Document ID: EPA-HQ-OAR-2003-0111-0065
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2004-02-12T05:00Z

DRAFT
2/
12/
04
DRAFT
1
ENVIRONMENTAL
PROTECTION
AGENCY
40
CFR
Parts
85
and
86
[
AMS­
FRL­
7250­
1]

RIN
0000­
A000
Motor
Vehicle
and
Engine
Compliance
Program
Fees
for:
Light­
Duty
Vehicles;
Light­
Duty
Trucks;
Heavy­
Duty
Vehicles
and
Engines;
Nonroad
Engines;
and
Motorcycles
AGENCY:
Environmental
Protection
Agency
(
EPA).

ACTION:
Final
Rule.

SUMMARY:
This
final
rule
updates
the
Motor
Vehicle
and
Engine
Compliance
Program
(
MVECP)
fees
regulation
promulgated
in
1992
under
which
the
Agency
collects
fees
for
certain
Clean
Air
Act
(
CAA)
compliance
programs
administered
by
EPA
including
those
for
light­
duty
vehicles
and
trucks,
heavy­
duty
highway
vehicles
and
engines,
and
highway
motorcycles.
Today's
action
updates
existing
fees
to
reflect
the
increased
costs
of
administering
these
compliance
programs
since
the
initial
1992
rulemaking.
EPA
is
also
adding
a
fee
program
for
similar
compliance
programs
for
certain
nonroad
engines
and
vehicles
for
which
emission
standards
have
been
finalized.

DATES:
This
final
rule
takes
effect
on
[
Insert
date
60
days
after
publication
in
the
Federal
Register].

ADDRESSES:
All
comments
and
materials
relevant
to
this
rulemaking
are
contained
in
EPA's
Air
Docket
Number
A­
2001­
09
at
the
following
address:
EPA
Docket
Center
(
EPA/
DC),
Public
Reading
Room,
Room
B102,
EPA
West
Building,
1301
Constitution
Avenue,
NW,
Washington,
DC,
20460.
The
EPA
Docket
Center
Public
Reading
Room
is
open
from
8:
30
a.
m.
to
4:
30
p.
m.,
Monday
through
Friday,
except
on
government
holidays.
You
can
reach
the
Reading
Room
by
telephone
at
(
202)
566­
1742,
and
by
facsimile
at
(
202)
566­
1741.
The
telephone
number
for
the
Air
Docket
is
(
202)
566­
1742.
You
may
be
charged
a
reasonable
fee
for
photocopying
docket
materials,
as
provided
in
40
CFR
part
2.

FOR
FURTHER
INFORMATION
CONTACT:
Lynn
Sohacki,
Certification
and
Compliance
Division,
U.
S.
Environmental
Protection
Agency,
2000
Traverwood,
Ann
Arbor,
Michigan
48105,
Telephone
734­
214­
4851,
Internet
e­
mail
"
sohacki.
lynn@
epa.
gov,"
or
Trina
D.
Vallion,
734­
214­
4449,
Internet
e­
mail
DRAFT
2/
12/
04
DRAFT
2
"
vallion.
trina@
epa.
gov."

SUPPLEMENTARY
INFORMATION:

Regulated
Entities
Entities
regulated
by
this
rule
are
those
which
manufacture
or
seek
certification
("
manufacturer"
or
"
manufacturers")
of
new
motor
vehicles
and
engines
(
including
both
highway
and
nonroad).
The
table
below
shows
the
category,
North
American
Industry
Classification
System
(
NAICS)
Codes,
Standard
Industrial
Classification
(
SIC)
Codes
and
examples
of
the
regulated
entities:
DRAFT
2/
12/
04
DRAFT
3
Category
NAICS
Codes
(
1)
SIC
Codes
(
2)
Examples
of
Potentially
Regulated
Entities
Industry
333111
3523
Farm
Machinery
and
Equipment
Manufacturing
Industry
333112
3524
Lawn
and
Garden
Tractor
and
Home
Lawn
and
Garden
Equipment
Manufacturing
Industry
333120
3531
Construction
Machinery
Manufacturing
Industry
333131
3532
Mining
Machinery
and
Equipment
Manufacturing
Industry
333132
3533
Oil
&
Gas
Field
Machinery
Industry
333210
3553
Sawmill
&
Woodworking
Machinery
Industry
333924
3537
Industrial
Truck,
Tractor,
Trailer,
and
Stacker
Machinery
Manufacturing
Industry
333991
3546
Power
Driven
Handtool
Manufacturing
Industry
336111
3711
Automotive
and
Light­
Duty
Motor
Vehicle
Manufacturing
Industry
336120
3711
Heavy­
duty
Truck
Manufacturing
Industry
336213
3716
Motor
Home
Manufacturing
Industry
336311
3592
Motor
Vehicle
Gasoline
Engine
and
Engine
Parts
Manufacturing
Industry
336312
3714
Gasoline
Engine
&
Engine
Parts
Manufacturing
Industry
336991
3751
Motorcycle,
Bicycle,
and
Parts
Manufacturing
Industry
336211
3711
Motor
Vehicle
Body
Manufacturing
Industry
333618
3519
Gasoline,
Diesel
&
dual­
fuel
engine
Manufacturing
Industry
811310
7699
Commercial
&
Industrial
Engine
Repair
and
Maintenance
Industry
336999
3799
Other
Transportation
Equipment
Manufacturing
Industry
421110
­­­­­­
Independent
Commercial
Importers
of
Vehicles
and
Parts
Industry
333612
3566
Speed
Changer,
Industrial
High­
speed
Drive
and
Gear
Manufacturing
Industry
333613
3568
Mechanical
Power
Transmission
Equipment
Manufacturing
Industry
333618
3519
Other
Engine
Equipment
Manufacturing
DRAFT
2/
12/
04
DRAFT
4
(
1)
North
American
Industry
Classification
System
(
NAICS)

(
2)
Standard
Industrial
Classification
(
SIC)
system
code.

This
table
is
not
intended
to
be
exhaustive,
but
rather
provides
a
guide
for
readers
regarding
entities
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
product
would
be
regulated
by
this
action,
you
should
carefully
examine
the
applicability
criteria
in
title
40
of
the
Code
of
Federal
Regulations,
Parts
86,
89,
90,
91,
92
and
94;
also
Parts
1048
and
1051
when
those
Parts
are
finalized.
If
you
have
questions
regarding
the
applicability
of
this
action
to
a
particular
product,
consult
the
person
listed
in
the
preceding
FOR
FURTHER
INFORMATION
CONTACT
section.

Obtaining
Rulemaking
Documents
Through
the
Internet:

Electronic
Access.
You
may
access
this
Federal
Register
document
electronically
through
the
EPA
Internet
under
the
"
Federal
Register"
listings
at
http://
www.
epa.
gov/
fedrgstr/.}

An
electronic
version
of
the
public
docket
is
available
through
EPA's
electronic
public
docket
and
comment
system,
EPA
Dockets.
You
may
use
EPA
Dockets
at
http://
www.
epa.
gov/
edocket/
to
view
public
comments,
access
the
index
listing
of
the
contents
of
the
official
public
docket,
and
to
access
those
documents
in
the
public
docket
that
are
available
electronically.
Although
not
all
docket
materials
may
be
available
electronically,
you
may
still
access
any
of
the
publicly
available
docket
materials
through
the
docket
facility
identified
in
the
ADDRESSES
section
above.
Once
in
the
system,
select
"
search,"
then
key
in
the
docket
identification
number:
OAR­
2003­
0111.

The
preamble,
regulatory
language
and
regulatory
support
documents
are
also
available
electronically
from
the
EPA
Internet
Web
site.
This
service
is
free
of
charge.
The
official
EPA
version
is
made
available
on
the
day
of
publication
on
the
primary
Web
site
listed
below.
The
EPA
Office
of
Transportation
and
Air
Quality
also
publishes
these
notices
on
the
secondary
Web
site
listed
below.

(
1)
http://
www.
epa.
gov/
docs/
fedrgstr/
EPA­
AIR/

(
either
select
desired
date
or
use
Search
feature)

(
2)
http://
www.
epa.
gov/
OTAQ/

(
look
in
"
What's
New"
or
under
the
specific
rulemaking
topic)
DRAFT
2/
12/
04
DRAFT
5
Please
note
that
due
to
differences
between
the
software
used
to
develop
the
document
and
the
software
into
which
the
document
may
be
downloaded,
changes
in
format,
page
length,
etc.
may
occur.

Table
of
Contents
I.
Introduction
II.
What
are
the
Requirements
of
This
Final
Rule?

A.
What
is
the
Finalized
Fee
Schedule?

B.
Will
the
Fees
Automatically
Adjust
to
Reflect
Future
Inflation?

C.
Will
Fees
Change
to
Reflect
Changes
in
the
Number
of
Certificates?

D.
What
is
the
Procedure
for
Paying
Fees?

E.
What
is
the
Implementation
Schedule
for
the
New
Fees?

F.
What
are
the
Reduced
Fees
Provisions?

G.
What
is
the
Finalized
Policy
for
Refunds
and
Final
Fee
Payments?

III.
What
Are
the
Changes
Made
to
the
Proposed
Cost
Analysis?

A.
Will
There
Be
Fees
for
Yet­
to­
be
Regulated
Industries?

B.
Is
There
a
Change
in
Costs
for
Heavy­
duty
Highway
and
Nonroad
CI
Engines
from
the
Proposal?

C.
Is
There
a
Change
in
the
Number
of
Certificates?

D.
Indirect
Changes
IV.
What
Were
the
Opportunities
for
Public
Participation?

V.
What
Were
the
Major
Comments
Received
on
the
Proposed
Rule?

A.
Legal
Authority
B.
Assessment
of
Costs
C.
Cost
Study
D.
Automatic
Adjustment
of
Fees
E.
Effective
Date
and
Application
of
New
Fees
F.
Reduced
Fees
G.
ICI
Issues
H.
Other
Topics
VI.
What
Is
the
Economic
Impact
of
this
Rule?

VII.
What
are
the
Administrative
Requirements
for
this
Rule?

A.
Executive
Order
12866:
Regulatory
Planning
and
Review
B.
Paperwork
Reduction
Act
DRAFT
2/
12/
04
DRAFT
6
C.
Regulatory
Flexibility
Act
(
RFA),
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996
(
SBREFA),
5
USC
601
et.
seq
D.
Unfunded
Mandates
Reform
Act
E.
Executive
Order
13132:
Federalism
F.
Executive
Order
13175:
Consultation
and
Coordination
with
Indian
Tribal
Governments
G.
Executive
Order
13045:
Children's
Health
Protection
H.
Executive
Order
13211:
Energy
Effects
I.
National
Technology
Transfer
and
Advancement
Act
J.
Congressional
Review
Act
I.
Introduction
Since
1992,
EPA
has
assessed
fees
for
the
motor
vehicle
emissions
compliance
program
(
MVECP).
Since
the
initial
MVECP
fees
regulation,
EPA
has
incurred
additional
costs
and
will
continue
to
incur
costs
in
administering
the
light­
duty
and
heavyduty
compliance
programs
for
motor
vehicles
and
engines,
and
new
compliance
programs
for
nonroad
vehicles
and
engines.
Today's
final
rule
updates
the
MVECP
fee
provisions
to
reflect
these
changes.

Today's
final
rule
establishes
fees
under
the
authority
of
section
217
of
the
Clean
Air
Act
(
CAA)
and
the
Independent
Offices
Appropriation
Act
(
IOAA)
(
31
U.
S.
C.
9701)
to
ensure
that
the
MVECP
is
self­
sustaining
to
the
extent
possible.
The
services
provided
by
EPA
are
described
in
the
section
II.
B.
of
the
Notice
of
Proposed
Rulemaking
(
NRPM)
(
67
FR
51402.)
Because
of
comments
received
EPA
has
adjusted
the
fees
collected
per
certificate
for
some
industry
categories
and
thus
EPA
has
created
several
new
worksheets
and
a
further
explanation
of
the
changes
in
the
worksheets
and
added
this
to
the
cost
analysis
that
EPA
conducted
to
determine
the
fees
for
the
NPRM
and
this
addition
is
available
in
Docket
A­
2001­
09.

On
September
19,
2002,
EPA
held
a
public
hearing
concerning
the
proposed
regulations.
Comments
from
that
hearing
and
written
comments
are
included
in
the
public
docket.
Today's
final
rule
addresses
comments
received
both
before
and
after
the
close
of
the
public
comment
period.
A
discussion
of
certain
comments
received
is
contained
in
section
V
below.
You
may
also
want
to
review
the
Response
to
Comments
document
in
the
Docket
A­
2001­
09
which
contains
a
detailed
discussion
of
many
topics
raised
in
this
preamble
and
other
comments
received
and
EPA's
responses.
DRAFT
2/
12/
04
DRAFT
1
A
spark­
ignition
engine
is
an
engine
that
uses
a
spark
source,
such
as
a
spark
plug,
to
initiate
combustion
in
the
combustion
chamber.
Examples
of
fuels
used
in
spark­
ignition
engines
are:
gasoline,
compressed
natural
gas,
liquid
petroleum
gas
and
alcohol­
based
fuels.

2
A
compression­
ignition
engine
is
an
engine
that
uses
compression
to
initiate
combustion
in
the
combustion
chamber.
Diesel
fuel
is
an
examples
of
a
fuel
used
in
compression­
ignition
engines.

7
II.
What
are
the
Requirements
of
This
Final
Rule?

EPA
is
adopting
as
final
its
proposed
rule
with
a
few
changes.
The
most
significant
changes
are
pointed
out
in
sections
II.
A
through
II.
G
below.
Additional
changes
are
listed
in
section
III.
A
more
detailed
discussion
of
the
comments
received
is
in
the
Response
to
Comments
Document
in
the
docket
for
this
rule.

A.
What
is
the
Finalized
Fee
Schedule?

The
following
table
indicates
fees
for
light­
duty
vehicles
(
LD),
medium­
duty
passenger
vehicles
(
MDPV),
complete
spark­
ignition1
heavy­
duty
vehicles
(
SI
HDV),
motorcycles
(
MC),
heavy­
duty
engines
(
HDE),
nonroad
compression­
ignition2
(
NR
CI)
engines
,
nonroad
spark­
ignition
(
NR
SI)
engines,
marine
engines
(
excluding
inboard
and
sterndrive
engines),
nonroad
recreational
vehicles
and
engines,
and
locomotives.
The
table
distinguishes
fees
for
vehicles
and
engines
that
are
imported
by
independent
commercial
importers
(
ICIs)
and
also
distinguishes
vehicles
and
engines
certified
for
highway
(
HW)
and
nonroad
(
NR)
use.
The
following
is
the
final
fee
schedule
for
each
certification
request:
DRAFT
2/
12/
04
DRAFT
8
Table
II.
A­
1
Fee
Schedule
Category
Certificate
Typea
Fee
LD,
excluding
ICIs
Fed
Certificate
$
33,883
LD,
excluding
ICIs
Cal­
only
Certificate
$
16,944
MDPV,
excluding
ICIs
Fed
Certificate
$
33,883
MDPV,
excluding
ICIs
Cal­
only
Certificate
$
16,944
Complete
SI
HDVs,
excluding
ICIs
Fed
Certificate
$
33,883
Complete
SI
HDVs,
excluding
ICIs
Cal­
only
Certificate
$
16,944
ICIs
for
the
following
industries:

LD,
MDPV,
or
Complete
SI
HDVs
All
Types
$
8,387
MC
(
HW),
including
ICIs
All
Types
$
2,414
HDE
(
HW),
including
ICIs
Fed
Certificate
$
21,578
HDE
(
HW),
including
ICIs
Cal­
only
Certificate
$
826
HDV
(
evap),
including
ICIs
Evap
Certificate
$
826
NR
CI
engines,
including
ICIs,
but
excluding
Locomotives,
Marine
and
Recreational
engines.
All
Types
$
1,822
NR
SI
engines,
including
ICIs
All
Types
$
826
Marine
engines,
excluding
inboard
&
sterndrive
engines,
including
ICIs
All
Types
and
Annex
VI
$
826
All
NR
Recreationalb,
including
ICIs,
but
excluding
marine
engines.
All
Types
$
826
Locomotives,
including
ICIs
All
Types
$
826
(
a)
Fed
and
Cal­
only
Certificate
and
Annex
VI
are
defined
in
40
CFR
85.2403
(
b)
Recreational
means
the
engines
subject
to
40
CFR
1051
which
includes
off
road
motorcycles,
DRAFT
2/
12/
04
DRAFT
9
all­
terrain
vehicles
and
snowmobiles
This
fee
schedule
will
change
in
calendar
year
2006
when
the
fees
will
be
adjusted
for
inflation
and
to
reflect
changes
in
the
number
of
certificates
issued
as
explained
in
sections
II.
B
and
C.

B.
Will
the
Fees
Automatically
Adjust
to
Reflect
Future
Inflation?

By
function
of
today's
rule
fees
will
be
automatically
adjusted
on
a
calendar
year
basis
to
reflect
inflation.
A
formula
created
by
today's
rule
will
determine
the
fees
each
year
by
applying
any
change
in
the
consumer
price
index
(
CPI)
to
EPA's
labor
costs.
The
formula
that
will
be
used
by
EPA
to
determine
the
total
cost
for
each
fee
category
is:

Fee
cy=
[
F
+
(
L*
(
CPI
CY­
2/
CPI
2002))]
*
1.169
F=
Fixed
costs
within
a
category,
from
worksheet
#
1,
sum
of
Total
Indirect
Program
Costs
and
Total
Direct
Costs
rows
L=
Labor
costs
within
a
category,
from
worksheet
#
1,
Total
Labor
row
CPI
CY­
2
=
the
consumer
price
index
for
all
United
States
(
U.
S.)
cities
using
the
"
U.
S.
city
average"
area
,
"
all
items"
and
"
not
seasonally
adjusted"
numbers
calculated
by
the
Department
of
Labor
listed
for
the
month
of
July
of
the
year
two
years
before
the
calendar
year
(
CY).
(
e.
g.,
for
the
2006
CY
use
the
CPI
based
on
the
date
of
July,
2004).

CPI
2002
=
the
consumer
price
index
for
all
U.
S.
cities
using
the
"
U.
S.
city
average"
area
,
"
all
items"
and
"
not
seasonally
adjusted"
numbers
calculated
by
the
Department
of
Labor
for
December,
2002.
The
actual
value
for
CPI
2002
is
180.9.

1.169
=
Adds
overall
EPA
overhead
which
is
applied
to
all
costs
The
applicable
CPI
results
calculated
by
the
Bureau
of
Labor
Statistics
are
currently
published
on
the
following
internet
address:
(
http://
www.
bls.
gov/
data/
home.
htm),
then
choosing
the
icon
under
"
CPI­
All
Urban
Consumers
(
Current
Series)
under
the
"
Most
Requested
Statistics"
column.
From
that
page,
choose
(
by
checking
the
box)
U.
S.
All
items,
1982­
84=
100
­
CUUR0000SA0.
This
results
in
a
page
with
a
table
called
"
Series
Id:
CUUR0000SA0"
from
which
the
applicable
numbers
may
be
drawn.

The
values
of
EPA's
labor
and
fixed
costs
were
from
worksheet
#
1
of
the
Cost
Analysis
are
shown
in
the
table
below:
DRAFT
2/
12/
04
DRAFT
3
For
purposes
of
this
preamble,
the
regulations
and
the
cost
analysis,
the
term
"
total
number
of
certificates"
is
used
to
represent
the
number
of
certificate
applications
for
which
fees
are
paid
or
waivers
are
issued.
This
term
is
not
intended
to
represent
multiple
certificates
which
are
issued
within
a
single
engine
family
or
test
group.

10
Table
II.
B­
1
Fixed
and
Labor
Costs
by
Fee
Category
ICI
LD
MC
(
HW)
HDE
(
HW)
NR
CI
Other
F
$
344,824
$
6,180,261
$
225,726
$
1,106,224
$
486,401
$
177,425
L
$
264,980
$
4,732,440
$
172,829
$
1,625,680
$
545,160
$
548,081
The
fee
amount
per
certificate
will
be
determined
by
dividing
the
total
cost
for
each
certificate
category
by
a
rolling
average
of
the
number
of
certificates
as
discussed
below
in
section
II.
C.
The
limitation
to
labor
costs
is
a
change
from
the
proposal.
The
removal
of
the
non­
labor
costs
from
the
portion
of
EPA's
costs
to
which
the
CPI
will
apply
is
a
response
to
comments
received
and
is
discussed
in
more
detail
in
section
4
of
the
Response
to
Comments
document.

EPA
will
calculate
new
fees
based
on
this
established
formula
for
each
certificate
category
in
Table
II.
A­
1
and
publish
the
fees
in
a
dear
manufacturer
letter
or
by
similar
means.
The
fees
will
be
applicable
by
calendar
year
rather
than
model
year.
The
first
year
that
the
fees
will
be
adjusted
for
inflation
is
calendar
year
2006.

C.
Will
Fees
Change
to
Reflect
Changes
in
the
Number
of
Certificates?

EPA
will
adjust
fees
based
on
the
total
number
of
certificates3
issued
to
reflect
the
change
in
the
cost
of
services
provided
by
EPA
per
certificate.
As
discussed
in
section
II.
B
above,
EPA
will
annually
adjust
the
amount
of
the
labor
costs
in
each
fee
category
by
the
CPI
approximately
16
months
before
the
new
fees
will
apply.
At
the
time
that
the
adjustment
based
on
CPI
is
made,
EPA
will
also
adjust
fees
based
on
the
average
of
the
total
number
of
certificates
issued
in
the
two
complete
model
years
previous
to
the
adjustment.
The
full
formula
that
will
be
applied
to
adjust
the
fee
amount
for
each
category
is:

Fee
cy=
[
F
+
L*
(
CPI
CY­
2/
CPI
2002)]
*
1.169
/
[(
cert#
MY­
3
+
cert#
MY­
4)
*
.5]
DRAFT
2/
12/
04
DRAFT
11
Feecy
=
the
calendar
year
of
the
fees
to
be
collected
F
=
the
fixed
costs,
not
to
be
adjusted
by
the
CPI
L
=
the
labor
costs,
to
be
adjusted
by
the
CPI
CPI
CY­
2
=
the
consumer
price
index
for
all
U.
S.
cities
using
the
"
U.
S.
city
average"
area
,
"
all
items"
and
"
not
seasonally
adjusted"
numbers
calculated
by
the
Department
of
Labor
listed
for
the
month
of
July
of
the
year
two
years
before
the
calendar
year.
(
e.
g.,
for
the
2006
CY
use
the
CPI
based
on
the
date
of
July,
2004).

CPI
2002
=
the
consumer
price
index
for
all
U.
S.
cities
using
the
"
U.
S.
city
average"
area
,
"
all
items"
and
"
not
seasonally
adjusted"
numbers
calculated
by
the
Department
of
Labor
for
December,
2002.
The
actual
value
for
CPI
2002
is
180.9.

1.169
=
Adds
overall
EPA
overhead
which
is
applied
to
all
costs
cert#
MY­
3
=
the
total
number
of
certificates
issued
for
a
fee
category
model
year
three
years
prior
to
the
calendar
year
for
applicable
fees
(
Feecy)

cert#
MY­
4
=
the
total
number
of
certificates
issued
for
a
fee
category
model
year
four
years
prior
to
the
calendar
year
for
the
applicable
fees
(
Feecy)

As
an
example,
the
first
year
for
which
the
fees
will
be
adjusted
is
calendar
year
2006.
In
August
2004,
EPA
will
adjust
the
total
for
each
fee
category
for
the
2006
model
year
(
MY)
based
on
the
CPI
published
in
July
2004
and
will
divide
the
total
fee
amounts
for
each
category
by
the
average
of
certificates
issued
for
model
years
2002
and
2003.

Fee
2006=
[
F
+
L*
(
CPI
2004/
CPI
2002)]
*
1.169
/
[(
cert#
2003
+
cert#
2002)
*
.5]

If
an
event
such
as
a
rulemaking
occurs
that
causes
a
significant
change
in
the
number
of
certificate
applications
received,
the
Agency
will
reexamine
the
formula
to
determine
whether
adjusting
the
fees
based
upon
the
number
of
certificate
applications
is
still
applicable.

This
formula
will
result
in
an
annual
adjustment
of
fees
to
reflect
the
change
in
the
number
of
certificates
issued
by
the
EPA.
This
change
from
the
proposal
to
adjust
fees
as
a
result
in
a
change
in
the
number
of
certificates
is
discussed
more
fully
in
the
response
to
comments
document.

D.
What
is
the
Procedure
for
Paying
Fees?

As
with
the
current
regulations,
fees
must
be
paid
in
advance
of
receiving
a
certificate.
For
each
certification
request
manufacturers
and
ICIs
will
submit
a
MVECP
DRAFT
2/
12/
04
DRAFT
12
Fee
Filing
Form
(
filing
form)
and
the
appropriate
fee
in
the
form
of
a
corporate
check,
money
order,
bank
draft,
certified
check,
or
electronic
funds
transfer
[
wire
or
Automated
Clearing
House
(
ACH)],
payable
in
U.
S.
dollars,
to
the
order
of
the
U.
S.
Environmental
Protection
Agency.
A
single
fee
will
be
paid
when
a
manufacturer
or
ICI
submits
an
application
for
a
single
engine
family
or
test
group
that
includes
multiple
evaporative
families.
It
should
be
noted
that
separate
fees
must
be
paid
for
each
heavy­
duty
evaporative
family
certificate
application.
The
filing
form
and
accompanying
fee
will
be
sent
to
the
address
designated
on
the
filing
form.
EPA
will
not
be
responsible
for
fees
sent
to
any
location
other
than
the
designated
location.
Applicants
will
continue
to
submit
the
application
for
certification
to
the
National
Vehicle
and
Fuel
Emission
Laboratory
(
NVFEL)
in
Ann
Arbor,
Michigan
or
to
the
Engine
Programs
Group
in
Washington,
DC.

To
ensure
proper
identification
and
handling,
the
check
or
electronic
funds
transfer
and
the
accompanying
filing
form
will
indicate
the
manufacturer's
corporate
name
and
the
EPA
standardized
test
group
or
engine
family
name.
The
full
fee
is
to
accompany
the
filing
form.
Partial
payments
or
installment
payments
will
not
be
permitted.
A
banking
institution
may
add
an
extra
charge
for
processing
a
wire
or
an
ACH.
The
manufacturer
is
responsible
for
any
extra
fees
a
banking
institution
may
charge
to
perform
these
services.

E.
What
is
the
Implementation
Schedule
for
the
New
Fees?

The
implementation
date
of
the
new
fees
is
March
1,
2004
or
60
days
after
publication
of
the
final
rule
in
the
Federal
Register,
whichever
is
later.
The
final
fee
schedule
adopted
in
this
rule
applies
to
2004
and
later
model
year
vehicles
and
engines
where
the
certification
application
is
received
on
or
after
March
1,
2004,
or
more
than
60
days
after
publication
of
this
rule
in
the
Federal
Register.
The
new
fees
will
not
apply
to
2004
and
later
model
year
certification
applications
received
by
EPA
prior
to
the
effective
date
of
the
regulations,
provided
that
the
applications
are
complete
and
include
all
required
data.
A
description
of
the
items
needed
to
constitute
a
complete
application,
for
the
purposes
of
this
fees
rule,
is
included
in
section
5
of
the
Response
to
Comments
Document.

F.
What
are
the
Reduced
Fees
Provisions?

EPA
believes
that
an
appropriate
fee
reduction
policy
can
be
consistent
with
the
premise
underlying
section
217
of
the
CAA:
to
reimburse
the
government
for
the
specific
regulatory
services
provided
to
an
applicant.
EPA
recognizes
that
there
may
be
instances,
in
the
case
of
small
engine
families,
where
the
full
fee
may
represent
an
unreasonable
economic
burden.
Therefore,
EPA
will
allow
manufacturers
to
pay
a
fee
based
on
1.0
percent
of
the
aggregate
retail
sales
price
(
or
value)
of
the
vehicles
covered
by
a
DRAFT
2/
12/
04
DRAFT
13
certificate.
EPA
believes
this
best
represents
the
proper
balance
between
recovering
the
MVECP
costs
without
imposing
an
unreasonable
economic
burden.
The
reduced
fees
provisions
will
continue
to
use
the
current
two
part
test
which,
if
met,
would
qualify
an
applicant
for
a
reduction
of
a
portion
of
the
certification
fee.
The
reduced
fee
is
available
in
cases
where:

(
1)
The
certificate
is
to
be
used
for
the
sale
of
vehicles
or
engines
within
the
U.
S.;
and
(
2)
The
full
fee
for
the
certification
request
exceeds
1.0
percent
of
the
projected
aggregate
retail
price
of
all
vehicles
or
engines
covered
by
that
certificate.

The
reduced
fee
program
for
this
rule
provides
two
separate
pathways
by
which
a
manufacturer
can
request
and
pay
a
reduced
fee
amount.
The
fee
will
be
1.0
percent
of
the
aggregate
retail
price
of
the
vehicles
and
engines
covered
by
the
certificate
with
a
refundable
minimum
initial
payment
of
$
750.
Each
pathway
specifies
when
manufacturers
are
required
to
determine
the
price
of
the
vehicles
or
engines
actually
sold
under
a
certificate
and
when
to
either
pay
additional
fees
or
seek
a
refund.
Under
both
pathways
the
manufacturer:

1)
Pays
a
fully
refundable
initial
payment
of
$
750
or
1.0
percent
of
the
aggregate
retail
price
of
the
vehicles
or
engines,
whichever
is
greater,
with
the
request
for
a
reduced
fee.

2)
Receives
a
certificate
for
an
estimated
number
of
vehicles
or
engines
in
the
engine
family
to
be
covered
by
the
certificate.

3)
Requests
a
revised
certificate
if
the
number
of
vehicles
or
engines
in
the
engine
family
exceeds
that
on
the
certificate.

