Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32729

been determined that section 553(b) of

the Administrative Procedure Act (5

U.S.C. chapter 5) and the Regulatory

Flexibility Act (5 U.S.C. chapter 6) do

not apply to these regulations, and,

therefore, a Regulatory Flexibility

Analysis is not required. Pursuant to

section 7805(f) of the Internal Revenue

Code, this notice of proposed

rulemaking will be submitted to the

Chief Counsel for Advocacy of the Small

Business Administration for comment

on its impact on small business.

Comments and Requests for a Public

Hearing

Before these proposed regulations are

adopted as final regulations,

consideration will be given to any

written comments (a signed original and

eight (8) copies) that are submitted

timely to the IRS. All comments will be

available for public inspection and

copying. A public hearing may be

scheduled if requested in writing by any

person that timely submits written

comments. If a public hearing is

scheduled, notice of the date, time, and

place for the hearing will be published

in the Federal Register.

Drafting Information

The principal author of the

regulations concerning the

modifications of bad debts is Craig R.

Wojay, Office of Assistant Chief Counsel

(Financial Institutions and Products),

IRS. The principal author of the

regulations concerning dealer

assignments of notional principal

contracts is Thomas J. Kelly, Office of

Assistant Chief Counsel (Financial

Institutions and Products), IRS.

However, other personnel from the IRS

and Treasury Department participated

in their development.

List of Subjects in 26 CFR Part 1

Income taxes, Reporting and

recordkeeping requirements.

Proposed Amendments to the

Regulations

Accordingly, 26 CFR part 1 is

proposed to be amended as follows:

PART 1—INCOME TAXES

Paragraph 1. The authority citation

for part 1 continues to read in part as

follows:

Authority: 26 U.S.C. 7805 * * *

Par. 2. Section 1.166–3 is amended by

adding paragraph (a)(3) to read as

follows:

§ 1.166–3 Partial or total worthlessness.

(The text of proposed paragraph (a)(3)

is the same as the text of § 1.166–

3T(a)(3) published elsewhere in this

issue of the Federal Register).

Par. 3. Section 1.1001–4 is added to

read as follows:

§ 1.1001–4 Modifications of notional

principal contracts.

(The text of proposed section 1.1001–

4 is the same as the text of § 1.1001–4T

published elsewhere in this issue of the

Federal Register).

Margaret Milner Richardson,

Commissioner of Internal Revenue,

[FR Doc. 96–15831 Filed 6–24–96; 8:45 am]

BILLING CODE 4830–01–P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 59

[AD–FRL–5526–3]

National Volatile Organic Compounds

Emission Standards for Architectural

Coatings

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Proposed rule and notice of

public hearing.

SUMMARY: The proposed standards

would reduce emissions of volatile

organic compounds (VOC) from

architectural coatings. The proposed

standards implement Section 183(e) of

the Clean Air Act (CAA), as amended in

1990, which 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), the Administrator

conducted a study to determine the

potential of VOC emissions from

consumer and commercial products to

contribute to ozone levels that violate

the National Ambient Air Quality

Standards (NAAQS) for ozone and

established a list of product categories

to be regulated. Based on the criteria

described in the study and

accompanying report, the EPA

determined that VOC emissions from

architectural coatings should be

reduced. Therefore, the EPA is

proposing standards to reduce ozonecausing VOC emissions from these

coatings. The proposed standards would

reduce annual emissions of VOC by

106,000 tons representing a 20 percent

reduction from 1990 levels.

The proposed rule is centered around

requiring VOC content levels for 55

individual architectural coating

categories. When promulgated these

requirements on manufacturers and

importers of architectural coatings are

anticipated to take effect on April 1,

1997. This rulemaking is on an

expedited schedule, with a relatively

short public comment period.

Following proposal of this rule, the

EPA plans to participate in a joint study

with the architectural coatings industry.

This study will focus on the feasibility

of adopting more stringent VOC

requirements in the future.

DATES: Comments. Comments pertaining

to the proposed rule must be received

on or before August 30, 1996.

Public Hearing. A public hearing will

be held, if requested, to provide

interested persons an opportunity for

oral presentation of data, views, or

arguments concerning the proposed

standards for architectural coatings. If

anyone contacts the EPA requesting to

speak at a public hearing concerning

this proposed rule by July 18, 1996, a

public hearing will be held on July 30,

1996, beginning at 10:00 a.m. Persons

interested in attending the hearing

should notify Ms. Kim Teal, (919) 541–

5580 by July 18, 1996, to verify that a

hearing will occur and for notification

of the location of the hearing. The

record for the public hearing will

remain open for 30 days after

completion of the hearing to provide an

opportunity for the submission of

rebuttal and supplementary

information.

Persons wishing to present oral

testimony concerning this proposed rule

must contact Ms. Kim Teal at the EPA

by July 18, 1996. Ms. Teal may be

contacted at the following address:

Coatings and Consumer Products Group

(MD–13), U.S. Environmental Protection

Agency, Research Triangle Park, North

Carolina 27711, telephone number (919)

541–5580, FAX number (919) 541–5689.

ADDRESSES: Comments. Comments

should be submitted (in duplicate) to:

Air and Radiation Docket and

Information Center (6102), Attention:

Docket No. A–92–18, U.S.

Environmental Protection Agency, 401

M Street SW, Washington, DC 20460.

Comments and data may also be

submitted electronically by sending

electronic mail (e-mail) to: a-and-rdocket@epamail.epa.gov. Electronic

comments must be submitted as an

ASCII file avoiding the use of special

characters and any form of encryption.

Comments and data will also be

accepted on disks in WordPerfect in 5.1

file format or ASCII file format. All

comments and data in electronic form

must be identified by the docket number

A–92–18. No Confidential Business
32730 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

Information (CBI) should be submitted

through e-mail. Electronic comments on

this proposed rule may be filed online

at many Federal Depository Libraries.

Docket. The proposed regulatory text

and other materials related to this

rulemaking, excepting any information

claimed as CBI, are available for review

in a public record. This record has been

established for this rulemaking under

docket number A–92–18. The docket,

including paper versions of electronic

comments, is available for inspection

from 8:00a.m. to 5:30p.m. MondayFriday, excluding legal holidays. The

docket is located at the EPA’s Air and

Radiation Docket and Information

Center, Room M1500, 1st Floor, 401 M

St. S.W., Washington, D.C. 20460,

telephone (202) 260–7548, FAX (202)

260–4400. A reasonable fee may be

charged for copying.

Background Information Document.

The background information document

(BID) and other documents supporting

the proposed standards may be obtained

from the docket or from the U.S. EPA

Library (MD–35), Research Triangle

Park, North Carolina 27711, telephone

number (919) 541–2777. Please refer to

‘‘Architectural Coatings—Background

for Proposed Standards,’’ EPA–453/R–

95–009a.

FOR FURTHER INFORMATION CONTACT: For

information concerning the proposed

standards, contact Ms. Ellen Ducey at

(919) 541–5408, Coatings and Consumer

Products Group, Emission Standards

Division (MD–13), U.S. Environmental

Protection Agency, Research Triangle

Park, North Carolina 27711.

SUPPLEMENTARY INFORMATION:

Regulated entities

Entities potentially regulated by this

action are those who have the potential

to supply products which emit VOC and

are listed in § 183(e) of the CAA in the

following regulated categories and

entities:

Category Examples of regulated entities

Manufacturer Source that produces, packages, or repackages architectural coatings for sale or

distribution in the U.S.

Importers ..... Source that brings architectural coatings from a location outside the U.S. into the

U.S. for sale or distribution

within the U.S.

This table is not intended to be

exhaustive, but rather provides a guide

for readers regarding entities likely to be

regulated by this action. This table lists

the types of entities that the EPA is now

aware could potentially be regulated by

this action. Other types of entities not

listed in the table could also be

regulated. To determine whether your

facility is regulated by this action, you

should carefully examine the

applicability criteria in § 59.400 of the

rule. If you have questions regarding the

applicability of this action to a

particular entity, consult the person

listed in the preceding

FOR FURTHER INFORMATION CONTACT

section of this preamble.

The regulatory text of the proposed

rule is not included in this Federal

Register notice, but is available in

Docket No. A–92–18 (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 TTN contains

18 electronic bulletin boards, and the

following five items can be obtained

through the Clean Air Act Amendments

bulletin board in the section called

Recently Signed Rules:

(1) ‘‘FACT SHEET: Proposed Air

Regulations for Architectural Coatings

(1995).’’

(2) Federal Register notice for this

preamble: ‘‘National Volatile Organic

Compound Emission Standards for

Architectural Coatings’’ (this

document).

(3) Regulatory text for the proposed

rule.

(4) ‘‘Architectural Coatings—

Background for Proposed Standards,’’

(EPA–453/R–95–009a).

(5) Information Collection Request

document for the proposed standards:

‘‘Reporting and Recordkeeping

Requirements for National VOC

Emission Standards for Architectural

Coatings,’’ November 29, 1995.

The TTN is accessible 24 hours per

day, 7 days per week except Monday

morning from 8:00 a.m. to 12:00 p.m.

when the system is down for

maintenance and back up. 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. Regulatory Background

C. Supporting Documentation for the

Proposed Standards

II. Summary of Proposed Standards

A. Applicability of the Standards

B. Regulated Entities

C. VOC Levels

D. Compliance Requirements

E. Labeling Requirements

F. Recordkeeping

G. Reporting

H. Test Methods

I. Variance

III. Summary of Impacts

A. Environmental Impacts

B. Energy Impacts

C. Cost and Economic Impacts

D. Cost-Effectiveness

IV. Rulemaking Decision Process

A. Legislative Authority

B. Regulatory Negotiation Procedure

V. Rationale

A. Applicability

B. Regulated Entities

C. Selection of Best Available Controls

(BAC)

D. Exceedance Fee Approach

E. Low Volume Categories/Exemption

F. Special Provisions

G. Labeling and Public Information

Requirements

H. Selection of the Recordkeeping and

Reporting Requirements

I. Test Methods

J. Alternative Regulatory Approaches

K. Solicitation of Comments

VI. Future Phase Under Consideration

VII. Administrative Requirements

A. Public Hearing

B. Executive Order 12866

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Unfunded Mandates

F. Enhancing the Intergovernmental

Partnership under Executive Order

12875.

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 (one to

three hour) exposure to ozone at levels

of 0.12 parts per million (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 groundlevel ozone concentrations, emissions of

VOC and NOX must be reduced.

Section 183(e) of the CAA addresses

VOC emissions from the use of

consumer and commercial products. It

requires the EPA to study VOC
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32731

emissions from the use of consumer and

commercial products, to report to

Congress the results of the study, and to

list for regulation products accounting

for at least 80 percent of VOC emissions

resulting from the use of such products

in ozone nonattainment areas.

Accordingly, in the March 23, 1995

Federal Register (60 FR 15264), the EPA

announced the availability of the

‘‘Consumer and Commercial Products

Report to Congress’’ (EPA–453/R–94–

066–A), and published the consumer

and commercial products list and

schedule for regulation. Architectural

coatings are in the first group of

products to be regulated by March 1997.

This listing and prioritization are not

final Agency actions, and the EPA

requests comment on the placement of

architectural coatings on the list and the

priority assigned to these coatings.

B. Regulatory Background

Architectural coatings are included

under the definition of consumer and

commercial products because the

definition under Section 183(e) of the

CAA specifically includes paints,

coatings, and solvents. Section 183(e) of

the CAA requires that the first group of

consumer and commercial products

(i.e., those with highest priority for

regulation) be regulated within two

years after publication of the regulatory

schedule. As mentioned previously,

architectural coatings are in the first

group of consumer and commercial

products to be regulated and, therefore,

must be regulated by March 1997.

