[Federal Register Volume 61, Number 2 (Wednesday, January 3, 1996)]
[Rules and Regulations]
[Pages 122-128]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-103]



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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 86 and 88

[AMS-FRL-5347-3]
RIN 2060-AF87


Requirements for Determining Assigned Deterioration Factors for 
Alternative Fuel Vehicles, Amendments to Labelling Requirements for 
Inherently Low-Emission Vehicles, and Related Provisions

AGENCY: Environmental Protection Agency (EPA).

ACTION: Direct final rule (DFRM).

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SUMMARY: This rulemaking promulgates actions to clarify and streamline 
existing regulations for certifiers and purchasers of clean-fuel and/or 
alternative fuel vehicles. This rule reduces the regulatory burden for 
industry, and it is highly accommodating to their concerns. To 
temporarily reduce the certification burden of the emerging industry of 
aftermarket conversions of alternative fuel vehicles, EPA will take 
action in this rule that will provide flexibility in the regulations 
for the determination of assigned deterioration factors for alternative 
fuel vehicles.
    To encourage the production of Inherently Low-Emission Vehicles 
(ILEVs), this rule also promulgates an amendment to allow additional 
options for external ILEV label dimensions. Also in this rule, EPA will 
amend two California Pilot Program (CPP) requirements: the method for 
determining a manufacturer's clean-fuel vehicle (CFV) sales quota and 
the method for administering CPP credits. This amendment to the method 
of administering credits will reduce a manufacturer's reporting 
requirements by a factor of four. Finally, this rule includes several 
additional technical amendments to the regulations issued under Clean 
Fuel Fleet Program and California Pilot Program final rules.

DATES: This rule is effective March 4, 1996 unless notice is received 
by February 2, 1996 that adverse or critical comments will be submitted 
on a specific element of this rule. EPA will publish a timely document 
in the Federal Register withdrawing that portion of the rule for which 
adverse comments were received.

ADDRESSES: Interested parties may submit written comments in response 
to this rule (in duplicate if possible) to Public Docket Nos. A-92-30 
and A-92-14 for alternative fuel vehicle provisions, Public Docket No. 
A-92-30 for ILEV and Clean Fuel Fleet Program provisions, and Public 
Docket No. A-92-69 for California Pilot Program provisions, at: Air 
Docket Section, U.S. Environmental Protection Agency, Attention: Docket 
Nos. A-92-30, A-92-14, or A-92-69, First Floor, Waterside Mall, Room M-
1500, 401 M Street SW., Washington, DC 20460. A copy of the comments 
should also be sent to Mr. Bryan Manning (SRPB-12), U.S. EPA, 
Regulation Development and Support Division, 2565 Plymouth Road, Ann 
Arbor, MI 48105.
    Materials relevant to this rule have been placed in Docket Nos. A-
92-30 and A-92-14 or A-92-69 by EPA. The docket is located at the above 
address and may be inspected from 8 a.m. to 5:30 p.m. on weekdays. EPA 
may charge a reasonable fee for copying docket materials.
    A copy of this action is available through the Technology Transfer 
Network Bulletin Board System (TTNBBS) under OMS, Rulemaking and 
Reporting, Alternative Fuels, Clean Fuel Fleets. TTNBBS is available 24 
hours a day, 7 days a week except Monday morning from 8-12 EST, when 
the system is down for maintenance and backup. For help in accessing 
the system, call the systems operator at 919-541-5384 in Research 
Triangle Park, North Carolina, during normal business hours EST.


[[Page 123]]

FOR FURTHER INFORMATION CONTACT: Mr. Bryan Manning (SRPB-12), U.S. EPA, 
Regulation Development and Support Division, 2565 Plymouth Road, Ann 
Arbor, MI 48105, Telephone: (313) 741-7832; FAX: 313-741-7816.

SUPPLEMENTARY INFORMATION: Because EPA considers this action to be 
noncontroversial, we are finalizing it without prior proposal. The 
action will become effective March 4, 1996 unless adverse comments are 
received by February 2, 1996. If EPA receives adverse comments, only 
the affected portions of the direct final rule will be withdrawn and 
all public comments received will be addressed in a subsequent final 
rule based on the proposed rule (please see proposed rule entitled, 
``Sales Volume Limit Provisions for Small-Volume Manufacturers 
Certification of Clean-Fuel and Conventional Vehicle Conversions and 
Related Provisions,'' published simultaneously in the ``Proposed 
Rules'' section of this Federal Register).

I. Description of Action

    The alternative fuel vehicle industry is likely to expand 
considerably over the next several years in response to Clean Air Act 
(CAA), the Energy Policy Act, and other alternative fuel fleet and 
vehicle programs at the state and local levels. Nevertheless, EPA 
believes alternative fuel vehicles will still have limited sales in 
comparison to conventional vehicles. Thus, due to this potential 
inequity in sales, EPA believes it may be difficult for aftermarket 
converters of alternative fuel vehicles to recover their certification 
cost over the next several years. Since EPA encourages the production 
of certified alternative fuel vehicles for air quality purposes, EPA 
believes it will be wise to temporarily reduce the certification burden 
for aftermarket converters of alternate fuel vehicles as described 
below.

