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[Federal Register Volume 61, Number 84 (Tuesday, April 30, 1996)]
[Proposed Rules]
[Pages 19005-19013]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10381]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 59

[AD-FRL-5463-6]
RIN 2060-AE35

National Volatile Organic Compound Emission Standards for 
Automobile Refinish Coatings

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule and notice of public hearing.

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SUMMARY: The EPA proposes standards to reduce emissions of volatile 
organic compounds (VOC) from the use of automobile refinish coatings. 
The proposed standards are in the first phase of implementation of the 
portion of the Clean Air Act (Act) that requires the Administrator to 
control VOC emissions from certain categories of consumer and 
commercial products.
    Exposure to ozone is associated with a wide variety of human health 
effects, agricultural crop loss, and damage to forests and ecosystems. 
As required by section 183(e) of the Act, the Administrator conducted a 
study to determine the potential of consumer and commercial products to 
contribute to ozone levels that violate the National Ambient Air 
Quality Standards (NAAQS) for ozone. Because the automobile refinish 
coatings category is a significant source of VOC emissions, the EPA is 
proposing standards to reduce emissions from this source.

DATES: Comments. Comments must be received on or before July 1, 1996.
    Public Hearing. A public hearing will be held, if requested. If 
anyone contacts the EPA requesting to speak at a public hearing by May 
21, 1996, a public hearing will be held on May 30, 1996, beginning at 
9:00 a.m.
    Request to Speak at Hearing. Persons wishing to present oral 
testimony must contact Ms. Marguerite Thweatt at the EPA by May 21, 
1996.

ADDRESSES: Comments. Comments should be submitted (in duplicate) to: 
Air and Radiation Docket and Information Center (6102), Attention: 
Docket No. A-95-18, U.S. Environmental Protection Agency, 401 M Street, 
SW, Washington, DC 20460.
    Public Hearing. Persons interested in attending the hearing should 
notify Ms. Marguerite Thweatt, (919) 541-5607, to verify that a hearing 
will occur and for notification of the location of the meeting.
    Request to Speak at Hearing. To present oral testimony contact Ms. 
Thweatt at the following address: Organic Chemicals Group (MD-13), U.S. 
Environmental Protection Agency, Research Triangle Park, North Carolina 
27711, telephone number (919) 541-5607, FAX number (919) 541-3470.
    Docket. Docket No. A-95-18, containing supporting information used 
in developing the proposed standards, is available for public 
inspection and copying between 8:30 a.m. and 3:30 p.m., Monday through 
Friday, at the EPA's Air and Radiation Docket and Information Center, 
Waterside Mall, Room M-1500, 1st Floor, 401 M Street, SW, Washington, 
DC 20460, telephone (202) 260-7548, FAX (202) 260-4400. The proposed 
regulatory text and other materials related to this rulemaking are 
available for review in the docket. A reasonable fee may be charged for 
copying.
    Background Information Document. The background information 
document (BID) supporting the proposed standards may be obtained from 
the docket or

[[Page 19006]]

from the U.S. EPA Library (MD-35), Research Triangle Park, North 
Carolina 27711, telephone number (919) 541-2777. Please refer to 
``Automobile Refinish Coatings--Background Information for Proposed 
Standards,'' EPA-453/D-95-005a.

FOR FURTHER INFORMATION CONTACT: For information concerning the 
proposed standards, contact Mr. Mark Morris at (919) 541-5416, Organic 
Chemicals Group, Emission Standards Division (MD-13), U.S. 
Environmental Protection Agency, Research Triangle Park, North Carolina 
27711.

SUPPLEMENTARY INFORMATION: The regulatory text of the proposed rule is 
not included in this Federal Register notice, but is available in 
Docket No. A-95-18 (see ADDRESSES for information about the docket). 
The proposed regulatory language is also available on one of the EPA's 
Technology Transfer Network (TTN) electronic bulletin boards. The TTN 
provides information and technology exchange in various areas of air 
pollution control. The service is free, except for the cost of a phone 
call. Dial (919) 541-5742 for up to a 14,400 bits per second (bps) 
modem. If more information on the TTN is needed, call the help desk at 
(919) 541-5384.
    The information presented in this preamble is organized as follows:

I. Background
    A. Clean Air Act Requirements
    B. Legislative Authority
    C. Regulatory Background
    D. Supporting Documentation for the Proposed Standards
II. Summary of Proposed Standards
    A. Applicability of the Standards
    B. Regulated Entities
    C. Standards
    D. Compliance Requirements
    E. Labeling Requirements
    F. Reporting
    G. Variance
    H. Test Methods
III. Summary of Impacts
    A. Environmental Impacts
    B. Energy Impacts
    C. Cost and Economic Impacts
    D. Cost-Effectiveness
IV. Rationale
    A. Applicability
    B. Selection of BAC
    C. Selection of Regulatory Format
    D. Labeling Requirements
    E. Selection of Reporting Requirements
    F. Variance
    G. Test Methods
    H. Solicitation of Comments
V. Administrative Requirements
    A. Public Hearing
    B. Executive Order 12866
    C. Paperwork Reduction Act
    D. Regulatory Flexibility Act
    E. Unfunded Mandates Reform Act

