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The Honorable Lisa P. Jackson 

Administrator 

U.S. Environmental Protection Agency 

Ariel Rios Building 

1200 Pennsylvania Avenue, NW 

Washington, DC 20460 

Dear Administrator Jackson: 

Enclosed for your consideration is the Report of the Small Business Advocacy Review 

Panel (SBAR Panel or Panel) convened for EPA’s planned proposed rulemaking entitled 

“Control of Air Pollution from New Motor Vehicles: Tier 3 Emission and Fuel Standards” (or 

“Tier 3”). This notice of proposed rulemaking is being developed by the U.S. Environmental 

Protection Agency (EPA) under the Clean Air Act (CAA). 

EPA’s Tier 2 Vehicle and Gasoline Sulfur Program, which was finalized in February 

2000, took a systems-based approach to motor vehicle pollution by setting standards for both 

passenger vehicles and their fuel (gasoline). The program set stricter tailpipe and evaporative 

emissions standards for criteria pollutants from vehicles beginning with model year 2004 and 

phasing in through 2009. The program also lowered the sulfur content of gasoline to a 30 parts 

per million (ppm) refinery average, 80 ppm per-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 refiners through the end of 2010 was provided in 

the Highway Diesel Rule (66 FR 5136, January 18, 2001) in exchange for early compliance with 

the diesel program. 

Similar to the Tier 2 rule, the proposed rule “Control of Air Pollution from New Motor 

Vehicles: Tier 3 Emission and Fuel Standards” (Tier 3) is a comprehensive, systems-based 

approach to address the impact of light-duty vehicles on air quality and health. The Tier 3 rule 

will establish new standards for light-duty vehicles and new fuel standards for gasoline. The 

May 21, 2010 Presidential Memorandum directed EPA to “review for adequacy” the current 

non-greenhouse gas (GHG) emissions regulations for new motor vehicles and fuels, including 

tailpipe emissions standards for NOx and air toxics, and sulfur standards for gasoline. The 

memo further directed EPA to “promulgate such regulations as part of a comprehensive 

approach toward regulating motor vehicles” if EPA determines new regulations are required.

On August 4, 2011, EPA’s Small Business Advocacy Chairperson convened this Panel 

under section 609(b) of the Regulatory Flexibility Act (RFA), as amended by the Small Business 

Regulatory Enforcement Fairness Act (SBREFA). In addition to its chairperson, the Panel 

consists of the Director of the Assessment and Standards Division within EPA’s Office of Air 

and Radiation, the Administrator of the Office of Information and Regulatory Affairs within the 

Office of Management and Budget (OMB), and the Chief Counsel for Advocacy of the Small 

Business Administration (SBA). It is important to note that the Panel’s findings and discussion 

are based on the information available at the time this report was drafted. EPA is continuing to 
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conduct analyses relevant to the proposed rule, and additional information may be developed or 

obtained during this process as well as from public comment on the proposed rule. The options 

the Panel identified for reducing the rule’s economic impact on small entities will require further 

analysis and/or data collection to ensure that the options are practicable, enforceable, protective 

of public health, environmentally sound and consistent with the CAA. 

SUMMARY OF SMALL ENTITY OUTREACH 

Before beginning the formal SBREFA process, EPA actively engaged in outreach with 

entities that would potentially be affected by the upcoming rulemaking. EPA held phone 

conferences and face-to-face meeting with many of these companies to discuss the upcoming 

proposed rulemaking and to provide these contacts with an early opportunity to ask questions 

and discuss their concerns with the upcoming rulemaking. 

Prior to convening the Panel, EPA conducted outreach with small entities that will 

potentially be affected by these regulations. In June 2011, EPA invited SBA, OMB, and 25

potentially affected small entity representatives to a conference call and meeting, and solicited 

comments from them on preliminary information sent to them. EPA shared the small entities’ 

written comments with the Panel as part of the Panel convening document. 

After the SBAR Panel was convened, the Panel distributed additional information to the 

small entity representatives (SERs) on August 4, 2011, for their review and comment and in 

preparation for another outreach meeting. On August 18, 2011, the Panel met with the SERs to 

hear their comments on the information distributed in these mailings. The SERs were asked to 

provide written feedback on ideas under consideration for the proposed rulemaking and 

responses to questions regarding their experience with the existing requirements. The Panel 

received written comments from the SERs in response to the discussions at this meeting and the 

outreach materials. See Section 8 of the Panel Report for a complete discussion of SER 

comments. Their full written comments are also attached (see Appendix B of the Panel Report). 