Because preliminary information

indicated that the architectural coatings

category is a sizable contributor to

ozone levels in nonattainment areas, it

seemed probable that this category

would be a high priority for regulation.

In 1992, the EPA initiated a regulatory

negotiation to address architectural

coatings (see section IV.B for a

discussion of the negotiation).

Throughout this process, the EPA

maintained that if the final results of the

study of consumer and commercial

products varied from preliminary

estimates, the EPA’s decision to include

architectural coatings in the first group

of categories to be regulated could

change. The study indicated that the

VOC emissions from consumer and

commercial products represent

approximately 28 percent of all

manmade VOC emissions. The

architectural coatings category is one of

the largest consumer and commercial

product categories, accounting for about

nine percent of the emissions of VOC

from all consumer and commercial

products. Based on evaluation of criteria

developed under Section 183(e) of the

CAA, architectural coatings were placed

in the first group of products to be

regulated. The criteria that contribute to

the prioritization of architectural

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 quantity of 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.

Architectural coating regulations are

already in place in a number of States,

and many other States are in the process

of developing regulations. For the

companies that market architectural

coatings in different States, 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 Federal control measures.

This is because a national rule helps

reduce compliance problems associated

with noncompliant coatings being

transported into nonattainment areas

from neighboring areas and neighboring

States. Also, a national rule will enable

States to obtain needed emission

reductions from this sector in the near

term, without having to expend their

limited resources to develop similar

rules in each State.

C. Supporting Documentation for the

Proposed Standards

The architectural coating BID (EPA

453/R–95–009a) contains some

supporting documentation for this

proposal. It contains a product category

description, an industry profile, a

discussion of control measures, and a

description of the expected emission

reductions. Other supporting

information for this proposed regulation

includes existing State regulations,

regulatory negotiation presentation

material, meeting summaries, survey

data, technical memoranda including

the economic impact analysis, 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 V.

A. Applicability of the Standards

The provisions of the proposed rule

apply to all architectural coatings that

are manufactured or imported for sale or

distribution in the United States on or

after April 1, 1997. An architectural

coating is defined in the proposed rule

as ‘‘a coating recommended for field

application to stationary structures and

their appurtenances, to portable

buildings, to pavements, or to curbs.’’

Category definitions in the proposed

rule, such as ‘‘exterior flats’’ or

‘‘industrial maintenance coatings,’’ are a

subset of architectural coatings. A

coating must first meet the general

definition of an architectural coating to

be subject to the provisions of the

proposed rule.

The proposed standards do not apply

to the following architectural coatings:

(1) Coatings manufactured exclusively

for sale outside the United States;

(2) Coatings manufactured or

imported prior to April 1, 1997;

(3) Coatings supplied in nonrefillable

aerosol containers;

(4) Coatings that are collected and

redistributed at community-based paint

exchanges; and

(5) Coatings sold in containers with

capacities of 1 liter or less.

B. Regulated Entities

Regulated entities in this proposal are

limited to architectural coating

manufacturers and importers as defined

below.

Architectural coating importer (or

importer) means a company, group, or

individual that brings architectural

coatings from a location outside the

United States into the United States for

sale or distribution within the United

States.

Architectural coating manufacturer

(or manufacturer) means a company,

group, or individual that produces,

packages, or repackages architectural

coatings for sale or distribution in the

United States. A company, group, or

individual that repackages architectural

coatings as part of a community-based

paint exchange and does not produce,

package, or repackage any other

architectural coatings for sale or

distribution in the United States is

excluded from this definition.

C. VOC Levels

The proposed rule is centered around

VOC content levels for 55 individual

architectural coating categories.

Manufacturers and importers must limit

the VOC content of subject coatings to

the VOC levels in Table 1, which are

effective April 1, 1997 and thereafter.

As shown in Table 1, the categories of

low solids stains and low solids wood
32732 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

preservatives have different units for the

VOC content level. The VOC content for

these categories is expressed in grams of

VOC per liter of coating thinned to the

manufacturer’s maximum

recommendation, including water and

exempt compounds. This is because,

unlike conventional coatings, which

achieve a film-build, these stains and

wood preservatives are not applied to

achieve a certain thickness of solid film,

but rather to affect penetration of the

stain or wood preservative. For these

low solids coatings, the assumption that

coverage of the coating is dependent on

the volume of solids in the coating is

not valid. The volume of the coating

(which must include at least 50 percent

water in the volatile fraction)

determines coverage. For this reason,

the VOC content level is determined

‘‘including water and exempt

compounds.’’

A coating is subject to the VOC

content level for the category in Table

1 that describes the coating’s

recommended use, appearance

characteristics, and/or resin type. If a

coating meets the definition of an

architectural coating and is subject to

the proposed rule, it must be identified

by the manufacturer or importer to be

defined under at least one of the

categories listed in Table 1. If a coating

does not meet any of the other category

definitions besides ‘‘flat’’ or ‘‘nonflat,’’ it

would be categorized in either the flat

or nonflat category depending on its

gloss level. These default categories

generally require lower VOC content

levels than other categories in Table 1.

If a coating is marketed in more than

one of the listed coating categories,

compliance is required with the lowest

applicable VOC content level except for

the following:

(1) High temperature coatings that

may also be suitable for use as metallic

pigmented coatings are subject only to

the VOC level for high temperature

coatings;

(2) Lacquer sanding sealers that may

also be suitable for use as sanding

sealers in conjunction with clear lacquer

topcoats are subject only to the VOC

level for lacquer sanding sealers;

(3) Metallic pigmented coatings that

may also be suitable for use as roof

coatings, industrial maintenance

coatings, or primers are subject only to

the VOC level for metallic pigmented

coatings;

(4) Shellacs that may be marketed as

primers, sealers, or undercoaters are

subject only to the VOC level for

shellacs;

(5) Fire-retardant/resistive coatings

that may be suitable for use as any other

architectural coatings are subject only to

the VOC level for fire-retardant/resistive

coatings;

(6) Pretreatment wash primers that

may be suitable for use as primers are

subject only to the VOC level for

pretreatment wash primers; and

(7) Industrial maintenance coatings

that may also be primers are subject

only to the VOC level for industrial

maintenance coatings.

These exceptions were developed to

clarify the applicable VOC level in

situations where inherent overlap exists

between category definitions, and the

least stringent VOC level is meant to

apply.

Manufacturers or importers of

‘‘recycled’’ architectural coatings

collect, reprocess, and market coatings

that contain a percentage of postconsumer coating product. Such use is

environmentally beneficial because it

reduces the magnitude of waste from

architectural coatings. Manufacturers

and importers of recycled coatings are

given the option of calculating an

‘‘adjusted VOC content.’’ The ‘‘adjusted

VOC content’’ provides some credit for

the amount of post-consumer material

contained in the coating. The EPA is

providing this credit to encourage

recycling of unused paint. The

‘‘adjusted VOC content’’ is determined

by multiplying the percentage of postconsumer content of the coating by the

VOC content of the recycled coating,

which can then be subtracted from the

VOC content of the recycled coating. An

explicit equation for the calculation is

in the proposed rule.

D. Compliance Requirements

1. Compliance Dates

The compliance date for all

manufacturers and importers is April 1,

1997. In draft versions of the proposed

rule, the compliance date for small

manufacturers and small importers was

January 1, 1998. Small manufacturers

and small importers were defined as

manufacturers and importers with

annual gross revenues in 1995 of less

than $10 million, and total gross

revenues in 1995 from sales of all

products of less than $50 million. This

extra compliance time has been

eliminated from the proposed rule due

to the inclusion of less stringent VOC

levels for some of the largest categories

of architectural coatings, and the

inclusion of a variance provision

described in sections II.I and V.F. These

provisions are expected to provide

sufficient compliance flexibility needed

by small manufacturers. However, the

EPA requests comment on whether the

final rule should include the small

manufacturer compliance extension. If

such a provision were included, the

VOC reduction achieved by the

proposed rule in 1997 would be reduced

from 20 percent to approximately 15

percent. The EPA also requests

comment on the adequacy of the

compliance lead time for all affected

sources. Comments supporting extra

compliance time for all manufacturers

and other affected sources should

include supporting data providing

economic and/or technological

justification.

2. Compliance Methods

Compliance with the VOC content

levels in the proposed rule is to be

determined on a coating-by-coating

basis. To determine compliance with

the VOC levels in Table 1,

manufacturers or importers would first

be required to determine the coating

category, the applicable VOC level, and

the VOC content for each coating

product manufactured or imported. An

initial report is required for all

manufacturers and importers subject to

the rule. Other labeling, recordkeeping,

and reporting requirements are

summarized in sections II.E, II.F, and

II.G, respectively. Test methods to be

used to determine VOC content of the

coatings are described in section II.H.

E. Labeling Requirements

With the exception of low solids

stains and low solids wood

preservatives, containers of all subject

coatings must bear labels or lids that

include the following information:

(1) The date of manufacture or a code

indicating the date of manufacture;

(2) The maximum VOC content of the

coating in the container, displayed in

units of grams of VOC per liter of

coating thinned to the manufacturer’s

maximum recommendation, excluding

the volume of any water, exempt

compounds, or colorant added to tint

bases; and

(3) A statement of the manufacturer’s

recommendation regarding thinning

with organic solvents. Containers of low

solids stains and low solids wood

preservatives must bear labels or lids

that include the following information:

(1) The date of manufacture or a code

indicating the date of manufacture;

(2) The maximum VOC content of the

coating in the container, displayed in

units of grams of VOC per liter of

coating thinned to the manufacturer’s

maximum recommendation, including

the volume of any water and exempt

compounds; and

(3) A statement of the manufacturer’s

recommendation regarding thinning

with organic solvents.
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32733

Containers of industrial maintenance

coatings, in addition to the labeling

requirements for all subject coatings,

must include on the container label or

lid the phrase ‘‘NOT INTENDED FOR

RESIDENTIAL USE.’’

Containers of recycled architectural

coatings, in addition to the labeling

requirements for all subject coatings,

must include on the label or lid a

statement of the percentage, by volume,

of post-consumer coating content. This

prerequisite must be met to be able to

determine compliance using an

‘‘adjusted VOC content.’’

The EPA considered requiring the

following statement on every label or lid

of architectural coatings: ‘‘This

architectural coating contains volatile

organic compounds that will be emitted

to the ambient air during use and, under

certain environmental conditions, these

compounds may contribute to the

formation of ground-level ozone, an air

pollutant and major component of urban

smog.’’ As an alternative to this

requirement, the EPA is considering

undertaking an educational effort

directed at informing the public about

the role of VOC emissions from

architectural coatings in the formation

of ground-level ozone. The EPA requests

comment on whether an outreach effort

would be as effective an approach as an

educational statement on each container

of architectural coating.

The EPA is aware that many

architectural coating labels currently

display information on the amount of

coverage that the coating is expected to

provide. The EPA is considering

requiring this information to be

displayed on the labels or lids of all

architectural coating containers. Both

coating coverage and VOC content

information are necessary to allow a

consumer to estimate and compare the

expected resulting VOC emissions from

application of different coatings to

complete a particular job. This

information on coating coverage would

allow consumers to make an informed

choice between coatings. The EPA

requests comment on the feasibility of

requiring coverage information to be

displayed on the label or lid of all

architectural coating containers subject

to this rule.

F. Recordkeeping

Except for recycled coatings, there are

no proposed recordkeeping

requirements. For recycled coatings,

manufacturers and importers must keep

the following records for three years:

(1) The minimum percentage of postconsumer coating content for each

recycled coating product;

(2) Calculation of an adjusted VOC

content that accounts for the postconsumer coating content credit;

(3) The volume of coating received for

recycling;

(4) The volume of coating received

that was unusable;

(5) The volume of virgin materials;

and

(6) The volume of the final recycled

coating manufactured.

