926 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Parts 9, 85, and 86

[AMS–FRL–5938–8]

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: Final rule.

SUMMARY: Today EPA is finalizing the

necessary federal regulations for 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. The

program will come into effect only if the

northeastern states (members of the

Ozone Transport Commission or

‘‘OTC’’) and the auto manufacturers sign

up for it. The National LEV regulations

allow manufacturers to commit to meet

tailpipe standards for cars and light

light-duty trucks that are more stringent

than EPA can mandate. Manufacturers

have said they would be willing to

commit to the program if the OTC States

also make binding commitments to the

program. Once the program comes into

effect, it would be enforceable in the

same manner as any other federal new

motor vehicle program.

After spending years helping to

develop the program, the OTC States

and the auto manufacturers must now

decide whether to commit to it and

allow the country to benefit from

significant reductions in pollution.

National LEV would also achieve the

same (or better) emission reductions in

the Ozone Transport Region (OTR) as

would OTC State adopted new motor

vehicle programs. Under National LEV

there would be substantial

harmonization of federal and California

new motor vehicle standards and test

procedures, which would enable

manufacturers to design and test

vehicles to one set of standards

nationwide. The program would

demonstrate how cooperative,

partnership efforts can produce a

smarter, cheaper program that reduces

regulatory burden while increasing

protection of the environment and

public health.

DATES: This regulation is effective

January 7, 1998. The information

collection requirements contained in

this rule has been approved by the

Office of Management and Budget

(OMB) and has an assigned OMB

control number of 2060–0345.

ADDRESSES: Materials relevant to this

final rule have been placed in Public

Docket No. A–95–26. The docket is

located at the Air Docket Section, U.S.

Environmental Protection Agency, 401

M Street SW, Washington, DC 20460

(Telephone 202–260–7548; Fax 202–

260–4400) 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. For further

information on electronic availability of

this final rule, 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 § 86.1701–99. 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,

response to comments 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 Federal Register version 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

and of the National LEV Program

B. Timing of OTC State Commitments,

Manufacturer Opt-Ins, and EPA Finding

that National LEV is 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

4. OTC State Without an Existing ZEV

Mandate Adopts a Backstop ZEV

Mandate

B. Offramp for Manufacturers if OTC State

or Manufacturer Legitimately Opts Out

of National LEV

C. Offramp for Manufacturers for EPA

Failure to Consider In-Use Fuel Issues

D. Offramps for OTC States

1. Manufacturer Opt-Out

2. Periodic Equivalency Determination

E. Lead Time Under Section 177

VII. National LEV Will Produce Creditable

Emissions Reductions Because it is

Enforceable

A. OTC States Will Keep Their

Commitments to National LEV

B. It is Unlikely That National LEV Would

Be Found Not to Produce Emission

Reductions Equivalent to OTC State

Section 177 Programs
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 927

1Although this section contains a brief summary

of the National LEV program and the process that

led up to it, this notice assumes that the reader has

an in-depth understanding of the National LEV

program and is familiar with the previous National

LEV rulemaking notices (i.e., the August, 1997,

Supplemental Notice of Proposed Rulemaking

(SNPRM); the October, 1995, Notice of Proposed

Rulemaking (NPRM); and the June, 1997, Final

Framework Rule cited in n.2). Readers should

review those documents for in-depth discussion of

the program, the process and other background

information.

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

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

44754 (Aug. 22, 1997).

C. EPA is Unlikely to Fail to Consider InUse Fuels Issues Upon a Manufacturer’s

Request

VIII. Additional Provisions

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

H. Clarifications to Final Framework Rule

1. Operation of National LEV Vehicles on

In-Use Fuels

2. Clarification of Banking and Trading

Provisions

3. Recordkeeping Requirements

IX. Supplemental Federal Test Procedures

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. Congressional Review of Agency

Rulemaking

E. Reporting and Recordkeeping

Requirements

F. Effective Date

XI. Judicial Review

XII. Statutory Authority

II. Background 1

Today’s Final Rule (FRM) is another

step towards a voluntary clean car

program (‘‘National LEV’’) that can help

control emissions nationwide as well as

in the northeastern states. As discussed

in previous Federal Register notices,2

there have been a number of regulatory

and other steps in the development of

this program. Today’s notice concludes

the federal regulatory steps 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’’). Today’s rule

finalizes the regulations for the National

LEV program. It is now up to the OTC

States and the auto manufacturers to

determine whether the program will

come into effect.

Under the National LEV program,

auto manufacturers will 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 decision making 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

principle 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 adoption of the CAL

LEV program in the OTR. 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

EPA’s decision. In March, 1997, 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. Virginia v. EPA, 108 F.3d 1397

(D.C. Cir. 1997). 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
928 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

3See Docket No. A–95–26, IV–G–31 and IV–G–

34.

5The National LEV program will start in MY2001

nationwide. The nationwide start date was not at

issue in the SNPRM.

6 ‘‘California-certified vehicles’’, as the term is

used in this rule, are those vehicles which have

received an Executive Order from California and a

federal certificate of conformity which allows the

sale of such vehicles only in the state of California

and other states that have adopted the California

motor vehicle emission standards under Section

177 of the Clean Air Act.

National LEV only if the OTC States

make certain commitments, including

committing to allow the manufacturers

to comply with National LEV in lieu of

certain CAL LEV programs adopted

under section 177 of the CAA (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 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.3 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 to improve

the nation’s air quality.

EPA believes there is sufficient

common ground between the parties to

provide a basis for a National LEV

program to which all parties could agree

to opt into. 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, on which many

stakeholders worked hard over the

years. EPA encourages the auto

manufacturers and OTC States to opt in

so the country does not lose the

significant benefits of National LEV.

Today’s final rule (FRM) finalizes

regulations on issues relating to how the

OTC States will voluntarily opt in to 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.

Today’s FRM also addresses several

other outstanding structural details of

the National LEV program. These

provisions include the timing of OTC

State and auto manufacturer opt-ins 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, today’s FRM includes

several modifications and clarifications

of several issues addressed to some

extent in the Final Framework Rule.

These include provisions relating to

how the off-cycle supplemental federal

test procedure would apply to National

LEV vehicles and provisions relating to

banking and trading of emissions

credits. For additional explanation of

the rationale for today’s rule and

responses to comments, see the

Summary and Analysis of Comments for

the Final Rule.

III. National LEV Start Date

In the SNPRM, EPA proposed to have

the National LEV program start in

MY1999, which reflected a change from

the original proposed start date of

MY1997.5 See 62 FR 44756–57. EPA

explained that this change in the start

date was necessary because requiring a

start date of MY1997 or MY1998 was

unrealistic given the delays associated

with finalizing the program and the

inability of manufacturers to produce

and certify National LEV vehicles before

MY1999. Additionally, EPA noted that

there was no longer a legal requirement

for National LEV to produce emissions

reductions at least equivalent to those

that would be produced by OTC LEV

due to the court case overturning EPA’s

decision granting the OTC’s petition.

(See Virginia v. EPA, supra.) EPA

received no negative comments

regarding this proposed change in

program start date. EPA is today

finalizing its proposal to have the

National LEV program start in MY1999

in the OTR.

The change in program start date

reflects in part EPA’s belief that, given

the voluntary nature of the National

LEV program, it would be unreasonable

to retain the MY1997 start date and have

the program begin with some

manufacturers having debits from not

meeting the fleet average NMOG

standards for MY1997 and MY1998.

Such debits would be difficult to erase

given the increasing stringency of the

fleet average NMOG standards and the

limited ability of manufacturers to

modify their production plans quickly,

once the program is in effect, to

manufacture a number of National LEV

vehicles sufficient to demonstrate

compliance with the applicable fleet

average NMOG standards.

The MY1999 start date for the

National LEV program does not mean

that the program is being delayed two

years, but merely that the National LEV

requirements for MY1997 and MY1998

are being dropped from the regulations.

Therefore, the fleet average NMOG

standards for MY1999 are 0.148 g/mi for

light-duty vehicles and light-duty trucks

(0–3750 pounds LVW) and 0.190 g/mi

for light-duty trucks between 3750–5750

pounds LVW. As stated above, the

MY2001 nationwide fleet average

NMOG standards remain unchanged.

EPA also took comment on allowing

manufacturers to sell California-certified

vehicles 6 instead of National LEV

vehicles throughout the Northeast

Trading Region (NTR) for MY1999 and

MY2000 as a means to help

manufacturers meet their fleet average

NMOG standards for these two model

years. Manufacturers expressed concern

that they might have difficulty

producing and certifying National LEV

vehicles for MY1999 given that

certification of MY1999 vehicles will

likely start before EPA is able to find

that National LEV is in effect. EPA

believes it is appropriate to provide

some limited flexibility to

manufacturers in a way that does not

undercut the environmental benefits of

the fleet average NMOG standards in the

first year of the program. Thus, for

MY1999 only, EPA will issue federal

National LEV certificates that will allow

manufacturers to sell California-certified

TLEV, LEV, ULEV, and ZEV vehicles

throughout the NTR and will count
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 929

7There are different federal and California test

procedures for evaporative emissions.

Manufacturers generally use the option in

California’s regulations which allows testing using

the federal requirements. EPA expects

manufacturers will continue using this option when

certifying vehicles for sale in California. The

National LEV program requires emission testing

using the federal requirements.

8The manufacturers have suggested that EPA

address the issue of MY1999 and MY2000 vehicles

through expansion of the cross border sales policy,

which currently allows sales of vehicles certified to

California’s emissions standards and other

requirements in states contiguous to, or within 50

miles of, California and states that have a program

adopted under section 177 in place. See note 49 for

further discussion of the cross border sales policy.

The approach that EPA is adopting in today’s rule

is separate from and will have no effect on the cross

border sales policy.

9Manufacturers can continue to produce and sell

TLEV vehicles after MY2000 under the National

LEV and California LEV programs as long as they

obtain a National LEV certificate for the TLEVs and

meet the applicable fleet average NMOG standards.

EPA is not requiring manufacturers to discontinue

TLEV production, which remains a manufacturer

decision.

those vehicles to determine compliance

with National LEV requirements. For

MY2000, EPA will also issue certificates

that will allow manufacturers to sell

California-certified TLEVs throughout

the NTR and to count those vehicles to

determine compliance with National

LEV requirements.

The harmonization of the federal and

California motor vehicle emission

requirements have left few differences

between National LEV and Californiacertified TLEV and cleaner vehicles.

EPA believes that production and

certification of vehicles meeting both

federal and California requirements,

done currently by some manufacturers,

should be much more attractive when

the National LEV program is in effect.

However, program differences do exist

and federal requirements such as the

Certification Short Test (CST) and highaltitude requirements remain part of the

federal program.7 Using Federal

certificates to allow manufacturers to

certify and sell MY1999 Californiacertified TLEVs, LEVs, ULEVs, and

ZEVs throughout the NTR will give

them an additional mechanism to

comply with the fleet average NMOG

standards by increasing the production

and sale of their California-certified

vehicles. Manufacturers may still certify

and sell National LEV vehicles for

MY1999 using the National LEV

program requirements, and such

vehicles could be sold nationwide. EPA

is not allowing sale of California Tier 1

vehicles throughout the NTR because

EPA does not believe that certification

of vehicles to California Tier 1 standards

proves that such vehicles meet the

Federal Tier 1 tailpipe emission

standards and EPA cannot justify

replacing Federal Tier 1 vehicles with

California Tier 1 vehicles in the federal

motor vehicle emissions program. EPA

has consistently taken this position on

California Tier 1 vehicles throughout

the development of the National LEV

program.

California-certified TLEVs, LEVs,

ULEVs and ZEVs can be sold in the NTR

in MY1999 if they receive a federal

National LEV certificate. This certificate

will state that, for MY1999, a Californiacertified vehicle sold in the NTR only

will be considered a National LEV

vehicle and meet all National LEV

requirements. EPA believes that the

compliance testing done to obtain a

California certificate of conformity for

these vehicle categories is sufficient to

meet the certification requirements for

the National LEV program in MY1999.

Allowing California certification to

substitute for National LEV certification

for vehicles sold in the NTR does not

mean that EPA is waiving compliance

with the Certification Short Test (CST)

and high-altitude requirements.

However, EPA believes that a vehicle

complying with the MY1999 California

TLEV, LEV, ULEV, or ZEV emission

standards will also most likely meet the

Federal Tier 1 CST and high-altitude

requirements. Currently, Federal Tier 1

vehicles are being certified as meeting

the CST and high-altitude requirements

and EPA, in its certification review and

testing, has not identified any problems

manufacturers have had in complying

with these two requirements. EPA

expects that California-certified TLEVs,

LEVs, ULEVs, and ZEVs would also

meet the Federal Tier 1 CST and highaltitude certification requirements and

is thus willing to allow a degree of

uncertainty regarding actual

demonstration of compliance with these

requirements in MY1999 in order to

facilitate the start of the National LEV

program for those manufacturers which

may find it difficult to certify and sell

National LEV vehicles in the NTR. EPA

does not believe it is appropriate to

waive demonstration with these

requirements beyond MY1999 because

manufacturers will have had sufficient

time to incorporate compliance with the

CST and high-altitude requirements into

their MY2000 National LEV vehicles.

EPA believes there should be minimal

adverse environmental impact from

substituting California-certified TLEVs,

LEVs, ULEVs and ZEVs for National

LEV vehicles in MY1999.

Today’s Final Rule addresses the

issue of National LEV vehicle sales in

MY1999 by issuing a Federal National

LEV certificate to those vehicles sold in

the NTR instead of expanding current

policies and allowing the sale of

California-certified vehicles throughout

the NTR. By granting a Federal

certificate to these vehicles, EPA retains

its authority to enforce the provisions of

the National LEV program. Compliance

with many of these provisions, such as

compliance with the fleet average

NMOG requirements and credit trading,

is dependent on meeting conditions

associated with the National LEV

certificate. EPA is not waiving

compliance with the National LEV

requirements in the NTR in MY1999. By

requiring a federal National LEV

certificate for MY1999 Californiacertified vehicles sold in the NTR, this

provision ensures that EPA may enforce

all of the National LEV regulations

applicable to MY1999 vehicles.8

California-certified vehicles receiving a

Federal National LEV certificate

allowing sale in the NTR may not be

sold outside the NTR.

EPA believes it is also appropriate to

issue Federal certificates that will allow

manufacturers to sell California-certified

TLEVs throughout the NTR in MY2000.

As discussed below in sections VIII.E

and IX, EPA does not expect

manufacturers to produce and sell many

TLEVs after MY2000 because other

provisions in the National LEV and

California LEV programs will provide

incentives and requirements which will

minimize TLEV production. EPA

believes it would be more

environmentally beneficial and costeffective to have manufacturers use their

resources to certify and produce cleaner

LEVs and ULEVs rather than TLEVs,

which will shortly be phased out of

production.9 Issuing Federal certificates

to allow manufacturers to sell

California-certified TLEVs in the NTR in

MY2000 does not mean that more

TLEVs will be sold in this region

because manufacturers will still need to

demonstrate compliance with the fleet

average NMOG standard in the NTR in

MY2000, and all TLEVs sold in the NTR

are to be included in the compliance

calculations. Instead, EPA is making the

determination that the environmental

benefits of issuing Federal certificates

allowing the sale of California-certified

TLEVs in the NTR in MY2000

outweighs the cost and any

environmental detriment associated

with manufacturers not completing all

of the testing generally required to meet

the certification requirements necessary

to produce and sell a National LEV

TLEV in the NTR in MY2000. EPA is

not waiving compliance with any

National LEV standards, but is accepting

California certification as sufficient to
930 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

10EPA’s National LEV modeling does not

incorporate any factors relating to the effect of fuel

sulfur levels on the emissions performance of

National LEV vehicles, outside of any factors

already included in the MOBILE 5a model. Studies

being conducted by the auto and oil industries

analyzing the impact of sulfur on the emissions

performance of LEV vehicles are ongoing. EPA has

not attempted to quantify a sulfur impact on

National LEV vehicle emissions as part of the

equivalency modeling because the studies and

associated analyses have not yet been completed.

Additionally, any quantifiable impact would apply

to both the National LEV and OTC State Section 177

Programs and would not alter any equivalency

determination.

11Start date assumptions for EPA’s modeling are

MY1999 for the National LEV program in the OTR,

MY2001 for the National LEV program nationwide,

MY1996 for Section 177 Programs in New York and

Massachusetts, MY1998 for a Section 177 Program

in Connecticut, and MY1999 for Section 177

Programs in Rhode Island, New Jersey, and

Vermont. The dates for state Section 177 Programs

reflect the effective dates for current state Section

177 Programs. Maine has taken steps to adopt a

Section 177 Program. EPA has included Maine with

the other six OTC States that have adopted a

Section 177 Program, and has given Maine’s

program a start date of MY2001, recognizing that

even though Maine has not yet completed all the

steps to make its program go into effect, it has

finished most of the actions and is expected to

complete its adoption actions in the near future.

12Under the National LEV program duration

requirements (see section V.A) the OTC States are

only committed to have the Naitonal LEV program

as a compliance alternative to a Section 177

Program until MY2006.

demonstrate compliance with TLEV

standards for the purpose of

certification.

This special provision regarding the

sale of California-certified TLEVs is

applicable only in the NTR and only in

MY2000. This provision is intended to

provide manufacturers with flexibility

in meeting the fleet average NMOG

standards in the NTR. When the

National LEV requirements are effective

nationally in MY2001, however,

manufacturers’ full production efforts

will be focused on meeting California

and National LEV requirements. If a

manufacturer plans to continue

producing TLEVs after MY2000, then

such vehicles must meet all of the

National LEV requirements, including

the CST and high-altitude requirements.

In meeting the certification

requirements for a MY2001 National

LEV TLEV, manufacturers may carry

over any appropriate data from their

MY2000.

EPA is not issuing Federal certificates

allowing California-certified vehicles to

be sold under National LEV outside the

NTR in MY1999. There is no

justification for allowing such sales and,

unlike in the NTR, there is no

requirement that manufacturers produce

anything but Federal Tier 1 vehicles. If

manufacturers wish to generate early

reduction credits in the All State

Trading Region in MY1999 and

MY2000, they must do so using

National LEV vehicle sales in that

region.

IV. National LEV Will Produce Larger

VOC and NOX Emission Reductions in

the OTR Compared to OTC State

Adopted Section 177 Programs

Modeling done in support of the Final

Framework Rule showed 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 44757. The SNPRM proposed several

changes to modeling assumptions. As

proposed, and in light of public

comments, EPA has modified some of

the assumptions in the modeling,

particularly regarding when various

programs would start. This modeling

supports EPA’s conclusion in today’s

rule that, given current assumptions and

best information about future vehicle

performance 10 and the migration of

people and vehicles, the NOX and VOC

emission reductions from National LEV

are equivalent to or greater than those

from state-by-state adoption of Section

177 Programs throughout the OTR.

The first set of changes to the

modeling relates to the start dates of

National LEV and Section 177 Programs.

As proposed in the SNPRM, the updated

modeling includes a start date of

MY1999 (rather than MY1997) for the

National LEV program. The updated

modeling analysis for the OTC State

Section 177 Programs (in the absence of

National LEV) also more accurately

reflects expected reductions from OTC

State Section 177 Programs than did the

analysis described in the Final

Framework Rule. The modeling for that

rule assumed that all of the OTC States

had Section 177 Programs in effect for

MY1999 and later. In reality, only six of

the OTC States have adopted programs

that could be effective in MY1999 and

there is no longer a specific legal

requirement for the other states to adopt

a Section 177 Program. Thus, EPA’s

analysis assumes Section 177 Programs

will exist only in those OTC States that

have adopted a Section 177 Program.11

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 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 as a third case a sensitivity

analysis assuming that all of the OTC

States adopted Section 177 Programs.

For the six OTC States without a Section

177 Program in place as of July 1, 1997,

EPA assumed that the programs became

effective in MY2001, 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.

EPA has also changed some of its

modeling assumptions regarding the

status of federal and state motor vehicle

programs in MY2005 and later, in part

as a result of changes EPA made

regarding the duration of National LEV.

To the extent possible, EPA has

attempted to make these new

assumptions, which affect all three

cases analyzed by EPA, consistent from

one case to the next. Although EPA has

made assumptions regarding future

regulatory actions, these assumptions in

no way limit EPA’s options in future

regulatory actions, nor do they indicate

that EPA has prejudged those future

actions.

In the National LEV case, EPA

assumes National LEV will be in place

in all OTC States through MY2005,

which is the latest model year the

program would be considered a

compliance alternative in those OTC

States which have adopted a Section

177 Program if EPA issues Tier 2

standards at least as stringent as

National LEV standards by December

15, 2000. In MY2006, the seven OTC

States with Section 177 Programs

already adopted are assumed, for

modeling purposes, to have those

programs go into effect.12 The model

assumes the rest of the country will

have a Tier 2 program which, for

modeling purposes, is considered to be

equivalent to the National LEV program.

The two modeling cases which

analyze emission reductions without the

National LEV program assume, for

modeling purposes, that a Tier 2

program equivalent to National LEV

would go into effect in MY2005. One

case assumes Tier 1 standards in effect

until then in those states that have not

adopted a Section 177 Program. The

other case assumes Tier 1 standards in

effect until then in all states outside the

OTR (except California). The MY2005

start date for Tier 2 was chosen as a

reasonable estimation for modeling

purposes, given the National LEV

program deadline of December 15, 2000
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 931

13 If EPA promulgates Tier 2 standards at least as

stringent as National LEV on or before December 15,

2000, and those standards are in effect in MY2004

or MY2005, the manufacturers will become subject

to those standards upon their effective date, but the

OTC States’ commitments to National LEV will not

end until MY2006.

date for EPA action on the Tier 2

program (which has been incorporated

into the modeling assumption for the

National LEV case) in conjunction with

lead time for manufacturers to prepare

to comply with Tier 2 standards. The

MY2005 start date for Tier 2 also

represents a reasonable midpoint, for

modeling purposes, between the

MY2004 and MY2006 deadlines

included in the MOUs. EPA is not

precluded by the National LEV program

from implementing a Tier 2 program in

MY2004 if it determines Tier 2

standards should apply in that model

year.

EPA’s modeling shows that National

LEV would achieve greater emission

reductions in the OTR than individual

OTC State Section 177 Programs. EPA’s

conclusion would not change even if all

OTC States were to adopt Section 177

Programs. The emission levels are listed

in the Table 1 below. The modeling is

based on National LEV starting in

MY1999 in the OTR and MY2001 in the

rest of the country, with Federal Tier 1

vehicles making up the federal nonNLEV fleet. EPA did 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.

All other assumptions used in the

modeling included in the Final

Framework Rule, the SNPRM, and

today’s rule remain consistent with

those used throughout the National LEV

process. EPA believes it is important to

keep consistent assumptions to provide

a comparison between benefits from the

National LEV program and state Section

177 Programs in the OTR.

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

This section describes the substance

of the OTC States’ commitments to

National LEV. It also addresses the

process (including timing) by which

OTC States and auto manufacturers

would commit to National LEV and by

which EPA would find the program in

effect.

A. Duration of OTC State Commitments

and of the National LEV Program

Today’s Final Rule takes a different

approach to the duration of the OTC

State commitments than was proposed

in the SNPRM. As discussed in the

SNPRM, the MOUs initialed by the OTC

States and the auto manufacturers both

had the duration of the National LEV

program (and hence the duration of both

the OTC States’ and the auto

manufacturers’ commitments) depend

on whether, by January 1, 2001, EPA

issued mandatory new motor vehicle

standards (‘‘Tier 2 standards’’) that were

at least as stringent as National LEV and

that would go into effect no later than

MY2006. If EPA issued the specified

standards by that time, the auto

manufacturers would stay in National

LEV until the Tier 2 standards became

effective, and the OTC States would not

enforce their own state Section 177

Programs until MY2006. If EPA did not

issue the specified regulations by that

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. Although EPA rejected the

MOU approach in the Final Framework

Rule, EPA has reconsidered the issue

based on the comments submitted by

the OTC States and the auto

manufacturers, and has decided to

adopt the approach agreed upon by the

OTC States and the auto manufacturers.

Thus, under 40 CFR 1701(c) and 1705(e)

and (g) of today’s rule, the commitments

of the OTC States and the auto

manufacturers to National LEV last until

MY2006, unless EPA fails to promulgate

Tier 2 standards at least as stringent as

National LEV on or before December 15,

2000, in which case the commitments

last until MY2004.13

EPA had proposed in the SNPRM that

the OTC States would commit to the

National LEV program until MY2006.

This meant that the OTC States would

have committed 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 opted into the

program would be bound to comply

with National LEV until the first model

year for which manufacturers would be

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 was to last

at least until MY2004 and could last

longer.

In the Final Framework Rule, EPA did

not accept the MOU provisions for

setting the duration of the National LEV

program. EPA rejected the MOU

provisions because it was concerned

about setting up a program that would

have the country take a step backward

environmentally if the Agency failed to

act by a specified deadline. EPA has

reconsidered its views.

The main reason for changing the

program duration is the comments

received from the OTC States and the

auto industry. The auto industry made

it clear that stability until MY2006 is

very important, and the OTC States

were clear that they were uncomfortable

with committing to allow National LEV

as a compliance alternative until

MY2006 if EPA were not to issue Tier

2 standards by January 1, 2001. The

OTC States’ primary reason for wanting

to tie the duration of the program to

promulgation of Tier 2 standards is that

they need to know sooner rather than

later how the Tier 2 standards and the

California LEV program compare so that

they can determine whether they will

need to have an enforceable California

LEV program to meet their air quality

goals. EPA believes that an orderly air

quality planning process is important

and believes that the OTC States are in

the best position to know what would

be most useful to them in that process.

EPA has decided to defer to the OTC

States’ judgment on this matter.

Having decided that the length of the

OTC States’ commitment should depend

on whether EPA issues Tier 2 standards,

EPA believes it would be unfair not to

have the manufacturers’ commitment

also depend on whether EPA issues Tier

2 standards. First, that is the agreement

that was reached by the OTC States and

the manufacturers. It would be unfair to

hold the manufacturers in for longer

than they had agreed to in the MOU
932 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

14EPA will provide directly affected parties

actual notice and make copies of the FRM available

within a week of signature. Upon request, copies of

the FRM will also be made available to other parties

in the same timeframe.

15 If one of these deadlines would otherwise fall

on a weekend or federal holiday, the FRM sets the

deadline as the next business day.

16ZEV 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. Any OTC

State with a ZEV mandate that was adopted prior

to the signature date of this rule is considered a

state with an existing ZEV mandate.

while giving the OTC States the benefit

of the agreement. Second, an

unintended consequence of EPA’s

decision not to tie the end of National

LEV to EPA’s issuance of the Tier 2

regulations is that several groups

interpreted that as a signal that EPA was

not intending to perform its statutory

duty under CAA section 202(i)(3) to

evaluate the need for, technological

feasibility of, and cost effectiveness of

new standards, and to issue new

standards if warranted. EPA has every

intention of meeting its statutory

obligations under the CAA and does not

want to send a contrary message. Third,

EPA now believes that if National LEV

comes into effect and manufacturers

change all their manufacturing facilities

over to build LEV technology, it is

highly unlikely that they would actually

change the technology back to Tier 1. A

combination of the cost of changing

back to old technology and adverse

publicity from selling ‘‘dirty’’ cars

probably should be sufficient incentive

to keep manufacturers using LEV

technology. One manufacturer’s

decision, announced this summer, to

sell LEV technology (albeit certified at

Tier 1 levels) nationally and various

marketing campaigns touting clean cars

are evidence that ‘‘clean’’ cars can be

used as a selling point. Thus, today’s

Final Rule modifies the duration of the

manufacturers’ commitment to National

LEV.

B. Timing of OTC State Commitments,

Manufacturer Opt-Ins, and EPA Finding

That National LEV Is in Effect

EPA is establishing a process and

deadlines for the OTC States and the

manufacturers to opt into the National

LEV program and for EPA to find the

program in effect. The process and

timing are unchanged from EPA’s

proposal in the SNPRM. Because

National LEV needs to be in place as

soon as possible to ensure that it is

available for MY1999, 40 CFR 86.1706

sets the following deadlines based on

the date of signature of this Final Rule.14

Seventy-five days from signature of this

FRM, EPA must determine whether the

National LEV program is in effect (see

section V.C.3 below for the criteria for

finding National LEV in effect). This

finding will 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 this rule and on the

manufacturers’ opt-ins submitted no

later than 60 days from signature of this

rule.15 If EPA finds National LEV in

effect, all parties are bound by their

commitments to the program. While any

party that misses its deadline for opt-in

is not barred from submitting a late optin, EPA is only 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.

As proposed, after the initial opt-ins

and an EPA finding that the program is

in effect, the OTC States will generally

have one year from the date of the ineffect finding to submit the final portion

of their opt-ins, which is 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. For a few

states, specifically Delaware, New

Hampshire, Virginia and the District of

Columbia, the deadline is eighteen

months, rather than one year, from the

date of the in-effect finding. These states

have particular circumstances related to

their state rulemaking processes that

make a one-year deadline unrealistic. If

a state were to miss its deadline for

submission of its SIP revision

committing to National LEV, the

manufacturers would have the

opportunity to opt out of the program,

as discussed further in section VI.

C. OTC State Commitments,

Manufacturer Opt-Ins, and EPA Finding

That National LEV Is in Effect

This section describes the 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 will commit to the program, the

elements of their commitments, the

permissible conditions on OTC State

and manufacturer opt-ins, and the

criteria that EPA will use to find the

program in effect.

1. Initial Opt-In by OTC States

As proposed, the OTC States will

commit to National LEV in two steps,

the first of which is 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 is a SIP

revision incorporating the OTC States’

commitment to National LEV in state

regulations, which EPA will approve

into the federally-enforceable SIP.