In light of these comments, the Panel considered the regulatory flexibility issues specified by 

RFA/SBREFA and developed the findings and discussion summarized below. 

PANEL FINDINGS AND DISCUSSION 

Under section 609(b) of the RFA, the Panel is to report its findings related to these four 

items: 

1) A description of and, where feasible, an estimate of the number of small entities to 

which the proposed rule will apply. 

2) A description of the projected reporting, recordkeeping and other compliance 

requirements of the proposed rule, including an estimate of the classes of small 

entities which will be subject to the requirement and the type of professional skills 

necessary for preparation of the report or record. 
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3) Identification, to the extent practicable, of all relevant federal rules which may 

duplicate, overlap or conflict with the proposed rule. 

4) A description of any significant alternatives to the planned proposed rule which 

would minimize any significant economic impact of the proposed rule on small 

entities consistent with the stated objectives of the authorizing statute. 

The Panel’s most significant findings and discussion with respect to each of these items are 

summarized below. To read the full discussion of the Panel findings and recommendations, see 

Section 9 of the Panel Report. 

A. Number and Types of Entities Affected 

 For a complete description of the small entities to which the proposed rule may apply, see 

Section 5 of the Panel Report. For businesses potentially impacted by the Tier 3 vehicle 

standards, this includes vehicle manufacturers, alternative fuel converters, and independent 

commercial importers. For businesses potentially impacted by the Tier 3 fuel standards, this 

includes gasoline refiners and importers, distributors, fuel additive manufacturers, transmix 

producers, and ethanol producers. For businesses potentially impacted by the change in 

certification fuel, this includes manufacturers of engines used in on-highway motorcycles, 

heavy-duty vehicles, nonroad equipment such as lawn and garden equipment, recreational 

vehicles, and marine vessels, as well as manufacturers of fuel tanks and fuel hoses used for these 

types of products.

B. Recordkeeping, Reporting, and Other Compliance Requirements 

 For any emission control program, EPA must have assurances that the regulated products 

will meet the standards. The program that EPA is considering for manufacturers subject to this 

proposal will include testing, reporting, and record keeping requirements for manufacturers of 

vehicles covered by the proposed Tier 3 regulations, and manufacturers of on-highway 

motorcycles, heavy-duty gasoline engines, and gasoline-powered nonroad engines. Testing 

requirements for these manufacturers could include certification emission (including 

deterioration factor) testing, in-use testing, and production line testing. Reporting requirements 

would likely include emission test data and technical data on the vehicles. Manufacturers would 

have to keep records of this information. 

 For any fuel control program, EPA must have assurance that fuel produced, distributed, 

sold and used meets the applicable standard. EPA expects that the recordkeeping, reporting, and 

compliance provisions of the proposed rule will be fairly consistent with those in place today for 

other fuel programs. Further, we expect to use existing registration and reporting systems that 

parties in the fuel production and distribution industry are already familiar with. 

C. Related Federal Rules 

 The Panel is aware of the following primary federal rules that are related to the proposed 

Tier 3 rule under consideration: the Tier 2 Vehicle/Gasoline Sulfur rulemaking (Federal Register 
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Vol. 65, p. 6698, February 10, 2000), Light-duty Greenhouse Gas (GHG) proposed rule, and the 

Petroleum Refinery Sector Risk and Technology Review and New Source Performance 

Standards proposed rule (RTR/NSPS). 

 The Light-duty GHG proposed rule is a coordinated effort by EPA and the National 

Highway Traffic Safety Administration (NHTSA) taking steps to enable the production of a new 

generation of clean vehicles, though reduced GHG emissions and improved fuel efficiency from 

on-road vehicles and engines. 