I. Background

A. Clean Air Act Requirements

    Exposure to ground-level ozone is associated with a wide variety of 
human health effects, agricultural crop loss, and damage to forests and 
ecosystems. The most thoroughly studied health effects of exposure to 
ozone at elevated levels during periods of moderate to strenuous 
exercise are the impairment of normal functioning of the lungs, 
symptomatic effects, and reduction in the ability to engage in 
activities that require various levels of physical exertion. Typical 
symptoms associated with acute (1 to 3 hour) exposure to ozone at 
levels of 0.12 ppm or higher under heavy exercise or 0.16 ppm or higher 
under moderate exercise include cough, chest pain, nausea, shortness of 
breath, and throat irritation.
    Ground-level ozone, which is a major component of ``smog,'' is 
formed in the atmosphere by reactions of VOC and oxides of nitrogen 
(NOX) in the presence of sunlight. In order to reduce ground-level 
ozone levels, emissions of VOC and NOX must be reduced.
    Section 183(e) of the Act requires the Administrator to study and 
report to Congress on emissions of VOC into the ambient air from 
consumer and commercial products and their potential to contribute to 
ozone nonattainment levels. In addition, section 183(e) requires the 
Administrator to list those categories of consumer and commercial 
products that account for at least 80 percent of the VOC emissions, on 
a reactivity-adjusted basis, in ozone nonattainment areas and establish 
priorities for their regulation. The list is to be divided into four 
groups, with one group regulated every 2 years until all four groups 
are regulated.
    The EPA submitted the Report to Congress on March 15, 1995, and on 
this same date established the priority list for future regulation of 
the consumer and commercial products that account for 80 percent of VOC 
emissions, on a reactivity-adjusted basis, in nonattainment areas 
(published on March 23, 1995, at 56 FR 15264). Automobile refinish 
coatings are in the first group of products to be regulated by March 
1997. This listing and prioritization are not final Agency actions, and 
EPA requests comment on the placement of automobile refinish coatings 
on the list and the priority assigned to these coatings. Further 
details about the study and the listing are available in the March 23, 
1995, Federal Register.

B. Legislative Authority

    Section 183(e) of the Act gives the EPA the authority to establish 
national standards to reduce VOC emissions from automobile refinish 
coatings. According to the Act, regulations developed under this 
section shall require best available controls (BAC). Best available 
controls are defined in section 183(e)(1)(A) as follows:

    The term ``best available controls'' means the degree of 
emissions reduction that the Administrator determines, on the basis 
of technological and economic feasibility, health, environmental, 
and energy impacts, is achievable through the application of the 
most effective equipment, measures, processes, methods, systems, or 
techniques, including chemical reformulation, product or feedstock 
substitution, repackaging, and directions for use, consumption, 
storage, or disposal.

Section IV.B describes the EPA's determination of BAC for the proposed 
regulation.
    The EPA could satisfy the requirements of section 183(e) by issuing 
Control Techniques Guidelines (CTG) instead of a national rule for 
automobile refinish coatings.
    Section 183(e)(3)(C) states:

    For any consumer or commercial product the Administrator may 
issue control techniques guidelines under this Act in lieu of 
regulations required under subparagraph (A) if the administrator 
determines that such guidance will be substantially as effective as 
regulations in reducing emissions of volatile organic compounds 
which contribute to ozone levels in areas which violate the national 
ambient air quality standard for ozone.

In many cases, CTG's can be effective regulatory approaches to reduce 
emissions of VOC in nonattainment areas--with the advantage of not 
imposing control costs on attainment areas, where VOC emissions 
reductions may be less beneficial. On the other hand, rules based on 
CTG's may impose requirements and costs in nonattainment areas that are 
beyond those of a national rule. For example, State automobile refinish 
rules require recordkeeping by body shops, while the national rule does 
not.
    The EPA can also use other systems of regulation. According to 
section 183(e)(4), EPA can consider ``any system or systems of 
regulation as the Administrator deems appropriate, including 
requirements for registration and labeling, self-monitoring and 
reporting, prohibitions, limitations, or economic incentives (including 
marketable permits and auctions of emissions rights) concerning the 
manufacture, processing, distribution, use, consumption or disposal of 
the

[[Page 19007]]

product.'' The EPA solicits comments on alternative approaches to 
regulation in section IV.H.

C. Regulatory Background

    Automobile refinish coatings are included under the definition of 
consumer and commercial products since the definition under section 
183(e) of the Act specifically includes paints, coatings, and solvents. 
Section 183(e) of the Act requires that the first group of consumer and 
commercial products (i.e., those with highest priority for regulation) 
be regulated within 2 years after publication of the regulatory 
schedule. As mentioned previously, automobile refinish coatings are in 
the first group of consumer and commercial products to be regulated. 
The regulation is required by March 1997. The criteria which contribute 
to the prioritization of automobile refinish coatings in the first 
group of consumer and commercial products to be regulated include the 
availability of alternatives, the cost-effectiveness of controls, and 
the VOC emissions in ozone nonattainment areas. Further details about 
the criteria used to prioritize consumer and commercial product 
categories for regulation are available in the Report to Congress.
    Automobile refinish coating regulations are in place or under 
development in a number of States. For the companies that market 
automobile refinish coatings nationwide, trying to fulfill the 
differing requirements of State rules has created administrative, 
technical, and marketing problems. A Federal rule is expected to 
provide some degree of consistency, predictability, and administrative 
ease for the industry.
    In addition, State representatives have recommended that the EPA 
develop and implement nationwide Federal control measures to enhance 
enforceability and conserve State resources.

D. Supporting Documentation for the Proposed Standards

    The automobile refinish coating background information document 
(BID) (EPA publication number EPA-453/D-95-005a) contains supporting 
documentation for this proposal. It contains a product category 
description, an industry profile, a discussion of control measures and 
their associated costs, and a description of the expected emissions 
reductions. Other supporting information for this proposed regulation 
includes existing State regulations, meeting summaries, and the report 
to Congress on consumer and commercial products. This information is 
contained in the docket and is available to the public as described 
above.

II. Summary of Proposed Standards

    The proposed standards are summarized below. The rationale for the 
regulatory decisions made in developing these standards is provided in 
section IV.