4)
Is
in
violation
of
the
Clean
Air
Act
if
the
number
of
vehicles
or
engines
made
or
imported
is
greater
than
the
number
indicated
on
the
certificate.

The
first
pathway
will
be
available
for
engine
families
having
less
than
6
vehicles,
none
of
which
have
a
retail
price
of
more
than
$
75,000
each.
Manufacturers
seeking
a
reduced
fee
shall
include
in
their
certification
application
a
statement
that
the
reduced
fee
is
appropriate
under
the
criteria.
If
1.0
percent
of
the
aggregate
retail
price
of
the
vehicles
or
engines
is
greater
than
$
750,
the
manufacturer
must
submit
a
calculation
of
the
reduced
fee
and
the
fee.
If
1.0
percent
aggregate
retail
price
of
the
vehicles
or
engines
is
less
than
$
750
the
manufacturer
will
submit
a
calculation
of
the
reduced
fee
and
an
initial
payment
of
$
750.
In
the
event
that
the
manufacturer
does
not
know
the
value
of
all
of
the
vehicles
DRAFT
2/
12/
04
DRAFT
4
Typically,
this
will
be
the
first
February
15
after
a
certificate
expires.
Certificates
generally
expire
on
December
31
of
the
model
year.

14
to
be
imported
under
the
certificate,
it
may
use
the
values
of
the
vehicles
or
engines
that
are
available
to
determine
the
initial
payment.

The
manufacturer's
evaluation
and
submission
of
a
fee
amount
under
this
reduced
fee
provision
is
subject
to
EPA
review
or
audit.
If
the
manufacturer's
statement
of
eligibility
is
accepted,
the
manufacturer
will
receive
a
certificate
for
5
vehicles
or
engines.

If
the
manufacturer's
statement
of
eligibility
or
request
of
a
reduced
fee
is
rejected
by
EPA
then
EPA
may
require
the
manufacturer
to
pay
the
full
fee
normally
applicable
to
it
or
EPA
may
adjust
the
amount
of
the
reduced
fee
that
is
due.

A
manufacturer's
statement
that
it
is
eligible
for
a
reduced
fee
can
be
rejected
by
EPA
before
or
after
a
certificate
is
issued
if
the
Agency
finds
that
manufacturer's
evaluation
does
not
meet
the
eligibility
requirements
for
a
reduced
fee,
the
manufacturer
failed
to
meet
the
requirements
to
calculate
a
final
reduced
fee
using
actual
sales
data,
or
the
manufacturer
failed
to
pay
the
net
balance
due
between
the
initial
and
final
reduced
fee
calculation
(
see
below
for
discussion
of
the
final
fee
calculation,
reporting
and
payment).

Within
30
days
of
the
end
of
the
model
year,
the
applicant
for
a
reduced
fee
will
provide
EPA
with
a
report
called
a
"
report
card"
to
aid
our
review
of
the
applicant's
statement
of
applicability.
This
report
shall
include
the
total
number
of
vehicles
ultimately
covered
by
the
certificate.
The
report
card
shall
include
information
on
all
certificates
held
by
the
manufacturer
that
were
issued
with
a
reduced
fee
under
the
first
pathway.
For
each
certificate
the
report
will
include
a
calculation
of
the
actual
final
reduced
fee
due
for
each
certificate
which
is
derived
by
adding
up
the
total
number
of
vehicles
and
their
sales
prices
and
calculating
1.0
percent
of
the
total,
a
statement
of
the
initial
fees
paid
and
the
difference
between
the
initial
payment
and
the
total
final
fee
for
the
manufacturer.
Manufacturers
will
be
required
to
submit
the
report
card
within
30
days
of
the
end
of
the
model
year4,
EPA
believes
this
is
reasonable
as
manufacturers
should
have
final
figures
for
each
certificate
by
this
time.

A
manufacturer
may
request
a
refund
if
the
final
fee
is
less
than
the
initial
payment.
If
the
final
fee
is
greater
than
the
initial
payment,
manufacturers
will
be
required
to
"
trueup
or
submit
the
final
reduced
fee
due
as
calculated
in
the
report
card
within
45
days
of
the
end
of
the
model
year.
This
is
a
change
from
the
NPRM
in
which
EPA
proposed
that
manufacturers
would
only
have
to
pay
the
final
reduced
fee
if
the
difference
between
the
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DRAFT
15
final
fee
and
the
initial
payment
was
greater
than
$
500.
The
decision
to
eliminate
a
minimum
final
reduced
fee
was
made
as
a
result
of
comments
regarding
EPA's
proposed
refund
policy.
This
is
discussed
more
fully
in
the
"
What
is
the
Finalized
Policy
for
Refunds
and
Final
Fee
Payments?"
section
below
and
in
section
8
of
the
Response
to
Comments
Document.

In
addition,
EPA
may
require
that
manufacturers
submit
a
report
card,
with
the
same
or
similar
information
as
noted
above,
for
previous
model
years.
The
purpose
of
such
report
card
would
be
to
give
EPA
assurance
that
the
manufacturer
has
demonstrated
a
continuous
capability
of
submitting
the
necessary
year­
to­
year
report
cards
and
that
appropriate
fees
have
been
paid.
This
will
assist
EPA
in
its
determination
as
to
whether
a
manufacturer
is
capable
of
adequately
projecting
its
annual
sales
for
reduced
fee
purposes
and
whether
the
manufacturer
shall
remain
eligible
for
the
reduced
fee
provisions.

Under
this
pathway,
if
a
manufacturer
fails
to
report
within
30
days
or
pay
the
balance
due
by
45
days
of
the
end
of
the
model
year,
then
EPA
may
refuse
to
approve
future
reduced
fee
requests
from
that
manufacturer.
In
addition,
if
a
manufacturer
fails
to
report
within
30
days
and
pay
the
balance
due
by
45
days
of
the
end
of
the
model
year
as
noted
above
then
the
Agency
may
deem
the
applicable
certificate
void
ab
initio.

The
second
pathway
is
available
for
engine
families
that
contain
more
than
5
vehicles
or
engines
and/
or
have
at
least
one
vehicle
or
engine
with
a
retail
price
of
more
than
$
75,000.
Manufacturers
seeking
a
reduced
fee
under
this
pathway
include
in
their
applications
a
statement
that
the
reduced
fee
is
appropriate
under
the
criteria
and
a
calculation
of
the
amount
of
the
reduced
fee
(
1.0
percent
of
the
aggregate
retail
price
of
vehicles
or
engines)
or
an
initial
payment
of
$
750,
whichever
is
greater.
As
in
the
first
pathway,
the
manufacturer's
evaluation
and
submission
of
a
fee
amount
under
this
reduced
fee
provision
is
subject
to
EPA
review
or
audit.
If
the
manufacturer's
statement
of
eligibility
is
accepted,
the
manufacturer
will
receive
a
certificate
for
the
number
of
vehicles
or
engines
to
be
covered
by
the
certificate.

If
the
manufacturer's
statement
of
eligibility
or
request
of
a
reduced
fee
is
rejected
by
EPA
then
EPA
may
require
the
manufacturer
to
pay
the
full
fee
normally
applicable
to
it
or
EPA
may
adjust
the
amount
of
the
reduced
fee
that
is
due.

A
manufacturer's
statement
that
it
is
eligible
for
a
reduced
fee
can
be
rejected
by
EPA
before
or
after
a
certificate
is
issued
if
the
Agency
finds
that
the
manufacturer's
evaluation
does
not
meet
the
eligibility
requirements
for
a
reduced
fee.
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DRAFT
16
At
the
end
of
the
model
year,
the
manufacturer
may
request
a
refund
if
the
final
fee
is
less
than
the
initial
payment.
Manufacturers
with
certificates
issued
with
reduced
fees
under
this
pathway
will
not
be
required
to
submit
the
report
card
and
true­
up
described
above
under
the
first
pathway.

Under
either
pathway,
if
the
manufacturer
realizes
that
it
will
make
or
import
more
vehicles
or
engines
than
the
number
specified
on
the
certificate,
the
manufacturer
must
request
a
revised
certificate
with
an
increased
number
of
vehicles
or
engines
indicated.
At
the
time
of
revision,
the
manufacturer
must
pay
1.0
percent
of
the
aggregate
retail
price
of
the
number
of
vehicles
or
engines
that
are
being
added
to
the
certificate.
The
additional
fee
must
be
received
by
the
Agency
and
the
certificate
must
be
revised
and
issued
before
the
additional
vehicles
or
engines
may
be
sold
or
imported
in
the
United
States.
If
a
manufacturer
imports
or
sells
more
vehicles
or
engines
than
that
indicated
on
the
certificate,
the
manufacturer
will
be
in
violation
of
the
CAA
for
selling
or
importing
uncertified
vehicles
(
those
over
and
above
the
number
indicated
on
the
original
certificate.)

In
the
case
of
vehicles
or
engines
which
have
originally
been
certified
by
an
original
equipment
manufacturer
(
OEM)
but
are
being
modified
to
operate
on
an
alternative
fuel,
the
cost
basis
for
the
reduced
fee
amount
is
the
value­
added
by
the
conversion,
not
the
full
cost
of
the
vehicle
or
engine.

On
the
other
hand,
ICI
vehicle
or
engine
certificates
cover
vehicles
or
engines
which
are
imported
into
the
U.
S.
and
that
were
not
originally
certified
by
an
OEM.
As
such,
EPA
costs
associated
with
providing
various
MVECP
services
for
these
vehicles
has
not
yet
been
recovered.
Since
the
Agency
has
not
received
a
fee
payment
for
the
"
base
vehicle"
or
the
vehicle
imported
before
its
conversion
to
meet
U.
S.
emissions
requirements,
the
cost
basis
for
calculating
a
reduced
fee
for
an
ICI
certification
shall
be
based
upon
the
full
cost
of
the
vehicle
or
engine
rather
than
the
cost
or
value
of
the
conversion.

For
ICI
requests,
EPA
will
continue
the
current
requirement
to
calculate
the
full
cost
of
a
vehicle
based
on
a
vehicle's
average
retail
price
listed
in
the
National
Automobile
Dealer's
Association
(
NADA)
price
guide.
By
using
the
NADA
price
guide
to
establish
a
vehicle's
retail
sales
price
(
or
value),
EPA
ensures
uniformity
and
fairness
in
charging
fees.
Further,
it
avoids
certain
problems
such
as
falsification
of
entry
documents,
in
particular,
sales
receipts.
Where
the
NADA
price
guide
does
not
provide
the
retail
price
of
a
vehicle,
and
in
the
case
of
engines,
the
applicant
for
a
reduced
fee
must
demonstrate
to
the
satisfaction
of
the
Administrator
the
actual
market
value
of
the
vehicle
or
engine
in
the
United
States
at
the
time
of
final
importation.
When
calculating
the
aggregate
retail
sales
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DRAFT
17
price
of
vehicles
or
engines
under
the
reduced
fee
provisions
such
calculation
must
not
only
include
vehicles
and
engines
actually
sold
but
also
those
modified
under
the
modification
and
test
options
in
40
CFR
85.1509
and
40
CFR
89.609
and
those
imported
on
behalf
of
a
private
or
another
owner.
Furthermore,
EPA
is
clarifying
its
policy
such
that
importation
of
modification
and
test
vehicles
and
engines
will
only
be
allowed
under
certificates
that
cover
that
type
of
vehicle
or
engine.
For
example,
light­
duty
modification
and
test
vehicles
must
be
imported
only
under
light­
duty
certificates,
motorcycle
modification
and
test
vehicles
must
be
imported
only
under
motorcycle
certificates.

Previously
EPA
had
an
exemption
of
fees
for
small
volume
certification
requests
for
vehicles
using
alternative
fuels
through
the
2003
model
year.
EPA
believes
that
this
program
has
completed
its
purpose
of
providing
a
short­
term
relief
for
alternative
fuel
conversion
manufacturers.
Therefore,
starting
with
the
2004
model
year,
EPA
is
no
longer
including
this
exemption
for
alternative
fuel
convertors,
and
such
convertors
shall
be
subject
to
the
same
fee
provisions
as
other
manufacturers.
This
includes
the
reduced
fee
provisions.

We
believe
that
this
fee
reduction
program
will
provide
adequate
relief
for
small
entities
that
would
otherwise
encounter
some
economic
hardship
by
a
standardized
fee.
It
is
important
to
note
that
this
fee
reduction
does
not
raise
the
fees
for
other
manufacturers;
EPA
will
simply
collect
less
funds.

The
change
in
the
reduced
fee
provisions
results
from
comments
received
regarding
EPA's
proposed
reduced
fee
program
as
is
discussed
more
fully
in
section
6
of
the
Response
to
Comments
Document.

G.
What
is
the
Finalized
Policy
for
Refunds
and
Final
Fee
Payments?

There
are
instances
when
an
applicant
submits
a
filing
form
with
the
appropriate
fee,
has
an
application
undergo
a
portion
of
the
certification
process,
but
fails
to
receive
a
signed
certificate.
Under
the
current
rule,
the
Agency
offers
the
manufacturer
a
partial
refund
and
retains
a
portion
of
the
fee
to
pay
for
the
work
which
has
already
been
done.
This
policy
has
been
difficult
to
administer
and
requires
substantial
Agency
oversight.
Consequently,
we
have
finalized
a
simplified
refund
policy
in
today's
rule.
When
a
certificate
has
not
been
issued,
for
any
reason,
the
applicant
will
be
eligible
to
receive,
upon
request,
a
full
refund
of
the
fee
paid.
Optionally,
in
lieu
of
a
refund,
the
manufacturer
may
apply
the
fee
to
another
certification
request.
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04
DRAFT
18
EPA
proposed
that
manufacturers
would
not
have
to
pay
a
final
fee
if
the
difference
between
the
final
fee
and
the
initial
payment
was
less
than
$
500.
Conversely,
EPA
proposed
that
it
would
not
issue
refunds
for
amounts
less
than
$
500.
EPA
estimated
that
the
reduction
in
fees
received
from
the
final
fee
payments
of
under
$
500
would
be
balanced
by
the
refunds
of
less
than
$
500
that
would
not
be
distributed.
However,
the
decision
to
eliminate
a
minimum
final
reduced
fee
of
$
500
was
made
as
a
result
of
comments
regarding
EPA's
proposed
policy
of
only
issuing
refunds
greater
than
$
500.
Therefore,
since
EPA
will
be
paying
full
refunds,
EPA
is
setting
forth
in
today's
rule
that
full
payment
must
be
submitted
at
true­
up
to
avoid
an
overall
deficit
in
its
recovery
of
MVECP
costs
and
to
continue
to
abide
by
the
intent
of
the
IOAA
and
CAA.
The
new
refund
policy
will
not
reduce
the
money
collected
by
the
Agency
because
the
fee
schedule
is
based,
in
part,
on
the
number
of
certificates
actually
issued
rather
than
the
number
of
certification
requests.

EPA
is
continuing
its
retroactive
refund
policy
wherein
a
manufacturer
that
paid
the
full
fee
for
a
certificate
but
would
have
qualified
for
a
reduced
fee,
may
request
a
refund
for
the
difference
between
the
fee
paid
and
the
amount
of
the
calculated
reduced
fee.
The
Agency
will
also
fully
refund
any
fees
if
the
manufacturer
overpaid
based
on
their
own
projections.
This
change
in
and
clarification
of
the
refund
policy
is
the
result
of
comments
received
an
d
are
discussed
more
fully
in
section
6
of
the
Response
to
Comments
Document.

III.
What
Are
the
Changes
Made
to
the
Proposed
Cost
Analysis?

EPA
published
in
the
Notice
of
Proposed
Rule
Making
(
NPRM)
fees
that
reflected
our
then
projected
test
plans
and
associated
costs
for
the
regulated
industries.
In
the
time
between
the
NPRM
and
the
FRM,
EPA
has
gathered
additional
information
about
the
programs
and
tests
that
it
plans
to
conduct
and
is
in
a
better
position
to
determine
the
actual
costs
of
its
compliance
programs
for
2004
and
beyond
than
it
was
at
the
time
of
that
the
NPRM
was
written.
As
a
result
of
an
internal
reassessment
of
testing
capabilities
and
requisite
levels
of
appropriate
compliance
oversight,
along
with
comments
received,
EPA
made
several
adjustments
which
have
resulted
in
a
change
in
costs
of
certificates
for
several
industry
categories.
EPA
has
used
the
information
on
resources
and
lab
capabilities
to
make
the
changes
and,
therefore,
the
current
rulemaking
more
accurately
represents
the
test
program
that
EPA
will
put
into
place.
EPA
also
notes
that
conducting
a
compliance
program
requires
some
flexibility
to
ensure
that
vehicles
and
engines
are
in
fact
meeting
applicable
standards
throughout
their
useful
lives.
This
flexibility
requires
that
potentially
more
testing
be
conducted
when
problem
areas
arise,
or
perhaps
a
shift
in
the
types
of
testing
that
EPA
conducts.
The
program
being
finalized
today
provides
a
foundation
for
an
adequate
compliance
program;
however,
EPA
plans
to
continue
DRAFT
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12/
04
DRAFT
19
assessing
the
requisite
levels
of
testing
to
determine
an
appropriate
compliance
program.
As
EPA's
programs
mature
and
testing
capabilities
increase
then
the
compliance
testing
program
will
likely
adjust.
Any
further
changes
in
costs
based
on
such
adjustments,
beyond
those
made
today,
will
be
made
through
a
future
rulemaking.
The
changes
are
generally
described
below.
The
issues
are
discussed
more
fully
in
the
Response
to
Comments
document.
The
changes
are
also
reflected
in
several
new
worksheets
based
on
"
Appendix
C"
which
was
attached
to
the
"
Motor
Vehicle
and
Engine
Compliance
Program
Cost
Analysis"
document.
Thus
several
new
worksheets
have
been
generated
from
those
originally
found
in
Appendix
C
and
EPA
also
provides
an
additional
description
of
the
changes
to
these
worksheets.
The
new
worksheets
and
description
are
available
in
the
docket
for
this
rule
and
are
called
"
Updated
Cost
Analysis."

A.
Will
There
Be
Fees
for
Yet­
to­
be
Regulated
Industries?

The
NPRM
for
this
rule
proposed
establishing
the
level
of
fees
for
classes
of
nonroad
engines
and
equipment
where
emissions
regulations
were
under
consideration
by
EPA
but
were
not
proposed
at
the
time
of
the
Fees
NPRM.
The
final
fees
rule
does
not
establish
fees
for
classes
of
nonroad
engines
and
equipment
where
EPA
had
not
proposed
emissions
standards
for
these
classes
before
the
Fees
NPRM
was
published
on
August
7,
2002.
Although
the
fees
proposal
included
fees
for
marine
SI
inboard
/
sterndrive
engines,
the
final
rule
does
not
set
fees
for
these
engines.
The
final
fees
regulation
does
include
fees
for
all
other
nonroad
categories
that
were
proposed.
This
change
is
a
result
of
comments
received.
A
more
detailed
discussion
may
be
found
in
section
1
of
the
Response
to
Comments
Document.

B.
Is
There
a
Change
in
Costs
for
Heavy­
duty
Highway
and
Nonroad
CI
Engines
from
the
Proposal?

In
the
NPRM,
EPA
projected
an
appropriate
yet
ambitious
test
program
for
heavyduty
highway
and
nonroad
CI
engines
that
included
in­
use
and
confirmatory
certification
testing
for
heavy­
duty
highway
engines
that
would
be
conducted
in
newly
equipped
HD
test
cells
at
its
Ann
Arbor
laboratory,
in­
use
on­
vehicle
testing
for
HD
HW
and
NR
CI
engines,
as
well
as
testing
that
would
take
place
at
a
contractor's
facility
that
would
include
confirmatory
certification
testing,
selective
enforcement
audits,
and
in­
use
dyno
testing.
In
its
reassessment
of
the
testing
capabilities
EPA
adjusted
its
testing
projections
to
a
level
that
is
more
representative
of
the
current
amount
of
testing
that
may
be
accomplished
with
the
new
testing
facility
in
Ann
Arbor
and
the
new
enhanced
engine
compliance
program
testing
that
will
be
conducted
at
a
contractor's
facility.
The
programs
set
forth
in
this
rulemaking
more
realistically
represent
the
level
of
testing
that
EPA
will
accomplish
as
it
acknowledges
that
the
in­
use
dyno
testing
at
Ann
Arbor
and
the
DRAFT
2/
12/
04
DRAFT
20
enhanced
engine
compliance
programs
are
new
programs
and
will
not
reach
the
proposed
level
of
testing
for
some
time.

As
part
of
the
reassessment,
EPA
also
reexamined
the
recoverable
costs
for
the
test
equipment
for
HDE
tests
cells
#
1
and
#
2.
As
discussed
below,
the
cost
of
the
test
equipment
for
these
cells
has
been
prorated
to
reflect
the
amount
of
time
that
the
cells
would
be
used
for
compliance
testing.
EPA
believes
that
this
is
a
more
appropriate
cost
to
be
included
in
the
cost
study
as
it
acknowledges
that
the
cells
are
not
used
for
compliance
testing
100
percent
of
the
time.

The
reassessment
resulted
in
changes
in
several
elements
of
the
cost
study,
specifically,
a
decrease
in
the
number
of
FTE
that
would
be
conducting
the
testing,
a
decrease
in
the
percentage
of
test
cell
time
in
the
Ann
Arbor
laboratory,
a
reduction
of
the
number
of
in­
use
engines
that
would
be
procured
for
testing
and,
finally,
a
decrease
in
the
tests
to
be
conducted
at
a
contracted
facility.
These
reductions
are
discussed
more
fully
below.
The
revised
testing
programs
for
heavy­
duty
highway
and
nonroad
CI
are
as
follows:

Table
III.
B­
1
Number
of
Tests
for
HD
HW
and
NR
CI
Confirmatory
Cert
at
AA
In­
Use
at
AA
Confirmatory
Cert
at
Contractors
SEA
In­
Use
at
Contractors
HD
HW
7
3
0
5
5
NR
CI
0
0
6
10
5
The
reduced
number
of
tests
requires
fewer
FTE
to
oversee
the
testing.
Therefore,
the
number
of
direct
FTE
and
indirect
FTE
listed
under
the
heavy­
duty
highway
column
has
been
decreased
to
1.25
and
.25
FTE,
respectively,
from
2.25
and
.5
FTE.
This
is
a
net
reduction
of
1.25
FTE.
The
change
is
included
on
revised
worksheet
#
7.

EPA
proposed
that
fees
recover
all
costs
identified
as
compliance
costs.
Worksheet
#
10
of
the
Cost
Analysis
Document
detailed
the
items
identified
in
the
laboratory
modification
budget
request
including
the
costs
for
various
pieces
of
equipment
within
the
heavy
duty
test
engine
sites.
One
hundred
percent
of
the
equipment
identified
for
two
heavy­
duty
engine
test
cells,
HDE
#
1
and
HDE
#
2,
related
to
compliance­
oriented
DRAFT
2/
12/
04
DRAFT
21
activities
was
listed
as
recoverable
and,
therefore,
was
included
in
the
fees
for
the
heavyduty
category.
These
cells,
however,
will
not
be
used
100
percent
of
the
time
for
compliance
work
as
anticipated,
rather,
one
cell
will
be
used
for
one
quarter
of
a
year
for
compliance
testing.
Therefore,
it
is
appropriate
that
the
amount
of
the
recoverable
costs
should
reflect
the
actual
amount
of
time
that
the
cells
are
used
for
compliance
work.
The
recoverable
amount
of
the
two
cells
listed
on
worksheet
#
10
has
been
decreased
to
include
only
one­
quarter
of
the
cost
for
the
equipment
identified
solely
for
use
in
HDE
cell
#
2.
In
addition,
some
of
the
compliance
oriented
equipment
will
be
used
for
both
HDE
cell
#
2
and
HDE
cell
#
1.
Of
this
equipment
EPA
is
only
recovering
one­
eighth
of
the
cost
based
on
evenly
splitting
the
cost
of
such
equipment
between
the
two
test
cells
and
then
recovering
one­
quarter
of
the
cost
associated
with
HDE
cell
#
2.
At
this
time
EPA
anticipates
using
HDE
cell
#
2
approximately
one­
quarter
of
the
year
for
compliance
oriented
activity.
EPA
plans
to
conduct
three
HD
in­
use
tests
and
seven
certification
confirmatory
tests
during
that
time.
Accordingly,
the
recoverable
total
for
worksheet
#
10
has
been
reduced
resulting
in
a
decrease
in
the
fees
for
heavy­
duty
highway
(
HDE
HW)
engine
families.
This
decrease
is
reflected
for
this
industry
in
the
fees
table,
Table
II.
B­
1
above.

Although
EPA
is
estimating
that
the
amount
of
test
cell
time
that
will
be
dedicated
to
compliance
testing
is
one­
quarter
of
the
time
of
HDE
#
2,
this
does
not
limit
the
testing
that
EPA
may
conduct.
In
the
future,
EPA
may
choose
to
conduct
additional
HDE
compliance
testing,
however,
fees
will
not
increase
to
reflect
this
change
until
a
new
fees
rulemaking
is
promulgated.
This
change
responds
to
a
comment
received
and
is
discussed
in
more
detail
in
section
V.
C.
below
and
section
2
of
the
Response
to
Comments
Document.
Additional
changes
in
the
cost
for
this
industry
are
explained
further
below
and
include
a
change
in
the
estimated
number
of
certificates
and
the
amount
of
compliance
testing
that
EPA
anticipates
will
be
conducted.

Proposed
engine
procurement
costs
for
heavy­
duty
engines
were
shown
in
worksheet
#
12.
EPA
had
proposed
to
test
10
in­
use
engines,
two
engine
families
of
five
engines
per
family.
The
cost
to
procure
the
engines
is
$
25,240
for
the
first
engine
of
the
family
and
$
21,860
for
subsequent
engines
as
explained
in
general
terms
in
the
Cost
Analysis,
page
52.
The
revised
test
plan
consists
of
testing
of
three
engines
in
one
engine
family.
The
new
cost
for
procuring
these
engines,
at
the
same
cost
per
engine
as
proposed,
is
$
68,960.
The
revised
costs
are
shown
on
new
worksheet
#
12.

The
costs
for
the
proposed
Enhanced
Engine
Compliance
Program
were
shown
on
worksheet
#
16.
The
number
of
tests
were
revised
as
follows:
the
number
of
confirmatory
tests
for
certification
at
a
contracted
facility
were
decreased
for
NR
CI
and
HD
HW
to
6
families
and
0
families,
respectively.
EPA
decided
that
it
will
conduct
certification
confirmatory
tests
at
its
Ann
Arbor
facility
in
test
cell
#
2
when
in­
use
tests
are
not
being
DRAFT
2/
12/
04
DRAFT
5
For
more
information
on
the
FTE
allocation
method
see
the
Cost
Analysis,
page
10.

22
conducted.
Five
HD
HW
confirmatory
certification
tests
are
being
planned
per
year
in
Ann
Arbor.
Furthermore,
the
number
of
selective
enforcement
audits
of
HD
HW
engines
has
been
revised
from
10
to
5
audits.
The
revised
costs
for
the
enhanced
engine
compliance
program
for
NR
CI
and
HD
HW
industries
are
$
300,000
and
$
165,000,
respectively.
The
revised
costs
are
shown
in
new
worksheet
#
16.

C.
Is
There
a
Change
in
the
Number
of
Certificates?

In
order
to
determine
the
cost
for
each
certificate
EPA
determine
the
total
compliance
costs
associated
with
each
industry
and
then
divided
that
cost
by
its
best
estimate
of
the
number
of
certificates
that
would
be
issued
to
that
industry
within
a
given
year.
EPA
received
comment
about
the
number
of
certificates
for
light
duty
vehicles,
heavy­
duty
highway
engines
and
NR
CI
engines.
EPA
reexamined
the
number
of
certificates
issued
over
the
last
three
complete
model
years
and
used
an
average
of
the
past
two
years
of
certification
information
to
determine
a
divisor
for
the
three
industries
noted
above.
The
divisor
for
the
light­
duty
vehicles
and
trucks
will
remain
405
as
listed
in
the
cost
analysis.
The
divisor
for
the
HDE
HW
category
will
be
148
(
the
number
used
in
the
cost
analysis
was
130)
and
the
divisor
for
the
NR
CI
category
is
662
as
compared
to
603
used
in
the
cost
analysis.
As
a
result
of
this
recalculation
of
the
number
of
certificates
only,
the
fee
for
heavy­
duty
compression
and
spark­
ignition
engines
went
from
$
30,437
to
$
25,819
and
the
fee
for
nonroad
compression­
ignition
engines
went
from
$
2,156
to
$
1,964.
This
change
is
a
result
of
comments
received
and
is
discussed
further
in
section
2
of
the
Response
to
Comments
Document.
The
number
of
certificates
will
be
adjusted
and
fees
changed
accordingly
beginning
in
the
2006
calendar
year
as
discussed
above
in
section
II.
C.

D.
Indirect
Changes
Program
changes
to
one
category
may
indirectly
affect
the
fees
in
another
category.
Specifically,
the
decrease
in
the
number
of
FTEs
in
worksheet
#
7
to
the
heavyduty
highway
engine
category
resulted
in
slight
changes
to
the
rest
of
the
categories.
The
change
is
a
result
of
the
use
of
the
FTE
method
of
allocating
costs5
to
the
different
categories.
This
change
in
FTE
changed
not
only
the
allocation
of
indirect
costs
to
the
heavy­
duty
industry
but
also
changed
the
proportion
of
recoverable
to
nonrecoverable
indirect
costs.
For
this
reason
the
costs
for
the
light­
duty
and
highway
motorcycles,
and
DRAFT
2/
12/
04
DRAFT
23
Other
categories
changed
even
though
there
were
no
changes
made
to
the
compliance
programs
for
these
industries.
This
change
resulted
in
a
slight
decrease
in
fees
for
the
light­
duty,
motorcycle,
ICI
and
Other
industries.