 The upcoming proposed rule on Petroleum Refinery Sector Risk and Technology Review 

(RTR) and New Source Performance Standards (NSPS) will focus on developing updated 

emissions standards for petroleum refineries for multiple pollutants, including GHGs. The 

proposed rule is expected to perform RTR analyses for both Maximum Achievable Control 

Technology standards (MACT 1 and 2). The technology review will be conducted to identify 

any new practices, processes, or control technologies for the industry and cost-effective emission 

control options. EPA is developing uniform standards for some emission sources in the 

petroleum refining sector that may serve as the basis for these technology reviews. The proposed 

rule will also review the standards and rule provisions to determine whether other changes may 

be needed during periods of start-up, shutdown, and malfunction to ensure the standards are 

consistent with recent court opinions and other CAA programs. With regard to NSPS, the 

proposed rule will address remaining NSPS issues under reconsideration and other NSPS rules 

affecting the refining sector, including the regulation of GHGs and the development of emission 

guidelines for existing sources. 

D. Regulatory Flexibility Alternatives 

 As described above, EPA is developing standards for vehicles and fuels to be addressed 

in this rulemaking. Because of the potential costs and technology challenges involved in 

meeting these standards, the Panel recommends that EPA consider and seek comments on the 

flexibility options described below. We believe that the following set of flexibility options, 

taken together, have the potential to significantly reduce compliance burden without 

compromising the environmental benefits of the program. 

 

Tier 3 Fuels

 The Panel discussed several regulatory flexibility alternatives with SERs for small 

businesses in the gasoline production and distribution, fuel additive manufacturing, and ethanol 

production industries subject to the proposed fuel requirements. Panel recommendations on 

these approaches are discussed below. 

Lead Time—Sulfur

 The Panel recommends that EPA propose a delay option, similar to previous fuels 

rulemakings, in the Tier 3 proposed rule. The Panel recommends that EPA allow small refiners 

to postpone their compliance with the Tier 3 program for up to three years. Small refiners 

choosing this flexibility option would have from January 1, 2017 through December 31, 2019 to 
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continue production of gasoline with an average sulfur level of 30 ppm (per the Tier 2 gasoline 

sulfur program). Compliance with the 10 ppm sulfur standard would begin on January 1, 2020. 

Any small refiner choosing this proposed option would be allowed to continue use of their Tier 2 

gasoline sulfur credits through December 31, 2019 to meet the refiner average 30 ppm sulfur 

standard. 

 The Panel also recommends that EPA request comment on case-by-case hardship 

provisions that would provide additional relief for any refiner experiencing extreme difficulty in 

compliance with the Tier 3 requirements, as discussed below in “Hardship Provisions”. 

Lead Time—RVP

 The Panel is aware that EPA is likely to propose a start date of 2017 for the RVP 

standards; as such, the Panel recommends that EPA request comment on the concept of either a 

phase-in or a delay of the RVP requirements. While a phase-in could take any number of forms, 

the Panel recommends that EPA consider: 10.0 psi (current levels), 9.7 psi beginning summer of 

2016, 9.4 psi beginning summer of 2017, and 9.0 psi beginning summer of 2018. The EPA 

Panel member also noted that any proposed RVP flexibilities may need to be industry-wide 

flexibilities, as small refiner-specific flexibilities could result in situations where there would be 

two different types of gasoline in the distribution system. EPA further noted that this could also 

create a need for additional compliance and enforcement requirements for small refiners and 

segregation of the fuel from fuel produced by non-small refiners, which could result in more 

compliance burdens and costs for small refiners. The Panel also recommends that EPA request 

comment on the trade-offs of the additional burden with a small refiner delay for RVP versus one 

industry-wide start date. 

Provisions for Additive Manufacturers

 The Panel recommends that EPA provide flexibilities for gasoline additive 

manufacturers. Following discussion with EPA, the Panel suggested that EPA propose the 

following flexibilities: 

• For additives used downstream of the refiner: Differentiating bulk additives based 

on whether they meet a 20 or 25 ppm sulfur standard. 

• For aftermarket consumer additives: Allow for aftermarket additives to meet 

either a 20 ppm or 25 ppm sulfur cap. 

• For additives not meeting a 10, 20, or 25 ppm sulfur limit: Allow for the use of 

volume accounting reconciliation (VAR) records for additives that would not be 

able to meet a 25 ppm sulfur cap to show that use of the additive would not cause 

the sulfur level of the finished fuel to exceed 10 ppm (similar to the Nonroad 

Diesel Rulemaking, 69 FR 39088, June 29, 2004), and require product labeling 

for aftermarket additives. 