A. Applicability of the Standards

    The provisions of this proposed rule apply to automobile refinish 
coatings that are manufactured or imported for sale or distribution in 
the United States.
    The proposed standards do not apply to the following automobile 
refinish coatings:
    (1) Coatings manufactured exclusively for sale outside the United 
States;
    (2) Coatings manufactured or imported before the compliance date of 
the rule;
    (3) Coatings manufactured for use by original equipment 
manufacturers for assembly-line coating operations; and
    (4) Coatings supplied in nonrefillable aerosol containers.

B. Regulated Entities

    Regulated entities are defined under section 183(e) to include 
manufacturers, processors, wholesale distributors, and importers. This 
proposed rule limits the VOC contents of coatings manufactured or 
imported for use in this country. Since the distribution of coatings 
has no effect on whether compliant coatings are used, distributors are 
not regulated entities under this proposed rule.

C. Standards

    Coatings subject to this proposed rule shall comply with the VOC 
content standards listed in table 1. If a coating is marketed under 
more than one of the listed coating categories, the coating shall 
comply with the lowest applicable VOC content standard.

    Table 1.--VOC Content Standards for Automobile Refinish Coatings    
------------------------------------------------------------------------
             Coating Category                VOC Contenta (grams/liter) 
------------------------------------------------------------------------
Pretreatment Wash Primer..................  780                         
Primer/Primer Surfacer....................  575                         
Primer Sealer.............................  550                         
Single/2 Stage Topcoats...................  600                         
Topcoats of 3 or more stages..............  625                         
Specialty Coatingsb.......................  840                         
------------------------------------------------------------------------
aVOC content means the amount of VOC in a coating that has been prepared
  for application according to the manufacturer's mixing instructions,  
  excluding water and exempt compounds.                                 
bSpecialty coatings include adhesion promoters, anti-glare/safety       
  coatings, bright metal trim repair coatings, elastomeric materials,   
  impact-resistant coatings, rubberized asphaltic underbody coatings,   
  uniform finish blenders, and weld-through primers.                    

D. Compliance Requirements

    The compliance date of the rule is 4 months after the promulgation 
date of the rule.

E. Labeling Requirements

    Containers of all subject coatings must bear labels or lids that 
include the date of manufacture of the contents or a code indicating 
the date of manufacture.

F. Reporting

    Manufacturers and importers of coatings subject to the proposed 
standards must file an initial report. The initial report must be 
submitted by the compliance date or within 180 days after becoming 
subject to the rule, whichever is later. The initial report must 
include the following information:
    (1) The name and mailing address of the manufacturer or importer.
    (2) In cases where codes are used to represent the date of 
manufacture, the manufacturer or importer shall submit an explanation 
of each date code to the Administrator. An explanation of any new date 
codes shall be filed with the Administrator no later than 30 days after 
it is first introduced into commerce.

G. Variance

    The proposed rule allows manufacturers and importers of automobile 
refinish coatings to submit a written application to the Administrator 
requesting a variance if, for reasons beyond their reasonable control, 
they cannot comply with the requirements of the proposed rule. The 
application must include the following information:
    (1) The specific grounds for which the variance is sought;
    (2) The proposed date(s) by which compliance with the provisions of 
the rule will be achieved; and
    (3) A compliance report reasonably detailing the method(s) by which 
compliance will be achieved.
    Upon receipt of the variance application, the Administrator will 
hold a public hearing to determine whether, under what conditions, and 
to what extent, a variance from the requirements of the proposed rule 
is necessary and will be permitted.
    The Administrator may grant a variance if the following criteria 
are met:
    (1) By complying with the proposed rule, the applicant would bear 
unreasonable economic hardship;
    (2) The public benefit of avoiding hardship to the applicant 
outweighs the public interest in any increased emissions or air 
contaminants that would result from issuing the variance; and

[[Page 19008]]

    (3) The proposed compliance schedule can be reasonably implemented, 
and compliance will be achieved as expeditiously as possible.
    The approved variance order will designate a final compliance date 
and a condition that specifies increments of progress necessary to 
assure timely compliance. A variance shall end immediately upon the 
failure (of the party to whom the variance was granted) to comply with 
any term or condition of the variance.

H. Test Methods

    For purposes of determining compliance with this rule, the VOC 
content of each coating product manufactured or imported must be 
determined using EPA's Reference Method 24--``Determination of Volatile 
Matter Content, Water Content, Density, Volume Solids, and Weight 
Solids of Surface Coatings,'' found in 40 CFR part 60, appendix A. 
Analysis of waterborne coating VOC content determined by Reference 
Method 24 must be adjusted as described in section 4.4 of Reference 
Method 24.
    The Administrator may approve, on a case-by-case basis, alternative 
methods of determining the VOC content of coatings if they are 
demonstrated to the Administrator's satisfaction to provide results 
equivalent to those obtained using Reference Method 24.

III. Summary of Impacts

A. Environmental Impacts

    This section will discuss the incremental increase or decrease in 
air pollution, water pollution, and solid waste generation that would 
result from implementing the proposed standards.
1. Air Pollution Impacts
    The proposed standards would reduce nationwide emissions of VOC 
from the use of automobile refinish coatings by an estimated 32,500 Mg 
(35,800 tons) in 1996. These reductions are compared to 1995 baseline 
emissions estimates. Since many regulated VOC species are also on the 
list of hazardous air pollutants (HAP) in section 112 of the Act, the 
proposed rule is expected to reduce some HAP emissions from the use of 
automobile refinish coatings.
2. Water and Solid Waste
    There are no adverse solid waste impacts anticipated from 
compliance with this rule. It is not expected that the disposal of 
coatings as solid waste will increase as a result of this rule. In 
fact, because the compliant (higher solids) coatings are more 
concentrated, fewer containers will require disposal when the same 
volume of solids is applied.
    In cases where conversion from solventborne to waterborne coatings 
is the method used to achieve compliance, an increase in wastewater 
discharge may occur if waste waterborne coatings are discharged to 
publicly owned treatment works.