A. Flexibility in Certification Procedure for Determining Deterioration 
Factors

    As is shown in 40 CFR 86.094-14, the Small-Volume Manufacturers 
(SVM) Certification Program exempts entities seeking a Certificate of 
Conformity with total annual vehicle/engine sales less than 10,000 from 
EPA's full certification program. Specifically, the SVM provisions 
relieve such entities from some elements otherwise required to 
demonstrate the durability of emissions over the life of the vehicle. 
Instead of accumulating mileage on actual prototype vehicles, the SVM 
program in some cases permits the use of EPA-assigned values for 
emission deterioration. This can be of significant economic benefit to 
entities manufacturing or converting relatively few vehicles. The 
standard protocol EPA uses to assign deterioration factors is described 
in EPA Advisory Circular No. 51-C.
    Currently, small volume manufacturers with aggregated sales of less 
than 301 vehicles per year or without durability data may use assigned 
deterioration factors of the 70th percentile deterioration factors from 
industry-wide data based on previously completed durability data 
vehicles. In addition, manufacturers with aggregated sales from 301 to 
9,999 may calculate and use assigned deterioration factors, but these 
assigned deterioration factors must be no less than either the 70th 
percentile or the average of all the manufacturer's deterioration 
factor data (whichever is less). (See 40 CFR 86.094-14(c)(7)(i)(C)). 
However, since alternative fuel vehicles are an emerging industry, 
manufacturers of these vehicles and EPA currently have an extremely 
limited database from which to calculate assigned deterioration 
factors. According to current EPA regulations, many small-volume 
manufacturers of alternative fuel vehicles would be required to 
determine deterioration factors by conducting full useful-life tests 
since there is an insufficient database of previously-certified 
vehicles on which to base deterioration factors.
    To enable certifiers of alternative fuel vehicles to avoid the 
burden of full certification testing for the economic reasons discussed 
above and to support the development of alternative fuel vehicle 
technology, EPA believes it is wise to provide flexibility in the 
regulations for the determination of assigned deterioration factors for 
alternative fuel vehicles. Thus, EPA will permit manufacturers to use 
assigned deterioration factors that the Administrator determines by 
alternative methods if no deterioration factor data (either the 
manufacturer's or industry-wide deterioration factor data) are 
available, as detailed in section 86.094-14(a)(2) of the regulations 
associated with today's rule. Following promulgation of this provision, 
EPA expects to issue guidance describing the specific alternative 
methods used in determining assigned deterioration factors for gaseous-
fueled vehicles through model year 2000.<SUP>1

    \1\ The assigned deterioration factors for gaseous-fueled 
vehicles and the specific methods used to determine these factors 
are expected to be specified in a ``Dear Manufacturer'' letter 
(advisory letter) that would be available in docket A-92-14 and A-
92-30 and on TTNBBS.
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B. Amendments to the Required Dimensions of Inherently Low-Emission 
Vehicle (ILEV) Exterior Labels

    In the regulations for the Clean Fuel Fleet (CFF) Credit Program 
final rule, EPA specified size and shape requirements for ILEV exterior 
identification labels. The manufacturer or dealer of an ILEV is 
required to attach one label on the rear of the vehicle and one on each 
of two sides of the vehicle if requested by a qualifying fleet 
purchaser. In February 1995, Ford commented <SUP>2 that the required 
dimensions for the rear ILEV labels are inappropriate for certain 
vehicle models since their vehicle body design makes the placement of 
such labels on these vehicles difficult or impossible. Ford also stated 
that safety requirements for lighting and bumpers affect the vehicle 
body design; in addition, for natural gas vehicles, a separate label is 
required on the lower right rear of the vehicle by the National Fire 
Protection Association Safety Standard 52. In April 1995 Ford suggested 
a much smaller alternative ILEV label design for such vehicle models, 
which American Automobile Manufacturer's Association (AAMA) agreed to 
in May 1995.<SUP>3 Ford also suggested that the problem of reduced 
space on the rear of passenger cars also exists for the side of 
vehicles since fleet advertisements often take up much of the space 
available on the side of the vehicle.

    \2\ Ford Motor Company, Comments on Reconsideration of ILEV 
Labelling Requirements, letter from Kelly M. Brown to Margo T. Oge 
of the U.S. Environmental Protection Agency, February 2, 1995.
    \3\ Ford Motor Company, ``ILEV Labels'', Facsimile from Sarah 
Rudy to Bryan Manning of the U.S. Environmental Protection Agency, 
April 21, 1995.
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    As indicated in the preamble for the Clean Fuel Fleet Credit 
Program final rule, EPA intends for ILEVs to be specially and clearly 
identified since properly labeled ILEVs may be exempt from 
transportation control measure (TCM) requirements, including high-
occupancy vehicle (HOV) lane restrictions. EPA expected ILEVs to look 
much like conventional vehicles, and thus, the Agency intended for 
ILEVs to have special labels to clearly indicate to law enforcement 
officers, as well as the general public, that these vehicles are not 
violating TCM ordinances.
    EPA believes that the distinctive design and shape of AAMA's 
suggested ILEV label would be consistent with EPA's intent to have 
ILEVs clearly identified by law enforcement officials, as well as the 
general public. At the time the CFF Credits/ILEV rule was finalized, 
EPA was unaware of any vehicle models that would have a conflict with 
the ILEV 

