44754 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 86

[AMS–FRL–5872–8]

RIN 2060–AF75

Control of Air Pollution From New

Motor Vehicles and New Motor Vehicle

Engines: State Commitments to

National Low Emission Vehicle

Program

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Supplemental notice of

proposed rulemaking (SNPRM).

SUMMARY: For several years, EPA, the

Ozone Transport Commission (OTC)

States, the auto manufacturers and other

interested parties have been developing

a voluntary clean car program called the

National Low Emission Vehicle

(‘‘National LEV’’) program, which is

designed to reduce smog and other

pollution from new motor vehicles.

National LEV would be a regulatory

program that would be enforceable in

the same manner as any other federal

new motor vehicle program, except that

it can only come into effect if the OTC

States and the auto manufacturers agree

to it.

A significant amount of progress has

been made in developing this program.

In October, 1995, EPA proposed the

National LEV program. In June of this

year, EPA issued a final rule setting

forth the basic framework and

regulatory provisions of the National

LEV program. EPA will resolve the

remaining issues in a supplemental final

rule it intends to issue this fall. This

supplemental notice of proposed

rulemaking (SNPRM) seeks comment on

some of the remaining issues to be

addressed in the supplemental final

rule.

DATES: Written comments on this

SNPRM must be submitted by

September 22, 1997 to the address

specified below. EPA will hold a public

hearing on this SNPRM on September 8,

1997 if one is requested by August 29,

1997. This hearing, if requested, would

begin at 9:00 a.m. and continue until

4:30 p.m. or until all commenters have

the opportunity to testify.

ADDRESSES: Interested parties may

submit written comments (in triplicate,

if possible) to Public Docket No. A–95–

26, at: Air Docket Section, U.S.

Environmental Protection Agency, 401

M Street SW, Washington, DC 20460

(Telephone 202–260–7548; Fax 202–

260–4400). Materials relevant to this

final rule have been placed in Public

Docket No. A–95–26. The docket is

located at the above address, in Room

M–1500, Waterside Mall, and may be

inspected weekdays between 8:00 a.m.

and 5:30 p.m. A reasonable fee may be

charged by EPA for copying docket

materials.

Members of the public may contact

the person indicated below to find out

whether a hearing will be held and, if

so, the exact location. Requests for a

public hearing should be directed to the

contact person indicated below. The

hearing, if requested, will be held in the

Ann Arbor, Michigan metropolitan area.

For further information on electronic

availability of this SNPRM, see the

SUPPLEMENTARY INFORMATION section

below.

FOR FURTHER INFORMATION CONTACT: Karl

Simon, Office of Mobile Sources, U.S.

Environmental Protection Agency, 401

M Street SW, Washington, DC 20460.

Telephone (202) 260–3623; Fax (202)

260–6011; e-mail

simon.karl@epamail.epa.gov.

SUPPLEMENTARY INFORMATION:

Regulated Entities

Entities potentially regulated by this

action are those that manufacture and

sell motor vehicles in the United States.

Regulated categories and entities

include:

Category Examples of regulated entities

Industry ...................... New motor vehicle

manufacturers.

This table is not intended to be

exhaustive, but rather provides a guide

for readers regarding entities likely to be

regulated by this action. This table lists

the types of entities that EPA is now

aware could potentially be regulated by

this action. Other types of entities not

listed in the table could also be

regulated. To determine whether your

activities are regulated by this action,

you should carefully examine the

applicability criteria in § 86.1701–97 of

the rule published in the June 6, 1997

Federal Register (62 FR 31192). If you

have questions regarding the

applicability of this action to a

particular entity, consult the person

listed in the preceding FOR FURTHER

INFORMATION CONTACT section.

Obtaining Electronic Copies of the

Regulatory Documents

The preamble, regulatory language,

regulatory support document, and other

related documents are also available

electronically from the EPA Internet

Web site. This service is free of charge,

except for any cost you already incur for

internet connectivity. The electronic

version of this proposed rule is made

available on the day of publication on

the primary Web site listed below. The

EPA Office of Mobile Sources also

publishes Federal Register notices and

related documents on the secondary

Web site listed below.

1. http://www.epa.gov/docs/fedrgstr/

EPA-AIR/ (either select desired date or

use Search feature)

2. http://www.epa.gov/OMSWWW/

lev-nlev.htm

Please note that due to differences

between the software used to develop

the document and the software into

which the document may be

downloaded, changes in format, page

length, etc. may occur.

I. Outline

The preamble is organized into the

following sections.

I. Outline

II. Background

III. National LEV Start Date

IV. National LEV Will Produce Larger VOC

and NOX Emission Reductions in the

OTR Compared to OTC State Adopted

Section 177 Programs

V. OTC State Commitments

A. Duration of OTC State Commitments

B. Timing of OTC State Commitments,

Manufacturer Opt-Ins, and EPA Finding

National LEV in Effect

C. OTC State Commitments, Manufacturer

Opt-Ins, and EPA Finding that National

LEV Is in Effect

1. Initial Opt-In by OTC States

2. Manufacturer Opt-Ins

3. EPA Finding That National LEV Is in

Effect

4. SIP Revisions

VI. Incentives for Parties to Keep

Commitments to Program

A. Offramp for Manufacturers for OTC

State Violation of Commitment

1. OTC State No Longer Accepts National

LEV as a Compliance Alternative

2. OTC State Fails to Submit SIP Revision

Committing to National LEV

3. OTC State Submits Inadequate SIP

Revision Committing to National LEV

B. OTC State or Manufacturer Legitimately

Opts Out of National LEV

C. Offramp for Manufacturers for EPA

Failure to Consider In-Use Fuel Issues

D. Offramp for OTC States

1. OTC State Offramp Based on

Manufacturer Opt-Out

2. OTC State Offramp Based on Change to

Stable Standards

E. Lead Time Under Section 177

VII. National LEV Will Produce Creditable

Emissions Reductions

A. OTC States Will Keep Their

Commitments to National LEV

B. EPA is Unlikely to Change a Stable

Standard to Allow OTC States to Opt Out

of National LEV

C. EPA is Unlikely to Fail to Consider InUse Fuels Issues to Allow Manufacturers

to Opt Out of National LEV

VIII. Additional Provisions
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44755

1Although this section contains a brief summary

of the National LEV program and the process that

led up to it, this SNPRM assumes that the reader

has an in-depth understanding of the National LEV

program and is best read as a supplement to the

October, 1995, NPRM and the June, 1997, Final

Framework Rule. Readers should review those

documents for in-depth discussion of the program,

the process and other background information.

2See 60 FR 4712 (Jan. 24, 1995), 60 FR 52734

(Oct. 10, 1995), 62 FR 31192 (June 6, 1997).

3This SNPRM supplements EPA’s October 10,

1995, proposal for the National LEV program (60 FR

52734) (‘‘NPRM’’).

A. Early Reduction Credits for Northeast

Trading Region

B. Calculation of Compliance With Fleet

Average NMOG Standards

C. Certification of Tier 1 Vehicles in a

Violating State

D. Provisions Relating to Changes to Stable

Standards

E. Nationwide Trading Region

F. Elimination of Five-Percent Cap on Sales

of Tier 1 Vehicles and TLEVs in the OTR

G. Technical Corrections to Final

Framework Rule

IX. Supplemental Federal Test Procedure

A. Background

B. Elements of the CARB Proposal and

Applicability Under National LEV

1. Test Procedure

2. Emission Standards

a. LEVs and ULEVs

b. Tier 1 Vehicles and TLEVs

3. Implementation Schedule

4. Implementation Compliance

X. Administrative Requirements

A. Administrative Designation

B. Regulatory Flexibility

C. Unfunded Mandates Reform Act

D. Reporting and Recordkeeping

Requirements

XI. Statutory Authority

II. Background 1

This Supplemental Notice of

Proposed Rulemaking (SNPRM) is

another step towards a voluntary clean

car program (‘‘National LEV’’) that will

help control emissions nationwide as

well as in the northeastern states. As

discussed in previous Federal Register

documents,2 there have been a number

of regulatory and other steps in the

development of this program. The

process will conclude with EPA

establishing all the regulations

necessary to set up the voluntary clean

car program, which will then come into

effect if the auto manufacturers and the

OTC States commit to it. In June of this

year, EPA published a final rule setting

forth the framework for the program,

including the specific standards that

would apply to new motor vehicles if

manufacturers opted in. See 62 FR

31192 (June 6, 1997) (‘‘Final Framework

Rule’’). This SNPRM solicits comments

on specified program issues that EPA

must resolve to finalize the regulations

for the National LEV program.3 Once

EPA issues that supplemental final rule,

it will be up to the OTC States and the

auto manufacturers to determine

whether the program comes into effect.

Under the National LEV program,

auto manufacturers would have the

option of agreeing to comply with

tailpipe standards that are more

stringent than EPA can mandate prior to

model year (MY) 2004. Once

manufacturers commit to the program,

the standards will be enforceable in the

same manner that other federal motor

vehicle emissions control requirements

are enforceable. See the Final

Framework Rule at 62 FR 31201–31223

for a detailed discussion of the program

structure, tailpipe and related standards,

and legal authority for and

enforceability of National LEV.

Manufacturers have indicated their

willingness to volunteer to meet these

tighter emissions standards if EPA and

the northeastern states (i.e., those in the

Ozone Transport Commission (OTC) or

the ‘‘OTC States’’) agree to certain

conditions, including providing

manufacturers with regulatory stability

and reducing regulatory burdens by

harmonizing federal and California

motor vehicle emissions standards.

The National LEV program has been

developed through an unprecedented,

cooperative effort by the OTC States,

auto manufacturers, environmentalists,

fuel providers, EPA and other interested

parties. The OTC States and

environmentalists provided the

opportunity for this cooperative effort

by pushing for adoption of the

California Low Emission Vehicle (CAL

LEV) program throughout the northeast

Ozone Transport Region (OTR). Under

EPA’s leadership, the states, auto

manufacturers, environmentalists, and

other interested parties then embarked

on a process to develop a voluntary

National LEV program, a process

marked by extensive public

participation and a focus on joint

problem solving. See the Final

Framework Rule at 62 FR 31199 and the

NPRM at 60 FR 52739–52740 for further

discussion of public participation in the

National LEV decisionmaking process.

National LEV will provide public

health and environmental benefits by

reducing air pollution nationwide. Both

inside and outside the OTR, National

LEV will reduce ground level ozone, the

principal harmful component in smog,

as well as emissions of other pollutants,

including particulate matter (PM),

benzene, and formaldehyde. The Final

Framework Rule contains a substantive

discussion on the health and

environmental benefits of the National

LEV program. See 62 FR 31195. EPA has

determined that the National LEV

program will result in emissions

reductions in the OTR that are

equivalent to or greater than the

emissions reductions that would be

achieved through OTC State Section 177

Programs. National LEV will also

provide manufacturers regulatory

stability and reduce regulatory burden

by harmonizing federal and California

motor vehicle standards. This will

reduce testing and design costs for

motor vehicles, as well as allow more

efficient distribution and marketing of

vehicles nationwide. See the Final

Framework Rule at 60 FR 31195–31197

and 31224 for further discussion of the

benefits of the National LEV program.

In addition to the national public

health benefits that would result from

National LEV, the program has been

motivated largely by the OTC’s efforts to

reduce motor vehicle emissions either

by adoption of the CAL LEV program

throughout the OTR or by adoption of

the National LEV program. One of the

OTC States’ efforts was a petition the

OTC filed with EPA. On December 19,

1994, EPA approved this petition,

which requested that EPA require all

OTC States to adopt the CAL LEV

program (called the Ozone Transport

Commission Low Emission Vehicle

(OTC LEV) program). See 60 FR 4712

(January 24, 1995) (‘‘OTC LEV

Decision’’). See the Final Framework

Rule at 60 FR 31195 for a summary of

this decision. In February of this year,

the U.S. Court of Appeals for the District

of Columbia affirmed states’ rights to

adopt the CAL LEV program, but

reversed EPA’s decision requiring the

OTC States to do so. Some, but not all,

OTC States have adopted CAL LEV

programs to date.

Given statutory constraints on EPA,

National LEV will be implemented only

if it is agreed to by the OTC States and

the auto manufacturers. EPA does not

have authority to force either the OTC

States or the manufacturers to sign up

to the program. EPA cannot require the

auto manufacturers to meet the National

LEV standards, absent the

manufacturers’ consent, because section

202(b)(1)(C) of the Clean Air Act (CAA,

or ‘‘the Act’’) prevents EPA itself from

mandating new exhaust standards

applicable before model year 2004. The

auto manufacturers have indicated that

they would be willing to opt into

National LEV only if the OTC States

make certain commitments, including

committing to allow the manufacturers

to comply with National LEV in lieu of

Section 177 Programs. EPA cannot

require the OTC States to make such

commitments (although EPA can issue

regulations to help make the

commitments enforceable). Thus,

National LEV cannot come into effect
44756 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

4See Docket No. A–95–26, IV–G–31 and IV–G–34.

5The supplemental final rule will resolve the

issues raised in this SNPRM, the issues that were

raised in the NPRM and not resolved in the Final

Framework Rule, and any closely related elements

of the Final Framework Rule that would need to be

modified in accordance with today’s proposal. The

reader should be aware that, although the CAA does

not require publication of proposed regulatory text,

EPA has included the proposed regulatory text for

most, but not all, of the proposed program elements.

Also, for some provisions of the Final Framework

Rule where EPA is not proposing a change in the

language but is merely reordering the provisions,

EPA has not reproduced those provisions here. In

particular, please note that EPA is not proposing to

modify or drop 40 CFR 86.1705(g)(5) in the existing

final regulations. While a new provision in today’s

proposed regulations is designated § 86.1705(g)(5),

the existing provision will be renumbered in the

supplemental final rule.

6 60 FR 52746 (Oct. 10, 1995).

absent the agreement of the auto

manufacturers and the OTC States.

Over the past several years, the OTC

States and the auto manufacturers have

conducted negotiations to develop an

agreement on National LEV to be

contained in a Memorandum of

Understanding (MOU). The parties have

reached agreement on most provisions

of the National LEV program. Each side

has sent EPA an MOU that it has

initialed, indicating its agreement with

the National LEV program as contained

in that Memorandum of

Understanding.4 Although there are

differences in the two Memoranda, they

show that agreement has been reached

between the OTC States and the auto

manufacturers on most of the provisions

of the National LEV program. Based on

the MOUs provided to the Agency, EPA

issued the Final Framework Rule on

June 6, 1997, setting the framework for

and describing most of the elements of

the National LEV program.

Although the parties had hoped to

jointly sign a comprehensive MOU

affirming their mutual agreement on the

National LEV program, the parties now

agree that further discussions are

unlikely to result in resolution of the

last outstanding issues. Nonetheless,

EPA and the parties believe that

National LEV would provide substantial

public health and environmental

benefits. Failure to come to agreement

on a National LEV program would be a

significant lost opportunity.

EPA believes that there is sufficient

common ground between the parties to

provide a basis for a National LEV

program that all parties could agree to

opt into, even if the parties do not first

come to agreement on an MOU laying

out the elements of that program.

Therefore, EPA intends to issue a

supplemental final rule that would

allow the parties to opt into National

LEV even without final agreement on an

MOU. In that final rule, EPA plans to

resolve the remaining issues. To do so,

EPA must first take comment on the

issues presented in this notice. EPA

believes that finalizing a program for the

OTC States and manufacturers to

evaluate as a whole presents the greatest

likelihood that the country will achieve

the benefits of National LEV.

EPA is proposing to resolve most of

the outstanding issues in the National

LEV program. EPA believes that a

targeted proposal will speed the

rulemaking process, give the parties a

better sense of the likely parameters of

the final program, and help to focus

attention on the few key critical issues

that remain. Nevertheless, in the few

areas where the OTC States and

manufacturers are farther apart in their

positions and in the areas where EPA

needs more factual information to

support a decision, the Agency is

explicitly taking comment on several

options.

In this SNPRM, EPA is making

proposals and soliciting public

comment on issues relating to how the

OTC States will voluntarily opt into the

National LEV program and commit to

allow motor vehicle manufacturers to

comply with the National LEV program

in lieu of state Section 177 Programs.

These issues include the duration of the

OTC State commitments, the

instruments and process through which

the OTC States will commit to the

program, and the substantive details of

their commitments.

EPA is also proposing resolutions of

several other outstanding structural

details of the National LEV program.

These provisions include the timing of

OTC State and auto manufacturer optins to the National LEV program,

incentives for the parties to keep their

commitments to the National LEV

program and conditions under which

OTC States and manufacturers could

exit the program (‘‘offramps’’), and the

start date of the National LEV program.

In addition, EPA is proposing to

address a number of technical issues not

fully resolved in the Final Framework

Rule. These include provisions relating

to how the off-cycle supplemental

federal test procedure would apply to

National LEV vehicles, provisions to

address manufacturer concerns

regarding the effect of in-use fuels on

National LEV vehicles, and provisions

relating to banking and trading issues.

EPA is soliciting comment solely on the

issues raised in this notice and any

closely related elements of the final rule

that would need to be modified in

accordance with today’s proposals.

Except to the extent that resolution of an

issue raised in this notice would

necessitate modifications of the Final

Framework Rule, EPA is not reopening

that final rule for further public

comment.5

III. National LEV Start Date

Although EPA had proposed model

year MY1997 as the start date for

National LEV,6 in the Final Framework

Rule EPA used MY1997 only as a

placeholder for the start date of National

LEV. EPA noted that MY1997 was no

longer a reasonable start date due to

changes in circumstances after the

proposal. Today EPA proposes that the

National LEV program start in MY1999.

This would still produce VOC and NOX

emissions reductions from National LEV

that are equivalent to or exceed the

emissions reductions that would occur

in the OTR in the absence of National

LEV, as discussed below in section IV.

As initially proposed by the

manufacturers and negotiated with the

OTC States, National LEV was designed

to begin in MY1997. Thus, EPA used

MY1997 as the program start date in

modeling the volatile organic compound

(VOC) and nitrogen oxide (NOX)

emissions reductions from National LEV

and in finding that those reductions

were equivalent to or greater than the

emissions reductions expected from

OTC LEV, assuming that OTC LEV was

implemented by the OTC States by the

date required under the OTC LEV state

implementation program (SIP) call (i.e.,

all OTC States were to have state LEV

programs effective in MY1999). In

addition, the MOUs initialed by the

OTC States and the manufacturers

assumed a program start date of

MY1997. However, as EPA noted in the

Final Framework Rule, changed

circumstances have since made a

National LEV start date of MY1997

unrealistic. Thus, in the Final

Framework Rule, EPA used MY1997 as

a placeholder for the start date for

National LEV, but noted that it would

take comment on a realistic start date at

a later time.

Several factors make a National LEV

start date of MY1997 unrealistic. Given

the delays that have occurred in

reaching agreement between the

manufacturers and the OTC States, and

the resulting delays in the National LEV

rulemaking, manufacturers are unlikely

to be able to opt into National LEV prior

to late in calendar year 1997. By then,

manufacturers will have already

completed EPA certification and

agreements with suppliers for the

MY1998 vehicles. A MY1997 start date

would effectively require manufacturers

to begin the program with debits for

MY1997 and probably for MY1998 as
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44757

7The sections in the Final Framework Rule

regulations that would need to be modified to

account for a start date of MY1999 include 40 CFR

86.097–1, 86.101, 86.1701–97, 86.1705–97,

86.1708–97, 86.1709–97, and 86.1710–97. In

addition, section titles would need to be changed

in some sections, such as 40 CFR 86.602–97,

86.1003–97, 86.1012–97, and all subpart R sections.

EPA is taking comment on other changes to the

Final Framework Rule regulations that need to be

made to account for the change in start dates for the

National LEV program.

well, and then make up those debits

over the next few model years. EPA

does not believe it is reasonable to have

the National LEV program start with

some manufacturers having debits from

the beginning, which will be difficult to

erase as the fleet average NMOG

standards become more stringent.

Moreover, the court decision vacating

EPA’s OTC LEV decision removed the

legal requirement for National LEV to

produce emissions reductions at least

equivalent to those that would be

produced by OTC LEV under EPA’s SIP

call. Nor does EPA believe there is any

compelling practical need to begin

National LEV effective MY1997.

Because many of the OTC States will

not have Section 177 Programs in place

effective MY1999, and there is no longer

a SIP call requiring such programs, a

MY1997 start date for National LEV is

not necessary to produce a quantity of

emissions reductions equivalent to or

greater than those that would be

produced in the absence of National

LEV through the alternative approach of

individual OTC State adoption of

Section 177 Programs. Even if National

LEV begins in MY1999, the program

will still produce emissions benefits in

the OTR at least equivalent to and likely

significantly greater than the alternative,

as well as producing substantial

additional emissions reductions for the

rest of the country.

EPA is proposing that National LEV

start with MY1999. All requirements set

forth in the Final Framework Rule for

MY1997 and MY1998 would be

dropped. National LEV would start in

MY1999 with all the requirements set

forth in the Final Framework Rule for

MY1999 (e.g., non-methane organic gas

(NMOG) average of 0.148 grams/mile for

light-duty vehicles and light light-duty

trucks (0–3750 loaded vehicle weight

(LVW)) in the OTR). In proposing a start

date of MY1999, EPA is proposing to

drop the first two years of the National

LEV program set forth in the Final

Framework Rule—it is not proposing

that the entire program be delayed two

years. Thus, the 2001 nationwide

NMOG fleet average of 0.075 g/mi for

light-duty vehicles and light light-duty

trucks (0–3750 LVW) would not be

changed. EPA has not included in

today’s notice proposed new regulatory

language to reflect this proposed start

date due to the straightforward nature of

the necessary changes to the

regulations.7

EPA is also taking comment on

allowing manufacturers to sell

California-certified vehicles instead of

National LEV vehicles throughout the

Northeast Trading Region (NTR) for

MY1999 and MY2000. Manufacturers

are concerned that they would have

insufficient time to produce and certify

National LEV vehicles for these two

model years given the likely effective

date of the National LEV program and

their typical production planning

cycles, which call for determining

models to be produced and arranging for

parts with suppliers in advance of

actual vehicle production. Allowing

manufacturers to increase their

production of California-certified

vehicles and sell them throughout the

NTR could help manufacturers meet the

National LEV fleet average NMOG

standards for these two model years. To

date, EPA has required manufacturers to

certify to federal National LEV

standards and requirements, rather than

accepting California-certified-vehicles

alone, to ensure that all federal

certification requirements are met.

While National LEV harmonizes most of

the elements of the federal and

California motor vehicle programs,

certain additional elements of the

federal program would not necessarily

be met by California-certified vehicles.

IV. National LEV Will Produce Larger

VOC and NOX Emission Reductions in

the OTR Compared to OTC State

Adopted Section 177 Programs

In the Final Framework Rule, EPA

found that the National LEV program

would provide greater emission

reductions than those from OTC LEV

(which is equivalent to state-by-state

adoption of the CAL LEV program

throughout the OTR). See 62 FR 31224.

EPA assumed a start date of MY1997 for

the National LEV program and MY1999

for the state Section 177 Programs. EPA

noted at that time that it would update

the modeling of benefits in the OTR to

reflect realistic start date assumptions.

Since the MY2001 introduction of

National LEV vehicles nationwide

remains unaffected by today’s proposal,

National LEV will continue to provide

substantial emission reductions to the

37 states outside the OTR (‘‘37 States’’).

EPA’s modeling includes nationwide

emissions inventories as well (included

in Docket A–95–26).

Using realistic start dates, EPA’s

modeling shows that National LEV

would produce larger VOC and NOx

emission reductions in the OTR than

would Section 177 Programs in the

OTR. This modeling is based on

National LEV starting in MY1999,

which EPA is proposing today, and on

state Section 177 Programs going into

effect as provided in the current state

regulations. EPA’s modeling includes a

sensitivity analysis that shows National

LEV would produce greater emission

reductions than state Section 177

Programs even if all OTC States adopted

Section 177 Programs as quickly as is

realistically possible, given their current

status.

EPA’s updated analysis more

accurately reflects expected reductions

from OTC State Section 177 Programs

than did the analysis described in the

Final Framework Rule. EPA’s previous

modeling assumed that all of the OTC

States had Section 177 Programs in

effect for MY1999 and later. Given the

two-year lead time requirement for such

adoption, as specified in section 177 of

the Clean Air Act, it is impossible for all

OTC States to have a Section 177

Program in place for MY1999. In fact,

only six states have adopted a Section

177 Program as of July 1, 1997: New

York, Massachusetts, Rhode Island,

Connecticut, New Jersey, and Vermont.

While other OTC States are

contemplating adoption of a Section 177

Program, the earliest any such adoption

could become enforceable is MY2000.

EPA’s analysis does not assume that any

other OTC State will implement a

Section 177 Program. Therefore, for

purposes of modeling emission benefits,

EPA is capturing the current level of

CAL LEV adoption in the OTR. EPA

believes that this realistic assumption is

the proper comparison to National LEV

since legally, individual state adoption

is the only manner in which California

vehicles can be required in the

Northeast.

EPA’s modeling shows that National

LEV would achieve greater emission

reductions in the OTR than individual

OTC State Section 177 Programs. The

emission levels are listed in the table

below. The modeling is based on

National LEV starting in MY1999 in the

OTR and MY2001 in the rest of the

country. For the OTC State Section 177

Program case, EPA included only those

OTC States that have adopted the CAL

LEV program and will have an

enforceable state program as of July 1,

1997. These states and their program

start dates are New York (MY1996),

Massachusetts (MY1996), Rhode Island

(MY1999), Connecticut (MY1998),

Vermont (MY1999), and New Jersey

(MY1999). All other states would

receive Federal Tier 1 vehicles. EPA did
44758 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

not include existing OTC State zero

emission vehicle (ZEV) sales mandates

in either of its modeling runs since

these mandates are not affected by the

National LEV rule. ZEV sales mandates

would thus have similar effects on

emission levels in both modeling cases

and would not affect the relative

emissions benefits of National LEV

compared to those of OTC State Section

177 Programs.

EPA believes its current modeling

makes the appropriate assumptions and

correctly estimates a realistic level of

OTC State Section 177 Programs.

However, to test its assumptions, EPA

also ran a sensitivity analysis assuming

that the seven OTC States without a

Section 177 Program in place as of July

1, 1997 had adopted the program

effective in MY2000, the earliest time a

state that had not yet adopted a Section

177 Program could legally enforce such

a program, given the two year lead time

requirement in section 177 of the Act.

This analysis showed that, even with all

13 OTC States having a Section 177

Program in place at the earliest possible

times, National LEV still provided

greater emission reductions in the

Northeast.

TABLE 1.—OZONE SEASON WEEKDAY EMISSIONS FOR HIGHWAY VEHICLES IN THE OTR

[Tons/day]

Year Pollutant OTC state

CAL LEV

National

LEV

2005 ............................................................................................................................................................ NMOG 1,573 1,499

NOX 2,526 2,403

2007 ............................................................................................................................................................ NMOG 1,480 1,366

NOX 2,427 2,226

2015 ............................................................................................................................................................ NMOG 1,386 1,148

NOX 2,367 1,899

V. OTC State Commitments

A. Duration of OTC State Commitments

EPA is proposing that the OTC States

would commit to the National LEV

program until MY2006. This means that

the OTC States would commit to accept

manufacturers’ compliance with

National LEV (or equally or more

stringent mandatory federal standards)

as an alternative to compliance with a

state Section 177 Program through

MY2005. The length of the auto

manufacturers’ commitment was set in

the Final Framework Rule. Under that

rule, manufacturers that opt into the

program would be bound to comply

with National LEV until the first model

year that manufacturers are subject to a

mandatory federal tailpipe emissions

program at least as stringent as the

National LEV program with respect to

NMOG, NOX and carbon monoxide (CO)

exhaust emissions (‘‘Tier 2 standards’’).

Under section 202(b)(1)(c) of the Clean

Air Act, EPA could not mandate such

standards prior to MY2004. Thus, the

manufacturers’ commitment to National

LEV lasts at least until MY2004 and

could last longer.

The proposed duration of the OTC

State commitments differs slightly from

the duration specified in the initialed

MOUs. The initialed MOUs provide that

the auto manufacturers’ and the states’

commitments to the program would end

at the same time. Under the MOU

approach, the auto manufacturers’ and

the states’ commitments would last

through MY2003 and possibly through

MY2005, depending on whether, by

January 1, 2001, EPA had promulgated

a final rule mandating Tier 2 standards

at least as stringent as National LEV and

effective in MY2004, MY2005, or

MY2006. If EPA did not issue the

specified regulations on time, then

National LEV would end with MY2003

and, starting in MY2004, in any state

where California or OTC LEV standards

were not in place, the applicable

standards for manufacturers would

revert back to the federal Tier 1

standards.

In the Final Framework Rule, EPA did

not accept the MOU provisions for

setting the duration of the National LEV

program. As it explained fully in that

final rule, EPA rejected the MOU

provisions because it is unacceptable to

set up a program that has the country

take a step backward environmentally if

the Agency fails to act by a specified

deadline. Instead, under the Final

Framework Rule, the auto

manufacturers’ commitment to National

LEV would continue until a mandatory

national tailpipe emissions program that

is at least equivalent in stringency to the

National LEV program is in effect. Once

EPA promulgates such a mandatory

tailpipe emissions program, the

manufacturers’ obligation under the

National LEV program would end in the

first model year that the mandatory

program is at least as stringent on a fleet

wide basis as National LEV. Under

section 202(b)(1)(C) of the Clean Air

Act, this cannot occur until MY2004.

Today’s proposal attempts to be as

faithful to the OTC States’ and auto

manufacturers’ intent regarding the

duration of state commitments to

National LEV as is possible, given that

EPA did not accept the MOU provision

that would have put the country back to

Tier 1 if EPA failed to issue Tier 2

standards by a certain date. The MOU

approach to the duration of the OTC

State commitments indicates that the

OTC States are willing to commit to

National LEV through MY2005, if they

are assured that they would continue to

receive vehicles meeting LEV stringency

or better standards (on average). The

Final Framework Rule provisions for the

duration of the auto manufacturers’

commitment provides such assurance.

Thus, EPA’s proposed approach to

duration of the OTC State commitments

would not bind the states beyond what

they have indicated is acceptable.

Moreover, under the MOU approach to

the duration of the OTC State

commitments, under no circumstances

would the states be bound beyond

MY2005, so the manufacturers could

not have expected the OTC State

commitments to extend further.

EPA believes this approach is also fair

to the manufacturers. It gives them the

maximum stability (both in terms of

state LEV programs and nationwide

tailpipe standards) that they could have

hoped to have achieved under the MOU.

Admittedly, the manufacturers’

commitment to National LEV may last

longer than the OTC States’

commitment (it could also end earlier),

but only if the National LEV standards

remain effective longer than currently

anticipated. Manufacturers thus would

get more stability of nationwide tailpipe

standards than they had bargained for,

which does not provide justification for

requiring states to extend their

commitments beyond MY2005.
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44759

8EPA would provide directly affected parties

actual notice and make copies of the final rule

available within a week of signature.

9ZEV mandates are those state regulations or

other laws that impose (or purport to impose)

obligations on auto manufacturers to produce or sell

a certain number or percentage of ZEVs. EPA is

proposing that any OTC State with a ZEV mandate

that was adopted prior to the OTC State’s opt-in to

National LEV would be treated as a state with an

existing ZEV mandate. EPA takes comment on

whether another cut-off date would be appropriate

in place of the date of the state’s opt-in, including:

September 15, 1996; the signature date of the Final

Framework Rule; the signature date of the final

supplemental rule; and the date of EPA’s finding

that National LEV is in effect.

B. Timing of OTC State Commitments,

Manufacturer Opt-Ins, and EPA Finding

National LEV in Effect

EPA is proposing a process for the

OTC States and the manufacturers to opt

into the National LEV program and for

EPA to find the program in effect that

would allow the program to go into

effect without requiring the parties to

sign an MOU. As discussed in the notice

of proposed rulemaking (NPRM) (60 FR

52742), to implement the program

promptly upon completion of the

National LEV rulemaking, there needs to

be a deadline for EPA to assess whether

the National LEV program is in effect.

Also, EPA must establish deadlines for

the OTC States and manufacturers to opt

into National LEV in advance of the

deadline for EPA’s determination.

EPA is proposing the following timing

for the OTC States and manufacturers to

opt into National LEV, and for EPA to

find the program in effect. Because

National LEV needs to be in place as

soon as possible to ensure that it is

available for MY1999, the following

deadlines are based on the date of

signature of the supplemental final

rule.8 Seventy-five days from signature

of the final supplemental rule, EPA

would be required to determine whether

the National LEV program was in effect

(see section V.C.3 below for the criteria

for finding National LEV in effect). This

finding would be based on the OTC

States’ initial opt-in packages from their

Governors and state environmental

commissioners or secretaries (discussed

below in section V.C) that were

submitted no later than 45 days from the

date of signature of the final

supplemental rule and on the

manufacturers’ opt-ins submitted no

later than 60 days from signature of the

final supplemental rule. If EPA were to

find National LEV in effect, all parties

would be bound by their commitments

to the program. While any party that

missed its deadline for opt-in would not

be barred from submitting a late opt-in,

EPA would only be required to consider

timely opt-ins in determining whether

National LEV is in effect. Moreover,

given the very short timeframe for the

opt-in process and the fact that some

parties may be reluctant to opt in before

they know whether others will do so, a

late opt-in is likely to jeopardize the

start-up of the program.

EPA recognizes that the proposed

deadlines are quite tight, and will

require swift action by the parties.

Given both the manufacturers’

production schedules and the earliest

plausible signature date for the

supplemental final rule, any extension

of the proposed schedule may

jeopardize the MY1999 start date and,

thus, the entire program. Nevertheless,

EPA requests comment on the proposed

schedule and the viable start date for the

program.

EPA is proposing that, after the initial

opt-ins and an EPA finding that the

program is in effect, the OTC States

would generally have one year from the

date of the in-effect finding to submit

the final portion of their opt-ins, which

would be a SIP revision committing the

state to the National LEV program and

allowing manufacturers to comply with

National LEV as an alternative to a state

Section 177 Program, as described in

more detail in section V.C.4 below. EPA

is aware that a few states, specifically

Delaware, New Hampshire, Virginia and

the District of Columbia, have particular

circumstances related to their state

rulemaking processes that make a one

year deadline unrealistic. Thus, EPA

proposes that for these states, the

deadlines would be eighteen months

from the date of the in-effect finding.

The consequence of a state missing its

deadline for submission of its SIP

revision committing to National LEV

would be that the manufacturers would

have the opportunity to opt out of the

program. See section VI below for

further discussion of offramps.

C. OTC State Commitments,

Manufacturer Opt-Ins, and EPA’s

Finding That National LEV is in Effect

This section describes EPA’s

proposed process for the OTC States and

the manufacturers to commit to the

National LEV program and for EPA to

find the program in effect. This includes

how the OTC States would commit to

the program, the elements of their

commitments, the permissible

conditions on OTC State and

manufacturer opt-ins, and the criteria

that EPA would use to find the program

in effect.

1. Initial Opt-In by OTC States

EPA proposes that the OTC States

would commit to National LEV in two

steps, the first of which would be an

opt-in package from each state’s

Governor and environmental

commissioner, indicating the OTC

State’s intent to opt into National LEV.