G. Reporting

Manufacturers and importers of

coatings subject to the proposed

standard must file an initial report. The

initial report must be submitted by

April 1, 1997 or within 180 days after

becoming subject to the requirements of

the proposed standard, whichever is

later. The initial report must include the

following information:

(1) Name and mailing address of the

manufacturer or importer; and

(2) A list of categories from Table 1 in

which coatings are manufactured or

imported.

For recycled coatings, manufacturers

and importers must submit an annual

report by February 1 of the calendar

year following the year in which the

coatings are introduced into commerce

that includes the following:

(1) The volume of coating received for

recycling;

(2) The volume received that was

unusable;

(3) The volume of virgin material

used;

(4) The volume of the final recycled

product; and

(5) The minimum post-consumer

content of the coating.

Reporting requirements for the

variance application are discussed in

II.I.

In cases where a code is used to

indicate the date of manufacture, all

manufacturers and importers of

architectural coatings must file an

explanation of each date code displayed

on coating containers by April 1, 1997.

Explanations of new codes must be filed

within 30 days after their first use.

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 the 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 Method

24.

Manufacturers and importers may use

alternate methods for determining

coating VOC content if it can be

demonstrated to the Administrator’s

satisfaction that the method provides

results equivalent to or more accurate

than those obtained using Reference

Method 24.

I. Variance

The proposed rule also allows

manufacturers and importers of

architectural 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

(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.

III. Summary of Impacts

A. Environmental Impacts

This section contains a discussion of

the incremental increase or decrease in

air pollution, water pollution, and solid

waste generation that would result from

implementing the proposed standards.
32734 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

1. Air Pollution Impacts

The proposed standards would reduce

annual nationwide emissions of VOC

from the use of architectural coatings by

an estimated 96,000 megagrams (Mg)

(106,000 tons) beginning in 1997. These

reductions are compared to the 1990

baseline emission estimate of 480,000

Mg (530,000 tons) and represent

emissions that would occur in the

absence of the proposed standards.

Because the VOC emissions from

architectural coatings include a large

class of compounds that are expected to

be associated with a wide spectrum of

health effects, reductions in VOC from

architectural coatings would result in a

decrease in the associated health effects.

Because many regulated VOC species

are also hazardous air pollutants (HAP),

the proposed standards are expected to

reduce some HAP emissions from the

use of architectural coatings. An

increase in the use of HAP in product

formulation is not expected to occur as

a result of the proposed standards. Data

on speciated VOC content from the VOC

Emissions Inventory Survey show no

pattern of higher HAP concentrations in

lower VOC formulations.

2. Water and Solid Waste

The major compliance method for this

rule will be the use of compliant

coatings. No adverse solid waste

impacts are 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.

Some provisions in this proposed rule

have the potential to reduce the amount

of coating discarded as solid waste.

Recycling of coatings may be

encouraged through two provisions. The

rule includes a provision that allows an

‘‘adjusted VOC content’’ to be calculated

for recycled coatings for compliance

purposes. This adjustment essentially

allows a higher VOC content standard

for coatings that contain post-consumer

coating. The rule also exempts any

coatings distributed through

community-based paint exchanges.

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

No adverse energy impacts are

anticipated from compliance with this

rule. No add-on controls are required.

C. Cost and Economic Impacts

By establishing a set of productspecific levels for VOC content, the

proposed regulations have cost

implications for manufacturers and

consumers of the affected products. In

1997, manufacturers of architectural

coatings that do not meet the VOC levels

in Table 1 will be required to

reformulate products or remove

products from the market (or participate

in an alternative compliance mechanism

such as an exceedance fee). It is

presumed that manufacturers will

choose the option that is most

advantageous to them, but each option

imposes costs, some of which will be

passed on to other members of society

(consumers) in the form of higher prices

and some of which will be borne

directly by the manufacturers.

The cost for reformulating

noncompliant products depends on the

level of effort required to develop a new

product (e.g., research and development

and market testing expenditures) and

how these expenditures are incurred

over time. Data on level of effort were

provided to the regulatory negotiation

committee (see section IV.B for

discussion of the negotiation) for

prototype reformulations, from which

an annualized cost estimate of

approximately $17,772 (in 1991 dollars)

per reformulation was computed. This

cost is assumed to be independent of the

annual sales volume of the product.

Other costs and cost savings associated

with reformulation are likely, but could

not be quantified. Unquantified costs

include material cost changes and

changes in disposal costs.

An economic impact analysis of the

proposed regulatory requirements was

performed. Potential cost, price, and

output effects for the architectural

coatings industry were examined for the

proposed table of VOC levels. The

economic analysis also evaluated the

option of utilizing an exceedance fee,

which is an alternative compliance

mechanism that is discussed in detail in

section V.D. However, the analysis did

not consider the impact of any variances

or low volume exemptions that may be

granted to reduce impacts.

The cost analyses performed were

based on data from the 1990 VOC

Emissions Inventory Survey. These

survey data represented approximately

75 percent of the total volume of

architectural coating products produced

in 1990. For the products in the survey

population, the estimated average

annualized cost, if all products

exceeding the VOC levels were

reformulated to meet the standard, is

$260 per ton of VOC emissions

reduction (in 1991 dollars). This value

is extrapolated to the national

population for the cost and economic

analysis.

With exceedance fees as an option, it

was estimated that manufacturers would

choose to pay fees for approximately 12

percent of products instead of incurring

reformulating costs or exiting the market

in 1997. These products only account

for about 2 percent of industry output,

so the foregone emissions reduction by

allowing the fee is less than 0.8 percent

(2,308 tons) of estimated baseline

emissions. However, the fee reduces

national reformulation costs by roughly

50 percent. Thus, it is anticipated that

the exceedance fee provision could

allow significant cost savings while

sacrificing little in the way of emissions

reduction.

The estimated market effects from the

proposed standards are relatively slight.

In 1997, approximately one million

liters of architectural coating products,

accounting for less than one-tenth of

one percent of industry product volume,

are projected to withdraw from the

market. Price effects in each market

ranged from no effect to an increase of

less than two cents per liter, which is

still less than a one percent increase of

the baseline price. Average price and

quantity effects across all market

segments were each less than one-tenth

of one percent of baseline values.

Although relatively little product

volume is projected to be withdrawn or

subject to an exceedance fee, the

remaining volume is subject to

reformulation and bears the associated

cost. The estimated cost to society of the

regulation is approximately $25.0

million per year (evaluated in 1991

dollars, excluding reporting and

recordkeeping costs, and costs to the

EPA). These cost estimates amount to

roughly 0.4 percent of baseline revenues

for the industry. With the exceedance

fee alternative compliance mechanism,

the estimated annual cost decreases to

$13 million, which equates to a savings

of $12 million.

Resource constraints preclude an

evaluation of foreign trade impacts.

However, according to a 1992 study by

SRI International, importers accounted

for less than one percent of total coating

sales volume in 1990. Due to importers’

small market presence and the lack of

detailed product data on imported

coatings, importers have not been

included in the cost and economic

impacts analysis. However, all of the
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32735

flexible compliance options that are

available for manufacturers are also

available for importers. The EPA solicits

comment on the potential cost and

economic impacts of this rule on

importers.

As discussed earlier in this section,

the estimated national cost for the

regulation is based on information

developed by industry representatives

during the regulatory negotiation. The

assumption in estimating these costs

was that coating technologies would

need to be researched and developed in

the laboratories of resin manufacturers/

suppliers and paint manufacturers in

order to meet VOC requirements.

Although the proposal is significantly

less stringent than the potential

requirements discussed during

negotiations (which would have been

implemented in three phases), the EPA

has relied on these same reformulation

cost estimates for calculating the

national cost of the proposed rule.

Given that the rule has similar VOC

content requirements to State rules

which have been enforced since 1990,

the EPA believes the reformulation

estimates used may be overstated. Since

the proposed rule is implementing

available resin technologies, the cost to

comply for those manufacturers needing

to reformulate their higher VOC coatings

is expected to be partially reduced

through the assistance of resin

manufacturers/suppliers. Upon request,

most resin suppliers are willing to share

information and sample low VOC

coating formulations with interested

paint manufacturers, both large and

small. In addition, another limitation in

the cost data is that no distinction for

reformulation cost is made between

categories (i.e., the reformulation cost in

one category is the same as the

reformulation cost in any other

category), or in relation to the required

VOC content reduction (i.e., it does not

distinguish between coatings at different

VOC levels above the limit). The EPA

requests comment and technical

information on previous (since 1990) or

potential reformulation costs.

Commenters on this topic should

provide detailed information specific to

a given category and VOC content level

change (e.g., total number of

noncompliant products within each

category, VOC content and sales

information for each noncompliant

product, the applicable category, and

the estimated cost of reformulation).

The EPA also requests historic

information about product

reformulations and reformulation costs

in response to State and local

architectural coating regulation. In

addition, information is requested on

any changes in variable (e.g., raw

material) costs or disposal costs

associated with manufacturing coatings

to meet the proposed VOC levels.

D. Cost-Effectiveness

The EPA often compares the relative

cost of different measures for controlling

a pollutant by calculating the ‘‘costeffectiveness’’ of the measures. Using

the 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 Mg (or ton) of emissions reduced.

Using social cost and emission

reduction figures presented earlier in

this section of the preamble, the

nationwide cost-effectiveness of the

proposed regulation is $260 per Mg

($237 per 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

($25 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.

The proposed standard will achieve

42,341 Mg of VOC emission reductions

in ozone nonattainment areas. Thus, the

cost-effectiveness of the rule in limiting

VOC emissions in nonattainment areas

would be $590/Mg ($538/ton). It has

been suggested that cost-effectiveness

could also be calculated considering the

seasonality of ozone formation, and the

EPA requests comment on this

approach.

While such an approach offers a

measure of the cost of emission

reductions in nonattainment areas, the

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

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 control techniques

guidelines (CTG). A request for

comment and further information on the

use of a CTG is discussed in section

V(J)(2) of this notice.

The EPA requests comments on the

traditional and alternative methods

discussed above to characterize the costeffectiveness of this regulation.

IV. Rulemaking Decision Process

A. Legislative Authority

Section 183(e) of the CAA gives the

EPA the authority to establish national

standards to reduce VOC emissions

from architectural coatings. According

to the CAA, regulations developed

under this section shall require best

available controls (BAC). Best available
32736 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

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 V.C describes the EPA’s

determination of BAC for the proposed

regulation.

B. Regulatory Negotiation Procedure

1. Overview of the Regulatory

Negotiation Process

The regulatory negotiation process is

an alternative to the traditional

approach to rulemaking. Negotiations

are conducted through an advisory

committee (hereafter ‘‘the committee’’)

that consists of representatives of the

interests significantly affected by the

outcome of the regulation (e.g., industry,

States, environmental groups, and

consumers). In this process, the EPA

works closely with the members of the

committee to develop the regulation.

The goal of the committee is to

attempt to reach consensus on language

or issues that can be used as the basis

of a proposed rule. If the committee fails

to reach consensus, the EPA proceeds

with its own regulatory development

approach.

2. History of the Architectural Coatings

Regulatory Negotiations

The EPA recognizes that there are

many issues and challenges in

developing, proposing, and

promulgating a rule for this source

category. In early 1992, the EPA held

three meetings with representatives of

the industry (including small and large

manufacturers), trade associations, resin

suppliers, States, and environmental

groups to discuss the potential scope of

the regulation and issues, share

information, determine data collection

needs, and assess whether a regulatory

negotiation would be appropriate for

this industry.