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labeling requirements. Since EPA encourages the production of ILEVs for 
air quality purposes, EPA will amend the ILEV label regulations in a 
manner similar to that suggested by AAMA in order to provide additional 
flexibility for ILEV manufacturers, thus reducing some of the 
certification burden. To meet industry's vehicle body space concerns 
while maintaining a label that is clearly identifiable, EPA will 
provide new optional ILEV labels of smaller dimensions. Specifically, 
for the sides and rear of an ILEV, EPA will provide an optional ILEV 
label of smaller dimensions than the existing primary ILEV label and in 
the distinctive shape of a truncated circle, as specified in 
88.312(a)(1) of the regulations in today's rule.
    For the rear of an ILEV, existing regulations provide an option to 
choose a smaller rectangular label, if the larger primary (side) 
rectangular label cannot be attached to the rear of an ILEV. Today's 
rule will provide two optional rear labels which could be chosen if 
neither of the primary labels described above and in section 
88.312(a)(1) of the regulations cannot be attached to the rear of an 
ILEV. One of these rear label options is the existing smaller 
rectangular label (see section 88.312(c)(2)(ii)(A) of the regulations 
in today's rule), and the other option is a smaller version of the 
truncated circular label described above, as detailed in section 
88.312(c)(2)(ii)(B) of the regulations associated with today's rule.

C. Method for Determining Each Manufacturer's CFV Sales Requirement 
Under the Federal California Pilot Program

    The California Pilot Program requires that California sales figures 
from two model years earlier be used to calculate required CFV sales 
shares (see California Pilot Test Program (CPP) final rule, 59 FR 
50066, September 30, 1994). In the proposal for the rulemaking (58 FR 
34727, June 29, 1993), EPA requested comment as to whether a 
manufacturer's share of required CFV sales should be calculated based 
on sales in the previous model year or sales two model years prior. No 
comments were received from manufacturers. EPA decided to use model 
year (MY) sales data from two years prior rather than from the previous 
model year to provide manufacturers with more time to plan their CFV 
production.
    However, after the CPP rule was finalized, the AAMA notified EPA of 
their view that basing the calculation on data from two years prior is 
not practical.<SUP>4 According to AAMA, this is because the production 
volumes would not be established early enough to allow auto 
manufacturers sufficient planning time to comply with the CFV sales 
requirements in the California Pilot Program. AAMA suggested that at 
least a three-year lead time is needed for the completion of the annual 
production reports, EPA calculation of the manufacturer total sales, 
and subsequent certification strategy or sales planning by the 
manufacturers. More specifically, AAMA suggested that a manufacturer's 
share of CFV sales be the average of two consecutive years based on 
data from model years three and four years earlier than the model year 
in question. AAMA believes a two-year average would help level out any 
fluctuations in the market.

    \4\ American Automobile Manufacturers Association (AAMA), 
Recommendation on Determination of Manufacturer Quotas for the 
California Pilot Test Program, Letter from Marcel L. Halberstadt to 
Tad Wysor of the U.S. Environmental Protection Agency, February 17, 
1995.
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    EPA has considered these comments and agrees that using data from 
the model year two years prior to the year in question does not provide 
manufacturers enough time to adequately plan their production, since 
production for the model year in question could be well underway before 
sales data is available for production planning. (Production under a 
certificate may begin on January 2 of the calendar year prior to the 
model year of the certificate and may continue through December 31 of 
the certification model year.)
    Thus, EPA will require that the average California sales figures 
from three and four model years earlier than the current model year be 
used by each manufacturer to calculate their required CFV sales share. 
For example, for the 1997 model year, the average of sales figures from 
1993 and 1994 model years would be used to calculate the CFV sales 
share. This change will have no impact on the overall number of CFVs 
sold in California; the allocation of those vehicles among 
manufacturers may change slightly. This change will also reduce the 
regulatory burden for manufacturers, and EPA believes it is highly 
accommodating to manufacturers considering that manufacturers did not 
comment on the method proposed.

D. Reporting Requirements for the Credit Program of the California 
Pilot Test Program

    In the information collection request <SUP>5 for the Credit Program 
for California Pilot Test Program Final Rule (57 FR 60038, December 17, 
1992), EPA had requested quarterly reporting of credit use and balance 
statements to administer the credit program. However, EPA has 
reevaluated this request and does not believe quarterly reporting is a 
necessary requirement for administering the CPP credit program. The 
Agency does not expect the volume or frequency of credit transactions 
to be substantial enough so as to require such frequent monitoring. EPA 
now believes that annual reports from the manufacturers of credit use 
and balances will be sufficient for EPA to adequately administer and 
enforce the CPP credit program and verify the proper use of traded CPP 
credits. Thus, EPA will require annual reporting of credit use and 
balances for the CPP credit program. (See section 88.205-94 (d)(1) and 
(d)(3)(iii) of the regulations associated with today's rule for further 
detail.) This change will reduce the manufacturer reporting burden by a 
factor of four, and thus, EPA believes it is highly accommodating to 
manufacturers.