B. Energy Impacts

    There are no adverse energy impacts anticipated from compliance 
with this rule. Compliant coatings will not require different 
application equipment and no add-on controls are required.

C. Cost and Economic Impacts

    The total cost of this rule includes coating manufacturer process 
modification costs, and costs for training coating manufacturer 
representatives, distributors, and body shop personnel. The EPA 
believes that coatings that meet the VOC content limits of this 
proposed rule do not have longer drying times than conventional 
coatings; therefore, the EPA has not included costs for lost 
productivity in this rule. The EPA requests comments and data regarding 
the drying times of coatings compliant with this proposed rule, and any 
information that indicates that there may be costs due to losses in 
productivity. The annual cost of this rule is 4.5 million dollars, or 
about $140 per megagram of VOC emissions reductions.
    If the manufacturer and distributor costs are completely passed on 
as a coating price increase, the price of coatings is estimated to 
increase less than 10 cents per gallon (less than 0.2 percent). If the 
total cost of the rule is passed on as an increase in the price of a 
refinish job, the price is estimated to increase less than 30 cents per 
job (less than 0.05 percent).

D. Cost-Effectiveness

    The EPA often compares the relative cost of different measures for 
controlling a pollutant by calculating the ``cost-effectiveness'' of 
the measures. Using EPA's traditional calculation methodology, the 
cost-effectiveness of a regulation that applies nationwide is based on 
a comparison of national costs and nationwide emission reductions. This 
comparison is expressed as the cost per megagram (or ton) of emissions 
reduced. Using cost and emission reduction figures presented earlier in 
this section of the preamble, the nationwide cost-effectiveness of the 
proposed regulation is $140/Mg ($130/ton).
    Alternative ways to calculate a measure of the ``cost-
effectiveness'' of the regulation have been suggested by others. One 
alternative would be to calculate cost-effectiveness on the basis of 
the nationwide cost of the regulation ($4.5 million for the proposed 
regulation) and the VOC reduction achieved in ozone nonattainment 
areas. The stated rationale for this approach is that cost-
effectiveness measures should be designed in a way that best represents 
the objective of the regulatory action. In this case, for example, a 
major objective, though not the only objective, of these regulations is 
the control of ozone formation in nonattainment areas. By establishing 
nationwide standards, the cost of achieving emission reductions in 
ozone nonattainment areas during the ozone seasons requires nationwide 
expenditures during all seasons of the year, including expenditures 
year-round in areas currently in attainment with the current standard. 
These nationwide emission reductions--including emission reductions 
outside of nonattainment areas and out of the ozone season--may or may 
not contribute to efforts to limit ozone in nonattainment areas, 
depending on whether they participate in ozone transport from one area 
to another. One example of the application of this method is presented 
in a December 21, 1993, draft Regulatory Impact Analysis developed by 
the EPA's Office of Mobile Sources (OMS) in which control of emissions 
from refueling of light duty vehicles (i.e., onboard refueling vapor 
recovery, or ORVR) could viably be applied either nationwide or in 
nonattainment areas alone. In this example, regional regulation 
represented an important alternative to national regulation. The OMS 
calculated cost-effectiveness using (1) nationwide costs and nationwide 
emission reductions, as well as (2) nationwide costs and the emission 
reductions achieved in nonattainment areas.
    Emissions from automobile refinish coatings used in nonattainment 
areas have been estimated. On a nonattainment area basis, the cost-
effectiveness of the proposed automobile refinish coatings rule would 
be $300/Mg ($280/ton). A similar calculation could be done to account 
for the seasonality of ozone formation.
    While such an approach offers a measure of the cost of emission 
reductions in nonattainment areas, EPA sees significant drawbacks to 
this approach. First, cost-effectiveness figures would no longer 
provide a consistent basis for comparison of the relative cost of 
different control measures or regulations considered at different 
points in time. Because the number and location of nonattainment areas 
changes frequently, the initial

[[Page 19009]]

calculation of the cost-effectiveness of a rule would depend upon when 
it was issued. The EPA believes it is important that cost-effectiveness 
be calculated in a consistent manner that allows for valid comparisons. 
Also, introducing new methodology would tend to make new control 
measures appear superficially to be less cost-effective than measures 
utilized in the past, simply because of a change in well-established 
terminology.
    Second, this alternative approach attributes all costs of the rule 
to emission reductions achieved in nonattainment areas and no cost to 
emission reductions achieved in attainment areas. By not including 
emission reductions in attainment areas, the methodology assumes that 
emission reductions in areas which attain the NAAQS for ozone have no 
value. In fact, attainment areas often contribute to pollution problems 
in nonattainment areas through the transport of emissions downwind. 
Also, emission reductions in attainment areas help to maintain clean 
air as the economy grows and new pollution sources come into existence. 
Furthermore, measures to reduce emissions of VOC often reduce emissions 
of toxic air pollutants.
    Another alternative that has been suggested would be to calculate 
not only the emission reductions but also the cost if the requirements 
applied only in ozone nonattainment areas, perhaps through issuance of 
a Control Techniques Guideline (CTG). The EPA has not estimated the 
cost of using a CTG to regulate only those products sold for use in 
ozone nonattainment areas.
    The EPA is planning to review internally the generic question of 
the alternative approach to measuring costs against emission 
reductions. The results of this review are not available for 
incorporation into this rulemaking. Therefore, the EPA requests 
comments on the traditional and alternative methods discussed above to 
characterize the cost-effectiveness of this and other Section 183(e) 
regulations.

V. Rationale

    The following sections explain the rationale for selecting the 
proposed standards.