To opt into National LEV, within 45

days of signature of this rule, the

Governor (or Mayor, in the District of

Columbia) will submit to EPA an

executive order or a letter committing

the OTC State to the National LEV

program. As specified in 40 CFR

86.1705(e), the executive order or letter

will contain three main elements. First,

it will state that its purpose is to opt the

state into National LEV. Second, it will

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 will 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 16 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 will enclose a letter signed by the

state environmental commissioner or

secretary of the appropriate state

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

which specifies 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 will send to EPA the

Governor’s executive order or letter, the

proposed regulations, and a letter from

the commissioner, which will contain

the elements specified below that were

not included in the proposed

regulations.

As proposed, the commissioner’s

letter will include the following

elements. First, it will indicate that

National LEV would achieve reductions

of VOC and NOx emissions equivalent to

or greater than the reductions that
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 933

17 ‘‘Backstop’’ Section 177 Programs are programs

that allow National LEV as a compliance alternative

to the Section 177 Program requirements.

would be achieved through state

adopted Section 177 Programs in the

OTR. Second, it will indicate that the

state intends National LEV to be the

state’s new motor vehicle emissions

control program. Third, it will 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. As

EPA is defining it here, 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

will further state that the state’s

participation in National LEV extends

until MY2006, except as provided in the

National LEV regulations’ provisions

addressing the duration of the OTC

State commitments and state offramps.

However, in a change from the proposal

(discussed in section V.A above), the

letter will add that if no later than

December 15, 2000, EPA does not issue

mandatory new motor vehicle standards

(‘‘Tier 2 standards’’) at least as stringent

as National LEV and that would go into

effect no later than MY2006, then the

state’s participation in National LEV

extends only until MY2004, except as

provided in the National LEV provisions

for state offramps. The offramps allow

the OTC States to exit National LEV if

an auto manufacturer were to decide to

exit the program. OTC States without

existing ZEV mandates would add a

statement that the state accepts National

LEV as a compliance alternative to any

ZEV mandates. OTC States with existing

ZEV mandates 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 will

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 will recognize that

the state’s executive branch must

comply with any laws passed by the

state legislature that might affect the

state’s commitment. The manufacturers’

comments opposed inclusion of the

proposed language stating that the

provisions of the state’s letter would not

have the force of law until adopted as

state regulations and that the state must

comply with any state legislation that

might affect the commitment. The

manufacturers expressed concern that

these provisions undermine the states’

commitments. However, a number of

states have indicated to EPA that they

could not make a commitment of this

nature before completing the states’

rulemaking processes, unless they

included language to clarify the legal

nature of the initial state commitment.

In light of the fact that the states will not

have sufficient time to complete a

rulemaking before opting into National

LEV, EPA believes it is appropriate for

the opt-in provisions to allow the states

to include the language that EPA

proposed. EPA does not believe this

language will in any way affect the

degree to which the states are legally or

politically bound by their initial opt-ins.

Fifth, the commissioner’s letter will

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 will state that the

state supports the legitimacy of the

National LEV program and EPA’s

authority to promulgate the National

LEV regulations.

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. Consistent with

the provisions in the MOU initialled by

the OTC, for states without existing ZEV

mandates, the commissioner’s letter will

state that the state intends to forbear

from adopting a ZEV mandate effective

during the period of the state’s

participation in National LEV. In this

rule, EPA is defining an existing ZEV

mandate as a ZEV mandate adopted by

an OTC State prior to the signature date

of this rule. The manufacturers

commented that the states should

commit that they will forbear from

adopting ZEV mandates, rather than

only stating their intent to forbear from

such action. However, the OTC States

have expressed their concern about

attempting to bind future legislatures in

this way and have consistently

indicated that such language would not

be acceptable to them. As it stated in the

NPRM (60 FR 52740) and SNPRM (62

FR 44760) for National LEV, 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. Thus, EPA believes

it is appropriate to include the language

supported by the OTC States here. If any

OTC State would prefer to commit that

it will forbear from adopting a ZEV

mandate, it may make that commitment

in its opt-in.

The commissioner’s letter from OTC

States that have not adopted a Section

177 Program at the time of signature of

this rule need not include a

commitment or statement of intent to

forbear from adopting a Section 177

Program effective during the period of

the state’s commitment to National LEV,

as long as the state commits to accept

National LEV as a compliance

alternative to any such program. EPA

took comment on such a provision in

the SNPRM (60 FR 44760) because the

draft MOU initialed by the

manufacturers included a statement that

certain OTC States would forbear from

adopting such ‘‘backstop’’ Section 177

Programs,17 while the draft MOU

initialed by the OTC States did not

include any statement regarding

adoption of such backstop programs.

The comments on the SNPRM from the

manufacturers and the OTC States

reiterate these positions. In particular,

the manufacturers stated that allowing

all OTC States to adopt backstop Section

177 Programs would destabilize the

National LEV program. The

manufacturers are concerned that the

prospect of a return to Tier 1 vehicles

in at least some OTC States if a state

violates its commitment to National LEV

is a powerful incentive for states to

abide by their commitments that would

be lost with widespread backstops. EPA

agrees that the absence of backstops in

some OTC States would contribute to

program stability in the manner that the

manufacturers suggest. However, EPA

does not believe it is necessary to bar

states from adopting backstops to

provide this source of stability, as it is

highly unlikely that all or nearly all

OTC States will adopt backstop Section
934 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

177 Programs effective during the

relevant time period and it is unlikely

that more than a few (if any) states

outside the OTR would adopt backstop

programs. In addition, the OTC States

said that they are unwilling to commit

not to adopt backstop programs. Thus,

EPA does not believe it is appropriate to

include a provision committing not to

adopt a backstop Section 177 Program

as an element of the OTC States’

commitments to National LEV.

Finally, the commissioner’s letter may

include a statement that the state’s optin 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. However, 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).

The OTC States commented that 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). An

agreement on ATVs has not been

contemplated to be part of the National

LEV regulations, but has been discussed

as a separate agreement between the

OTC States and the auto manufacturers.

At one point, the OTC States and

manufacturers reached consensus on the

substance and language of an ATV

agreement, which was to establish

mechanisms for sharing information not

only about advanced technology

vehicles and alternative fuels, but also

about the incentives and infrastructure

development necessary to make new

technology feasible. This agreement was

attached to the MOUs initialed by the

manufacturers’ organizations and the

OTC. EPA supports this agreement, but

does not believe that opt-ins to National

LEV need be conditioned on final

signature of the agreement. If the OTC

States and manufacturers want to

finalize the agreement (contingent on

National LEV coming into effect), they

can and should do so before the due

date for the OTC State opt-ins. There is

no reason to delay finalizing the ATV

agreement until after the OTC States

have opted in. Thus, although OTC

States can refuse to opt in if there is no

ATV agreement, they cannot send in an

opt-in which is conditioned on an ATV

agreement being signed.

In the regulations at 40 CFR 86.1705

(e) and (g), EPA is providing 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. Although it is somewhat

unusual for EPA to identify specific

language for state submissions, EPA

believes that this is an appropriate

situation 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 will 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.

However, in a slight modification to the

proposed approach, the final regulations

provide that for the Governors’ and

commissioners’ letters, a state may opt

into National LEV using the specified

language or ‘‘substantively identical

language.’’ Because the first step of the

OTC States’ commitments to National

LEV will occur before the states can

complete their rulemaking processes,

EPA recognizes that some slight

wording variations may be necessary for

individual states. For the subsequent

SIP revisions, however, states will have

the opportunity to go through noticeand-comment rulemaking on the

specified language. Moreover, because

the deadline for manufacturers to opt

into National LEV is after the deadline

for the OTC States, the manufacturers

will have the opportunity to assess the

adequacy of any state opt-ins that vary

from the specified language. If the

variation is sufficient to undercut the

assurance that the state will carry out its

commitment to National LEV, the

manufacturers may decide not to opt

into National LEV. However, the

manufacturers would not have an

opportunity to assess beforehand any

variations in the SIP revision language

submitted by the states. Prior to opt-in,

the manufacturers can evaluate the SIP

revision language specified in the

regulations to determine whether they

view the language as an adequate

expression of the states’ commitments to

National LEV, but they would not have

the opportunity to evaluate any

variations on that specified language.

The importance of ensuring that all

parties know what they are signing up

to at the time of opt-in further supports

the requirement for states to use exact

language for the SIP revisions.

Despite the possibility that states may

opt into National LEV even with slight

non-substantive variations in the

language of the Governor’s letter or

commissioner’s letter, EPA emphasizes

that any differences must be minor and

non-substantive. Because the Governor’s

letter and commissioner’s letter are

political as well as legal documents,

even language without direct legal effect

is important to bind the state politically

to carry out its commitment. Hence,

EPA and/or the manufacturers are likely

to view variations in such language as

substantive changes to the state’s

commitment. To avoid invalid opt-ins,

EPA expects most, if not all, OTC States

to use the specified language

unmodified. Only a few OTC States

commented that they might need to

make unspecified changes in the

language. In addition, as discussed

further below, EPA will find National

LEV in effect without providing for

additional notice-and-comment on

whether the conditions are met for

finding National LEV in effect. EPA may

proceed without additional rulemaking

or other process 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 has determined to be

adequate through a notice-and-comment

rulemaking, EPA will be able to find

National LEV in effect on that basis.

EPA also recognizes that a state may

wish to include background

information, especially in the

Governor’s executive order or letter.

This is permissible under today’s

regulations, providing that the

additional information does not add

conditions to the state’s opt-in.

2. Manufacturer Opt-Ins

As proposed, the motor vehicle

manufacturers’ opt-ins to National LEV

are due within 60 days from signature

of this Final Rule. As provided in the

Final Framework Rule, a manufacturer

will 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). The only permissible

conditions on a manufacturer’s opt-in

notification would be that the OTC

States or the auto manufacturers

specified by the manufacturer opt into

National LEV pursuant to the National
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 935

18OTC States that had Section 177 Programs at

the time of opt-in would need to modify their

existing regulations in accordance with this

provision.

LEV regulations and that EPA find the

program to be in effect. These

conditions parallel the permissible

conditions described above for the OTC

States’ opt-ins.

One commenter voiced a concern that

the opt-in language that would commit

the manufacturers ‘‘not to seek to certify

any vehicle except in compliance with

the regulations in subpart R’’ would

prevent manufacturers from certifying

heavy-duty vehicles. The statement

would not have that effect. Heavy-duty

vehicles are not covered by the National

LEV program, so they would not need

to be (and could not be) certified under

the National LEV regulations. Similarly,

this opt-in language would not preclude

manufacturers from seeking to certify a

vehicle for sale only in California and

states that have the California program

in effect. The opt-in language also

would not commit manufacturers to

obtain National LEV certificates for

vehicles sold outside the United States.

3. EPA Finding That National LEV Is In

Effect

The OTC States’ and the auto

manufacturers’ opt-ins will become

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

conditioned, upon the satisfaction of

that condition. As provided in 40 CFR

86.1706, EPA will find National LEV in

effect if each of the listed manufacturers

submits an opt-in notification that

complies with the requirements for optins, each of the opt-in notifications

submitted by an OTC State complies

with the requirements for opt-ins, and

any conditions placed upon any of the

opt-ins are satisfied. Thus, if all the

parties that opted into National LEV

agree to participate in the program, even

if fewer than all OTC States opt into

National LEV, EPA will find the

program in effect. 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. By

allowing each of the parties in National

LEV to condition their agreement to opt

in on specified other parties opting in,

EPA is leaving it up to each of the

parties to decide what is an acceptable

basis for its own participation. EPA

expects that each motor vehicle

manufacturer and each OTC State will

carefully evaluate the National LEV

program as a whole and make the choice

as to whether and under what

conditions it chooses to participate.

Once all conditions on opt-ins are

satisfied, the manufacturers will be

subject to the National LEV

requirements for new motor vehicles for

the duration of the program, and the

OTC States that opt in will 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 will

make the finding as to whether National

LEV is in effect and National LEV will

begin before the OTC States’ SIP

revisions are due. Through an 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, 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.

See Sec. VI.A.2; 40 CFR 86.1707(f).

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 will publish the finding that

National LEV is in effect in the Federal

Register, but the Agency will not 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 noticeand-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). The public has had full

opportunity to comment on the

adequacy of the elements of the

manufacturers’ and OTC States’ opt-ins.

Thus, EPA will find that National LEV

is in effect without conducting further

rulemaking if the Agency determines

that each of the listed manufacturers has

submitted an opt-in notification that

includes the specified elements in

approved language without

qualifications, each of the opt-in

notifications submitted by an OTC State

includes the specified elements in

specified or substantively identical

language without qualifications, and

any conditions placed upon any of the

opt-ins have been satisfied.

4. SIP Revisions

Within one year (eighteen months for

a few specified states, as discussed

above in section V.B) of the date set for

EPA’s finding that National LEV is in

effect, the OTC States will complete the

second phase of their commitments to

National LEV by submitting SIP

revisions to EPA incorporating their

commitments (‘‘National LEV SIP

revisions’’). As proposed and specified

in 40 CFR 86.1705(g), the SIP revisions

will contain the following elements

incorporated in enforceable state

regulations.

The first regulatory provision will

commit that, for the duration of the

state’s commitment to 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).18 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 will 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. However,

as discussed in section V.A above, the

regulations will also provide that if, no

later than December 15, 2000, EPA has

not issued mandatory new motor

vehicle standards (‘‘Tier 2 standards’’) at

least as stringent as National LEV that

would go into effect no later than

MY2006, then the state is committed to

participate in National LEV only until

MY2004, except as provided in the

National LEV provisions for state

offramps. States that do not have an

existing ZEV mandate (see n. 16 above)
936 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

will additionally provide that

manufacturers may comply with

National LEV as a compliance

alternative to any ZEV mandates for the

duration of the state’s commitment to

National LEV.

The second element of the state

regulations will 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 will

include state regulations containing the

elements discussed above, and a

transmittal letter or similar document

from the state commissioner forwarding

those regulations. As proposed, four

additional elements of the SIP

commitment must be included either in

the transmittal letter or the state

regulations. First, the state will commit

to support National LEV as an

acceptable alternative to state Section

177 Programs for the duration of the

state’s commitment to National LEV.

Second, the state would recognize that

its commitment to National LEV is

necessary to ensure that National LEV

remain in effect. Third, the state will

state that it is submitting the SIP

revision to EPA in accordance with the

National LEV regulations. Fourth, each

OTC State without an existing ZEV

mandate (see n. 16 above) will state that,

for the duration of the state’s

commitment to National LEV, the state

intends to forbear from adopting a ZEV

mandate effective during the period of

the state’s participation in National

LEV. See section V.C.1 above for further

discussion of OTC State commitments

relating to ZEV mandates. As discussed

in section V.C.1 above, OTC States that

had not adopted a Section 177 Program

at the time of signature of this rule

would not need to commit not to adopt

backstop Section 177 Programs.

EPA will be able to find that an OTC

States’ SIP submission meets the

National LEV SIP requirements and to

approve it into the SIP without further

rulemaking as long as the submission

both includes the language specified in

the regulations without additional

conditions and meets the CAA

requirements for approvable SIP

submissions. In the SNPRM, EPA

provided full opportunity for public

comment on the language that the states

would use in their SIP revisions.

Today’s rule finalizes that language with

a few modifications arising from the

public comments. Thus, in reviewing

such a SIP submittal, EPA will only

have to determine whether the submittal

includes the specified language without

additional conditions, and whether it

meets 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 leave EPA little

discretion in deciding whether a state

submission meets the requirements for a

National LEV SIP revision, and

consequently remove any benefits to be

derived from conducting notice-andcomment 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, 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 will merely have to

determine whether the state has

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. 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 an OTC State

commitment to National LEV would not

interfere with attainment or any other

Act requirement. See below for further

discussion of this point.

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. General Motors Corp. v. U.S., 496

U.S. 530, 540 (1990).

In the SNPRM, EPA explained the

circumstances under which EPA

believes these SIP commitments would

have binding effect. Several commenters

disagreed with EPA’s legal

interpretations. Of course, whether a

subsequent state law or regulation could

be approved into the SIP or whether it

would be preempted by the earlier

National LEV SIP revision would be a

fact-specific determination that could

not be made unless and until a state

took final action arguably in conflict

with its National LEV SIP revision.

Although this is an issue that might

never arise, EPA believes it is

appropriate to lay out the key legal

principles that EPA believes would

apply in such circumstances so that any

OTC State that submits a National LEV

SIP revision does so with a full

understanding of how its commitment

to National LEV would be enforceable.

A National LEV 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. EPA approves

SIP submissions through a federal

notice-and-comment rulemaking

process under section 110(k) of the Act.

Approved SIP submissions are

incorporated by reference into the CFR

and are enforceable federal law. 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 conflict with the federallyapproved National LEV SIP revision and

would not be valid prior to EPA

approval into the SIP of 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). The courts

have held that where Congress has the

power under the Supremacy Clause of

the U.S. Constitution to preempt an area

of state law (which it has with respect

to air pollution controls), state law is

preempted if either Congress evidences
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 937

an intent to occupy a given field, or to

the extent that the state law actually

conflicts with federal law. Hence, the

later state regulation that did not allow

National LEV as a compliance

alternative would be preempted by the

federally-approved National LEV SIP

provision and would be unenforceable

against the manufacturers.

Manufacturers could bring suit against

the state to clarify that the new state law

was not enforceable until approved by

EPA, thereby enforcing the initial SIP

commitment in federal court.

To revise the SIP, the state would

have to submit the new provisions and

EPA would have to approve them into

the SIP through notice-and-comment

rulemaking. If EPA approved the new

provisions, they would take effect. If

EPA disapproved the new provisions,

then the new state law would continue

to conflict with the federally-approved

SIP revision (which is federal law)

containing the state commitment to

National LEV, and manufacturers could

seek a judicial determination that the

federally-approved National LEV SIP

revision commitment preempted the

new state law.

Once a state has an approved SIP

provision committing to accept National

LEV as a compliance alternative for a

specified duration, under section 110(l)

of the CAA, EPA would be obligated to

disapprove a subsequent SIP revision

that violated the state’s commitment 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 keeping its commitment 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 those other

states’ ability to attain. As discussed

above, 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.

One commenter opposed EPA’s

reading of section 110 on several

grounds, focusing in particular on the

potential effects on states downwind

from the violating state. The commenter

objects to anything that would

discourage a state that committed to

National LEV from implementing a

Section 177 Program if that state finds

in the future that National LEV will not

prevent emissions within that state from

interfering with attainment in

downwind states. The commenter

claims that the commitment to National

LEV would violate the section

110(a)(2)(D) requirement that emissions

in a state cannot interfere with

attainment or maintenance in

downwind states.

EPA rejects the suggestion that a

state’s commitment to National LEV has

the potential to interfere with that

state’s ability to comply with section

110(a)(2)(D). Section 110(a)(2)(D)

requires SIPs to ‘‘contain adequate

provisions prohibiting * * * any source

or other type of emissions activity

within the State from emitting any air

pollutant in amounts which will * * *

contribute significantly to

nonattainment in, or interfere with

maintenance by, any other state. * * *’’

Thus, section 110(a)(2)(D) holds a state

responsible for reducing a given

quantity of emissions that contributes

significantly to nonattainment in

another state. It does not mandate any

particular measure for reducing those

emissions, and the Circuit Court of

Appeals for the District of Columbia, in

Virginia v. EPA, 108 F. 3d 1397 (D.C.

Cir. 1997), precluded EPA from

requiring states to adopt a program

under section 177. States commonly

make choices between emissions control

measures, and the decision to adopt one

measure often precludes another,

usually due to practical constraints such

as incompatible technology, limited

resources, lead time requirements, etc.

The choice of National LEV is no

different. In selecting National LEV as a

means of controlling emissions from

new motor vehicles, a state will be fully

aware that the choice requires giving up

the ability to adopt a state Section 177

Program for a given period of time,

except under specified circumstances.

EPA has determined that National LEV

produces equivalent or greater

emissions reductions than OTC Stateby-State adoption of Section 177

Programs. Thus, the only way in which

adoption of OTC State Section 177

programs in lieu of National LEV could

help meet OTC States’ section

110(a)(2)(D) obligations is if California

were to adopt more stringent CAL LEV

requirements, all or almost all OTC

States also adopted such standards, and

the timing of the adoptions was such

that the standards would become

effective earlier than the date on which

the OTC States’ participation in

National LEV would have ended had the

states opted into National LEV instead.

For National LEV to come into effect in

MY1999, OTC States must evaluate the

alternatives based on the information

available at this time and make a choice

now as to whether to opt into National

LEV. As is often the case, if state

regulators wait until they have perfect

information about all possible options,

one option—National LEV, which now

looks to be the most attractive option—

will no longer be available. Nor is it an

option for OTC States to opt into

National LEV without making an

enforceable commitment for the

specified duration. National LEV is a

voluntary program for both states and

manufacturers, and manufacturers are

unwilling to supply National LEV

vehicles without assurance that their

future compliance obligations will

remain stable for the specified duration.

Therefore, a commitment by OTC States

to accept compliance with National LEV

for the specified duration is an integral

and critical element of National LEV.

Based on the options and information

available now to OTC States and only

the possibility that California will

tighten its standards at some point in

the future, an OTC State that made an

enforceable commitment to National

LEV for the specified duration could not

be said to be interfering with attainment

of downwind states, nor could that

commitment be held unenforceable in

the future. Of course, for most OTC

States, National LEV is only one of the

actions they will need to take to meet

their CAA obligations. States committed

to National LEV would remain

responsible for compliance with section

110(a)(2)(D) and would be able to use

other means to achieve the necessary

reductions. Thus, the state

commitments to National LEV in no

way violate section 110(a)(2)(D), nor are

they consequently unenforceable as the

commenter suggests.

The commenter further asserts that

EPA is attempting to prohibit states

from adopting Section 177 Programs
938 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

19 If a state violated its commitment, it would

have the ability to limit the period of time for which

it would receive Tier 1 vehicles to approximately

two full model years by curing the violation. Even

if EPA were to approve the SIP revision, the state

would receive Tier 1 vehicles for two years

pursuant to the requirement for lead time under

section 177. Thus, an EPA disapproval of a

violating state’s proposed SIP revision would not

necessarily result in higher emissions in the

violating state compared to the result if EPA had

approved the proposed SIP revision.

and this is illegal and contrary to

section 177, which provides states the

right to adopt state standards for new

motor vehicles that are identical to

California standards. EPA agrees that

section 177 clearly provides states the

right to adopt the California standards.

Under National LEV, states make the

choice whether to exercise that right

and implement the California standards,

or to commit to accept manufacturers’

compliance with an alternative set of

emissions controls on new motor

vehicles for a limited period of time.

The OTC States and the manufacturers

developed the basic framework and

requirements for the National LEV

program and the fundamental agreement

on which it is based. EPA does not have

the authority to require the

manufacturers to produce National LEV

vehicles without their agreement or to

require the OTC States to commit to

National LEV. Absent the voluntary

actions of the manufacturers and OTC

States there will be no National LEV

Program. However, if the manufacturers

and OTC States choose to commit to

National LEV and bring the program

into being, it is in no way contrary to

section 177 or any other provision of the

Clean Air Act for EPA to enforce the

agreement in the manner provided in

today’s rule.

The commenter further contends that

EPA’s reading of section 110(l) is

incorrect for several reasons. As

discussed above, under EPA’s

interpretation, section 110(l) could bar

EPA from approving into the SIP a state

submission that would revoke an earlier

SIP provision committing a state to

accept National LEV as a compliance

alternative for a specified duration.

First, the commenter states that based

on the same analysis, EPA could use its

authority under section 110(k)(5) to

require even unwilling states to revise

their SIPs to accept National LEV as a

compliance alternative on the theory

that failure to do so would frustrate

National LEV and thus interfere with

attainment in neighboring states. The

commenter states that EPA has no such

authority under section 110(k)(5),

(under Commonwealth of Virginia v.

Environmental Protection Agency, 108

F.3d 1397 (D.C. Cir. 1997).

EPA rejects the contention that the

section 110(k)(5) analysis is comparable

to EPA’s interpretation of section 110(l).

As emphasized above, National LEV is

a voluntary program. Enforcing an

agreement that states have voluntarily

entered into is a fundamentally different

action from mandating that states enter

into an agreement. More specifically,

EPA’s interpretation of section 110(l)

relies on the effect that a violation of a

state commitment is likely to have on

other states that have relied upon the

National LEV program. A program will

not be useful for state air pollution

control and planning purposes unless

there is some assurance that it will

continue over time, and EPA has

attempted to structure National LEV so

as to provide such an assurance of

stability. Given this structure, states will

likely reasonably rely on achieving a

certain quantity of emissions reductions

from National LEV and hence will likely

decide not to adopt other pollution

control measures. Since most measures

take time to adopt and implement, the

sudden and unexpected loss of

emissions reductions from National LEV

would be likely to cause a significant

delay in some states’ emissions control

efforts. As a consequence, it would

affect such states’ ability to meet the

statutory and regulatory deadlines for

attainment as well as the obligation to

protect the health and welfare of their

citizens. In contrast, if OTC States did

not commit to National LEV and the

program never came into effect, while

the opportunity for emissions

reductions from National LEV would be

lost, states would never have expected

to receive those reductions, would not

have foregone opportunities for other

types of emissions reductions, and

would not be disadvantaged in their

ability to pursue other measures. Under

those circumstances, EPA would have

no basis for finding that failure to

include a commitment to National LEV

would make a SIP substantially

inadequate to attain the NAAQS or

otherwise comply with any requirement

of the CAA.

The commenter also cites section

110(a)(2)(D) to argue that section 110

holds each state responsible only for

emissions within its jurisdiction and

requires a state to take action only if

those emissions are interfering with

attainment in another state. EPA agrees

that section 110(a)(2)(D) only applies to

emissions activity within the state, but

EPA is here relying on section 110(l),

not section 110(a)(2)(D). Section 110(l)

simply provides that EPA shall not

approve a revision if it ‘‘would interfere

with any applicable requirement

concerning attainment and reasonable

further progress * * * or any other

applicable requirement of [the] Act.’’

(Emphasis added.) Section 110(l) makes

no reference to emissions activities

within the state, and EPA declines to

attempt to read in such a limitation.

The commenter states further that it

would not violate section 110 for EPA

to approve into a SIP state provisions

that replace National LEV with a section

177 program when the section 177

program would result in equivalent or

lower emissions within the state. If the

manufacturers might choose to opt out

of National LEV as a consequence of an

EPA approval of such a revision, the

revision would jeopardize all of the

emissions reductions from the National

LEV program and states without

backstop programs could experience the

significantly higher emissions that

would be produced by Tier 1 vehicles.

Thus, it is highly unlikely that the

proposed SIP revision would not

interfere with attainment in at least

some states that had relied upon

National LEV, even if emissions in the

violating state remained stable or

decreased and vehicles from the

violating state that migrated into other

states emitted at the same or lower

levels. For these reasons, section 110(l)

could require EPA to disapprove the

state’s proposed revision.

Finally, the commenter states that

EPA could not find that a proposed SIP

revision breaking the state’s

commitment to National LEV would

interfere with attainment under section

110(l) because manufacturers would be

allowed to sell Tier 1 vehicles in the

violating state even if they do not opt

out of National LEV. In that situation,

approval of the section 177 program

would reduce emissions in that state in

comparison to the Tier 1 requirements

that would otherwise apply. EPA

disagrees with the commenter’s analysis

of how this situation would relate to the

requirements of section 110(l). Given

the likelihood that manufacturers would

opt out of National LEV if EPA were to

approve the SIP revision, approval of

the SIP revision would be likely to

result in overall higher emissions from

Tier 1 requirements in many states, not

just one, and a number of these states

are likely to be relying on the reductions

from National LEV. Moreover, the

violating state has the ability to avoid

some or all of the negative emissions

effects of its action, either by not taking

the action in the first place, or by curing

its violation, as discussed above in

section VI.A.1.19 In contrast, other states

cannot prevent a state from violating,

but rather must rely on EPA’s

disapproval to retain the emissions

reductions that they are relying on for
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 939

20 In addition, as discussed in the following

section, manufacturers may opt out if an OTC State

takes a legitimate offramp.

21An OTC State’s commitment to National LEV

lasts until MY2006, unless EPA fails to issue Tier

2 standards at least as stringent as National LEV on

or before December 15, 2000, in which case the

commitment lasts until MY2004.

22Throughout 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.’’

attainment. Under these circumstances,

the fact that the violating state had taken

action that caused Tier 1 requirements

to apply in that state would not prevent

EPA from disapproving that state’s SIP

revision on the grounds that the revision

would interfere with attainment in other

states.

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,

provided such standards are necessary

and cost-effective. 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, the program includes 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, National LEV also

includes 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’

offramps, set forth in 40 CFR 86.1707,

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 OTC States opted out,

today’s 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

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. EPA has

received no comments on the SNPRM

opposing this general approach.

In the NPRM, EPA proposed that the

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 (recodified

in today’s rule at 40 CFR 86.1707(d)),

which would allow manufacturers to

opt out of National LEV if EPA were to

modify a Stable Standard except as

provided for under the National LEV

regulations. The second offramp is

addressed in today’s Final Rule. EPA

also is adding 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, as proposed in the SNPRM,

today’s Final Rule includes a fourth

type of offramp that allows

manufacturers to opt out based on an

OTC State or another manufacturer

legitimately opting out of National LEV.

Today’s rule also finalizes two offramps

for OTC States. An OTC State may opt

out if a manufacturer opts out or if EPA

makes a finding that National LEV will

not produce (or is not producing)

emissions reductions in the OTR

equivalent to state Section 177 Programs

in the OTR. Finally, this section

discusses EPA’s interpretation of

Section 177 if an offramp is taken.

