and measurable a ctions the agency will take to improve these processes . 477 With regard to permitting under the Clean Air Act, this plan stated EPA ’s intention to issue a guidance memorandum by the end of 2012 to apply to PSD permits issued b y EPA and by state or local agenc ies with delegated authority from EPA , aimed at clarifying expectations and responsibilities regarding the timely

476 See “Available and Emerging Technologies for Reducing Greenhouse Gas Emissions from the Petroleum Re fining Industry,” October 2010, available at http://www.epa.gov/nsr/ghgpermitting.html

. 477 The U.S. EPA Plan for Modernizing Federal Permitting and Review Pursuant to EO 13604, August 9, 2012. http://www.epa.gov/epainnov/pdf/eo

- infrastructure

- epa - final

- plan.pdfPage 368 of 529

processing of permit a

pplications by

an EPA Regional Office or delegated agency

. This memorandum was subsequently issued on October 15, 2012. 478 EPA Regional Offices serving as the permitting authorities for refineries making modifications as part of the Tier 3 program will be guided b y the memorandum. The memorandum also recommends that other permitting authorities consider following the approach es outlined in the memorandum where applicable

. 3. Comments and Responses Several oil industry

commenters expressed doubt about whether EPA’s prediction of the small number of refineries that would need GHG permits was realistic. Commenters generall y stated that permits for the modifications needed to comply with the Tier 3 requirements should be issued expeditiously . Some industry commenters expressed doubt that this would be the case, noting what they characterized as the slow pace at which GHG permits have been issued since the requirement for GHG permitting became effective. One oil industry commenter suggested that Tier 3

- related modifications be completely exempt from permitting if they would not increase refinery capacity by more than 10 percent. No othe r specific suggestions for streamlining were submitted. Environmental groups commented that an y efforts to streamline permitting should not relax the substantive requirements to get a permit. The final rule does not establish any new flexibilities or exceptions to current permitting regulations. On an ongoing basis, EPA continues to consider way s to streamline the permitting process consistent with CAA requirements and goals. EPA has concluded that only a small number of refineries appear to have the pote ntial of triggering major source permitting as a result of modifications needed to meet the Tier 3 fuel program, given the flexibilities provided by the final program in terms of when modifications must be in place in order to achieve compliance. There wer e no industry comments that demonstrated a specific reason for concern about permitting implications on a broad scale. The Response to Comment Document includes a fuller summary of the comments on refinery

perm i tting implications and the EPA responses to these comments. **L. Refinery Feasibility**  While evaluating the merits of a national gasoline sulfur program to reduce emissions and enable future vehicle technologies, we also considered the refining

478 Timely

Processing of Prevention of Significant Deterioration (PSD) Permits when EPA or a PSD

Delegated Air Agency Issues the Permit, Stephen D. Page to Regional Air Division Directors, October 15, 2012. http://www.epa.gov/region07/air/nsr/nsrmemos/timely.pdfPage 369 of 529

industry ’s abilit y to reduce sulfur to 10 ppm on average b y January 1, 2017 and the associated costs (for more on fuel costs, refer to Section VII. B ). Based on information gathered from numerous stakeholder meetings and discussions with vendor companies that provide the gasoline desulfurization technologies both b efore and after the proposal , as well as the results from our refinery

- by

- refinery modeling, we believe it is technologically feasible at a reasonable cost for refiners to meet the sulfur standards in the lead time provided. A summary of our feasibility anal ys is is presented below. For more on our feasibility and cost assessment s and the refinery

modeling that supports them , refer to Chapters 4 and 5 of the RIA. 1. Comments Received We received a number of comments on the proposed rule regarding feasibility and lead time. Commenters in the refining industry generall y stated that they believe that the amount of lead time proposed is not sufficient. These commenters noted concerns that the short lead time proposed would drive up costs as there would be unsc heduled shut

- downs to install and/or revamp equipment to meet the Tier 3 sulfur standard, and would not provide enough time for the permitting process. These commenters requested at least five ye ars of lead time, and noted that EPA has historically provid ed at least four years of lead time in previous fuels rulemakings. Commenters in the auto industry , as well as states and non - governmental organizations (NGOs), encouraged us to finalize the rule as soon as possible and to retain the January 1, 2017 start date to harmonize our program with California’s LEVIII program and to enable Tier 3 benefits as soon as possible. As discussed in more detail below, we believe the amount of lead time provided is sufficient, especiall y given the flexibilities being provi ded. A complete discussion on the comments received with regard to lead time can be found in Chapter 5 of the Summary and Anal ys is of Comments document. 2. Is it Feasible for Refiners to Comply with a 10 ppm Average Sulfur Standard? Gasoline desulfurization technologies are well known and are readily available. Man y technologies were demonstrated under Tier 2 and have been further demonstrated b y current fuel programs in California, Japan, and Europe. Under California’s Phase 3 Reformulated Gasoline program (CaRFG3), gasoline sulfur is limited to 15 ppm on average with a 20 ppm per - gallon cap. 479 California reduced their per

- gallon cap in phases from 60 ppm effective December 31, 2003, to 30 ppm effective December 31, 2005, to 20 ppm effective December 31, 20 11. Actual in

- use gasoline sulfur levels, however, have been largel y constrained by the

479 California Air Resources Board. (2008, August 29). The California Reformulated Gasoline R egulations , Title 13, California Code of Regulations, Sections 2250

- 2273.5. Retrieved from http://www.arb.ca.gov/fuels/gasoline/082908CaRFG_regs.pdf.Page 370 of 529

Predictive Model that California refiners are using to demonstrate compliance. As a result, gasoline sulfur levels are lower than the CaRFG3 limits. Based on the Pre dictive Model, California gasoline contained approximately 10 ppm sulfur on average in 2010 (9 ppm in the summer and 11 ppm in the winter). Japan currentl y has a 10 ppm gasoline sulfur cap that took effect in January 2008. Europe also has a 10 ppm sulfur cap that has been adopted b y the 30 Member States that comprise the European Union (EU) and the European Free Trade Association (EFTA) as well as Albania and Bosnia

- Herzegovina. 480 Beijing, China also recentl y introduced a 10 ppm sulfur limit for gasoline. 481 These standards are considerably more stringent than the 10 ppm annual average standard being finalized today

because each batch of gasoline produced at every refinery must meet the 10 ppm cap. As a result, every refinery must be designed to meet this c ap regardless of changes in crude oil supply , operation conditions, or product mix. We note, however, that many oil refineries outside of the United States operate differently

from their U.S. counterparts. U.S. refiners have invested more heavily in flui dized cataly

tic cracker (FCC) units than the rest of the world to maximize gasoline production. Because the FCC unit is responsible for nearly all the sulfur that ends up in gasoline, man y U.S. refineries may face a bigger challenge in achieving 10 ppm ga soline sulfur levels. Even in the U.S., however, the picture is changing. The Annual Energy Outlook for 2013 produced b y the Energy In formation Administration supports the view that the U.S. demand for diesel fuel is increasing while the demand for gasol ine is decreasing, starting the process that will make the U.S. more like Europe. Thus, U.S. refiners seem to be beginning to move away

from rel yi ng on the FCC unit as the most important refinery unit. For this reason, the challenge of complying with more stringent gasoline sulfur control will decrease over time, and we discuss this more at the end of this section. The review of gasoline sulfur control in California and elsewhere and the future trend for gasoline demand support that achieving 10 ppm is fe asible. The Tier 3 requirements are less demanding than those of Europe or Japan. This is because the Tier 3 sulfur standard is an average standard instead of a cap standard. The accompan yi ng Tier 3 cap standard is 80 ppm, which is much higher than the average standard, allows individual gasoline batches to vary in sulfur level throughout the ye ar. Complying with Tier 3 is also made easier, as compared to California, Europe and Japan, by the ABT program which allows refineries with an eas y path to comp liance with Tier 3 to reduce their gasoline sulfur to less than 10 ppm sulfur and generate and sell those credits to refineries, which are more challenged b y Tier 3.

480 Hart Energy Consulting. (2011). International Fuel Quality Center: 2011 Worldwide Fuel Specifications 481 Article from China.org.cn entitled “ Beijing to implement stricter fuel standards ”, May 19, 2012, retrieved from http://www.china.org.cn/environment/2012

- 05/19/content_25422404.htmPage 371 of 529 3. Can Refiners Meet the January 1, 2017 Start Date? An adequate amount of lead time is req uired for the implementation of any rulemaking. Depending on the level of effort required to comply , more or less lead time is also required. In the case of Tier 3, refiners need time to select the technology

and the vendor that will provide the technolo gy needed for compliance with the fuels standard. Next, they need time to arrange an engineering and construction (E & C) contractor which will design and oversee the construction of the refinery

unit and the time needed to obtain the necessary permits an d procure the necessary

hardware. Next, refiners need time to construct the unit. Finally , the refiner needs time to make the necessary unit tie

- ins of the unit with the rest of the refinery and then startup the unit. This section, along with detailed anal ys is provided in the RIA, explains that when taking into account the time to revamp existing FCC postreater units or build grassroots postreater units, tie

- in the new or revamped units with the rest of the refinery and considering the flexibility offer ed b y the ABT program, refiners will be able to comply

with the Tier 3 program within the lead time provided.
a. Time Required to Install Grassroots Units and Revamp Existing Units The technologies for complying with Tier 3 are well known and well proven. Refiners which complied with Tier 2 using FCC naphtha desulfurization technologies installed the following units: Axens Prime G+, CDTech’s CDHydro and CDHDS, UOP’s ISAL Sinopec’s S

- Zorb and Exxon’s Scanfining. Refiners shopped around and chose among thes e various technologies which were largely untested at the time, which required us to provide more lead time for Tier 2. Since the Tier 2 sulfur standard began to be phased in, nine years have elapsed, and we believe that refiners now have direct experienc e with the installation and operation of these technologies and the vendor companies that license them and continue to support their installations onsite. We therefore believe that refiners will be able to reach a decision very

quickly when compl yi ng with Tier 3, particularl y, because in most cases the refiners will be revamping the units already installed for Tier 2 when complying with Tier 3. Based on our conversations with refiners, construction companies, vendor companies and from published literature, we estimated the time it takes to revamp existing postreaters and install grassroots postreaters. To revamp an existing postreater it is expected to require up to two ye ars. Installing a grassroots postreater is estimated to require three ye ars. Figure A reflects these project completion times showing the various major intermediate steps for completing the projects.Page 372 of 529

**Figure V.L**  **- 1**  **. Estimated Project Lead T**  **ime for Revamps and Grassroots Units** 
0

- 3

- 6 6

- 9 9

- 12 12

- 15 15

- 18 18

- 21 21

- 24 24

- 27 27

- 30 30

- 33 33

- 36RevampPre-&Postreaters Scoping Studies Process Design Permitting Detailed Engineering Field Construction Start

- up / ShakedownGrassrootsPostreater Scoping S tudies Process Design Permitting Detailed Engineering Field Construction Start

- up / Shakedown
Since many

of the Tier 3 revamps are expected to be very modest (e.g., change out a reboiler or heat exchanger), we believe that the revamping of postreaters could take less time than what we estimate in Figure V. L

- 1. Following EPA held discussions with many refiners in 2011 about EPA’s plan to pursue additional sulfur control post

- Tier 2 (Tier 3), refiners began the process of assessing how they would comply . The Tier 3 proposal was delayed for about a ye ar and it is our understanding from recent discussions with vendor companies and some refiners that, during this time, many refi ners began assessing how they intended to comply with Tier 3. Thus, many refiners likely

have completed the scoping studies, which involves technology selection, and in the case of grassroots units, vendor selection as well (refiners with a particular pos treater technology in most cases are expected to simply

revamp the same vendor’s technology , so there is no need to select a vendor). If refiners have already completed their scoping studies, we estimate that installation of the revamps or grassroots unit s would be about 3 months shorter than the 2 and 3 years, respectivel y, than we estimate in Figure V.L

1.Page 373 of 529 We believe that these project timelines are reasonable in light of past industry experiences which show FCC postreaters being installed in refinerie s in less time than what we estimate. At the Motiva refinery in Port Arthur, TX, a grassroots CDTech postreater was designed, constructed and started up in less than 2 years. At two refineries in Germany , two Prime G+ units were designed, constructed and started up

– one of them in two years, and the other in 18 months. As an extreme example, the $3.6 billion dollar, 180 kbbl/day crude oil expansion at Marathon’s Gary

ville, LA refinery

was designed, constructed and started up in 4 ye ars. This project involved construction of 10 major refinery units. Since these may be best case examples, we continue to believe the projections provided above in Figure V.L

- 1 are reasonable. In contrast, EPA received comments and feedback during meetings from the refining industry suggesting that many

of the steps outlined in Figure V.L

- 1 could take considerabl y l onger. For example, they stated that permits could take 2 years and procurement of vessels, pumps, compressors and heaters could take 2 years as well, extending the time needed to complete their projects. However, even if this may be true in some situations, the examples above highlight that this is not true in all situations. Furthermore, most refineries, as discussed in section V.K. will not need to go through an y extensive permitting process and as discussed below, not all refineries will need to undertake extensive revamps of existing units or installation of grassroots units. So once again, we believe the timeline shown is reasonable for the vast majority o f refineries. Many can complete there actions faster. For those that may require a longer timeline, the program flexibilities discussed below allow for this within the lead time provided. b. Program Flexibility

that Extends Lead Time As discussed in Sect ion V.D, the final Tier 3 program includes an ABT program that significantly helps refiners comply

with the January

1, 2017 start date. There are several provisions of the ABT program that help with respect to any leadtime constraints. The ABT program a llow s for ongoing intra

- company and inter

- compan y trading nationwide . This will allow some refineries to over - compl y with the 10 ppm gasoline sulfur standard (in our anal ys is, we modeled these refineries bringing their gasoline down to 5 ppm) , allowing other refineries that would otherwise need to install grassroots units to not invest and purchase credits instead. This aspect of the ABT program is very important because our analy sis estimates that only one refinery would need to install a grassroots hydr otreater whereas without the ABT provisions, there could be as man y as 20 grassroots units. This one aspect has huge implications for leadtime because as discussed in the previous subsection, revamps require two ye ars or less whereas grassroots FCC postre ater units require approximately

three years to install. We are convinced that this aspect of the ABT program will be utilized to the maximum extent possible because refineries revamping their postreaters in lieu of installing grassroots posttreaters resu lt s in the most cost
- effective mechanism for meeting the 10 ppm annual average standard.Page 374 of 529 An important issue to consider is that in order for refiners to opt not to invest in a grassroots unit they would have to trust that credits will be available to the m. For the proposal, we conservativel y assumed that refiners would only rel y on credits if they

could generate them internall y. However, for the final rule analysis, we have assessed how the sulfur credits were being traded under Tier 2 and found that ov er half the sulfur credits were freel y traded between companies (as opposed to only being used within companies), and many single

- refinery

companies had sulfur levels above 30 ppm (single

- refinery companies must purchase credits from other companies). Bec ause credits have a 5

- ye ar life, we also see in the Tier 2 data that refiners tend to sell credits rather than let them simply expire. Refiners may hold them as a contingency , but then sell them prior to their expiration. For example, in 2012, 40 percent of the credits traded were generated in 2007 and were set to expire at the end of 2012. This one quality of the Tier 2 program ensures the free access to credits. We designed the Tier 3 credit trading program to work just like the Tier 2 credit trading program, thus we are confident that there will be widespread trading within and between refining companies. A second aspect of the ABT program that helps with leadtime is the provision for generating earl y sulfur credits and banking them for later use. As discussed in Section V.D above, this provision allows refineries to reduce their gasoline sulfur to less than 30 ppm prior to January 1, 2017 and bank the credits for later use. Based on comments that we received on the proposed rule, we are allowing T ier 2 credits which are generated during the years 2012 and 2013 to also be used to show compliance for Tier 3. This effectively extends the earl y credit generation period for Tier 3 to encompass the ye ars 2012 to 2016, which is 5 years. Analyzing the 20 12 gasoline quality data that refiners reported to EPA, we found that gasoline sulfur levels in the U.S. averaged about 26.7 ppm. Thus, refiners have already begun overcomplying with Tier 2 b y 3.3 ppm, and are therefore already generating earl y credits th at can be used for Tier 3. If refiners do nothing more but continue to overcompl y with Tier 2 by 3.3 ppm over the 5 years of earl y credit generation, refiners will have generated enough credits to delay the completion of their capital projects by

roughl y a ye ar. Furthermore since those credits generated in 2012 and 2013 will expire in 2017 and 2018 respectivel y, refiners will have an incentive to either use them themselves or trade them in 2017 and 2018. Thus refiners that may

need to count on them to de lay their capital investment are likely to be able to have access to them. When the extent of the flexibility afforded by

the final ABT provisions is fully understood by

refiners, we believe that refiners will generate a lot more earl y credits with thei r existing gasoline sulfur control units than the 3.3 ppm we observed in 2012. As we discussed in our cost analy sis, to produce more diesel fuel in response to a greater demand for diesel fuel relative to gasoline, refiners arePage 375 of 529

undercutting the swingcut portion of FCC naphtha at their refineries. 482 This action to shift what historically

was blended into the gasoline pool to the diesel fuel pool, actuall y also dramatically reduces the sulfur content of the gasoline pool. If the entire swingcut portion of FCC naphtha is undercut to the diesel fuel pool, the amount of sulfur in the gasoline pool is reduced by about 50 percent. Our cost anal ys is estimates that at almost one quarter of U.S. refineries, refiners are fully undercutting the FCC naphtha to diesel fuel today. At many other refineries, refiners are onl y partiall y undercutting their FCC naphtha. These refineries will be able to reduce the sulfur of their gasoline well below their current levels and generate a large number of earl y credits for Tier 3. Even for the subset of refineries at which the FCC naphtha is not being undercut, refiners can assess how much activity or catal ys t life is left in its FCC postreater catal ys t and compare this time with the time to the next turnaround when the FCC postreater catal ys t is scheduled to be replaced. If there is spare catal ys t life, the refiner could elect to “turn up” their postreaters to reduce their gasoline sulfur levels to under 30 ppm. With this strategy , the refiner would generate earl y sulfur credi ts. Also, when the refiner replaces the cataly st in its Tier 2 postreater, it can elect to do so with a more active catal ys t which would allow the refinery to produce gasoline at sulfur levels below 30 ppm and generate more earl y credits for Tier 3. Bas ed on the early

actions refiners are already taking, or could take, to reduce their gasoline sulfur levels, we believe that refiners would be able to reduce their gasoline sulfur to as low as 20 ppm, on average. By averaging 20 ppm for 2.5 ye ars prior to 2017, refiners would be able to delay completion of all capital investments for Tier 3 until mid 2019. If we add the 3.3 ppm of credits during 2012, 2013 and first part of 2014, refiners would be able to delay completion of all capital investments in T ier 3 until 2020. Thus, the earl y credit provisions will, in

effect, provide nearl y 6 years of leadtime for full compliance with the fuels program. This will allow ample time for refiners to complete their investment and schedule their tie

- ins during nor mal shutdown activities. It effectively provides even more lead time than the 5 years that the refining industry requested in their comments. The delay

in the program implementation will also help to distribute the demand on the E & C industry over more ye ars ensuring that the E & C industry won’t be overwhelmed. We are also finalizing a compliance deadline of January 1, 2020 for small refiners and small volume refineries (i.e., refineries processing less than or equal to 75,000 net barrels per day of c rude oil) . This will provide approximately 36 of the 108 affected refineries with nearly 6 years of lead time; again more than the 5 years

482 The term swingcut means that this portion of the FCC product pool can be blended into gasoline or diesel fuel while still meeting the fuel quality specifications for either fuel regardless of where this swingcut is blended.Page 376 of 529

that the refining industry

requested in their comments. W e believe that these refiners and refineries are disproportionally impacted when it comes to their cost of compliance and ability

to rationalize investment costs in today ’s gasoline market. Giving these refiners and refineries additional lead time provides more time to invest in desulfurization technology , take advantage of advancements in technology , develop confidence in a Tier 3 credit market as a means of compliance, and avoid competition for capital, engineering, and construction resources with the larger refineries. Due to the January 1, 2020 compliance de adline for small refiners and small volume refineries we estimate that of the 64 refineries that will ultimately need to revamp (63) their existing hydrotreaters or add a grassroots hydrotreater (1) over the course of implementing the Tier 3 program 15 ref ineries could wait to take such actions until 2020. Further, as discussed in more detail in Section V.E.1 , small refiners and small volume refineries can generate earl y credits (from January 1, 2017 through December 31, 2019) relative to 30 ppm for sale t o other small refiners/small volume refineries, and relative to 10 ppm for sale to non

- small refiners. This could provide another pool of earl y credits for Tier 3 prior to January 1, 2017 and ongoing credits during the ye ars of 2017, 2018 and 2019. Despit e the flexibility

afforded by

the ABT program, some refiners have expressed concern that should they want or need to rely

on credits for compliance, they may not be able to do so if they cannot be assured that they will be able to acquire the necessary

cre dits from other parties when the time comes. This could force them into making relatively costly investments that they

would otherwise be able to avoid. We recognize that this may be a concern, particularl y prior to 2020 when the market will be in a stat e of transition. While we cannot guarantee credit availability , and we are confident that the program as designed provides ample opportunity

for credit generation, we do believe that providing the market with at least some basic information on credit avai lability may provide some added assurance and aid in credit market liquidity . Consequently , we pledge to work with the refining industry

on way s to make information on the sulfur credit market more transparent over the period leading up to 2020, balancing their need for information with the resource constraints of the Agency . In doing so, to protect confidentiality , we will not be able to identify individual compan y credit balances or deficits , but will provide some aggregated level of information followi ng the agency ’s annual compliance determinations that would help inform the industry of the credit balances for each vintage and deficits carried over from the previous ye ar . Because industry has already shown the ability to identify

and establish the ne cessary trading relationships under the Tier 2 program, we anticipate that they will be able to continue to do so under Tier 3. In summary , we believe that the ABT program we are finalizing today provides ample flexibility for compl yi ng with Tier 3. The averaging provisions will allow refiners that only

need to revamp their Tier 2 postreaters to generate credits by overcompl yi ng with the 10 ppm standard, and in turn allow refineries that otherwise need to install grassroots units to comply solel y through the purchase ofPage 377 of 529

credits. The banking provisions also allow refiners to generate earl y credits, effectivel y delayi ng investments for compliance to potentially as late as 2020. Finally , the small refiner and small refinery provisions delay

compliance for a pproximately

36 refineries until 2020, as well as generate and trade earl y credits. We believe that all of these provisions effectivel y address an y leadtime concerns. Furthermore, there are additional options available to refineries to avoid a noncompliance situation should all these program flexibilities prove insufficient. Refineries are permitted to carry a credit deficit for one year as long as they make it up the following ye ar, and the final rule allows refiners to apply for h ardship waivers if necessary . In addition, refineries with access to export markets can alway s choose to export fuel until such time as they can bring their desulfurization capacity online. There is a large and growing gasoline export market from the U.S

. already. Such exports of higher sulfur gasoline could be offset through imports of compliant gasoline such as historically occurred from Europe, which has a 10 ppm sulfur cap on gasoline.
c. Impact of Turnaround Timing We received numerous comments on th e proposed January 1, 2017 compliance deadline. In their comments to the proposed Tier 3 rulemaking, the oil industry stated that EPA must consider and include the time it takes to tie

- in the revamps and grassroots units in the proposed leadtime. The oil industry urged EPA increase the leadtime for Tier 3 to 5 years to allow for refiners to make their investments needed to comply with Tier 3 and tie

- in those new investments. In today ’s action we are finalizing a compliance deadline of January 1, 2017. A s previously

explained above, various provisions of the ABT program effectively provide nearly

6 years of leadtime to complete capital projects. We also note that the capital projects do not have to be completed prior to installing the necessary tie

ins. We do agree, however, that the need to make tie

- ins must be considered when assessing the feasibility

of leadtime, and in doing so, our anal ys is shows that refiners can comply

with Tier 3 within the leadtime provided. This is true not only because the fi nal rule effectivel y provides nearl y 6 years of leadtime to complete capital projects, as described above, but also because the capital projects do not have to be completed prior to installing the necessary tie

- ins. When a refiner builds a grassroots unit or some sort of revamp which involves new reactor volume or perhaps b y adding a splitter, this new capital must be “tied

- in” to the rest of the refinery . The tie in usually involves connecting a pipe from the existing unit to the new capital installed for complying with Tier 3. However, a pipe cannot simply be added while the refinery is operating. Instead, the refiner will add the necessary pipe for making the tie

- in when the refinery is shutdown for regular maintenance. The revamp or grassroots unit d oes not have to be started up at that time. Instead, the connection pipe just needs to be added and blocked off with a sealing

- ty pe valve and a blind flange (essentially a flat piece of steel) is bolted on as a precaution against a leaky valve. Once this piping has beenPage 378 of 529

added, the refiner can restart its refinery . Then when the refiner is ready to complete the tie

- in to the completed Tier 3 revamp or grassroots unit, the refiner would remove the blind flange and connect a pipe which connects the existing part of the refinery

to the newly

installed grassroots postreater unit or revamp postreater subunit. This last step can either occur when the refinery is shutdown or still operating. At that point the refiner would onl y need to open the block valve to c omplete the tie

- in of the grassroots unit or revamp to the existing refinery

. On its webpage, the American Petroleum Institute (API) reports that the average time between turnarounds is 4 years when the U.S. refineries perform maintenance on the FCC unit

. 483 This means that on average, 25% of U.S. refineries shutdown to perform maintenance on its FCC units each year. Most often, refiners conduct maintenance turnarounds on their refineries during the spring when the demand for gasoline and diesel fuel is at their lowest. Thus, refiners will have the ye ars of 2014, 2015 and 2016 to make their tie

- ins during a regularl y scheduled refinery turnaround to be able to comply by January 1, 2017, thus roughl y three

- quarters of the tie

- ins could occur before the January 1, 2017 compliance date. 484 If we superimpose the tie

- in issue with the ty pes of investments we project will be made for Tier 3, we project that for three

- quarters of the revamps, refiners will be able to make their tie

- ins prior to the January 1, 2017 start date, while the other refineries will require until the spring of 2017 to make their tie

- ins. As a worse

- case scenario, if refiners don’t even try to begin making their tie

- ins until the spring of 2015, they would need the spring of 2015 to the spring of 2018 to complete their tie

- ins. However, regardless of whether we assume that tie

- ins begin to occur in 2014 or 2015, the flexibility afforded b y the ABT program is expected to readily enable refiners to complete their capita l investments and tie

- ins and comply with Tier 3 within the lead time provided. A more detailed discussion and anal ys is of Tier 3 compliance considering unit construction time, the tie

- ins of revamps and grassroots units and availability of credits is contained in Chapter 4 of the RIA.

483 Fact Sheet entitled “Refinery Turnarounds,” American Petroleum Institute (API) webpage: http://www.api.org/oil

- and

- natural

- gas - overview/fuels

- and

- refining/refineries/refinery

- turnarounds ; dow nloaded June 21, 2013. 484 Since most refiners hav e already completed their scoping studies with the vendor companies which license the desulfurization technologies, they likely already understand what steps would need to be taken to tie

- in their revamps and grassroots units with their existing refinery. For this reason, we believe that refiners can begin making their tie

- ins as soon as the spring of 2014, and perhaps even earlier than that. One refiner who owns a number of refineries shared with us that they prepared the tie

- ins for Tier 3 when they ins talled their Tier 2 units.Page 379 of 529 d. Hardship While we project that there will be plenty of credits available to allow refiners to complete their capital investments and tie in the new or revamped unit to the rest of their refinery , we are providing another opt ion to refiners as a safety valve in case there is a shortfall of credits. Consistent with our proposal, today’s rule contains provisions for a refiner to appl y for a hardship waiver. Thus, where a refiner cannot complete its project by January 1, 2017 and credits are not available or are prohibitively

expensive, the refiner may file a hardship waiver. Details of our hardship provisions can be found in Section V.E.2.
e. Impact on the Engineering and Construction Industry As in prior rules, we also evaluated the capabilit y of E&C industries to design and build gasoline hydrotreaters as well as performing routine maintenance. Two areas where it is important to consider the impact of the fuel sulfur standards are: (1) refiners’ ability

to procure design and construction services , and (2) refiners’ ability

to obtain the capital necessary for the construction of new equipment required to meet the new gasoline quality specification. We evaluated the requirement for engineering design and construction personnel in a manner consistent with the Tier 2 anal ys is, particularl y for three t ypes of workers needed to implement the refinery

changes: front

- end designers, detailed designers, and construction workers. We developed estimates of the maximum number of each of these ty pes of workers needed throughout the design and construction process and compared those figures to the number of personnel currentl y emplo yed in these areas. The number of job hours necessary to design and build individual pieces of refinery equi pment and the job hours per piece of equipment were taken from Moncrief and Ragsdale. 485 Their paper summarizes anal ys es performed in support of a National Petroleum Council study of gasoline desulfurization, as well as other potential fuel quality

changes. The design and construction factors for desulfurization equipment are summarized in Table V

- 1

.

**Table V**  **- 1**  **Design and Construction Factors** Gasoline Refiners Number of New Pieces of Equipment per Refinery 60

485 Moncrief, Philip & Ragsdale, Ralph. (2000). Can the U.S. E&C Industry Meet the EPA’s Low Sulfur Timetable? Paper presented at NPRA Annual Meeting, March 26

- 28, 2000. Paper No. AM

00

- 57.Page 380 of 529 Number of Revamped Pieces of Equipment per Refinery 15 Job Hours Per Piece of New Equipment a Front End Design 300 Detailed Design 1,200 Direct and Indirect Construction 9,150

a Revamped equipment estimated to require half a s many hours per piece of equipment Refinery projects will differ in complexity and scope. Even if all refiners desired to complete their project b y the same date, their projects would inevitably begin over a range of months. Thus, two projects scheduled to start up at exactly the same time are not likely to proceed through each step of the design and construction process at the same time. Second, the design and construction industries will likely

provide refiners with economic incentives to avoid tempor ary peaks in the demand for personnel. Applying the above factors, we projected the maximum number of personnel needed in an y given month for each ty pe of job. The results are shown in Table V

- 2 . In addition to total personne l required, the percentage of the U.S. workforce in these areas is also shown, assuming that half of all projects occur in the Gulf Coast

.

**Table V**  **- 2**  **Maximum Monthly Demand for Personnel**

Front

- End Design Det ailed

Engineering Construction Tier 3 Gasoline Sulfur Program Number of Workers 202 809 6,012 Percentage of Current Workforce a 11% 9% 4%

a Based on current employment in the U.S. Gulf Coast assuming half of all projects occur in the Gulf Coast To meet the Tier 3 sulfur standards, refiners are expected to invest $2.0 billion between 2014 and 2019 and utilize approximately 250 front

- end design and engineering jobs and 1,500 construction jobs

. The number of estimated jobs required is small relative to overall number available in the U.S. job market. As such, w e believe that three years, plus the additional flexibilities provided, is adequate lead time for refineries to obtain necessary permits, secure E&C resources, install new desulfurization equipment, and make all necessary retrofits to meet the Tier 3 sulfur standards. For an in

- depth assessment of stationary source implications, refer to Section V.K . For more on our E&C assessment, refer to Chapter 4 of the RIA.Page 381 of 529

**M. Statutory Authority for Tier 3 Fuel Controls**  Consistent with our proposal, w e are adopting ga soline sulfur controls under our authority

in section 211(c)(1) of the Clean Air Act. This section gives us the authority to “control or prohibit the manufacture, introduction into commerce, offering for sale, or sale” of an y fuel or fuel additive for use in a motor vehicle, motor vehicle engine, or nonroad engine or nonroad vehicle (1) whose emission products, in the judgment of the Administrator, cause or contribute to air pollution which may

reasonabl y be anticipated to endanger the public health or wel fare [section 211(c)(1)(A)] or (2) whose emission products will impair to a significant degree the performance of an y emission control device or s ys tem which is in general use, or which the Administrator finds has been developed to a point where in a reaso nable time it would be in general use were the fuel control or prohibition adopted [section 211(c)(1)(B)]. Consistent with our proposal, w e are finalizing controls on gasoline sulfur levels based on both of the Clean Air Act criteria, as described in more detail below. 1. Section 211(c)(1)(A) Under the first criterion, we believe that emission products of gasoline with current levels of sulfur contribute to ambient levels of ozone, particulate matter (PM), nitrogen dioxide (NO 2 ), sulfur dioxide (SO 2 ) and carb on monoxide (CO), which are all pollutants for which EPA has established National Ambient Air Quality Standards (NAAQS). These pollutants are linked with respiratory and/or cardiovascular problems and other adverse health impacts leading to increased medi cation use, hospital admissions, emergency department visits, and premature mortality . Approximately 1 4 9 million people currently live in counties exceeding a NAAQS. 486 Motor vehicles also emit air toxics, and the majority of Americans continue to be expo sed to ambient concentrations of air toxics at levels which have the potential to cause adverse health effects, including cancer, immune sy stem damage, and neurological, reproductive, developmental, respiratory , and other health problems. 487 A more detailed discussion of the health and environmental effects of these pollutants is included in Section II.B. As discussed there , emissions of these pollutants cause or contribute to ambient levels of air pollution that are reasonabl y anticipated to endanger publi c health and welfare. Control of gasoline sulfur to 10 ppm will lead to significant reductions in emissions of these pollutants, with the benefits to public health and welfare significantly outweighing the costs.

486 Data come from Summary Nonattainment Area Population Exposure Report, current as of July 20, 2012 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA

- HQ

OAR

- 20 11

- 0 135. 487 U.S. EPA. (2011) Summary of Results for the 2005 National

- Scale Assessment. www.epa.gov/ttn/at w/nata2005/05pdf/sum_results.pdf.Page 382 of 529 EPA has evaluated the te chnical feasibility of achieving these sulfur levels, including the cost of the reductions. W e have concluded that these reductions are feasible in the lead time provided

. For more on the feasibility of the fuel standards , refer to Section V.L above and Chapter 4 of the RIA. As discussed in Section III , and further supported by the discussion in Section IV.A.6 , EPA also evaluated the emissions reductions from pre

- Tier 3 vehicles that will be achieved b y controlling gasoline sulfur level to 10 ppm on avera ge . The 10 ppm sulfur standard will provide significant reductions in harmful emissions independent of the vehicle standards and these reductions are significant and contribute to the total monetized health benefits. Already in 201 8 , when the emission re ductions are almost entirely due to the sulfur standards , the Tier 3 program will provide significant benefits

. We continue to believe that the Tier 3 program will produce benefits to public health and welfare whose value significantl y outweighs the cost s. These reductions can be achieved in a manner that is technologically

feasible. In sum, EPA concludes that the entire body of evidence strongl y supports the view that controlling gasoline sulfur to 10 ppm is quite reasonable in light of the emissions r eductions and benefits achieved, taking costs into consideration. For more detail on the costs and benefits of the Tier 3 program, refer to Chapter 5 of the RIA. Section 211(c)(2)(A) requires that, prior to adopting a fuel control based on a finding that the fuel’s emission products contribute to air pollution that can reasonabl y be anticipated to endanger public health or welfare, EPA must consider “all relevant medical and scientific evidence available, including consideration of other technologicall y or economicall y feasible means of achieving emission standards under [section 202 of the Act].” EPA’s anal ys is of the medical and scientific evidence relating to the emissions impact from motor vehicle engines, which are impacted b y gasoline sulfur, is de scribed in more detail in Chapter 6 of the RIA. EPA has also satisfied the statutory requirement to consider “other technologicall y or economically feasible means of achieving emission standards under section [202 of the Act].” This provision has been interpreted as requiring consideration of establishing emission standards under section 202 prior to establishing controls or prohibitions on fuels or fuel additives under section 211(c)(1)(A). See Ethyl	Corp.	v.	EPA , 541 F.2d. 1, 31

- 32 (D.C. Cir. 1976). In Ethyl , the court stated that section 211(c)(2)(A) calls for good faith consideration of the evidence and options, not for mandatory deference to regulation under section 202 compared to fuel controls. Id . at 32, n.66. EPA is also adopting Tier 3 emissio ns standards for motor vehicles under section 202. These standards could not achieve an y emission reductions for vehicles already in use , while reducing fuel sulfur will achieve l arge emission reductions for vehicles already in use. For new vehicles, the use of 10 ppm average sulfur fuel is an essential part of achieving Tier 3 levels while appl yi ng an array of advancements in emissions control technology to the light

- duty

fleet

. As shown in Section IV.A, w e believe that a chieving the Tier 3 exhaust emis sion standards will require technological improvements such asPage 383 of 529

very careful control of the exhaust chemistry and exhaust temperatures to ensure high catal ys t efficiency

. These technology improvements, which are described in greater detail in the RIA (Chap ter 1)

– improving warm

- up and catal ys t light

- off after cold starts and maintaining very high catal ys t efficiency

– all rel y on 10 ppm sulfur average fuel to achieve the very significant emissions reductions required for the fleet to achieve Tier 3 emissio ns levels. Achieving Tier 3 emissions standards without a reduction in sulfur to 10 ppm levels would only

be possible if there were technology improvements significantl y above and beyond even those mentioned above. EPA cannot identify technology

improveme nts that could provide such a large additional increase in emissions control effectiveness, across the fleet, above and beyond that provided by the major improvements in technology discussed above, without any additional gasoline sulfur control. As discus sed in Section IV.A.3, the Tier 3 fleet average exhaust emissions standards of 30 mg/mi NMOG+NOx will require large reductions of emissions across a broad range of light

- duty vehicles and trucks with differing degrees of utility . Specificall y, achieving T ier 3 emissions standards as an average across the fleet will require fleet wide reductions of approximately 80%. We believe this means significant reductions from all sectors, with the result that there is a need for major reductions from all t ypes of ve hicles in the light

- duty fleet, including those above as well as most vehicles that are already near , at , or below the Tier 3 Bin 30 fleet average standard

. Achieving these reductions presents a major technology challenge and EPA is not aware of technology improvements that could provide such large additional increases in emissions control effectiveness, across the fleet, above and beyond that provided b y the major improvements in control technologies expected for use in meeting today ’s Tier 3 standards. R ather, as available test data indicates, in addition to lower gasoline sulfur levels, the required reductions are of a magnitude that EPA expects manufacturers to emplo y advances in technology in all of the relevant areas of emissions control

– exhaust cat alyst technologies , (such as reducing the time to catalyst light off, improving exhaust cataly st durability at 120,000 or 150,000 miles and improving efficiency of full y warmed up exhaust catal ys ts), reducing engine out emissions, power train calibration p rimarily focused on reducing cold

- start NMOG emissions , and on reducing both cold

- start and warmed

- up (running) NO X emissions

. The impact of sulfur reduction on the effectiveness of the available technology

improvements play s such a large role in achieving the Tier 3 emissions standards that it is clearl y unrealistic to expect that technology would be available, at the 30 ppm sulfur standard , to fill the emission control gap left from no sulfur reduction, and still achieve the very significant fleet wide re ductions needed to meet the Tier 3 fleet average. In effect reducing sulfur from 30 ppm to 10 ppm has such a large impact on the ability of the technology

improvements to achieve Tier 3 emissions levels that absent these sulfur reductions there is not a s uite of technologyPage 384 of 529

advancements available to fill the resultin g gap in emissions reductions. As also discussed in Section IV.A.6, testing of Tier 2 and Tier 3 ty pe vehicles, as well as other information , shows that sulfur has a very large impact on the eff

ectiveness of the control technologies expected to be use d in Tier 3 vehicles. Without the reduction in sulfur to a 10 ppm average , the major technology improvements projected under Tier 3 would only result in a limited portion of the emissions reductions needed to achieve Tier 3 levels. For example, without the reduction in sulfur from a 30 ppm to 10 ppm average , the technology improvements would not come close to achieving Tier 3 levels . In some cases this may result in the same effectiveness as the cur

rent Tier 2 technology

and achieve onl y approximately Tier 2 levels of exhaust emissions control

. As earlier explained, EPA has not identified t echnology that would achieve the average Tier 3 emissions standards , across the fleet, with sulfur at 30 ppm l evels, and as a result Tier 3 emissions standards would not be technicall y feasible and achievable. This is also the case for levels in

- between 30 and 10 ppm, e.g. , 20 ppm. The required emissions reductions are so large and widespread across the fleet, an d the technology

challenges are high enough, especiall y for heavier vehicles, that the large increase in emissions that would occur even from a higher average sulfur level compared to 10 ppm average would lead to an inability for the technology

to widely a chieve the Tier 3 fleet wide average emissions standards. Further, as also explained in Section IV.A.6, larger vehicles (the largest LDVs and LDT3s, LDT4s and MDPVs) will hav e greater difficult y achieving cold

start NMOG emissions control as a result of t oday’s emissions standards. ( Certifying to a useful life of 150,000 miles versus the current 120,000 miles will further add to manufacturers’ compliance challenge for large light trucks; see Section IV.A.7.c for the useful life requirements.) This is based in part on the impact on NMOG emissions of the larger engine surface

- to
- volume ratio and resultant heat conduction from the combustion chamber during warm

- up. There are also tradeoffs between some cold

- start NMOG controls and cold

- start NOx control. For example, secondary

air injection and/or leaner fueling strategies improve catal ys t light

- off for NMOG after a cold

- start but also place OSC components in an oxidation state that limits potential for NOx reduction and thus often result in higher cold

- start NOx emissions. Some applications achieve lower NMOG+NOx emissions without the use of secondary air injection by

careful calibration, changes to the catal ys t formulation and balancing of catal yst HC and NOx activity . The EPA Prototy

pe Silverado and the de velopmental Ford Explorer discussed in Section IV .A.6.c are specific examples of this approach. Thus, as a result of today’s emissions standards these larger vehicles, in addition to needing to reduce NOx emissions to near

- zero levels (as is generally the case for all Tier 3 vehicles, as discussed below), these trucks may also have additional NMOG reduction challenge.Page 385 of 529 2. Section 211(c)(1)(B) Under the second criterion, we believe that sulfur in gasoline will significantl y impair the emission

- control sy stems expected to be in general use in motor vehicle engines designed to meet the Tier 3 emission standards. The Tier 3 fuel sulfur standards will restrict gasoline sulfur content to an annual average of 10 ppm beginning in 2017, to enable compliance with new emission standards based on the use of advanced emission control technology that will be available to Tier 3 vehicles

. Section IV describes the substantial adverse effect of high gasoline sulfur levels on the emission

- control devices or s ys tems for vehicle s and engines meeting the Tier 3 emission standards. As discussed in Section IV.A.6 , sulfur in gasoline inhibit s the emissions control performance of modern three

- way exhaust cataly st sy stems by

selectively

binding with, and in some instances reacting wi th active sites and coating materials. The amount of sulfur retained by the cataly st is primarily

a function of its operating temperature, the active materials and coatings used within the catal ys t, the concentration of sulfur oxides in the incoming exhaus t gases, and air

- to
- fuel ratio feedback and control b y the engine management system. In addition to its interaction with cataly st materials, sulfur can also react with the wash

- coating itself to form alumina sulfate, which in turn can block coating pores and reduce gaseous diffusion to active materials below the coating surface. Sulfur also interferes with the ability of OSC components to reduce NO X emissions. Water

- gas shift reactions , which are also important for NO X reduction over catal ys ts combining Pd and ceria , can be blocked b y sulfur poisoning and may be responsible for observations of reduced NO X activity over Pd/ceria catal ys ts even with exposure to fairly low levels of sulfur (equivalent to 15 ppm in gasoline ). Operating the catal ys t at a suffi cientl y high temperature under net reducing conditions (e.g., air

- to
- fuel equivalence that is net fuel

- rich of stoichiometry) can effectivel y release the sulfur oxides from the catalyst components. Thus, regular operation at sufficiently

high temperatures at rich air

- to
- fuel ratios can minimize the effects of fuel sulfur levels on cataly st active materials and cataly st efficiency

. As discussed in Section IV.A.6, h owever, it cannot completely eliminate the effects of sulfur poisoning. In current vehicles, desulfurization conditions occur ty pically at high loads when there is a degree of commanded enrichment (i.e., fuel enrichment commanded b y the engine management system primarily for protection of engine and/or exhaust sy stem components). A study of Tier 2 vehicles in the in

- use fleet recentl y completed b y EPA shows that emission levels immediately following high speed/load operation is still a function of fuel sulfur level, suggesting that lower gasoline sulfur levels will bring emission benefits unachie vable by catal ys tPage 386 of 529

desulfurization procedures alone. 488 For example, i f a vehicle operates on gasoline with less than 10 ppm sulfur, exhaust emissions stabilize over repeat FTP tests at emissions near those of the first FTP that follows the high speed/load operation and catal ys t desulfurization. Continued operation on gasoline with 10 ppm average sulfur content or lower is necessary after catal ys t desulfurization in order to achieve emissions reductions with the current in

- use fleet. 489 As also discussed in Section IV .A.6, the emission effects study performed b y S GS also suggests that negative effects of exposure to a somewhat higher sulfur level (80 ppm in this case) are largel y reversible for Tier 2 vehicles, and thus, suggests that reducing fuel sulfur lev els nationwide will bring significant immediate benefits b y reducing emissions of the existing fleet. Finally , to the extent such conditions do not occur today as part of normal driving for vehicles in the in

- use fleet, there is no practical way to modify such existing vehicles to do so. Thus, reducing fuel sulfur levels has been the primary

regulatory

mechanism to minimize sulfur contamination of the catal ys t and ensure optimum emissions performance over the useful life of a vehicle and is the only effec tive means for the in

- use fleet

. For T ier 3 vehicles , there are several reasons wh y regular operation at the high exhaust temperatures and rich air

- to
- fuel ratios necessary for catal ys t desulfurization is not desirable and may not be possible

. The temperatures necessary to release sulfur oxides are high enough to lead to thermal degradation of the catal ys t over time through thermal sintering of active materials. Sintering reduces the surface area available to participate in reactions. Additionall y, it is not alway s possible to maintain these cataly st temperatures (because of cold weather, idle conditions, light load operation) . Also, the rich air

- to
- fuel ratios necessary for sulfur removal can result in increased PM, NMOG and CO emissions

. T he impact of gasoline sulfur has become even more important as vehicle emission standards have become more stringent. Some studies have suggested an increase in catal ys t sensitivity to sulfur when standards increase in stringency and emissions levels decrease. 490 , 491 Em ission standards under the programs that preceded the Tier 2 program (Tier 0, Tier 1 and National LEV, or NLEV) were high enough that the impact of sulfur was considered negligible. The Tier 2 program recognized the importance of sulfur and reduced the su lfur levels in the fuel from

488 The Effects of Ultra

- Lo w Sulfur Gasoline on Emissions from Tier 2 Vehicles in the In

- Use Fleet, EPA

- 420

- R

- 14

- 002.
489 See Preamble Section IV.A.6.c and Chapter 1 of the RIA (Section 1.2.3.2) for more details on this study and its results. 490 Takei, Y., Kungasa, Y., Okada, M., Tanaka, T. Fujimoto, Y. (2000). Fuel Property Requirement for Advanced Technology Engines. SAE Technical Paper 2000

- 01

- 2019. 491 Ball, D., Clark, D., Moser, D. (2011). Effects of Fuel Sulfur on FTP NOX Emissions from a PZEV 4 Cylinder Application. SAE Technical Paper 2011

- 01

- 0300.Page 387 of 529

around 300 ppm to 30 ppm in conjunction with the new emission standards. At that time, very

little work had been done to evaluate the effect of further reductions in fuel sulfur

– especiall y on in

- use vehicles that may have so me degree of cataly st deterioration due to real

- world operation. As also shown in Section IV.A.6, there are currentl y available data from various studies and testing on Tier 2 vehicles that indicate that emissions performance is sensitive to sulfur levels in gasoline. Specificall y, the MSAT studies of Tier 2 vehicles showed the emission reduction potential of lower sulfur fuel on Tier 2 and later technology vehicles over the FTP cycle. For instance, there was a 48 percent increase in NOx over the FTP whe n gasoline sulfur was increased from 6 ppm to 32 ppm . Further, emissions data from testing conducted by