Refinery Gate and Downstream Caps

 With regard to the 20 ppm refinery gate cap discussed in Section 3 of the Panel Report, 

the Panel has concerns that this standard could cause operational problems for small refiners 
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during a refinery turnaround or an upset, because a cap of this level could result in a refiner not 

being able to produce gasoline (as noted in their comments in Section 8 of the Panel Report). 

The Panel likewise has concerns that a downstream cap of 25 ppm may cause problems for small 

downstream entities, such as transmix processors, because they may not be able to reprocess 

finished gasoline down to this level (also noted in their comments in Section 8 of the Panel 

Report). 

 Thus, the Panel recommends 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 system upsets for the entire refining and distribution system. 

However, the SBA and OMB Panel members recommend that EPA propose retaining the 80 

ppm and 95 ppm caps. 

 The Panel also recommends that EPA request comment on additional refinery gate and 

downstream caps that are above 20/25 ppm but below 80/95 ppm. 

Special Provisions for Alaska and Hawaii

 The Panel recommends that EPA allow the current Tier 2 80 ppm sulfur refinery gate cap 

and 95 ppm sulfur downstream cap in Alaska to remain at these levels indefinitely. The Panel 

also recommends that EPA continue the RVP exemptions for Alaska and Hawaii, as governed by 

ASTM International (ASTM). 

Hardship Provisions

 EPA has stated that it intends to propose hardship provisions (for all gasoline refiners and 

importers) similar to those in prior EPA fuels programs: a) the extreme unforeseen circumstances 

hardship provision and b) the extreme hardship provision. A hardship based on extreme 

unforeseen circumstances is intended to provide short term relief due to unanticipated 

circumstances beyond the control of the refiner, such as a natural disaster or a refinery fire. An 

extreme hardship is intended to provide short-term relief based on extreme circumstances (e.g., 

extreme financial problems, extreme operational or technical problems, etc.) that impose extreme 

hardship and thus significantly affect a refiner's ability to comply with the program requirements 

by the applicable dates. In the context of the proposal, the Panel agrees that such relief could 

consider long-term relief on the sulfur cap (similar to that for Alaska) if the circumstances both 

warrant it and can be structured in a way to allow for it. The Panel agrees with the proposal of 

such provisions and recommends that EPA include them in the Tier 3 proposed rulemaking. 

 While the Panel understands EPA’s concerns that small refiner flexibilities for RVP (e.g., 

small refiner-specific standards or a small refiner delay) could result in situations where there 

would be multiple types of gasoline (that could not be commingled) in the distribution system or 

additional compliance and enforcement burdens for small entities, the Panel nonetheless 

recommends that EPA continue to explore and consider hardship provisions for refiners who are 

facing hardship with the RVP standards under consideration. The Panel further recommends that 

EPA request comment on potential hardship relief for the RVP standards. 
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Tier 3 Vehicles

As discussed in Section 5 of the Panel Report, in addition to vehicle manufacturers, two 

distinct categories of businesses relating to highway light-duty vehicles and trucks would be 

covered by the new vehicle standards: independent commercial importers (ICIs), and alternative 

fuel vehicle converters. As discussed below, EPA expects to propose a set of flexibilities that 

would be available to all small entities in these three business categories as well as any 

businesses in these categories that sell less than 5,000 vehicles per year. The Panel identified a 

number of entities covered by the vehicle standards that qualify as small businesses under the 

SBA definition. Six of these companies participated as SERs. 

The Panel discussed several regulatory flexibility alternatives with SERs for small 

businesses that certify vehicles subject to the proposed Tier 3 emission standards. As described 

in Appendix A (and similar to provisions in the Tier 2 rule), we sought comment from the SERs 

on allowing small entities to simply comply with the proposed emission standards with 100 

percent of their vehicles during the last year of the phase-in period. In addition, we sought 

comment on the following flexibilities: 1) a hardship provision that would allow these 

businesses to apply for additional time to meet any of the 100 percent phase-in requirements, 2) 

use of assigned deterioration factors for certification purposes, and 3) reduction in the number of 

tests required in the manufacturer in-use verification testing program (see 40 CFR 86.1845-04). 

SERs were generally supportive of these flexibility provisions. However, one SER requested that 

we consider providing relaxed standards for exhaust emissions in addition to the delay and 

another SER requested that we consider eliminating some of the evaporative emission testing 

requirements. 