A. Offramp for Manufacturers for OTC

State Violation of Commitment

As established in today’s Final Rule,

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) taking

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)

failing to submit a National LEV SIP

revision within the timeframe set forth

in the National LEV regulations; (3)

submitting an inadequate National LEV

SIP revision; and (4) taking final action

(by an OTC State without an existing

ZEV mandate) adopting a ZEV mandate

effective during the state’s commitment

to National LEV. 20 The discussion

below addresses each of these 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 during the state’s commitment to

National LEV 21 and that did not allow

National LEV or mandatory federal

standards of at least equivalent

stringency as a compliance

alternative. 22 (An OTC State would not

be in violation of its commitment under

National LEV if it had (or adopted) a

Section 177 Program that was effective

after the end of its commitment to

National LEV that did not allow

National LEV as a compliance

alternative.) This could happen if an
940 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

23 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 is 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.24.

24 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.E. 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.

25The ‘‘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.

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 the alternative

compliance 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. 23 This

violation of the OTC State’s

commitment to National LEV attempts

to impose a compliance burden directly

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 discussed below and set forth in 40

CFR 86.1707(e), take into account the

seriousness of the breach of the

commitment, even though the violation

would not necessarily directly burden

the manufacturers. Once a state

adequately commits 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 more stringent

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 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 and its dependence on the specific

facts—would create further uncertainty

for manufacturers.

Manufacturers would be able to opt

out at any time after an OTC State took

final action that would (or attempted to)

require manufacturers to comply with a

Section 177 Program or a ZEV mandate

(in an OTC State without an existing

ZEV mandate) prior to the end of the

state’s commitment to National LEV

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

were 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

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.

The manufacturers commented that

the definition of ‘‘final state action’’

should include the date on which a state

passes legislation that requires a state

environmental agency to eliminate

National LEV as a compliance

alternative, even if that state legislation

is not self-effectuating. EPA is

concerned that it may not necessarily be

clear in a particular instance how a law

directing a state agency to change its

regulations relating to National LEV

would actually be implemented by the

state agency. Depending on the

substantive results of the state

rulemaking process implementing the

directives of the law and the timing of

such regulations, the state may or may

not actually violate its commitment to

the program. Rather than attempting to

hypothesize the effect of final state

regulations once promulgated, EPA

believes it is appropriate to define a

final state action as the action that

finalizes the state law or regulations that

would be directly applicable to the

motor vehicle manufacturers upon the

effective date of such law or regulations.

Today’s rule provides 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.24 Two significant elements

determine the consequences in the

violating state. The first element is the

manufacturers’ National LEV

compliance obligations in the violating

state. The second element is when 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. In a state that had

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,25 the 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.

EPA had proposed that, 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. Several commenters objected

to this provision on the basis that the

violating state or a downwind state

might need emissions reductions from

controls on new motor vehicles in the
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 941

26The commenters mistakenly assumed that, in

the absence of this provision, a state that broke its

commitment would immediately get the benefits of

a state Section 177 Program. Rather, under section

177, a violating state would only be entitled to Tier

1 vehicles for at least two years after it broke its

commitment. Thus, for at least two years, the

National LEV provision that manufacturers that stay

in the program are obligated to provide only Tier

1 vehicles in the violating state is consistent with

what would happen under section 177 if the

violating state’s action ended the program. (For ease

of administration, if a violating state is in and then

out and then back in the National LEV program,

EPA has extended the period that would otherwise

be provided by section 177 to ensure that when a

states’ vehicles again count towards calculation of

the NMOG average, all of a manufacturer’s vehicles

in the first covered model year count towards the

NMOG average.) Even were lead time not required

by section 177, EPA believes it is appropriate to

give manufacturers time to comply with new motor

vehicle requirements pursuant to a change in a

state’s requirements.

27Some commenters have expressed the view

that, if an OTC State were to delete National LEV

as a compliance alternative, the State’s new (or

revised) Section 177 Program would not be

preempted by the federally approved National LEV

SIP revision nor would EPA have the legal authority

to disapprove the revised state program if it were

submitted to EPA for approval into the SIP. As

discussed in this preamble and the Response to

Comments for today’s rule, EPA disagrees with

these commenters. However, if these commenters

were correct regarding the legal status of the revised

state program disallowing National LEV as a

compliance alternative, the earliest date on which

the violating state’s Section 177 Program or ZEV

mandate would apply is 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.

violating state during the timeframe in

which National LEV regulations

required that federal Tier 1 standards be

met in the violating state. In response,

EPA is modifying this provision slightly

to allow a violating state to ‘‘cure’’ a

violation and regain the benefits of

National LEV (with respect to

manufacturers that had not opted out of

National LEV) by reversing the action

that caused the violation. EPA believes

it is highly unlikely that a state would

violate its commitment in the first place,

let alone that it would do so and then

reverse its action shortly thereafter.

Nevertheless such a scenario can be

envisioned, for example, in the situation

where a state was counting on an

alternative means of obtaining needed

emissions reductions and then found

that the alternative was for some reason

not viable. EPA believes that it is

appropriate to structure the National

LEV regulations so as to maximize

states’ incentives to uphold their

commitments to National LEV without,

under certain circumstances, foreclosing

a state from obtaining the benefits of

National LEV for the remainder of the

National LEV program.

Under today’s final rule, rather than

allowing manufacturers to sell only Tier

1 vehicles in a violating state for as long

as the manufacturers are governed by

National LEV in that state, if the

violating state reverses its action (by

taking final action withdrawing,

nullifying or otherwise reversing the

final action that violated its

commitment), after a transition period,

vehicles sold in that state by

manufacturers that had not opted out of

National LEV would once again be

subject to the National LEV fleet average

NMOG requirements. Vehicles would be

subject to the fleet average NMOG

standard as of the model year named for

the second calendar year after the

violating state took the final action

reversing the action that broke its

commitment or as of the model year

named for the fourth calendar year

following the calendar year in which the

violating state took the final action,

whichever is later. For example, if the

violating action occurred in 1999 and

the violating state reversed that action

in 2000, vehicles sold in that state

would count towards the NLEV NMOG

fleet average starting with MY2003 (the

model year named for the fourth

calendar year following the calendar

year in which the violating action

occurred). If the violating action action

occurred in 1999 and was reversed in

2002, vehicles in that state would count

towards the NLEV NMOG fleet average

starting with MY2004 (the model year

named for the second calendar year in

which the violating action was

reversed). EPA believes that it is

important to provide OTC States that

commit to National LEV with an

incentive to keep their commitments

and that this approach provides such an

incentive.26

The earliest date on which the

violating state’s Section 177 Program or

ZEV mandate would apply is governed

by the two model-year lead time

requirement of section 177, EPA’s

regulations on model year at 40 CFR

part 85 subpart X and 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 optout), 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.27 (As discussed above, EPA

believes the violating state’s refusal to

allow National LEV as a compliance

alternative would not otherwise be

effective until MY2006 (or MY2004, if

EPA failed to issue Tier 2 standards at

least as stringent as National LEV on or

before December 15, 2000).) Thus, if

none of these situations occurred, the

only requirements applicable to

manufacturers in the violating state

would be the National LEV regulations,

which would allow manufacturers to

sell in the violating state vehicles that

meet Tier 1 tailpipe standards and to

exclude those vehicles from the fleet

average NMOG calculation for the time

period discussed above.

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.E 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 today’s regulations at 40

CFR 86.1707, 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 might apply to some, but

certainly not all, MY2003 vehicles.

In the SNPRM, EPA raised the issue

of whether manufacturers should have

at least four, rather than two, years of

lead time from the date that the state

takes final action changing its

regulations to delete National LEV as a

compliance alternative. The

manufacturers’ comments advocated

that there should be four years of lead

time from the date of the state violation

of its commitment, but they did not

suggest any way (other than enforcing

the commitment in a SIP) to make such

a requirement for lead time legally

enforceable against a state that was

already in violation of its commitment

to accept National LEV as a compliance

alternative to a state Section 177

Program. Numerous other commenters

opposed the idea of providing four years

of lead time on the basis that it is

contrary to the statutory language

governing lead time for state programs

adopted under section 177. The MOUs

initialled by the OTC and

manufacturers’ organizations did not
942 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

28See 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.

29 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.D, an

OTC State legitimately opting out of National LEV

is required to provide manufacturers at least twoyears lead time.

allude to a four-year lead time under

any circumstances, indicating that the

parties had not raised this in their

negotiations, let alone agreed upon it, as

an appropriate element of the National

LEV program. Finally, the National LEV

regulations provide several other

significant disincentives to an OTC

State breaking its commitment, as

discussed in this section, and a fouryear lead time would likely add little to

these existing disincentives. Thus, EPA

does not believe it would be reasonable

to try to require a four-year lead time

under section 177 for a state violation of

its commitment to National LEV.

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 new motor 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.28 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’

compliance with the National LEV fleet

average NMOG standards. Thus, the

state would not receive emission credits

beyond Tier 1 levels if the vehicles sold

in that state were certified to Tier 1

levels when sold in that state because

the SIP would not provide in any way

for such vehicles to meet emission

standards more stringent than Tier 1

levels.

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. As proposed,

the FRM does not set a time limit for

manufacturers to exercise their right to

opt out as long as the state is 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

today’s final rule does not provide for

such a determination.

As proposed, 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 discussed above). A

manufacturer’s opt-out notification must

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).29 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 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
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 943

30For example, if the violating action occurred in

1999 and the violating state reversed that action in

2000, vehicles sold in that state would count

towards the NLEV NMOG fleet average starting with

MY2003 (the model year named for the fourth

calendar year following the calendar year in which

the violating action occurred). If the violating action

occurred in 1999 and was reversed in 2002,

vehicles in that state would count towards the

NLEV NMOG fleet average starting with MY2004

(the model year named for the second calendar year

after which the violating action was reversed).

31 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

Continued

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 the model year that would

start two years after the date EPA

received the manufacturer’s opt out.

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 for two years following the

state violation and to exclude those

vehicles from the NMOG fleet average.

However, if the violating state reversed

the action that broke its commitment,

vehicles sold in the violating state

would count towards the NLEV NMOG

fleet average as of the model year named

for the second calendar year after the

violating state took the final action

reversing the action that broke its

commitment or as of the model year

named for the fourth calendar year

following the calendar year in which the

violating state took the final action

breaking its commitment, whichever is

later.30 To the extent these provisions

would give a manufacturer 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 lead time would provide.

To the extent these provisions would

give a manufacturer more than the twoyears lead time set forth in section 177,

by opting into National LEV the OTC

States agree to provide the additional

time.

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 to be contained

in the SIP revisions is critical to the

long-term enforceability of the state

commitments, so EPA believes it is

important to allow the manufacturers to

opt out of National LEV if a state fails

to submit a SIP revision. This will

provide incentive for OTC States to

submit their National LEV SIP revisions

and provide manufacturers recourse in

the event of a state failure to do so. This

offramp is addressed in 40 CFR

86.1707(f).

As under the previous scenario, 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, 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.

The manufacturers commented that

the National LEV regulations should not

provide a six-month grace period for

states to submit their SIP revisions

beyond the one-year (or for a few states,

eighteen-month) period provided for the

SIP submissions because the deadline

provides states adequate time to submit

their SIP revisions. EPA believes this

limited opportunity to cure is

appropriate here. While the timeframes

provided for the OTC States to submit

their SIP revisions are feasible, they are

very tight and do not give much leeway

for delays that may occur in the state

regulatory processes. Moreover, the

MOUs initialed by the OTC and the

manufacturers’ associations provided

that OTC States would have two years

to submit their SIP revisions committing

to National LEV. Even if they needed to

take advantage of the grace period, the

deadline for most of the OTC States to

submit their SIP revisions to EPA would

still be sooner than provided under the

initialed MOUs and no state would have

a deadline any later than the MOUs

provided. In light of this, together with

the fact that failure to submit this SIP

revision would not pose the risk of any

immediate change in the manufacturers’

compliance obligations, it is reasonable

to provide a limited grace period for

OTC States to submit their SIP revisions

without jeopardizing the benefits of the

National LEV program.

After the six-month grace period, the

state’s submission of a SIP revision

would not negate a manufacturer’s optout that EPA had already received, 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 the state

was. As under the previous scenario,

whether or not an OTC State has failed

to submit a SIP revision by a given date

and thereby provided a basis for an optout is a very clear cut issue.

Consequently, EPA is not providing for

an EPA determination of the validity of

an opt-out based on this violation.

If a manufacturer opts out it may set

the effective date of its opt-out no earlier

than MY2000 (or MY2001 if the

violating state is the District of

Columbia, New Hampshire, Delaware or

Virginia) or the next model year after

EPA’s receipt of the opt-out, whichever

is later.31 If a manufacturer opts out of
944 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

effective. As discussed below in section VI.D an

OTC State legitimately opting out of National LEV

is required to provide manufacturers at least twoyears lead time.

32However, these special provisions would start

no earlier than MY2001 if the District of Columbia,

New Hampshire, Delaware or Virginia were the

violating state and no earlier than MY2000 if

another OTC State were the violating state.

33 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.D an

OTC State legitimately opting out of National LEV

is required to provide manufacturers at least two

years lead time.

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 fleet

average NMOG calculations. These

special provisions for vehicles sold in

the violating state generally would start

with the next model year after EPA

receives the manufacturer’s opt-out

notification (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.32

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 twoyear lead time requirement of section

177 had been met.

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 nonviolating states, once the opt-out

became effective 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 not

have to comply with any ZEV mandates

(except those that were unaffected by

National LEV) until the model year that

would start two years after the date EPA

received the manufacturer’s opt-out

notification. To the extent that these

regulations would provide a

manufacturer with less than the twoyear 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. To the extent that these

provisions would provide

manufacturers more than the two-years

lead time set forth in Section 177, by

opting into National LEV the OTC States

agree to provide the additional time.

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 meet the

requirements for a National LEV SIP

revision, and thus did not adequately

commit the state to the National LEV

program. Today’s rule, 40 CFR

86.1707(g), maintains the principle EPA

had proposed, specifically that a

violation of this commitment would

allow manufacturers to opt out.

However, today’s rule takes a somewhat

different approach towards when a

manufacturer could opt out based on an

inadequate SIP revision.

EPA proposed 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 the proposal, 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 took comment on

several alternative approaches.

The auto manufacturers’ comments

supported their right to opt out if an

OTC State were to submit an inadequate

National LEV SIP submission, but

opposed the proposed process and

timing for using such an offramp. The

manufacturers believe that the proposal

did not provide them a real opportunity

to opt out in a timely fashion if a SIP

submission did not adequately commit

an OTC State to National LEV. The

manufacturers calculated that EPA’s

proposal might not allow them to opt

out until MY2004 if a state submitted an

inadequate SIP. Given the expected

duration of National LEV, the autos felt

this effectively prevented them from

opting out if a state were to fail to

submit an adequate SIP revision.

The SIP revisions are a critical

component of the OTC States’

commitments to National LEV. The auto

manufacturers should have a right to opt

out of the program if an OTC State that

has opted into National LEV does not

follow through on its commitment. EPA

agrees with the manufacturers that the

proposal did not provide them an

adequate or realistic opportunity to

ensure that OTC States submitted

adequate SIP revisions. Thus, the FRM

takes a slightly different approach than

EPA proposed.

Today’s rule allows manufacturers to

opt out of National LEV if an OTC State

has not submitted an adequate SIP

revision and either EPA has taken final

action on the state’s submission finding

that it did not meet the requirements for

a National LEV SIP revision or at least

12 months has passed since the state

submitted its National LEV SIP

submission to EPA and EPA has not

approved it as meeting the requirements

for a National LEV SIP revision. By

prohibiting manufacturers from opting

out until after EPA has had one year to

take action on a SIP submission, the

FRM respects EPA’s role in evaluating

and approving SIPS, as delegated by

Congress under section 110(k) of the

Act. By allowing manufacturers to opt

out immediately if EPA disapproves a

SIP submission or if EPA fails to act

within one year of receiving the

submission, it gives manufacturers a

real opportunity to opt out in a timely

fashion if a SIP submission is

inadequate. This should provide

additional incentive for OTC States to

send in submissions that meet the

requirements for adequate National LEV

SIP revisions and thereby increase the

stability of the program.

As with the other types of state

violations, there is no deadline for

manufacturers to opt out based on this

offramp. Also, there would be no

opportunity for an OTC State to cure the

violation with respect to a manufacturer

that had already opted out, although

manufacturers that had not opted out

could no longer do so once EPA had

taken final action finding the State’s

submission met all the requirements for

a National SIP revision. The action

allowing opt out is very clear, and hence

the regulations do not provide for an

EPA determination of the validity of an

opt-out based on this type of violation.

Again consistent with the previous

scenarios, 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.33 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.
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 945

34 If an OTC State without an existing ZEV

mandate adopts a ZEV mandate that does not allow

National LEV as a compliance alternative, the optout provisions discussed in Section VI.A.1 above

apply.

35Only those manufacturers that are large enough

that they would be subject to the ZEV mandate if

it comes into effect could opt out based on an OTC

State’s adoption of a ZEV mandate.

36 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.D an

OTC State legitimately opting out of National LEV

is required to provide manufacturers at least two

years of lead time.

37The 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 OTC State or manufacturer’s optout 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 optouts.

4. OTC State Without an Existing ZEV

Mandate Adopts a Backstop ZEV

Mandate

OTC States without ZEV mandates

will also state in their opt-ins that they

do not intend to adopt a ZEV mandate

that would be effective during the state’s

commitment to National LEV. EPA took

comment on whether auto

manufacturers should be able to opt out

if an OTC State without an existing ZEV

mandate acted contrary to its stated

intent and adopted a backstop ZEV

mandate (i.e., a ZEV mandate that

allows National LEV as a compliance

alternative) with an effective date

during the state’s commitment to

National LEV.34 Today’s final rule, 40

CFR 86.1707(h), provides such an

offramp for manufacturers. EPA believes

this is appropriate given the differing

positions of the manufacturers (who

wanted the OTC States to agree that they

would not adopt a ZEV mandate) and

the OTC States (who were willing to

state their current intent not to adopt a

ZEV mandate). It is also appropriate

given that the OTC States without

existing ZEV mandates have little

incentive to adopt backstop ZEV

mandates since they have agreed that a

manufacturer would not have to comply

with a backstop ZEV mandate until the

later of the end of the OTC State’s

commitment to National LEV (MY2006

or MY2004, depending upon EPA’s

issuance of Tier 2 standards) or two

years after either the manufacturer or

the OTC State opts out of National LEV.

Sec. 86.1707(h) allows

manufacturers 35 to opt out of National

LEV if an OTC State without an existing

ZEV mandate takes final action adopting

a backstop ZEV mandate that would

become effective during the state’s

commitment to National LEV. This

offramp does not allow manufacturers to

opt out if a state adopts a ZEV mandate

that could not come into effect until the

end of the state’s commitment (i.e., until

MY2006 or MY2004, depending on

EPA’s issuance of Tier 2 standards).

Adoption of a backstop ZEV mandate

would not impose an immediate

compliance obligation on auto

manufacturers, so EPA has structured

the offramp and its consequences to be

similar to those for an OTC State’s

failure to submit its National LEV SIP

revision on time. 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.

As for other offramps based on OTC

State actions, there would be no time

limit for manufacturers to exercise their

right to opt out of National LEV if an

OTC State without an existing ZEV

mandate adopted a backstop ZEV

mandate. Final action reversing the

violating state’s adoption of a backstop

ZEV mandate would not negate a

manufacturer’s opt-out that EPA had

already received, even if the

manufacturer’s opt-out had not yet

become effective. However, if the

violating state were to take final action

reversing itself and deleting the

backstop ZEV mandate, no

manufacturer would be able to opt out

after such final action. ‘‘Final action’’

shall have the same meaning here as

discussed above in Section VI.A.1. EPA

is not providing for an EPA

determination of the validity of an optout under this provision because it

should be very clear cut whether an

OTC State has adopted a backstop ZEV

mandate.

If a manufacturer opts out, it may set

the effective date of its opt-out as early

as the next model year after EPA’s

receipt of the opt-out notification.36 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 fleet

average NMOG calculations. These

special provisions for vehicles sold in

the violating state would start with the

next model year after EPA receives the

manufacturer’s opt-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 twoyear lead time requirement of section

177 had been met.

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 nonviolating states, once the opt-out

became effective 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 not

have to comply with any ZEV mandates

(except those that were unaffected by

National LEV) until the model year that

would start two years after the date EPA

received the manufacturer’s opt-out

notification. To the extent that these

regulations would provide a

manufacturer with less than the twoyear 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. To the extent that these

provisions would give manufacturers

more than the two-years lead time set

forth in section 177, by opting into

National LEV the OTC States agree to

provide the additional time.

B. Offramp for Manufacturers if OTC

State or Manufacturer Legitimately Opts

Out of National LEV

Following the general principle that

parties should be able to exit National

LEV if there is a significant change in

the assumptions that underlay their

decision to opt in initially, 40 CFR

86.1707(j) finalizes EPA’s proposal that

a manufacturer also could opt out if an

OTC State or another manufacturer were

to opt out of National LEV

legitimately.37 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.
946 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

38OBD and Sulfur White Paper, March 1997

(Docket A–95–26, IV–B–06). This paper has been

revised to address comments EPA received on the

March, 1997 paper. A copy is included in the

docket for this rule (A–95–26, VII–J–02).

39The next model year would be the model year

named for calendar year after which EPA received

the opt-out notification.

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. EPA received no

comments on this provision.

C. Offramp for Manufacturers for EPA

Failure to Consider In-Use Fuel Issues

Believing that the effects of fuel sulfur

were not adequately addressed by EPA

in the National LEV program, the auto

manufacturers recommended in June,

1997, 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. Such an

offramp would alleviate their concern

that the sulfur levels of in-use fuels

outside California may affect the onboard diagnostic (OBD) systems and

tailpipe emissions of National LEV

vehicles. The manufacturers outlined

six different conditions related to EPA

actions (or lack of action) on these

issues that they believe should allow

them to opt out of National LEV. In the

SNPRM, EPA proposed an additional

offramp that took into account three of

the six conditions advanced by

manufacturers and rejected the

remaining three. (A complete discussion

of these six conditions and EPA’s

rationale for selecting only three can be

found in the SNPRM, 62 FR at 44768–

44771.) The proposed offramp was

structured such that manufacturers

could opt out of National LEV only 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 fuel with high sulfur levels.

Today’s final rule incorporates this

offramp as it was proposed.

EPA recognizes that this remains an

important issue for the manufacturers

and other interested parties, and 40 CFR

86.1707(i) sets forth a process to allow

potential problems related to potential

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 will

be addressed on a case-by-case basis.

EPA will respond to a manufacturer’s

request, supported by data, for

appropriate relief for a specific engine

family or families adversely affected by

sulfur in a manner covered by one of the

conditions incorporated into the

National LEV regulations for the fuel

sulfur offramp.

EPA also recognizes that the effects of

sulfur on emission control systems is an

issue that raises concerns beyond the

context of the National LEV program

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 and

analyzing 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.38 The fundamental

suggested approach of addressing these

issues on a case-by-case basis remains

EPA’s expected approach. The offramp

related to fuel sulfur effects in today’s

final rule is entirely consistent with the

approach outlined in EPA’s revised

paper.

Today’s final rule contains a fuel

sulfur offramp identical to that

proposed in the SNPRM. This offramp

could be triggered under the three

following conditions:

(1) If, upon a written request from a

manufacturer in relation to the

certification of an OBD catalyst monitor

system, EPA declines to consider the

use of the system because it indicates

sulfur-induced passes when exposed to

high-sulfur gasoline, even though it

functions properly on low-sulfur

gasoline.

(2) If, upon 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

malfunction indicator light (MIL)

illuminations due to high-sulfur

gasoline so as to eliminate the sulfurinduced MIL.

(3) If, upon a written request from a

manufacturer, EPA declines to consider,

on a case-by-case basis, prior to in-use

testing, pre-conditioning procedures

designed solely to remove the effects of

high sulfur from currently available

gasoline.

EPA has defined a process for

manufacturers to opt out of National

LEV if one of the conditions described

above were to occur. A manufacturer

must send a request to EPA in writing

identifying the particular problem at

issue, demonstrating that it is due to inuse fuel sulfur levels, requesting that

EPA consider taking a specified action

in response, and demonstrating the

emissions impact of the requested

change. For some changes, engineering

judgement may be sufficient to

demonstrate the emissions impact. 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 were to fail 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 responds 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 EPA had already received

a manufacturer’s 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.

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.39

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 rogram (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 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.

Several commenters highlighted this

offramp as an area of some concern.
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 947

40The condition allowing an OTC State to opt out

would only arise if the initial manufacturers’ optout were valid. See n. 37.

41However, 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.

These comments and EPA’s responses

are detailed in the Response to

Comments document. In general, the

auto manufacturers felt that the

proposed offramp did not go far enough

to protect their interests. They would

have preferred that the regulations allow

a manufacturer to opt out if EPA did not

approve the manufacturer’s suggested

solution to an alleged problem if the

manufacturer felt corrective action was

justified. EPA’s proposed (and final)

regulations instead require EPA to

consider allowing corrective action

based on a request from a manufacturer

accompanied by a persuasive

demonstration that a problem does

indeed exist. EPA believes that

following the manufacturers’ approach

would destabilize the program by

putting EPA in what could be an

untenable position of either giving a

manufacturer the ability to opt out or

allowing the manufacturer to dictate a

substantive outcome which EPA did not

believe was warranted.

Several state government commenters

saw the addition of this offramp as a

new issue that had not arisen in prior

discussions and that had potentially

destabilizing impacts on the National

LEV program. The American Petroleum

Institute likewise commented that it did

not support this offramp. Contrary to

some commenters’ concerns, this

offramp cannot be used by the

manufacturers to dictate a particular

result, nor does it destabilize the

National LEV program. The offramp

makes it clear that EPA intends to

follow through on its commitment in

the OBD & Sulfur Status Report to look

at potential fuel sulfur effects on a caseby-case basis. The offramp does not

expand whatever right to substantive

judicial review a manufacturer would

otherwise have of an EPA decision

related to potential fuel sulfur effects.

Rather, to avoid providing

manufacturers an opportunity to opt out

of the program, this offramp requires

EPA to provide a written response to a

manufacturers’ request. Some

commenters expressed the concern that

this offramp would require EPA to act

in the absence of necessary information.

EPA does not read the provision that

way. Rather, if a manufacturer submits

insufficient information (perhaps by

failing to characterize the potential fuel

sulfur effect adequately or to provide

adequate information regarding the

effects of the requested change), EPA

could deny the request or ask the

manufacturer to submit additional

information without triggering an

offramp, provided that EPA explained

its response in writing. EPA does not

believe the fuel sulfur offramp

destabilizes the National LEV program

given that it sets up a process rather

than requiring a substantive result and

given that EPA does not foresee any

problem complying with the process.

D. Offramps for OTC States

In light of the practically and legally

binding commitments that the OTC

States would make to the National LEV

program, this Final Rule also identifies

the limited circumstances under which

the OTC States would no longer be

bound by those commitments. There are

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, based on a

periodic equivalency determination,

EPA were to find that certain

circumstances had changed that would

have changed EPA’s initial

determination that National LEV would

produce emissions reductions

equivalent to OTC State Section 177

Programs. The first offramp, found in 40

CFR 86.1707(e) through (j), is being

finalized as proposed. The second

offramp, found in 40 CFR 86.1707(k),

has been modified somewhat from the

proposal, as described below in more

detail. 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, 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 OTC 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 optout letter, but there would be a two-year

transition period before the state opt-out

would become effective and the state

could require compliance with a Section

177 Program or ZEV mandate (in a state

without an existing ZEV mandate)

without allowing National LEV as a

compliance alternative. Whether an optout 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. Manufacturer Opt-Out

As proposed, 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.40 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, OTC

States would have a three-month period

to submit an opt-out 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.41 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
948 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

42This 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.

43Modeling assumptions that would remain

unchanged from those used in the initial

equivalency determination include: assumptions

related to vehicle miles traveled, MOBILE5a model

inputs, inspection and maintenance programs,

reformulated gasoline, and permanent migration

effects.

that EPA received that state’s opt-out

letter. Manufacturers commented that

for manufacturers that had not opted out

of National LEV, states that have opted

out should provide four, rather than

two, years of lead time. As discussed

above in section VI.A.1, section 177

does not require states to provide

manufacturers four years of lead time

from the date that manufacturers are

notified that the state will no longer

accept National LEV as a compliance

alternative to a state Section 177

Program. Several commenters opposed

providing four years of lead time under

any circumstances and agreed that

section 177 does not provide such lead

time. Moreover, the MOUs initialled by

the OTC and the manufacturers’

associations provided only two model

years of lead time before a state election

to no longer be bound by its obligations

under the MOU would become effective.

Thus, EPA believes it is appropriate to

finalize the proposed approach, which

provides for two years of lead time

before a state opt-out becomes effective.

Until the OTC 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.42 As the existence of a

manufacturer opt-out as the basis for the

state opt-out is a simple factual

determination, the rule does not provide

for EPA to evaluate the validity of a

state opt-out before it could become

effective.

2. Periodic Equivalency Determination

EPA had proposed that an OTC State

could opt out of National LEV if EPA

were to change a Stable Standard in a

way that made National LEV less

stringent and, if the change had been

known at the start of National LEV, it

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. In today’s Final

Rule, EPA is departing somewhat from

the proposal. Today’s rule is very

similar to the proposal regarding how

subsequent equivalency determinations

would be made, but takes a different

approach regarding when they would be

made. Today’s rule allows an OTC State

to request an equivalency determination

at any time during the state’s

commitment to National LEV, rather

than limiting states’ ability to request

such a determination to those times

when EPA changes a Stable Standard.