EPA on a representative subset of vehicles (after clean

- out procedures) on 28 ppm and 5 ppm fuel with accumulated mileage , showed Bag 2 NO X emissions w ere 47 percent lower on the 5 ppm fuel as compared to 28 ppm fuel . T he reductions found in th ese studies are also cons is tent with the MSAT and Umicore studies on Tier 2 vehicles in terms of the magnitude of N O X and HC reductions when switching from 28 ppm to 5 ppm fuel. The results of the emission effects study

performed by

SGS and included with API ’s comments on the Tier 3 proposal are also consistent with the findings of EPA’s Tier 2 in

- use study , namely that emissions performance is sensitive to fuel s ulfur level. In sum, these studies confirm our view that r educing sulfur levels in gasoline from current levels to levels in the range of t oday ’s final gasoline sulfur standards will be expected to achieve significant reductions in emissions of NO X , hydro carbons, and other pollutants of interest from the in

- use fleet. The importance of lower sulfur gasoline is also demonstrated by the fact that vehicles certified to California SULEV typicall y certify to higher bins for the federal Tier 2 program. Light

- d ut y vehicles certified to SULEV under LEV II are more ty pically certified federall y to Tier 2 Bin 3, Bin 4 or Bin 5. In particular, non

hy brid vehicles certified to California SULEV are not certified to federal Tier 2 Bin 2 emissions standards even though the numeric limits for NO X and NMOG are shared between the California LEV II and federal Tier 2 programs for SULEV and Bin 2. Confidential business information shared by the auto companies indicate that the primary

reason is an inability

to demonstrate c ompliance with SULEV/Bin 2 emission standards after vehicles have operated in

- use on gasoline with greater than 10 ppm sulfur and with exposure to the higher sulfur gasoline sold nationwide

. While vehicles certified to the SULEV and Tier 2 Bin 2 standards both demonstrate compliance using certification gasoline with 15

- 40 ppm sulfur content, in

- use compliance of SULEV vehicles in California occurs after significant, sustained operation on gasoline with an average of 10 ppm sulfur and a maximum cap of 2 0 pp m sulfur while federally certified vehicles operate on gasoline with an average of 30 ppm sulfur and a maximum cap of 80 ppm sulfur. Although the SULEV and Tier 2 Bin 2 standards are numericall y equivalent, the increased sulfur exposure of in

- use vehicles certified under the federal Tier 2 program results in a need for aPage 388 of 529

higher emissions compliance margin to take into account the impact of in

- use gasoline sulfur on full useful life vehicle emissions. As further discussed in Section IV.A.6.d, available stud ies and testing also confirm that there is significantly increased sensitivity

of exhaust emissions to gasoline sulfur b y vehicles with exhaust emission control technologies that we expect to be used with vehicles complying with today ’s Tier 3 emissions st udies. Specificall y, available test data from the Ford Motor Company developmental heav y - light

- dut y truck and the Umicore Autocat 2009 Chevrolet Malibu PZEV show more increases in NOx and NMOG+NOx emissions with increased gasoline sulfur than was observed for Tier 2 vehicles. Similarly , test data from the EPA Tier 3 prototy pe 2012 Chevrolet Silverado heavy

- light duty pickup also showed increased NMOG+NOx emissions and one exceedance of today ’s final Bin 30 exhaust emissions standards. In sum, available t est data indicate that increasing gasoline sulfur levels from 10 ppm to 30 ppm on vehicles meeting Tier 3 standards essentially

negated the entire benefit of the advances in emissions control technology

that were applied to meet Tier 3 developmental goals. Because of the resulting need to reach near

- zero NO X levels to offset NMOG emissions, any significant degradation in NO X emissions control over the useful life of the vehicle will likely

prevent some if not most larger vehicles from reaching a combined NMOG+NO X level low enough to compl y with the 30 mg/mi fleet

- average standard. An y degradation in catal ys t performance due to gasoline sulfur will also reduce or eliminate the margin necessary to ensure in

- use compliance with the Tier 3 emissions standards

. Thus, the impact of gasoline sulfur poisoning on exhaust catal ys t performance and the relative stringency of the Tier 3 exhaust emissions standards, particularl y for larger vehicles and trucks, when considered together make a compelling argument for the virtual elimination of sulfur from gasoline. As discussed in Section V. B , the average 10 ppm gasoline sulfur standard is feasible and is the level that appropriately balances costs with the emission reductions that it provides and enables. Not onl y wil l a 10 ppm sulfur standard enable vehicle manufacturers to certify their entire product line of vehicles to the Tier 3 fleet average standards, but reducing gasoline sulfur to 10 ppm will better enable these vehicles to maintain their emission performance in

- use over their full useful life. Higher sulfur levels would make it impossible for vehicle manufacturers to meet the Tier 3 standards, and would forego the very large immediate reductions from the existing fleet. Reducing the sulfur level below 10 ppm would further reduce vehicle emissions and allow the Tier 3 vehicle standards to be achieved more easily. However, we believe that a 10 ppm average standard is sufficient to allow vehicles to meet the Tier 3 standards. Further, as discussed in Sections V.B and IX.B there are significant challenges associated with reducing sulfur below 10 ppm.Page 389 of 529 3. S ection 211(c)( 2 )(B) Section 211(c)(2)(B) requires that, prior to adopting a fuel control based on a significant impairment to vehicle emission

- control sy stems, E PA consider available scientific and economic data, including a cost benefit anal ys is comparing emission

- control devices or sy stems which are or will be in general use that require the proposed fuel control with such devices or s ys tems which are or will be in general use that do not require the proposed fuel control. As described above and in the RIA (Chapter 1) , we conclude that the emissions control technology expected to be used to meet Tier 3 standards would be significantly impaired by

operation on ga soline with annual average sulfur levels greater than 10 ppm. Our anal ys is of the available scientific and economic data can be found below in Section VII . The RIA includes a detailed anal ysis of the environmental benefits of the emission standards (Chap ters 6 and 8), an analy sis of the technological feasibility and cost of controlling sulfur to the levels established in the final rule (Chapters 4 and 5), and a cost anal ys is of the sulfur control and motor vehicle and engine emission standards (Chapter 9). Under section 211(c)(2)(B), as just noted, EPA is also required to compare the costs and benefits of achieving emission standards through emission

control sy stems that would not be sulfur

- sensitive, if any such sy stems are or will be in ge neral use. We have determined that there are not (and will not be in the foreseeable future) emission control devices available for general use in motor vehicles that can meet the emission standards and would not be significantly impaired by

gasoline with current gasoline sulfur levels. Emissions cannot be reduced an ywhere near the magnitude contemplated by the emission standards without the application of the kind of emissions control technology discussed in this final rule

. 4. S ection 211(c)( 2 )( C ) Section 211(c)(2)(C) of the Clean Air Act requires that prior to prohibiting a fuel or fuel additive, EPA establish that such prohibition will not cause the use of another fuel or fuel additive “which will produce emissions which endanger the public health or welf

are to the same or greater degree” than the prohibited fuel or additive. This finding is required b y the Act onl y prior to prohibiting a fuel or additive, not prior to controlling a fuel or additive. Since EPA is not prohibiting use of gasoline sulfur, b ut rather is controlling the level of sulfur in these fuels, this finding is not required for this rulemaking. However, EPA does not believe that the gasoline sulfur controls will result in the use of any other fuel or additive that will produce emissions that will endanger public health or welfare to the same or greater degree as the emissions produced b y gasoline with current sulfur levels. Unlike the case of unleaded gasoline in the past, where lead performed a primary function by providing the necessary

octane for the vehicles to function properl y, sulfur does not serve an y useful function in gasoline. It is not added to gasoline, but occurs naturally in the crude oil into which gasoline is processed. Were it not for the expense of sulfur removal, it would likely have been removed from gasoline yearsPage 390 of 529

ago in order to improve the maintenance and durability characteristics of motor vehicle engines. We are also adopting the various controls for DFE, other ox ygenates, butane and pentane blended into gaso line, and gasoline additives, under our authority in section 211(c)(1). As explained above, these controls are necessary to prevent emissions products that may endanger the public health or welfare or impair to a significant degree the performance of an y emission control device or sy stem. Th is action basicall y extends various controls on gasoline to DFE, other ox ygenates, butane, and gasoline additives. The reasons for adopting the controls for gasoline apply as well to adopt the controls for DFE, other oxygenates, butane, and gasoline additives.Page 391 of 529



## VI. **Te chnical**  **Amendments and Regulatory St**  **rea mlining**  In addition to adopting new Tier 3 vehicle standards and new gasoline sulfur standards, we are also finalizing a range of technical amendments and regulatory streamlining actions as part of the Regulatory Review initiative. Some of these may have some bearing on implementation of the Tier 3 vehicle and fuel standards, while others deal with other aspects of EPA’s existing fuel and vehicle regulations. EPA is als o sy

nchronizing several different reporting deadlines under various regulations affecting transportation and motor vehicle fuels and fuel additives. This action will reduce regulatory burdens by

aligning reporting deadlines across several programs and lay s the foundation for the overall goal of combining various fuels reports together into a single, simplified electronic format in the near future

. **A. Fuel Program**  **Amendments** The following sections discuss the changes being finalized today to the fuels regulati ons in 40 CFR part s 79 and 80. Some of these changes are technical amendments to correct minor errors or inconsistencies in the regulations; others are to address areas in the regulations that needed clarification and/or streamlining ; still others are to provide additional flexibility

. With regard to regulatory streamlining, the majority of these items involve providing additional clarity , remov ing or updating outdated provisions, and decreasing the frequency and/or volume of reporting burden where data are either no longer needed or are redundant in light of other EPA fuels programs. In general, we believe that these changes are straightforward and will reduce burden on industry with no expected environmental impact. We are also finalizing regulat ions to adopt a performance

- based measurement s ys tems approach to fuel parameter testing as discussed in Section VI .A.2, to expand the downstream butane blending provisions to allow for pentane blending as discussed in Section VI.A. 3, and to accept Top Ti er test data under the gasoline deposit control program as discussed in Section VI.A.4

. We may undertake additional regulatory streamlining in a future action following additional stakeholder interactions , as discussed in Section VI.A.5

. Below is a table listing the provisions that we are amending in today ’s action. We have provided additional explanation for those amendments that warr ant additional explanation in the following sections

. **Table VI**  **- 1**  **Summary of Regulatory Streamlining and Technical Amendments**  Section DescriptionPage 392 of 529

Varied Various sections amended to update references to test methods (see Section VI.A.1.a.iii). 79.5 Revise d periodic reporting requirements. 80.2 Revise d and add ed definitions. 80. 8 Amended to update sampling test methods, and to state to which fuels §80.8 applies. 80.46 Revise d measurement of RFG fuel parameters. 80.47 Added Performance

- Based Test Method Approach. 80.65 Amended to reduce complex model test parameters and reporti ng and to accommodate RVP adjustment when blender grade pentane is blended into gasoline downstream of the refinery

. 80.65(f)(5) Added to allow for designation of an alternative lab. 80.66(f) Amended to delete references to appendices that no longer exis t. 80.74 Amended to reflect the recordkeeping requirements for entities in the blender grade pentane distribution sy stem. 80.75 Revise d RFG reporting requirements. Added reporting requirements for produces and importers of blender grade pentane. 80.77 Amended to reflect the product transfer document requirements for entities in the distribution system for blender grade pentane. 80.80 Amended to reflect the potential penalties requirements for entities in the distribution sy stem for blender grade pentane. 80.82 Amended to appl y butane blending provisions to entire part 80 and to revise RVP test method. 80.85 Added the re quirements for downstream pentane blending. 80.86 Added the requirements for producers and importers of blender grade pentane. 80.87 Added the controls and prohibitions for entities in the blender grade pentane distribution sy stem. 80.101 Revise d measur ement of conventional gasoline fuel parameters. 80.105 Amended to require identification of test methods used in refiner report s, and to add reporting requirements for butane blenders

. 80.161(b)(1)(ii)(A)( 2 ) Amended to specify the requirements for certi fication of an additive under the new alternative gasoline deposit control certification option. 80.161(b)(1)(ii)(A)( 3 ) Added to specify the requirements for certification of an additive under all gasoline deposit control options other thanPage 393 of 529 the alternativ e certification option. 80.161(b)(2) Amended to address the submission of gasoline deposit control additive samples under the alternative gasoline detergent certification option. 80.161(b)(3)(ii)(C) Amended to reflect that documentation of the fuel inj ector deposit demonstration test will be required under the alternative gasoline d eposit control certification option. 80.161(b)(3)(v) Amended to state that the results of the intake valve and fuel injector deposit demonstration test must be submitted to EPA as part of the certification letter under the alternative gasoline deposit control certification option. 80.161(b)(3)(viii) Amended to change “PFID test” to “fuel injector test”. 80.161(d)(1) Amended to reflect the availability of the alternative gas oline deposit control certification option. 80.163(a)(1)(iii) Amended to specify that gasoline deposit control additives may be certified under the new alternative certification option. 80.164(a) Amended to reference the test fuel requirements under the alternative gasoline deposit control certification option. 80.165 Amended to accommodate the alternative deposit control test procedures and standards under the alternative gasoline deposit control certification option. 80.167(a) Amended to specify how c onfirmatory

testing will be conducted for additives certified under the alternative gasoline d eposit control certification option. 80.176 Added to specify the certification test procedures and standards under the alternative gasoline deposit control certi fication option. 80.177 Added to specify the certification test fuels under the alternative gasoline deposit control certification option. 80.178 Added to i ncorporate standards and test methods by reference. 80.330 Revise d sampling and testing requireme nts. 80.340 Amended to add standards for gasoline produced by blending pentane into previousl y certified gasoline. 80.370 Amended to require identification of test method used and revises reporting requirements. 80.511 Revise d per - gallon and marker requ irements. 80.572 Revise d labeling requirements. Amended to remove the requirement for 15 ppm highway diesel fuel pump labels beginning November 30, 2014, and to amend the title to reflect that the section includes labeling requirements for dispensers of m otor vehicle diesel fuel. 80.573 Revise d labeling requirements. 80.574 Revise d labeling requirements. 80.580 In corporate d test methods by reference. 80.584(b)(3)(i) Amended to correct t ypographical error (“notc” to “not”).Page 394 of 529

80.585 Revise d test method a pproval process. 80.604 Revise d reporting requirements. 80.1235(a)(6) Amended to allow refiners and importers who are blending blendstock into previously certified gasoline ( PCG) an alternative to directly

test the blendstock for benzene. 80.1235(a)(5) Amended to clarify that refiners and importers may use either approach for blendstocks that are blended into either conventional gasoline or reformulated gasoline. 80.1235(b)(2) Amended to clarify EPA’s intent (per §80.1238(b)) to allow refiners and impo rters to include oxygenate blended downstream of a refinery or import facility in their annual average benzene calculation, and to make the section consistent with §80.1238(b). 80.1238 Revise d benzene determination. 80.1347(a)(5) Amended to require that a negative annual average must be reported as zero, and that a refiner must comply with §80.65(i) when producing RBOB or RFG and §80.101(g)(9) when producing conventional gasoline. 80.1347(a)(6) Added to allow refiners and importers who are blending blend stock into previously certified gasoline ( PCG) an alternative to directly

test the blendstock for benzene. 80.1348 Revise d sample retention requirements. 80.1349 Added to allow importers who import gasoline into the U.S. by truck to use the sampling and testing requirements in 40 CFR part 80 subpart E as an alternative to the sampling and testing requirements in subpart L. 80.1354 Revise d reporting requirements for gasoline benzene program. 80.1407 Amended to reflect that pentane blenders incur a renewa ble volume obligation (RVO) for the blender grade pentane they add to previously

certified gasoline (PCG) 80.1451 Revise d RFS reporting requirements. 80.1640(d) Added to allow refiners who blend only blender

- grade pentane into PCG to meet the sampling an d testing requirements for sulfur by using sulfur test results pursuant to §80.85.

1. Fuels Program Regulatory Streamlining
a. Amendments Related to Reduction of Testing and Reporting of Complex Model Gasoline Parameters In §§80.65 and 80.75, we are streamlin i ng and reduc ing the reformulated gasoline ( RFG ) and conventional gasoline ( CG ) testing and reporting burden of gasoline refiners and importers b y reducing the testing and reporting requirements of certain fuel parameters associated with the complex model. Currently , for RFG,Page 395 of 529

every batch must be tested for every parameter listed in §80.65

. No monthly compositing of batch samples is allowed for any parameter. For CG , monthly compositing and batch reporting based on those monthly composites is allowed for a ll parameters except sulfur and benzene. W ith the phasing out of complex model standards 492 , reduced testing and reporting is appropriate, particularl y for RFG. In cases where a refiner is subject to only benzene, RVP, and sulfur standards, certain paramet ers no longer need to be tested and reported on an every

- batch basis. However, the full slate of complex model parameters will still be needed in some cases. Specificall y, refiners producing RFG during the summer volatile organic compound ( VOC ) control s eason will still need to use the complex model to determine VOC performance, and thus must still measure and report the relevant complex model fuel parameters. In addition, small refiners that are subject to the delayed compliance option for the 0.62 volume percent benzene standard will have to use the complex model (and thus measure all complex model parameters) until 2015 for CG MSAT1 compliance. 493 Currently , there are 17 complex model parameters on the RFG/anti

- dumping batch report. We are reducing tes ting and reporting requirements for some of these parameters for RFG, CG or both. For both RFG and CG, w e are eliminat ing testing and reporting of American Petroleum Institute (API) gravit y. In addition, we are finalizing that oxygenates need not be repo rted unless the refiner’s gasoline includes ox ygenates or the refiner is including downstream added ox ygenate in its compliance calculations. Apart from being necessary for use in the complex model, these parameters have little use for program compliance. Commenters agreed with the elimination of testing of APIgravit y and ox yg enates. For winter RFG, we are eliminating the requirement to test and report aromatics, distillations and olefins on an every batch basis and instead will allow testing and r eporting of monthl y composites

. Commenters from the refining industry strongl y suggested that we eliminate testing of these parameters altogether, since they are not needed, and their elimination would further reduce the burden on regulated parties. Whil e we agree that a reduction in burden would occur if refiners were not required to test, even on a monthl y composite basis, for these parameters, the many interconnected aspects of the RFG program make any seemingl y innocuous change potentially fraught with unintended consequences . Thus, we are deferring the consideration of an y action to completely eliminate the testing of these parameters to an y future fuel program restructuring, as discussed in Section VI.A.5. S ulfur and benzene will continue to be test ed and reported on an every batch basis as these values are necessary for the Tier 2 and Tier 3 gasoline sulfur and MSAT2 benzene programs. All summer complex model parameters will still be

492 Per §§80.41(e) and (f), and §80.101(c), applicable NOx and toxics emissions requirements are superseded by the Tier 2 gasoline sulfur standards and MSAT2 benzene standards, respectively. 493 61 FR 17230 (March 29, 2001).Page 396 of 529

required to be tested and reported on an every batch basis becaus e of the summer VOC requirement for RFG. For CG , o nl y benzene, sulfur, and an y ox ygenates that are actuall y included in the gasoline batch must be tested and reported on an every

batch basis (except for refiners that are still subject to a complex model t oxics standard; they

must test all parameters but may use monthly

composite testing and reporting except for sulfur and benzene, and ox ygenate, where applicable). In the proposal, we stated “... values for aromatics, olefins, and distillation terms may conti nue to be determined from monthly composites. ” Some commenters thought the term “may” in that sentence meant that reporting on those parameters at all is optional. That is an incorrect interpretation. We were conveying that obligated parties may

use either monthly

composites or batch testing. But those parameters must still be measured and reported. Commenters in the refining industry do not think these parameters need to be measured at all for parties subject to the MSAT2 benzene standard, as complian ce with that standard is not dependent on aromatic, olefin, or distillation values. As mentioned earlier, there are several areas of the RFG and/or anti

- dumping programs where testing and reporting burden could likely be reduced; however, we have not fully evaluated the implications of changing the current requirements, and thus we are leaving consideration of such changes to the broader program restructuring discussed in Section VI.A5. Nonetheless, the changes that are finalized today will substantially

r educe the testing and reporting burden on regulated parties.

b. Amendments Related to Reporting Dates EPA is amend ing various provisions in 40 CFR parts 79 and 80 to reduce the number of different reporting deadlines that regulated parties must meet and to en able the future use of a unified and simplified reporting form. Currentl y under 40 CFR parts 79 and 80, there are ten separate cyclical reporting dates each ye ar (eleven in a leap ye ar). Streamlining reporting deadlines will allow EPA to develop a single, user - friendl y, electronic form that will collect all required data, maximizing the capability of electronic reporting to provide reuse of data and avoid duplicate data submission. EPA’s goal is to simplify reporting and reduce the number of hours parties spend preparing and submitting reports while simultaneously

improving data received from stakeholders . This overall effort responds to Executive Orders 13563 and 13610, which direct government agencies to simplify

rules and to achieve reductions in paper work and reporting burdens, and is part of EPA’s agency

- wide effort to streamline regulatory reporting requirements. We are amending these deadlines so that all affected programs use the same four reporting deadlines

. Programs that will be affected b y thi s change include :

 the fuels and fuel additives registration program (40 CFR part 79, subpart A) ;

 the Reformulated Gasoline and Anti

- Dumping program (40 CFR part 80, subparts D and E) ;Page 397 of 529  the Gasoline Sulfur program (40 CFR part 80 subpart H) ;

 the Motor Vehic le, Nonroad, L ocomotive, and Marine Diesel program (40 CFR part 80 subpart I) ;

 the Gasoline Benzene program (40 CFR part 80 subpart L) ;

 the Renewable Fuel Standard program (40 CFR part 80 subparts K and M) ; and

 the Tier 3 program being finalized today (40 CFR part 80 subpart O)

. We are finalizing that reporting deadlines will be standardized as follows: June 1, for all reports covering quarter 1 of the compliance year (January through March) ; September 1, for quarter 2 (April through June) ; December 1, f or quarter 3 (July through September) ; and March 31 for quarter 4 (October through December)

. End

- of

- ye ar compliance reports will also be due on March 31. These changes will either delay

or maintain current deadlines for nearly all required reports. Deadl ines for all other annual reports will either be maintained if they matched the new quarterl y deadline, or extended to match the new quarterl y deadline. It should be noted that even with the changes finalized today , r espondents will still have the option to report earlier than an y given deadline. Commenters generally agreed with the proposed date changes. Some commenters in the refining industry suggested eliminating all quarterly

reporting for RFG if winter aromatics, olefins and distillation are no lon ger required to be reported as they suggested. These values are normally

reported in the 1 st and 4 th quarters. As one commenter stated, “In addition, there is no point in splitting up summer RFG/RBOB reporting between the 2 nd and 3 rd quarters.” As noted above, winter aromatics, olefins and distillation are still required to be reported, albeit on a monthly composite basis. Thus, the need for quarterl y reporting remains. However, we expect that the need for quarterly reports will be evaluated as part of the broader program restructuring discussed in Section VI.A.5. EPA proposed not to include “Attest Engagements” (currentl y due May 31 of the following ye ar) or reporting related to specific events under the Fuels Program, such as trading Renewable Identifi cation Numbers (RIN s ) in EPA’s Moderated Transaction Sy stem (EMTS) , in the reporting revisions described above

. Rather, a ll reporting deadlines for Attest Engagements and reporting specific events will remain the same. Some commenters communicated that i f the annual and fourth quarter reporting deadlines were to be extended to March 31 of each y ear, then the attest engagement date should also be shifted one month from May 31 to June 30 to allow sufficient time for the significant data

- gathering and commun ications required to complete those engagements. EPA is not changing the compliance period associated with the new extended reporting date, but rather, is simply allowing additional time for data review, preparation and reporting. EPA does not believe th at extending the attest engagement date is necessary because companies have the flexibility to use the extra reporting time to begin preparationPage 398 of 529

for the attest engagement if they prefer. As stated previously , the extension to reporting deadlines does not p reclude stakeholders from reporting before the deadline. EPA is not extending the date for attest engagements from May 31 to June 30. That said, EPA is streamlining reporting dates to aid in our development of a single electronic reporting format and is updating the due date for attest engagements found in part 80 from May 31 to June 1. This change will not affect compliance or increase burden of reporting entities. Rather, the purpose of streamlining various reporting deadlines is to ease reporting burden and help aid EPA in the development and implementation of a single electronic reporting format. We are also correcting a ty pographical error in 40 CFR 80.1451(f)(2) and clarifying that reports are to be signed by the “responsible corporate officer.” One commenter suggested that EPA revise the instances when a “responsible corporate officer” signature is required, and when perhaps someone else in the company can sign. The example given in the comment was that a phone number change should not require a “responsible corporate officer” signature, as getting this level of signature can be burdensome, and the compan y can have appropriate delegations in place when someone other than the “responsible corporate officer” is the signatory

. While we understand the concern expressed, EPA does not believe a regulatory action is necessary

to address this concern but rather believes this issue is best addressed via administrative procedures. EPA plans to further evaluate this specific concern and similar “responsibl e corporate officer” issues and address the concerns in the future, outside of the regulatory framework. Finally , we are addressing a t ypographical error in the regulatory text. Specificall y, incorrect reference s under 40 CFR 79.5(a)(2) and 79.5(b) are b eing addressed as well as clarification being added

.

c. Amendments to Update Fuel Parameter Test Methods Refiners, importers and ox ygen ate blenders producing gasoline and diesel motor vehicle fuel are required to test RFG, CG and diesel fuel for various fue l parameters including aromatics, benzene, distillation, olefins, ox ygenate content, RVP, and sulfur. As stated in the proposal, a number of relevant regulatory provisions had references to test methods that have been revised and updated. Several comment s were received indicating that since the time of the proposal, some of the proposed updates have been further revised and updated and the desire was expressed for the regulated community to have the opportunity

to use the most current version of each of these test methods. Today , we are updat ing those test methods to reflect current test methods in order to ensure that all test methods are readil y available to the regulated community. ASTM International (ASTM) test method D2622 is currently the designate d test method for measuring sulfur, in gasoline and diesel fuel at the 500 ppm sulfur standard. (§§80.46(a)(1), 80.580(b)(2)

. ) ASTM test methods D5453, D6920, D3120 and D7039 are currentl y alternative test methods for measuring sulfur in gasoline. (§§80 .46(a)(3)(i), 80.46(a)(3)(ii), 80.46(a)(3)(iii), 80.46(a)(3)(iv)

. ) ASTM test method D5453 is also an alternative test method for measuring sulfur in diesel fuel at the 500 ppm sulfurPage 399 of 529

standard, as well as ASTM test method D4294. (§80.580(c)(2)

. ) ASTM tes t method D6667 is currently the designated test method for measuring sulfur in butane. (§80.46 (a)(2)

. ) ASTM test methods D4468 and D3246 are currently alternative test methods for measuring the sulfur content in butane. (§ § 80.46(a)(4)(i), 80.46(a)(4)(i i)

. ) ASTM D1319 is currentl y the designated test method for measuring olefins in gasoline and aromatics in diesel fuel and is also allowed as an alternative test method for measuring aromatics in gasoline. (§ § 80.46(b) , 80.2(z) , and 80.46(f)(3) , respectiv el y. ) ASTM D6550 is currently an alternative test method for measuring olefins in gasoline. (§80.46(b)(2)(i)

. ) ASTM test method D5599 is currently the designated test method for measuring oxygenates in gasoline. (§80.46(g)(1)

. ) ASTM test method D4815 is currently an alternative test method for measuring ox ygenates in gasoline. (§80.46(g)(2)

. ) ASTM test method D5769 is currentl y the designated test method for measuring aromatics in gasoline. (§80.46(f)(1)

. ) ASTM test method D3606 is currently the de signated test method for measuring benzene in gasoline. (§80.46(e)

. ) ASTM test method D86 is currentl y the designated test method for measuring the distillation of gasoline. (§80.46(d)

. ) ASTM test method D5191 is currentl y the designated test method fo r measuring the RVP of gasoline. (§80.46(c)

. ) ASTM test method D976 is currentl y the designated test method for measuring the Cetane Index of diesel fuel. (§80.2(w)

. ) ASTM standard practice D4057 is currentl y the manual sampling standard practice for p etroleum and petroleum products. (§80.8(a)

. ) ASTM standard practice D4177 is currentl y the automatic sampling standard practice for petroleum and petroleum products

. (§80.8(b)

. ) ASTM standard practice D5842 is currentl y the RVP sampling standard practi ce for fuels

. (§80.8(c)

. ) ASTM standard practice D5854 is currentl y the composite sampling standard practice for petroleum and petroleum products

. (§80.8(a)

. ) Table VI

- 2 lists the designated anal yt ical test methods and alternative anal yt ical test methods for RFG, CG and diesel fuel that we are updat ing in today ’s action. The Agency

has reviewed these updated ASTM test methods and believes that the revisions contained in them will result in improvements in the utilization of these test methods for the regulated industry . We also believe that our revisions to these test methods will not result in significant changes that would cause a user of an older version of the same method to incur increased complia nce costs. Moreover, all of the revisions were deemed necessary by ASTM so that improvements in the test method’s procedures would ensure better operation for the user of the test method. Thus, EPA is today updat ing the regulations for the following ASTM test methods: 1) ASTM D2622

- 10, the designated test method for measuring sulfur in RFG, CG, and alternative test method for diesel fuel at the 500 ppm sulfur standard; 2) ASTM D3120

- 08, alternative test method for sulfur in gasoline ; 3) ASTM D4294

- 10, alt ernative test method for sulfur in diesel fuel at the 500 ppm sulfur standard; 4 ) ASTM D5453

- 12 , alternative test method for sulfur in gasoline and diesel fuel at the 500 ppm sulfur standard; 5 ) ASTM D6667

- 10, designated test method for sulfur in butane; 6 ) ASTM D4468

- 85( Reapproved 2011 ), alternative test method for sulfur in butane; 7 ) ASTM D3246

- 11, alternative test method for sulfur in butane; 8 ) ASTM D1319

- 13 , designated test method forPage 400 of 529

measuring olefins in gasoline and aromatics in diesel fuel, as well as the alternative test method for measuring aromatics in gasoline; 9 ) ASTM D6550

- 10, alternative test method for measuring olefin content in gasoline; 10 ) ASTM D4815

- 13 , alternative test method for measuring ox ygenate content in gasoline; 11 ) ASTM D5599

- 00 (2010), the designated test method for measuring oxygen content in gasoline; 12 ) ASTM D5769

- 10, the designated test method for measuring aromatics in gasoline; 13 ) ASTM D3606

- 10, the designated test method for measuring benzene in gasoline; 14 ) ASTM D86

- 12 , the designated test method for measuring distillation properties of gasoline; 15 ) ASTM D5191

- 12 , the designated test method for measuring the RVP of gasoline; 16 ) ASTM D976

- 06(2011), the designated test method for measuring the Cetane Index of diesel fuel ; and 17) ASTM D7039

- 13, alternative test method for measuring sulfur in gasoline

. **Table VI**  **- 2**  **Designated & Alternative ASTM International Analytical Test Methods Under RFG, CG & Diesel Motor Ve**  **hicle Fuel Programs** Fuel Parameter ASTM Analy tical Test Method Sulfur ( designated test method for gasoline) ASTM D2622

- 10, entitled “Standard Test Method for Sulfur in Petroleum Products by Wavelength Dispersive X

- Ray Fluorescence Spectrometry” Sulfur ( d esignated test method for 500 ppm sulfur diesel) ASTM D2622

- 10, entitled “Standard Test Method for Sulfur in Petroleum Products by Wavelength Dispersive X

- Ray Fluorescence Spectrometry” Sulfur (alternative test method for gasoline) ASTM D3120

- 08, entitled , “Standard Test Method for Trace Quantities of Sulfur in L ight Petroleum Hydrocarbons by

Oxidative Microcoulometry” Sulfur (alternative test method for 500 ppm sulfur diesel) ASTM D4294

- 10, entitled, “Standard Test Method for Sulfur in Petroleum Products by Energy Dispersive X

- ray Fluorescence Spectrometry” Sulfur ( alternative test method for gasoline) ASTM D5453

- 12 , entitled, “Standard Test Method for Determination of Total Sulfur in L ight Hydrocarbons, Spark Ignition Engine Fuel, Diesel Engine Fuel, an d Engine Oil b y Ultraviolet Fluorescence” Sulfur ( alternative test method for 500 ppm sulfur diesel) ASTM D5453

- 12 , entitled, “Standard Test Method for Determination of Total Sulfur in L ight Hydrocarbons, Spark Ignition Engine Fuel, Diesel Engine Fuel, an d Engine Oil b y Ultraviolet Fluorescence” Sulfur ( designated test method for butane) ASTM D6667

- 10, entitled, “Standard Test Method for Determination of Total Volatile Sulfur in Gaseous Hydrocarbons and Liquefied Petroleum Gases b y Ultraviolet Fluorescenc e” Sulfur ( alternative test method for butane) ASTM D4468

- 85( Reapproved 2011 ), entitled, “Standard Test Method for Total Sulfur in Gaseous Fuels b y Hydrogenol ys is and Rateometric Colorimetry” Sulfur ( alternative test method for butane) ASTM D3246

- 11, ent itled, “Standard Test Method for Sulfur in Petroleum Gas by Oxidative Microcoulometry”Page 401 of 529

Olefins (designated test method for gasoline) ASTM D1319

- 13, entitled “Standard Test Method for Hydrocarbon Ty

pes in Liquid Petroleum Products by Fluorescent Indicator Adsorption” Aromatics (alternative test method for gasoline and designated test method for diesel) ASTM D1319

- 13, entitled “Standard Test Method for Hydrocarbon Ty

pes in Liquid Petroleum Products by Fluorescent Indicator Absorption,” for diesel fuel, this method is the designated test method; for gasoline, this method is an alternative test method and if used as an alternative method, its results must be correlated to ASTM D5769. Olefins (alternative test method for gasoline) ASTM D6550

- 10, entitled, “Standard Test Method for the Determination of Olefin Content of Gasolines by Supercritical

- Fluid Chromatograph y” Ox ygen content ( designated test method for gasoline) ASTM D5599

- 00 (2010), entitled, “Standard Test Method for Determination of Oxygenates in Gas oline by Gas Chromatograph y and Oxygen Selective Flame Ionization Detection” Ox ygen content ( alternative test method for gasoline) ASTM D4815

- 13 , entitled “Standard Test Method for Determination of MTBE, ETBE, TAME, DIPE, tertiary

Amyl Alcohol and C 1 to C 4 Alcohols in Gasoline by Gas Chromatograph y” Aromatics ( designated test method for gasoline) ASTM D5769

- 10, entitled, “ Standard Test Method for Determination of Benzene, Toluene, and Total Aromatics in Finished Gasolines b y Gas Chromatograph y/Mass Spectrometry” Benzene ( designated test method for gasoline) ASTM D3606

- 10 , entitled, “Standard Test Method for Determination of Benzene and Toluene in Finished Motor and Aviation Gasoline by Gas Chromatography” Distillation ( designated test method for gasoline ) ASTM D86

- 12 , entitled, “Standard Test Method for Distillation of Petroleum Products at Atmospheric Pressure” Reid Vapor Pressure ( designated test method for gasoline) ASTM D5191

- 12 , entitled, “Standard Test Method for Vapor Pressure of Petroleum Product s (Mini

- Method)” Cetane Index ( designated test method for diesel) ASTM D976

- 06(2011), entitled, “Standard Test Method for Calculated Cetane Index of Distillate Fuels” Sulfur (alternative test method for gasoline) ASTM D7039

- 13, entitled, “Standard Test M ethod for Sulfur in Gasoline, Diesel Fuel, Jet Fuel, Kerosine, Biodiesel, Biodiesel Blends, and Gasoline Ethanol Blends by Monochromatic Wavelength Dispersive X

- ray Fluorescence Spectrometry”Page 402 of 529 d. Amendments Related to Downstream Blending and Upstream Refine r/Importer Compliance Determination Today ’s rule also clarifies the list of products that are not to be included in a refinery ’s or importer’s compliance determination under §80.1240. Refiners and importers are currently

required under §80.1235(b)(2) to e xclude oxygenate added to finished gasoline, RBOB or CBOB downstream of either the refinery that produced the gasoline or the import facility where the gasoline was imported. This conflicts with EPA’s intended approach in §80.1238(b), which allows refiner s and importers to include ox ygen ate blended downstream of a refinery or import facility in their annual average benzene calculation, provided the refiner or importer meets certain requirements. We are finalizing changes that will allow refiners and importers to include ox ygen ate blended downstream of their facility and that will make these related sections consistent. EPA received significant support for this action from commenters.

e. Amendments Regarding Previously Certified Gasoline For compliance with the MSAT2 regulations, for blendstock that is blended into previously

certified gasoline (PCG ), we are providing flexibility for refiners and importers b y providing an alternative allowing them to directly sample and test each batch of blendstock, and treat the blendstock as a produced batch

. We are add ing §80.1347(a)(6) to reflect this alternative. This practice is already allowed under the Tier 2 sulfur program (at §80.340(a)(2)). Refiners and importers are currentl y required to determine the benzene c ontent of the PCG before the addition of blendstock, determine the benzene content of the combined blend of PCG and blendstock, and calculate the properties of the blendstock by treating the PCG as a negative volume batch and treating the blended product a s a positive batch. Due to variability

in the benzene test method, the PCG approach can sometimes result in calculated blendstock benzene concentrations that are negative, which is physicall y impossible. We are amend ing the regulations at §80.1235(a)(6) (and add ing §80.1347(a)(6), as mentioned) to allow refiners and importers who blend blendstock into PCG to directly test the blendstock for benzene. We expect that this method will improve accuracy and ensure a positive benzene test result. Also, today ’s action will clarify that regardless of the approach used, a negative sulfur or benzene result cannot be reported; rather, any negative result must be rounded to zero. Similarly , no negative annual average result can be reported. We are also amend ing the regulations at §80.1235(a)(5) to clarify that refiners and importers may use either approach for blendstocks that are blended into either conventional gasoline or reformulated gasoline. Lastl y, we are allow ing importers who import gasoline into the United States by truck to use the sampling and testing requirements in subpart E for truck importers as an alternative to the sampling and testing requirements in subpart L.Page 403 of 529

EPA provided these alternative requirements in subpart E to eliminate the need to test every truckload of imported conventional gasoline for all complex model parameters, including benzene. 494 Since Subpart L also requires importers to test every truckload of imported gasoline for benzene, EPA believes it is appropriate to allow truck importe rs of gasoline to use the sampling and testing requirements in subpart E as an alternative. We are amend ing the regulations to provide this alternative b y adding a new §80.1349. EPA received significant support for this action from commenters.

f. Amendments Related to Designation of an Alternative Lab Refiners have indicated to EPA that significant problems are created when a facility ’s designated lab is nonoperational and testing cannot be performed at the lab during that time period. We are thus finaliz in g (at §80.65(f)(5)) that a facility will have the ability

to designate a back

- up or alternative lab for testing during such times. In no case could this alternative lab be used to select the best test result, rather it may onl y be used on those occasions where operational necessity causes a need for it (e.g., the normal lab is closed, the apparatus for certain test methods are down, or independent lab personnel are not available). EPA received significant support for this action from commenters.

g. Amendment s Related to De Minimis Reporting Changes We proposed that parties who submit batch reports would not be required to correct inconsequential errors in reporting batch volumes under certain conditions, the primary

condition being that the discrepancy met th e definition of “de minimis”, which as proposed, was an amount no greater than the smaller of 500 gallons or one (1) percent of the true batch volume. Under the proposal, regulated parties would no longer be require d to provide a complete resubmission of a compliance report when a minor discrepancy of a few barrels was uncovered. We proposed that this new provision would apply to reporting for RFG, anti

- dumping, gasoline and diesel sulfur, and MSAT2 . We proposed that it would also apply to the RFS renewab le volume obligation (RVO) , but would only appl y t o the volume of fuels produced or exported that result in a RVO for obligated parties. We received comments on this proposed change, many of which generall y agreed with our concept. However, commenters wh o agreed with the concept stated that they

believe the proposed levels are so small that they are of little practical value, and that a de minimis volume of 500 gallons will almost alway s be less than 1 percent of the true batch volume. In examples provid ed, commenters stated that pipeline batch volumes are approximately 25,000 barrels, and that a 500 gallon difference equates to a 0.05% difference; 500 gallons on a 250,000 gallon refinery production batch equates to 0.005%. Thus, according to the comment ers,

494 70 FR 74561 (December 15, 2005).Page 404 of 529

the 500 gallon limit

– which is clearl y less than 1% in the two examples

- would fail to provide the intended relief and would not prevent a party from having to make inconsequential volume corrections. These commenters suggested that a de minimis threshold value of 0.5 percent be applied regardless of batch size. Several commenters also recommended that we delete the proposed regulatory text at §80.10 (c) and (d), as the application of a de minimis threshold implies that small volume errors in batch reporting are trul y inconsequential and do not have an impact on compliance with fuel standards, so no separate demonstration of material impact should be required. One commenter stated that it opposes the de minimis provision with respect to the RFS pr ogram. According to the commenter, EPA did not provide sufficient legal or factual basis for the proposal in order for the public to provide meaningful comment. In addition, according to the commenter, the proposed de minimis change, if finalized, would allow obligated parties to under report their volume, thereb y reducing their RVO. The commenter also stated that EPA cannot finalize the proposed provision based on other comments it receives because, according to the commenter, EPA would still not be sat isfying notice and comment requirements. We have decided not to finalize the proposed de minimis provisions at this time. One of the primary motivations for proposing the de minimis provision was to avoid the need for inconsequential corrections to produc tion volumes that would have no impact on compliance with standards that rely on production volumes (e.g., average standards and RFS). Late changes to production volumes for whatever reason can necessitate simultaneous changes to compliance calculations that, if de minimis, would have no meaningful impact on compliance. However, as comments highlight, it is has proven difficult to come up with an acceptable de minimis threshold that can appl y across all potential situations. Furthermore, the proposed pr ovision focused onl y on volume corrections, but in reality our experience suggests that corrections often take place for other purposes such as data entry , coding, formating or other ty pographical errors

– not only minor corrections to reported volume. We believe that adjusting reports for inconsistencies will become less burdensome, as EPA intends to transition all reporting to electronic reporting in the future. In addition, EPA received input from the regulated community about a de minimis provision spe cificall y as it related to the RFS program. As discussed below in Section VI.A.1.h, we are finalizing a one

- month delay in the RFS reporting deadline, which we believe will provide obligated parties with more time to review and correct their records and reports, and help to minimize the need for late corrections. We will revisit the need for a de minimis threshold in the future if these changes prove insufficient.

h. Amendments Related to RFS2 Annual Report Date EPA is finalizing the proposed changes to the RFS2 annual report date from the last day

of February

to March 31. EPA intended the change would 1) alleviate staffing problem s for regulated entities because the regulatory requirements arePage 405 of 529

often handled b y the same personnel and 2) provide relief from the urgent need to obtain RI Ns when small discrepancies in gasoline production or import volumes are realized. Another reason for proposing a change to the reporting deadline from the last day in February

to March 31 was described in Section VI.A.1.b. (Ame ndments Related to Reporting Dates). Streamlining reporting dates will allow EPA to develop a single, user

- friendly , electronic form that will collect all required data, maximizing the capability of electronic reporting to provide reuse of data and avoid duplicate data submission. Commenters generally agreed with the proposed date change. One commenter pointed out that the staffing issue described would not be addressed b y the change date because EPA is changing both RFG and Anti

dumping compliance deadli nes to March 31

– same as the RFS2 annual reporting. EPA understands the point made but nonetheless, believes that d elaying the RFS reporting date will give reporting entities additional time and flexibility to review data and will have no impact on emiss ions, air quality , or compliance with the standard. EPA also believes that the overarching goal of streamlining reporting dates to develop a single electronic reporting format, in and of itself, will provide general relief to regulated parties. Comments r eceived generall y support this view. EPA requested comment on whether or not the same date extension from the last day of February

to March 31 should appl y to those transferring RINs in EMTS for satisfying RVOs under the previous compliance year. Some commenters wanted to have RIN trading through the new deadline (March 31), while others wanted trading to end on the last day of February

to allow time for data cleanup which could improve compliance and reporting accuracy . One commenter also pointed out that changing the RIN trading deadline might have an unforeseen impact on the RI N market and suggested EPA carefully consider this possibility

before making a decision on extending the RIN trading date. EPA agrees that providing enough time for data cleanup is important to ensure reporting accuracy and meet compliance goals. In addition, EPA understands stakeholders’ concerns about how such a change in RIN trading could conceivabl y impact the RIN trading market dynamics. As such, RIN transfers in EMTS for satis fying RVOs under the previous compliance ye ar will continue to end on the last day of February

. i. Amendments to the Highway Diesel Pump Label Requirements We are remov ing the requirement for diesel fuel pump labels for 15 ppm highway diesel fuel. Beginnin g December 1, 2010, all highway diesel fuel was required to be 15 ppm or less; thus, highway diesel fuel labels are no longer needed to distinguish it from 500 ppm highway diesel fuel. However, we do recognize that it may confuse consumers who are accusto med to seeing the highway diesel fuel pump labels if those labels were to disappear, thus , retail and wholesale purchaser

consumer facilities will be free to continue labeling to eliminate confusion if they so choose. The elimination of this requirement f rom the regulations does not preclude retail and wholesale purchaser

- consumer facilities from keeping 15 ppm highway diesel fuel labels, it only

eliminates the EPA requirement that such labels must be present.Page 406 of 529 Comments from parties in the fuels industry e xpressed support for this proposal. Additionally , we received a comment suggesting that the requirement of vehicle labeling for 15 ppm highway diesel fuel (ultra low sulfur diesel fuel, or “UL SD”) should also be removed i n conjunction with this change, as the vehicle labels would be unnecessary for the same reasons noted for the pump labels. We note that this change was in fact made for vehicles under 14,000 lbs GVWR in a previous rulemaking for MY 2014 and later vehicles (see 40 CFR 86.1807

- 01(h)). Further, in today ’s action, we are discontinuing the UL SD labels for MY 2014 and later vehicles above 14,000 lbs GVWR at 40 CFR 86.007

- 35(c).