    \5\ U.S. Environmental Protection Agency, Office of Mobile 
Sources, Supporting Statement for Information Collection Request--
California Pilot Test Program: Vehicle Credit Program, May 1991.
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E. Technical Amendments to CFV Emission Standards Rulemaking and CFF 
and CPP Credit Program Rulemakings

1. Redesignation of Paragraph Specifying Methane Analyzer Method Within 
Description of Exhaust Analytical System
    In the regulations for the Clean-Fuel Vehicle Emission Standards 
final rulemaking (59 FR 50042, September 30, 1994), the specifications 
for the measurement of methane from heavy-duty exhaust samples, 
paragraph (b)(2)(iii) of section 86.1311-94 (``Exhaust gas analytical 
system; CVS bag sample''), were incorrectly designated as a sub-
paragraph of paragraph (b)(2), which contains the specifications for 
the measurement of carbon monoxide from heavy-duty exhaust samples. 
Thus, in today's action, EPA will redesignate paragraph (b)(2)(iii) as 
paragraph (b)(3) in section 86.1311-94.
2. Clarification of Applicable Test Procedures for CFV Exhaust 
Standards for Light-duty Vehicles and Light-duty Trucks
    In paragraph (k) of section 88.104-94 of the regulations for the 
Clean-Fuel Vehicle Standards final rulemaking, EPA specifies that CFV 
tailpipe emission standards for light-duty vehicles and light-duty 
trucks shall 

[[Page 125]]
comply with the following requirement: ``* * * standards in this 
paragraph shall be administered and enforced in accordance with the 
California Regulatory Requirements * * *.'' However, in paragraph (l) 
of section 88.104-94 EPA incorrectly specified that CFV standards for 
light-duty vehicles and light-duty trucks shall be ``* * * tested in 
accordance with test procedures set forth in 40 CFR part 86 * * *.'' 
(In this same paragraph, EPA correctly specified that NMOG emissions 
are to be measured in accordance with the California Regulatory 
Requirements which were incorporated by reference in paragraph (k) of 
the same section.) Thus, EPA wishes to clarify that all CFV standards 
set forth in section 88.104-94 for light-duty vehicles and light-duty 
trucks shall be administered and enforced in accordance with California 
requirements by deleting paragraph (l) of section 88.104-94.
3. Corrections to Specifications for Emission Standards for Inherently 
Low-Emission Vehicle (ILEV)
    In the regulations for the Clean-Fuel Vehicle final rulemaking, EPA 
specified in paragraph (c) of section 88.311-93 that exhaust emissions 
for ILEVs in light-duty vehicle and light-duty truck classes ``* * * 
shall be measured in accordance with the test procedures specified in 
Sec. 88.104(l).'' As mentioned above in section I.E.2., EPA is deleting 
paragraph (l) in section 88.104-94. Thus, EPA today wishes to clarify 
that exhaust emissions for ILEVs in light-duty vehicle and light-duty 
truck classes shall be measured in accordance with test procedures 
specified in section 88.104-94(k) (California Regulatory Requirements). 
Thus, section 88.311-93(c) will be amended accordingly.
    For heavy-duty ILEVs, EPA incorrectly specified in section 88.311-
93(d) that exhaust emissions ``* * * shall be measured in accordance 
with the test procedures specified in Sec. 88.105(d).'' However, 
paragraph (d) specifies only the exhaust standards but not the exhaust 
test procedures for heavy-duty ILEVs. The exhaust emission test 
procedures for ILEVs are specified in Sec. 88.105(e). Thus, EPA today 
revises this section to require that the exhaust emissions for heavy-
duty ILEVs be measured in accordance with the test procedures specified 
in Sec. 88.105(e).
    Further, in paragraph (d) of section 88.311-93, the requirements 
that heavy-duty (HD) ILEVs ``* * * have exhaust emissions with combined 
non-methane hydrocarbon and oxides of nitrogen * * * which do not 
exceed the exhaust emission standards * * * in Sec. 88.105'' may be 
misleading. Not only are HD ILEVs required to meet exhaust emission 
standards in section 88.105(d) for combined non-methane hydrocarbon and 
oxides of nitrogen emissions, but HD ILEVs are also required to meet 
exhaust emission standards in section 88.105(d) for carbon monoxide, 
particulate matter, and formaldehyde emissions. Thus, EPA wishes to 
clarify that HD ILEVs shall have exhaust emissions which do not exceed 
any of the exhaust emission standards specified in section 88.105(d).
4. Correction to Clean Fuel Fleet Credit Table Applying When a Fleet 
Purchases More Clean-Fuel Vehicles Than Required
    Due to an editorial error, in Table C94-1.1 of the regulations for 
the Clean Fuel Fleet Credit Program final rule (58 FR 11888, March 1, 
1993) and the CFV Emission Standards final rule, the two vehicle-
equivalent credits for ULEVs in the two heavy light-duty truck (HLDT) 
classes greater than 3,750 pounds ALVW were incorrectly specified as 
1.29 and 1.47 respectively. For Table C94-1.1, EPA today corrects these 
values to 1.26 and 1.56, respectively.
    Within this same table, EPA incorrectly specified in the last 
column heading for HLDTs greater than 5750 ALVW pounds that the ALVW 
parameter was ``K5750'' pounds. The ``K'' prefix added to 5750 pounds 
is an editorial error and may be misleading. EPA today changes the 
column heading to ``LDT >6000 GVWR, >5750 ALVW''.
5. Correction to Early Credits Requirements for Heavy Light-Duty Trucks 
in the CPP
    In the regulations for the Credit Program for the CPP final rule, 
EPA incorrectly excluded heavy LDTs that meet CFV standards from being 
eligible for early credits during model years 1996 and 1997. (For the 
CPP, a manufacturer's share of required CFV annual sales for model 
years 1996 and 1997 is based on LDVs and light LDTs sales only; 
however, a manufacturer's share of required CFV annual sales beginning 
in 1998 is also based on heavy LDTs sales.) In the final rule, EPA 
allowed early credits for LDVs and all LDTs up to the beginning of CPP 
sales requirements in 1996. To provide heavy LDT manufacturers with a 
similar opportunity to earn early credits, EPA had intended to allow 
manufacturers to earn early credits for heavy LDTs up to the beginning 
of their sales requirements in 1998. Thus, to rectify this 
inconsistency for heavy LDTs in the CPP, EPA wishes to clarify that 
heavy LDTs certified to CFV standards shall be eligible for early 
credits up to model year 1998. Today's action changes section 88.205(g) 
of the regulations accordingly.

