# Tier 3 K ey Pr ogr am Issues

Brief ing for Int er ag ency

R eview ers Ja nuar y 28, 2014

Deliber ative -- Do not cite or q uote 1

# Brie fing Ov er vie w  

### Lead - time/Start

Date  Ve hicleProgr am  Fuel Progr am 

###  

### Re fi ner y Gat e Sulfur

Cap  

### Ce rtif icationFu el  

### PM Ve hicleStandar ds for Supplemental F eder al Te st Pr oc edur e  

### Small Vo lumeManufactur ers (SVMs)  

### Schedulea nd N ext

St eps Deliber ative -- Do not cite or q uote 2

# Lead Time Backgr ound  

### Timing of

t hep ro posed Tier

3 start d at es wa s d rivenb y the desir e to :  Harmonizet he vehicle p rov isionsw itht he California L ow EmissionV

ehicle III (LE VIII) pr ogr am  Phase - int he T ier

3 ve hicle s tandar ds a long witht he 201 7+ light - duty

GHG standar ds  Re duc e g asoline s ulfur to a chieve i mmediat e emission re ductions a nd healthbenef its f ro m t he e xisting fl eet, and in time to s upport

NAA QS at tainment

a nd maint enanc e 

###  

### Pr oposed  10 ppms ulfur

beginning 1/1/201 7  Lig ht - duty

ve hicle s tandar ds beginning withMY201 7  Lig ht - duty

t ruck and hea

vy - duty ve hicle s tandar ds beginning withMY2018

Deliber ative -- Do not cite or q uote 3

# Tier 3 V ehicle Lead Time and St art Da te

Deliber ative -- Do not cite or q uote 4

# Ve hicle Lead Time  

### Ve hicleOEMs need lead time to a ddr ess p ra ctical and te chnical issues  Designa nd develop new ve hiclesincluding dur ability te sts  Develop p ro duct

plansto s upport

f leet a ve ra ge standar ds  Engag e suppliersa nd develop to oling for n ew har dwa re 

###  

### CleanA ir

A ct p rov isions  Fo r ve hicles>6,000 lbs , CAA r equir es a minimumo f 4 ye ars lead time a nd 3 ye ars s tability o f standar ds  Fo r ve hicles<6,000 lbs , CAA does not s pecif y minimuml ead time  Re quires lead time a s Ad ministr ator f inds nec essar y to permit development

and application of

requisite te chnology, considering co mplianc e co sts

Deliber ative -- Do not cite or q uote 5

# Ve hicle R egula to ry Classes

• Passenger cars (all) • Light trucks and SUVs (Escape) • Minivans and crossovers (Caravan) 0 - 6k lbs . • LD Pick - ups (F150) • Large SUVs (Jeep GC) • Medium Duty Passenger Vehicles (MDPVs)

– large passenger vans 6k - 8.5k lbs . • HD pickups (F250/350) • Large vans (Sprinter, E250) 8.5k - 14k lbs .

Deliber ative -- Do not cite or q uote Light - duty V ehicles Heavy - duty V ehicles

6

CAA R equir ements f or Minimum Lead Time and St ability Timefr ames

# Ve hicle St art Da te i n Pr oposal  

### <6,000 lbs:  

### MY201 7 pr ogr ams tart; full phase - inby MY 20 25  Ear ly c re dits c anbe e arned inMY ’s 201 5 and 2016 

###  

### Fo r >6,000 lbs, manufactur ers c ould choosef ro m t wo options:  

### Harmonized LE V III Option: MY 2018 pr ogr ams tart  

### Alt ernative Option: MY 2019 pr ogr ams tart  Dir ectl y go es to f

inal standar ds, with

% fl eet p hase - in  Pr ov ides CAA - re quir ed 4 - ye ar lead time Deliber ative -- Do not cite or q uote 7

# Commen ts on V ehicle Pr ogr am St art Da te /Lead Time  

### Ma jority

o f aut o industr y c omment ers s tr ess t he importanc e o f harmonizing pr ogr amw ithLE V III and fi nalizing it

A SAP to s upport

L EV III and LDGHG/CAFE pr oduct

p lanning  

### Stat e/NGO co mment ers a lso e mphasiz ed importanc e of implementationb eginning in201 7

# EP A Appr oach f or Final Rule  

### Thep ro gr ama s p ro posed, withd eclining standar ds a nd phase - ins a nd ve ry

flexibleave ra ging , pr ov ides s uff icient lead time  OEMs a re alr eady d eveloping pr oducts to meet t he California re quir ements , so te chnological feasibility i s not i n question  The f irst years a re n ot

s o s tring ent

t hat OEMs ha

ve to p ro duc e an y o f cleanest

vehicles immediat el

y  Tier 3 includes a 9 - ye ar

p hase - ino f the f

leetwide NMOG+NOx standard  Co mpanies c ange ner at e ear ly c re dits o r a llo wa nc es fr om201 5 to 201 7 for

u se d uring the e ar ly ye ars o f the p ro gr am Deliber ative -- Do not cite or q uote 9