2. Performance

- Based Measurement Sy stems (PBMS) T oday we are finalizing a performance

- based measurement s ys tem (PBMS) for chemical and ph ys ical properties of fuels regulated by EPA’s motor vehicle and engine fuel programs

. S pecificall y , they are gasoline properties at §80.46, gasoline sulfur at §80.195, and diesel fuel properties at §80.2(z). At proposal, we explained that PBMS would set forth procedures and criteria for those laboratories making measurements to demonstrate compliance with fuels regulations to qualify alternative anal yt ical test methods. We also explained that it would set minimum statistical quality

contr ol (SQC) requirements, based on standard industry practices , and that laboratories must maintain and document the precision and accuracy of anal yt ical methods used in the context of th i s program. We further explained that EPA envision ed that PBMS would pr ovide additional flexibility to the regulated industry in choosing test methods and foster innovation and improvement in the precision and accuracy

of the measurement of motor vehicle and engine fuel properties while not reducing the emission benefits that result from these fuel programs. We reasoned that PBMS should also provide cost savings to the regulated industry

by providing rapid access to newly

- developed test methods with superior speed and ease of anal ys is. This is because s ome of these newer meth ods use less

- expensive easier to automate instrumentation and smaller quantities of consumables, thus , reducing both operating costs and environmental impact (78 FR 29953). Table VI

- 3 below lists fuel parameters and the ir corresponding designated test methods that we proposed to update

. **Table VI**  **- 3**  **Designated Analytical Test Methods for Gasoline and Diesel Fuel** Fuel Parameter Designated Analy tical Method Sulfur in gasoline ASTM D 2622

- 10 Sulfur in butane ASTM D 6667

- 10 500 ppm Sulfur Diesel Fuel ASTM D 2622

- 10 Olefins in gasoline ASTM 1319

- 10 Reid vapor pressure (RVP) in gasoline ASTM D 5191

- 10b , with the following correlation equation: RVP psi = (0.956 * X)

- 0.347 RVP kPa = (0.956 * X)

- 2.39 where: X = total measured vapor pressure in psi orPage 407 of 529 kPa. Distillation in gasoline ASTM D86

- 11a Benzene in gasoline ASTM D 3606

- 10 , except that instrument parameters shall be adjusted to ensure complete resolution of benzene, ethan ol, and methanol peaks. Aromatics in gasoline ASTM D 5769

- 10 , except that sample chilling requirements in section 8 of this standard are optional. Ox ygen and ox ygenate content in gasoline ASTM D 5599

- 00 (20 10 ) Aromatics in diesel fuel ASTM D1319

- 10

a. Ov erview of Proposed Program Requirements As explained at proposal, i n a June 29, 2004 rulemaking, EPA specified a performance

- based approach for measuring diesel sulfur at 15 ppm and 500 ppm and removed previous requirement s that had specified particular de signated and alternative methods for 15ppm diesel sulfur

. 495 We decided, in that rulemaking, to offer two options for test methods for diesel sulfur at the 500 ppm level. The first option required use of either the designated test method or specific altern ative test methods

. 496 The second option was for a test method to meet performance based requirements similar to those adopted for 15ppm diesel sulfur

. 497 We proposed extend ing the performance

- based approach to method selection and qualification to other par ameters besides diesel sulfur, with modifications appropriate to accommodate the differences among fuel parameters. Today , consistent with our proposal, we are finalizing requirements for PBMS subject to a few revisions of certain requirements that we are making in response to comments on our proposal. Specificall y, in today ’s action we are setting forth requirements that laboratories sh ould use to demonstrate the precision498 and accuracy499 of chosen fuel parameter measurement methods. As also explained at proposal, PBMS as finalized would: 1) require individual laboratories to demonstrate adequate

495 See 40 CFR 80.584 and 80.545. 496 See 40 CFR 80.580(c)(2). 497 See 40 CFR 80.584(a)(2), 40 CFR 80.584(b)(2)(i) through 40 CFR 80.584(b)(2)(iii), and 40 CFR 80.585. 498 Precision

– the amount of consistency in a set of measurements performed on the same material. ASTM repeatability and reproducibility are examples of measures of precision. ASTM Repeatability (“r”)

– the difference between successive test results obtained by the s ame operator with the same apparatus under constant operating conditions on identical test material. ASTM Reproducibility (“R”)

– the difference between two single and independent test results obtained by different operators working in different laborator ies on identical test material using the same method. 499 Accuracy

– the closeness of a single measurement to its true value of what is being measured.Page 408 of 529

measurement quality , 2) allow laboratories to choose methods that meet their own needs, provided they

can meet quality

criteria, 3) prescribe criteria rather than specific methods 500 , and 4) require all laboratories making regulatory measurements to establish and maintain a statistical quality control program (72 FR 29955). EPA continues to believe that PBMS w ill no t compromise on either precision or accuracy relati ve to the sy stem that exists under current regulations. We have also incorporate d the standards and practices of V oluntary C onsensus S tandard B ased (VCSB) organizations wherever feasible. Today ’s requirements appl y to the qualification of anal yt ical test instrumentation and methods used to measure various characteristics of individual fuel samples. Consistent with our proposal, i t does not apply to sampling methods or in

- line blending methods. The Agency received several comments asking to extend PBMS to in

- line blending methodologies expeditiously . As earlier explained, today ’s final action does not extend to sampling methods or in

- line blending methods. This is because , in

- line blending alrea dy has a certification process that sets forth qualification criteria that take into account the unique combinations of sampling, control, and anal ys is that are involved with in

- line blending. See 40 CFR 80.65(f). b. How Can We Establish the Accuracy of the Measurement Sy stem (All Qualified Methods/Installations) For Each Parameter? We proposed grouping the gasoline and diesel fuel parameters that must be measure d ( e.g., aromatics, sulfur, etc.), into two categories, depending upon whether it is practically

feasible to construct and use gravimetric standards 501 for defi ning the parameter and thus , for determining the accuracy of a measurement method. To establish the accuracy of methods measuring each parameter for which gravimetric standards are not feasible , we proposed retain ing an EPA

- prescribed reference method or designated method that would, in effect, define the parameter

— as in “parameter X is, for federal regulatory purposes, whatever method Z measures

. ” We explained that p arameters that require such treatment w ould be described as “method

- defined” parameters. We also explained that anchoring the accuracy of a method intended to measure such a parameter would be accomplished by relating its measurements on a particular set of test fuels to measurements made on the same fuels b y a laboratory operating the design ated method . We further explained that this approach is often referred to as “correlating” the new method

500 For some parameters the criteria will be based on the laboratory’s chosen method’s ability to closely p redict the measurements made by EPA’s chosen or “designated” method. This approach is made necessary by the “method

- dependent” definition of some of the parameters to be measured. 501 Gravimetric standards are test materials made by adding a carefully weigh ed (hence “gravimetric”) quantity of the analyte of interest to a measured quantity of another substance known not to contain any of the analyte. The result is a solution with a very accurately known concentration of the analyte. The accuracy of gravimetric standard reference materials can be closely controlled and is not dependent on an analytical test method.Page 409 of 529

with the designated method. Such a correlative approach to qualification is dependent for its workability upon the test fuels used to establish the c orrelation. They must be sufficiently

varied along all important dimensions so that day

- to
- day production laboratory

operations are very

unlikel y to turn up some unusual fuels (or a new class of fuels produced, say , by some new refining process) for which the correlation equation derived earlier does not hold true and where the predictions of the designated method’s results are quite erratic and inaccurate. As also explained at proposal, our c lassification of parameters into the absolute or method

- defined categories is not entirely straightforward. Of the parameters subject to our proposal, only those with sulfur as the analy te seem to fall unambiguousl y into the absolute category. We additionally explained that s ulfur is a single element rather than a compound (or, worse, a class of compounds with numerous members) and thus lends itself to the construction of gravimetric standards. We further explained that the methods that are currentl y used to measure sulfur in gasoline and diesel fuel have been subject to intensive recent development work and are largel y free of matrix effects. Sulfur in butane is, arguabl y, even more amenable to the absolute approach, since the matrix, butane, is a single compound rather than a constantl y varyi ng mixture of many compo unds. We noted that the diesel sulfur rule used the absolute approach. W e therefore proposed to treat gasoline sulfur and sulfur in butane as absolute parameters. For a complete discussion of our classification scheme see 78 FR 29955

- 29956. Given logica l and practical difficulties with using a gravimetric approach to qualifying methods for parameters other than sulfur, EPA proposed and sought comment on classification of parameters into either the absolute category to be used for sulfur or method defined or correlative category to be used for all parameters other than sulfur

. All comments received were in support of this approach. Therefore, today , EPA is adopting a classification of fuel parameters where the absolute category

will be used for sulfur in gasoline and butane, and a method defined category

will be used for all other gasoline and diesel fuel parameters.
c. How Would Analy

tic Methods be Evaluated for Qualification? i. General Provisions : To Which Methods and Which Parties do the Proposed Requiremen ts Apply? W e proposed and requested comments on requiring laboratories to qualify all methods used in measurements for regulatory purposes. We explained that EPA did not believe that a relatively simple qualification test w ould ensure continued measureme nt quality , but rather that th ese requirements w ould greatl y reduce the likelihood of a laboratory undertaking important measurements without somePage 410 of 529

assurance that an instrument is in working order, that at least one operator 502 in the laboratory

understands the method for its use, and that it can be made to perform to meet acceptable criteria. We received comments that were supportive of these requirements. ii. How W ould Laboratories Demonstrate the Precision and Accuracy of Methods for Measuring “Absolute” Param eters and Thus Qualify the Methods for Use? As explained at proposal, test methods ty picall y used for gasoline sulfur are also frequentl y used for diesel sulfur . We also noted that the ASTM test method designations for both are the same. At proposal, we explained that examination of test method descriptions , however, pointed toward substantial differences in how the se test methods are used in the different matrices . Thus, while we considered the possibility

of allowing the diesel sulfur qualifications to be used also for gasoline sulfur, we believe d differences between a diesel fuel matrix and gasoline fuel matrix were likely too great to permit such a sweeping exemption from qualification requirements. We reasoned that reworking test methods to measure gasoline sulfur w ould , in many cases, generate most of the data needed for qualification, and thus w ould not represent a major additional effort. So, despite VCSB

- sponsored gasoline sulfur test methods bearing the same organizational designations as their diesel counterparts, we propos ed to require that these test methods qualify

separately

for use in measuring gasoline sulfur (78 FR 29956). No negative comments were received on our proposal to require test methods that have already been qualified for die sel fuel to qualify separatel y for gasoline. Thus, consistent with our proposal, we are finalizing requirements for test facilities that have already qualified a method for measuring sulfur in diesel fuel to qualify test methods for measuring sulfur in gas oline. Operational Description : We proposed requiring a pplications for qualification to include a complete operational description of the test method in question

. For methods published by organizations such as ASTM International, we explained that the te st method designation number and title would satisfy this requirement. We also proposed requiring the description to include the scope of the test method, a summary , discussion of interferences that are expected, apparatus needed, reagents, sampling and s pecimen preparation, calibration, test method procedure, calculations, and any test method

- specific quality control (78 FR 29956). We received comments in support of these requirements as well as comments indicating that the regulations should explicitly s tate that the test method

502 The intent behind the qualification process is to demonstrate the facility’s capability with the method. Accordingly we did not propos e that each instrument used to implement a particular method be required to qualify (some labs may have several instruments implementing a single method) or that each operator be so required. We recommend, but did not propos e to require, that a laboratory rotate operators during the testing required for qualification, thereby both improving and testing the skills of all operators for a given method and strengthening its quality program.Page 411 of 529

designation number and title of the test method would meet the operational description requirement for VCSB test methods. The Agency agrees with this comment and has modified the final regulations as suggested. In today ’s action we are also finalizing all other operational description requirements as proposed. Precision Qualification : We proposed and sought comments on requirements for precision qualification that were similar to requirements set forth in the non

- road diesel sul fur rule. As explained at proposal that rule imposed a maximum value for the standard deviation 503 of a series of at least 20 measurements over at least 20 days on a single fuel under site precision conditions. Specifically , the diesel rule used 1.5 times the repeatability standard deviation (ASTM “r”/2.77) of what was the least precise of the then

- allowed methods. We explained that the factor of 1.5, expands the allowable variability from that of back

- to
- back tests (as in ASTM’s definition of repeatability) to account for the sources of greater variability that find their way

into a longer series of tests on the same material. We explained that in the qualification process for ultra

- low sulfur diesel testing, the factor of 1.5 proved to be neither so tight that most laboratories were unable to meet it, nor so loose as to not be challenging at all. Thus , we consider ed it to be reasonable, as well as having proven to be workable in practice, and therefore proposed that the precision qualification for diesel f uel be applied to both absolute and method defined fuel parameters. Comments were supportive of our proposed precision criteria for the absolute fuel parameters of sulfur in gasoline and sulfur in butane. We also received comments that were against the e xtrapolation of precision qualification for absolute fuel parameters based on published method repeatability (r) to method defined parameters. These comments will be addressed in more detail below under the discussion of precision criterion for method def ined fuel parameters. Gasoline Sulfur Precision Criteria : We proposed and sought comments on the use of the repeatability for ASTM D7039

- 07 ( i.e., 1.76 ppm at 10 ppm) to set the precision criterion for sulfur in gasoline

. We reasoned that the maximum all owable standard deviation of the twenty test results on a 10 ppm gasoline would be 0.95 ppm 504

. We did not propose to prescribe the parameter level for the fuel used for these precision tests, because we believed that this maximum limit will vary depending upon the repeatability number that the ASTM D7039

- 07 test method’s repeatability

formula yields, given the parameter value of the test fuel chosen. We also explained that i f a laboratory selected a 5 ppm fuel to test instead

503 Where the standard deviation is estimated from a sample of the population ( formula uses “N

- 1” in the denominator).
504 This number was determined by using the repeatability equation for “r” from ASTM D7039

- 07 for a 10 ppm sulfur gasoline to get 1.76 ppm, dividing the “r” in ppm by 2.77 to obtain the underlying standard deviation o f 1.39 ppm, and multiplying the result by 1.5 (criterion used in diesel sulfur rule) to get 0.95 ppm.Page 412 of 529

of a 10 ppm fuel, the maximum limit for the standard deviation would be 0.67 ppm (78 FR 29956

- 29957). Comments provided were in support of this requirement. Thus the Agency

is finalizing the precision criterion for sulfur in gasoline that is based on the repeatability of ASTM D7039

- 07 . This would require dividing it by 2.77 to obtain the underlying standard deviation, and multiplying the result by 1.5 to get the applicable precision criterion based on the concentration of sulfur in gasoline. Sulfur in Butane Precision Criteria : W e propos ed a precision criterion based on the repeatability of ASTM D6667

- 10

. We explained that this test method’s repeatability

at the 10 ppm level would be 1.15 ppm, and that calculations for sulfur yi eld ed an upper limit for the standard deviation of the 20 tests for sulfur in butane of 0.62 ppm (78 FR 29957). Most of the c omments we received were in support of our proposal . We also received one comment from the Independent Fuel Terminal Operators Association (IFTOA), a trade association for fuel terminal operators, which provided comments on behalf of its members. IFTOA expressed concerns over the repeatability calculation we provided at proposal for 10 ppm sulfur in butane. IFTOA explained that reduced sulfur levels would inhibit butane blending due to reduced availability of butane with very

low sulfur. IFTOA requested additional flexibility and noted the difficulty

and expense involved in finding butane with sulfur content of 10 ppm or below. Therefore, IFTOA urged the Agency

to consider focusing on the sulfur content of the final blend and not the sulfur content of the butane component. IFTOA further provided comments urging the Agency

to allow blenders downstream of the refinery and importer gate to add butane that meets the downstream per gallon c ap so long as the butane blending operation does not cause the blender’s finished gasoline to have annual average sulfur content above 10 ppm. The Agency

disagrees with IFTOA’s reading of the example calculation provided in the proposed preamble and regulations, which utilized the repeatability of ASTM D6667

- 10 as the basis for the precision criterion when the sulfur level of butane was at 10 ppm. The intent of this example was not to provide a cap on sulfur in butane at 10 ppm, but rather onl y intended to be an example explaining that the precision criterion for sulfur in butane would be 0.62 ppm if the sulfur level in butane was 10 ppm. The Agency agrees with IFTOA that blenders downstream of the refinery

and importer gate should be permitted to add butane that meets the downstream per gallon cap of 80 ppm so long as the butane blending operation does not cause the blender’s finished gasoline to have an annual average sulfur content above 10 ppm. Accordingl y, today’s final regulations include examples if sulfur in butane is at the 80 ppm cap, instead of the 10 ppm sulfur average. We are also finalizing precision criteria for sulfur in butane that is based on the repeatability of ASTM D6777

- 10, consistent with our proposal. Temporal Distribution of Precis ion Tests : With regard to spacing of the required 20 precision tests, we proposed and sought comments on requiring 7 or fewer tests per week and 2 or fewer tests per day . We also sought comments on the following two options : 1) a requirement that 23 or m ore hours must elapse betweenPage 413 of 529

tests (this option requires either testing on weekends or an extension of the 20 day s); and 2 ) tests arranged into no fewer than five batches of five or fewer tests each, with onl y one such batch allowed per day over 20 day s ( 78 FR 29957). We received comments in support of option 2, (i.e., arranging tests into no fewer than five batches or fewer tests each, with onl y one such batch allowed per day over the minimum of 20 day s) because, according to commenters, it would provide the most flexibility and be easier to implement. Today ’s rule includes requirements for testing that are consistent with our proposed option 2. Accuracy Qualification : We propos ed and sought comments on accuracy criteria for absolute fuel parameters that are similar to the criteria for sulfur in diesel fuel. We proposed that applicants for qualification would be required to select two commerciall y available gravimetric standard reference materials (SRM), and then show that their laboratory and method ar e capable of getting an average of ten consecutive results that are very close to the Accepted Reference Value ( ARV ), for each SRM

. W e propose d to use 0.75 times the precision criterion described above, which is the same value for sulfur in diesel. We explained that i n the case of gasoline sulfur, for a gravimetric standard with ARV = 10 ppm, this would be 0.75 times 0.95 ppm or 0.71 ppm. The corresponding numbers for sulfur in butane at the 10 ppm level would be 0.75 times 1.15 or 0.47 ppm. For other p arameter s that might eventuall y fall into the absolute category , we proposed that the precision and accuracy criteria would be determined as a function of the ASTM repeatability of one of the methods (selected by EPA) available for measuring that parameter (78 FR 29957). 505 Comments were supportive of our proposed requirements for determining accuracy

criteria for absolute fuel parameters. Thus, the Agency is finalizing the accuracy

qualification criteria as proposed. iii. How W

ould Laboratories Demonstrate The Precision and Accuracy of Methods for Measuring “Method

-Defined” Parameters and Qualify the Methods for Use? Operational Description : We proposed the same operational description requirements for both method defined and absolute parameters. We explained that publication of a test method by a VCSB organization , such as ASTM , where the test method number and title is cited, would meet this criterion. We also explained that a non - VCSB test method would require additional information because non - VCSB

505 It is important to understand that the numerical examples presented in the text are entirely hypothetical, because use of precision testing material or gravimetric standards at levels other than those used in the examples would change all of the numbers. Use of a gasoline sulfur gravimetric standard at 5 ppm

(instead of the 10 ppm

used in the example) would require computing the repeatability of the meth od at 5 ppm using the equation given in the method description, dividing it by 2.77, multiplying the result by 1.5, and then multiplying that result by 0.75. As a short

- cut, the accuracy criterion could be determined by multiplying the ASTM repeatability of the method at the level in question by 0.4061.Page 414 of 529

test m ethods have not been fully vetted by a VCSB. We explained that the underlying scientific measurement principles must be thoroughly explained and the apparatus described well enough that a trained outsider could successfully implement the non

- VCSB test method and replicate the applicant’s results (78 FR 299957). In addition, for non

- VCSB test method we proposed that the description must include the scope of the test method, a summary , discussion of an y interferences that are expected, apparatus needed, re agents, sampling and specimen preparation, calibration, test method procedure, calculations, and any test method

specific qualit y control. As previously discussed in Section VI.A.3 .c.ii , we received comments in support of these requirements as well as co mments indicating that the regulations should explicitly state that the test method designation number and title of the test method would meet the operational description requirement for VCSB test methods. The Agency agrees with this comment and has modif ied the final regulations as suggested. In today ’s action we are also finalizing all other operational description requirements as proposed. Precision Qualification Specifics : We proposed the same precision qualification criteria for both method defined and absolute parameters. For reference installations , we propose d additional requirements that the instrument must be shown to be in statistical control, as provided for in ASTM D6299

- 10 e1 (and the proposed SQC procedures) and that the applicant must subm it control charts showing a record of in

- control operation for at least five months. At proposal we acknowledged that while these requirements would likely result in a delay between instrument setup and the ability to qualify a reference installation, we believe d that an y delay wa s necessary to demonstrate the stability of these critically important installations. We reasoned that EPA expect ed no lack of laboratories that are capable of meeting these standards c onsidering the number of long

- established in stallations o f these designated test methods (78 FR 29957). The Agency

received several comments from the American Petroleum Institute, the Association of Fuel and Fuel Petrochemical Manufacturers, Chevron Products Company , and Marathon Petroleum Company L P that were against extrapolating the same precision qualification criteria for absolute fuel parameters, which is based on the published method’s repeatability (r), to the precision qualification criterion of method defined fuel parameters. Specifically, according to the commenters, precision criteria for method defined fuel parameters are sensitive to the matrix making up the fuel material that is to be anal yz ed. This degree of sensitivity

to the fuel matrix is different for different test methods, techniques, and instrumentation that measure the same method defined fuel property . Commenters recommended instead that the precision standard deviation qualification criterion be based on the Test Performance Index (TPI), as described in ASTM D6792. 506 The co mmenters further explained that the TPI in ASTM D6792 sets minimum site

506 ASTM D6792

- 07, entitled, “Standard Practice for Quality System in Petroleum Products and Lubricants Testing Laboratories”.Page 415 of 529

precision performance criteria based on test method reproducibility (R) and the Precision Ratio (PR) of the published test method. Also, commenters noted that using the TPI as outline d ASTM D6792 would be consistent with OMB Circular 119, which directs agencies to use voluntary consensus standards in lieu of government unique standard except where inconsistent with law or otherwise impractical. The Agency

has evaluated ASTM D6792 and a grees that it would be appropriate to base the precision qualification criterion for method defined parameters on the TPI as described in ASTM D6792. We also agree that method

defined test methods are subject to fuel matrix effects, and therefore, that th e degree of sensitivity

to the fuel matrix is different for different test methods, techniques, and instrumentation that measure the same method defined fuel property. Therefore, in a change from proposal, and in response to comments, we are requiring that the precision qualification criterion for method defined parameters be based on the Test Performance Index (TPI) as described in ASTM D6792. Olefins in Gasoline Criterion : We had proposed to base the precision qualification for olefins in gasoline on th e repeatability of ASTM D1319

- 10. Thus , we explained that for a test fuel with olefins at, say , 9 volume percent (Vol.%), the repeatability would be 0.972, the underl yi ng standard deviation would be 0.972/2.77=0.351, and the precision criterion would be 1.5 times that or 0.53 Vol.%. We had proposed that a laboratory ’s standard deviation for the 20 tests could not exceed that value and still qualify for precision (78 FR 29957

- 58). Several commenters including the American Petroleum Institute, the Associ ation of Fuel and Fuel Petrochemical Manufacturers, Chevron Products Company , and Marathon Petroleum Company L P , argued that that the precision standard deviation criterion for method

- defined parameters should be based on the TPI described in ASTM D6792

- 07

. 507 Also, both APIand AFPM stated that using the TPI as outlined in ASTM D6792 is consistent with OMB Circular 119, which directs agencies to use voluntary consensus standards in lieu of government unique standards except where either inconsistent with law or otherwise impractical. As previously

explained, the Agency

has evaluated and agrees with the comment that the TPI , in ASTM D6792, should be used because it sets minimum site precision performance criteria based on test method reproducibility (R) and the Precision Ratio (PR) of the published test method. The Agency is therefore, finalizing the requirement that precision criteria for olefins in gasoline will be based on the TPIin ASTM D6792. Additionally , consistent with our proposal to afford the regulated community the use of the most current version of test methods, we are also updating the olefin in gasoline test method ASTM D1319 to the 2013 year version, as discussed in Section VI.A.1.a.iii above. We are also finalizing

507 ASTM D6792

- 07, Standard Practice for Quality System in Petroleum Products and Lubricants Testing Laboratories 1

.Page 416 of 529

requirements that the rep roducibility of ASTM D1319

- 13 be utilized in setting the precision criterion. For example, the reproducibility is 3.06 , and the precision criterion is 0.3 times 3.06 or 0. 92 volume percent (Vol. %), for a test fuel with olefins at 9 Vol. %

. **Table VI**  **- 4**  provides the TPIin ASTM D6792 for setting the olefin precision criterion. **Table VI**  **- 4**  **Method -**  **Defined Precision Criterion for Olefins in Gasoline**
ASTM Method Property Precision Ratio (R/r) ASTM

D6792 minimum TPI= (r/R’) Maximum

acceptable site precision (R’) Site

Precision Standard Deviation Qualification = R’/2.77
D1319

- 13 Olefins 3.2 1.2 0.83R 0.3R
Aromatics in Gasoline Criterion : W e propose d use of the repeatabilit y standard deviation for D1319

- 10 to set the precision criteria for aromatics in gasoline (78 FR 29958). As previously explained, in response to comments received on proposed requirements for precision criteria for method

- defined parameters, such as olefins in ga soline, the Agency is finalizing regulations for the use of the TPI in ASTM D6792 because we believe that it sets minimum site precision performance criteria based on test method reproducibility (R) and the Precision Ratio (PR) of the published test method . Additionally , as also previously explained, consistent with our proposal to afford the regulated community the use of the most current version of test methods, we are updating the aromatic in gasoline test method ASTM D1319 to the 2013 year version, as discussed in Section VI.A.1.a.iii. Thus, the reproducibility of ASTM D1319

- 13 should be utilized in setting the precision criterion. In today ’s action, the Agency is finalizing precision criteria for aromatics in gasoline that is based on the TPI in ASTM D6792 TPI

. Thus , for example, the reproducibility is 3.7 , and the precision criterion is 0.3 times 3.7 or 1.11 Vol. % for a test fuel with aromatics at 32 Vol. %. Table VI

- 5 provides the TPIin ASTM D6792 TPI for setting the aromatics precision criterion along with the use of ASTM D1319

- 13’s reproducibility

. Table VI

- 5 **Method -**  **Defined Precision Criterion for Aromatics in Gasoline**  ASTM Method Property Precision Ratio (R/r) AST M

D6792 Maximum

acceptable Site

PrecisionPage 417 of 529 minimum TPI= (r/R’) site

precision (R’) Standard

Deviation Qualification = R’/2.77 D1319

- 13 Aromatics 2.8 1.2 0.83R 0.3R Oxygen and Oxygenates in Gasoline Criterion : We propose d use of the repeatability for D55 99

- 00 ( 2010) to determine the precision criterion for oxygen and ox ygenates in gasoline

. We explained that for a test gasoline with 3 m ass% total oxygen, the repeatability would be 0.083 m ass% and the criterion for precision in this example to be 0.045 m a ss% (78 FR 29958). As previously explained, in response to comments we received on our proposed precision criteria for method

defined parameters, the Agency is finalizing the use of the TPI in ASTM D6792 for setting precision criteria for method defined p arameters. T hus , for a test fuel with total oxygenate content at 3 mass % total oxygen , the reproducibility would be 0.32 , and the precision criterion is 0.3 times 0.32 or 0.10 mass % total oxygen. Table VI

- 6 provides the TPIin D6792for setting oxygen and oxygenates precision criterion. Table VI

- 6 **Method -**  **Defined Precision Criterion for Oxygenates in Gasoline** 

**ASTM Method**  **Property Precision**  **Ratio (R/r)**  **ASTM**

**D6792 minimum**  **TPI =**  **(r/R’) Maximum** 

**acceptable site**  **precision (R’)**  **Site**

**Precision Standard**  **Deviation Qualification**  **= R’/2.77** D5599

— 00 (2010) Ox ygenates 6.8 2.4 0.42R 0.15R For each method defined fuel parameter that lacked alternative test methods we proposed a precision criterion of 1.5 times the repeatability for the designated test method divided by

2.77. We had proposed that a laboratory ’s standard deviation for the 20 tests could not exceed that value and still qualify for precision (Table VI

- 6, 78 FR 29958). As exp lained above, as it relates to the Agency’s response to the proposed precision criterion for method defined fuel parameters, the Agency today is finalizing precision criterion as provided in Table VI

- 7 for the various me thod defined fuel parameters lacking alternatives to the designated test method using the ASTM D6792 TPIapproach, except for distillation. The distillation method defined fuel parameter is discussed in further detail below.

**Table VI**  **- 7**  **Method -**  **Defined Precision Criterion for Fuel Parameters lacking**

**Alternatives to the Designated Test Method**Page 418 of 529 **Test Method**  **Property Precision**  **ratio (R/r) ASTM** 

**D6792 minimum**  **TPI = (R/R’)**  **Maximum**

**acceptable site**  **precision (R’)**  **Site**

**Pr ecision**  **Standard Deviation**  **Qualification = R’/2.77**  D5191

- 12 RVP 1.9 1.2 0.83R 0.3R D3606

- 10 Benzene 4.6 2.4 0.42R 0.15R D1319

- 13 Aromatics

in Diesel 2.8 1.2 0/83R 0.3R

With regard to distillation properties, (which is one of the parameters lacking alt ernatives to designated test methods), several commenters, including API and AFPM, recommended the use of ASTM D86

- 07 for setting the precision criterion for distillation properties. According to these commenters, the precision criterion as published in l ater ye ar versions of ASTM D86 is not consistently supportable b y actual ASTM ILCC program data. As support, they referenced Note 31 of the current ASTM D86 test method. 508 They commented that a plausible explanation for this is that the interlaboratory study (IL S) used to derive the current precision criteria required several runs on the ILS material to select heating profile, and hence does not reflect how the method is actually conducted in a routine production environment. In addition, the IL S study sample set may

not adequately cover the range of available real world production gasoline. They also stated that there is general consensus that the precision of this test method is sensitive to the slope of the boiling curve; hence, a constant precision as articulated in the cited ASTM D86

- 11, a method may not be appropriate as a one

- size

- fits

- all measure for gasolines with different matrices and volatility properties for winter as compared to summer fuels. According to commenters, directionally , and based on on - going discussions with ASTM, it would appear that the ASTM test method precision may revert to a boiling curve slope based approach, similar to ASTM D86

- 07. They further commented that for gasoline containing ten volume percent ethanol (E10), the b oiling curve slope and hence precision is impacted b y the location of the azeotrope point relative to the distillation points of interest (T 10 , T 50 and T 90 ). 509 Both API and AFPM also commented that the precision function as stated in ASTM D86

- 07 is a more realistic representation for E

- 10 gasoline precision with different fuel matrices. Finall y, APIand AFPM expressed concerns on the use of ASTM D86

- 11a precision criteria and the proposed precision qualification of 1.5r/2.77,

508 Note 31 of the current ASTM D86 test method reads “NOTE 31

– A new inter laboratory study is being planned to address concerns that laboratories are not able to meet the precision for percent evaporated temperature at fif ty percent.” 509 The azeotrope point is a function of the base stock gasoline composition, and therefore can vary with different fuel matrices.Page 419 of 529

which they

described as too re strictive. Both APIand AFRPM provided fuel producer control chart data as an example, which is reproduced in Table VI

- 10. 510

Table VI

- 8 **: API**  **& AFPM**  **E xample of ASTM D86**  **- 11a**  **F uel**  **Producer Control Chart Data**  **IB P**  **E10 E50**  **E90 FB**  **P Avg F**  103.65 151.32 224.88 351.44 417.16 **Stdev F** 1.93 1.66 1.36 1.22 2.66 **Avg C** 39.81 66.29 107.16 177.47 213.98 **StDev C** 1.07 0.92 0.75 0.68 1.48 **EPA precision**  **criteria** 1.54 0.72 0.40 0.97 1.80

After reviewing these comments and es peciall y data set out in Table VI

- 8 , we agree that our proposed distillation precision criterion would likely be too restrictive, especiall y for the distillation point of E50. Accordingl y, in a change from proposal and in response to these comments and additional data, the Agency is finalizing precision criterion for the gasoline distillation parameter based on 0.3 times the automated reproducibility of ASTM D86

- 07 instead of ASTM D86

- 11a. Table VI

- 9 provides the precision criterion for the gasoline distillation method defined fuel parameter. Table VI

- 9 **Method -**  **Defined Precision Criterion for Gasoline Distillation based on 0.3 times the Aut**  **omated Reproducibility of ASTM D86 -**  **07** Percent Evaporated Point 0.3* Reproducibility ( 0C) Initial Boiling Point 0.3 * 8.5 10 Percent Evaporated 0.3 *(3.0 +2.64*S c ) 50 Percent Evaporated 0.3*(2.9+3.97*S c ) 90 Percent Evaporated 0.3*(2.0+2.53*S c ) Final B oiling Point 0.3*10.5 Where S c is the average slope (or rate change) of the gasoline distillation curve as calculated in accordance with Section 13.5 of ASTM D86

- 07

510 The raw

data supporting the control data is supplied by API and AFPM in docket EPA

- HQ

- OAR

2011

- 0135.Page 420 of 529 Accuracy Qualification : At proposal, we also explained that t est methods used to measur e method

- defined parameters would likely fall into three separate tracks: reference installations of designated methods intended for use in qualifying alternative methods; designated method installations intended for ordinary production measurements; and n on - designated methods. W e propos ed and sought comments on requirements that reference instruments must be shown to have been near the middle of the distribution of the industry monthly inter

- laboratory crosscheck program (ILCC) for at least five months prior to application. We also proposed that laboratories would specificall y compute the difference between the instrument's average measurement of the fuel closest to the applicable standards (or to the average value for the fuel type in the complex model) and the robust mean for that fuel obtained b y all of the non

- outlier labs in the program. We further proposed that this difference would be standardized by expressing it in robust standard deviation units. These standardized ILC C differences would be put into a moving average with a span of, say , 5 months. We proposed to set the standard s o that the instrument's moving average would be within the central 50% of the distribution of participating designated method labs. We also reasoned that because a robu s t standard deviation is used by the ILCC program this percentage will have to be approximate (78 FR 29958). Several commenters, including API and AFPM commented on the proposed requirements for reference installations of method defined fuel parameters use d to qualify other method defined test methods. These comments and our response to these comments are discussed in further detail below. At proposal we discussed the role of Voluntary Consensus Bodies in qualifying alternative analy tical test methods as w ell as the use of reference materials in qualifying and maintaining such test methods. We requested comments on the appropriateness of using three ty pes of standard reference materials for accuracy and on their applicability in the qualification process an d statistical quality control process of anal yt ical test methods. Specifically , we proposed use of the following: 1) Gravimetric standards, 2) Consensus named fuels (e.g., gasoline or diesel fuels), and 3) Locally named standards. For a complete discussio n of these issues see 78 FR 29958

- 29960. All comments received were in support of the use of these kinds of reference materials in the qualification process and statistical control program.

d. Qualification Criteria for Designated Method Installations Used t o Qualify

Method

- Defined Parameter Instruments. We proposed the following requirements for d esignated test method installations (also known as are reference installations ) that w ould be used to qualify method

- defined parameter instruments. We explained th at these reference installations w ould be used to evaluate the accuracy of other alternative test methods and to establish correlation equations, and as such that we believe d that the y should be held to higher standards

.Page 421 of 529 First, we propos ed that reference i nstruments must meet precision qualification requirements that are similar to the criteria set forth in the non

- road diesel sulfur rule. As explained earlier, that rule imposed a maximum value for the standard deviation 511 of a series of at least 20 measure ments over at least 20 day s on a single fuel under site precision conditions. Specifically , the diesel rule used 1.5 times the repeatability standard deviation (ASTM “r”/2.77) of what was the least precise of the then

- allowed methods. We proposed that f o r those method

- defined parameters , shown in Table VI

- 6 of the proposed preamble, lacking currently allowed alternatives to their designated methods , the precision criteria would be based on the fuel parameter’s designated test method. At proposal, we also explained that i n each case the precision criterion is determined b y (“r”/2.77) times 1.5 where “r” is the ASTM repeatability determined for the particular fuel that is being used for the purpose of demonstrating the test method’s precision (79 FR 29960). As previously

discussed, the Agency

received comments that were not in support of extrapolating the same precision qualification criteria for absolute fuel parameters, which is based on published method repeatability (r) of the applicable fuel parameter t imes 1.5 and dividing by 2.77, to precision criterion of method defined parameters. As previously explained, these commenters stated that the precision criteria of method defined parameters are sensitive to the matrix of the fuel. This degree of sensitiv ity to fuel matrix effects is different for different test methods, techniques, and instrumentation that claim to measure the same method defined fuel propert y. Also, commenters recommended that the precision standard deviation qualification criterion for method defined parameters be based on a TPIas described in ASTM D6792. 512 As previously explained, the Agency

has evaluated ASTM D6792 and agrees that the precision qualification criterion for method defined parameters be based on a TPI as described in AS TM D6792. Thus, in a change from proposal, we are finalizing requirements for reference instruments to meet precision qualification requirements as discussed above for their respective fuel parameter in **Table VI**  **- 4**  through Table VI

- 9 of this preamble. Second, we propos ed that reference instruments must be shown to be near the middle of the distribution of the ILCC program for at least the five months prior to application. 513 We propo sed requiring laboratories to specificall y compute the difference between the instrument's average measurement of the fuel closest to the applicable standards (or to the average value for the fuel type in the complex model) and the robust mean for that fu el obtained by all of the non

- outlier labs in

511 Where the standard deviation is estimated from a sample of the population (formula uses “N

- 1” in the denominator). 512 ASTM D6792

- 07, entitled, “Standard Practice for Quality System in Petroleum Products and Lubricants Testing Laboratories”. 513 There may be an alternative to this measure to be had from the D6299

- 10 e1 calculations, so that we could require that the instrument be doing SQC and having a certain quality of performance. This could reduce the burden of calculations and align this requirement better with the NTTAA.Page 422 of 529

the program. We further proposed that this difference be standardized by expressing it in robust standard deviation units. We also proposed that these standardized ILCC d ifferences would be put into a moving average with a span of, say , 5 months. We proposed to set the standard such that the instrument's moving average would be within the central 50% of the distribution of participating designated method labs. We explained that because a robus t standard devi ation is used by the ILCC program this percentage w ould have to be approximate. We further explained that s uch lab

- specific qualification would be outside of the normal qualification of a lab for making regulatory measurements for certifying fuel and woul d pertain only

to use of the instrument in certifying other methods. In essence, these designated method installations w ould serve as surrogates for the gravimetric standards that cannot be used in qualifying alternative methods for method

- defined paramet ers (79 FR 29960). Both API and AFPM stated that this requirement would be feasible f or a single entit y wishing to qualify alternate test methods under ASTM D6708 by using a single reference installation; however, they described the requirement as overly r estrictive in other instances. Based on a workup, provided as a separate attachment to their comments 514 , of the proposed requirements using ASTM D5599 Total Ox ygen results on eleven RFG distributions, RFG1205 through RFG1303, they showed that less than fif

teen percent of the participants met the proposed EPA requirement of staying within the central 50 percent for 5 successive exchanges. Therefore, they

suggested a requirement of 3 out of 5 successive exchanges staying within the middle 50 percent of the di stribution of measurements on the ILCC program would be more realistically achieved in practice. After reviewing these comments and data, the Agency agrees that setting a requirement of 3 out of 5 successive exchanges to stay within the middle 50% of the distribution of measurements of the industry monthly I LC C program for at least five months is more appropriate and achievable as compared to 5 out of 5 successive exchanges staying within the middle 50% of the distribution of measurements of the ILCC for at least five months. Another commenter recommended the option of using other crosscheck programs besides those from ASTM, and suggested that EPA revise criteria for the reference installations at 40 CFR 80.47(k)(2) to also refer to use of commerciall y ava ilable monthly I LC C. The Agency

agrees that the regulated community

should be able to use both commercially available and industry

monthly ILCC, and has made this change to 40 CFR 80.47(k) to afford this flexibility. Therefore, in a change from proposal, and in response to these comments, the Agency is setting a requirement that a reference installation of the designated test method must be shown to be within the middle 50% of the distribution of measurements for 3 out of 5 exchanges of either the industry or commercially available monthly

I LC C program for at least five months.

514 For a description of workup and spreadsheet associated with these comments, see attachment No. 4 in Docket number EPA

- HQ

- OAR

- 2011

- 0135

- 4276

- A5.pdf and attachment No. 5 in EPA

- HQ

OAR

- 2011

- 0135

- 4276

- A6.pdf.Page 423 of 529 Another commenter suggested that EPA should require applicants to submit control charts showing a record of in

- control operation for at least five months provided that: 1) regular m aintenance and/or re

- calibration conducted during the 5 month in

- control qualification period is considered as part of in

- control normal operation, and 2) the clock for the 5 month period does not re

- start (in other words the sy stem is still considered to be in

- control) if an assignable cause for out of control is found, mitigated, and the s ys tem is brought back in

- control during the period that the reference installation is attempting to meet the 5 month in

- statistical

control requirement. The Agency agre es with these two conditions and in a change from our proposal, we are finalizing regulations that would allow sy stems meeting these two conditions to be in

- control with respect to the 5 month in

- statistical

control requirement. Finally , for reference in stallations , we propose d that the reference instrument must be shown to be in statistical control, as provided for in ASTM D6299

- 10 e1 , comply with applicable SQC procedures a s well as have control charts showing a record of in

- control operation for at leas t five months. We explained that while these requirements would likely impose a delay between instrument setup and the ability to qualify

as a reference installation we believe d that any delay would be necessary to demonstrate the stability of these criti cally important installations. We also reasoned that we expected no lack of facilities capable of meeting these standards c onsidering the number of long

- established installations of these designated methods. APIand AFPM disagreed with this requirement and stated that summary statistics (mean and standard error = standard deviation / square root [no. of results]) from IL CC program data can be used as is, i.e., without imposing the reference installation criteria to conduct an ASTM D6708 assessment on VCSB alternate test methods, provided that the number of non

- outlying results is greater than 16 for both designated and alternate methods. According to both commenters, this is the current de facto methodology for determination of ARV of check standards as sp ecified in ASTM D6299, clause 6.2.2.1 and Note 7. Both commenters also suggested that using ASTM D6299 for establishing ARV would be consistent with OMB Circular 119. They noted also that ASTM ILCC program data for the method

- defined parameters of intere st exceeds this number (16) significantl y. APIand AFPM also commented that it is neither necessary nor statisticall y justified to apply

the reference installation precision and middle 50 percent criteria to the ILCC program data for designated test method because the relevant ILCC program statistics are calculated using outlier

- free data, and the number of data points is large, hence providing a better statistical sample of the laboratory population. According to them, the mean calculated using the full ILCC program outlier

- free data set is a more accurate representation of the population parameter (μ) than the mean calculated using onl y the middle 50 percent. They noted the standard error for the arithmetic mean calculated using the full ILCC program data set is significantl y reduced due to the square root [number of non

- outl yi ng results] term in the denominator for calculation of standard error. Both API and AFPM alsoPage 424 of 529

urged EPA to clearly

state that the use of ILCC program data as described above is s uitable for an ASTM D6708 assessment of VCSB alternate test methods. EPA agrees that the use of ASTM ILCC program data is suitable for an ASTM D6708 assessment of VCSB alternative test methods, provided that the number of non

outlying results is greater than 16 for both designated and alternate methods. In these situations where VCSB ILCP data is utilized during an ASTM D6708 assessment, the reference installation criteria provided in the regulations will not apply , rather a VCSB will have the flexibility of utilizing the VCSB ILCC program data to conduct an ASTM D6708 assessment. The Agency has made these changes in the final regulations to reflect these comments. Finally , API and AFPM noted that the current “robust” outlier treatment methodology

for the ASTM CS92 IL CP program will be replaced with a statistically

more rigorous approach using the Generalized Extreme Studentized Deviation (GESD) technique. Thus, they suggested that EPA remove the term “robust” from the preamble and regulations wording. E PA agrees with the comment and has removed “robust” from the final regulations wording.
e. Qualification Criteria for Designated Test Method Installations that are “Method

- Defined” Parameters Instruments and Not Used to Qualify Other “Method

- Defined” Method s At proposal, we explained that r efiners, importers and oxygenate blenders producing gasoline and diesel fuel are required to test these fuels to determine the levels of various specified parameters. A designated test method is associated with each param eter to be tested (except for sulfur concentration in ultra

- low sulfur diesel fuel, which must meet performance

- based requirements 515 ) in 40 CFR p art 80. Table VI

- 5 of th e proposed rule preamble list ed the fuel parameters and their corresponding designated test methods. We proposed that installations of designated methods must maintain records and meet certain statistical quality control requirements. We explained that r equiring all installations of all methods, including existing designated method install ations, to implement statistical quality control, would likely

suffice to homogenize and improve measurement quality in these already - stable and standardized methods (78 FR 29961). f. Qualification Criteria for Method Defined Parameter Instruments Other Than Designated Test Methods With regard to method

- defined parameters, the Agency today is finalizing two options for qualif

ication of alternative test method s . The first option, known as the VCSB approach, allows for qualifying methods that have been sponsore d and published by

a voluntary

consensus standards body , such as ASTM International

. The second option, known as the non

- VCSB approach, involves qualification for a

515 See 40 CFR 80.580, 40 CFR 80.584 and 40 CFR 80.585.Page 425 of 529

laboratory

that has developed its own anal yt ical test method but has decided not to offer it for evaluation and establishment through a VCSB

- based organizational process. At proposal, we explained that both options would require the candidate method to have a precision criterion that is at least equal to that of the designated anal yt ical test method (though not defined in precisely the same way). We also proposed to require that the alternative method must also be capable of close correlation with the designated method for the parameter such that the refiner may use the alternative method resu lts to produce predicted designated method results that it can subsequentl y use in demonstrating compliance with the applicable fuel compos ition or performance standards (78 FR 29961). Consistent with our proposal, we are finalizing the following criteria for both the VCSB and non

- VCSB approaches to qualify method

- defined instruments that are discussed in further detail below.

i. Qualification Criteria for VCSB Method

-Defined Parameter Test Methods For methods that have been sponsored and published by a VCSB, such as ASTM, we expect that at a minimum, the VCSB must have fully described the anal yt ical test method, so that it is replicable in many different laboratories and its operation may

be understood by

a technician. (We continue to consider publication of a method b y a VCSB organization such as ASTM as meeting this criterion

. ) The VCSB must have tested the candidate method in a round robin program against the designated method, must have published a determination that the method meets the criteria specifie d in the discussion below, and must have published the information necessary to correlate the alternative method to the designated method

. Consistent with our proposal, a VCSB

- based candidate alternative anal yt ical test method need not be qualified separately in each laboratory

that adopts it. This is because by the time such a test method has been through the extensive development process ty picall y required b y a VCSB, the method’s procedures would have been exhaustively

described. At this point there wi ll be little uncertainty about how the anal yt ical test method is to be applied, and it will have been implemented in a variet y of different laboratories and used on a variety of different types of fuels. Therefore, we continue to believe that the VCSB

- bas ed process gives EPA some confidence that the analytical test method is likely to be stable in use and can be implemented with very

little ambiguity

regarding instrumentation, materials, and procedures. Moreover, VCSB method evaluation protocols have been established; including a protocol for comparing methods provide means for establishing a VCSB alternative method’s precision parity with the designated method for the parameter and for determining whether the alternative method can be adequately correlate dPage 426 of 529

with the designated method. 516 Further, consistent with our proposal, VCSB method

- defined test methods must utilize ASTM D6708 to determine if a correlation equation is necessary

.

ii. Qualification Criteria for non

- VCSB Method

-Defined Parameter Test Methods C onsistent with our proposal, a candidate method that follows the non

VCSB

- based route for qualification must be qualified independentl y b y each anal yt ical laboratory

th at wishes to adopt the method. We proposed the following seven qualification criteria f or non - VCSB method

- defined p arameter test methods. First, the Agency

propose d to require a complete operational description of the non

- VCSB test method, as described above in Section VI.A.2.c.iii of this preamble. We explained that the operational descrip tion must be thorough enough that a person lacking expertise in the operation of the test instrument would be able to replicate its results. Second, the Agency

propose d that the candidate non

- VCSB test method be tested on a range of fuels 517 and by a qualifi ed reference installation of the applicable designated test method. Third, the Agency

propose d that the specific laboratory using the candidate non - VCSB test method must statistically establish through application of ASTM D6708

- 08 that the candidate method measures the same aspect of samples as the applicable designated test method. Fourth, the Agency

propos ed to disqualify non - VCSB test methods with important sample

- specific biases (matrix effects) that cannot be considered as random as determined b y ASTM D6708

- 08

. We explained that i t was possible that a non - VCSB test method suspected by the applicant of being highl y matrix

sensitive may

be qualified on a narrowly circumscribed range of fuels (which must, meet the D6708 statistical variability criteria). In this situation, ty pes of fuels used for qualification and the method that is to be approved must be specified in the method description. Fuels outside of this scope would have to be analyzed for regulatory

purposes by

some other method. The Agency be lieves that any restriction on the scope of fuels to be used in qualifying a method must be accompanied b y a discussion of how the applicant plans to screen samples for conformity

to the scope.