IV.
What
Were
the
Opportunities
for
Public
Participation?

On
September
19,
2002,
a
public
hearing
was
held.
The
public
comment
period
was
open
until
October
19,
2002.
EPA
received
comments
before
and
after
the
close
of
the
comment
period.
All
comments
were
fully
addressed
to
the
extent
possible.
We
received
comments
from
11
manufacturers.
Comments
were
received
from
manufacturers,
manufacturer
trade
associations
and
representatives,
and
an
environmental
consulting
firm.
For
the
complete
list
of
commenters,
see
Response
to
Comments
document
contained
in
EPA
Air
Docket
No.
A­
2001­
09.

V.
What
Were
the
Major
Comments
Received
on
the
Proposed
Rule?

Comments
on
a
wide
range
of
issues
concerning
the
proposed
Fees
rulemaking
were
received.
Summarized
here
are
the
comments
concerning
the
major
or
significant
issues
and
the
rationale
behind
EPA's
final
decisions.
These
issues
are
considered
in
more
detail
in
the
Response
to
Comments
document
prepared
for
this
final
rule
and
included
in
the
docket
noted
earlier.

A.
Legal
Authority
1.
Authority
to
Assess
Nonroad
Fees
What
We
Proposed:

We
proposed
an
update
to
our
existing
Motor
Vehicle
and
Engine
Compliance
Program
(
MVECP)
fees
regulations
under
which
we
assess
fees
for
highway
vehicle
and
engine's
certification
and
compliance
activities.
We
also
proposed
the
collection
of
fees
for
nonroad
engines
certification
and
compliance
activities
which
we
have
regulated
since
our
initial
fees
rulemaking.
The
"
nonroad
engine
category"
includes:
nonroad
compression
engines,
marine
spark­
ignition
outboard/
personal­
water­
craft,
locomotive,
small
spark­
ignition,
recreational
vehicles
(
including,
but
not
limited
to,
snowmobiles,
offroad
motorcycles
and
all
terrain
vehicles),
recreational
marine
and
compression­
ignition
engines,
large
spark­
ignition
engines
(
over
19
kilowatts
(
kW))
and
marine
sparkignition
inboard­
sterndrive
engines.
DRAFT
2/
12/
04
DRAFT
24
Our
proposal
examined:
the
Independent
Offices
Appropriation
Act
(
IOAA),
several
provisions
of
the
Clean
Air
Act
(
CAA
or
Act),
the
Office
of
Management
and
Budget's
(
OMB's)
Circular
No.
A­
25,
and
various
court
decisions
including
Engine
Manufacturers
Association
v.
EPA,
20
F.
3d
1177
(
D.
C.
Cir.
1994)
which
considered
the
Environmental
Protection
Agency's
(
EPA's
or
Agency's)
initial
fees
rulemaking.

We
explained
that
section
217
of
the
CAA
authorizes
the
collection
of
fees
for
our
new
nonroad
vehicle
and
engine
certification
and
compliance
activities.
Section
217
allows
the
Agency
to
"
recover
reasonable
costs"
associated
with:
new
vehicle
or
engine
certification
activities
conducted
under
section
206(
a)
of
the
CAA,
new
vehicle
or
engine
compliance
monitoring
and
testing
under
section
206(
b)
of
the
CAA
(
including
such
activities
as
selective
enforcement
audits
(
SEA)
and
production
line
testing
(
PLT)),
and
in­
use
vehicle
or
engine
compliance
monitoring
and
testing
under
section
207(
c)
of
the
CAA.
We
also
explained
that
section
213
creates
a
statutory
enforcement
program
which
generally
mirrors
that
which
Congress
created
for
the
regulation
of
new
highway
vehicles
and
engines.
We
noted
that
EPA's
nonroad
standards
created
under
section
213
are
subject
to
the
same
requirements
(
e.
g.,
sections
206,
207,
208,
and
209)
and
implemented
in
the
same
manner
(
including
certification,
SEA,
and
in­
use
testing)
and
under
the
same
sections
(
as
those
referenced
in
section
217)
as
regulations
for
new
highway
vehicles
and
engines
under
section
202
(
with
modifications
to
the
implementing
nonroad
regulations
as
the
Administrator
deems
appropriate).
We
then
concluded
that
because
the
text
of
section
217
does
not
specify
either
highway
or
nonroad
engines
and
vehicles,
and
because
the
certification
and
compliance
activities
related
to
both
are
pursuant
to
sections
206
and
207,
we
believed
collecting
fees
for
new
nonroad
vehicles
and
engines'
certification
and
compliance
activities
under
section
217
were
appropriate
as
an
additional
compliance
requirement.

We
also
stated
that
the
IOAA
creates
additional
and
independent
authority
for
EPA
to
collect
fees
due
to
the
same
special
and
unique
benefits
that
manufacturers
of
both
new
highway
and
nonroad
vehicle
and
engine
manufacturers
receive
from
EPA
under
the
certification
and
compliance
program.

What
Commenters
Said:

We
received
several
comments
that
questioned
our
authority
to
assess
and
collect
fees
for
our
nonroad
certification
and
compliance
program
activities.
EMA
argued
that
the
IOAA
neither
overrides
nor
provides
the
EPA
with
expanded
fee
assessment
authority
since
section
217
specifically
sets
out
the
Agency's
authority
to
assess
fees
and
also
incorporates
the
IOAA
by
reference.
EMA
also
argued
that
Congress
would
not
have
DRAFT
2/
12/
04
DRAFT
25
enacted
the
specific
provisions
of
section
217
if
the
IOAA
was
still
intended
to
apply
to
EPA's
mobile
source
certification
and
compliance
activities.

In
addition,
EMA
argued
that
since
section
217
is
entitled:
"
Motor
Vehicle
Compliance
Program
Fees,"
Congress
could
not
have
intended
that
this
section
would
authorize
fees'
assessment
for
nonroad
compliance
activities.
The
commenter
further
noted
the
distinction
drawn
between
motor
vehicle
and
nonroad
vehicle
in
sections
216(
2)
and
(
11)
and
the
omission
of
nonroad
vehicle
and
engine
in
section
217
even
though
both
sections
213
and
217
were
promulgated
as
part
of
the
1990
Amendments.
EMA
also
pointed
out
that
section
213(
d)
specifically
subjects
the
nonroad
standards
to
sections
206,
207,
208
and
209
but
fails
to
incorporate
or
even
mention
section
217.

The
Motorcycle
Industry
Council
questioned
the
applicability
of
section
217
to
off­
road
motorcycles
and
all­
terrain
vehicles
(
ATVs)
and
further
urged
the
Agency
not
to
assess
fees
until
clarification
of
the
Agency's
authority
and
issuance
of
applicable
emission
standards
for
these
categories.

Another
commenter
argued
that
EPA
does
not
have
the
authority
under
section
213
to
assess
fees
for
nonroad
engines
and
therefore,
lacked
authority
to
assess
fees
for
lawn
and
garden
engines.
This
commenter
also
considered
our
discussion
of
our
authority
to
assess
fees
for
non­
road
engines
and
vehicles
as
"
tortured."

Our
Response:

EPA
disagrees
with
these
comments.
EPA
confirms
its
view
that
section
217
authorizes
the
Agency
to
recover
all
reasonable
costs
associated
with
certification
and
compliance
activities
for
nonroad
vehicles
and
engines,
including
nonroad
equipment.
EPA
also
believes
that
action
taken
under
section
217
is
to
be
consistent
with
the
IOAA.
We
also
believe
that
even
if
section
217
does
not
extend
to
nonroad
vehicles
and
engines,
then
the
IOAA
separately
provides
the
Agency
with
authority
to
assess
and
recover
fees
for
nonroad
and
engine
certification
and
compliance,
and
section
217
does
not
limit
or
override
the
IOAA.

A
plain
reading
of
section
217
indicates
that
EPA
may
recover
the
costs
associated
with
all
of
its
vehicle
and
engine
certification
and
compliance
programs
conducted
under
sections
206
and
207
of
the
Act.
Under
section
217,
the
Agency
may
recover
the
reasonable
costs
associated
with
"
new
vehicle
or
engine
certification"
under
section
206(
a),
"
new
vehicle
or
engine
compliance
monitoring
and
testing"
under
section
206(
b),
and
"
in­
use
vehicle
or
engine
compliance
monitoring
and
testing"
under
section
207(
c).
42
DRAFT
2/
12/
04
DRAFT
6
See,
for
example,
section
218:
"[
t]
he
Administrator
shall
promulgate
regulations
applicable
to
motor
vehicle
engines
and
nonroad
engines..."
42
USC
§
7553
(
emphasis
added).

26
U.
S.
C.
§
7522(
a).
Under
section
213(
d),
the
standards
for
new
nonroad
vehicles
and
engines
are
subject
to
all
the
applicable
requirements
of
sections
206
through
209.
The
provisions
of
sections
206(
a),
206(
b)
and
207(
c)
are
therefore
applicable
to
emissions
standards
for
nonroad
engines.
Here,
the
nonroad
certification
and
compliance
activities
for
which
EPA
is
adopting
fees
are
actions
taken
pursuant
to
these
specific
provisions.
These
nonroad
costs
are
clearly
costs
for
"
new
vehicle
or
engine
certification"
under
section
206(
a),
"
new
vehicle
or
engine
compliance
monitoring
and
testing"
under
section
206(
b),
and
"
in­
use
vehicle
or
engine
compliance
monitoring
and
testing"
under
section
207(
c).

Section
217
expressly
allows
for
recovery
of
costs
associated
with
"
vehicle
or
engine"
certification
and
compliance,
and
nonroad
vehicles
and
engines
are
clearly
"
vehicles"
and
"
engines."
CAA
section
216(
10),
(
11).
The
text
of
section
217
does
not
limit
its
scope
to
"
motor
vehicle
or
engine"
certification
and
compliance
programs.
Congress
was
clearly
aware
that
the
terms
motor
vehicle
or
engine
are
different
from
the
terms
nonroad
vehicle
or
engine,
and
in
section
217
chose
to
use
the
more
general
terms
"
vehicle"
and
"
engine"
to
identify
the
scope
of
authority
under
section
217.
Congress
defined
motor
vehicles
and
engines
distinct
from
nonroad
vehicles
and
engines,
but
subjected
them
both
to
sections
206(
a),
206(
b)
and
207(
c),
as
well
as
other
provisions
in
Title
II.
Congress
authorized
the
same
fundamental
certification
and
compliance
framework
for
both
nonroad
and
motor
vehicle
programs,
and
used
language
in
section
217
that
would
then
allow
EPA
to
collect
fees
for
its
certification
and
compliance
costs
for
both
motor
vehicles
and
engines
and
nonroad
vehicles
and
engines.
Congress
likely
would
have
expressly
employed
the
term
"
motor
vehicle
or
engine,"
6
instead
of
"
vehicle"
or
"
engine,"
had
it
intended
to
limit
the
reach
of
section
217
to
motor
vehicle
or
engine
certification
and
compliance
activity.
There
also
is
no
specific
provision
in
section
217
that
can
be
read
as
precluding
EPA
from
assessing
fees
for
nonroad
engines
and
vehicles.
Collecting
fees
to
recover
the
certification
and
compliance
costs
associated
with
nonroad
engines
and
vehicles
therefore
is
within
the
plain
meaning
of
the
language
Congress
used
in
section
217.

Moreover,
there
is
nothing
in
the
legislative
history
for
section
217
to
support
the
commenters'
narrow
reading.
Rather,
legislative
history
only
evinces
an
intent
for
the
Agency
to
"
recover
the
costs
associated
with
operating"
compliance
and
certification
programs.
[
H.
R.
101­
490,
May
1990,
1990
U.
S.
C.
C.
A.
N.
3355].
The
terms
used
here
are
general
in
nature
and
reasonably
indicate
an
intention
to
recover
such
certification
and
DRAFT
2/
12/
04
DRAFT
27
compliance
costs.
There
is
no
indication
in
this
text
that
Congress
intended
to
recover
only
some
of
these
costs,
those
associated
with
motor
vehicles
and
engines.
Congress
likely
would
have
at
least
identified
or
mentioned
the
limitation
of
section
217
to
motor
vehicles
and
engines
and
the
inapplicability
to
nonroad
vehicles
and
engines
in
this
legislative
history.

If,
as
the
commenter
suggests,
EPA
were
to
subject
all
nonroad
engines
and
vehicles
to
the
same
applicable
requirements
as
on­
highway
vehicles
and
engines
except
for
fees
assessment,
this
narrow
reading
of
section
217
would
not
comport
with
the
stated
congressional
intent
that
we
"
recover
the
costs
associated
with
operating"
our
certification
and
compliance
programs.
[
H.
R.
101­
490,
May
1990,
1990
U.
S.
C.
C.
A.
N
3355].
EPA's
interpretation
avoids
this
result
and,
consistent
with
the
intent
of
section
217
and
the
IOAA,
provides
a
reasonable
mechanism
to
equitably
collect
fees
for
specific
private
benefits
provided
by
the
agency.

Commenters
argue
that
Congress
adopted
both
sections
213
and
217
in
the
1990
amendments,
but
failed
to
specifically
identify
nonroad
certification
and
compliance
costs
in
section
217,
and
failed
to
reference
section
217
in
section
213(
d),
both
indicating
that
Congress
did
not
intend
to
include
nonroad
engines
and
vehicles
in
section
217'
s
authority
to
collect
fees.
As
noted
above,
this
fails
to
account
for
the
plain
meaning
of
the
language
employed
in
section
217
and
213(
d).
In
section
213(
d),
Congress
specifically
stated
that
nonroad
engines
and
vehicles
would
be
subject
to
the
certification
and
compliance
requirements
of
section
206
and
207,
along
with
other
provisions
unrelated
to
fees.
Congress
also
stated
in
section
217
that
EPA
could
collect
fees
for
costs
related
to
engine
and
vehicles
subject
to
these
specific
certification
and
compliance
provisions
in
sections
206
and
207.
Congress
did
not
need
to
specifically
mention
nonroad
engines
and
vehicles
in
section
217,
and
did
not
need
to
specifically
mention
section
217
in
section
213(
d)
to
authorize
the
collection
of
nonroad
related
fees,
as
the
language
it
did
use
leads
directly
to
that
result.
Similarly,
Congress
did
not
need
to
specifically
mention
motor
vehicles
or
engines
in
the
text
of
section
217
to
authorize
collection
of
fees
for
motor
vehicle
and
engine
certification
and
compliance
costs
under
sections
206
and
207.
The
reference
to
section
206(
a),
206(
b)
and
207(
c)
brings
in
both
motor
vehicle
and
nonroad
related
costs.

Clearly
Congress
could
have
made
such
specific
references,
but
it
instead
used
broader
language
in
section
217
and
a
specific
tie
into
actions
under
sections
206
and
207,
where
the
plain
meaning
then
covers
both
nonroad
and
motor
vehicles
and
engines.
It
did
not
need
to
specifically
refer
to
nonroad
engines
and
vehicles
to
include
them
in
section
217.
The
lack
of
specific
references
cited
by
commenters
does
not
detract
from
the
plain
meaning
of
these
provisions,
and
does
not
lead
to
the
implication
drawn
by
commenters.
DRAFT
2/
12/
04
DRAFT
7
"
It
is
the
sense
of
Congress
that
each
service
or
thing
of
value
provided
by
an
agency
(
except
a
mixed­
ownership
Government
corporation)
to
a
person
(
except
a
person
on
official
business
of
the
United
States
Government)
is
to
be
self­
sustaining
to
the
extent
possible."
31
U.
S.
C.
§
9701(
a).

28
The
plain
text
of
section
217,
read
in
combination
with
section
213(
d),
indicates
that
Congress
intended
to
authorize
collection
of
fees
for
both
nonroad
and
motor
vehicles
and
engines.
There
is
no
indication
in
the
text
of
either
section
217
or
section
213(
d)
that
Congress
intended
to
limit
section
217
to
motor
vehicles.
This
is
not
a
tortured
interpretation,
but
a
reasonable
reading
of
the
language
used
by
Congress.

The
Agency
also
disagrees
with
the
contention
that
the
title
of
section
217
­
"
Motor
Vehicle
Compliance
Program
Fees"­
indicates
that
Congress
did
not
intend
to
authorize
assessment
of
fees
for
nonroad
vehicles
and
engines.
"
Headings
and
titles
are
not
meant
to
take
the
place
of
the
detailed
provisions
of
the
statutory
text;
nor
are
they
necessarily
designed
to
be
a
reference
guide
or
a
synopsis."
Thistlethwaite
v.
Dowty
Woodville
Polymer,
Ltd.,
110
F.
3d
861,
866
(
2d
Cir.
1997)
(
Internal
quotation
marks
and
alterations
omitted),
rather,
"[
a]
bsent
a
clearly
expressed
legislative
intention
to
the
contrary,
[
statutory]
language
must
ordinarily
be
regarded
as
conclusive."
Consumer
Product
Safety
Commission
447
U.
S.
108,
100
S.
Ct.
2055
(
1980).
Here,
both
the
plain
language
of
section
217
and
it's
legislative
history
indicate
an
intention
to
authorize
collection
of
fees
for
all
of
the
new
vehicle
and
engine
certification
and
compliance
actions
undertaken
by
EPA
under
section
206(
a),
(
c)
and
207(
c).
They
provide
no
indication
of
an
intention
to
limit
such
authority
to
motor
vehicles
and
engines.
In
these
circumstances,
the
use
of
the
term
"
motor
vehicle"
in
the
heading
of
section
217
does
not
support
rejecting
a
conclusion
based
on
the
language
actually
used
by
Congress.

Regardless
of
whether
section
217
authorizes
the
collection
of
fees
for
costs
related
to
nonroad
engines
and
vehicles,
the
IOAA
does
authorize
EPA
to
assess
and
recover
fees
associated
with
implementing
the
nonroad
engines
and
vehicles
certification
and
compliance
programs.
The
plain
language
of
the
IOAA
allows
Agencies
to
charge
and
recoup
reasonable
costs
for
services
that
confer
specific
benefits
upon
identifiable
beneficiaries7.
It
authorizes
federal
agencies
to
"
impose
a
fee
only
for
a
service
that
confers
a
specific
benefit
upon
an
identifiable
beneficiary."
Engine
Manufacturers
Association
(
EMA)
v.
EPA,
20
F.
3d
1177,
1180
(
D.
C.
Cir.
1994).
That
case
indicates
that
the
certification
and
compliance
actions
for
which
EPA
is
collecting
fees
do
in
fact
confer
a
specific
private
benefit.
"
In
a
regulated
industry
a
certificate
of
approval
[
such
as
a
certificate
of
conformity]
is
deemed
a
benefit
specific
to
the
recipient."
Id.
DRAFT
2/
12/
04
DRAFT
29
There
is
nothing
in
the
text
of
the
IOAA
that
indicates
the
IOAA
does
not
apply
to
collection
of
nonroad
related
costs,
assuming
section
217
does
not
authorize
such
fees.
The
question
then
is
whether
section
217
itself
limits
the
scope
of
the
IOAA
with
respect
to
nonroad
certification
and
compliance
costs
that
are
otherwise
outside
the
scope
of
section
217.

Nothing
in
the
text
of
section
217
indicates
that
it
limits
the
IOAA
in
areas
not
covered
by
section
217.
The
introductory
text
of
section
217
refers
to
the
IOAA,
stating
that
EPA's
action
under
section
217
is
to
be
"
consistent
with"
the
IOAA.
The
clear
meaning
of
that
phrase
is
that
EPA
is
to
apply
the
criteria
of
the
IOAA
in
promulgating
fees
under
section
217.
It
indicates
an
intention
that
action
taken
under
section
217
is
to
be
consistent
with
the
IOAA.
It
does
not
indicate
that
Congress
intended
to
deviate
from,
limit,
or
override
the
IOAA
in
areas
outside
the
scope
of
section
217.

It
seems
quite
unlikely
that
Congress
would
limit
the
reach
of
the
IOAA
in
such
an
oblique
fashion
in
section
217.
If
Congress
intended
to
amend
or
overrule
the
IOAA
through
section
217,
Congress
likely
would
have
used
language
indicating
that
intent.
Instead
Congress
just
generally
provided
that
section
217
is
to
be
read
"
consistent"
with
the
IOAA.
See,
Chisom
v.
Roemer,
501
U.
S.
380,
111
S.
Ct.
2354
(
1991).
Such
an
important
limitation
likely
would
be
clearly
discernable
from
the
Act
and
the
legislative
history
of
section
217,
and
it
is
not.

The
enactment
of
section
217
even
though
the
IOAA
was
already
in
existence
does
not
indicate
otherwise.
Section
217
serves
several
valid
functions,
none
of
which
is
related
to
or
indicate
an
intention
to
limit
or
overrule
the
IOAA
for
areas
not
covered
by
section
217.
For
example,
section
217
creates
the
fees
fund
and
specifies
that
fees
collected
are
to
be
deposited
in
a
special
account
at
the
United
States
Treasury.
It
also
resolves
any
doubt
that
a
certification
and
compliance
program
can
be
basis
for
fees.
The
reference
to
the
IOAA
in
section
217
is
best
read
in
this
context.
Moreover,
reading
section
217
as
overriding
the
provisions
of
the
IOAA
would
amount
to
a
repeal
by
implication
which
is
generally
disfavored.

Commenter's
argument
would
mean
that
EPA
is
precluded
from
recovering
the
costs
associated
with
the
nonroad
vehicle
or
engine
certification
and
compliance
program
under
either
the
IOAA
or
section
217.
This
narrow
reading
of
section
217,
as
overriding
the
IOAA,
would
result
in
our
conferring
the
specific
benefits
of
our
certification
and
compliance
program
on
non­
road
engine
manufacturers
without
the
authority
to
recover
associated
costs
for
providing
this
service.
Such
an
interpretation
would
be
inconsistent
with
the
overall
purpose
of
the
IOAA
­
that
agencies
be
"
self­
sustaining"
by
charging
fees
DRAFT
2/
12/
04
DRAFT
30
to
recover
costs
associated
with
rendering
services
to
identifiable
beneficiaries.
Commenter's
interpretation
also
does
not
have
any
clearly
limited
boundaries.
The
interpretation
begs
the
question
of
the
extent
to
which
section
217
limits
the
IOAA
for
areas
outside
the
scope
of
the
IOAA.
Is
it
limited
to
nonroad
certification
and
compliance
activities?
Is
it
limited
to
other
activities
under
Title
II
of
the
Act?
Does
it
extend
to
all
other
EPA
actions
under
the
Act?
The
lack
of
a
clear
boundary
to
the
limits
of
IOAA
authority
under
commenter's
interpretation
indicates
it
is
neither
a
likely
nor
reasonable
interpretation
of
Congressional
intent
underlying
section
217.

EPA
believes
the
best
interpretation
of
section
217
and
the
IOAA
is
to
read
them
as
acting
in
harmony
and
in
conjunction
with
each
other.
For
areas
covered
by
section
217,
EPA's
actions
under
that
section
are
to
be
consistent
with
the
IOAA.
For
areas
not
covered
by
section
217,
the
IOAA
continues
to
be
in
effect
as
before
section
217
was
adopted.
This
will
appropriately
ensure
that
fees'
assessment
for
all
of
the
Agencies
programs
will
be
adequately
addressed.

Since
a
nonroad
engine
manufacturer,
similar
to
the
on­
highway
engine
manufacturer,
"
obtains
a
benefit
from
the
entire
[
EPA]
compliance
program,"
we
believe
we
may
recover
the
reasonable
costs
of
compliance
testing,
by
a
fee
that
does
not
exceed
the
value
of
the
benefit
derived
by
the
manufacturer,
under
the
IOAA.
See,
EMA,
20
F.
3d
at
1181
(
D.
C.
Cir.
1994).
Thus,
we
believe
that
if
section
217
is
inapplicable,
and
we
do
not
believe
so,
the
IOAA
would
provide
authority
to
assess
fees
for
nonroad
engines
and
vehicles.

In
light
of
the
foregoing,
we
disagree
with
the
commenters'
narrow
interpretation
of
section
217.
Accordingly,
we
believe
that
it
is
reasonable
to
read
section
217
as
providing
the
requisite
authority
to
collect
fees
associated
with
nonroad
certification
and
compliance
activities.
EPA
also
believes
it
is
reasonable
to
read
the
IOAA
as
providing
independent
authority
for
assessment
of
fees
for
nonroad
engine
compliance
and
certification
activities,
if
section
217
does
not
authorize
such
assessment.
EPA
believes
today's
action
is
appropriate
under
either
section
217
or
the
IOAA.

Similarly,
with
regard
to
comments
asserting
our
lack
of
fees'
assessment
authority
for
other
nonroad
engines
such
as
off­
road
motorcycles,
ATVs
and
lawn
and
garden
engines,
we
believe
as
discussed
above
that
both
section
217
and
the
IOAA
provide
us
with
the
requisite
authority
to
"
recover
the
reasonable
costs"
associated
with
the
certification
and
compliance
programs
for
these
nonroad
engines.
DRAFT
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04
DRAFT
31
We
also
do
not
believe
it
is
necessary
to
further
"
clarify"
our
authority
to
collect
nonroad
fees.
We
set
forth
the
basis
for
our
authority
within
the
NPRM
and
today's
action
confirms
that
authority.
We
separately
address
the
suggestion
to
defer
fees'
collection
until
issuance
of
the
off­
road
motorcycles
and
ATVs
emission
standards
in
the
Authority
to
Recover
Anticipated
Costs
for
Proposed
Programs
section
below.

2.
Authority
to
Recover
Anticipated
Costs
for
Proposed
Programs
What
We
Proposed:

EPA
published
new
fees
for
all
industries
in
the
fees
rule
NPRM,
Table
III.
D­
1,
67
FR
51410.
EPA
updated
fees
for
light­
duty
vehicles,
motorcycles
and
heavy­
duty
highway
engines
and
vehicles
that
were
covered
by
EPA's
original
fees
rulemaking.
The
new
fees
for
these
industries
are
determined
considering
inflationary
costs,
additional
costs
associated
with
programmatic
decisions,
and
some
future
costs
known
at
the
time
of
the
proposal
that
were
also
known
to
be
necessary
to
maintain
an
effective
MVECP.

We
also
proposed
fees
for
certain
certification
request
types
in
the
nonroad
industry
based
on
the
fact
that
EPA
has
had
emission
regulations
in
place,
prior
to
the
fees
proposal,
covering
such
nonroad
industries
and
thus
an
on­
going
compliance
program
exists
for
these
industries.
These
industries
include
nonroad
(
NR)
compression­
ignition
(
CI),
marine
spark­
ignition
(
SI)
outboard/
personal
water
craft,
small
nonroad
SI,
and
locomotives.
Some
of
these
industries
have
had
emissions
programs
in
place
since
the
1996
model
year.

In
addition,
we
proposed
fees
for
certain
nonroad
industries
(
marine
CI
>
37kW)
where
EPA
had
finalized
the
applicable
emission
regulations
for
that
industry
prior
to
the
fees
proposal
but
the
compliance
programs
had
not
yet
been
implemented.
Such
industries
would
only
pay
a
fee
for
certification
at
the
time
of
their
initial
applications
for
certification.

Similarly,
EPA
also
proposed
fees
for
certain
nonroad
industries
(
large
nonroad
SI
>
19kW,
recreational
marine
>
37kW,
and
recreational
vehicles
(
off­
road
motorcycles
(
MC),
ATVs,
snowmobiles,
etc))
for
which
emission
regulations
had
been
proposed
at
the
time
of
the
fees
proposal
(
August
7,
2002)
but
for
which
no
emission
regulations
had
yet
been
finalized.
DRAFT
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04
DRAFT
32
Lastly,
for
a
certain
nonroad
industry
(
marine
SI
inboard/
sterndrive)
we
proposed
fees
although
the
emission
regulation
and
proposal
was
just
under
development
at
the
time
of
the
fees
proposal.

What
Commenters
Said:

EMA
maintains
that
it
is
improper
for
EPA
to
quantify
fees
for
anticipated
nonroad
certification
and
compliance
programs
that
have
not
been
implemented
and
in
some
cases
not
even
proposed.
EMA
asserts
that
section
217
only
authorizes
the
Agency
to
"
recover"
the
actual
costs
that
it
incurs
for
administering
established
certification
and
compliance
programs
­
"[
T]
he
Administrator
may
...
recover
..."
EMA
provides
what
it
feels
to
be
the
plain
meaning
of
"
recover"
which
is
"
to
get
back."
EMA
contends
that
for
the
industry
categories
noted
above,
there
are
no
such
actual
costs
for
the
Agency
to
tally
and
then
seek
to
recover
or
get
back.
There
is
no
proper
basis
for
the
Agency
to
merely
anticipate
expenses
that
will
be
incurred
in
the
future.
EMA
maintains
that
EPA
should
not
impose
fees
for
nonroad
categories
that
were
not
finalized
before
the
NPRM,
nor
should
EPA
include
fees
associated
with
nonroad
rulemakings
that
have
not
yet
been
finalized
and
published.

Additionally,
EMA
believes
it
is
unlawful
and
improper
to
establish
fees
for
programs
that
have
not
even
been
proposed
as
it
presupposes
the
outcome
of
such
rulemakings
and
so
undermines
and
trivializes
the
administrative
rulemaking
process.
Without
knowledge
of
the
final
outcome
of
the
predicate
rulemaking
the
public
cannot
participate
meaningfully
in
the
rulemaking.
EMA
urges
EPA
to
wait
for
the
underlying
regulatory
measures
to
be
finalized
and
implemented
before
charging
manufacturers
for
anticipated
costs.