On July 16, 1992, the EPA solicited

comments on its intent to form an

advisory committee under the authority

of provisions of the Federal Advisory

Committee Act (FACA), 5 U.S.C. app. II

9(c), and the Negotiated Rulemaking Act

(NRA), 5 U.S.C. Sections 581–590, to

negotiate a proposed regulation for

architectural coatings, referred to in the

notice as AIM (architectural and

industrial maintenance) coatings. The

EPA held a meeting in July 1992 to

discuss the feasibility of conducting

regulatory negotiations to develop a

regulation for architectural coatings.

Based on the interest of the potentially

affected parties and the EPA, the EPA

decided to proceed with the regulatory

negotiation process. After publishing a

notice of establishment of the regulatory

negotiation committee in the Federal

Register on October 2, 1992 (57 FR

45597), the first official regulatory

negotiation meeting was held in October

1992 (57 FR 45597).

The members of the regulatory

negotiation committee represented the

affected industries, consumers, Federal

agencies, State and local air pollution

control agencies, environmental groups,

and labor organizations. Regulatory

negotiation meetings were held from

October 1992 to February 1994. During

the negotiation process, it became

evident that certain groups of committee

members shared similar views and

interests. These groups were called

‘‘caucuses.’’

During the negotiations, most of the

caucuses submitted proposed

regulations for review by the rest of the

committee. Based on elements from the

caucus proposals and discussions, a

number of ‘‘frameworks’’ for a potential

regulation were prepared by the EPA

and the facilitator during the more than

two years of negotiation. Despite these

efforts, the committee could not reach

consensus on a regulatory framework.

Therefore, on September 23, 1994, the

negotiations facilitator notified each of

the committee members that the

regulatory negotiations were concluded

without consensus. Following this

decision, the EPA continued

development of the rule. The EPA used

the information obtained in the

negotiations to develop the proposed

rule. The proposed rule development

was, therefore, assisted in part through

the regulatory negotiation. Specifically,

information on the volume, VOC

content, and HAP content of coatings

produced in 1990 was collected in the

VOC Emissions Inventory Survey

conducted by industry. Categories and

definitions for architectural coatings

were presented and discussed both in

caucus meetings and meetings of the

entire committee.

V. Rationale

The following sections explain the

rationale for selecting the proposed

standards.

A. Applicability

These proposed standards apply to all

architectural coatings that are

manufactured or imported for sale or

distribution in the United States on or

after April 1, 1997. Architectural

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 CAA.

In general, architectural coatings

protect the substrates to which they are

applied from corrosion, abrasion, decay,

ultraviolet light damage, or the

penetration of water. These coatings are

recommended for field application to

stationary structures and their interior

or exterior appurtenances, portable

buildings, pavement, and curbs. The

definition in the proposed regulation

includes the term ‘‘field application’’

and specifies ‘‘stationary structures’’ in

order to distinguish architectural

coatings from those coatings applied at

a coating or recoating facility or other

shop or maintenance facility.

Some architectural coatings have

specialized functions. Concrete form

release compounds and concrete curing

compounds are examples of

architectural coatings that are used

during construction, rather than being

used for protecting or enhancing the

finished structure. Fire-retardant/

resistive coatings and traffic marking

coatings have important public safety

functions. Coatings may also increase

the aesthetic value of a structure by

changing the color or texture of its

surface. Application of architectural

coatings also decreases maintenance

costs associated with stationary

structure replacement or repair. Input

received during negotiations from

committee members was used to take

these economic, protective, safety, and

aesthetic benefits of architectural

coatings into consideration in the

development of these proposed

standards.

The proposed standards do not apply

to some types of coatings. There are

exemptions for exported coatings,

coatings manufactured or imported

prior to April 1, 1997, coatings that are

sold in nonrefillable aerosol containers,

coatings that are collected and

redistributed at community-based paint

exchanges, and coatings that are sold in

containers with a volume of one liter or

less.

The purpose of Section 183(e) of the

CAA 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 the 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
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32737

are exempt from the requirements of the

proposed rule. Coatings manufactured

and imported prior to April 1, 1997 are

exempted because the compliance date

for the proposed rule is April 1, 1997.

An exemption for coatings sold in

nonrefillable aerosol containers is

included in the proposed rule because

the EPA is addressing these coatings

separately under Section 183(e)

authority. The reason is because aerosol

paint is considered a specialty paint

product and typically involves a

specialized division within a paint

company. In addition, it is a complex

category due to the many subcategories

of aerosol paint, and the range of

options to reformulate include the

potential to change propellant

formulations.

Community-based paint exchanges

are programs in which the general

public may drop off and pick up postconsumer architectural coatings

(leftover paint), typically free of charge,

and thereby reduce household

hazardous waste. The exchanges occur

between users and not manufacturers.

Even though these coatings may be

repackaged and the proposed regulatory

definition of ‘‘manufacturer’’ includes

repackagers, repackaging that occurs at

community-based paint exchanges is

specifically excluded from the

definition. These programs are

consistent with the EPA’s pollution

prevention policies and are generally

considered effective in minimizing

waste. Because the EPA wants to

encourage this form of recycling, the

EPA has excluded paints exchanged in

these programs from the proposed rule.

An exemption for products sold in

containers with capacities of one liter or

less is included in the proposed rule as

means for manufacturers and importers

to keep selected products on the market.

Similar exemptions are included in

State regulations. Due to the increased

cost of packaging products in smaller

size containers, and the increased bulk

of multiple containers, the EPA would

not expect a marked increase in the

number of products sold in small

volume containers as a result of the

exemption. No reporting or

recordkeeping would be required for

this provision.

B. Regulated Entities

In contrast to traditionally regulated

stationary sources that emit VOC at a

specific fixed location (e.g., a

manufacturing plant), VOC from

architectural 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 architectural coatings at the

distributor and end user level.

Regulated entities are defined under

Section 183(e) to include processors,

wholesale distributors, and those

entities that supply manufacturers,

processors, wholesale distributors, and

importers. However, regulated entities

in this proposal are limited to

architectural coating manufacturers and

importers.

The EPA is also considering including

‘‘processors’’ as a regulated entity.

Processors would be defined to include

individuals who add organic thinner to

the coating in a commercial setting at

the point of application. Commercial

settings would include industrial

applications of architectural coatings.

This would allow the regulation to

prohibit an applicator from using

organic solvents to thin a coating

beyond the manufacturer’s

recommendation. This is a concern

because if an applicator exceeds the

maximum recommended thinning,

expected VOC reductions may not be

achieved. The EPA requests comments

on this approach.

C. Selection of Best Available Controls

(BAC)

The primary factors considered in

determining BAC were technological

and economic feasibility, and

environmental impacts. Other factors,

such as non-air-environmental impacts

(solid waste and water) and energy

impacts, are expected to be minimal and

therefore do not vary significantly

among various VOC control levels.

Health impacts are expected to parallel

environmental impacts in terms of

directional benefit (i.e., as the

environment improves, health

improves).

The process of determining BAC for

architectural coatings presented a new

challenge for the EPA. In the past,

control levels for VOC emissions from

coatings were often established based on

the ability to use add-on controls. For

architectural coatings, the method for

achieving VOC reduction is through

reformulation, which is a pollution

prevention technique. Reformulation

could involve minor adjustments in

coating formulation or larger

adjustments involving a change in resin

technology.

The EPA considered many factors in

evaluating economic and technological

feasibility of VOC levels (i.e., degree of

reformulation). These include State and

local VOC requirements, VOC content

and sales information, technical

information, performance

considerations, cost considerations,

market impacts, and stakeholder

positions.

The discussion in section V.C.1

focuses on the general process used to

determine categories and VOC levels

that constitute BAC. The discussion in

V.C.2 describes the selection of BAC.

The determination of what constitutes

BAC by April 1, 1997 involved

consideration of what is economically

and technologically feasible in light of

the lead time available for compliance.

1. Process for Selection of BAC

The process of determining BAC

began with the collection of information

from existing State and local

architectural coating requirements. The

EPA focused generally on existing

categories and associated VOC limits in

State architectural coating rules to

determine what categories and VOC

levels might constitute the degree of

emissions reduction that represents

BAC. Since California has been

regulating architectural coatings for

almost two decades and generally has

the most stringent VOC limits in the

country, some California air quality

management district regulations were

gathered and the record underlying

these regulations was analyzed. The

EPA recognizes that what is achievable

now in California cannot necessarily be

used to extrapolate what is achievable

nationwide in 1997. Adequate

consideration must be given to lead

time, and any other factors that may

influence the ability to apply

requirements nationwide (e.g., climate

considerations).

After analyzing existing standards, the

EPA reviewed the data from the

Emissions Inventory Survey that was

developed during the regulatory

negotiation process. The regulatory

negotiation committee developed the

survey that was administered through

an industry trade association. This

survey accounted for roughly 75 percent

of the volume of architectural coatings

sold in 1990. The survey data included

information on the volume and VOC

content of coatings. Manufacturers were

surveyed primarily using a system of

coating categories that form the basis for

existing rules in several California

districts. The survey data were used to

identify the minimum VOC contents

needed for certain applications and/or

resin types as well as to determine the

feasibility of establishing lower VOC

levels for various categories based on

the distribution of coating sales with

respect to different VOC content levels.

The EPA also relied on technical

input and information received during

the regulatory negotiation process to
32738 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

determine BAC. The EPA considered

information that was submitted to the

docket by coating manufacturers and

other members of the general public

during the course of the regulatory

negotiations, and definitions for

categories found in other EPA

regulations. The expertise of the EPA’s

engineering staff also was used to

develop the appropriate definitions that

would minimize overlap and specify

characteristics so that manufacturers

and enforcement personnel can identify

the applicable category for each coating

on the market.

The Emissions Inventory Survey did

not provide data to answer the question

as to whether coatings at a given VOC

level can meet all the performance

needs within a particular category.

Ideally, coating performance data in

addition to VOC content and sales data

would have been gathered to better aid

this type of determination. Collection of

performance data, however, is

complicated due to the subjective nature

of performance requirements.

‘‘Acceptable’’ performance is difficult to

evaluate. In evaluating potential

emissions of VOC into the environment,

acceptable performance means durable

coatings with qualities acceptable to the

consumer that would maximize the

interval between required repaintings.

These acceptable qualities can vary

significantly depending on the

consumer and the coating category. For

example, durability might be of limited

value in evaluating house paint since a

house paint may be painted over due to

extraneous factors such as resale of the

house or redecorating long before the

coating begins to fail. For coatings used

in an industrial setting, such as high

temperature and industrial maintenance

coatings, repainting is more dependent

on durability considerations. A variety

of performance levels within most

coating categories presently exist in the

marketplace and will continue to exist

after regulation.

Because there is no consensus within

the architectural coating industry on

standards by which to evaluate

acceptable coating performance, it was

not obvious what performance data

could be gathered to permit comparison.

The EPA relied to some extent on input

from the negotiation committee to

determine the BAC VOC level within

each coating category that would allow

customer performance needs to be met.

Beyond that, the EPA also relied on the

survey results as support for its

conclusions about the achievability of

various VOC levels in light of

performance needs. Although the EPA

recognizes that the authority under

Section 183(e) does not limit BAC

determination to coatings available in

the marketplace today, availability and

the fact that customers are purchasing

coatings at a particular VOC content

level to meet their performance needs

were significant factors in the EPA’s

BAC determination process.

While low VOC coatings are available

today which meet the proposed coating

VOC limits, there continues to be debate

over the performance characteristics and

perceived limitations of low VOC

architectural coatings. This issue was

raised by some industry representatives

during development of the proposed

rule. Specifically, it has been argued

that low VOC content levels may be

counterproductive if the use of coatings

with reduced VOC results in more

coating applied, more thinners needed,

and more frequent recoating, and

consequently, more emissions. This

argument has been made broadly,

without detail as to the VOC content

levels to which it pertains or the

categories involved. The EPA is aware

of numerous examples of low VOC

systems which perform better than the

traditional higher VOC systems and

which result in less emissions. The EPA

requests documentation, test results, or

factual evidence which either supports

or refutes claims about performance

changes in coatings with VOC contents

that comply with the proposed

standards.