This offramp for OTC States is

comparable 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, Section 177 Programs would be in

place in those OTC States that currently

have adopted such programs (including

backstop programs) and that, in all other

states (except California) Tier 1

standards would apply through MY2004

and Tier 2 standards equivalent to

National LEV would apply thereafter.

Today’s rule allows an OTC State that

is in the National LEV program to

request EPA to reevaluate whether

National LEV is still equivalent to the

alternative approach of OTC State

Section 177 Programs. Within six

months of receiving the request, EPA is

to conduct such a determination.

As proposed, in reevaluating

equivalency, EPA would use the same

model and inputs as it used in the

initial equivalency determination.43

EPA would modify the modeling only to

reflect (1) the effect of changes in EPA

regulations governing new motor

vehicles and implementation of such

regulations (to the extent

implementation is reflected in the

model), and (2) 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 after 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 its

new motor vehicle regulations in a way

that 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.

As proposed, the FRM provides that

any equivalency reevaluation will

include the effect of Section 177

Programs in any additional OTC States

that adopt Section 177 Programs after

the initial equivalency determination.

This represents a compromise between

the OTC States’ and manufacturers’

positions. In making the initial

equivalency determination, EPA is

comparing National LEV to the

alternative of OTC State Section 177

Programs. See section IV. As discussed

above, EPA’s determination assumes

that Section 177 Program requirements

would apply in those OTC States that

currently have the programs (including

backstop programs) in their state law or

regulations and that mandatory federal

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 assumption about which OTC States

have LEV programs 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 thencurrent reality in terms of which OTC

States had actually adopted Section 177

Programs. The modeling would
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 949

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 states’ 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.

Several commenters disagreed with

this approach, arguing that any changes

California makes to its LEV program

should be reflected in any future

equivalency determinations,

particularly since California is

contemplating tightening its LEV

program. EPA believes that states

should take the possibility of future

changes to the California LEV program

into account in deciding whether to opt

in. As noted above, given the

uncertainties regarding changes to

California’s program and the much

greater benefits of National LEV as

compared to OTC State Section 177

Programs (based on the current CAL

LEV program), EPA believes it is

reasonable and prudent for states to

commit to keep National LEV as a

compliance alternative until MY2006.

EPA recognizes that this raises the

possibility that OTC States might be

foregoing enforcement of a tighter

California LEV program for a year or

two. However, for practical or legal

reasons, states often have to make

regulatory choices without complete

information and taking one regulatory

approach often precludes changing

course in midstream even if it turns out

that another approach might have been

better.

Although today’s rule generally

adopts the approach to periodic

equivalency findings contained in the

MOUs initialed by the OTC and the auto

manufacturers’ trade associations, it

does differ in one respect. Whereas the

MOUs provided for such findings every

three years and upon an OTC State’s

request, today’s rule provides for such

findings only upon the request of an

OTC State that is participating in

National LEV. There might not be a

need for an equivalency finding every

three years. If there is a need, an OTC

State can request one.

If EPA were to find that National LEV

was not equivalent to OTC State Section

177 Programs, under today’s rule, 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

finding of inequivalency could not

become effective for model years (as

defined in Subpart X) that commence

prior to the date two years after the date

that EPA received the state’s opt-out

letter. If a state took this offramp, the

manufacturers’ obligations 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

Sec. 86.1707’s provisions discussed

above incorporate and rely on EPA’s

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.

Today’s final regulations address the

issue of when under section 177 and

EPA’s implementing regulations 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. These regulations and

EPA’s underlying interpretation of

section 177 apply only in the context of

the National LEV program, and only in

the special circumstances that arise

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 intent of the two-year lead time

provision in section 177 is obvious in

the context of a state deleting National

LEV as a compliance alternative in

violation of its commitment. If a state

has a Section 177 Program (or a ZEV

mandate) that allows National LEV as a

compliance alternative and National

LEV is in effect, and then the state

changes those regulations to require

compliance with the Section 177

Program or ZEV mandate (and does so

in a way that violates its commitment to

National LEV), then the two-year lead

time required by section 177 would start

to run when the revised regulations (or

other state laws) were adopted.

Although the Section 177 Program (or

ZEV mandate) was previously on the

books, it would have been a very

different program because it allowed

National LEV as a compliance

alternative. Deleting National LEV as a

compliance alternative once National

LEV is in effect is essentially the same

as adopting a new Section 177 Program

(or ZEV mandate), and section 177
950 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

44EPA is rejecting 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 two-year

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. EPA did not

receive any comments disagreeing with this

application of section 177.

45See 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).

prohibits states from enforcing a new

program without providing at least twoyears lead time.

The meaning of the two-year lead

time provision in section 177 is

ambiguous in the context of a backstop

Section 177 Program (or ZEV mandate)

where a state legitimately opts out of

National LEV. 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 (or ZEV

mandate). Under this interpretation,

section 177 would require the state to

have adopted its backstop Section 177

Program (or ZEV mandate) 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 (or ZEV mandate) at any

time. Another possible approach 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. Several of the OTC States’

comments strongly supported the first

approach, focusing on section 177’s use

of the word ‘‘adopt.’’ In addition, these

commenters expressed concern that the

second approach, which EPA proposed,

could set a precedent for other

reinterpretations to ‘‘fit unique

circumstances.’’ The comments stated

that it would be inappropriate to

discourage a state from availing itself of

a right granted by Congress, and they

stated that EPA’s proposed

interpretation is inconsistent with the

CAA and federal district and appellate

court decisions.

Nevertheless, EPA does not believe

the first approach 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 timeframes. 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

prevent manufacturers from receiving

the protection that Congress conferred

on manufacturers in section 177.44 EPA

does not believe it is appropriate to

interpret the statute in a manner that

negates the intended purpose of the

provision, and hence does not agree that

the alternative interpretation is

inconsistent with either the CAA or the

court cases to date that have addressed

the implementation of section 177. In

addition, EPA is explicitly stating that

this interpretation is only warranted by

and is confined to the unique

circumstances presented by backstop

programs under National LEV, and thus

EPA does not believe this interpretation

will set a precedent that could be

applied in inappropriate circumstances.

Finally, EPA does not agree that this

interpretation discourages a state from

exercising a right provided by Congress.

EPA does not believe that Congress

provided a state the right to accept

National LEV as a compliance

alternative and then impose a backstop

Section 177 Program without providing

any time for the manufacturers to meet

the new requirements. Thus, EPA is not

adopting this approach.

EPA is therefore adopting the second

approach to section 177 under these

limited circumstances. 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,45 there should be little

question that manufacturers have the

ability to waive the lead time

requirement if they choose. The

manufacturers’ comments did not

question their ability to waive lead time

under section 177. 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.

However, the OTC States indicated

that even if section 177 did not require

the amount of lead time incorporated in

the National LEV regulations, the OTC

States were willing to agree to provide

that lead time. Thus, as an alternative

legal theory independent of the proper

interpretation or application of section

177, by opting into National LEV, the

OTC States agree to provide

manufacturers with the lead time

provided in the National LEV final

regulations if a state deletes National

LEV as a compliance alternative

(including legitimately opting out of

National LEV) or a manufacturer

legitimately opts out of National LEV.

EPA’s interpretation of section 177 is

reflected in today’s final regulations 40

CFR 86.1707 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. 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

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
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 951

46OTC States could also 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.

47The list of Non-Core Stable Standards which

previously referenced the federal Tier 1

Supplemental Federal Test Procedures (SFTP)

requirements has been updated to reflect the SFTP

provisions in today’s rule. This does not affect

EPA’s rationale for finding the National LEV

program stable, as discussed in the Final

Framework Rule.

Due to the change in the duration of the auto’s

commitment (discussed in section V.A. above), EPA

has reworded 40 CFR 86.1705(d)(10). The wording

changes do not change the intent of the provision,

however, which is to clarify that EPA’s

promulgation of Tier 2 standards effective in

MY2004 or later does not allow manufacturers to

opt out of National LEV.

manufacturer with less than two-years

lead time, the manufacturer will have

waived the lead time provision by

opting into National LEV combined

with setting the effective date for its optout. 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 twoyear lead time with respect to ZEV

mandates. Additionally, by opting in,

the OTC States are agreeing to provide

this two-years of lead time regardless of

the applicability of section 177.

A third possible approach to section

177’s two-year lead time requirement

provides an alternative basis for today’s

rule. 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

provided 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.

Today’s interpretation of section 177

applies only in the 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

Because It Is Enforceable

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

finds that the complete National LEV

program as contained in today’s Final

Rule and the Final Framework Rule will

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, an EPA determination that

National LEV would no longer produce

emission reductions equivalent to or

greater than OTC State Section 177

Programs, or certain EPA actions or

inactions related to in-use fuels.46 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.47 Here EPA finds

that National LEV is stable because EPA

believes that an OTC State is unlikely to

fail to meet its commitments to National

LEV, National LEV is likely to continue

to produce equivalent (or better)

emission reductions than OTC State

Section 177 Programs, 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, there are four

ways in which an OTC State could

violate its commitments to National LEV

and allow the manufacturers to opt out
952 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

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 did not allow National

LEV as a compliance alternative for the

duration of the state’s commitment to

National LEV; (2) in states without

existing ZEV mandates, adopt a

backstop ZEV mandate that would come

into effect before the end of the state’s

commitment to National LEV, even if

the state allows National LEV as a

compliance alternative to the ZEV

mandate for the duration of the state’s

commitment to National LEV; (3) fail to

submit a National LEV SIP revision to

EPA by the specified date; or (4) fail 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

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. After the OTC States

have opted into National LEV and the

program has come into effect, the states

will 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 and the absence of any comments

to the contrary, 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.) See the

SNPRM (60 FR 44754 at 44775) for

further discussion of how the timing

and political significance of the initial

opt-ins enhances the likelihood that the

states will submit their SIP revisions in

a timely manner.

Once EPA has approved a National

LEV SIP revision, the state will 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

preempt 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 federal 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 if it

would interfere with other states’ ability

to attain the NAAQS. Other states are

likely to have reasonably relied upon

the emissions reductions from National

LEV for attainment and maintenance,

and the effect of approving the new SIP

revision would very likely be to deprive

the states of those reductions.

For states without existing ZEV

mandates, the statement of intent not to

adopt a backstop ZEV mandate effective

during the period of the state’s

commitment to National LEV need not

be incorporated as a legally enforceable

element of the state’s SIP revision.

However, there are still strong practical

disincentives for a state to adopt such a

provision, as it would allow the

manufacturers to opt out of National

LEV with all of the negative

environmental consequences that doing

so would entail, as discussed below. In

addition, OTC States would have very

little incentive to adopt a backstop ZEV

mandate effective during the period of

the state’s commitment to National LEV

because such a backstop would offer a

state very little protection against a

manufacturer’s opt-out from National

LEV. A backstop state Section 177

Program, which would require

compliance with the fleet average

NMOG provisions of the CAL LEV

program, would apply to any

manufacturer that had opted out of

National LEV immediately upon such a

manufacturer’s opt-out becoming

effective. Thus, adoption of a backstop

state Section 177 Program at least two

years prior to the effective date of a

manufacturer’s opt-out would allow the

program to apply as soon as the

manufacturer was no longer subject to

the National LEV requirements, without

the state providing an additional two

years of lead time. However, in their

commitments to National LEV, OTC

States would commit to, and section 177

would require, that they provide

manufacturers at least two years of lead

time from the date of the manufacturer’s

opt-out prior to any ZEV mandate

becoming effective, regardless of the

effective date of the manufacturer’s optout. Thus, the only potential benefit

from adoption of a backstop ZEV

mandate effective during the period of

the state’s commitment to National LEV

would be to avoid the additional delay

in the applicability of the mandate that

would be caused by the time required

for adoption, but not to avoid the delay

caused by providing the required lead

time. Given that the state commitments

to National LEV extend until MY2006 at

the latest, it is highly unlikely that a

manufacturer would opt out of National

LEV within a timeframe in which such

a delay could have any effect. With

virtually no benefit to be gained from

such an action, combined with the fact

that it would allow manufacturers to opt

out of National LEV, EPA believes it is

highly unlikely that any state without

an existing ZEV mandate would adopt

a backstop ZEV mandate effective

during the period of the state’s

commitment to National LEV.

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 opt-out provisions establishes

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, 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, as provided in 40 CFR

86.1707(e)(2), the violating state would

receive SIP credits based on this

reduced compliance obligation.

Similarly, if a state failed to submit its

SIP revision committing to National

LEV, submitted an inadequate SIP

revision, or adopted a backstop ZEV

mandate effective during the period of

the state’s commitment to National LEV,

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
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 953

48The OTC States have suggested that changes in

implementation of EPA new motor vehicle

regulations might also affect the equivalency

determination. EPA is not aware that the model

reflects this type of implementation of EPA

regulations.

vehicles and commensurately fewer SIP

credits. (See section VI.A above for a

discussion of timing of requirements

applicable to manufacturers under

various options.)

In addition, states will 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 and transport of air pollution

from states receiving Tier 1 vehicles.

EPA is confident that the combination

of the feasibility of compliance with the

OTC State commitments, the practical

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. It Is Unlikely That National LEV

Would Be Found Not To Produce

Emission Reductions Equivalent to OTC

State Section 177 Programs

As discussed in section VI.D.2 above,

today’s Final Rule allows OTC States to

request that EPA do a periodic

equivalency finding to determine

whether modifications to EPA new

motor vehicle regulations (or their

implementation, to the extent that is

reflected in the modeling) will reverse

EPA’s finding that National LEV is

equivalent to (or better than) OTC State

Section 177 Programs. EPA believes it is

unlikely to change the result of its

equivalency determination as a result of

the periodic determinations. The

primary, and perhaps only, possible

circumstance that could cause a change

in the equivalency finding would be

EPA modifying a new motor vehicle

regulation in a way that makes it

significantly less stringent.48 It is highly

unlikely that this would occur. 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 an EPA regulation would

be likely to change EPA’s determination

that National LEV would produce

emissions reductions at least equivalent

to the alternative. Such a weakening of

an EPA new motor vehicle regulation

would be contrary to EPA’s mission of

environmental protection and would

jeopardize the National LEV program,

which the Agency strongly supports.

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. The discussion in the SNPRM as

to why EPA would not make a Stable

Standard less stringent in a way that

would change the equivalency

determination applies to changes to all

new motor vehicle standards. See

Section VII.B of the SNPRM, 62 FR

44776.

C. EPA Is Unlikely To Fail To Consider

In-Use Fuels Issues Upon a

Manufacturer’s Request

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 the

offramp related to in-use fuels. As

discussed above, today’s Final Rule

provides autos with an offramp if EPA

fails to consider certain manufacturer

requests regarding the potential effects

of fuel sulfur levels on the emission

performance of National LEV vehicles.

Given the nature of the offramp, EPA

believes it is highly unlikely that it

would ever be triggered. This offramp

does not guarantee manufacturers any

particular substantive outcome to their

requests, nor does it provide

manufacturers any additional rights

(beyond what rights, if any, are

provided otherwise under the Clean Air

Act and the Administrative Procedure

Act) to a particular substantive outcome

or to have the substantive outcome

reviewed by a court. Rather, this

offramp formalizes the process EPA

previously committed to follow in

addressing potential problems related to

the higher sulfur levels in fuel supplied

nationally (including in the OTC States)

than in California. 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

VI.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 new

motor vehicle requirements that could

result in a change to the equivalency

finding.

VIII. Additional Provisions

A. Early Reduction Credits for Northeast

Trading Region

As was proposed, under today’s rule

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. 40 CFR

86.1710(c)(8). No commenters opposed

early reduction credits. The ability to

generate these credits will 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.

Today’s rule takes 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 MY2001.40 CFR

86.1710(c)(7). 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,

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.
954 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

49See 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

have a program adopted under section 177 in place.

Thus, in the OTR for MY1997 and MY1998,

manufacturers are allowed to sell California

vehicles in Maine, New Hampshire, Vermont,

Massachusetts, New York, Rhode Island, New

Jersey, Pennsylvania, and Connecticut.

50EPA’s treatment of vehicle sales in OTC States

that break their commitments is addressed in the

regulatory provisions and preamble discussion of

manufacturer and OTC State offramps. See section

VI above and 40 CFR 86.1707.

Manufacturers will 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.49

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

commit 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 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.

Although EPA took comment on the

potential for windfall credits in the NTR

and in the 37 State region and whether

ten percent is an appropriate discount

factor for each region, EPA decided that

circumstances had not changed since

the Final Framework Rule in a way that

would justify reducing the discount

factor below 10%. To the contrary,

Honda’s introduction nationally of LEV

technology vehicles (albeit certified to

Tier 1 levels) confirmed that National

LEV and the ability to earn early

reduction credits are not the only

reasons manufacturers would move to

cleaner vehicle technology.

B. Calculation of Compliance with Fleet

Average NMOG Standards

Today’s final rule contains provisions

for the calculation of compliance with

the National LEV fleet NMOG average in

the event that fewer than 49 states are

participating in the program. These

provisions are necessary even though

EPA continues to believe that National

LEV should be a 49-state program and

the auto manufacturers have repeatedly

stated that all thirteen OTC States must

opt in for National LEV to come into

effect. If the auto manufacturers and the

relevant OTC States are interested in

National LEV proceeding even with less

than 49 states participating, EPA would

want National LEV to proceed.

Additionally, after the program is found

in effect, it is possible that National LEV

would continue even if one or more

OTC States opt out at a future time.

Therefore, National LEV requirements

must provide for the possibility of

having less than 49 states in the

program, which will necessitate changes

in the Final Framework Rule’s

provisions for determining compliance

with the fleet average NMOG standards.

In the SNPRM, EPA proposed to

modify the Final Framework Rule so

that the fleet average NMOG calculation

would not include vehicle sales in any

OTC State that legitimately opts out

once that opt-out becomes effective.50

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 with state Section 177

Programs at the expense

(environmentally) of OTC States

committed to National LEV. EPA is

finalizing the program to have

manufacturers not include vehicles sold

in a state that opts out of the program

in their fleet average NMOG compliance

calculations for the Northeast Trading

Region (NTR) or All States Trading

Region (ASTR). This action provides the

maximum emission benefits to the states

participating in the National LEV

program. Additionally, vehicles sold in

an OTC State that was not participating

in National LEV will be included in the

fleet average NMOG compliance

calculations for that state, and it would

be inequitable to count those vehicles in

compliance calculations for the National

LEV program as well.

EPA also took 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. The

policy was designed to alleviate the

burden on dealerships located in border

regions of states with a Section 177

Program from having to stock, service,

and sell two types of vehicles: those

meeting the California emission

requirements and those meeting the

Federal emission requirements. 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. The necessity of

continuing the Cross-Border Sales

policy 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.

EPA has decided to allow

manufacturers to include all National

LEV vehicles and California-certified

vehicles sold in the NTR in MY1999

and MY2000 (including California Tier

1 vehicles) in their fleet average NMOG

compliance calculations for the NTR in

MY1999 and MY200 (except for any

vehicles sold in an OTC State that has

not opted in or that otherwise has its

own Section 177 Program). If all these
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 955

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

34.

52Such a running change would not have a

retroactive effect. Any vehicle sold as a TLEV, LEV,

ULEV or ZEV (i.e., any vehicle without a label that

said Tier 1 was the applicable standard for sales in

the relevant state at the time of the sale) would still

be subject to warranty and recall for the tailpipe

standards applicable to that category. EPA believes

it would be unacceptable for a consumer who

purchases a LEV that, at the time of sale in that

state, is being sold as a vehicle certified to LEV

standards for that state to find out later that the

vehicle has mysteriously been converted to a Tier

1 vehicle.

California-certified vehicles were not

included in the compliance calculation,

a manufacturer could detrimentally

affect its compliance with the fleet

average NMOG standards in the NTR by

selling higher-emitting Californiacertified vehicles, which would not be

included in its NTR compliance

calculation nor in any calculation done

to show compliance with a state Section

177 Program. These vehicles would

decrease the size of the manufacturer’s

fleet in the NTR and allow the

manufacturer to demonstrate

compliance with applicable fleet

average NMOG standards using a

smaller fleet size than was actually sold

in the NTR.

EPA has also decided to allow

manufacturers to count only vehicles

certified to federal standards in the fleet

average NMOG calculation for MY2001

and later. No California-certified

vehicles sold in National LEV states will

count in a manufacturer’s fleet average

NMOG compliance calculation after

MY2000. Given the nationwide trading

region that will go into effect in

MY2001, it becomes much more

difficult for a manufacturer to

artificially decrease the size of its

National LEV fleet and thereby

artificially inflate its NLEV NMOG fleet

average through sales of Californiacertified vehicles. The much larger

number of vehicles included in the

ASTR means that any sales of California

vehicles in the NTR under the CBS

policy will not have a generally

noticeable effect on the calculated fleet

averages in the ASTR. Californiacertified vehicles sold in the NTR after

MY2000 will also likely be LEVs and

ULEVs, as discussed in sections IX and

VIII.E, so there is even less likelihood of

a detrimental environmental impact

from the sale of California-certified

vehicles in the NTR. The auto

manufacturers’ comments supported not

including California-certified vehicles

in their fleet average NMOG compliance

calculations after MY2000.

C. Certification of Tier 1 Vehicles in a

Violating State

If an OTC State violates its

commitment to National LEV, in some

instances manufacturers will have the

option of supplying vehicles meeting

only the Tier 1 emission standards in

the violating state. To exercise this

option, manufacturers could sell

different vehicles (i.e., Tier 1 vehicles)

to the violating OTC State than they are

selling to the other states (i.e., TLEVs,

LEVs, ULEVs and ZEVs). Alternatively,

manufacturers could sell the same

vehicles to all states, but have a label

that indicates that vehicles sold in the

violating OTC State are only certified to

Tier 1 levels. Such vehicles sold in the

violating OTC State would have Tier 1

tailpipe standards for their compliance

levels (which would govern recall and

warranty actions and SIP credits), but

would have TLEV, LEV, ULEV or ZEV

tailpipe standards for their compliance

levels when sold in other states covered

by the National LEV program.

It is possible that a manufacturer

could begin vehicle certification for a

given model year before learning that it

is only required to sell Tier 1 vehicles

in a given state. In such a situation, EPA

will 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

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 that

applies only to vehicles sold in a

violating OTC State, manufacturers will

have a procedure to respond in a timely

fashion to a state breaking its

commitment, which will provide a real

disincentive for an OTC State to break

its commitment.

Manufacturers currently use running

changes in the federal certification

process to obtain EPA approval of a

change in a specified vehicle

configuration or an addition of a vehicle

or engine to an approved engine family

that is still in production.51 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 will 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 set

the only applicable tailpipe standards at

Tier 1 levels in a particular state. Such

running changes will reflect only the

change in emission standards the

vehicles are required to meet. After such

running change has been made, vehicles

sold in a state for which Tier 1

standards are applicable 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.

If a manufacturer wished to sell

vehicles with Tier 1 compliance levels

in a violating OTC State and more

stringent compliance levels in other

states, it 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,

ULEV or ZEV standards (whichever is

applicable), 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.52 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 is judged to be insufficient to

support a change, EPA will require

additional data.

Vehicles complying only with Tier 1

tailpipe standards and sold in an OTC

State that has violated its National LEV

commitment will be treated as Tier 1

vehicles in that state for purposes of

demonstrating compliance with federal

requirements and SIP credits. These

vehicles will be held only to the Tier 1

tailpipe standards for purposes of recall

liability in that state. For example, a

National LEV vehicle certified to LEV

standards but sold as a Tier 1 vehicle in

a violating state would not be subject to

recall action in the violating state if the
956 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

53 EPA 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.

54The ‘‘next model year’’ is the model year

named for the calendar year following the calendar

year in which EPA received the opt-out notification.

For example, if EPA received the opt-out in 2000,

the ‘‘next model year’’ would be MY2001.

problem causing the recall did not cause

the vehicle to exceed the Tier 1

standards.53

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 generally are other federal

motor vehicle standards that EPA does

not anticipate changing for the duration

of National LEV. For both Core and

Non-Core 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).

As proposed in the SNPRM, EPA is

making a few minor changes to the

provisions for opt-outs based on a

change to a Stable Standard. See 40 CFR

86.1707(d). Under the Final Framework

Rule, EPA had 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

of the opt-out. To give EPA sufficient

time to withdraw the change and

prevent the opt-out, under the Final

Framework Rule, 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.

As proposed in the SNPRM, this Final

Rule deletes the provisions that allowed

the Agency the ability to prevent an optout by withdrawing a change that had

allowed manufacturers to opt out.

Today’s rule also sets 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’’ after

the manufacturer opts out.54 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 does not believe that this change

will adversely affect the stability of the

National LEV program. For the reasons

discussed in the SNPRM (60 FR 44776),

EPA is highly unlikely to make any

change to a Stable Standard that may

allow the manufacturers to opt out. EPA

received no comments opposing this

proposed change. See the SNPRM

section VIII.D for additional discussion

of the reasons why EPA believes this

change is appropriate.

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. As proposed in

the SNPRM (60 FR 44779), today’s rule

provides 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 in the same

manner 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). As of the

effective date of its opt-out, 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), and

would be subject to Tier 1 requirements

in states without such programs.

Manufacturers would be subject to

backstop ZEV mandates for model years

(as defined in Part 85, Subpart X)

commencing two years after the date of

EPA’s receipt of the 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. To the

extent these regulations would provide

a manufacturer with more time than

required by section 177, by opting into

National LEV the OTC States commit to

provide the lead time set forth in the

National LEV regulations.

E. Nationwide Trading Region

The National LEV program, as set

forth in the Final Framework Rule,

required 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). In the

SNPRM, EPA proposed to remove the

requirement for two trading regions for

MY2001 and later model years and

instead establish a nationwide trading

region. EPA cited the elimination of the

legal requirement for National LEV to

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 as the major reasons for it to

reconsider the necessity of separate

trading regions. See 62 FR 44779–80. In

today’s rule in 40 CFR 86.1710, EPA is

establishing a nationwide trading region

which manufacturers will use to

demonstrate compliance with National

LEV standards in MY2001 and later.

It is important that the emissions

reductions expected from National LEV

in the OTR are actually achieved.

Various aspects of the program, such as

the periodic equivalency determination

and the separate trading regions, were

designed to ensure the expected

quantity of emission reductions in the

OTR. However, EPA believes that a

nationwide trading region will not

detrimentally affect the environmental

benefits of National LEV in the OTR.

EPA has received no data showing

significantly different vehicle model

sales in different regions of the country
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 957

55As stated in the SNPRM, 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.

and has no reason to expect that

manufacturers’ compliance with a

nationwide trading region will lead to

greater numbers of higher-emitting

vehicles in the OTR.

Even if vehicle model sales levels

were significantly different in various

regions of the country, a discrepancy

between the emissions produced by the

fleets 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. After

MY2000, a manufacturer’s fleet would

have to include Tier 1 vehicles and

TLEVs, as well as LEVs and ULEVs, 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. As noted in the

SNPRM, 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.

Two factors support EPA’s belief that

the OTC States participating in the

National LEV program will receive

vehicles with the same level of

emissions control under a nationwide

trading region as would be expected if

the program retained two trading

regions. First, 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); 40 CFR

86.1711.55 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.

Second, 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

under National LEV 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

fleet average NMOG standard. Each Tier

1 vehicle or TLEV sold by a

manufacturer would have to be offset by

more than one ULEV vehicle in order

for that manufacturer to remain in

compliance with the applicable fleet

average NMOG standards. 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. This result is not

dependent on having a separate trading

region in the OTR.

A nationwide trading region will also

reduce manufacturers’ and EPA’s

administrative burden in demonstrating

and assessing compliance with the

National LEV fleet average NMOG

standards. Compliance under one

nationwide trading region rather than

two separate regions for MY2001 and

later model years will reduce the

manufacturers’ compliance burden by

eliminating the need specifically to

track and report vehicle sales in 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 will not have

any significant air quality benefit and

will add additional unnecessary

complexity to the National LEV

program. Moreover, even separate

trading regions would not have required

manufacturers to demonstrate program

compliance on an OTC state-by-state

basis, but would instead have only

required compliance demonstrations

based on regionwide sales. Separate

trading regions would thus have been of

limited value to OTC States wishing to

use National LEV program vehicle

tracking requirements to check on the

different types of vehicles sold within

individual states.

Under today’s rule, National LEV

retains 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 will include all states in

National LEV except for California, and

apply for 2001 and later model years.

Manufacturers will demonstrate

compliance with the fleet average

NMOG standards in these two regions

under the provisions set forth in today’s

rule and the Final Framework Rule. EPA

is eliminating the 37 State trading

region that was finalized in the Final

Framework Rule.

Manufacturers can generate early

reduction credits in the states outside

the NTR before MY2001 to apply to

compliance in 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, 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 in the NTR.

Shifting from the NTR in MY2000 to

the ASTR in MY2001 does raise special

transition issues for manufacturers that

end MY2000 with debits in the NTR. (If

a manufacturer ends MY2000 with

credits in the NTR, these credits would

be subject to the usual discounting

(rather than to the special provisions for

early reduction credits) and then could

be applied either in the ASTR or the

NTR. Section 86.1710(d)(2) specifically

addresses this situation. If a

manufacturer ends MY2000 with debits

in the NTR, it can make up those debits

only with NTR credits. This is necessary

to ensure that the NTR gets the intended

environmental benefits from starting the

program in the NTR two years before it

starts in the rest of the country. A

manufacturer than ends MY2000 with

debits in the NTR must calculate its

fleet average NMOG value in the NTR

for MY2001. If the manufacturer does

not have any credits in the NTR in

MY2001 (and it does not obtain NTR

credits from another manufacturer),

then it will be subject to an enforcement

action for the MY2000 debits. If the

manufacturer has credits in MY2001 in

the NTR, these must be applied to offset

its MY2000 NTR debits. If the MY2000

debits exceed the MY2001 credits, then

the manufacturer would be subject to an

enforcement action for the remaining

MY2000 debits. In addition to

calculating fleet average NMOG values

for the NTR, the manufacturer must also

calculate fleet average NMOG values for

the ASTR. After calculating the level of

debits or credits in the ASTR, the level

must be adjusted by deducting all
958 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

56Staff Report: Public Hearing to Consider

Adoption of New Certification Tests and Standards

to Control Exhaust Emissions from Aggressive

Driving and Air-Conditioner Usage for Passenger

Cars, Light-Duty Trucks, and Medium-Duty

Vehicles under 8501 Pounds Gross Vehicle Weight

Rating. State of California, California Environmental

Protection Agency, Air Resources Board, July, 1997.

credits used to offset MY2000 debits in

the NTR.