A. Applicability

    This proposed rule applies to automobile refinish coatings that are 
manufactured or imported for sale or distribution in the United States. 
Coatings that are currently used for automobile refinishing are also 
used outside the automobile refinish industry. In fact, some of these 
coatings are not labeled specifically as automobile refinish coatings, 
but are labeled generally as primers, basecoats, etc. This proposed 
rule applies only to those coatings that are marketed as automobile 
refinish coatings. Therefore, coating manufacturers define which of 
their coatings are automobile refinish coatings by the way they market 
them. All coatings marketed as automobile refinish coatings are subject 
to this proposed rule; all other coatings are not.
    Automobile refinish coatings were determined to be a significant 
source of VOC emissions in nonattainment areas and were designated for 
regulation under the authority of section 183(e) of the Act. The 
proposed standards do not apply to some types of coatings. There are 
exemptions for exported coatings, coatings manufactured or imported 
before the compliance date, coatings that are sold in nonrefillable 
aerosol containers, and coatings that are manufactured for use by 
original equipment manufacturers (OEM's) for assembly-line coating 
operations.
    The purpose of section 183(e) of the Act is to control VOC 
emissions that contribute to ozone nonattainment in the United States. 
Because exported coatings do not contribute to VOC emissions in the 
United States, and because EPA has no legal or factual basis to impose 
VOC control measures outside the United States, coatings manufactured 
for the explicit purpose of export, and which are in fact exported, are 
exempt from the requirements of the proposed rule.
    An exemption for coatings sold in nonrefillable aerosol containers 
is included in the proposed rule because the EPA is developing a 
separate VOC regulation for these coatings under section 183(e) 
authority.
    Coatings that are manufactured for use by OEM's for assembly-line 
coating operations are exempt from this proposed rule because such 
coatings are significantly different than refinish coatings; OEM's are 
covered by standards promulgated under section 111 of the Act, and will 
be covered by standards promulgated under section 112 of the Act.
    Each coating manufacturer produces coating components, such as 
hardeners, reducers, additives, etc., necessary for the preparation of 
a ``ready-to-spray'' coating. Some coating manufacturers also produce 
components for use in the coatings of other manufacturers; some 
companies do not produce coatings at all, but produce only coating 
components for use in the coatings of other manufacturers. Although 
preparing a coating using only the components and suggested mixing 
ratio of one manufacturer may yield a compliant coating, preparing a 
coating with the components of several manufacturers may not. To be 
effective, this proposed rule may need to apply to all coating 
components; that is, if a coating component manufacturer suggests that 
a coating component may be used for automobile refinishing, and if its 
suggested use would result in the preparation of a noncompliant 
coating, then the coating component manufacturer would be out of 
compliance with the rule. Until recently the EPA was not aware of the 
extent to which coating users combined the components of multiple 
manufacturers. As a result, the EPA has not sufficiently examined how 
to enforce this proposed rule if its applicability were expanded to 
include all automobile refinish coating components, or the impacts that 
the rule would have on the manufacturers who would become affected by 
the rule if its applicability were expanded. The EPA has, therefore, 
limited applicability to coating manufacturers in this proposed rule, 
but is soliciting comments on whether to expand the applicability. 
Based on information received during the comment period, the EPA may 
expand the applicability in the promulgated rule.
    The EPA is aware that the VOC content standards of this proposed 
rule would likely prohibit the manufacture or import of lacquer 
coatings. Lacquers are no longer used on new vehicles, and are mainly 
used by antique car restorers; therefore, the demand for lacquers is 
small and is likely to decrease. Although other coatings are compatible 
with lacquers and may be used to refinish an existing lacquer finish, 
some colors available in lacquer are not available in other coatings. 
Since the production of lacquer topcoats is small and not likely to 
increase, and since they may be necessary to fill a niche in automobile 
refinishing, the EPA is considering exempting lacquer topcoats from the 
proposed rule. Although lacquer topcoat use is not likely to increase, 
an exemption would not prevent it. Therefore, the EPA is also 
considering whether to include lacquer topcoats in the specialty 
coating category (described in section IV.B.) and limit their 
production to a small percentage of total automobile refinish coating 
production. The EPA solicits comments on these issues in section IV.H.; 
based on information received during the public comment period, the EPA 
may, in the promulgated rule, either exempt lacquer topcoats, or

[[Page 19010]]

categorize them as specialty coatings and limit their production.