In addition, the EPA relied on the

background and expertise present

within the Agency to make decisions

regarding category selection and

corresponding VOC content levels. The

EPA has developed VOC standards and

guidance documents for different

sectors of the paint industry since 1977.

The EPA has expertise in analysis of

control techniques for coatings and in

developing test methods for coatings,

including the test method used to

determine the VOC content of coatings

(Method 24).

The BAC selection process involved

both selection of categories and

determination of VOC content levels.

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, the industrial maintenance

coating category is fairly broad and

encompasses many industrial coating

applications. As the technological and

economic feasibility of lower VOC

content levels are considered for the

industrial maintenance category,

coatings within a particular application

may not be able to meet the VOC level

under consideration. Rather than

establish the VOC level high enough to

allow this particular application, the

category can be subdivided to create

another category that would then allow

the achievable VOC content for

industrial maintenance to be lower. For

example, the ‘‘high temperature

coating’’ category was created to allow

a more stringent VOC level for the

broader category of ‘‘industrial

maintenance coatings,’’ which

otherwise would have included high

temperature coatings. Rather than raise

the VOC content level for all the

industrial maintenance coatings to

ensure that high temperature coatings

could achieve this level, the EPA

created a separate, less stringent VOC

level for high temperature coatings

while maintaining the more stringent

level achievable for other types of

industrial maintenance coatings. Thus,

it is possible to achieve lower VOC

levels and greater emission reductions

while still meeting the performance

needs of some coating categories by

further subdividing particular

categories. Stains and wood

preservatives have both been

subdivided into clear and

semitransparent, and opaque coatings.

This subdivision of categories helps

preserve markets while still achieving

emission reductions.

During development of the proposed

rule, some industry representatives

provided requests for particular

categories to be created and given a

higher VOC level than the VOC level for

the more general category in which it

would otherwise be grouped. Categories

for which adequate justification was

presented appear in the proposed rule.

However, in cases where significant

overlap between the requested category

and other existing categories was

apparent and the overlap could be

expected to undermine the degree of

emission reductions achieved, the

category was not included in the

proposal. The categories and definitions

in the proposed rule are roughly

consistent with the categories and

definitions presented during

negotiations.

For the BAC determination, the EPA

generally focused on the coating

categories that contribute the largest

amount of VOC to the environment.

2. Determination of BAC

A primary consideration affecting the

selection of VOC content levels that

EPA believes represent BAC was the

need expressed by many industry and

regulatory stakeholder representatives to

proceed with development of these

standards as quickly and expeditiously
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32739

as possible. State and local agencies and

representatives of industry who market

products in different States have

expressed concern about the lack of

Federal VOC standards for architectural

coatings. For this reason, the EPA has

focused on establishing VOC levels that

would take effect in 1997. An expedited

rulemaking process for this proposed

rule is necessary to fulfill the

expectations and reliance of the States

and to give coating manufacturers

timely notice of requirements.

Therefore, EPA based the BAC

determination on VOC content levels

that could be achieved in a short time

frame (by April 1, 1997). As discussed

in section II.D.1 of this preamble, EPA

requests comment on the adequacy of

this compliance lead time.

The EPA attempted to gather specific

information with which to determine

the technological and economic

feasibility of different VOC limits that

would take effect in 1997. The following

paragraphs discuss this information and

how EPA used it to determine BAC.

Fourteen categories which appear in

the proposed rule and which are found

in existing State standards were

included in a list of categories

developed during the regulatory

negotiation referred to as ‘‘low volume.’’

These are anti-graffiti coatings,

bituminous coatings and mastics, bond

breakers, concrete curing compounds,

fire-retardant/resistive coatings (clear/

pigmented), form release compounds,

graphic arts coatings (sign paints), high

temperature coatings, magnesite cement

coatings, mastic texture coatings, multicolor coatings, pre-treatment wash

primers, sanding sealers, and swimming

pool coatings. The VOC content levels

in Table 1 for these categories are in the

upper range of the VOC content limits

found in existing State rules. The

industry argued that these coatings

represent unique compositions and

specialized uses, and the imposition of

lower VOC levels on these categories

would probably result in an adverse

economic impact on the manufacturers

and may even have a disproportionate

effect on small manufacturers. Because

these coatings are used in relatively low

volumes and in a limited range of

circumstances, the EPA has determined

that it should set VOC levels for these

coatings based on the justification

presented by the industry and that

additional effort to collect more data is

not warranted in the development of

this proposal. After proposal, the EPA

plans to reevaluate the feasibility of

more stringent VOC levels for these

categories as part of the joint study with

industry that is described in section VI.

In addition to the 14 ‘‘low volume’’

categories discussed, the VOC

Emissions Inventory Survey contains 12

categories that represent about 75

percent of the VOC emissions

(industrial maintenance, interior

nonflat, exterior nonflat, clear and

semitransparent stains, clear

waterproofing sealers and treatments,

interior flat, roof coatings, primers and

undercoaters, traffic markings, exterior

flat, varnishes, and lacquers). For these

26 categories and an additional 15

categories contained in the survey, sales

and VOC content data indicate that

coatings are available that can achieve

the VOC content levels listed in Table

1. The fact that the survey reveals that

coatings are available that meet today’s

proposed standard is one factor that

supports the conclusion that these

coatings are economically and

technologically feasible.

During regulatory negotiation

discussions of potential VOC content

limits, 17 additional specialty coating

categories were added to the list of

categories under consideration. These

categories were generally offered as a

result of discussion of specific VOC

content levels for more general and

broad categories such as industrial

maintenance coatings. These specialty

coating categories did not appear in any

existing State architectural coating

regulation and, excepting high

performance architectural coatings,

were not categories for which data were

collected in the VOC Emissions

Inventory Survey. These 17 categories

include alkali-resistant primers, antenna

coatings, antifouling coatings,

chalkboard resurfacers, concrete

protective coatings, extreme high

durability coatings, floor coatings, flow

coatings, heat reactive coatings, high

performance architectural coatings,

impacted immersion coatings, lacquer

stains, nonferrous ornamental metal

lacquers and surface protectants,

nuclear coatings, repair and

maintenance thermoplastic coatings,

rust preventative coatings, and

thermoplastic rubber coatings and

mastics.

Fourteen of these 17 additional

specialty coating categories appear in

today’s proposal because discussion

during negotiations and/or petitions

from individual companies provided

support for inclusion of these categories

and an associated VOC content level

separate from the broader category and

level to which they otherwise would

have been assigned. No data were

available to the EPA to conclude that

lower VOC content levels for these

categories would represent BAC.

Three of these 14 categories which

appear in the rule, antenna coatings,

antifouling coatings, and nuclear

coatings, were assigned VOC content

levels consistent with those found in the

EPA’s National Emission Standards for

Hazardous Air Pollutants for

Shipbuilding and Ship Repair (59 FR

62681). These VOC levels were based

primarily on information contained in

the EPA’s Alternative Control

Techniques (ACT) Document: ‘‘Surface

Coating Operations at Shipbuilding and

Ship Repair Facilities,’’ EPA–453/R–94–

032.

Two of the three specialty categories

that do not appear in the proposed rule

are alkali-resistant primers and lacquer

stains. Although the EPA considered

inclusion of alkali-resistant primers

based on requests from some

manufacturers, it was excluded for two

reasons. Significant overlap between

alkali-resistant primers and the more

general primer category is apparent, and

comments were received about the

ability of latex coatings (lower VOC

coatings) to perform the function of

alkali-resistant primers. For lacquer

stains, although arguments were

presented about the need for the

category, the overlap between lacquer

stains and the more general stain

categories would allow the higher VOC

lacquer stain for uses in which lower

VOC stains would be acceptable

substitutes. In order to attain the degree

of emission reductions achievable, these

categories are excluded in the proposed

rule. The coatings that would have been

classified into these categories would be

subject to the VOC level of the more

general category of either primers or

stains, as applicable.

The third coating category that was

surveyed in the VOC Emissions

Inventory Survey, but does not appear

in the proposed rule, is ‘‘high

performance architectural (HPA)

coatings.’’ Several industry proposals

presented to the regulatory negotiation

committee contained a definition and

VOC standard for HPA coatings with

subcategories for concrete protective

coatings, floor coatings, and rust

preventative coatings. However, the

information available to the EPA does

not support a need for a broad HPA

category. Rather than including a

separate, broad category of HPA

coatings, the proposal contains separate

definitions and VOC levels for concrete

protective, floor, and rust preventative

coatings. These subcategories were

specifically identified during

negotiations, and arguments were

presented for VOC levels and

definitions. These categories have

specific performance requirements such
32740 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

as prevention of water and chloride ion

intrusion (concrete protective coatings),

abrasion resistance (floor coatings), and

prevention of the corrosion of metals

(rust preventative coatings).

In April 1995, architectural coating

industry representatives submitted

recommended VOC content limits for

BAC to the EPA. These industry

representatives reported that these

limits were developed based on

extensive negotiations within the

industry to determine what is

economically and technologically

feasible. Today’s proposed VOC

requirements are consistent with those

in the proposal submitted by these

industry representatives.

The EPA requests comment and any

supporting data on the appropriateness

of inclusion or exclusion of the 17

additional specialty categories and the

VOC content levels assigned to all of the

categories included in the proposed

rule. For comments supporting

exclusion of a category, the supporting

argument should include data to show

why the category under consideration

could be expected to meet (consistent

with performance needs) the VOC levels

applicable to the more general category

to which it would revert back in the

absence of the specific category. For

comments supporting inclusion of a

category, the request should be

accompanied by a detailed explanation

of the need for the category, and data on

why lower VOC coatings would not be

acceptable substitutes.

In addition, the EPA requests

information on any coating category

where recent progress in low VOC resin

systems has resulted in new low VOC

coatings being introduced into the

market since 1990. The EPA requests

comments on the ability of coatings

with VOC content levels lower than

those in Table 1 to meet the

performance needs within the category.

D. Exceedance Fee Approach

An exceedance fee economic

incentive approach is being considered

for inclusion in the architectural coating

rule. Under this approach,

manufacturers and importers would

have the option of paying a fee, based

on the amount that VOC content levels

are exceeded, instead of achieving the

VOC content levels listed in Table 1.

The fee would be calculated at an

initial rate of $0.0028 per gram ($2,500

per ton) of VOC in excess of the

applicable VOC level, multiplied by the

volume of coating produced. For

example, if a coating is 50 grams of VOC

per liter over the applicable VOC

standard, the fee rate would be

approximately 14 cents per liter ($.0028

per gram multiplied by 50 grams per

liter). The fee rate is in the upper end

of the range of the incremental VOC

reduction cost imposed by VOC

regulations for other source categories.

The EPA believes this rate is

appropriate because the exceedance fee

rate is intended to provide compliance

flexibility, but also be high enough to

encourage reformulation to meet the

applicable VOC level. This rate would

be adjusted for inflation periodically.

For all but two categories, the volume

of coating produced is determined

excluding the volume of any water,

exempt compounds, or colorant added

to tint bases to be consistent with the

units of the VOC content level. For the

two ‘‘low solids’’ categories (low solids

stains and low solids wood

preservatives), the volume is

determined ‘‘including water and

exempt compounds’’ to be consistent

with the units of the VOC content level

for these coatings. The exceedance fee

would be paid quarterly to the

Administrator and would be due no

later than two months after the end of

the quarter in which the coating is

manufactured or imported.