The second step would be a SIP revision

incorporating the OTC State’s

commitment to National LEV in state

regulations, which EPA would approve

into the federally enforceable SIP.

EPA proposes that, within 45 days of

signature of the supplemental final rule,

the Governor (or Mayor, in the District

of Columbia) would submit to EPA an

executive order (or, for some states, a

letter) committing the OTC State to the

National LEV program. The executive

order (or letter) would contain three

main elements. First, it would state that

its purpose is to opt the state into

National LEV. Second, it would state

that the Governor is forwarding a letter

signed by the head of the state

environmental agency (or other

appropriate agency or department),

which specifies the details of the state’s

commitment to the National LEV

program. Third, it would state that the

Governor has directed the head of the

state environmental agency to take the

necessary steps to adopt regulations and

submit a SIP revision committing the

state to National LEV in accordance

with the requirements of the National

LEV regulations. In addition, OTC States

with existing ZEV mandates 9 may add

language confirming that the opt-in will

not affect the state’s requirements

pertaining to ZEVs.

The Governor’s executive order (or

letter) would enclose a letter signed by

the state environmental commissioner

or secretary of the appropriate state

department (‘‘commissioner’s letter’’),

which would specify the details of the

state’s commitment to National LEV.

Alternatively, if an OTC State has

proposed regulations meeting the

requirements for a SIP revision specified

below, the state may substitute the

proposed regulations for the portions of

the commissioner’s letter for which they

are duplicative. In that case, the

Governor would send to EPA the

Governor’s executive order (or letter),

the proposed regulations, and a letter

from the commissioner, which would

contain the elements specified below

that were not included in the proposed

regulations.

EPA is proposing that the

commissioner’s letter would include the

following elements. First, it would

indicate that National LEV would

achieve reductions of VOC and NOx

emissions equivalent to or greater than

the reductions that would be achieved

through state adopted Section 177

Programs in the OTR. Second, it would
44760 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

10 ‘‘Backstop’’ Section 177 Programs are programs

that allow National LEV as a compliance alternative

to the Section 177 Program requirements.

indicate that the state intends National

LEV to be the state’s new motor vehicle

emissions control program. Third, it

would state that for the duration of the

state’s participation in National LEV,

the state will accept National LEV or

mandatory federal standards of at least

equivalent stringency as a compliance

alternative to any state Section 177

Program. A state Section 177 Program is

any regulation or other law, except a

ZEV mandate, adopted by an OTC State

in accordance with section 177 and

which is applicable to passenger cars,

light duty trucks up through 6,000

pounds GVWR, and/or medium-duty

vehicles from 6,001 to 14,000 pounds

GVWR if designed to operate on

gasoline, as these vehicle categories are

defined under the California

regulations. (This commitment would

not restrict states from adopting and

implementing requirements under

section 177 for heavy-duty trucks and

engines and diesel-powered vehicles

between 6,001 and 14,000 pounds

GVWR.) The letter would further state

that the state’s participation in National

LEV extends until MY2006, except as

provided in the National LEV

regulations’ provisions for the duration

of the OTC State commitments,

including provisions for state offramps.

The offramps would allow the OTC

States to exit National LEV if an auto

manufacturer decided to exit the

program. OTC States without existing

ZEV mandate provisions would add a

statement that the state accepts National

LEV as a compliance alternative to any

ZEV mandates. OTC States with existing

ZEV mandate provisions would add a

statement that their acceptance of

National LEV as a compliance

alternative for state Section 177

Programs does not include or have any

effect on the OTC State’s ZEV mandates.

Fourth, the commissioner’s letter

would include both an explicit

recognition that the manufacturers are

opting into National LEV in reliance on

the OTC States’ opt-ins, and a

recognition that the commitments in the

initial OTC State opt-in package have

not yet gone through the state

rulemaking process to be incorporated

into state regulations, so they do not yet

have the force of law; in addition, the

letter would recognize that the state’s

executive branch must comply with any

laws passed by the state legislature that

might affect the state’s commitment.

Fifth, the commissioner’s letter would

include an acknowledgment that, if a

manufacturer were to opt out of

National LEV pursuant to the opt-out

provisions in the National LEV

regulations, the transition from the

National LEV requirements to any state

Section 177 Program or ZEV mandate

would be governed by the National LEV

regulations. Sixth, similar to the

manufacturers’ opt-in letters, the

commissioner’s letter would state that

the state supports the legitimacy of the

National LEV program and EPA’s

authority to promulgate the National

LEV regulations.

As it stated in the NPRM for National

LEV (60 FR 52740), EPA believes that

the decision regarding adoption of ZEV

mandates by OTC States must be left up

to each individual OTC State, to the

extent permitted under section 177. The

OTC States have indicated that they

support certain commitments regarding

ZEV mandates by including those

provisions in the MOU voted on by the

OTC and initialed by the OTC pursuant

to the vote. EPA is proposing in the

alternative that the OTC States without

existing ZEV mandate provisions would

either have to include a statement in the

commissioner’s letter indicating that the

state intends to forbear from adopting a

ZEV mandate effective before MY2006

or would have to include a statement

that the state will forbear from adopting

such a provision. The draft MOU

initialed by the OTC contains the

‘‘intends to’’ language, while the draft

MOU initialed by the manufacturers

uses the ‘‘will’’ language.

EPA is also taking comment on

whether those OTC States that have not

adopted a Section 177 Program at the

time of signature of the supplemental

final rule should include in the

commissioner’s letter a statement that

the state intends to or will forbear from

adopting a Section 177 Program

effective before MY2006. The draft

MOU initialed by the manufacturers

included a statement that certain OTC

States would forbear from adopting such

‘‘backstop’’ Section 177 Programs,10

while the draft MOU initialed by the

OTC States did not include any

statement regarding adoption of such

backstop programs.

Finally, EPA is proposing that the

commissioner’s letter may include a

statement that the state’s opt-in to

National LEV is conditioned on all of

the motor vehicle manufacturers listed

in the National LEV regulations opting

into National LEV pursuant to the

National LEV regulations and on EPA

finding National LEV to be in effect.

EPA is further proposing that, as with

the manufacturers’ opt-ins, no

conditions other than those specified in

the regulations may be placed on any of

the state opt-in instruments (the

Governor’s executive order (or letter),

the commissioner’s letter, or the SIP

revision).

EPA is taking comment on whether

the regulations should allow an OTC

State to condition its opt-in on signature

of an acceptable independent agreement

with the manufacturers to promote

advanced technology vehicles (ATVs).

Although EPA agrees that advancing

technology is an important policy goal

and EPA believes that the National LEV

program could be a part of an agreement

that would provide important

opportunities to promote ATVs, as

proposed, the regulatory portion of the

National LEV program does not address

ATVs. EPA also recognizes that the

manufacturers have indicated their

belief that any agreement on ATVs

should only be addressed as part of a

larger MOU committing to National

LEV. Some of the OTC States, however,

have indicated a continuing interest in

an ATV agreement and the desire to

condition their opt-ins on the signature

of an ATV agreement. Such an

agreement could be comprehensive, as

contemplated by the agreement

contained in the MOU. Or, it could be

a smaller agreement between a

particular state or states and a particular

manufacturer or manufacturers. EPA

believes that if such a condition were

allowed, it would have to be met prior

to EPA finding that National LEV was in

effect. Under the proposed timetable,

this would allow manufacturers and

states only 30 days to conclude such an

agreement after the due date for the OTC

States’ initial opt-in packages. Even if

manufacturers were amenable to some

type of an ATV agreement (or

agreements with individual states),

conditioning an opt-in on an undefined

ATV agreement might dissuade

manufacturers from opting in.

Therefore, EPA believes that the

questions of whether there will be any

ATV agreements and if so, what they

will contain, are best determined

between the auto manufacturers and the

OTC States prior to the deadline for

state opt-ins.

In the proposed regulations, EPA is

proposing specific language for each

element of the OTC States’ opt-ins to be

included in the Governor’s executive

order (or letter), the commissioner’s

letter, and the SIP revision. EPA is also

taking comment on whether it is

necessary for EPA to specify language or

whether it would be sufficient for the

National LEV regulations to identify the

elements that must be in the OTC States’

opt-in documents without specifying

exact language. Although it is somewhat

unusual for EPA to identify specific
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44761

language for state submissions, EPA

believes this may be an appropriate case

to do so. Because the OTC States and

manufacturers are signing up for a

voluntary program and are unlikely to

sign an MOU, using specified language

would be useful to ensure that they sign

up to the same program. Otherwise, the

opt-ins might not represent agreement

on the terms and conditions of the

voluntary National LEV program. In

addition, as discussed further below,

EPA proposes to find National LEV in

effect without providing for additional

notice-and-comment on whether the

conditions are met for finding National

LEV in effect. It is more appropriate to

proceed without additional rulemaking

if the Agency’s in-effect finding is

essentially a nondiscretionary action

based on clear factual determinations. If

EPA must use its discretion to

determine whether a state has

adequately committed to National LEV,

that might require further rulemaking

and substantially delay implementation

of the program. However, if the OTC

States use the language specified in the

regulations, which EPA will have

determined to be adequate through a

notice-and-comment rulemaking, EPA

could find National LEV in effect on

that basis.

EPA recognizes that some states may

need to use language for certain

elements of the opt-in that deviates in

a few respects from the language

proposed today, due to the requirements

of different states’ individual

administrative laws and rulemaking

procedures. EPA requests that any OTC

States that have concerns about using

the proposed language notify EPA to

that effect in comments on this

proposal. EPA requests that any such

comments include alternate suggested

language for the specified elements of

the opt-in, and that a state make the

minimum adjustments to the language

necessary to allow the state to opt into

National LEV. EPA proposes to provide

in the final rule alternate approved

specific language for specific states, as

necessary to account for individual

states’ particular needs. Any such

language would still need to address

each of the opt-in elements and commit

the state adequately to the National LEV

program. EPA also recognizes that a

state may wish to include background

information, especially in the

Governor’s executive order (or letter).

This would be permissible under EPA’s

proposed regulations, providing that the

additional information did not add

conditions to the state’s opt-in.

2. Manufacturer Opt-Ins

EPA is proposing that motor vehicle

manufacturers’ opt-ins to National LEV

would be due within 60 days from

signature of the final rule. As provided

in the Final Framework Rule, a

manufacturer would opt into National

LEV by submitting a written notification

signed by the Vice President for

Environmental Affairs (or a company

official of at least equivalent authority

who is authorized to bind the company

to the National LEV program) that

unambiguously and unconditionally

states that the manufacturer is opting

into the program, subject only to

conditions expressly contemplated by

the regulations. See 40 CFR

86.1705(c)(2). EPA is proposing that the

only permissible conditions in a

manufacturer’s opt-in notification

would be that all of the OTC States opt

into National LEV pursuant to the

National LEV regulations and that EPA

find the program to be in effect. These

conditions parallel the proposed

permissible conditions described above

for the OTC States’ opt-ins.

3. EPA Finding That National LEV is in

Effect

The OTC States’ and the auto

manufacturers’ opt-ins would become

effective upon EPA’s receipt of the optin notification or, if the opt-in were

conditioned, upon the satisfaction of

that condition. Under today’s proposal,

EPA would find National LEV in effect

if each OTC State and each listed

manufacturer were to submit an opt-in

notification that complied with the

requirements for opt-ins, and all

conditions on any of those opt-ins had

been satisfied (or would be satisfied

upon EPA finding National LEV in

effect). EPA is also taking comment on

whether the Agency should be able to

find National LEV in effect if each of the

listed manufacturers were to submit an

opt-in notification that complied with

the requirements for opt-ins, each of the

opt-in notifications submitted by an

OTC State complied with the

requirements for opt-ins, and any

conditions placed upon any of the optins were satisfied, even if fewer than all

OTC States opted into National LEV.

EPA believes that National LEV should

be a national program—effective in all

states but California. This would

provide the OTR with emissions

reductions greater than what could be

achieved without National LEV and

would simplify distribution and other

aspects of the sale of motor vehicles.

Moreover, the manufacturers have

stated that they are not willing to opt

into National LEV unless each and every

OTC State opts into National LEV.

However, if the OTC States and auto

manufacturers are willing to participate

in a National LEV program even if all

OTC States do not opt-in, EPA will not

stand in the way of National LEV going

into effect. Once EPA finds National

LEV in effect, the manufacturers would

be subject to the National LEV

requirements for new motor vehicles for

the duration of the program, and the

OTC States would be committed to

participate in the National LEV program

for the duration of their commitments,

as discussed above in section V.A.

While the OTC States’ SIP revisions

are a necessary component of their

commitments to National LEV, EPA is

proposing to make the finding as to

whether National LEV is in effect before

the OTC States’ SIP revisions are due.

Through the executive order (or letter),

the Governor of each state will have

opted into National LEV and started the

process for submission of an approvable

SIP revision. Also, as discussed further

below, EPA is proposing that an OTC

State’s failure to submit the SIP revision

within the time provided for submission

would give manufacturers an

opportunity to opt out of the National

LEV program. Together, this high level

directive for action and the

consequences of a failure to conclude

the action provide substantial assurance

that the OTC States will submit their

SIP revisions within the specified time.

EPA would publish the finding that

National LEV is in effect in the Federal

Register, but the Agency would not

need to go through additional

rulemaking to make this determination.

In the Final Framework Rule, EPA

stated that further Agency rulemaking to

find National LEV in effect would be

unnecessary because EPA would

establish the criteria for the finding

through notice-and-comment

rulemaking, and EPA’s finding that the

criteria are satisfied would be an easily

verified objective determination. See 62

FR 31226 (June 6, 1997). As discussed

above, to find National LEV in effect,

EPA would have to determine that the

OTC States and the manufacturers had

submitted opt-in notifications that met

the requirements specified in the

regulations and that any conditions on

those opt-ins had been satisfied. EPA

established most of the specifics of the

manufacturers’ opt-in notifications in

the Final Framework Rule after taking

comment on those issues in the NPRM.

In today’s SNPRM, EPA is taking

comment on additional details of

manufacturer opt-in notifications and

the specifics of the OTC States’ opt-in

notifications, which EPA will finalize in

the supplemental final rule. Thus, the
44762 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

11See section V.B above for discussion of the

proposed extended deadline for a few specified

states.

12OTC States that had Section 177 Programs at

the time of opt-in would need to modify their

existing regulations in accordance with this

provision. EPA is also taking comment on whether

by some earlier date (perhaps June 1, 1998), OTC

States with Section 177 Programs at the time of optin would have to take whatever actions would be

necessary to ensure that manufacturers complying

with National LEV in MY1999 would not have to

comply with the state Section 177 Program for

MY1999.

public will have had full opportunity to

comment on the adequacy of the

elements of the manufacturers’ and OTC

States’ opt-ins and the language

provided for those opt-ins. As with the

manufacturers’ opt-ins, determining

whether a state has used the specified

language without adding any conditions

is a simple, objective determination,

which would not require further

rulemaking. Similarly, if OTC States or

manufacturers conditioned their opt-ins

on either all manufacturers or all OTC

States opting into National LEV,

determining whether these conditions

were satisfied would be a simple factual

inquiry involving no discretion on the

part of EPA. Thus, EPA proposes to find

that National LEV is in effect without

conducting further rulemaking if the

Agency determines that it has received

opt-in notifications from each OTC State

and listed manufacturer that include the

specified elements in approved

language without qualifications and the

Agency determines that all conditions

on those opt-ins have been satisfied.

4. SIP Revisions

EPA proposes that within one year of

the date of EPA’s finding that National

LEV is in effect, the OTC States would

complete the second phase of their

commitments to National LEV by

submitting SIP revisions to EPA

incorporating their commitments

(‘‘National LEV SIP revisions’’).11 EPA

proposes that the SIP revisions would

contain the following elements

incorporated in enforceable state

regulations. The first regulatory

provision would commit that, for the

duration of the state’s participation in

National LEV, the manufacturers may

comply with National LEV or

mandatory federal standards of at least

equivalent stringency as a compliance

alternative to any state Section 177

Program (which is any regulation or

other law, except a ZEV mandate,

adopted by an OTC State in accordance

with section 177 and which is

applicable to passenger cars, light duty

trucks up through 6,000 pounds GVWR,

and medium-duty vehicles from 6,001

to 14,000 pounds GVWR if designed to

operate on gasoline, as these vehicle

categories are defined under the

California regulations).12 This provision

would not restrict states from adopting

and implementing requirements under

section 177 for heavy-duty trucks and

engines and diesel-powered vehicles

between 6,001 and 14,000 pounds

GVWR. The regulations would also

commit the state to participate in

National LEV until MY2006, except as

provided in the National LEV regulatory

provisions for the duration of the OTC

State commitments, including

provisions for state offramps. States that

did not have an existing ZEV mandate

(see n. 9 above) would additionally

provide that manufacturers may comply

with National LEV as a compliance

alternative to any ZEV mandates for the

duration of the state’s participation in

National LEV. The second element of

the state regulations would explicitly

acknowledge that, if a manufacturer

were to opt out of National LEV

pursuant to the opt-out provisions in the

National LEV regulations, the transition

from the National LEV requirements to

any state Section 177 Program or ZEV

mandate (for states without existing

ZEV mandates) would be governed by

the National LEV regulations, thereby

incorporating these National LEV

provisions by reference into state law.

The SIP submission to EPA would

include state regulations containing the

elements discussed above, and a

transmittal letter or similar document

from the state commissioner forwarding

those regulations. EPA proposes that

three additional elements of the SIP

commitment may be included either in

the transmittal letter or the state

regulations. First, the state would

commit to support National LEV as an

acceptable alternative to state Section

177 Programs. Second, the state would

recognize that its commitment to

National LEV is necessary to ensure that

National LEV remain in effect. Third,

the state would state that it is

submitting the SIP revision to EPA in

accordance with the National LEV

regulations.

EPA is further proposing that the

provisions of the OTC States’

commitments relating to ZEV mandates

should also be included in the SIP

revision. EPA is proposing in the

alternative that in the transmittal letter

portion of the SIP submission to EPA,

each OTC State without an existing ZEV

mandate (see n. 9 above) would have to

state either that, for the duration of the

state’s participation in National LEV,

the state intends to forbear from

adopting any ZEV mandate provisions

effective before MY2006, or the state

will forbear from adopting such

provisions. EPA is taking comment on

whether this commitment instead

should be incorporated in the state’s

regulations.

Finally, EPA is also taking comment

on whether those OTC States that have

not adopted a Section 177 Program at

the time of signature of the

supplemental final rule should include

in the transmittal letter for the SIP

revision or in the state regulations a

statement that the state intends to or

will forbear from adopting a Section 177

Program effective before MY2006. As

noted above, the draft MOU initialed by

the manufacturers included a statement

that certain OTC States would forbear

from adopting such backstop Section

177 Programs, while the draft MOU

initialed by the OTC States did not

include any comparable statement.

As with the finding that National LEV

is in effect, EPA is proposing that the

Agency could approve SIP revisions

committing to the National LEV

program without further rulemaking, as

long as the revisions include the

language specified in the regulations

without adding conditions and meet the

CAA requirements for approvable SIP

submissions. In this notice, EPA is

providing full opportunity for public

comment on the language that the states

would use in their SIP revisions. Thus,

in reviewing a SIP submittal, EPA

would only have to determine whether

the submittal included the specified

language without additional conditions,

and whether it met the statutory criteria

for approvable SIP submissions, as laid

out in sections 110(a)(2) and 110(l) of

the CAA. Section 110(a)(2), in relevant

part, specifies that the state must have

provided public notice and a hearing on

the SIP provisions and the submission

must provide necessary assurances that

the state will have adequate personnel,

funding and authority under state law to

carry out the provisions. Section 110(l)

(discussed in more detail below)

provides that SIP revisions must not

interfere with attainment or any other

applicable requirement.

In this case, these requirements for

EPA’s approval are easily verified

objective criteria. They would leave

EPA little discretion in deciding

whether to approve the SIP revision,

and consequently would remove any

benefits to be derived from conducting

notice-and-comment rulemaking on

each approval. Determining whether the

language of the SIP submittal tracks the

language provided in the final

regulations and whether the state has

substantively qualified or conditioned

that language through modifications or

additions is a straightforward,
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44763

essentially ministerial task. This is also

true for assessing whether the state has

provided notice and a public hearing on

the SIP submission. Because National

LEV is a federal program, the state needs

no personnel or funding to carry it out,

so there is nothing related to the

requirement for adequate personnel and

funding for EPA to evaluate. For a state

with existing regulations requiring

compliance with a state Section 177

Program, EPA would merely have to

determine whether the state had

modified its regulations to include the

language in the National LEV

regulations to accept National LEV as a

compliance alternative for the specified

duration of the state commitment, as

well as the additional provisions

specified above. Again, this is a very

simple, objective assessment, requiring

no exercise of discretion. Finally, EPA

has determined that National LEV

would provide reductions in the OTR

equivalent to or greater than OTC State

Section 177 Programs in the OTR (see

section IV), so that a state commitment

to National LEV would not interfere

with attainment or any other Act

requirement. Because the satisfaction of

the criteria for approval of the state SIP

revisions is so clear as to be virtually

self-executing, EPA believes that

conducting further notice-and-comment

rulemaking on whether the criteria were

satisfied for each individual SIP

revision would produce additional

delay while serving no purpose.

Incorporating the OTC States’

commitments to National LEV in state

regulations approved into the SIPs will

substantially enhance the stability of the

National LEV program and support

giving states credit for SIP purposes for

emissions reductions from National

LEV. A SIP revision would clearly

indicate a state’s commitment to

National LEV and would reiterate the

state executive branch’s support for the

National LEV program. More

importantly, an approved SIP revision is

federal law and hence has binding legal

effect. Violation of a commitment to

National LEV contained in a SIP is

enforceable as a violation of applicable

federal law.

The SIP revision would provide that

the state commits to accept National

LEV or mandatory federal standards of

at least equivalent stringency as a

compliance alternative to a state

program under section 177 for a

specified time period. If a state adopted

new state law or regulations that

violated this commitment in the SIP

(e.g., by requiring compliance only with

a state Section 177 Program), this new

state law would not be valid prior to

EPA action on the SIP revision

incorporating the new law. Prior to such

action, the new state law would be

precluded by the federal law with

which it conflicted (i.e., the SIP revision

EPA had approved). Moreover, pursuant

to section 304(a)(1) and (f),

manufacturers could bring suit against

the state to enforce the initial SIP

commitment in court. To revise the SIP,

the state would have to submit a new

SIP revision and EPA would have to

approve the new revision through notice

and comment rulemaking. Moreover, if

EPA disapproved the newly submitted

SIP revision, then the new state law

would continue to violate the approved

SIP revision containing the state

commitment to National LEV, and

manufacturers could continue to enforce

the initial SIP commitment in court.

EPA would be obligated under section

110(l) of the CAA to disapprove a SIP

revision that violated a state’s

commitment to allow National LEV as a

compliance alternative if EPA were to

find that the SIP revision would

interfere with other states’ ability to

attain or maintain the national ambient

air quality standards (NAAQS).

Specifically, section 110(l) provides that

EPA must disapprove a plan revision if

it ‘‘interfere[s] with any applicable

requirement concerning attainment and

reasonable further progress * * * or any

other applicable requirement of this

Act.’’ By the terms of its rulemaking,

National LEV comes into and stays in

effect only if all relevant states commit

to allow it as a compliance alternative.

If National LEV comes into effect, a

number of OTC States, as well as states

outside the OTR, are likely to rely on

National LEV as a means of attaining

and maintaining the ozone NAAQS.

These states are likely to forego

adoption of other control measures

because they will count on reductions

from National LEV to meet their

attainment and maintenance

obligations. In this manner, other states

will be relying on each of the OTC

States’ commitments to National LEV.

An OTC State breaking its commitment

to allow National LEV as a compliance

alternative could lead to the dissolution

of the National LEV program, which in

turn would likely deprive other states of

the emission reductions from National

LEV, and could thereby interfere with

other states’ ability to attain. As

discussed above, EPA is proposing that

in the SIP revisions committing to

National LEV, each OTC State would

explicitly recognize that the state’s

commitment to National LEV is

necessary to ensure that the program

remain in effect.

VI. Incentives for Parties To Keep

Commitments to Program

Once it comes into effect, National

LEV is designed to be a stable program

that will remain in effect until replaced

by mandatory federal tailpipe standards

of at least equivalent stringency.

Manufacturers have the option, but not

the requirement, to participate in

National LEV. Manufacturers have

indicated a willingness to opt into the

program, but only if the EPA and the

OTC States make certain commitments.

To give the manufacturers both

assurance that the commitments will be

kept and recourse if they are not, EPA

is proposing that the program include a

few specified conditions (‘‘offramps’’)

that would allow manufacturers to opt

out of National LEV if EPA or the OTC

States did not keep their commitments.

In addition, the OTC States also need

assurance that National LEV will

continue to provide the benefits they

anticipated when they opted into the

program, both in terms of the number of

manufacturers covered by the program

and the level of emissions reductions

that the program was designed to

achieve. Thus, EPA is proposing that

National LEV would also include

limited offramps for the OTC States to

protect against changes in anticipated

emission benefits or the number of

covered manufacturers. Both the

manufacturers’ and the OTC States’

proposed offramps are structured to

maximize all parties’ incentives to

maintain the agreed-upon program

provisions and thereby to maximize the

stability of National LEV over its

intended duration.

In the unlikely event that any of the

offramps were triggered and

manufacturers or states opted out, EPA’s

proposed regulations set forth which

requirements would apply, the timing of

such requirements, the states in which

they would apply, and the

manufacturers that would have to

comply with them. The main purpose of

these provisions is to enhance the

stability of the program by minimizing

the incentives for EPA or the OTC States

to act in a manner that would trigger an

offramp. Additionally, EPA has

structured the offramp provisions such

that no single event automatically

would end the National LEV program.

EPA will continue to make National

LEV available as long as one or more

manufacturers and one or more OTC

States wish to remain in the program.

EPA recognizes, of course, that if a

significant number of OTC States or

manufacturers were to opt out of

National LEV, after a certain point it is

unlikely that the remaining parties
44764 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

13 In addition, as discussed in the following

section, EPA is proposing that manufacturers may

opt out if an OTC State takes a legitimate offramp.

14 If, as discussed at n. 12 above, EPA were to set

a separate date by which OTC States with Section

177 Programs had to take action to ensure that

manufacturers complying with National LEV would

not have to comply with the state program

requirements, failure to meet such a deadline would

also trigger an offramp. EPA is taking comment on

what the consequences should be if such an

offramp were triggered.

15Throughout this preamble, EPA often uses

‘‘National LEV as a compliance alternative’’ as

shorthand for ‘‘National LEV or mandatory federal

standards of at least equivalent stringency as a

compliance alternative.’’

16An OTC State with a Section 177 Program that

did not allow National LEV as a compliance

alternative as of MY2006 or later would not be in

violation of its commitment under National LEV.

17 In addition, an OTC State with a Section 177

Program in its regulations at the time of opt-in that

does not already permit manufacturers to comply

with National LEV as a compliance alternative

might fail to modify those existing regulations

within the time-frame provided, which would be

the same as the deadline for submission of the

state’s SIP revision. The consequences of this type

of violation would differ slightly from the

consequences of other types of violations that

attempted to have a Section 177 Program without

allowing National LEV as a compliance alternative,

as noted below in n.18.

would choose to continue the program.

However, the issue is highly unlikely to

arise and if it did, it is not clear what

would be the critical mass of opt-outs

sufficient to end the program. Rather

than deciding now how many OTC State

and auto manufacturer opt outs would

be significant enough to end National

LEV, EPA believes it is both more

appropriate and more efficient to leave

that decision to the OTC States and

manufacturers to decide, in the unlikely

event that an offramp is triggered and

significant opt-outs occur.

In the NPRM, EPA proposed that

manufacturers’ right to opt out of the

National LEV program would be limited

to two conditions. These offramps were:

(1) EPA modification of a Stable

Standard, except as specifically

provided, and (2) an OTC State’s failure

to meet or keep its commitment

regarding adoption or retention of a

state motor vehicle program under

section 177. The Final Framework Rule

addressed the first offramp, which

would allow manufacturers to opt out of

National LEV if EPA modified a Stable

Standard except as provided for under

the National LEV regulations, but did

not address the second offramp. This

second offramp is addressed here. EPA

also is proposing to add a third type of

offramp related to auto manufacturers’

concerns regarding the effects of using

federal fuel (instead of California fuel)

on emissions control systems. This is

discussed in section VI.C below. In

addition, EPA is proposing a fourth type

of offramp based on an OTC State or

another manufacturer legitimately

opting out of National LEV.

A. Offramp for Manufacturers for OTC

State Violation of Commitment

Under today’s proposal, there are

several ways in which an OTC State

might break its commitment and thereby

allow manufacturers to opt out of

National LEV. These are: (1) Final action

in violation of the commitment to

continue to allow National LEV as a

compliance alternative to a Section 177

Program or to a ZEV mandate (in those

OTC States without existing ZEV

mandates); (2) failure to submit a

National LEV SIP revision within the

timeframe set forth in the National LEV

regulations; and (3) submission of an

inadequate National LEV SIP revision. 13

In addition, EPA is taking comment on

whether manufacturers should also be

able to opt out of National LEV if an

OTC State without an existing ZEV

mandate adopted a ZEV mandate (even

if it accepted National LEV as a

compliance alternative for that

requirement) and that state had either

stated its intent or committed not to

adopt such a mandate. 14 The discussion

below addresses each of these proposed

possible types of OTC State violations

individually. EPA does not believe that

any of these scenarios are likely to arise

under the National LEV program.

Nevertheless, spelling out in the

regulations the consequences under

each of these scenarios will provide the

parties certainty regarding the worstcase outcomes, and more importantly,

allows EPA to structure the

consequences so as to minimize the

likelihood that any of these scenarios

will occur.

1. OTC State No Longer Accepts

National LEV as a Compliance

Alternative

The most significant way in which an

OTC State could violate its commitment

to National LEV would be to attempt to

have a Section 177 Program that was in

effect and that did not allow National

LEV or mandatory federal standards of

at least equivalent stringency as a

compliance alternative 15 through

MY2005.16 This could happen if an OTC

State accepted National LEV as a

compliance alternative to a state Section

177 Program or a ZEV mandate (in an

OTC State without an existing ZEV

mandate) and then took final action

purportedly removing those provisions

from its regulations, leaving only the

state Section 177 Program or ZEV

mandate requirements in place. It would

also happen if an OTC State took final

action purportedly adopting a Section

177 Program or a ZEV mandate (in an

OTC State without an existing ZEV

mandate) without providing for

National LEV as a compliance

alternative.17 This violation of the OTC

State’s commitment to National LEV

attempts to directly impose a

compliance burden on the

manufacturers and would abandon the

most fundamental element of the

agreement underlying the voluntary

National LEV program.

The consequences of such a violation,

as proposed below, take into account

the seriousness of the breach of the

commitment, even though the violation

would not necessarily burden the

manufacturers. Once a state had

adequately committed to National LEV

through an approved SIP revision, even

if the state were to change its

regulations to disallow compliance with

National LEV, the requirement would

not be enforceable until EPA approved

a further SIP revision incorporating the

change, as discussed above in section

V.C.4. Yet although the violation might

not actually impose any burden on the

manufacturers because it is not

enforceable, manufacturers should not

be bound to comply with the National

LEV requirements in the violating state

and should not be bound to continue in

the National LEV program, as even an

unenforceable Section 177 Program

would create risks and uncertainties for

manufacturers. Manufacturers would be

at risk of having to defend against a state

enforcement action. The question of

whether, under any circumstances, EPA

could approve a proposed state SIP

revision deleting National LEV as a

compliance alternative—if only by

virtue of the lack of precedence for this

issue—would create further uncertainty

for manufacturers.

EPA is proposing that manufacturers

would be able to opt out at any time

after an OTC State takes final action that

would require manufacturers to comply

with a Section 177 Program or a ZEV

mandate (in an OTC State without an

existing ZEV mandate) prior to MY2006

without allowing them to comply with

National LEV or mandatory federal

standards of at least equivalent

stringency as an alternative, even if the

effective date of the state requirement

would be some time in the future. The

final state action would be the action

promulgating the state law or

regulations at issue, not the act of

defending such law or regulations in

litigation. Thus, a self-effectuating state

law purporting to impose a Section 177

Program without including National

LEV as a compliance alternative would
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44765

18 In an OTC State that had a Section 177 Program

in its regulations at the time of opt-in and that had

never accepted National LEV as a compliance

alternative to the Section 177 Program

requirements, the consequences in the violating

state discussed in this section would not apply,

given EPA’s interpretation of section 177. See

section VI.D. However, the provisions for a

manufacturer’s offramp would be the same for a

state that failed to modify existing regulations to

accept National LEV as a compliance alternative as

for any other state action not allowing National LEV

as a compliance alternative.

19The ‘‘next model year’’ would be the model

year named for the calendar year following the

calendar year in which the OTC State took final

state action violating its commitment. For example,

if an OTC State violated its commitment by taking

final state action in calendar year 1999, the next

model year would be MY2000.

20See section VIII.C for discussion of how EPA’s

vehicle certification process would allow a

manufacturer to provide vehicles meeting Tier 1

standards in a violating state.

be final state action, as would final state

regulations purporting to impose such a

program. A state law directing the

relevant state agency to change its

regulations to remove National LEV as

a compliance alternative would not be

a final state action, but the regulations

promulgated in accordance with that

directive would be final state action.

EPA is proposing that, if an OTC State

were to violate its commitment by

purportedly disallowing National LEV

as a compliance alternative, there would

be both automatic consequences in the

violating state and an opportunity for

manufacturers to opt out of National

LEV.18 To determine the consequences

in the violating state, there are two

significant issues. The first issue is what

are the compliance obligations of the

manufacturers in the violating state. The

second issue is when would the state

Section 177 Program or ZEV mandate

requirements apply to manufacturers.

Outside of the violating state,

manufacturers would continue to be

subject to the National LEV

requirements unless they opted out of

the National LEV program.

Until the violating state’s Section 177

Program or ZEV mandate requirements

apply, the manufacturers’ compliance

obligations in that state would be

governed by the terms of the National

LEV regulations. EPA is proposing that,

in a state that has violated its

commitment by attempting to have a

Section 177 Program or ZEV mandate

without allowing National LEV as a

compliance alternative, beginning with

the next model year,19 National LEV

regulations would allow manufacturers

to sell vehicles complying with Tier 1

tailpipe standards in that state and those

vehicles would not be counted in

determining whether the NLEV fleet

average NMOG standard was met.

Because model years generally run

somewhat ahead of the calendar years

with the same numbers, generally this

will result in a near-term or immediate

change in the manufacturers’

compliance obligations. Until the

violating state’s Section 177 Program

requirements applied (which might not

be until MY2006), the manufacturers

would only have to meet the federal

Tier 1 tailpipe standards for vehicles

sold in the violating state, and those

vehicles would not be used to calculate

the manufacturers’ fleet NMOG

averages.

The earliest date on which the

violating state’s Section 177 Program or

ZEV mandate would apply would be

governed by the lead time requirements

in section 177 and EPA’s regulations on

model year at 40 CFR part 85 subpart X

and in the National LEV regulations.