# EP A Appr oach f or Final Rule  Re tainM Y 2 01 7 start

d at e f or ve hicles< 6,000 lbs  Re tainM Y 2 018 start

d at e f or Harmonized California O ptionfor ve hicles>6,000 lbs  Adjust t he MY 2 019 start

d at e f or A lt ernative Optionino rd er to pr ov ide t he re quir ed 4 ye ars o f lead time  Us e a “s plit

m odel ye ar ” provision (as was d onein Tier 2) to p re ser ve most o f MY 2019  Themodel ye ar

for a n individual ve hiclel inebegins when production co mmenc es, not whenthec alendar

ye ar begins  Based on typical ce rtif icationp atterns, we e xpect vast majority o f ve hiclemodels w ill beginp roduction aft er t he4 - ye ar

a nni ve rsary o f rule s ignature, and thus A lt ernati ve O ption wo uld typically a pply i n MY2019 Deliber ative -- Do not cite or q uote 10

# Tier 3 Fuels Lead Time/St art Da te

Deliber ative -- Do not cite or q uote 11

# Pr oposed Lead Time f or Fuel St andar ds  

### 1/1/201 7 start

d at e, but

t he p ro gr amp rov ides u p to 6 ye ars o f lead time t hr oug h a fl exible e ar ly c re dit pr ogr amw ithnation

wide a ve ra ging , banking , and tr ading  Ear ly c re dit

p ro gr ama llo ws re fi ners to p hase - ini nve stments as nec essar y  Smootht ra nsitionf

ro m T ier 2 cr edit p ro gr am – cange ner at e cr edits re lative to 30 ppm(Tier 2) in2014 - 16, use t hemto help co mpl y w ithT ier

3 in201 7 - 19  Re fi ners ha

ve a ra ng e of

means to ge ner at e ear ly c re dits e ve n withtheir

e xisting units 

###  

### 3 - ye ar d ela y for ~30 small re fi ners & small vo lume re fi neries  

### Te chnical and ec onomichar dship p rov isions a s a failsafe Deliber ative -- Do not cite or q uote 12

# Commen ts on Fuel Pr ogr am Lead Time
 

### Mo st f uel industr y c omment ers r equest ed 5 ye ars o f lead time  

### Stat e/NGO co mment ers e mphasiz ed importanc e o f implementationb eginning in201 7 because o f the signif icant, immediat e healtha nd air q uality b enef its  

### Au to m anufactur ers a lso want t he f uel pr ogr amto start i n 201 7 Deliber ative -- Do not cite or q uote 13

# EP A Vie w on Lead Time Issues  

### Le ad time isn ’t

n eeded to d evelop n ew te chnology – hydr otr eating is p rove n and we ll established  

### Le ad time isn ’t

n eeded to identif

y co ntr act ors – re fi neries w ill use t he c ontr act ors s er vicing their existing units  

### 1/1/201 7 pr ov ides s uff

icient lead time to install new equipment

( capital ac quisition, permit ting , pr oject planning , sit e p re par ation, co nstruction, startup , et c.), evenw ithout

t he f lexibility o f AB T Deliber ative -- Do not cite or q uote 14

# EP A Vie w on Lead Time Issues  

### Ke y lead time issueis p hasing in/stagg ering re fi ner y c hang es  Re fi neries a re ona 3 - 5 ye ar c yc le for m ajor m aint enanc e when they s hut d ow n or “turnar ound” the re fi ner y  Due to co st, this is whena ny major T ier 3 chang es wo uld be made  This is themain reason thefuel industr y re quested at least 5 ye ars o f lead time  Lead time a lso helpse nsur e t hat t he e ntir e i ndustr y is not co mpeting for

t he s ame c onstruction& engineering re sour ce s a t the s ame t ime  Dri ving up co sts  Creating unnec essar y implementationi ssues if/whent hings d on ’t go quite a s p lanned

Deliber ative -- Do not cite or q uote 15

# EP A Appr oach f or Final Rule

 

### 1/1/201 7 start

d at e p rov ides a mplelead time

 

### Howe ve r, we a ref

inalizing somea dditional fl exibilities to further incr easec onf

idenc e i n t hea ppr opriat eness o f a 1/1/201 7 start

d at e

 Carr yove r o f Tier

2 “bank ed” cr edits  Lo ng er

d ef icit c arr y - forwar d int he c ase o f har dship

Deliber ative -- Do not cite or q uote 16

# Additional Fle xibility: Tier 2 Cr edits  Tier 3 will not

be a s epar at e cr edit

p ro gr am, but

just a co ntinuationo f the T ier 2 cr edit p ro gr am  Allo ws f

or a s eamless t ra nsition  We w ill be a llo wing carr yove r o f Tier 2 cr edits ge ner at ed in2012 & 2013 int o T ier