The fee option could be expected to

provide transition time for those

manufacturers that desire additional

time to obtain lower VOC technologies.

It could also provide a less costly

compliance approach for manufacturers

selling very low volume products.

Under the exceedance fee approach,

manufacturers and importers would be

required to keep records and submit

reports detailing the following

information for all coatings for which

fees are paid: VOC content, excess VOC

content above the standard, volume of

product manufactured or imported,

product quarterly fee, and the total

quarterly fee for all products.

Section 183(e) specifies that fees

collected must be deposited in a special

fund. Specifically, under Section

183(e)(5) of the CAA, funds collected

pursuant to the regulation of consumer

and commercial products:

* * * shall be deposited in a special fund in

the United States Treasury for licensing and

other services, which thereafter shall be

available until expended, subject to annual

appropriation Acts, solely to carry out the

activities of the Administrator for which such

fees, charges or collections are established

and made.

The Congress, through the annual

appropriations process, will determine

whether and how to spend any fee

revenues collected. The Administrator,

however, may make recommendations

to Congress concerning use of any funds

collected. Therefore, the EPA today

seeks comment on how the revenues

should be spent should the proposed

exceedance fee option be promulgated

as part of the final rule. The EPA

believes that it may be possible to

construe the statutory language on

potential uses of the money either

broadly, to authorize spending for a

wide variety of activities related to

reducing ozone, or more narrowly. In

particular, the EPA requests comment

on whether these revenues should be

used for:

(1) Grants or awards to promote the

development of lower VOC architectural

coating technologies by private firms, or

by other governmental or

nongovernmental entities;

(2) Purchase by the government of

VOC emission reduction credits from

private firms or emission credit brokers;

(3) State and EPA administrative and

enforcement costs in carrying out

architectural coating rules, or other

rules to reduce VOC emissions from

consumer and commercial products; or

(4) Other possible uses.

In addition to comments on the use of

exceedance fees, the EPA seeks

comment on the exceedance fee rate,

and recordkeeping and reporting

associated with this option.

E. Low Volume Categories/Exemption

The EPA recognizes that there may be

some low volume, specialty niche

products for which it may not be cost

effective for either the manufacturer or

resin supplier to develop a lower VOC

formulation. The Agency addressed this

concern during the regulatory

negotiation by developing many new

specialty categories and definitions

which have been subsequently included

in the proposed rule. To evaluate what

further steps may still be needed to

accommodate niche coatings within the

proposed rule, the EPA requests

detailed information on the following:

(1) Identification of any specialty

coatings which do not comply with

Table 1. (specify coating category from

Table 1 in which the product would be

classified) and that cannot be costeffectively reformulated, (2) the sales

volume and VOC content of each

identified product, (3) detailed cost

estimate for reformulation (e.g., manyears, and product testing expected to

be involved) and (4) whether a lower

VOC alternative product currently exists

in the market which can adequately

substitute for the identified specialty

product.

EPA will consider developing

additional categories for newly

identified niche markets in the final

rule. In addition, based on

reformulation cost, sales volume, and

VOC emissions information gathered in
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32741

response to the above request on low

volume products, the EPA will evaluate

the option of a categorical exemption for

any new or existing low volume

specialty categories. Alternatively,

although no coating manufacturers have

requested that EPA consider a low

volume exemption, the EPA will

consider establishing a low volume cutoff, under which a coating may be

exempt from regulation. These

approaches would allow these low

volume, specialized products to remain

on the market. Under the low volume

exemption concept, any manufacturer or

importer may request an exemption

from the VOC levels in Table 1 for

specialized coating products that are

manufactured or imported in quantities

less than a specified number of gallons

per year. This exemption would require

an annual report, recordkeeping, and

labeling.

A major issue with this type of an

exemption is where to set the cut-off.

The EPA would design any low volume

exemption to avoid significant loss in

emission reductions. The EPA has

limited data with which to evaluate an

appropriate cut-off level. The EPA

requests comment on a cut-off in the

range between 1,000 and 5,000 gallons

per year.

A manufacturer or importer applying

for this type of exemption would need

to submit an annual report. This report

would contain a written request for the

exemption, a list of the coating products

for which the exemption is being

requested, a statement signed by a

responsible official that the sales of each

product for which the exemption is

being requested will not exceed the cutoff established, and documentation and

a statement signed by a responsible

official that each product serves a

specialized use which cannot be costeffectively replaced with another, lower

VOC product. In addition, the report

would contain the following

information for each product for which

the exemption is being requested: the

name of the product, the specialized

use, the sales of the product in the

previous year, and the VOC content of

the product. The EPA can waive this

reporting requirement on a case-by-case

basis if the information from each year

is essentially the same. Whether or not

reporting is waived, the company would

be required to keep records for a three

year period sufficient to demonstrate

upon request that the product qualified

for the exemption. A company that sold

more than the cut-off amount of a

product for which the exemption was

claimed would be in violation of the

rule and subject to the same penalties as

any company producing coatings in

violation of the VOC content limits.

In addition, the following statement

would need to be placed on the label or

lid of each container of coating for

which the exemption is being applied:

‘‘This is a specialized architectural

coating produced in volumes less than

X gallons per year.’’ The labeling

requirement would serve to identify

these coatings to enforcement

personnel.

The EPA’s goal would be to set the

volume cut-off for this exemption low

enough such that it would not

significantly impact the VOC emission

reductions achieved by the rule, yet

high enough such that, if needed, it

could be expected to be used by a

number of smaller manufacturers and

importers for their low volume

products.

The EPA requests comment on

whether a low volume exemption would

have any disadvantages. Such an

exemption might create an incentive for

some companies to circumvent the rule

by taking a higher volume product and

marketing (with or without any

variations in formulation) as several

separate products, each meeting the

sales volume cut-off. Also, some may

perceive that a low volume exemption

would give competitive advantage to

higher polluting, low volume products.

The EPA requests comments on

whether this exemption should be

included in the final rule and on the

following specific aspects of this

exemption: (1) What would be an

appropriate cut-off level? (2) To what

degree would a low volume exemption

aid small manufacturers and importers

in complying with the rule? (3) To what

extent would the exemption be used if

included in the regulation? (4) Would

such an exemption be equitable? (5)

Would such an exemption create

incentives for circumvention of the

rule?

F. Special Provisions

This section contains a description of

the rationale for the recycled coating

and variance provisions that are

included in the proposed standard.

1. Recycled Coatings

The proposed regulation allows

manufacturers and importers VOC

credit for recycling post-consumer

coatings. Post-consumer coating is

unused coating that has been previously

purchased by a consumer, and is

subsequently combined with virgin

materials and offered for sale as a

recycled coating. The proposed credit

for recycled coating content is

demonstrated in the following example:

If a coating has a VOC content

(calculated as prescribed in § 59.404 of

the regulation) of 400 grams per liter of

coating and contains 10 percent

recycled coating, then 10 percent of the

calculated VOC content (40 grams per

liter) is subtracted or credited to give an

adjusted VOC content of 360 grams per

liter. Compliance is determined based

on the adjusted VOC content.

The calculation of an adjusted VOC

content is included in the proposed

regulation to encourage recycling by

providing flexibility to manufacturers of

recycled coatings. Recycling these

coatings eliminates the need for their

disposal (some unused coatings may be

considered hazardous waste) and

reduces the amount of new coating that

must be manufactured.

The EPA recognizes the inherent

difficulties associated with enforcing

the credit associated with the recycled

coating provision. It is not normally

possible to determine the fraction of

post-consumer content by analytical

means. Therefore, enforcement would

be through an evaluation of reports

submitted by manufacturers or

importers of recycled coatings (see

section II.G) and a comparison of these

reports to claims of recycled content on

the labels of coatings. The EPA requests

comment on this VOC credit for

recycled coatings and the enforcement

of such a provision.

2. Compliance Variance.

The proposed rule includes a variance

provision whereby manufacturers and

importers of subject architectural

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. Within

the architectural coatings industry,

small manufacturers are likely to have

fewer research and development
32742 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

resources, and therefore, will benefit

from the allowed variance.

G. Labeling and Public Information

Requirements

1. Containers of All Subject Coatings

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) and the maximum VOC content in

the coating. The date of manufacture on

the label or lid allows enforcement

personnel to determine whether the

coating was manufactured prior to April

1, 1997.

Section 183(e) of the CAA specifically

authorizes the EPA to require certain

labeling and informing of the public as

mechanisms for control of VOC

emissions from consumer and

commercial products. The proposed

standards include labeling requirements

that not only allow the EPA to verify

compliance with the VOC content levels

but also to inform consumers about VOC

content. Such labeling, with appropriate

consumer education, might provide an

incentive to consumers to purchase

coatings that will emit less VOC, and to

manufacturers and importers to

manufacture or import lower VOC

content coatings.

As described in section II.E, the EPA

is considering two other labeling

requirements. The EPA is considering a

requirement to include on the label of

each coating an educational statement

about VOC emissions, and their

potential contribution to ground-level

ozone. The EPA requests comment on

whether an outreach effort would be as

effective an approach as an educational

statement. Also, the EPA is considering

a requirement to include coating

coverage information on all

architectural coating labels. Comment is

requested on the feasibility of this

requirement.

2. Containers of Industrial Maintenance

Coatings

In addition to the general labeling

requirements for all architectural

coatings, containers of industrial

maintenance coatings (as defined in

§ 59.401 of the proposed regulation)

must also include on the label or lid the

phrase ‘‘NOT INTENDED FOR

RESIDENTIAL USE.’’ Section 183(e) of

the CAA provides authority to include

in the regulation directions for use of

the product. The proposed VOC levels

for industrial maintenance coatings

were set based on more rigorous

performance specifications than those

needed for residential applications.

While this labeling requirement is

intended to discourage consumers from

applying industrial maintenance

coatings in a residential setting where a

lower VOC coating with less rigorous

performance specifications may be

adequate, it does not prohibit the use of

industrial maintenance coatings in a

residential setting where extreme

environmental conditions are present

and for which an industrial

maintenance coating would provide the

most viable protection from these

conditions.

3. Containers of Recycled Architectural

Coatings

Containers of recycled architectural

coatings, in addition to the requirements

listed previously for all subject coatings,

must also display a label that includes

the statement ‘‘CONTAINS NOT LESS

THAN X PERCENT, BY VOLUME,

POST-CONSUMER COATING,’’ where

X is replaced by the percentage, by

volume, of post-consumer coating.

Inclusion of the recycled coating

content is necessary for compliance

purposes to identify coatings for which

an adjusted VOC content has been

calculated.

H. Selection of Recordkeeping and

Reporting Requirements

The EPA evaluated what recorded and

reported information would be

sufficient to ensure compliance with the

VOC levels. The recordkeeping and

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

architectural coatings. For all but the

initial report, recordkeeping and

reporting are only required for

manufacturers and importers who

choose to take advantage of optional

provisions, including the calculation of

an adjusted VOC content (based on postconsumer coating content), the variance

provision, or the exceedance fee

approach that is under consideration.

For coatings for which the

manufacturer or importer chooses to

demonstrate compliance by meeting the

VOC content levels in the proposed

table (Table 1), enforcement personnel

can compare the VOC content of the

product to the VOC content statement

on the label to establish compliance or

noncompliance. Therefore, there are no

reporting or recordkeeping provisions

for the manufacturers and importers of

these coatings beyond initial

notification. The initial report serves to

notify the EPA of the identity of the

universe of all manufacturers and

importers subject to the standards.

The proposed rule includes reporting

and recordkeeping requirements for

coatings that contain post-consumer

coating and for which an adjusted VOC

content is reported for compliance

purposes. Manufacturers and importers

must maintain the required records for

these coatings for a period of three

years. The required recordkeeping and

initial reports are essential for the EPA

to determine whether coatings are in

compliance.