II. Environmental and Economic Impacts

    The nature of today's provisions for the determination of assigned 
deterioration factors for alternative fuel vehicles are such that no 
impact on air quality should result. If and when an entity (converter 
or original equipment manufacturer) certifies an alternative fuel 
vehicle, these actions will not seriously compromise EPA's confidence 
that certified emission levels are being met in use. While some loss of 
control could theoretically occur if the reduced durability 
demonstration were in serious error, the Agency does not believe that 
this is likely to be common and in any event the numbers of vehicles 
involved is not large in comparison to conventional vehicle production. 
In addition, these provisions should significantly reduce the cost of 
certifying an alternative fuel engine family, thus encouraging the 
development of such vehicles.
    For the relaxed ILEV labelling requirements, EPA believes that if 
the smaller but distinctive ILEV labels are used on an ILEV, they will 
still be able to be clearly identified by law enforcement officials. 
EPA expects that these changes will help encourage manufacturers to 
develop and produce ILEVs, which will in turn have a positive 
environmental impact relative to conventional vehicles.
    With these changes to the CPP, EPA will ease the certification 
burden for manufacturers with no effect on air quality. This result 
will occur because the same number of vehicles will be sold under the 
CPP industry-wide; only the relative allocations among manufacturers 
might change.
    In today's rule, EPA will reduce the regulatory burden on industry 
without effecting air quality. EPA believes this rule is highly 
accommodating to industry's concerns.

III. Public Participation

    EPA believes the provisions of today's action are non-controversial 
and will make the affected provisions less burdensome and more 
effective. Nonetheless, if public comments are to be submitted, the 
Agency requests wherever applicable, full supporting data and detailed 
analysis should be submitted to allow EPA to make maximum use of the 
comments. Commenters should provide specific suggestions for any 
changes to any 

[[Page 126]]
aspect of the regulations that they believe need to be modified or 
improved. All comments should be directed to EPA Air Docket, Docket No. 
A-92-30 and A-92-14 for the certification flexibility provisions and 
Docket No. A-92-69 for the CPP provisions (See ADDRESSES). The official 
comment period will last for 30 days following publication of this 
direct final rule.
    Commenters desiring to submit proprietary information for 
consideration should clearly distinguish such information from other 
comments to the greatest possible extent, and clearly label it 
``Confidential Business Information.'' Submissions containing such 
proprietary information should be sent directly to the contact person 
listed above, and not to the public docket, to ensure that proprietary 
information is not inadvertently placed in the docket.
    Information covered by such a claim of confidentiality will be 
disclosed by EPA only to the extent allowed and by the procedures set 
forth in 40 CFR part 2. If no claim of confidentiality accompanies the 
submission when it is received by EPA, it may be made available to the 
public without further notice to the commenter.

IV. Statutory Authority

    The statutory authority for this action is granted by Sections 202, 
203, 206, 207, 241, 242, 243, 244, 245, 246, 247, 249, and 301(a) of 
the Clean Air Act.

V. Administrative Designation and Regulatory Analysis

    Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the 
Agency must determine whether this regulatory action is ``significant'' 
and therefore subject to Office of Management and 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 Executive Order 12866, EPA believes that 
this action is not a ``significant regulatory action'' within the 
meaning of the Executive Order. Today's action provides greater 
flexibility in the certification process for manufacturers of alternate 
fuel vehicles, thus eliminating some of the certification burden. ILEV 
labelling requirements have been relaxed, reducing some of the 
certification burden. Today's action also reduces the certification 
burden for manufactures required to produce CFVs under the CPP, by 
providing more flexibility in CFV production planning and credit 
reporting.