 Panel recommendations on these approaches are discussed below. 

Exhaust Emission Standards and Leadtime

In the types of businesses subject to the potential Tier 3 standards, small businesses have 

limited resources available for developing new designs to comply with new emission standards. 

In addition, it is often necessary for these businesses to rely on vendor companies for technology. 

Moreover, percentage phase-in requirements pose a dilemma for a small manufacturer that has a 

limited product line (e.g., the manufacturer certifies vehicles in only one or two test groups). 

Thus, similar to the flexibility provisions implemented in previous vehicle rules, the Panel 

recommends that we allow small businesses the following flexibility options for meeting the 

potential Tier 3 exhaust emissions standards. 

The Panel recommends that small businesses be given additional leadtime to comply with 

the potential Tier 3 exhaust standards and allow small businesses to comply with the standards 

with 100 percent of their vehicles starting in model year 2022. (This is similar to the Tier 2 rule 

where EPA allowed small manufacturers to wait until the end of the phase-in to comply with the 

Tier 2 standards.) The proposed Tier 3 rule is expected to have several different phase-in 

schedules; with the final dates varying from model year 2021 for the new exhaust PM standards 

and use of the new E15 certification fuel, to model year 2022 for the new evaporative emission 

standards, to model year 2025 for the new exhaust gaseous pollutant standards. Requiring all 
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small businesses to comply with the full slate of Tier 3 requirements in model year 2022 should 

provide sufficient lead time for manufacturers to plan for and implement the technology changes 

needed to comply with the Tier 3 standards. 

One of the SERs recommended that EPA adopt relaxed exhaust standards for small 

manufacturers. They noted that the exhaust emission averaging program being proposed by EPA 

will allow large manufacturers that have many engine families to certify their small, niche 

products at levels numerically higher than the standards. Small manufacturers that typically do 

not have more than one or two emission families generally cannot use averaging to the same 

extent because of their limited product offerings. The SER is concerned that the highperformance vehicles produced by large manufacturers which they compete against will be able 

to certify at numerically higher levels at less cost than the SER would incur. While EPA is 

planning to propose the same standards for all manufacturers, the Panel recommends that EPA 

request comment on allowing small manufacturers to meet relaxed exhaust emission standards. 

This could also be included as part of the hardship provision discussed below. The Panel 

recommends that EPA request comment on the relaxed standards recommended by the SER. 

The SER-recommended relaxed NMOG+NOx standards over the Federal Test Procedure (FTP) 

are 0.125 grams/mile in model year 2020 and 0.070 grams/mile in model year 2025. In addition, 

the Supplemental FTP standards would be the standards for the corresponding bins which the 

manufacturer selected for complying with the FTP standards. For example, if the manufacturer 

certified to the proposed Tier 3 Bin 125 standards over the FTP, the manufacturer would have to 

comply with the corresponding Tier 3 Bin 125 standards for the Supplemental FTP. 

Evaporative Emission Standards and Leadtime

The Panel recommends that small businesses comply with the Tier 3 evaporative 

emission standards, including the leak standard, with 100 percent of their vehicles starting in 

model year 2022. For evaporative emissions, where the Tier 3 standards begin as early as 2017 

and phase-in through 2022, this provision would allow small businesses and SVMs to wait until 

the last year of the Tier 3 phase-in period for evaporative emission standards for all of their 

vehicles. This start date is consistent with the start date described above for the Tier 3 exhaust 

emission requirements being recommended by the Panel for small businesses. 

Assigned Deterioration Factors

 Under EPA’s regulations, manufacturers must demonstrate that their vehicles comply 

with the emission standards throughout the “useful life” period. This is generally done by testing 

vehicles at low-mileage and then applying a deterioration factor to these emission levels. The 

deterioration factors are determined by aging new emission control systems and then testing the 

aged systems again to determine how much deterioration in emissions has occurred. In order to 

reduce the testing burden on small manufacturers, EPA suggested that small manufacturers could 

use deterioration factor values assigned by EPA instead of performing the extended testing. A 

manufacturer would apply the assigned deterioration factors to its low-mileage emission level to 

demonstrate whether it complied with the Tier 3 emission standards. EPA currently allows this 

flexibility for small manufacturers. The Panel recommends EPA propose that small businesses 

be allowed the option to use EPA-developed assigned deterioration factors in demonstrating 
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compliance with the Tier 3 exhaust and evaporative emission standards. In the past, EPA has 

relied on deterioration factor data from large manufacturers to develop the assigned DFs for 

small manufacturers. EPA would expect to follow a similar procedure to determine the assigned 