Manufacturers or importers that

choose to apply for a variance are

required to submit a variance

application to the Administrator. The

purpose of this application is for the

applicant to provide the Administrator

with sufficient information on which

the decision to grant, or not to grant, the

variance can be made.

The reporting and recordkeeping

requirements for the exceedance fee

approach and low volume exemption

that is under consideration for inclusion

in the final rule is discussed in section

V.D., and V.E. respectively

I. Test Methods

Under the proposed provisions,

compliance with the VOC content levels

is based on the EPA’s Reference Method

24. This is the EPA’s standard test

method for determining the VOC

content of coatings.

A provision allowing use of

alternative methods of determining VOC

content subject to the Administrator’s

approval is also included in the

proposed rule.

J. Alternative Regulatory Approaches

1. Other Systems of Regulation.

Section 183(e)(4) allows the EPA to

consider ‘‘any system or systems of

regulation as the Administrator may

deem appropriate, including

requirements for registration and

labeling, self-monitoring and reporting,

prohibitions, limitations, or economic

incentives (including marketable

permits and auctions of emission rights)

concerning the manufacture, processing,

distribution, use, consumption, or

disposal of the product.’’ Accordingly,

the EPA requests comment on any

alternative to the proposed system of

regulation.

2. Regulation with the Use of CTG

Section 183(e)(3)(C) gives the EPA the

flexibility to ‘‘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
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32743

compounds which contribute to ozone

levels in areas which violate the

national ambient air quality standard for

ozone.’’

In many cases, a CTG can be an

effective approach to reduce emissions

of VOC in nonattainment areas without

imposing control costs on attainment

areas. For example, a CTG may

effectively reduce VOC emissions from

commercial products used in industrial

settings where the targeted emissions

occur at a point of end use which is

readily identifiable, and at a fixed

location. However, a CTG may not be as

effective as a regulation to reduce

emissions in nonattainment areas for

architectural products because these

products are easily transportable and

widely distributed. This is because an

architectural coating CTG would

prohibit the sale of noncompliant

architectural coatings in nonattainment

areas. A CTG would have the potential

compliance problems associated with

noncompliant products being

transported into nonattainment areas

from neighboring areas and neighboring

states. In contrast, a regulation could

require modification of the product

itself. Since all products would be

subject to the same requirements, this

would help ensure effective

enforcement and implementation in all

areas.

It is expected that an architectural

coating national rule would reduce costs

of compliance for companies serving

national or large regional markets by

promoting consistency in VOC

requirements across the country. In

addition, a national rule would help

reduce recordkeeping and reporting for

those manufacturers who sell products

in both attainment and nonattainment

areas. To evaluate the benefits (i.e.,

reduction in cost) to manufacturers from

the consistency aspect of a national rule,

the EPA requests detailed information

from manufacturers on the cost to

comply with a variety of State

standards. In particular, the EPA

requests comment on the administrative

cost burden (inventory tracking,

distribution, labeling, and tracking of

State architectural coating regulation

development) expected to result from

use of a CTG. In addition, to evaluate

the population and product mix of

manufacturers who may be excluded

from regulation under a CTG approach,

the EPA requests comment on the

number and identity of manufacturers

who sell products solely in attainment

areas. To evaluate differences in the

reformulation cost associated with a

CTG versus a national rule, the EPA

requests comment on the proportion of

products which would be reformulated

if, in general, only nonattainment areas

were regulated. For example, EPA

requests information on whether

manufacturers would tend to produce

one product for attainment areas and

one for nonattainment areas, only sell

products in attainment areas, or

reformulate all products to be compliant

with applicable nonattainment area

requirements.

The EPA requests comment on

whether and how a CTG approach (by

itself, or in combination with any other

regulatory alternatives) would be as

effective as a national rule in reducing

VOC emissions in ozone nonattainment

areas. If warranted by comments, a

quantitative analysis of costs and

emission reductions expected from a

CTG will be completed.

K. Solicitation of Comments

The EPA invites comments

concerning the proposed standards,

particularly as noted in the preceding

sections concerning: the inclusion of

specialty product categories; the

technological and economic feasibility

of VOC levels listed in Table 1; the

ability of coatings with VOC content

levels lower than the proposed levels to

meet performance needs; the inclusion

of processors in the applicability of the

rule; economic and other impacts on

importers; the feasibility of requiring

coverage information to be displayed on

coating labels or lids; the effectiveness

of a public outreach program versus

statements on the container label to

educate users about the environmental

impacts of VOC in coatings; and the

placement of architectural coatings on

the consumer products priority list. The

EPA also requests information on

coating categories where recent progress

in low VOC resin systems has resulted

in new low VOC coatings that have been

introduced since 1990.

The EPA requests comment on the

inclusion of an exceedance fee option

for use as a compliance alternative to

meeting the VOC levels in Table 1.

Specifically, the EPA requests

comments on the following: the

appropriate use for revenues generated

from the fee; the appropriateness of the

exceedance fee rate; and the

appropriateness of the recordkeeping

and reporting requirements associated

with the fee.

The EPA requests detailed

information on any specialty coatings

which do not comply with proposed

standards, and cannot be cost-effectively

reformulated. The EPA also requests

comment on the inclusion of a low

volume exemption for specialty, niche

products. Specifically, the EPA requests

comment on the following: (1) What

would be an appropriate cut-off level?

(2) To what degree would a low volume

exemption aid small manufacturers and

importers in complying with the rule?

(3) To what extent would the exemption

be used if included in the regulation? (4)

Would such an exemption be equitable?

(5) Would such an exemption create

incentives for circumvention of the

rule?

In addition, the EPA requests

comment on the inclusion of the special

provision for VOC credit for recycled

coatings, the variance provision, and the

small container exemption. For all of

these provisions, the EPA requests

comment on the expected extent of their

use by small manufacturers and small

importers.

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 levels 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. Future Phase Under Consideration

The EPA believes further VOC

reductions beyond those in Table 1 may

be technologically and economically

feasible. A great deal of controversy

surrounds the proposal of more

stringent VOC levels in a future phase

of regulation. To address the

controversy, the EPA will participate in

a joint study with industry

representatives to investigate the cost

and performance characteristics of

coatings with VOC contents lower than

the proposed levels in Table 1. The

environmental and economic impacts of

requiring lower VOC contents will also

be assessed. In addition, the EPA will

continue to meet with other

stakeholders regarding the potential for

a future phase for the architectural

coatings rule. After analyzing comments

received regarding this proposal and

following completion of the joint EPA/

industry study, the EPA will evaluate

whether further reductions beyond the

1997 requirements are technologically

and economically feasible. The result of

this evaluation could be proposal of

more stringent VOC levels, the proposal

of economic incentive approaches, some

combination of VOC levels and

economic incentive approaches, or no

further action beyond the 1997

requirements.

The EPA is using this proposal as an

opportunity to solicit input for use in
32744 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

the joint EPA/industry study. The EPA

expects to focus effort in the study on

evaluation of issues which will include

the following: the cost and economic

impact of requiring lower VOC contents

than those in Table 1, identification of

any performance issues associated with

lower VOC content coatings, and

investigation of reactivity

considerations involved in

reformulating architectural coatings.

The EPA invites comments concerning

the planned EPA/industry study, and

any input on performance, cost or

reactivity considerations which should

be included in the study.

Because the EPA’s data consists of the

Emissions Inventory Survey of coatings

sold in 1990 and on limits in California

coatings regulations that have been in

effect since the late 1980’s, the EPA is

requesting information on coating

categories where recent progress in low

VOC resin systems has resulted in new

low VOC coatings being introduced into

the market since 1990. The EPA

requests comments on the ability of

coatings with VOC content levels lower

than those in Table 1 to meet the

performance needs within the category.

Cost information on these coatings is

also requested.

VII. 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

requirements in the proposed regulation

in accordance with Section 307(d)(5) of

the CAA. Persons wishing to make oral

presentation on the proposed regulation

for architectural 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 and Radiation

Docket and Information Center at the

address given in the ADDRESSES section

of this preamble and should refer to

Docket No. A–92–18.

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

and Radiation Docket and Information

Center in Washington, DC (see

ADDRESSES section of the preamble).

B. Executive Order 12866

Under Executive Order 12866, the

Agency must determine whether the

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 EPA has determined that this

rule is a ‘‘significant regulatory action’’

under criterion (4) above, based on both

the long regulatory negotiation process

that preceded this proposal and the

novel use of economic incentives

(potential exceedance fees) for this

industry. Therefore, the proposed

regulation presented in this notice was

submitted to the OMB for review as

required. Any written comments from

the OMB to the EPA and any written

EPA response to those comments will be

included in Docket No. A–92–18, listed

at the beginning of this notice under the

ADDRESSES section of this preamble.

C. Paperwork Reduction Act

The information collection

requirements in this proposed rule have

been submitted for approval to the OMB

under the Paperwork Reduction Act, 44

U.S.C. 3501 et seq. An Information

Collection Request (ICR) document has

been prepared by the EPA (ICR No.

1750.01) and a copy may be obtained

from Sandy Farmer, Office of Policy

Planning and Evaluation (OPPE)

Regulatory Information Division; U.S.

Environmental Protection Agency

(2136); 401 M Street., SW, Washington,

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

This ICR document is also available on

the EPA’s OAQPS TTN bulletin board

under the Clean Air Act Amendments

menu. See the SUPPLEMENTARY

INFORMATION section of this preamble for

information on accessing the EPA’s TTN

electronic bulletin board.

The information required to be

collected by this proposed rule is

necessary to identify the regulated

entities who are subject to the rule and

to ensure their compliance with the

rule. The recordkeeping and reporting

requirements are mandatory and are

being established under authority of

Section 114 of the CAA. All information

submitted as part of a report to the

Agency for which a claim of

confidentiality is made will be

safeguarded according to the Agency

policies set forth in title 40, Chapter 1,

part 2, subpart B, ‘‘Confidentiality of

Business Information’’ (see 40 CFR 2; 41

FR 36902, September 1, 1976, amended

by 43 FR 39999, September 28, 1978; 43

FR 42251, September 28, 1978; 44 FR

17674, March 23, 1979).

The total annual reporting and

recordkeeping burden for this

information collection averaged over the

first three years is estimated to be

37,447 hours and $1,279,469. This is the

estimated burden for 500 respondents

(i.e., architectural coating

manufacturers).

The average burden, per respondent,

is 75 hours per year. The total reporting,

recordkeeping, and labeling burden for

an individual respondent will vary

depending on the compliance option

chosen. Respondents choosing to meet

the VOC levels will have the lowest

reporting, recordkeeping, and labeling

burden, whereas, manufacturers and

importers that use the option of

calculating an ‘‘adjusted VOC content’’

(for recycled coatings) will have the

highest reporting, recordkeeping, and

labeling burden. The proposed rule

requires an initial one-time notification

from each respondent. Respondents

whose coatings products have a VOC

content that is less than or equal to the

VOC content levels have no periodic

reporting requirements. Respondents

choosing the recycled coatings

provision must submit annual reports.

Respondents choosing the variance

provision must submit a one-time report

requesting the variance.

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 estimate includes

the time needed to: (1) Review

instructions; (2) 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; (3) adjust the

existing ways to comply with any

previously applicable instructions and

requirements; (4) train personnel to be

able to respond to a collection of

information; (5) search data sources; (6)

complete and review the collection of
Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules 32745

information; and (7) transmit or

otherwise disclose the information.

The exceedance fee alternative

compliance mechanism being

considered for inclusion in the final rule

would require quarterly reports of fees

by the manufacturers choosing this

option. In addition, these manufacturers

would keep records for each coating

product on which fees are paid. The

average annual burden increase for each

manufacturer choosing this option is

194 hours.