This date would apply only for any auto

manufacturer that opted out of National

LEV as a result of the violating state’s

action (provided that it is later than the

effective date of the opt-out), for any

auto manufacturer that decided to

comply with the violating state’s

requirements even though it otherwise

chose to stay in National LEV, and for

all manufacturers if EPA approved the

violating state’s program into the SIP.

(As discussed below, EPA believes the

violating state’s refusal to allow

National LEV as a compliance

alternative would not otherwise be

effective until MY2006. Thus, if none of

these situations occurred, National LEV

regulations would allow manufacturers

to sell in the violating state vehicles that

meet Tier 1 tailpipe standards and to

exclude those vehicles from the NMOG

fleet average calculation until MY2006.)

After National LEV is in effect, a

change to a state regulation that deletes

National LEV as a compliance

alternative attempts to change the

manufacturers’ obligations. In that

circumstance, as discussed in section

VI.D below, EPA interprets section 177

to require two years of lead time from

the date that the state takes final action

changing its regulations (or other law)

deleting National LEV as a compliance

alternative regardless of when the state

adopted its previous Section 177

Program. Thus, pursuant to the model

year regulations at 40 CFR part 85

subpart X and those proposed here, the

earliest the state Section 177 Program or

ZEV mandate requirements could apply

would be to engine families for which

production begins after the date two

calendar years from the date of the final

state action. For example, if the

violating state promulgated regulations

purportedly removing National LEV as a

compliance alternative on June 1, 2000,

the earliest the state Section 177

Program or ZEV mandate requirements

could apply would be to engine families

that began production on or after June

1, 2002, which likely would apply to

some, but not all, MY2003 vehicles.

EPA is also taking comment on whether

there is a way to ensure that

manufacturers have at least four, rather

than two, years of lead time from the

date that the state takes final action

changing its regulations deleting

National LEV as a compliance

alternative, and what the legal basis

would be for such an approach.

The combined effect of the National

LEV regulations allowing manufacturers

to comply with Tier 1 tailpipe standards

in the violating state and the

requirement for two years lead time

before the state Section 177 Program or

ZEV mandate requirements could apply

means that, if an OTC State were to

violate its commitment by not allowing

National LEV as a compliance

alternative, manufacturers would be

subject to only Tier 1 tailpipe standards

(and not the NLEV NMOG average) in

that state for at least two years. As a

consequence, the violating state could

not claim SIP credits for control of

emissions from vehicles meeting

anything more stringent than Tier 1

tailpipe standards during that period.

EPA believes that this would provide a

powerful incentive for the OTC States to

uphold their commitments to accept

National LEV as a compliance

alternative for the specified duration.

EPA recognizes that it may take

manufacturers some time to take

advantage of the less stringent Tier 1

tailpipe standards, and that,

consequently, the hardware of the

vehicles supplied to the violating state

may not change dramatically in the

short-term. However, manufacturers

would be able to revise vehicle

compliance levels rapidly to provide

that, for warranty and recall purposes,

the vehicles are only complying with

Tier 1 tailpipe standards. This means

that over the life of those vehicles they

would only be required to produce

emissions below the 50,000 mile and

100,000 mile Tier 1 standards and

enforcement action could not be taken

to require those vehicles to meet any

more stringent standards.20 As long as

manufacturers are not required to sell

vehicles meeting standards more

stringent than Tier 1 in the violating

state, it would not be appropriate for

EPA to approve SIP credits for any

emissions reductions beyond the levels

provided by Tier 1 tailpipe standards.

Those vehicles would not be included

in calculating the manufacturers’
44766 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

21 If, however, an OTC State took a legitimate

offramp as discussed below, a manufacturer could

not use a delayed effective date of opt out to

continue to comply with National LEV in a state

that had opted out after that state’s opt-out became

effective. As discussed below in section VI.B, an

OTC State legitimately opting out of National LEV

is required to provide manufacturers at least two

years lead time.

compliance with the National LEV fleet

average NMOG standards and the SIP

would not provide in any way for

vehicles sold in that state to meet

emission standards more stringent than

Tier 1 levels. EPA is proposing to

include in the supplemental final

regulations provisions for this approach

to SIP credits for vehicles sold in a

violating state.

In addition to the relaxed emissions

standards that would apply to vehicles

sold in the violating state, the other

incentive for OTC States not to violate

their commitments is that

manufacturers would also be able to opt

out of National LEV if an OTC State

violated its commitment to the program

by not allowing National LEV as a

compliance alternative. EPA is

proposing that there would be no time

limit for manufacturers to exercise their

right to opt out as long as the state was

in violation of its commitment. After a

manufacturer opted out, there also

would be no opportunity for the state to

cure the violation by changing the state

law or regulations to accept National

LEV as a compliance alternative and

thereby negate an opt-out that a

manufacturer had already submitted,

regardless of whether that opt-out had

become effective already. However,

once a violating state took final action

to cure the violation, manufacturers that

had not already opted out could not opt

out based on the violation that the state

had cured.

The Final Framework Rule gives EPA

an opportunity to make a finding as to

the validity of an opt-out based on a

change to a Stable Standard. See 62 FR

31202–07. This both provides a safe

harbor for a manufacturer that relies on

an EPA determination of validity, and

provides for rapid resolution in the

United States Court of Appeals for the

District of Columbia if the validity is

disputed, thereby avoiding protracted

litigation in federal district court. In

contrast, EPA does not believe such a

process is necessary here. The validity

of an opt-out based on a state

disallowing National LEV as a

compliance alternative should be a

straight-forward factual determination.

Consequently, EPA believes there is

very little benefit to be gained by

providing for an EPA determination of

the validity of such an opt-out, and EPA

is not proposing such a provision.

EPA is proposing that a manufacturer

that opts out of National LEV based on

a state violation of its commitment to

National LEV must continue to comply

with National LEV until the opt-out

becomes effective (although Tier 1

tailpipe standards will apply in the

violating state, as proposed above). EPA

is proposing that each manufacturer’s

opt-out notification would specify the

effective date of the opt-out, which in

no event could be any earlier than the

next model year (i.e., the model year

named for the calendar year following

the calendar year in which the

manufacturer opted out).21 After the

effective date of its opt-out, a

manufacturer would have to comply

with any non-violating state’s Section

177 Program (except for ZEV mandates)

provided that at least two-years lead

time (as provided in section 177) had

passed since the adoption of the state’s

Section 177 Program. Other than those

ZEV mandates that would be unaffected

by the National LEV program (i.e.,

existing ZEV mandates), if a

manufacturer opts out, it would not be

subject to any other ZEV mandates until

two years of lead time had passed,

which would run from the date the

manufacturer opts out of National LEV

and be measured according to the

section 177 implementing regulations.

After the effective date of a

manufacturer’s opt-out, in a nonviolating state without a Section 177

Program, the manufacturer must meet

all applicable federal standards that

would apply in the absence of National

LEV.

The following summarizes EPA’s

proposal for the tailpipe standards that

would apply if an OTC State violated its

commitment by not allowing National

LEV as a compliance alternative. For

vehicles sold in the violating state, all

manufacturers would be allowed to sell

vehicles meeting Tier 1 standards and to

exclude those vehicles from the NMOG

fleet average beginning in the next

model year after the date of the state

violation for at least the two-year lead

time set forth in section 177 and the

implementing regulations; then

manufacturers would become subject to

the state Section 177 Program only if the

manufacturer opted out of National LEV

and its opt-out had become effective, if

the manufacturer decided to comply

with the violating state’s new Section

177 Program while remaining in

National LEV, or if EPA approved the

state’s requirements into the SIP. If a

manufacturer opted out, before the optout became effective, the manufacturer

would continue to be subject to all

National LEV requirements for vehicles

sold outside of the violating state. Once

a manufacturer’s opt-out had become

effective, for vehicles sold outside of the

violating state, the manufacturer would

have to comply with any backstop state

Section 177 Programs (except ZEV

mandates) that a state had adopted at

least two years before the effective date

of opt-out and, in other states, would

have to comply with all applicable

federal standards that would apply in

the absence of National LEV.

Manufacturers would not have to

comply with any ZEV mandates (except

those that were unaffected by National

LEV) until after two years of lead time

had passed as set forth in section 177,

which would start to run from the date

EPA received the manufacturer’s optout. Manufacturers that did not opt out

would continue to be subject to all

National LEV requirements for vehicles

sold outside of the violating state and,

in the violating state, would be allowed,

under the National LEV regulations, to

sell vehicles meeting Tier 1 tailpipe

standards and to exclude those vehicles

from the NMOG fleet average. To the

extent these proposed regulations would

provide a manufacturer with less than

the two-years lead time set forth in

section 177, the manufacturer would

waive that protection by opting into

National LEV and then setting an

effective date in its opt-out notification

that was earlier than the two-years

leadtime would provide.

2. OTC State Fails to Submit SIP

Revision Committing to National LEV

The second way in which an OTC

State could violate its commitment to

National LEV would be to fail to submit

a SIP revision to EPA containing the

state’s regulatory commitment to the

program. The consequences of this

violation differ slightly from a situation

where a state does submit such a SIP

revision, receives EPA approval for it,

but then violates the commitment by

attempting to remove National LEV as a

compliance alternative. Failure to

submit a SIP revision would not

necessarily indicate that the state was

attempting to impose a compliance

obligation on the manufacturers

contrary to the terms of the fundamental

agreement underlying the voluntary

National LEV program. Consequently, if

manufacturers did not choose to opt out

of National LEV, they would continue to

be subject to all the National LEV

requirements for vehicles sold both

within and outside of the violating state,

and the National LEV program would

continue. However, the portion of the

OTC State commitments contained in

the SIP revisions is critical to the longterm enforceability of the state

commitments, so EPA believes it is
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44767

22 If, however, an OTC State took a legitimate

offramp as discussed below, a manufacturer could

not use a delayed effective date of opt out to

continue to comply with National LEV in a state

that had opted out after the state opt-out became

effective. As discussed below in section VI.B an

OTC State legitimately opting out of National LEV

is required to provide manufacturers at least two

years lead time.

23 If, however, an OTC State took a legitimate

offramp as discussed below, a manufacturer could

not use a delayed effective date of opt out to

continue to comply with National LEV in a state

that had opted out after the state opt-out became

effective. As discussed below in section VI.B an

OTC State legitimately opting out of National LEV

is required to provide manufacturers at least two

years lead time.

important to allow the manufacturers to

opt out of National LEV if a state fails

to submit a SIP revision. This will

maximize the incentives for OTC States

to submit their National LEV SIP

revisions and to provide manufacturers

recourse in the event of a state failure

to do so.

As under the previous scenario, EPA

is proposing that there would be no time

limit for manufacturers to exercise their

right to opt out of National LEV if an

OTC State had missed the deadline for

its National LEV SIP revision and had

not yet submitted such a SIP revision.

Once the state submitted its SIP

revision, even if after the deadline,

manufacturers would no longer have the

opportunity to decide to opt out of

National LEV. Unlike the previous

scenario, EPA is proposing that a state

that had missed the deadline for its SIP

submission would have a limited

opportunity to cure the violation. For

the first six months from the deadline

for the SIP submission, manufacturers

would only be able to opt out

conditioned on the state not submitting

a SIP revision within six months of the

initial deadline. If the state submitted

the revision within that six-month grace

period, any opt-outs based on that

violation would be invalidated and

would not come into effect. EPA

believes this limited opportunity to cure

is appropriate here, given the very tight

timeframes provided for the OTC States

to submit their SIP revisions and the

fact that failure to submit this SIP

revision would not pose the risk of any

immediate change in the manufacturers’

compliance obligations. After the sixmonth grace period, the state’s

submission of a SIP revision would not

negate an opt-out that a manufacturer

had already submitted to EPA, even if

the manufacturer’s opt-out had not yet

become effective. However, no

manufacturer would be able to opt out

after the state submitted the SIP revision

no matter how late. As under the

previous scenario, whether or not a state

has failed to submit a SIP revision by a

given date and thereby provided a basis

for an opt-out is a very clear cut issue.

Consequently, EPA is not proposing to

provide for an EPA determination of the

validity of an opt-out based on this

violation.

Again consistent with the previous

scenario, EPA is proposing that, if a

manufacturer opts out it may set the

effective date of its opt-out as early as

the next model year after the date of the

opt-out or any model year thereafter. 22

If a manufacturer opts out of National

LEV, in the violating state, the National

LEV regulations would allow the

manufacturer to meet Tier 1 tailpipe

standards and would not require those

vehicles to be included in the NMOG

fleet average calculations. These special

provisions for vehicles sold in the

violating state would start with the next

model year after the manufacturer opts

out (e.g., MY2000 for a manufacturer

that opts out in calendar year 1999) and

continue until the effective date set in

the opt-out notice. As under the

scenario above, the violating state

would not receive SIP credits for

emissions reductions from vehicles

meeting anything more stringent than

the Tier 1 tailpipe standards while those

standards apply. Once the

manufacturer’s opt-out had become

effective, the manufacturer would be

subject to a Section 177 Program in the

violating state if the two-year lead time

requirement of section 177 had been

met. EPA is taking comment on

whether, regardless of the effective date

of an opt-out, National LEV regulations

should allow manufacturers to sell

vehicles that meet Tier 1 tailpipe

standards for four years in the violating

state.

If a manufacturer opted out of

National LEV, in non-violating states it

would continue to meet all National

LEV requirements until the effective

date of its opt out. For vehicles sold in

the non-violating states, once the optout became effective.

3. OTC State Submits Inadequate SIP

Revision Committing to National LEV

A third way in which an OTC State

could violate its commitment to

National LEV would be to submit a SIP

revision that did not adequately commit

the state to the National LEV program.

Evaluation and approval of SIP

revisions is an EPA responsibility, as

delegated by Congress under section

110(k) of the Act. Thus, EPA believes

that it is appropriate for the Agency to

evaluate the adequacy of the submission

before a manufacturer could opt out on

the basis of a claimed inadequacy. EPA

is proposing that manufacturers would

be able to opt out if EPA disapproved

a National LEV SIP revision, and either

the state failed to submit a corrected SIP

revision within one year of EPA’s

disapproval, or the state submitted a

modified SIP revision and EPA

subsequently disapproved the revision.

Under this scenario, the date of the

violation that would allow a

manufacturer to opt out of National LEV

would be either the state’s failure to

submit a National LEV SIP revision

committing to National LEV within one

year of EPA’s disapproval of its initial

SIP revision, or publication of EPA’s

second disapproval. EPA also

considered and is taking comment on

the following alternative approaches for

when a manufacturer could opt out

based on an inadequate National LEV

SIP revision. One alternative would be

to allow manufacturers to opt out

immediately upon EPA’s initial

disapproval of a state’s National LEV

SIP revision. Another would be to allow

manufacturers to opt out if a state’s

National LEV SIP revision was

inadequate and EPA failed to approve it

within nine months (or one year) of the

deadline for state submission of the SIP

revision, whether that failure was

through disapproval or inaction. Still

another alternative would be upon a

determination by the manufacturer that

the SIP revision is inadequate, even if

EPA has not yet acted on it.

As with the other types of state

violations, EPA is proposing no

deadline for manufacturers to opt out

based on this offramp. Also, there

would be no opportunity for the state to

cure the violation after a manufacturer

had opted out, although manufacturers

that had not opted out could no longer

do so once the state had cured a

violation and EPA had approved the SIP

revision committing the state to

National LEV. As proposed, the action

allowing opt out is very clear, and hence

EPA is not proposing to provide for an

EPA determination of the validity of an

opt-out based on this type of violation.

Again consistent with the previous

scenarios, EPA is proposing that if a

manufacturer opts out it may set the

effective date of its opt-out as early as

the next model year or any model year

thereafter.23 EPA is proposing that

manufacturers’ obligations under

National LEV and state Section 177

Programs would be identical to those

described if a state failed to submit a SIP

revision.

B. OTC State or Manufacturer

Legitimately Opts Out of National LEV

Following the general principle that

parties should be able to exit National
44768 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

24The validity of any opt-out from National LEV

would depend in part on whether the underlying

condition allowing opt-out has actually occurred.

Where the initial state or manufacturer’s opt-out

was invalid, it would not provide an offramp for

another manufacturer to opt-out of National LEV.

Thus, throughout this notice when EPA refers to an

initial opt-out as the condition that allows another

opt-out, it refers only to valid initial opt-outs.

25OBD and Sulfur White Paper, March 1997

(Docket A–95–26, IV–B–06).

LEV if there is a significant change in

the assumptions that underlay their

decision to opt in initially, a

manufacturer also could opt out if an

OTC State or another manufacturer were

to opt out of National LEV

legitimately.24 This offramp could be

used within 30 days of EPA’s receipt of

an OTC State or a manufacturer opt-out.

The manufacturer could set an effective

date for its opt-out beginning the next

model year after the date of the

manufacturer’s opt-out, or any model

year thereafter. EPA would not

determine the validity of opt-out under

this offramp unless EPA is to determine

the validity of the initial opt-out. EPA

is proposing that manufacturers’

obligations under National LEV and

state Section 177 Programs would be

identical to those described if a state

failed to submit a SIP revision, except

that no state would be a violating state.

C. Offramp for Manufacturers for EPA

Failure to Consider In-Use Fuel Issues

EPA is proposing an additional

offramp for manufacturers related to the

potential effects of fuel sulfur levels on

emissions performance of National LEV

vehicles. EPA is proposing that

manufacturers could opt out of National

LEV if EPA failed to consider certain

vehicle modifications, on-board

diagnostic control systems, or

preconditioning of vehicles when

requested to do so by a manufacturer as

a result of an alleged effect of highsulfur fuel levels. Manufacturers are

concerned that the sulfur levels of inuse fuels supplied outside of California

may affect the on-board diagnostic

(OBD) systems and tailpipe emissions of

National LEV vehicles. However, EPA

does not believe that at this point it has

sufficient data on these potential effects

to identify any problems conclusively

and to fully resolve any such problems

in the context of the National LEV

regulations. EPA recognizes that this

remains an important issue for the

manufacturers, however, and is

proposing to build into National LEV

means to allow problems related to fuel

sulfur effects on emissions performance

of National LEV vehicles to be

addressed within the context of

National LEV as more information

becomes available. These problems

would be addressed on a case-by-case

basis. EPA would act based on a

manufacturer’s request, supported by

data, that a specific engine family or

families are adversely affected by sulfur

in a manner covered by one of the

conditions incorporated into the

National LEV regulations and that

appropriate relief is warranted for such

family or families.

EPA recognizes that sulfur effects on

motor vehicles is also an issue outside

of the National LEV context and is being

addressed in numerous other actions.

These include testing being done to

support EPA’s Tier 2 Study and the

Ozone Transport Assessment Group’s

recommendation to EPA to explore

reducing fuel sulfur levels. EPA is

working with the various stakeholders

in developing data to quantify any

sulfur effects on current and future

technology vehicles. EPA has said that

in appropriate instances, EPA will

address sulfur effects on specific mobile

source programs. In March, 1997, EPA

released a paper entitled ‘‘OBD & Sulfur

White Paper: Sulfur’s Effect on the OBD

Catalyst Monitor on Low Emission

Vehicles.’’ This paper summarized the

sulfur concerns and the available data,

and outlined EPA’s approach to

resolving OBD/sulfur issues on a caseby-case basis. 25 EPA is pursuing

additional investigations into sulfur

impacts on OBD and emission control

system performance with the

cooperation and contribution of other

stakeholders. However, as of yet there is

little additional data, and while the

OBD & Sulfur White Paper will likely be

revised in the near future, its suggested

case-by-case approach remains EPA’s

expected approach regarding the OBD/

sulfur issue.

Based on their continuing concerns

regarding the effects of fuel sulfur levels

on OBD systems and vehicle emissions,

the auto manufacturers approached EPA

in June, 1997 with a proposed

resolution for National LEV. Believing

that the effects of fuel sulfur were not

adequately addressed by EPA in the

National LEV program, the

manufacturers proposed that National

LEV should include an offramp for

manufacturers related to in-use fuels

issues and that they should be allowed

to exit the National LEV program if EPA

were to act (or fail to act) in a specified

manner to resolve specific sulfur-related

issues. The manufacturers outlined six

different conditions (set forth below)

related to EPA actions (or lack of action)

on these issues that they believe should

allow the manufacturers to opt out of

National LEV. Below, EPA has

reproduced each of the conditions for

triggering the offramp as stated by the

manufacturers, followed by a discussion

and EPA’s proposal regarding each of

the requested offramp conditions.

First, the manufacturers suggested

that they be allowed to opt out if ‘‘EPA

declines to allow the use of OBD

catalyst monitor systems which, if

functioning properly on low sulfur

gasoline, indicate sulfur-induced passes

when exposed to high sulfur gasoline.’’

Under current regulations,

manufacturers are required to install

OBD systems that monitor emission

control components for any malfunction

or deterioration causing exceedance of

certain emission thresholds. These

systems also must alert the vehicle

operator to the need for repair by

illuminating a dashboard malfunction

indicator light (MIL) and must store

diagnostic information in the vehicle’s

computer to assist the diagnosis and

repair of the problem. Before an OBD

system can appear on new vehicles,

EPA must certify that the system meets

these requirements, and these

requirements must continue to be met in

actual in-use operation. Proper

functioning of OBD systems is evaluated

by simulating various malfunctions of

the emission control system (e.g.,

replacing the catalyst or oxygen sensors

with ineffective components) and

determining whether or not the OBD

system ‘‘notices’’ the simulated

malfunction and responds

appropriately.

The offramp condition suggested by

the manufacturers reflects their concern

that their OBD systems will be designed

to pass a certification or recall test

properly using the low-sulfur fuel

required in California, but that highsulfur fuel supplied outside of

California may affect the OBD system

such that it may be unable to detect

catalyst degradation at the necessary

emission level. In such cases, the MIL

could fail to illuminate (a ‘‘sulfurinduced pass’’), whereas if the vehicle

was operated on low sulfur fuel the MIL

would react appropriately. In the

unlikely event that EPA concluded that

an OBD system should not be certified

specifically because of this type of

behavior, manufacturers suggest that

they be allowed to opt out of the

National LEV program.

EPA acknowledges that some data

indicate that some OBD systems may

behave in the way suggested by this

suggested condition for triggering an

offramp. Thus, an OBD system might be

affected by high-sulfur fuel and fail to

register decreased catalyst performance.

However, EPA believes that more data is

needed to characterize this potential
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44769

concern better. Also, as stated above,

considerable efforts involving various

stakeholders are underway to evaluate

this and other related concerns further.

EPA believes that, in the context of the

National LEV program, it may be

inappropriate to penalize a

manufacturer who uses a system that

performs as required on low-sulfur fuel

but has sulfur-induced passes due to

high-sulfur fuel. However, EPA needs to

evaluate this potential problem properly

on a case-by-case basis. To certify such

a system, EPA would have to conclude

that the effect was due solely to sulfur

and that the OBD system could not

otherwise account for the effects of

high-sulfur fuel. EPA is also concerned

that providing an offramp if the Agency

failed to certify an OBD system upon a

manufacturer’s request puts the Agency

in the difficult position of having to

approve every request or else risk the

collapse of the National LEV program,

even if EPA believes that certification is

not technically supportable.

EPA is proposing that manufacturers

could opt out of National LEV if EPA,

upon a written request from a

manufacturer in relation to the

certification of an OBD catalyst monitor

system, fails to consider the use of the

system because it indicates sulfurinduced passes when exposed to highsulfur gasoline, even though it functions

properly on low-sulfur gasoline. EPA

does not intend to preclude the use of

such systems out-of-hand, but believes

it cannot at this time accept the offramp

language proposed by manufacturers

given the current state of knowledge and

the need for EPA to evaluate requests

carefully on a case-by-case basis. EPA is

taking comment on the manufacturers’

suggestion. EPA is also taking comment

on an alternative that would allow

manufacturers to opt out if EPA

determined that an OBD system

functioned properly on low-sulfur fuel,

had sulfur-induced passes due solely to

high-sulfur fuel and that the OBD

system could not otherwise account for

the effects of high-sulfur fuel, and EPA

then refused to certify the OBD system

because of the sulfur-induced

Second, the manufacturers suggested

that they be allowed to opt out of

National LEV if ‘‘EPA declines to

approve modifications to, on a case-bycase basis, vehicles that exhibit sulfurinduced MIL illuminations due to high

sulfur gasoline so as to eliminate the

sulfur-induced MIL.’’

This suggested offramp condition

reflects the manufacturers’ concern that

exposure to high-sulfur fuel could cause

the performance of the catalyst to

degrade to the point of OBD detection

and the MIL is therefore illuminated,

even though the same catalyst would

not have degraded enough to cause the

MIL to illuminate if the vehicle had

been operated on low-sulfur fuel. When

such a MIL illumination problem is

identified, under current regulations

modifications to OBD systems to resolve

the problem could be accomplished via

field fixes or running changes, which

are methods that allow a manufacturer

(with EPA approval) to make changes to

a previously certified emission control

system configuration. With this offramp

proposal, manufacturers are essentially

requesting that they be allowed to

determine when a sulfur-related MIL

illumination is occurring in a given

engine family and what the appropriate

response is, and that if they are not

allowed to implement their chosen

response (e.g., if EPA does not approve

a particular field fix or running change

requested by a manufacturer) they are

then provided an opportunity to exit the

National LEV program.

EPA pledged to address the issue of

sulfur-induced MIL illuminations on an

in-use, case-by-case basis until future

data and information enable a long-term

resolution of this issue. This remains

the current policy. EPA currently

believes that it would be inappropriate

to modify OBD systems unless a

manufacturer were able to supply in-use

data, or at least production-ready

vehicle data, demonstrating that sulfur

has an adverse effect on catalyst

monitoring systems for specific engine

families. EPA believes that the offramp

language suggested by the

manufacturers would be inappropriate

because it would effectively force EPA

to accept solutions to this problem that

may not be technically supportable or

else risk the termination of the National

LEV program.

EPA is proposing that manufacturers

could opt out if, based on a written

request from a manufacturer, EPA

declines to consider, on a case-by-case

basis, the manufacturer’s suggested

modifications to vehicles that exhibit

sulfur-induced MIL illuminations due to

high-sulfur gasoline so as to eliminate

the sulfur-induced MIL. As explained

below, EPA is proposing that the

National LEV regulations would define

a specific process that would allow

manufacturers to notify EPA of this type

of problem and would require EPA to

respond to a manufacturer’s request

(e.g., for a running change) within a

specified time period. EPA is taking

comment on the manufacturers’

suggestion. EPA is also taking comment

on an alternative that would allow

manufacturers to opt out if, on a caseby-case basis, EPA determined that an

OBD system exhibited sulfur-induced

MIL illuminations due solely to highsulfur fuel and failed to allow

modifications to the vehicles to

eliminate the sulfur-induced MIL.

Third, the manufacturers suggested

that they be allowed to opt out of

National LEV if ‘‘EPA declines to adjust

I/M (240/ASM) cut points to account for

the effect of the high sulfur content of

current commercially available

gasoline.’’

Similar to the previous issue,

manufacturers are concerned that highsulfur levels could degrade catalysts to

the point where vehicles would fail

state Inspection/Maintenance (I/M) tests

due to the high-sulfur fuel, and they are

requesting that EPA adjust I/M

standards upwards to account for the

impact of sulfur. If EPA does not take

such action, manufacturers have

proposed that they be allowed to opt out

of the National LEV program. EPA does

not believe adjustments to I/M cut

points to account for the impacts of

sulfur are necessary or appropriate at

this time. While data being collected by

the several cooperative sulfur test

programs may help EPA in assessing

this issue, there is currently no data to

determine whether an adjustment to I/

M cutpoints is necessary and if so, the

appropriate degree of such an

adjustment. Although EPA is taking

comment on the manufacturers’

suggestion, EPA cannot justify

establishing the above condition as a

trigger for an offramp because the

necessity for such an adjustment is not

clear at this time. EPA is interested in

obtaining data, including data on Tier 1

vehicles, that might help quantify the

effect of sulfur on I/M testing and will

work with all the stakeholders to

develop the appropriate response if data

indicates there is a problem in this

instance.

Fourth, the manufacturers suggested

that they be allowed to opt out of

National LEV if ‘‘EPA declines to allow

sufficient pre-conditioning procedures

(including low sulfur fuel and

additional vehicle preparation cycles)

prior to in-use testing to remove the

effects of high sulfur from currently

available gasoline.’’

Current emission test procedures

require specific procedures to

‘‘precondition’’ each test vehicle before

the vehicle enters the actual emission

test portion of the procedure. This

ensures that all vehicles enter the

emission test in a similar condition.

Current data suggests that the

deleterious effect of sulfur on the

catalyst is reversible by operating the

vehicle for some period of time on a

low-sulfur fuel. This suggested offramp

condition is designed to alleviate
44770 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

manufacturers concern that in-use

vehicles tested by EPA (recall testing)

might not experience enough

preconditioning operation under current

regulations to eradicate the effect of

sulfur, and that this could cause

vehicles to inappropriately fail in-use

emission tests. This issue does not

apply to preconditioning of vehicles for

certification or Selective Enforcement

Auditing (SEA) testing, since these

vehicles would not have been exposed

to high-sulfur fuel. Consequently,

manufacturers propose that EPA allow

them to expand the preconditioning of

the vehicle used for in-use testing in

order to guarantee the maximum

reversal of the sulfur impact.

Current regulations allow the

approval of additional preconditioning

in ‘‘unusual circumstances’’ if the need

is demonstrated (see 40 CFR 86.132–

96(d)). EPA stated in the Final

Framework Rule that ‘‘[d]etrimental

effects on National LEV vehicles from

commercially available fuel sold in the

49 States could likely be considered an

unusual circumstance’’ (62 FR 31230).

The specific preconditioning offramp

language proposed by the auto

manufacturers is inappropriate because

it would remove EPA’s ability to

determine what type and amount of

preconditioning is necessary and

appropriate, particularly given that all

stakeholders are continuing to explore

the exact nature of sulfur’s impact on

various technologies and the degree of

reversibility exhibited by different

emission control technologies. EPA will

work with manufacturers in the context

of the currently applicable regulations

to determine an appropriate level of

allowable preconditioning. Any

preconditioning procedure utilized

under 40 CFR 86.132–96(d) to address

sulfur effects on National LEV vehicles

must be directed only at alleviating

sulfur effects. EPA also notes that the

automakers, oil industry, and EPA are

currently testing the potential effects of

various sulfur levels on clean vehicles,

and in the context of this testing a preconditioning cycle to remove sulfur

effects on catalysts is being analyzed.

EPA will look at the results of this

testing and other appropriate test results

presented by interested parties and will

determine whether any resulting sulfur

preconditioning cycle is appropriate to

apply to specific National LEV vehicles

for in-use testing. Currently it is

premature to discuss whether an

offramp should be triggered by EPA’s

refusal to allow a specific sulfur

preconditioning procedure since no

such procedure has been developed.

Sulfur effects seem to vary depending

on catalyst type and location, so EPA

will not automatically apply one

procedure to all manufacturers unless

new information arises from the various

test programs that causes EPA to

determine that to be an appropriate

course of action.

EPA believes that given the current

understanding of sulfur effects on in-use

emission performance (as measured by

in-use testing) and the case-by-case

approach EPA is planning to use to

address sulfur effects on OBD systems,

manufacturers should only be able to

opt out of National LEV based on

preconditioning concerns if EPA fails to

consider information before the Agency

in a specific case showing a need for

additional preconditioning. Thus, EPA

is proposing that manufacturers would

be able to opt out of National LEV if

EPA declines to consider, on a case-bycase basis, prior to in-use testing, preconditioning procedures designed solely

to remove the effects of high sulfur from

currently available gasoline. EPA is

taking comment on the manufacturers

suggestion. EPA is also taking comment

on an alternative that would allow

manufacturers to opt out if EPA

determined that there are significant

effects of high-sulfur fuel on OBD

systems, and then EPA declined to

allow sufficient pre-conditioning

procedures prior to in-use testing to

remove the effects of high sulfur from

currently available gasoline.

Fifth, the manufacturers suggested

that they be allowed to opt out of

National LEV if ‘‘EPA declines to ensure

that in-use, SEA, and/or certification

testing of low emission vehicles is

conducted using California Phase 2

reformulated gasoline (RFG).’’

The regulations promulgated in the

Final Framework Rule allow the use of

California Phase II RFG for in-use, SEA,

and certification testing. Certification

test fuel specifications, which include

California Phase II RFG, are part of the

National LEV Core Stable Standards,

and thus EPA cannot change these

specifications over the objection of the

manufacturers without providing an

offramp for them to opt out of National

LEV (See 62 FR 31202). Under National

LEV, manufacturers will be able to

choose to use specified Federal or

California gasoline for exhaust emission

testing, except where a specific fuel is

required, such as Federal fuel for

evaporative emissions testing. EPA’s

longstanding policy of conducting SEA

and recall testing using the fuel on

which the manufacturer chose to certify

its vehicle will continue to apply under

the National LEV program. EPA does

not believe that a specific condition for

opt-out related to use of California

Phase 2 RFG for vehicle testing is

necessary given the fuel specifications

already in the National LEV regulations

and EPA’s policy regarding in-use test

fuels. However, EPA is taking comment

on allowing manufacturers to opt out of

National LEV if EPA declines to conduct

National LEV compliance testing on the

fuel used by a manufacturer during

certification of the vehicle or engine.

Sixth, the manufacturers suggested

that they be allowed to opt out of

National LEV if ‘‘EPA, after concluding

that there are significant effects of high

sulfur fuel, fails to initiate a multi-party

process to take appropriate action to

ameliorate the effects of high sulfur

gasoline.’’

EPA has already committed that it

will conduct a multi-party process to

resolve in-use fuel sulfur issues if

further testing reveals a significant

sulfur effect on National LEV vehicles.

See 62 FR 31221. However, EPA

believes that it is unnecessary to make

violation of this commitment a

condition that would allow

manufacturers to opt out of National

LEV.

EPA is proposing the following

process for manufacturers to opt out of

National LEV if one of the conditions

described above occurred. A

manufacturer would have to send a

request to EPA in writing identifying the

particular problem at issue,

demonstrating that it was due to in-use

fuel sulfur levels, and requesting EPA to

consider taking a specified action in

response. EPA proposes that the Agency

would have 60 days to respond to the

manufacturer’s request in writing,

stating the Agency’s decision and

explaining the basis for the decision. If

EPA fails to respond in this manner in

the timeframe allotted, manufacturers

would have 180 days after the deadline

for the EPA response to decide to opt

out of National LEV. Once EPA

responded to the manufacturer’s

request, even if after the 60-day

deadline, a manufacturer that had not

yet opted out based on this offramp

would no longer be able to do so,

although if a manufacturer had already

submitted an opt-out, that opt-out

would be unaffected by EPA’s

subsequent response. Only the

manufacturer that sent the initial

request to EPA would be able to opt out

if EPA failed to respond, but in section

VI, EPA is proposing that if one

manufacturer (or OTC State) opted out

based on any of the identified offramps,

other manufacturers would be able to

opt out as well on the basis that there

had been a change to the set of parties

originally covered by the program.
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44771

26 The condition allowing an OTC State to opt

out would only arise if the initial manufacturers’

opt-out were valid. See n. 27.