VI. Compliance with Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) of 1980 requires federal 
agencies to examine the effects of federal regulations and to identify 
significant adverse impacts on a substantial number of small entities. 
Because the RFA does not provide concrete definitions of ``small 
entity'', ``significant impact'', or ``substantial number'', EPA has 
established guidelines setting the standards to be used in evaluating 
impacts on small businesses.<SUP>6 Section 604 of the Regulatory 
Flexibility Act requires EPA to prepare a Regulatory Flexibility 
Analysis when the Agency determines that there is a significant adverse 
impact on a substantial number of small entities.

    \6\  U.S. Environmental Protection Agency Memorandum to 
Assistant Administrators, ``Compliance With the Regulatory 
Flexibility Act'', EPA Office of Policy, Planning, and Evaluation, 
1984. In addition, U.S. Environmental Protection Agency, Memorandum 
to Assistant Administrators, ``Agency's Revised Guidelines for 
Implementing the Regulatory Flexibility Act'', EPA Office of Policy, 
Planning, and Evaluation, 1992.
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    Today's action will provide regulatory flexibility to converters of 
alternative fuel vehicles in the determination of assigned 
deterioration factors. EPA has evaluated the effects of today's 
regulations and the Administrator of EPA certifies that there will not 
be an adverse impact on a substantial number of small entities; in 
fact, most small converters of alternative fuel vehicles will 
experience an economic benefit. Therefore, a Regulatory Flexibility 
Analysis has not been performed for this rule.

VII. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a written statement to accompany any rule where the 
estimated costs to State, local, or tribal governments, or to the 
private sector will be $100 million or more in any one year. Under 
section 205, EPA must select the most cost-effective and least 
burdensome alternative that achieves the objective of the rule and that 
is consistent with statutory requirements. Section 203 requires EPA to 
establish a plan for informing and advising any small governments that 
may be significantly and uniquely impacted by the rule.
    EPA estimates that the costs to State, local, or tribal 
governments, or the private sector, from this rule will be less than 
$100 million. EPA has determined that this rule will reduce the 
regulatory burden imposed on certifiers of clean-fuel and/or 
alternative fuel vehicles (especially converters of such vehicles). EPA 
has determined that an unfunded mandates statement therefore is 
unnecessary.

VIII. Paperwork Reduction Act

    Today's rule does not add any mandatory information collection 
requirements for certifiers of alternative fuel vehicles or any other 
entity, and EPA has not prepared an Information Collection Request 
document for this rule.
    The information collection requirements of the Credit Program for 
California Pilot Test Program have been amended to reflect today's 
relaxation of the credit reporting requirements. These amended 
requirements have been approved by the Office of Management and Budget 
(OMB) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 
3501 et seq., and have been assigned OMB control number 2060-0229. A 
copy of the Information Collection Request document (ICR No. 1590) may 
be obtained from Sandy Farmer, OPPE Regulatory Information Division, 
U.S. Environmental Protection Agency (2136); 401 M St. S.W.; 
Washington, DC 20460 or by calling (202) 260-2740.
    Send comments regarding this collection of information to the 
Director, OPPE Regulatory Information Division; U.S. Environmental 
Protection Agency (2136); 401 M. St., S.W.; Washington, DC 20460; and 
to the Office of Information and Regulatory Affairs, Office of 
Management and Budget, 725 17th St., N.W., Washington, DC 20503, marked 
``Attention: Desk Officer for EPA.'' Include the ICR number in any 
correspondence. 

[[Page 127]]


List of Subjects
40 CFR Part 86
    Environmental protection, Administrative practice and procedure, 
Confidential business information, Labeling, Motor vehicle pollution, 
Reporting and recordkeeping requirements.
40 CFR Part 88
    Environmental protection, Motor vehicle pollution, Reporting and 
recordkeeping requirements.

    Dated: November 27, 1995.
Carol M. Browner,
Administrator.

    For the reasons set forth in the preamble, part 86 and 88 of title 
40 of the Code of Federal Regulations are amended as follows:
PART 86--CONTROL OF AIR POLLUTION FROM NEW AND IN-USE MOTOR 
VEHICLES AND NEW AND IN-USE MOTOR VEHICLE ENGINES: CERTIFICATION 
AND TEST PROCEDURES
    1. The authority citation for part 86 continues to read as follows:

    Authority: Secs. 202, 203, 205, 206, 207, 208, 215, 216, 217, 
and 301(a), Clean Air Act as amended (42 U.S.C. 7521, 7522, 7524, 
7525, 7541, 7542, 7549, 7550, 7552, and 7601(a)).
    2. Section 86.094-14 of subpart A is amended by redesignating 
paragraph (a) as paragraph (a)(1) and adding paragraph (a)(2) to read 
as follows:
Sec. 86.094-14  Small-volume manufacturers certification procedures.
    (a)(1) * * *
    (2) To satisfy the durability data requirements of the small-volume 
manufacturers certification procedures, manufacturers of vehicles (or 
engines) as described in paragraph (b) of this section may use assigned 
deterioration factors that the Administrator determines by methods 
described in paragraph (c)(7)(i)(C) of this section. However, if no 
deterioration factor data (either the manufacturer's or industry-wide 
deterioration factor data) are available from previously completed 
durability data vehicles or engines used for certification, 
manufacturers of vehicles (or engines) as described in paragraph (b) of 
this section or with new technology not previously certified may use 
assigned deterioration factors that the Administrator determines by 
alternative methods, based on good engineering judgement. The factors 
that the Administrator determines by alternative methods will be 
published in an advisory letter or advisory circular.
* * * * *
Sec. 86.1311-94  [Amended]
    3. Section 86.1311-94 of subpart N is amended by redesignating 
paragraph (b)(2)(iii) as paragraph (b)(3) preceding figure N94-1.
PART 88--CLEAN-FUEL VEHICLES
    4. The authority citation for Part 88 continues to read as follows:

    Authority: 42 U.S.C. 7410, 7418, 7581, 7582, 7583, 7584, 7586, 
7588, 7589, and 7601(a).