DFs for the Tier 3 standards once large manufacturers start certifying their Tier 3 designs. Given 

that larger manufacturers will begin phasing in to the Tier 3 standards in model year 2017, EPA 

should have a significant set of emissions deterioration data upon which to base the assigned DFs 

for small businesses within the first few years of the Tier 3 program. EPA recognizes that 

assigned DFs need to be determined well in advance of model year 2022 in order to provide 

sufficient time for small businesses to decide whether or not to use the assigned DFs for 

certification purposes. 

Reduced Testing Burden

Under EPA’s regulations, manufacturers must perform in-use testing on their vehicles 

and demonstrate their in-use vehicles comply with the emission standards. The current in-use 

testing regulations provide for reduced levels of testing for small manufacturers, including no 

testing in some cases. EPA suggested that these provisions should continue for small 

manufacturers with the Tier 3 program. The Panel recommends EPA propose that small 

businesses be allowed to have reduced burden under the in-use testing program for Tier 3 

vehicles. 

One SER requested that EPA eliminate some of the evaporative emission testing 

requirements for small businesses based on its belief that some of the tests may be duplicative. 

While EPA understands the reasons behind the manufacturer’s suggestion, we believe it may be 

premature to consider such an option in the Tier 3 rule given the impact of the CO2 emission 

standards on engine and fuel system development. Currently, it is generally understood that the 

2-day diurnal test drives the purge characteristics of evaporative control systems, while the 

refueling test, and to a lesser degree the 3-day test, drive the capacity requirement of evaporative 

canisters. Prospectively, due to expected changes in engine and fuel system designs in response 

to upcoming CO2 emission standard requirements, this may not be the case. Therefore, at this 

point in time EPA believes it is appropriate to retain all of the evaporative test procedures. It can 

be noted that under current regulations, EPA does allow manufacturers to waive 2-day diurnal 

testing for certification purposes (see 40 CFR 86.1829-01(b)(2)(iii)) and perform only the 2-day 

diurnal test as part of the in-use testing program (see 40 CFR 86.1845-04(c)(5)(ii)). These 

provisions would continue in the Tier 3 program. In general, EPA is open to changes that reduce 

test burden while maintaining the environmental effectiveness of its programs and could consider 

changes like those suggested by the SER in the future as the impacts of the future regulations on 

engine and vehicle design become clearer. EPA intends to request comment in the Tier 3 

proposal on streamlining the current test procedures for small businesses in ways that would still 

maintain the overall stringency of the tests. 

Hardship Provisions

The Panel recommends that hardship provisions be provided to small businesses for the 

Tier 3 exhaust and evaporative emission standards. Under the hardship provisions, small 

businesses would be allowed to apply for additional time to meet the 100 percent phase-in 
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requirements for exhaust and evaporative emissions. All hardship requests would be subject to 

EPA review and approval. Appeals for such hardship relief must be made in writing and must be 

submitted well before the earliest date of noncompliance. The request should identify how much 

time is being requested. It must also include evidence that the noncompliance will occur despite 

the manufacturer's best efforts to comply, and must contain evidence that severe economic 

hardship will be faced by the company if the relief is not granted. The above provision should 

effectively provide the opportunity for small businesses to obtain more time to comply with the 

new Tier 3 standards. (The existing hardship provisions limit the extra time that can be 

requested to 1 year, but such a limit may or may not be included in the proposed Tier 3 hardship 

provisions.) 

Applicability

 Under EPA’s current Tier 2 regulations, EPA provides a number of flexibilities for small 

volume manufacturers. The criteria for determining if a company is a small volume 

manufacturer is based on the annual production level of vehicles and is based on whether the 

company produces less than 15,000 vehicles per year. Unlike EPA’s small volume manufacturer 

criteria noted above, SBA defines which manufacturers are small businesses (and therefore 

should be considered under the SBAR Panel process) based on the number of employees for 

vehicle manufacturers and annual revenues for ICIs and alternative fuel converters. For 

example, SBA defines a small business vehicle manufacturer as those who have less than 1,000 

employees. Similarly, SBA defines a small business ICI as those who have annual revenue of 

less than $8 million per year. 