27However, if a manufacturer were to opt out

because a state failed to submit a SIP revision by

the applicable deadline and the manufacturer

submitted the opt-out notification within six

months of the applicable deadline for the SIP

revision, the manufacturer’s opt-out would not be

final until the end of that six-month period. That

date (not the date of the manufacturer’s opt-out)

would start the three-month period for state opt out.

28This is true even for a manufacturer that had

opted out and set an effective date for its opt-out

that was later than the effective date of the state’s

opt-out.

EPA proposes that, consistent with

opt-outs based on other offramps, a

manufacturer that opts out based on this

offramp must continue to comply with

National LEV until the opt-out becomes

effective. The manufacturer may set the

effective date of its opt-out as early as

the next model year or any model year

thereafter. After the effective date of its

opt-out, the manufacturer would be

subject to any backstop Section 177

Programs (except for ZEV mandates)

provided that at least two-years lead

time (as provided in section 177) had

passed since the adoption of the state’s

Section 177 Program, or would be

subject to Tier 1 requirements in states

without such backstops. Other than

those ZEV mandates that would be

unaffected by the National LEV program

(i.e., existing ZEV mandates), if a

manufacturer opts out, it will not be

subject to any other ZEV mandates until

two years of lead time has passed,

which would run from the date the

manufacturer opts out of National LEV

and would be measured according to the

section 177 implementing regulations.

In lieu of providing the offramps

described above, EPA is also taking

comment on an alternative approach

that would make the provisions for EPA

action described above a substantive

requirement on EPA under the

regulations, rather than making EPA’s

failure to act a condition that would

allow manufacturers to opt out of

National LEV. For example, the

preconditioning regulations of 40 CFR

86.132–96(d) would be modified to

include a requirement that EPA respond

to any manufacturer’s request made

under that section within 60 days. In the

event that EPA failed to respond within

the specified time period, the

manufacturer would be able to enforce

the regulatory requirement against EPA,

but would not also be able to opt out of

National LEV.

D. Offramp for OTC States

In light of the proposed practically

and legally binding commitments that

the OTC States would make to the

National LEV program, it is also

appropriate to identify the limited

circumstances under which the states

should no longer be bound by those

commitments. EPA is proposing two

circumstances in which an OTC State

could opt out of National LEV: (1) If a

manufacturer were to opt out of

National LEV; or (2) if EPA were to

change a Stable Standard in a way that

would make it less stringent and as a

consequence, it would have changed

EPA’s initial determination that

National LEV would produce emissions

reductions equivalent to OTC State

Section 177 Programs. EPA is proposing

that if an OTC State were to take an

identified legitimate offramp from

National LEV, it would no longer be

bound by any commitments that it made

to the program in its initial opt-in

package, other than its commitment to

follow the National LEV regulations to

transition from National LEV to a state

Section 177 Program. An OTC State that

was already in violation of its National

LEV commitments would not be able

legitimately to opt out of National LEV

based on a manufacturer’s opt-out.

To opt out of National LEV, EPA is

proposing that the state official that

signed the commissioner’s letter in that

state would send EPA an opt-out

notification letter. The letter would state

that the state was opting out of National

LEV and specify the condition allowing

the state to opt out. The date of the state

opt-out would be the date that EPA

received the opt-out letter, but EPA is

proposing that there would be a twoyear transition period before the state

opt-out would become effective and the

state could require compliance with a

Section 177 Program without allowing

National LEV as a compliance

alternative. EPA is taking comment on

whether the National LEV regulations

should require a four-year transition

period instead. Whether an opt-out

letter alone would itself remove

National LEV as a compliance

alternative as of the effective date of the

opt-out depends on how the state

regulations are written. In opting into

National LEV the state could structure

its regulations and SIP to provide that

National LEV would not be an

alternative to the state’s Section 177

Program if the state had opted out of

National LEV pursuant to the National

LEV regulations and the opt-out had

become effective.

1. OTC State Offramp Based on

Manufacturer Opt-Out

EPA is proposing that an OTC State

would be able to opt out of National

LEV without violating its commitment if

a manufacturer opted out of National

LEV under one of the identified

offramps for manufacturers.26 All parties

would have made the choice to opt into

National LEV with an understanding

about the manufacturers and states that

would be subject to the program. If

those fundamental assumptions were to

change, the parties to the voluntary

program should have the opportunity to

reevaluate their commitments and

choose to opt out. Some OTC States

have indicated, for example, that they

believe it would not be feasible in their

states to have some manufacturers

subject to National LEV while others

that had opted out of National LEV were

subject to Section 177 Program

requirements.

If a manufacturer opted out, EPA is

proposing that OTC States would have

a three-month period to submit an optout letter. The start of the three-month

period would depend on the reason the

manufacturer opted out. If a

manufacturer were to opt out because of

state action or inaction, or because of

EPA’s failure to consider a

manufacturer’s request related to effects

of in-use fuels, the three-month period

would start on the date EPA received

the manufacturer’s opt out

notification.27 For a manufacturer’s optout based on a change to a Stable

Standard, the three-month period would

start on the date of EPA’s finding that

the opt-out was valid or the date of a

final judicial ruling that a disputed optout was valid. If a state did not opt out

within that three-month period, the

opportunity to opt out based on that

manufacturer action would no longer be

available.

The state opt-out could not become

effective until the state had provided

manufacturers with the two-year lead

time set forth in section 177, with the

two-year lead time to start on the date

that EPA received that state’s opt-out

letter. Until the state’s opt-out became

effective, manufacturers that had not

opted out of National LEV or whose optouts had not yet become effective would

continue to be subject to all the National

LEV requirements for vehicles sold in

that state. Manufacturers whose opt-outs

had already become effective would not

be affected by the state opt-out. Once

the state opt-out became effective, all

manufacturers would be subject to the

state’s Section 177 Program, if it had

been adopted at least two years

previously.28 As the existence of a

manufacturer opt-out as the basis for the

state opt-out is a simple factual

determination, EPA is not proposing

that the Agency should evaluate the
44772 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

validity of a state opt-out before it could

become effective.

2. OTC State Offramp Based on Change

to Stable Standards

The second condition that would

allow an OTC State to opt out of

National LEV would be an EPA change

to a Stable Standard that made National

LEV less stringent and, if the change

had been known at the start of National

LEV, would have changed EPA’s initial

determination that National LEV would

produce emissions reductions at least

equivalent to the adopted OTC State

Section 177 Programs. This offramp for

OTC States is the counterpart to the

manufacturers’ offramp if EPA makes

certain types of changes to Stable

Standards that make the Standards more

stringent.

In section IV above, EPA discussed its

determination that National LEV would

produce equivalent or greater emissions

reductions than the alternative of

adopted OTC State Section 177

Programs. In the modeling, EPA

assumed that, in the absence of National

LEV, programs would be in place in

those OTC States that currently have

Section 177 Programs (including

backstop programs) and that the federal

Tier 1 standards would apply in the

other OTC States. EPA is proposing that,

if EPA were to change any of the Stable

Standards in a way that made the

requirements less stringent, an OTC

State could request EPA to reevaluate

whether National LEV is still equivalent

to the alternative approach of OTC State

Section 177 Programs. The National

LEV regulations would provide that

within six months of receiving the

request EPA would conduct such an

evaluation or would determine that the

revision to the standard or requirement

would not make it less stringent.

In reevaluating equivalency, EPA

would use the same model and inputs

as it used in the initial equivalency

determination. EPA would modify the

modeling only to reflect the effect of the

modified Stable Standard and the effect

of having Section 177 Programs

(identical in stringency to the Section

177 Programs modeled in the initial

equivalency determination) in any

additional OTC States that had adopted

section 177 backstop programs since the

initial equivalency determination. In

reevaluating equivalency, EPA believes

that the focus of the evaluation should

be the ongoing validity of the initial

decision to opt into National LEV, not

whether the parties would make the

same decision at the time of the

reevaluation based on then-current

conditions. This is consistent with the

approach that the parties took to the

periodic equivalency evaluation in the

initialed MOUs. At the time of their optins, the parties should not have

anticipated that EPA would change one

of the Stable Standards, and such a

change would affect one of the basic

assumptions used to calculate the

relative benefits of National LEV and the

alternative of OTC State Section 177

Programs. Thus, it is appropriate to

reevaluate the equivalency of the two

approaches given such a change, and

provide the OTC States an opportunity

to opt out of National LEV if it is no

longer equivalent to the alternative.

EPA is proposing to include in the

equivalency reevaluation the effect of

Section 177 Programs in any additional

OTC States that had adopted Section

177 Programs since the initial

equivalency determination. This

represents a compromise between OTC

States’ and manufacturers’ positions. In

making the initial equivalency

determination, EPA is proposing to

compare National LEV to the alternative

of OTC State Section 177 Programs. See

section IV. As discussed above, EPA is

proposing to assume that Section 177

Program requirements would apply in

those OTC States that currently have the

requirements or backstop requirements

in their state law or regulations and that

the federal Tier 1 standards would

apply in the other OTC States. The OTC

States requested that EPA take a

somewhat different approach to the

initial equivalency determination by

assuming that Section 177 Programs

would also apply in particular OTC

States that are currently in the process

of developing such regulations. For the

initial determination, such a change in

the assumptions would have no effect

on EPA’s finding that National LEV

would produce emissions reductions at

least equivalent to those that would be

produced by the alternative. EPA

performed a sensitivity analysis for the

initial equivalency determination to

analyze the effects of the most

optimistic assumptions regarding

adoption of Section 177 Programs by

OTC States, which indicated that even

with those assumptions National LEV

would still produce emissions

reductions equivalent to or greater than

that alternative. However, given the

OTC States’ concern, EPA believes it

would be appropriate to modify the

inputs to any reevaluation to reflect the

then-current reality in terms of which

OTC States had actually adopted

Section 177 Programs. The modeling

would continue to assume that all states

with Section 177 Programs would have

the same requirements used in the

initial equivalency modeling, as

discussed above. Thus, the reevaluation

would not reflect any changes in the

state’s legal authority under the CAA to

adopt programs subsequent to their

decision to opt into National LEV, but

it would take into account subsequent

actions taken by the OTC States based

on legal authority they had at the time

of the decision.

EPA does not believe it would be

appropriate to include in the

reevaluation of equivalency the effects

of other changes in circumstances

affecting emissions reductions under

National LEV or the alternative, such as

changes to California’s LEV program. At

the time of opt-in, all of the parties will

be aware that circumstances might

change over the period that National

LEV is in effect. For example, California

might modify its requirements during

that time. In making the decision to opt

into National LEV and choose it over the

alternative for a given period of time,

the parties will have to evaluate the

likelihood that any of the relevant

circumstances would change

sufficiently to reverse their inclination

to opt in. Thus, the OTC States will

have to consider the likelihood that

California would modify its CAL LEV

requirements and the likely effect of

such a modification, and decide

whether to commit to National LEV in

lieu of a state Section 177 Program that

could include any subsequent changes

to CAL LEV. By opting in, the OTC

States will have made the decision that

the possibility of those benefits is

outweighed by the certainty of the

benefits from National LEV (if it goes

into effect). The reevaluation of

equivalency should not allow parties to

reconsider that initial choice with the

benefit of hindsight. National LEV will

only come into effect if the parties to the

program commit to it for a specified

duration, and an EPA change to the

underlying standards should not

become an opportunity to undermine

that basic commitment.

If EPA made a change to a Stable

Standard that would have changed the

equivalency determination, EPA is

proposing that the OTC States would

have three months to opt out, running

from the date that EPA found that

National LEV would no longer produce

emissions reductions equivalent to

those that would be produced by OTC

State Section 177 Programs. If a state

did not opt out within that three month

period, the opportunity to opt out based

on that finding would no longer be

available.

Also consistent with the other state

offramp, a state opt-out based on a

change to a Stable Standard could not

become effective until it had provided
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44773

29EPA is proposing to reject the date of state

adoption of regulations as the starting date for

determining whether the section 177 lead time

requirement has been met only in those situations

where a state has adopted a backstop Section 177

Program and National LEV has come into effect. For

those states that already have backstop Section 177

Programs, if National LEV does not come into effect,

the date of adoption of the state regulations is still

the controlling date for determining when the twoyear lead time requirement has been met. In those

states, the only legal option available to

manufacturers has been to comply with the state

Section 177 Program. The theoretical possibility

that they might not have to comply with the state

requirements does not mean that they have not been

given the two-year lead time required by section

177.

30See American Automobile Manufacturers Ass’n

v. Greenbaum, No. 93–10799–MA, slip op. at 23,

1993 WL 442946 (D. Mass. Oct. 27, 1993), aff’d.,

31 F.3d 18 (1st Cir., 1994).

manufacturers with the two-year lead

time set forth in section 177, with the

two-year lead time to start on the date

that EPA received the state’s opt-out

letter. The manufacturers’ obligations if

a state took this offramp would be

determined the same way as described

in the preceding section (when an OTC

State opts out because a manufacturer

opted out).

E. Lead Time Under Section 177

The proposed opt-out regulations

discussed above incorporate and rely on

EPA’s proposed interpretation of section

177’s requirements related to state

adoption of the CAL LEV program.

Section 177 of the Act provides the legal

authority for states to adopt ‘‘standards

relating to the control of emissions from

new motor vehicles’’ and governs the

timing of implementation of such

requirements. It provides that a state

may adopt new motor vehicle standards

only if they are identical to California

standards for a given model year for

which EPA has granted a waiver, and

the state must ‘‘adopt such standards at

least two years before commencement of

such model year (as determined by

regulation of the Administrator).’’ EPA

has previously adopted regulations

interpreting this provision. See 40 CFR

85.2301 et seq. These regulations do not

adequately address the issue of when

the two-year lead time starts for

backstop Section 177 Programs (i.e., a

Section 177 Program that allows

National LEV as a compliance

alternative) after National LEV has come

into effect.

It is not clear under section 177 or

EPA’s current implementing regulations

when the two-year lead time period

would start if, after National LEV came

into effect, a state with a backstop

Section 177 Program were to delete

National LEV as a compliance

alternative (either in violation of its

commitment to National LEV or

legitimately by taking an offramp) or if

a manufacturer legitimately decided to

opt out of National LEV. Therefore, as

part of the National LEV regulations,

EPA is proposing regulations to

determine the date on which the twoyear lead time period starts in the

special circumstances that arise only

when a state has a backstop Section 177

Program that allows National LEV as a

compliance alternative and National

LEV has gone into effect.

The meaning of the two-year lead

time provision in section 177 is

ambiguous in the context of National

LEV and backstop Section 177

Programs. There are at least three

possible ways to approach this

provision in this context. One possible

approach is that the two-year lead time

period starts when the state adopts the

backstop Section 177 Program. Under

this interpretation, section 177 would

require the state to have adopted its

backstop Section 177 Program at least

two years before the model year to

which it applies. After the two-year lead

time had run from the date of adoption,

the state could remove National LEV as

a compliance alternative and require

immediate compliance with the Section

177 Program at any time. EPA does not

believe this is a proper application of

section 177 in the National LEV context.

The two-year lead time requirement is

intended to give manufacturers time to

make the changes in product planning,

production and distribution that are

involved in switching from one motor

vehicle program to another. It

recognizes the practical difficulties in

making large production shifts in very

short time-frames. Where manufacturers

have had the legal authority to comply

with National LEV in lieu of the state

program, allowing states to drop

National LEV as a compliance

alternative with no lead time would

allow states to circumvent the

protection that Congress conferred on

manufacturers in section 177.29 Thus,

EPA is not proposing to adopt this

approach.

Another possible approach to section

177 in these limited circumstances, and

the one that EPA is proposing to adopt,

is that, if a manufacturer will need to

comply with a state Section 177

Program after National LEV has come

into effect, the two-year lead time runs

from the date that the manufacturer

knew that it would need to comply with

the state Section 177 Program rather

than with National LEV. EPA believes

this is the most appropriate way to

implement section 177 in this special

circumstance, as long as manufacturers

are able to waive the two-year lead time

requirement. Given that the failure to

provide statutory lead time renders

noncomplying state programs

unenforceable, rather than rendering

them void,30 there should be little

question that manufacturers have the

ability to waive the lead time

requirement if they choose. This

approach to section 177 (including both

when lead time starts and that

manufacturers can waive the lead time)

ensures that, in the context of National

LEV and state backstop Section 177

Programs, two of Congress’ purposes in

adopting section 177 are met—it

protects manufacturers from having

insufficient time to switch from one

motor vehicle program to another, and

it allows states to ensure that they can

achieve the extra emissions reductions

from motor vehicles contemplated by

section 177.

EPA’s proposed interpretation of

section 177 is reflected in today’s

proposed regulations regarding what

requirements would apply in the

unlikely event that an OTC State were

to break its commitment to National

LEV or that a manufacturer or an OTC

State were to opt out of National LEV.

For example, if a state with a backstop

Section 177 Program were to delete

National LEV as a compliance

alternative after National LEV had come

into effect, the state would have

changed the manufacturers’ regulatory

obligations and the manufacturers

would be entitled to two-years lead time

running from the date of the state action

purporting to change the manufacturers’

regulatory obligation. By opting into

National LEV, manufacturers would not

be agreeing to waive the lead time

required under section 177 in a

circumstance where a state broke its

commitment to National LEV and

deleted National LEV as a compliance

alternative, and thus the manufacturer

would get the full two-years lead time

set by section 177.

Another example demonstrates how

the waiver provision modifies the twoyear lead time. If an offramp were

triggered and a manufacturer were to

decide to opt out of National LEV and

then set an effective date one year from

the time of its opt out, under today’s

proposed regulations, upon the effective

date of the opt out, the manufacturer

would be required to comply with

Section 177 Programs (except for

backstop ZEV mandates) in any state

that had not broken its commitment to

National LEV. To the extent that this

provides the manufacturer with less

than two-years lead time, the

manufacturer will have waived the lead

time provision by opting into National
44774 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

31 EPA is also proposing that OTC States could

opt out if a manufacturer opted out, and

manufacturers could opt out if either another

manufacturer or an OTC State opted out. Yet for

purposes of evaluating the stability of the National

LEV program, EPA need not consider these

secondary opt-out opportunities because they

would only arise if an OTC State or EPA had

already triggered another offramp.

LEV combined with setting the effective

date for its opt-out. For backstop ZEV

mandates, however, manufacturers

would not have to comply with the ZEV

mandate until the two-year lead time

period had passed (which would start

running from the date of the

manufacturer’s opt-out) because in

opting into National LEV manufacturers

are not waiving the two-year lead time

with respect to ZEV mandates.

A third possible approach to section

177’s two-year lead time requirement

provides an alternative basis for today’s

proposal. Under this approach, the lead

time requirement differs depending

upon the factual setting. In some

instances, measuring lead time from the

date of state adoption of a backstop

Section 177 Program still provides

manufacturers adequate protection and

thereby implements both the clear

language of the statute and the clear

intent of the provision. For example, in

opting into National LEV, a

manufacturer is choosing to accept a

compliance alternative that involves

some risk of a rapid change in the

manufacturer’s regulatory obligations if

the manufacturer opts out. However, as

proposed here, the program that the

manufacturer is opting into provides

substantial protection for manufacturers

with regard to the applicability of

backstop Section 177 Programs upon an

opt-out. Because the manufacturer

controls the effective date of the opt-out

and the manufacturer would not be

subject to a backstop Section 177

Program until its opt-out became

effective, the manufacturer can ensure

that it does not become subject to a

Section 177 Program without whatever

lead time it views as adequate. In this

situation, the statutory intent to ensure

that manufacturers have lead time is

met by providing that a state can

immediately implement a Section 177

Program for any manufacturer whose

opt-out from National LEV is effective,

if the backstop Section 177 Program was

adopted at least two years previously.

Thus, for situations where the

manufacturer controls the date that it

becomes subject to the Section 177

Program, section 177 would start the

two year lead time period from the date

of state adoption of the backstop Section

177 Program.

The other type of situation is one

where the state takes an action imposing

requirements on a manufacturer under

section 177 and the manufacturer has no

control over the timing of those

requirements. For example, a state

might remove National LEV as a

compliance alternative from its state

regulations, leaving only the Section

177 Program requirements in place,

which the state had adopted at least two

years earlier. In that instance, making

the manufacturer immediately subject to

the section 177 requirements would be

contrary both to the purposes of the

section 177 lead time requirement and

to the intended operation of National

LEV. By opting into National LEV the

manufacturer did not accept the

possibility that a state might commit to

National LEV and then violate that

commitment. Nor is there any way for

the manufacturer to protect itself against

an immediate application of the section

177 requirements by the violating state,

except not to opt into National LEV at

all. Under the circumstances where the

state controls the timing of the

applicability of the Section 177

Program, the section 177 lead time

provisions would be implemented by

requiring two years of lead time from

the date that the manufacturer knew it

would become subject to the state’s

Section 177 Program without the option

of complying with National LEV as an

alternative.

The interpretation of section 177 that

EPA is proposing would apply only in

the very unique situation presented by

National LEV—where states and

manufacturers are both voluntarily

opting into the national program. It does

not necessarily provide any guidance for

other circumstances.

VII. National LEV Will Produce

Creditable Emissions Reductions

In the Final Framework Rule, EPA

noted that National LEV must be an

enforceable program to grant states

credits for SIP purposes for emission

reductions from National LEV vehicles.

As discussed in the Final Framework

Rule, there are two aspects to ensuring

that National LEV is enforceable. See 62

FR 31225 (June 6, 1997). First, the

National LEV program emissions

standards and requirements must be

enforceable against those manufacturers

that have opted into the program and

are operating under its provisions. In

the Final Framework Rule, EPA found

that the National LEV program meets

this aspect of enforceability. Second, the

National LEV program itself must be

sufficiently stable to make it likely to

achieve the expected emissions

reductions. To achieve the expected

emissions reductions from National

LEV, the offramps must not be triggered

and the program must remain in effect

for its expected lifetime. EPA also found

in the Final Framework Rule that the

program elements finalized in that rule

would contribute to a stable National

LEV program. In today’s notice, EPA

proposes that the complete National

LEV program as contained in today’s

proposal and the Final Framework Rule

would be sufficiently stable to make the

program enforceable and hence

creditable for SIP purposes.

The only circumstances that would

allow the National LEV program to

terminate prematurely would be an OTC

State’s failure to meet the commitments

it makes regarding adoption of motor

vehicle programs under section 177 of

the Act, certain EPA changes to Stable

Standards that would allow either a

manufacturer or an OTC State to opt out

of National LEV, or certain EPA actions

or inactions related to in-use fuels. 31

The Final Framework Rule described

the basis for EPA’s belief that the

Agency is unlikely to change any of the

Stable Standards in a manner that

would give the auto manufacturers the

right to opt out of National LEV. Here

EPA proposes to find that National LEV

is stable because EPA believes that an

OTC State is unlikely to fail to meet its

commitments to National LEV, EPA is

unlikely to change any of the Stable

Standards in a manner that would allow

the OTC States to opt out of National

LEV, and EPA is unlikely to act in a

manner that would allow manufacturers

to opt out based on the proposed

offramps related to in-use fuels.

A. OTC States Will Keep Their

Commitments to National LEV

As discussed above, under this

proposal there are three ways in which

an OTC State could violate its

commitments to National LEV and

allow the manufacturers to opt out of

the program: (1) Attempt to have a state

Section 177 Program (including ZEV

mandates, except in states with existing

ZEV mandates) that was in effect and

that prior to MY2006 did not allow

National LEV as a compliance

alternative; (2) failure to submit a

National LEV SIP revision to EPA by the

specified date; or (3) failure to submit an

adequate National LEV SIP revision.

EPA is confident that the OTC States

will keep all of their commitments to

National LEV for the duration of the

program. The OTC States’ practical

ability to meet their commitments, the

fact that the OTC States would have

made commitments to the program

through both practically binding

instruments and legally binding

instruments, and the effects of a
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44775

violation of their commitments, all

combine to support a finding that the

states are unlikely to trigger an offramp

for manufacturers.

First, the OTC States should have no

practical difficulty carrying out their

commitments. As proposed, after the

OTC States have opted into National

LEV and the program has come into

effect, the states would need to adopt

regulations (or modify existing

regulations) to commit to accept

National LEV as a compliance

alternative for the specified duration

and to submit those regulations to EPA

as a SIP revision within one year (or for

a few states, eighteen months) of the

date of EPA’s finding that National LEV

is in effect. Based on discussions with

each of the OTC States on the time

needed to complete a rulemaking in that

state, EPA believes that these are

realistic deadlines for state action,

which would provide sufficient time for

the states to complete their regulatory

processes and submit their SIP

revisions. (See docket no. A–95–26 for

memo on these discussions.) In

addition, the SIP submissions follow

fairly quickly upon the initial OTC State

opt-ins, which maintains the political

momentum for the states to follow

through on the second step of their

commitments. The deadline for SIP

submissions would require states to

begin developing their regulatory

commitments almost immediately after

their Governors issue executive orders

(or letters) committing to National LEV

and directing the state agencies to

submit the SIP revisions. EPA believes

it is highly unlikely that states would go

through all the effort to sign up to the

National LEV program and then almost

immediately derail the program by

failing to submit a SIP revision. There

appears to be no way in which such an

action could benefit a state, and there

could be a substantial negative public

reaction associated with such a reversal.

Apart from the need to adopt

regulations and submit a SIP revision,

there is no other action states need to

take to uphold their commitments to

National LEV and hence no practical

impediment to states carrying out their

commitments to National LEV.

In addition, the OTC States would be

practically and legally bound to uphold

their commitments to allow National

LEV as a compliance alternative to a

state Section 177 Program for the

duration of their commitments. The

initial opt-ins from the Governors and

state commissioners would provide a

substantial expression of support for

National LEV at high state political

levels. Through the opt-in instruments,

the state would have publicly

committed to accept National LEV as a

compliance alternative to a state Section

177 Program for the duration of the

commitment. The executive order (or

letter) would both invest the

commitments with the full authority of

the state Governors and initiate the

second step of the opt-in. An explicit

directive from the Governor to submit

such a SIP revision should assure that

the state agency will initiate the ordered

action. The only foreseeable cause of

failure to do so would be if a Governor

subsequently countermanded the

directive. EPA believes this eventuality

is highly unlikely, given both the short

time frame in which such a reversal

would have to occur and all of the other

incentives for the states to meet their

commitments, such as the

environmental costs of allowing the

manufacturers to opt out once the

program has begun. While the outcome

of a government rulemaking process

cannot be predetermined, these same

incentives for the states to meet their

commitments make it highly probable

that, once proposed, the states will

finalize the regulatory changes and SIP

revisions necessary to complete their

commitments to National LEV.

Once EPA has approved a National

LEV SIP revision, the state would be

legally bound to uphold its

commitment. As discussed above in

section V.C.4, an approved SIP

provision committing a state to accept

National LEV as a compliance

alternative to a state Section 177

Program or ZEV mandate would

preclude a conflicting state law that

required manufacturers to comply with

a state Section 177 Program or ZEV

mandate without allowing National LEV

as a compliance alternative. Until EPA

approved a subsequent SIP revision,

manufacturers could enforce the initial

SIP commitment in court. Furthermore,

EPA would be obligated to disapprove

a subsequent SIP revision that violated

a state’s commitment to allow National

LEV as a compliance alternative for the

specified period because it would likely

interfere with other states’ ability to

attain the NAAQS. Other states would

have reasonably relied upon the

emissions reductions from National LEV

for attainment and maintenance, and the

effect of approving the new SIP revision

would almost certainly be to deprive the

states of those reductions.

Even if the state were not bound to its

commitment legally, the practical effects

of not meeting its commitment provide

an independent basis for finding that

National LEV is stable. The structure of

the proposed opt-out provisions would

establish substantial disincentives for

OTC States to violate their

commitments, given the requirements

that would apply to vehicles sold in the

violating state, the opportunity it would

provide for manufacturers to opt out of

National LEV, and the consequences of

such an opt-out. As discussed in detail

above in section VI.A.1, EPA is

proposing that, for an OTC State that

has violated its commitment by

attempting to have a state Section 177

Program that does not allow National

LEV as a compliance alternative, the

consequences in that violating state

would be that under National LEV all

manufacturers would be able to comply

with Tier 1 tailpipe standards and not

count those vehicles in the fleet NMOG

average. Thus, the violating state would

receive SIP credits based on this

reduced compliance obligation.

Similarly, if a state fails to submit its

SIP revision committing to National

LEV or submits an inadequate SIP

revision, the same reduced tailpipe

standard requirements would apply in

the violating state for any manufacturer

that opted out of National LEV until the

manufacturer’s opt out became effective.

Thus, the violating state would (or is

likely to, depending upon the type of

violation) receive higher emitting

vehicles and commensurately fewer SIP

credits for a potentially long period of

time. (See section VI.A above for a

discussion of timing of requirements

applicable to manufacturers under

various options.)

In addition, states would be further

discouraged from violating their

commitments because a state violation

would give manufacturers the

opportunity and reason to opt out of

National LEV, and manufacturer optouts would hurt air quality in all states.

If National LEV is in effect, a substantial

number of the OTC States and probably

all of the 37 States are unlikely to have

backstop Section 177 Programs in place.

States without backstop Section 177

Programs would not be able to

implement a state Section 177 Program

for over two years because of the time

needed to adopt a program and the two

years of lead time required under

section 177. During this period,

manufacturers that had opted out of

National LEV would have to comply

only with federal Tier 1 standards for

sales of new motor vehicles in those

states without backstop programs. Also,

sales of these Tier 1 vehicles would

further increase vehicle emissions in

both the violating state and states with

backstop Section 177 Programs as well,

through migration of dirtier Tier 1

vehicles.

EPA is confident that the combination

of the feasibility of compliance with the

OTC State commitments, the practical
44776 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

32See docket no. A–95–26, IV–A–03 for EPA’s

cross border sales policy. The current cross border

sales policy allows sales of vehicles certified to

California’s emission standards in states contiguous

to, or within 50 miles of, California and states that

and legal constraints on a state breaking

its commitment, and the environmental

and SIP-related consequences of a state

breaking its commitment make it highly

unlikely that an OTC State that has

opted into National LEV will violate any

of its commitments to the program.

B. EPA Is Unlikely To Change a Stable

Standard To Allow OTC States To Opt

Out of National LEV

In the Final Framework Rule, EPA

explained why the Agency is unlikely to

change any of the Stable Standards in a

manner that would give the auto

manufacturers the right to opt out of

National LEV. EPA also believes it is

unlikely to change any of the Stable

Standards in a manner that would allow

the OTC States to opt out of National

LEV. As proposed above in section

VI.B.2, an OTC State would be able to

opt out of National LEV if EPA changed

a Stable Standard in a way that made it

less stringent and as a consequence

would have changed EPA’s initial

determination that National LEV would

produce emissions reductions

equivalent to the OTC State Section 177

Programs that would be in place in the

absence of National LEV. Given the

greater emissions reductions that would

be produced by National LEV compared

to the alternative of OTC State Section

177 Programs (discussed above in

section IV), only a significant weakening

of a Stable Standard would be likely to

have changed EPA’s determination that

National LEV would produce emissions

reductions at least equivalent to the

alternative. Such a weakening of a

Stable Standard would be contrary to

EPA’s mission of environmental

protection and would jeopardize the

National LEV program, which the

Agency strongly supports and in which

EPA has invested significant resources.

EPA’s mission is to protect human

health and the environment, in this case

by reducing air pollution from motor

vehicles. Absent a serious problem of

technical feasibility, EPA has no reason

to make the Stable Standards

significantly less stringent over time.

EPA has evaluated each of the National

LEV requirements contained in the

Final Framework Rule and today’s

proposal, and the Agency believes that

they are technically feasible. Almost all

of the technical requirements for

vehicles certified under National LEV

are consistent with the provisions of the

draft MOU initialed by the motor

vehicle manufacturers’ associations as

an acceptable approach to the program,

which strongly indicates that the

manufacturers believe the National LEV

requirements are feasible. While a few

requirements, such as the Supplemental

Federal Test Procedure (SFTP), were not

fully developed at the time the

manufacturers initialed the draft MOU,

the manufacturers are extremely

unlikely to sign up to a voluntary

program with substantial outstanding

technical issues and no identified

approach for resolution. Moreover, the

requirements under National LEV are no

more stringent than the requirements

under the California LEV program. EPA

has granted a waiver of preemption

under section 209 of the Act for the

California LEV program after finding

that the standards were technically

feasible. See 58 FR 4166 (Jan. 13, 1993).

In addition, EPA strongly supports

National LEV and is extremely unlikely

to act in a manner that would risk

dissolution of the program. For many

areas of the country National LEV

would be a very cost-effective program

to reduce motor vehicle emissions of

pollutants that harm public health and

the environment. EPA has invested

significant resources in facilitating the

negotiations between the parties and

developing the regulatory framework for

the National LEV program, and the

Agency would not lightly jeopardize the

results of this effort.

C. EPA Is Unlikely To Fail To Consider

In-Use Fuels Issues To Allow

Manufacturers To Opt Out of National

LEV

EPA also believes that the Agency is

unlikely to act or fail to act in a manner

that would allow the manufacturers to

opt out of National LEV based on an

offramp related to in-use fuels. As

discussed above, EPA is proposing an

additional offramp for manufacturers to

address their concerns regarding the

potential effects of fuel sulfur levels on

the emission performance of National

LEV vehicles. This offramp could be

triggered if manufacturers assert that

one of the identified potential problems

related to fuel sulfur levels arises and

EPA declines to consider allowing

manufacturers to take the identified

actions in response. EPA recognizes that

the potential effects of fuel sulfur levels

are of particular concern to

manufacturers. If ongoing additional

investigations indicate problems that

need to be addressed, EPA will need to

reassess the fuel sulfur issue in both the

National LEV context and other EPA

motor vehicle emission control

programs, as discussed above in section

VII.C. Given EPA’s recognition of the

manufacturers’ concerns and the

ongoing process for resolving them

outside of the National LEV context,

EPA believes it is highly unlikely that

the Agency would fail to respond to a

manufacturer’s request to address any

problems that are identified or decline

to consider any reasonable solutions. In

addition, EPA would have all the same

incentives here to avoid taking any

action that would jeopardize the

benefits from the National LEV program,

as discussed above for changes to Stable

Standards.

VIII. Additional Provisions

A. Early Reduction Credits for Northeast

Trading Region

EPA is proposing that manufacturers

may generate early reduction credits for

sales of vehicles in the Northeast

Trading Region (NTR) in MY1997 and

MY1998, prior to the start of National

LEV in MY1999. This would provide

manufacturers added flexibility as well

as create an incentive for them to

introduce cleaner vehicles into this

region before MY1999, thus providing

air quality benefits sooner. EPA

proposes to take the same approach to

these early reduction credits in the NTR

as the Final Framework Rule took to the

early reduction credits earned in the 37

States before MY2001. Since the credits

cannot be used or traded before

MY1999, EPA is proposing to treat any

credits earned in the NTR before

MY1999 as if earned in MY1999 for

annual discounting purposes. This is

consistent with EPA’s approach to early

reduction credits in the 37 States and

with California’s approach to allowing

early generation of credits. These credits

will be subject to the normal discount

rate starting with MY1999, meaning

they will retain their full value for

MY2000 and will be discounted from

then on. In addition, EPA is proposing

that, consistent with the approach to

early reduction credits in the 37 States,

early reduction credits in the NTR will

be subject to a one-time ten percent

discount applied in MY1999, as

discussed below.