516 ASTM D 6708

- 08, entitled, Standard Practice for Statistical Assessment and Improvement of Expected Agreement Between Two Test Methods that Purport to Measure the Same Property of a Material. 517 Fuels, either consensus named fuels or locally n amed reference materials, used must be typical of those to be analyzed by the facility in practice and must meet the data requirements (variability, etc.) of ASTM D6708

- 08.Page 427 of 529 Fifth, the Agency

propose d that precision qualification be con ducted in the form of cross

- method reproducibility of the candidate and applicable designated test method, where the “cross

- method reproducibility” must be equal to or less than 70 percent of the published reproducibility of the applicable designated test method. We explained that the Agency believes that when ASTM D6708

- 08 is used in this manner (without joint round robin data) the cross

- method reproducibility (Rcm) output by

the program is not reall y a reproducibility in the usual sense, but rather indicates the expected value with uncertainty of the differences between the designated method and qualification candidate method. We believe that when used this way , Rcm from ASTM D6708

- 08 is more analogous to a site precision than to an inter

- laboratory

repro ducibility

. For a detailed description of cross

- method reproducibility

(Rcm) see 78 FR 29962. Sixth , the Agency propose d that the applicant would demonstrate, through the use of ASTM D6708

- 08, whether a correlation to the designated test method is necessary . We explained that ASTM D6708

- 08 could also be used to determine whether the candidate methods results are either null compared to the designated test method and thus , needs no adjustment or correlation, or whether some correction or correlation equati on is required so the candidate method may predict designated method results. We proposed the use of ASTM 6708

- 08 for corrections, i f it is determined that the candidate method requires such a correction to predict designated test method results. The Age ncy propose d that the correction would be applied to the candidate instruments output to obtain measurements results for regulatory

purposes. Finally , we proposed to require that applicants for non

- VCSB test methods secure an independent third part y oversi ght and audit review of the data generated and used to qualify

non - VCSB test methods. We proposed that the independent third party

would provide an overall assessment of the anal yt ical technique and methodology

and discuss any

limitations in the scope of the method, as well as attest that all requirements for non

- VCSB test method qualification have been satisfied. The Agency

explained that this requirement would provide additional assurance that a non

- VCSB test method is found to be adequate in use for co mpliance (78 FR 29961

- 29962). We received comments in support of the proposed qualification criterion for non - VCSB Method

- Defined Parameters. One commenter recommended allowing third

- part y oversight service providers that have good working knowledge of AS TM D6708 and ASTM D6299 in addition to degrees in Chemistry or Statistics. Further, they

believed that limiting the third party oversight qualification to only U

. S

. degree holders would exclude non

- U

. S

. degreed subject matter experts with equivalent knowl edge and qualification. They suggested that rule language be expanded to include non

- U

. S

. equivalent degreed or industry recognized subject matter experts. Another commenter recommended professional chemical engineers with demonstrated experience in anal yt ical techniques as an option to chemists and statisticians because, according to the commenter, chemical engineers have a strongPage 428 of 529

background in chemistry , and based on trends within industry they would also have experience in statistical process control. The Agency agrees with these comments and has amended the final regulations to include chemical engineers and non

- U

. S

. degreed subject matter experts with equivalent knowledge and qualifications as third party

oversight service providers. Rule revisions have also been made to reflect the recommendation that all of these candidates should also have a good working knowledge of ASTM D6708 and ASTM D6299. Consistent with our proposal, the Agency today is finalizing the qualification criteria for non

- VCSB meth od defined fuel parameters with the few changes in response to comments as discussed above. g. Statistical Quality Control: How Can We Ensure that Test Methods Continue to Deliver Quality Measurement in Practice? T oday ’s final action also i nclude s a statistic al quality control (SQC) program that must be applied to any anal yt ical test method used in the regulatory programs covered b y this final action

. Consistent with our proposal, every laboratory that us es test instruments to measure fuel parameters to satis fy EPA’s reporting or recordkeeping requirements must implement and maintain a basic SQC program. Unlike the qualification criteria requirements, where onl y one set of essentially

identical instruments implementing the same method in a laboratory must qua lify , every

laboratory must have a separate SQC program for each instrument used to make measurements for reporting or recordkeeping purposes. 518 Consistent with our proposal, w e are also finaliz ing requirements that provide implementation of a SQC program b y a laboratory as a defense in any subsequent enforcement action s where measurements are in issue

. Today ’s requirements also reflect our proposal to adopt a subset of SQC procedures that are already widely in use from ASTM D6299

- 10 e1 . We continue to anti cipate that the measures we are finalizing would not require the generation of much additional data by the laboratory

that employ s them and that the SQC program would improve the quality of measurement among those lab oratorie s that adopt such measures. Th ese SQC procedures used b y laboratories would ensure that the test methods they have qualified and the instruments on which the methods are run yi eld results with appropriate accuracy

and precision, e.g., that the results from a particular instrument does not drift over time to yield unacceptable values. The finalized minimum specific SQC requirements for laboratories for absolute parameters, VCSB

approved methods used to measure method

- defined parameters, and non

- VCSB

518 Such SQC programs are already an established part of VCSB protocols for analytica l laboratory operation (as indicated by such practices as ASTM’s D6299

- 10 e1 ) and are likely to be part of most laboratories ”standard operating procedures.” Thus, such a requirement very likely adds little or nothing in the way of burden for most laborato ries. Laboratories that lack such programs and would have to expend significant effort to create them are those most at risk for poor measurements and for which the effort is most easily justified.Page 429 of 529

proprietary

methods used to measure m ethod

- defined parameters are discussed in further detail below. We proposed similar precision and accuracy SQC requirements for each instrument used to measure absolute and VCSB

- approved and non

- VCSB proprietary

methods for measuring method

- defined paramet ers in the laboratory

. W e proposed that every

instrument would test a quality control (QC) material 519 either once per 20 production tests or once per week and maint ain both an “I” chart 520 and an “MR” chart

. 521 We proposed that any violation of the control li mit w ould be investigated b y laboratory personnel, corrective action taken as required, and records kept of the incident for a period of 5 years. We also propos ed allowing used of ASTM D6299

- 10 e1 procedures f or transition ing from one batch of QC material to another. We also proposed use of Annex A1.9, entitled “Q

- Procedure”, of ASTM D6299

- 10 e1 for validating new QC material. We proposed that when QC material is soon - to
- be

- depleted, that a new batch of QC material would be prepared and its value compared t o the old QC material on a chart. We explained that the new batch of QC material w ould be tested concurrentl y with the soon

- to
- be

- depleted old QC material. And the results would be plotted from the “old” and “new” QC materials on respective chart s , and if no special

- cause signals are noted, then the result for the new material would be considered valid (78 FR 29963

- 64). 522 We received comments in support of all these requirements with the exception of requirements for both QC verification and validation of new QC materials. One commenter recommended that test facilities conduct verification of new QC material three times a year rather than on a quarterly basis so that this requirement is aligned with ASTM International ILCC program sample cycle frequency . T he Agency

agrees with this comment and has made rule language changes to reflect that test facilities can conduct verification of new QC material three times a ye ar in order to align this requirement with ASTM ILCC program sample cycle frequency . Addition ally , the Agency envisions this change will help encourage the participation of ASTM Subcommittees in the PBATM approach for their respective alternative test methods.

519 See ASTM D6299

- 10 e1 , paragraph 3.2.3 for a definition and Section 6 for guidance, selection, construction, handling, storage and use of reference material samples. 520 See ASTM D6299

- 10 e1 , section 7 and Section A1.5.1 for chart construction and usage, including criteria for deciding upon corrective action. 521 See ASTM D6299

- 10 e1 , Section A1.5.2 for chart construction and usage. Any exceed ance of the control limit should be investigated. 522 See ASTM D6299

- 10 e1 , Annex A1.9 Q

- Procedure. Procedures differ depending whether an I

chart, MR chart, EWMA chart, Q

- chart or a com bination of these charts are utilized by the laboratory.Page 430 of 529 One commenter noted that the Q

- procedure in ATSTM D6299, which relates to the handling o f QC material batch transition, is intended to be an alternative approach to the concurrent testing (overlap) protocol. They suggested the option of using either one of the two procedures, and not both the Q

- Procedure and I

- procedure as we had proposed. According to the commenter, the Q

- procedure is technically

equivalent to the I

- procedure. They also suggested that for sites opting to use the Q

- procedure, the very first run on the new QC batch should be validated b y either an overlap in

- control result o f the old batch, or b y a single execution of an accompanying SRM. Then the new result would be considered validated if the single result of the SRM is within the established site precision (R’) of the ARV of the SRM. The Agency agrees that the Q

- procedur e is functionally equivalent to the I

- procedure and that laboratories should be given the flexibility to use either of these two procedures instead of both procedures, as proposed. The Agency also agrees that for sites opting to use the Q

- procedure, the v ery first run on the new QC batch should be validated b y either an overlap in

- control result of the old batch, or b y a single execution of an accompanying SRM. The new result would be considered validated if the single result of the SRM is within the esta blished site precision (R’) of the ARV of the SRM. In response to these comments, we have revised our proposed regulations to reflect these suggested changes. We proposed requiring every instrument to test a commerci all y available gravimetric “ SRM” (“check standard” as defined in ASTM D6299

- 10 e1 ) on a quarterl y basis. We explained that the absolute difference between the mean of multiple back

- to
- back tests of the SRM and the ARV of the SRM that is greater than 0.75 times the published reproducibility of th e test method must be investigated b y laboratory personnel, appropriate action taken, and records kept of the incident and investigation. We propos ed to require that records of the SRM measurements and investigations into an y exceedance of these proposed criteria must be kept for a period of 5 years. Additionally, we proposed to require l aboratories to pre - treat and assess results from the check standard testing after at least 15 testing occasions 523 , construct “MR” and “I” charts 524 with control lines, and maintain control charts, logging, investigating, and correcting underl yi ng causes of an y control limit violations as discussed in ASTM D6299

- 10 e1 . We propos ed to require that records of such incidents and the underl yi ng control charts must be kept by

the facility

for a period of 5 years. (78 FR 29963.) One commenter suggested that the expanded uncertainty of the ARV should be incorporated into the accuracy qualification criterion as follows: Accuracy qualification criterion = square root [(0.75R)^2 + (0. 75R)^2/L ], where L = the

523 See ASTM D6299

- 10 e1 , Section 8.2 (pretreatment) and Section 8.4 (assessment). Procedures differ depending upon whether a single check standard is used for multiple testing occasions or multiple check standards must be used. 524 See ASTM D6299

- 10 e1 , Section 8.4 and appropriate Annex sections for chart construction and guidance.Page 431 of 529

number of single results obtained from different labs used to calculate the consensus ARV. According to the commenter, this is because the standard error of the ARV in the consensus

- named fuels may not in all cases be negligible when compared to 0.75R. The Agency agrees with this comment and has incorporated the standard error of the ARV in the consensus

- named fuel into the accuracy qualification criteria for determining when appropriate action should be taken during an SQC invest igation. Today , the Agency

is also finalizing the Statistical Quality Control requirements for absolute fuel parameters, and VCSB

- approved and non

- VCSB proprietary

methods that are used for measuring method defined parameters, as proposed. Consistent with our proposal, the Agency is also finalizing requirements allowing use of either the “I” chart or Q

- procedure for validation of new check standards, and the incorporation of the standard error of the ARV in the consensus

named fuel into the accuracy qual ification criteria for determining when appropriate action should be taken during an SQC investigation.

h. Agency

Approval Options We proposed to require qualification of onl y proprietary anal yt ical test methods, i.e., non

- VCSB test methods for fuel paramete rs. We also sought comment on whether we should require qualification of all anal yt ical test methods for fuel parameters. The following section contains a discussion of our propos al, as well as our final decision based on the comments received on our propo sal. At proposal, we explained that the approach to performance

- based qualification of test methods would go considerably beyond the minimum requirements of the National Technology Transfer and Advancement Act of 1995 in providing flexibility

of method cho ice, and accomplish performance

- based qualification without compromising measurement quality

. We also reasoned that the primary

tools for achieving the latter objective are lab oratory
- specific qualification of method installations and a requirement for ac ross - the

- board SQC. W e also explained that while EPA would benefit from PBMS, when finalized, by no longer having to evaluate new alternative measurement methodologies, this benefit would likely not offset the substantial and unpredictable resource costs involved in administering a qualification process and providing infrastructural support for laboratories’ SQC programs (78 FR 29964

- 65). We proposed qualification requirements for only non - VCSB test methods for fuel parameters. We also proposed excluding designated test methods that have been in operation 6 months prior to finalizing this rule, as well as test methods that are developed b y VCSBs, like ASTM International or the International Organization for Standards (I SO) from qualification requirements. We had also proposed subjecting laboratories that develop test methods but decide not to offerPage 432 of 529

them for evaluation and establishment through a VCSB

- based organizational process to qualification requirements. 525 We proposed that all test methods subject to qualification requirements must be qualified independentl y b y each analytical laboratory

that wishes to adopt the test method. We explained that this is because such a test method would not have been shown to be capable of accuratel y measuring the fuel par ameter in different laboratories and across a variety of fuel matrices. We also explained that the precision for the candidate anal yt ical test method must be established by a medium

- term series of measurements on production fuels, the workability of the t est method must be verified by at least on other laboratory , and its accuracy must be demonstrated by direct correlation to the designated anal yt ical test method for the particular fuel parameter. For test methods that have been sponsored and published by a VCSB such as ASTM or I SO, we proposed that the test method must be fully described so that it is replicable in many

different laboratories and so that its operation may be understood by

a technician. We also proposed that the VCSB must have tested the candidate test method in a round robin program against the designated test method, must have published a determination that the test method meets the performance criteria as discussed, and must have published the information necessary to correlate the alte rnative test method to the designated test method. 526 We also proposed that a VSCB

- based alternative test method need not be qualified separatel y in each laboratory that adopts it. We explained that this is because the test method’s procedures would have be en exhaustively described by the time the VCSB

- based candidate alternative test method has been through the extensive development process t ypicall y required by a VCSB. We also reasoned that at this point there would be little uncertainly about how the ana ly

tical test method is to be applied, and it would have been implemented in a variety of different laboratories and used on a variety of different t ypes of fuels. We continue to believe that the VCSB

- based process gives some confidence that the analy tical test method is likely

to be stable in use and can be implemented with very little ambiguit y regarding instrumentation, materials, and procedures. As also explained at proposal, VCSB method evaluation protocols have been established, including a recentl y developed protocol for comparing methods, which provide means for establishing a proposed VCSB alternative method’s precision parity with the

525 Reasons for not submitting a local method for VCSB evaluation may include the proprietary nature of software or appar atus or the fact that the method is highly matrix

- sensitive and not likely to perform consistently when used to analyze fuels with widely varying properties. EPA recognizes that matrix sensitivities may be subtle and methods with such characteristics may have been sponsored and published by VCSB’s. 526 This first approach assumes that a single such equation can be used for all labs using the method, an assumption that may not always hold true. The more detailed discussion of the two approaches that follow

s this introduction explores this problem.Page 433 of 529

designated method for the parameter 527 and for determining whether the alternative test method can be adequately cor related with the designated test method. 528 We also recognized that imposing qualification requirements on existing test methods developed b y a VCSB without adequate lead time may be problematic. We thus proposed to give methods published and in operation u pon publication of the Tier 3 proposed rule (May 21, 2013) a grace period of one year from the effective date of a final rule to comply with today’s requirements. We also proposed to exempt existing (i.e., in use for six months prior to publication of the proposal) installations of designated test methods that are method

- defined parameters from the qualification requirement. We reasoned that these installations were stable and capable methods in relatively experienced hands because they

are already being u sed to certify fuels, and that requiring their qualification could be disruptive and burdensome to both their operators and to whomever manages the qualification process. We further reasoned that such installations would not benefit tangibly from this rul e (as b y obtaining access to a desired new method), but would nevertheless bear a newl y - imposed burden. We also proposed record keeping and retention requirements for both VCSB alternative and non

- VCSB test methods. Parties would need to maintain qualific ation records for demonstrating compliance for a period of 5 ye ars after they cease use of the particular test method. Parties must also maintain a complete description of the test method and data with statistical anal ys is that supports its qualification. We also sought comment on whether the Agency should require qualification of all anal yt ical test method for the fuel parameters of 40 CFR 80. This would include each designated test method, all alternative test method currentl y allowed b y our regulations , as well as any other anal yt ical test method regardless of whether the test method was developed by a voluntary

consensus standards based organization, like ASTM, or if it is a proprietary anal yt ical test method, that is, non

- VCSB test method. We recogniz ed that imposing the qualification requirement on existing and operational installations of all methods without adequate lead time may be problematic. We thus proposed to give laboratories (i.e., those in operation when the proposal was published (May 21, 2013)) a grace period of one year from the effective date of the final rule prior to compl yi ng with the requirements being

527 ASTM D6708

- 08, entitled, Standard Practice for Statistical Assessment and Improvement of Expected Agreement Between Two Test Methods that Purport to Measure the Same Property of a Material. 528 ASTM D6708

- 08, enti tled, Standard Practice for Statistical Assessment and Improvement of Expected Agreement Between Two Test Methods that Purport to Measure the Same Property of a Material.Page 434 of 529

finalized in today ’s rule. We explained that we believed that a year should be enough time to determine whether an existing test me thod is likely to qualify

or to adopt and qualify

a replacement test method if it should fall short. New installations of previously accepted methods, including alternatives, would be required to qualify

their laboratory

before being put into service just like all other installations of new test methods in a laboratory (78 FR 29964

- 29965). All comments received were in support of our proposal to require qualification of onl y non - VCSB test methods for fuel parameters. We also received several comments reque sting a compliance period of 18 months from the effective date of this rule rather than one ye ar. According to commenters, this period of time was needed b y the regulated community to help ensure adequate lead time to implement this new performance based measurement sy stem program especiall y because there of expected modifications based on comments that were received on the proposed PBMS requirements. Thus, there will be a need for further clarification and implementation guidance beyond what was proposed and finalized today . Some commenters noted the discrepancy between the preamble and regulatory

text as it related to the proposed exemption for installations of designated test methods of method

- defined parameters that were in use six months prior to publication of the proposed rule. Consistent with our proposal, the Agency today is finalizing requirements for qualification of onl y non - VCB test methods for fuel parameters, as proposed. We are also finalizing as proposed the exemption of existing (i.e., in use for six months prior to May 21, 2013) installations of designated test methods from today ’s qualification requirements. Further, in response to comments and in a change from our proposal, we are now providing a compliance period of 18 months from the effective date of this final rule for when these performance based anal yt ical test methods measurement sy stem requirements at 40 CFR 80.47 will be effective.

3. Downstream Pentane Blending Today ’s action finalizes provisions to allow blender grade pentan e to be blended into previously

certified gasoline (PCG) downstream of a crude oil refinery

. 529 These provisions will become effective [I NSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERAL REGI STER]. These provisions that are being finalized today

are simi lar to the long standing provisions for blending butane into gasoline at 40 CFR 80.82, with additional provisions to provide adequate compliance assurance. Refiners are not able to produce gasoline or BOBs that are as close to the applicable maximum vol atility (RVP) standard in a given area as what can be

529 Blender grade pentane refers to pentane that meets the specifications for either co mmercial grade or non - commercial grade pentane discussed below and as such may be added to previously certified gasoline by pentane blenders meeting the requirements finalized today. .Page 435 of 529

achieved at a terminal through RVP trimming due to spatial and temporal considerations regarding the shipment of gasoline to terminals. Butane is currentl y blended into PCG downstream of the refinery i n order to trim RVP levels closer to the applicable maximum RVP specifications. Butane blenders are required to test the finished gasoline they produce to demonstrate compliance with the maximum RVP requirements. Testing for RVP is quick, and requires re lativel y inexpensive and eas y to operate equipment. Hence, RVP testing can be accommodated at a terminal where small (tank truck sized) batches are continually produced by blending for delivery

to retail stations. Testing for other fuel parameters such a s sulfur and benzene content requires more costly and technicall y demanding equipment that cannot readily be accommodated at a terminal. Such testing can also not be completed in a time frame that is compatible with the need for terminals to quickly

move product to retailers in order to maintain adequate suppl y for consumers. These considerations informed the Agency ’s prior decision to allow butane blenders to primarily rely on testing conducted by

the butane supplier (and the producer of the PCG) to demo nstrate compliance with gasoline fuel quality requirements other than maximum RVP. 530 The same considerations exist today regarding blending pentane into PCG. Therefore, we are finalizing provisions to allow pentane blenders to also primarily rel y on testi ng conducted b y the pentane producer or importer and the producer of the PCG to demonstrate compliance with gasoline fuel qualit y requirements other than maximum RVP. We are requiring that the test results on the pentane be generated b y the producer or importer of the pentane because we believe that it is necessary to identify

a specific part y that must register with EPA and be responsible for the pentane quality requirements. The fuels regulations place primary responsibility for sampling, testing, reporting and assuring that gasoline meets applicable fuel standards on refiners. The flexibility

that this rule provides to butane blenders and pentane blenders does not shift this primary

compliance obligation. The rule does, however, provide a limited flex ibility

for refiners who add these blendstocks to previously certified gaso line. The agency

has provided this limited flexibility because of the unique nature of these blendstocks, and because of additional compliance requirements that are imposed on the manufacturers of these blendstocks and the refiners who use these blendstocks. Refiners who use the special allowance for butane and pentane blending will remain liable for an y fuel quality violations, but will be able to rely on sampling and testing fro m the butane and pentane manufacturer, if all of the requirements of the regulations are met. All other refiners, including blender

refiners, must compl y with all of the applicable sampling, testing, reporting recordkeeping and fuel quality standards, and may not rely on test results from blendstock suppliers.

530 Regulation of Fuels and Fuel Additives: Modifications to Standards and Requirements for Reformulated and Conventional Gasoline Including Butane Blenders and Attest Engagements; Final Rule, December 15, 2005, 70 FR 74552.Page 436 of 529 As discussed in Section V.C. of today ’s preamble, the current butane sulfur cap will also appl y to blender grade pentane blended into gasoline b y until the implementation of today ’s Tier 3 sulfur re quirements, when a 10 ppm sulfur cap will apply

to both butane and pentane blended into gasoline. The benzene, olefins, and aromatics specifications for “commercial grade” and “non commercial grade” blender grade pentane discussed below are similar to the requirements for butane. We received comments in favor of our proposal to allow pentane blending into PCG. During our discussions with stakeholders following the proposal and from the review of public comments, we became aware of additional potential i ssues associated with assuring the quality of pentane for gasoline blending beyond those that exist for butane. 531 In response to comments and to further limit variability

in pentane quality , C6 and higher hydrocarbons in pentane blended into gasoline must be limited to 5 volume percent or less. We were also made aware of the possibility

that parties that handle natural gasoline liquids (NGL) might misinterpret the pentane blending provisions finalized today to appl y to natural gas liquids. A pentane stream for gasoline blending does not currently exist, and there are currentl y varyi ng definitions of NGL , which is sometimes referred to pentanes

plus. There is also concern about potential contamination if the same equipment is used to transport blender grad e and NGL. Today ’s rule finalizes the following additional requirements, that will preclude potential confusion of NGL with blender grade pentane, help ensure that the quality of blender grade pentane is maintained throughout the distribution sy stem, and facilitate EPA enforcement and compliance assurance of the quality

requirements for blender grade pentane. First, producers and importers of pentane for gasoline blending must register with EPA. Such registrations must include sufficient information to de monstrate that the producer or importer will be capable of producing or importing blender grade pentane meeting today ’s quality specifications and that contamination during distribution to the pentane blender can be adequately limited. Second, producers and importers of pentane for gasoline blending must test each batch of blender grade pentane to demonstrate that the quality requirements are met. Third, producers and importers of pentane for gasoline blending must submit an annual report to EPA that includes batch test data and information on the volume produced or imported. These requirements will enable EPA to perform effective oversight of entities that produce pentane for use b y pentane blenders. Fourth, pentane blenders must use only blender grade pentane from registered producers or importers. We believe that this requirement will provide additional assurance that pentane blenders are obtaining product onl y from legitimate producers. Fifth, pentane blenders must conduct periodic quality assuranc e testing on both the commercial grade pentane and the non

- commercial

531 See the Summary and Analysis of Comments for this rule for a detailed response to comments on the pe ntane blending provisions finalized today.Page 437 of 529

grade pentane that they

receive. Sixth, we are requiring a more frequent sampling frequency than is required for butane. For commercial

- grade pentane, pentane blenders must sample and test once for every 350,000 gallons of pentane received, or on c e every

three months, whichever is more frequent. For non

- commercial

grade pentane, pentane blenders must sampl e and test once for every 250,000 gallons of pentane received, or on c e every thr ee months, whichever is more frequent. We believe that the heightened level of concern regarding assuring the quality of pentane used by

downstream blenders warrants these additional requirements. Finally , we are finalizing specific product transfer doc ument and recordkeeping requirements for parties that produce and take custody of pentane for gasoline blending. Entities in the distribution chain for blender grade pentane must maintain records of their quality assurance activities to manage contaminati on while blender grade pentane is in their custody

. We proposed amendments to 40 CFR 80.79 to address the liability and prohibited activities for entities in the blender

grade pentane distribution sy stem. During our review of the regulations finalized to day , we noted that such provisions are already covered under existing regulations that pertain to entities in the distribution system for butane used b y downstream butane blenders as well as other parties. Therefore, we are not finalizing the proposed ame ndments to 40 CFR 80.79. A parties that blends pentane into gasoline is a refiner, similar to butane blenders. Similar to the butane blending provisions, pentane blending will not be allowed into RFG or RBOB from April 1 through September 30, or into any RFG or RBOB that is designated as VOC

- controlled. Like butane blenders, pentane blenders must test the finished gasoline to ensure that the applicable volatility requirements are met. Consistent with the requirements for butane blenders, pentane blender s will not be subject to other sampling and testing requirements that would otherwise appl y to a refiner, provided that they use blender grade pentane that meets today ’s specifications and conduct today ’s specified quality assurance practices. Testing to d emonstrate compliance with gasoline compositional requirements other than maximum RVP will not be required for pentane blender provided that the blender has product transfer documents from the supplier that demonstrate the pentane is “commercial grade”. Until December 31, 2016, commercial grade pentane is defined as pentane that test results demonstrate is 95 percent pure and has the following properties: sulfur ≤ 30 ppm, benzene ≤ 0.03 volume percent, olefins ≤ 1.0 volume percent, aromatics ≤ 2.0 volume percent, and C6 and higher h ydrocarbon content ≤ 5.0 volume percent. Beginning January 1, 2017, a sulfur standard of ≤ 10ppm will apply while the other specifications for commercial grade pentane will remain unchanged. Product transfer documents from the supplier demonstrating the pentane is “non

- commercial grade” may also be used to demonstrate compliance with gasoline quality requirements other than volatility

. Until December 31, 2016, non

- commercial grade pentane is pentane that test results demonstrate as having the following properties: sulfur ≤ 30 ppm,Page 438 of 529

benzene ≤ 0.03 volume percent, olefins ≤ 10.0 volume percent, aromatics ≤ 2.0 volume percent, and C6 and higher h ydrocarbon content ≤ 5.0 volume percent. Beginning January

1, 2017, a sulfur standard of ≤ 10ppm will apply while the other specific ations for non

- commercial grade pentane will remain unchanged. As discussed above, producers and importers of pentane for gasoline blending must test each batch of finished gasoline to demonstrate compliance with these quality requirements. The pentane parameter testing that is required of pentane producer/importers and pentane blenders must be conducted using test procedures that have been approved b y the Administrator. No such test procedures are currentl y approved. As part of their registration requir ements, pentane producers and importers must specify the test procedures that they will use to demonstrate compliance with the pentane qualit y requirements finalized today. EPA will continue to work with industry in establishing test procedures for use in meeting pentane testing requirements. We believe that the butane blending provisions have reduced the burden of compliance with EPA gasoline quality requirements. We anticipate that expanding these provisions to allow pentane to be blended into gasoline wil l further reduce the burden of compliance . The requirement that final blen ds must comply with maximum gasoline volatility requirements will ensure that the flexibility to conduct downstream RVP trimming will not reduce the environmental benefits of EP A’s gasoline quality

requirements. Due to its lower volatility compared to butane, larger volumes of pentane than butane can be blended into gasoline while still meeting the gasoline RVP standards. Thus, allowing pentane to be blended into gasoline downs tream of the refinery may displace butane blending. Since pentanes have a lower boiling point than butane, this could result in some environmental benefit from reduced vehicle evaporative emissions. A prominent butane blender stated that allowing pentan e blending would provide an opportunity to increase domestic gasoline suppl y which in turn could help reduce gasoline prices. One commenter requested that the blending flexibility for pentane be extended to other gasoline range h ydrocarbons such as heav y naptha. We disagree. We are not expanding today ’s provisions beyond pentane. Pentane is a clean burning alkane like butane. The onl y concern with respect to the effect of downstream pentane and butane blending on vehicle emissions can be addressed thro ugh compliance with gasoline maximum volatility requirements. Less is known about the potential impacts on vehicle emissions of the downstream blending of blendstocks other than butane and pentane. We note that such blendstocks can still be utilized by

r efiners. Allowing blending of heavier boiling range h ydrocarbons, such as heav y naptha, would also likely raise additional compliance assurance issues. Similar toPage 439 of 529

butane, blender grade pentane requires special pressure vessels for transport, storage, and blending into gasoline due to its relatively high vapor pressure / boiling point. 532 These special equipment and handling needs present a significant barriers to entry into the pentane blending market, thereby limiting the potential number of parties engag ed in the market. The substantial investments needed for such special equipment also provides assurance that parties engaged in the pentane blending market will be motivated to comply with EPA requirements. These factors make us confident that the compli ance assurance requirements finalized today are sufficient to support provisions for pentane blending. On the other hand, in the case of heavier h ydrocarbons that are liquid under ambient conditions, gasoline handling equipment could be used. This would greatly multiply the number of potential parties that could supply

product to downstream blenders, thereby substantially increasing compliance assurance concerns. Therefore, we are not finalizing provisions for downstream blending other than those for pentane at this time.

4. Acceptance of Top Tier D eposit Control Test Data Today ’s action finalizes the proposed amendments to EPA’s gasoline deposit control regulations to accept test data collected for the industry

- based “Top

Tier” deposit control program as d emonstration of compliance with EPA’s intake valve deposit (IVD) and fuel injector deposit (F ID ) control requirements. The “Top Tier” deposit control gasoline standards developed by four major automakers are based on the premise that a more robust level o f the control of vehicle engine and fuel sy stems beyond that provided by the EPA deposit control requirements is desirable and necessary

for current vehicle technology

. 533 Several major gasoline marketers have adopted Top Tier for their gasoline. It is wi dely accepted that conformance with the Top Tier IVD and FID control testing requirements is more challenging than compl yi ng with the standard EPA IVD and FID testing requirements. A ccept ing IVD/FID test data that complies with the Top Tier requirements i n place of the standard EPA IVD/FID testing requirements will provide significant saving s to industry from reduced deposit control testing while maintaining the emissions benefits of EPA’s gas oline deposit control program. These changes are being codified in the regulations at §§80.161(b), 80.163(a)(1)(iii), 80.164(a), 80.165, 80.167(a), 80.176, and 80.177. The comments we received were in favor of the proposal to accept test data that demonstrates compliance with the Top Tier program as alternative compli ance data under EPA’s deposit control program. Chevron stated that their extensive experience with deposit control and related vehicle/engine performance testing, combined with the vast body of technical literature on the subject, shows that compliance wi th Top Tier IVD/FID requirements provides improvements in emissions and performance compared to fuels with deposit control additive levels

532 The boiling point of pentane is ~ 97° F and butane is ~30° F. 533 The industry

- based Top Tier deposit control program is discussed at http://www.toptiergas.com/Page 440 of 529

that merel y meet EPA’s deposit control requirements. Chevron identified a ty pographical error in the proposed regulations to codify the Top Tier testing requirements at §80.177(b)(1)(iv). The proposed regulations stated that test fuel used in IVD testing must contain no less than 240 ppm sulfur. This error is corrected in the regulations finalized today to state that test fuel used in IVD testing must contain no less than 24 ppm sulfur, consistent with the Top Tier deposit control standard.

5. Potential Broader Regulatory Streamlining Through Program Restructuring The current set of fuel regulations is the result of programs that have been established over the ye ars to reduce emissions from mobile sources. These programs include gasoline volatility (RVP), reformulated gasoline and anti

dumping, sulfur control (which today ’s Tier 3 program will revise), mobile source air t oxics (MSAT1), benzene control (MSAT2), and the renewable fuel standards (RFS). Most of these regulations have been amended numerous times. The RFG and anti

- dumping regulations in particular contain some of the more extensive requirements on sampling, tes ting, and reporting. They also have some of the more stringent restrictions on gasoline use (e.g., restricting where fuel produced can be sold, what it may be commingled with, etc.). EPA used the RFG and anti

- dumping rules as the foundation for many aspe cts of subsequently developed fuel regulatory programs. However, the subsequent rules, considered as a whole, have supplanted most of the RFG and anti

- dumping standards. For this reason, we proposed to streamline the regulations in several places as desc ribed above. Initial discussions with fuel industry representatives have indicated that a comprehensive review of the complete set of fuel regulations contained in 40 CFR p arts 79 and 80 (“Registration of Fuels and Fuel Additives” and “Regulation of Fuels and Fuel Additives,” respectivel y) of the Code of Federal Regulations could lead to further streamlining of the regulations beyond the streamlining provisions being finalized today

. EPA expects that further streamlining would result in more efficient and less costly

compliance determinations for affected parties while maintaining the environmental benefits of the programs. However, in many cases such changes could require not just the removal or streamlining of existing provisions but also the replacement of several provisions with new, less onerous ones that require further development, notice and comment. We intend to continue to seek comment in future actions on potential areas in the fuel regulations that may benefit from such a more comprehensive str eamlining effort. For example, it may be possible for the RFG VOC standard to be met if a sufficientl y stringent RVP level is attained. Under this scenario, sampling and testing requirements at the refinery would be reduced. Another potential scenario c ould involve consolidation of some RFG and anti

- dumping rules; for example, a single set of rules governing the treatment of downstream ethanol blending and in

- use survey s could provide greater efficiency

and flexibility

regarding fuel distribution.Page 441 of 529 We rec eived a number of comments supporting the concept of further streamlining in 40 CFR parts 79 and 80, including suggestions for additional areas of the regulations to consider in the future. **B. Engine, Vehicle and Equipment Programs**  **Amendments** We are amending several regulatory requirements for motor vehicles and other ty pes of vehicles and engines. These changes are intended to align with the Tier 3 standards and to make various adjustments and corrections to the regulations. We are also removing large port ions of obsolete regulatory text and updating cross references accordingl y.

1. Fuel Econom y Labeling EPA adopted updated fuel econom y labeling requirements in 40 CFR part 600 on July

6, 2011. 534 The label display s a smog rating based on relative emission rate s for certified vehicles. With new Tier 3 standards, this rating scale becomes less useful, since the Tier 3 standards disallow certification to half of the existing smog ratings. We are therefore adopting a new transitional smog rating scale starting in model year 2018. Manufacturers choosing to transition to the Tier 3 NMOG+NO X standards based on a percentage phase

- in may continue to meet Tier 2 standards for the “phase

- out” fraction of the fleet through model ye ar 2020, but must use a new smog rating scale that lines up, to the extent possible, the Tier 2 standards with the new Tier 3 scale. We believe it is appropriate to shift to the new transitional smog rating scale in model year 2018 to reflect the start of Tier 3 program for the majority

of vehi cles. The smog rating scale ranges from 1 to 10. The federal Tier 3 program comprises seven different NMOG+NO X emission certification levels. In addition, the California ZEV program for 2018 and later model years includes a unique TZEV category , which falls between a ZEV (Bin 0) and a SULEV20 (Bin 20), resulting in a total of eight emission standards. 535 EPA received comment asking that we develop appropriate ratings that account for both the exhaust certification and all

- electric range of TZEV vehicles. EPA plans to develop guidance for smog ratings for TZEV vehicles in its annual fuel economy guidance letter. Therefore we are not finalizing a smog rating for California TZEV vehicles at this time. As proposed, w e are omitting rankings 2 and 4 to help convey the larger absolute differences in the g/mile standards between Bins 70 and 125 and Bins 125 and 160. We are also adjusting the scale again in mode l year 2025 , once the Tier 3 standards are full y implemented, so that, the middle of the scale (a smog rating of 5 or 6) is equivalent to the fleet average standard of 0.030 g/mile for NMOG + NOx, consistent with the fuel economy and greenhouse gas rating.

534 76 FR 39478 (July 6, 2011). 535 http://www.arb.ca. gov/regact/2012/zev2012/fro2rev.pdfPage 442 of 529 We revised the regulations slightly after the proposal to accommodate the presence of LEV III vehicles in 2017 and earlier model years.

2. Removing Obsolete Regul atory Text EPA regulations for highway and nonroad engines, vehicles, and equipment in many cases appl y for a range of model years before being replaced b y a new set of standards, requirements, and other provisions for implementing a program that changes t o reflect technological innovation, changing environmental needs, new business dy

namics, and other factors. We are taking steps in this rulemaking to remove substantial portions of regulatory

text that no longer have any regulatory

significance, generally because they have been superseded by newer provisions. In many cases, this simply involves removing paragraphs or sections related to certifying products that no longer appl y to 2004 or newer model ye ars. In other cases, we can remove whole subparts that apply

onl y t o engines and vehicles that have reached the end of their useful lives for the purpose of regulation. For example, the in

- use regulations from 40 CFR part 86, subpart H, applied only for 1993 through 2003 model year light

duty vehicles, light
- dut y trucks, and medium

- dut y passenger vehicles. Also, the National LEV standards in 40 CFR part 86, subpart R (and in Appendix XIII through XVIII of part 86), applied only for 1999 through 2003 model years. These subparts, and references to that conte nt, can be removed from the CFR. Similarly , the provisions of 40 CFR part 86, subpart A, applied to light

- duty vehicles only

through model year 2000 for light

- duty vehicles and model year 2004 for light

- dut y trucks and chassis

- certified heavy

- duty vehicles . Much of that subpart continues to apply for heavy

- dut y engines, so the obsolete portions must be removed more selectively. We are removing substantial portions of 40 CFR part 86, subpart A, to omit text that applies only for light

- dut y vehicles or light
- duty trucks, and additional portions that do not apply for any 2004 or newer model years. There are also instances where we are streamlining the organization of regulatory

sections in 40 CFR part 86. For those places where there is a new section for a given model year where all the old provisions continue to apply , and the new section introduces a narrow additional provision, we are cop yi ng the new paragraph into the section for the older model

- year provisions, with descriptive language in place to say when the new provision applies as appropriate . This consolidation allow s us to take out numerous sections that can lead to confusion for the reader. The following sections describe additional changes to remove material.
a. Certification Short Test and I/M Provisions Inspection and maintenance (I/M) programs have been implemented by state and local governments for many years. These programs have been effective atPage 443 of 529

identifying vehicles that need some kind of repair to restore the performance of a vehicle ’ s em ission control sy stem. In that context, they have also provided useful information to facilitate warranty coverage where defective components or sy stems were still covered b y the manufacturer’s warranty, as required b y s ection 207 of the Clean Air Act. In 1993, EPA adopted a requirement for the certification short test (“CST” or “cert short test”). 536 The purpose of the cert short test was to correlate the vehicle manufacturer’s certification and I/M testing. Under this approach, the vehicle manufacturer certifies that a properly maintained and operated vehicle will pass I/M testing. When such a vehicle fails I/M during the warrant y period, the manufacturer is responsible for the cost of repairs necessary to correct the problem so the vehicle can pass the I/M test. EPA adopted requirements in 1993 for manufacturers to design and build their vehicles with OBD, which provides performance feedback for evaluating whether emission control sy stems are functioning properl y. This rule, combined with fleet turnove r, has resulted in vehicles subject to I/M being equipped with OBD. The standard protocol for I/M programs now depends on the OBD sy stem instead of tailpipe tests to determine which vehicles need maintenance. Since vehicle manufacturers have to certify th e performance of OBD s ys tems as part of the certification process, the use of OBD for I/M testing also provides a basis for determining that emission repairs are covered b y the manufacturer’s warranty, when necessary . For man y ye ars, manufacturers have submitted a compliance statement for certification instead of submitting data to demonstrate that they meet the standards associated with the cert short test. Since emission measurements are no longer part of an y standardized I/M testing, it has become clear that OBD sy stems have completel y replaced the cert short test as the means of making warranty determinations for I/M testing. We are therefore entirely removing the cert short test standards and test procedures from 40 CFR part 86, subparts O and S, and similarly removing the emission measurement procedures from 40 CFR part 85, subpart W. The remaining regulatory text in 40 CFR part 85, subpart W, relates onl y to the role of OBD testing in the determination of manufacturers’ warranty obligations resultin g from I/M testing. In addition to removing material that no longer applies based on model years, we are updating this remaining text in two way s. First, we are expanding the scope to include medium

- duty passenger vehicles since these vehicles are now su

bject to both OBD certification requirements and I/M testing. Second, we are replacing all citations to SAE reference procedures with a cross

reference to 40 CFR 86.1806, which accounts for the relevant OBD reference procedures. This avoids the possibili ty of changing the certification procedures in a way that departs from the I/M and warrant y provisions. Since these programs are paired, there will never be a need to specify different reference procedures for the two programs.

536 58 FR 58382 (November 1, 1993)

.Page 444 of 529 b. Testing for Heav y - Dut y Highway Engines We recentl y completed the migration of test procedures for heav y - dut y highway engines from 40 CFR part 86, subpart N, to 40 CFR part 1065. Now that these manufacturers are all relying on the new test procedures, we are eliminating the regulato ry

provisions that no longer appl y. This involves large portions of text in 40 CFR part 86, subpart N, that have been superseded b y analogous material in 40 CFR part 1065, such as analyzer specifications, calibration procedures, calculation methods, and f uel specifications. The obsolete text also included several references to 40 CFR part 86, subpart D, which we will also no longer print in the CFR. We are keeping regulatory provisions in 40 CFR part 86, subpart N, that serve as the “standard

- setting part” for matters related to testing, such as the duty cycles and not

- to
- exceed test procedures. These provisions are unique to heav y duty highway engines and are therefore not suitable for the general test specifications in 40 CFR part 1065. We will eventually migrate these remaining provisions to 40 CFR part 1036, where we already describe the greenhouse gas emission standards and certification requirements for heav y - dut y highway engines. In the case of testing in

- use engines that were originally certifie d using the procedures in 40 CFR part 86, subpart N, we are including a regulatory provision to allow EPA and manufacturers to continue to use the original certification procedures as a pre

- approved alternate procedure.

c. Testing for Heav y - Dut y Highway Vehic les The regulations at 40 CFR part 86 , subpart M, describe how to test heavy

duty vehicles above 14,000 lbs GVWR to demonstrate compliance with evaporative emission standards. Most of these provisions are identical to those that apply under 40 CFR part 86 , subpart B. As described in Section IV.C, we are eliminating subpart M and replacing it with a simple instruction to test these heav y - dut y vehicles using the procedures of subpart B, with a small number of appropriate modifications noted as exceptions to the light

- duty test procedures. d. Service Information Requirements for Light

- Dut y Vehicles The service information regulations were originally adopted for light

- dut y motor vehicles 40 CFR 86.038

- 96. These requirements applied for 1996 and later model year vehicles. Starting with the 2001 model year, these same requirements were copied into §86.1808

- 01. These two sets of requirements are identical except for the model ye ar applicability and a variet y of very minor stylistic differences. We are revising the service information regulations in §86.1808

- 01 to apply also to 1996 through 2000 model year vehicles, and to correct several ty pographical and formatting errors. These changes should have no practical significance, since the requirements are the same in both regulatory sections.Page 445 of 529 3. Motorcycle Driving Schedules The CFR includes two separate driving schedules for motorcycles. The first, for motorcycles at or above 170 cubic centimeters (cc), is identical to that used for light

- dut y vehicles except that the speeds are converted to kilometers per hour. The second driving schedule, for smaller motorcycles, is also identical except for a period of about three minutes of reduced

- speed operation. To simplify this arrangement, and to better incorporate the new LA

- 92 driving schedule described in Section IV.B for heav y - duty vehicles, we are eliminating the identical portions of these drive schedules. This revised approach involves referencing the driving schedule for light

- dut y vehicles with instructions to conve rt to kilometers per hour and round the resulting speeds to the nearest 0.1 kilometers per hour, instead of repeating the driving schedule just to publish the same speed trace in different units. The unique portion of the driving schedule is laid out, with reference to the light

duty driving schedule for the portions that are unchanged. This is not intended to cause an y change in the current requirements or practices for certifying motorcycles. 4. Updating Reference Procedures The regulations in 40 CFR part 1065 depend on a large number of reference procedures and technical standards from ASTM, SAE International, and ISO, among others. These reference procedures and technical standards are updated periodicall y to keep them current with ongoing developments i n the field. Many times these changes include only minor corrections or clarifications. In other cases the updates incorporate new test methods, accommodate changing engine technologies, or other more substantive changes. Whether the updated reference d ocuments involve major changes or not, it is important for the regulations to rely on documents that are readily available. Toward that end, we are updating §1065.1010 with the latest versions of all the reference procedures and technical standards that w e were able to identify

. In areas of the regulations other than part 1065, we are generall y updating the regulation to rel y on the latest reference documents where we are changing or adding a provision that depends on one of these reference documents, but we are not making broad or universal changes to these references in other parts of the regulation

. One particular area of interest relates to rounding. As described in Section IV

. H .3, we are defining “round” for 40 CFR part 86 to have the meaning we giv e in 40 CFR 1065.20, which spells out a detailed rounding protocol that is consistent with ASTM E29 and NI ST SP811. This definition of “round” will defer to existing references in part 86 so that the part 1065 protocol will apply only where we do not spec ificall y refer to ASTM E29. This is not intended to change the policy for calculating or reporting numerical quantities, but rather to clarify the protocol and avoid the administrative complication of referencing multiple versions of the ASTM document. W e expect to eventually remove all mandatory

references toPage 446 of 529

ASTM E29 and NI ST SP811 and rel y exclusively on §1065.20 as the method for rounding numerical quantities. 

## VII. **What ar e the Cost Impacts of the Rule?**  We have estimated the costs for both the vehicle stan dards described in Section IV and the fuel standards described in Section V. This section summarizes these costs, while further information on the methodology we used to develop these costs can be found in Chapters 2 and 5 of the RIA. Section VII.C provid es a summary of total costs for the final vehicle and fuel programs together. For a comparison of the program costs to the monetized health and welfare benefits, see Section VIII. **A. Estimated Costs of the Vehicle Standards**  To determine the cost for vehicles , we first determined which technologies were most likel y to be applied by vehicle manufacturers to meet the standards. These technologies were then combined into technology packages which reflected vehicle design attributes that directly contribute to a vehicle’s emissions performance. The attributes considered included vehicle type (car or truck), number of cylinders, engine displacement, and the ty pe of fuel used (gasoline or diesel). We also created separate packages for light

- duty and heav y - dut y tru cks and vans. In estimating both cost and technology application, we have relied on publicly available information (such as that developed by California or submitted as comments on the proposal ), confidential information supplied by individual manufacture rs and suppliers, and the results of our own in

- house testing. The technology

packages that we developed represent what we consider to be the most likely average emissions control solution for each vehicle type. In general, we expect that the majority of vehicles will be able to comply with the Tier 3 standards which we are adopting through refinements of current emissions control components and sy stems. Some vehicles may require additional emission controls, such as large trucks with large displacement engines (in particular, LDT3s and LDT4s). Overall, smaller, lighter

- weight vehicles will require less extensive improvements than larger vehicles and trucks. Specifically , we anticipate a combination of technology upgrades including:

 Cataly st Platinum Gro up Metal (PGM) Loading. Increased catal ys t application of precious metals.

 Optimized Close

- coupled C ataly st: Improvements to the catal ys t sy stem design, structure, and packaging to reduce light

- off time.

 Optimized Thermal Management: Overall thermal man agement of the emissions control sy stem to shorten the time it takes for the catal ys t to light

- off.Page 447 of 529  Secondary

Air Injection: Increased application of secondary air injection for some 6

- cylinder and larger engines.

 Engine Calibration: Engine control and c alibration modifications to improve air and fuel mixtures, particularl y at cold start and/or to control secondary air and hydrocarbon adsorbers.

 Hydrocarbon Adsorber: Limited application of hydrocarbon adsorbers to trap hydrocarbons during cold start and release the hydrocarbons after the catal ys t lights off.