 The Panel recommends that EPA propose to allow all small businesses that meet the SBA 

criteria be eligible for the flexibilities described above. In addition, EPA is expecting to propose 

that manufacturers that meet a specified sales-based criteria to be eligible for the flexibilities 

described above. It is relatively easy for a manufacturer to project and ultimately determine 

sales. Determining the annual revenues or number of employees is less straightforward. In the 

recent rule setting the first light-duty vehicle and truck CO2 emission standards, EPA adopted 

provisions for small manufacturers based on a sales cutoff of 5,000 vehicles per year as opposed 

to the 15,000 level noted earlier that is used in the Tier 2 program. EPA expects to propose a 

small volume manufacturer definition based on the 5,000 vehicle per year level for the Tier 3 

program. EPA believes the 5,000 unit cut-off for small volume manufacturers would include all 

of the small business vehicle manufacturers, ICIs, and alternative fuel converters that meet the 

applicable SBA definition as well as some additional companies that have similar concerns to 

small businesses. EPA expects to propose the flexibilities described above to be available to any 

manufacturer that meets either the SBA small business criteria or the sales-based criteria. 

Certification Test Fuel

 EPA expects to propose a revised certification fuel specification for light-duty vehicles, 

light-duty trucks, medium-duty passenger vehicles, and complete heavy-duty vehicles with 

GVWR at or below 14,000 pounds that are subject to the new Tier 3 requirements. As noted in 

Section 3 of the Panel Report, EPA expects the following additional regulatory categories also 

will be subject to the new certification fuel requirement. 
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- On-highway heavy-duty engine manufacturers 

- On-highway motorcycle manufacturers 

- Small spark-ignition (SI) engine (≤19 kilowatts) manufacturers 

- Large SI engine (>19 kW) manufacturers 

- Marine SI engine (including outboard and personal watercraft) manufacturers 

- Off-highway motorcycle & motorcycle parts manufacturers 

- Snowmobile & all-terrain vehicle (ATV) manufacturers 

- Manufacturers of evaporative emission components (i.e., fuel tanks and fuel hose) for 

nonroad SI engines and equipment 

- Portable gas can manufacturers 

 The Panel presented several ideas regarding regulatory flexibility alternatives for these 

additional regulatory categories based on initial comments from SERs that will be impacted by 

the proposed change in certification fuel. Panel recommendations for small businesses impacted 

by the certification fuel change in these additional categories are discussed below. (Panel 

recommendations with regard to flexibilities for the Tier 3 vehicle requirements are described 

above.) 

 Assuming EPA proposes an E15 certification fuel requirement for these other categories 

of engines, vehicles, equipment, and fuel system components, the Panel recommends that EPA 

assess and request comment on two other possible options for the new certification fuel 

requirement. First, EPA should request comment on adopting an E10 certification fuel for these 

other categories. Second, EPA should request comment for these other categories on an initial 

switch to an E10 certification fuel followed by another switch to an E15 certification fuel either 

based on a market review that shows E15 is in widespread use throughout the country or 

triggered based on E15 use meeting some market threshold (e.g., 30%). The Panel recommends 

that EPA provide a robust analysis of these two possible options in order to be able to finalize 

either of these options as part of the final rulemaking. 

Lead Time

EPA is expecting to propose a multiple year period in which manufacturers would start 

using the new certification fuel. Given the expected timing of the final rule, we would likely 

start allowing manufacturers to use the new certification fuel as early as the 2014 model year, but 

that would be at the manufacturer’s option. Starting in model year 2015, any “new” 

certifications would need to be done on the new certification fuel. (By “new” certifications, EPA 

means an emission family that is not being certified based on carryover emissions data.) Starting 

in model year 2020, all certifications would need to be done on the new certification fuel. 

