# Tier 3 K ey Pr ogr am Issues

Dec ember

3, 2013

Deliber ative -- Do not cite or q uote 1

# Brie fing Ov er vie w  

### Lead - time/Start

Date  Ve hicle Progr am  Fuel Progr am 

###  

### Re fi ner y Gat e Sulfur

Cap  

### Ce rtif icationFu el  

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

### Small Vo lume Manufactur ers (SVMs)  

### Schedulea nd N ext

St eps Deliber ative -- Do not cite or q uote 2

# Lead Time Backgr ound  

### Timing of

t hep ro posed Tier

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

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

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

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

NAA QS at tainment

a nd maint enanc e 

###  

### Pr oposed  10 ppms ulfur

beginning 1/1/201 7  Lig ht - duty

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

t ruck and hea

vy - duty ve hicle s tandar ds beginning withMY2018

Deliber ative -- Do not cite or q uote 3

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

Deliber ative -- Do not cite or q uote 4

# Ve hicle Lead Time  

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

plansto s upport

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

###  

### CleanA ir

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

and application of

requisite te chnology, considering co mplianc e co sts

Deliber ative -- Do not cite or q uote 5

# Ve hicle R egula to ry Classes

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

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

Deliber ative -- Do not cite or q uote Light - duty V ehicles Heavy - duty V ehicles

6

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

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

### <6,000 lbs:  

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

###  

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

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

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

inal standar ds, with

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

# EP A Appr oach f or Final Rule  

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

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

s o s tring ent

t hat OEMs ha

ve to p ro duc e an y o f cleanest

vehicles immediat el

y  Tier 3 includes a 9 - ye ar

p hase - ino f the f

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

u se d uring the e ar ly ye ars o f the p ro gr am Deliber ative -- Do not cite or q uote 8

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

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

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

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

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

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

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

a nni ve rsary o f rule s ignature, and thus A lt ernati ve O ption wo uld typically a pply i n MY2019 Deliber ative -- Do not cite or q uote 9

# Tier 3 Fuels Lead Time/St art Da te

Deliber ative -- Do not cite or q uote 10

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

### 1/1/201 7 start

d at e, but

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

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

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

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

3 in201 7 - 19  Re fi ners ha

ve a ra ng e of

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

e xisting units 

###  

### 3 - ye ar d ela y for ~31 small re fi ners & small vo lume re fi neries  

### Te chnical and ec onomichar dship p rov isions a s a failsafe Deliber ative -- Do not cite or q uote 11

# EP A R esponse t o Fuel Indus try Commen ts on Lead Time  

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

### Howe ve r...  

### Lead time isn ’t

needed t o d evelop new t echnolog y – hydr otr eating is p rove n a nd we ll established  

### Lead time isn ’t

needed t o identif

y co ntr act ors – re fi neries w ill use t heco ntr act ors s er vicing their e xisting units  

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

icient l ead time to install new equipment

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

t heflexibility

o f AB T Deliber ative -- Do not cite or q uote 12

# Wha t ARE the Lead Time Consider at ions?  

### It is a ll about

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

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

Deliber ative -- Do not cite or q uote 13

# Our Curr en t Thinking f or Final Rule

 

### Thep ro posal pr ov ides a mplelead time

 

### Howe ve r, s omea dditional fl exibility wo uld incr ease co nf idenc e i n t hea ppr opriat eness o f a 1/1/201 7 start d at e

 

### Wea reco nsidering for t hef inal ruletwo a dditional fl exibilities:

 Carr yove r o f Tier

2 “bank ed” cr edits  Lo ng er

d ef icit c arr yforwar d Deliber ative -- Do not cite or q uote 14

# Additional Fle xibility: Tier 2 Cr edits  

## Wea rec onsidering allo wing carr yove r o f Tier 2 cr edits fr om2012 and 2013 int o T ier 3  

### Tier 2 cr edits ha

ve a five - ye ar

l ifef ro m t hep oint

o f ge ner ation  Howe ve r, c re dits g ener at ed in2012 and 2013 that we re n ot used befor e Ja nuar y 1, 201 7 wo uld ex pir e b efor e t he e nd of their f ull lifetime  