 Evaporative Emissions Controls: Improved evaporative emissions sy stems, including canister scrubbers, more permeation

- resistant materials, and improved sy stem integration. 1. What Changes Have Been Made to Vehicle Program Costs Since Proposal? Chapter 2 of the final RIA contains details about what changes have been made since the proposal and wh y we have made those changes. We have made several changes since the proposal, but two changes have significant impacts on the final rule vehicle costs and help to explain the large reduction in cost estimates between proposal and final rule. The first of these significant changes involves the catal ys t platinum group metal (PGM) loading costs. As commenters pointed out, the cost estimates in the proposal have become dated, as they were based largely

on four

- ye ar - old estimates of the CARB LEVIII program. For this final rule, we have developed a more robust catal ys t loading cost estimate using a methodology sugges ted b y one commenter. 537 This more robust estimate results in lower costs than estimated in the proposal. The second significant contributer to reduced final rule cost estimates is the use of the MY 2017

- 2025 fleet mix projected to result from the most recent GHG and fuel economy

rules. That projected fleet mix shows a large percentage of four

cylinder engines (generally these are inline engines, or I4), which are less costly to modify to achieve Tier 3 compliance than the proposal’s projected MY 2012

- 2016 f leet mix, which included many more V

- configuration six

- cylinder (V6) and eight

cylinder (V8) engines. We mentioned in the preamble to the proposal our intention to use the projected MY 2017

- 2025 fleet for our final rule cost analy sis (see 78 FR 29970).We have made man y other updates to the anal ys is for this final rule. For example, we reviewed the MY2013 certification database to evaluate the certified

537 ICCT Comments in Response to the Tier 3 Proposed Rulemaking, Docket ID No. EPA

- HQ

OAR

- 2011

- 0135

- 4304; Posada, Francisco, et. al., “Estimated Cost of Emission Control Technologies for L ight

- Duty Vehicles Part 1

– Gasoline,” SAE 2013

- 01

- 0534, 4/8/2013.Page 448 of 529

emission levels of the fleet. We found that many vehicles are already

being certified with emission le vels that would meet final Tier 3 standards. Further, many vehicles have certified emission levels that are 70% of the 0.30 g/mi NOx+NMOG standard, meaning that sufficient compliance margin exists for those vehicles to comply with Tier 3 without any

addit ional costs. 538 Our final rule estimates no exhaust emission

- related Tier 3 costs for these vehicles (evaporative emission

related costs are discussed below). We have also concluded that active HC adsorbers are not expected on any vehicles and, instead, a p assive HC adsorber will be used. The passive HC adsorber is considerabl y less costly. We base this on comments from MECA and ICCT and on confidential business information (CBI) provided by Tier 1 suppliers after the proposal. 539 We have also decreased our evaporative emission control costs, in part because of the high penetration of gasoline engines with direct injection as projected b y the MY 2017

- 2025 GHG and fuel economy rules. Direct injection removes a large source of evaporative emissions and, thus, means fewer vehicles need to add certain evaporative control technologies. We have also decreased the penetration rates of secondary air injection in the later years of the program, for reasons described below. L astl y, we have modified very slightl y our indirect cost markups to account for the fact that most of the research and development efforts required of auto makers are in response to CARB’s LEVIII rule and need not be conducted again for Tier 3 compliance. We have made some changes that have increa sed costs, although the cost increases are smaller in magnitude than the cost decreases from other changes so, on net, estimated vehicle

- level costs are lower than in the proposal. One such change was to increase the engine calibration costs (from roughl y $2/vehicle to $5/vehicle), to cover expected calibration efforts associated with PM control on direct injected gasoline engines. We have also increased the penetration rates of the technology

we term “optimized thermal management” for some vehicle classe s. This was done to ensure that all vehicles adding technology include costs for either optimized close

- coupled catal ys ts or optimized thermal management b y setting the combined phase

- in rate in each vehicle category to 100%. Another change was to update all costs from 2010 dollars to 2011 dollars. 540

538 As discussed in Section IV, we expect manufacturers to target 60

- 80% of the standard, or 20

- 40% compliance margins under Tier 3. 539 See ICCT, Docket ID No. EPA

- HQ

- OAR

- 2011

- 0135

- 4304, at pa ge 11 of 21; see MECA, Docket ID No. EPA

- HQ

- OAR

- 2011

- 0135

- 4675, at page 3 of 7. 540 We have updated 2010 dollars to 2011 dollars using the Gross Domestic Product (GDP) price deflator as reported by the Bureau of Economic Analysis on May 30, 2013. The factor used, taken from Line 1 of Table 1.1.4 Price Indexes for Gross Domestic Product , wa s 1.035 to convert from 2009$ and 1.021 to convert from 2010$. For example, to convert from 2010$ to 2011$, we calculated the (value in 2010$)x1.021=(value in 2011$).Page 449 of 529 With respect to total program costs, the significant change since proposal was to exclude costs incurred on vehicles sold in all states (California and elsewhere) that have adopted the California LEVIII progr am. As a result, our estimated costs per vehicle are applied to millions fewer vehicles in the final rule, thus making the total program costs considerably lower. And finally , we have included operating savings (fuel savings) associated with avoiding the loss of fuel that would have otherwise evaporated absent the new Tier 3 controls. The otherwise evaporated fuel is ultimately used to propel the vehicle, thus providing a savings to the consumer. 2. Summary

of Vehicle Program Costs As in the proposal , we hav e developed our costs with respect to a given vehicle t ype and the type of engine with which it is equipped. The final cost per vehicle is the result of not only the cost per technology , but also the application rate of that technology

for each vehicle t y

pe. For example, while the $ 119 ( 2017 cost in 2011$ ) cost of secondary air injection is the same for both a 6

- cylinder (V6) and 8

- cylinder (V8) application, we anticipate that onl y 25 percent of the V6 and 75 percent of the V8 passenger car applications w ill require it in MY2017

. In the same way , we anticipate that light truck applications will not add that technology until MY2018, again at a 25%/75% penetration rate for V6/V8 applications, respectivel y. Table VII

- 1 below shows our estimate of the cost of each of the emission control technologies for the gasoline vehicles affected by this final rule. Table VII

- 2 provides the anticipated application rate of the technology by vehicle ty

pe. Note that all of the costs shown in this section are in 2011 dollars and are marked

- up by an Indirect Cost Multiplier (ICM) so they include both direct and indirect costs. (For details of regarding ICMs and their ap plication refer to Chapter 2 of the RIA.)Page 450 of 529 **Table VII**  **- 1**  **MY 2017 Technology Costs by Gasoline Engine Type (**  **2011 $)**  **a** Technology PC

I4 PC V6 PC V8 LT

I4 LT V6 LT V8 HD c Class 2b HD Class 3 >14K HD d Cataly st Loadin g $ 43 $ 68 $ 101 $50 $75 $108 $ 59 $59 N/R Optimized Close

coupled Cataly st $24 $48 $ 71 $24 $48 $ 71 N/R N/R N/R Optimized Thermal Management $36 $36 $36 $36 $36 $36 $36 $36 N/R Secondary Air Injection N/R b $119 $119 N/R $119 $119 N/R N/R N/R Engine Calib ration $ 5 $ 5 $ 5 $ 5 $ 5 $ 5 $ 5 $5 N/R Hydrocarbon Adsorber N/R N/R $20 N/R N/R $20 N/R N/R N/R Evaporative Emissions Controls $ 15 $ 15 $ 15 $14 $14 $14 $ 11 $17 $17

a PC=passenger car; LT=light truck; I4 = In

- line 4

- cylinder ; V6 = 6

- cylinder, V8 = 8

- cylinder b N/R

– Not Required c Heavy

- duty d Gasoline onlyPage 451 of 529 **Table VII**  **- 2**  **Technology Application Rates for Gasoline Vehicles** Technology PC I4 a PC V6 a PC V8
a LT I4 b LT V6 b LT V8 b Class 2b & 3 b >14K HD c Cataly st Lo ading 100% 100% 100% 100% 100% 100% 100% 0% Optimized Close

coupled Cataly st 50% 60% 75% 50% 60% 75% 0% 0% Optimized Thermal Management 50 % 40 % 25% 50 % 40 % 25% 25% 0% Secondary Air Injection d 0% 25% 75% 0% 25% 75% 0% 0% Engine Calibration 100% 100% 10 0% 100% 100% 100% 100% 0% Hydrocarbon Adsorber 0% 0% 15% 0% 0% 15% 0% 0% Evaporative Emissions Controls 100% 100% 100% 100% 100% 100% 100% 100%

a MY2017 and later b MY2018 and later (Note that, for the vehicle cost analysis, LDT1/2/3/4 are treated colle ctively as light trucks.) c Gasoline only d Secondary air injection penetration rates ramp down from values shown here as follows: Pass enger car and light truck V6 gasoline: 25/25/25/15/15/5/5/5/5% beginning in 2017 except for light trucks which have a 0 % penetration in MY2017; Pass enger car and light truck V8: 75/75/ 7 5/65/65/55/55/45/45% beginning in 2017 except for light trucks which have a 0% penetration in MY2017.
Note the footnote to Table VII

- 2 describing the penetration rates used for secondary air injection sy stems in V6 and V8 gasoline vehicles. In the proposal, we did not use a ramped down penetration rate like that being used in this final rule for this technology . We have revised the pe netration rates in this final rule because of the historical pattern b y which secondary air injection has been implemented in the light

- duty fleet. Generally , secondary air makes an appearance in the early implementation stages and then is slowly phased o ut as auto makers learn more about and become more comfortable with their ability to meet any

new emission standards with a lower degree of reliance on secondary air. Presumably , this technology

is added in the earl y stages because it provides effective and relatively easily implemented cold temperature control for difficult applications in which auto makers tend to consider every technique at their disposal to ensure full useful life compliance. Then, as experience is gained, the secondary air injection sy stemsPage 452 of 529

slowly disappear from the new light

- duty fleet due to its relatively

high cost. We expect a similar implementation pattern in response to Tier 3. This position is corroborated b y ICCT in their comments where they say , in the context of LEV II veh icles meeting the LEV III standards, “In some cases it was easier and cheaper for manufacturers to add existing hardware (i.e., secondary air injection) than to invest the engineering resources to full y optimize precise air/fuel control and fast light

- off strategies, or to develop new hardware” (emphasis added). 541 Medium Duty

Passenger Vehicles (MDPVs) were included in the light

- dut y fleet as part of Tier 2. Given their current certification requirements for criteria pollutants, we have included the costs for MDPVs to meet the Tier 3 standards with the light truck cost estimates. We do not expect that the technologies required to meet the Tier 3 standards for MDPVs will be different from those applied to light trucks (with V8 engines) , as in many cases th ere are identical powertrains and chassis between the large light truck and MDPV platforms. We also expect that some manufacturers may continue to build and sell light

- duty diesel vehicles and certify those vehicles to Tier 3. All light

- duty diesel vehicl es currentl y being sold in the federal fleet are equipped with some means of controlling NO X emissions, either a Lean NO X Trap (LNT) or selective cataly tic reduction ( SCR) sy stem. As these s ys tems are already very effective in controlling NO X emissions, w e expect that they will remain the primary

emissions control sy stems to meet Tier 3. Similar to gasoline engines, diesel powertrains may be required to improve the effectiveness of their emission control sy stems during cold start. Therefore, we have dev eloped our costs for diesels with the expectation that the incremental costs will be realized to improve LNT and SCR sy stems during cold start. The improvements have been categorized as general SCR optimization, which include packaging changes to the SCR sy stem to allow faster light off; o ptimized thermal m anagement, to reduce the thermal mass of the system and allow more of the combustion heat to reach the SCR system sooner; and the calibration work associated with both of these changes. Table VII

- 3 below describes both the cost of the technologies as well as their anticipated application rates. **Table VII**  **- 3**  **MY 2017 Technology Costs and Application Rates fo**  **r Diesel Engines (**  **2011 $)**  Technology Diesel Engine Costs (all ty pes) Li ght

- dut y and

Heav y - dut y Application Rate Optimized Thermal Management $36 25% Engine Calibration a $2 100% SCR Optimization $ 59 100%

541 Se e EPA

- HQ

- OAR

- 2011

- 0135

- 4304 at page 11 of 21.Page 453 of 529 a These engine calibration costs are the same as the proposal since the increased calibration costs associated with gasoline direct injection do not apply for diesels

. We also estimated costs for HDVs between 8,501 and 14,000 lbs GVWR and for gasoline HDVs above 14,000 lbs . Vehicles in this range are o ften referred to as Class 2b (8,5001

- 10,000 lbs) , Class 3 (10,001

- 14,000 lbs) and Class 4 and above (>14,000 lbs) vehicles and are t ypicall y full

- size pickup truck and work vans. We applied the same process to the heav y - duty vehicles as we did to the light
- duty vehicles. Heav y - dut y costs and application rates are included in Table VII

- 1 , Table VII

- 2 , and Table VI I

- 3 above. We have also considered the impacts of manufacturer “learning

- by

- doing” on the technology

cost estimates. We reflect the phenomenon of volume

- based learning curve cost reductions in our modeling using two algorithms, depending on where in the learning cycle (i.e., on what portion of the learning curve) we consider a technology

to be: the “steep” portion of the curve for newer technologies and “flat” portion of the curve for more mature technologies. We have made no changes to the application of learning curve cost reductions relative to the proposal. For details surrounding learning

- by

- doing, please refer to Chapter 2 of the final RIA. The evaporative emissions standards that we are adopting will impose relativel y small cos t impacts. We estimate the cost of sy stem improvements, including indirect cost s , to be less than $17 (MY2017 cost in 2011$) per vehicle, for all vehicle classes. This incremental cost reflects the cost of moving to low

permeability

materials, reduced number of fuel

- sy stem connections, longer contiguous lengths of plumbing, and low

- permeation connectors. We believe that learning is also appropriate for evaporative emissions control sy stems as described above and in more detail in Chapter 2 of the RIA. We have used the individual technology costs discussed briefl y here and in more detail in Chapter 2 of the RIA to estimate package costs for each of the different gasoline and diesel engine ty pes in the fleet (i.e., I4 passenger car, V6 passenger car, etc. ). We have then multiplied these package costs by the project ed sales estimates for the ye ars 2017 and later. The projected sales estimates used, as noted earlier, represent the future fleet mix rather than today ’s fleet mix. That fleet mix is discussed in more detail in Chapter 2 of the RIA. With these total annual costs, we then determined the sales

- weighted average cost increase for all passenger cars, light trucks and heavy

- dut y vehicles. Table VII

- 4 below provides our estimates of the incremental cost per vehicle by model year for both tailpipe and evaporative emissions standards. These values reflect the total direct and indirect manufacturing costs as well as the appropriate learning

- by

- doing e ffects . As stated above, a large portion of the cost is incurred in the initial model years. Costs then continue to rise as the percentage of vehicles complying with the final standards increases through MY 2025.Page 454 of 529 We have estimated costs consistent with the fact that manufacturers would be required to start the phase

- in of Tier 3 standards in MY2017 for vehicles under 6,000 lbs GVWR and the expectation that MY2018 will begin the phase

- in for vehicles greater than 6,000 lbs GVWR. Based on the declining f leet averages for cars and trucks, we have apportioned our estimates for full compliance across the phase

- in years as a percentage of the final standard. Manufacturers will be required to move from a Tier 2 Bin 5 fleet average in MY 2017 (for vehicles <6,0 00 lbs GVW). This results in a significant step in stringency . As a result, a large portion of the costs are expected to be incurred in the initial model years. Finall y, manufacturers have the opportunity in MY 2015 and MY 2016 to earn Tier 3 credits by p roducing a fleet that is cleaner than the current Tier 2 requirements. While we expect that most manufacturers will earn credits, either b y selling California vehicles as 50

- state vehicles or by certifying existing vehicles to lower Tier 2 bins, we have n ot reflected these credits in our cost analy sis. In that way , we believe that our cost estimates are conservative. **Table VII**  **- 4**  **Per Vehicle Technology**  **Costs by Model Year (2011$)**  **a**
**Model Year 2017**  **2018 2019**  **20 20**  **2021 2022**  **2023 2024**  **2025** Passenger car $46 $51 $53 $57 $59 $63 $63 $64 $65
Li ght truck $0 $73 $78 $82 $86 $88 $87 $87 $86 Li ght

- dut y Combined $29 $59 $62 $66 $68 $72 $71 $72 $72
Class 2b $0 $44 $51 $60 $66 $75 $71 $70 $69
Class 3 $0 $33 $41 $49 $57 $65 $62 $61 $60 >14,000 pound HD $0 $10 $10 $13 $13 $16 $15 $15 $15

a Costs shown include costs for the Tier 3 standards on vehicles sold outside California and other states that have adopted LEVIII

. Total annual costs are shown below in Table VI I

- 5 . This table includes all costs associated with the final Tier 3 vehicle standards, i.e., both exhaust and evaporative emission standards. Also included are facility - related costs associated with the fina l requirements to conduct more PM testing on gasoline vehicles. (Additional detail regarding the PM facility costs are described in section 2.6 of the final RIA .) We show the facility costs in the year 2016 even though the program does not begin until 201 7. These costs represent the construction cost s that would be incurred before the first year of the standards in preparation for the testing effortsPage 455 of 529

that would be required. We have not made an y changes to the costs per facility upgrade rel ative to the proposal, and we present the details supporting our estimates in Chapter 2 of the final RIA. Lastl y, as noted above, we have included the impact on operating costs associated with the new evaporative emission controls. Because the evaporative emissions that would have been emitted absent the new standards will ultimately be used to propel the vehicle, the avoided evaporative emissions represent a savings to the consumer. While these savings are small on a per

- vehicle basis

— generally less than $2/vehicle over its lifetime

—they are notable on a fleetwide basis where, in calendar year 2025, they result in $11 million in pre

- tax savings. We also considered other operating costs, such as maintenance costs and repair costs, but concluded that the n ature of the Tier 3 compliance technologies will not result in any increases or decreases in existing operating costs. We present the details about these operating savings in Chapter 2 of the final RIA.

**Table VII**  **- 5**  **Annual Costs of the Tier 3**  **Vehicle Program (Millions of 2011**  **Dollars) a** 

Year Exhaust Evap Operating b Facili

ties Total LD HD All LD HD All LD HD All

2016 $0 $0 $0 $0 $0 $0 $0 $0 $0 $21.4 $21.4 2017 $268 $0 $268 $25.5 $0 $25.5 $0 $0 $0 $3.52 $297 2018 $519 $20.2 $539 $70.2 $3.24 $73.4

- $1.17

- $0.047

- $1.22 $3.52 $615 2019 $555 $24.2 $579 $69.2 $3.18 $72.4

- $2.03

- $0.094

- $2.12 $3.52 $653 2020 $571 $27.8 $599 $94.3 $4.12 $98.4

- $3.22

- $0.160

- $3.38 $3.52 $697 2021 $598 $31.5 $630 $92.8 $4. 04 $96.8

- $4.44

- $0.226

- $4.67 $3.52 $725 2022 $605 $34.8 $640 $116 $4.93 $121

- $5.96

- $0.309

- $6.27 $3.52 $758 2023 $606 $33.3 $639 $111 $4.73 $116

- $7.45

- $0.390

- $7.84 $3.52 $751 2024 $620 $33.1 $653 $109 $4.70 $114

- $8.95

- $0.472

- $9.42 $3.52 $761 2025 $635 $32.8 $668 $108 $4.66 $113

- $10.4

- $0.553

- $11.0 $3.52 $773 2030 $632 $31.8 $664 $108 $4.56 $113

- $18.0

- $0.959

- $19.0 $3.52 $761

a Costs shown include costs for the Tier 3 standards on vehicles sold outside California and other states that hav e adopted LEVIII

. b Operating costs use pre

- tax fuel prices; negative cost values denote savings. **B. Estimated Costs of the Fuel Program**  The sulfur control program we are adopting is expected to result in many refiners further investing in sulfur control hard ware and changing the operations in their refineries to reduce their gasoline sulfur levels. The final sulfur control program requires refiners and importers to reduce their gasoline sulfur levels on average down to 10 ppm. The ABT provisions being adopt ed along with the 10 ppm average sulfur control standard will allow refiners that reduce their gasoline sulfur levels below 10 ppm to earn credits and trade those credits to other refinersPage 456 of 529

who would find it more expensive to reduce their sulfur levels down to the average standard. The ABT program will allow refiners to optimize their investments, which we believe will result in achieving the average sulfur control standard nationwide at lower costs. We are maintaining the current 80 ppm sulfur cap at the refinery gate
. We estimate that the national average refinery costs incurred to comply with the full y phased

- in Tier 3 sulfur control program with ABT program will be 0.65 cents per gallon, averaged over all gasoline. This estimate includes the capital c osts, which are amortized over the volume of gasoline produced. In this section we summarize the methodology used to estimate the costs of Tier 3 sulfur control and our estimated costs for the program. A detailed discussion of all of these anal ys es is f ound in Chapter 5 of the RIA. 1. Overview The basic methodology

we used to estimate the cost of sulfur control for the final rule is similar to that for other rulemakings. Using a refinery

- by

- refinery cost model that we developed for this rulemaking, we projected the sulfur control technology

expected to be used by

each refinery , and the cost of each refinery ’s sulfur control step, to estimate compliance with the final sulfur control program. We aggregated the individual refinery costs to develop a natio nal average cost estimate for the final sulfur control program. We modeled costs assuming an in

- use average of 10 ppm and assuming refiners take full advantage of the ABT provisions and minimize overcompliance based on experience for the Tier 2 program de monstrating this today

. R efinery

- by

- refinery

cost models are useful when individual refineries are expected to respond to program requirements in different way s and/or have significantl y different process capabilities. Furthermore, as is the case with s ulfur control, such approaches are possible when the refinery changes required are primarily “add

- on s ” that do not impact the fundamental operation at the refinery

. Thus, in the case of modeling potential gasoline sulfur control programs, we needed a mode l that could accurately simulate the variet y of decisions refiners will make at different refineries, especially in the context of a nationwide ABT program. For this and other related reasons, we developed a refinery

- by

- refinery cost model to evaluate the costs and other impacts of the final sulfur control program. Refinery

- by

- refinery

cost models have been used in the past by both EPA and the oil industry

for such programs as the Mobile Source Air Toxics gasoline benzene control 542 , highway and nonroad die sel fuel sulfur standards

. T hey are a proven means for estimating the cost of compliance for fuel control programs. While they

will never precisely

model and predict individual refinery operations and impacts, they

provide both a good assessment of the ov erall market impacts and

542 “Co ntrol of Hazardous Air Pollutants From Mobile Sources,” 72 FR 8428, February 26, 2007.Page 457 of 529

of the variation of impacts across the refineries. Refinery

- by

- refinery models are also very useful when estimating the cost impacts of ABT programs. We used a linear program (LP) cost model to estimate a cost for recovering the o ctane lost when refiners further desulfurize their gasoline to compl y with the 10 ppm sulfur standard. Our refinery modeling run for estimating octane cost assumed E10 with a small amount of E85. This cost is a key input into the refinery

by

- refinery

cos t model. The octane cost we developed from the LP model is $0.31 octane number

- barrel. We also used the LP refinery model to estimate the change in gasoline qualities that occurs when refiners make up for the lost octane that were used as inputs into the emissions impacts analy sis discussed in Section III. 2. Methodology The way that the refinery

- by

- refinery cost model works can be subdivided into two primary

steps. First, the model attempts to model how refiners blend up gasoline at each of their refineri es. This is an important step because the fluidized catal yt ic cracker (FCC) naphtha, a product from FCC units, is responsible for almost all the sulfur in gasoline, even after compl ying with Tier 2. To help our understanding of how refiners blend up thei r gasoline, we used refinery unit throughput data which tell us how refiners are using their refinery units. The per

gallon cost is calculated over all the gasoline pool, while the desulfurization cost is incurred b y desulfurizing FCC naphtha; thus, the relative volume of FCC naphtha to the rest of the gasoline pool is important. The second primary

step of the refinery

- by

- refinery cost model is to project how refiners would comply with the Tier 3 10 ppm average sulfur standard taking into consideration h ow they complied with the 30 ppm Tier 2 gasoline sulfur standard. To determine how refiners would comply with Tier 3, we contacted the vendors which provided the technology to refiners for compl yi ng with Tier 2 and continued to provide onsite support. V endors provided information to us for installing grassroots units or revamping existing FCC postreaters sufficient to reduce the gasoline pool down to 10 and 5 ppm. We also evaluated the need and cost to refiners to reduce the sulfur levels of other refin ery streams and included costs for those refineries to hydrotreat the light straight run naphtha stream where such additional control appeared warranted. Finally , we assessed the cost for complying with Tier 3 assuming that refiners take advantage of an A BT program. To assess the costs for the Tier 3 program that included an ABT program, we organized the estimated sulfur reduction costs for each refinery for achieving both 5 and 10 ppm from lowest to highest to determine the set of investments for Tier 3 which minimized the cost of the Tier 3 program. We made a number of modifications to the refinery

- by

- refinery model for the final rule cost anal ys is. Based on a review of credit trading occurring for Tier 2, which revealed that credits are freel y traded be tween refining companies, we changed our cost anal ys is to assume nationwide credit trading instead of restricting it to intra

- compan y trading, as we did for the Tier 3 proposal’s cost analysis. WePage 458 of 529

incorporated refinery

unit throughput data that we obtaine d from EPA’s Office of Air Quality

Planning and Standards (OAQPS). The refinery model we used for this final rule estimated sulfur reduction cost for each refinery based on actual starting sulfur levels, instead of assuming that each refinery was desulfurizing their gasoline from 30 ppm to 10 or 5 ppm. We further refined our assessment for treating light straight run naphtha, but did not include any costs for treating butane since we found out from a vendor that butane is routinely treated today . We requ ested and received additional desulfurization cost data from vendor companies that we applied in our cost anal ys is. In response to comments from peer reviewers and other information that we obtained, we applied a higher offsite factor and a higher conting ency

factor to the capital costs. Additional changes that were made for the final rule cost analy sis are discussed in Chapter 5 of the RIA. Our refinery

- by

- refinery

sulfur cost model incorporates data on throughput volumes for each of the major refinery units in each refinery , including the crude unit, FCC unit, coker, hydrocracker, alkyl ation unit, reformer, isomerization unit, naphtha h ydrotreater and aromatics plant. Unlike the unit capacity data used for the NPRM analy sis, throughput volumes are a mu ch more robust set of data because they eliminate the need to try

to estimate how that refinery is operating that unit, or whether the unit is shutdown. We also used purchase and sales information for each refinery

such as purchases of natural gas liquids , naphtha and sales of propylene. The propylene sales data w ere used to estimate whether a refinery is operating its FCC unit in propylene maximization mode. If a refinery is operating in propylene maximization mode, some of the volume of FCC naphtha i s cracked to produce increased volume of prop yl ene for sales to the chemicals industry , but these refineries are producing a smaller volume of FCC naphtha. While the increased use of refinery

- specific data has improved the ability of the refinery

- by

refin ery model to represent the operations of each refinery, there still is uncertainty about how each refinery

is being operated. To assess how well our refinery model estimates the gasoline production for each refinery , w e compared the gasoline production v olume estimated by the refinery

- by

- refinery model for each individual refinery to the 2011 gasoline volumes reported b y refiners to EPA. Despite the use of very robust throughput data, there was still an overproduction of gasoline by quite a few refineries . In trying to address this overproduction of gasoline volume by our refinery

model, we spoke to refiners, vendors and peer reviewers and also reviewed the results of our LP refinery

modeling runs. This led us to conclude that this volumetric difference in the refinery

model was due in many

cases to not accounting for the undercutting of heav y gasoline into the jet and diesel fuel pools. We further discuss the implications of undercutting in Section VII.B.3. Overall, after we made some adjustments by

as suming that certain refiners are undercutting heavy gasoline to distillate, we were satisfied with the model’s volumetric estimates. To set up the refinery model, the model was updated with a projection of refined product volumes, and of input and output prices, from the Energy Information Administration’s Annual Energy Outlook (AEO) 2013 for the y ear 2018.Page 459 of 529 For this refinery

- by

- refinery sulfur cost model, we conducted two sets of independent peer review s. One set of peer reviews was conducted for the ve rsion of the refinery

- by

- refinery

model we developed for estimating the costs for the NPRM. We reviewed the peer review comments and decided that the impact on the estimated costs would be small, so we deferred making changes to address those peer review comments until the final rule. We developed another version of the refinery

- by

- refinery

cost model which addressed the comments we received from the first set of peer reviews, as well as included additional improvements to the refinery model based on new information that we received after we conducted the cost anal ys is for the NPRM. We submitted the final rule version of the refinery cost model for a second round of peer review. The peer review comments as well as our responses to these comments are cont ained in the docket. We addressed many of the comments made by the peer reviewers in the final version of the cost model. The oil industry

has also conducted a similar anal ys is using a refinery

- by

refinery cost model, and we discuss the results of its an aly sis at the end of this chapter. Our assessment of how refiners will compl y with Tier 3 has not changed since we conducted our cost analy sis for the NPRM. The refinery unit responsible for the greatest contribution of sulfur to gasoline is the FCC. T he FCC processes a very heav y feedstock which contains high levels of sulfur. 543 When the FCC cracks this heavy , sour feedstock, a portion of the sulfur in the feed to the FCC ends up in the FCC naphtha, an important gasoline blendstock stream. 544 Before the Tier 2 sulfur control program was implemented, FCC naphtha contributed over 95 percent of the sulfur to a refinery’s gasoline, and now that Tier 2 has been full y implemented it still contributes roughl y 80 to 90 percent of the sulfur in refiner’s gasoline for those refineries with FCC units. To comply with the Tier 2 sulfur control program, most refiners installed FCC naphtha hydrotreaters (FCC postreaters) and some refiners installed FCC feed hydrotreaters (FCC pretreater) to reduce that unit’s sulfur contribution to their gasoline pool. The technologies installed include Axens Prime G+, Exxon

- Mobil Scanfining, CDTech’s CDHydro and CDHDS, Sinopec’s S

- Zorb and UOP’s ISAL (UOP now offers a postreating technology

named Selectfining). Despite the much lower sulfur contribution to the gasoline pool b y the FCC after complying with Tier 2, the vendors which supplied sulfur control technology for compl yi ng with the Tier 2 sulfur control program have informed us that to comply with a more stringent sulfur standard , refiners are expected to further reduce the sulfur in the FCC naphtha. We contacted each of those technology

vendors , and some of them provided information useful to estimate the cost of lowering the sulfur in the FCC naphtha to allow each refinery to r educe the sulfur in its gasoline to 10 ppm. We also reviewed literature that is

543 A hydrocarbon stream which contains large amounts of sulfur is also referred to as being sour. In general, the heav ier the hydrocarbon portion of crude oil, the higher the natural sulfur content. 544 On average, the fluidized catalytic cracker supplies about 35 percent of a refiner’s gasoline output.Page 460 of 529

available on the Web to further understand what would be involved to achieve a 10 ppm sulfur standard using postreating (see Chapter 4 of the RIA)

. We were able to obtain som e additional sulfur cost information from the vendors since we conducted our cost anal ys is for the proposed rule, and this was incorporated into our cost anal ys is. Gasoline desulfurization vendors were pessimistic that the operations of FCC pretreaters cou ld be adjusted to enable those refineries which relied on those units to comply

with the Tier 2 sulfur standard to meet a 10 ppm sulfur standard. Many of those FCC pretreater units have marginal (less than two y ears) turnaround times today

and they would either require a major revamp or suffer even shorter turnaround times if they

were to simply

be turned up. For the refineries solely relying on FCC pretreaters to comply with Tier 2, desulfurization vendors project that most refineries in this situation w ill put in grassroots FCC postreaters to allow those refineries to comply with a 10 ppm gasoline sulfur standard. However, since adding grassroots FCC postreaters is relativel y expensive for the amount of sulfur reduction obtained, the ABT analy sis we con ducted avoided many of these ty

pes of investments. Instead , the refiner s with refineries in this situation are projected to acquire credits from refiners capable of reducing sulfur levels below 10 ppm at a lower cost. In addition to addressing the sulfur in the FCC naphtha, we believe that some refineries may

need to reduce the sulfur in the light straight run (LSR) naphtha. Most refiners hydrotreat the LSR before sending that stream to an isomerization unit , and therefore that stream is very low in sulf ur. Other refiners use a sweet crude oil, and once the LSR is treated by using an extraction desulfurization technology, the sulfur level of the LSR is likely to be very

low (under 10 ppm). However, some refineries that refine a more sour crude oil slate and do not have isomerization units could have fairly high sulfur levels in their LSR, even after using extraction desulfurization. For these refineries, we conducted an assessment to determine whether these refineries have sufficient h ydrotreating capac ity to hydrotreat the L SR. We believe that refiners that do not currently desulfurize their L SR , but may need to do so because their crude oil is not sweet, could do so by

either feeding it to their naphtha hydrotreater (the hydrotreater which desulfurize s the feed to the isomerization and reformer units) , or perhaps even to the FCC postreater; we added a cost for this . Because LS R does not contain any olefins, it is an eas y stream to hydrotreat and actually improves the h ydrotreating conditions within th e FCC naphtha hydrotreater. 3. Fuel Program Costs We used the refinery

- by

- refinery cost model to estimate the costs of the 10 ppm average standard being adopted in this final rule. The Tier 3 fuels program maintains the 80 ppm cap sulfur control standard that was put in place under the Tier 2 sulfur program. Ingeneral, the cost model indicates that further desulfurizing the FCC naphtha will be the most cost

- effective means for achieving sulfur control. We accounted for additional costs to refiners for desulfurizing theirPage 461 of 529

LSR naphtha, for those refineries where we estimate that the LS R naphtha is not being desulfurized today and found that it likely needs to be

. A s described in Section V.A.4, we are also adopting an ABT program that is designed to ease the overall burden on the industry while still achieving the 10 ppm annual average sulfur standard for the nation as a whole. Under the ABT program, refineries that can reduce sulfur below 10 ppm at a relativel y low cost can generate credits which can th en be acquired by refinerie s for whom the cost of attaining the 10 ppm sulfur standard would be high er . These credits can be traded among refineries within the same compan y, or between refiners and importers nationwide. The net effect of this credit trading would be to reduce the overall cost of the program. The extent to which the ABT provisions reduce the cost of the Tier 3 program depends on the extent that the ABT program is used by refiners. As summarized in the alternatives section (Section IX), th e cost of the 10 ppm Tier 3 sulfur program is 0.65 c/gal assuming widespread nationwide credit trading, while if we assume that no credit averaging or trading between an y individual refinery occurs, the Tier 3 program cost increases to 0.88 c/gal, a 35% in crease. In between those two scenarios is the case that sulfur credits are only used for averaging within companies (not traded between refineries owned by different companies), and we estimated the cost for that scenario at 0.75 c/gal. Since we were not sure about the extent that credits were traded under Tier 2 when we conducted the cost analy sis for the NPRM, we conservatively assumed for the NPRM cost analy sis that refiners would only

volume

- average sulfur levels among their refineries, and not trade credits between refining companies. However, for the final rule cost anal ysis we evaluated the credit trading that was occurring under Tier 2. We found that 56% of credits were in fact being traded between refining companies under Tier 2, with the balanc e being used within refining companies. This demonstrated that credit trading was freel y occurring between refining companies, supporting the conclusion that credit trading would occur nationwide among refineries under Tier 3. We therefore assumed natio nwide credit trading for our final rule. To estimate the impact that the ABT program could have on nationwide average fuel costs, we began with the refinery

- by

- refinery costs described in Section VII.B.2.b for sulfur reductions down to either 10 ppm or 5 p pm. We then determined the lowest cost option among three alternatives for each refinery: 1. The refinery

reduces its sulfur to 10 ppm. 2. The refinery

reduces its sulfur to 5 ppm and generates credits for the increment between 10 ppm and 5 ppm. 3. The refinery

does not lower sulfur, but instead relies on the purchase of credits to comply

with the 10 ppm standard. A fourth category

applied to refineries whose average gasoline sulfur levels are already below 10 ppm (the ir refineries do not have FCC units ). All suchPage 462 of 529

refineries were assumed to generate credits for the increment between 10 ppm and their current sulfur level. Our methodology

was unable to consider a fifth category where a refinery may utilize less expensive capital and operational changes to reduce their sulfur levels partiall y below Tier 2 levels and rely on purchasing credits only for the remainder. Such opportunities are likel y to exist at most refineries, but such refinery specific information is not available to us. As a result, refine ries in the third category

are modeled to simply

remain at Tier 2 sulfur levels and incur no capital or operating cost. To simplify

the modeling of how an ABT program might operate, we focused on the circumstances that refineries would face in the longer t erm, specificall y after 2020. This approach meant that the ABT program modeling did not consider the impact on gasoline sulfur levels of delayed compliance for small refiners and small volume refineries, nor did it consider the generation and use of any e arl y sulfur credits. Moreover, our ABT modeling considered onl y gasoline sold for use outside of California, and onl y gasoline produced b y domestic refineries (not importers). Our final rule cost anal ys is is based on a nationwide credit trading scenario. Under Tier 2 today , a significant fraction of Tier 2 sulfur credits are bought and sold between companies and we believe that this practice will continue (see Section V.D for details about the ABT program). To model this phenomenon, we first establish an estimated cost for each refinery for reducing its gasoline sulfur down to 10 ppm and to 5 ppm. Next we ranked the sulfur control strategies for all the refineries in order from lowest to highest sulfur control cost per gallon of gasoline and estimated th e impact of their projected sulfur control strategies on refinery sulfur levels using onl y one cost (either 10 or 5 ppm) for an y one refinery . The model then follows this ranking, starting with the lowest

- cost refineries, and adds refineries and their ass ociated control technologies one

- by

- one until the projected national average gasoline sulfur level reaches 10 ppm. This modeling strategy projects the sulfur control technology that will be used by

each refinery , as well as identifies those refineries that are expected to generate credits and those that are expected to use credits in lieu of investing in sulfur control. The sum of the costs of the refineries expected to invest in further sulfur control provides the projected overall cost of the program. Based on the results of our cost anal ys is, we estimate that for the U

. S

. refining industry to achieve a 10 ppm average level with the full benefit of nationwide credit trading , the final sulfur control program would cost on average 0.65 cents per gallon when it is fully phased in, assuming that capital investments are amortized at a seven percent return on investment be fore taxes and expressed in 2011 dollars. Refiners would be expected to make $ 2.025 b illion in capital investments to achieve this sulfur reduction. These capital investments are expected to be made over the 6 years that the Tier 3 program is expected to bePage 463 of 529

phased in, which would spread out the capital costs to average about $330 million per year. Our cost assessment is likely conservative (i.e., overestimates costs) . The capital cost estimate is based on vendor data which assumes that refiners are hydrotreating full range FCC naphtha. If refiners are indeed undercutting their FCC naphtha at man y refineries (and more will be doing so in th e future), man y refiners would likely

not need to make an y capital changes. This is because the FCC postreaters were designed when refiners were maximizing their gasoline production and hydrotreating full range FCC naphtha. When undercutting the FCC naphtha to the diesel pool, refiners cut out about 16% of the FCC naphtha volume and about half of the sulfur. Thus, if a refiner was able to produce 30 ppm gasoline, after full y undercutting their FCC naphtha into the diesel pool, they would likel y be able t o produce 15 ppm sulfur gasoline using their existing Tier 2 postreater. They could then use a more active cataly st which likel y would enable the refinery to achieve 10 ppm gasoline without any capital changes to their FCC postreaters. If all refiners we re undercutting their FCC naphtha and are able to comply with Tier 3 without any capital additions to their FCC postreaters, the cost of the program would decrease to around 0.4 c/gal. Another way

that our modeling could be conservative is that refiners are slowly converting their FCC pretreaters over to mild hydrocrackers to produce more diesel fuel, which is in higher demand. We do not know the extent that this is happening, and our current analy sis assumes that none of the FCC pretreaters have been co nverted over to mild hydrocrackers. However, a cost sensitivity analy sis that we conducted with our refinery model estimates that if all the FCC pretreaters were converted over to mild hydrocrackers, costs of the Tier 3 program would decrease to 0.55 c/ga l, assuming nationwide credit trading. If we combined the cost reduction of undercutting with the mild hydrocracking, the Tier 3 costs would be lower than either of two cost sensitivities which were conducted independently

. We also received some comments by API and two of the peer reviewers about our octane costs. We will not include all the discussion here about octane costs because we do so in detail in the response to peer review comments and in Chapter 5 of the RIA. While we are comfortable with the octane costs that we used, we did conduct a sensitivity at a higher octane cost ($0.5/per octane number barrel instead of $0.31/octane number

- barrel that we used). At the higher octane cost of $0.5/octane number barrel, the Tier 3 sulfur control costs inc reases from 0.65 c/gal to 0.73 c/gal. We also estimated annual aggregate costs, including the amortized capital costs, associated with the new fuel standard. When the 10 ppm gasoline sulfur standard is fully

phased in 20 20 , we estimate that the sulf ur standard would cost $ 790_ million in that year . Figure VII

- 1 shows the distribution of refinery costs over the accumulated gasoline volume for the fully phased in 10 ppm sulfur standard.Page 464 of 529 **Figure VII**  **- 1**  **Tier 3 Sulfur Control Costs**

Figure VI I

- 1 shows that for almost 20 percent of the gasoline pool, refineries will not incur any cost under Tier 3, either because these refineries are already very low in sulf

ur because they

do not have FCC units, or because the refineries are purchasing credits. 545 For another 10 percent of the gasoline pool, the refinery costs are in the 0

– 0.5 cent/gal range. For the next 55 percent of the gasoline pool, the refinery costs are in the 0.5

– 1.0 c/gal range. For the last 15 percent of the gasoline pool, the refinery costs range from 1.0 to 2.1 c/gal for revamps, with the exception of one refinery at 2.8 c/gal representing the cost for the sole grassroots unit which our modeli ng estimates would need to be installed. All other refiners that may

otherwise need to install a grassroots hydrotreater were projected to compl y more cheaply through the purchase of credits. Figure VI I

- 2 summarizes our estimated U

. S

. gasoline sulfur levels over the accumulated gasoline volume post Tier 3.