The National LEV program will allow

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.

A manufacturer will 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 will grant such a

petition if the manufacturer establishes,

to the satisfaction of the Administrator,

that production volume is functionally

equivalent to sales volume.

Manufacturers will 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 in the

NTR if such engine families are not

certified for sale in California for the

same model year, but such data would

not be reported to EPA as part of a

regular report. 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. This provision is

being retained in the National LEV

program. The second provision is a fivepercent 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 proposed to delete the fivepercent cap 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 the 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. See 62 FR 44781

(August 22, 1997).

EPA has decided to delete the fivepercent cap provision from the National

LEV program. 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, 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 five-percent cap to control NOX

emissions.

EPA also 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. 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.

The provision limiting manufacturers’

sale in the NTR of Tier 1 vehicles and

TLEVs based on Calfornia certification

also provides additional assurance. A

staff report on SFTP revisions issued by

the California Air Resources Board

offers further support for EPA’s decision

to drop the five percent cap

requirement. In this report, CARB states

that their cost estimates assume that the

entire California new motor vehicle fleet

will be certified to LEV or more

stringent standards by MY 2001,

although they note that ‘‘in actuality,

staff estimates that something less than

five percent of new motor vehicles will

be certified to the Tier 1 and TLEV

emission standards by the 2001 model

year’’ due to the stringency of the fleet

average NMOG standard in California.56

For all these reasons, 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 requirement 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 that it would not justify the

administrative burden given the single

trading region that applies after

MY2000. Requiring compliance

demonstrations with the five-percent

cap would negate any administrative

savings associated with the All State

Trading Region for 2001 and later model

years and the provision allowing

manufacturers to demonstrate

compliance through production data.

Moreover, retention of the five-percent

cap would not provide any additional

assurance that National LEV will

continue to provide a quantity of

emissions reductions at least equivalent

to the quantity that would be provided

by OTC State Section 177 Programs as

demonstrated through EPA’s periodic

equivalency determination. The mobile

source emissions model used in the

original equivalency determination,

including fleet make-up in the OTR,

will be used as part of the equivalency

determination, unless all parties agree to

use an updated modeling methodology.

Modifications made to the model in the

course of a periodic equivalency

determination would take into account

changes in EPA’s rules and regulations

and implementation of such rules and

regulations, not changes in the

emissions inventory assumptions used

in the original equivalency

determination.

G. Technical Corrections to Final

Framework Rule

The Agency is also making several

minor technical corrections to the

National LEV regulations issued in the

Final Framework Rule. 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 a

number of technical corrections to the

regulations EPA promulgated on June 6,

1997. The corrections detailed by

AAMA/AIAM have been reviewed by

EPA and incorporated in today’s rule to

the extent that they are necessary and

appropriate. In addition, a number of

changes must be made to reflect the start

of the program in MY1999, rather than

MY1997, which was used as a

placeholder in the Final Framework

Rule. These revisions are detailed in the

Response to Comments document for

today’s Final Rule.

In the Final Framework Rule, EPA

required manufacturers to track vehicles
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 959

57The auto and oil industries are currently

conducting studies designed to quantify the

emissions performance of LEV-type vehicles when

operated on gasoline with varius levels of sulfur.

The data tabulation and associated analyses for

these studies are not yet completed.

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

of determining compliance with fleet

average NMOG standards (62 FR 31212,

June 6, 1997). 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, today’s final rule modifies

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

the National LEV program such that it

is equivalent to the ‘‘point of first sale’’

language found in 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 if a manufacturer’s 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.

H. Clarifications to Final Framework

Rule

Based on comments and other letters

submitted by the auto manufacturers,

EPA believes that some provisions and

discussions in the Final Framework

Rule and preamble could cause

confusion. Thus, EPA is taking the

opportunity here to clarify a few issues

addressed in the Final Framework Rule.

1. Operation of National LEV Vehicles

on In-Use Fuels

In the Final Framework Rule EPA

reiterated a set of three principles

originally presented in the October 10,

1995 NPRM. These principles, agreed

upon by representatives of the auto

industry, some segments of the oil

industry, and the OTC States, stated:

(1) Adoption of the National LEV

program does not impose unique

gasoline requirements on any state.

Gasoline specified for use by any state

will have the same effect on the

National LEV program as on the OTC

LEV program.

(2) Testing is needed to evaluate the

effects of non-California gasoline on

emissions control systems.

(3) If testing results show a significant

effect, EPA will conduct a multi-party

process to resolve the issue without

adversely affecting SIP credits or actual

emission reductions when compared to

OTC LEV using fuels available in the

OTR or imposing obligations on

manufacturers different from the

obligations they would have had under

OTC LEV.

The Agency continues to hold to these

principles, but at the request of some

members of the auto industry EPA will

clarify some related statements made in

the Final Framework Rule. As noted in

the Final Framework Rule, EPA

anticipates that auto manufacturers will

take advantage of the option to certify

vehicles under the National LEV

program using California Phase II

reformulated gasoline (62 FR 31219,

June 6, 1997). Consequently, vehicles

will be designed by auto manufacturers

to achieve the applicable emission

standards using fuel meeting the

California specifications. Under the

National LEV Program, vehicles in

actual use will be using the range of

fuels commercially available across the

country. In the preamble to the final

regulations, EPA stated that ‘‘section

86.1705–97(g)(5) [renumbered as

86.1701(d) in today’s rule] requires auto

manufacturers to design National LEV

vehicles to operate on fuels that are

otherwise required under applicable

federal regulations.’’ In this context, the

use of the word ‘‘operate’’ refers to the

overall performance of the vehicle, such

as starting, acceleration, etc. It is not

intended to convey that a gasolinepowered vehicle using commercially

available fuel outside California would

necessarily achieve the same emissions

performance as it would using the

relatively cleaner fuel required in

California. Nonetheless, the emission

reductions potentially realized by the

National LEV program remain

significant relative to the alternative of

a fleet of Tier 1 vehicles operating on

the same commercially-available fuels.57

To clarify another provision, 40 CFR

86.1701(d) does not require

manufacturers to design methanol,

ethanol, electric, compressed natural

gas, or propane vehicles to operate on

gasoline or any alternative fuel other

than the type (methanol, ethanol,

electricity, etc.) of fuel for which it was

designed.

2. Clarification of Banking and Trading

Provisions

In the Final Framework Rule, EPA

included a limitation on the nature of

the emissions credits recognized under

the National LEV program. (See 40 CFR

86.1710(c)(10).) In the preamble, EPA

stated that, as with other emission

credits or allowances recognized under

the Act, any emissions credits generated

under the National LEV program are not

the holder’s property, but instead are a

limited authorization to emit the

designated amount of emissions.

Consequently, nothing in the National

LEV regulations or any other provision

of law should be construed to limit

EPA’s authority to terminate or limit

this authorization through a rulemaking.

In their comments, manufacturers

expressed their concern that this

provision might affect the status of the

National LEV averaging, banking and

trading provisions as a Core Stable

Standard, which, if EPA made certain

changes to those provisions, would

allow the manufacturers to opt out of

the National LEV program.

The limitation at issue is a standard

provision for EPA emissions trading

programs. EPA believes it is important

to make it clear that while emissions

credits can be generated, banked, bought

and sold pursuant to regulatory

authorization, they do not constitute

property. Rather, they are only a limited

authorization to emit a designated

amount of emissions. In establishing a

credit trading system, EPA is providing

an alternative means of compliance with

statutory or regulatory limits on

emissions. In authorizing the generation

and use of emissions credits, EPA has in

no way given up its regulatory authority

to limit emissions further by modifying

either the underlying regulatory
960 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

58 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.

59Notice 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 Vehicles 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.

60Notice of Public Availability of Modified Text:

Public Hearing to Consider Adoption of New

Certification Tests and Standards to Control

Emissions from Aggressive Driving and Airemission limitations or the way they

may be achieved through generation or

use of emissions credits. As a

consequence, if EPA were to modify the

provisions relating to emissions credits

under National LEV, the Agency would

not be subject to challenge on the

grounds that its action was a taking of

private property protected under the

Fifth Amendment to the U.S.

Constitution.

However, the limits on the nature of

emissions credits included in the Final

Framework Rule are not intended to

affect the opt-out provisions of the

National LEV program. If EPA modified

any of the National LEV banking and

trading provisions in a manner that

triggered an offramp based on a change

to a Stable Standard, the manufacturers

would be able to opt out of National

LEV. In stating the limited nature of

emissions credits, EPA only intended to

preserve its regulatory authority to make

regulatory changes affecting such

credits, in the unlikely event that EPA

decided such changes were appropriate.

Section 86.1710(c)(10) does not nullify

either the designation of the banking

and trading provisions as a Core Stable

Standard or the manufacturers’ ability to

opt out if EPA changes them over a

manufacturer objection. Nevertheless, to

clarify further its intent, EPA is adding

the following language to the end of 40

CFR 86.1710(c)(10): ‘‘If EPA were to

terminate or limit the authorization to

emit associated with emissions credits

generated under the provisions of this

section, this paragraph (c)(10) would

have no effect on manufacturers’ ability

to opt out of the National LEV program

pursuant to § 86.1707.’’

3. Recordkeeping Requirements

Under the final National LEV

regulations, EPA may void certificates

ab initio only for a manufacturer’s

failure to retain records or provide such

information as specified upon request.

EPA will enforce most of the other

National LEV requirements through

conditioning the certificate and

identifying individual noncomplying

vehicles in the event of a violation.

EPA has determined that the authority

to void certificates ab initio for major

record-keeping and reporting violations

is an important enforcement mechanism

for programs in which compliance must

be demonstrated using data held by

manufacturers. For many flexible

compliance schemes, such as averaging,

banking and trading approaches or

phase-ins of requirements, the absence

of records and reports on how the

regulated entities complied could

preclude EPA from enforcing the

underlying substantive requirements.

For example, EPA could never prove

that a particular vehicle violates a fleet

average or a phase-in by testing that

vehicle; enforcement of a fleet average

or a phase-in depends on accurate

records for the entire fleet. Thus, in

return for giving regulated parties some

flexibility in meeting the requirements,

EPA must have a mechanism to ensure

that the manufacturers keep the records

and make the reports necessary to verify

compliance.

In their comments, the manufacturers

expressed concerns about EPA’s

authority to void ab initio certificates for

recordkeeping or reporting violations.

As discussed above, EPA believes that

this enforcement mechanism is an

important tool to ensure compliance

with the provisions of the National LEV

program such as averaging, banking, and

trading of fleet average NMOG credits

and debits. However, EPA does not

intend to use this authority for every

recordkeeping or reporting violation

which might occur under the National

LEV regulations. Most violations will

likely be minor, such as submitting late

reports or not providing all of the

required information, and would be

considered violations of section

203(a)(1) of the Act, subjecting the

manufacturer to applicable civil

penalties. EPA would only void a

certificate ab initio for the most

egregious record-keeping and reporting

violations, where a manufacturer’s

records or reporting are so substantially

incomplete that EPA cannot determine

compliance with the fleet average

NMOG standard or other substantive

requirements. EPA regulations currently

provide for voiding certificates ab initio

for record-keeping and reporting

violations for several motor vehicle

requirements with some compliance

flexibility. (See e.g., Tier 1 (40 CFR

86.094–23), and evaporative emissions

(40 CFR 86.096–23)). Both precedent

and practical enforcement concerns

support providing this strong penalty as

a critical means to ensure the

enforceability of underlying substantive

requirements.

IX. Supplemental Federal Test

Procedures

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 (a pattern of

acceleration and deceleration over a

given period of time), using a

dynamometer to simulate the vehicle-toroad interface. Pursuant to the

requirements of section 206(h) of the

CAA, EPA has 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).

These revisions added the

Supplemental Federal Test Procedure

(SFTP) with accompanying emission

standards. The SFTP emission standards

promulgated by EPA are appropriate for

vehicles meeting EPA’s Tier 1 emission

standards. EPA did not propose LEVstringency standards as part of its FTP

revisions. In addition, the earlier

National LEV final rulemaking (62 FR

31192, June 6, 1997) did not include

LEV-stringency standards for the SFTP

test procedure.

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.58 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’’).59 The CARB proposal

had 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, then subsequently

released a Notice of Public Availability

of Modified Text for a 15 day comment

period on September 5, 1997 (‘‘15-day

Notice’’).60
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 961

Conditioner Usage for Passenger Cars, Light-Duty

Trucks, and Medium-Duty Vehicles under 8,501

Pounds Gross Vehicle Weight Rating, Mail-Out #

MSC 97–17, September 5, 1997. Available in the

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

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

61Based on comments from AAMA/AIAM with

which EPA agrees, a practical result of making this

change is that the list of Non-Core Stable Standards

in 40 CFR 86.1707(d) must be updated to reflect the

change in emphasis from the federal SFTP to the

California SFTP. Today’s regulations thus

incorporate the California SFTP as a Non-Core

Stable Standard.

EPA stated in the National LEV Final

Framework Rule its intent to harmonize

the SFTP requirements of the National

LEV program with California, and

proposed to do so in the SNPRM once

California completed the adoption of

such requirements under its LEV

program. As CARB has completed the

adoption of SFTP requirements into its

LEV program, today’s rule harmonizes

the CARB and National LEV SFTP

programs.61 The following sections

address this harmonization, including

changes made as a result of CARB’s

public hearing on July 24, 1997 and as

published in their 15-day Notice, as

well as those changes resulting from

public comments received on EPA’s

SNPRM. A more detailed discussion of

the SFTP standards and test procedures

can be found in the SNPRM (62 FR

44782, August 22, 1997).

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. In fact, CARB

incorporated by reference the federal

regulations for SFTP test procedures.

Therefore, as proposed in the SNPRM,

the SFTP test procedures for all vehicles

covered by National LEV are 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 regulations. In

addition to the items discussed below,

today’s final rule makes several changes

to be consistent with changes

announced at CARB’s hearing and

published in their 15-day Notice. These

include revisions to the language

regarding ‘‘A/C-on Specific

Calibrations’’ found in the regulations in

paragraphs 86.1708(e)(3) and

86.1709(e)(3), and revisions to the

‘‘Lean-On-Cruise’’ Calibration Strategies

language found in paragraphs

86.1708(e)(4) and 86.1709(e)(4).

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). These standards apply only to

gasoline, diesel, and fuel-flexible

vehicles while operating on gasoline or

diesel fuel. These standards apply at

4,000 miles, and in conjunction with the

low-mileage standards, CARB provides

for no in-use vehicle compliance

requirements (recall testing) for SFTP

standards. Today’s rule adopts the

standards shown in Table 1 as the SFTP

standards applicable to LEVs and

ULEVs covered under the National LEV

Program. These standards apply 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. For

further information and justification for

this approach, see the SNPRM (62 FR

44783–44784, August 22, 1997).

A commenter pointed out that the

proposed regulations contained

incorrect SFTP standards for light-duty

trucks from 3751 to 5750 pounds loaded

vehicle weight (the preamble to the

proposed regulations contained the

correct standards). This error has been

corrected in today’s final rule.

TABLE 1—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

b. Tier 1 Vehicles and TLEVs

CARB’s final SFTP standards for Tier

1 vehicles and TLEVs are identical to

those promulgated by EPA for Tier 1

vehicles. As under the federal

regulations, these standards apply at

50,000 and 100,000 miles, and vehicles

certifying to these standards face an inuse compliance requirement.

Additionally, CARB also maintains

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. As proposed

in the SNPRM, today’s final rule adopts

CARB’s treatment of Tier 1 vehicles and

TLEVs.

3. Implementation Schedule

Today’s final rule also adopts CARB’s

four year implementation schedule for

SFTP emission standards, which

requires compliance of 100 percent of

the fleet by MY2004. Beginning with a

minimum of 25 percent of the fleet in

MY2001, the schedule then requires 50

and 85 percent in MY2002 and MY2003,

respectively. Although Tier 1 vehicles

and TLEVs are certified to standards of

different stringency than LEVs and

ULEVs, CARB allows the number of

vehicles from both groups to be

combined for the purpose of

determining compliance with the phasein schedule. However, CARB ensures an

adequate phase-in of LEVs and ULEVs

complying with the SFTP by requiring

that the percentage of LEVs and ULEVs

meeting the SFTP requirements also

meet the required phase-in schedule.

This means 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 certifying

some proportion of those vehicles to the
962 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

SFTP standards or expending some

effort phasing in additional LEV or

ULEV engine families in order to

maintain compliance with the phase-in

requirements. Consistent with the

SNPRM, today’s rule adopts the same

SFTP implementation schedule

finalized by CARB, including provisions

consistent with the methodology noted

above.

To provide some additional

flexibility, CARB uses a concept of

equivalent phase-in schedules, which

are 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. In the case of the CARB SFTP

phase-in, the required ‘‘credits’’ are:

(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

number of credits by the end of the last

model year of the scheduled phase-in is

acceptable. 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

year of the phase-in. CARB made one

change to this element of the SFTP in

the 15-day Notice, adding language that

requires manufacturers who choose to

use an alternative phase-in schedule to

submit the schedule they intend to use

‘‘before or during calendar year 2001 for

passenger cars and light-duty trucks and

calendar year 2003 for medium-duty

vehicles.’’ Today’s rule adopts an

alternative phase-in schedule

methodology consistent with the

methodology adopted by CARB,

including the changes contained in the

15-day Notice.

As proposed in the SNPRM, this

alternative phase-in schedule will be

enforced much like the current

enforcement provisions regarding noncompliance with a phase-in 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 regulations contain appropriate

revisions to 40 CFR 86.096–30 to

implement this approach.

4. Implementation Compliance

To determine manufacturer

compliance with the SFTP phase-in

levels under the National LEV program,

EPA proposed to give the manufacturers

the option of combining their entire

fleet of light-duty vehicles and light

light-duty trucks such that this

combined fleet meets the applicable

phase-in requirements. EPA also

proposed to have manufacturers

demonstrate compliance with the phasein requirements based on vehicles sold

outside California, but requested

comment on having compliance

determinations based on vehicles sold

only in California or in all states.

As noted in the SNPRM, EPA

supports allowing manufacturers to

combine light-duty vehicles and lightduty trucks into one fleet for the

purpose of the SFTP phase-in

requirements. This approach is

consistent with CARB’s implementation

of the SFTP phase-in, and is the

approach contained in today’s final rule.

However, EPA noted in the SNPRM

some concerns with allowing

manufacturers to show compliance with

National LEV SFTP requirements based

on a manufacturer’s California fleet mix

as opposed to its National LEV fleet

mix. AAMA/AIAM commented that

manufacturers have already planned

which products will be meeting the

early-term SFTP requirements in

California, and that using national sales

volumes would cause changes in their

phase-in plans without adequate lead

time, creating an undue burden. Based

on this, as well as on this commenter’s

definition of harmonization (‘‘identical

in every aspect to the California

requirements’’), AAMA/AIAM

expressed support for the option of

using California sales volumes to assess

compliance with the SFTP phase-in

schedule.

EPA has decided to adopt language in

today’s rule that addresses the concerns

heard from the auto companies by

basing the SFTP phase-in compliance

on vehicle sales in California. EPA

understands the implications of

requiring a separate phase-in for

vehicles outside California, and agrees

that the burden of requiring such a

phase-in is unnecessary. However, EPA

is adding language to the SFTP phasein under National LEV to assure that

SFTP vehicles are not underrepresented

in states outside of California. Given

that the phase-in will be demonstrated

using California sales, unique cases

could potentially arise whereby the

California version of a vehicle is

certified to the SFTP but the version

distributed federally is not. Without

some protective language in the

regulations, there would be no

obligation or requirement for the version

marketed in the 49 states outside

California to comply with the SFTP, and

although the phase-in would be met in

California, certainly the potential exists

for the rest of the country to fall

unacceptably short of the phase-in

percentage. To protect against this type

of scenario, yet to allow auto

manufacturers the flexibility of only

having to demonstrate compliance with

the phase-in in California, EPA is

adding the additional requirement that,

for every engine family certified to SFTP

standards in California, the ‘‘sibling’’ of

that vehicle certified under the National

LEV program outside California must

also be certified to the SFTP standards.

Today’s regulations define the

relationship between California and

federal ‘‘sibling’’ vehicles as vehicles of

the same make and model, and with the

same number of cylinders, the same

cylinder configuration, the same

cylinder volume, the same transmission

class, and the same axle ratio. However,

the ability to use California sales to

demonstrate phase-in compliance

applies only to those years of the phasein with a less than 100 percent

compliance requirement (MY2001–

2003). When California is scheduled to

achieve 100 percent compliance with

the SFTP in MY2004, the National LEV

fleet must also have attained 100

percent compliance in that model year.

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
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 963

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’’ because the

regulations in this rule will not have

annual impacts on the economy that are

likely to exceed $100 million. This rule,

along with the Final Framework Rule,

sets forth the National LEV program

regulations. The Final Framework Rule

was determined to be a significant

regulatory action. See 62 FR 31231 and

the Regulatory Impact Analysis. 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 has updated the Regulatory

Impact Analysis (RIA) prepared for the

Final Framework Rule. Changes reflect

the current program start dates, updated

cost information, and other changes to

the emissions reduction modeling as

discussed in Sec. IV.

B. Regulatory Flexibility

EPA has determined that it is not

necessary to prepare a regulatory

flexibility analysis in connection with

this rule. EPA has also determined that

this rule will not have a significant

economic 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.

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.

D. Congressional Review of Agency

Rulemaking

Under section 801(a)(1)(A) of the

Administrative Procedure Act (APA) as

amended by the Small Business

Regulatory Enforcement Reform Act of

1996, EPA has submitted a report

containing this rule and other required

information to the U.S. Senate, the U.S.

House of Representatives, and the

Comptroller General of the General

Accounting Office prior to publication

of the rule in today’s Federal Register.

Today’s rule is not a ‘‘major rule’’ as

defined in section 804(2) of the APA, as

amended.

E. Reporting and Recordkeeping

Requirements

The Office of Management and Budget

(OMB) has approved the information

collection requirements contained in

this rule under the provisions of the

Paperwork Reduction Act, 44 U.S.C.

3501 et seq. and has assigned OMB

control number 2060–0345.

The information collection would be

conducted to support the averaging,

banking and trading provisions

included in the National LEV program.

These averaging, banking and trading

provisions would give automobile

manufacturers a measure of flexibility in

meeting the fleet average NMOG

standards. EPA would use the reported

data to calculate credits and debits and

otherwise ensure compliance with the

applicable production levels. When a

manufacturer has opted into the

voluntary National LEV program,

reporting would be mandatory as per

the regulations included in this

rulemaking. This rulemaking would not

change the requirements regarding

confidentiality claims for submitted

information, which are generally set out

in 40 CFR part 2.

The information collection burden

associated with this rule (testing, record

keeping and reporting requirements) is

estimated to average 241.3 hours

annually for a typical manufacturer. It is

expected that approximately 25

manufacturers will provide an annual

report to EPA. However, the hours spent

annually on information collection

activities by a given manufacturer

depends upon manufacturer-specific

variables, such as the number of engine

families, production changes, emissions

defects, and so forth.

Burden means the total time, effort, or

financial resouces expended by persons

to generate, maintain, retain, or disclose

or provide information to or for a

Federal agency. This estimate also

includes the time needed to: review

instructions; develop, acquire, install,

and utilize technology and systems for

the purposes of collecting, validating,

and verifying information, processing

and maintaining information, and

disclosing and providing information;

adjust the existing ways to comply with

any previously applicable instructions

and requirements; train personnel to be

able to respond to a collection of

information; search data sources;

complete and review the collection of

information; and transmit or otherwise

disclose the information.

An Agency may not conduct or

sponsor, and a person is not required to

respond to a collection of information

unless it displays a currently valid OMB

control number. The OMB control

numbers for EPA’s regulations are listed

in 40 CFR part 9 and 48 CFR chapter 15.

EPA is amending the table in 40 CFR

Part 9 of currently approved ICR

numbers issued by OMB for various

regulations to list the information

requirements contained in this rule.

Send comments on the Agency’s need

for this information, the accuracy of the

provided burden estimates, and any

suggested methods for minimizing

respondent burden, including through

the use of automated collection

techniques to the Director, OPPE

Regulatory Information Division; U.S.

Environmental Protection Agency

(2137); 401 M St., S.W., Washington,

D.C. 20460; and to the Office of

Information and Regulatory Affairs,

Office of Management and Budget, 725

17th St., N.W., Washington, D.C. 20503,

marked ‘‘Attention: Desk Officer for

EPA.’’ Include the ICR number in any

correspondence.

F. Effective Date

This rule is effective upon the date of

publication. This expedited effective
964 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

date is necessary to provide effective

final regulations to guide the process for

the OTC States and auto manufacturers

to opt into the National LEV program in

time for the program to begin in model

year 1999. Given their planning and

production schedules, manufacturers

have informed EPA that the Agency

must find National LEV in effect early

in the 1998 calendar year, at the latest,

to allow them to comply with the

National LEV requirements for MY1999

vehicles. This requires that the OTC

States and the manufacturers complete

the opt-in process as soon as possible.

While the timing for opt-ins is based on

the signature date of the rule, rather

than its effective date, it would not be

appropriate for parties to have to make

the decision to opt in to the program

before this rule becomes effective, and

if the effective date of these regulations

were delayed until thirty days from

publication, depending upon the length

of time between signature and

publication, it is possible that the

deadline for OTC State opt-ins would

occur before the rule became effective.

In addition, because National LEV is a

voluntary program, this rule, by itself,

does not place a burden on any party.

Rather, it provides an opportunity for

the OTC States and the manufacturers to

avail themselves of the benefits of the

National LEV program and voluntarily

to become subject to its requirements.

Finally, in the SNPRM, EPA took

comment on the timing for parties to opt

into National LEV, and none of the

parties potentially affected by the rule

objected to this timing. Given the lack

of burden on affected parties and the

need to make this rule effective upon

publication, the Agency finds good

cause for expediting the effective date of

the rule. EPA believes that this is

consistent with 5 U.S.C. 553(d) (1) and

(3).

XI. Judicial Review

Under section 307(b)(1) of the Act,

EPA hereby finds that these regulations

are of national applicability.

Accordingly, judicial review of this

action is available only by filing of a

petition for review in the United States

Court of Appeals for the District of

Columbia Circuit within 60 days of

publication in the Federal Register.

Under section 307(b)(2) of the Act, the

requirements which are the subject of

today’s rule may not be challenged later

in judicial proceedings brought by EPA

to enforce these requirements. This

rulemaking and any petitions for review

are subject to the provisions of section

307(d) of the Clean Air Act.

XII. Statutory Authority

The promulgation of these regulations is

authorized by sections 177, 202, 203, 204,

205, 206, 207, 208, 209 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, 7543, and 7601).

List of Subjects

40 CFR Part 9

Environmental protection, Reporting

and recordkeeping requirements.

40 CFR Part 85

Confidential business information,

Imports, Labeling, Motor vehicle

pollution, Reporting and recordkeeping

requirements, Research, Warranties.

40 CFR Part 86

Administrative practice and

procedure, Confidential Business

Information, Incorporation by reference,

Labeling, Motor vehicle pollution,

Reporting and recordkeeping

requirements.

Dated: December 16, 1997.

Carol M. Browner,

Administrator.

For the reasons set out in the

preamble, chapter I, title 40 of the Code

of Federal Regulations is amended as

follows:

PART 9—[AMENDED]

1. The authority citation for part 9

continues to read as follows:

Authority: 7 U.S.C. 135 et seq., 136–136y;

15 U.S.C. 2001, 2003, 2005, 2006, 2601–2671;

21 U.S.C. 331j, 346a, 348; 31 U.S.C. 9701; 33

U.S.C. 1251 et seq., 1311, 1313d, 1314, 1318,

1321, 1326, 1330, 1342, 1344, 1345 (d) and

(e), 1361; E.O. 11735, 38 FR 21243, 3 CFR,

1971–1975 Comp., p. 973; 42 U.S.C. 241,

242b, 243, 246, 300f, 300g, 300g–1, 300g–2,

300g–3, 300g–4, 300g–5, 300g–6, 300j–1,

300j–2, 300j–3, 300j–4, 300j–9, 1857 et seq.,

6901–6992k, 7401–7671q, 7542, 9601–9657,

11023, 11048.

2. The table in § 9.1 is amended by

adding the new entries in numerical

order under the indicated heading to

read as follows:

§ 9.1 OMB approvals under the Paperwork

Reduction Act.

* * * * *

40 CFR citation OMB control No.

* * * * *

Control of Air Pollution From

New and In-Use Motor Vehicles and New and In-Use

Motor Vehicle Engines: Certification and Test Procedures:

* * * * *

86.1705 .............................. 2060–0345

86.1707 .............................. 2060–0345

86.1708 .............................. 2060–0345

86.1709 .............................. 2060–0345

86.1710 .............................. 2060–0345

86.1712 .............................. 2060–0345

86.1713 .............................. 2060–0345

86.1714 .............................. 2060–0345

86.1717 .............................. 2060–0345

86.1721 .............................. 2060–0345

86.1723 .............................. 2060–0345

86.1724 .............................. 2060–0345

86.1725 .............................. 2060–0345

86.1726 .............................. 2060–0345

86.1728 .............................. 2060–0345

86.1734 .............................. 2060–0345

86.1735 .............................. 2060–0345

86.1770 .............................. 2060–0345

86.1771 .............................. 2060–0345

86.1776 .............................. 2060–0345

86.1777 .............................. 2060–0345

86.1778 .............................. 2060–0345

* * * * *

PART 85—CONTROL OF AIR

POLLUTION FROM MOTOR VEHICLES

AND MOTOR VEHICLE ENGINES

3. The authority citation for part 85

continues to read as follows:

Authority: 42 U.S.C. 7521, 7522, 7524,

7525, 7541, 7542, and 7601(a).