    5. In Sec. 88.104-94, paragraph (l), which precedes the tables to 
the section, is removed.
    5a. A center heading is added immediately preceding the tables to 
the section to read as follows:
Tables to Sec. 88.104-94
    6. Section 88.204-94 of subpart B is amended by revising the 
introductory text of paragraph (c)(2) and paragraph (c)(2)(ii) to read 
as follows:
Sec. 88.204-94  Sales requirements for the California Pilot Test 
Program.

* * * * *
    (c) * * *
    (2) The required annual clean fuel vehicle sales volume for a given 
manufacturer is expressed in the following equation rounded to the 
nearest whole number:
[GRAPHIC] [TIFF OMITTED] TR03JA96.003

Where:

RMS=a manufacturer's required sales in a given model year.
MS=the average of a manufacturer's total LDV and light LDT sales in 
California three and four model years earlier than year in question 
(for MY 1996 and 1997 RMS calculations).
  =the average of a manufacturer's total LDV and LDT sales in 
California three and four model years earlier than year in question 
(for MY 1998 and later RMS calculations).
TS=the average of total LDV and light LDT sales in California of all 
manufacturers three and four model years earlier than the year in 
question (for MY 1996 and 1997 RMS calculations). Sales of 
manufacturers which meet the criteria of (d) of this paragraph will 
not be included.
  =the average of total LDV and LDT sales in California of all 
manufacturers three and four model years earlier than the year in 
question (for MY 1998 and later RMS calculations). Sales of 
manufacturers which meet the criteria of (d) of this paragraph will 
not be included.
TCPPS=Pilot program annual CFV sales requirement (either 150,000 or 
300,000) for the model year in question.

    (i) * * *
    (ii) A manufacturer certifying for the first time in California 
shall calculate annual required sales share based on projected 
California sales for the model year in question. In the second year, 
the manufacturer shall use actual sales from the previous year. In the 
third year, the manufacturer will use sales from two model years prior 
to the year in question. In the fourth year, the manufacturer will use 
sales from three years prior to the year in question. In the fifth year 
and subsequent years, the manufacturer will use average sales from 
three and four years prior to the year in question.
* * * * *
    7. Section 88.205-94 of subpart B is amended by revising paragraphs 
(d)(1), (d)(3)(iii), and (g) to read as follows:
Sec. 88.205-94  California Pilot Test Program Credits Program.

* * * * *
    (d) * * *
    (1) During certification, the manufacturer shall calculate the 
projected credits, if any, based on required sales projections.
* * * * *
    (3) * * *
    (iii) Maintain the records required under this subpart.
* * * * *
    (g) Early credits. Beginning in model year 1992 appropriate 
credits, as determined from the given credit table, will be given for 
the sale of vehicles certified to the clean-fuel vehicle standards for 
TLEVs, LEVs, ULEVs, and ZEVs, where appropriate. For LDVs and light 
LDTs (<6000 lbs GVWR), early credits can be earned from model year 1992 
to the beginning of the Pilot Program sales requirements in 1996. For 
heavy LDTs (>6000 lbs GVWR), early credits can be earned from model 
years 1992 through 1997. The actual calculation of early credits shall 
not begin until model year 1996.
    8. Section 88.311-93 of subpart C is amended by revising paragraphs 
(c) and (d) to read as follows:
Sec. 88.311-93  Emissions standards for Inherently Low-Emission 
Vehicles.

* * * * *
    (c) Light-duty vehicles and light-duty trucks. ILEVs in LDV and LDT 
classes shall have exhaust emissions which do not exceed the LEV 
exhaust emission standards for NMOG, CO, HCHO, and PM and the ULEV 
exhaust emission standards for NO<INF>x listed in Tables A104-1 through 
A104-6 for light-duty CFVs. Exhaust emissions shall be measured in 
accordance with the test procedures specified in Sec. 88.104-94(k). 

[[Page 128]]

An ILEV must be able to operate on only one fuel, or must be certified 
as an ILEV on all fuels on which it can operate. These vehicles shall 
also comply with all requirements of 40 CFR part 86 which are 
applicable to conventional gasoline-fueled, methanol-fueled, diesel-
fueled, natural gas-fueled or liquified petroleum gas-fueled LDVs/LDTs 
of the same vehicle class and model year.
    (d) Heavy-duty vehicles. ILEVs in the HDV class shall have exhaust 
emissions which do not exceed the exhaust emission standards in grams 
per brake horsepower-hour listed in Sec. 88.105-94(d). Exhaust 
emissions shall be measured in accordance with the test procedures 
specified in Sec. 88.105-94(e). An ILEV must be able to operate on only 
one fuel, or must be certified as an ILEV on all fuels on which it can 
operate. These vehicles shall also comply with all requirements of 40 
CFR part 86 which are applicable in the case of conventional gasoline-
fueled, methanol-fueled, diesel-fueled, natural gas-fueled or liquified 
petroleum gas-fueled HDVs of the same weight class and model year.
* * * * *
    9. Section 88.312-93 of subpart C is amended by revising paragraphs 
(a)(1) and (c)(2)(ii) to read as follows:


Sec. 88.312-93  Inherently Low-Emission Vehicle Labeling.