545 Refineries purchasing credits will incur a cost for the purchase of the credit, but since we do not know what the price of a credit will be, we allocate all the cost for complying with Tier 3 solely on the refineries adding capital and incurring operating costs to comply with Tier 3.Page 465 of 529 **Figure VII**  **- 2**  **Estimated U .**  **S .**  **Gasoline Sulfur Levels Post Tier 3**

Figure VI I

- 2 shows that over 80 percent of the gasoline pool would predominatel y be either 5 or 10 ppm representing the two sulfur levels to which we assumed that refiners would desulfurize their gasoline pool. For the rest of the gasoline pool, the refineries are clearl y purc hasing credits and their sulfur levels range from 10 to nearl y 70 ppm. As discussed earlier, lacking more detailed refinery

- specific information, for these refineries we assumed that they take no action to reduce their gasoline sulfur below their Tier 2 l evels. In realit y these refineries are likely

to take some very

cost
- effective steps to partially reduce their gasoline sulfur and not rely solel y on credits to demonstrate compliance with Tier 3. Were we able to model such refinery changes, it would onl y serve to further lower our projected costs. 4. Other Cost Estimates Three other cost studies were conducted to estimate the cost of additional reduction in gasoline sulfur. All of these studies show average costs of less than 2 cents per gallon. One of these studies was conducted in October 2011 by the International Council for Clean Transportation (I CCT). 546 IC CT retained Mathpro for this

546 Mathpro (October 2011). Refining Econ om ics of a National Low Sulfur, Low RVP Gasoline Standard, Performed for The International Council for Clean Transportation, Available at: http://www.theicct.org/sites/default/files/publications/ICCT04_Tier3_Report_Final_v4_All.pdf. Accessed December 12, 2011.Page 466 of 529

anal ys is. I CCT had Mathpro anal yz e a 10 ppm average gasoline sulfur standard in PADDs 1

– 4 (generall y speaking, P ADDs 1

– 4 represents the part of the U.S. east of, and including, the Rocky Mountain states). The cost presented by I CCT is that complying with a 10 ppm average sulfur standard would cost refiners on average 0.8 cents per gallon. This cost was calculate d based on a before

- tax 7 percent return on investment, the same capital amortization basis that we use for our cost anal ys is. The cost of a 10 ppm average gasoline sulfur control standard estimated by I CCT is very close to our cost estimate. APIretaine d Baker and O’Brien to study the cost of additional sulfur control using a refinery

- by

- refinery cost approach with Baker and O’Brien’s Prism model. 547 APIstudied a 10 ppm average gasoline sulfur standard, however, API included a very

stringent 20 ppm cap standard which did not allow for an ABT program to optimize refinery investments and minimize overall costs (an estimate of the impact of the 20 ppm cap standard using APIinformation is presented below)

. APImade a series of conclusions based on the study. Perhaps the most important conclusion is that no refinery would shut down as a result of the 10 ppm gasoline sulfur control standard, even though API did not study the flexibilities of an ABT program and used excessively high capital costs for a grassr oots FCC postreater (see below). APIdid not report average costs, but reported the marginal costs for the cost study. Marginal costs reflect the cost of the program to the refinery or refineries which would incur the highest costs, assuming that the highest cost refineries would set the price (or in this case, the price increase) of gasoline. Since they

assumed a 20 ppm cap precluding refiners from utilizing the ABT program, it required virtually all refiners to incur capital costs thereby driving up marginal costs. The report concluded that marginal costs after the imposition of a 10 ppm gasoline sulfur program would increase the price of gasoline b y 6 to 9 cents per gallon in most markets. APIdid not define how its statement “in most markets” would apply

to the U.S. gasoline suppl y. API also did not provide any justification why it assumed that the refineries that would experience the highest desulfurization cost under Tier 3 would also be the same refineries which set the gasoline price in the gas oline market today

. Although API did not provide an average gasoline desulfurization cost in its report, we could calculate an average cost based on the gasoline volume and total annual costs provided. The total cost reported in the report for the 10 ppm average gasoline sulfur standard is $2390MM/y r and the non

- California gasoline volume is 7343 thousand barrels per day . This results in an average per

- gallon desulfurization cost of $0.89/bbl or 2.12 c/gal. The difference between the average cost and

547 Baker and O’Brien , Addendum to Potential Supply and Cost Impacts of Lower Sulfur, Lower RVP Gasoline; prepared for The American Petroleum Institute. March 2012. Available at: http://www.api.org/Newsroom/upload/110715_LowerSulfur_LowerRVP_Final.p df.Page 467 of 529

marginal cost (price increase) that API is projecting is profit. Thus, API’s anal ys is would suggest that the oil industry would profit from 10 ppm low sulfur standard b y roughl y 4 to 7 cents per gallon, or roughly $4 to $8 billion dollars per year as a resu lt of gasoline sulfur control. The average cost of the 10 ppm average gasoline sulfur standard described above was calculated using API’s methodology for amortizing capital investments. To assess the costs consistent with OMB’s guidance for our rulemakings and to allow a direct comparison between the API cost study and our cost study , we adjusted the API costs to be on a similar basis as our costs. We adjusted the API costs to reflect a before

- tax 7 percent return on investment (ROI) for capital invest ed for the h ydrotreaters and h ydrogen plants instead of the after

- tax 10 percent ROI used b y AP I. This lowered the API estimated costs from 2.12 c/gal to 1.58 c/gal. API’s 1.58 cents per gallon cost is still higher than our 0. 65 c/gal cost with an ABT program that assumes nationwide trading of credits, and higher than our 0. 86 c/gal for the case which assumes no ABT program. The remaining difference between our estimated costs and those by API are driven by

API’s assumptions for the capital costs that wo uld be incurred for adding grassroots FCC postreaters, or revamping existing ones. While little detail is provided by API about what hardware comprises their desulfurization units, the inside battery limits (I SBL) and total capital costs for the FCC postreaters and FCC pretreaters are provided in API ’s report. API’s FCC pretreaters capital costs are consistent with the capital costs that we have used for this unit. However, the FCC postreater costs used by API are much higher than what we used and have been used in the past b y others. API’s capital cost for a grassroots FCC postreater is $228 million for a 35,000 bbl/day unit, or $6540 per/bbl per day . API’s capital cost includes the outside battery limit (OSBL) costs. We were able to obtain a docume nt which shed some light on the methodology

that API used to develop its FCC postreater capital costs. 548 When the proposed rule was being reviewed b y the Office of Management Budget (OMB) at the end of 2012, API provided to OMB a document which provided an swers to questions that EPA and EIA posed to API and Baker and O’Brien back in mid

- 2011 when API was about to release its study of gasoline sulfur control costs. According to the document, APIcollected investment cost information for 5 FCC naphtha hydrotreater projects that were apparently completed by

refiners to compl y with Tier 2, and not the low severity capital projects that refiners would use to comply with Tier 3. No specific information was provided for an y of those projects to determine whether each of those projects was ty pical, or if they

included aty

pical costs add

- ons for other refinery upgrades, which is common when refiners make changes in response to an environmental regulation. APIadjusted the capital cost

548 Document entitled “Follow

- up Questions from EPA

- EIA” (no other information provided on the document).Page 468 of 529

to be on a 35kbbl/day

basi s and the capital costs were inflated from the ye ar that the project was constructed in the 2003 to 2005 timeframe, to mid

- 2009 dollars using the Nelson

- Farrar Refinery Construction Index. APIthen reviewed the final capital investment costs for FCC po streaters with several other members that had recentl y installed FCC postreaters. One refiner which had presented an itemized list of capital costs for a recent FCC postreater installation stated that the costs for their recent FCC postreater installation were two times higher than the Nelson

- Farrar adjusted costs, so APIdoubled the costs. The information provided did not state whether these later installations used to double the estimated postreater costs were in the U.S. where engineering and construct ion are readil y available or overseas where most recent FCC postreater installations have been occurring and where the installation costs could be much higher. In contrast, the ISBL capital cost that we used for a grassroots FCC postreater is $1500/bbl

- day for a 30,000 bbl/day grassroots unit, which increases to $ 2430 /bbl/day

when the offsite and contingency costs are added on. Thus, the API capital costs of $6540 are about 2 and one half times higher than the capital costs that we are using for a grassroo ts FCC postreater. To check our capital costs, we found other capital cost estimates to which we could compare our costs, including the capital costs used b y the National Petroleum Council when it studied the cost of gasoline desulfurization prior to Tier 2. Compared to the average of the rest of the capital cost estimates, the API capital cost for FCC postreater is about four times higher. Compared to the next highest cost estimate, which is the FCC postreater capital cost from the Jacobs data base in the Haverly refinery cost model that we use, 549 the API capital costs are almost two times higher. As alluded to earlier, an important distinction must be made with respect to the severit y of desulfurization for the capital cost comparison made for comply in g with Tier 2 versus Tier 3. For compl yi ng with the Tier 2 gasoline sulfur standard (Jacobs and NPC costs), a ty pical refinery

would have installed an FCC postreater to desulfurize the FCC naphtha from about 800 ppm down to about 75 ppm, a 725 ppm, or a 9 1 percent sulfur reduction. In the case of a grassroots postreater that would be installed for Tier 3, the postreater would treat FCC naphtha already low in sulfur due to the pretreater installed before the FCC unit (these refineries are currentl y compl yi ng with Tier 2 using an FCC pretreater). Thus, the new grassroots FCC postreater would only have to reduce the FCC naphtha from 100 ppm to 25 ppm, a much smaller 75 ppm or 75 percent sulfur reduction. A grassroots FCC postreater installed for Tier 2 would ty picall y remove 10 times more sulfur than one installed for Tier 3. This is important because a significant portion of the FCC postreater capital cost is devoted to avoiding the recombination reactions which occur when h ydrogen sulfide concentrations ar e high and react with the olefins

549 The installed capital cost for an FCC postreater from the Jacobs data base was adjusted to current year dollars. This estimated installed capit al cost is several years old and may not represent Jacobs current cost estimate for a FCC postreater.Page 469 of 529

contained in the FCC naphtha. Thus, a grassroots FCC postreater installed for Tier 3 would be expected to be significantly lower in capital cost compared to a Tier 2 FCC postreater. When APIpresented the costs, they stated that their grassroots capital costs were based on an actual installation for the Tier 2 program. This is likely one important reason why the capital costs used by

APIfor its cost study

of the Tier 3 program are so high. Another way to assess the API capital cost for the FCC postreaters is to compare it to the FCC pretreater cost that API is using. FCC pretreaters are much higher pressure units and use more expensive metallurgy than FCC postreaters and, for these two reasons, are much more expensive than FCC postreaters on a per
- barrel basis. However, API’s FCC postreater capital costs are about 50 percent more expensive than its own FCC pretreater capital costs, which is inconsistent with the design requirements of the units. API ’s estimated range of capital cost for revamping an FCC postreater is also higher than our range of capital cost for revamping an FCC postreater, when assessing the revamped costs as a percentage of the capital cost for a grassroots unit. APIestimates that revamping an FC C postreater would cost 30 to 70 percent of the capital cost for a grassroots FCC unit. Our capital cost estimate for revamping an FCC naphtha postreaters range from 17 to 50 percent of the capital cost for a grassroots FCC postreater, however, most of th e revamps are estimated to cost at the lower end of that range. As discussed above, an important reason wh y API’s projected capital costs for compl yi ng with Tier 3 are so high is that API assumed a 20 ppm cap standard in addition to the 10 ppm average st andard that it studied. The 20 ppm cap standard eliminates the possibility

of realizing the cost savings of an ABT program. After we proposed the Tier 3 rule, APIpresented to EPA, in its comments on the proposed rulemaking, its estimate for the cost of finalizing a more stringent cap standard. The study, which was contracted to the Turner, Mason & Company, estimated that a 20 ppm cap standard would increase the capital cost of complying with a 10 ppm average standard b y $6.1 billion. If we subtract the $6.1 billion in capital costs attributed to the 20 ppm cap standard from the $9.8 billion in total capital costs from API’s Addendum report which estimated the cost of complying with Tier 3, and adjust the fixed operating costs accordingl y, the API estimated average cost (not marginal cost) for complying with Tier 3 decreases to 0.97 c/gal. In addition to the questionable capital costs assumed for FCC postreaters as discussed above, this information from API on its estimated cost of complyingwith a 20 pp m cap standard helps to answer an important question of why API estimated average cost was still higher than the other studies after other cost adjustments were made. This final adjustment to the APIcosts makes the estimated API costs for complying with Tier 3 right in line with the other cost studies. This adjusted API cost, however, still does include the cost saving aspects of credit averaging and trading since the API analy sis assumed that each refinery meets the 10 ppm average sulfur standard. Thus, to compare this most recent cost adjustment of APIcosts to our cost study , our 0.87 c/gal cost for no ABT program would be the mostPage 470 of 529

appropriate cost for comparison (see Chapter IX for alternative costs), The adjusted APIcost and our cost are only 0.1 c/ gal different. Our assessment of the APIstudy is supported b y work performed b y The Emissions Control Technology Association (ECTA) which retained personnel within Navigant Economics. That study assessed the costs of a 10 ppm average gasoline sulfur standard and also evaluated the ICCT and APIcost studies. 550 The authors made a number of conclusions. After reviewing both the IC CT and API studies, the authors found that a primary difference in estimated costs between the two studies was the capital costs . The authors contacted vendor companies that license FCC postreater technologies and surveyed the companies to find out what the capital costs are for a FCC postreater. As a result of the survey , the report authors concluded that API ’s capital costs wer e too high, and those used in the ICCT study were about right. The authors found that Baker and O’Brien has a history of exaggerating the economic impacts of EPA rules, citing the costs and other impacts of its anal ysis of the 2007 on

- highway heavy

- dut y p roposed rulemaking. The authors concluded that the impact of a 10 ppm gasoline sulfur standard on the average refining cost would likely be closer to the 1 cent per gallon estimate by

the IC CT study . Furthermore, the report’s authors also pointed out that the marginal cost analy sis conducted by API did not consider the averaging banking and trading (ABT) program that we adopted, which would reduce the marginal costs of the Tier 3 final rule. **C. Summary of Program Costs**  While the estimated costs for the separate vehicle and fuel programs are presented in Sections VII.A and VII.B , respectively , it is useful to present the combined cost estimates representing the full Tier 3 program

. We have chosen to use an annual cost format to represent the combined vehicle and program costs because this approach provides the most straightforward means for comparing vehicle costs to fuel costs, and for demonstrating the total cost impact of our final program. This approach to combined costs also provides a basis for comparing the program costs to the projected benefits as described more fully in Section VIII. Table VII

- 6 below shows our estimated program costs by year. The total program costs for the final rule are lower than those projected for the proposal due to several reasons. First, the vehicle program costs are lower due in part to applying the per vehicle costs to vehicles excluding those sold in California and the states that have adopted the LEV III program. A complete discussion of the differences in vehicle costs between the proposal and final rule are outlined above in Section

550 Schink, George R., Singer, Hal J., Economic Analysis of the Implications of Implementing EPA’s Tier 3 Rules, prepared for the Emissions Control Technolo gy Association, June 14, 2012.Page 471 of 529

VII.A.1. Second, the fuel program costs are also low er than the values projected for the proposal due to lower refinery cost estimates, as discussed above in Section VII.B. In addition, the annual fuel consumption projections are lower in the final rule because they

reflect the inclusion of the L ight

- Duty Greenhouse Gas and Fuel Economy Standards for 2017

- 2025 model years. Complete details of this analy sis can be found in the RIA Chapter 8

. **Table VII**  **- 6**  **Total Annual Vehicle and Control Costs, 201 1**  **$ a**  Year Vehi cle

Exhaust Emission Control Costs ($Million) Vehicle Evaporative

Emission Control Costs ($Million) Vehicle

Operating Costs ($Million) Facilit y

Costs ($Million) Fuel Sulfur

Control Costs ($Million) Total

Program Costs ($Million) 2016 $0 $0 $0 $21 $0 $21 2017 $268 $26 $0 $4 $804 $1,101 2018 $539 $73

- $1 $4 $799 $1,414 2019 $579 $72

- $2 $4 $794 $1,447 2020 $599 $98

- $3 $4 $787 $1,484 2021 $630 $97

- $5 $4 $778 $1,503 2022 $640 $121

- $6 $4 $768 $1,526 2023 $639 $116

- $8 $4 $758 $1,509 2024 $653 $114

- $9 $4 $748 $1,509 2025 $668 $113

- $11 $4 $737 $1,510 2030 $664 $113

- $19 $4 $696 $1,457

a These estimates include costs associated with : (a) the Tier 3 vehicle standards in all states except California and the states that have adopted the LEV III program; and, (b) the Tier 3 fuel standards in all states except California.


## VIII. **What ar e the Estimated Benefits of the Rule?**  This section presents EPA’s anal ys is of the criteria pollutant

- related health and environmental impacts that will occur as a resu lt of the final Tier 3 standards. The vehicles and fuels subject to the standards are significant sources of mobile source air pollution such as direct PM, NO X , SO X , VOCs and air toxics. The standards will reduce exhaust and evaporative emissions of these pollutants from vehicles. Emissions of NO X (a precursor to ozone formation and secondarily

formed PM 2.5 ), SO X (a precursor to secondarily

- formed PM 2.5 ), VOCs (a precursor to ozone formation and, to a lesser degree, secondarily

- formed PM 2.5 ) and d irectly

emitted PM 2.5 contribute to ambient concentrations of PM 2.5 and ozone. Exposure to ozone, PM 2.5 , and air toxics is linked to adverse human health impacts such as premature deaths as well as other important public health and environmental effects.Page 472 of 529 For the final rulemaking , we have estimated the health and environmental impacts in 2030, representing projected impacts associated with a ye ar when the program is fully

implemented and when most of the fleet is turned over . Overall, we estimate that the s tandards will lead to a net decrease in PM 2.5 - and ozone

- related health impacts. The estimated decrease in population

- weighted national average PM 2.5 exposure results in a net decrease in adverse PM

- related human health impacts (the decrease in national p opulation

- weighted annual average PM 2.5 is 0.04 μg/m 3 in 2030). The estimated decrease in population

- weighted national average ozone exposure results in a net decrease in ozone

- related health impacts (population

- weighted maximum 8

- hour average ozone decreases b y 0.32 ppb in 2030). 551 Using the lower end of EPA’s range of preferred premature mortality estimates ( Krewski et al., 20 09 for PM 2.5 and Bell et al., 2004 for ozone), 552 , 553 we estimate that by

2030, implementation of the standards will reduce approximately 770 premature mortalities annually and will yi eld between $ 6.7 and $7.4 billion in total annual benefits , depending on the discount rate used

. 554 The upper end of the range of avoided premature mortality estimates associated with the standards (based on Lep eule et al., 20 12 for PM 2.5 and L ev y et al., 2005 for ozone) 555 , 556 results in approximately

2, 0 00 premature mortalities avoided in 2030 and will yi eld between $ 18 and $19 billion in total benefits. Thus, even using the lower end of the range of premature mortality

estimates, the health impacts of the final standards presented in this rule are projected to be substantial. We note that of necessit y , decisions on the emissions and other elements used in the air quality modeling were made earl y i n the anal yt ical process for the final rulemakin g . For this reason, the modeled changes in emissions used to

551 Note that the national, population

- weighted PM 2.5 and ozone air quality metrics presented in this Section represent an average for the entire, gridded U.S. CMAQ domain. These are different than the population

- weighted PM 2. 5 and ozone design value metrics presented in Chapter 7, which represent the average for areas with a current air quality monitor. 552 Krew ski, D., M. Jerret, R.T. Burnett, R. Ma, E. Hughes, Y. Shi, et al. (2009). Extended follow

up and spatial analysis of the American Cancer Society study linking particulate air pollution and mo rtality. HEI Research Report, 140, Health Effects Institute, Boston, MA. 553 Bell, M.L., et al. (2004). Ozone and short

- term mortality in 95 U

. S

. urban communities, 1987

- 2000. Journal of the American Medical Association , 292(19) , 2372

- 2378. 554 The monetized value of PM 2.5 - related mortality accounts for a twenty
- year segmented cessation lag. To discount the value of premature mortality that occurs at different points in the future, we app ly both a 3 and 7 percent discount rate. We also use both a 3 and 7 percent discount rate to value PM

- related nonfatal heart attacks (myocardial infarctions). Nonfatal myocardial infarctions (MI) are valued using age

- specific cost

- of

- illness values that reflect lost earnings and direct medical costs over a 5

- year period following a nonfatal MI. 555 Lepeule J, Laden F, Dockery D, Schwartz J (2012). Chronic Exposure to Fine Particles and Mortality: An Extended Follow

- Up of the Harvard Six Cities Study from 19 74 to 2009

. Environ Health Perspect. Jul;120(7):965

- 70. 556 Levy, J.I., S.M. Chemerynski, and J.A. Sarnat. (2005). Ozone exposure and mortality: an empiric bayes metaregression analysis. Epidemiology. 16(4) , 458

- 68.Page 473 of 529

support the air quality

and benefits anal ys es are slightl y different than those used to represent the final emissions impacts of the Tier 3 standards. The magnitude of the differences is small, however, and for that reason we do not expect these differences to materially

impact our cost

- benefit conclusions. See Chapter 7.2.1.1 of the RIA for more details. **A. Overview**  We base our analy sis of the program’s impact on human health on peer

reviewed stu dies of air quality and human health effects. 557 , 558 These methods are described in more detail in Chapter 8 of the RIA . Our benefits methods are consistent with the RIA that accompanied the final revisions to the National Ambient Air Quality

Standards (NAAQ S) for Particulate Matter and the final ozone NAAQS. To model the ozone and PM air quality impacts of the final standards, we used the Community

Multiscale Air Qualit y (CMAQ) model (see Chapter 7.2.2 of the RIA that accompanies this preamble). The modele d ambient air quality data serves as an input to the Environmental Benefits Mapping and Anal ys is Program version 4.0 65 (BenMAP). 559 BenMAP is a computer program developed b y the U.S. EPA that integrates a number of the modeling elements used in previous ana ly ses (e.g., interpolation functions, population projections, health impact functions, valuation functions, analy sis and pooling methods) to translate modeled air concentration estimates into health effects incidence estimates and monetized benefits estimates. The range of total monetized ozone

- and PM

- related health impacts projected in 2030 is presented in Table VI II

- 1 . We present total benefits based on the PM

- and ozone

- related premature mortality f unction used. The benefits ranges therefore reflect the addition of each estimate of ozone

- related premature mortality (each with its own row in Table VIII

- 1 ) to estimates of PM

- related premature morta lity

. **Table VIII**  **- 1**  **Estimated 2030 Monetized PM -**  **and Ozone -**  **Related Health Benefits**  2030 Total Ozone and PM Benefits

– PM Mortality Derived from American Cancer Society Analysis and Six

- Cities Analysis a Premature Ozone Mortality Function Reference Total Benefits (Billions, 201 1 $, 3% Total Benefits (Billions, 201 1 $, 7%

557 U.S. Enviro nmental Protection Agency. ( 2012 ). Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter . Prepared by: Office of Air and Radiation , EPA

- 452/R

- 12

- 005 . Retrieved August 14, 2013 at http://www.epa.gov/ttn/ecas/ria.html 558 U.S. Environmental Protection Agency. (2008). Final Ozone NAAQS Regulatory Impact Analysis . Prepared by: Office of Air and Radiation, Office of Air Quality Planning and Standards. Retrieved August 14, 2013 at http://www.epa.gov/ttn/ecas/ria.html 559 I nformation on BenMAP, including downloads of the software, can be found at http://www.epa.gov/ttn/ecas/ benmodels.html.Page 474 of 529 Discount Rate) b,c Discount Rate) b,c Multi

- city analyses Bell et al., 2004 Total: $7.4

- $15 PM: $6.0

- $14 Ozone: $1.1 Total: $6.7

- $14 PM: $5.4

- $12 Ozone: $1.1 Huang et al., 2005 Total: $7.9

- $16 PM: $6.0

- $14 Ozone: $1.7 Total: $7.3

- $14 PM: $5.4

- $12 Ozone: $1.7 Schwartz, 2005 Total: $8.0

- $16 PM: $6.0

- $14 Ozone: $1.7 Total: $7.3

- $14 PM: $5.4

- $12 Ozone: $1.7 Meta

- analyses Bell et al., 2005 Total: $9.8

- $18 PM: $6.0

- $14 Ozone: $3.6 Total: $9.2

- $16 PM: $5.4

- $12 Ozone: $3.6 Ito et al., 2005 Total: $11

- $19 PM: $6.0

- $14 Ozone: $4.9 Total: $11

- $18 PM: $5.4

- $12 Ozone: $4.9 Levy et al., 2005 Total: $11

- $19 PM: $6.0

- $14 Ozone: $5.0 Total: $11

- $18 PM: $5.4

- $12 Ozone: $5.0

. a Total includes premature mortality

- related and morbidity

- related ozone and PM 2.5 estimated benefits. Range was developed by adding the estimate from the ozone premature mortality func tion to the estimate of PM 2.5 - related premature mortality derived from either the ACS study ( Krewski et al., 200 9 ) or the Six

- Cities study ( Lepeule et al., 20 12 ). Range also reflects alternative estimates of non - fatal heart attacks avoided based on either Peters et al. (2001) or a pooled estimate of four studies. b Note that total benefits presented here do not include a number of unquantified benefits categories. A detailed listing of unquantified health and welfare effects is provided in Table VIII

- 2. c Results reflect the use of both a 3 and 7 percent discount rate, as recommended by EPA’s Guidelines for Preparing Economic Analyses and OMB Circular A

- 4. Results are rounded to two significant digits for ease of presentation and computation. Totals may not sum due to rounding. The benefits anal ys is presented in this chapter incorporates an array of policy and technical changes that the Agency has adopted since the Tier 3 proposal’s draft RIA. These changes reflect EPA’s work to update PM

- related benefits reflected in the most recent PM NAAQS. 560 Below we note the aspects of this analy sis that differ from the Tier 3 proposal’s draft RIA: 561 1. Incorporation of the newest American Cancer Society (ACS) mortality study and newest Harvard Six Cities mortality study

. In 2012, Lepeule et al.

560 U.S. Environmental Protection Agency. (2012). Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter. Prepared by: Office of Air and Radiation, EPA

- 452/R

- 12

- 005. Retrieved August 14, 2013 at http://www.epa.gov/ttn/ecas/ria.html 561 U.S. Environmental Protection Agency. (2013). Dr aft Regulatory Impact Analysis: Ti er 3 Moto r Vehicle Emission and Fuel Standards . Prepared by: Office of Air and Radiation. EPA

- 420

- D

- 13

- 002 . Retrieved October 18, 2013 at http://www.epa.gov/otaq/documents/tier3/420d13002.pdfPage 475 of 529 published an extended analy sis of the Six Cities cohort. 562 Compared to the study it replaces (Laden et al., 2006) , 563 this new analy sis follows the cohort for a longer time and includes more ye ars of PM 2.5 monitoring data. The all

ca use PM 2.5 mortality

risk coefficient drawn from Lepeule et al. is roughl y similar to the L aden et al. risk coefficient applied in the EPA’s recent anal yses of long

- term PM 2.5 mortality and has narrower confidence intervals. In 2009, the Health Effects In stitute published an extended analy sis of the ACS cohort (Krewski et al., 2009). 564 Compared to the study it replaces (Pope et al., 2002), 565 this new analy sis incorporates a number of methodological improvements

. 566 The all

- cause PM 2.5 mortality risk estimate drawn from Krewski et al. (2009) is identical to the Pope et al. (2002) risk estimate applied in recent EPA anal ys es of long

- term PM 2.5 mortality but has narrower confidence intervals. 2. Updated health endpoints. We have re moved the quantification of chron ic bronchitis from our main anal ys is. This change is consistent with the findings of the PM Integrated Science Assessment (ISA) that the evidence for an association between long

- term exposure to PM 2.5 and respiratory effects is more tenuous
. 567 3. Updated demographic data. We updated the population demographic data in BenMAP to reflect the 2010 Census and future projections based on economic forecasting models developed b y Woods and Poole, Inc. 568 These data replace the earlier demographic projection data from Wo ods and Poole (20 11 ). 569

562 Lepeule J, Laden F, Dockery D, Schwartz J

. 2012. Chronic Exposure to Fine Particles and Mortality: An Extended Follow

- Up of the Harvard Six Cities Study from 1974 to 2009

. Environ Health Perspect. Jul;120(7):965

- 70. 563 Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. 2006. “Reduction in Fine Particulate Air Pollution and Mortality.” American Journal of Respiratory and Critical Care Medicine 173:667

- 672. 564 Krew ski, D., M. Jerret, R.T. Burnett, R. Ma, E. Hughes, Y. Shi, et al. (2009). Extended follow

up and spatial analysis of the American Cancer Society study linking p articulate air pollution and mo rtality. HEI Research Report, 140, Health Effects Institute, Boston, MA. 565 Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. Krewski, K. Ito, and G.D. Thurston. 2002. “Lung Cancer, Cardiopulmonary Mortality, and Long

- te rm Exposure to Fine Particulate Air Pollution.” Journal of the American Medical Association 287:1132

- 1141. 566 Refer to the 2012 PM NAAQS RIA for mor e detail regarding the studies themselves. 567 U.S. Environmental Pro tection Agency (U.S. EPA). 2009 . Integrate d Science Assessment for Particulate Matter (Final Report). EPA

- 600

- R

- 08

- 139F. National Center for Environmental Assessment

—RTP Division. December. Available on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546>. 568 W oods & Poole E conomics Inc. 20 12 . Population by Single Year of Age. CD

- ROM. Woods & Poole Economics, Inc. Washington, D.C. 569 Woods & Poole Economics, Inc. (2011). 2012 Complete Economic and Demographic Data Source (CEDDS).Page 476 of 529 4. Incorporation of new morbidity studies. Since the publication of the 2004 Criteria Document for Particulate Matter , 570 the publication of the more recent PM I SA, 571 and the Provisional Assessment of Recent Studies on Health Effects of Particulate Matter Exposure (“Provisional Assessment”), 572 the epidemiological literature has produced several new studies examining the association between short

- term PM 2.5 exposure and acute m yocardial infarctions, respiratory

and cardiovascular hospitaliz ations, respiratory and cardiovascular emergency department visits, acute respiratory s ymptoms and exacerbation of asthma , respiratory and cardiovascular hospitalizations. Upon careful evaluation of this new literature, we added several new studies to our health impact assessment; in many cases we have replaced older single

- city time

- series studies with newer multi

- cit y time

- series anal ys es. 5. Updated the survival rates for non

- fatal acute myocardial infarctions. Based on recent data from Agency for Healthcare Research and Quality ’s Healthcare Utilization Project National Inpatient Sample database, 573 we identified death rates for adults hospitalized with acute myocardial infarction stratified by

age. These rates replace the survival rates from Rosamond et al. (1999). 574 6. Updated hospital cost

- of

- illness (COI), including median wage data. In previous benefits anal ys es , estimates of hospital charges and lengths of hospital stay s were based on discharge statistics provided by the Agency

for Healthcare Research and Q uality ’s Healthcare Utilization Project National Inpatient Sample (NIS) database for 2000. 575 The version of BenMAP (version 4.0. 65 ) used in this analy sis updated this information to use the 2007

570 U.S. Environmental Protection Agency (U.S. EP A). 2004. Air Quality Criteria for Particulate Matter. National Center for Environmental Assessment, Office of Research and Development, U.S. Environmental Protection Agency, Research Triangle Park, NC EPA/600/P

- 99/002bF. Available on the Internet at <http ://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=87903>. 571 U.S. Environmental Pro tection Agency (U.S. EPA). 2009 . Integrated Science Assessment for Particulate Matter (Final Report). EPA

- 600

- R

- 08

- 139F. National Center for Environmental Assessment

—RTP Divisi on. December. Available on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=216546>. 572 U.S. Environmental Pro tection Agency (U.S. EPA). 2012 . Provisional Assessment of Recent Studies on Health Effects of Particulate Matter Exposure. EPA/600/R

- 12/056A. National Center for Environmental Assessment

—RTP Division. December. 573 Agency for Healthcare Research and Quality (AHRQ). 2009. HCUPnet, Healthcare Cost and Utilization Project. Rockville, MD. Available on the Internet at <http://hcupnet.ahrq.gov>.American Lung Association (ALA). 1999. Chronic Bronchitis. Available on the Internet at <http://www.lungusa.org/diseases/lungchronic.html>. 574 Rosamond, W., G. Broda, E. Kawalec, S. Rywik, A. Pajak, L. Cooper, and L. Chambless. 1999. “Comparison of Medical Care and Survival of Hospitalized Patients with Acute Myocardial Infarction in Poland and the United States.” American Journal of Cardiology 83:1180

- 1185

. 575 Agency for Healthcare Research and Quality (AHRQ). 2000. HCUPnet, Healthcare Cost and Utili zation Project. Rockville, MD. Available on the Internet at <http://hcupnet.ahrq.gov>.Page 477 of 529 database. The data source for the updated median annual income is the 2007 American Community

Survey

. The benefits in Table VIII

- 1 include all of the estimated human health impacts we are able to quantify and monetize at this time. However, the full complement of human health effects associated with PM , ozone and other criteria pollutants remain unquantified because of current limitations in methods and/or available data. We have not quantified a number of known or suspected health effects linked with these pollutants for which appropriate health impact functions are not available or which do not provide easil y interpretable outcomes (e.g., changes in heart rate variability). These are listed in Table VIII

- 2

. As a result of these omissions , the health benefits quantified in this section are likel y underestimates of the total benefits attributable to the final standards.

**Table VIII**  **- 2**  **Estimated Quantified and U**  **nqua ntified**  **Health Effects**  **BENEFITS CATEGORY**  **SPECIFIC EFFECT EFFECT HAS**  **BEEN QUANTIFIED**  **EFFECT HAS**

**BEEN MONETIZED**  **MORE**

**INFORMATION Improved Human Health**  Reduced incidence of premature mo rtality and mo rbidity from exposure to PM 2.5 Adult premature mortality based on

cohort study estimates and expert elicitation estimates (age >25 or age >30)   PM NAAQS RIA, Section 5.6
Infant mortality (age <1)   PM NAAQS RIA, Section 5.6 Non

- fatal heart attacks (age > 18)   PM NAAQS RIA, Section 5.6 Hospital admi ssions

—

respiratory (all ages)   PM NAAQS RIA, Section 5.6 Hospital admissions

— cardiovascular (age >20)   PM NAAQS RIA, Section 5.6 Emergency department visits for asthma (all ages)   PM NAAQS RIA, Section 5.6 Ac ute bronchitis (age 8

– 12)   PM NAAQS RIA, Section 5.6 Lo wer respiratory symptoms (age 7

– 14)   PM NAAQS RIA, Section 5.6 Upper respiratory symptoms (asthmatics age 9

– 11)   PM NAAQS RIA, Section 5.6 Asthma exacerbation (asthmatics age   PM NAAQS RIA,Page 478 of 529

**BENEFITS CATEGORY**  **SPECIFIC EFFECT EFFECT HAS**  **BEEN QUANTIFIED**  **EFFECT HAS**

**BEEN MONETIZED**  **MORE**

**INFORMATION**
6

– 18) Section 5.6 Lost w ork days (age 18

– 65)   PM NAAQS RIA, Section 5.6 Minor restricted

- activity days (age 18

– 65)   PM NAAQS RIA, Section 5.6 Chronic Bronchitis (age >26)

— — PM NAAQS RIA, Section 5.6 c Emergency department visits for cardiovascular effects (all ages) — — PM NAAQS RIA, Section 5.6 c Strokes and cerebrovascular disease (age 50

– 79) — — PM NAAQS RIA, Section 5.6 c Other cardiovascular effects (e.g., other ages) — — PM ISA a Other respiratory effects (e.g., pulmonary function, non

- asthma ER visits, non

- b ronchitis chronic diseases, other ages and populations) — — PM ISA a

Reproductive and developmental effects (e.g., low

birth weight, pre

term births, etc.) — — PM ISA a , b

Cancer, mutagenicity, and genotoxicity effects — — PM ISA a , b
Reduced incidence of premature mo rtality and mo rbidity from exposure to ozone Premature mortality based on short

term study estimates (all ages)   Ozone ISA
Premature mortality based on long

term study estimates (age 30

– 99) — — Ozone ISA c Hospital admissions

—

respiratory causes (age > 65)   Ozone ISA Hospital admissions

—

respiratory causes (age <2)   Ozone ISA
Emergency department visits for asthma (all ages)   Ozone ISA
Minor restricted

- activity days (age 18

– 65)   Ozone ISA School absence days (age 5

– 17)   Ozone ISA Decreased outdoor worker   Ozone ISAPage 479 of 529

**BENEFITS CATEGORY**  **SPECIFIC EFFECT EFFECT HAS**  **BEEN QUANTIFIED**  **EFFECT HAS**

**BEEN MONETIZED**  **MORE**

**INFORMATION** productivity (age 18

– 65) Other respiratory effects (e.g., premature aging of lungs) — — Ozone ISA a Cardiovascular and nervous system effects — — Ozone ISA b Reproductive and developmental effects — — Ozone ISA b
Reduced incidence of mo rbidity from exposure to air toxics Cancer (benzene, 1,3

- butadiene,

formaldehyde, acetaldehyde) Anemia (benzene) Disruption of production of blood components (benzene) Reduction in the number of blood platelets (benzen e) Excessive bone marrow

formation (benzene) Depression of lymphocyte counts (benzene) Reproductive and developmental effects (1,3

- butadiene) Irritation of eyes and mucus membranes (formaldehyde) Respiratory irritation (formaldehyde) Asthma attacks in asthmatics (formaldehyde) Asthma

- like symptoms in non

asthmatics (formaldehyde) Irritation of the eyes, skin, and respiratory tract (acetaldehyde) Upper respiratory tract irritation and congestion (acrolein) — — IRIS a,b

a We assess these benefits qualitative ly because we do not have sufficient confidence in available data or methods. b We assess these benefits qualitatively because current evidence is only suggestive of causality or there are other significant concerns over the strength of the association.
c We assess these benefits qualitatively due to time and resource limitations for this analysis.
While there would be impacts associated with reductions in air toxic pollutant emission s that result from the final standards, we do not attempt to quantify and monetize those impacts (Section III presents the estimated emission reductions associated with the final standards ). This is primarily because currentl y available tools and methods to assess air toxics risk from mobile sources at thePage 480 of 529

national sca le are not adequate for extrapolation to incidence estimations or benefits assessment. The best suite of tools and methods currentl y available for assessment at the national scale are those used in the National

- Scale Air Toxics Assessment (NATA). The EPA Science Advisory Board specifically

commented in their review of the 1996 NATA that these tools were not yet ready for use in a national

scale benefits anal ys is, because they did not consider the full distribution of exposure and risk, or address sub

- chro nic health effects. 576 While EPA has since improved these tools, there remain critical limitations for estimating incidence and assessing benefits of reducing mobile source air toxics. As part of the second prospective anal ys is of the benefits and costs o f the Clean Air Act, 577 EPA conducted a case study analysis of the estimated health effects associated with reducing exposure to benzene in Houston from implementation of the Clean Air Act. While reviewing the draft report, EPA’s Advisory Council on Clean A ir Compliance Analy sis concluded that “the challenges for assessing progress in health improvement as a result of reductions in emissions of hazardous air pollutants (HAPs) are daunting...due to a lack of exposure - response functions, uncertainties in emiss ions inventories and background levels, the difficulty of extrapolating risk estimates to low doses and the challenges of tracking health progress for diseases, such as cancer, that have long latency periods.” 578 EPA continues to work to address these limitations; however, we did not have the methods and tools available for national

- scale application in time for the anal ys is of the final standards. 579 The reduction in air pollut ion emissions that will result from the final program also is project ed to have “welfare” co

- benefits in addition to human health benefits, including changes in visibility , materials damage, ecological effects from PM deposition, ecological effects from nitrogen and sulfur emissions, vegetation

576 Science Advisory Board. (2001). NATA

– Evaluating the National

- Scale Air Toxics Assessment for 1996

– an SAB Advisory. http://www.epa.gov/ttn/atw/sab/sabrev.html. 577 U.S. Environmental Protection Agency (U.S. EPA). (2011). The Benefits and Costs of the Clean Air Act from 1990 to 2020 . Office of Air and Radiation, Washington, DC. March. Available on the Internet at <http://www.epa.gov/air/sect812/feb11/fullreport.pdf >. 578 U.S. Environmental Protection Agency

— Science Advisory Board (U.S. EPA

- SAB). (2008). Benefits of Reducing Benzene Emissions in Houston, 1990

–2020 . EPA

- COUNCIL

- 08

- 001. July. Available at <http://yosemite.epa.gov/sab/sabproduct.nsf/D4D7EC9DAEDA8A54852574 8600728A83/$File/EP A

- COUNCIL

- 08

- 001

- unsigned.pdf>. 579 In April, 2009, EPA hosted a workshop on estimating the benefits or reducing hazardous air pollutants. This workshop built upon the work accomplished in the June 2000 Science Advisory Board/EPA Workshop on the Benefits of Reductions in Exposure to Hazardous Air Pollutants, which generated thoughtful discussion on approaches to estimating human health benefits from reductions in air toxics exposure, but no consensus was reached on methods that could be im plemented in the near term for a broad selection of air toxics. Please visit http://epa.gov/air/toxicair/2009workshop.html for more information about the workshop and its associated materials.Page 481 of 529

effects from ozone exposure, and climate effects. 580 Despite our goal to quantify and monetize as many

of the benefits as possible for the final rulemaking , the welfare co

- benefits of the Tier 3 standard s remain unquantified and non

- monetized due to data, methodology, and resource limi tations. As a result, the benefits quantified in this analy sis are likel y underestimates of the total benefits attributable to the final program. We refer the reader to Chapter 6 of the PM NAAQS RIA for a complete discussion of these welfare co

- benefits. 581 We received man y comments from the public and interested stakeholders, many of which were supportive of the benefits analy sis conducted in support of the rulemaking and some that were adverse. Several commenters (primaril y associated with the fuels indus try) were critical of a number of EPA assumptions and other aspects of the anal ys is

. As described more full y in the Summary and Analysis of Comments document that accompanies this rulemaking, EPA disagrees with the claims of these commenters. We base our anal ys is of the program’s impact on human health and the environment on peer

- reviewed studies of air qua lity and human health effects. 582 , 583 Our benefits methods are consistent with the RIA that accompanied the final revisions to the National Ambient Air Qual ity Standards (NAAQS) for Particulate Matter and the final ozone NAAQS. Our methods also undergo rigorous review b y man y independent expert panels, including the Science Advisory Board and the National Research Council. Our methods and assumptions reflec t their guidance, review, and recommendations. As a result , we believe our analysis reflects the state of the science for health impacts and benefits assessment. The Agency

also received many

comments supportive of the benefits that the Tier 3 standard s will achieve. This includes broad support from man y non governmental institutions, state and local governments, and private citizens.

580 We project that the Tier 3 vehicle and fuel standards will r educe nitrous oxide (N 2 O) and methane (CH 4 ) emissions from vehicles. The reductions in these potent greenhouse gases will be offset to some degree by the increase in CO 2 emissions from refineries. The combined impact is a net de crease on a CO2

- equivalent basis and would yield a net benefit if these reductions were mo netized. 581 U.S. Enviro nmental Protection Agency. (2012 ). Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter . Prepared by: Office of Air and Radiation , EPA

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- 005 . Retrieved August 14, 2013 at http://www.epa.gov/ttn/ecas/ria.html 582 U.S. Enviro nmental Protection Agency. (2012 ). Regulatory Impact Analysis for the Final Revisions to the National Ambient Air Quality Stand ards for Particulate Matter . Prepared by: Office of Air and Radiation , EPA

- 452/R

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- 005 . Retrieved August 14, 2013 at http://www.epa.gov/ttn/ecas/ria.html 583 U.S. Environmental Protection Agency. (2008). Final Ozone NAAQS Regulatory Impact Analysis . Pr epared by: Office of Air and Radiation, Office of Air Quality Planning and Standards. Retrieved March, 26, 2009 at http://www.epa.gov/ttn/ecas/ria.html . EPA

- HQ

- OAR

- 2009

- 0472

- 0238Page 482 of 529

**B. Quantified Human Health Impacts**  Table VIII

- 3 and Table VI II

- 4 present the core estimates of annual PM 2.5 and ozone health impacts, respectivel y, in the 48 contiguous U.S. states associated with the final standards for 2030. For each endpoint presented in Table VI II

- 3 and Table VI II

- 4 , we provide both the mean estimate and the 90 percent confidence interval. Using EPA’s preferred estimates, based on the Am erican Cancer Society (ACS) and Six

- Cities studies and no threshold assumption in the model of mortality , we estimate that the final standards would result in between 660 and 1,500 cases of avoided PM 2.5 - related premature mortalities annually in 2030. A s ensitivity

anal ys is was also conducted to understand the impact of alternative concentration response functions suggested b y experts in the field. When the range of expert opinion is used, we estimate between 130 and 2,200 fewer premature mortalities in 2 030 (see Table 8.8 in the RIA that accompanies this action). For ozone - related premature mortality in 2030, we estimate a range of between 110 to 500 fewer premature mortalities.

**Table VIII**  **- 3**  **Estimated PM 2.5**  **- Related Health Impacts**  **a** Health Effect 2030 Annual Reduction in Incidence (5 th %

- 95 th %ile) Premature Mortality

– Derived from epidemiology literature b Adult, age 30+, ACS Cohort Study ( Krewski et al., 200 9 ) Adult, age 25+, Six

- Cities Study ( Lepeule et al., 20 12 ) Infant, age <1 year (Woodruff et al., 1997) 660 (480

– 840) 1,500 (860

– 2,100) Non

- fatal myocardial infarction (adult, age 18 and over) Peters et al. (2001) Pooled estimate of 4 studies 790 (290

– 1,300) 85 (42

– 190) Hosp ital admissions

- respiratory (all ages) c,e 210 (

- 38

– 380) Hospital admissions

- cardiovascular (adults, age >18) d 250 (130

– 440) Emergency room visits for asthma (age 18 years and younger) e 340 (

- 58

– 660) Ac ute bronchitis, (children, age 8

- 12) e 98 0 (

- 35

– 2,000) Lo wer respiratory symptoms (children, age 7

- 14) 13,000 (6,000

– 19,000) Upper respiratory symptoms (asthmatic children, age 9

- 18) 18,000 (5,600

– 30,000) Asthma exacerbation (asthmatic children, age 6

- 18) 19,000 (2,300

– 37,000) Work lo ss days 81,000 (70,000

– 91,000)Page 483 of 529 Minor restricted activity days (adults age 18

- 65) 480,000 (400,000

– 550,000)

a Incidence is rounded to two significant digits. Estimates represent incidence within the 48 contiguous United States. b PM

- related adult mo rtality based upon the most recent American Cancer Society (ACS) Cohort Study ( Krewski et al., 200 9 ) and the mo st recent Six

- Cities Study ( Lepeule et al., 20 12 ). Note that these are two alternative estimates of adult mortality and should not be summed. P M

related infant mortality based upon a study by Woodruff, Grillo, and Schoendorf, (1997). 584
c Respiratory hospital admissions for PM include admissions for chronic obstructive pulmonary disease (COPD), pneumonia and asthma. d Cardiovascular hospital admiss ions for PM include total cardiovascular and subcategories for ischemic heart disease, dysrhythmias, and heart failure. e The negative estimates at the 5th percentile confidence estimates for these morbidity endpoints reflect the statistical power of the study used to calculate these health impacts. These results do not suggest that reducing air pollution results in additional health impacts.
**Table VI**  **II -**  **4 Estimated Ozone**  **- Related Health Impacts**  **a** Health Effect 2030 Annual Reduction in Incidence (5th%

- 95th%ile) Premature Mortality, All ages b Multi

- City Analyses Bell et al. (2004)

– Non

- accidental Huang et al. (2005)

– Cardiopulmonary Schwartz (2005)

– Non

- accidental Meta

- analyses: Bell et al. (200 5)

– All cause Ito et al. (2005)

– Non

- accidental Levy et al. (2005)

– All cause 110 (46

– 170) 160 (74

– 250) 170 (68

– 270) 350 (190

– 510) 490 (320

– 660) 500 (360

– 630) Hospital admissions

- respiratory causes (adult, 65 and older) c 740 (87

– 1,400) Hospital admissions

- respiratory causes (children, under 2) 310 (160

– 450) Emergency room visit for asthma (all ages) d 330 (

- 8

– 990) Minor restricted activity days (adults, age 18

- 65) 600,000 (290,000

– 910,000) School absence days 210,000 ( 92,000

– 300,000)

584 Woodruff, T.J., J. Gril lo, and K.C. Schoendorf. (1997). The Relationship Between Selected Causes of Postneonatal Infant Mortality and Particulate Air Pollution in the United States. Environmental Health Perspectives 105(6):608

- 612.Page 484 of 529 a Incidence is rounded to two significant digits. Estimates represent incidence within the 48 contiguous U.S. b Estimates of ozone

- related premature mortality are based upon incidence estimates derived from several alternative studies: Bell et al. (2004); Huang et al. (2005); Schwartz (2005) ; Bell et al. (2005); Ito et al. (2005); Levy et al. (2005). The estimates of ozone

- related premature mo rtality should therefore not be summed. c Respiratory hospital admissions for ozone include admi ssions for all respiratory causes and subcategories for COPD and pneumonia. d The negative estimate at the 5th percentile confidence estimate for this morbidity endpoint reflect s the statistical power of the study used to calculate this health impact

. T his result do es not suggest that reducing air pollution results in additional health impacts. **C. Monetized Benefits**  Table VIII

- 5 presents the estimated monetary value of changes in the incidence of ozone and PM 2.5 - related health effects. All monetized estimates are stated in 201 1 dollars . These estimates account for growth in real gross domestic product (GDP) per capita between the present and 2030. Our estimate of total monetized benefits in 2030 for th e program, using the ACS and Six

- Cities PM mortality studies and the range of ozone mortalit y assumptions, is between $ 7.4 and $ 19 billion, assuming a 3 percent discount rate, or between $ 6.7 and $ 18 billion, assuming a 7 percent discount rate. This repre sents the health benefits of the Tier 3 program anticipated to occur annually when the program is fully implemented and most of the fleet turned over. **Table VIII**  **- 5**  **Estimated Monetary Value of Changes in Incide nce of Health** 

**and Welfare Effects in 2030 (Millions of 201 1**  **$) a**  **HEALTH ENDPOINTS 2030**  **(5 TH**  **AND 95 TH**  **PERCENTILE) PM**  **2.5 -**  **Related Health Effects** Premature Mortality

– Derived from Epidemiology Studies b , c Adult, age 30+

- ACS study ( Krew ski et al., 200 9 ) 3% discount rate 7% discount rate $6,100 ($910

- $14,000) $5,500 ($820

- $13,000) Adult, age 25+

- Six

- Cities study ( Lepeule et al., 20 12 ) 3% discount rate 7% discount rate $14,000 ($2,000

- $33,000) $12,000 ($1,800

- $30,000) Infant Mortality, <1 year

– (Woodruff et al. 1997) $13 ($1.8

- $32) Non

- fatal acute myocardial infarctions Peters et al., 2001 3% discount rate 7% discount rate Pooled estimate of 4 studies $96 ($21

- $230) $93 ($19

- $220)Page 485 of 529 3 % discount rate 7% discount rate $10 ($2.6

- $27) $10 ($2.4

- $27) Hospital admissions for respiratory causes d $5.9 (

- $1.6

- $11) Hospital admissions for cardiovascular causes $9.9 ($5.0

- $17) Emergency room

visits for asthma d $0.15 (

- $0.02

- $0.29) Ac ute bronchitis (children, age 8

– 12) d $0.49 (

- $0.02

- $1.2) Lo wer respiratory symptoms (children, 7

– 14) $0.27 ($0.11

- $0.51) Upper respiratory symptoms (asthma, 9

– 11) $0.62 ($0.18

- $1.4) Asthma exacerbations $1.1 ($0.14

- $2.7) Work loss days $12 ($11

– $14) Minor restricted

- activity days (MRADs) $34 ($20

- $49) **Ozone -**  **Related Health Effects** Premature Mortality, All ages

– Derived from Multi

- city analyses Bell et al., 2004 $1,100 ($150

- $2,800) Hu ang et al., 2005 $1,600 ($220

- $4,100) Schwartz, 2005 $1,700 ($220

- $4,400) Premature Mortality, All ages

– Derived from Meta

- analyses Bell et al., 2005 $3,600 ($510

- $8,800) Ito et al., 2005 $5,000 ($740

- $12,000 Levy et al., 2005 $5,100 ($760

- $12,000) Hospital admissions

- respiratory causes (adult, 65 and older) $21 ($2.5

- $39) Hospital admissions

- respiratory causes (children, under 2) $3.7 ($1.9

- $5.4) Emergency room visit for asthma (all ages) $0.14 (

- $0.003

- $0.41) Minor restricte d activity days (adults, age 18

- 65) $43 ($19

- $73) School absence days $21 ($9.3

- $31) a Monetary benefits are rounded to two significant digits for ease of presentation and computation. PM and ozone benefits are nationwide. b Monetary benefits adju sted to account for growth in real GDP per capita between 1990 and the analysis year (2030). c Valuation assumes discounting over the SAB recommended 20 year segmented lag structure. Results reflect the use of 3 percent and 7 percent discount rates consis tent with EPA and OMB guidelines for preparing economic analyses.Page 486 of 529 d The negative estimate at the 5th percentile confidence estimate for this morbidity endpoint reflect s the statistical power of the study used to calculate this health impact

. This result do es not suggest that reducing air pollution results in additional health impacts.
**D. What are the Limitations of the Benefits Analysis?**  Every benefit

- cost analy sis examining the potential effects of a change in environmental protection requirements is limited to some extent by data gaps, limitations in model capabilities (such as geographic coverage), and uncertainties in the underl yi ng scientific and economic studies used to configure the benefit and cost models. L imitations of the scientific literature ofte n result in the inability to estimate quantitative changes in health and environmental effects, such as potential decreases in premature mortality associated with decreased exposure to carbon monoxide. Deficiencies in the economics literature often result in the inability to assign economic values even to those health and environmental outcomes which can be quantified. These general uncertainties in the underl yi ng scientific and economics literature, which can lead to valuations that are higher or lower, are discussed in detail in the RIA and its supporting references. Key uncertainties that have a bearing on the results of the benefit

- cost analy sis of the final standards include the following:

 The exclusion of potentially significant and unquantified bene fit categories (such as health, odor, and ecological benefits of reduction in air toxics, ozone, and PM);

 Errors in measurement and projection for variables such as population growth;

 Uncertainties in the estimation of future ye ar emissions inventories and air quality

(including future year climate uncertainty);

 Uncertaint y in the estimated relationships of health and welfare effects to changes in pollutant concentrations including the shape of the concentration

- response function, the size of the effect est imates, and the relative toxicity

of the many

components of the PM mixture;

 Uncertainties in exposure estimation; and

 Uncertainties associated with the effect of potential future actions to limit emissions. As Table VIII

- 5 indicates, total benefit estimates are driven primaril y b y the reduction in premature mortalities each ye ar. Some key assumptions underlyingthe premature mortality

estimates include the following, which may also contribute to uncertaint y:Page 487 of 529  We assume that all fine particles, regardless of their chemical composition, are equall y potent in causing premature mortality . This is an important assumption, because PM 2.5 varies considerabl y in composition across sources, but the scientific evi dence is not yet sufficient to allow differential effects estimates by particle t ype. The 2009 PM I SA, which was twice reviewed by EPA’s Science Advisory Board Clean Air Science Advisory Committee (SAB

- CASAC) , concluded that “man y constituents of PM 2.5 can be linked with multiple health effects, and the evidence is not yet sufficient to allow differentiation of those constituents or sources that are more closel y related to spec ific outcomes

. ” 585

 We assume that the health impact function for fine particles is log

- linear without a threshold in this analy sis. Thus, the estimates include health benefits from reducing fine particles in areas with varied concentrations of PM 2.5 , including both areas that do not meet the fine particle standard and those areas that ar e in attainment, down to the lowest modeled concentrations.