### Co mment ers s ugg est ed that we a llo w thesec re dits to re ce ive their

f ull five - ye ar

life, for u seinT ier

3  

### Pr ov ides a dded assur anc e o f a s moothtr ansitionto T ier 3 witha 1/1/201 7 start

d at e  

### Ma y e nc our ag e tr ading to t hoset hat might need cr edits  

### Pr ogr amw ill still befull y p hased inb y 20 20 Deliber ative -- Do not cite or q uote 15

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

## As a har dship re lief

o ption only

, we a lso a re co nsidering allo wing ane xt ended def icit carr yf orwar d period fo r up to 3 ye ars  

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

### Enfor ce ment

c onc erns re quir e t hat

this a llo wanc e be limit ed to har dship s ituations o nly Deliber ative -- Do not cite or q uote 16

# Sulfur Cap

Deliber ative -- Do not cite or q uote 17

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

80 ppm ref

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

on 20 ppm ref

iner y g ate c ap  10 ppmave ra ge witha highc ap  Provides flexibility

in ref iner y o per ations  Re duc es co st; re fi ners p rov ided a s tudy e stimating theco sts o f lo we r caps  Re duc es p otential for

local supply

d isruptions  But a highc ap a lso p ermits bothindividual bat ches o f fuel, as we ll as s ome re fi neries , to re maina t higher levels in - use  Ve hicle manufacturers c ited co nc erns w ith ve hiclete chnolog y  States/NGOs c ited co nc erns w ith higher localized emissions re sulting fr om higher

s ulfur f uel remaining in local markets Deliber ative -- Do not cite or q uote 18

# Final Rule Sulfur Cap  

### Fo r the FRM we int end to maintaint he c urr ent 80 ppmc ap  

### A lo we r cap wo uld re duc e fl exibility a nd lik el y r esult in higher co sts (~10%)  

### Cu rr entl

y d iff icult to p re dict

if i n - use s ulfur

levels wo uld wa rr ant a lo we r cap 

###  

### Onc e implement ed we w ill be a ble to bet te r a ssess t he need for a lo we r c ap  

### EP A will co mmit

int heFRM to further

s tud y in - use sulfur levels a ft er

implementation Deliber ative -- Do not cite or q uote 19

# Certific at ion Fuel

Deliber ative -- Do not cite or q uote 20

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

f uel to bet te r r ef

lect in - use f uel  Cu rrent

c ertif icationte st

f uel is E0 and has f

uel par amet ers re presentati

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

uel toda y is E10 with different

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

o n E10 

###  

### EP A int ends to f

inalizeE 10 for

ce rt fuel  E1 5 is not

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

to m onitor

f or f uture Deliber ative -- Do not cite or q uote 21

# Other Issues

 

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

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

Deliber ative -- Do not cite or q uote 22

# Ve hicle T ailpipe PM St andar ds  

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

p ro ce dur e (aggr essi

ve d ri ving )

 

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

p erformers

 

### Weint end t o s tr engthenp ro posed standar ds, based on te st d ata a nd co mments re ce ived  Pr oposal soug ht

c omment

o n lo we r s tandar ds

Deliber ative -- Do not cite or q uote 23

# Small V olume Manuf actur er s  

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

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

### Based onco mments a nd numer ous meetings w ith SVMs, we int end t o a llo w thr eemor e ye ars to meet t he fi nal standar d and adjust thep ro posed int erimp hase - in

Deliber ative -- Do not cite or q uote 24

# Ne xt St eps  

### Brief ing for int er ag ency

re view ers o n u pdat ed analysis  

### Co st, emissions, air

q uality , benef its 

###  

### Submissiont o OMB inlat e Ja nuar y  

### EP A s ignatur e inlat e Fe bruar y

Deliber ative -- Do not cite or q uote 25