The
Alliance
and
the
Association
of
International
Automobile
Manufacturers
(
AIAM)
state
that
EPA
incorrectly
bases
its
costs
on
"
budget
requests"
and
"
plans"
rather
than
actual
"
expenditures."
It
is
inappropriate
to
base
costs
on
projections.
EPA
should
account
for
"
actual
expenditures"
or
where
costs
have
occurred.
In
addition,
EPA
must
account
for
each
employee
who
works
on
MVECP
activities
and
subtract
out
time
not
spent
on
such
activities.

The
Motorcycle
Industry
Council
asserts
that
the
compliance
fees
should
not
include
anticipated
or
projected
costs,
future
plans
and
services.
The
commenter
further
states
that
only
when
actual
costs
are
determined
should
a
fair
fee
be
established
and
the
costs
recovered.
The
Council
further
requested
that
the
Agency
defer
finalizing
fees
for
DRAFT
2/
12/
04
DRAFT
33
off­
road
motorcycles
and
ATVs
until
the
Agency
finalizes
the
applicable
emissions
requirements
and
at
that
time,
issue
the
applicable
fees
or
a
"
separate
but
concurrent
fee
rule."

The
Outdoor
Power
Equipment
Institute
(
OPEI)
supports
EMA's
comment
stating
that
EPA
lacks
the
statutory
authority
to
recover
anticipated
costs
for
proposed
programs
prior
to
their
adoption
as
final
regulations.

Our
Response:

As
stated
above,
we
believe
section
217
authorizes
the
Agency
to
recover
reasonable
costs
associated
with
vehicle
and
engine
certification
and
compliance
activities.
We
also
believe
that
the
IOAA
authorizes
the
Agency
to
recover
fees.
We
believe
it
is
appropriate
to
recover
all
costs
which
EPA
will
incur
to
provide
the
necessary
MVECP
services
to
a
manufacturer
during
the
course
of
certification
and
in­
use
compliance
activities.
For
several
reasons
EPA
also
believes
it
is
appropriate
to
collect
such
fees
prior
to
issuing
certificates.
EPA
disagrees
with
EMA's
suggestion
that
the
language
in
section
217
authorizing
EPA
to
establish
fees
"
to
recover"
all
reasonable
costs
means
that
EPA
should
"
tally"
its
costs
and
then
"
get
back"
such
costs.
EMA
does
not
suggest
that
EPA
change
its
current
regulatory
practice
of
collecting
fees
in
advance
of
granting
a
certificate.
As
such,
EMA
tacitly
recognizes
that
EPA
is
indeed
projecting
the
actual
future
costs
associated
with
certification
and
in­
use
activities
at
the
time
it
is
adopting
the
fees
rule
and
when
it
collects
the
fee
with
the
application
for
a
certificate.
EPA
believes
it
may
project
actual
costs
as
long
as
the
fee
payers
are
on
adequate
notice
through
rulemaking
of
what
those
projected
costs
are
and
that
EPA
has
a
reasonable
basis
for
deciding
that
such
projections
will
be
accurate.
EPA's
fees
rule
is
designed
to
recover
or
get
back
its
expected
actual
costs.

We
believe
this
practice
is
consistent
with
the
guidance
provided
by
OMB
Circular
No.
A­
25,
which
states
under
its
"
General
Policy"
section
6(
a)(
2)(
c)
that
when
determining
the
amount
of
user
charges
to
assess
that
"
User
charges
will
be
collected
in
advance
of,
or
simultaneously
with,
the
rendering
of
services
unless
appropriations
and
authority
are
provided
in
advance
to
allow
reimbursable
services."
In
this
instance,
EPA
does
not
believe
that
section
217
of
the
CAA
limits
EPA's
authority
such
that
EPA
could
only
seek
reimbursement
of
past
expenses.
In
addition,
EPA's
continued
practice
of
collecting
fees
in
advance
is
the
most
appropriate
method
and
provides
applicants
with
the
best
information
regarding
the
fees
that
are
owed
at
time
of
certification.
DRAFT
2/
12/
04
DRAFT
34
The
Agency
has
finalized
rules
for
certain
nonroad
categories
that
were
proposed
but
not
finalized
at
the
time
this
fees
rule
was
proposed.
With
the
one
exception
noted
below,
we
also
no
longer
are
"
projecting"
what
our
compliance
activities
will
be
for
many
of
the
nonroad
industries
included
in
the
"
Other"
category
as
the
rules
regulating
emissions
for
those
industries
have
been
finalized
and
our
expected
compliance
activities
will
be
implemented.

We
agree
with
commenters
that
we
should
not
finalize
fees
at
this
time
for
nonroad
categories
that
were
not
proposed
at
the
time
that
the
fees
rule
NPRM
was
published.
Although
EPA
also
proposed
fees
for
the
marine
SI
inboard/
sterndrive
industry,
based
on
what
we
anticipated
to
be
a
modest
compliance
program,
we
agree
with
EMA
that
it
is
premature
to
require
fees
at
this
time.
EPA
believes
that
the
cost
study
and
analysis
are
proper
for
this
industry
but
we
choose
to
wait
until
the
actual
emission
regulation
for
this
industry
is
proposed,
to
provide
ample
opportunity
for
comment
on
potential
fees.
We
anticipate
finalizing
fees
for
that
industry
in
the
final
emission
regulation.
Therefore,
in
EPA's
revised
worksheet
#
2,
in
the
"
Other"
column,
we
have
reduced
the
total
cost
of
compliance
activities
by
$
20,645
to
reflect
that
the
marine
SI
category
will
not
be
covered
by
this
regulation.
The
fees
associated
with
the
remaining
regulated
industries
in
the
"
Other"
column
remain
the
same
­
$
826
per
certificate.
This
change
is
reflected
in
section
85.2405
of
the
regulations,
item
14
of
the
fees
table,
which
indicates
the
fees
for
marine
engines,
excluding
inboard
and
sterndrive
engines.

As
EPA
has
maintained
throughout
this
rulemaking,
we
believe
it
is
appropriate
to
recover
all
costs
which
EPA
will
incur
to
provide
the
necessary
MVECP
services
to
a
manufacturer
for
certification
and
in­
use.
For
several
reasons
EPA
also
believes
it
is
appropriate
to
collect
such
fees
prior
to
issuing
certificates.
We
also
believe
that
when
any
significant
budget
changes
occur
that
affect
allocations
of
resources
dedicated
to
any
MVECP
activity,
or
regulatory
changes
that
affect
MVECP
activities,
or
EPA
evaluations
of
the
compliance
rates
and
associated
environmental
impacts
change,
then
it
is
likely
appropriate
for
EPA
to
reexamine
its
updated
MVECP
activities
and
determine
whether
any
changes
in
costs
have
occurred.

We
believe
it
is
appropriate
within
this
rule
to
require
fees
for
those
industries
that
are
in
fact
required
to
meet
EPA's
emission
standards
in
order
to
receive
certificates
of
conformity.
EPA
proposed
fees
for
certain
nonroad
industries
where
the
compliance
date
of
the
emission
standards
had
not
yet
occurred
(
meaning
no
applications
for
certification
had
been
submitted),
and
we
believe
that
such
manufacturers
had
adequate
notice
of
the
regulatory
emission
requirements
they
would
be
required
to
meet
in
the
future
and
how
EPA
intended
to
impose
a
fee
related
to
EPA's
services.
Based
on
the
regulatory
DRAFT
2/
12/
04
DRAFT
8
See
Cost
Analysis
Document
starting
at
page
16
(
step
5
of
"
general
steps").

35
structure
of
the
emissions
program
for
these
industries,
EPA
also
had
a
reasonable
basis
for
deciding
that
the
projected
costs
are
accurate.
As
noted
in
the
proposal,
EPA
intends
to
only
conduct
a
modest
MVECP
program
for
these
industries.

In
addition,
we
also
believe
it
is
appropriate
to
require
fees
for
those
industries
that
are
newly
regulated
since
EPA
issued
the
fees
proposal.
At
the
time
of
the
fees
proposal
such
industries
(
large
nonroad
SI
>
19kW,
recreational
marine
>
37kW,
and
recreational
vehicles)
were
on
notice
of
the
emission
requirements
they
would
likely
face
(
including
the
requirement
of
certification)
due
to
existence
of
NPRMs
for
such
industries
prior
to
the
fees
proposal.
Based
on
the
regulatory
structure
of
the
emissions
program
for
these
industries,
EPA
also
had
a
reasonable
basis
for
deciding
that
the
projected
costs
are
accurate.
The
final
emission
regulations
have
since
become
effective
for
these
industries
and
EPA
anticipates
no
changes
in
its
modest
projections
of
the
compliance
activities
and
costs
associated
with
these
newly
regulated
industries.

B.
Assessment
of
Costs
1.
Costs
Apportioned
to
Industries
What
We
Proposed:

Our
proposed
fees
were
based
on
past
and
projected
actual
costs
of
providing
certification
and
compliance
services
to
the
various
mobile
source
manufacturers
and
industries.
We
grouped
these
various
manufacturers
and
industries
into
fee
categories
and
we
explained
that
separation
of
industries
into
groups
with
other
similar
industries
was
in
order
to
ensure
that
each
category
pays
fees
only
for
the
services
that
it
receives.
8
We
also
explained
that
EPA
conducted
a
cost
analysis
to
determine
the
various
compliance
activities
associated
with
each
fee
category
and
associated
annual
costs
for
each
certification
request
type.
We
set
forth
our
analyses
in
the
Motor
Vehicle
and
Engine
Compliance
Program
Costs
Analysis
(
Cost
Analysis
Document).
We
further
explained
that
where
the
level
and
type
of
EPA
activity
and
costs
were
similar
for
each
industry
then
those
industries
were
grouped
together,
the
total
number
of
certificates
were
added
together,
and
equal
fees
were
allocated
to
each
anticipated
certificate.
(
See
Cost
Analysis
Document
at
p.
21.)
In
this
way,
EPA
determined
the
portion
of
the
MVECP
costs
dedicated
to
each
certification
request
type.
DRAFT
2/
12/
04
DRAFT
9
EMA
cites
EMA
v
EPA,
20
F.
3d
1177,
1180
(
D.
C.
Cir.
1994)
for
this
proposition.
The
court
held
in
this
instance
that
"
Under
the
IOAA
an
agency
may
impose
a
fee
only
for
a
service
that
confer
a
specific
private
benefit
upon
an
identifiable
beneficiary."

36
We
proposed
three
"
fee
categories":
1.
Light­
Duty,
which
includes
light­
duty
vehicles
and
trucks,
motorcycles,
and
because
of
similar
compliance
programs
mediumduty
passenger
vehicles
and
certain
heavy­
duty
vehicles
were
included,
with
subcategories
created
where
it
was
determined
that
a
different
level
of
services
and
costs
were
expected
to
be
expended;
2.
Engines,
which
includes
heavy­
duty
highway
(
HDE
HW)
and
nonroad
compression­
ignition
(
NR
CI)
engines
(
excluding
marine
and
locomotive),
with
subcategories
created
where
it
was
determined
that
a
different
level
of
services
and
costs
were
expected
to
be
expended;
and
3.
Other
Engines
and
Vehicles,
where
currently
EPA
only
plans
to
do
certification
review
and
includes
marine
CI
and
SI
engines,
nonroad
SI
engines,
locomotive
engines,
large
spark­
ignition
engines,
recreational
marine
engines,
recreational
vehicles,
heavy­
duty
engine
evaporative
systems
and
heavy­
duty
engines
certified
for
California
only
.

What
Commenters
Said:

EMA
maintains
that
the
language
of
section
217(
a)
of
the
CAA
relevant
to
heavyduty
engine
and
vehicle
manufacturers,
which
states
in
part,
that
EPA's
fees
for
such
manufacturers
"
shall
not
exceed
a
reasonable
amount
to
recover
an
appropriate
portion
of
[
the]
reasonable
costs
[
of
the
MVECP]"
requires
EPA
to
only
recover
a
portion
and
not
all
of
the
certification
and
compliance
program
costs.
EMA
believes
such
portion
should
be
from
the
costs
just
associated
with
the
heavy­
duty
engine
and
vehicle
manufacturers.
Although
EMA
initially
stated
that
they
did
not
have
a
definitive
percentage
or
portion
that
EPA
should
assess,
EMA
in
a
subsequent
comment
stated
that
the
appropriate
"
portion"
of
EPA's
certification
and
compliance
costs
for
heavy­
duty
engine
and
vehicle
manufacturers
to
bear
is
50
percent.

EMA
states
that
the
plain
language
of
section
217(
a)
requires
that
only
a
"
portion"
of
the
costs
associated
with
the
heavy­
duty
engine
(
HDE)
compliance
program
can
be
recoverable
and
thus
100
percent
of
such
costs
is
not
a
portion.
EMA
suggests
that
EPA's
interpretation
(
that
heavy­
duty
manufacturers
pay
100
percent
of
the
costs
allocated
to
that
industry)
would
provide
no
purpose
or
effect
to
the
last
sentence
in
217(
a).
Since
the
basic
premise
of
fee
collection
is
to
impose
fees
for
specific
benefits
conferred
upon
an
identifiable
beneficiary9,
EMA
suggests
that
it
is
self­
evident
that
EPA
would
only
collect
such
appropriate
fee
even
without
the
language
in
the
last
sentence.
Further,
EMA
points
to
the
EMA
decision
and
claims
it
does
not
validate
EPA's
DRAFT
2/
12/
04
DRAFT
37
interpretation
of
217(
a).
EMA
suggests
that
the
dicta
from
that
decision
only
states
that
"
Congress
intended
that
the
EPA
charge
manufacturers
of
heavy­
duty
engines
and
vehicles
something
less
than
it
charges
other
manufacturers"
and
the
EPA
must
"
do
something
that
moves
non­
trivially
in
the
direction
that
Congress
intended"
and
thus
does
not
hold
that
EPA
may
assess
HDE
manufacturers
100
percent
of
all
costs
and
yet
still
comply
with
the
requirement
in
217(
a)
which
requires
that
only
a
portion
of
such
reasonable
costs
be
assessed.

Our
Response:

EPA
agrees
with
EMA's
suggestion
that
the
general
principle
of
section
217
and
of
the
IOAA
is
to
generally
recover
all
costs
that
are
specifically
tied
to
a
specific
benefit
for
an
identifiable
party.
The
introductory
sentence
on
217(
a)
suggests
that
"
all
reasonable
costs"
might
appropriately
be
calculated
for
the
all
MVECP
services
as
noted
in
217(
a)(
1­
3)
for
all
industries
and
then
EPA
is
subsequently
directed
to
charge
the
heavy­
duty
engine
and
vehicle
manufacturers
its
appropriate
"
portion"
of
the
otherwise
aggregated
costs.

We
disagree
with
EMA's
interpretation
of
the
EMA
decision.
The
court
discusses
EMA's
claim
that
heavy­
duty
manufacturers
should
pay
less
than
the
"
fair
share"
of
costs
occurs
in
section
III
C
of
the
decision.
The
court
noted
that
"
According
to
EMA,
the
Congress
intended
that
heavy­
duty
manufacturers
be
charged
a
fee
that
recovers
less
than
their
fair
share
of
the
total
cost
of
the
Compliance
Program
because
they
face
smaller
sales
volumes
and
more
onerous
compliance
testing
than
do
manufactures
of
light­
duty
vehicles
and
engines."
The
cost
methodology
EPA
used
in
the
fees
rule
that
the
court
reviewed,
and
used
for
the
current
rule,
was
to
segregate
the
costs
for
each
certificate
type
(
including
HDE
HW
CI
and
SI)
and
divide
such
total
costs
by
the
number
of
certificates
expected
to
be
issued
within
that
certificate
type.
As
noted
on
worksheet
#
2
of
the
original
Cost
Analysis,
the
total
costs
for
HDE
HW
CI
and
SI
is
$
3,956,759
and
cost
per
certificate
is
$
30,437.
Worksheet
#
2
of
the
revised
Cost
Analysis
shows
that
this
amount
is
now
$
3,193,596.
The
amount
per
certificate
is
$
21,578,
a
reduction
of
$
8,859
per
certificate
in
the
final
rule
(
this
reduction
is
a
result
in
a
recalculation
in
the
number
of
certificates
expected
to
be
issued,
a
reduction
in
the
costs
associated
with
the
upgrades
to
the
test
cells
in
Ann
Arbor,
and
other
adjustments)
whereas
the
fee
per
light­
duty
vehicle
certificate
is
$
33,883.

The
court
in
EMA
(
page
1183)
acknowledged
EPA's
methodology
of
and
intent
to
give
effect
to
section
217(
a)
by
segregating
the
costs
of
heavy­
duty,
light­
duty,
and
motorcycle
certificates
and
by
waiving
the
fee
to
the
extent
that
it
exceeds
one
percent
of
DRAFT
2/
12/
04
DRAFT
10
EMA
at
1180.

38
the
projected
sales
revenue
for
any
manufacturer.
The
court
suggests
that
it
is
reasonably
clear
that
Congress
intended
that
the
EPA
charge
manufacturers
of
heavy­
duty
engines
and
vehicles
"
something
less
than
it
charges
other
manufacturers"
although
"
the
statute
is
silent
as
to
both
the
means
by
which
and
the
degree
to
which
the
agency
is
to
do
so."
The
court
continued
and
found
that
what
EPA
had
done,
in
segregating
costs
as
noted
above,
was
an
appropriate
way
to
implement
section
217(
a)
for
heavy­
duty
manufacturers.

We
also
note
that
the
discussion
that
EMA
cites
from
EMA
regarding
the
fact
that
the
IOAA
already
provides
the
necessary
authority
and
requirement
that
fees
for
service
only
be
collected
when
a
specific
benefit
falls
upon
an
identifiable
industry
includes
additional
discussion
of
what
is
an
"
identifiable
beneficiary"
versus
the
general
public.
The
court
states
that
"[
a]
general
benefit
conferred
upon
an
industry,
such
as
the
public
confidence
that
may
attend
the
mere
facts
of
its
regulation,
is
insufficient
to
justify
a
fee."
(
italics
added).
The
court
continues
and
states
that
"[
i]
n
a
regulated
industry,
a
certificate
of
approval
is
deemed
a
benefit
specific
to
the
recipient."
(
italics
added).
10
The
court
clearly
differentiates
between
the
regulated
industry
versus
the
general
public.

All
such
manufacturers
receive
the
specific
benefit
of
a
certificate
from
EPA
and
are
otherwise
regulated.
However,
we
believe
the
language
of
section
217
authorizes
us
to
use
a
methodology
that
identifies
the
costs
directly
associated
or
portioned
by
EPA
that
relate
to
the
heavy­
duty
engine
and
vehicle
industry.
We
have
in
fact
identified
such
costs
for
this
industry
and
apply
no
other
costs
to
the
fees
collected
from
it.
Since
the
resulting
fee
levels
and
waiver
provisions
result
in
a
fee
for
heavy­
duty
engine
manufacturers
that
is
significantly
lower
than
all
other
motor
vehicle
manufacturers
except
for
motorcycle
manufacturers
and
independent
commercial
importers
(
ICIs),
whose
costs
are
segregated
both
from
heavy­
duty
and
general
light­
duty
vehicle
costs,
and
thus
EPA
believes
this
is
an
appropriate
way
to
implement
section
217(
a).

What
Commenters
Said:

EMA
then
points
to
section
217'
s
use
of
the
term
"
reasonable"
and
legislative
history
on
section
which
is
to
the
effect
that
"[
t]
he
authority
granted
to
the
Administrator
under
this
section
[
217]
must
be
carefully
exercised
so
as
to
avoid
proceeding
with
`
gold
plated'
compliance
programs
since
the
costs
will
not
fall
on
the
government."
(
See
H.
R.
101­
490,
May
17,
1990).
EMA
suggests
that
a
50
percent
allocation
would
also
give
recognition
to
the
tremendous
outlays
of
capital
and
man­
hours
that
HDE
manufacturers
DRAFT
2/
12/
04
DRAFT
11
Not­
to­
exceed
requirements
specify
that
engine
emissions
must
not
exceed
a
specified
value
for
any
of
the
regulated
pollutants.

39
already
spend
to
conduct
extensive
certification
and
compliance
testing
and
given
the
new
costs
to
comply
with
the
2007
model
year
requirements
and
its
own
in­
use
not­
to­
exceed
(
NTE)
11
compliance
testing.

EMA
believes
that
50
percent
is
the
appropriate
portion
of
the
costs
that
should
be
collected
in
order
to
protect
against
"
gold­
plated"
programs
and
by
ensuring
that
EPA
maintains
a
meaningful
role
in
funding
such
programs.
It
would
also
recognize
the
capital
and
man­
hours
that
heavy­
duty
manufacturers
spend
to
stay
up
with
EPA
requirements,
including
costs
for
additional
data
and
new
test
cells
in
order
to
meet
the
2007
standards.
In
addition,
EMA
again
claims
that
the
manufacturers
face
extensive
in­
use
NTE
compliance
testing
in
the
future
and
thus
in
many
ways
are
already
paying
more
than
their
fair
share
of
compliance
cost
burden.

Our
Response:

EPA
believes
the
best
interpretation
of
section
217
is
that
the
costs
associated
with
heavy­
duty
manufacturers
be
segregated
from
other
types
of
manufacturers.
In
reaching
this
conclusion
EPA
is
guided
by
the
sentence
in
section
217
that
EMA
relies
upon
"
In
the
case
of
heavy­
duty
engine
and
vehicle
manufacturers,
such
fees
shall
not
exceed
a
reasonable
amount
to
recover
an
appropriate
portion
of
such
reasonable
costs"
and
the
preceding
sentence
which
states
"
The
Administrator
may
establish
for
all
foreign
and
domestic
manufacturers
a
fee
schedule
based
on
such
factors
as
the
Administrator
finds
appropriate
and
equitable
and
nondiscriminatory,
including
the
number
of
vehicles
or
engines
produced
under
a
certificate
of
conformity"
(
italics
added).

We
believe
it
is
appropriate
to
segregate
the
MVECP
costs
associated
with
each
industry
and
then
to
divide
the
number
of
certificates
within
each
respective
industry
by
its
segregated
costs.
In
order
to
be
nondiscriminatory
we
also
believe
that
all
industry
groups
(
or
"
fee
categories")
must
reimburse
the
government
for
all
the
costs
for
their
respective
industry
group.
The
costs
that
each
industry
group
must
incur
to
comply
with
EPA's
emission
requirements
such
as
manufacturers'
own
NTE
testing,
test
cell
development,
etc.,
is
properly
considered
by
EPA
when
it
adopts
such
requirements,
e.
g.
when
it
adopts
emission
standards.
The
cost
to
industry
is
taken
into
account
in
that
rulemaking.
This
rule,
however,
focuses
on
EPA's
actions
and
associated
costs.
We
believe
that
is
consistent
with
the
directive
in
the
IOAA
that
special
benefit
programs
be
self­
sustaining
DRAFT
2/
12/
04
DRAFT
40
to
the
extent
possible
and
the
first
sentence
of
section
217(
a)
authorizing
EPA
to
"...
establish
fees
to
recover
all
reasonable
costs."

Thus,
we
believe
that
the
directive
to
recover
"
reasonable,"
"
appropriate,"
and
"
equitable
and
nondiscriminatory"
costs
or
fees
means
that
EPA
must
use
clear
and
explained
accounting
measures,
make
reasonable
estimates
of
costs,
and
properly
distribute
its
costs
to
specific
programs
where
specific
benefits
are
bestowed
to
a
specific
industry
group.

Therefore,
EPA
believes
the
purposes
of
section
217
and
IOAA
are
also
best
served
by
collecting
all
costs
incurred
by
the
Agency
but
only
collecting
the
fair
share
of
costs
of
HDE
compliance
that
is
associated
with
such
activity
and
therefore
EPA
makes
no
adjustment
of
its
fees
based
on
commenters'
suggestions.

EPA
believes
that
the
certification
and
compliance
program
designed
for
the
heavy­
duty
industry
is
appropriate
and
reasonably
correlates
with
the
contribution
of
emissions
from
this
sector
to
the
overall
inventory
of
emissions
from
mobile
sources
and
also
is
very
reasonable
when
compared
to
the
level
of
activity
and
costs
associated
with
other
industry
categories,
including
the
light­
duty
industry.
EPA
believes
its
certification
and
compliance
program
is
reasonable,
if
not
modest,
for
the
heavy­
duty
industry
and
in
no
respect
can
it
be
considered
a
"
gold­
plated"
program.
From
EPA's
original
proposed
cost
of
$
30,347
for
each
heavy­
duty
certificate
we
have
now
reduced
the
cost
in
the
final
rule
to
$
21,578.

2.
Costs
Unrelated
to
the
MVECP
What
We
Proposed:

We
proposed
recovery
of
those
costs
incurred
by
the
Agency
in
conducting
new
vehicle
and
engine
certification,
new
vehicle
and
engine
compliance
monitoring
and
testing
and
in­
use
vehicle
or
engine
compliance
monitoring.
The
proposed
fees
are
based
on
what
EPA
believes
to
be
all
recoverable
direct
and
indirect
costs
associated
with
administering
these
activities.
Recoverable
costs
include
all
labor,
direct
and
indirect
program
operating
costs
associated
with
the
activities
listed
above,
and
EPA's
general
overhead
costs.
Operating
costs
include
such
things
as
the
purchase
of
equipment
or
property
as
that
specified
on
worksheet
#
10,
which
is
the
itemization
of
laboratory
modernization
budget
request.
DRAFT
2/
12/
04
DRAFT
41
The
Cost
Analysis
contains
worksheets
which
further
explain
the
associated
costs.
Several
worksheets
within
the
Cost
Analysis
set
forth
the
costs
that
are
applicable
to
the
heavy­
duty
highway
certification
type.

What
Commenters
Said:

In
its
initial
comments,
EMA
expressed
the
concern
that
EPA
was
seeking
to
assess
and
recover
fees
for
EPA's
developmental
test
lab
facilities
and
personnel
in
Ann
Arbor.
EMA
stated
that
since
these
facilities
were
not
utilized
in
connection
with
the
MVECP
for
manufacturers'
heavy­
duty
on­
highway
or
nonroad
engines
compliance
or
certification
activities
but
instead
are
used
for
general
regulatory
efforts
and
technological
feasibility
demonstrations,
such
efforts
and
demonstrations
do
not
confer
specific
benefits
on
any
identifiable
beneficiary
or
manufacturer.

OPEI
supported
EMA's
comment
and
contended
that
EPA
cannot
impose
certification
fees
on
small
spark­
ignition
(
SSI)
engine
manufacturers
for
costs
that
are
not
directly
related
to
processing
SSI
engine
certification.
Both
commenters
considered
costs
associated
with
EPA's
developmental
test
lab
facilities
and
personnel
associated
with
such
facilities
in
Ann
Arbor,
Michigan
as
"
unrelated
costs."

Our
Response:

EPA
agrees
with
commenters
that
fees
should
not
be
assessed
for
the
costs
associated
with
using
Ann
Arbor's
test
laboratory
facilities
and
personnel
for
activities
not
related
to
the
MVECP
such
as
general
regulatory
efforts
and
technological
feasibility
demonstrations,
or
for
other
developmental
purposes.
As
EPA
noted
in
the
NPRM,
the
costs
of
activities
such
as
regulation
development,
emission
factor
testing,
air
quality
assessment,
support
of
state
inspection
programs
and
research
were
not
included
with
the
costs
study
nor
are
included
in
the
fees
proposed.
(
See
67
FR
at
51409).
As
noted
on
worksheet
#
10,
of
the
$
14,130,000
associated
with
the
laboratory
modification
budget,
only
$
8,485,000
was
deemed
recoverable
as
a
laboratory
equipment
associated
with
compliance
testing
activities.
Specifically,
those
costs
linked
to
the
"
advance
engine
test
sites"
and
the
"
climate
control
test
facility,"
which
fall
under
the
heading
"
Critical
Regulatory
Developmental
Test
Capability"
are
not
labeled
as
recoverable
and
thus
are
not
included
in
the
fees
proposed.
Worksheet
#
10
also
reflects
that
other
costs
associated
with
developmental
testing
are
not
labeled
as
recoverable.
As
further
noted
below,
EPA
has
further
refined
these
costs
and
has
eliminated
other
costs
not
determined
to
be
MVECP
related.
DRAFT
2/
12/
04
DRAFT
42
We
did
not
include
the
costs
of
developmental
lab
facilities
and
personnel
in
Ann
Arbor
in
our
fees
calculation.
The
lab
facilities
that
were
included
as
recoverable
in
the
cost
study
are
for
engine
testing
that
EPA
plans
to
begin
in
the
near
future.
Therefore,
the
costs
are
associated
with
compliance
testing
and
are
recoverable
by
fees.

What
Commenters
Said:

In
its
initial
comments,
EMA
also
contended
that
EPA
does
not
currently
conduct
any
HDE
testing
at
Ann
Arbor
and
therefore
questioned
both
the
need
for
such
testing
along
with
the
additional
labor
costs
of
conducting
such
testing
along
with
the
other
costs
of
such
testing
as
summarized
on
worksheet
#
3.

Our
Response:

EPA
notes
that
the
need
for
such
testing
partially
arises
from
purely
the
emission
contribution
from
heavy­
duty
engines
which
is
second
only
to
light­
duty
on­
highway
vehicles
for
mobile
sources
and
represents
approximately
one­
half
of
the
emissions
of
light­
duty
vehicles.
Furthermore,
EPA
has
experienced
a
relatively
high
degree
of
the
use
of
defeat
devices
and
non­
conformity
of
heavy­
duty
vehicles
in
recent
years.
The
discovery
of
the
level
of
noncompliance
in
this
industry
led
to
the
perception
that
EPA
was
not
doing
an
adequate
job
of
overseeing
the
HDE
industry.
In
1998
consent
decrees
were
entered
into
with
almost
the
entire
HDE
HW
industry,
to
resolve
claims
of
several
cases
of
noncompliance.
The
Agency
is
only
now
beginning
on
its
efforts
to
test
some
of
these
vehicles
during
in­
use
operation
over
their
useful
lives.
EMA's
comment
suggests
that
it
may
be
unnecessary
to
implement
a
new
HDE
compliance
program
(
or
that
it
is
not
necessary
until
the
2007
requirements
commence),
or
that
such
a
program
is
untenable
in
Ann
Arbor.
EPA
believes
these
comments
are
misplaced.
As
noted
from
revised
worksheet
#
1,
EPA's
proposed
fees
program
allocated
a
cost
of
$
3.2
million
for
the
HDE
on­
highway
industry.
This
amount
has
been
further
reduced
by
today's
final
rule.