Subpart P—[Amended]

4. Section 85.1515 is amended by

revising paragraph (c) to read as follows:

§ 85.1515 Emission standards and test

procedures applicable to imported

nonconforming motor vehicles and motor

vehicle engines.

* * * * *

(c) Nonconforming motor vehicles or motor

vehicle engines of 1994 OP model year and

later conditionally imported pursuant to

§ 85.1505 or § 85.1509 shall meet all of the

emission standards specified in 40 CFR part

86 for the model year in which the motor

vehicle or motor vehicle engine is modified.

At the option of the ICI, the nonconforming

motor vehicle may comply with the

emissions standards in 40 CFR 86.1708–99 or

86.1709–99, as applicable to a light-duty

vehicle or light light-duty truck, in lieu of the

otherwise applicable emissions standards

specified in 40 CFR part 86 for the model

year in which the nonconforming motor

vehicle is modified. The provisions of 40

CFR 86.1710–99 do not apply to imported

nonconforming motor vehicles. The useful

life specified in 40 CFR part 86 for the model

year in which the motor vehicle or motor
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 965

vehicle engine is modified is applicable

where useful life is not designated in this

subpart.

* * * * *

PART 86—CONTROL OF AIR

POLLUTION FROM NEW AND IN-USE

MOTOR VEHICLES AND NEW AND INUSE MOTOR VEHICLE ENGINES:

CERTIFICATION AND TEST

PROCEDURES

5. The authority citation for part 86

continues to read as follows:

Authority: 42 U.S.C. 7401–7671(q).

6. Section 86.1 is amended by revising

the entry for ASTM E29–90 in the table

in paragraph (b)(1) and by revising the

entry to the table in paragraph (b)(4), to

read as follows:

§ 86.1 Reference materials.

* * * * *

(b) * * *

(1) * * *

Document number

and name

40 CFR part 86 reference

* * * * *

ASTM E29–90,

Standard Practice

for Using Significant

Digits in Test Data

to Determine Conformance with

Specifications.

86.609–84; 86.609–

96; 86.609–97;

86.609–98;

86.1009–84;

86.1009–96;

86.1442; 86.1708–

99; 86.1709–99;

86.1710–99;

86.1728–99

* * * * *

(4) * * *

Document no. and

name

40 CFR part 86 reference

* * * * *

California Regulatory

Requirements Applicable to the National Low Emission

Vehicle Program,

October, 1996.

86.612–97; 86.1012–

97; 86.1702–99;

86.1708–99;

86.1709–99;

86.1717–99;

86.1735–99;

86.1771–99;

86.1775–99;

86.1776–99;

86.1777–99; Appendix XVI; Appendix XVII.

* * * * *

Subpart A—[Amended]

7. Section 86.096–30 is amended by

reserving paragraph (a)(22) and by

adding paragraphs (a)(23) and (a)(24), to

read as follows:

§ 86.096–30 Certification.

* * * * *

(a) * * *

(22) [Reserved]

(23)(i) The Administrator will issue a

National LEV certificate of conformity

for 1999 model year vehicles or engines

certified to comply with the California

TLEV, LEV, or ULEV emission

standards.

(ii) This certificate of conformity shall

be granted after the Administrator has

received and reviewed the California

Executive Order a manufacturer has

received for the same vehicles or

engines.

(iii) Vehicles or engines receiving a

certificate of conformity under the

provisions in this paragraph can only be

sold in the states included in the NTR,

as defined in § 86.1702, and those states

where the sale of California-certified

vehicles is otherwise authorized.

(24)(i) The Administrator will issue a

National LEV certificate of conformity

for 2000 model year vehicles or engines

certified to comply with the California

TLEV emission standards.

(ii) This certificate of conformity shall

be granted after the Administrator has

received and reviewed the California

Executive Order a manufacturer has

received for the same vehicles or

engines.

(iii) Vehicles or engines receiving a

certificate of conformity under the

provisions in this paragraph can only be

sold in the states included in the NTR,

as defined in § 86.1702, and those states

where the sale of California-certified

vehicles is otherwise authorized.

* * * * *

§ 86.097–1 [Redesignated as § 86.099–1]

8. Section 86.097–1 is redesignated as

§ 86.099–1 and revised to read as

follows:

§ 86.099–1 General applicability.

Section 86.099–1 includes text that

specifies requirements that differ from

those specified in § 86.094–1. Where a

paragraph in § 86.094–1 is identical and

applicable to § 86.099–1, this may be

indicated by specifying the

corresponding paragraph and the

statement ‘‘[Reserved]. For guidance see

§ 86.094–1.’’.

(a) through (b) [Reserved]. For

guidance see § 86.094–1.

(c) National Low Emission Vehicle

Program for light-duty vehicles and light

light-duty trucks. A manufacturer may

elect to certify 1999 and later model

year light-duty vehicles and light lightduty trucks to the provisions of the

National Low Emission Vehicle Program

contained in subpart R of this part.

Subpart R of this part is applicable only

to those manufacturers that opt into the

National Low Emission Vehicle

Program, under the provisions of that

subpart, and that have not exercised a

valid opt-out from the National Low

Emission Vehicle Program, which optout has gone into effect under the

provisions of § 86.1707. All provisions

of this subpart are applicable to vehicles

certified pursuant to subpart R of this

part, except as specifically noted in

subpart R of this part.

(d) [Reserved]

(e) through (f) [Reserved]. For

guidance see § 86.094–1.

Subpart B—[Amended]

9. Section 86.101 is amended by

revising paragraph (c) to read as follows:

§ 86.101 General applicability.

* * * * *

(c) National Low Emission Vehicle

Program for light-duty vehicles and light

light-duty trucks. A manufacturer may

elect to certify 1999 and later model

year light-duty vehicles and light lightduty trucks to the provisions of the

National Low Emission Vehicle Program

contained in subpart R of this part.

Subpart R of this part is applicable only

to those manufacturers that opt into the

National Low Emission Vehicle

Program, under the provisions of

subpart R of this part, and that have not

exercised a valid opt-out from the

National Low Emission Vehicle

Program, which opt-out has gone into

effect under the provisions of § 86.1707.

All provisions of this subpart are

applicable to vehicles certified pursuant

to subpart R of this part, except as

specifically noted in subpart R of this

part.

Subpart R—[Amended]

10. The table of contents to subpart R

is revised to read as follows:

Subpart R—General Provisions for the

Voluntary National Low Emission

Vehicle Program for Light-Duty

Vehicles and Light-Duty Trucks

Sec.

86.1701–99 General applicability.

86.1702–99 Definitions.

86.1703–99 Abbreviations.

86.1704–99 Section numbering;

construction.

86.1705–99 General provisions; opt-in.

86.1706–99 National LEV program in effect.

86.1707–99 General provisions; opt-outs.

86.1708–99 Exhaust emission standards for

1999 and later light-duty vehicles.

86.1709–99 Exhaust emission standards for

1999 and later light light-duty trucks.

86.1710–99 Fleet average non-methane

organic gas exhaust emission standards

for light-duty vehicles and light lightduty trucks.

86.1711–99 Limitations on sale of Tier 1

vehicles and TLEVs.

86.1712–99 Maintenance of records;

submittal of information.
966 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

86.1713–99 Light-duty exhaust durability

programs.

86.1714–99 Small-volume manufacturers

certification procedures.

86.1715–99 [Reserved]

86.1716–99 Prohibition of defeat devices.

86.1717–99 Emission control diagnostic

system for 1999 and later light-duty

vehicles and light-duty trucks.

86.1718–99 through 86.1720–99

[Reserved]

86.1721–99 Application for certification.

86.1722–99 [Reserved]

86.1723–99 Required data.

86.1724–99 Test vehicles and engines.

86.1725–99 Maintenance.

86.1726–99 Mileage and service

accumulation; emission measurements.

86.1727–99 [Reserved]

86.1728–99 Compliance with emission

standards.

86.1729–99 through 86.1733–99

[Reserved]

86.1734–99 Alternative procedure for

notification of additions and changes.

86.1735–99 Labeling.

86.1736–99 through 86.1769–99

[Reserved]

86.1770–99 All-Electric Range Test

requirements.

86.1771–99 Fuel specifications.

86.1772–99 Road load power, test weight,

and inertia weight class determination.

86.1773–99 Test sequence; general

requirements.

86.1774–99 Vehicle preconditioning.

86.1775–99 Exhaust sample analysis.

86.1776–99 Records required.

86.1777–99 Calculations; exhaust

emissions.

86.1778–99 Calculations; particulate

emissions.

86.1779–99 General enforcement

provisions.

86.1780–99 Prohibited acts.

§ 86.1701–97 [Redesignated as § 86.1701–

99 and Amended]

11. Section 86.1701–97 is

redesignated as § 86.1701–99 and

amended by revising paragraphs (a) and

(c) and by adding paragraph (d), to read

as follows:

§ 86.1701–99 General applicability.

(a) The provisions of this subpart may

be adopted by vehicle manufacturers

pursuant to the provisions specified in

§ 86.1705. The provisions of this subpart

are generally applicable to 1999 and

later model year light-duty vehicles and

light light-duty trucks to be sold in the

Northeast Trading Region, and 2001 and

later model year light-duty vehicles and

light light-duty trucks to be sold in the

United States. In cases where a

provision applies only to certain

vehicles based on model year, vehicle

class, motor fuel, engine type, vehicle

emission category, intended sales

destination, or other distinguishing

characteristics, such limited

applicability is cited in the appropriate

section or paragraph. The provisions of

this subpart shall be referred to as the

‘‘National Low Emission Vehicle

Program’’ or ‘‘National LEV’’ or

‘‘NLEV.’’

* * * * *

(c) The requirements of this subpart

apply to new vehicles manufactured by

covered manufacturers through model

year 2003. In addition, the requirements

of this subpart apply to new vehicles

manufactured by covered manufacturers

for model years prior to the first model

year for which a mandatory federal

exhaust emissions program for lightduty vehicles and light light-duty trucks

is at least as stringent as the National

LEV program with respect to NMOG,

NOX, and CO exhaust emissions, as

determined by the Administrator,

provided that such a program is

promulgated no later than December 15,

2000, and is effective no later than

model year 2006.

(d) Adoption of the National LEV

program does not impose gasoline or

other in-use fuel requirements and is

not intended to require any new federal

or state regulation of fuels. Vehicles

under National LEV will be able to

operate on any fuels, including

conventional gasoline, that, in the

absence of the National LEV program,

could be sold under federal or state law.

§ 86.1702–97 [Redesignated as § 86.1702–

99 and Amended]

12. Section 86.1702–97 is

redesignated as § 86.1702–99 and

amended in paragraph (b) by revising

the definitions for ‘‘Averaging sets,’’

‘‘Core Stable Standards,’’ ‘‘Non-Core

Stable Standards,’’ ‘‘Northeast Trading

Region,’’ and ‘‘Point of first sale’’ and by

adding new definitions in alphabetical

order for ‘‘All States Trading Region,’’

‘‘Axle Ratio,’’ ‘‘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; California; and

any state outside the OTR with a

Section 177 Program in effect that does

not allow National LEV as a compliance

alternative.

* * * * *

Averaging sets are the categories of

LDVs and LDTs for which the

manufacturer calculates a fleet average

NMOG value. The four averaging sets

for fleet average NMOG value

calculation purposes are:

(1) Class A delivered to a point of first

sale in the Northeast Trading Region;

(2) Class A delivered to a point of first

sale in the All States Trading Region;

(3) Class B delivered to a point of first

sale in the Northeast Trading Region;

(4) Class B delivered to a point of first

sale in the All States Trading Region.

* * * * *

Axle ratio means the number of times

the input shaft to the differential (or

equivalent) turns for each turn of the

drive wheels.

* * * * *

Core Stable Standards means the

standards and other requirements listed

in § 86.1707(d)(9)(i) (A) through (F).

* * * * *

Covered state means a state that meets

the conditions specified under

§ 86.1705(d).

* * * * *

Existing 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

and that was adopted prior to December

16, 1997.

* * * * *

Non-Core Stable Standards means the

standards and other requirements listed

in § 86.1707(d)(9)(i) (G) through (L).

* * * * *

Northeast Trading Region (NTR)

means the region comprised of the states

that meet the conditions specified under

§ 86.1705(d).

* * * * *

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 light-duty vehicle or

light-duty truck 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
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 967

manufacturer, the end user is the point

of first sale.

* * * * *

Section 177 Program means state

regulations or other laws, except ZEV

Mandates, that 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.

§ 86.1703–97 [Redesignated as § 86.1703–

99 and Amended]

13. Section 86.1703–97 is

redesignated as § 86.1703–99 and

amended in paragraph (b) by adding

‘‘ASTR’’ and ‘‘OTC’’ as new

abbreviations in alphabetical order, to

read as follows:

§ 86.1703–99 Abbreviations.

* * * * *

(b) * * *

* * * * *

ASTR—All States Trading Region

* * * * *

OTC—Ozone Transport Commission

* * * * *

§ 86.1704–97 [Redesignated as § 87.1704–

99 and Amended]

14. Section 86.1704–97 is

redesignated as § 86.1704–99.

§ 86.1705–97 [Redesignated as § 86.1705–

99 and Amended]

15. Section 86.1705–97 is

redesignated as § 86.1705–99 and

amended by revising the heading of the

section, 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(c)

that opts into the program after EPA

issues a finding pursuant to § 86.1706(b)

that the program is in effect must

comply with the standards and

requirements of this subpart beginning

in the model year named for the

calendar year after the calendar year in

which EPA receives the manufacturer’s

opt-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

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 manufacturer shall send

a copy of this notification to : Director,

Vehicles Programs and Compliance

Division; U.S. Environmental Protection

Agency; 2565 Plymouth Road; Ann

Arbor, Michigan, 48105. 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 set forth 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) and/or motor vehicle

manufacturers opt into National LEV

pursuant to § 86.1705, to be indicated

with the following language (language

in brackets indicates that either or both

formulations are acceptable):

This opt-in is subject to the condition that

[each of the states of [list state names]/[and]

each of the following manufacturers [list

manufacturer 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 an opt-in notification to the

Administrator, with a copy to Director,

Vehicle Programs and Compliance

Division; U.S. Environmental Protection

Agency; 2565 Plymouth Road; Ann

Arbor, Michigan, 48105. The

notification must contain the following

or substantively identical language:

(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 Executive Order [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
968 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

by the general statutes of STATE to take the

necessary steps to adopt regulations and

submit a state implementation plan (SIP)

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

this paragraph (e)(1) confirming that this

opt-in will not affect the state’s

requirements pertaining to ZEVs.

(2)(i) 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):

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.

[I am forwarding to EPA the [enclosed

letter 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. 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.]

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 (SIP) 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.

(ii) States with Existing ZEV

Mandates may add language to the letter

submitted pursuant to this paragraph

(e)(2) 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 a 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 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, including any ZEV

mandates. STATE’s participation in National

LEV extends until model year 2006, except

as provided in 40 CFR 86.1707. If, no later

than December 15, 2000, the US EPA does

not adopt standards at least as stringent as

the National LEV standards provided in 40

CFR part 86 subpart R that apply to new

motor vehicles in model year 2004, 2005 or

2006, STATE’s participation in National LEV

extends only until model year 2004, 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

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. If, no later than

December 15, 2000, the US EPA does not

adopt standards at least as stringent as the

National LEV standards provided in 40 CFR

part 86 subpart R that apply to new motor

vehicles in model year 2004, 2005 or 2006,

STATE’s participation in National LEV

extends only until model year 2004, 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 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, until model

year 2006 (or, under the circumstances

specified above, model year 2004), the OTC

States that commit to the National LEV

program will allow National LEV as a

compliance alternative for state programs

adopted pursuant to the authority provided

in section 177 of the Clean Air Act, 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. / Regulations providing for

STATE’s opt-in to National LEV have been

approved for proposed rulemaking by

APPROPRIATE STATE AGENCY on [INSERT

DATE]. However, they will not have the force

and effect of law until they are approved as

final regulations.] Adoption of state

regulations and the contents of a final state

implementation plan 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 / provides in its proposed

rule] that the transition from National LEV

requirements to any STATE program adopted

pursuant to the authority provided in section

177 of the Clean Air Act 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.
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 969

(viii) Any state may include the

following language:

[This [commitment/opt-in] / As provided

in the proposed regulations, STATE’s opt-in]

is conditioned on all motor vehicle

manufacturers (listed in EPA regulations at

40 CFR 86.1706(c)) 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 state

implementation plan (SIP) revision

within one year and seventy-five days of

December 16, 1997 except for the

District of Columbia, New Hampshire,

Delaware, and Virginia, for which the

deadline is 18 months and seventy-five

days from December 16, 1997. The SIP

revisions shall include the following

using identical or substantively

identical language:

(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. If, no later than

December 15, 2000, the US EPA does not

adopt standards at least as stringent as the

National LEV standards provided in 40 CFR

part 86 subpart R that apply to new motor

vehicles in model year 2004, 2005 or 2006,

STATE’s participation in National LEV

extends only until model year 2004, 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. If, no later than

December 15, 2000, the US EPA does not

adopt standards at least as stringent as the

National LEV standards provided in 40 CFR

part 86 subpart R that apply to new motor

vehicles in model year 2004, 2005 or 2006,

STATE’s participation in National LEV

extends only until model year 2004, 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 Section

177 Programs for the duration of STATE’s

participation in National LEV.

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. Notwithstanding the previous

sentence, if, no later than December 15, 2000,

the US EPA does not adopt standards at least

as stringent as the National LEV standards

provided in 40 CFR part 86 subpart R that

apply to new motor vehicles in model year

2004, 2005 or 2006, STATE [intends to / will]

forbear from adopting and implementing a

ZEV mandate effective prior to model year

2004.

§ 86.1706–97 [Redesignated as § 86.1706–

99]

16. Section 86.1706–97 is

redesignated as § 86.1706–99 and is

revised to read as follows:

§ 86.1706–99 National LEV program in

effect.

(a) No later than March 2, 1998, 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

January 30, 1998, and on opt-in

notifications from manufacturers

submitted pursuant to § 86.1705(c) and

received by EPA February 17, 1998.

(b) EPA shall find that the National

LEV 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) Each OTC State that opts in has

lawfully opted in pursuant to

§ 86.1705(e) and any conditions placed

on opt-ins by OTC States that are

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 Honda Motor Company, Inc.

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.
970 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

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

17. 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

(j) 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 set forth 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. A copy of the

notification shall be sent to the Director,

Vehicle Programs and Compliance

Division; U.S. Environmental Protection

Agency; 2565 Plymouth Road; Ann

Arbor, Michigan, 48105. 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 set forth 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 takes

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 calendar 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

shall be effective no earlier than the

model year named for the calendar year

following the calendar year in which

EPA receives the manufacturer’s opt-out

notification. 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

paragraph (j) of this section. 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 this

paragraph (d).

(ii) [Reserved]

(2) Within sixty days of receipt of an

opt-out notification under this

paragraph (d), 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 under

this paragraph (d) remains a covered

manufacturer until the opt-out has come

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

section and EPA or a reviewing court

determines that the opt-out is valid.

(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 starting

with the model year for which the optout would have come into effect under

paragraph (d)(1) of this section if EPA

had determined the opt-out 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.

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.

(5) Upon the effective date of a

manufacturer’s opt-out under this

paragraph (d), that manufacturer shall

be subject to all requirements (except

ZEV Mandates) that would apply to a

manufacturer that had not opted into

the National LEV program, including all

applicable standards and other

requirements promulgated under title II

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

seq.) and any state standards and other

requirements (except ZEV Mandates) in

effect pursuant to section 177 of the

Clean Air Act (42 U.S.C. 7507). For any

state Section 177 Program that allowed

National LEV as a compliance

alternative and was adopted at least two

years before 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
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 971

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

Clean Air Act. A manufacturer shall not

be subject to any ZEV Mandates (except

Existing ZEV Mandates) in OTC States

until the model year (as defined in part

85, subpart X) that commences two

years after the date of EPA’s receipt of

the manufacturer’s opt-out notice.

(6) If a covered manufacturer opts out

under this paragraph (d), any covered

state that is not a violating state under

paragraph (e), (f), (g) or (h) 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 no earlier than two calendar

years after the date of EPA’s receipt of

the state’s opt-out notification and shall

provide that the opt out is not effective

for model years (as defined in part 85,

subpart X) that commence prior to this

effective date.

(7) 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 optout. Upon the effective date of the

state’s opt-out, in that state covered

manufacturers shall comply with any

state standards and other requirements

in effect pursuant to section 177 of the

Clean Air Act or, if such state standards

are not in effect, with all requirements

that would apply to a manufacturer that

had not opted into the National LEV

program, including all applicable

standards and other requirements

promulgated under title II of the Clean

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

(8) In a state that has not opted out,

obligations under National LEV shall be

unaffected for covered manufacturers.

(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 §§ 86.1708(e),

86.1709(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, if the relevant California

factor is raised to 1.0 or higher, 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); and

(D) 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 by EPA of

mandatory tailpipe standards and other

related requirements effective model

year 2004 or later 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 or state

law a state Section 177 Program and/or

a ZEV Mandate (except in a state with

an Existing ZEV Mandate), that does not

allow National LEV as a compliance

alternative for the duration of the state’s

commitment to the National LEV

program. The state’s commitment to

National LEV extends until model year

2006. If, no later than December 15,

2000, EPA has not adopted standards at

least as stringent as the National LEV

standards provided in 40 CFR part 86,

subpart R that apply to new motor

vehicles in model year 2004, 2005 or

2006, the state’s commitment to

National LEV only extends until model

year 2004. A manufacturer could opt out

based on this condition even if the state

regulations or law 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.’’

(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 prior to EPA’s receipt of the optout notification. An opt-out under this

paragraph (e) shall be effective no

earlier than the model year named for

the calendar year following the calendar

year in which EPA receives the

manufacturer’s opt-out notification.

(2) As of the model year named for the

calendar year following the calendar

year of 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, and § 86.1711 shall no

longer apply to vehicles sold in the

violating state. Beginning in that model

year and until the violating state’s

requirements become effective pursuant
972 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

to sections 110(l) and 177 of the Clean

Air Act or until the date specified in the

following sentence, whichever is earlier,

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. If the violating state

withdraws or otherwise nullifies the

relevant violating final action, vehicles

sold in that state shall count towards the

covered manufacturers’ fleet NMOG

standards under § 86.1710 and be

subject to § 86.1711 as of the model year

named for the second calendar year

following the calendar year in which the

violating state took the final action

nullifying or withdrawing the final

violating action, or as of the model year

named for the fourth calendar year

following the calendar year in which the

violating state took the violating final

action, whichever is later. 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 violating final action.

Notwithstanding an earlier effective

date of a manufacturer’s opt-out under

this paragraph (e), 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

violating final action). For model years

for which vehicles sold in the violating

state do not count towards the National

LEV NMOG average, in calculating

emissions reductions from new motor

vehicles creditable for state

implementation plan requirements, the

violating state’s emissions reductions

shall be based on the emission

standards of §§ 86.096—8(a)(1)(i),

86.097–9(a)(1)(i) and subsequent model

year provisions, and shall not be based

on the National LEV standards,

provided that vehicles sold in the

violating state are certified to Tier 1

levels when sold in that state.

(3) Upon the effective date of a

manufacturer’s opt-out under this

paragraph (e) in any covered state that

is not a violating state under this

paragraph (e), that manufacturer shall be

subject to all requirements (except ZEV

Mandates) that would apply to a

manufacturer that had not opted into

the National LEV program, including all

applicable standards and other

requirements promulgated under title II

of the Clean Air Act and any state

standards and other requirements

(except ZEV Mandates) in effect

pursuant to section 177 of the Clean Air

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

Section 177 Program that allowed

National LEV as a compliance

alternative and was adopted by a nonviolating state at least two years before

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 two-year

lead time under section 177 of the Clean

Air Act. A manufacturer shall not be

subject to any ZEV Mandates (except

Existing ZEV Mandates) in OTC States

until the model year (as defined in part

85, subpart X) that commences two

years after the date of EPA’s receipt of

the manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

under this paragraph (e), any covered

state that is not a violating state under

paragraph (e), (f), (g) or (h) 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

no earlier than two calendar years after

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

opt-out notification and shall provide

that the opt-out is not effective for

model years (as defined in part 85,

subpart X), that commence prior to this

effective date.

(5) 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 and

other requirements in effect pursuant to

section 177 of the Clean Air Act or, if

such state standards are not in effect,

with all requirements that would apply

to a manufacturer that had not opted

into the National LEV program,

including all applicable standards and

other requirements promulgated under

title II of the Clean Air Act (42 U.S.C.

7521 et seq.).

(6) In a non-violating state that has

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(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 EPA has not

received a National LEV SIP revision

from the violating state prior to EPA’s

receipt of the manufacturer’s opt-out

notification. If a manufacturer opts out

within 180 calendar days from the

deadline for the state to submit its

National LEV SIP revision, the opt-out

must be conditioned on the state not

submitting a National LEV SIP revision

within 180 calendar 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 under this paragraph (f) would

be invalidated and would not come into

effect. An opt-out under this paragraph

(f) shall be effective no earlier than

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 the calendar

year in which EPA receives the opt-out

notification, whichever is later.

(2) For a manufacturer that opts out

under this paragraph (f), 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 the calendar

year in which EPA receives 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 and the manufacturer does not

have to comply with § 86.1711 for

vehicles sold in the violating state.

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 under this paragraph (f) 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. For

model years in which vehicles sold in

the violating state do not count towards

the National LEV NMOG average, in

calculating emission reductions from

new motor vehicles creditable for state

implementation plan requirements, the

violating state’s emissions reductions

shall be based on the emissions

standards of §§ 86.096–8(a)(1)(i),

86.097–9(a)(1)(i), and subsequent model

year provisions, and shall not be based
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 973

on the National LEV standards,

provided that vehicles sold in the

violating state are certified to Tier 1

levels when sold in that 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 under this

paragraph (f), in any covered state that

is not a violating state under this

paragraph (f), that manufacturer shall be

subject to all requirements (except ZEV

Mandates) that would apply to a

manufacturer that had not opted into

the National LEV program, including all

applicable standards and other

requirements promulgated under title II

of the Clean Air Act and any state

standards and other requirements

(except ZEV Mandates) in effect

pursuant to section 177 of the Clean Air

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

Section 177 Program that allowed

National LEV as a compliance

alternative and was adopted by a nonviolating state at least two years before

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 two-year

lead time under section 177 of the Clean

Air Act. A manufacturer shall not be

subject to any ZEV Mandates (except

Existing ZEV Mandates) in OTC States

until the model year (as defined in part

85, subpart X) that commences two

years after the date of EPA’s receipt of

the manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

under this paragraph (f), any covered

state that is not a violating state under

paragraph (e), (f), (g) or (h) 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

no earlier than two calendar years after

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

opt-out notification and shall provide

that the opt-out is not effective for

model years (as defined in part 85,

subpart X), that commence prior to this

effective date.

(5) 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 and

other requirements in effect pursuant to

section 177 of the Clean Air Act or, if

such state standards are not in effect,

with all requirements that would apply

to a manufacturer that had not opted

into the National LEV program,

including all applicable standards and

other requirements promulgated under

title II of the Clean Air Act (42 U.S.C.

7521 et seq.).

(6) In a non-violating state that has

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(g) Conditions allowing manufacturer

opt-outs—inadequate National LEV SIP

submission. A covered manufacturer

may opt out of National LEV if EPA

disapproves a covered state’s National

LEV SIP submission or finds that it fails

to meet the requirements for a National

LEV SIP revision set forth in

§ 86.1705(g) or if EPA has not taken

final action regarding such a SIP

submission and more than one year has

passed since such SIP submission was

submitted to EPA. 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 submission or

found that it does not meet the

requirements of § 86.1705(g), provided

that EPA has not subsequently approved

a revised National LEV SIP revision

from that state and found that the SIP

revision meets the requirements of

§ 86.1705(g). A covered manufacturer

may also opt out any time after one year

EPA’s receipt of a state’s National LEV

SIP submission, provided that EPA has

not approved the revision or has not

found that the SIP revision meets the

requirements of § 86.1705(g). An opt-out

under this condition shall 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

under this paragraph (g), as of the model

year named for the calendar year

following the calendar year in which

EPA receives the opt-out 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 and the manufacturer does not

have to comply with § 86.1711 for

vehicles sold in the violating state.

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 under this paragraph (g) 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. For

model years in which vehicles sold in

the violating state do not count towards

the National LEV NMOG average, in

calculating emission reductions from

new motor vehicles creditable for state

implementation plan requirements, the

violating state’s emissions reductions

shall be based on the emissions

standards of §§ 86.096–8(a)(1)(i),

86.097–9(a)(1)(i), and subsequent model

year provisions, and shall not be based

on the National LEV standards,

provided that vehicles sold in the

violating state are certified to Tier 1

levels when sold in that 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 under this

paragraph (g), in any covered state that

is not a violating state under this

paragraph (g), that manufacturer shall be

subject to all requirements (except ZEV

Mandates) that would apply to a

manufacturer that had not opted into

the National LEV program, including all

applicable standards and other

requirements promulgated under title II

of the Clean Air Act and any state

standards and other requirements

(except ZEV Mandates) in effect

pursuant to section 177 of the Clean Air

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

Section 177 Program that allowed

National LEV as a compliance

alternative and was adopted by a nonviolating state at least two years before

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 two-year

lead time under section 177 of the Clean

Air Act. A manufacturer shall not be

subject to any ZEV Mandates (except

Existing ZEV Mandates) in OTC States

until the model year (as defined in part

85, subpart X) that commences two

years after the date of EPA’s receipt of

the manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

under this paragraph (g), any covered

state that is not a violating state under

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

section may opt out within 90 calendar
974 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

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 is no earlier than two calendar

years after the date of EPA’s receipt of

the state’s opt-out notification and shall

provide that the opt-out is not effective

for model years (as defined in part 85,

subpart X that commence prior to this

effective date.