Manufacturers would be able to

generate early reduction credits in the

NTR by supplying vehicles with lower

emissions than otherwise required

during this time period in any OTC

State that is in National LEV for

MY1999 and later. Specifically,

manufacturers would be able to generate

credits for sales of TLEVs, LEVs, ULEVs

and ZEVs sold in the OTR outside New

York and Massachusetts in MY1997,

and outside of New York, Massachusetts

and Connecticut in MY1998, to the

extent that such vehicles can be sold

under EPA’s cross-border sales policy.32
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44777

have a Section 177 Program in place. Thus, in the

OTR for MY1997 and MY1998, manufacturers

would be allowed to sell California vehicles in

Maine, New Hampshire, Vermont, Massachusetts,

New York, Rhode Island, Pennsylvania, and

Connecticut.

33These changes would also be required if not all

OTC States opted in. EPA continues to believe that

National LEV should be a 49-state program. EPA

notes that the auto manufacturers have repeatedly

stated that all OTC States must opt into National

LEV. However, if the auto manufacturers and the

relevant OTC States were interested in National

LEV proceeding even with less than 49 states

participating, EPA would want National LEV to

proceed. The air quality benefits of National LEV

are too important not to do so.

34Similarly, if National LEV came into effect

without all OTC States opting in, EPA is proposing

that vehicle sales in those states would not be

included in the NMOG average. EPA’s proposed

treatment of vehicle sales in OTC States that break

their commitments is addressed in the proposed

regulatory provisions and preamble discussion of

manufacturer and OTC State offramps.

Additionally, manufacturers could

generate credits for sales of vehicles

achieving a lower fleet average NMOG

value than required under the state

Section 177 Programs in New York and

Massachusetts in MY1997, and in New

York, Massachusetts and Connecticut in

MY1998, assuming that those states

have committed to National LEV for

MY1999 and later. Manufacturers would

not be able to take credit for vehicles

sold to meet the applicable NMOG

averages in New York, Massachusetts

and Connecticut in MY1997 and

MY1998, as that would be using

vehicles required independent of

National LEV to reduce the stringency of

the National LEV requirements, and

hence would be ‘‘double-counting.’’

EPA believes that there are substantial

benefits to encouraging early

introductions of cleaner vehicles.

However, the Final Framework Rule

included a discount for early reduction

credits in the 37 States in part to

address a concern that giving full,

undiscounted credits for all early

reductions may generate some windfall

credits. See 62 FR 31214–31215.

‘‘Windfall’’ credits are credits given for

emission reductions the manufacturer

would have made even in the absence

of an early credit program. The purpose

of giving credits for early reductions is

to encourage manufacturers to make

reductions that they would not have

made but for the credit program.

Because credits can be used to offset

higher emissions in later years, if

manufacturers are given credits for early

reductions they would have made even

without a credit program, an early credit

provision could decrease the

environmental benefits of the program.

EPA is taking comment on the

potential for windfall credits in the NTR

and whether ten percent is an

appropriate discount factor.

Specifically, EPA requests comment on

whether a lower number such as five

percent or no discount factor would be

more appropriate in light of the

probability that manufacturers would

introduce cleaner vehicles early absent

early reduction credits, and the fact that

National LEV is a voluntary program

that will produce cleaner vehicles than

EPA has the authority to require before

MY2004. In addition, EPA requests

comment on whether it should apply a

uniform approach to early reduction

credits in the 37 States and the NTR, or

whether there are reasons to take

different approaches in the two regions.

EPA is also taking comment on whether

ten percent (or some lower percent or

zero) is the appropriate discount factor

for early credits in the 37 states given

that National LEV is now proposed to

start in MY1999 instead of MY1997.

B. Calculation of Compliance With

Fleet Average NMOG Standards

Various provisions in the Final

Framework Rule assume that National

LEV is a 49-state program. However, it

is possible that National LEV would

continue even if one or more OTC States

opt out. Having less than 49 states in the

National LEV program would require

changes in the Final Framework Rule’s

provisions for determining compliance

with the fleet average NMOG

standards.33

EPA is proposing to modify the Final

Framework Rule so that the NMOG fleet

average calculation will not include

vehicle sales in any OTC State that

legitimately opts out once that opt-out

becomes effective.34 This would help

ensure that states that opt into National

LEV will receive the anticipated

emissions benefits as long as they and

the auto manufacturers participate in

National LEV. The opposite approach

(i.e., including all vehicle sales in any

OTC States that are not participating in

National LEV) would concentrate

cleaner cars in those OTC States not in

National LEV at the expense

(environmentally) of OTC States

committed to National LEV.

EPA is taking comment on whether to

count in a manufacturer’s fleet average

NMOG calculation those Californiacertified vehicles that are sold under

EPA’s Cross Border Sales (CBS) policy

in states that are participating in

National LEV. A National LEV program

consisting of less than all of the OTC

States would necessitate the

continuation of EPA’s CBS policy for

those manufacturers producing vehicles

certified separately to Federal and

California standards. This policy allows

manufacturers to introduce into

commerce California-certified vehicles

in states that are contiguous to

California or other states that have

adopted the Section 177 Program. Thus,

if a state were not participating in

National LEV and instead had a Section

177 Program in effect, under the CBS

policy, manufacturers would be allowed

to sell California-certified vehicles in

National LEV states bordering the nonparticipating state. This raises the issue

of how to count such California-certified

vehicles sold in those contiguous states

in calculating the manufacturer’s

compliance with its National LEV fleet

average NMOG requirement.

One approach to the fleet average

NMOG calculation would be to include

in the calculation all vehicle sales in the

states participating in National LEV

regardless of whether the vehicles are

California or federally-certified. EPA is

concerned that this might encourage

manufacturers to sell only (or primarily)

California-certified vehicles in the OTR

(at least in MY1999 and MY2000),

which might not be allowed under the

Clean Air Act. It might also raise

warranty and recall problems if those

vehicles were found to violate LEV (but

not Tier 1) standards in use. Another

alternative would be to count only

vehicles certified to federal standards in

the fleet average NMOG calculation.

EPA is also taking comment on whether

it would be appropriate to count some

(but not all) types of California-certified

vehicles in the National LEV fleet

average NMOG calculation. In any

event, EPA would want to ensure that

manufacturers would not include those

vehicles sold in National LEV states to

consumers residing in a state with a

Section 177 Program in the

manufacturers’ compliance

determinations for both the National

LEV NMOG average and the applicable

Section 177 Program; it would not be

equitable to allow manufacturers to take

credit for such sales for two

independent programs.

C. Certification of Tier 1 Vehicles in a

Violating State

If an OTC State violated its

commitment to National LEV, in some

instances National LEV would only

require manufacturers to supply

vehicles meeting Tier 1 emission

standards in the violating state. EPA is

proposing that, as one means of

implementing this provision, EPA

would allow a manufacturer to change

the compliance levels of its vehicles

sold in a violating OTC State through

the submission of running changes to

EPA. A running change is a mechanism

manufacturers use to obtain approval
44778 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

35See 40 CFR 86.079–32, 86.079–33, and 86.082–

34.

36EPA is considering making significant changes

to its existing federal compliance program,

currently targeted to begin with MY2000 (these

changes are referred to as CAP 2000, or Compliance

Assurance Program 2000). While CAP 2000 is still

pre-proposal, EPA has established a docket (A–96–

50), which contains information on the concepts

currently being considered. Once promulgated, CAP

2000 may have some potential ramifications for

quickly changing certification designations for

National LEV vehicles sold in an OTC State that

had violated its National LEV commitment. In

particular, EPA is considering significantly

streamlining its current certification program and

requiring manufacturers to perform an in-use

verification testing program to demonstrate that the

streamlined certification procedures are capable of

predicting in-use compliance. This program would

apply to all federally certified vehicles, including

Tier 1 vehicles. Thus, CAP 2000 could also possibly

apply to any National LEV vehicles that were only

required to comply with Tier 1 tailpipe standards

under the proposal outlined above.

from EPA for modifications or additions

to vehicles or engines that have already

been certified by EPA but are still in

production. By allowing a manufacturer

to change the compliance levels of its

vehicles through a running change only

applicable to vehicles sold in a violating

OTC State, EPA would give a

manufacturer a procedure to respond to

a state violation in a timely fashion and

produce a real disincentive for an OTC

State to violate its commitment.

Manufacturers currently use running

changes in the federal certification

process to obtain EPA approval of a

change in specified vehicle

configuration or an addition of a vehicle

or engine to an approved engine family

that is still in production.35 A

manufacturer may notify the

Administrator in advance of or

concurrent with making the addition or

change. The manufacturer must

demonstrate to EPA that all vehicles or

engines affected by the change will

continue to meet the applicable

emission standards. This demonstration

can be based on an engineering

evaluation and testing if the

manufacturer determines such testing is

necessary. The Administrator may

require that additional emission testing

be performed if the manufacturer’s

determination is not supported by the

data included in its running change

application. EPA may disapprove a

running change request, which could

then require manufacturers to remedy

vehicles or engines produced under the

request.

EPA is proposing to exercise its

current authority to allow

manufacturers to use a running change

to modify quickly the compliance level

of their National LEV vehicles to Tier 1

tailpipe standards when the National

LEV regulations allow a manufacturer to

sell vehicles meeting Tier 1 tailpipe

standards in a particular state. Running

changes submitted under this proposal

will reflect only the change in emission

standards the vehicles are meeting.

Vehicles sold in an OTC State that had

violated its National LEV commitment

will be treated as Tier 1 vehicles for

purposes of federal enforcement

requirements and warranty limits and

would not count in the manufacturers’

NMOG fleet average. A manufacturer

providing vehicles that in a violating

OTC State were complying at only Tier

1 levels and were meeting more

stringent standards elsewhere would be

required to modify its certification

application to reflect the change and

install a modified Vehicle Emission

Control Information (VECI) label. The

label would state that the vehicle

complies with TLEV, LEV, or ULEV

standards, but if such vehicle is sold in

the specified violating OTC State, such

vehicle is certified to Tier 1 tailpipe

standards. The modified VECI label will

highlight the distinction in vehicle

compliance levels to consumers and the

general public. EPA believes that

running changes for this particular

situation may be allowed by applying

good engineering judgment, rather than

additional emission testing, since a

vehicle certified to National LEV TLEV,

LEV, ULEV, or ZEV standards should

also meet Federal Tier 1 standards. In

the instance where an engineering

evaluation would be insufficient to

support a change, EPA would require

additional data.

Vehicles complying only with Tier 1

tailpipe standards and sold in an OTC

State that had violated its National LEV

commitment would be treated as Tier 1

vehicles in that state for purposes of

demonstrating compliance with federal

requirements and SIP credits. These

vehicles would be held only to the Tier

1 tailpipe standards for purposes of

recall liability in that state. For example,

a vehicle recall on a National LEV

vehicle certified to LEV standards might

not be subject to recall action in the

violating state if the problem causing

the recall did not cause the vehicles to

exceed the Tier 1 standards. 36

D. Provisions Relating to Changes to

Stable Standards

The Final Framework Rule provided

that, with certain exceptions,

manufacturers would be able to opt out

of National LEV if EPA changed a motor

vehicle requirement that it had

designated a ‘‘Stable Standard.’’ The

Stable Standards are divided into two

categories: Core Stable Standards and

Non-Core Stable Standards. Core Stable

Standards generally are the National

LEV standards that EPA could not

impose absent the consent of the

manufacturers. Non-Core Stable

Standards are other federal motor

vehicle standards that EPA does not

anticipate changing for the duration of

National LEV. For both Core and NonCore Stable Standards, EPA can make

changes to which manufacturers do not

object. For Non-Core Stable Standards,

EPA can also make changes that do not

increase the stringency of the standard

or that harmonize the standard with the

comparable California standard. EPA

can make other changes to any of the

Stable Standards, but such changes

would allow the manufacturers to opt

out of National LEV. See the Final

Framework Rule for more detail on the

specific Stable Standards and the

offramp for manufacturers associated

with changes to the Stable Standards. 62

FR 31202–31207.

EPA is proposing to make a few minor

changes to the provisions for opt-outs

based on a change to a Stable Standard.

Under the Final Framework Rule, a

manufacturer cannot opt out of National

LEV based on a change to a Stable

Standard unless the manufacturer has

provided a written comment during the

rulemaking on that change stating that

it is sufficient to trigger a National LEV

offramp. If EPA went ahead and made

the change despite the objection,

manufacturers generally would have to

decide whether to exercise their opt-out

option within 180 days of the

occurrence of the condition triggering

opt-out. EPA usually consults

extensively with manufacturers

regarding contemplated changes to the

technical motor vehicle requirements to

get information on the manufacturers’

views regarding the feasibility and

effectiveness of different requirements.

Also, manufacturers have the

opportunity during the comment period

to alert EPA to any changes that

manufacturers believe may be sufficient

to provide an offramp. Thus, EPA is

highly unlikely to make any change to

a Stable Standard that may allow the

manufacturers to opt-out without being

aware of that potential and without

carefully weighing the emissions

benefits of the change relative to the

emissions benefits of assuring the

continuation of National LEV.

Nevertheless, in the final rule, EPA

provided an additional protection to

ensure that a change to a Stable

Standard did not inadvertently provide

an offramp. EPA has an opportunity to

prevent an opt-out based on a change to

a Stable Standard from coming into

effect by withdrawing the change to the

Stable Standard before the effective date
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44779

37The ‘‘next model year’’ is the model year

named for the calendar year following the calendar

year in which the event allowing opt-out occurred.

38EPA could have reconsidered the need for two

separate trading regions prior to promulgating the

Final Framework Rule, but it did not do so. EPA

thought it best to take comment on combining the

two trading regions before doing so.

of the opt-out. In addition, to make

EPA’s ability to cure the offramp

effective, the final rule delays the

earliest possible effective date of an optout based on a change to a Core Stable

Standard. Such an opt-out could not

become effective until the model year

named for the second calendar year

following the calendar year in which the

manufacturer opted out.

EPA is proposing to delete the

provisions allowing the Agency the

ability to cure under these

circumstances, and is proposing to set

the earliest effective date of an opt-out

based on a change to a Core Stable

Standard to be the same as the earliest

effective date of an opt-out based on a

violation of an OTC State commitment

to National LEV. Thus, an opt-out based

on an EPA change to a Core Stable

Standard or an OTC State violation of its

commitment to National LEV could

become effective beginning in the ‘‘next

model year.’’ 37 See section VI.A above

for further discussion of the effective

date of opt-outs based on an OTC State

violation of its commitment to National

LEV.

EPA believes that providing the

Agency a formal opportunity to cure a

change to a Stable Standard adds

unnecessary complexity to the program.

Also, if an offramp were triggered,

EPA’s ability to cure extends the period

of uncertainty as to whether National

LEV would remain in effect, which is a

destabilizing influence on the program.

EPA believes it is highly unlikely that

the Agency would change a Stable

Standard so as to trigger an offramp.

Nevertheless, in the hypothetical

situation where one of those conditions

triggering an offramp occurred, EPA

believes that it would be in all of the

parties’ best interests to know as soon as

possible whether any manufacturer

intended to opt-out, and if so, when that

opt-out would become effective. Adding

yet another layer of complexity to the

opt-out provisions undermines that

goal.

In the Final Framework Rule, EPA

stated that, if a manufacturer were to

take an offramp because EPA changed a

Stable Standard, the applicable state or

federal standards would apply. At that

time, EPA did not discuss in detail the

timing for when state or federal

standards would apply. Today EPA is

proposing that, if a manufacturer validly

opted out of National LEV based on an

EPA change to a Stable Standard, once

the manufacturer’s opt out was effective,

the manufacturer’s obligations would be

determined the same as if the

manufacturer had opted out because an

OTC State failed to submit its National

LEV SIP revision on time (except that no

state could be treated as a violating

state). The manufacturer would be

subject to any backstop Section 177

Programs for which the two-year lead

time requirement of section 177 had

been met (running from the date the

state adopted the backstop program), or

would be subject to Tier 1 requirements

in states without such programs.

Manufacturers would be subject to

backstop ZEV mandates once the twoyear lead time set forth in section 177

had passed (running from the date of the

manufacturer’s opt-out notification). To

the extent that these regulations would

provide a manufacturer with less than

the two-year lead time set forth in

section 177, the manufacturer waives

that protection by opting into National

LEV and then setting an effective date

in its opt-out notification that provides

for less than two-years lead time.

E. Nationwide Trading Region

The National LEV program, as

initially proposed and as set forth in the

Final Framework Rule, requires

manufacturers to determine compliance

with the fleet average NMOG standards

for the two classes of National LEV

vehicles in two separate trading regions:

The OTC States and the 37 States

making up the rest of the country

(except California). Credits and debits

generated under the program are

specific to the region of creation.

Several factors led the parties to

support and EPA to establish separate

trading regions in the Final Framework

Rule. In part, the two regions were set

up because the National LEV program

starts in the OTR before it applies in the

rest of the country. Additionally, at the

time the two regions were proposed, the

separate regions were designed in part

to meet the OTC States’ legal obligations

under the OTC LEV SIP call. The OTC

States were concerned that

manufacturers would provide a

different, higher emitting mix of

vehicles in the OTR than they would in

the 37 States region if they were allowed

to average their vehicle sales over a

nationwide region. Also, to ensure that

the OTC States would receive the

intended benefit of the program’s earlier

start in the OTR, the separate trading

regions facilitated the offset of debits

generated in the OTR through vehicle

introductions or credits earned in the

OTR.

The elimination of the legal

requirement to have National LEV

provide equivalent emission reductions

to the OTC LEV program and the change

in program start dates for both National

LEV and OTC State Section 177

Programs allows EPA to reconsider the

necessity of establishing separate

trading regions.38 As a result of the court

decision, EPA no longer is required to

demonstrate that National LEV provides

emission reductions at least equivalent

to those from the OTC LEV program.

The main purposes in having two

separate trading regions were to ensure

that the manufacturers meet certain fleet

average NMOG standards in the OTR for

purposes of the equivalency

requirement and to provide the actual

emissions reductions in the OTR that

the OTC States would expect to receive

upon opting into National LEV. The

absence of the legal requirement to find

equivalency means that separate trading

regions are not necessary to demonstrate

that National LEV will achieve

emissions reductions in the OTR at the

level that would be provided by

compliance with the fleet average

NMOG requirements in the OTR alone.

Additionally, in comparison to

individual OTC State adopted Section

177 Programs, National LEV starting in

MY1999 provides greater emission

reductions in the OTR. Thus, EPA does

not believe that two trading regions are

necessary to achieve the actual

emissions reductions expected in the

OTR under National LEV. Finally, EPA

believes that even with one trading

region, manufacturers’ fleets in the OTR

will comply with the fleet average

NMOG standards, as discussed below.

EPA is proposing to establish a

nationwide trading region (not

including California), starting in

MY2001. For MY1999 and MY2000,

manufacturers will have to demonstrate

compliance with National LEV

standards only in the OTR. For MY2001

and later, when the program is

introduced nationwide, EPA is

proposing that there be one compliance

region. EPA believes this will not

detrimentally affect the environmental

benefits of National LEV in the OTR and

will reduce manufacturers’ and EPA’s

administrative burden in demonstrating

compliance with the National LEV fleet

average NMOG standards. A

discrepancy between the fleet sold in

the OTR and outside the OTR would

only be possible if a manufacturer’s fleet

was made up of a number of engine

families certified to Tier 1, TLEV, and

LEV standards and vehicle buying

patterns differed significantly between
44780 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

39To meet this requirement, manufacturers will

not be required always to sell exactly the same

engine families in both California and the NTR

because in some instances, that would not be

possible. In the specific case of Tier 1 engine

families, National LEV maintains Federal Tier 1

standards while California has its own Tier 1

standards, so a manufacturer could not sell an

identical California Tier 1 vehicle as a Federal Tier

1 vehicle in the NTR under the National LEV

program. Therefore, for purposes of this provision,

EPA will consider a National LEV Tier 1 or TLEV

engine family the same as a California Tier 1 or

TLEV engine family if the National LEV engine

family has the same technology (hardware and

software) as the comparable California engine

family. A manufacturer could always certify a Tier

1 or TLEV engine family as a 50-state family and

avoid this issue.

the Northeast states and other regions of

the country. EPA does not believe that

vehicle sales patterns of the relevant

vehicles will differ dramatically

between the two regions. Moreover, for

there to be even a possibility of

introducing a greater percentage of

dirtier vehicles in the OTR than in the

rest of the country, a manufacturer’s

fleet after MY2000 would have to

include Tier 1 vehicles and TLEVs, as

well as LEVs. EPA does not believe

significant numbers of Tier 1 vehicles

and TLEVs will be sold in the OTR after

MY2000, since other provisions of the

National LEV program will act to reduce

the incentive to sell substantial numbers

of such vehicles at that time. Beginning

in MY2001, National LEV regulations

prohibit manufacturers from offering for

sale any Tier 1 vehicles and TLEVs in

the NTR unless the same engine families

are certified and offered for sale in

California in the same model year. See

62 FR 31218 (June 6, 1997).39

California’s more stringent fleet average

NMOG standard and SFTP phase-in

requirements, as described in section IX,

will act to limit the number of Tier 1

and TLEV engine families certified and

sold in California, and, therefore, the

number sold in the NTR.

Additionally, even though the

National LEV fleet average NMOG

standard is not as stringent as

California’s, the 0.075 g/mi and 0.100 g/

mi standards applicable for MY2001

and later will make it difficult for

manufacturers to include substantial

numbers of Tier 1 vehicles and TLEVs

in their fleet and still comply with the

National LEV NMOG fleet average

standard. For example, manufacturers

would have to build five ULEVs for

every one Tier 1 vehicle produced, and

approximately three ULEVs for every

two TLEVs produced, to comply with

the 0.075 g/mi fleet average NMOG

standard. Therefore, EPA believes there

are strong incentives for manufacturers

to limit or even eliminate the

production and sale of Tier 1 vehicles

and TLEVs in the NTR in MY2001 and

later, which would result in a

nationwide vehicle fleet of essentially

LEVs.

Compliance under one nationwide

trading region versus two separate

regions for MY2001 and later model

years will reduce the manufacturers’

compliance burden by eliminating the

need to specifically track vehicle sales

to two separate regions and maintain

two separate tallies of credits and debits

specific to the two regions. A single

trading region will also reduce EPA’s

administrative burden in determining

whether manufacturers are complying

with the applicable fleet average NMOG

standards. Given a nationwide fleet that

is all or almost all LEVs, a separate

trading region for the OTR would not

have any significant air quality benefit

and would add additional unnecessary

complexity to the National LEV

program.

Under today’s proposal, National LEV

would continue to include the NTR,

which would apply for MY1999–2000

and cover vehicles sold in the OTC

States. The second region would be the

All States Trading Region (ASTR),

which would include all states in

National LEV except for California, and

apply for 2001 and later model years.

Manufacturers would demonstrate

compliance with the fleet average

NMOG standards in these two regions

under the provisions set forth in the

Final Framework Rule. EPA is

proposing to delete the 37 State trading

region that was finalized in the Final

Framework Rule.

The National LEV regulations would

still need to address how to treat credits

and debits generated before MY2001.

EPA is proposing that manufacturers

could continue to generate early

reduction credits in the states outside

the NTR before MY2001 to apply to the

ASTR from MY2001 on. Manufacturers

could also use credits generated in the

NTR for demonstrating compliance in

the ASTR from MY2001 on at the same

value as if the manufacturer had used

them in the NTR under the Final

Framework Rule. However, EPA is

proposing that a manufacturer could not

apply early reduction credits generated

outside the NTR to offset any debits

generated in the NTR before MY2001.

Using credits generated outside the NTR

to offset debits generated in the NTR

during MY1999 and MY2000 would

decrease the environmental benefits that

should accrue to the NTR. EPA is taking

comment on two possible methods to

ensure that any debits in the NTR from

MY1999 or MY2000 are made up in the

NTR. One possibility is for EPA to

require compliance with fleet average

NMOG standards in the NTR and the 37

States after MY2000 if a manufacturer

has outstanding debits in the NTR after

calculating its compliance with the

MY2000 fleet average NMOG standards

for the Class A and B vehicle categories.

Such a manufacturer would be required

to meet separate fleet average NMOG

standards in the OTR and 37 States until

the model year following the model year

for which it has eliminated the

outstanding debits. Another possibility

is that an All States Trading Region

would start for all manufacturers in

MY2001. A manufacturer with debits in

the NTR after MY2000, however, would

be required to make up those debits in

the NTR. Unless a manufacturer bought

NTR-specific credits, sufficient to offset

its NTR debit on a timely basis, the

manufacturer would need to calculate

an NTR NMOG average for MY2001 and

apply any NTR-specific credits to its

NTR debits. Under no circumstance

could credits outside the NTR be used

to offset NTR debits from MY2000 or

MY1999.

EPA is also taking comment on

allowing a manufacturer to demonstrate

compliance with the fleet average

NMOG standards using actual

production data in lieu of actual sales

data if the manufacturer is

demonstrating compliance with the fleet

average NMOG standards in the ASTR.

In the Final Framework Rule, EPA

included regulations allowing

manufacturers to use production data in

lieu of sales data if a manufacturer’s

entire fleet, apart from California, was

certified to LEV or cleaner standards.

EPA was concerned about allowing the

use of production data without these

restrictions because of the need to

demonstrate compliance in two separate

trading regions. However, if EPA

establishes a nationwide trading region,

EPA is taking comment on allowing

manufacturers to demonstrate

compliance using production date

rather than sales date, even if the

manufacturer’s fleet is not all LEV or

cleaner vehicles. A manufacturer would

need to petition EPA to allow

production volume to be used in lieu of

actual sales volume and would have to

submit the petition to EPA within 30

days after the end of the model year.

EPA would grant such petition if the

manufacturer establishes, to the

satisfaction of the Administrator, that

production volume is functionally

equivalent to sales volume.

Manufacturers would still have to keep

sales data in the NTR to demonstrate

compliance with the ban on the sale of

Tier 1 and TLEV engine families if such

engine families are not certified for sale
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44781

in California for the same model year.

EPA has previously allowed

manufacturers to use production

volume in lieu of sales volume as part

of the Tier 1 standards phase-in.

F. Elimination of Five-Percent Cap on

Sales of Tier 1 Vehicles and TLEVs in

the OTR

EPA’s Final Framework Rule codified

the OTC States’ and manufacturers’

recommendation that National LEV

include provisions limiting the sale of

Tier 1 vehicles and TLEVs in the NTR

after MY2000. The first provision is that

manufacturers may sell in the NTR Tier

1 vehicles and TLEVs only if the same

or similar engine families are certified

and offered for sale in California as Tier

1 vehicles and TLEVs. See section VIII.E

above for further discussion on this

provision. The second provision is a

five-percent cap on sales of Tier 1

vehicles and TLEVs in the NTR starting

in MY2001, which allows all

manufacturers to sell Tier 1 vehicles

and TLEVs in the NTR to the extent

permitted under the first limitation as

long as the overall Tier 1 vehicle and

TLEV fleet does not exceed five percent

of the National LEV vehicles sold in the

NTR. EPA is proposing to delete the

five-percent cap provision. The parties

originally developed this provision to

address OTC States’ concerns that

National LEV could have a

disproportionate effect on NOX

emissions when compared to OTC stateby-state adoption of Section 177

Programs. See 62 FR 31217. EPA is now

proposing to delete this provision

because of the change in the OTC States’

legal obligation since this provision was

proposed and because of the additional

administrative burden it would entail if

EPA were to adopt today’s proposal to

have a single trading region starting in

MY2001. Furthermore, EPA believes the

five-percent cap would not provide any

air quality benefit given the expected

fleet make-up after MY2000 and the

other limitation on sales of these

vehicles in the NTR.

First, the court reversal of the

requirement that all OTC States adopt

Section 177 Programs effective in

MY1999, means there is no longer a

legal requirement that EPA find that

National LEV is equivalent to state

Section 177 Programs throughout the

OTR. Additionally, as discussed above

(see section IV comparing NLEV and

OTC LEV emissions reductions), the

expected benefits in the OTR of

National LEV as compared to OTC State

adopted Section 177 Programs has

increased. Therefore, there is no legal

need and less practical need for a fivepercent cap to control NOX emissions.

Second, EPA believes the five percent

cap is not necessary because it expects

manufacturers will not introduce

significant numbers of Tier 1 vehicles

and TLEVs after MY2000 in the

national, let alone the Northeast,

market. See section VIII.E above for

EPA’s rationale for this belief. This

means that National LEV will not have

a NOX penalty when compared to OTC

State adopted Section 177 Programs. A

National LEV fleet, made up primarily

of LEV vehicles, will have similar

effects on NOX emissions when

compared to a CAL LEV fleet consisting

primarily of LEV and ULEV vehicles

since both types of vehicles have the

same NOX emission standards. EPA

believes that any sales of Tier 1 vehicles

and TLEVs in the NTR after MY2000

will make up less than five percent of

the fleet in any instance, and does not

believe having a separate program to

ensure such sales limits is needed.

Finally, even if there were some

benefit to the NTR from a five-percent

cap, EPA believes the benefit would be

so minimal (at best) that it would not

justify the administrative burden given

EPA’s proposal for one trading region

after MY2000. Under EPA’s proposal for

an All State Trading Region for 2001

and later model years and the proposal

to allow manufacturers to demonstrate

compliance through production data,

manufacturers would not need to report

state-specific sales data, except to

demonstrate compliance with the fivepercent cap.

G. Technical Corrections to Final

Framework Rule

The Agency is also proposing today to

make several minor technical

corrections to the National LEV

regulations issued in the Final

Framework Rule. As already noted, a

number of changes must be made to

reflect the proposed start of the program

in the 1999 model year, rather than the

1997 model year as was used as a

placeholder in the June 6 Final

Framework Rule. In addition, EPA is

aware of several other errors and

omissions that require correction, and is

continuing to evaluate the regulations to

determine the need for additional such

corrections. Errors and omissions

identified to date include a missing ‘‘0–

3750’’ in the Loaded Vehicle Weight

column of Table R97–8 (62 FR 31249),

and incorrect full useful life in-use

formaldehyde (HCHO) standards for

LEVs and ULEVs for light light-duty

trucks of 3751–5750 lbs loaded vehicle

weight in Table R97–13 (62 FR 31250).

In the latter case, the LEV and ULEV

standards were reported as 0.018 and

0.014 grams per mile, respectively,

when in fact they should have been

0.023 and 0.013 grams per mile,

respectively. EPA is not including

proposed regulatory text for these

changes with today’s action, but

anticipates making these and similar

minor corrections with the finalization

of today’s proposal later this year. In

addition, a June 24, 1997 letter from the

American Automobile Manufacturers

Association (AAMA) and Association of

International Automobile Manufacturers

(AIAM) (available in the public docket

for review) suggests numerous other

technical corrections to the regulations

EPA promulgated on June 6, 1997. The

technical corrections detailed by

AAMA/AIAM will be reviewed by EPA,

and to the extent that they are necessary

and appropriate they will be

implemented when this rulemaking is

finalized later this year.

In the Final Framework Rule, EPA

required manufacturers to track vehicles

to the ‘‘point of first sale’’ for purposes

of determining compliance with fleet

average NMOG standards. See 62 FR

31212. EPA defined ‘‘point of first sale’’

as ‘‘the location where the completed

LDV or LDT is purchased’’ and it ‘‘may

be a retail customer, dealer, or

secondary manufacturer.’’ See 40 CFR

86.1702–97(b). EPA recognized that

requiring manufacturers to always track

vehicle sales to the ultimate purchaser

would add an additional burden on

manufacturers without having any

significant effect on air quality.

Requiring manufacturers to track

vehicles to the point of first sale was

intended to impose similar

requirements on manufacturers as those

associated with EPA’s Tier 1 standard

phase-in compliance requirements

found in 40 CFR 86.094–8 and 86.094–

9. In the Tier 1 program, manufacturers

could demonstrate compliance ‘‘based

on total actual U.S. sales of light-duty

vehicles of the applicable model year by

a manufacturer to a dealer, distributor,

fleet operator, broker, or any other entity

which comprises the point of first sale.’’

See 40 CFR 86.094–8(a)(1)(i)(B)(1)(i).

EPA believes the National LEV vehicle

sales tracking requirements operate in

the same manner as those found in the

Tier 1 regulations, but the auto

manufacturers have notified EPA of

their concern that National LEV imposes

different requirements. (Document

available in docket A–95–26.)

To eliminate confusion about the

required level of vehicle tracking

necessary to demonstrate compliance

with National LEV fleet average NMOG

standards, EPA is proposing to modify

the definition of ‘‘point of first sale’’ in

the National LEV program to include the

‘‘point of first sale’’ language found in
44782 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

40 Draft Regulatory Measure to Control Emissions

During Non-Federal Test Procedure Driving

Conditions From Passenger Cars, Light-Duty

Trucks, and Medium-Duty Vehicles Under 8,500

Pounds Gross Vehicle Weight Rating, Mail-Out

#MSC 97–06, April 23, 1997. Available in the

public docket for review, and also at http://

arbis.arb.ca.gov/msprog/macmail/macmail.htm.

41Notice of Public Hearing to Consider Adoption

of New Certification Tests and Standards to Control

Emissions from Aggressive Driving and AirConditioner Usage for Passenger Cars, Light-Duty

Trucks, and Medium-Duty Vehicles Under 8,501

Pounds Gross Vehicle Weight Rating, Mail Out #97–

13, May 27, 1997. Available in the public docket

for review, and also at http://arbis.arb.ca.gov/

msprog/macmail/macmail.htm#msc9713.

42An additional issue arises if for some reason it

becomes impossible, impractical, or undesirable for

the National LEV program to harmonize with the

CARB SFTP requirements. As the Agency

recognized in the October 22, 1996 final rule

promulgating the SFTP, the phase-in schedule of

the new standards and test procedures contained in

that rule ‘‘could create an additional burden for

auto manufacturers if the [National LEV] Program

goes into effect as proposed with a MY2001

implementation nationwide’’ (61 FR 54854). As

noted above, the new SFTP requirements, which are

of a Tier 1 level of stringency, start phasing in with

MY2000. In that model year, if the National LEV

Program is in effect, vehicles in the OTR will be a

mixture of TLEVs, LEVs, and ULEVs that is driven

by the National LEV fleet average NMOG

requirements. Outside the OTR, however, many

MY2000 vehicles are expected to be Tier 1

technology vehicles (except for possibly in some of

the states bordering OTC States), which would be

the applicable set of emission standards in that

model year. A minimum of forty percent of a

manufacturer’s nationwide fleet would be required

to meet the SFTP emission standards. However, if

the National LEV Program continues in effect, the

program would transition to a nationwide program

with MY2001. In that model year the fleet average

NMOG standard would be 0.075 grams/mileequivalent to a fleet of 100 percent LEVs. The effect

of the nationwide implementation of National LEV

at this fleet average level would be essentially to

make Tier 1 vehicles obsolete. In MY2001 a

minimum of eighty percent of a manufacturer’s fleet

must meet the new federal SFTP standards. Under

such a scenario, the auto manufacturers would have

to invest in bringing a number of Tier 1 engine

families into compliance with the federal SFTP

standards for MY2000 only to transition to a fleet

of LEVs in the following model year. EPA believes

that the environmental benefit of this investment

would be minimal, and the costs to industry would

be considerable. Consequently, under the scenario

where the CARB SFTP does not apply to National

LEV vehicles and the default federal requirements

apply, EPA does not believe it is practical or

necessary to hold manufacturers to the 40 percent

phase-in in MY2000 if the affected vehicles are

essentially phased out in the following model year.