3  Supported by

co mment ers  Un der t hee xisting Tier

2 progr am, Tier

2 credits h ave a fi

ve - ye ar life  Pe r t heT ier

3 NP RM, credits ge ner ated in 2012 & 2013 that we renot used before1/1/17 (thes tart

o f theT ier

3 program) wo uld ha

ve e xpired before thee nd of

their full f iv e - ye ar life  Provides a dded assur anc e o f a s mooth tr ansitiont o T ier 3 with a 1/1/201 7 start

d ate  Enc our ag ement

t o tr ade2012/13 credits to thosethat might need them in 201 7 beforethey

e xpire  Thep rogr am will still befully p hased inby

20 20 as p roposed Deliber ative -- Do not cite or q uote 17

# Additional Fle xibility: Long er De ficit Carr yf or wa rd  

## As a har dship re lief

o ptiono nly, we a lso a re allo wing ane xt ended def icit c arr yf orwar d period fo r up to 3 ye ars  

### Give s a re fi ner y a bet te r c hanc e o f making up t heir ow n def icit w ithout t he need to p ur chase c re dits  

### Enfor ce ment

c onc erns re quir e t hat

this a llo wanc e be limit ed to har dship s ituations o nly Deliber ative -- Do not cite or q uote 18

# Sulfur Cap

Deliber ative -- Do not cite or q uote 19

# Tier 3 Sulfur Cap Pr oposal  Pr oposed two maino ptionsfor t he re fi ner y gat e s ulfur c ap  Maintaining current

80 ppm ref

iner y g ate c ap  Lo we ring to 50 ppm ref iner y g ate **beginning Ja**  **nuar y**  **1, 20 20**   Also took comment

on 20 ppm ref

iner y g ate c ap  Fu elsindustr y s upport ed maintaining the c urr ent 80 ppmc ap  Provided a s tudy

showing signif

icantl y increased co sts for

lo we r c aps  Stat es , en

vir onmental gr oups, and most a ut omak ers s upport ed lo we ring the c ap  A h ig her

c ap permits both individual batches o f fuel, as we ll as s ome ref ineries , to remain at

hig her levels i n - use  Ve hicle manufacturers c it ed co nc erns w ith ve hicle technology  Stat es/NGOs c it ed co nc erns w ith hig her localized emissions resulting from higher

s ulfur fuel remaining in local mark ets Deliber ative -- Do not cite or q uote 20

# EP A Appr oach f or Final Rule  

### Ma intaint he c urr ent

80 ppmc ap  

### Pr ov ides flexibility

i n re fi ner y o per ations  

### Re duc es p ot ential for

local supply

d isruption  

### Re duc es co st  A lo we r c ap wo uld lik el y re sult i n higher

c osts ( ~10%)  

### Cu rr entl

y d iff icult to p re dict

if i n - uses ulfur

levels wo uld wa rr ant a lo we r cap 

###  

### Onc e T ier

3 is implement ed, we w ill be a ble to bet te r assess t he need for

a lo we r c ap  

### EP A co mmits int heFRM t o further s tud y in - uses ulfur levels a ft er

implementation Deliber ative -- Do not cite or q uote 21

# Certific at ion Fuel

Deliber ative -- Do not cite or q uote 22

# Certific at ion Fuel  We p ro posed t o chang e t he ce rtif icationte st

f uel to bet te r r ef

lect in - use f uel  Cu rrent

c ertif icationte st

f uel is E0 and has f

uel par amet ers re presentati

ve of co nve ntional gasolinein the1980’ s  In - usef

uel toda y is E10 with different

a romaticl evels a nd distillationr ang es  We p ro posed E1 5 ce rtif icationf uel to be “forwar d looking” and sought co mment

o n E10  EP A int ends to f

inalize E 10 for

ce rt f uel  E1 5 is not

materializing and still fac es s ignif icant h urdles  All co mment ers e xce pt e thanol industr y o pposed E1 5  Commit

to m onitor

f or f uture Deliber ative -- Do not cite or q uote 23

# Other Issues

 

### PM Ve hicle Standar ds fo r Supplemental Fe der al Te st Pr oc edur e  

### Small Vo lume Ma nufactur ers ( SVMs)

Deliber ative -- Do not cite or q uote 24

# Ve hicle T ailpipe PM St andar ds  

### PM ve hicle e missions s tandar ds o n supplemental fe der al t est

p ro ce dur e (aggr essi

ve d ri ving )
 

### Standar ds a reint ended t o pr event backsliding and eliminat e p oor

p erformers
 

### Fi nal rule a dopts s tandar ds lo we r thanwe pr oposed, based onte st

d ata a nd co mments re ce ived  Pr oposal soug ht

c omment

o n lo we r s tandar ds  Stat es (including California) and NGOs s upport ed lo we r standar ds Deliber ative -- Do not cite or q uote 25

# Small V olume Manuf actur er s

 

### Small Vo lume Ma nufactur er ( SVM) re lief  

### Applies to manufactur ers o f <5000 units  Lotus , M cL ar en, Ast on - Martin, F err ari  

### Based onco mments a nd meetings w ithSVMs, we a re allo wing thr eemor e ye ars to meet t hef inal standar d and adjusting thep ro posed int erimp hase - in

Deliber ative -- Do not cite or q uote 26

# Ne xt St eps  

### Fe b. 5 brief

ing onu pdat ed analysis  

### Co st, emissions, air

q uality , benef its 

###  

### EP A re questing 30 - da

y OMB re view  

### Clear anc e Fe b. 24

Deliber ative -- Do not cite or q uote 27