(5) 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 and

other requirements in effect pursuant to

section 177 of the Clean Air Act or, if

such state standards are not in effect,

with all requirements that would apply

to a manufacturer that had not opted

into the National LEV program,

including all applicable standards and

other requirements promulgated under

title II of the Clean Air Act (42 U.S.C.

7521 et seq.).

(6) In a non-violating state that has

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(h) Conditions allowing manufacturer

opt-outs—adoption of a ZEV Mandate.

A covered manufacturer to which a ZEV

Mandate might apply may opt out of

National LEV if a covered state without

an Existing ZEV Mandate takes final

action such that it has in its regulations

or state law a ZEV Mandate that allows

National LEV as a compliance

alternative that would be effective

during the state’s commitment to

National LEV. For purposes of this

paragraph (h), such a state shall be

called the ‘‘violating state.’’

(1) A covered manufacturer may opt

out any time after the violating state

takes the final action, provided that the

violating state has not withdrawn or

otherwise nullified the relevant final

action prior to EPA’s receipt of the optout notification. An opt-out under this

opt-out condition shall be effective no

earlier than the model year named for

the calendar year following the calendar

year in which EPA receives the

manufacturer’s opt-out notification.

(2) For a manufacturer that opts out

under this paragraph (h), as of the

model year named for the calendar year

following the calendar year in which

EPA receives the opt-out 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 and the manufacturer does not

have to comply with § 86.1711 for

vehicles sold in the violating state.

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 under this paragraph (h) 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. For

model years in which vehicles sold in

the violating state do not count towards

the National LEV NMOG average, in

calculating emission reductions from

new motor vehicles creditable for state

implementation plan requirements, the

violating state’s emissions reductions

shall be based on the emissions

standards of §§ 86.096–8(a)(1)(i),

86.097–9(a)(1)(i), and subsequent model

year provisions, and shall not be based

on the National LEV standards,

provided that vehicles sold in the

violating state are certified to Tier 1

levels when sold in that 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 under this

paragraph (h), in any covered state that

is not a violating state under this

paragraph (h), that manufacturer shall

be subject to all requirements (except

ZEV Mandates) that would apply to a

manufacturer that had not opted into

the National LEV program, including all

applicable standards and other

requirements promulgated under title II

of the Clean Air Act and any state

standards and other requirements

(except ZEV Mandates) in effect

pursuant to section 177 of the Clean Air

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

Section 177 Program that allowed

National LEV as a compliance

alternative and was adopted by a nonviolating state at least two years before

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 two-year

lead time under section 177 of the Clean

Air Act. A manufacturer shall not be

subject to any ZEV Mandates (except

Existing ZEV Mandates) in OTC States

until the model year (as defined in part

85, subpart X) that commences two

years after the date of EPA’s receipt of

the manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

under this paragraph (h), any covered

state that is not a violating state under

paragraph (e), (f), (g) or (h) 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 is no earlier than two calendar

years after the date of EPA’s receipt of

the state’s opt-out notification and shall

provide that the opt-out is not effective

for model years (as defined in part 85,

subpart X) that commence prior to this

effective date.

(5) In a non-violating 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 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 and

other requirements in effect pursuant to

section 177 of the Clean Air Act or, if

such state standards are not in effect,

with all requirements that would apply

to a manufacturer that had not opted

into the National LEV program,

including all applicable standards and

other requirements promulgated under

title II of the Clean Air Act (42 U.S.C.

7521 et seq.).

(6) In a non-violating state that has

not opted out, obligations under

National LEV shall be unaffected for

covered manufacturers.

(i) 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 (i)(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

(i)(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, ask EPA to consider taking a

specific action, and demonstrate the

emissions impact of the requested

change. Within 60 calendar days of

EPA’s receipt of the manufacturer’s

request, EPA must consider the

manufacturer’s request and respond to it

in writing, stating the Agency’s decision

and explaining the basis for the

decision. The date of EPA’s response is

the date the response is signed.
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 975

(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 calendar 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

paragraph (j) of this section.) An opt-out

notification under this paragraph (i) is

not valid if received by EPA after EPA

responds to the request, even if EPA

responds after the expiration of the 60-

day EPA deadline. An opt-out under

this paragraph (i) shall be effective no

earlier than the model year named for

the calendar year following the calendar

year in which EPA receives the

manufacturer’s opt-out notification.

(3) Upon the effective date of a

manufacturer’s opt-out under this

paragraph (i), the manufacturer shall be

subject to all requirements (except ZEV

Mandates) that would apply to a

manufacturer that had not opted into

the National LEV program, including all

applicable standards and other

requirements promulgated under title II

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

seq.) and any state standards and other

requirements (except ZEV Mandates) in

effect pursuant to section 177 of the

Clean Air Act (42 U.S.C. 7507). For any

state Section 177 Program that allowed

National LEV as a compliance

alternative and was adopted at least two

years before 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. A manufacturer shall not

be subject to any ZEV Mandates (except

Existing ZEV Mandates) in OTC States

until the model year (as defined in part

85, subpart X) that commences two

years after the date of EPA’s receipt of

the manufacturer’s opt-out notice.

(4) If a covered manufacturer opts out

under this paragraph (i), any covered

state that is not a violating state under

paragraph (e), (f), (g) or (h) 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 is no earlier than two calendar

years after the date of EPA’s receipt of

the state’s opt-out notification and shall

provide that the opt out is not effective

for model years (as defined in part 85,

subpart X), that commence prior to this

effective date.

(5) In a state that opts out pursuant to

paragraph (i)(4) of this section,

obligations under National LEV shall be

unaffected for covered manufacturers

until the effective date of the state’s optout. Upon the effective date of the

state’s opt-out, in that state covered

manufacturers shall comply with any

state standards and other requirements

in effect pursuant to section 177 of the

Clean Air Act or, if such state standards

are not in effect, with all requirements

that would apply to a manufacturer that

had not opted into the National LEV

program, including all applicable

standards and other requirements

promulgated under title II of the Clean

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

(6) In a state that has not opted out,

obligations under National LEV shall be

unaffected for covered manufacturers.

(7) Following are the actions that a

manufacturer may request EPA to

consider under paragraph (i)(1) of this

section:

(i) During the certification process

and upon a manufacturer’s written

request, EPA will consider allowing the

use of an on-board diagnostic system (as

required by § 86.1717), that functions

properly on low sulfur gasoline, but

indicates sulfur-induced passes when

exposed to high sulfur gasoline.

(ii) Upon a manufacturer’s written

request, if vehicles exhibit illuminations

of the emission control diagnostic

system malfunction indicator light (as

defined in § 86.094–17(c)) 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

illumination.

(iii) Upon a manufacturer’s written

request, prior to in-use testing, that

presents information to EPA regarding

pre-conditioning 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.

(j) 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 this paragraph (j) is based on a

covered state’s or covered

manufacturer’s opt-out under paragraph

(e), (f), (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’s or

manufacturer’s opt-out notification. If a

manufacturer’s opt-out under this

paragraph (j) is based on a

manufacturer’s opt-out under paragraph

(d) of this section, the manufacturer may

only 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. An

opt-out under this paragraph (j) shall 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) Upon the effective date of a

manufacturer’s opt-out under this

paragraph (j), in any covered state that

manufacturer shall be subject to all

requirements (except ZEV Mandates)

that would apply to a manufacturer that

had not opted into National LEV,

including all applicable standards and

other requirements promulgated under

title II of the Clean Air Act and any state

standards and other requirements

(except ZEV Mandates) in effect

pursuant to section 177 of the Clean Air

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

Section 177 Program that allowed

National LEV as a compliance

alternative and was adopted at least two

years before 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. A manufacturer shall not

be subject to any ZEV Mandates (except

Existing ZEV Mandates) in OTC States

until the model year (as defined in part

85, subpart X) that commences two

years after the date of EPA’s receipt of

the manufacturer’s opt-out notice.

(3) If a covered manufacturer opts out

under this paragraph (j), any covered

state that is not a violating state under

paragraph (e), (f), (g) or (h) 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

no earlier than two calendar years after

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

opt-out notification and shall provide

that the opt-out is not effective for

model years (as defined in part 85,

subpart X), that commence prior to this

effective date.

(4) In a state that opts out pursuant to

paragraph (j)(3) of this section,

obligations under National LEV shall be

unaffected for covered manufacturers
976 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

until the effective date of the state’s optout. Upon the effective date of the

state’s opt-out, in that state covered

manufacturers shall comply with any

state standards and other requirements

in effect pursuant to section 177 of the

Clean Air Act or, if such state standards

are not in effect, with all requirements

that would apply to a manufacturer that

had not opted into the National LEV

program, including all applicable

standards and other requirements

promulgated under title II of the Clean

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

(5) In a state that has not opted out,

obligations under National LEV remain

unaffected for covered manufacturers.

(k) Conditions allowing OTC State

opt-outs—EPA finding of inequivalency.

Any covered state may opt out of

National LEV if EPA determines that

National LEV would not produce (or is

not producing) emissions reductions at

least equivalent to the OTC State

Section 177 Programs.

(1) At any time during National LEV,

a covered state may request in writing

that EPA reevaluate its initial

equivalency determination (of December

16, 1997) 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. Within 180

calendar days of receipt of the state’s

request, EPA must take final agency

action to determine whether the

determination that National LEV will

produce at least equivalent emission

reductions to OTC State Section 177

Program is still valid. 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 equivalency

determination, EPA shall use the same

Mobile emission factor model and the

same inputs and assumptions (including

vehicle miles traveled, MOBILE5a

model inputs, inspection and

maintenance programs, reformulated

gasoline, and permanent migration

effects) as used in the initial

determination, with the following

exceptions:

(i) In modeling the emission

reductions from National LEV, EPA

shall use any revised federal new motor

vehicle standard or other requirement in

place of the standard or other

requirement as it existed when EPA

made its initial determination; and, to

the extent that the modeling reflects

EPA’s implementation of federal new

motor vehicle standards or other

requirements, EPA shall take any

changes in such implementation into

account.

(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

equivalency 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 equivalency determination

and shall not model any effects of state

regulation of medium-duty 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 calendar days of

a final EPA determination pursuant to

paragraph (k)(1) of this section that

National LEV would not produce (or is

not producing) emissions reductions at

least equivalent to OTC State Section

177 Programs. The state’s opt-out

notification shall specify an effective

date for the state’s opt-out that is no

earlier than two calendar years after the

date of EPA’s receipt of the state’s optout notification and shall provide that

the opt-out is not effective for model

years (as defined in part 85, subpart X),

that commence prior to this effective

date.

(3) If a covered state opts out based on

this condition, a covered manufacturer

may opt out of National LEV pursuant

to paragraph (j) of this section.

(4) In a state that opts out pursuant to

paragraph (k)(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 and other requirements

in effect pursuant to section 177 of the

Clean Air Act or, if such state standards

and other requirements are not in effect,

with all requirements that would apply

to a manufacturer that had not opted

into the National LEV program,

including all applicable standards and

other requirements promulgated under

title II of the Clean Air Act (42 U.S.C.

7521 et seq.).

§ 86.1708–97 [Redesignated § 86.1708–99

and Amended]

18. Section 86.1708–97 is

redesignated as § 86.1708–99 and

amended by revising the section

heading, by removing Table R97–7 and

redesignating Tables R97–1 through

R97–6 as Tables R99–1 through R99–6,

by revising the references ‘‘R97–1’’,

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

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

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

‘‘R99–6’’, respectively, wherever they

appear in the section, by revising

paragraphs (b)(1)(i), (b)(1)(iii)(B), and

(c), and by adding paragraph (e) to read

as follows:

§ 86.1708–99 Exhaust emission standards

for 1999 and later light-duty vehicles.

* * * * *

(b)(1) Standards. (i) Exhaust

emissions from 1999 and later model

year light-duty vehicles classified as

TLEVs, LEVs, and ULEVs shall not

exceed the standards in Tables R99–1

and R99–2 in rows designated with the

applicable vehicle emission category.

These standards shall apply equally to

certification and in-use vehicles, except

as provided in paragraph (c) of this

section. The tables follow:

TABLE R99–1.—INTERMEDIATE USEFUL LIFE (50,000 MILE) STANDARDS (G/MI) FOR LIGHT-DUTY VEHICLES CLASSIFIED AS

TLEVS, LEVS, AND ULEVS

Vehicle emission category NMOG CO NOX HCHO

TLEV ................................................................................................................................. 0.125 3.4 0.4 0.015

LEV ................................................................................................................................... 0.075 3.4 0.2 0.015

ULEV ................................................................................................................................ 0.040 1.7 0.2 0.008
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 977

TABLE R99–2.—FULL USEFUL LIFE (100,000 MILE) STANDARDS (G/MI) FOR LIGHT-DUTY VEHICLES CLASSIFIED AS TLEVS,

LEVS, AND ULEVS

Vehicle emission category NMOG CO NOX HCHO PM (diesels

only)

TLEV ......................................................................................................... 0.156 4.2 0.6 0.018 0.08

LEV ........................................................................................................... 0.090 4.2 0.3 0.018 0.08

ULEV ......................................................................................................... 0.055 2.1 0.3 0.011 0.04

* * * * *

(iii) * * *

(B) The applicable NMOG emission

standards for flexible-fuel and dual-fuel

light-duty vehicles when certifying the

vehicle for operation on gasoline shall

be the NMOG standards in Tables R99–

3 and R99–4 in the rows designated

with the applicable vehicle emission

category, as follows:

TABLE R99–3.—INTERMEDIATE USEFUL LIFE (50,000 MILE) NMOG

STANDARDS (G/MI) FOR FLEXIBLEFUEL AND DUAL-FUEL LIGHT-DUTY

VEHICLES CLASSIFIED AS TLEVS,

LEVS, AND ULEVS

Vehicle emission category NMOG

TLEV ........................................... 0.25

LEV ............................................. 0.125

ULEV ........................................... 0.075

TABLE R99–4.—FULL USEFUL LIFE

(100,000 MILE) NMOG STANDARDS

(G/MI) FOR FLEXIBLE-FUEL AND

DUAL-FUEL LIGHT-DUTY VEHICLES

CLASSIFIED AS TLEVS, LEVS, AND

ULEVS

Vehicle emission category NMOG

TLEV ........................................... 0.31

LEV ............................................. 0.156

ULEV ........................................... 0.090

* * * * *

(c) In-use emission standards. (1)

1999 model year light-duty vehicles

certified as LEVs and 1999 through 2002

model year light-duty vehicles certified

as ULEVs shall meet the applicable

intermediate and full useful life in-use

standards in paragraph (c)(2) of this

section, according to the following

provisions:

(i) [Reserved]

(ii) The applicable in-use emission

standards for vehicle emission

categories and model years not shown

in Tables R99–5 and R99–6 shall be the

intermediate and full useful life

standards in paragraph (b) of this

section.

(2) Light-duty vehicles, including

flexible-fuel and dual-fuel light-duty

vehicles when operated on gasoline and

on an available fuel other than gasoline,

shall meet all intermediate and full

useful life in-use standards for the

applicable vehicle emission category

and model year in Tables R99–5 and

R99–6, as follows:

TABLE R99–5.—INTERMEDIATE USEFUL LIFE (50,000 MILE) IN-USE STANDARDS (G/MI) FOR LIGHT-DUTY VEHICLES

Vehicle emission category Model year NMOG CO NOX HCHO

LEV ......................................................................................................... 1999 0.100 3.4 0.3 0.015

ULEV ...................................................................................................... 1999–2000 0.055 2.1 0.3 0.012

2001–2002 0.055 2.1 0.3 0.008

TABLE R99–6.—FULL USEFUL LIFE (100,000 MILE) IN-USE STANDARDS (G/MI) FOR LIGHT-DUTY VEHICLES

Vehicle emission category Model year NMOG CO NOX HCHO

LEV ......................................................................................................... 1999 0.125 4.2 0.4 0.018

ULEV ...................................................................................................... 1999–2002 0.075 3.4 0.4 0.008

* * * * *

(e) SFTP Standards. Exhaust

emissions 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 this

paragraph (e)(1).

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
978 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

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

Useful life Fuel type

NMHC +

NOX composite

CO

A/C test US06 test Composite

option

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—2001 to

2003 model years. For the purposes of

this paragraph (e)(1)(i) only, each

manufacturer’s light-duty vehicle and

light light-duty truck fleet shall be

defined as the total projected number of

the following types of vehicles sold in

California: light-duty vehicles certified

to the exhaust emission standards in

§ 86.099–8(a)(1)(i) and subsequent

model year provisions, and light lightduty trucks certified to the exhaust

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

and subsequent model year provisions,

and light-duty vehicles and light lightduty trucks certified as TLEVs. 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)(i)

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 California.

(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

(B) [Reserved]

(ii) Phase-in requirements—2004 and

later model years. For the purposes of

this paragraph (e)(1)(ii) only, each

manufacturer’s light-duty vehicle and

light light-duty truck fleet shall be

defined as the total projected number of

the following types of vehicles sold in

the United States: 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 light-duty vehicles and

light light-duty trucks certified as

TLEVs. 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)(ii) 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) In 2004 and subsequent model

years, manufacturers of light-duty

vehicles and light light-duty trucks,

including low volume manufacturers,

shall certify 100 percent of their lightduty vehicle and light light-duty truck

fleet to the standards in this paragraph

(e)(l).

(B) [Reserved]

(iii) Phase-in requirements—vehicles

sold outside California. Light-duty

vehicles and light light-duty trucks sold

outside California shall be certified to

the applicable emission standards in

this paragraph (e) if a vehicle has been

certifed to the emission standards in

this paragraph (e) for sale in California

and is identical in the following

respects:

(A) Vehicle manufacturer;

(B) Vehicle make and model;

(C) Cylinder block configuration (L–6,

V–8, and so forth);

(D) Displacement;

(E) Combustion cycle;

(F) Transmission class; and

(G) Axle ratio.

(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 this paragraph (e)(2)(i).

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—2001 to

2003 model years. For the purposes of

this paragraph (e)(2)(i) 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 California.

(A) Manufacturers of light-duty

vehicles and light light-duty trucks,

except low volume manufacturers, shall

certify to the standards in this paragraph

(e)(2) 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

(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)
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 979

= 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).

(ii) Phase-in requirements—2004 and

later model years. For the purposes of

this paragraph (e)(2)(ii) 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) In 2004 and subsequent model

years, manufacturers of light-duty

vehicles and light light-duty trucks,

including low volume manufacturers,

shall certify 100 percent of their lightduty vehicle and light light-duty truck

fleet to the standards in this paragraph

(e)(2).

(iii) Phase-in requirements—vehicles

sold outside California. Light-duty

vehicles and light light-duty trucks sold

outside California shall be certified to

the applicable emission standards in

this paragraph (e) if a vehicle has been

certifed to the emission standards in

this paragraph (e) for sale in California

and is identical in the following

respects:

(A) Vehicle manufacturer;

(B) Vehicle make and model;

(C) Cylinder block configuration (L–6,

V–8, and so forth);

(D) Displacement;

(E) Combustion cycle;

(F) Transmission class; and

(G) Axle ratio.

(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. Other than 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. (i) In the Application for

Certification, the manufacturer shall

state whether any ‘‘lean-on-cruise’’

strategies are incorporated into the

vehicle design. A ‘‘lean-on-cruise’’ airfuel calibration strategy is defined as the

use of an air-fuel ratio significantly

greater than stoichiometry, during nondeceleration conditions at speeds above

40 mph. ‘‘Lean-on-cruise’’ air-fuel

calibration strategies shall not be

employed during vehicle operation in

normal driving conditions, including A/

C usage, unless at least one of the

following conditions is met:

(A) Such strategies are substantially

employed during the FTP or SFTP;

(B) Such strategies are demonstrated

not to significantly reduce vehicle

NMHC+NOX emission control

effectiveness over the operating

conditions in which they are employed;

(C) Such strategies are demonstrated

to be necessary to protect the vehicle

occupants, engine, or emission control

hardware.

(ii) If the manufacturer proposes to

use a ‘‘lean-on-cruise’’ calibration

strategy, the manufacturer shall specify

the circumstances under which such a

calibration would be used, and the

reason or reasons for the proposed use

of such a calibration.

(iii) The provisions of this paragraph

(e)(4) shall not apply to vehicles

powered by ‘‘lean-burn’’ engines or

diesel-cycle engines. A ‘‘lean-burn’’

engine is defined as an Otto-cycle

engine designed to run at an air-fuel

ratio significantly greater than

stoichiometry during the large majority

of its operation.

(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.

§ 86.1709 [Redesignated as § 86.1709–99

and Amended]

19. Section 86.1709–97 is

redesignated as § 86.1709–99 and

amended by revising the section

heading, by removing Table R97–14 and

redesignating Tables R97–8 through

R97–13 as Tables R99–8 through R99–

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

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

12’’, and ‘‘R97–13’’ to read ‘‘R99–8’’,

‘‘R99–9’’, ‘‘R99–10’’, ‘‘R99–11’’, ‘‘R99–

12’’, and ‘‘R99–13’’, respectively,

wherever they appear in the section, by

revising paragraphs (b)(1)(i), (b)(1)(iii)

(B), and (c), and by adding paragraph (e)

to read as follows:
980 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

§ 86.1709–99 Exhaust emission standards

for 1999 and later light light-duty trucks.

* * * * *

(b)(1) Standards. (i) Exhaust

emissions from 1999 and later model

year light light-duty trucks classified as

TLEVs, LEVs, and ULEVs shall not

exceed the standards in Tables R99–8

and R99–9 in rows designated with the

applicable vehicle emission category

and loaded vehicle weight. These

standards shall apply equally to

certification and in-use vehicles, except

as provided in paragraph (c) of this

section. The tables follow:

TABLE R99–8.—INTERMEDIATE USEFUL LIFE (50,000 MILE) STANDARDS (G/MI) FOR LIGHT LIGHT-DUTY TRUCKS

CLASSIFIED AS TLEVS, LEVS, AND ULEVS

Loaded vehicle weight Vehicle emission category NMOG CO NOX HCHO

3751 ................................................................................................... TLEV ................ 0.125 3.4 0.4 0.015

LEV ................... 0.075 3.4 0.2 0.015

ULEV ................ 0.040 1.7 0.2 0.008

3751–5750 ......................................................................................... TLEV ................ 0.160 4.4 0.7 0.018

LEV ................... 0.100 4.4 0.4 0.018

ULEV ................ 0.050 2.2 0.4 0.009

TABLE R99–9.—FULL USEFUL LIFE (100,000 MILE) STANDARDS (G/MI) FOR LIGHT LIGHT-DUTY TRUCKS CLASSIFIED AS

TLEVS, LEVS, AND ULEVS

Loaded vehicle weight Vehicle emission category NMOG CO NOX HCHO PM (diesels only)

0–3750 ............................................................................................ TLEV ................ 0.156 4.2 0.6 0.018 0.08

LEV .................. 0.090 4.2 0.3 0.018 0.08

ULEV ............... 0.055 2.1 0.3 0.011 0.04

3751–5750 ...................................................................................... TLEV ................ 0.200 5.5 0.9 0.023 0.10

LEV .................. 0.130 5.5 0.5 0.023 0.10

ULEV ............... 0.070 2.8 0.5 0.013 0.05

* * * * *

(iii) * * *

(B) The applicable NMOG emission

standards for flexible-fuel and dual-fuel

light light-duty trucks when certifying

the vehicle for operation on gasoline

shall be the NMOG standards in Tables

R99–10 and R99–11 in the rows

designated with the applicable vehicle

emission category and loaded vehicle

weight, as follows:

TABLE R99–10.—INTERMEDIATE USEFUL LIFE (50,000 MILE) NMOG

STANDARDS (G/MI) FOR FLEXIBLEFUEL AND DUAL-FUEL LIGHT LIGHTDUTY TRUCKS CLASSIFIED AS

TLEVS, LEVS, AND ULEVS

Loaded vehicle

weight

Vehicle emission category NMOG

0–3750 TLEV ................ 0.25

LEV ................... 0.125

ULEV ................ 0.075

3751–5750 TLEV ................ 0.32

LEV ................... 0.160

ULEV ................ 0.100

TABLE R99–11.—FULL USEFUL LIFE

(100,000 MILE) NMOG STANDARDS

(G/MI) FOR FLEXIBLE-FUEL AND

DUAL-FUEL LIGHT LIGHT-DUTY

TRUCKS CLASSIFIED AS TLEVS,

LEVS, AND ULEVS

Loaded vehicle

weight

Vehicle emission category NMOG

0–3750 TLEV ................ 0.31

LEV ................... 0.156

ULEV ................ 0.090

3751–5750 TLEV ................ 0.40

LEV ................... 0.200

ULEV ................ 0.130

* * * * *

(c) In-use emission standards. (1)

1999 model year light light-duty trucks

certified as LEVs and 1999 through 2001

model year light light-duty trucks

certified as ULEVs shall meet the

applicable intermediate and full useful

life in-use standards in paragraph (c)(2)

of this section, according to the

following provisions:

(i) [Reserved]

(ii) The applicable in-use emission

standards for vehicle emission

categories and model years not shown

in Tables R99–12 and R99–13 shall be

the intermediate and full useful life

standards in paragraph (b) of this

section.

(2) Light light-duty trucks, including

flexible-fuel and dual-fuel light lightduty trucks when operated on gasoline

and on an available fuel other than

gasoline, shall meet all intermediate and

full useful life in-use standards for the

applicable vehicle emission category,

loaded vehicle weight, and model year

in Tables R99–12 and R99–13, as

follows:

TABLE R99–12.—INTERMEDIATE USEFUL LIFE (50,000 MILE) IN-USE STANDARDS (G/MI) FOR LIGHT LIGHT-DUTY TRUCKS

Loaded vehicle

weight

Vehicle emission category Model year NMOG CO NOX HCH0

0–3750 LEV ................... 1999 0.100 3.4 0.3 0.015

ULEV ................ 1999–2002 0.055 2.1 0.3 0.008

3751–5750 LEV ................... 1999 0.130 4.4 0.5 0.018
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 981

TABLE R99–12.—INTERMEDIATE USEFUL LIFE (50,000 MILE) IN-USE STANDARDS (G/MI) FOR LIGHT LIGHT-DUTY

TRUCKS—Continued

Loaded vehicle

weight

Vehicle emission category Model year NMOG CO NOX HCH0

ULEV ................ 1999–2002 0.070 2.8 0.5 0.009

TABLE R99–13.—FULL USEFUL LIFE (100,000 MILE) IN-USE STANDARDS (G/MI) FOR LIGHT LIGHT-DUTY TRUCKS

Loaded vehicle

weight

Vehicle emission category Model year NMOG CO NOX HCHO

0–3750 LEV ................... 1999 0.125 4.2 0.4 0.018

ULEV ................ 1999–2002 0.075 3.4 0.4 0.011

3751–5750 LEV ................... 1999 0.160 5.5 0.7 0.023

ULEV ................ 1999–2002 0.100 4.4 0.7 0.013

* * * * *

(e) SFTP Standards. Exhaust

emissions 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 this

paragraph (e)(1).

TABLE R99–14.1.—SFTP EXHAUST EMISSION STANDARDS (G/MI) 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—2001 to

2003 model years. For the purposes of

paragraph (e)(1)(i) of this section only,

each manufacturer’s light-duty vehicle

and light light-duty truck fleet shall be

defined as the total projected number of

the following types of vehicles sold in

Calfornia: light-duty vehicles certified to

the exhaust emission standards in

§ 86.099–8(a)(1)(i) and subsequent

model year provisions, and light lightduty trucks certified to the exhaust

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

and subsequent model year provisions,

and light-duty vehicles and light lightduty trucks certified as TLEVs. 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)(i)

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 California.

(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

(B) [Reserved]

(ii) Phase-in requirements—2004 and

later model years. For the purposes of

paragraph (e)(1)(ii) of this section only,

each manufacturer’s light-duty vehicle

and light light-duty truck fleet shall be

defined as the total projected number of

the following types of vehicles sold in

the United States: light-duty vehicles

certified to the exhaust emission

standards in § 86.099–8(a)(1)(i) and

subsequent model year provisions, light

light-duty trucks certified to the exhaust

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

and subsequent model year provisions,

and light-duty vehicles and light lightduty trucks certified as TLEVs. 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)(ii)

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) In 2004 and subsequent model

years, manufacturers of light-duty

vehicles and light light-duty trucks,

including low volume manufacturers,

shall certify 100 percent of their lightduty vehicle and light light-duty truck
982 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

fleet to the standards in this paragraph

(e)(1).

(B) [Reserved]

(iii) Phase-in requirements—vehicles

sold outside California. Light-duty

vehicles and light light-duty trucks sold

outside California shall be certified to

the applicable emission standards in

this paragraph (e) if a vehicle has been

certifed to the emission standards in

this paragraph (e) for sale in California

and is identical in the following

respects:

(A) Vehicle manufacturer;

(B) Vehicle make and model;

(C) Cylinder block configuration (L–6,

V–8, and so forth);

(D) Displacement;

(E) Combustion cycle;

(F) Transmission class; and

(G) Axle ratio.