 We assume that there is a “cessation” lag between the change in PM exposures and the total realization of changes in mortality effects. Specificall y, we assume that some of the incidences of premature mortality related to PM 2.5 exposures occur in a distributed fashion over the 20 years following exposure based on the advice of EPA’s Science Advisory Board Health Effects Subcommittee (SAB

- HES) , 586 which affects the valuation of mortality benefits at different discount rates.

 There is uncertainty in the magnitude of the association between ozone and premature mortality . The range of ozone benefits associated with the final standards is estimated based on the risk of several sources of ozone - related mo rtalit y effect estimates. In a report on the estimation of ozone - related premature mortality published by

the National Research Council, a panel of experts and reviewers concluded that short

- term exposure to ambient ozone is likely to contribute to premature deaths

585 U.S. Environmental Protection Agency (U.S. EPA) . 2009 . Integrated Science Assessment for Particulate Matter (Final Report). EPA

- 600

- R

- 08

- 139F. National Center for Environmental Assessment

—RTP Division. December. Available on the Internet at <http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=21654 6>. 586 U.S. Environmental Protection Agency

— Science Advi sory

Board (U.S. EPA

- SAB). 2004

. Advisory Council on Clean Air Compliance Analysis Response to Agency Request on Cessation Lag. EPA

- COUNCIL

- LTR

- 05

- 001. December. Available on the Internet at <http://yo semite.epa.gov/sab/sabproduct.nsf/0/39F44B098DB49F3C85257170005293E0/$File/coun cil_ltr_05_001.pdf>.Page 488 of 529 and that ozone

- related mortality should be included in estimates of the health benefits of reducing ozone exposure. 587 Despite the uncertainties described above, we believe this anal ys is provides a conservative estimate of the estimated criteria pollutant

- related health and environmental benefits of the standards in future years because of the exclusion of potentially

significant benefit categories that are not quantifiable at this time. Acknowledging benefits omissions and uncertainties, we pre sent a best estimate of the total benefits based on our interpretation of the best available scientific literature and methods supported by EPA’s technical peer review panel, the Science Advisory Board’s Health Effects Subcommittee (SAB

- HES). The National Academies of Science (NRC, 2002) has also reviewed EPA’s methodology for anal yz ing the health benefits of measures taken to reduce air pollution. EPA addressed many of these comments in the analy sis of the final PM NAAQS. 588 , 589 This analy sis incorporates this work to the extent possible. **E. Illustrative Analysis of**  **Estimated Monetized Impacts Associated with the**  **Rule in 201**  **8** For illustrative purposes, this section presents the total estimated monetized benefits associated with the final standards in 201 8 . A s presented in Section III.B, the emissions impacts of the final standards in 201 8 are primarily due to the effects of sulfur on the existing (pre

- Tier 3) fleet. Table VIII

- 6 p resents total aggregate monetized be nefits of the program in 201 8 . Monetized estimates are presented in 201 1 $. Our estimate of total monetized benefits associated with the final standards in 201 8 , using the ACS and Six

- Cities PM mortality

studies and the range of ozone mortality assumption s, is between $ 2.1 and $ 5.6 billion, assuming a 3 percent discount rate, or between $ 1.9 and $ 5.3 billion, assuming a 7 percent discount rate. For a more detailed presentation of the quantified and monetized impacts of the final standards in 201 8 , please refer to Chapter 8 of the RIA that accompanies this preamble.

587 National Research Council (NRC), (2008). Estimating Mortality Risk Reduction and Economic Benefits from Controlling Ozone Air Pollution. The National Ac ademies Press: Washington, D.C. 588 National Research Council (NRC). (2002). Estimating the Public Health Benefits of Proposed Air Pollution Regulations. The National Academies Press: Washington, D.C. 589 U.S. Enviro nmental Protection Agency. (2012 ). Regulato ry Impact Analysis for the Final Revisions to the National Ambient Air Quality Standards for Particulate Matter . Prepared by: Office of Air and Radiation , EPA

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- 005 . Retrieved August 14, 2013 at http://www.epa.gov/ttn/ecas/ria.htmlPage 489 of 529 **Table VIII**  **- 6**  **Total Estimated**  **Monetized Ozone and PM -**  **related Benefits**

**Associated with the Final**  **Standards in 201**  **8 a**  **Total Ozone and PM Benefits (bill ions, 201**  **1 $)** 

**– PM Mortality Derived from**  **the ACS and Six -**  **Cities Studies 3% Discount Rate**  **7% Discount Rate** Ozone Mortality Function Reference Mean Total Benefits Ozone

Mortality Function Reference Mean Total Benefits Multi

- city Bell et al.,

2004 $2.1

- $4.1 Multi

- city Bell et al., 2004 $1.9

- $3.7 Huang et al., 2005 $2.3

- $4.2 Huang et al., 2005 $2.1

- $3.9 Schwartz, 2005 $2.3

- $4.3 Schwartz, 2005 $2.1

- $3.9 Meta

- analysis Bell et al.,

2005 $3.1

- $5.0 Meta

- analysis Bell et al., 2005 $2.9

- $4.7 Ito et al., 2005 $3.6

- $5.6 Ito et al., 2005 $3.4

- $5.2 Levy et al., 2005 $3.6

- $5.6 Levy et al., 2005 $3.5

- $5.3 **Total Ozone and PM Benefits (billions, 2010$)**

**– PM Mortality Derived from**  **Expert Elicitation (Lowest and Highest Estimate) 3%**  **Discount Rate 7% Discount Rate**  Ozone Mortality Function Reference Mean Total Benefits Ozone

Mortality Function Reference Mean Total Benefits Multi

- city Bell et al.,

2004 $0.81

- $5.8 Multi

- city Bell et al., 2004 $0.78

- $5.3 Huang et al., 2005 $1.0

- $ 6.0 Huang et al., 2005 $0.98

- $5.5 Schwartz, 2005 $1.0

- $6.0 Schwartz, 2005 $1.0

- $5.5 Meta

- analysis Bell et al.,

2005 $1.8

- $6.8 Meta

- analysis Bell et al., 2005 $1.8

- $6.3 Ito et al., 2005 $2.3

- $7.3 Ito et al., 2005 $2.3

- $6.8 Levy et al., 2005 $2.4

- $7.4 Levy et al., 2005 $2.4

- $6.8

a Total includes estimated premature mortality

- related and morbidity

- related ozone and PM 2.5 benefits. Range was developed by adding the estimate from the ozone premature mortality function to the est imate of PM 2.5 - related premature mortality derived from either the ACS study ( Krewski et al., 200 9 ) or the Six

- Cities study ( Lepeule et al., 20 12 ) or the lowest and highest mortality estimate across the range derived from the expert elicitation

. Range als o reflects alternative estimates of non

fatal heart attacks avoided based on either Peters et al. (2001) or a pooled estimate of four studies. 

## IX. **Alternatives Analysis**  As described throughout this preamble, we have considered a number of regulatory

alternativ es in the development of this final rule , including alternatives related to timing and stringency of the standards, as well as alternative program design elements (e.g., averaging, banking, and trading). This section summarizes alternatives we have consid ered for both vehicle emission and fuel standards.Page 490 of 529

**A. Vehicle Emission Standards**  The federal vehicle emission standards we are adopting are the most stringent feasible considering anticipated developments in motor vehicle emissions control technology

. C onsi deration of alternatives focused less on the level of the fleet

- average and per - vehicle standards themselves and more on the phase

- in schedule for the standards, which can have an important influence on the cost of the standards. Phase

- in schedules direct ly impact costs depending on how they are aligned with other light

- duty rules and product design cycles , especiall y those of the California LEV III criteria emissions program and the EPA greenhouse gas (GHG) rules . In addition, phase

- in schedules can impa ct the cost of available resources, specificall y design, development and testing resources within vehicle manufacturers and emission control suppliers. 590 As we considered options for the Tier 3 vehicle standards, one of the important factors we considered was the degree of harmonization that would result between Tier 3 and the CARB LEV III program. As discussed earlier in this preamble, the auto manufacturing industry stressed throughout the development of the Tier 3 rule and in their comments on the prop osed rule

– both as individual companies and through their trade associations

– the need for harmonization of the two programs as completely and as soon as possible. Another factor in our consideration of program options has been how the timing of the Ti er 3 program aligns with the federal light

- dut y vehicle GHG rules. We believe that both programs will be more efficient and less costly if manufacturers have greater ability to coordinate their product planning to respond to the various regulatory

require ments they face

. For these reasons, we have focused on program alternatives that generall y achieve close harmony

with the California programs in the earliest appropriate time frame, and on a schedule matching those of the GHG rules as much as possible. Th e following paragraphs describe the major alternatives we have considered. 1. Shorter NMOG+NO X Standard Phase

- in We originall y considered requiring full implementation of the NMOG+NO X final fleet average standard by MY 2022. However, we determined that this would have disrupted the manufacturer’s normal product design cycles, 591 and it would not have allowed manufacturers to use consistent product design cycle s for both the Tier 3 standards and the 2017 LD GHG standards, which reach full implementation

590 We note that the Tier 3 program includes additional phase

- in flexibility through the alternative phase

- in schedules for light

- duty exhaust emissions standards, heavy

- duty exhaust emissions standards, and light

- and heavy

- duty evaporative emissions standards. 591 A light
- duty

vehicle product design cycle is the number of years between major redesigns of a vehicle. Typically, major redesigns are completed every 5 to 6 years.Page 491 of 529

in MY 20 25. We are adopting a phase

- in schedule that graduall y increases the stringency

of the standards until MY 2025 , as with the GHG program, in order to allow vehicle manufacturers to better integrate the compliance with Tier 3 into their product design cycl es as well as to take advantage of additional learning to reduce costs. We believe this implementation schedule for the Tier 3 NMOG+NO X standards allow s us to achieve the environmental objectives of the program without imposing unnecessary

cost s and burde n on the industry

. 2. NMOG+NO X Standards Phase

- in and Early Tier 3 Credits The key agency goals in designing the structure of the Tier 3 program are to facilitate the step

- down in fleet average stringency in the initial model years and to create a program that is of equivalent stringency and aligned with LEV III as earl y as possible. W e considered allowing manufacturers to generate earl y credits against the current Tier 2 Bin 5 fleet average and to use generated earl y credits without limitation for the first five years of the Tier 3 program. CARB, along with some vehicle manufacturers, noted that if a manufacturer were to substantially over comply with the Tier 2 Bin 5 fleet average, these early credits might delay achievement of the Tier 3 emission levels an d also delay harmonization between the Tier 3 and LEV III programs for several ye ars. Based on the fact that manufacturers are selling many vehicles today

that are already cleaner than the existing Tier 2 Bin 5 fleet average, we believe that there is a st rong potential for them to generate an excessive amount of credits. Also, most manufacturers will already have begun to sell vehicles that meet the LEV III standards (and thus the Tier 3 standards). The use of such a “windfall” of credits would likely re sult in a substantial delay

in achieving alignment between the LEV III and Tier 3 programs. To avoid this potential misalignment, we are finalizing as proposed a provision that any earl y credits generated be capped starting in MY 2018 at the number of a manufacturer’s LEV III credits , but adjusted by the ratio of California and other LEV III sales nationwide . (See Section IV.A.7.a for more detail on these earl y credit provisions .) This approach balance s the need for meaningful transition flexibility to avoid unnecessary

costs, while still ensuring expeditious harmonization with LEV III and achievement of the environmental benefits of the Tier 3 standards. 3. NMOG+NO X Standards We believe that the fleet

- average NMOG+NO X standards that we are finalizing refl ect the greatest degree of emission reduction achievable considering cost , developments in technology , and gasoline sulfur levels as required b y this rule. We also believe the implementation schedule for the NMOG+ NO X standards is as short as practicable, as explained above. W e believe that more stringent or less stringent standards are not justified based on the information currently available , including comments received. Therefore, and consistent with our goal of harmonizing the Tier 3 program with LE V III as much as possible, we are finalizingPage 492 of 529

the declining FTP and SFTP NMOG+NO X standards and phase

- in schedules as proposed, as discussed in Section IV.A.3 and IV.A.4 above. 4. PM Standards The FTP and SFTP (US06) PM standards that we are adopting are the most stringent technicall y feasible standards within the ir implementation timeframe and meet the EPA goal of bringing all vehicles to the FTP and US06 PM emission levels demonstrated b y most vehicles today

. We considered adopting for Tier 3 the 1 mg/mi FTP PM standard that the LEV III program will begin phasing

- in in MY 2025. However, as explained in the proposal and in Section IV.A.3.b above, and upon further review of current test procedures and the public comments, we concluded that 3 mg/mi is the mo st stringent technologically

feasible FTP PM standard. We will continue to work closely with CARB in this area. Specificall y, our agencies will continue our parallel evaluations of how improved gravimetric PM measurement methods can reduce PM mass measur ement variability at very low PM levels , and how this relates to the evolving technological capabilities of automakers to reach very low PM levels with sufficient compliance margins. As discussed in Section IV.A.4, we are finalizing numericall y lower US0 6 standards than those we proposed. More recent test data show s that the levels of the final US06 standards better meet EPA’s goal of capping US06 PM emissions at levels already being demonstrated b y most vehicles in the current light

- duty fleet. We propo sed a 10 mg/mi US06 PM standard for cars, and 20 mg/mi for trucks. Like the FTP PM standards, the US06 PM standards are per

- vehicle caps and not fleet averages. The comments we received ranged from suggesting a numericall y lower standard to maintaining the standards as proposed. CARB and other stakeholders recommended a standard of 4 mg/mi, and the International Council on Clean Transportation recommended that the standards be no higher than 6 mg/mi. The Alliance and Global Automakers supported the prop osed standards. We considered all of the comments suggesting various levels for these standards, and we are finalizing standards of 10 mg/mi through MY 2021 and of 6 mg/mi for 2022 and later model ye ars, for both lighter and heavier vehicles , because they reflect the current US06 PM performance of most vehicles. We believe these standards will address current poor performing vehicles and ensure that future vehicles with future technologies will perform, at a minimum, at or near the level of PM emissions that is being demonstrated b y current vehicles. Because th e final standards maintain the same stringency relative to emission levels achieved currentl y, as we describe our goal for these standards in the proposal, there is no difference in the projected co sts and benefits associated with the proposed and final US06 PM standard levels. The costs associated with meeting the final PM standards are driven b y the vehicle performance over the FTP. That is, the 3 mg/mi FTP standard is the primary controlling fac tor in a vehicle’s overall PM performance and manufacturer compliance strategies. The US06 PMPage 493 of 529

standard is intended to supplement the FTP PM standard in that an y additional level of PM control required to meet the US06 PM standard is expected to be accompl ished through calibration and not through the use of additional hardware

. 5. Higher Ethanol Content of Emissions Test Fuel We proposed and considered a change in the required ethanol content of emissions test fuel, from the current zero percent (E0) specifi cation to a 15 percent ethanol (E15) specification. However, as discussed in Section IV.F above, the market fuel shift toward higher ethanol content has not materialized, and we are finalizing E10 as the Tier 3 gasoline test fuel to better match in

- use fu els expected in the implementation timeframe of the Tier 3 standards. The adoption of E10 in lieu of E15 not only

creates a federal test fuel that more closel y reflects the ethanol content of in

- use fuel currently and in the foreseeable future, but also more closely aligns with California’s LEV III test fuel. **B. Fuel Sulfur Standards**  1. Annual Average Sulfur Standard As explained in Section V. B ., we believe that a 10 ppm annual average standard is required to enable the vehicle fleet to meet the final Tier 3 s tandards and appropriatel y balances feasibility with costs. Other countries and California have also reduced the sulfur content of their gasoline; California’s gasoline is already meeting our proposed 10 ppm average sulfur level, and Europe and Japan have a cap on the sulfur content of gasoline at 10 ppm. During the development of the proposed rule, we considered imposing a 10 ppm cap (i.e., no averaging, banking and trading), similar to the standard in Europe and Japan, as well as an average standard low er than 10 ppm average , b ecause vehicle emission performance improves as sulfur is reduced

. However, b y allowing averaging to meet 10 ppm, we believe that the most challenged refiners would be able to avoid what could be cost

- prohibitive investments, while still meeting 10 ppm across the fuel pool. As discussed in Section VII.B., we estimate that allowing averaging would reduce nationwide control costs by

nearl y 26 percent, and would still be sufficient to enable vehicles to meet the proposed Tier 3 standards. We also considered an even lower sulfur standard of 5 ppm. Based upon the results of our test programs and associated modeling, a sulfur standard of 5 ppm could reduce VOC+NO X emissions from the existing fleet by an additional 65,000 tons in 201 8

. Ho wever, we believe a 5 ppm standard would significantly increase both capital and operating costs. Such a standard would require: (1) more severe treatment of FCC gasoline; ( 2 ) treatment of additional (non

- FCC) gasoline blendstocks; ( 3 ) essentially all re fineries to reduce sulfur to 5 ppm, therebyPage 494 of 529

eliminating much of the benefit of the ABT provisions ; and potentially (4 ) more overcapacit y and storage for reprocessing off

- specification product . A 5 ppm standard would also warrant consideration of controlli ng the contribution to gasoline sulfur from gasoline additives, transmix, ethanol denaturants, and contamination in the distribution sy stem. In our anal ys is of the 10 ppm average standard and refineries that might reduce sulfur to 5 ppm in order to generat e credits, we estimated that the sulfur control costs to achieve 5 ppm would be about twice that for our final 10 ppm standard. This is 60 percent high er on a cost per ppm
- gallon basis. The much higher cost is because a 5 ppm standard eliminat es the prac tical ability for refineries to trade credits. That is, there would not be enough refineries overcomplying to generate credits and support a viable trading program . As a result, it could become prohibitively

expensive for the more challenged refineries t o compl y, creating potential financial hardship situation s . Because the costs and other economic impacts rise dramatically as sulfur is reduced below 10 ppm, we believe that a 10 ppm sulfur standard is the most stringent feasible standard considering technology and cost. Table IX

- 1 below summarizes the various alternative gasoline sulfur programs that we assessed and our estimated costs for those alternative programs.

**Table IX**  **- 1**  **.** Summary

of Costs for Alternative Fuel Programs **Sulfur Level Credit Trading**  **Per -**  **gallon Cost (c/gal)**  **Capital Cost**

**($MM)** Final Rule Case 10 Nationwide 0.65 2025 NPRM Case 10 Intra

- company Only 0.75 2195 No ABT Case 10 None 0.87 2990 Stringent Case 5 None 1.27 3805 Table IX

- 1 demo nstrates that the ABT program has a profound impact on the cost of sulfur control. The estimated per

- gallon cost and the capital costs for the case without an ABT program are 35 percent and 47 percent higher, respectively , than the final rule case which a ssumes nationwide credit trading. The stringent sulfur control case, which modeled a 5 ppm average standard and assumes no ABT program, is estimated to cost about twice that of the final rule case. The final rule case, which provides a very flexible ABT program, achieves a 10 ppm average sulfur standard at the lowest cost and therefore is the most cost

- effective of the various options that we studied. A dditionally , a s discussed in Section s IV .A and V.B a standard above 10 ppm would not be sufficiently l ow to meet the Tier 3 emissions standards. The feasibility of the 30 mg/mi NMOG+NOx fleet average depends on exhaust catal ys t sy stems that require gasoline with average sulfur levels of 10 p p m or less. Further,Page 495 of 529

annual average sulfur levels greater than 1 0 ppm would significantl y impair the emission control technology that we expect will be used to meet the Tier 3 standards and to ensure in

- use compliance over a vehicle’s useful life. This is particularl y a concern for some larger vehicles that will need to reduce NOx to near - zero levels, due to greater difficult y in reducing cold

- start NMOG, in order to meet a combined NMOG+NOx standard. As discussed in Section IV.A.6, increasing gasoline sulfur to 20 or 30 ppm would make it impossible for vehicle manufa cturers to meet the Tier 3 standards. Achieving Tier 3 standards would require offsetting the resultant higher emissions , but EPA is not aware of existing or developing technology

that could address these higher emissions when taking into consideration th e entire vehicle fleet. Thus, we believe that a standard of 10 ppm is appropriate. When combined with the advances in emissions control technologies, a 10 ppm average sulfur standard is sufficient to allow vehicles meet the Tier 3 emissions standards at the lowest cost. 2. Refinery

Gate Sulfur Cap In addition to lower average sulfur standards, we also consider ed lowering the per - gallon cap standards . As discussed in Section V.C, we are maintaining the current per
- gallon caps of 80 ppm at the refinery gate and 95 ppm downstream. We co - proposed refinery

gate per
- gallon cap standards of 50 ppm and 80 ppm (with downstream caps of 65 and 95, respectivel y), and we requested comment on a refinery gate cap of 20 ppm. In assessing the potential of a lower refinery g ate cap of 50 ppm, we found that it would directionally increase the costs of the Tier 3 program. Our analy sis shows that a 50 ppm cap would increase the cost of the Tier 3 gasoline sulfur standards b y approximately 10 percent (see RIA Chapter 5). A cap at this level would result in higher capital costs for a number of refiners due to the decreased ability to handle off

- spec product with a lower refinery gate cap. The need for installation of additional tankage and/or increased refinery processing capabi lity would also be greater, as refiners must ensure that they can continue to produce saleable product and meet demand in the event of an upset or an off

- spec batch of fuel. Additionally , the more stringent cap would unlikely provide significant additional emission benefits nationwide. As discussed previously in Sections III through V, the emissions benefits associated with the Tier 3 program are mainly associated with the reduction in the average sulfur content of gasoline from 30 to 10 ppm, since vehicle emissions are proportional to the sulfur content of the fuel; changes in the cap would not affect this. We anticipate that in most (if not all) cases refineries will make operational changes and/or investments in order to reduce their credit burden and r educe their compliance costs; thus, we anticipate that most refineries, including those using credits, will still average less than 20 or 30 ppm in their phy sical gasoline production. While there will certainly be some variationsPage 496 of 529

above and below 10 ppm (j ust as there are today relative to the 30 ppm standard under the current Tier 2 program), it is not possible for us to predict them in a way that we could quantify

the associated emissions and air quality impacts. As a result, we cannot currently

estimate the potential benefits of a 50 ppm cap. However, during the implementation of the program we will be monitoring in

- use sulfur levels and further evaluating in

- use sulfur levels and their impact on vehicle emissions. This will provide us additional infor mation with which to evaluate the potential benefits of a lower sulfur cap, if warranted. **C. Program**  **Start Date** We are finalizing the Tier 3 vehicle emissions and fuel standards with a 2017 start date, considering the vehicle and its fuel together as an int egrated sy stem. As described in Section IX.A.1 and 2, we considered different phase

- ins for the vehicle program. We have also considered the comments requesting additional lead time for the fuel program. As discussed in Section V.L .3., we believe that the lead time provided is sufficient to meet a January 1, 2017, start date for the fuel sulfur standard, especiall y coupled with the flexibilities being offered as part of the program and the fact that only a few refineries will need to install grassroots e quipment to meet the Tier 3 standards. As discussed in Section V.D, we did consider and are finalizing, in response to comments, a provision allowing refiners to carry over credits from Tier 2. Given that the lead time and associated programmatic flexib ility we are finalizing is sufficient to allow industry to readily

comply ; we do not expect that a delay in the start date of the fuel standards would change the cost of compliance; any further delay

in the program start date would simply delay the actions to comply . Furthermore, delaying the start of the program would forego significant emissions, air quality , and health benefits. Sections III and VIII describe the impacts of the Tier 3 standards in the year 2018. The majority of these impacts result from the effects of the fuel sulfur standard on the existing fleet, because there will be limited penetration of Tier 3 vehicles in 2018, and even those vehicles will not yet be meeting fully

phased

- in standards. Thus, the 2018 estimates of emission reducti ons, air qualit y improvements, and health benefits are an approximation of the benefits that would be foregone for each year that the program is delayed. Because we believe the start of the Tier 3 program is feasible and appropriate, and its delay would f orego significant benefits, we are finalizing, as proposed, fuel sulfur standards that take effect January 1, 2017. 

## X. **Econom ic**  **Im pact**  **Analysis A.**  **Introduction** The rule will affect two sectors directly : vehicle manufacturing and petroleum refining. For these tw o regulated sectors, the economic impact analy sis discusses the market impacts from the rule : changes in price and quantity sold. In addition, although analy sis of employ ment impacts is not part of a benefit

- costPage 497 of 529

anal ys is (except to the extent that labor costs contribute to costs), employ ment impacts of federal rules are of particular concern in the current economic climate of sizeable unemploy

ment. Executive Order 13563, “Improving Regulation and Regulatory

Review” (January

18, 2011), states, “ Our regulatory s ys tem must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation ” (emphasis added). For this reason, we are examining the effects of this rule on employ ment in the regulated sectors. Some commenters suggest that the overall effects of Tier 3 on the economy are likel y to be positive, because the standards encourage innovation and reduce emissions. In addition, they suggest that Tier 3 will lead to greater employment to develop the emissions control technologies and to upgrade refineries. As discussed further below, other commenters suggest negative impacts, especiall y due to the fuel standards. The Motor and Equipment Manufacturers Association asks that the regulati ons “be based on sound science and data and balance the public interest objectives with economic realities of manufacturers.” EPA has used the best available information in developing these standards (including the use of peer reviewed literature, peer re viewed models, public comments received, etc.), and has documented its final estimates of the economic impacts from these standards in the RIA. **B. Vehicle Sales Impacts**  This rule takes effect from MY 2017

- 2025. In the intervening ye ars, it is possible that the assumptions underlying a quantitative anal ys is, as well as market conditions, might change. For this reason, we present a qualitative discussion of the effects on vehicle sales of the standards at the aggregate market level. Vehicle manufacturers are expected to comply with the standards primaril y through technological changes to vehicles. These changes to vehicle design and manufacturing are expected to increase manufacturers’ costs of vehicle production. Section VII.A estimates the increase in ve hicle costs due to the standards. These costs differ across years and range from $ 46 to $ 65 for cars, $ 73 to $88 for trucks and $ 33 to $ 75 for Class 2b/3 vehicles (see Section VII.A). These costs are small relative to the cost of a vehicle. In a full y c ompetitive industry , these costs would be entirel y passed through to consumers. However in an oligopolistic industry such as the automotive sector, these increases in cost may not fully pass through to the purchase price, and the consumers may face an inc rease in price that is less than the increased manufacturers’ costs of vehicle production. 592 We do not

592 See, for instance, Gr on, A., and Swenson, D. (2000), Cost Pass

- Through in the U.S. Automobile M arket. Review of Economics and Statistics 82, 316

- 324 (Docket EPA - HQ
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- cost pass
- through using data from 1984

- 1994. Using full

- cost pass
- through overstates costs and thus contributes to lower vehic le sales than using a lowerPage 498 of 529

quantify the expected level of cost pass

- through or the ultimate vehicle price increase consumers are expected to face, apart from noting that prices are expected to increase by

an amount up to the increase in manufacturers’ costs. This increase in price is expected to lower the quantity of vehicles sold. Given that we expect that vehicle prices will not change b y more than the cost increase, we expect th at the decrease in vehicle sales will be negligible. The effect of this rule on the use and scrappage of older vehicles is related to its effects on new vehicle prices and the total sales of new vehicles. The increase in price is likely

to cause the “turnover” of the vehicle fleet (i.e., the retirement of used vehicles and their replacement by new models) to slow slightly , thus reducing the anticipated effect of the rule on fleet

- wide emissions. Because we do not estimate the effect of the rule on new v ehicle price changes nor do we have a good estimate of the effect of new vehicle price changes on vehicle turnover, we have not attempted to estimate explicitly the effects of the rule on scrappage of older vehicles and the turnover of the vehicle fleet. Commenters note that the incentives to go beyond the 8

- ye ar/80,000

- mile warranty could improve vehicle reliabilit y and lower costs, in addition to improving air quality . Other commenters suggest that harmonizing standards across the whole U.S. will benef

it the economy . EPA agrees that harmonized standards will simplify manufacturing and marketing decisions for automakers. The Manufacturers of Emission Controls Association points out that many SULEV

- and PZEV

- compliant vehicles have already been sold in the U.S. Commenters did not raise other concerns with the qualitative vehicle sales anal ys is. **C. Impacts on Petroleum Refinery Sector Production**  The key change for refiners from the standards is more stringent sulfur requirements. This change to fuels is expected to increase manufacturers’ costs of gasoline production b y about 0. 65 cents per gallon (see Section VII.B). Some commenters raise concerns about the economic burdens to refineries and to consumers who must buy more expensive gasoline, in part bas ed on estimates of the costs of the standards as high as 6

- 9 cents per gallon. As discussed in Section VII.B. of this preamble, EPA has considered the costs to refineries and has estimated that the additional cost of gasoline will be about 0.65 cents per gallon. Though some refineries may face costs of up to 2.1 cents per gallon, and one refinery up to 2.8 cents per gallon, most will face much lower costs, as the averaging, banking, and trading provisions of the standards si gnificantl y ease the challenge of refineries to meet the standards

.

estimate. To the extent that the auto industry has become more competitive over time, full

- cost pass
through may be more appropriate than a result based on this older study.Page 499 of 529 In a perfectl y competitive industry , this cost would be passed along completely

to consumers. In an imperfectl y competitive industry , as noted above, full cost pass

- through is not necessary : firms may choose to redu ce impacts on sales by not passing along full costs. In 2004, the Federal Trade Commission reported that “concentration for most levels of the petroleum industry has remained low to moderate.” 593 Thus the assumption of competitive markets has some foundati on in this industry. We estimate that the price increase that consumers are likely to face should be positive and up to the increase in manufacturers’ costs of gasoline production. The Emissions Control Technology Association (ECTA) and Northeast States f or Coordinated Air Use Management (NESCAUM) note that previous Tier 2 standards, which required greater reductions in absolute magnitude, do not appear to have had measurable adverse impacts on refineries. ECTA cites a study by Navigant Economics that found no measurable impact on gasoline price from Tier 2. NESCAUM notes that refineries used a number of technologies and facility improvements to achieve the standards in a cost

- effective manner, and notes that the North American refining industry is making significant new investments in response to favorable long

- term conditions. Small increases in gasoline price due to standards may

be very difficult to identify , because of the natural volatility of gasoline prices. The effect of higher gasoline prices on gasoline sales is expected to be different over the short and long term. In the long run, in response to the increase in fuel costs, consumers can more easil y change their driving habits, including where they live or what vehicles they use. Because of this, we expect that gasoline sales will decrease more in the long run compared to the short run as a result of the price increase due to the rule. However, because manufacturers’ costs are expected to increase less than one cent per gallon, we expect th at the decrease in gasoline sales will be negligible over all time horizons. **D. Employment Impacts**  This section discusses changes in employ ment due to the rule. We focus on the auto manufacturing sector and the refinery sector because they

are directly regulated, and because they are likel y to bear a substantial share of changes in employ ment due to this rule. We partially quantify impacts in the auto sector, providing a mix of qualitative and quantitative discussion, following the methods used in the Fina l Rulemaking for 2017

–2025 Model Year Li ght

- Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards. 594

593 Federal Trade Commission, Bureau of Economics. (200 4). The Petroleum Industry: Mergers, Structural Change, and Antitrust Enforcement . Retrieved August 16, 2011from Federal Trade Commission website: http://www.ftc.gov/os/2004/08/ 040813mergersinpetrolberpt.pdf (Docket EPA - HQ
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.Page 500 of 529

For the refinery

sector we provide a qualitative analy sis. We also include discussion of effects on the motor vehicle parts m anufacturing sector because the auto manufacturing sector can either produce parts internally or buy them from an external supplier, and we do not have estimates of the likely breakdown of effort between the two sectors. For the same reasons, we discuss e ffects on producers of equipment that refiners will use to comply with the standards. Chevron Products Company states that we did not consider the economic context of the time when discussing our impacts. As we stated in the NPRM, we recognize the importance of context. When the economy is at full employment, an environmental regulation is unlikely to have much impact on net overall U.S. employ ment; instead, labor would primarily be shifted from one sector to another. These shifts in employ

ment impose an opportunity cost on society , approximated by the wages of the employees, as regulation diverts workers from other activities in the econom y. In this situation, any effects on net employment are likely to be transitory as workers change jobs (e.g., some w orkers may need to be retrained or require time to search for new jobs, while shortages in some sectors or regions could bid up wages to attract workers). On the other hand, if a regulation comes into effect during a period of high unemploy ment, a change in labor demand due to regulation may affect net overall U.S. employ

ment because the labor market is not in equilibrium. Schmalansee and Stavins point out that net positive employ ment effects are possible in the near term when the economy

is at less than full employ ment due to the potential hiring of idle labor resources b y the regulated sector to meet new requirements (e.g., to install new equipment) and new economic activity in sectors related to the regulated sector. 595 Inthe longer run, the net effect on employment is more difficult to predict and will depend on the way in which the related industries respond to the regulatory

requirements. As Schmalansee and Stavins note, it is possible that the magnitude of the effect on employ ment could vary

over tim e, region, and sector, and positive effects on employ ment in some regions or sectors could be offset by negative effects in other regions or sectors. For this reason, they urge caution in reporting partial emplo yment effects since it can “paint an inaccurate picture of net employ ment impacts if not placed in the broader economic context.” A number of commenters (including unions, environmentalists, investor organizations, Medical Advocates for Health Air, NESCAUM, and the National Association of Clean Air Agencies) argue that the standards will increase employ ment, by stimulating auto companies and refiners to invest in pollution abatement equipment. As will be discussed further below, EPA agrees that the standards are likel y to lead to more employment to provide abatement equipment,

595 Schmalensee, R., & Stavins, R. (2011). A Guide to Economic and Policy Analysis of EPA’s Transport Rule ” White paper commissioned by Excelon Corporation ( Docket EPA - HQ
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but employ

ment due to production may also be reduced (although by very small amounts) due to incrementally higher prices for vehicles and fuel; we expect the net impact on employ

ment in the regulated sectors to be small. Chevron Products Company states that we do not account for the hardship on local and regional economies due to the increase in refinery costs. Because we do not consider emplo ym ent impacts to be large, even at local and regional scale, we do not expect large impacts on the economies at that scale. ECTA argues that job impacts will be not only positive in the auto and auto parts sectors, but substantially more positive than EPA states, based on Regional Input

- Output Modeling Sy stem (RIMS) multipliers that find increases of 5.9 jobs for every $1 million investment in new auto parts. Multiplier impacts trace the entire chain of job impacts associated with an expenditure, including factors such as changes in emplo ym ent in retail establishments due to changes in wo rkers in the auto sector. Because the expenditures will occur when unemplo ym ent is still high, ECTA argues, it is important to consider the multiplier effects of the expenditures that are embedded in the RIMS multipliers. As discussed above, the multipli er impacts of expenditures depend heavily on the state of the macroeconom y. Because of uncertainty

over the state of the econom y when the increased expenditures will occur, EPA has not quantified the multiplier impacts due to changes in employ ment associated with these standards. As discussed again below, some expenditures, perhaps especiall y in the refinery sector, will occur before the standards take effect, to get the manufacturing processes in place to meet the standards. These near

- term expenditures may

have some multiplier effects, because they are more likely

to have their impacts during the current period of above

- average unemploy ment. In contrast, the ongoing costs of complying with the standards, which contribute most directly to price increase s, are likel y to come in future years, when it is expected that unemploy

ment rates will be lower. The Mercatus Center at George Mason University recommended that we “acknowledge that both jobs gained and jobs destroyed are costs of the proposed regulation. Ideally , compliance jobs should be minimized, not viewed as a benefit of a regulation.” This assertion is confusing, in that it implies that any effect on employ ment, positive or negative, is costly

. Marathon Petroleum Company and the American Petroleum Institute with the Association of Fuel and Petroleum Manufacturers argue that employ ment impacts should not be counted as benefits. Our anal ys is of the employ ment impacts of the standards is intended to identify additional ways that these standards will affect the public. Employ ment clearl y provides benefits to the people who are emplo yed, and reducing unemployment is considered a desirable outcome in times of high unemploy ment. EPA disagrees that minimizing compliance jobs should be an independent obj ective of this rulemaking. The objective of the program is to improve air quality through reductions in vehiclePage 502 of 529

emissions; we provide information concerning employ ment impacts as part of our overall anal ys is of economic impacts from the rule. 596 The Mercatu s Center also requests that we consider the long

- term effects of unemploy ment on workers who may lose jobs, and that we acknowledge that those who lose jobs may

not be the same people who gain jobs. We recognize there are costs to workers who shift from o ne job to another, 597 but we also note, as discussed further below, that we expect very small employ

ment impacts from the standards. After reviewing these comments, we conclude they have not identified an y specific reason to depart from the approach to emplo ym ent analy sis that was used in the NPRM , though we here use a slightly modified theoretical framework

. In the NPRM, w e follow ed the theoretical structure in a study by Morgenstern, Pizer, and Shih (2002) 598 of the impacts of regulation in employment in th e regulated sectors. We here shift to a very

similar framework b y Berman and Bui. 599 RIA Chapter 9.1 provides additional background on this framework. In Berman and Bui’s (2001, p. 274

- 75) theoretical model, the change in a firm’s labor demand arising fro m a change in regulation is decomposed into two main components: output and substitution effects. 600

 The output effect describes how, if labor

- intensity of production is held constant, a decrease in output generally leads to a decrease in labor demand. Howe ver, as noted by Berman and Bui, although it is often assumed that regulation increases marginal cost, and thereby reduces output, it need not be the case. A regulation could induce a firm to upgrade to less polluting, and more efficient equipment that low ers marginal production costs, for example. In such a case, output could theoretically increase.

596 We note that employment shows up in the benefit

- cost analysis through labor costs, which are included in the costs of achieving the standards; any increases in employment are part of the increased expenditures due to the standards , and decreases in employment reduce expenditures

. 597 E.g., Jaco bson, Louis S., Robert J. LaLonde, and Daniel G. Sullivan, “Earnings Losses of Displaced Workers.” American Economic Review 83(4) (1993): 685

- 709 (Docket EPA - HQ
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. 598 Morgenstern, R., Pizer, W., & Shih, J. (2002). Jobs Versus the Environment: An Industry

- Level Perspective. Journal of Environmental Economics and Management 43, 412

- 436 (Docket EPA - HQ
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. 599 Berman, E. and L. T. M. Bui (2001). “Environmental Regulation and Labor Demand: Evidence from the South Coast Air Basin.” Jo urnal of Public Economics 79 (2): 265

- 295 (Docket EPA - HQ
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. 600 The authors also discuss a third component, the impact of regulation on factor prices, but conclude that this effect is unlikely to be important for large competitive factor markets, such as labor and capital. Morgenstern, Pizer and Shih (2002) use a very similar model, but they break the em ployment effect into three parts: 1) the demand effect; 2) the cost effect; and 3) the factor

- shift effect. See Morgenstern, Richard D., William A. Pizer, and Jhih

- Shyang Shih. “Jobs Versus the Environment: An Industry

- Level Perspective.” Journal of Environmental Economics and Management 43 (2002): 412

- 436 (Docket EPA - HQ
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.Page 503 of 529  The substitution effect describes how, holding output constant, regulation affects the labor

- intensity of production. Although increased environmental regul ation generally results in higher utilization of production factors such as pollution control equipment and energy to operate that equipment, the resulting impact on labor demand is ambiguous. For example, e quipment inspection requirements, specialized was te handling, or pollution technologies that are added to the production process may affect the number of workers necessary to produce a unit of output . Berman and Bui (2001) model the substitution effect as the effect of regulation on pollution control eq uipment and expenditures that are required by the regulation and the corresponding change in labor

- intensity of production. In summary , as the output and substitution effects may be both positive, both negative or some combination, standard neoclassical theory alone does not point to a definitive net effect of regulation on labor demand at regulated firms. 1. Employ

ment Impacts in the Auto Sector Following the Berman and Bui (2001) framework, we consider two effects for the auto sector: the output effect and the substitution effect.
a. The Output Effect The output effect depends on the effects of this rule on vehicle sales. If vehicle sales decrease , employ ment associated with these activities will decrease. As discussed in Section X.B, we do not make a quantitative estimate on the effect of the rule on vehicle sales but we note that the decrease in vehicle sales is expected to be negligible. Thus we expect any decrease in employ

ment in the auto sector through the output effect to be small as well. b. The Substitution Effect The output effect, above, measures the effect due to new vehicle sales onl y. The substitution effect mea sures the impacts due to the changes in technologies needed for vehicles to meet the standards , separate from the effect on output (that is, as though holding output constant)

. This effect includes both changes in employ ment due to incorporation of abatem ent technologies and overall changes in the labor intensity

of manufacturing. We estimate the substitution effect by multiplying the ratio of workers to each $1 million of expenditures in the auto sector b y the cost estimate s for compl yi ng with the r ule. This approach estimates the effects of increased expenditures while holding constant the labor intensity of manufacturing; it does not take into account changes in labor intensity due toPage 504 of 529

changes in the nature of production. This latter effect could either increase or decrease the employ

ment impacts estimated here. 601 Some of the costs of this rule will be spent directl y in the auto manufacturing sector, but it is also likely that some of the costs will be spent in the auto parts manufacturing sector. We separatel y present the ratios for both the auto manufacturing sector and the auto parts manufacturing sector. There are several public sources for estimates of employ ment per $1 million expenditures. As discussed in the RIA, EPA examines several source s for these estimates: the U.S. Bureau of Labor Statistics (BLS) ’s Employ ment Requirements Matrix (ERM), 602 the Census Bureau ’s Annual Survey of Manufactures 603 (ASM) , and its Economic Census. The use of these ratios has both advantages and limitations. It is often possible to estimate these ratios for quite specific sectors of the econom y: for instance, it is possible to estimate the average number of workers in the light

- duty

vehicle manufacturing sector per $1 million spent in the sector, rather than use the ratio from another, more aggregated sector, such as motor vehicle manufacturing. As a result, it is not necessary to extrapolate employ

ment ratios from possibly

unrelated sectors. On the other hand, these estimates are averages for the sectors, cove ring all the activities in those sectors; they may not be representative of the labor required when expenditures are required on specific activities, or when manufacturing processes change sufficientl y that labor intensity changes . For instance, the ratio for the motor vehicle manufacturing sector represents the ratio for all vehicle manufacturing, not just for emissions reductions associated with compliance activities . In addition, these estimates do not include change s in sectors that supply these sectors, such as steel or electronics producers. They thus may best be viewed as the effects on employ ment in the specific sectors due to the changes in expenditures in those sectors, rather than as an assessment of all empl oy

ment changes due to these changes in expenditures. The values used here are adjusted to remove the employ ment effects of imports through use of a ratio of domestic production to domestic sales of 0.667. 604 As discussed in the RIA, trends in the BLS ERM ar e used to estimate productivity improvements over time that are used to adjust these ratios over time.

601 As noted above, Morgenstern et al. (2002) separate th e effect of holding output constant into two effects: the cost effect, which holds labor intensity constant, and the factor shift effect, which estimates those changes in labor intensity. 602 Bureau of Labor Statistics. Employment Requirements Matrix. http ://www.bls.gov/emp/ep_data_emp_requirements.htm (Docket EPA - HQ
- OAR
- 2011
- 0135)
. 603 U.S. Census Bureau. Annual Survey of Manufactures. http://www.census.gov/manufacturing/asm/index.html (Docket EPA - HQ
- OAR
- 2011
- 0135)
. 604 To estimate the proportion of domestic production affected by the change in sales, we use data from Ward’s Automotive Group for total car and truck production in the U.S. compared to total car and truck sales in the U.S. For the period 2001

- 2010, the proportion is 66.7 percent (Docket EPA HQ
- OAR
- 2011
- 0135
- 0333)

.Page 505 of 529 Table X

- 1 provides estimates of the substitution effect of this rule on employ ment. Chapter 2.1 of the RIA discusses the vehicle cost estimates developed for this rule, discussed in Section VII.A, presented in the second column. The maximum value for employ ment impacts per $1 million (2011$) (before adjustments for changes in productivity , after acc ounting for the share of domestic production) is 1. 771 if all the additional costs are in the parts se ctor; the minimum value is 0.389 , if all the additional costs are in the light

- duty vehicle manufacturing sector. Increased costs of vehicles and parts will , by itself, and holding labor intensity constant, be expected to increase employment between 2017 and 2025 by some hundreds of jobs each year . While we estimate employment impacts, measured in job

- ye ars, beginning with program implementation, some of these employ ment gains may

occur earlier as auto manufacturers and parts suppliers hire staff in anticipation of compliance with the standard. A job

- ye ar is a way to calculate the amount of work needed to complete a specific task. For example, a job

- ye ar is one year of work for one person. **Table X**  **- 1**  **Employment Effects due to Increased Costs of Vehicles and Parts, in job**  **- years**  Year Costs (Millions of 2010$) Maximum Employ ment Effect (if all expenditures are in the Parts Sector) Minimum Employ ment Effect (if all expenditures are in the Li ght Dut y Vehicle Mfg Sector) 2016 $ 21 0 0 2017 $ 297 400 100 2018 $ 615 800 200 2019 $ 653 800 200 2020 $ 6 97 800 200 2021 $ 725 800 200 2022 $ 758 800 200 2023 $ 751 800 200 2024 $ 761 800 200 2025 $ 773 700 200

c. Summary

of Employ

ment Effects in the Auto Sector The overall effect of the standards on auto sector employ ment depends on the relative magnitude of the output effect and the substitution effect. Because we do not have quantitative estimates of the output effect , and onl y a partial estimate of the substitution effect, we cannot reach a quantitative estimate of the overall employ ment effects of the standards on auto sector employ ment or even whether the total effect will be positive or negative. However, given that the expected increase in production costs to the auto manufacturers is relativel y small, we expect that the magnitudes of all these effects will be small as well.Page 506 of 529 Additionally , the standards are not expected to provide incentives for manufa cturers to shift employ ment between domestic and foreign production. This is because the increased standards of the rule will apply to vehicles sold in the U.S. regardless of where they

are produced. If foreign manufacturers already have increased experti se in satisfying the requirements of the rule , there may be some initial incentive for foreign production, but the opportunity for domestic manufacturers to sell in other markets might increase. To the extent that the requirements of this rule might lead to installation and use of technologies that other countries may

seek now or in the future, developing this capacity for domestic production now may

provide some additional ability to serve those markets. This potential benefit for domestic production wil l not apply if other countries are not likely to have similar standards. 2. Refinery

Employ ment Impacts The Berman and Bui (200 1 ) framework of output and substitution effects can also be applied to the impact of the rule on employ ment in the refinery

sector. Here we use a full y qualitative approach. A qualitative discussion allows for a wider incorporation of additional considerations, such as timing of impacts and the effects of the rule on imports and exports. Because the discussion is qualitative, we do not sum the net effects on employ ment. The output effect on refining sector emplo ym ent is expected to be negative. The discussion in Section X.C above suggested that the standards will cause a small decrease in the quantity

of gasoline demanded due to higher production costs being passed through to consumers. This slightly reduced level of sales will likely have a negative impact on employ ment in the refining sector. While we do not quantify the level of job losses that could be expected here, recall that the quantity of gasoline sold as a result of the se standards is expected to decrease by only a very small amount over an y time horizon. Th e substitution effect of the standards on employment in the refining sector can be either positive or negative in the Berman and Bui framework; here, we expect a small, possibly

positive impact . In order to satisfy the requirements of the rule, firms in the refining industry are expected to perform additional work that will require hiring more employees, especiall y perhaps in the short run. Section V. L .2. e discusses the exp ected employ ment needed to reduce the sulfur content of fuels; as noted there, to meet the Tier 3 sulfur standards, refiners are expected to invest $2 billion between 201 2 and 2019 and utilize approximately 25 0 front

- end design and engineering jobs an d 1 , 5 00 construction jobs. As the petroleum sector employed approximately 71,000 workers in 2011 , this temporary increase in employment will be small when compared to 2011 levels. Chevron Products Company states that we have not considered global competitive forces in our assessment. As we discussed in the NPRM, this rule is not expected to provide incentives to shift employment between domestic an d foreign production. First, the standards will appl y to gasoline sold in the U.S.Page 507 of 529

regardless of where it has been produced. U.S. gasoline demand is projected to continue to decline for the foreseeable future in response to higher gasoline prices, more stringent vehicle and engine greenhouse gas and fuel economy standards as well as increased use of renewable fuels. As a result, this analy sis of incentives to shift employ

ment between domestic and foreign production focuses on investments for existing capa city

instead of expanding capacity

. 605 Inthis case, what is relevant is whether the necessary

modifications to comply with Tier 3 will be significantly cheaper overseas than in the U.S. The main impacts on capital and operating costs to comply with Tier 3 associated with adding hydrotreating capacity are likely to be similar overseas as in the U.S. This is particularly true when anal yz ing likely sources of U.S. imports. The majority

of gasoline imported to the U.S. today comes into the East Coast and is sourced out of either Europe or refineries in Canada or the Caribbean that exist almost solely

to supply the U.S. market. These Canadian and Caribbean refineries, by virtue of their focus on the U.S. market, are very similar to U.S. based refineries and would be expected to have to incur similar capital and operating costs as their U.S. based competitors meeting the 10 ppm standard. Furthermore, the European refineries are already producing gasoline to a 10 ppm sulfur cap for Europe. To the extent they have refinery

streams that are more difficult to hydrotreat, the U.S. market currentl y serves as an outlet for their higher sulfur gasoline streams. As a result, they

may incur capital and operating costs on a per gallon basis at least as high as for the ir U.S. based competitors for these remaining higher sulfur gasoline streams. Alternativel y, they may instead choose to find markets outside the U.S., opening the way

for increased U.S. based refinery demand. Finally , despite refining industry projectio ns that previously imposed diesel rules would lead to greater U.S. reliance on imports through major negative impacts on domestic refining, the reverse has actuall y occurred. Over the last 8 ye ars, imports of gasoline and diesel fuel have continued to be the marginal suppl y, and have even dropped precipitously so that the U.S. is now a net exporter of diesel fuel and is importing half the gasoline that it did at its peak in 2006. With the projected decline in future gasoline demand in the U.S. as vehicle fuel efficiency improves, gasoline imports are expected to continue to decline. Thus it is expected that for the refining sector, the output effect will lower employ ment, and the substitution effect will raise employ ment . As a whole then, it is not evident whether the standards will increase or decrease employ ment in the refining sector. However, given the small anticipated reduction in quantity sold, it appears that the standards will not have major employ ment consequences for this sector.