* * * * *
    (a) Label design. (1) Label design shall consist of either of the 
following specifications:
    (i) The label shall consist of a white rectangular background, 
approximately 12 inches (30 centimeters) high by 18 inches (45 
centimeters) wide, with ``CLEAN AIR VEHICLE'' printed in contrasting 
block capital letters at least 4.3 inches (10.6 centimeters) tall and 
1.8 inches (4.4 centimeters) wide with a stroke width not less than 0.5 
inches (1.3 centimeters). In addition, the words ``INHERENTLY LOW-
EMISSION VEHICLE'' must be present in lettering no smaller than 1 inch 
(2.5 centimeters) high. Nothing shall be added to the label which 
impairs readability. Labels shall include a serialized identification 
number; or
    (ii) The label shall consist of a white truncated-circular 
background, approximately 10 inches (25 centimeters) in diameter by 7 
inches (17.5 centimeters) in height. The bottom edge of the truncated-
circular background shall be approximately 2 inches (5 centimeters) 
from the center. The acronym ``ILEV'' shall be printed on the label in 
contrasting block capital letters at least 2 inches (5 centimeters) 
tall and 1.5 inches (3.8 centimeters) wide with a stroke width not less 
than 0.4 inches (1.0 centimeter). In addition, the words ``CLEAN AIR 
VEHICLE'' must be present in lettering no smaller than 0.8 inches (2.0 
centimeters) high. Nothing shall be added to the label which impairs 
readability. Labels shall include a serialized identification number.
* * * * *
    (c) * * *
    (2) * * *
    (ii) In the case that an ILEV label of the proportions specified in 
paragraph (a)(1) of this section cannot be attached to the rear of the 
ILEV, the manufacturer or the manufacturer's agent shall attach to the 
rear of the vehicle an ILEV label of either of the following 
proportions:
    (A) The label shall consist of a white rectangular background, 
approximately 4 inches (10 centimeters) high by 24 inches (60 
centimeters) wide, with ``CLEAN AIR VEHICLE'' printed in contrasting 
block capital letters at least 2.8 inches (7 centimeters) tall and 1.3 
inches (3.3 centimeters) wide with a stroke width not less than 0.3 
inches (0.8 centimeter). In addition, the words ``INHERENTLY LOW-
EMISSION VEHICLE'' must be present in lettering no smaller than 0.6 
inches (1.5 centimeters) high. Nothing shall be added to the label 
which impairs readability. Labels shall include a serialized 
identification number; or
    (B) The label shall consist of a white truncated-circular 
background, approximately 5 inches (12.5 centimeters) in diameter by 
3.5 inches (8.8 centimeters) in height. The bottom edge of the 
truncated-circular background shall be approximately 1 inch (2.5 
centimeters) from the center. The acronym ``ILEV'' shall be printed on 
the label in contrasting block capital letters at least 1 inch (2.5 
centimeters) tall and 0.8 inches (2.0 centimeters) wide with a stroke 
width not less than 0.3 inches (0.8 centimeters). In addition, the 
words ``CLEAN AIR VEHICLE'' must be present in lettering no smaller 
than 0.4 inches (1.0 centimeter) high. Nothing shall be added to the 
label which impairs readability. Labels shall include a serialized 
identification number.
* * * * *
    10. Table C94-1.1 to subpart C of part 88 is revised to read as 
follows:

Tables to Subpart C of Part 88

  Table C94-1.--Fleet Credit Table Based on Reduction in NMOG. Vehicle  
        Equivalents for Light-Duty Vehicles and Light-Duty Trucks       
                                                                        
                                                                        


       Table C94-1.1.--Credit Generation: Purchasing More Clean-Fuel Vehicles Than Required by the Mandate      
----------------------------------------------------------------------------------------------------------------
                                  LDV, LDT <ls-     LDT <ls-thn-                                                
                                   thn-eq>6000     eq>6000 GVWR,   LDT >6000 GVWR,  LDT >6000 GVWR,   LDT >6000 
              NMOG                GVWR, <ls-thn-   >3750 LVW <ls-  <ls-thn-eq>3750  >3750 ALVW <ls-  GVWR, >5750
                                   eq>3750 LVW    thn-eq>5750 LVW        ALVW         thn-eq>5750        ALVW   
                                                                                          ALVW                  
----------------------------------------------------------------------------------------------------------------
LEV............................           1.00             1.26             0.71             0.91           1.11
ULEV...........................           1.20             1.54             1.00             1.26           1.56
ZEV............................           1.43             1.83             1.43             1.83           2.23
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. 96-103 Filed 1-2-96; 8:45 am]
BILLING CODE 6560-50-P