(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 this paragraph (e)(2).

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

0.25 ................ 10.5 0.27 ............... 3.5

(i) Phase-in requirements—2001 to

2003 model years. For the purposes of

this paragraph (e)(2)(i) 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 California.

(A) Manufacturers of light-duty

vehicles and light light-duty trucks,

except low volume manufacturers, shall

certify to the standards in this paragraph

(e)(2) 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

(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).

(ii) Phase-in requirements—2004 and

later model years. For the purposes of

this paragraph (e)(2)(ii) 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) In 2004 and subsequent model

years, manufacturers of light-duty

vehicles and light light-duty trucks,

including low volume manufacturers,

shall certify 100 percent of their lightduty vehicle and light light-duty truck

fleet to the standards in this paragraph

(e)(2).

(B) [Reserved]

(iii) Phase-in requirements—vehicles

sold outside California. Light-duty

vehicles and light light-duty trucks sold

outside California shall be certified to

the applicable emission standards in

this paragraph (e) if a vehicle has been

certifed to the emission standards in

this paragraph (e) for sale in California

and is identical in the following

respects:

(A) Vehicle manufacturer;

(B) Vehicle make and model;

(C) Cylinder block configuration (L–6,

V–8, and so forth);

(D) Displacement;

(E) Combustion cycle;

(F) Transmission class; and

(G) Axle ratio.

(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. Other than 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
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 983

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. (i) In the Application for

Certification, the manufacturer shall

state whether any ‘‘lean-on-cruise’’

strategies are incorporated into the

vehicle design. A ‘‘lean-on-cruise’’ airfuel calibration strategy is defined as the

use of an air-fuel ratio significantly

greater than stoichiometry, during nondeceleration conditions at speeds above

40 mph. ‘‘Lean-on-cruise’’ air-fuel

calibration strategies shall not be

employed during vehicle operation in

normal driving conditions, including A/

C usage, unless at least one of the

following conditions is met:

(A) Such strategies are substantially

employed during the FTP or SFTP;

(B) Such strategies are demonstrated

not to significantly reduce vehicle

NMHC+NOx emission control

effectiveness over the operating

conditions in which they are employed;

(C) Such strategies are demonstrated

to be necessary to protect the vehicle

occupants, engine, or emission control

hardware.

(ii) If the manufacturer proposes to

use a ‘‘lean-on-cruise’’ calibration

strategy, the manufacturer shall specify

the circumstances under which such a

calibration would be used, and the

reason or reasons for the proposed use

of such a calibration.

(iii) The provisions of this paragraph

(e)(4) shall not apply to vehicles

powered by ‘‘lean-burn’’ engines or

diesel-cycle engines. A ‘‘lean-burn’’

engine is defined as an Otto-cycle

engine designed to run at an air-fuel

ratio significantly greater than

stoichiometry during the large majority

of its operation.

(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.

§ 86.1710–97 [Redesignated as § 86.1710–

99 and Amended]

20. Section 86.1710–97 is

redesignated as § 86.1710–99 and

amended by redesignating Tables R97–

15 and R97–16 as Tables R99–15 and

R99–16, by revising the references

‘‘R97–15’’ and ‘‘R97–16’’ to read ‘‘R99–

15’’ and ‘‘R99–16’’, respectively,

wherever they appear in the section, by

adding introductory text to paragraph

(a), by revising paragraphs (a)(1),

(a)(3)(i), (a)(3)(iii) (A) and (B), (a)(4)(i),

(a)(4)(iii) (A) and (B), (a)(5)(ii), (b)(4), (c)

(1) and (2), (c)(6) through (c)(8), (d),

(e)(2), and (e)(4)(ii), and by adding

paragraph (c)(9), to read as follows:

§ 86.1710–99 Fleet average non-methane

organic gas exhaust emission standards for

light-duty vehicles and light light-duty

trucks.

(a) Fleet average NMOG standards

and compliance. (1) Each manufacturer

shall certify light-duty vehicles or light

light-duty trucks to meet the exhaust

emission standards in this subpart for

TLEVs, LEVs, ULEVs, or ZEVs, or 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, such

that, using the applicable intermediate

useful life standards, the manufacturer’s

fleet average NMOG values for lightduty vehicles and light light-duty trucks

sold in the applicable region according

to the specifications of Tables R99–15

and R99–16 are less than or equal to the

standards in Tables R99–15 and R99–16

in the rows designated with the

applicable vehicle type, loaded vehicle

weight, and model year, as follows:

TABLE R99–15—FLEET AVERAGE NON-METHANE ORGANIC GAS STANDARDS (g/mi) FOR LIGHT-DUTY VEHICLES AND

LIGHT LIGHT-DUTY TRUCKS SOLD IN THE NORTHEAST TRADING REGION

Vehicle type

Loaded

vehicle

weight

Model year

Fleet

average

NMOG

Light light-duty vehicles ...................................................................................................................................... All ............ 1999 ........ 0.148

2000 ........ 0.095

and

Light light-duty trucks ......................................................................................................................................... 0–3750.

Light light-duty trucks ......................................................................................................................................... 3751–5750 1999 ........ 0.190

2000 ........ 0.124

TABLE R99–16—FLEET AVERAGE NON-METHANE ORGANIC GAS STANDARDS (g/mi) FOR LIGHT-DUTY VEHICLES AND

LIGHT LIGHT-DUTY TRUCKS SOLD IN THE ALL STATES TRADING REGION

Vehicle type

Loaded

vehicle

weight

Model year

Fleet

average

NMOG

Light-duty vehicles .............................................................................................................................................. All ............ 2001 and

later.

0.075

and

Light light-duty trucks ......................................................................................................................................... 0–3750.

Light light-duty trucks ......................................................................................................................................... 3751–5750 2001 and

later.

0.100
984 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

* * * * *

(3)(i) Each manufacturer’s applicable

fleet average NMOG value for all light

light-duty trucks from 0–3750 lbs.

loaded vehicle weight and light-duty

vehicles sold in the applicable region

according to Tables R99–15 and R99–16

shall be calculated in units of g/mi

NMOG according to the following

equation, where the term ‘‘Sold’’ means

sold in the applicable region according

to Tables R99–15 and R99–16, and the

term ‘‘Vehicles’’ means light light-duty

trucks from 0–3750 lbs loaded vehicle

weight and light-duty vehicles: (((No. of

Vehicles Certified to the Federal Tier 1

Exhaust Emission Standards and

Sold)×(0.25))+((No. of TLEVs Sold

excluding HEVs)× (0.125)) +((No. of

LEVs Sold excluding

HEVs)×(0.75))+((No. of ULEVs Sold

excluding HEVs)×(0.040))+(HEV

contribution factor))/(Total No. of

Vehicles Sold, including ZEVs and

HEVs).

(A) For model years 1997 through

2000, ‘‘Vehicles’’ in the preceding

equation shall include Californiacertified vehicles, including vehicles

certified to California Tier 1 standards.

(B) For model years 2001 and later,

‘‘vehicles’’ in the preceding equation

shall not include California-certified

vehicles unless they are also certified

under the National LEV program.

* * * * *

(iii)(A) For any model year in which

a manufacturer certifies its entire fleet of

light-duty vehicles and light light-duty

trucks from 0–3750 lbs LVW to

intermediate useful life NMOG emission

standards specified in §§ 86.1708 and

86.1709 that are less than or equal to the

applicable fleet average NMOG standard

specified in Tables R99–15 and R99–16,

the manufacturer may elect not to

calculate a fleet average NMOG value

for such vehicles for that model year.

(B) The fleet average NMOG value for

a manufacturer electing under

paragraph (a)(3)(iii)(A) of this section

not to calculate a fleet average NMOG

value shall be deemed to be the

applicable fleet average NMOG standard

specified in Table R99–15 or R99–16 for

the applicable model year.

* * * * *

(4)(i) Each manufacturer’s applicable

fleet average NMOG value for all light

light-duty trucks from 3751–5750 lbs

loaded vehicle weight sold in the

applicable region according to Tables

R99–15 and R99–16 shall be calculated

in units of g/mi NMOG according to the

following equation, where the term

‘‘Sold’’ means sold in the applicable

region according to Tables R97–15 and

R97–16, and the term ‘‘Vehicles’’ means

light light-duty trucks from 3751–5750

lbs loaded vehicle weight: (((No. of

Vehicles Certified to the Federal Tier 1

Exhaust Emission Standards and

Sold)×(0.32))+((No. of TLEVs Sold

excluding HEVs)×(0.160))+((No. of LEVs

Sold excluding HEVs)×(0.100))+(No. of

ULEVs Sold excluding

HEVs)×(0.050))+(HEV Contribution

factor))/(Total No. of Vehicles Sold,

including ZEVs and HEVs).

(A) For model years 1997 through

2000, ‘‘Vehicles’’ in the preceding

equation shall include Californiacertified vehicles, including vehicles

certified to California Tier 1 standards.

(B) For model years 2001 and later,

‘‘Vehicles’’ in the preceding equation

shall not include California-certified

vehicles unless they are also certified

under the National LEV program.

* * * * *

(iii)(A) For any model year in which

a manufacturer certifies its entire fleet of

light light-duty trucks from 3751–5750

lbs LVW to intermediate useful life

NMOG emission standards specified in

§ 86.1709 that are less than or equal to

the applicable fleet average NMOG

requirements specified in Tables R99–

15 and R99–16, the manufacturer may

elect not to calculate a fleet average

NMOG value for such vehicles for that

model year.

(B) The fleet average NMOG value for

a manufacturer electing under

paragraph (a)(4)(iii)(A) of this section

not to calculate a fleet average NMOG

value shall be deemed to be the

applicable fleet average NMOG standard

specified in Table R99–15 or R99–16 for

the applicable model year.

* * * * *

(5) * * *

(ii) Adequate information includes the

number of vehicles purchased, vehicle

makes and models, and the associated

engine families. A copy of the letter

should be sent to: Director, Vehicle

Programs and Compliance Division,

U.S. Environmental Protection Agency,

2565 Plymouth Road, Ann Arbor,

Michigan, 48105.

* * * * *

(b) * * *

(4) For each applicable region and

model year, a manufacturer’s available

credits or level of debits shall be the

sum of credits or debits derived from

the respective class A and class B

averaging sets for that region and model

year. Paragraph (d)(2)(ii)(C) of this

section contains a special provision for

manufacturers that end model year 2000

with a debit balance in the NTR.

(c) * * *

(1) Only credits generated in the NTR

may be used to offset NMOG debits

incurred in the NTR. Manufacturers

may use in the ASTR credits generated

in the NTR.

(2) Only after credits are earned may

they be used, traded, or carried over to

another model year. Before trading or

carrying over credits to the next model

year, a manufacturer must apply

available credits to offset any of its

debits from the same region, where the

deadline to offset such debits has not

yet passed.

* * * * *

(6) Prior to model year 2001, low

volume manufacturers may earn credits

in the NTR to transfer to other motor

vehicle manufacturers for use in the

NTR or the ASTR, or to bank for their

own use in the ASTR. Such credits will

be calculated as set forth in paragraphs

(a) and (b) of this section, except that

the applicable fleet average NMOG

standard shall be 0.25 g/mi NMOG for

the averaging set for light light-duty

trucks from 0–3750 lbs LVW and lightduty vehicles or 0.32 g/mi NMOG for

the averaging set for light light-duty

trucks from 3751–5750 lbs LVW. Credits

shall be discounted in accordance with

the provisions in paragraph (c)(4) of this

section.

(7) Prior to model year 2001,

manufacturers may earn credits in the

ASTR states that are not in the NTR and

may bank those credits for use in the

ASTR. Such credits will be calculated as

set forth in paragraphs (a) and (b) of this

section, except that the applicable fleet

average NMOG standard shall be 0.25 g/

mi NMOG for the averaging set for light

light-duty trucks from 0–3750 lbs LVW

and light-duty vehicles or 0.32 g/mi

NMOG for the averaging set for light

light-duty trucks from 3751–5750 lbs

LVW, and ‘‘sold’’ shall mean sold in the

ASTR states that are not in the NTR.

(i) Emission credits earned in the

ASTR states outside the NTR prior to

model year 2001 shall be treated as

generated in model year 2001.

(ii) In the 2001 model year, a one-time

discount rate of 10 percent shall be

applied to all credits earned under the

provisions of this paragraph (c)(7).

(iii) These credits shall be discounted

in accordance with the provisions in

paragraph (c)(4) of this section.

(8) Manufacturers may earn and bank

credits in the NTR for model years 1997

and 1998. In states without a Section

177 Program effective in model year

1997 or 1998, such credits will be

calculated as set forth in paragraphs (a)

and (b) of this section, except that the

applicable fleet average NMOG standard

shall be 0.200 g/mi NMOG for the

averaging set for light light-duty trucks

from 0–3750 lbs LVW and light-duty
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 985

vehicles or 0.256 g/mi NMOG for the

averaging set for light light-duty trucks

from 3751–5750 lbs LVW. In states that

opt into National LEV and have a

Section 177 Program effective in model

year 1997 or 1998, such credits will

equal the unused credits earned in those

states.

(i) Emissions credits earned in the

NTR prior to the 1999 model year shall

be treated as generated in the 1999

model year.

(ii) In the 1999 model year, a one-time

discount rate of 10 percent shall be

applied to all credits earned under the

provisions of this paragraph (c)(8).

(iii) These credits shall be discounted

in accordance with the provisions in

paragraph (c)(4) of this section.

(9) There are no property rights

associated with credits generated under

the provisions of this section. Credits

are a limited authorization to emit the

designated amount of emissions.

Nothing in the regulations or any other

provision of law should be construed to

limit EPA’s authority to terminate or

limit this authorization through a

rulemaking. If EPA were to terminate or

limit the authorization to emit

associated with emissions credits

generated under the provisions of this

section, this paragraph (c)(9) would

have no effect on manufacturers’ ability

to opt out of the National LEV program

pursuant to § 86.1707.

(d) Fleet average NMOG debits. (1)

Manufacturers shall offset any debits for

a given model year by the fleet average

NMOG reporting deadline for the model

year following the model year in which

the debits were generated.

Manufacturers may offset debits by

generating credits or acquiring credits

generated by another manufacturer.

Only credits generated in the NTR may

be used to offset NMOG debits

generated in the NTR.

(2) The provisions of this paragraph

(d)(2) apply only when a manufacturer

has a debit balance in the NTR at the

end of model year 2000. Manufacturers

shall offset any debits incurred in the

NTR for model year 2000 by the fleet

average NMOG reporting deadline for

model year 2001.

(i) A manufacturer may offset debits

generated in the NTR in model year

2000 either by generating credits in the

NTR in model year 2001 or by applying

NTR credits acquired under the

provisions of this section.

(ii) If a manufacturer has a debit

balance in the NTR at the end of model

year 2000, then such manufacturer shall

be required to calculate fleet average

NMOG values for both the NTR and the

ASTR for model year 2001.

(A) The NTR values shall be

calculated according to paragraphs (a)

and (b) of this section, with the fleet

average NMOG standards equal to the

standards for model year 2001 in the

ASTR.

(B) If such a manufacturer has a credit

balance in the NTR for model year 2001,

before trading or carrying over credits to

the next model year, the manufacturer

must apply available NTR credits to

offset its debits in the NTR.

(C) Notwithstanding paragraph (b)(4)

of this section, for the ASTR and model

year 2001, such a manufacturer’s

available credits or level of debits shall

be the sum of credits or debits derived

from the respective class A and class B

averaging sets for the ASTR and model

year 2001, minus any credits used

pursuant to paragraph (d)(2)(ii)(B).

(iii) To transfer a credit as an NTR

credit earned in model year 2001, a

manufacturer must have credits

generated in the NTR based on separate

fleet average NMOG values calculated

for the NTR in model year 2001. In

addition, the number of model year

2001 NTR credits available for a

manufacturer to transfer cannot exceed

the manufacturer’s available number of

model year 2001 ASTR credits. Any

transferred model year 2001 NTR credits

shall be deducted from the

manufacturer’s available model year

2001 ASTR credits.

(3)(i) Failure to meet the requirements

of paragraphs (a) through (d) of this

section within the required timeframe

for offsetting debits will be considered

to be a failure to satisfy the conditions

upon which the certificate(s) was issued

and the individual noncomplying

vehicles not covered by the certificate

shall be determined according to this

section.

(ii) If debits are not offset within the

specified time period, the number of

vehicles not meeting the fleet average

NMOG standards and not covered by

the certificate shall be calculated by

dividing the total amount of debits for

the model year by the fleet average

NMOG standard applicable for the

model year and averaging set in which

the debits were first incurred. If both

averaging sets are in debit, any

applicable credits will first be allocated

between the averaging sets according to

the manufacturer’s expressed

preferences. Then, the number of

vehicles not covered by the certificate

shall be calculated using the revised

debit values.

(iii) EPA will determine the vehicles

for which the condition on the

certificate was not satisfied by

designating vehicles in those engine

families with the highest certification

NMOG emission values first and

continuing until a number of vehicles

equal to the calculated number of

noncomplying vehicles as determined

above is reached. If this calculation

determines that only a portion of

vehicles in an engine family contribute

to the debit situation, then EPA will

designate actual vehicles in that engine

family as not covered by the certificate,

starting with the last vehicle produced

and counting backwards.

(4) If a manufacturer opts out of the

National LEV program pursuant to

§ 86.1707, the manufacturer continues

to be responsible for offsetting any

debits outstanding on the effective date

of the opt-out within the required time

period. Any failure to offset the debits

will be considered to be a violation of

paragraph (d)(1) of this section and may

subject the manufacturer to an

enforcement action for sale of vehicles

not covered by a certificate, pursuant to

paragraph (d)(2) of this section.

(5) For purposes of calculating tolling

of the statute of limitations, a violation

of the requirements of paragraph (d)(1)

of this section, a failure to satisfy the

conditions upon which a certificate(s)

was issued and hence a sale of vehicles

not covered by the certificate, all occur

upon the expiration of the deadline for

offsetting debits specified in paragraph

(d)(1) of this section.

* * * * *

(e) * * *

(2) A manufacturer may not sell

credits that are not available for sale

pursuant to the provisions in paragraphs

(c)(2) or (d)(2) of this section.

* * * * *

(4) * * *

(ii) Failure to offset the debits within

the required time period will be

considered a failure to satisfy the

conditions upon which the certificate(s)

was issued and will be addressed

pursuant to paragraph (d)(3) of this

section.

* * * * *

§ 86.1711–97 [Redesignated as § 86.1711–

99 and Amended]

21. Section 86.1711–97 is

redesignated as § 86.1711–99 and

amended by removing and reserving

paragraph (b).

§ 86.1712–97 [Redesignated as § 86.1712

and Amended]

22. Section 86.1712–97 is

redesignated as § 86.1712–99 and

amended by revising paragraphs

(a)(2)(iii), (b)(1), and (b)(3)(vi), to read as

follows:
986 Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations

§ 86.1712–99 Maintenance of records;

submittal of information.

(a) * * *

(2) * * *

(iii) EPA engine family, or if

applicable for model year 1999 or 2000,

the California engine family;

* * * * *

(b) * * *

(1) Each covered manufacturer shall

submit an annual report. Except as

provided in paragraph (b)(2) of this

section, the annual report shall contain,

for each averaging set, the fleet average

NMOG value achieved, all values

required to calculate the NMOG value,

the number of credits generated or

debits incurred, and all the values

required to calculate the credits or

debits. For each applicable region (NTR

and ASTR), the annual report shall

contain the resulting balance of credits

or debits.

* * * * *

(3) * * *

(vi) Region (NTR or ASTR) to which

the credits belong.

* * * * *

§ 86.1713–97 [Redesignated as § 86.1713–

99]

23. Section 86.1713–97 is

redesignated as § 86.1713–99.

§ 86.1714–97 [Redesignated as § 86.1714–

99]

24. Section 86.1714–97 is

redesignated as § 86.1714–99.

§ 86.1716–97 [Redesignated as § 86.1716–

99 and Amended]

25. Section 86.1716–97 is

redesignated as § 86.1716–99 and

amended by removing and reserving

paragraph (b).

§ 86.1717–97 [Redesignated as § 86.1717–

99 and Amended]

26. Section 86.1717–97 is

redesignated as § 1717–99 and amended

by revising the section heading, to read

as follows:

§ 86.1717–99 Emission control diagnostic

system for 1999 and later light-duty

vehicles and light-duty trucks.

* * * * *

§ 86.1721–97 [Redesignated as § 86.1721–

99]

27. Section 86.1721–97 is

redesignated as § 86.1721–99.

§ 86.1723–97 [Redesignated as § 86.1723–

99]

28. Section 86.1723–97 is

redesignated as § 86.1723–99 and is

revised to read as follows:

§ 86.1723–99 Required data.

The provisions of § 86.096–23 and

subsequent model year provisions apply

to this subpart, with the following

exceptions and additions:

(a) The provisions of § 86.096–23(c)(1)

and subsequent model year provisions

apply to this subpart, with the following

addition:

(1) For all TLEVs, LEVs, and ULEVs

certifying on a fuel other than

conventional gasoline, manufacturers

shall multiply the NMOG exhaust

certification level for each emission-data

vehicle by the appropriate reactivity

adjustment factor listed in

§ 86.1777(d)(2)(i) or established by the

Administrator pursuant to Appendix

XVII of this part to demonstrate

compliance with the applicable NMOG

emission standard. For all TLEVs, LEVs,

and ULEVs certifying on natural gas,

manufacturers shall multiply the NMOG

exhaust certification level for each

emission-data vehicle by the

appropriate reactivity adjustment factor

listed in § 86.1777(d)(2)(i) or established

by the Administrator pursuant to

Appendix XVII of this part and add that

value to the product of the methane

exhaust certification level for each

emission-data vehicle and the

appropriate methane reactivity

adjustment factor listed in

§ 86.1777(d)(2)(ii) or established by the

Administrator pursuant to Appendix

XVII of this part to demonstrate

compliance with the applicable NMOG

emission standard. Manufacturers

requesting to certify to existing

standards utilizing an adjustment factor

unique to its vehicle/fuel system must

follow the data requirements described

in Appendix XVII of this part. A

separate formaldehyde exhaust

certification level shall also be provided

for demonstrating compliance with

emission standards for formaldehyde.

(2) [Reserved]

(b) The provisions of § 86.096–23(l)

introductory text and subsequent model

year provisions do not apply to this

subpart. The following shall instead

apply to this subpart:

(1) Additionally, manufacturers

certifying vehicles shall submit for each

model year 2001 through 2004 lightduty vehicle and light light-duty truck

engine family, the information listed in

§ 86.096–23(l)(1) and (2). If applicable,

manufacturers shall also submit

‘‘Alternative or Equivalent Phase-in

Schedules’’ before or during calendar

year 2001 for light-duty vehicles and

light light-duty trucks.

(2) [Reserved]

(c) In addition to the provisions of

§ 86.096–23 and subsequent model year

provisions, the following requirements

shall apply to this subpart:

(1) For each engine family certified to

TLEV, LEV, or ULEV standards,

manufacturers shall submit with the

certification application, an engineering

evaluation demonstrating that a

discontinuity in emissions of nonmethane organic gases, carbon

monoxide, oxides of nitrogen and

formaldehyde measured on the Federal

Test Procedure (subpart B of this part)

does not occur in the temperature range

of 20 to 86 deg F. For diesel vehicles,

the engineering evaluation shall also

include particulate emissions.

(2) [Reserved]

§ 86.1724 [Redesignated as § 86.1724–99

and Amended]

29. Section 86.1724–97 is

redesignated as § 86.1724–99 and

amended by revising paragraph (b)

introductory text and adding paragraph

(b)(2), to read as follows:

§ 86.1724–99 Test vehicles and engines.

* * * * *

(b) The provisions of § 86.096–24(b)

and subsequent model year provisions

apply to this subpart with the following

additions:

* * * * *

(2) For vehicles certified to the SFTP

exhaust emission standards, if air

conditioning is projected to be available

on any vehicles within the engine

family, the selection of engine codes

will be limited selections which have

air conditioning available and would

require that any vehicle selected under

this section has air conditioning

installed and operational.

§ 86.1725–97 [Redesignated as § 86.1725–

99 and Amended]

30. Section 86.1725–97 is

redesignated as § 86.1725–99 and

amended by adding paragraph (d), to

read as follows:

§ 86.1725–99 Maintenance.

* * * * *

(d) When air conditioning SFTP

exhaust emission tests are required, the

manufacturer must document that the

vehicle’s air conditioning system is

operating properly and that system

parameters are within operating design

specifications prior to testing. Required

air conditioning system maintenance is

performed as unscheduled maintenance

that does not require the

Administrator’s approval.

§ 86.1726–97 [Redesignated as § 86.1726–

99 and Amended]

31. Section 86.1726–97 is

redesignated as § 86.1726–99 and
Federal Register / Vol. 63, No. 4 / Wednesday, January 7, 1998 / Rules and Regulations 987

amended by revising paragraph (c)(1), to

read as follows:

§ 86.1726–99 Mileage and service

accumulation; emission measurements.

* * * * *

(c) * * *

(1) For vehicles certified to the SFTP

exhaust emission standards, complete

exhaust emission tests will include both

the FTP and the SFTP tests. The

Administrator will accept the

manufacturer’s determination of the

mileage at which the engine-system

combination is stabilized for emission

data testing if (prior to testing) a

manufacturer determines that the

interval chosen yields emissions

performance that is stable and

representative of design intent.

Sufficient mileage should be

accumulated to reduce the possible

effects of any emissions variability that

is the result of insufficient vehicle

operation. Of primary importance in

making this determination is the

behavior of the catalyst, EGR valve, trap

oxidizer or any other part of the ECS

which may have non-linear aging

characteristics. In the alternative, the

manufacturer may elect to accumulate

4,000 mile +/¥250 miles on each test

vehicle within an engine family without

making a determination.

* * * * *

§ 86.1728–97 [Redesignated as § 86.1728–

99]

32. Section 86.1728–97 is

redesignated as § 86.1728–99.

§ 86.1734–97 [Redesignated as § 86.1734–

99]

33. Section 86.1734–97 is

redesignated as § 86.1734–99.

§ 86.1735–97 [Redesignated as § 86.1735–

99]

34. Section 86.1735–97 is

redesignated as § 86.1735–99.

§ 86.1770–97 [Redesignated as § 86.1770–

99 and Amended]

35. Section 86.1770–97 is

redesignated as § 86.1770–99 and

amended by revising paragraph (a)(2), to

read as follows:

§ 86.1770–99 All-Electric Range Test

requirements.

* * * * *

(a) * * *

(2) Driving schedule.

(i) Determination of All-Electric

Range—Highway. At the end of the cold

soak period, the vehicle shall be placed,

either driven or pushed, onto a

dynamometer and operated through an

Urban Dynamometer Driving Schedule,

found in 40 CFR part 86, Appendix I,

until the vehicle is no longer able to

maintain within 5 miles per hour of the

speed requirements or within 2 seconds

of the time requirements of the driving

schedule. For hybrid electric vehicles,

this determination shall be performed

without the use of the auxiliary power

unit.

(ii) Determination of All-Electric

Range—Urban. At the end of the cold

soak period, the vehicle shall be placed,

either driven or pushed, onto a

dynamometer and operated through a

Highway Fuel Economy Driving

Schedule, found in 40 CFR part 600,

Appendix I, until the vehicle is no

longer able to maintain within 5 miles

per hour of the speed requirements or

within 2 seconds of the time

requirements of the driving schedule.

For hybrid electric vehicles, this

determination shall be performed

without the use of the auxiliary power

unit.

* * * * *

§ 86.1771–97 [Redesignated as § 86.1771–

99]

36. Section 86.1771–97 is

redesignated as § 86.1771–99.

§ 86.1772–97 [Redesignated as § 86.1772–

99 and Amended]

37. Section 86.1772–97 is

redesignated as § 86.1772–99 and

amended by revising the section

heading, to read as follows:

§ 86.1772–99 Road load power, test

weight, and inertia weight class

determination.

* * * * *

§ 86.1773–97 [Redesignated as § 86.1773–

99 and Amended]

38. Section 86.1773–97 is

redesignated as § 86.1773–99 and

amended by adding paragraph (d), to

read as follows:

§ 86.1773–99 Test sequence; general

requirements.

* * * * *

(d) A manufacturer has the option of

simulating air conditioning operation

during testing at other ambient test

conditions provided it can demonstrate

that the vehicle tailpipe exhaust

emissions are representative of the

emissions that would result from the

SC03 cycle test procedure and the

ambient conditions of paragraph

86.161–00. The Administrator has

approved two optional air conditioning

test simulation procedures, AC1 and

AC2, for the 2001 to 2003 model years

only. If a manufacturer desires to

conduct an alternative SC03 test

simulation other than AC1 and AC2, or

the AC1 and AC2 simulations for the

2004 and subsequent model years, the

simulation test procedure must be

approved in advance by the

Administrator.

§§ 86.1774–97 through 86.1780–97

[Redesignated as §§ 86.1774–99 through

86.1780–99]

39. Section 86.1774–97 is

redesignated as § 86.1774–99.

40. Section 86.1775–97 is

redesignated as § 86.1775–99.

41. Section 86.1776–97 is

redesignated as § 86.1776–99.

42. Section 86.1777–97 is

redesignated as § 86.1777–99.

43. Section 86.1778–97 is

redesignated as § 86.1778–99.

44. Section 86.1779–97 is

redesignated as § 86.1779–99.

45. Section 86.1780–97 is

redesignated as § 86.1780–99.

Appendix XVIII to part 86 [Amended]

46. Appendix XVIII to part 86 is

amended by redesignating the second of

the two paragraphs currently designated

as (b)(3) as paragraph (b)(4).

[FR Doc. 97–33314 Filed 12–31–97; 8:45 am]

BILLING CODE 6560–50–P