605 While refinery capacity has been increasing around the world in recent years, it has been designed primarily to supply foreign markets other than the U.S. (e.g., increasing demand in China and India).Page 508 of 529 The petroleum refining industry is one of the manufacturing industries studied by Berman and Bui (200 1 ) when they look ed at the effect of environmental expendi tures on employment. They found that “ Employ

ment effects are very

small, generall y positive, but not statistically different from zero.” (p . 281) [ Berman and Bui, Table 3]. Berman and Bui also state that the estimates rule out large negative effects (p. 2 82). Because most of the abatement cost of the regulations they anal yz e is incurred b y refineries, in their sample, they report separate emplo ym ent effects for refineries and non

- refineries “which are also all small.” (p. 282). Berman and Bui suggest some explanations for the zero or small estimates, particularl y for oil refineries: they

are capital

- intensive industries with relativel y little employment when compared to other manufacturing; they face relativel y inelastic demand because they

sell output in l ocal markets and/or because there are no unregulated refineries to compete with; and, finally , regulations may have been associated with productivity

gains in petroleum refineries. We note that the regulations that th e s e estimate s are derived from are not directly comparable to the current rule; they are based on the costs of reductions in refinery air pollution emissions instead of changing fuel properties, and therefore may not be applicable for the se standards. The American Petroleum Institute requested that we delete reference to use of anal ys is by

Morgenstern et al. (2002) because it is based on temporary construction jobs and a single study. We had present ed that figure not as a conclusive estimate, but rather as one estimate that we too consider of unclear applicability to the standards ; we have substituted Berman and Bui’s results . Several commenters cite a study by Navigant Economics that e stimates 24,500 installation jobs during the first three ye ars of the program, and 5,300 permanent jobs, associated with the refinery standards. These estimates include employ ment not just in the refinery sector, but also multiplier effects (discussed abo ve) for suppliers, which EPA does not estimate. As noted above, EPA estimates approximately 25 0 front

- end design and engineering jobs and 1 , 5 00 construction jobs

. Section 5.3 of the RIA contains some historical discussion regarding the impact on refineries and refining capacity of earlier rules which resulted in higher costs for refiners. Over the period 2003

- 2011, when a number of rule s were being implemented, EIA data show a net of two refinery closures on its website. Meanwhile, over this same period the average size of U.S. refineries increased from 113,000 barrels per day

to 123,000 barrels per day, and total U.S. refining capacit y increased b y six percent. Thus, historically during a time when rules with much larger expected impacts were being implemented (the 2003 ultra

- low sulfur nonroad diesel proposal alone was expected to have a cost impact on refineries more than five times greater than the current rule), U.S. refining capacity increased even as the number of U.S. refineries slightly fell. While closing refineries has a negative effect on industry

employ ment, it is likely

that the increased refining capacity at many of the re maining plants had a positive effect on industry employ ment. The standards are also likely to have a positive impact on employ ment among producers of equipment that refiners will use to comply with the standards. Section V.A.2.c notes that some refiners a re expected to need to revamp theirPage 509 of 529

current treatment units, and others will need to add additional treatment units. Producers of this equipment will be expected to hire additional labor to meet this increased demand. We also note that the employment eff ects may be different in the immediate implementation phase than in the ongoing compliance phase. Itis expected that the employment increases through the substitution effect from revamping old equipment and installing additional equipment should occur in the near term, when current unemploy ment levels are high, and the opportunity cost of workers is relatively

low. Meanwhile, the employment decreases in the refining sector from the output effect will not start until 2017, when compliance will be required, and when unemploy ment is expected to be reduced; in a time of full employ ment, an y changes in employ ment levels in the regulated sector are mostly expected to be offset b y changes in emplo ym ent in other sectors. 

## XI **. Public Participation**  Many inte rested parties participated in the rulemaking process that culminates with this final rule. This process provided opportunity for submitting written public comments following the proposal that we published on May 21, 2013 (78 FR 29816 ), and we considered these comments in developing the final rule. In addition, we held public hearings on the proposed rulemaking on April 24 and 29, 2013, and we have considered comments presented at the hearing. Throughout the rulemaking process, EPA met with stakeholders i ncluding representatives from various industries (vehicle manufacturers, fuel refiners, fuel distributors, suppliers, engine manufacturers, etc.), states, non

- governmental organizations, and others. We have prepared a detailed Summary and Anal ys is of Comme nts document, which describes the comments we received on the proposal and our responses. The Summary and Anal ys is of Comments is available in the docket for this rule at the Internet address listed under ADDRESSES, as well as on the Office of Transportat ion and Air Quality Web site (http://www.epa.gov/tier3.htm). In addition, comments and responses for key issues are included throughout this preamble. 

## XII. **St atutory and Executive Order Reviews**  **A. Executive Order 12866: Regulatory Planning and Review and Executiv**  **e Order 13563: Improving Regulation and Regulatory Review**  Under section 3(f)(1) of Executive Order 12866 (58 FR 51735, October 4, 1993), this action is an “economically significant regulatory

action” because it is likely to have an annual effect on the eco nomy of $100 million or more. Accordingl y, EPA submitted this action to the Office of Management and Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR 3821, JanuaryPage 510 of 529

21, 2011) and an y changes made in response to OMB recommendations have been documented in the docket for this action. In addition, EPA prepared an anal ys is of the potential costs and benefits associated with this action. This analy sis is contained in Sections VII and VIII of this preamble and in Chapter 8 of the RIA. A cop y of the anal ys is is available in the docket for this action. **B. Paperwork Reduction Act**  This action is continuing existing information collection from the Tier 2 program, with additional changes as noted below

. T he Office of Management and Budget (OMB) has previously approved the information collection requirements contained in the existing the existing Tier 2 gasoline rule (65 FR 6698, February 10, 2000), under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. The I CR s w ere assigned OMB Control Numbers 2060

- 0437 (fuels), 2060

- 0104 (light

- dut y vehicles), 2060

- 0287 (heav y - dut y vehicles), and 2060

- 0086 (in

- use ve rification program) . Th e I CRs are being revised to reflect the c hanges being finalized today

. T he additional information collection requirements in this rule will be submitted for approval to OMB under the Paperwork Reduction Act

. The information collection requirements are not enforceable until OMB app roves them. This rule contains reporting and recordkeeping requirement s to implement EPA’s motor vehicle certification program and the manufacturers’ in

- use verification program (IUVP). Existing regulations require manufacturers to submit emissions inform ation to EPA in conjunction with these two programs. Manufacturers must submit an application for emission certification prior to production. The application describes the major aspects of the product line, technical details of the emission control syste ms, and the results of tests to indicate compliance with the emissions limitations . The application and supporting test results are reviewed and, if appropriate, a certificate of conformity is issued. Subsequently , low

- and high

- mileage vehicles in use are tested for emissions by manufacturers and the results of those tests reported to EPA. EPA estimates the total number of respondents to be 55, the total burden hours to be 73,567 , and the total cost to respondents to be $7,690,934. As a result of the ch ange in certification test fuel from 9 RVP E0 to 9 RVP E10 , EPA must assess the need to make test procedure adjustments related to fuel econom y testing such that the change in test fuel quality does not impact the stringency

of the CAFE standards. EPA rec ognized that this action was needed in the proposed rule , but deferred proposing a specific adjustment or set of adjustments because the data needed to determine the value(s) for the adjustments was not available. Historically , manufacturers have used cri teria pollutant emission information from the exhaust emission testing for certification as part of the data needed to determine fuel econom y values. The final rule sets a process in motion for EPA to gather the information need to develop any test proced ure adjustments. While the basic data will likely be available in late 2015 or earl y 2016, an y rule toPage 511 of 529

enact potential test procedure adjustments will take additional time. During this interim period, an y LEV III or earl y Tier 3 vehicles using E10 test f uel for exhaust emission certifications will have to be tested for fuel econom y values on E0. EPA has studied the expected phase

- in rates for these vehicles in LEV III and estimates that for the 2015

- 2017 model years there will an average about 35 additio nal tests per year for the industry with an hour burden of about 30 hours per test. Thus, over this three

- year period , the added hour burden is 1050 hours and the sum of the cost of testing and the hour burden is $402,150. This rule also contains reportin g, recordkeeping, and Product Transfer Document (PTD) requirements for refiners and importers of motor vehicle gasoline. This rule contains registration, reporting, recordkeeping , and PTD requirements for producers and importers of denatured fuel ethanol (DFE) and other ox ygenates
. This rule also contains registration, recordkeeping, and PTD requirements for producers of certified ethanol denaturants

. This rule also contains recordkeeping and PTD requirements for producers of gasoline additives. The reporting, recordkeeping, and PTD requirements for refiners and importers of motor vehicle gasoline are the same requirements that exist under the Tier 2 sulfur program. 606 The registration and reporting requirements for DFE producers and importers are new as are the registration requirements for producers and importers of certified ethanol denaturants. The recordkeeping and PTD requirements for gaso line additive producers, DFE manufacturers, ethanol denaturant manufacturers, and downstream parties under the Tier 3 program are new but should be minimal since we expect that they

are already followed as part of normal business practices. EPA estimates the total number of respondents to be 2,675 , the total burden hours to be 84,000 and the total cost to respondents to be $ 6,300,000

. Finally , this rule also contains provisions for qualifications of laboratories on test methods. We have adopted recordkeep ing and reporting requirements that would apply

to fuel testing laboratories. The collected data will permit EPA to: (1) Qualify laboratories to use test methods based upon accuracy and precision criteria supported by

industry ; and (2) Ensure that various fuels meet the standards required under the regulations at 40 CFR part 80 and that the associated benefits to human health and the environment are realized. We estimate that 750 laboratories may be subject to the information collection. This estimate is based upon our experience with qualification of laboratories under the existing diesel sulfur program. We estimate an annual reporting burden of 95 hours per respondent and an annual recordkeeping burden of 104 hours, yielding a total of 199 hours. For those laboratories that elect to be reference installations, the annual reporting burden would be 95 hours and the annual recordkeeping burden would be 128 hours. Burden is defined at 5 CFR 1320.3(b).

606 65 FR 6698, February 10, 200 0 ; OMB Control Number: 2060

- 0437; EPA ICR 1907.05Page 512 of 529 The I CR s upporting statements can be found in Docket I D number EPA

– HQ

– OAR

–2011

– 0135. An agency

may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA’s regulations in 40 CFR are listed in 40 CFR part 9. When th e IC R s are approved by OMB, the Agency

will publish a technical amendment to 40 CFR part 9 in the Federal Register to display the OMB control number s for the approved information collection requirements contained in this final rule. We did not receive an y s pecific comments on the ICR; comments received regarding compliance

- related provisions are discussed above in Sections IV and V. **C. Regulatory Flexibility Act**  1. Overview The Regulatory

Flexibility

Act (RFA) generall y require s an agency to prepare a regulatory

flexibility

anal ys is of an y rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or an y other statute unless the agency

certifies that the rule will not have a significant eco nomic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions. For purposes of assessing the impacts of today ’ s rule on small entities, small entity is defined as : (1) a small business as defined by the Small Business Administration’s (SBA) regulations at 13 CFR 121.201 (see table below); (2) a small governmental jurisdiction that is a government of a city, count y, town, school district or special district with a p opulation 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. The following table provides an overview of the primary SBA small business categories potentially affected b y this regulation: **Industry NAICS**  **a Code (2007)**  **Defined as small entity by SBA**

**if less than or equal to:** Gasoline fuel refiners and importers 324110 1,500 employees Ethanol producers 325193 1,000 employees Gasoline additive manufacturers 325199, 325998, 424690 1,000 employees

500 employees 100 employees Transmix processors Varied 1,500 employees Petroleum bulk stations and terminals 424710 100 employeesPage 513 of 529

Other warehousing and storage

bulk petroleum storage 493190 $25.5 mi llion (annual receipts) Li ght

- dut y vehicle and light

- dut y truck manufacturers 336111, 336112 1,000 employees Independent commercial importers 811111, 811112, 811198 $7 million (annual receipts)
Alternative fuel converters 335312, 336312, 336322, 336399, 811198 1,000 employees

750 employees ”
” $7 million (annual receipts) On

- highway

heavy

- dut y engine & vehicle (>8,500 lbs GVWR) manufacturers 333618, 336120, 336211, 336312 1,000 employees

”
” 750 employees Note: a North American Industrial Classificatio n System 2. Background EPA’s Tier 2 Vehicle and Gasoline Sulfur Program, which was finalized in February 2000, took a s ystems
- based approach to motor vehicle pollution by setting standards for both passenger vehicles and their fuel (gasoline). The program se t stricter tailpipe and evaporative emissions standards for criteria pollutants from vehicles beginning with model year (MY) 2004 and phasing in through 2009. The program also lowered the sulfur content of gasoline, to a 30 ppm refinery average, 80 ppm pe r - gallon cap, and 95 ppm downstream cap; beginning in 2004 and phasing in through 2008. The potential to extend the phase

- in for small refiners and approved Gasoline Phase

- In Area (GPA) refiners through the end of 2010 was provided in the Highway

Diesel R ule 607 in exchange for early compliance with the diesel program. Similar to the Tier 2 rule, the Tier 3 program is a comprehensive, sy stems
- based approach to address the impact of light

- dut y vehicles and certain heav y - dut y vehicles on air quality and health

. Pursuant to section 603 of the RFA, EPA prepared an initial regulatory flexibility anal ys is (IRFA) for the proposed rule and convened a Small Business Advocacy

Review Panel to obtain advice and recommendations of representatives of the regulated small entities ( see 78 FR 29816, May 21, 2013). A detailed discussion of the Panel’s advice and recommendations is found in the Panel Report, located in the rulemaking docket (document number: EPA

- HQ

- OAR

- 2011

- 0135

- 0423). A summary

of the Panel’s recommendations is presented at 78 FR 29994 (May 21, 2013).

607 66 FR 5136 (January 18, 2001).Page 514 of 529 As required b y s ection 604 of the RFA, we also prepared a final regulatory flexibility anal ys is (FRFA) for today ’s final rule. The FRFA addresses the issues raised b y public comments on the IRFA, which was part of the proposal of this rule. The FRFA is available for review in the docket (see Chapter 10 of the RIA) and is summarized below. 3. Reason for Today ’s Rule This rule establish es more stringent vehicle emissions standards and reduce s the sulfur content of ga soline beginning in 2017, as part of a s ys tems approach in addressing the impacts of motor vehicles and fuels on air quality and public health. The gasoline sulfur standard s will make emission control sy stems more effective and enable more stringent vehic le emissions standards, and the vehicle standards will reduce vehicle tailpipe and evaporative emissions. This will result in significant reductions in pollutants such as ozone, particulate matter, and air toxics. For a more detailed discussion of the re asoning for today ’s rule, please see Sections II and III of this preamble. The vehicle and fuel programs are further discussed in Sections IV and V, respectively

. 4. Legal Basis for Agency Action The Clean Air Act (CAA) authorizes EPA to establish emissions standards for motor vehicles to address air pollution that may reasonabl y be anticipated to endanger public health or welfare. EPA also has authority to establish fuel controls to address such air pollution. The authority for the vehicle emission standards comes from CAA section 202(a), Section 202(k) provides EPA with authority to issue and revise regulations applicable to evaporative emissions of hydrocarbons from gasoline

- fueled motor vehicles, and section 206(d) authorizes EPA to establish methods and procedures for testing whether a motor vehicle or motor vehicle engine conforms with section 202 requirements. The authority for the fuel standards comes from section 211(c). For more detailed information on our legal authority for today ’s proposal, plea se see Sections II.A and V.M of this preamble. 5. Summary

of Potentiall y Affected Small Entities The table above lists industries/sectors potentially affected b y the Tier 3 rule. For businesses potentially impacted b y the Tier 3 vehicle standards, this inclu des vehicle manufacturers, alternative fuel converters, and independent commercial importers. For businesses potentially impacted by

the Tier 3 gasoline sulfur standards, this includes gasoline refiners and importers, distributors, fuel additive manufacturers, transmix processors , and ethanol producers. EPA used a variety

of sources to identify

which entities are appropriatel y considered “small.” EPA used the criteria for small entities developed b y the Small Business Administration under the North Americ an Industry Classification Sy stemPage 515 of 529

(NAICS) as a guide. Information about these entities comes from sources including the Energy

Information Administration (EIA) within the U.S. Department of Energy , oil industry

literature, EPA’s certification data, and pr evious rulemakings that have affected these industries. EPA then found employ ment information for these companies using the business information database Hoover’s Online (a subsidiary

of Dun and Bradstreet). These entities fall under the categories liste d in the table. 6. Reporting, Recordkeeping, and Compliance For an y emission control program, EPA must have assurances that the regulated products will meet the standards. The program that EPA is finalizing for manufacturers subject to this rule will include testing, reporting, and recordkeeping requirements for manufacturers of vehicles covered by the Tier 3 regulations. Testing requirements for these manufacturers will include certification emission (including deterioration factor) testing, in

- use testing, and production line testing. Reporting requirements will include emission test data and technical data on the vehicles. Manufacturers must keep records of this information. Similarly f or an y fuel control program, EPA must have the assurance that fuel produced, distributed, sold and used meets the applicable standard. T he recordkeeping, reporting, and compliance provisions of th is rule are consistent with those in place today

for other fuel programs. Further, we will use existing registration and report ing sy stems that parties in the fuel production and distribution industry are already familiar with. 7. Related Federal Rules The primary

federal rules that are related to this final rule are: the Tier 2 Vehicle/Gasoline Sulfur rulemaking (65 FR 6698, February 10, 2000) , the 2017 Li ght

- dut y Greenhouse Gas ( LD GHG) rule (77 FR 62623) , and the Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium

- and Heav y Duty Engines and Vehicles (HD GHG) rule (76 FR 57106)

. The LD GHG and HD GHG rule s are coordinated effort s by EPA and the National Highway

Traffic Safet y Administration (NHTSA) taking steps to reduce GHG emissions and improve fuel efficiency from on

- road vehicles and engines. 8. Steps Taken to Minimize the Economic Impact on Small Entities
a. Significant Panel Findings The Small Business Advocacy Review Panel (SBAR Panel, or the Panel) considered regulatory

options and flexibilities to help mitigate potential adverse effects on small businesses as a result of this rule. During the SBREFA Panel process, the Panel sought out and received comments on the regulatory options and flexibilities that were presented to SERs and Panel members. As described below,Page 516 of 529

much of the Panel’s recommendations were proposed, and many of those flexibilities are bein g finalized today . ( The recommendations of the Panel are also located in Section 9 of the SBREFA Final Panel Report, which is available in the public docket. ) In today ’s action we are also finalizing some additional flexibilities that were not discussed d

uring the Panel process. b. Outreach with Small Entities and the Panel Process As required b y s ection 609(b) of the RFA, as amended by SBREFA, we conducted outreach to small entities and convened an SBAR Panel on August 4, 2011 to obtain advice and recommendations of representatives of the small entities that would be subject to the Tier 3 requirements. As part of the SBAR Panel process, we conducted outreach with representatives of small businesses that would be affected by the rule. We met with these SERs t o discuss the potential rulemaking approaches and flexibility options to decrease the impact of the rulemaking on their industries. The SERs provided written comments to the Panel, specifically on regulatory

alternatives that could help to minimize the ru le’s impact on small businesses. The Panel’s findings and discussions were based on the information that was available during the term of the Panel and issues that were raised b y the SERs during the outreach meetings and in their comments. It was agreed that EPA should consider the issues raised by the SERs and discussions had by the Panel itself, and that EPA should consider comments on flexibility alternatives that would help to mitigate negative impacts on small businesses to the extent legall y allowabl e by the Clean Air Act. Alternatives discussed throughout the Panel process included those offered in previous or current EPA rulemakings, as well as alternatives suggested by SERs and Panel members. A full discussion of the regulatory alternatives and h ardship provisions discussed and recommended by the Panel can be found in the SBREFA Final Panel Report , located in the rulemaking docket . A summary of the Panel’s recommendations, what the Agency proposed, and what is being finalized today is discussed b elow. (A more detailed discussion of the final provisions for small entities can be found in Sections IV.G and V.E.) It should be noted that during the Panel process, two additional issues were discussed with SERs. EPA was considering extending the new c ertification fuel specifications to all regulatory categories of engines, vehicles, equipment, and fuel sy stem components that use gasoline. This would have included a wide range of additional applications, including small nonroad engines used in lawn and garden applications, recreational vehicles such as ATVs and snowmobiles, recreational marine applications, on

- highway motorcycles, and heavy

- dut y gasoline engines. In addition, EPA considered new volatility (Reid Vapor Pressure, or RVP) standards for in

- use gasoline. Neither of these issues was proposed, thus the discussion ofPage 517 of 529

Panel recommendations below does not address these issues, however they are addressed in the Final Panel Report

. c. Panel Recommendations , Proposed Provisions, and Provisions Being Fi nalized Today i. Tier 3 Fuels (1) Lead Time

—Sulfur The Panel recommended that EPA allow small refiners to postpone their compliance with the Tier 3 program for up to three years. EPA proposed, and is finalizing, this provision. Approved s mall refiners will have from January 1, 2017 through December 31, 2019 to continue production of gasoline with an average sulfur level of 30 ppm (per the Tier 2 gasoline sulfur program). Compliance with the 10 ppm annual average sulfur standard will begin on January 1, 2020. A s discussed further in Section V.D.6, small refiners may continue to generate sulfur credits relative to the 30 ppm sulfur standard through December 31, 2019. Comments received on the small refiner provisions were generally supportive of the proposed thre e - ye ar delay. However, commenters did not agree with EPA’s proposal that small refiners could only generate early

credits relative to the 10 ppm sulfur standard beginning January 1, 2017, and requested an earl y credit generation period for small refiners relative to the 30 ppm sulfur standard. As small refiners will still be subject to the 30 ppm sulfur standard when the Tier 3 program begins on January 1, 2017, we are finalizing that small refiners may continue to generate credits relative to 30 ppm throu gh December 31, 2019. Additionally , from January 1, 2017 through December 1, 2019, small refiners may split their credit generation between both the 10 ppm and 30 ppm standards (without double

- counting). For example, during this time period, a small refi ner with an average gasoline sulfur level of 8 ppm could generate 20 ppm

- volume credits (30

- 10 ppm, relative to the 30 ppm Tier 2 sulfur standard) plus 2 ppm

volume credits (10

- 8 ppm, relative to the 10 ppm Tier 3 sulfur standard).

(2) Provisions for Additive Manufacturers During the SBREFA Panel process, different requirements than those proposed (and being finalized today) were discussed for additive manufacturers. Thus, the provisions recommended by the Panel were not applicable to the provisions proposed and now finalized for these parties. More information on the Panel’s recommendations for gasoline additive manufacturers can be found in the Final Panel Report, located in the rulemaking docket. W e proposed that p arties introducing additives to gasoline greater than 1.0 volume percent would be required to satisfy all of the obligations of a fuel manufacturer , including demonstration that the finished blend meets the applicable sulfur specification. We also proposed a maximum sulfur contribution of 3 ppmPage 518 of 529

f rom the use of a gasoline additive added downstream of the refinery at less than 1.0 volume percent ( when added at the maximum recommended treatment rate ). Lastl y, we proposed that additive manufacturers would need to maintain records of their additive production quality control activities for five ye ars. As discussed further in Section V.C., we are finalizing the requirement that manufacturers of gasoline additives used downstream of the refinery at less than 1.0 volume percent must limit the sulfur contribution to the finished gasoline from the use of the additive to less than 3 ppm when the additive is used at the maximum recommended treatment rate. For each batch of additive produced, the manufacturer must retain sulfur test records for five years, and must make these records available to EPA upon request. Parties that introduce additives to gasoline at over 1.0 volume percent will be required to satisfy all of the obligations of a fuel manufacturer, including demonstration that the finished blend meet s the applicable sulfur specification.

(3) Refinery Gate and Downstream Caps The Panel recommended that EPA assess and request comment on retaining the current Tier 2 refinery gate and downstream caps of 80 and 95 ppm, respectivel y, to help provide maximum fle xibility and avoid s ys tem upsets for the entire refining and distribution sy stem. The Panel also recommended that EPA request comment on additional refinery gate and downstream caps above 20/25 ppm but below 80/95 ppm. T he Panel expressed concern with a refinery gate cap as low as 20 ppm, because such a standard could cause operational problems for small refiners during a refinery turnaround or an upset

— a cap of this level could result in a refiner not being able to pro duce gasoline . The Panel likewise e xpressed concerns that a downstream cap of 25 ppm could cause problems for small downstream entities, such as transmix processors, because they may not be able to reprocess finished gasoline down to this level. In the proposal, EPA co

- proposed caps of 80/9 5 ppm and 50/65 ppm and took comment on caps at 20/25 ppm. However, as discussed above in Section V.C, we are finalizing retaining the Tier 2 80 and 95 ppm caps. Since we are retaining the same caps from the Tier 2 program that entities in the fuel indus try are currentl y complying with, we do not believe that additional flexibilities with respect to the refinery gate and downstream sulfur caps are needed. (4) Hardship Provisions The Panel recommended that EPA propose hardship provisions for all gasoline refin ers and importers , similar to those in prior EPA fuels programs: (a) the extreme unforeseen circumstances hardship provision, and (b) the extreme hardship provision. The Panel also recommended that if EPA were to propose lower refinery

gate and downstream caps, EPA should also consider hardship relief in the form of long

- term relief on the sulfur cap if the circumstances both warrant it and can be structured in a way to allow for it. EPA proposed, and is finalizing, bothPage 519 of 529

the extreme unforeseen circumstanc es and extreme hardship provisions for all gasoline refiners and importers. As described in Section V.E.2, hardship relief will be granted on a case

- by

- case basis following a showing that compliance (especiall y through the use of credits) is not feasible. If a hardship waiver is granted, EPA will determine appropriate hardship relief based on the refiner’s hardship application and an assessment of the credit market at that time.

ii. Tier 3 Vehicles As discussed in Section 5 of the Panel Report, in addition to vehicle manufacturers, two categories that include small businesses are covered b y the new vehicle standards: independent commercial importers (ICIs), and alternative fuel vehicle converters. As discussed below, EPA’s expectation at the time of the Panel process was to propose a set of flexibilities that would be available to all small entities in these three business categories as well as to small volume manufacturers (SVMs) that sell less than 5,000 vehicles per ye ar. The Panel identified a number of e ntities covered by

the vehicle standards that qualify as small businesses under the SBA definition. Six of these companies participated as SERs. The Panel and SERs discussed several regulatory flexibility

alternatives for small businesses that certify veh icles subject to the proposed Tier 3 emission standards. As described in Appendix A of the Panel Report , EPA sought comment from the SERs on allowing small entities to skip the Tier 3 phase

- in and instead implement Tier 3 requirements for all of their ve h icles following the phase

- in period. In addition, EPA sought comment on the following flexibilities: (1) a hardship relief provision that would allow these businesses to apply for additional time to meet the requirements, (2) use of assigned deterioratio n factors for certification purposes, and (3) reduction in the number of tests required in the manufacturer in

- use verification testing program. SERs were generall y supportive of these flexibility

provisions. However, one SER requested that EPA consider p roviding relaxed standards for exhaust emissions in addition to the delay , and another SER requested that we consider eliminating some of the evaporative emission s testing requirements. The recommendations made b y the Panel on these approaches are discus sed in detail in Section XII.C of the NPRM

. We consequently proposed small business and small volume manufacturer provisions based on the se recommendations , as summarized in Section IV.G above

. These proposed provisions consisted of additional lead time , reduced testing requirements, and opportunities for hardship relief, that would help small entities to leverage technological developments by other s and to spread the availability of needed engineering , supplier, and capital resources. Based on the comme nts we subsequently received during the public comment period, we have improved on the proposed provisions and are finalizing Tier 3 vehicle provisions for small businesses and SVMs as described in detail in Section IV.G above, consisting of:Page 520 of 529

 An alternativ e NMOG+NOx light

- duty fleet average standard phase

- in schedule for small businesses and SVMs: 125 mg/mi for MYs 2017

- 2021, 51 mg/mi for MYs 2022

- 2027, and 30 mg/mi thereafter;

 An optional delay

of Tier 3 requirements until MY 2022 for small businesses and SVMs;

 EPA

- assigned deterioration factors for small businesses and SVMs (as well as for small volume test groups);

 Reduced in

- use testing requirements for SVMs with annual sales under 15,000, including no required testing for those with annual sales under 5,000;

 A PM testing waiver for small businesses and SVMs;

 An allowance for small alternative fuel vehicle converters to meet existing OBD requirements (40 CFR 86.1806

- 05) instead of new Tier 3 requirements;

 A provision for small businesses and SVMs in hard ship situations to apply for additional time to meet the Tier 3 standards;

 An exten sion of eligibility for the Tier 3 SVM provisions to small manufacturers that are owned b y large manufacturers but are able to demonstrate that they

are operationall y indepe ndent. As required b y s ection 212 of SBREFA, EPA also is preparing a Small Entity Compliance Guide to help small entities comply with this rule. The Small Entity Compliance Guide will be available on EPA’s Office of Policy ’s Small Entity website at: http://www.epa.gov/rfa/compliance

- guides.html , and on the Tier 3 website (http://www.epa.gov/otaq/tier3.htm ) 60 day s after publication of the fin al rule in the Federal Register. **D. Unfunded Mandates Reform Act**  Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531

- 1538, requires Federal agencies, unless otherwise prohibited b y law, to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule contains 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 an y one year. Accordingly , EPA has prepared under section 202 of the UMRA a written statement of the cost

- benefit anal ys is , which can be found in Section VIII of this preamble, and in Chapter 8 of the RIA. Consistent with section 205, EPA has identified and considered a reasonable number of regulatory

alternatives. These alternatives are described above in Sections IV, V, and IX of this preamble.Page 521 of 529 This rule is not subject to the requirements of section 203 of UMRA because it contains no regulatory

requirements that might significantl y or uniquely affect small governments. The rule imposes no enforceable duty on an y State, local or tribal governments. EPA has determined that this rule contains no regulatory requirements that might significantl y or uniquely affect small governments. EPA has determined that this rule contains a Federal mandate that may result in expenditures of $100 million or more for the private sector in any one year, however EPA believes that the program being finalized today represents the least cos tly , and least burdensome approach to achieve the statutory requirements of the rule. The costs and benefits associated with this rule are discussed above in Section VIII of this preamble, and in Chapter 8 of the RIA, as required b y s ection 202 of the UMRA. **E. Executive Order 13132: Federalism**  This 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 resp onsibilities among the various levels of government, as specified in Executive Order 13132. Thus, Executive Order 13132 does not apply to this action. Although Executive Order 13132 does not apply to this rule, EPA did consult with representatives of various State and local governments in developing the rule. EPA also consulted with representatives from the National Association of Clean Air Agencies (NACAA, representing state and local air pollution officials), Northeast States for Coordinated Air Use Management (NESCAUM, the Clean Air Association of the Northeast States), and the Ozone Transport Commission (OTC, a multi

- state organization created under the CAA responsible for advising EPA on transport issues and for developing and implementing regional s olutions to the ground

- level ozone problem in the Northeast and Mid

- Atlantic regions). In the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA specificall y solicit ed comment on th e proposed action from State and local officials. These comments are in the rulemaking docket and are summarized in the Summary and Anal ys is of Comments document. **F. Executive Order 13175: Consultation and Coordination with Indian Tribal**  **Governm ents**  This action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000). This rule will be implemented at the Federal level and will impose compliance costs only on those in the gasoline production, distri bution, and additive industry and in the engine and vehicle manufacturing industries . Tribal governments will be affected onl y to the extent they purchase and use regulated fuels, vehicles, and equipment. Thus, Executive Order 13175 does not apply to thi s action.Page 522 of 529 Although Executive Order 13175 does not appl y t o this action, EPA specificall y solicit ed additional comment from tribal officials in developing this action (however we did not receive an y comments)

. **G. Executive Order 13045: Protection of Children f**  **rom Environmental Health Risks and Safety Risks**  This action is subject to EO 13045 (62 FR 19885, April 23, 1997) because it is an economicall y significant regulatory action as defined b y EO 12866, and EPA believes that the environmental health or safety ri sk addressed b y this action may have a disproportionate effect on children. Accordingl y, we have evaluated the environmental health or safety effects of air pollutants affected b y the Tier 3 program on children. The results of this evaluation are containe d in Section II.B and associated references. Children are more susceptible than adults to many air pollutants because of differences in ph ys iology, higher per body weight breathing rates and consumption, rapid development of the brain and bodily s ys tems, and behaviors that increase chances for exposure. Even before birth, the developing fetus may be exposed to air pollutants through the mother that affect development and permanently harm the individual. In fants and children breathe at much higher rates per body weight than adults, with infants under one year of age having a breathing rate up to five times that of adults. 608 Inaddition, children breathe through their mouths more than adults and their nasal passages are less effective at removing pollutants, which leads to a higher deposition fraction in their lungs. 609 Certain motor vehicle emissions present greater risks to children as well. Earl y lifestages (e.g., children) are thought to be more susceptible to tumor development than adults when exposed to c arcinogenic chemicals that act through a mutagenic mode of action. 610 Exposure at a young age to these carcinogens could lead to a higher risk of developing cancer later in life. The adverse effects of individual air pollutants may be more severe for children, particularl y the youngest age groups, than adults. The Integrated Science

608 U.S. Environmental Protection Agency. ( 2009 ) . Metabolically

- derived ventilation rates: a revised approach based upon oxygen consumption rates. Washington, DC: Office of Research and Development. EPA/600/R

– 06/129F. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=202543. 609 Foos, B.; Marty, M.; Schwartz, J.; Bennet, W.; Moya, J.; Jarabek, A.M.; Salmon, A.G. (2008) Focusing on children’s inhalation dosimetry and health eff ects for risk assessment: an introduction. J Toxicol Environ Health 71A: 149

– 165. 610 U.S. Environmental Protection Agency. ( 2005 ) . Supplemental guidance for assessing susceptibility from early

- life exposure to carcinogens. Washington, DC: Risk Assessment Fo rum. EPA/630/ R

- 03/003F. http://www.epa.gov/raf/publications/pdfs/childrens_supplement_final.pdfPage 523 of 529

Assessments and Criteria Documents for a number of pollutants affected b y this rule, including those for NO 2 , SO 2 , PM, ozone and CO, describe children as a group with greater s usceptibility

. Section II.B.6 discusses a number of childhood health outcomes associated with prox imity to roadways, including evidence for exacerbation of asthma symptoms and suggestive evidence for new onset asthma. In general, these studies do not ide ntify the specific contaminants associated with adverse effects, instead addressing the near

- roadway environment as one containing numerous exposures potentially associated with adverse health effects. T here is substantial evidence that people who live or attend school near major roadway s are more likely to be of a minority race, Hispanic ethnicity, and/or low SES. Within these highl y exposed groups, children’s exposure and susceptibility

to health effects is greater than adults due to school

- related and seasonal activities, behavior, and physiological factors. Section III.C describes the ambient air qualit y changes resulting from the proposed standards, which represent levels to which the general population is exposed. Children are not expected to experi ence greater ambient concentrations of air pollutants than the general population. However, because of their greater susceptibility

to air pollution and their increased time spent outdoors, it is likely that the proposed standards would have particular be nefits for children’s health. **H. Executive Order 13211: Actions Concerning Regulations That**  **Significantly Affect Energy Supply, Distribution, or Use** Executive Order 13211, “Actions Concerning Regulations That Significantl y Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)), requires EPA to prepare and submit a Statement of Energy Effects to the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, for certain actions identified as “significant energy actions.” Section 4(b) of Executive Order 13211 defines “significant energy actions” as “an y action by an agency (normall y published in the Federal Register) that promulgates or is expected to lead to the promulgation of a final rule or regulation , including notices of inquiry , advance notices of proposed rulemaking, and notices of proposed rulemaking: (1)(i) that is a significant regulatory action under Executive Order 12866 or an y successor order, and (ii) is likel y to have a significant adverse effect on the supply , distribution, or use of energy ; or (2) that is designated b y the Administrator of the Office of Information and Regulatory Affairs as a significant energy action.” Given the flexibilities being finalized for entities in the gasoline production and distribution sy stem, we believe that these mitigate an y potential adverse effects on gasoline supply and distribution. Although EPA does not expect this rule to have significant adverse effects on the supply or distribution of gasoline, we have prepared a Statement of Energy Effects for this action as follows. This rule ’s potential effects on energy suppl y, distribution, or use have been anal yz ed and are further discussed above in:Page 524 of 529  Section V

— fuel provisions of the rule and flexibilities, inc luding hardship provisions.

 Section VII.B

— estimated costs of the fuel program.

 Section X

— economic impacts (specificall y, Section X.C for fuel economic impacts, and Section X.D on emplo ym ent impacts). Given the estimated costs and impacts of the Tier 3 program , as discussed in this preamble and in the RIA , we do not expect this rule to have an adverse effect on the supply

or distribution of gasoline. This judgment is based on a comparison of the estimated impacts of the Tier 3 program to those required for the Tier 2 program, and a review of gasoline suppl y during the phase

- in of the Tier 2 gasoline sulfur program from 2003 through 2011. As the Tier 2 program reduced gasoline sulfur from levels as high as 450 ppm to a 30 ppm annual average, significant capi tal investments were required of many refineries to meet the 30 ppm sulfur standard. Both during and at the end of the Tier 2 phase

- in, the U.S. gasoline markets did not experience a loss in gasoline supply as refiners utilized the flexibilities offered b y the Tier 2 program to stagger investments and unit turnarounds/shutdowns to limit supply impacts. As discussed further in Chapter 5 of the RIA, we do not believe that the Tier 3 program will significantl y affect U.S. gasoline suppl y and/or distribution. Comments received on the proposal estimating the impacts of an even more stringent program than Tier 3 support this conclusion 611

. Further, we do not believe that there are any reasonabl e alternatives to the control of sulfur in gasoline which would provi de the level of reduction of emissions, considering our cost
- benefit anal ys es, given b y the sulfur reduction being finalized in this rule. **I. National Technology Transfer and Advancement Act**  Section 12(d) of the National Technology Transfer and Advancement Ac t of 1995 (“NTTAA”), Public Law No. 104

- 113 (15 U.S.C. 272 note) directs EPA to use voluntary

consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standard s 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 Agency decides not to use available and applicable voluntary

consensus standards. This rulemaking involves technical standards. EPA has decided to update a number of regulations which already contain voluntary consensus standards to more recent ve rsions of these standards. EPA is finalizing use of the ASTM International

611 EPA

- HQ

- OAR

- 2011

- 0135

- 4276 ; Attachment 7.Page 525 of 529

(ASTM) standards listed in Table XII

- 1 below. The standards may be obtained through the ASTM Web site (www.astm.org) or by cal ling ASTM at (610) 832

– 9585. This rulemaking also involves environmental monitoring or measurement. Consistent with the Agency ’s Performance Based Measurement S ys tem (“PBMS”), EPA has decided not to require the use of specific, prescribed anal yt ic methods

. Rather, the rule will allow the use of an y m ethod that meets the prescribed performance criteria. The PBMS approach is intended to be more flexible and cost

effective for the regulated community ; it is also intended to encourage innovation in anal yt ica l technology

and improved data quality. EPA is not precluding the use of any method, whether it constitutes a voluntary consensus standard or not, as long as it meets the performance criteria specified. Comments received on this approach are discussed in Section VI and in the Summary and Analy sis of Comments document. **Table XII**  **- 1**  **Designated Analytical Test Methods for Gasoline and Diesel Fuel** Fuel Parameter Designated Analy tical Method Sulfur in gasoline AS TM D 2622

- 10 Sulfur in butane ASTM D 6667

- 10 500 ppm Sulfur Diesel Fuel ASTM D 2622

- 10 Olefins in gasoline ASTM D 1319

- 13 Reid vapor pressure (RVP) in gasoline ASTM D 5191

- 12 , with the following correlation equation: RVP psi = (0.956 * X)

- 0.347 RVP kP a = (0.956 * X)

- 2.39 where: X = total measured vapor pressure in psi or kPa Distillation in gasoline ASTM D86

- 12 Benzene in gasoline ASTM D 3606

- 10 , except that instrument parameters shall be adjusted to ensure complete resolution of benzene, ethanol, and methanol peaks. Aromatics in gasoline ASTM D 5769

- 10 , except that sample chilling requirements in section 8 of this standard are optional. Ox ygen and ox ygenate content in gasoline ASTM D 5599

- 00 ( 2010 ) Aromatics in diesel fuel ASTM D1319

- 13

**J. E**  **xecutive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low**  **- Income Populations** Page 526 of 529 Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes federal executive policy

on environmental justice. Its main prov ision 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 ef fects of their programs, policies, and activities on minority populations and low

income populations in the United States. EPA has determined that this final rule will not have disproportionatel y high and adverse human health or environmental effects on mi nority or low

- income populations because it increases the level of environmental protection for all affected populations without having an y disproportionately high and adverse human health or environmental effects on an y population, including an y minorit y or low

income population. This final rule w ill reduce emissions from vehicles across the nation, both new vehicles (beginning in model year 2017, when the vehicle standards start to apply) and existing vehicles (as soon as the lower

- sulfur gasoline becomes available in 2017). As a result , this rule increase s the level of environmental protection for all populations. As discussed in Section III. C .7, there is evidence that minority populations and low

- income populations live disproportionately near high

- traffic roadway s, where concentrations of many air pollutants are elevated. We expect this final rule to increase the level of environmental protection for these populations. Thus, this final rule will not have a disproportionately high adverse human hea lth or environmental effect on minority or low

- income populations. **K. Congressional Review Act**  The Congressional Review Act, 5 U.S.C. 801 et seq., as added b y the Small Business Regulatory

Enforcement Fairness Act of 1996, generall y provides that before a rul e may

take effect, the agency

promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other re quired information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A m ajor rule cannot take effect until 60 day s after it is published in the Federal Register. This action is a “major rule” as defined b y 5 U.S.C. 804( 2). This rule will be effective on [I NSERT DATE 60 DAYS AFTER PUBLICATION IN THE FEDERALREGI STER]. 

## XIII. **St atutory Pr**  **ovisions and Legal Authority**  Statutory authorit y for this action c omes from sections 202, 203

- 209, 211, 213, 216, and 301 of the Clean Air Act, 42 U.S.C. sections 7414, 7521, 7522

- 7525, 7541, 7542, 7543, 7545, 7547, 7550, and 7601. Additional support for the procedural and compliance related aspects of this proposal, in cluding the proposedPage 527 of 529

recordkeeping requirements, comes from sections 114, 208, and 301(a) of the Clean Air Act, 42 U.S.C. sections 7414, 7542, and 7601(a). **List of Subjects** 40 CFR Part 79 Environmental protection, Administrative practice and procedure, Air pollution control, Confidential business information, Diesel fuel, Energy , Fuel additives, Gasoline, Motor vehicle pollution, Penalties, Petroleum, Reporting and recordkeeping requirements. 40 CFR Part 80 Environmental protection, Administrative practice and procedure, Air pollution control, Confidential Business Information, Diesel fuel, Fuel additives, Gasoline, Imports, Incorporation by reference, Labeling, Motor vehicle pollution, Penalties, Petroleum, Reporting and recordkeeping requirements. 40 CFR Part 85 Environmental protection, Administrative practice and procedure, Air pollution control, Confidential Business Information, Imports, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Research, Wa rranties. 40 CFR Part 86 Environmental protection, Administrative practice and procedure, Air pollution control, Confidential Business Information, Imports, Incorporation by reference, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirem ents, Warranties. 40 CFR Part 600 Administrative practice and procedure, Electric power, Fuel economy , In corporation by

reference, Labeling, Reporting and recordkeeping requirements. 40 CFR Parts 1036 and 1037 Administrative practice and procedure, Air pol lution control, Confidential business information, Environmental protection, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Warranties. 40 CFR Part 1039 Environmental protection, Administrative prac tice and procedure, Air pollution control, Confidential business information, Imports, Labeling, Penalties, Reporting and recordkeeping requirements, Warranties.Page 528 of 529 40 CFR Part 1042 Environmental protection, Administrative practice and procedure, Air pollutio n control, Confidential business information, Imports, Labeling, Penalties, Vessels, Reporting and recordkeeping requirements, Warranties. 40 CFR Part 1048 Environmental protection, Administrative practice and procedure, Air pollution control, Confidentia l business information, Imports, Labeling, Penalties, Reporting and recordkeeping requirements, Warranties. 40 CFR Part 1054 Environmental protection, Administrative practice and procedure, Air pollution control, Confidential business information, Imports, Labeling, Penalties, Reporting and recordkeeping requirements, Warranties. 40 CFR Parts 1065 and 1066 Environmental protection, Administrative practice and procedure, In corporation by

reference, Reporting and recordkeeping requirements, Research.

Dated:

____________________________

__________________________________ Gina McCarth y, Administrator.Page 529 of 529 [Page intentionally

left blank for reg formatting]