However, EPA does not view a shifting of the entire

phase-in schedule forward by a model year (e.g., the

40 percent requirement would apply in MY2001) as

a necessary or desirable solution to the problem.

Instead, EPA is proposing to waive the MY2000

requirement, but continue the existing phase-in

with the existing MY2001 and MY2002

requirements. While EPA proposes this as a

resolution to an issue that arises under a specific

scenario, this is not addressed in the proposed

regulatory text; which assumes successful

harmonization with the CARB SFTP requirements

(making such an adjustment to the phase-in of the

federal requirements moot, as described below).

Furthermore, this proposal would only apply if

National LEV is in effect. If National LEV does not

come into effect, the current phase-in schedule

would continue to apply.

the Tier 1 regulations. EPA did not

intend to limit ‘‘point of first sale’’

entities to those specifically listed in the

National LEV regulations. EPA also does

not intend to limit a manufacturer to

tracking vehicles only to the point of

first sale if a manufacturer decides

further tracking gives it a more accurate

account of vehicle sales in the different

trading regions or its current vehicle

tracking system is set up to track

vehicles beyond the point of first sale.

However, as noted in the Final

Framework Rule, EPA does not believe

this additional level of tracking vehicles

is necessary.

IX. Supplemental Federal Test

Procedure

A. Background

The Federal Test Procedure (FTP) is

the vehicle test procedure historically

used by EPA and the California Air

Resources Board (CARB) to determine

the compliance of light-duty vehicles

and light-duty trucks with the

conventional or ‘‘on-cycle’’ exhaust

emission standards. Using the FTP,

emissions performance is tested while

the vehicle is driven over a ‘‘typical’’

driving schedule, using a dynamometer

to simulate the vehicle-to-road interface.

Pursuant to the requirements of section

206(h) of the CAA, EPA recently

promulgated revisions to the Federal

Test Procedure to make the test

procedure better represent the manner

in which vehicles are actually driven

(61 FR 54852, October 22, 1996). The

primary new element of the revisions

was the addition of a Supplemental

Federal Test Procedure (SFTP) with

accompanying emission standards

designed to address shortcomings of the

conventional FTP in the representation

of aggressive driving behavior, rapid

speed fluctuations, driving behavior

following startup, and use of air

conditioning. In addition, a new set of

requirements designed to more

accurately reflect real road forces on the

test dynamometer affects both the SFTP

and the preexisting conventional FTP.

Absent any modifications that might

result due to implementation of the

National LEV Program, these new

requirements are to be phased in,

applying to 40 percent of a

manufacturer’s fleet of light-duty

vehicles and light light-duty trucks in

MY2000, 80 percent in MY2001, and

100 percent in MY2002. A similar

phase-in schedule for heavy LDTs

begins in MY2002. The SFTP emission

standards promulgated by EPA are

appropriate for vehicles meeting the socalled ‘‘Tier 1’’ on-cycle emission

standards; EPA did not propose LEVstringency off-cycle standards as part of

its FTP revisions or as part of an earlier

National LEV rulemaking.

EPA and CARB coordinated closely

their review of the FTP, their research

efforts, and the development of their

respective off-cycle policies. On April

23, 1997, CARB published a proposal

detailing their approach to addressing

off-cycle emissions in the State of

California.40 Following a comment

period that remained open through May

6, 1997, CARB released a notice of

public hearing accompanied by a staff

report regarding its proposed adoption

of SFTP test procedures and standards

(‘‘Staff Report’’).41 The proposal has four

basic elements to it: test procedures,

emission standards for LEVs and

ULEVs, emission standards for Tier 1

vehicles and TLEVs, and a phase-in

schedule. CARB adopted SFTP

requirements largely consistent with

their proposal at a public hearing on

July 24, 1997. Any additional minor

changes that arise in subsequent stages

of CARB’s regulatory process will be

addressed in the National LEV

supplemental final rule.

EPA stated in the National LEV Final

Framework Rule its intent to harmonize

the SFTP requirements of the National

LEV program with California once

California completes the adoption of

such requirements under its LEV

program. Given that the finalization of

today’s proposal will occur sometime

after the CARB public hearing, EPA is

optimistic that the timing will allow the

CARB and National LEV SFTP programs

to be largely harmonized with the

completion of the supplemental final

National LEV rulemaking initiated by

today’s proposal. However, pending

completion of that harmonization, the

federal SFTP requirements that have

already been promulgated are the

default requirements for vehicles in the

National LEV program. In today’s

notice, as further described below, EPA

is proposing to adopt the CARB SFTP

substantially as outlined by CARB in its

June 6, 1997 Staff Report and as adopted

at their July 24, 1997 public hearing.42

B. Elements of the CARB Proposal and

Applicability Under National LEV

1. Test Procedure

CARB adopted high speed, high

acceleration, and air conditioner

supplemental test procedures that are in

all respects identical to the procedures

adopted by EPA. EPA anticipates that

the remaining CARB rulemaking process

is highly unlikely to make any changes

to the test procedure elements, and that
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44783

their final rule will maintain complete

harmonization in this regard. The two

agencies cooperated closely in the

development of the driving schedules

and testing protocols and placed

significant emphasis on total alignment

throughout the development process.

Therefore, EPA proposes that the SFTP

test procedures for all vehicles covered

by National LEV would be those

currently contained in federal

regulations (40 CFR 86.158, 86.159,

86.160, 86.161, 86.162, 86. 163, and

86.164).

2. Emission Standards

California adopted two sets of

emission standards, one applicable to

LEVs, ULEVs, and super ULEVs

(SULEVs), and the other applicable to

Tier 1 vehicles and TLEVs. However,

the only SULEVs in CARB’s regulations

are in their Medium-Duty Vehicle

category, a class of vehicles not covered

by the National LEV Program, and

consequently not covered in the

following discussion of emission

standards or in today’s proposed

regulations.

a. LEVs and ULEVs. For each of the

affected vehicle weight categories,

CARB adopted a set of SFTP

certification standards that applies to

LEVs and ULEVs (see Table 1). Due to

limited data on emissions and

appropriate reactivity adjustment

factors, CARB exempted alternative fuel

vehicles from these standards, applying

them only to gasoline, diesel, and fuelflexible vehicles while operating on

gasoline or diesel fuel. These standards

would only apply at 4,000 miles, a

significant departure from EPA’s

traditional method of standard setting.

These standards have already received

the support of the auto industry. In

conjunction with the low-mileage

standards, CARB maintains that there be

no in-use vehicle compliance

requirements (recall testing) for SFTP

standards, which CARB admits raises

the issue of the adequacy of controls on

in-use emissions. Although CARB

believes that in-use testing based on the

preexisting conventional FTP, combined

with the efficacy of On-Board

Diagnostics II (OBD II) systems, is likely

to capture emissions increases occurring

under off-cycle conditions, they

recognize the risk that ‘‘in-use vehicles

may show [off-cycle] emission

deterioration not paralleled by

deterioration over the FTP.’’ Because of

this, CARB plans to assess in-use offcycle emissions and implement 50,000-

mile and 100,000-mile standards if

necessary, although they have

committed to maintaining stability in

the standards through the phase-in

period.

TABLE 2.—PROPOSED US06 AND SC03 4,000 MILE CERTIFICATION STANDARDS FOR LEVS AND ULEVS

Vehicle

type

Loaded vehicle weight

(lbs.)

US06

(g/mi)

SC03

(g/mi)

NMHC+NOX CO NMHC+NOX CO

LDV .......... All ............................................................................................................................... 0.14 8.0 0.20 2.7

LDT .......... 0–3,750 ...................................................................................................................... 0.14 8.0 0.20 2.7

3,751–5,750 ............................................................................................................... 0.25 10.5 0.27 3.5

EPA is proposing today to adopt the

standards shown in Table 1 as the SFTP

standards applicable to LEVs and

ULEVs covered under the National LEV

Program. These standards will be

applied to the National LEV Program in

the same manner as adopted by CARB,

in that they apply at 4,000 miles and

there will be no in-use enforcement to

these SFTP standards for LEVs and

ULEVs.

Although the low-mileage approach to

standard-setting is unconventional, EPA

believes that the incorporation of the

above standards into the NLEV program

can be justified technically,

environmentally, and legally. The

National LEV provisions are structured

to ensure that vehicles certified under

National LEV will continue to meet all

of the federal requirements for Tier 1

vehicles and hence meet the minimum

requirements under the Act, in addition

to the more stringent National LEV

requirements. Section 202(a) of the Act

requires motor vehicle standards to

apply for the full useful life of the

vehicle, which is 100,000 miles,

pursuant to section 202(d). The Tier 1

standards, both FTP and SFTP, apply to

federal Tier 1 vehicles at 50,000 miles

and 100,000 miles. Thus, the statute

requires that National LEV LEVs and

ULEVs also meet the Tier 1 SFTP

requirements at 50,000 and 100,000

miles.

EPA carefully assessed the level of the

standards adopted by CARB for LEVs

and ULEVs, and found that they are of

a sufficient stringency to provide

emission reductions significantly greater

than those that would be achieved by

applying full useful life Tier 1 SFTP

standards to LEVs and ULEVs.

Moreover, for LEVs and ULEVs the full

useful life National LEV FTP standards

should prevent deterioration of the same

types of systems that control emissions

over the SFTP cycles. Therefore, the

combination of the stringent SFTP 4,000

mile standard and the full useful life

LEV and ULEV FTP standards provides

considerable confidence that these

vehicles will be certified at a low

emission level and will not deteriorate

during their useful life to a point where

they may be emitting above the Tier 1

100,000 mile SFTP levels.

While EPA is confident that the

combination of requirements applicable

to LEVs and ULEVs means that they

would not emit above the Tier 1 100,000

mile SFTP levels, manufacturers are

concerned that structuring the

regulations to apply the Tier 1 100,000

mile SFTP standards to LEVs and

ULEVs would impose a substantial

additional burden on the manufacturers

for no environmental benefit. If EPA

were to apply the full useful life Tier 1

100,000 mile SFTP standards to LEVs

and ULEVs, manufacturers would need

to conduct additional testing for each

manufacturer to ensure compliance with

such standards. While manufacturers

share EPA’s confidence that the vehicles

will meet the full useful life Tier 1 SFTP

standards, nonetheless manufacturers

have stated that they would have to

conduct full useful life SFTP tests to

protect against any possibility of

enforcement liability. Alternatively,

manufacturers might choose not to opt

into the National LEV program. In either

case, manufacturers would incur

substantial additional burdens.

In light of these factual

determinations, EPA believes that a de

minimis exemption to the statutory

requirements is appropriate here, which

would allow EPA to set SFTP standards

for LEVs and ULEVs at 4,000 miles only.

In a situation such as this where

Congress has not drafted a statute so

rigidly as to preclude a de minimis

exemption, the courts have held that

agencies have implied authority to craft

a de minimis exemption from a

statutory provision ‘‘when the burdens
44784 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

of regulation yield a gain of trivial or no

value.’’ See EDF v. EPA, 82 F.3d 451

(DC Cir. 1996); Alabama Power v.

Costle, 636 F.2d 323 (DC Cir. 1979). EPA

believes that applying the Tier 1 level

stringency 50,000 and 100,000 mile

SFTP standards to LEVs and ULEVs

would produce no or trivial additional

environmental benefit because EPA is

confident the vehicles would meet those

emissions levels even in the absence of

enforceable standards. Such standards

would also impose substantial

additional costs on manufacturers.

Consequently, EPA believes a de

minimis exemption from the statutory

requirement to set full useful life SFTP

standards for LEVs and ULEVs under

National LEV is appropriate here.

b. Tier 1 Vehicles and TLEVs. Because

the extensive test programs culminating

in CARB’s development of SFTP

standards focused on developing

standards for LEVs and ULEVs, CARB

proposed to apply to Tier 1 vehicles and

TLEVs standards identical to those

promulgated by EPA for Tier 1 vehicles.

As under the federal regulations, these

standards would apply at 50,000 and

100,000 miles, and vehicles certifying to

these standards would face an in-use

compliance requirement. Additionally,

CARB also proposed to maintain EPA’s

higher NMHC+NOX standard for diesel

vehicles, as well as EPA’s exemption of

alternative fuel Tier 1 vehicles and

TLEVs from compliance with the SFTP

standards.

CARB’s treatment of Tier 1 vehicles

and TLEVs, however, remains an issue

of some controversy. Auto

manufacturers have approached CARB

staff and requested consideration of

4,000-mile standards for Tier 1 vehicles

and TLEVs, which would align the

certification requirements of these

vehicles with the requirements that

apply to LEVs and ULEVs. The

methodology suggested by the auto

manufacturers for establishing 4,000-

mile standards for Tier 1 vehicles and

TLEVs is to increase the proposed LEV

SFTP emission standards (Table 1) by

the ratio of Tier 1 to LEV emission

standards applicable to the conventional

FTP. EPA supports the current CARB

proposal, in that it maintains what EPA

strongly believes are appropriate

standards for Tier 1 vehicles. CARB

pursued low-mileage standards for LEVs

and ULEVs for several reasons, but

largely because the value of the data

they had collected at high mileage for

standard-setting became questionable.

EPA did not face similar problems with

standard-setting, and was able to

establish 50,000-mile and 100,000-mile

standards that are well-justified and

appropriate for Tier 1 vehicles. It has

been EPA’s experience with pre-LEV

technologies that full useful life

standards with in-use recall liability are

important for ensuring clean and

durable vehicles. In addition, part of the

justification for providing a de minimis

exemption for LEVs and ULEVs from

the statutory requirement that the Tier

1 requirements apply for the full useful

life of these vehicles is that the LEV and

ULEV 4,000 mile standards are

significantly more stringent than Tier 1

standards, so the vehicles would have to

deteriorate drastically to exceed the full

useful life Tier 1 standards in use. This

argument would not apply to Tier 1

vehicles with 4,000 mile standards

calculated as the manufacturers have

suggested. Consequently, today’s notice

proposes that the NLEV program adopt

CARB’s proposed treatment of Tier 1

vehicles and TLEVs.

3. Implementation Schedule

As noted earlier, EPA’s SFTP

requirements applicable to Tier 1

vehicles would begin to phase in with

the 2000 model year, achieving 100

percent compliance in the 2002 model

year. The implementation schedule

proposed by CARB is somewhat

different, in that it starts later and

extends for four years. CARB initially

considered maintaining the federal

phase-in rate for Tier 1 vehicles and

TLEVs, while subjecting LEVs and

ULEVs to the longer and later schedule,

but elected instead to propose phasing

in all vehicle emission categories at the

same rate. Although Tier 1 vehicles and

TLEVs are certified to standards of

different stringency than LEVs and

ULEVs, CARB proposed to allow the

number of vehicles from both groups to

be combined for the purpose of

determining compliance with the phasein schedule. CARB proposed this

approach because of the concern that, if

a separate phase-in schedule was

maintained for Tier 1 vehicles and

TLEVs, manufacturers would have to

dedicate resources to making Tier 1

vehicles SFTP-compliant when the rest

of the California LEV program is causing

Tier 1 vehicles to phase out in the fairly

short term. In their Staff Report, CARB

acknowledges that Tier 1 vehicles and

TLEVs will be phasing out due to the

decreasing NMOG fleet average

requirements and they specifically

structure their SFTP program to allow

these vehicles time to phase out without

having to comply with SFTP standards.

CARB prefers to allow manufacturers to

focus efforts on development of LEVs

and ULEVs that comply with LEV/ULEV

SFTP standards, which will be the

predominant vehicles in California,

rather than expend effort on vehicles

that will be phasing out in California in

the time frame of their proposed SFTP

phase-in. While allowing Tier 1 vehicles

an adequate opportunity to phase out,

CARB also ensures an adequate phasein of LEVs and ULEVs complying with

the SFTP be ensured. They achieve this

by requiring that the percentage of LEVs

and ULEVs meeting the SFTP

requirements also meet the required

phase-in schedule. This implies that

meeting the phase-in percentage with

the subset of the fleet made up of LEVs

and ULEVs will also meet the overall

phase-in requirement if a manufacturer

has no Tier 1 vehicles or TLEVs. If a

manufacturer does have some Tier 1 or

TLEV engine families, it would have the

choice of making some proportion of

those vehicles SFTP-compliant or

expending some effort phasing in

additional LEV or ULEV engine families

in order to maintain compliance with

the phase-in requirements.

To provide some additional

flexibility, CARB proposed a concept of

equivalent phase-in schedules, which

would be allowed in place of the

required phase-in schedule. This

approach allows manufacturers to use

an alternative phase-in schedule

providing that the alternative measures

up to the required schedule according to

a set methodology. The equivalent

phase-in methodology calculates credits

by weighting the required phase-in

percentages in each model year of the

phase-in schedule by the number of

model years prior to and including the

last model year of the scheduled phasein, then summing these credits over the

phase-in period. These ‘‘credits’’ are

calculated for the required phase-in

schedule, and any alternative phase-in

that results in an equal or larger

cumulative total number of credits by

the end of the last model year of the

scheduled phase-in is acceptable. For

example, in the case of the CARB

proposed phase-in, the required

‘‘credits’’ are: (25% * 4 years)+(50% *

3 years)+(85% * 2 years)+(100% * 1

year)=520. This allows manufacturers

some additional flexibility while

ensuring no loss in overall emissions

over the phase-in schedule.

Additionally, using this methodology,

manufacturers can gain credits towards

their phase-in through early

introductions of vehicles meeting the

applicable requirement even prior to the

beginning of the required phase-in (e.g.,

10 percent compliance five years before

full phase-in gains 50 ‘‘points’’ towards

the total required). Regardless of the

number of ‘‘points’’ earned by a given

alternative schedule, phase-in of 100%

must be achieved in the required final
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44785

year of the phase-in. EPA proposes to

adopt this proposal, with the additions

noted below.

It is not entirely clear from the CARB

Staff Report what enforcement

mechanism will apply to the proposed

allowance for an alternative phase-in.

However, EPA believes that allowing

the alternative phase-in approach

requires that it be accompanied by an

appropriate enforcement mechanism.

Although it is possible that a

manufacturer could reach the next-tolast year of the phase-in and realize that

there is no way to achieve the desired

credits, EPA believes that manufacturers

would not plan this phase-in on a yearby-year basis, but rather would

determine a specific schedule prior to

implementation that integrates the

phase-in with the product planning

cycle and that would enable

manufacturers to achieve the required

points with an adequate margin of

safety. In the event that a manufacturer

does not attain the required number of

phase-in credits, EPA proposes that

enforcement will be much like the

current enforcement provisions

regarding non-compliance with a phasein schedule. Specifically, failure to

attain the required credits will be

regarded as a failure to satisfy the

conditions on which the certificate was

issued. Vehicles sold in violation of that

condition will not be covered by the

certificate and hence will be subject to

the currently available penalties.

Today’s notice proposes appropriate

revisions to 40 CFR 86.096–30 to

address this enforcement issue.

Although EPA is proposing in today’s

notice largely to adopt these phase-in

elements of CARB SFTP and apply them

on a national basis to the National LEV

program, doing so raises several issues

that EPA must consider. Perhaps most

important is the implication that the

structure of the phase-in as proposed by

CARB allows Tier 1 vehicles to delay

meeting SFTP standards beyond when

they would have to meet SFTP

standards under the currently

applicable federal program. A couple of

mitigating factors suggest that

harmonizing with CARB in this regard

is on balance a desirable policy. First,

because of the requirement in the

National LEV Program that Tier 1

vehicles and TLEVs can not be sold in

the OTR after MY2000 unless those

same engine families are certified as

Tier 1 vehicles and TLEVs in California,

it will be the California NMOG fleet

average that will be driving the number

of Tier 1 vehicles and TLEVs in the OTR

(and in the rest of the country, for all

practical purposes). It is EPA’s

expectation that Tier 1 vehicles in

particular are unlikely to exist beyond

the 2002 or 2003 model year, and if they

exist in those years they will be a very

small fraction of the new vehicle fleet.

The environmental impact of not

certifying this very small number of

vehicles to SFTP standards should be

negligible. Second, while the structure

of the CARB phase-in requirements

allows manufacturers to put off

demonstrating compliance of Tier 1

vehicles with SFTP standards,

potentially until such vehicles are no

longer produced, for those years where

a manufacturer continues to sell such

vehicles they must phase some of them

into SFTP standards or phase in

additional LEVs or ULEVs to meet the

overall fleet phase-in requirements.

Given the overall benefits of achieving

a fleet of LEVs and ULEVs that meet an

appropriate SFTP standard, EPA

believes that it is appropriate to

harmonize the NLEV SFTP phase-in

with the phase-in schedule as proposed

by CARB.

4. Implementation Compliance

EPA must determine manufacturer

compliance with the SFTP phase-in

levels under the National LEV program.

EPA is proposing to give the

manufacturers the option of combining

their entire fleet of light-duty vehicles

and light light-duty trucks and such that

this combined fleet meets the applicable

phase-in requirements. EPA is also

proposing to have manufacturers

demonstrate compliance with the phasein requirements based on vehicles sold

outside of California, but is taking

comment on having compliance

determinations based on vehicles sold

only in California or in all states.

EPA believes that combining lightduty vehicles and light light-duty trucks

into one fleet and then determining

SFTP phase-in requirements based on

the combined fleet makes sense by

giving manufacturers some additional

flexibility in meeting the requirements

without having detrimental

environmental impacts. Manufacturers

will have the ability to determine which

light-duty vehicles and light light-duty

trucks to include in their SFTP fleet for

a particular model year instead of

meeting specified phase-in levels for

each vehicle class. For example, in

MY2002, assuming equal numbers of

light-duty vehicles and light light-duty

trucks are produced, a manufacturer

could certify 45% of its light-duty

vehicle fleet and 55% of its light lightduty truck fleet to SFTP standards as

long as 50% of its overall fleet met the

SFTP standards, provided that all other

provisions of the phase-in requirements

were met. EPA does not believe that this

proposal would have detrimental

environmental effects because EPA does

not expect actual SFTP phase-ins

between vehicle classes to differ

significantly. This proposal is consistent

with CARB’s requirements as well as the

Federal Tier 1 SFTP regulations.

EPA has concerns about the

manufacturers’ proposal to show

compliance with National LEV SFTP

requirements based on a manufacturer’s

California fleet mix as opposed to its

National LEV fleet mix. While EPA

anticipates that vehicle product offering

between California and the rest of the

country will be similar, it is not certain

that sales of such vehicles will be

proportionately equivalent between the

two regions. As California accounts for

roughly only 10 percent of U.S. sales,

EPA is concerned about having this

small fraction dictate phase-in for 90%

of the fleet. For example, harsher

weather patterns elsewhere could cause

sales of convertible vehicles in

California to make up a greater

percentage of a manufacturer’s

California fleet than of the

manufacturer’s federal fleet, while sales

of four-wheel drive vehicles could be a

greater percentage of the federal fleet.

Sales mix differences between the

California and Federal fleet can also

differ between manufacturers. Thus,

EPA is hesitant at this time to tie

compliance with the National LEV SFTP

standards solely to the vehicle mix

offered in California. EPA does not

believe that requiring compliance based

on Federal, as opposed to California

sales, is an undue burden on

manufacturers. EPA has used a similar

approach in other programs, such as the

Tier 1 standards, on the understanding

that providing a phase-in to

manufacturers provides them with

sufficient flexibility and burden

reduction.

EPA is taking comment, however, on

the manufacturers’ proposal to base

National LEV SFTP compliance on their

vehicle sales mixes in California.

Another option is to have EPA use the

California vehicle sales mix, but include

a maximum percentage by which a

manufacturer’s California SFTP fleet

and its National LEV SFTP fleet may

vary. A variance of five percentage

points would still allow manufacturers

to make their compliance

determinations based on their California

vehicle sales mix, but it would also

ensure that the National LEV SFTP fleet

will be substantially similar to the

California fleet. This would mean that a

manufacturer would certify 25% of its

California fleet to SFTP standards in

MY2002 and would be in compliance

with National LEV SFTP requirements
44786 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

as long as its Federal sales of SFTPcertified vehicles were at least 20% of

the 49-state sales total.

EPA is also taking comment on a

second alternative which would

combine sales of California, any state

with a Section 177 program, and Federal

vehicles for the purpose of calculating

fleet percentages in determining phasein compliance. Compliance would be

determined by analyzing a

manufacturer’s entire fleet of vehicles

sold in the United States for compliance

with the applicable SFTP phase-in

requirements. A manufacturer choosing

to overcomply in California would be

able to have its Federal SFTP fleet levels

somewhat below the applicable phasein percentages, but the nationwide

averaging requirement would ensure

that the difference between California

and Federal SFTP fleets would be

minimal. This alternative would also

give manufacturers credit for the

California fleet sales and ensure that

they meet the phase-in targets, while

properly accounting for the bulk of sales

which are in the other 49 states. In

addition, this approach is consistent

with the original Tier 1 final rule in

which EPA elected to allow

manufacturers to include California

sales and sales to section 177 states in

the phase-in compliance calculation.

See 56 FR 25724 (June 5, 1991).

X. Administrative Requirements

A. Administrative Designation

Under Executive Order 12866 (58 FR

51735), the Agency must determine

whether the regulatory action is

‘‘significant’’ and therefore subject to

OMB review and the requirements of

the Executive Order. The Order defines

a ‘‘significant regulatory action’’ as one

that is likely to result in a rule that may:

(1) Have an annual effect on the

economy of $100 million or more or

adversely affect in a material way the

economy, a sector of the economy,

productivity, competition, jobs, the

environment, public health or safety, or

State, local, or tribal governments or

communities;

(2) Create a serious inconsistency or

otherwise interfere with an action taken

or planned by another agency;

(3) Materially alter the budgetary

impact of entitlements, grants, user fees,

or loan programs or the rights and

obligations of recipients thereof; or

(4) Raise novel legal or policy issues

arising out of legal mandates, the

President’s priorities, or the principles

set forth in the Executive Order.

Pursuant to the terms of Executive

Order 12866, it has been determined

that this rule is not a ‘‘significant

regulatory action’’. The Final

Framework Rule was determined to be

a ‘‘significant regulatory action’’ because

it had an annual effect on the economy

of more than $100 million. 62 FR 31231.

The regulations being proposed in this

rule will not have an economic impact

greater than $100 million. EPA has

submitted this rule to OMB for review.

Changes made in response to OMB

suggestions or recommendations will be

documented in the public record. EPA

prepared a Regulatory Impact Analysis

(RIA) for the Final Framework Rule

(docket A–95–26, V–A–02). EPA

indicated that the RIA will need to be

modified to reflect the later start date

proposed today and any new cost

information. EPA will issue a final RIA

at the time the supplemental final rule

is issued.

B. Regulatory Flexibility

The Regulatory Flexibility Act (RFA)

generally requires an agency to conduct

a regulatory flexibility analysis of any

rule subject to notice and comment

rulemaking requirements unless the

agency certifies that the rule will not

have a significant economic impact on

a substantial number of small entities.

Small entities include small businesses,

small not-for-profit enterprises, and

small governmental jurisdictions. This

proposed rule would not have a

significant impact on a substantial

number of small entities. Only

manufacturers of motor vehicles, a

group which does not contain a

substantial number of small entities,

will have to comply with the

requirements of this rule. Therefore, I

certify that this action will not have a

significant economic impact on a

substantial number of small entities.

C. Unfunded Mandates Reform Act

Under sections 202 and 205 of the

Unfunded Mandates Reform Act of 1995

(UMRA), EPA generally must prepare a

written statement to accompany any

proposed or final rule that includes a

federal mandate that may result in

expenditures by state, local, or tribal

governments in the aggregate, or by the

private sector, of $100 million or more

in any one year.

EPA has determined that the written

statement requirements of sections 202

and 205 of UMRA do not apply to

today’s rule, and thus do not require

EPA to conduct further analyses

pursuant to those requirements.

National LEV is not a federal mandate

because it does not impose any

enforceable duties and because it is a

voluntary program. Because National

LEV would not impose a federal

mandate on any party, section 202 does

not apply to this rule. Even if these

unfunded mandates provisions did

apply to this rule, they are met by the

Regulatory Impact Analysis prepared

pursuant to Executive Order 12866 and

contained in the docket.

Section 203 requires EPA to establish

a plan for informing and advising any

small governments that may be

significantly or uniquely impacted by

the rule. EPA has not prepared such a

plan because small governments would

not be significantly or uniquely

impacted by the rule.

Under section 204, an agency must

develop an effective process for state,

local, and tribal officials to provide

meaningful input in the development of

regulatory proposals that contain

significant intergovernmental mandates.

Section 204 does not apply because this

rule would not impose any mandates.

Throughout the National LEV process,

however, EPA has provided numerous

opportunities for states to provide

meaningful input.

D. Reporting and Recordkeeping

Requirements

Today’s rule does not impose any

additional reporting or recordkeeping

burdens on an affected party. The

Information Collection Request (ICR) for

the National LEV program was

developed as part of the Final

Framework Rule and has already been

submitted for approval to the OMB

under the Paperwork Reduction Act, 44

U.S.C. 3501 et seq. An ICR document

has been prepared by EPA (ICR No.

1761.02) and a copy may be obtained

from Sandy Farmer, OPPE Regulatory

Information Division, EPA, 401 M St.,

SW (Mail Code 2137), Washington, DC

20460 or by calling (202) 260–2740. The

information requirements are not

effective until OMB approves them.

XI. Statutory Authority

The promulgation of these regulations

is authorized by sections 177, 202, 203,

204, 205, 206, 207, 208 and 301 of the

Clean Air Act as amended by the Clean

Air Act Amendments of 1990 (CAAA)

(42 U.S.C. 7507, 7521, 7522, 7523, 7524,

7525, 7541, 7542, and 7601).

List of Subjects in 40 CFR Part 86

Administrative practice and

procedure, Confidential Business

Information, Labeling, Motor vehicle

pollution, Reporting and recordkeeping

requirements.

Dated: August 4, 1997.

Carol M. Browner,

Administrator.

For the reasons set out in the

preamble, chapter I, title 40 of the Code
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44787

of Federal Regulations is proposed to be

amended as follows:

PART 86—CONTROL OF AIR

POLLUTION FROM NEW AND IN-USE

MOTOR VEHICLES AND NEW AND INUSE MOTOR VEHICLE ENGINES:

CERTIFICATION AND TEST

PROCEDURES

1. The authority citation for part 86

continues to read as follows:

Authority: 42 U.S.C. 7401–7671(q).

Subpart A—[Amended]

2. Section 86.096–30 is amended by

adding paragraph (a)(23) to read as

follows:

§ 86.096–30 Certification.

* * * * *

(a) * * *

(23) For all light-duty vehicles and

light light-duty trucks certified to

standards under §§ 86.1710 through

86.1712, the provisions of paragraphs

(a)(23)(i) through (iv) of this section

apply.

(i) All certificates issued are

conditional upon manufacturer

compliance with all provisions of

§§ 86.1709 through 86.1709 both during

and after model year production.

(ii) Failure to meet the required

implementation schedule sales

percentages of the Alternative Phase-In

schedule requirements (if chosen), in

§ 86.1708(a)(1)(i) for light-duty vehicles

or § 86.1708(a)(1)(i) for light light-duty

trucks, will be considered to be a failure

to satisfy the conditions upon which the

certificate(s) was issued and the

individual vehicles sold in violation of

the implementation schedule shall not

be covered by the certificate.

(iii) The manufacturer shall bear the

burden of establishing to the satisfaction

of the Administrator that the conditions

upon which the certificate was issued

were satisfied.

(iv) For recall and warranty purposes,

vehicles not covered by a certificate

because of a violation of this condition

of the certificate will continue to be

held to the standards stated in the

certificate that would have otherwise

applied to the vehicles.

* * * * *

Subpart R—[Amended]

3. Section 86.1702–97 is redesignated

as § 86.1702–99 and amended in

paragraph (b) by revising the definitions

for ‘‘Northeast Trading Region’’ and

‘‘Point of first sale’’ and by adding new

definitions in alphabetical order for ‘‘All

States Trading Region,’’ ‘‘Covered

State,’’ ‘‘Existing ZEV Mandate,’’

‘‘Ozone Transport Commission States,’’

‘‘Section 177 Program,’’ and ‘‘ZEV

Mandate,’’ to read as follows:

§ 86.1702–99 Definitions.

* * * * *

(b) * * *

* * * * *

All States Trading Region (ASTR)

means the region comprised of all states

except the OTC States that have not

opted into National LEV pursuant to the

opt-in provisions at § 86.1705 or that

have opted out of National LEV and

whose opt outs have become effective,

as provided at § 86.1707; and California;

and any state outside the OTR with a

Section 177 Program in effect that does

not allow National LEV as a compliance

alternative.

* * * * *

Covered State means an OTC State

that has opted into National LEV and

meets the conditions specified under

§ 86.1705(d).

* * * * *

Existing ZEV Mandate means any

OTC State regulation or other law that

imposes (or purports to impose)

obligations on auto manufacturers to

produce or sell a certain number or

percentage of ZEVs and that was

adopted prior to the date that the state

submitted a National LEV opt-in

notification to EPA.

* * * * *

Northeast Trading Region (NTR)

means the region comprised of the OTC

States that have opted into National LEV

pursuant to the opt-in provisions at

§ 86.1705(e) and have not opted out of

National LEV pursuant to the opt-out

provisions at § 86.1707 or whose opt

outs have not yet become effective, as

provided at § 86.1707.

* * * * *

Ozone Transport Commission States

or OTC States means the States of

Connecticut, Delaware, Maine,

Maryland, Massachusetts, New

Hampshire, New Jersey, New York,

Pennsylvania, Rhode Island, Vermont

and Virginia, and the District of

Columbia.

* * * * *

Point of first sale is the location where

the completed LDV or LDT is

purchased, also known as the final

product purchase location. The point of

first sale may be a retail customer,

dealer, distributor, fleet operator,

broker, secondary manufacturer, or any

other entity which comprises the point

of first sale. In cases where the end user

purchases the completed vehicle

directly from the manufacturer, the end

user is the point of first sale.

* * * * *

Section 177 Program means state

regulations or other laws, except ZEV

Mandates, which apply to any of the

following categories of motor vehicles:

Passenger cars, light duty trucks up

through 6,000 pounds GVWR, and

medium duty vehicles from 6,001 to

14,000 pounds GVWR if designed to

operate on gasoline, as these categories

of motor vehicles are defined in the

California Code of Regulations, Title 13,

Division 3, Chapter 1, Article 1, Section

1900.

* * * * *

ZEV Mandate means any state

regulation or other law that imposes (or

purports to impose) obligations on auto

manufacturers to produce, deliver for

sale, or sell a certain number or

percentage of ZEVs.

4. Section 86.1705–97 is redesignated

as § 86.1705–99 and amended by

revising the heading of the section, by

adding a heading to paragraph (a), and

by revising paragraphs (a) introductory

text, (a)(2), (a)(3), and (b) through (g), to

read as follows:

§ 86.1705–99 General provisions; opt-in.

(a) Covered manufacturers. Covered

manufacturers must comply with the

provisions in this subpart, and in

addition, must comply with the

requirements of 40 CFR parts 85 and 86.