B. Selection of BAC

    The primary factors considered in determining best available 
controls (BAC) were technological and economic feasibility, and 
environmental impacts. Other impacts, such as nonair environmental 
impacts (solid waste and water) and energy impacts, are expected to be 
minimal. Health impacts are expected to parallel environmental impacts 
in terms of directional benefit (i.e., as environment improves, health 
improves). The EPA relied on existing State and local automobile 
refinish rules, coating product information, and input from the 
automobile refinish industry to determine the availability and 
technological and economic feasibility of coatings.
    The BAC selection process involves both the selection of coating 
categories and the determination of VOC content limits for those 
categories. These components are linked in a determination of what 
degree of emissions reduction represents BAC. Decisions to subdivide a 
given category into more specific ``subcategories'' can be a direct 
consequence of the VOC content levels under consideration. For example, 
pretreatment wash primers etch bare metal surfaces to provide adhesion 
of the coating to the metal. According to coating product information 
there are no pretreatment wash primers that have VOC content levels as 
low as other primers. Therefore, a subcategory was created for this 
primer, along with a VOC content level different from the general 
primer category. Similarly, a subcategory was created for topcoats of 
three (or more) stages because coating information indicates that there 
are no such coatings with VOC content levels as low as those of other 
topcoats.
    ``Specialty coatings'' that serve specific functions and that 
either do not belong in other coating categories or are not available 
at the VOC content limits of those categories are included in a 
separate category. This category includes coatings that are designed 
for a specific use, and coatings of other categories that are modified 
by changing the components of the coating. In this proposed rule, all 
coatings that the EPA considers specialty coatings are defined. It may 
not be possible to determine all of the specialty coatings that may be 
needed in the future as new OEM coatings are developed; therefore, an 
open-ended definition of specialty coatings is desirable. However, such 
a definition could be abused by simply renaming existing coatings as 
specialty coatings. Even with a closed definition, the specialty 
coating category may have undesirable effects. For example, an 
elastomeric coating is a specialty coating. Some flexible topcoats, 
which are considered elastomeric coatings, are prepared simply by 
adding a flexible hardener in place of the normal hardener. In this 
case, the specialty coating category would allow topcoats to be used 
that exceed the VOC content standard for topcoats.
    Limiting the production of specialty coatings to a small percentage 
of total automobile refinish coating production may be effective in 
minimizing the problems associated with this category. However, as 
mentioned above, some specialty coatings are just modifications of 
other coatings, and it is unclear what the EPA would be limiting. 
Limiting specialty coating production to a percentage of total 
production would adversely affect manufacturers that are mainly in the 
specialty coating business. The EPA is considering limiting the 
production of specialty coatings, and is soliciting comments on how to 
determine such limits and how they can be made enforceable. Based on 
information received during the public comment period, the EPA may 
include specialty coating production limits in the promulgated rule.
    The process of determining BAC began with the examination of State 
and local automobile refinish rules. The EPA focused on existing 
coating categories and their associated VOC standards in State and 
local rules to determine which categories and VOC content limits might 
constitute the degree of emissions reduction that represents BAC. 
Specifically, California rules were analyzed because California has 
been regulating automobile refinish coatings for several years and 
generally has the most stringent VOC standards in the country.
    The VOC limits of California rules are typically met with 
waterborne coatings. Coating manufacturers have stated that they would 
need to modify their production facilities to supply the entire country 
with waterborne coatings. Such modifications reportedly include the 
replacement of carbon steel equipment with corrosion-resistant 
materials. Although not usually necessary in the relatively dry climate 
of California, in some geographic areas of the country waterborne 
coatings would likely require forced drying with supplemental heating 
equipment (such as heated spray booths or infrared heating lamps) 
because of their longer drying times.
    In geographic areas without existing automobile refinish rules, 
solventborne coatings are typically used that have relatively high VOC 
content levels; these coatings are sometimes referred to as 
``conventional'' coatings. Conventional coatings are typically fast-
drying and, therefore, do not need to be force-dried. There is not a 
continuous spectrum of coating VOC content levels; coatings with the 
lowest VOC content levels (such as waterborne coatings) were developed 
to comply with State and local rules. Conventional coatings (that have 
the highest VOC content levels) were developed to satisfy the demand 
for fast-drying coatings that are easy to use. However, between these 
extremes there exist coatings that have VOC content levels that are 
lower than those of conventional coatings, that are not significantly 
harder to use or slower to dry than conventional coatings, and that do 
not require the forced drying or extensive coating manufacturer process 
modifications of the coatings with the lowest VOC content levels. The 
VOC content limits that are being proposed as BAC in this proposed rule 
are based on such ``medium-solids'' coatings.
    The EPA considered proposing a VOC content standard of 550 grams 
per liter for primers and primer surfacers. Coating product information 
indicates that coatings at this level are available. However, primers 
at this level are not tintable according to the information available 
to the EPA. Tintable primers are available with a VOC content of 575 
grams per liter. When tintable primers are used, less topcoat needs to 
be applied because the tint of the primer assists in achieving the 
final color desired. Since less topcoat is used when tintable primers 
are used, and since the VOC content of topcoats are generally higher 
than 550 grams per liter, VOC emissions reductions are expected to be 
equal or greater when tintable primers are used. The EPA is therefore 
proposing a 575 grams per liter standard for primers and primer 
surfacers. Comments on the proposed standard for primers and primer 
surfacers are solicited in section IV.H.
    Since most of the nation uses conventional coatings, these coatings 
provide a reference point from which to assess technological and 
economic feasibility. The emissions reductions and cost impacts of 
regulatory alternatives considered by the EPA are given in table 2.

[[Page 19011]]

                                  Table 2.--Impacts of Regulatory Alternatives                                  
----------------------------------------------------------------------------------------------------------------
                                           Emissions     Capital     Annual         Cost        Incremental cost
        Regulatory alternative           reductions *    costs 10   costs 10  effectiveness $/  effectiveness $/
                                             Mg/yr        \6\ $      \6\ $           Mg                Mg       
----------------------------------------------------------------------------------------------------------------
BAC...................................          32,500         32          5               140  ................
Beyond BAC............................          36,800        240         34               930             6900 
----------------------------------------------------------------------------------------------------------------
* Baseline emissions are 88,500 Mg/yr.                                                                          

    As previously mentioned, medium-solids coatings do not need to be 
force-dried, and the process modifications of coating manufacturing 
facilities necessary to produce such coatings nationwide are less 
extensive than those needed to produce waterborne coatings. The capital 
cost associated with the use of medium-solids coatings is about 4.5 
million dollars; about 60% of the cost is for the training of coating 
manufacturer and distributor representatives and shop personnel in the 
use of lower-VOC coatings. The cost effectiveness of using medium-
solids coatings is about $140 per megagram; the incremental emissions 
reductions that would be achieved by going beyond (or lower than) the 
VOC content limits of medium-solids coatings would cost about $6900 per 
megagram. Most of this cost (60%) is from the purchase by body shops of 
additional heating equipment necessary to speed the drying of the 
coatings to avoid losses in productivity. Because of these high 
incremental costs, the EPA selected the VOC content limits in Table 1 
as BAC.