EPA
plans
at
this
point
to
conduct
dyno
certification
testing
and
in­
use
testing
on
9
families
out
of
150
families,
and
approximately
11
additional
families
using
portable
test
equipment
for
in­
use
surveillance
testing.
Thus,
EPA
believes
that
given
the
past
rates
of
compliance
with
emissions
standards
of
these
industries,
along
with
emissions
contributions,
demonstrates
that
creation
of
a
reasonable
compliance
program
for
the
heavy­
duty
industry
is
reasonable.
DRAFT
2/
12/
04
DRAFT
12
Note
that
the
final
costs
for
the
HDE
equipment
costs
is
$
77,000
per
year,
not
$
193,000
as
proposed.

43
EPA
believes
it
has
developed
and
is
now
in
the
process
of
implementing
a
cohesive
and
comprehensive
compliance
program,
including
a
significant
component
in
Ann
Arbor,
for
HDE
on­
highway
engines.
EMA
is
correct
that
a
testing
program
in
Ann
Arbor
did
not
exist
at
the
time
of
the
fees
proposal,
however,
EPA
has
extensive
experience
in
testing
light­
duty
vehicles
and
has
identified
a
similar
need
for
heavy­
duty
in
order
to
ensure
that
any
emission
problems
are
found
in
a
timely
manner.
Similarly,
EPA
has
extensive
experience
with
procuring
vehicles
for
testing
and
estimating
costs
and
we
note
that
commenters
did
not
question
the
accuracy
of
such
costs.
EPA
has
invested
the
requisite
resources
to
conduct
a
testing
program
in
Ann
Arbor
and
plans
to
use
that
facility
along
with
testing
conducted
in
the
Washington,
DC
area
and
at
any
necessary
outside
contracted
laboratories
as
explained
at
2.2.4.

3.
Costs
for
In­
use
Programs
What
We
Proposed:

We
proposed
continuance
of
the
Agency's
current
compliance
methods
for
lightduty
vehicles,
motorcycles
and
heavy­
duty
highway
vehicles
and
engines
which
insure
the
overall
compliance
of
a
vehicle
or
engine
with
applicable
emission
standards
throughout
their
useful
life.
EPA
explained
that
this
certification
process
may
include
confirmatory
testing
(
testing
conducted
by
EPA
in­
house
to
confirm
manufacturer
test
data)
and
compliance
inspections
and
investigations
(
such
as
selective
enforcement
audits)
and
inuse
testing.
(
67
FR
at
51406­
51408).
Currently,
EPA
conducts
testing
of
in­
use
heavyduty
highway
engines
and
nonroad
compression­
ignition
engines
at
costs
of
$
297,200
and
$
72,800,
respectively.
This
testing
is
screening
in
nature,
and
uses
portable
test
equipment
on­
board
the
vehicle.
This
screening
is
used
as
an
indicator
of
engines
that
may
be
noncompliant.
To
assist
in
this
testing,
EPA
is
planning
to
purchase
commercial
emission
detection
units
that
can
monitor
emissions
from
heavy­
duty
engines
and
nonroad
compression­
ignition
engines
during
use
at
costs
of
$
80,000
and
$
20,000,
respectively.
These
costs
are
shown
on
worksheet
#
13.

We
also
proposed
fees
for
new
compliance
testing
for
in­
use
heavy­
duty
engines.
Some
of
the
testing
will
be
conducted
in
the
Ann
Arbor
laboratory
at
a
test
site
that
is
being
upgraded
to
conduct
compliance­
level
tests.
The
proposed12
costs
for
the
in­
use
testing
conducted
at
EPA's
Ann
Arbor
facility
included
the
equipment
costs
listed
in
DRAFT
2/
12/
04
DRAFT
44
revised
worksheet
#
10
($
385,000
per
year
for
heavy­
duty),
the
labor
listed
in
revised
worksheet
#
7
(
1.50
FTE),
and
the
cost
of
procuring
in­
use
heavy­
duty
engines
listed
under
Engine
Procurement
­
Heavy­
Duty,
on
revised
worksheet
#
12
($
68,960).

In
addition
to
the
new
testing
that
will
be
conducted
in
Ann
Arbor,
we
are
planning
an
Enhanced
Engine
Compliance
Program.
Revised
worksheet
#
16
reflects
the
costs
for
this
program.
This
will
be
conducted
at
a
contracted
facility
(
with
the
exception
of
the
selective
enforcement
testing)
and
includes
selective
enforcement
testing
and
in­
use
engine
dyno
testing
for
both
heavy­
duty
highway
engines
and
nonroad
CI
engines
and
certification
confirmatory
testing
for
NR
CI
engines.

What
Commenters
Said:

EMA
opposed
fees
based
on
EPA's
expectation
of
conducting
an
enhanced
in­
use
compliance
program
when,
at
the
same
time,
the
Agency
is
in
the
process
of
developing
and
implementing
a
manufacturer­
run
in­
use
testing
program.

EMA
states
that
EPA's
current
in­
use
testing
is
just
geared
toward
regulatory
development
and
feasibility
testing
of
its
measurement
equipment.
EMA
further
contended
that
the
fees
are
inappropriate
because
the
NTE
emissions
standards
and
related
testing
and
requirements
do
not
become
effective
for
HDE
HW
engines
until
2007,
much
later
than
when
the
new
fees
become
effective,
and
are
not
yet
proposed
for
NR
CI
engines.

Our
Response:

Regulatory
development
and
feasibility
testing
were
not
included
in
the
cost
study,
and
were
not
included
in
the
costs
that
will
be
recovered
by
fees.
Furthermore,
the
cost
study
only
assesses
the
costs
of
compliance
and
confirmatory
testing.

EPA
acknowledges
that
one
purpose
of
the
current
in­
use
testing
has
been
developing
the
portable
testing
devices
and
related
testing
procedures,
but
the
primary
purpose
now
and
certainly
in
the
future
of
the
enhanced
engine
compliance
program
will
be
compliance
testing.
This
is
to
implement
the
prohibition
against
use
of
defeat
devices
and
to
conduct
compliance
testing
of
new
emission
control
components
based
on
both
the
2004
HDE
HW
standards
and
the
2007
standards.
Thus
both
our
screening
testing
and
laboratory
testing
will
commence
in
2004
and
not
await
the
additional
requirements
(
such
DRAFT
2/
12/
04
DRAFT
13
Not­
to­
exceed
requirements
specify
that
engine
emissions
must
not
exceed
a
specified
value
for
any
of
the
regulated
pollutants.

45
as
NTE
standards)
in
2007.
Our
current
on­
vehicle
testing
has
several
compliance
purposes,
including:
as
a
general
screening
tool
to
see
how
such
vehicles
might
perform
based
on
federal
test
procedure
(
FTP)
conditions,
as
a
tool
to
insure
that
no
heavy­
duty
engine
manufactures
are
employing
defeat
devices.
As
explained
below,
in
addition
to
continuing
surveillance­
like
testing
of
small
samples
of
vehicles
per
engine
family,
EPA
plans
to
conduct
more
compliance
testing
to
measure
the
durability
of
new
emission
components
and
to
measure
such
vehicles
or
engines
in
laboratory
conditions.

EPA
has
included
the
additional
HDE
HW
compliance
programs
in
its
cost
analysis
and
is
recovering
such
costs
by
today's
rule
because
such
programs
are
part
of
EPA's
plan
to
increase
its
compliance
oversight
for
this
industry.

We
also
note
that
the
near
term
compliance
testing
will
not
be
for
"
regulatory
development"
purposes
but
rather
to
insure
the
durability
on
new
technologies
being
applied
to
heavy­
duty
on­
highway
and
nonroad
engines.
These
new
technologies
have
not
undergone
extensive
in­
use
scrutiny
and
assurances
of
durability.
As
a
result
an
in­
use
compliance
program
is
necessary
now
to
ensure
that
the
applicable
new
emission
standards
are
being
met.

What
Commenters
Said:

EMA
states
that
manufacturers
will
be
conducting
a
comprehensive
in­
use
not
to
exceed
(
NTE)
13
testing
program
of
on­
highway
HDE
during
the
2005
and
2006
time
period
and
will
subsequently
conduct
a
manufacturer­
run
in­
use
program.
EMA
maintains
that
as
a
result,
EPA
and
the
California
Air
Resources
Board
(
CARB)
will
not
engage
in
routine
in­
use
testing
of
HDE
engine
families.
Thus,
EMA
argues
that
EPA's
in­
use
testing
will
be
minimized,
not
enhanced,
due
to
the
manufacturer­
run
in­
use
testing.

Our
Response:

EPA
agrees
with
EMA's
comment
that
manufacturers
will
be
conducting
an
inuse
NTE
pilot
testing
program
during
2005
and
2006
yet
we
disagree
with
EMA's
characterization
of
this
testing
as
"
comprehensive."
In
fact
during
this
pilot
period
it
is
expected
that
EPA
will
be
required
to
conduct
its
own
testing
if
determination
of
the
DRAFT
2/
12/
04
DRAFT
46
scope
or
causes
of
potential
nonconformance
was
required
and
that
EPA
may
be
required
to
generate
additional
testing
data
should
a
remedial
action
for
nonconformance
be
sought.
EPA
also
expects,
and
therefore
agrees
with
EMA's
comment,
that
manufacturers
will
be
conducting
their
own
in­
use
verification
testing
program
in
2007,
and
thus
EPA
will
not
be
conducting
routine
testing
that
is
duplicative
of
manufacturer
testing.
Independent
from
the
manufacturers'
testing
throughout
this
time
period,
EPA
sees
the
need
to
conduct
the
projected
levels
in­
use
testing
to
ensure
compliance
with
all
emission
standards,
including
NTE
standards.
EPA
believes
that
an
EPA­
run
in­
use
presence
will
continue
into
the
future
at
the
levels
projected.

The
enhanced
in­
use
program
is
planned
by
EPA
to
address
the
Agency's
compliance
testing
needs.
New
technologies,
such
as
catalysts
and
traps,
will
soon
be
added
to
heavy­
duty
on­
highway
(
both
for
the
2004
and
2007
regulatory
requirements)
and
nonroad
compression­
ignition
engines
which
have
not
undergone
extensive
in­
use
scrutiny
and
assurances
of
durability.
Thus
we
believe
it
is
appropriate
to
establish
an
inuse
compliance
presence
to
ensure
that
the
applicable
new
emission
standards
are
being
met.
In
terms
of
equity
with
other
industries
and
in
terms
of
the
need
for
the
compliance
programs,
we
believe
that
EPA's
proposed
compliance
program
and
the
associated
fees
are
appropriate.
In
addition,
as
noted
above,
EPA's
in­
use
testing
will
not
be
duplicative,
but
as
envisioned
by
EPA's
settlement
agreement
with
EMA,
EPA's
testing
will
be
used
for
purposes
of
verifying
any
manufacturer
testing
as
necessary
in
order
to
make
final
compliance
determinations
and
other
separate
testing
to
supplement
the
testing
of
engine
families
not
tested
by
manufacturers.

As
evidence
of
EPA's
intent
to
conduct
the
current
and
future
HDE
HW
and
NR
CI
testing
programs,
EPA
has
formally
requested
an
additional
$
8
million
in
the
fiscal
year
2004
budget
request
sent
to
Congress
"
to
help
ensure
compliance
with
the
more
stringent
and
complex
Tier
II
and
Diesel
regulations
for
cars,
heavy­
duty
diesel
engines,
and
gasoline
and
diesel
fuels
that
will
take
effect
in
FY
2004."
Included
in
the
request
is
the
"
development
of
a
credible
heavy­
duty
compliance
program"
as
Congress
has
previously
questioned
EPA's
oversight
of
this
industry.
We
believe
it
is
appropriate
to
include
the
new
testing
program
costs
associated
with
heavy­
duty
compliance
in
the
budget
request
just
as
it
was
appropriate
to
include
the
$
10
million
associated
with
the
recoverable
portion
of
the
$
14
million
spent
on
the
laboratory
modernization
projections
which,
at
the
time,
was
based
on
both
EPA's
design
plans
and
needs
and
a
similar
request
to
Congress
for
such
funding
which
has
since
been
funded
in
subsequent
appropriations.
We
also
note
that
much
of
the
testing
that
will
be
conducted
during
the
2005­
2006
pilot
testing
period
will
be
for
purposes
of
refining
testing
protocols,
etc.
and
that
EPA
must
maintain
a
reasonable
level
of
compliance
testing
in
order
to
ensure
that
emission
standards
are
being
DRAFT
2/
12/
04
DRAFT
47
met
while
vehicles
are
operating
during
their
useful
lives.
Similar
to
EPA's
in­
use
verification
program
conducted
by
manufacturers
in
the
light­
duty
industry
(
the
Compliance
Assurance
Program
(
CAP
2000)),
EPA
believes
it
will
continue
to
test
at
projected
levels
beyond
2007
when
manufacturers
will
be
expected
to
be
required
to
conduct
their
own
in­
use
testing
as
EPA
testing
in
conjunction
with
manufacturer
testing
forms
the
basis
for
adequately
determining
the
performance
of
engines
during
in­
use
operation.

What
Commenters
Said:

The
Alliance/
AIAM
maintains
that
since
CAP
2000
transferred
the
obligation
of
in­
use
verification
and
confirmatory
testing
to
manufacturers,
EPA
appears
to
be
charging
fees
for
costs
that
are
already
borne
by
manufacturers.
They
also
cite
to
a
statement
regarding
our
authority
to
require
SEA
testing
in
the
NPRM
and
contend
that
since
CAP
2000
also
reduced
or
transferred
EPA's
workload
as
it
relates
to
SEA
testing,
that
any
costs
associated
with
SEA
testing
is
inappropriate.

Our
Response:

Although
the
Alliance/
AIAM
maintains
that
CAP
2000
transferred
the
obligation
of
in­
use
verification
and
confirmatory
testing
to
manufacturers,
in
fact
what
CAP
2000
accomplished
was
the
shift
in
emphasis
that
had
been
placed
on
certification
to
in­
use
performance
and
in­
use
testing.
EPA
neither
transferred
nor
intended
to
transfer
EPA's
own
in­
use
verification
and
confirmatory
testing
to
the
manufacturers.
Rather,
after
CAP
2000
was
implemented,
EPA
began
gradually
increasing
the
amount
of
in­
use
testing
that
it
was
conducting,
initially
at
the
Virginia
test
laboratory
(
VTL)
in
Alexandria,
Virginia,
then
transferred
this
testing
(
during
the
time
when
testing
at
VTL
was
being
phased
out)
to
EPA's
Ann
Arbor
laboratory
where
the
in­
use
testing
program
continues
to
operate
and
increase
in
scope.
The
costs
of
the
in­
use
testing
program
reflects
our
implementation
of
the
new
Tier
2
emission
standards
and
associated
new
technology.

We
did
not
propose
any
fees
for
SEA
testing
for
the
light­
duty
program,
therefore,
the
Cost
Analysis
Document
does
not
reflect
any
light­
duty
costs
for
SEA
testing.
However,
this
does
not
preclude
EPA
from
increasing
its
in­
use
testing
program
or
conducting
SEA
testing
if
it
deems
it
necessary
in
the
future.
Any
related
fee
change
would
be
through
Notice
and
Comment
rulemaking.

What
Commenters
Said:
DRAFT
2/
12/
04
DRAFT
48
EMA
indicated
that
EPA
should
readdress
the
assessment
of
fees
for
in­
use
testing
once
the
manufacturer­
run
program
is
up
and
running.
EMA
also
stated
that
by
the
time
EPA
conducts
a
new
rulemaking
for
HDE
fees,
the
HDE
manufacturers
will
have
been
making
"
double
payments."

Our
Response:

EPA
believes
that
its
initial
modest
compliance
program
that
has
been
designed
for
the
HDE
industry,
and
for
which
costs
will
be
recovered
by
today's
rulemaking,
is
appropriate
and
is
expected
to
continue
for
the
foreseeable
future.
The
Agency
recognizes
the
significant
role
the
HDE
manufacturers
will
play
in
contributing
to
a
comprehensive
compliance
program
by
conducting
their
own
in­
use
testing.
As
such
EPA
anticipates
that
it
may
re­
examine
the
scope
of
its
own
HDE
HW
in­
use
compliance
program
and
its
effectiveness
at
a
time
when
its
new
program
is
fully
developed
and
can
also
be
examined
in
the
context
of
a
mature
manufacturer­
run
in­
use
program.
This
reexamination
will
focus
on
whether
the
manufacturer
in­
use
testing
program
as
finally
adopted
and
implemented
indicates
that
changes
are
appropriate
in
the
nature
or
extent
of
EPA
testing.
EPA
will
examine
the
scope
of
manufacturer­
run
testing
and
determine
whether
any
redundant
or
unnecessary
in­
use
testing
is
being
done
by
EPA
or
whether
additional
EPA
testing
is
required.
EPA
believes
that
this
will
timely
address
the
concern
of
"
double
payments,"
in
order
to
avoid
manufacturers
paying
for
testing
that
they
are
conducting
and
also
paying
fees
for
EPA
to
conduct
the
same
testing.

4.
Costs
Too
High
for
Industry
What
We
Proposed:

In
the
Cost
Analysis
Document
we
explained
that
each
request
for
a
certificate
of
conformity
within
a
certification
request
type
is
potentially
subject
to
an
equal
amount
of
EPA
expenditure
related
to
the
applicable
certification,
SEA,
and
in­
use
compliance
monitoring
and
audit
programs,
and
where
applicable,
fuel
economy.
EPA
believes
it
is
fair
and
equitable
to
calculate
fees
in
a
manner
whereby
the
fee
for
each
certificate
within
a
certification
request
type
is
approximately
the
same.

The
Cost
Analysis
divided
the
various
affected
industries
into
three
separate
categories,
light­
duty
vehicles,
heavy­
duty
and
nonroad
compression­
ignition
engines
and
"
Other."
Each
category
was
further
subdivided
if
the
amount
of
testing
or
EPA
services
varied
significantly.
The
"
Other"
category
was
not
subdivided
as
it
included
vehicles
and
engines
that
would
only
receive
certification
review
and
some
minimal
testing.
The
fees
DRAFT
2/
12/
04
DRAFT
49
were
determined
by
dividing
the
total
costs
of
services
provided
by
EPA
to
this
category
by
the
projected
number
of
certificate
applications
that
would
be
received
by
manufacturers
included
in
the
category.

What
Commenters
Said:

Mercury
Marine
opposed
the
fee
structure
for
marine
engine
manufacturers.
It
asserted
that
EPA's
proposed
fee
of
$
827
per
certificate
would
have
a
2003
model
year
impact
to
Mercury
Marine
of
over
$
23,000.

Mercury
Marine
stated
that
the
marine
industry
agreed
to
redesign
its
products
to
meet
EPA
regulations
in
1994
and
1995.
They
noted
that
the
cost
of
this
redesign
is
in
excess
of
500
million
dollars
industry
wide.
Mercury
stated
that
the
discussions
at
that
time
certainly
did
not
include
any
additional
costs
for
certification.

Mercury
Marine
stated
that
the
marine
industry
is
sensitive
to
changing
costs
and
is
unable
to
deal
with
the
fees
that
EPA
proposed.

Our
Response:

As
mentioned
above,
both
section
217
and
the
IOAA
direct
EPA
to
recover
fees
associated
with
the
various
engine
and
vehicle
certification
and
compliance
programs.
Today's
rulemaking
is
in
compliance
with
the
strictures
of
both
provisions.
Industries
that
have
not
had
to
pay
fees
until
now
will
be
charged
fees
to
cover
the
services
provided
by
the
EPA.
EPA
understands
that
the
new
fees
are
an
expense
that
many
manufacturers
have
not
had
to
pay
and
that
this
expense
may
be
difficult
to
budget
into
a
manufacturer's
expenses.
This
is
why
EPA
notified
manufacturers
of
the
new
fees
early
in
the
rulemaking
process
to
give
manufacturers
time
to
budget
for
the
new
fees.

To
reduce
their
fees
burden,
EPA
included
liberal
waiver
provisions
for
small
engine
families
to
assure
manufacturers
that
the
cost
of
fees
will
never
exceed
one
percent
of
the
projected
aggregate
retail
value
of
the
vehicle
or
engines
being
certified.
It
should
be
noted
that
when
a
fee
is
reduced
the
cost
of
the
compliance
services
are
covered
by
the
government
and
are
not
distributed
among
other
fee
payers.

Although
we
did
not
mention
certification
fees
as
part
of
the
marine
engines
rulemaking,
we
believe
that
we
have
given
adequate
notice
of
the
new
fees
in
order
for
manufacturers
to
prepare
for
the
new
fees.
Furthermore,
since
1992
light­
duty
vehicle
and
DRAFT
2/
12/
04
DRAFT
50
heavy­
duty
engine
manufacturers
have
been
paying
fees.
Thus,
we
also
believe
that
the
new
fees
schedule
will
ensure
the
equitable
treatment
of
all
manufacturers
that
are
certified
by
EPA.

What
Commenters
Said:

Briggs
and
Stratton
stated
that
small
engine
applications
are
simple
and
straightforward,
they
require
a
minimum
amount
of
review
by
EPA,
there
is
no
OBD
II,
fleet
averaging,
etc.
Therefore,
only
a
minimum
fee
should
be
set
for
certification,
lower
than
those
in
the
"
Other"
fee
category.
Because
manufacturers
of
the
small
engine
industry
have
a
larger
number
of
smaller
engine
families
and
the
engines
are
of
a
low
cost
then
this
provides
an
additional
justification
for
lower
fees.

Outdoor
Power
Equipment
Institute
(
OPEI)
suggested
that
lawn
and
garden
engines
should
be
treated
differently
than
the
other
engines
and
vehicles
in
EPA's
category
for
"
other
engines."
OPEI
asserted
that
EPA
took
the
position
that
it
incurs
the
same
expense,
whether
processing
a
certificate
for
a
very
complex
locomotive
engine,
or
an
engine
used
to
power
a
hedge
trimmer.
Furthermore,
OPEI
comments
that
although
it
is
not
familiar
with
the
intricacies
of
locomotive
engine
design
and
usage,
EPA
cannot
possibly
spend
the
same
amount
of
time
certifying
a
locomotive
engines
as
a
lawn
and
garden
engine.

Our
Response:

To
reflect
the
services
we
provide
to
industries
within
a
category
(
see
worksheet
#
2
for
the
categories
"
LDV
and
Highway
Motorcycles,"
"
HDE
Highway
and
Nonroad
CI,"
and
"
Other")
in
some
instances
we
further
subcategorized
the
fee
categories.
In
addition
to
assessing
the
time
that
may
be
spent
reviewing
certification
applications
within
a
category
or
subcategory,
we
also
assessed
whether
the
applicable
industry
type
would
receive
a
similar
level
of
compliance
testing
and
associated
costs.
The
goal
of
this
is
to
develop
subcategories
that
are
expected
to
receive
similar
compliance
activity
and
related
costs.
EPA's
cost
analysis
for
the
fees
rule
divided
categories
into
subcategories
whenever
there
was
a
substantial
difference
between
the
level
of
services
given
to
a
subcategory.
For
example,
EPA
conducts
pre­
certification
testing
and
in­
use
testing
for
light­
duty
vehicle
and
trucks.
Conversely,
EPA
plans
to
conduct
much
less
motorcycle
testing
within
that
same
category.
Therefore,
the
fees
for
the
motorcycles
are
less
than
the
light­
duty
vehicle
and
light­
duty
truck
fees.
EPA
plans,
for
the
industries
in
the
"
Other"
category,
to
conduct
the
same
level
of
effort
for
certification
review
and
also
plans
only
a
DRAFT
2/
12/
04
DRAFT
51
minimal
amount
of
testing.
Testing
is
a
major
cost
that
separates
subcategories
and
is
not
a
significant
cost
for
this
category.
Therefore,
the
industries
in
the
"
Other"
category
remained
grouped
together.

The
certification
information
submitted
by
the
individual
industries
largely
consists
of
test
data,
descriptions
of
engines
or
vehicles
in
the
engine
family,
and
forms
indicating
the
standards
that
the
vehicles
or
engines
meet.
This
information
does
not
vary
significantly
whether
the
engines
are
large
and
complex
or
small
and
less
complex.
Certification
review
of
all
industries
in
the
"
Other"
category
consists
of
a
review
of
the
information
that
the
manufacturer
submits.
The
review
includes
determining
that
the
engine
or
vehicle
is
being
certified
in
the
correct
certification
category,
that
the
certification
tests
were
conducted
on
the
worst
case
engine
or
vehicle,
that
the
forms
were
filled
out
correctly,
and
that
the
vehicle
or
engine
meets
EPA's
emission
standards.
In
this
respect,
all
of
the
certificate
applications
submitted
by
the
industries
included
in
the
"
Other"
category
are
the
same.

In
the
course
of
EPA's
review
of
certification
applications,
certain
items
may
be
reviewed
more
closely
for
one
application
than
for
another
application,
items
such
as
defeat
devices,
auxiliary
control
devices
or
new
technology.
EPA
decides
whether
these
items
should
be
reviewed
depending
upon
the
history
of
the
industry,
the
manufacturer
and
other
factors.
Although
the
level
of
review
of
these
items
may
change
the
total
time
spent
on
an
individual
or
an
industry's
applications,
the
difference
is
not
significant
and
does
not
merit
a
separate
subcategory.
Furthermore,
other
factors
such
as
assisting
new
manufactures
and
reviewing
incomplete
applications
require
more
time
than
the
average
difference
in
review
time
for
industries'
applications.
For
these
reasons,
EPA
decided
that
the
applications
in
the
"
Other"
category
are
provided
basically
the
same
review
and
testing
services
and,
therefore,
should
be
assessed
the
same
fee.

What
Commenters
Said:

OPEI
stated
that
EPA
had
an
overly
simplistic
arithmetic
system
of
evenly
dividing
the
certification
costs
between
such
disparate
industries
(
as
locomotive
and
trimmers)
and
OPEI
finds
this
inappropriate
and
inequitable.
OPEI
asserted
that,
using
the
figures
generated
by
EPA,
more
than
half
(
546)
of
the
1,027
engine
families
in
the
Other
Industries
category
are
lawn
and
garden
engines.
In
addition,
OPEI
stated
that
the
simple
arithmetic
used
by
EPA
results
in
unfairly
loading
the
"
lion's
share"
of
the
certification
costs
onto
a
single
industry
which
should
only
be
responsible
for
its
own
share
of
certification
costs.
DRAFT
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12/
04
DRAFT
52
Our
Response:

As
described
in
2.4.2
above,
EPA
divided
the
costs
attributed
to
the
services
provided
to
the
"
Other"
category
by
the
number
of
projected
certification
applications
from
the
industries
included
in
this
category
since
each
application
entails
approximately
the
same
amount
of
review
or
effort
by
the
Agency.
Regardless
of
the
disparity
of
the
applications,
the
amount
of
time
spent
on
locomotive
applications
and
trimmer
applications
will
be
about
the
same.

The
projected
number
of
applications
for
the
lawn
and
garden
industry
constitutes
more
than
half
of
the
applications
that
will
be
received
and
processed
by
the
Agency.
Over
half
of
resources
that
EPA
spends
on
the
"
Other"
category
will
be
spent
on
lawn
and
garden
engines.
For
this
reason,
we
believe
it
is
appropriate,
equitable
and
nondiscriminatory
for
the
lawn
and
garden
industry
to
pay
more
than
half
of
the
costs
for
the
"
Other"
category.

C.
Cost
Study
1.
Number
of
Engine
Families
What
We
Proposed:

EPA
grouped
industries
into
three
fee
categories
(
industry
groups):
1)
Light­
Duty,
consisting
of
light­
duty
vehicles
and
highway
motorcycles;
2)
Engines,
consisting
of
heavy­
duty
highway
and
nonroad
compression­
ignition
engines;
and
3)
"
Other",
which
contains
other
vehicles
and
engines.
We
proposed
a
fee
schedule
based
upon
the
recoverable
costs
for
each
certificate
type
under
each
fee
category
and
the
number
of
known
and
projected
certificates
issued
annually
for
that
certificate
type.
We
then
divided
our
recoverable
costs
by
the
number
of
certificates
expected
to
be
issued
to
manufacturers
within
that
certification
request
type.
Thus,
for
example,
we
determined
the
recoverable
costs
for
the
nonroad
CI
industry
as
$
1,300,155
and
the
number
of
certificates
issued
as
603
and
the
resulting
fee
is
$
2,156.
(
Revised
worksheet
#
2
of
the
revised
Cost
Analysis
shows
updated
cost
for
the
NR
CI
industry
to
be
$
2,205,895,
the
updated
number
of
engine
families
to
be
662
resulting
in
a
new
fee
of
$
1,822.)

We
determined
the
number
of
certificates
expected
to
be
issued
by
examining
EPA's
certification
database.
For
currently
active
certification
programs,
we
listed
the
DRAFT
2/
12/
04
DRAFT
53
number
of
certificates
based
on
the
latest
information
at
the
time
of
the
proposal
which
was
for
the
2001
model
year
(
67
FR
at
51406).
For
other
newly
regulated
industries
for
which
certificates
have
not
yet
been
issued,
we
projected
the
number
of
certificates
based
on
discussions
with
manufacturers
and
information
presented
to
EPA
during
the
emission
standards
rulemakings
for
such
industries.
Id.