A manufacturer shall be a covered

manufacturer if:

* * * * *

(2) Where a manufacturer has

included a condition on opt-in provided

for in paragraph (c)(2) of this section,

that condition has been satisfied; and

(3) The manufacturer has not opted

out, pursuant to § 86.1707, or the

manufacturer has opted out but that optout has not become effective under

§ 86.1707.

(b) Covered manufacturers must

comply with the standards and

requirements specified in this subpart

beginning in model year 1999. A

manufacturer not listed in § 86.1706(b)

that opts into the program after EPA

issues a finding pursuant to § 86.1706(a)

that the program is in effect must

comply with the standards and

requirements of this subpart beginning

in the model year that includes January

1 of the calendar year after the calendar

year in which that manufacturer opts in.

Light-duty vehicles and light light-duty

trucks sold by covered manufacturers

must comply with the provisions of this

subpart.

(c) Manufacturer opt-ins. (1) To opt

into the National LEV program, a motor

vehicle manufacturer must submit a

written opt-in notification to the

Administrator signed by a person or
44788 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

entity within the corporation or

business with authority to bind the

corporation or business to its election

and holding the position of vice

president for environmental affairs or a

position of comparable or greater

authority. The notification must

unambiguously and unconditionally

(apart from the permissible conditions

specified in paragraph (c)(2) of this

section) indicate the manufacturer’s

agreement to opt into the program and

be subject to the provisions in this

subpart, and include the following

language:

XX COMPANY, its subsidiaries, successors

and assigns hereby opts into the voluntary

National LEV program, as defined in 40 CFR

part 86, subpart R, and agrees to be legally

bound by all of the standards, requirements

and other provisions of the National LEV

program. XX COMPANY commits not to

challenge EPA’s authority to establish or

enforce the National LEV program, and

commits not to seek to certify any vehicle

except in compliance with the regulations in

subpart R.

(2) The opt-in notification may

indicate that the manufacturer opts into

the program subject to either or both of

the following conditions:

(i) That the Administrator finds under

§ 86.1706 that the National LEV program

is in effect, to be indicated with the

following language:

This opt-in is subject to the condition that

the Administrator make a finding pursuant to

40 CFR 86.1706 that the National LEV

program is in effect.

(ii) That certain states (limited to the

OTC States) opt into National LEV

pursuant to § 86.1705, to be indicated

with the following language:

This opt-in is subject to the condition that

each of the states of [list state names] opt into

National LEV pursuant to 40 CFR 86.1705.

(3) A manufacturer shall be

considered to have opted in upon the

Administrator’s receipt of the opt-in

notification and satisfaction of the

conditions set forth in paragraph (c)(2)

of this section, if applicable.

(d) Covered states. An OTC State shall

be a covered state if:

(1) The state has opted into National

LEV pursuant to paragraph (e) of this

section;

(2) Where a state has included a

condition on opt-in provided for in

paragraph (e)(3)(viii) of this section, that

condition has been satisfied; and

(3) The state has not opted out,

pursuant to § 86.1707, or the state has

opted out but that opt-out has not

become effective under § 86.1707.

(e) OTC State opt-ins. To opt into the

National LEV program, a state must

submit the following as an opt-in

notification to EPA:

(1)(i) An Executive Order signed by

the governor of the state (or the mayor

of the District of Columbia) that

unambiguously and unconditionally

(apart from the permissible conditions

set forth in this section) indicates the

state’s agreement to opt into the

National LEV program and includes the

following language (language in brackets

indicates that either formulation is

acceptable):

This instrument [commits STATE to / opts

STATE into] the National Low Emission

Vehicle (National LEV) program, in

accordance with the EPA National LEV

program regulations at 40 CFR part 86,

subpart R.

I hereby direct HEAD OF APPROPRIATE

STATE AGENCY to forward to EPA with my

concurrence the [enclosed letter signed /

enclosed letter and proposed regulations

signed and proposed] by the HEAD OF

APPROPRIATE STATE AGENCY, which

[specifies /specify] the details of STATE’s

commitment to the National LEV program.

I hereby direct APPROPRIATE STATE

AGENCY to follow the procedures prescribed

by the general statutes of STATE to take the

necessary steps to adopt regulations and

submit a state implementation plan revision

committing STATE to National LEV in

accordance with the EPA National LEV

program regulations on SIP revisions at 40

CFR part 86, subpart R, and with section 110

of the Clean Air Act and its implementing

regulations at 40 CFR parts 51 and 52.

(ii) States with Existing ZEV

Mandates may add language to the

Executive Order submitted pursuant to

paragraph (e)(1) of this section

confirming that this opt-in will not

affect the state’s requirements pertaining

to ZEVs.

(2) If a state does not submit an

Executive Order pursuant to paragraph

(e)(1) of this section, a letter signed by

the governor of the state (or the mayor

of the District of Columbia) that

unambiguously and unconditionally

(apart from the permissible conditions

set forth in this section) indicates the

state’s agreement to opt into the

National LEV program and includes the

following language (language in brackets

indicates that either formulation is

acceptable):

(i) ‘‘This submittal is made in

accordance with the EPA National Low

Emission Vehicle (National LEV)

regulations at 40 CFR part 86, subpart R

to [commit STATE to / opt STATE into]

the National LEV program.’’

(ii)(A) ‘‘I am forwarding to EPA the

[enclosed letter which I signed /

enclosed letter and proposed regulations

which were signed and proposed] by

HEAD OF APPROPRIATE STATE

AGENCY at my direction, and which

[specifies / specify] the details of

STATE’s commitment to the National

LEV program.’’ or;

(B) ‘‘I am forwarding to EPA and

concur with the [enclosed letter signed

/ enclosed letter and proposed

regulations signed and proposed] by

HEAD OF APPROPRIATE STATE

AGENCY, which [specifies / specify] the

details of STATE’s commitment to the

National LEV program.’’

(iii) ‘‘I [hereby direct / have directed]

APPROPRIATE STATE AGENCY to

follow the procedures prescribed by the

general statutes of STATE to take the

necessary steps to adopt regulations and

submit a state implementation plan

revision committing STATE to National

LEV in accordance with the EPA

National LEV regulations on SIP

revisions at 40 CFR part 86, subpart R,

and with section 110 of the Clean Air

Act and its implementing regulations at

40 CFR parts 51 and 52.’’

(iv) States with Existing ZEV

Mandates may add language to the letter

submitted pursuant to section (e)(2) of

this section confirming that this opt-in

will not affect the state’s requirements

pertaining to ZEVs.

(3) A letter signed by the head of the

appropriate state agency that would

unconditionally (except as set forth in

this section) include the following:

(i) States without any Section 177

Program or with a Section 177 Program

but not an Existing ZEV Mandate shall

include the following language:

National LEV is designed as a compliance

alternative for OTC State programs adopted

pursuant to section 177 of the Clean Air Act

that apply to passenger cars, light duty trucks

up through 6,000 pounds GVWR, and/or

medium duty vehicles from 6,001 to 14,000

pounds GVWR if designed to operate on

gasoline, as these categories of motor vehicles

are defined in the California Code of

Regulations, Title 13, Division 3, Chapter 1,

Article 1, Section 1900. For the duration of

STATE’s participation in National LEV,

[STATE will allow manufacturers to /

manufacturers may] comply with National

LEV in lieu of compliance with any program

adopted by STATE pursuant to the authority

provided in section 177 of the Clean Air Act

applicable to the vehicle classes specified

above, including any ZEV mandates.

STATE’s participation in National LEV

extends until model year 2006, except as

provided in 40 CFR 86.1707.

For the duration of STATE’s participation

in National LEV, STATE [intends to / will]

forbear from adopting and implementing a

ZEV mandate effective before model year

2006.

(ii) States with a Section 177 Program

and an Existing ZEV Mandate, shall

include the following language:

National LEV is designed as a compliance

alternative for OTC State programs adopted

pursuant to section 177 of the Clean Air Act

that apply to passenger cars, light duty trucks

up through 6,000 pounds GVWR, and

medium duty vehicles from 6,001 to 14,000
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44789

pounds GVWR if designed to operate on

gasoline, as these categories of motor vehicles

are defined in the California Code of

Regulations, Title 13, Division 3, Chapter 1,

Article 1, Section 1900. With the exception

of any requirements pertaining to ZEVs, for

the duration of STATE’s participation in

National LEV, [ STATE will allow

manufacturers to / manufacturers may]

comply with National LEV or equally

stringent mandatory federal standards in lieu

of compliance with any program adopted by

STATE pursuant to the authority provided in

section 177 of the Clean Air Act applicable

to the vehicle classes specified above.

STATE’s participation in National LEV

extends until model year 2006, except as

provided in 40 CFR 86.1707. Any existing or

future requirement pertaining to ZEVs is not

affected by STATE’s acceptance of National

LEV as a compliance alternative for other

state requirements.

(iii) All states shall include the

following language:

Based on EPA’s determination in the

preamble to the final supplemental National

LEV rule [CITE], STATE believes that

National LEV will achieve reductions of VOC

and NOx emissions that are equivalent to or

greater than the reductions that would be

achieved through OTC State adoption of

California Low Emission Vehicle programs in

the Ozone Transport Region.

(iv) All states shall include the

following language:

STATE intends National LEV to be

STATE’s new motor vehicle emissions

control program.

(v) All states shall include the

following language:

STATE recognizes that motor vehicle

manufacturers are committing to National

LEV with the expectation that, through

model year 2006, OTC States will allow

National LEV as a compliance alternative for

state Section 177 Programs applying to the

vehicle classes specified above (except any

requirements pertaining to ZEVs in states

with Existing ZEV Mandates). It is our intent

to abide by this commitment. However, the

provisions of this letter will not have the

force of law until STATE adopts them as

state regulations. Adoption of state

regulations and the contents of a final SIP

revision will be determined through a state

rulemaking process pursuant to the state

requirements at [CITE to STATE law] and

federal law. Also, STATE must comply with

any subsequent STATE legislation that might

affect this commitment.

(vi) All states shall include the

following language:

If the manufacturers exit the National LEV

program pursuant to the EPA National LEV

regulations at 40 CFR 86.1707, STATE

acknowledges that the transition from

National LEV requirements to any STATE

Section 177 Program applying to the vehicle

classes specified above, including any

requirements pertaining to ZEVs (except any

requirements pertaining to ZEVs in states

with Existing ZEV Mandates), will proceed in

accordance with the EPA National LEV

regulations at 40 CFR 86.1707.

(vii) All states shall include the

following language:

STATE supports the legitimacy of the

National LEV program and EPA’s authority to

promulgate the National LEV regulations.

(viii) Any state may include the

following language:

This [commitment/opt-in] is conditioned

on all motor vehicle manufacturers (listed in

EPA regulations at 40 CFR 86.1706(b)) opting

into National LEV and on EPA finding that

National LEV is in effect pursuant to 40 CFR

86.1706.

(4) In lieu of statements described in

paragraphs (e)(3)(i), (e)(3)(ii) and

(e)(3)(vi) of this section, states may

submit proposed regulations containing

the provisions required under

paragraphs (g)(1), (g)(2), (g)(3), and (g)(5)

of this section.

(f) A state shall be considered to have

opted in upon the Administrator’s

receipt of the opt-in notification and

satisfaction of the conditions set forth in

paragraph (e)(3)(viii) of this section, if

applicable.

(g) Each OTC State that opts into

National LEV pursuant to paragraph (e)

of this section shall submit a SIP

revision within one year of the date that

EPA finds National LEV is in effect

(pursuant to § 86.1706(a)), except for the

District of Columbia, New Hampshire,

Delaware, and Virginia, for which the

deadline is 18 months from the date of

such finding. The SIP revisions shall

include the following:

(1) Covered States without any

Section 177 Program, or with a Section

177 Program but not an Existing ZEV

Mandate, shall submit regulations

containing the following language:

For the duration of STATE’s participation

in National LEV, manufacturers may comply

with National LEV or equally stringent

mandatory federal standards in lieu of

compliance with any program, including any

mandates for sales of zero emission vehicles

(ZEVs), adopted by STATE pursuant to the

authority provided in section 177 of the

Clean Air Act applicable to passenger cars ,

light duty trucks up through 6,000 pounds

GVWR, and/or medium duty vehicles from

6,001 to 14,000 pounds GVWR if designed to

operate on gasoline, as these categories of

motor vehicles are defined in the California

Code of Regulations, Title 13, Division 3,

Chapter 1, Article 1, Section 1900.

STATE’s participation in National LEV

extends until model year 2006, except as

provided in 40 CFR 86.1707.

(2) Covered States with a Section 177

Program and an Existing ZEV Mandate

shall submit regulations containing the

following language:

With the exception of any STATE

requirements pertaining to zero emission

vehicles (ZEVs), for the duration of STATE’s

participation in National LEV, manufacturers

may comply with National LEV or equally

stringent mandatory federal standards in lieu

of compliance with any program adopted by

STATE pursuant to the authority provided in

section 177 of the Clean Air Act applicable

to passenger cars, light duty trucks up

through 6,000 pounds GVWR, and/or

medium duty vehicles from 6,001 to 14,000

pounds GVWR if designed to operate on

gasoline, as these categories of motor vehicles

are defined in the California Code of

Regulations, Title 13, Division 3, Chapter 1,

Article 1, Section 1900.

STATE’s participation in National LEV

extends until model year 2006, except as

provided in 40 CFR 86.1707.

Any existing or future STATE requirement

pertaining to ZEVs is not affected by

STATE’s acceptance of National LEV as a

compliance alternative for other state

requirements.

(3) All covered states shall submit

regulations containing the following

language:

If a covered manufacturer, as defined at 40

CFR 86.1702, opts out of the National LEV

program pursuant to the EPA National LEV

regulations at 40 CFR 86.1707, the transition

from National LEV requirements to any

STATE section 177 program applicable to

passenger cars, light duty trucks up through

6,000 pounds GVWR, and/or medium duty

vehicles from 6,001 to 14,000 pounds GVWR

if designed to operate on gasoline, as these

categories of motor vehicles are defined in

the California Code of Regulations, Title 13,

Division 3, Chapter 1, Article 1, Section

1900, will proceed in accordance with the

EPA National LEV regulations at 40 CFR

86.1707.

(4) All covered states shall accompany

the regulatory language with the

following language:

STATE commits to support National LEV

as an acceptable alternative to state CAL LEV

programs.

STATE recognizes that its commitment to

National LEV is necessary to ensure that

National LEV remain in effect.

STATE is submitting this SIP revision in

accordance with the applicable Clean Air Act

requirements at section 110 and EPA

regulations at 40 CFR Part 86 and 40 CFR

Parts 51 and 52.

(5) States without Existing ZEV

Mandates shall accompany the

regulatory language with the following

language:

For the duration of STATE’s participation

in National LEV, STATE [intends to / will]

forbear from adopting and implementing a

ZEV mandate effective prior to model year

2006.

5. Section 86.1706–97 is revised to

read as follows:

§ 86.1706–97 National LEV program in

effect.

(a) No later than [date of first business

day 75 days after date of signature of
44790 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

final rule] EPA shall issue a finding as

to whether National LEV is in effect.

EPA shall base this finding on opt-in

notifications from OTC States submitted

pursuant to § 86.1705(e) and received by

EPA [date 45 days after date of signature

of final rule], and on opt-in notifications

from manufacturers submitted pursuant

to § 86.1705(c) and received by EPA

[date 60 days after date of signature of

final rule].

(b) EPA shall find that the NLEV

program is in effect and shall

subsequently publish this determination

if the following conditions have been

met:

(1) All manufacturers listed in

paragraph (c) of this section have

lawfully opted in pursuant to

§ 86.1705(c) and any conditions placed

on the opt-ins allowed under

§ 86.1705(c)(2) have been met (apart

from a condition that EPA find the

National LEV program in effect);

(2) All OTC States have lawfully

opted in pursuant to § 86.1705(e) and

any conditions placed on the opt-ins

allowed under § 86.1705(e)(3)(viii) have

been met (apart from a condition that

EPA find the National LEV program in

effect); and

(3) No valid opt out has become

effective pursuant to § 86.1707.

(c) List of manufacturers of light-duty

vehicles and light-duty trucks:

American Suzuki Motor Corporation

BMW of North America, Inc.

Chrysler Corporation

Fiat Auto U.S.A., Inc.

Ford Motor Company

General Motors Corporation

Hyundai Motor America

Isuzu Motors America, Inc.

Jaguar Motors Ltd.

Kia Motors America, Inc.

Land Rover North America, Inc.

Mazda (North America) Inc.

Mercedes-Benz of North America

Mitsubishi Motor Sales of America, Inc.

Nissan North America, Inc.

Porsche Cars of North America, Inc.

Rolls-Royce Motor Cars Inc.

Saab Cars USA, Inc.

Subaru of America, Inc.

Toyota Motor Sales, U.S.A., Inc.

Volkswagen of America, Inc.

Volvo North America Corporation

6. Section 86.1707–99 is added to

subpart R to read as follows:

§ 86.1707–99 General provisions; opt-outs.

A covered manufacturer or covered

state may opt out of the National LEV

program only according to the

provisions of this section. Vehicles

certified under the National LEV

program must continue to meet the

standards to which they were certified,

regardless of whether the manufacturer

of those vehicles remains a covered

manufacturer. A manufacturer that has

opted out remains responsible for any

debits outstanding on the effective date

of opt-out, pursuant to § 86.1710(d)(3).

(a) Procedures for opt-outs—

manufacturers. To opt out of the

National LEV program, a covered

manufacturer must notify the

Administrator as provided in

§ 86.1705(c)(1), except that the

notification shall specify the condition

and final action allowing opt-out,

indicate the manufacturer’s intent to opt

out of the program and no longer be

subject to the provisions in this subpart,

and specify an effective date for the optout. The effective date shall be specified

in terms of the first model year for

which the opt-out shall be effective, but

shall be no earlier than the applicable

date indicated in paragraphs (d) through

(i) of this section. For an opt-out

pursuant to paragraph (d) of this

section, the manufacturer shall specify

the revision triggering the opt-out and

shall also provide evidence that the

triggering revision does not harmonize

the standard or requirement with a

comparable California standard or

requirement, if applicable, or that the

triggering revision has increased the

stringency of the revised standard or

requirement, if applicable. The

notification shall include the following

language:

XX COMPANY, its subsidiaries, successors

and assigns hereby opt out of the voluntary

National LEV program, as defined in 40 CFR

part 86, subpart R.

(b) Procedures for opt-outs—OTC

states. To opt out of the National LEV

program, a covered state must notify the

Administrator through a written

statement from the head of the

appropriate state agency. The

notification shall specify the final action

allowing opt-out, indicate the state’s

intent to opt out of the program and no

longer be subject to the provisions in

this subpart, and specify an effective

date for the opt-out. The effective date

shall be specified in terms of the first

model year for which the opt-out shall

be effective, but shall be no earlier than

the applicable date indicated in

paragraphs (d) through (k) of this

section. The notification shall include

the following language:

STATE hereby opts out of the voluntary

National LEV program, as defined in 40 CFR

part 86, subpart R.

(c) Procedures for opt-outs—EPA

notification. Upon receipt of an opt-out

notification under this section, EPA

shall promptly notify the covered states

and covered manufacturers of the optout. Publication in the Federal Register

of notice of receipt of the opt-out

notification is sufficient but not

necessary to meet EPA’s obligation to

notify covered states and covered

manufacturers.

(d) Conditions allowing manufacturer

opt-outs—change to Stable Standards.

A covered manufacturer may opt out if

EPA promulgates a final rule or other

final agency action making a revision

not specified in paragraph (d)(9)(iii) of

this section to a standard or requirement

listed in paragraph (d)(9)(i) of this

section and the covered manufacturer

objects to the revision.

(1) A covered manufacturer may opt

out within 180 days of the EPA action

allowing opt-out under this paragraph

(d). A valid opt-out based on a revision

to a Core Stable Standard may be

effective no earlier than the model year

named for the calendar year following

the calendar year in which the

manufacturer sends its opt-out

notification to EPA. A valid opt-out

based on a revision to a Non-Core Stable

Standard may become effective no

earlier than the first model year to

which that revision applies.

(i) Only a covered manufacturer that

objects to a revision may opt out if EPA

adopts that revision, except that if such

a manufacturer opts out, other

manufacturers that did not object to the

revision may also opt out pursuant to

§ 86.1707(i). An objection shall be

sufficient for this purpose only if it was

filed during the public comment period

on the proposed revision and the

objection states that the proposed

revision is sufficiently significant to

allow opt-out under § 86.1707(d).

(2) Within sixty days of receipt of an

opt-out notification, EPA shall

determine whether the opt-out is valid

by determining whether the alleged

condition allowing opt-out has occurred

and whether the opt-out complies with

the requirements under paragraphs (a)

and (d) of this section. An EPA

determination regarding the validity of

an opt-out is not a rule, but is a

nationally applicable final agency action

subject to judicial review pursuant to

section 307(b) of the Clean Air Act (42

U.S.C. 7607(b)).

(3) A manufacturer that has submitted

an opt-out notification to EPA remains

a covered manufacturer until EPA or a

reviewing court determines that the optout is valid and the opt-out has come

into effect under paragraph (d)(1) of this

section.

(4) In the event that a manufacturer

petitions for judicial review of an EPA

determination that an opt-out is invalid,

the manufacturer remains a covered

manufacturer until final judicial

resolution of the petition. Pending

resolution of the petition, and after the
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44791

date that the opt-out would have come

into effect under paragraph (d)(1) of this

section if EPA had determined the optout was valid, the manufacturer may

certify vehicles to any standards in this

part applicable to vehicles certified in

that model year and sell such vehicles

without regard to the limitations

contained in § 86.1711–99. However, if

the opt-out is finally determined to be

invalid, the manufacturer will be liable

for any failure to comply with

§§ 86.1710 through 86.1712, except for

failure to comply with the limitations

contained in § 86.1711(b).

(5) Upon the effective date of a

manufacturer’s opt-out based on this

condition, that manufacturer shall be

subject to all provisions that would

apply to a manufacturer that had not

opted into the National LEV program,

including all applicable standards and

requirements promulgated under title II

of the Clean Air Act (42 U.S.C. 7521 et

seq.) and any state standards in effect

pursuant to section 177 of the Clean Air

Act (42 U.S.C. 7507). For any state

Section 177 Program that has been in

place at least two years as of the

effective date of a manufacturer’s optout, a manufacturer waives its right

under section 177 of the Clean Air Act

to two years of lead time to the extent

that the effective date of its opt-out

provides for less than two years of lead

time and to the extent such a waiver is

necessary. With respect to ZEV

Mandates, the manufacturer will not be

deemed to have waived its two-year

lead time under section 177 of the Clean

Air Act, and such lead time shall run

from the date of EPA’s receipt of the

manufacturer’s opt-out notice.

(6) If a covered manufacturer opts out

based on this condition, any covered

state that is not a violating state under

paragraph (e), (f) or (g) of this section

may opt out within 90 calendar days of

the date of either an EPA finding that

the opt-out is valid, or a judicial ruling

that a disputed opt-out is valid. The

state’s opt-out notification shall specify

an effective date for the state’s opt-out

that may not provide for less than the

two-years lead-time required under

section 177 of the Clean Air Act

(running from the date of the EPA’s

receipt of the state’s opt-out

notification).

(7) In states that do not opt out,

obligations under National LEV shall be

unaffected for covered manufacturers.

(8) In a state that opts out pursuant to

paragraph (d)(6) of this section,

obligations under National LEV shall be

unaffected for covered manufacturers

until the effective date of the state’s opt

out. Upon the effective date of the

state’s opt out, in that state covered

manufacturers shall comply with any

state standards in effect pursuant to

section 177 of the Clean Air Act or, if

such state standards are not in effect,

with all provisions that would apply to

a manufacturer that had not opted into

the National LEV program, including all

applicable standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.).

(9)(i) The following are the emissions

standards and requirements that, if

revised, may provide covered

manufacturers the opportunity to opt

out pursuant to paragraph (d)(1) of this

section:

(A) The tailpipe emissions standards

for NMOG, NOX, CO, HCHO, and PM

specified in § 86.1708(b) and (c) and

§ 86.1709(b) and (c);

(B) Fleet average NMOG standards

and averaging, banking and trading

provisions specified in § 86.1710;

(C) Provisions regarding limitations

on sale of Tier 1 vehicles and TLEVs

contained in § 86.1711;

(D) The compliance test procedure

(Federal Test Procedure) as specified in

subparts A and B of this part, as used

for determining compliance with the

exhaust emission standards specified in

§ 86.1708(b) and (c) and § 86.1709(b)

and (c);

(E) The compliance test fuel, as

specified in § 86.1771;

(F) The definition of low volume

manufacturer specified in § 86.1702;

(G) The on-board diagnostic system

requirements specified in § 86.1717;

(H) The light-duty vehicle refueling

emissions standards and provisions

specified in § 86.099–8(d), and the lightduty truck refueling emissions

standards and provisions specified in

§ 86.001–9(d);

(I) The cold temperature carbon

monoxide standards and provisions for

light-duty vehicles specified in

§ 86.099–8(k), and for light light-duty

trucks specified in § 86.099–9(k);

(J) The evaporative emissions

standards and provisions for light-duty

vehicles specified in § 86.099–8(b), and

the evaporative emissions standards and

provisions for light light-duty trucks

specified in § 86.099–9(b);

(K) The reactivity adjustment factors

and procedures specified in

§ 86.1777(d);

(L) The Supplemental Federal Test

Procedure, standards and phase-in

schedules specified in § 86.000–8(e),

§ 86.000-9(e), § 86.127(f) and (g),

§ 86.129(e) and (f), § 86.130(e),

§ 86.131(f), § 86.132(n) and (o), § 86.158,

§ 86.159, § 86.160, § 86.161, § 86.162,

§ 86.163, § 86.164, and Appendix I to

this part, paragraphs (g) and (h).

(ii) The standards and requirements

listed in paragraphs (d)(9)(i)(A) through

(d)(9)(i)(F) of this section are the ‘‘Core

Stable Standards’’; the standards and

requirements listed in paragraphs

(d)(9)(i)(G) through (d)(9)(i)(L) of this

section are the ‘‘Non-Core Stable

Standards.’’

(iii) The following types of revisions

to the Stable Standards listed in

paragraph (d)(9)(i) of this section do not

provide covered manufacturers the right

to opt out of the National LEV program:

(A) Revisions to which covered

manufacturers do not object;

(B) Revisions to a Non-Core Stable

Standard that do not increase the overall

stringency of the standard or

requirement;

(C) Revisions to a Non-Core Stable

Standard that harmonize the standard or

requirement with the comparable

California standard or requirement for

the same model year (even if the

harmonization increases the stringency

of the standard or requirement),

provided that EPA can only raise to 1.0

any of the reactivity adjustment factors

specified in 86.1777 applicable to

gasoline meeting the specifications of

86.1771(a)(1), even if the California

factor is greater than 1.0;

(D) Revisions to a Non-Core Stable

Standard that are effective after model

year 2006;

(E) Revisions to cold temperature

carbon monoxide standards and

provisions for light-duty vehicles (as

specified in § 86.099–8(k)) and for light

light-duty trucks (as specified in

§ 86.099–9(k)) that are effective after

model year 2000.

(10) Promulgation of mandatory

standards and requirements that end the

effectiveness of the National LEV

program pursuant to § 86.1701(c) does

not provide an opportunity to opt out of

the National LEV program.

(e) Conditions allowing manufacturer

opt-outs—state Section 177 Program

that does not allow National LEV as a

compliance alternative. A covered

manufacturer may opt out of National

LEV if a covered state takes final action

such that it has in its regulations a state

Section 177 Program and/or a ZEV

Mandate (except in a state with an

Existing ZEV Mandate at the time of its

opt-in), that, prior to the 2006 model

year, does not allow National LEV as a

compliance alternative. A manufacturer

could opt out based on this condition

even if the state regulations are contrary

to an approved SIP revision committing

the state to National LEV pursuant to

§ 86.1705(g). For purposes of this

paragraph (e), such a state shall be

called the ‘‘violating state’’.
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(1) A covered manufacturer may opt

out any time after the violating state

takes such final action, provided that

the violating state has not withdrawn or

otherwise nullified the relevant final

action. An opt-out under this opt-out

condition may be effective no earlier

than the model year named for the

calendar year following the calendar

year in which the manufacturer sends

its opt-out notification to EPA.

(2) As of the model year named for the

calendar year following the violating

state’s final action, the violating state

shall no longer be included in the

applicable trading region for purposes of

calculating covered manufacturers’

compliance with the fleet average

NMOG standards under § 86.1710.

Beginning in that model year and until

the violating state’s regulations become

effective pursuant to sections 110(l) and

177 of the Clean Air Act, the National

LEV program allows covered

manufacturers to certify and produce for

sale vehicles meeting the exhaust

emission standards of § 86.096–8(a)(1)(i)

and subsequent model year provisions

or § 86.097–9(a)(1)(i) and subsequent

model year provisions in the violating

state. The two-year lead time required

by section 177 of the Clean Air Act for

the state Section 177 Program or ZEV

Mandate shall run from the date of the

final state action. Notwithstanding an

earlier effective date of a manufacturer’s

opt out based on this condition, the

manufacturer’s opt out is not effective in

the violating state until the two-year

lead time for the violating state’s

program has passed (which shall run

from the date of the final violating state

action).

(3) Upon the effective date of a

manufacturer’s opt-out based on this

condition in any covered state that is

not a violating state under this

paragraph (e), that manufacturer shall be

subject to all provisions that would

apply to a manufacturer that had not

opted into National LEV, including all

applicable standards and requirements

promulgated under title II of the Clean

Air Act and any state standards in effect

pursuant to section 177 of the Clean Air

Act (42 U.S.C. 7507). For any state

Section 177 Program that has been in

place in a non-violating state at least

two years as of the effective date of a

manufacturer’s opt-out, a manufacturer

waives its right under section 177 of the

Clean Air Act to two years of lead time

to the extent that the effective date of its

opt-out provides for less than two years

of lead time and to the extent such a

waiver is necessary. With respect to

ZEV Mandates, the manufacturer will

not be deemed to have waived its twoyear lead time under section 177 of the

Clean Air Act, which shall run from the

date of EPA’s receipt of the

manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

based on this opt-out condition, any

covered state that is not a violating state

under paragraph (e), (f) or (g) of this

section may opt out within 90 calendar

days of EPA’s receipt of the

manufacturer’s opt-out notification. The

state’s opt-out notification shall specify

an effective date for the state’s opt-out

that may not provide for less than the

two-years lead-time required under

section 177 of the Clean Air Act

(running from the date of EPA’s receipt

of the state’s opt-out notification).

(5) In non-violating states that have

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(6) In a non-violating state that opts

out pursuant to paragraph (e)(4) of this

section, obligations under National LEV

shall be unaffected for covered

manufacturers until the effective date of

the non-violating state’s opt-out. Upon

the effective date of the state’s opt-out,

in that state covered manufacturers shall

comply with any state standards in

effect pursuant to section 177 of the

Clean Air Act or, if such state standards

are not in effect, with all provisions that

would apply to a manufacturer that had

not opted into the National LEV

program, including all applicable

standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.).

(f) Conditions allowing manufacturer

opt-outs—failure to submit SIP revision.

A covered manufacturer may opt out of

National LEV if a covered state fails to

submit a National LEV SIP revision on

the date specified in § 86.1705(g). For

purposes of this paragraph (f), such a

state shall be called the ‘‘violating

state’’.

(1) A covered manufacturer may opt

out any time after the violating state

misses the deadline for its National LEV

SIP revision, provided that the violating

state has not submitted a National LEV

SIP revision prior to the manufacturer’s

submission of its opt-out notification. If

a manufacturer opts out within 180 days

from the deadline for the state to submit

its National LEV SIP revision, the optout must be conditioned on the state not

submitting a National LEV SIP revision

within 180 days from the deadline for

such SIP revision. If the state submits

such a SIP revision within the 180-day

period, any manufacturer opt-outs based

on this opt-out condition would be

invalidated and would not come into

effect. An opt-out under this opt-out

condition may be effective no earlier

than the model year named for the

calendar year following the calendar

year in which the manufacturer sends

its opt-out notification to EPA, or the

date 180 days from the deadline for the

state to submit its National LEV SIP

revision, whichever is later.

(2) For a manufacturer that opts out

based on this opt-out condition, as of

model year 2000 (or model year 2001 if

the violating state is the District of

Columbia, New Hampshire, Delaware,

or Virginia) or the model year named for

the calendar year following EPA’s

receipt of the opt-out notification,

whichever is later, the violating state

shall no longer be included in the

applicable trading region for purposes of

calculating that manufacturer’s

compliance with the fleet average

NMOG standards under § 86.1710.

Beginning in that model year and until

the manufacturer’s opt-out becomes

effective, the National LEV program

allows a manufacturer that has opted

out based on this condition to certify

and produce for sale vehicles meeting

the exhaust emission standards of

§ 86.096–8(a)(1)(i) and subsequent

model year provisions or § 86.097–

9(a)(1)(i) and subsequent model year

provisions in the violating state.

National LEV obligations in the

violating state remain unchanged for

those manufacturers that do not opt out

based on this condition.

(3) Upon the effective date of a

manufacturer’s opt-out based on this

opt-out condition, in any covered state

that is not a violating state under this

paragraph (f), that manufacturer shall be

subject to all provisions that would

apply to a manufacturer that had not

opted into National LEV, including all

applicable standards and requirements

promulgated under title II of the Clean

Air Act and any state standards in effect

pursuant to section 177 of the Clean Air

Act (42 U.S.C. 7507). For any state

Section 177 Program that has been in

place in a non-violating state at least

two years as of the effective date of a

manufacturer’s opt-out, a manufacturer

waives its right under section 177 of the

Clean Air Act to two years of lead time

to the extent that the effective date of its

opt-out provides for less than two years

of lead time and to the extent such a

waiver is necessary. With respect to

ZEV Mandates, the manufacturer will

not be deemed to have waived its twoyear lead time under section 177 of the

Clean Air Act, which shall run from the

date of EPA’s receipt of the

manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

based on this opt-out condition, any

covered state that is not a violating state

under paragraph (e), (f) or (g) of this

section may opt out within 90 calendar
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44793

days of EPA’s receipt of the

manufacturer’s opt-out notification. The

state’s opt-out notification shall specify

an effective date for the state’s opt-out

that may not provide for less than the

two-years lead-time required under

section 177 of the Clean Air Act

(running from the date of EPA’s receipt

of the state’s opt-out notification).

(5) In non-violating states that have

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(6) In a non-violating state that opts

out pursuant to paragraph (f)(4) of this

section, obligations under National LEV

shall be unaffected for covered

manufacturers until the effective date of

the non-violating state’s opt-out. Upon

the effective date of the state’s opt-out,

in that state covered manufacturers shall

comply with any state standards in

effect pursuant to section 177 of the

Clean Air Act or, if such state standards

are not in effect, with all provisions that

would apply to a manufacturer that had

not opted into the National LEV

program, including all applicable

standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.).

(g) Conditions allowing manufacturer

opt-outs—lack of an approvable SIP

revision. A covered manufacturer may

opt out of National LEV if EPA

disapproves a National LEV SIP revision

submitted by a covered state pursuant to

§ 86.1705(g) and the State fails to correct

the SIP revision. For purposes of this

paragraph (g), such a state shall be

called the ‘‘violating state.’’