C. Selection of Regulatory Format

    In contrast to traditionally regulated stationary sources that emit 
VOC at a specific fixed location (e.g., a manufacturing plant), VOC 
from automobile refinish coatings are emitted wherever the products are 
used. For this reason, regulating at the manufacturer and importer 
level is the most efficient and least burdensome method of regulating 
the VOC content of coatings, and would ultimately impact the VOC 
content of automobile refinish coatings at the distributor and end user 
level.
    The framework EPA chose to implement BAC is VOC content standards. 
Coatings manufactured or imported on or after the effective date must 
comply with the VOC content standards. The EPA will continue to gather 
data with which to evaluate the potential for further emissions 
reductions or alternate frameworks for implementing BAC such as 
economic incentive-type approaches.

D. Labeling Requirements

    The proposed regulation requires that containers for all subject 
coatings display on the label or lid the date of manufacture or a code 
indicating the date of manufacture. This information allows enforcement 
personnel to determine whether a coating was manufactured before or 
after the compliance date.

E. Selection of Reporting Requirements

    The EPA evaluated what reported information would be sufficient to 
ensure compliance with VOC standards within the proposed rule. The 
reporting requirements proposed are necessary to allow determination of 
compliance, and the EPA believes they do not represent an undue burden 
on manufacturers or importers of automobile refinish coatings. 
Compliance with this rule will be determined by periodic random testing 
(EPA Reference Method 24, described below). Therefore, beyond the 
initial report, which serves to identify all manufacturers and 
importers of automobile refinish coatings, there are no reporting 
provisions in this rule (except for reports explaining any new date 
codes and for variances).

F. Variance

    The proposed rule includes a variance provision whereby 
manufacturers and importers of subject automobile refinish coatings may 
apply to the Administrator for a temporary variance from compliance 
with the standards. A variance will be granted if the applicant 
demonstrates that compliance would result in economic hardship, and 
that granting the variance would better serve the public interest than 
would requiring continuous compliance under the conditions of economic 
hardship. The EPA intends for this provision to allow manufacturers and 
importers some flexibility in responding to unforeseen circumstances 
that may cause additional, unanticipated compliance burden. The EPA 
recognizes that certain interruptions in the availability of raw 
materials and or manufacturing processes may affect the manufacturer's 
or importer's ability to continuously comply with the standards. In 
particular, the EPA anticipates that this variance provision will help 
to mitigate impacts to small manufacturers. Small manufacturers are 
likely to have fewer research and development resources, and, 
therefore, will benefit from the allowed variance.

G. Test Methods

    Under the proposed provisions, compliance with the VOC content 
standards is based on the EPA's Reference Method 24. This test method 
represents the EPA's approved protocol for determining the VOC content 
of coatings and is EPA's standard test method for determining the VOC 
content of coatings.
    Standard language allowing use of alternative methods of 
determining VOC content subject to the Administrator's approval is also 
included in the proposed rule.

H. Solicitation of Comments

    The Administrator welcomes comments from interested persons on any 
aspect of the proposed rule, and on any statement in the preamble or 
the referenced supporting documents. The proposed rule was developed on 
the basis of information available to the EPA. The Administrator is 
specifically requesting factual information that may support either the 
approach taken in the proposed standards or an alternate approach.
    The EPA is requesting specific comments and data on several aspects 
of the proposed rule: (1) Alternative approaches to regulation; (2) 
expanding the applicability of the rule to include all automobile 
refinish coating components; (3) limiting production of lacquer 
topcoats, or exempting lacquer topcoats from the rule; (4) determining 
and enforcing specialty coating production limits; and (5) the 
technical and economic feasibility of VOC content levels that are 
higher or lower than the 575 grams/liter standard for primers and 
primer surfacers.
    The EPA anticipates promulgating this rule on an expedited 
schedule. This will benefit States for which VOC reductions from 
automobile refinish coating are critical to their 15 percent rate-of-
progress plans, and help minimize the patchwork of individual State 
automobile refinish coating rules across the country.

[[Page 19012]]

    Comments submitted to the Administrator should contain specific 
proposals and supporting data to allow the EPA to fully evaluate the 
comments. Recommended changes to any of the VOC content standards 
presented in this proposal should include sufficient information for 
the EPA to evaluate the technological and economic feasibility 
associated with such changes. Applicable dates and addresses for the 
submission of comments are included at the beginning of this preamble.

VI. Administrative Requirements

A. Public Hearing

    A public hearing will be held, if requested, to provide opportunity 
for interested persons to make oral presentations regarding the 
proposed regulation in accordance with section 307(d)(5) of the Act. 
Persons wishing to make oral presentation on the proposed regulation 
for automobile refinish coatings should contact the EPA at the address 
given in the ADDRESSES section of this preamble. Oral presentations 
will be limited to 15 minutes each. Any member of the public may file a 
written statement before, during, or within 30 days after the hearing. 
Written statements should be addressed to the Air Docket Section at the 
address given in the ADDRESSES section of this preamble and should 
refer to Docket No. A-95-18.
    A verbatim transcript of the hearing and written statements will be 
available for inspection and copying during normal business hours at 
the EPA's Air Docket Section in Washington, DC (see ADDRESSES section 
of the preamble).

B. Executive Order 12866

    Under Executive Order 12866, the Agency must determine whether a 
regulatory action is ``significant'' and therefore subject to Office of 
Management Budget (OMB) review and the requirements of the Executive 
Order. The Order defines ``significant regulatory action'' as one that 
is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more, 
or adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of the Executive Order, the OMB has notified 
the EPA that it considers this a ``significant regulatory action'' 
within the meaning of the Executive Order. The EPA submitted this 
action to the OMB for review. Any written comments from the OMB to the 
EPA and any written EPA response to those comments will be included in 
Docket No. A-95-18, listed at the beginning of this notice under 
ADDRESSES.