What
Commenters
Said:

EMA
states
that
EPA
significantly
understated
the
number
of
HDE
on­
highway
and
nonroad
CI
engine
certificates
that
are
issued
annually
which
resulted
in
an
overstatement
of
the
fees
that
should
be
allocated
to
each
certificate.
EMA
stated
that
in
2001,
we
issued
159
HDE
HW
and
661
nonroad
CI
certificates.
EMA
also
asked
for
an
explanation
as
to
why
more
current
years
and
certification
data
should
not
be
used
since
that
would
be
more
reflective
of
the
increase
in
engine
families.

The
Alliance/
AIAM
stated
that
the
Agency
did
not
provide
an
explanation
for
the
estimated
number
of
certification
requests
used
in
calculating
the
fees.
The
Alliance/
AIAM
expresses
concern
that
the
number
of
light­
duty
certificates
appears
to
be
based
on
CAP
2000
assumptions;
assumptions
that
they
maintain
have
not
materialized.
In
addition,
they
contended
that
EPA's
Tier
2
and
heavy­
duty
regulations,
as
well
as
CARB's
low
emission
vehicle
(
LEV
II)
regulation,
will
likely
result
in
creation
of
more
certification
requests
than
projected
and
lead
to
collection
of
more
fees
by
EPA.
As
a
result,
EPA
may
collect
more
fees
than
it
is
entitled
to
if
it
receives
more
certification
requests
than
projected.

The
Alliance/
AIAM
submitted
further
comment
that
they
expected
35
additional
certificates
to
be
issued
for
light­
duty
vehicles
for
model
year
(
MY)
2004
and
that
the
number
of
certificates
would
either
remain
the
same
or
increase
as
a
result
of
Tier
2.
The
Alliance/
AIAM
was
hesitant
to
predict
the
effect
of
the
CAP
2000
rule
on
the
number
of
certificate
requests.

The
Alliance/
AIAM
suggests
that
EPA
should
base
its
fee
calculation
on
the
most
current
number
of
issued
certificates.
Because
this
number
may
fluctuate
and
because
it
may
be
difficult
to
project
future
certification
trends,
they
suggest
that
EPA
keep
track
of
the
trends
and
assess
a
fee
based
on
the
average
taken
from
several
years.
Lastly,
they
suggest
that
this
process
be
done
by
rulemaking
to
prevent
EPA
collecting
more
fees
than
appropriate.
DRAFT
2/
12/
04
DRAFT
54
Our
Response:

EPA's
intention
throughout
this
rulemaking
process
is
to
determine
with
a
reasonable
level
of
certainty
the
recoverable
costs
of
implementing
its
MVECP
and
assessing
fees
per
certificate
to
cover
such
costs.
Thus,
we
agree
with
the
comment
that
we
should
use
the
most
current
and
accurate
number
of
issued
certificates.
However,
EPA
does
not
agree
with
the
comments
of
EMA
that
the
number
of
certificates
used
in
the
cost
determination
should
remain
the
same
regardless
of
the
impact
on
fees
collected.
Simply
put,
EPA
believes
it
should
only
recover
what
it
anticipates
to
be
its
actual
costs
and
should
devise
a
reasonable
system
in
order
to
charge
a
fee
that
most
closely
matches
its
final
actual
costs
and
final
number
of
certificates
to
be
issued
in
a
given
year.
As
explained
below,
EPA
is
including
a
"
rolling
average"
formula
to
be
applied
in
2006
and
thereafter
in
order
to
more
accurately
reflect
the
number
of
certificates
issued
each
year
and
the
corresponding
fee
that
is
owed
per
certificate.

In
light
of
the
comments
that
we
received,
EPA
gathered
information
regarding
the
number
of
certificates
for
HDE
HW,
nonroad
CI,
and
light­
duty
vehicles
and
trucks,
motorcycles
and
ICIs
from
several
databases,
and
reexamined
its
certification
numbers
for
the
last
three
years,
2000,
2001
and
2002
which
comprise
EPA's
most
recent
and
complete
information.

Using
an
average
of
the
past
two
years
of
the
most
recent
complete
certification
information
(
2001
and
2002)
we
determined
the
average
number
of
certificates
for
HDE
HW,
nonroad
CI,
and
light­
duty
vehicles
and
trucks
certification
request
types.
For
the
other
types
EPA
saw
no
need
to
reexamine
its
projected
number
of
certificates
nor
did
EPA
receive
any
comment.
For
the
light­
duty
vehicles
and
truck
category
we
have
chosen
to
keep
the
number
405
as
used
in
the
proposal.
Although
the
actual
average
is
382
for
the
2001
and
2002
model
years,
we
believe
it
is
likely
that
there
will
be
at
least
a
modest
increase
in
the
number
of
light­
duty
vehicle
and
truck
certificates
given
the
complexity
of
Tier
2
standards.
In
addition,
information
submitted
by
the
Alliance/
AIAM
states
that
the
number
of
additional
certificates
for
2004
may
be
as
high
as
35.
This
would
bring
our
projection
to
417
for
2004.
However,
this
is
a
projection
and
we
do
not
have
complete
confidence
in
this
number.
Therefore,
we
have
decided
to
retain
the
proposed
405
certificates
in
the
final
rule.

For
the
HDE
HW
category
we
have
determined,
based
on
a
re­
examination
of
our
database
and
discussions
with
representatives
from
EMA,
that
148
certificates
is
a
more
accurate
projection,
rather
than
the
130
in
the
proposal.
This
will
result
in
a
slight
reduction
of
fees
for
such
certificates.
For
NR
CI
we
have
also
revised
the
number
DRAFT
2/
12/
04
DRAFT
55
slightly
upward
to
reflect
a
more
accurate
projection
of
662
rather
than
the
proposed.
We
have
re­
calculated
the
fees
amount
for
each
of
these
categories
and
this
is
reflected
in
the
new
fees
table
(
a
new
revised
worksheet
#
2
of
the
Revised
Cost
Analysis
available
in
Docket
A­
2001­
09)
and
at
40
CFR
§
85.2405(
a).

D.
Automatic
Adjustment
of
Fees
What
We
Proposed:

We
considered
the
effect
of
inflation
on
the
MVECP
and
explained
that
inflation
may
have
an
impact
on
our
recovery
of
the
full
costs
associated
with
the
program.
Thus,
we
proposed,
beginning
with
the
2005
model
year,
an
annual
automatic
adjustment
of
fees
based
on
the
annual
change
in
the
Consumer
Price
Index
(
CPI).
We
also
proposed
a
formula
to
enable
manufacturers
to
calculate
the
increase.
We
also
solicited
comments
on
alternate
ways
of
adjusting
fees
on
account
of
inflationary
factors.
(
See
67
FR
at
51410)

We
explained
that
we
intended
to
issue
annual
letters,
again
beginning
with
the
2005
model
year,
informing
manufacturers
of
the
adjusted
applicable
fees.
The
proposed
formula
included
an
ability
to
project
future
fees
due
to
the
CPI
adjustment
based
on
two
model
years
before
the
adjusted
fee
model
year.
Thus,
for
model
year
2005
EPA
proposed
a
formula
whereby
the
CPI
for
MY2003
(
as
determined
by
July
2003
CPI
number)
is
compared
to
the
CPI
from
2002.
We
also
solicited
comments
regarding
notification
procedures
of
the
new
fee
amounts.
Id.

What
Commenters
Said:

One
commenter
urged
the
Agency
not
to
include
an
annual
automatic
adjustment
and
maintained
that
an
"
automatic"
increase
in
fees
based
on
the
CPI
for
"
all
items"
should
not
be
implemented
as
the
actual
costs
of
MVECP
will
be
impacted
by
many
factors
more
significant
than
the
CPI
and
such
factors
are
not
significantly
correlated
with
the
general
rate
of
inflation.
This
commenter
also
suggested
that
the
Agency's
formula
for
annual
adjustment
is
improper
because
many
of
the
underlying
costs
are
actually
one­
time
capital
expenditures
that
will
not
fluctuate
at
all
in
response
to
any
changes
in
the
CPI.

Our
Response:
DRAFT
2/
12/
04
DRAFT
56
In
order
to
comply
with
both
section
217
and
the
IOAA,
and
to
timely
collect
fees
based
on
actual
costs
and
to
collect
fees
for
such
costs
at
time
of
certification,
EPA
believes
that
it
is
most
practical
and
appropriate
to
collect
fees
based
on
what
it
reasonably
believes
will
be
its
actual
costs
at
the
time
new
certification
applications
are
received.
Thus
EPA
continues
to
believe
it
most
appropriate
to
determine
its
current
costs
and
how
such
costs
may
be
affected
by
future
events,
including
events
such
as
inflation
or
the
addition
of
new
compliance
programs.
Although
EPA
does
recognize
that
several
variables
exist
which
may
influence
the
actual
future
costs
that
EPA
incurs
to
provide
MVECP
services,
including
changes
to
its
budget
(
and
resulting
changes
to
EPA's
expenditures
on
certain
compliance
programs
such
as
contract
costs
for
testing
and
procurement
of
testing
vehicles,
etc),
EPA
believes
that
such
general
historical
budget
variability
(
appropriations
for
most
of
EPA's
costs
don't
change
dramatically
from
year
to
year
and
general
contract
costs
remain
relatively
unchanged)
has
not
in
fact
significantly
affected
EPA's
actual
costs
as
compared
to
increases
associated
with
annual
inflation
costs.
However,
by
today's
rule
we
are
narrowing
the
budget
items
that
will
be
affected
by
the
inflation
adjustment
to
further
limit
those
items
that
may
indeed
be
affected
by
general
budget
variability.

We
believe
it
is
reasonable
to
consider
the
effect
of
inflation
on
the
costs
of
conducting
our
various
certification
and
compliance
programs.
However,
at
this
time,
EPA
chooses
to
only
implement
a
fee
schedule
that
will
include
some
adjustment
by
calendar
year
for
labor
costs
as
these
costs
can
be
reasonably
determined
as
explained
below.

We
also
agree
with
comments
that
fees
should
not
be
adjusted
for
one­
time
capital
expenditures
or
for
other
fixed
costs.
Because
several
components
of
the
MVECP
reflects
items
that
have
a
"
fixed
cost"
(
for
example,
the
costs
associated
with
the
Lab
Modernization),
EPA
has
changed
the
inflation
formula
to
address
concerns
regarding
"
one
time
costs"
and
that
such
cost
not
be
adjusted
by
the
CPI.
At
this
time,
EPA
will
only
adjust
labor
costs
each
calendar
year
because,
as
explained
below,
we
can
reasonable
determine
the
effect
of
inflation
on
these
costs.

EPA
also
believes
that
to
some
extent
it
may
not
be
appropriate
to
automatically
adjust
fees
for
the
costs
of
some
compliance
programs,
including
current
direct
program
costs
(
e.
g.
contract
costs)
despite
the
general
history
of
such
costs
increasing
by
some
amount
each
year.
Because
EPA
is
not
only
continuing
to
implement
its
many
current
compliance
activities
but
is
also
implementing
several
new
compliance
programs
that
may
not
have
a
predictable
cost
increase
each
year
that
tracks
the
inflation
rate,
EPA
is
not
adjusting
such
direct
program
costs.
DRAFT
2/
12/
04
DRAFT
14
EPA
normally
uses
Federal
payroll
and
non­
payroll
inflators
for
budget
projections
issued
by
the
Office
of
Management
and
Budget
(
OMB)
when
OMB
submits
the
President's
Budget
to
Congress
and
the
assumptions
used
for
the
"
inflators"
are
higher
than
the
CPI
inflation
adjuster
that
EPA
is
choosing
to
use
to
account
for
increases
in
labor
costs
in
today's
rulemaking.
For
example,
in
the
fiscal
year
2004
(
FY
04)
President's
Budget
to
Congress,
for
FY
04
EPA
used
a
payroll
(
or
labor)
inflator
of
1.048
and
for
FY
05
through
FY
13
EPA
used
an
inflator
of
1.040.

57
EPA
believes
that
the
determination
of
the
labor
requirements
to
cover
the
numerous
compliance
activities
was
accurate
and
that
such
labor
requirements
will
remain
constant
or
perhaps
slightly
increase
within
the
next
few
years.
Such
labor
costs
(
as
expressed
in
annual
salary
increases
or
decreases)
for
EPA
historically
track
a
rate
of
increase
(
or
decrease)
that
is
at
least
as
high
as
that
of
the
CPI14.
Thus,
we
are
finalizing
our
regulations
with
a
provision
for
automatic
adjustment
of
labor
costs
for
each
fee
category
based
on
the
changes
in
the
CPI.
The
fee
formula
and
the
table
with
labor
and
fixed
cost
values
are
discussed
in
detail
in
section
II.
B.
above.

EPA
notes
that
manufacturers
may
have
some
concern
regarding
the
proper
budgeting
for
its
costs
for
future
certification
applications
and
thus
the
regulations
note
that
EPA
will
provide
notification
to
manufacturers
at
least
15
months
in
advance
of
the
calendar
year
in
which
new
fees
are
due.
If
an
event
such
as
a
rulemaking
occurs
that
causes
a
significant
change
in
the
number
of
certificate
applications
received,
the
Agency
will
reexamine
the
formula
to
determine
whether
adjusting
the
fees
based
upon
the
number
of
certificate
applications
is
still
applicable.

E.
Effective
Date
and
Application
of
New
Fees
What
We
Proposed:

We
proposed
the
"
effective
date"
of
our
new
fees
schedule
as
60
days
from
the
date
of
publication
of
the
final
rule.
(
67
FR
at
51411).
We
also
proposed
applying
the
new
fees
to
2003
and
later
model
year
vehicles
and
engines.
Id.
In
addition,
we
proposed
excluding
"
complete"
certification
applications
received
prior
to
the
effective
date
of
the
new
fees
regulation
(
including
any
remaining
2003
certification
applications).
Id.

What
Commenters
Said:
DRAFT
2/
12/
04
DRAFT
58
One
commenter
suggested
that
the
new
fee
schedule
should
take
effect
for
certification
applications
for
the
model
year
following
the
model
year
in
which
the
final
rule
is
published,
in
this
way
the
manufacturers
will
have
certainty
regarding
the
appropriate
amount
of
the
certification
fee
to
be
submitted
and
thus
will
not
have
to
guess
the
date
that
EPA
will
deem
their
certification
application
complete.

The
Alliance/
AIAM
stated
that
EPA's
proposal
to
increase
fees
(
for
light­
duty
vehicle
manufacturers)
for
manufacturers
that
submit
2003
and
later
model
year
certification
requests
received
on
or
after
60
days
from
publication
of
the
final
rule
creates
uncertainty
regarding
the
appropriate
fee
to
submit
with
each
application.
The
commenter
notes
that
it
cannot
project
when
EPA
will
issue
the
rule
and
thus
for
it
to
perform
its
necessary
budgeting
to
assure
that
it
has
necessary
funds
to
cover
the
increase.

Our
Response:

EPA
understands
that
it
would
be
helpful
to
manufacturers
to
have
a
date
before
which
they
are
assured
that
they
will
be
paying
the
old
fees
so
that
they
can
budget
with
certainty
up
to
that
date.
For
this
reason
EPA
is
finalizing
the
implementation
date
as
March
1,
2004
or
60
days
from
the
publication
of
the
final
rule,
whichever
is
later.
We
believe
that
at
least
a
60
day
lead
time
between
when
the
rule
is
published
and
when
applicants
will
be
required
to
pay
new
fees
is
adequate
and
appropriate.
EPA
is
again
guided
by
the
principle
that
its
compliance
programs
ought
to
be
self­
sustaining
to
the
extent
possible
and
that
because
we
are
incurring
costs
at
this
point
in
time
that
new
fees
should
commence.
Although
we
anticipated
that
the
final
fees
rule
would
become
final
in
fiscal
year
2003
(
FY03),
and
based
our
projections
of
costs
to
be
incurred
during
that
time,
we
believe
it
even
more
appropriate
that
we
collect
fees
in
FY04
(
during
which
this
rule
becomes
effective)
as
our
compliance
programs
based
on
new
requirements
such
as
Tier
2
and
the
2004
HDE
regulations
will
be
in
place
and
our
anticipated
budget
increases
will
be
more
likely
in
place.

In
addition,
manufacturers
have
been
informed
of
the
new
fees
rulemaking
and
commencement
of
new
fees
in
FY03
for
over
2
years.
An
advance
fees
rulemaking
briefing
was
held
for
regulated
industries
on
August
29,
2001
in
Ann
Arbor,
MI.
At
that
time
EPA
provided
a
draft
of
the
fees
schedule
and
cost
study.
The
purpose
of
the
briefing
was
to
give
businesses
enough
time
to
plan
for
fees
in
their
2003
FY
budgets.
Furthermore,
the
proposed
rule
was
published
in
August
2002
giving
manufacturers
notice
of
the
fees
rulemaking
and
implementation
time
periods.
Therefore,
the
new
fees
will
be
applicable
to
any
new
certification
applications
(
for
MY
2004,
or
2005)
submitted
and
received
on
or
after
March
1,
2004,
or
more
than
60
days
after
publication
of
this
rule
in
DRAFT
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04
DRAFT
59
the
Federal
Register.
The
new
fees
will
not
apply
to
any
certification
applications
received
by
EPA
prior
to
the
effective
date
of
the
regulations,
providing
that
they
are
complete
and
include
all
required
data.

F.
Reduced
Fees
1.
Reduced
Fee
of
One
Percent
Aggregate
Retail
Price
What
We
Proposed:

EPA
proposed
to
continue
the
current
two
part
test
which,
if
met,
would
qualify
an
applicant
for
a
reduction
of
a
portion
of
the
certification
fee.

A
reduced
fee
is
available
when:

(
1)
The
certificate
is
to
be
used
for
the
sale
of
vehicles
or
engines
within
the
U.
S.;
and
(
2)
The
full
fee
for
the
certification
request
exceeds
one
percent
of
the
projected
aggregate
retail
price
of
all
vehicles
or
engines
covered
by
that
certificate.

Manufacturers
that
qualify
for
a
reduced
fee
pay
one
percent
of
the
aggregate
retail
price
of
the
vehicles
and
engines
covered
by
a
certificate.
Under
the
reduced
fee
provision,
we
proposed
to
retain
this
requirement
to
ensure
proper
balance
between
recovering
the
MVECP
costs
and
mitigate
economic
burden.
EPA
invited
comment
on
the
continued
use
of
the
one
percent
multiplier,
67
FR
51412.

The
Agency
proposed
two
separate
pathways
by
which
a
manufacturer
may
request
and
pay
a
reduced
fee
amount.
Under
the
first
pathway,
manufacturers
seeking
a
reduced
fee
would
include
in
their
certification
application
a
calculation
of
the
reduced
fee
and
a
statement
that
they
meet
the
reduced
fee
criteria.

Under
the
second
pathway,
manufacturers
who,
due
to
the
nature
of
their
business,
are
unable
to
make
accurate
estimates
of
the
aggregate
projected
retail
price
of
all
the
vehicles
or
engines
to
be
covered
by
the
requested
certificate,
would
pay
one
percent
of
the
retail
selling
price
of
five
vehicles,
engines
or
conversions
when
applying
for
a
certificate
or
a
minimum
fee
of
$
300.
Id.
DRAFT
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DRAFT
60
What
Commenters
Said:

VSC
contended
that
the
proposed
minimum
"
5­
car­
up­
front
deposit"
was
unreasonable
and
that
the
Agency
had
failed
to
provide
a
rationale
for
its
proposal.
VSC
also
stated
that
it
is
just
as
common,
if
not
more
common,
for
an
ICI's
certificate
to
cover
a
total
of
one
(
1)
car
as
opposed
to
5.
VSC
noted
that
EPA
had
previously
acknowledged
that
it
is
difficult
for
ICIs
to
work
with
a
system
that
requires
them
to
predict
the
number
of
cars
they
will
import.
VSC
stated
that
the
same
associated
problem
would
arise
under
the
Agency's
proposal.

VSC
suggested
that
the
one
percent
low
volume
fee
should
allow
the
ICI
to
pay
one
percent
of
the
value
of
the
cars
to
be
covered
by
the
certificate
for
which
the
ICI
has
a
contract
when
making
a
certification
request.
VSC
further
suggested
that
for
additional
cars
imported
under
the
certificate,
ICIs
should
pay
one
percent
of
the
value
of
each
car
as
each
car
is
imported,
until
payment
of
the
standard
$
8,394
fee.
VSC
noted
that
under
a
pay­
as­
you­
go
system,
EPA
would
receive
fees
at
the
time
of
certification
or
importation
and
ICIs
would
only
pay
for
cars
they
are
actually
working
on
and
importing.

Our
Response:

In
response
to
comments
received
EPA
has
modified
its
reduced
fee
provisions
to
respond
to
many
of
the
issues
raised.
The
revised
reduced
fees
provisions
also
include
two
pathways
that
are
discussed
in
detail
in
section
II.
F.
above.

The
first
pathway
will
be
available
for
engine
families
having
less
than
six
vehicles,
none
of
which
have
a
retail
price
of
more
than
$
75,000
each.
Manufacturers
seeking
a
reduced
fee
shall
include
in
their
certification
application
a
statement
that
the
reduced
fee
is
appropriate
under
the
criteria.
If
one
percent
of
the
aggregate
retail
price
of
the
vehicles
or
engines
is
greater
than
$
750,
the
manufacturer
must
submit
a
calculation
of
the
reduced
fee
and
the
fee.
If
one
percent
aggregate
retail
price
of
the
vehicles
or
engines
is
less
than
$
750
the
manufacturer
will
submit
a
calculation
of
the
reduced
fee
and
an
initial
payment
of
$
750.
In
the
event
that
the
manufacturer
does
not
know
the
value
of
all
of
the
vehicles
to
be
imported
under
the
certificate,
it
may
use
the
values
of
the
vehicles
or
engines
that
are
available
to
determine
the
initial
payment.

As
suggested
by
VSC,
after
the
initial
payment
has
been
submitted,
the
above
reduced
fee
provisions
will
allow
manufacturers
to
pay
one
percent
of
the
retail
price
of
each
vehicle
or
engine
as
needed.
This
pay­
as­
you
go
provision
will
give
ICIs
and
other
DRAFT
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04
DRAFT
61
manufacturers
the
advantage
of
only
paying
a
$
750
(
equivalent
to
the
average
fee
for
two
imported
vehicles)
or
one
percent
of
the
value
of
the
vehicles
initial
payment
and
then
paying
for
additional
vehicles
as
needed.
If
the
initial
payment
is
greater
than
the
final
fee,
the
manufacturer
may
request
and
receive
a
refund
for
the
difference.

Under
the
provisions
we
are
finalizing
today,
the
difference
between
the
initial
payment
and
the
final
reduced
fee
will
not
be
required
until
after
the
end
of
the
year.
Furthermore,
there
is
no
$
300
minimum
fee
as
was
proposed.
Therefore,
EPA
believes
that
the
reduced
fee
provides
flexibility
and
mitigates
any
unreasonable
economic
burden
that
a
full
fee
may
present
to
manufacturers
with
small
engine
families.

2.
Retroactive
Payment
Under
Reduced
Fee
Program
What
Commenters
Said:

EMA
submitted
an
additional
alternative
to
the
reduced
fee
pathways.
EMA
suggested
that
manufacturers
who
pay
the
full
fee
at
the
time
of
certification
should
also
have
the
ability
to
seek
refunds
at
the
end
of
the
model
year
if
the
fee
paid
exceeds
one
percent
of
the
retail
sales.
According
to
EMA,
this
would
enable
EPA
to
receive
the
fees
up
front
and
avoid
any
unnecessary
delays
while
not
adding
too
much
year
end
burden
for
manufacturers
already
required
to
produce
year­
end
production
volume
reports.

EPA
Response:

Currently,
the
retroactive
reduced
fee
option
is
available
for
those
engine
families/
test
groups
that
meet
the
one
percent
reduced
fee
provision.
Our
response
is
just
to
clarify
the
process.
A
manufacturer
that
pays
the
standard
fee
for
an
engine
family
or
test
group
and
later
determines
that
it
meets
the
criteria
for
a
reduced
fee
may
qualify
for
a
retroactive
reduced
fee.
Under
today's
provision,
the
manufacturer
may
be
required
to
submit
a
report
card
and
a
refund
request
at
the
end
of
the
calender
year
for
the
amount
of
the
difference
between
the
fee
paid
and
one
percent
of
the
aggregate
retail
sales
price
of
the
vehicles
or
engines
covered
by
the
certificate.

G.
ICI
Issues
1.
ICIs
and
SBREFA
DRAFT
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DRAFT
62
What
We
Proposed:

In
section
VIII.
B.
of
the
proposed
rule
we
concluded
that
certified
our
proposed
fees
will
have
no
significant
economic
impacts
on
a
substantial
number
of
small
entities.
In
addition,
we
also
stated
that
our
reduced
fee
provisions
would
limit
the
impacts
of
this
rule
on
small
entities.
(
Section
VIII.
B.,
Regulatory
Flexibility
Act
(
RFA),
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996
(
SBREFA),
5
U.
S.
C.
601
et
seq.
(
67
FR
51414).

What
Commenters
Said:

VSC
stated
that
the
Regulatory
Flexibility
Act,
5
U.
S.
C.
601­
612
was
amended
by
SBREFA,
Public
Law
104­
121,
to
ensure
that
concerns
regarding
small
entities
are
adequately
considered
during
the
development
of
new
regulations
that
affect
them.
VSC
further
quoted
the
SBREFA
amendments
in
which
Congress
stated
that
"
uniform
Federal
regulatory
*
*
*
requirements
have
in
numerous
instances
imposed
unnecessary
and
disproportionately
burdensome
demands
including
legal,
accounting,
and
consulting
costs
upon
small
businesses
*
*
*
with
limited
resources[,]"
and
directed
agencies
to
consider
the
impacts
of
certain
actions
on
small
entities.

VSC
suggested
that
EPA
consider
two
points:
(
1)
"
the
significant
economic
impact
the
proposed
rule
has
on
small
entities;
and
(
2)
any
significant
alternatives
to
the
proposed
rule
which
would
ensure
that
the
objectives
of
the
proposal
were
accomplished
while
minimizing
the
economic
impact
of
the
proposed
rule
on
small
entities
and
providing
relief
to
small
certifiers
of
vehicles."

Our
Response:

We
are
committed
to
minimizing
the
burden
of
the
fees
regulations
on
small
entities
or
entities
with
small
engine
families
to
the
extent
feasible
while
still
meeting
the
statutory
requirements
to
charge
fees.
The
Agency
did
consider
the
economic
impacts
of
this
rule
on
small
entities,
however,
we
believe
this
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
We
reviewed
the
rulemakings
that
set
emission
standards
for
the
industries
affected
by
the
fees
rule,
including
those
manufacturers
affected
by
the
recreational
vehicle
rule.
The
review
showed
that
approximately
108
small
businesses
will
be
paying
fees.
The
Agency
examined
the
cost
of
the
fees
and
determined
that
the
average
cost
for
manufacturers
of
all
sizes,
across
industry
sectors,
is
approximately
$.
41
per
vehicle
or
engine.
DRAFT
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04
DRAFT
63
Nevertheless,
to
mitigate
possible
economic
hardship
EPA
is
adopting
an
alternative
to
the
full
certification
fee
requirement
including
reduced
fee
provisions
to
help
small
volume
entities
meet
the
regulations
while
ensuring
the
fees
rule
objectives
can
be
accomplished.
The
reduced
fee
provisions
limits
the
impact
of
this
rule
on
small
entities
to
one
percent
of
the
aggregate
retail
sales
price
of
the
vehicles
or
engines
covered
by
a
certification
request.
Hence,
the
fee
a
manufacturer
would
pay
will
not
exceed
one
percent
of
the
aggregate
retail
sales
price
of
the
vehicles
or
engines
covered
by
a
certificate.
This
one
percent
amount
represents
a
modest
cost
of
doing
business.
EPA
also
believes
enough
notification
of
this
fees
rule
was
provided
to
allow
manufacturers
enough
time
to
plan
for
fees
in
their
budgets.

What
Commenters
Said:

VSC
suggested
that
EPA
should
recognize
that
ICIs
are
not
OEMs.
VSC
further
stated
that
SBREFA
requires
this
distinction
and
also
compels
EPA
to
adopt
a
fee
system
that
carefully
considers
ICIs
and
how
they
differ
from
OEMs.
VSC
requested
that
we
consider
and
include
the
fact
that
ICIs
are
small
businesses
that,
on
the
average,
import
fewer
than
100
vehicles
annually.

Our
Response:

EPA
believes
that
although
ICI
manufacturers
are
often
small
businesses
and
in
some
instances
may
differ
from
OEMs,
both
ICIs
and
OEMs
are
certificate
holders.
As
certificate
holders,
ICIs
are
required
to
meet
certain
certification
and
compliance
requirements.
These
requirements
include
meeting
emission
standards,
and
also
include
undergoing
recall,
maintenance
instruction,
warranty,
running
changes,
emissions
testing
and
labeling,
and
fuel
economy
testing
and
labeling
which
are
the
same
requirements
with
which
light­
duty
OEMs
must
comply.
EPA
incurs
costs
for
conducting
these
types
of
services.

Under
the
ICI
category
of
the
cost
study,
we
have
calculated
fees
only
for
the
services
applicable
to
ICIs
and
thus,
ICI
certificates
cost
considerably
less
than
certificates
for
other
vehicle
manufacturers.
EPA
also
believes
that
the
reduced
fees
provision,
while
enabling
the
objectives
of
both
section
217
and
the
IOAA
to
be
met,
minimizes
the
economic
impact
of
this
rule
on
small
entities
or
entities
with
small
engine
families.