(1) A covered manufacturer may opt

out any time after EPA has disapproved

a state’s National LEV SIP revision

provided that it is more than a year after

EPA’s disapproval and the state has not

yet submitted a revised National LEV

SIP. If the state has submitted a revised

National LEV SIP revision, covered

manufacturers may not opt out unless

and until EPA disapproves the state’s

revised National LEV SIP revision. An

opt-out under this condition may be

effective no earlier than the model year

named for the calendar year following

the calendar year in which the EPA

receives the manufacturer’s opt-out

notification.

(2) For a manufacturer that opts out

based on this opt-out condition, as of

the model year named for the calendar

year following EPA’s receipt of the optout notification, the violating state shall

no longer be included in the applicable

trading region for purposes of

calculating that manufacturer’s

compliance with the fleet average

NMOG standards under § 86.1710.

Beginning in that model year and until

the manufacturer’s opt-out becomes

effective, the National LEV program

allows a manufacturer that has opted

out based on this condition to certify

and produce for sale vehicles meeting

the exhaust emission standards of

§ 86.096–8(a)(1)(i) and subsequent

model year provisions or § 86.097–

9(a)(1)(i) and subsequent model year

provisions in the violating state.

National LEV obligations in the

violating state remain unchanged for

those manufacturers that do not opt out

based on this condition.

(3) Upon the effective date of a

manufacturer’s opt-out based on this

opt-out condition, in any covered state

that is not a violating state under this

paragraph (g), that manufacturer shall be

subject to all provisions that would

apply to a manufacturer that had not

opted into National LEV, including all

applicable standards and requirements

promulgated under title II of the Clean

Air Act and any state standards in effect

pursuant to section 177 of the Clean Air

Act (42 U.S.C. 7507). For any state

Section 177 Program that has been in

place at least two years as of the

effective date of a manufacturer’s optout, in a non-violating state a

manufacturer waives its right under

section 177 of the Clean Air Act to two

years of lead time to the extent that the

effective date of its opt-out provides for

less than two years of lead time and to

the extent such a waiver is necessary.

With respect to ZEV Mandates, the

manufacturer will not be deemed to

have waived its two-year lead time

under section 177 of the Clean Air Act,

which shall run from the date of EPA’s

receipt of the manufacturer’s opt-out

notice.

(4) If a covered manufacturer opts out

based on this opt-out condition, any

covered state that is not a violating state

under paragraph (e), (f) or (g) of this

section may opt out within 90 calendar

days of EPA’s receipt of the

manufacturer’s opt-out notification. The

state’s opt-out notification shall specify

an effective date for the state’s opt-out

that may not provide for less than the

two-years lead-time required under

section 177 of the Clean Air Act

(running from the date of EPA’s receipt

of the state’s opt-out notification).

(5) In non-violating states that have

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(6) In a non-violating state that opts

out pursuant to paragraph (g)(4) of this

section, obligations under National LEV

shall be unaffected for covered

manufacturers until the effective date of

the non-violating state’s opt-out. Upon

the effective date of the state’s opt-out,

in that state covered manufacturers shall

comply with any state standards in

effect pursuant to section 177 of the

Clean Air Act or, if such state standards

are not in effect, with all provisions that

would apply to a manufacturer that had

not opted into the National LEV

program, including all applicable

standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.).

(h) Conditions allowing manufacturer

opt-outs—EPA failure to consider in-use

fuel issues. A covered manufacturer may

opt out of National LEV if EPA does not

meet its obligations related to fuel sulfur

effects, as those obligations are set forth

in paragraph (h)(7) of this section.

(1) A manufacturer may request in

writing that EPA consider taking a

specific action with regard to a fuel

sulfur effect described in paragraph

(h)(7) of this section. The request must

identify the alleged fuel sulfur related

problem, demonstrate that the problem

exists and is caused by in-use fuel sulfur

levels, and ask EPA to consider taking

a specific action. Within 60 days of

EPA’s receipt of the manufacturer’s

request, EPA must respond to the

manufacturer’s request in writing,

stating the Agency’s decision and

explaining the basis for the decision.

(2) If EPA fails to respond to a

manufacturer’s request within the time

provided, the covered manufacturer that

submitted the request may opt out

within 180 days of the deadline for the

EPA response (if such a manufacturer

opts out, other manufacturers that did

not submit requests may also opt out

pursuant to § 86.1707(i). Once EPA

responds to the request, even if after the

expiration of the 60-day EPA deadline,

a manufacturer that had not yet

submitted an opt-out notification may

no longer opt out based on this opt-out

condition. An opt-out based on this

condition may be effective no earlier

than the model year named for the

calendar year following the calendar

year in which EPA received the

manufacturer’s opt-out notification.

(3) Upon the effective date of a

manufacturer’s opt-out based on this

opt-out condition, that manufacturer

shall be subject to all provisions that

would apply to a manufacturer that had

not opted into the National LEV

program, including all applicable

standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.) and any

state standards in effect pursuant to

section 177 of the Clean Air Act (42

U.S.C. 7507). For any state Section 177

Program that has been in place at least

two years as of the effective date of a

manufacturer’s opt-out, a manufacturer
44794 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

waives its right under section 177 of the

Clean Air Act to two years of lead time

to the extent that the effective date of its

opt-out provides for less than two years

of lead time and to the extent such a

waiver is necessary. With respect to

ZEV Mandates, the manufacturer will

not be deemed to have waived its twoyear lead time under section 177 of the

Clean Air Act, and such lead time shall

run from the date of EPA’s receipt of the

manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

based on this condition, any covered

state that is not a violating state under

paragraph (e), (f) or (g) of this section

may opt out within 90 calendar days of

EPA’s receipt of the manufacturer’s optout notification. The state’s opt-out

notification shall specify an effective

date for the state’s opt-out that may not

provide for less than the two-years leadtime required under section 177 of the

Clean Air Act (running from the date of

EPA’s receipt of the state’s opt-out

notification).

(5) In states that do not opt out,

obligations under National LEV shall

not be affected for covered

manufacturers.

(6) In a state that opts out pursuant to

paragraph (h)(4) of this section,

obligations under National LEV shall be

unaffected for covered manufacturers

until the effective date of the state’s opt

out. Upon the effective date of the

state’s opt out, in that state covered

manufacturers shall comply with any

state standards in effect pursuant to

section 177 of the Clean Air Act or, if

such state standards are not in effect,

with all provisions that would apply to

a manufacturer that had not opted into

the National LEV program, including all

applicable standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.).

(7) Following are EPA’s obligations

related to the potential effects of sulfur

levels in in-use fuels. If EPA does not

meet the obligations pursuant to

paragraph (h)(1) of this section, it will

provide covered manufacturers the

opportunity to opt out pursuant to

paragraph (h)(1) of this section:

(i) During the certification process

and upon a manufacturer’s request, EPA

will consider allowing the use of an onboard diagnostic system (as required by

§ 86.1717), that functions properly on

low sulfur gasoline, but indicates sulfurinduced passes when exposed to high

sulfur gasoline.

(ii) Upon a manufacturer’s request, if

vehicles exhibit sulfur-induced MIL

illuminations due to high sulfur

gasoline, EPA will consider allowing

modifications to such vehicles on a

case-by-case basis so as to eliminate the

sulfur-induced MIL.

(iii) Upon a manufacturer’s request,

prior to in-use testing, that presents

information to EPA regarding preconditioning procedures designed solely

to remove the effects of high sulfur from

currently available gasoline, EPA will

consider allowing such procedures on a

case-by-case basis.

(i) Conditions allowing manufacturer

opt-outs—OTC state or manufacturer

opts out. A covered manufacturer may

opt out of National LEV if a covered

state or another covered manufacturer

opts out of the National LEV program

pursuant to this section.

(1) If a covered manufacturer’s opt-out

under § 86.1707(i) is based on a covered

state or covered manufacturer’s opt-out

under paragraph (e), (g), (h), (i), (j) or (k)

of this section, the manufacturer may

opt out within 90 calendar days of

EPA’s receipt of the underlying state or

manufacturer’s opt-out notification. If a

manufacturer’s opt-out under

§ 86.1707(i) is based on a manufacturer’s

opt-out under paragraph (d) of this

section, the manufacturer may opt out

within 90 calendar days of the date of

either an EPA finding or a judicial

ruling that the opt-out under paragraph

(d) of this section is valid. If a

manufacturer’s opt-out under

§ 86.1707(i) is based on a manufacturer’s

opt-out under paragraph (f) of this

section, the manufacturer may opt out

within 90 days of the expiration of the

condition required by paragraph (f) of

this section, or within 90 calendar days

of EPA’s receipt of the underlying state

or manufacturer’s opt-out notification,

whichever is later. An opt-out under

§ 86.1707(i) may be effective no earlier

than the model year named for the

calendar year following the calendar

year in which the manufacturer sends

its opt-out notification to EPA.

(2) Upon the effective date of a

manufacturer’s opt-out based on this

opt-out condition, in any covered state

that manufacturer shall be subject to all

provisions that would apply to a

manufacturer that had not opted into

National LEV, including all applicable

standards and requirements

promulgated under title II of the Clean

Air Act and any state standards in effect

pursuant to section 177 of the Clean Air

Act (42 U.S.C. 7507). For any state

Section 177 Program that has been in

place at least two years as of the

effective date of a manufacturer’s optout, a manufacturer waives its right

under section 177 of the Clean Air Act

to two years of lead time to the extent

that the effective date of its opt-out

provides for less than two years of lead

time and to the extent such a waiver is

necessary. With respect to ZEV

Mandates, the manufacturer will not be

deemed to have waived its two-year

lead time under section 177 of the Clean

Air Act, which shall run from the date

of EPA’s receipt of the manufacturer’s

opt-out notice.

(3) If a covered manufacturer opts out

based on this condition, any covered

state that is not a violating state under

paragraph (e), (f) or (g) of this section

may opt out within 90 calendar days of

EPA’s receipt of the manufacturer’s optout notification. The state’s opt-out

notification shall specify an effective

date for the state’s opt-out that may not

provide for less than the two-years leadtime required under section 177 of the

Clean Air Act (running from the date of

EPA’s receipt of the state’s opt-out

notification).

(4) In non-violating states that have

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(5) In a non-violating state that opts

out pursuant to paragraph (i)(3) of this

section, obligations under National LEV

shall be unaffected for covered

manufacturers until the effective date of

the non-violating state’s opt-out. Upon

the effective date of the state’s opt-out,

in that state covered manufacturers shall

comply with any state standards in

effect pursuant to section 177 of the

Clean Air Act or, if such state standards

are not in effect, with all provisions that

would apply to a manufacturer that had

not opted into the National LEV

program, including all applicable

standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.).

(j) Conditions allowing OTC state optouts—change to Stable Standards. Any

covered state may opt out of National

LEV if EPA promulgates a final rule or

other final agency action revising a

standard or requirement listed in

paragraph (d)(9)(i) of this section, and,

had the revised standard or requirement

been included at the time, it would have

changed EPA’s [date of signature of final

rule] determination (‘‘initial

determination’’) that National LEV

would produce emissions reductions at

least equivalent to the OTC State

Section 177 Programs that would apply

in the absence of National LEV.

(1) If EPA promulgates a final rule or

other final agency action revising a

standard or requirement listed in

paragraph (d)(9)(i) of this section, a

covered state may request in writing

that EPA reevaluate, using the revised

standard or requirement, its initial

determination that National LEV would

produce emissions reductions at least

equivalent to the OTC State Section 177
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44795

Programs that would be operative in the

absence of National LEV. Within 180

days of receipt of the state’s request,

EPA must take final agency action to

determine whether the revision would

have changed EPA’s initial

determination. These EPA

determinations are not rules, but are

nationally applicable final agency

actions subject to judicial review

pursuant to section 307(b) of the Clean

Air Act (42 U.S.C. 7607(b)). In

reevaluating its determination regarding

the relative emission benefits of

National LEV, EPA shall use the same

Mobile emission factor model and the

same inputs and assumptions as used in

the initial determination, with the

following exceptions:

(i) In modeling the emission

reductions from National LEV, EPA

must use the revised standard or

requirement in place of the standard or

requirement as it existed when EPA

made its initial determination; and

(ii) In modeling the emissions

reductions that would be achieved

through the OTC State Section 177

Programs that would apply in the

absence of National LEV, EPA shall take

into account all Section 177 Programs

adopted by OTC States (including

programs that allow National LEV as a

compliance alternative) that had been

adopted subsequent to EPA’s initial

determination. In accounting for the

emissions effect of OTC State Section

177 Programs, EPA shall continue to

assume that all OTC State Section 177

Programs have the same substantive

requirements used in EPA’s initial

determination and shall not model any

effects of state regulation of mediumduty vehicles (as defined in the

California Code of Regulations, Title 13,

Division 3, Chapter 1, Article 1, Section

1900).

(2) A covered state may opt out of

National LEV within 90 days of a final

EPA determination pursuant to

paragraph (j)(1) of this section that a

revision to a standard or requirement

listed in paragraph (d)(9)(i) of this

section, if it had been included at the

time, would have changed EPA’s initial

determination that National LEV would

produce emissions reductions at least

equivalent to the OTC State Section 177

Programs that would be operative in the

absence of National LEV. The state’s

opt-out notification shall specify an

effective date for the state’s opt-out that

may not provide for less than the twoyears lead-time required under section

177 of the Clean Air Act (running from

the date of EPA’s receipt of the state’s

opt-out notification).

(3) If a covered state opts out based on

this condition, a covered manufacturer

may opt out of National LEV pursuant

to § 86.1707(i).

(4) In a state that opts out pursuant to

paragraph (j)(1) of this section,

obligations under National LEV shall be

unaffected for covered manufacturers

until the effective date of that state’s

opt-out. Upon the effective date of the

state’s opt-out, in that state covered

manufacturers shall comply with any

state standards in effect pursuant to

section 177 of the Clean Air Act or, if

such state standards are not in effect,

with all provisions that would apply to

a manufacturer that had not opted into

the National LEV program, including all

applicable standards and requirements

promulgated under title II of the Clean

Air Act (42 U.S.C. 7521 et seq.).

7. Section 86.1708–97 is redesignated

as § 86.1708–99 and amended by

revising the section heading, by

redesignating Tables R97–1 through

R97–7 as Tables R99–1 through R99–7,

by revising the references ‘‘R97–1’’,

‘‘R97–2’’, ‘‘R97–3’’, ‘‘R97–4’’, ‘‘R97–5’’,

‘‘R97–6’’, and ‘‘R97–7’’ to read ‘‘R99–1’’,

‘‘R99–2’’, ‘‘R99–3’’, ‘‘R99–4’’, ‘‘R99–5’’,

‘‘R99–6’’, and ‘‘R99–7’’, respectively,

wherever they appear in the section,

and by adding paragraph (e) to read as

follows:

§ 86.1708–99 Exhaust emission standards

for 1999 and later light-duty vehicles.

* * * * *

(e) SFTP Standards. Exhaust emission

standards from 2001 and later model

year light-duty vehicles shall meet the

additional SFTP standards in this

paragraph (e) according to the

implementation schedules in this

paragraph (e). The standards set forth in

this paragraph (e) refer to exhaust

emissions emitted over the

Supplemental Federal Test Procedure

(SFTP) as set forth in subpart B of this

part and collected and calculated in

accordance with those procedures.

(1) Tier 1 vehicles and TLEVs. The

SFTP exhaust emission levels from new

2001 and subsequent model year lightduty vehicles certified to the exhaust

emission standards in § 86.099–8(a)(1)(i)

and subsequent model year provisions

and light-duty vehicles certified as

TLEVs shall not exceed the standards in

Table R99–7.1, according to the

implementation schedule in paragraph

(e)(1)(i) of this section.

TABLE R99–7.1—SFTP EXHAUST EMISSION STANDARDS (G/MI) FOR TIER 1 VEHICLES AND TLEVS

Useful life Fuel type

NMHC +

NOX composite

CO

A/C test US06 test Composite

option

Intermediate ............................................... Gasoline .................................................... 0.65 3.0 9.0 3.4

Diesel ........................................................ 1.48 NA 9.0 3.4

Full ............................................................. Gasoline .................................................... 0.91 3.7 11.1 4.2

Diesel ........................................................ 2.07 NA 11.1 4.2

(i) Phase-in requirements. For the

purposes of this paragraph (e)(1) only,

each manufacturer’s light-duty vehicle

and light light-duty truck fleet shall be

defined as the total projected number of

light-duty vehicles certified to the

exhaust emission standards in § 86.099–

8(a)(1)(i) and subsequent model year

provisions and light light-duty trucks

certified to the exhaust emission

standards in § 86.099–9(a)(1)(i) and

subsequent model year provisions and

certified as TLEVs sold in the United

States. As an option, a manufacturer

may elect to have its total light-duty

vehicle and light light-duty truck fleet

defined, for the purposes of this

paragraph (e)(1) only, as the total

projected number of the manufacturer’s

light-duty vehicles and light light-duty

trucks, other than zero emission

vehicles, certified and sold in the

United States.

(A) Manufacturers of light-duty

vehicles and light light-duty trucks,

except low volume manufacturers, shall

certify a minimum percentage of their

light-duty vehicle and light light-duty

truck fleet according to the following

phase-in schedule:

Model year Percentage

2001 .......................................... 25

2002 .......................................... 50

2003 .......................................... 85
44796 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

Model year Percentage

2004 and subsequent ............... 100

(B) Low volume manufacturers of

light-duty vehicles and light light-duty

trucks shall certify 100 percent of their

light-duty vehicle and light light-duty

truck fleet in the 2004 and subsequent

model years.

(ii) [Reserved]

(2) LEVs and ULEVs. The SFTP

standards in this paragraph (e)(2)

represent the maximum SFTP exhaust

emissions at 4,000 miles +/¥ 250 miles

or at the mileage determined by the

manufacturer for emission data vehicles

in accordance with § 86.1726. The SFTP

exhaust emission levels from new 2001

and subsequent model year light-duty

vehicle LEVs and ULEVs shall not

exceed the standards in the following

table, according to the implementation

schedule in paragraph (e)(2)(i) of this

section:

TABLE R99–7.2.—SFTP EXHAUST EMISSION STANDARDS (G/MI) FOR LEVS AND ULEVS

US06 test A/C test

NMHC + NOx CO NMHC + NOx CO

0.14 8.0 0.20 2.7

(i) Phase-in requirements. For the

purposes of this paragraph (e)(2) only,

each manufacturer’s light-duty vehicle

and light light-duty truck fleet shall be

defined as the total projected number of

light-duty vehicles and light light-duty

trucks certified as LEVs and ULEVs sold

in the United States.

(A) Manufacturers of light-duty

vehicles and light light-duty trucks,

except low volume manufacturers, shall

certify a minimum percentage of their

light-duty vehicle and light light-duty

truck fleet according to the following

phase-in schedule:

Model year Percentage

2001 .......................................... 25

2002 .......................................... 50

2003 .......................................... 85

2004 and subsequent ............... 100

(B) Manufacturers may use an

‘‘Alternative or Equivalent Phase-in

Schedule’’ to comply with the phase-in

requirements. An ‘‘Alternative Phasein’’ is one that achieves at least

equivalent emission reductions by the

end of the last model year of the

scheduled phase-in. Model-year

emission reductions shall be calculated

by multiplying the percent of vehicles

(based on the manufacturer’s projected

California sales volume of the

applicable vehicle fleet) meeting the

new requirements per model year by the

number of model years implemented

prior to and including the last model

year of the scheduled phase-in. The

‘‘cumulative total’’ is the summation of

the model-year emission reductions

(e.g., a four model-year 25/50/85/100

percent phase-in schedule would be

calculated as: (25%*4 years) + (50%*3

years) + (85%*2 years) + (100%*1 year)

= 520). Any alternative phase-in that

results in an equal or larger cumulative

total than the required cumulative total

by the end of the last model year of the

scheduled phase-in shall be considered

acceptable by the Administrator under

the following conditions: All vehicles

subject to the phase-in shall comply

with the respective requirements in the

last model year of the required phase-in

schedule; and if a manufacturer uses the

optional phase-in percentage

determination in paragraph (e)(1)(i) of

this section, the cumulative total of

model-year emission reductions as

determined only for light-duty vehicles

and light light-duty trucks certified to

this paragraph (e)(2) must also be equal

to or larger than the required cumulative

total by end of the 2004 model year.

Manufacturers shall be allowed to

include vehicles introduced before the

first model year of the scheduled phasein (e.g., in the previous example, 10

percent introduced one year before the

scheduled phase-in begins would be

calculated as: (10%*5 years) and added

to the cumulative total).

(C) Low volume manufacturers of

light-duty vehicles and light light-duty

trucks shall certify 100 percent of their

light-duty vehicle and light light-duty

truck fleet in the 2004 and subsequent

model years.

(ii) [Reserved]

(3) A/C-on specific calibrations. A/Con specific calibrations (e.g. air to fuel

ratio, spark timing, and exhaust gas

recirculation), may be used which differ

from A/C-off calibrations for given

engine operating conditions (e.g., engine

speed, manifold pressure, coolant

temperature, air charge temperature,

and any other parameters). Such

calibrations must not unnecessarily

reduce the NMHC+NOX emission

control effectiveness during A/C-on

operation when the vehicle is operated

under conditions which may reasonably

be expected to be encountered during

normal operation and use. If reductions

in control system NMHC+NOX

effectiveness do occur as a result of such

calibrations, the manufacturer shall, in

the Application for Certification, specify

the circumstances under which such

reductions do occur, and the reason for

the use of such calibrations resulting in

such reductions in control system

effectiveness. A/C-on specific ‘‘openloop’’ or ‘‘commanded enrichment’’ airfuel enrichment strategies (as defined

below), which differ from A/C-off

‘‘open-loop’’ or ‘‘commanded

enrichment’’ air-fuel enrichment

strategies, may not be used, with the

following exceptions: Cold-start and

warm-up conditions, or, subject to

Administrator approval, conditions

requiring the protection of the vehicle,

occupants, engine, or emission control

hardware. With these exceptions, such

strategies which are invoked based on

manifold pressure, engine speed,

throttle position, or other engine

parameters shall use the same engine

parameter criteria for the invoking of

this air-fuel enrichment strategy and the

same degree of enrichment regardless of

whether the A/C is on or off. ‘‘Openloop’’ or ‘‘commanded’’ air-fuel

enrichment strategy is defined as

enrichment of the air to fuel ratio

beyond stoichiometry for the purposes

of increasing engine power output and

the protection of engine or emissions

control hardware. However, ‘‘closedloop biasing,’’ defined as small changes

in the air-fuel ratio for the purposes of

optimizing vehicle emissions or

driveability, shall not be considered an

‘‘open-loop’’ or ‘‘commanded’’ air-fuel

enrichment strategy. In addition,

‘‘transient’’ air-fuel enrichment strategy

(or ‘‘tip-in’’ and ‘‘tip-out’’ enrichment),

defined as the temporary use of an airfuel ratio rich of stoichiometry at the

beginning or duration of rapid throttle

motion, shall not be considered an

‘‘open-loop’’ or ‘‘commanded’’ air-fuel

enrichment strategy.

(4) ‘‘Lean-on-cruise’’ calibration

strategies. ‘‘Lean-on-cruise’’ air-fuel

calibration strategies shall not be

employed during vehicle operation in
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44797

normal driving conditions, unless such

strategies are also substantially

employed during the SFTP. A ‘‘lean-oncruise’’ air-fuel calibration strategy is

defined as the use of an air-fuel ratio

significantly greater than stoichiometry,

during non-deceleration conditions at

speeds above 40 mph, for the purposes

of improving fuel economy or other

purposes. A/C-on ‘‘lean-on-cruise’’

strategies which differ from A/C-off

‘‘lean-on-cruise’’ strategies for a given

engine operating condition (e.g., engine

speed, manifold pressure, coolant

temperature, air charge temperature,

and any other parameters) shall not be

used.

(5) Applicability to alternative fuel

vehicles. These SFTP standards do not

apply to vehicles certified on fuels other

than gasoline and diesel fuel, but the

standards do apply to the gasoline and

diesel fuel operation of flexible-fuel

vehicles and dual-fuel vehicles.

(6) Single-roll electric dynamometer

requirement. For all vehicles certified to

the SFTP standards, a single-roll electric

dynamometer or a dynamometer which

produces equivalent results, as set forth

in § 86.108, must be used for all types

of emission testing to determine

compliance with the associated

emission standards.

8. Section 86.1709–97 is redesignated

as § 86.1709–99 and amended by

revising the section heading, by

redesignating Tables R97–8 through

R97–14 as Tables R99–8 through R99–

14, by revising the references ‘‘R97–8’’,

‘‘R97–9’’, ‘‘R97–10’’, ‘‘R97–11’’, ‘‘R97–

12’’, ‘‘R97–13’’, and ‘‘R97–14’’ to read

‘‘R99–8’’, ‘‘R99–9’’, ‘‘R99–10’’, ‘‘R99–

11’’, ‘‘R99–12’’, ‘‘R99–13’’, and ‘‘R99–

14’’, respectively, wherever they appear

in the section, and by adding paragraph

(e) to read as follows:

§ 86.1709–99 Exhaust emission standards

for 1999 and later light light-duty trucks.

* * * * *

(e) SFTP Standards. Exhaust emission

standards from 2001 and later model

year light light-duty trucks shall meet

the additional SFTP standards in this

paragraph (e) according to the

implementation schedules in this

paragraph (e). The standards set forth in

this paragraph (e) refer to exhaust

emissions emitted over the

Supplemental Federal Test Procedure

(SFTP) as set forth in subpart B of this

part and collected and calculated in

accordance with those procedures.

(1) Tier 1 vehicles and TLEVs. The

SFTP exhaust emission levels from new

2001 and subsequent model year light

light-duty trucks certified to the exhaust

emission standards in § 86.099–9(a)(1)(i)

and subsequent model year provisions

and light light-duty trucks certified as

TLEVs shall not exceed the standards in

Table R99–14.1, according to the

implementation schedule in paragraph

(e)(1)(i) of this section.

TABLE R99–14.1.—SFTP EXHAUST EMISSION STANDARDS (G/MIL) FOR TIER 1 VEHICLES AND TLEVS

Useful life Fuel type LVW (lbs) NMHC+NOX

composite

CO

A/C test US06 test Composite

option

Intermediate .................................. Gasoline ....................................... 0–3750 0.65 3.0 9.0 3.4

3751–5750 1.02 3.9 11.6 4.4

Diesel ........................................... 0–3750 1.48 NA 9.0 3.4

3751–5750 NA NA NA NA

Full ................................................ Gasoline ....................................... 0–3750 0.91 3.7 11.1 4.2

3751–5750 1.37 4.9 14.6 5.5

Diesel ........................................... 0–3750 2.07 NA 11.1 4.2

3751–5750 NA NA NA NA

(i) Phase-in requirements. For the

purposes of paragraph (e)(1) of this

section only, each manufacturer’s lightduty vehicle and light light-duty truck

fleet shall be defined as the total

projected number of light-duty vehicles

certified to the exhaust emission

standards in § 86.099-8(a)(1)(i) and

subsequent model year provisions and

light light-duty trucks certified to the

exhaust emission standards in § 86.099–

9(a)(1)(i) and subsequent model year

provisions and certified as TLEVs sold

in the United States. As an option, a

manufacturer may elect to have its total

light-duty vehicle and light light-duty

truck fleet defined, for the purposes of

this paragraph (e)(1) only, as the total

projected number of the manufacturer’s

light-duty vehicles and light light-duty

trucks, other than zero emission

vehicles, certified and sold in the

United States.

(A) Manufacturers of light-duty

vehicles and light light-duty trucks,

except low volume manufacturers, shall

certify a minimum percentage of their

light-duty vehicle and light light-duty

truck fleet according to the following

phase-in schedule:

Model year Percentage

2001 .......................................... 25

2002 .......................................... 50

2003 .......................................... 85

2004 and subsequent ............... 100

(B) Low volume manufacturers of

light-duty vehicles and light light-duty

trucks shall certify 100 percent of their

light-duty vehicle and light light-duty

truck fleet in the 2004 and subsequent

model years.

(ii) [Reserved]

(2) LEVs and ULEVs. The SFTP

standards in this paragraph (e)(2)

represent the maximum SFTP exhaust

emissions at 4,000 miles +/¥ 250 miles

or at the mileage determined by the

manufacturer for emission data vehicles

in accordance with § 86.1726. The SFTP

exhaust emission levels from new 2001

and subsequent model year light lightduty truck LEVs and ULEVs shall not

exceed the standards in the following

table, according to the implementation

schedule in paragraph (e)(2)(i) of this

section:
44798 Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules

TABLE R99–14.2.—SFTP EXHAUST EMISSION STANDARDS (G/MI) FOR LEVS AND ULEVS

US06 test A/C test

NMHC + NOX CO NMHC + NOx CO

0.14 8.0 0.20 2.7

(i) Phase-in requirements. For the

purposes of this paragraph (e)(2) only,

each manufacturer’s light-duty vehicle

and light light-duty truck fleet shall be

defined as the total projected number of

light-duty vehicles and light light-duty

trucks certified as LEVs and ULEVs sold

in the United States.

(A) Manufacturers of light-duty

vehicles and light light-duty trucks,

except low volume manufacturers, shall

certify a minimum percentage of their

light-duty vehicle and light light-duty

truck fleet according to the following

phase-in schedule:

Model year Percentage

2001 .......................................... 25

2002 .......................................... 50

2003 .......................................... 85

2004 and subsequent ............... 100

(B) Manufacturers may use an

‘‘Alternative or Equivalent Phase-in

Schedule’’ to comply with the phase-in

requirements. An ‘‘Alternative Phasein’’ is one that achieves at least

equivalent emission reductions by the

end of the last model year of the

scheduled phase-in. Model-year

emission reductions shall be calculated

by multiplying the percent of vehicles

(based on the manufacturer’s projected

California sales volume of the

applicable vehicle fleet) meeting the

new requirements per model year by the

number of model years implemented

prior to and including the last model

year of the scheduled phase-in. The

‘‘cumulative total’’ is the summation of

the model-year emission reductions

(e.g., a four model-year 25/50/85/100

percent phase-in schedule would be

calculated as: (25%*4 years) + (50%*3

years) + (85%*2 years) + (100%*1 year)

= 520). Any alternative phase-in that

results in an equal or larger cumulative

total than the required cumulative total

by the end of the last model year of the

scheduled phase-in shall be considered

acceptable by the Administrator under

the following conditions: All vehicles

subject to the phase-in shall comply

with the respective requirements in the

last model year of the required phase-in

schedule; and if a manufacturer uses the

optional phase-in percentage

determination in paragraph (e)(1)(i) of

this section, the cumulative total of

model-year emission reductions as

determined only for light-duty vehicles

and light light-duty trucks certified to

this paragraph (e)(2) must also be equal

to or larger than the required cumulative

total by the end of the 2004 model year.

Manufacturers shall be allowed to

include vehicles introduced before the

first model year of the scheduled phasein (e.g., in the previous example, 10

percent introduced one year before the

scheduled phase-in begins would be

calculated as: (10%*5 years) and added

to the cumulative total).

(C) Low volume manufacturers of

light-duty vehicles and light light-duty

trucks shall certify 100 percent of their

light-duty vehicle and light light-duty

truck fleet in the 2004 and subsequent

model years.

(ii) [Reserved]

(3) A/C-on specific calibrations. A/Con specific calibrations (e.g. air to fuel

ratio, spark timing, and exhaust gas

recirculation), may be used which differ

from A/C-off calibrations for given

engine operating conditions (e.g., engine

speed, manifold pressure, coolant

temperature, air charge temperature,

and any other parameters). Such

calibrations must not unnecessarily

reduce the NMHC+NOX emission

control effectiveness during A/C-on

operation when the vehicle is operated

under conditions which may reasonably

be expected to be encountered during

normal operation and use. If reductions

in control system NMHC+NOX

effectiveness do occur as a result of such

calibrations, the manufacturer shall, in

the Application for Certification, specify

the circumstances under which such

reductions do occur, and the reason for

the use of such calibrations resulting in

such reductions in control system

effectiveness. A/C-on specific ‘‘openloop’’ or ‘‘commanded enrichment’’ airfuel enrichment strategies (as defined

below), which differ from A/C-off

‘‘open-loop’’ or ‘‘commanded

enrichment’’ air-fuel enrichment

strategies, may not be used, with the

following exceptions: Cold-start and

warm-up conditions, or, subject to

Administrator approval, conditions

requiring the protection of the vehicle,

occupants, engine, or emission control

hardware. With these exceptions, such

strategies which are invoked based on

manifold pressure, engine speed,

throttle position, or other engine

parameters shall use the same engine

parameter criteria for the invoking of

this air-fuel enrichment strategy and the

same degree of enrichment regardless of

whether the A/C is on or off. ‘‘Openloop’’ or ‘‘commanded’’ air-fuel

enrichment strategy is defined as

enrichment of the air to fuel ratio

beyond stoichiometry for the purposes

of increasing engine power output and

the protection of engine or emissions

control hardware. However, ‘‘closedloop biasing,’’ defined as small changes

in the air-fuel ratio for the purposes of

optimizing vehicle emissions or

driveability, shall not be considered an

‘‘open-loop’’ or ‘‘commanded’’ air-fuel

enrichment strategy. In addition,

‘‘transient’’ air-fuel enrichment strategy

(or ‘‘tip-in’’ and ‘‘tip-out’’ enrichment),

defined as the temporary use of an airfuel ratio rich of stoichiometry at the

beginning or duration of rapid throttle

motion, shall not be considered an

‘‘open-loop’’ or ‘‘commanded’’ air-fuel

enrichment strategy.

(4) ‘‘Lean-on-cruise’’ calibration

strategies. ‘‘Lean-on-cruise’’ air-fuel

calibration strategies shall not be

employed during vehicle operation in

normal driving conditions, unless such

strategies are also substantially

employed during the SFTP. A ‘‘lean-oncruise’’ air-fuel calibration strategy is

defined as the use of an air-fuel ratio

significantly greater than stoichiometry,

during non-deceleration conditions at

speeds above 40 mph, for the purposes

of improving fuel economy or other

purposes. A/C-on ‘‘lean-on-cruise’’

strategies which differ from A/C-off

‘‘lean-on-cruise’’ strategies for a given

engine operating condition (e.g., engine

speed, manifold pressure, coolant

temperature, air charge temperature,

and any other parameters) shall not be

used.

(5) Applicability to alternative fuel

vehicles. These SFTP standards do not

apply to vehicles certified on fuels other

than gasoline and diesel fuel, but the

standards do apply to the gasoline and

diesel fuel operation of flexible-fuel

vehicles and dual-fuel vehicles.

(6) Single-roll electric dynamometer

requirement. For all vehicles certified to

the SFTP standards, a single-roll electric

dynamometer or a dynamometer which

produces equivalent results, as set forth

in § 86.108, must be used for all types
Federal Register / Vol. 62, No. 163 / Friday, August 22, 1997 / Proposed Rules 44799

of emission testing to determine

compliance with the associated

emission standards.

[FR Doc. 97–21138 Filed 8–21–96; 8:45 am]

BILLING CODE 6560–50–U