C. Paperwork Reduction Act

    The information collection requirements in this proposed rule have 
been submitted for approval to the Office of Management and Budget 
(OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An 
Information Collection Request (ICR) document has been prepared by EPA 
(ICR No. __) and a copy may be obtained from Sandy Farmer, OPPE 
Regulatory Information Division; U.S. Environmental Protection Agency 
(2136); 401 M Street, S.W.; Washington, DC 20460, or by calling (202) 
260-2740.
    Pursuant to Section 183(e) of the Act, the proposed rule regulates 
VOC emissions from automobile refinish coatings. The only information 
collection requirements of the proposed rule are for labeling and 
reporting. To determine whether a coating is manufactured before or 
after the compliance date of the rule, the date of manufacture, or code 
representing the date, must appear on the coating container. Coating 
manufacturers currently include this information on coating containers. 
The proposed rule requires all coating manufacturers to submit an 
initial report containing their name and mailing address, and an 
explanation of coating date codes, if codes are used to represent the 
date of coating manufacture. Reporting beyond the initial report is 
required only for the explanation of any new date codes used by coating 
manufacturers, and for requests for variances. The information to be 
reported is not of a sensitive nature.
    The EPA estimated the cost and hour burden of the information 
collection requirements of the proposed rule. Burden means the total 
time, effort, or financial resources expended by persons to generate, 
maintain, retain, or disclose or provide information to or for a 
Federal agency. This 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.
    The initial report must be submitted by all coating manufacturers. 
Averaged over a 3 year period, EPA estimates that the initial report 
will require 8 hours to complete, and will be submitted by 10 
respondents annually. Beyond the initial report, EPA estimates that 3 
respondents per year will spend 2 hours each reporting the explanations 
of any new date codes used. The total annual cost of the reporting 
requirements of the proposed rule is $3,200.
    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.
    Comments are requested 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. Send comments on the ICR to the 
Director, OPPE Regulatory Information Division; U.S. Environmental 
Protection Agency (2136); 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. Since OMB is required to make a decision concerning 
the ICR between 30 and 60 days after April 30, 1996, a comment to OMB 
is best assured of having its full effect if OMB receives it by May 30, 
1996. The final rule will respond to any OMB or public comments on the 
information collection requirements contained in this proposal.

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires EPA 
to consider potential impacts of proposed regulations on small business 
``entities.'' A regulatory flexibility analysis (RFA) is required if 
preliminary analysis indicates ``a significant economic impact on a 
substantial number of small entities.''

[[Page 19013]]

    Shops in the autobody refinish industry are classified as small by 
the U.S. Small Business Administration if the entity that owns the shop 
has total sales of less than $3.5 million. Most individual shops are 
small by this criterion if the owning entity has no other sales from 
other shops. Therefore, an RFA was performed and is contained in the 
docket for this proposed rule. Information on the size of manufacturers 
and distributors impacted by this rule is not available, but some small 
entities among manufacturers and distributors may also be affected.
    Several industry trade associations, including the Automotive 
Service Association (ASA) that represents body shops, and the 
Automotive Service Industry Association (ASIA) that represents coating 
distributors, have submitted comments and provided information during 
the development of the national rule. Most of the members of these 
associations are small businesses. The main concerns of these 
associations deal with recordkeeping and VOC content limits. Some 
members of ASA are already subject to State rules that contain VOC 
content limits and recordkeeping at the body shop. The drying times of 
some coatings compliant with State rules are significantly longer than 
those of conventional coatings, which can result in losses in body shop 
productivity. Some shops report that the recordkeeping required under 
some rules is burdensome and time consuming.
    The proposed national rule applies to automobile refinish coating 
manufacturers and importers only, not to body shops or any other users 
of the coatings. After the national rule is effective, only compliant 
coatings will be available for purchase by coating users in this 
country. Since the purpose of most State recordkeeping requirements is 
to demonstrate that body shops are using compliant coatings, some 
States may decide to remove such requirements from their rules after 
the national rule is effective.
    Coatings compliant with the proposed rule do not take significantly 
longer to dry than conventional coatings; therefore, small shops will 
be able to apply compliant coatings without purchasing additional 
equipment.

E. Unfunded Mandates Reform Act

    Section 202 of the Unfunded Mandates Reform Act of 1995 (``Unfunded 
Mandates Act'') (signed into law on March 22, 1995) requires that the 
Agency prepare a budgetary impact statement to accompany any proposed 
or final rule that includes a Federal mandate that may result in 
expenditure by State, local, and tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year. 
Section 203 requires the Agency to establish a plan for obtaining input 
from and informing, educating, and advising any small governments that 
may be significantly or uniquely affected by the rule.
    Under section 205 of the Unfunded Mandates Act, the Agency must 
identify and consider a reasonable number of regulatory alternatives 
before promulgating a rule for which a budgetary impact statement must 
be prepared. The Agency must select from those alternatives the least 
costly, most cost-effective, or least burdensome alternative that 
achieves the objectives of the rule, unless the Agency explains why 
this alternative is not selected or the selection of this alternative 
is inconsistent with law.
    Because the proposed rule is estimated to result in expenditure by 
State, local, and tribal governments or the private sector of less than 
$100 million in any one year, the Agency has not prepared a budgetary 
impact statement or specifically addressed the selection of the least 
costly, most cost-effective, or least burdensome alternative. Because 
small governments will not be significantly or uniquely affected by 
this rule, the Agency is not required to develop a plan with regard to 
small governments.

List of Subjects in 40 CFR Part 59

    Environmental protection, Air pollution control, Automobile 
refinish coatings, Consumer and commercial products, Ozone, Volatile 
organic compound.

    Dated: April 19, 1996.
Carol M. Browner,
Administrator.
[FR Doc. 96-10381 Filed 4-29-96; 8:45 am]
BILLING CODE 6560-50-P
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