H.
Other
Topics
DRAFT
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04
DRAFT
64
1.
Fee
Payment
Timing
What
We
Proposed:

EPA
proposed
that
fees
must
be
paid
in
advance
of
receiving
a
certificate
(
67
FR
51410).
We
also
emphasized
that
the
Agency
would
not
process
applications
until
the
appropriate
fees
had
been
fully
paid.
(
67
FR
51411).

What
Commenters
Said:

Three
commenters
suggested
that
the
Agency
should
not
require
fees
payment
prior
to
issuing
certificates.

Our
Response:

In
most
instances,
we
begin
reviewing
certification
applications
and,
in
some
cases,
complete
our
review,
prior
to
receiving
fees
payment.
Thus,
we
do
not
necessarily
suspend
application
review
because
of
non
payment
of
fees.
However,
because
we
cannot
issue
a
certificate
of
conformity
before
receipt
of
fees,
we
are
maintaining
the
requirement
that
fees
be
paid
in
advance
of
submitting
an
application
for
certification.
We
believe
this
will
ensure
that
we
do
not
delay
the
issuance
of
certificates.

2.
Refunds
Less
than
$
500
and
Final
Fee
Payments
Less
than
$
500
What
We
Proposed:

For
applicants
who
fail
to
obtain
certificates
and
who
subsequently
request
refunds,
we
proposed
full
fee
refunds
of
amounts
exceeding
$
500.
This
was
a
change
from
the
existing
requirement
that
allowed
for
partial
refunds
when
applicants
fail
to
obtain
a
signed
certificate
(
see
40
CFR
§
86.908­
93(
b)(
1),
as
amended
by
§
86.908­
01(
b)(
1)).
We
also
proposed
the
option
of
applying
the
refund
to
another
certification
request.

Further,
we
proposed
the
continuation
of
the
existing
requirement
of
providing
partial
refunds
resulting
from
decreases
in
the
aggregate
projected
retail
sales
price
of
vehicles
or
engines
covered
by
the
certification
request.
(
See,
40
CFR
§
§
86.908­
93(
b)(
2)
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DRAFT
65
and
86.908­
01(
b)(
2)).
We
also
invited
comments
on
whether
to
limit
refund
requests
to
$
500.
(
67
FR
51412).

As
discussed
in
section
II.
F.
above,
we
proposed
a
reduced
fee
provision
that
includes
calculating
a
final
reduced
fee
within
30
days
of
the
end
of
the
model
year
and
"
true­
up"
of
any
additional
fees
owed
within
45
days
of
the
end
of
the
model
year.
Under
the
1992
fees
rule
reduced
fee
applicants
pay
an
additional
waiver
fee
any
time
the
aggregate
projected
retail
sales
price
of
the
vehicles
or
engines
to
be
covered
by
a
certification
request
changes.
Also,
there
was
no
minimum
amount
due
before
payment
was
required.
(
See,
40
CFR
§
86.908­
93(
a)(
5)).

What
Commenters
Said:

EMA
supported
our
proposal
to
allow
manufacturers
request
a
full
refund
in
cases
where
a
certificate
is
not
issued.
EMA
suggested
that
40
CFR
§
85.2407(
a)
should
read
"
may,"
instead
of
"
shall."
EMA
suggested
that
we
clarify
that
manufacturers
are
entitled
to
a
full
refund
regardless
of
the
reason
for
non­
issuance
of
a
certificate.

EMA
suggested
that
40
CFR
§
85.2407(
b)
should
read
"
shall"
instead
of
"
may."
EMA
also
suggested
that
refunds
should
be
predicated
upon
a
decrease
in
"
actual"
rather
than
"
projected"
sales
prices.

EMA
further
objected
to
proposed
40
CFR
§
85.2407(
b)(
3)
and
(
b)(
4)(
vi)
and
argued
that
manufacturers
should
be
entitled
to
any
and
all
refunds
regardless
of
the
amount.

Our
Response:

EPA
agrees
with
EMA's
comment
regarding
refund
language.
Regulatory
language
has
been
amended
to
reflect
these
changes
in
40
CFR
§
85.2405(
a)
and
(
b).
Upon
request
from
a
manufacturer
EPA
will
refund
fees.
This
includes
instances
of
overpayment,
when
the
manufacturer
withdraws
an
application
or
when
EPA
denies
a
certificate
as
well
as
any
other
circumstances
that
would
lead
to
a
certificate
not
being
issued.

However,
we
disagree
with
the
comment
that
refunds
should
be
predicated
on
the
decrease
in
the
aggregate
"
actual"
price
rather
than
the
aggregate
"
projected"
price.
This
is
because
not
all
of
the
vehicles
or
engines
would
have
been
sold
and
the
actual
price
may
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DRAFT
66
not
be
available
at
the
time
of
the
refund
request
therefore
we
have
revised
the
regulatory
language
to
indicate
projected
or
actual
price.
The
manufacturer
should
use
whichever
is
more
accurate.

EPA
agrees
that
it
should
not
limit
refunds
to
$
500
minimum.
Therefore
EPA
is
not
adopting
proposed
§
85.2407(
b)(
3)
and
(
b)(
4)(
vi).
However,
the
rationale
behind
EPA's
proposal
that
manufacturers
should
not
be
required
to
pay
a
"
true­
up"
payment
of
less
than
$
500
was
balanced
out
by
the
proposal
that
refunds
would
be
limited
to
amounts
of
$
500
or
more.
We
believed
that
the
amounts
not
paid
in
refunds
would
equal
the
payments
not
received
for
"
true­
up."
Therefore,
since
EPA
will
be
paying
full
refunds,
EPA
is
setting
forth
in
today's
rule
that
full
payment
must
be
submitted
at
true­
up
to
avoid
an
overall
deficit
in
its
recovery
of
MVECP
costs
and
to
continue
to
abide
by
the
intent
of
the
IOAA
and
CAA.

3.
Reduced
Costs
for
California­
only
What
We
Proposed:

EPA
proposed
a
separate
California­
only
fee
for
only
the
light­
duty
and
heavyduty
fee
categories.
No
California­
only
fee
was
proposed
for
the
motorcycle,
ICI,
Nonroad
CI
and
Other
categories
because
EPA's
responsibilities
for
vehicles
and
engines
are
not
decreased
even
though
certification
is
only
requested
for
the
State
of
California.

What
Commenters
Said:

One
commenter
argued
that
our
proposed
fees
for
California­
only
certificates
was
inappropriate
since
the
Agency
did
not
provide
any
benefits
to
manufacturers.

Echo
stated
that
the
"
Other"
category
should
have
reduced
fees
for
California­
only
families
because
other
categories
have
reduced
fees
for
California­
only.
Echo
stated
that
the
full
fees
for
these
families
cannot
be
justified
and
that
EPA
should
not
charge
for
service
not
provided.
Echo
also
observed
that
CARB
may
decided
to
add
its
own
fees
further
raising
the
cost
to
manufacturers.

OPEI
commented
that
EPA
should
not
impose
certification
fees
on
California­
only
engine
families
that
are
not
sold
outside
of
California.
OPEI
questioned
the
utility
of
requiring
this
dual
certification
burden.
The
commenter
further
argued
that
the
proposed
DRAFT
2/
12/
04
DRAFT
67
fees
should
be
waived
since
California­
only
engine
families
are
sold
only
in
California,
and
as
a
result,
do
not
generate
national
sales
revenue.
OPEI,
further
requested
that
the
certification
fee
be
waived
with
respect
to
California­
only
engine
families.

Our
Response:

The
Clean
Air
Act
requires
that
vehicles
sold
in
the
United
States
to
be
covered
by
a
federal
certificate
of
conformity
including
those
sold
in
California.
The
EPA
receives
applications
and
certifies
all
vehicles
and
engines
sold
in
the
US.
The
EPA
review
and
testing
required
for
California­
only
certification,
and
therefore
the
benefits
received,
are
no
less
than
that
required
for
other
certificates.
Test
results
generated
by
EPA
from
certification
tests
of
these
vehicles
and
engines
are
shared
with
the
CARB
to
assist
in
its
certification
process.
However,
the
California­
only
fee
is
less
than
the
standard
fee
because
EPA
does
not
incur
the
cost
of
the
in­
use
program.
The
CARB
conducts
an
inuse
program
for
these
categories,
but
at
this
time
EPA
does
not.
Thus
the
fee
for
California­
only
certificates
for
light­
duty
and
heavy­
duty
vehicles
and
engines
reflects
the
EPA
costs
in
the
certification
component
of
the
MVECP.

In
the
case
of
engines
and
vehicles
in
the
"
Other"
category,
EPA
is
assessing
the
costs
of
the
certification
and
minimal
testing
services
that
it
provides.
A
lower
Californiaonly
fee
is
not
offered
as
EPA's
work
is
not
decreased
by
compliance
work
done
by
the
CARB.

OPEI
stated
that
no
national
sales
revenue
is
generated
to
absorb
the
cost
of
the
fee,
however,
because
EPA
reviews
the
certificate
applications
and
the
manufacturer
receives
benefit
from
receiving
a
certificate,
EPA
should
recover
the
costs
of
providing
this
service
as
directed
by
the
CAA
and
the
IOAA.

VI.
What
Is
the
Economic
Impact
of
this
Rule?

This
rule
will
not
have
a
significant
impact
on
the
majority
of
vehicle
and
engine
manufacturers.
The
cost
to
industry
will
be
a
relatively
small
value
per
unit
manufactured
for
most
engine­
system
combinations.

EPA
expects
to
collect
about
18
million
dollars
annually,
an
increase
of
7
million
dollars
from
the
11
million
that
is
currently
collected.
This
averages
out
to
approximately
50
cents
per
vehicle
or
engine
sold
annually.
However,
for
engine
families
or
test
groups
DRAFT
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12/
04
DRAFT
68
with
low
annual
sales
volume,
the
cost
per
unit
will
be
higher.
To
remove
the
possibility
of
serious
financial
harm
to
companies
producing
only
low
sales
volume
designs,
the
regulations
adopted
today
include
reduced
fee
provisions
for
small
volume
engine
families
to
reduce
the
burden
of
fees.
These
provisions
should
alleviate
concerns
about
undue
economic
hardship
to
small
volume
manufacturers.
Refer
to
the
Regulatory
Flexibility
Act
section,
section
VII.
B,
below,
for
more
discussion
on
this
topic.

VII.
What
are
the
Administrative
Requirements
for
this
Rule?

A.
Executive
Order
12866:
Regulatory
Planning
and
Review
Under
Executive
Order
12866
(
58
FR
51735
October
4,
1993),
EPA
must
determine
whether
this
regulatory
action
is
"
significant"
and
therefore
subject
to
Office
of
Management
and
Budget
(
OMB)
review
and
the
requirements
of
this
Executive
Order.
The
Order
defines
a
"
significant
regulatory
action"
as
one
that
is
likely
to
result
in
a
rule
that
may:

(
1)
Have
an
annual
effect
on
the
economy
of
$
100
million
or
more
or
adversely
affect
in
a
material
way
the
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
12866,
it
has
been
determined
that
this
rule
is
a
"
significant
regulatory
action"
because
this
rulemaking
materially
alters
user
fees.
As
such,
this
action
was
submitted
to
OMB
for
review.

B.
Paperwork
Reduction
Act
The
information
collection
requirements
in
this
final
rule
have
been
submitted
for
approval
to
the
Office
of
Management
and
Budget
(
OMB)
under
the
Paperwork
Reduction
Act,
44
U.
S.
C.
3501
et
seq.
An
Information
Collection
Request
(
ICR)
document
has
been
prepared
by
EPA
(
ICR
No.
2080.02)
DRAFT
2/
12/
04
DRAFT
69
EPA
estimates
that
1600
certifications
will
be
requested
annually
of
which
180
will
qualify
for
a
reduced
fee.
In
addition,
approximately
50
fee
refunds
will
be
processed
each
year.
The
total
burden
of
these
projected
responses
per
year
is
500
hours;
an
average
of
18
minutes
per
response.
There
are
no
capital,
start­
up,
operation,
maintenance
or
other
costs
associated
with
this
collection.

The
annual
public
reporting
and
recordkeeping
burden
for
this
collection
of
information
is
estimated
to
average
0.3
hours
per
response.
Burden
means
the
total
time,
effort,
or
financial
resources
expended
by
persons
to
generate,
maintain,
retain,
or
disclose
or
provide
information
to
or
for
a
Federal
agency.
This
includes
the
time
needed
to
review
instructions;
develop,
acquire,
install,
and
utilize
technology
and
systems
for
the
purposes
of
collecting,
validating,
and
verifying
information,
processing
and
maintaining
information,
and
disclosing
and
providing
information;
adjust
the
existing
ways
to
comply
with
any
previously
applicable
instructions
and
requirements;
train
personnel
to
be
able
to
respond
to
a
collection
of
information;
search
data
sources;
complete
and
review
the
collection
of
information;
and
transmit
or
otherwise
disclose
the
information.
An
agency
may
not
conduct
or
sponsor,
and
a
person
is
not
required
to
respond
to,
a
collection
of
information
unless
it
displays
a
currently
valid
OMB
control
number.
The
OMB
control
numbers
for
EPA's
regulations
are
listed
in
40
CFR
part
9
and
48
CFR
chapter
15.

EPA
has
established
a
public
docket
for
this
ICR
under
Docket
ID
No.
OAR­
2003­
0111,
which
is
available
for
public
viewing
at
the
Air
and
Radiation
Docket
and
Information
Center,
in
the
EPA
Docket
Center
(
EPA/
DC),
EPA
West,
Room
B102,
1301
Constitution
Ave.,
NW,
Washington,
DC.
The
EPA
Docket
Center
Public
Reading
Room
is
open
from
8:
30
a.
m.
to
4:
30
p.
m.,
Monday
through
Friday,
excluding
legal
holidays.
The
telephone
number
for
the
Reading
Room
is
(
202)
566­
1744,
and
the
telephone
number
for
the
Air
Docket
is
(
202)
566­
1742.
An
electronic
version
of
the
public
docket
is
available
through
EPA
Dockets
(
EDOCKET)
at
http://
www.
epa.
gov/
edocket.

C.
Regulatory
Flexibility
Act
(
RFA)

EPA
has
determined
that
it
is
not
necessary
to
prepare
a
regulatory
flexibility
analysis
in
connection
with
this
final
rule.

For
purposes
of
assessing
the
impacts
of
today's
rule
on
small
entities,
a
small
entity
is
defined
as:
(
1)
a
small
business
that
meets
the
definition
for
business
based
on
SBA
size
standards;
(
2)
a
small
governmental
jurisdiction
that
is
a
government
of
a
city,
county,
town,
school
district
or
special
district
with
a
population
of
less
than
50,000;
and
DRAFT
2/
12/
04
DRAFT
70
(
3)
a
small
organization
that
is
any
not­
for­
profit
enterprise
which
is
independently
owned
and
operated
and
is
not
dominant
in
its
field.
Table
VII.
B­
1
provides
an
overview
of
the
primary
SBA
small
business
categories
potentially
affected
by
this
regulation.
This
list
is
not
intended
to
be
exhaustive,
but
rather
provides
a
guide
regarding
entities
likely
to
be
regulated
by
this
action.

Table
VII.
B­
1
Primary
SBA
Small
Business
Categories
Potentially
Affected
by
this
Regulation
Industry
NAICS
a
Codes
Defined
by
SBA
as
a
Small
Business
If:
b
Farm
Machinery
and
Equipment
Manufacturing
333111
<
500
employees
Lawn
and
Garden
Tractor
and
Home
Lawn
and
Garden
Equipment
Manufacturing
333112
<
500
employees
Construction
Machinery
Manufacturing
333120
<
750
employees
Mining
Machinery
and
Equipment
Manufacturing
333131
<
500
employees
Turbine
and
Turbine
Generator
Set
Unit
Manufacturing
333611
<
1,000
employees
Speed
Changer,
Industrial
High­
speed
Drive
and
Gear
Manufacturing
333612
<
500
employees
Mechanical
Power
Transmission
Equipment
Manufacturing
333613
<
500
employees
Other
Engine
Equipment
Manufacturing
333618
<
1,000
employees
Nonroad
SI
engines
333618
<
1,000
employees
DRAFT
2/
12/
04
DRAFT
71
Internal
Combustion
Engines
333618
<
1,000
employees
Industrial
Truck,
Tractor,
Trailer,
and
Stacker
Machinery
Manufacturing
333924
<
750
employees
Power­
Driven
Handtool
Manufacturing
333991
<
500
employees
Automobile
Manufacturing
336111
<
1000
employees
Light
Truck
and
Utility
Vehicle
Manufacturing
336112
<
1000
employees
Heavy­
Duty
Truck
Manufacturing
336120
<
1000
employees
Fuel
Tank
Manufacturers
336211
<
1000
employees
Gasoline
Engine
and
Engine
Parts
Manufacturing
336312
<
750
employees
Aircraft
Engine
and
Engine
Parts
Manufacturing
336412
<
1000
employees
Railroad
Rolling
Stock
Manufacturing
336510
<
1000
employees
Boat
Building
and
Repairing
336612
<
500
employees
Motorcycles
and
Motorcycle
Parts
Manufacturers
336991
<
500
employees
Snowmobile
and
ATV
manufacturers
336999
<
500
employees
Independent
Commercial
Importers
of
Vehicles
and
Parts
421110
<
100
employees
Engine
Repair
and
Maintenance
811310
<$
5
million
annual
receipts
NOTES:

(
a)
North
American
Industry
Classification
System
(
b)
According
to
SBA's
regulations
(
13
CFR
Part
121),
businesses
with
no
more
than
the
listed
number
of
employees
or
dollars
in
annual
receipts
are
considered
"
small
entities"
for
purposes
of
a
regulatory
flexibility
analysis.
DRAFT
2/
12/
04
DRAFT
72
After
considering
the
economic
impacts
of
today's
rule
on
small
entities,
EPA
has
concluded
that
this
action
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
Under
the
reduced
fee
provisions
described
above
in
section
II.
F,
the
fee
paid
by
any
manufacturer
will
not
exceed
1.0
percent
of
the
aggregate
retail
sales
price
of
the
vehicles
or
engines
covered
by
a
certificate
request.
The
reduced
fee
provision
limits
the
impact
of
this
rule
on
small
entities,
and
other
manufacturers,
to
1.0
percent
of
the
aggregate
retail
sales
price.
Therefore,
the
rule
will
not
have
a
significant
economic
impact
on
any
manufacturers,
including
small
entities.
A
review
of
rulemakings
that
set
emissions
standards
for
the
industries
affected
by
today's
rule,
including
those
manufacturers
affected
by
the
recreational
vehicle
rule,
showed
that
approximately
108
small
businesses
will
be
paying
fees.

The
cost
per
vehicle
or
engine
will
vary
because
the
cost
per
unit
depends
upon
the
cost
of
the
certificate
and
the
number
of
vehicles
or
engines
that
are
manufactured
and
sold
under
one
certificate.
The
cost
per
vehicle
will
be
highest
if
a
manufacturer
pays
a
fee
for
a
light­
duty
vehicle
certificate
but
only
makes
and
sells
a
single
vehicles
that,
because
of
the
value
of
the
vehicle,
does
not
qualify
for
a
reduced
fee.
The
fee
cost
per
vehicle
or
engine
will
be
least
for
a
manufacturer
that
pays
an
"
Other"
category
fee
and
receives
a
certificate
that
will
cover
thousands
of
vehicles
or
engines.
In
this
case
the
fee
cost
per
vehicle
may
be
a
fraction
of
a
penny.
Because
of
the
difference
between
highest
and
lowest
possible
cost
of
fees
per
vehicle,
EPA
determined
that
the
average
fee
cost
for
manufacturers,
which,
across
industry
sectors,
is
approximately
$.
41
per
vehicle
or
engine.

The
following
is
an
example
of
a
final
reduced
fee
calculation:
If
a
light­
duty
vehicle
manufacturer
has
an
engine
family
of
2
vehicles
that
are
sold
for
$
35,000
per
vehicle,
under
today's
fee
schedule
the
full
fee
would
be
$
33,883,
or
$
16,944
per
engine
family
($
16,942
or
$
8,472
per
vehicle,
respectively),
depending
upon
whether
the
engine
family
is
certified
as
a
Federal
vehicle
or
California­
only
engine
family.
Under
the
rule,
the
reduced
fee
would
be
1.0
percent
of
the
aggregate
retail
sales
price
of
the
vehicles
($
70,000),
or
$
700
(
or
$
350
per
vehicle)
as
shown
below:

2
*
$
35,000
*
0.01
=
$
700
In
today's
rule
EPA
established
an
initial
fee
payment
of
$
750.
If,
at
the
end
of
a
model
year
the
final
reduced
fee
is
less
than
the
initial
fee
payment,
the
manufacturer
may
request
a
refund
of
the
difference.
EPA
has
eliminated
the
minimum
refund
provision
DRAFT
2/
12/
04
DRAFT
73
proposed
in
the
NPRM
so
the
manufacturer
will
be
entitled
to
the
entire
refund.
In
the
above
example
the
manufacturer
would
be
refunded
the
sum
of
$
50.

D.
Unfunded
Mandates
Reform
Act
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
action
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
by
state,
local,
and
tribal
governments,
in
the
aggregate,
or
by
the
private
sector,
of
$
100
million
or
more
in
any
one
year.
Before
promulgation
of
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
cost­
effective
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
we
establish
any
regulatory
requirement
that
may
significantly
or
uniquely
affect
small
governments,
including
tribal
governments,
we
must
develop,
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
our
regulations
with
significant
federal
intergovernmental
mandates.
The
plan
must
also
provide
for
informing,
educating,
and
advising
small
governments
on
compliance
with
the
regulatory
requirements.

Today's
rule
contains
no
Federal
mandates
for
state,
local,
or
tribal
governments.
Nor
does
this
rule
have
Federal
mandates
that
may
result
in
the
expenditures
of
$
100
million
or
more
in
any
year
by
the
private
sector
as
defined
by
the
provisions
of
Title
II
of
the
UMRA
as
the
total
cost
of
the
fee
program
is
estimated
to
be
about
20
million
dollars.
Nothing
in
the
rule
would
significantly
or
uniquely
affect
small
governments.

E.
Executive
Order
13132:
Federalism
DRAFT
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12/
04
DRAFT
74
Executive
Order
13132,
entitled
"
Federalism"
(
64
FR
43255,
August
10,
1999),
requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
State
and
local
officials
in
the
development
of
regulatory
policies
that
have
federalism
implications."
"
Policies
that
have
federalism
implications"
is
defined
in
the
Executive
Order
to
include
regulations
that
have
"
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government."

This
rule
will
not
have
federalism
implications.
It
will
not
have
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government,
as
specified
in
Executive
Order
13132.
This
rule
will
impose
no
direct
compliance
costs
on
states.
Thus,
the
requirements
of
section
6
of
Executive
Order
13132
do
not
apply
to
this
rule.

F.
Executive
Order
13175:
Consultation
and
Coordination
with
Indian
Tribal
Governments
Executive
Order
13175,
entitled
"
Consultation
and
Coordination
with
Indian
Tribal
Governments"
(
65
FR
67249,
November
6,
2000),
requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
tribal
officials
in
the
development
of
regulatory
policies
that
have
tribal
implications."
This
rule
does
not
have
tribal
implications.
It
will
not
have
substantial
direct
effects
on
tribal
governments,
on
the
relationship
between
the
Federal
government
and
Indian
tribes,
or
on
the
distribution
of
power
and
responsibilities
between
the
Federal
government
and
Indian
tribes,
as
specified
in
Executive
Order
13175.
The
requirements
finalized
by
this
action
impact
private
sector
businesses,
particularly
the
vehicle
and
engine
manufacturing
industries.
Thus,
Executive
Order
13175
does
not
apply
to
this
rule.

G.
Executive
Order
13045:
Children's
Health
Protection
Executive
Order
13045:
"
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks"
(
62
FR
19885,
April
23,
1997)
applies
to
any
rule
that:
(
1)
is
determined
to
be
economically
significant
as
defined
under
Executive
Order
12866,
and
(
2)
concerns
an
environmental
health
or
safety
risk
that
EPA
has
reason
to
believe
may
have
a
disproportionate
effect
on
children.
If
the
regulatory
action
meets
both
criteria,
the
Agency
must
evaluate
the
environmental
health
or
safety
effects
of
the
planned
rule
on
DRAFT
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04
DRAFT
75
children,
and
explain
why
the
planned
regulation
is
preferable
to
other
potentially
effective
and
reasonably
feasible
alternatives
considered
by
the
Agency.

EPA
believes
this
rule
is
not
subject
to
the
Executive
Order
because
it
is
not
an
economically
significant
regulatory
action
as
defined
by
Executive
Order
12866.
In
addition,
this
rule
is
not
subject
to
the
Executive
Order
because
it
does
not
involve
decisions
based
on
environmental
health
or
safety
risks
that
may
disproportionately
affect
children.
Today's
rule
seeks
to
implement
a
fees
program
and
is
expected
to
have
no
impact
on
environmental
health
or
safety
risks
that
would
affect
the
public
or
disproportionately
affect
children.

H.
Executive
Order
13211:
Energy
Effects
This
rule
is
not
a
"
significant
energy
action"
as
defined
in
Executive
Order
13211,
"
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use"
(
66
FR
28355
(
May
22,
2001)
because
it
will
not
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.
Further,
we
have
determined
that
this
rule
is
not
likely
to
have
any
adverse
energy
effects.

I.
National
Technology
Transfer
and
Advancement
Act
Section
12(
d)
of
the
National
Technology
Transfer
and
Advancement
Act
of
1995
(
NTTAA),
Public
Law
104­
113,
12(
d)
(
15
U.
S.
C.
272),
directs
the
EPA
to
use
voluntary
consensus
standards
(
VCS)
in
its
regulatory
activities
unless
to
do
so
would
be
inconsistent
with
applicable
law
or
otherwise
impractical.
Voluntary
consensus
standards
are
technical
standards
(
e.
g.,
materials
specifications,
test
methods,
sampling
procedures,
business
practices,
etc.)
that
are
developed
or
adopted
by
voluntary
consensus
standard
bodies.
The
NTTAA
requires
EPA
to
provide
Congress,
through
OMB,
explanations
when
the
Agency
decides
not
to
use
available
and
applicable
voluntary
consensus
standards.

J.
Congressional
Review
Act
The
Congressional
Review
Act,
5
U.
S.
C.
801
et
seq.,
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996,
generally
provides
that
before
a
rule
may
take
effect,
the
agency
promulgating
the
rule
must
submit
a
rule
report,
which
includes
a
copy
of
the
rule,
to
Congress
and
the
comptroller
General
of
the
United
States.
DRAFT
2/
12/
04
DRAFT
76
We
will
submit
a
report
containing
this
rule
and
other
required
information
to
the
U.
S.
Senate,
the
U.
S.
House
of
Representatives,
and
the
Comptroller
General
of
the
United
States
prior
to
publication
of
the
rule
in
the
Federal
Register.
A
major
rule
cannot
take
effect
until
after
it
is
published
in
the
Federal
Register.
This
action
is
not
a
"
major
rule'"
as
defined
by
5
U.
S.
C.
804(
2).
This
rule
will
be
effective
[
insert
date
60
days
from
publication]

List
of
Subjects
40
CFR
Part
85
Environmental
protection,
Confidential
business
information,
Imports,
Labeling,
Motor
vehicle
pollution,
Reporting
and
recordkeeping
requirements,
Research,
Warranties.

40
CFR
Part
86
Environmental
protection,
Administrative
practice
and
procedure,
Air
Pollution
Control,
Confidential
business
information,
Diesel,
Gasoline,
Fees,
Imports,
Incorporation
by
reference,
Labeling,
Motor
vehicle
pollution,
Motor
vehicles,
Reporting
and
recordkeeping
requirements.

Dated:
[
insert
date]

Michael
O.
Leavitt
Administrator
For
the
reasons
set
forth
in
the
preamble,
title
40
chapter
I
of
the
Code
of
Federal
Regulations
are
amended
as
follows:
DRAFT
2/
12/
04
DRAFT
77
PART
85­­
CONTROL
OF
AIR
POLLUTION
FROM
MOBILE
SOURCES
1.
The
Authority
for
part
85
continues
to
read
as
follows:

AUTHORITY:
42
U.
S.
C.
7401­
7671q.

2.
Add
a
new
Subpart
Y
to
Part
85
to
read
as
follows:

Subpart
Y
­
Fees
for
the
Motor
Vehicle
and
Engine
Compliance
Program
Sec.

85.2401
To
whom
do
these
requirements
apply?

85.2402
[
Reserved]

85.2403
What
definitions
apply
to
this
subpart?

85.2404
What
abbreviations
apply
to
this
subpart?

85.2405
How
much
are
the
fees?

85.2406
Can
I
qualify
for
reduced
fees?

85.2407
Can
I
get
a
refund
if
I
don't
get
a
certificate
or
overpay?

85.2408
How
do
I
make
a
fee
payment?

85.2409
Deficiencies
85.2410
Special
provisions
applicable
to
the
2003
model
year
only
Subpart
Y
­
Fees
for
the
Motor
Vehicle
and
Engine
Compliance
Program
§
85.2401
To
whom
do
these
requirements
apply?