During the intervening years, manufacturers could continue to carry-over certifications based on 

the existing certification fuel tests. Given that EPA is expecting to allow six years for switching 

over to the new certification fuel, EPA does not believe it is necessary to offer any additional 

lead time for small businesses. However, the Panel recommends that EPA request comment on 

whether the phase-in period could be adjusted to appropriately align with life-cycle redesign 

periods for engines, vehicles, equipment, or fuel system components. 
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“Grandfathered” Certifications and Small Volume Exemptions

Given that exhaust certification testing is currently performed on a fuel that contains no 

ethanol, and because ethanol can impact emissions significantly depending on how 

manufacturers adjust and recalibrate their engines to operate on an ethanol-containing fuel, EPA 

does not believe it can allow current certifications to be carried over indefinitely or allow small 

volume exemptions once a new certification fuel is required. EPA believes that eventually 

manufacturers must recertify all of their engines on the new certification fuel, and will provide 

several years of leadtime in which the manufacturer can make the transition, as described in the 

previous section (“Lead Time”). 

In the situations where evaporative certifications are performed on a fuel with 10 percent 

ethanol (i.e., fuel tank and fuel line permeation emissions), the Panel recommends that EPA 

allow existing certifications to continue indefinitely whether EPA adopts a new certification fuel 

that contains 10 percent or 15 percent ethanol. For permeation emissions, EPA expects the 

differences in emission levels should not be significant between an E10 and E15 certification 

fuel. For diurnal emissions, which only apply in some of the regulatory categories and are 

currently performed with no ethanol in the fuel, EPA does not believe it can allow current 

certifications to be grandfathered because tank permeation emissions are measured as part of the 

diurnal test and increasing the ethanol in the fuel from zero percent to 10 or 15 percent will 

potentially have a noticeable impact on permeation emissions and the associated diurnal 

emissions measured during the test. As noted earlier, EPA expects to provide several years of 

leadtime in which the manufacturer can make the transition to the new certification fuel. 

Certifying with Alternative Emissions Data

A wide range of engines have been certified with EPA’s nonroad programs. In some 

situations, engines certified in one nonroad program could potentially be used in applications 

regulated under another of EPA’s nonroad programs. For example, there is a large variety of 

engines certified to EPA Small SI standards some of which could be used in recreational 

vehicles. Two SERs commented that EPA should allow manufacturers to certify to EPA 

standards based on engines certified in a different emission control program (whether certified 

by EPA or a different entity such as Europe). The Panel recommends that EPA propose allowing 

small businesses to request certification for a given nonroad category based on data collected for 

another EPA emission control program provided that through tests data the manufacturer can 

demonstrate that the controls and emission rates are at least as stringent as the nonroad category 

for which the manufacturer is attempting to certify. The Panel also recommends that EPA 

consider developing a process to allow small businesses to request certification on the basis of 

non-EPA data provided that the manufacturer can demonstrate that the controls and emission 

rates are at least as stringent as the nonroad category for which the manufacturer is attempting to 

certify. Under such a flexibility, the small business using the engine would not have to retest the 

engine provided the manufacturer does not alter the engine in such a way as to cause it to exceed 

the emission standards it was originally certified as meeting. 

Replacement Fuel Tanks
13

The Panel recommends that EPA propose to allow manufacturers to sell replacement fuel 

tanks that were originally certified on an E10 certification fuel if a switch in the certification fuel 

to E15 is adopted. This would be consistent with the flexibility noted earlier in which the Panel 

recommended that manufacturers be allowed to carry-over evaporative certifications performed 

on E10 if a switch in the certification fuel to E15 is adopted. 

Extending Current Flexibilities

In most of the categories of engines, vehicles, equipment and fuel system components 

affected by the change in certification fuel, EPA has adopted a variety of flexibilities for small 

businesses. For example, in some categories, EPA has allowed small businesses to use assigned 

deterioration factors and broad engine family criteria, among others. The Panel recommends that 

EPA propose to extend those existing flexibilities available to small businesses in each of the 

categories as the switch to the new certification fuel is implemented. 

One SER raised concerns regarding the start of the new certification fuel requirements 

and whether manufacturers would be allowed to use up existing products in their inventory. 

Under current regulations (see 40 CFR Part 1068, section 1068.105), when a new set of 

requirements take effect, EPA allows manufacturers to use up their normal inventory of products 

that were manufactured before the date of the new or changed standards. (It should be noted that 

the regulations prohibit manufacturers from stockpiling products that were built before new or 

changed standards take effect in an attempt to take advantage of this provision.) Therefore, EPA 

does not believe any new flexibilities are necessary to continue to allow this practice. The Panel 

recommends that EPA request comment on whether the current regulations are sufficient to 

address the concerns raised by the SER.