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 Street SW; Washington,

DC 20460; and to the Office of

Information and Regulatory Affairs,

Office of Management and Budget, 725

17th Street NW; Washington, DC 20503;

marked ‘‘Attention: Desk Officer for the

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 June 25,

1996, a comment to OMB is best assured

of having its full effect if OMB receives

it by July 25, 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 the EPA to

consider potential adverse impacts of

proposed regulations on small entities

and to consider regulatory options that

might mitigate any such impacts. It is

currently the EPA’s policy to perform a

regulatory flexibility analysis of the

potential impacts of proposed

regulations on small entities whenever

it is anticipated that any small entities

may be adversely impacted. Because it

is anticipated that some small

architectural coating manufacturers

could be adversely impacted from

implementation of the proposed

standards, a regulatory flexibility

analysis was performed.

The analysis of small entity impacts

focused on the potential impacts on

small manufacturers producing

architectural coatings. For the purpose

of this analysis, small manufacturers

were considered to be firms with less

than $10 million of total gross annual

revenues from the sale of architectural

coatings and less than $50 million in

total gross annual revenues from all

products. Using this definition,

potentially 85 percent of architectural

coating manufacturers are considered

small manufacturers. A copy of the

technical memorandum titled

‘‘Economic Impact and Regulatory

Flexibility Analysis of the Proposed

Architectural Coatings Rule’’ is

included in the public docket.

Reducing VOC content generally

requires a fixed investment for

reformulation of each product to its

respective regulatory level. Because, on

average, coatings sold by small

manufacturers are sold in smaller

quantities than the industry average (an

estimated 67,000 liters per product

versus 377,000 liters per product), the

cost of reformulation per unit sold may

in some cases be significantly higher for

small manufacturers. To meet the

limitations in Table 1, the estimated

ratio of annualized reformulation cost to

revenues for small manufacturers equals

approximately 3.5 percent as opposed to

a ratio of only about 0.4 percent for the

entire industry. Thus, it may be difficult

for small coating manufacturers to pass

control costs to consumers in product

markets where competition with larger

manufacturers is significant. This

impact will be reduced to the extent that

small manufacturers are provided

reformulation technologies from larger

resin suppliers. Still, the EPA has

recognized a need to include special

compliance provisions in the rule to

avoid adverse economic impacts upon

small manufacturers.

The economic impacts on small

manufacturers were taken into

consideration in establishing both the

categories and VOC levels. Special effort

was made to consider the economic

feasibility of VOC levels for product

categories in which small manufacturers

have a disproportionate presence. The

small container exemption, compliance

variance, and consideration of an

exceedance fee option and low volume

exemption are also included in the

proposed rule primarily to reduce small

business impacts.

Because the per-unit costs of the

economic incentive options are constant

with respect to volume sold, and

because the per-unit reformulation cost

is higher for small-volume products

than large-volume products, an

economic incentive option, such as a

fee, if included, is more likely to be

beneficial to and adopted by small

manufacturers than by large

manufacturers. The results of the

economic analysis suggests that the fee

option is likely to provide a cost-saving

alternative to reformulation for

relatively low-volume products with

VOC content fairly close to the

regulatory VOC levels. Estimated annual

reformulation cost savings minus fee

payments associated with the fee option

equals approximately $5.0 million. In

addition, the fee option reduces

foregone profits by roughly 0.3 million

for products which otherwise would

have been removed from the market. It

is anticipated that most of these savings

would accrue to small manufacturers.

E. Unfunded Mandates

Title II of the Unfunded Mandates

Reform Act of 1995 (UMRA), Public

Law 104–4, establishes requirements for

Federal agencies to assess the effects of

their regulatory actions on State, local,

and tribal governments and the private

sector. Under Section 202 of the UMRA,

EPA generally must prepare a written

statement, including a cost-benefit

analysis, for proposed and final rules

with ‘‘Federal mandates’’ that may

result in expenditures to State, local,

and tribal governments, in the aggregate,

or to the private sector, of $100 million

or more in any one year. Before

promulgating an EPA rule for which a

written statement is needed, Section 205

of the UMRA generally requires EPA to

identify and consider a reasonable

number of regulatory alternatives and

adopt the least costly, most costeffective or least burdensome alternative

that achieves the objectives of the rule.

The provisions of Section 205 do not

apply when they are inconsistent with

applicable law. Moreover, Section 205

allows EPA to adopt an alternative other

than the least costly, most cost-effective

or least burdensome alternative if the

Administrator publishes with the final

rule an explanation why that alternative

was not adopted. Before EPA establishes

any regulatory requirements that may

significantly or uniquely affect small

governments, including tribal

governments, it must have developed

under Section 203 of the UMRA a small

government agency plan. The plan must

provide for notifying potentially

affected small governments, enabling

officials of affected small governments

to have meaningful and timely input in

the development of EPA regulatory

proposals with significant Federal

intergovernmental mandates, and

informing, educating, and advising

small governments on compliance with

the regulatory requirements.

Today’s rule contains no Federal

mandates (under the regulatory

provisions of Title II of the UMRA) for

State, local, or tribal governments or the

private sector. The rule imposes no

enforceable duties on any of these

governmental entities. In any event,

EPA has determined that this rule does

not contain a Federal mandate that may
32746 Federal Register / Vol. 61, No. 123 / Tuesday, June 25, 1996 / Proposed Rules

result in expenditures of $100 million or

more for State, local, and tribal

governments, in the aggregate, or the

private sector in any one year. Thus,

today’s rule is not subject to the

requirements of Sections 202 and 205 of

the UMRA.

F. Enhancing the Intergovernmental

Partnership under Executive Order

12875

In compliance with Executive Order

12875, the EPA has involved State and

local governments in the development

of this rule. State and local air pollution

control associations participated in the

regulatory negotiation and have also

provided regulatory review. State and

local air pollution control

representatives participated in the

regulatory negotiation and have also

provided input into subsequent

regulatory development.

List of Subjects in 40 CFR Part 59

Environmental protection, Air

pollution control, Architectural

coatings, Consumer and commercial

products, Incorporation by Reference,

Ozone, Regulatory negotiation, Volatile

organic compound.

TABLE 1.—ARCHITECTURAL COATING

VOLATILE ORGANIC COMPOUND

CONTENT LEVELS

[Unless otherwise specified, units are in grams

of VOC per liter of coating thinned to the

manufacturer’s maximum recommendation

excluding the volume of any water, exempt

compounds, or colorant added to tint

bases.]

Coating category

Effective

Apr. 1,

1997

Antenna coatings ............................ 530

Antifouling coatings ......................... 400

Anti-graffiti coatings ........................ 600

Bituminous coatings and mastics ... 500

Bond breakers ................................ 600

Chalkboard resurfacers .................. 450

Concrete curing compounds ........... 350

Concrete protective coatings .......... 400

Dry fog coatings .............................. 400

Extreme high durability coatings .... 800

Fire-retardant/resistive coatings:

Clear ........................................ 850

Opaque .................................... 450

Flat coatings:

Exterior .................................... 250

Interior ...................................... 250

Floor coatings ................................. 400

Flow coatings .................................. 650

Form release compounds ............... 450

Graphic arts coatings (sign paints) 500

Heat reactive coatings .................... 420

High temperature coatings ............. 650

Impacted immersion coatings ......... 780

Industrial maintenance coatings ..... 450

Lacquers (including lacquer sanding sealers) .................................. 680

Magnesite cement coatings ............ 600

TABLE 1.—ARCHITECTURAL COATING

VOLATILE ORGANIC COMPOUND

CONTENT LEVELS—Continued

[Unless otherwise specified, units are in grams

of VOC per liter of coating thinned to the

manufacturer’s maximum recommendation

excluding the volume of any water, exempt

compounds, or colorant added to tint

bases.]

Coating category

Effective

Apr. 1,

1997

Mastic texture coatings ................... 300

Metallic pigmented coatings ........... 500

Multi-colored coatings ..................... 580

Nonferrous ornamental metal lacquers and surface protectants .... 870

Nonflat coatings:

Exterior .................................... 380

Interior ...................................... 380

Nuclear coatings ............................. 420

Pretreatment wash primers ............ 780

Primers and undercoaters .............. 350

Quick-dry coatings:

Enamels ................................... 450

Primers, sealers, and

undercoaters ........................ 450

Repair and maintenance thermoplastic coatings ............................ 650

Roof coatings .................................. 250

Rust preventative coatings ............. 400

Sanding sealers (other than lacquer sanding sealers) ................. 550

Sealers (including interior clear

wood sealers) .............................. 400

Shellacs:

Clear ........................................ 650

Opaque .................................... 550

Stains:

Clear and semitransparent ...... 550

Opaque .................................... 350

Low solids ................................ 1 120

Swimming pool coatings ................. 600

Thermoplastic rubber coatings and

mastics ........................................ 550

Traffic marking coatings ................. 150

Varnishes ........................................ 450

Waterproofing sealers and treatments:

Clear ........................................ 600

Opaque .................................... 400

Wood preservatives:

Below ground wood preservatives ...................................... 550

Clear and semitransparent ...... 550

Opaque .................................... 350

Low solids ................................ 1 120

1 Units are grams of VOC per liter of coating, including water and exempt compounds,

thinned to the maximum thinning recommended by the manufacturer.

Dated: June 18, 1996.

Carol M. Browner,

Administrator.

[FR Doc. 96–16009 Filed 6–24–96; 8:45am]

BILLING CODE 6560–50–P

40 CFR Part 261

[SW–FRL–5525–3]

Hazardous Waste Management

System; Identification and Listing of

Hazardous Waste; Proposed Exclusion

AGENCY: Environmental Protection

Agency.

ACTION: Proposed rule and request for

comment.

SUMMARY: The Environmental Protection

Agency (EPA) is proposing to grant a

petition to Bekaert Steel Corporation

(Bekaert) of Rogers, Arkansas to exclude

(or ‘‘delist’’), certain solid wastes

generated at its facility from the lists of

hazardous wastes contained in 40 CFR

261.31 and 261.32 (hereinafter all

sectional references are to 40 CFR

unless otherwise indicated). This action

responds to a delisting petition

submitted under 40 CFR 260.20, which

allows any person to petition the

Administrator to modify or revoke any

provision of 40 CFR Parts 260 through

266, 268 and 273, and under 40 CFR

260.22, which specifically provides

generators the opportunity to petition

the Administrator to exclude a waste on

a ‘‘generator specific’’ basis from the

hazardous waste lists. This proposed

decision is based on an evaluation of

waste-specific information provided by

the petitioner. If this proposed decision

is finalized, the petitioned waste will be

conditionally excluded from the

requirements of hazardous waste

regulations under the Resource

Conservation and Recovery Act (RCRA).

DATES: The EPA is requesting public

comments on this proposed decision.

Comments will be accepted until

August 9, 1996. Comments postmarked

after the close of the comment period

will be stamped ‘‘late.’’

Any person may request a hearing on

this proposed decision by filing a

request with Jane N. Saginaw, Regional

Administrator, whose address appears

below, by July 10, 1996. The request

must contain the information prescribed

in 40 CFR 260.20(d).

ADDRESSES: Send three copies of your

comments. Two copies should be sent to

William Gallagher, Delisting Program,

Multimedia Planning and Permitting

Division (6PD–O), Environmental

Protection Agency, Region 6, 1445 Ross

Avenue, Dallas, Texas 75202. A third

copy should be sent to the Arkansas

Department of Pollution Control and

Ecology, P.O. Box 8913, 8001 National

Drive, Little Rock, Arkansas 72219–

8913. Identify your comments at the top

with this regulatory docket number: ‘‘F–

96–ARDEL–BEKAERT.’’