(
a)
This
subpart
prescribes
fees
manufacturers
must
pay
for
the
motor
vehicle
and
engine
compliance
program
(
MVECP)
activities
performed
by
the
EPA.
The
prescribed
fees
and
the
provisions
of
this
subpart
apply
to
manufacturers
of:

(
1)
Light­
duty
vehicles
(
cars
and
trucks)
(
See
40
CFR
Part
86);

(
2)
Medium
Duty
Passenger
Vehicles
(
See
40
CFR
Part
86);
DRAFT
2/
12/
04
DRAFT
78
(
3)
Complete
gasoline­
fueled
highway
heavy­
duty
vehicles
(
See
40
CFR
Part
86);

(
4)
Heavy­
duty
highway
diesel
and
gasoline
engines
(
See
40
CFR
Part
86);

(
5)
On­
highway
motorcycles
(
See
40
CFR
Part
86);

(
6)
Nonroad
compression­
ignition
engines
(
See
40
CFR
Part
89);

(
7)
Locomotives
(
See
40
CFR
Part
92);

(
8)
Marine
engines,
excluding
inboard
&
sterndrive
engines
(
See
40
CFR
Parts
91,
94,
and
MARPOL
Annex
VI,
as
applicable);

(
9)
Small
nonroad
spark­
ignition
engines
(
engines

19kW)
(
See
40
CFR
Part
90);

(
10)
Recreational
vehicles
(
including,
but
not
limited
to,
snowmobiles,
all­
terrain
vehicles
and
off­
highway
motorcycles)
(
See
40
CFR
Part
1051);

(
11)
Heavy­
duty
highway
gasoline
vehicles
(
evaporative
emissions
certification
only)
(
See
40
CFR
Part
86);
and
(
12)
Large
nonroad
spark­
ignition
engines
(
engines
>
19
kW)
(
See
40
CFR
Part
1048).

(
b)
This
subpart
applies
to
manufacturers
that
submit
certification
requests
received
by
the
agency
on
or
after
[
March
1,
2004
or
60
days
after
the
date
of
publication
of
the
final
rule,
whichever
is
later].

(
c)
Certification
requests
which
are
complete,
contain
all
required
data,
and
are
received
prior
to
[
March
1,
2004
or
60
days
after
the
date
of
publication
of
the
final
rule,
whichever
is
later]
are
subject
to
the
provisions
of
40
CFR
Part
86,
Subpart
J.

(
d)
Nothing
in
this
subpart
will
be
construed
to
limit
the
Administrator's
authority
to
require
manufacturer
or
confirmatory
testing
as
provided
in
the
Clean
Air
Act,
including
authority
to
require
manufacturer
in­
use
testing
as
provided
in
section
208
of
the
Clean
Air
Act.

§
85.2402
[
Reserved]

§
85.2403
What
definitions
apply
to
this
subpart?

(
a)
The
following
definitions
apply
to
this
subpart:

Agency
or
EPA
means
the
U.
S.
Environmental
Protection
Agency.
DRAFT
2/
12/
04
DRAFT
79
Annex
IV
is
a
Statement
of
Voluntary
Compliance
or
Engine
International
Air
Pollution
Prevention
Certificate
issued
by
EPA
under
MARPOL
Annex
VI.

Body
Builder
means
a
manufacturer,
other
than
the
OEM,
who
installs
certified
onhighway
HDE
engines
into
equipment
such
as
trucks,
busses
or
other
highway
vehicles.

California­
only
certificate
is
a
Certificate
of
Conformity
issued
by
EPA
which
only
signifies
compliance
with
the
emission
standards
established
by
California.

Certification
request
means
a
manufacturer's
request
for
certification
evidenced
by
the
submission
of
an
application
for
certification,
ESI
data
sheet,
or
ICI
Carryover
data
sheet.
A
single
certification
request
covers
one
test
group,
engine
family,
or
engine
system
combination
as
applicable.
For
HDV
evaporative
certification,
the
certification
request
covers
one
evaporative
family.

Consumer
Price
Index
means
the
consumer
price
index
for
all
U.
S.
cities
using
the
"
U.
S.
city
average"
area
,
"
all
items"
and
"
not
seasonally
adjusted"
numbers
calculated
by
the
Department
of
Labor.

Federal
certificate
is
a
Certificate
of
Conformity
issued
by
EPA
which
signifies
compliance
with
emission
requirements
in
40
CFR
part
85,
86,
89,
90,
91,
92,
94,
1048,
and/
or
1051
as
applicable.

Fuel
economy
basic
engine
means
a
unique
combination
of
manufacturer,
engine
displacement,
number
of
cylinders,
fuel
system,
catalyst
usage,
and
other
characteristics
specified
by
the
Administrator.

Filing
form
means
the
MVECP
Fee
Filing
Form
to
be
sent
with
payment
of
the
MVECP
fee.

MARPOL
Annex
VI
is
an
annex
to
the
International
Convention
on
the
Prevention
of
Pollution
from
Ships,
1973,
as
modified
by
the
protocol
of
1978
relating
thereto;
the
international
treaty
regulating
disposal
of
wastes
generated
by
normal
operation
of
vessels.

Recreational
means
the
engines
subject
to
40
CFR
1051
which
includes
off
road
motorcycles,
all­
terrain
vehicles,
and
snowmobiles.
DRAFT
2/
12/
04
DRAFT
80
Total
Number
of
Certificates
Issued
means
the
number
of
certificates
for
which
fees
are
paid
or
waivers
are
issued.
This
term
is
not
intended
to
represent
multiple
certificates
which
are
issued
within
a
single
family
or
test
group.

(
b)
The
definitions
contained
in
the
following
parts
also
apply
to
this
subpart.
If
the
term
is
defined
in
paragraph
(
a)
of
this
section
then
that
definition
will
take
precedence.

(
1)
40
CFR
Part
85;

(
2)
40
CFR
Part
86;

(
3)
40
CFR
Part
89;

(
4)
40
CFR
Part
90;

(
5)
40
CFR
Part
91;

(
6)
40
CFR
Part
92;

(
7)
40
CFR
Part
94;

(
8)
40
CFR
Part
1048;
and
(
9)
40
CFR
Part
1051.

§
85.2404
What
abbreviations
apply
to
this
subpart?

The
abbreviations
in
this
section
apply
to
this
subpart
and
have
the
following
meanings:

Annex
IV­­
a
Statement
of
Voluntary
Compliance
or
Engine
International
Air
Pollution
Prevention
Certificate
issued
by
EPA
under
MARPOL
Annex
VI.

Cal­­
California;

CI
 
Compression­
ignition
(
Diesel)
cycle
engine;

CPI­­
Consumer
Price
Index;

ESI­­
Engine
System
Information;

EPA­­
U.
S.
Environmental
Protection
Agency;

Evap
 
Evaporative
Emissions;

Fed­­
Federal;

HD­­
Heavy­
duty
HDE­­
Heavy­
duty
motor
vehicle
engine;

HDV­­
Heavy­
duty
motor
vehicle;
DRAFT
2/
12/
04
DRAFT
81
HW
 
On­
Highway
versions
of
a
vehicle
or
engine;

ICI­­
Independent
Commercial
Importer;

LD­­
Light­
Duty
motor
vehicle
including
both
LDT
and
LDV;

LDT­­
Light­
duty
truck;

LDV­­
Light­
duty
vehicle;

MARPOL
 
An
International
Maritime
Organization
treaty
for
the
control
of
marine
pollution;

MC­­
Motorcycle;

MDPV
 
Medium­
Duty
Passenger
Vehicle;

MVECP­­
Motor
Vehicle
and
Engine
Compliance
Program;

MY­­
Model
Year;

NR­­
Nonroad
version
of
a
vehicle
or
engine;

OEM­­
Original
equipment
manufacturer;

SI­­
Spark­
ignition
(
Otto)
cycle
engine.

§
85.2405
How
much
are
the
fees?

(
a)
Fees
for
the
2004
and
2005
calendar
years.
For
certification
applications
received
for
these
calendar
years
that
qualify
for
today's
fees
under
the
provisions
of
§
85.2401
(
b),
the
fee
for
each
certification
request
is
in
the
following
table:
DRAFT
2/
12/
04
DRAFT
82
Category
Certificate
Type
Fee
1)
LD,
excluding
ICIs
Fed
Certificate
$
33,883
2)
LD,
excluding
ICIs
Cal­
only
Certificate
$
16,944
3)
MDPV,
excluding
ICIs
Fed
Certificate
$
33,883
4)
MDPV,
excluding
ICIs
Cal­
only
Certificate
$
16,944
5)
Complete
SI
HDVs,
excluding
ICIs
Fed
Certificate
$
33,883
6)
Complete
SI
HDVs,
excluding
ICIs
Cal­
only
Certificate
$
16,944
7)
ICIs
for
the
following
industries:

LD,
MDPV,
or
Complete
SI
HDVs
All
Types
$
8,387
8)
MC
(
HW),
including
ICIs
All
Types
$
2,414
9)
HDE
(
HW),
including
ICIs
Fed
Certificate
$
21,578
10)
HDE
(
HW),
including
ICIs
Cal­
only
Certificate
$
826
11)
HDV
(
evap),
including
ICIs
Evap
Certificate
$
826
12)
NR
CI
engines,
including
ICIs,
but
excluding
Locomotives,
Marine
and
Recreational
engines.
All
Types
$
1,822
13)
NR
SI
engines,
including
ICIs
All
Types
$
826
14)
Marine
engines,
excluding
inboard
&
sterndrive
engines,
including
ICIs
All
Types
and
AnnexVI
$
826
15)
All
NR
Recreational,
including
ICIs,
but
excluding
marine
engines
All
Types
$
826
16)
Locomotives,
including
ICIs
All
Types
$
826
(
1)
A
manufacturer
that
requests
a
federal
certificate
for
a
marine
engine
family
and
an
Annex
VI
for
the
same
engine
family
will
be
charged
the
fee
indicated
in
§
85.2405
(
a),
Table
item
14,
for
only
the
federal
certificate.

(
2)
Reserved
DRAFT
2/
12/
04
DRAFT
83
(
b)
Fees
for
2006
calendar
year
and
beyond.

(
1)
This
subpart
applies
to
manufacturers
that
submit
certification
requests
received
by
the
agency
on
or
after
January
1
of
each
calendar
year
beginning
in
2006.
The
fees
due
for
each
certification
request
will
be
calculated
using
an
equation
which
adjusts
the
fees
in
paragraph
(
a)
of
this
section
for
the
change
in
the
consumer
price
index
and
the
change
in
the
total
number
of
certificates
issued
for
each
fee
category.

(
2)
Certification
requests
which
are
complete,
contain
all
required
data,
and
are
received
prior
to
January
1
of
each
calendar
year
are
subject
to
the
fees
provisions
of
the
year
that
they
are
received
by
the
Agency.

(
3)
Fees
for
the
2006
and
later
calendar
year
certification
requests
will
be
calculated
using
the
following
equation.

Feecy=
[
F
+
(
L
*
(
CPICY­
2/
CPI2002))]
*
1.169
/
[(
cert#
MY­
3
+
cert#
MY­
4)
*
.5]

Where:

FeeCY
=
the
applicable
fee
for
the
calendar
year
of
the
certification
request.
EPA
will
determine
the
fees
for
each
calendar
year
beginning
in
2006.

F
=
the
fixed
costs,
not
to
be
adjusted
by
the
CPI
L
=
the
labor
costs
from
the
table
below,
to
be
adjusted
by
the
CPI
CPICY­
2
=
the
consumer
price
index
for
all
U.
S.
cities
using
the
"
U.
S.
city
average"
area
,
"
all
items"
and
"
not
seasonally
adjusted"
numbers
calculated
by
the
Department
of
Labor
listed
for
the
month
of
July
of
the
year
two
years
before
the
calendar
year.
(
e.
g.,
for
the
2006
CY
use
the
CPI
based
on
the
date
of
July,
2004).

CPI2002
=
the
consumer
price
index
for
all
U.
S.
cities
using
the
"
U.
S.
city
average"
area
,
"
all
items"
and
"
not
seasonally
adjusted"
numbers
calculated
by
the
Department
of
Labor
for
December,
2002.
The
actual
value
for
CPI
2002
is
180.9.

1.169
=
Overall
EPA
overhead
applied
to
all
costs
cert#
MY­
3
=
the
total
number
of
certificates
issued
for
a
fee
category,
for
which
fees
are
paid
or
waivers
are
issued,
three
model
years
prior
to
the
calendar
year
for
applicable
fees
(
Feecy)

cert#
MY­
4
=
the
total
number
of
certificates
issued
for
a
fee
category,
for
which
fees
are
paid
or
waivers
are
issued,
four
model
years
prior
to
the
calendar
year
for
the
applicable
fees
(
Feecy)
DRAFT
2/
12/
04
DRAFT
84
ICI
LD
MC
(
HW)
HDE
(
HW)
NR
CI
Other
1)
F
$
344,824
$
6,180,261
$
225,726
$
1,106,224
$
486,401
$
177,425
2)
L
$
264,980
$
4,732,440
$
172,829
$
1,625,680
$
545,160
$
548,081
EPA
will
notify
manufacturers
within
15
months
of
the
calendar
year
in
which
fees
are
adjusted
by
this
section,
with
the
new
fees
for
each
category,
the
number
of
certificates
for
the
appropriate
model
years
and
the
applicable
CPI
values
after
the
July
CPI
values
for
each
year
are
made
available
by
the
U.
S.
Department
of
Labor.

(
c)
A
single
fee
will
be
charged
when
a
manufacturer
seeks
to
certify
multiple
evaporative
families
within
a
single
engine
family
or
test
group.
Manufacturers
that
seek
to
certify
HDE
evaporative
families
will
be
charged
a
fee
for
each
evaporative
family.

(
d)
A
body
builder,
who
exceeds
the
maximum
fuel
tank
size
for
a
HDV
that
has
been
certified
by
an
OEM
and
consequently
makes
a
request
for
HDV
certification,
must
pay
a
separate
fee
for
each
certification
request.
The
fee
will
be
that
listed
in
paragraphs
(
a)
and
(
b)
of
this
section,
paragraph
(
c)
does
not
apply.

§
85.2406
Can
I
qualify
for
reduced
fees?

(
a)
Eligibility
Requirements.
To
be
eligible
for
a
reduced
fee,
the
following
conditions
must
be
satisfied:

(
1)
The
certificate
is
to
be
used
for
sale
of
vehicles
or
engines
within
the
United
States;
and
(
2)
The
full
fee
for
a
certification
request
for
a
MY
exceeds
1.0%
of
the
aggregate
projected
retail
sales
price
of
all
vehicles
or
engines
covered
by
that
certificate.

(
b)
Determination
of
Certificate
Type
(
1)
If
the
number
of
vehicles
or
engines
to
be
covered
by
the
certificate
is
less
than
six
and
the
retail
sales
price
of
all
of
the
vehicles
or
engines
is
less
than
$
75,000
each,
a
reduced
fee
request
shall
be
made
for
a
certificate
covering
5
vehicles
or
engines.
The
final
DRAFT
2/
12/
04
DRAFT
85
reduced
fee
calculation
and
adjustment
provisions
of
§
85.2406
(
e)
are
applicable
to
certificates
issued
under
this
provision.

(
2)
If
the
number
of
vehicles
or
engines
to
be
covered
by
the
certificate
is
greater
than
five
and/
or
the
retail
sales
price
of
at
least
one
of
the
vehicles
or
engines
is
greater
than
$
75,000
each,
a
reduced
fee
request
shall
be
made
for
a
certificate
covering
the
estimated
number
of
vehicles
or
engines.

(
c)
Initial
Reduced
Fee
Calculation.

(
1)
If
the
requirements
of
paragraph
(
a)
of
this
section
are
satisfied,
the
initial
fee
payment
to
be
paid
by
the
applicant
(
the
"
initial
fee
payment")
will
be
the
greater
of:

(
i)
1.0%
of
the
aggregate
projected
retail
sales
price
of
all
the
vehicles
or
engines
to
be
covered
by
the
certification
request;
or
(
ii)
A
minimum
initial
fee
payment
of
$
750.

(
2)
For
vehicles
or
engines
that
are
converted
to
operate
on
an
alternative
fuel
using
as
the
basis
for
the
conversion
a
vehicle
or
engine
which
is
covered
by
an
existing
OEM
certificate
of
conformity,
the
cost
basis
used
in
this
section
must
be
the
aggregate
projected
retail
value­
added
to
the
vehicle
or
engine
by
the
conversion
rather
than
the
full
cost
of
the
vehicle
or
engine.
To
qualify
for
this
provision,
the
applicable
OEM
certificate
must
cover
the
same
sales
area
and
model
year
as
the
requested
certificate
for
the
converted
vehicle
or
engine.

(
3)
For
ICI
certification
requests,
the
cost
basis
of
this
section
must
be
the
aggregate
projected
retail
cost
of
the
entire
vehicle(
s)
or
engine(
s),
not
just
the
value
added
by
the
conversion.
If
the
vehicles/
engines
covered
by
an
ICI
certificate
are
not
being
offered
for
sale,
the
manufacturer
shall
use
the
fair
retail
market
value
of
the
vehicles/
engines
as
the
retail
sale
price
required
in
this
section.
For
an
ICI
certification
request,
the
retail
sales
price
(
or
fair
retail
market
value)
must
be
based
on
the
applicable
National
Automobile
Dealer's
Association
(
NADA)
appraisal
guide
and/
or
other
evidence
of
the
actual
market
value.

(
4)
The
aggregate
cost
used
in
this
section
must
be
based
on
the
total
projected
sales
of
all
vehicles
and
engines
under
a
certificate,
including
vehicles
and
engines
modified
under
the
DRAFT
2/
12/
04
DRAFT
86
modification
and
test
option
in
40
CFR
85.1509
and
89.609.
The
projection
of
the
number
of
vehicles
or
engines
to
be
covered
by
the
certificate
and
their
projected
retail
selling
price
must
be
based
on
the
latest
information
available
at
the
time
of
the
fee
payment.

(
5)
A
manufacturer
may
submit
a
reduced
fee
as
described
in
paragraphs
(
a),
(
b)
and
(
c)(
1)
through
(
c)(
4)
of
this
section
if
it
is
accompanied
by
a
statement
from
the
manufacturer
that
the
reduced
fee
is
appropriate
under
this
section.
The
reduced
fee
shall
be
deemed
approved
unless
EPA
determines
that
the
criteria
of
this
section
has
not
been
met.
The
Agency
may
make
such
a
determination
either
before
or
after
EPA
issues
a
certificate
of
conformity.
If
the
Agency
determines
that
the
requirements
of
this
section
have
not
been
met,
EPA
may
deny
future
reduced
fee
requests
and
require
submission
of
the
full
fee
payment
until
such
time
as
the
manufacturer
demonstrates
to
the
satisfaction
of
the
Administrator
that
its
reduced
fee
submissions
are
based
on
accurate
data
and
that
final
fee
payments
are
made
within
45
days
of
the
end
of
the
model
year.

(
6)
If
the
reduced
fee
is
denied
by
the
Administrator,
the
applicant
will
have
30
days
from
the
date
of
notification
of
the
denial
to
submit
the
appropriate
fee
to
EPA
or
appeal
the
denial.

(
d)
Revision
of
the
Number
of
Vehicles
or
Engines
Covered
by
the
Certificate
(
1)
If
after
the
original
certificate
is
issued,
the
number
of
vehicles
or
engines
to
be
produced
or
imported
under
the
certificate
exceeds
the
number
indicated
on
the
certificate,
the
manufacturer
or
importer
shall:

(
i)
Request
that
EPA
revise
the
certificate
with
a
number
that
indicates
the
new
projection
of
the
vehicles
or
engines
to
be
covered
by
the
certificate.
The
revised
certificate
must
be
requested,
revised
and
issued
before
the
vehicles
or
engines
are
sold
or
imported
into
the
United
States.

(
ii)
Submit
payment
of
1.0%
of
the
aggregate
projected
retail
sales
price
of
all
the
vehicles
or
engines
over
and
above
the
number
of
vehicles
or
engines
listed
on
the
original
certificate
to
be
covered
by
the
certification
request;

(
iii)
Submit
a
final
reduced
fee
calculation
and
adjustment
at
the
end
of
the
model
year
as
set
forth
in
the
provisions
of
§
85.2406
(
e),
below,
if
the
original
certificate
was
issued
under
the
provisions
of
paragraph
§
85.2406
(
b)(
1)
above.
DRAFT
2/
12/
04
DRAFT
87
(
2)
A
manufacturer
must
receive
a
revised
certificate
prior
to
the
sale
or
importation
of
any
vehicles
or
engines
that
are
not
originally
included
in
the
certificate
issued
under
85.2406(
b)(
1)
or
85.2406(
b)(
2),
or
as
indicated
in
a
revised
certificate
issued
under
85.2406(
d)(
1).
In
the
event
that
a
certificate
is
not
timely
revised
such
additional
vehicles
or
engines
are
not
covered
by
a
certificate
of
conformity.

(
e)
Final
Reduced
Fee
Calculation
and
Adjustment.

(
1)
For
certificates
issued
under
the
provisions
of
§
85.2406
(
b)(
1)
above,
within
30
days
of
the
end
of
the
model
year,
the
manufacturer
shall
submit
a
model
year
reduced
fee
payment
report
covering
all
certificates
issued
under
the
provisions
of
§
85.2406
(
b)(
1)
in
the
model
year
for
which
the
manufacturer
has
paid
a
reduced
fee.
This
report
will
include
for
each
certificate
issued:

(
i)
The
fees
paid
prior
to
the
time
of
issuance
of
the
certificate;

(
ii)
The
total
actual
number
of
vehicles
covered
by
the
certificate;

(
iii)
The
calculation
of
the
actual
final
reduced
fee
due
for
each
certificate;
and
(
iv)
The
difference
between
the
total
fees
paid
and
the
total
final
fees
due
from
the
manufacturer.

(
2)
The
final
reduced
fee
shall
be
calculated
using
the
procedures
of
paragraph
(
c)
of
this
section
but
using
actual
production
figures
rather
than
projections.

(
3)
If
the
initial
fee
payment
does
not
exceed
the
final
reduced
fee,
then
the
manufacturer
shall
pay
the
difference
between
the
initial
reduced
fee
and
the
final
reduced
fee
using
the
provisions
of
§
85.2408.
This
payment
shall
be
paid
within
45
days
of
the
end
of
the
model
year.
The
total
fees
paid
for
a
certificate
shall
not
exceed
the
applicable
full
fee
of
§
85.2405.
If
a
manufacturer
fails
to
make
complete
payment
with
45
days
or
to
submit
the
report
under
paragraph
(
e)(
1)
of
this
section
then
the
Agency
may
void
ab
initio
the
applicable
certificate.
EPA
may
also
refuse
to
grant
reduced
fee
requests
submitted
under
paragraph
(
c)(
5)
of
this
section.
DRAFT
2/
12/
04
DRAFT
88
(
4)
If
the
initial
fee
payment
exceeds
the
final
reduced
fee
then
the
manufacturer
may
request
a
refund
using
the
procedures
of
§
85.2407.

(
5)
Manufacturers
must
retain
in
their
records
the
basis
used
to
calculate
the
projected
sales
and
fair
retail
market
value
and
the
actual
sales
and
retail
price
for
the
vehicles
and
engines
covered
by
each
certificate
that
is
issued
under
the
reduced
fee
provisions
of
this
section.
This
information
must
be
retained
for
a
period
of
at
least
three
years
after
the
issuance
of
the
certificate
and
must
be
provided
to
the
Agency
within
30
days
of
request.
Manufacturers
are
also
subject
to
the
applicable
maintenance
of
records
requirements
of
Part
86,
Subpart
A.
If
a
manufacturer
fails
to
maintain
the
records
or
provide
such
records
to
EPA
as
required
by
this
paragraph
then
EPA
may
void
ab
initio
the
certificate
for
which
such
records
shall
be
kept.

§
85.2407
Can
I
get
a
refund
if
I
don't
get
a
certificate
or
overpay?

(
a)
Full
Refund.
The
Administrator
shall
refund
the
total
fee
imposed
by
§
85.2405
if
the
applicant
fails
to
obtain
a
certificate,
for
any
reason,
and
requests
a
refund.

(
b)
Partial
Refund.
The
Administrator
shall
refund
a
portion
of
a
reduced
fee,
paid
under
85.2406,
due
to
a
decrease
in
the
aggregate
projected
or
actual
retail
sales
price
of
the
vehicles
or
engines
covered
by
the
certificate
request.
The
Administrator
shall
also
refund
a
portion
of
the
initial
payment
when
the
initial
payment
exceeded
the
final
fee
for
the
vehicles
or
engines
covered
by
the
certificate
request.

(
1)
Partial
refunds
are
only
available
for
certificates
which
were
used
for
the
sale
of
vehicles
or
engines
within
the
United
States.

(
2)
Requests
for
a
partial
refund
may
only
be
made
once
the
model
year
for
the
applicable
certificate
has
ended.
Requests
for
a
partial
refund
must
be
submitted
no
later
than
six
months
after
the
model
year
has
ended.

(
3)
Requests
for
a
partial
refund
must
include
all
the
following:

(
i)
A
statement
that
the
applicable
certificate
was
used
for
the
sale
of
vehicles
or
engines
within
the
United
States.
DRAFT
2/
12/
04
DRAFT
89
(
ii)
A
statement
of
the
initial
fee
amount
paid
(
the
reduced
fee)
under
the
applicable
certificate.

(
iii)
The
actual
number
of
vehicles
or
engines
produced
or
imported
under
the
certificate
(
whether
or
not
the
vehicles/
engines
have
been
actually
sold).

(
iv)
The
actual
retail
selling
or
asking
price
for
the
vehicles
or
engines
produced
or
imported
under
the
certificate.

(
v)
The
calculation
of
the
reduced
fee
amount
using
actual
production
figures
and
retail
prices.

(
vi)
The
calculated
amount
of
the
refund.

(
c)
Refunds
due
to
errors
in
submission.
The
Agency
will
approve
requests
from
manufacturers
to
correct
errors
in
the
amount
or
application
of
fees
if
the
manufacturer
provides
satisfactory
evidence
that
the
change
is
due
to
an
accidental
error
rather
than
a
change
in
plans.
Requests
to
correct
errors
must
be
made
to
the
Administrator
as
soon
as
possible
after
identifying
the
error.
The
Agency
will
not
consider
requests
to
reduce
fee
amounts
due
to
errors
that
are
reported
more
than
90
days
after
the
issuance
of
the
applicable
certificate
of
conformity.

(
d)
In
lieu
of
a
refund,
the
manufacturer
may
apply
the
refund
amount
to
the
amount
due
on
another
certification
request.

(
e)
A
request
for
a
full
or
partial
refund
of
a
fee
or
a
report
of
an
error
in
the
fee
payment
or
its
application
must
be
submitted
in
writing
to:
U.
S.
Environmental
Protection
Agency,
Vehicle
Programs
and
Compliance
Division,
Fee
Program
Specialist,
National
Vehicle
and
Fuel
Emission
Laboratory,
2000
Traverwood,
Ann
Arbor,
MI
48105.

§
85.2408
How
do
I
make
a
fee
payment?

(
a)
All
fees
required
by
this
subpart
shall
be
paid
by
money
order,
bank
draft,
certified
check,
corporate
check,
or
electronic
funds
transfer
payable
in
U.
S.
dollars
to
the
order
of
the
Environmental
Protection
Agency.
DRAFT
2/
12/
04
DRAFT
90
(
b)
A
completed
fee
filing
form
must
be
sent
to
the
address
designated
on
the
form
for
each
fee
payment
made.

(
c)
Fees
must
be
paid
prior
to
submission
of
an
application
for
certification.
The
Agency
will
not
process
applications
for
which
the
appropriate
fee
(
or
reduced
fee
amount)
has
not
been
fully
paid.

(
d)
If
EPA
denies
a
reduced
fee,
the
proper
fee
must
be
submitted
within
30
days
after
the
notice
of
denial,
unless
the
decision
is
appealed.
If
the
appeal
is
denied,
then
the
proper
fee
must
be
submitted
within
30
days
after
the
notice
of
the
appeal
denial.

§
85.2409
Deficiencies.

(
a)
Any
filing
pursuant
to
this
subpart
that
is
not
accompanied
by
a
completed
fee
filing
form
and
full
payment
of
the
appropriate
fee
is
deemed
to
be
deficient.

(
b)
A
deficient
filing
will
be
rejected
and
the
amount
paid
refunded,
unless
the
full
appropriate
fee
is
submitted
within
a
time
limit
specified
by
the
Administrator.

(
c)
EPA
will
not
process
a
request
for
certification
associated
with
any
filing
that
is
deficient
under
this
section.

(
d)
The
date
of
filing
will
be
deemed
the
date
on
which
EPA
receives
the
full
appropriate
fee
and
the
completed
fee
filing
form.

PART
86
 
CONTROL
OF
EMISSIONS
FROM
NEW
AND
IN­
USE
HIGHWAY
VEHICLES
AND
ENGINES
3.
The
Authority
for
Part
86
continues
to
read
as
follows:

AUTHORITY:
42
U.
S.
C.
7401­
7671q.

Subpart
J­[
Amended]

4.
Section
86.903­
93
is
revised
to
read
as
follows:
DRAFT
2/
12/
04
DRAFT
91
§
86.903­
93
Applicability.

(
a)
This
subpart
prescribes
fees
to
be
charged
for
the
MVECP
for
the
1993
through
2003
model
year.
The
fees
charged
will
apply
to
all
manufacturers
and
ICIs
of
LDVs,
LDTs,
HDVs,
HDEs,
and
MCs.
Nothing
in
this
subpart
shall
be
construed
to
limit
the
Administrator's
authority
to
require
manufacturer
or
confirmatory
testing
as
provided
in
the
Clean
Air
Act,
including
authority
to
require
manufacturer
in­
use
testing
as
provided
in
section
208
of
the
Clean
Air
Act.

(
b)
The
fees
prescribed
in
this
subpart
are
replaced
by
the
requirements
of
40
CFR
Part
85,
Subpart
Y
for
2004
and
later
certification
requests
received
on
or
after
[
March
1,
2004
or
60
days
after
the
date
of
publication
of
the
final
rule,
whichever
date
is
later].

(
c)
The
fees
prescribed
in
this
subpart
will
only
apply
to
those
2004
model
year
certification
requests
which
are
complete,
include
all
data
required
by
this
title,
and
are
received
by
the
Agency
prior
to
[
March
1,
2004
or
60
days
after
the
date
of
publication
of
the
final
rule,
whichever
is
later].