Document ID: EPA-HQ-OAR-2003-0111-0064
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2004-02-12T05:00Z

2/
12/
04
1
Response
to
Comments
Document
Motor
Vehicle
and
Engine
Compliance
Program
Fees
for:
Light­
Duty
Vehicles;
Light­
Duty
Trucks;
Heavy­
Duty
Vehicles
and
Engines;
Nonroad
Engines
and
Motorcycles
Table
of
Contents
I.
Introduction
II.
List
of
Commenters
and
Abbreviations
III.
Comments
and
Responses
SECTION
1:
Legal
Authority
1.1.
Authority
to
Assess
Nonroad
Fees
1.2.
Authority
to
Recover
Anticipated
Costs
for
Proposed
Programs
1.3.
Authority
to
Collect
Fees
for
Manufacturers
1.4.
Other
Authority
Issues
SECTION
2:
Assessment
of
Costs
2.1.
Costs
Apportioned
to
Industries
2.2.
Costs
Unrelated
to
the
MVECP
2.3.
Costs
for
In­
use
Programs
2.4.
Costs
Too
High
for
Industry
SECTION
3:
Cost
Study
3.1.
Number
of
Engine
Families
3.2.
Heavy­
duty
Highway
and
Nonroad
Compression­
ignition
Compliance
Activities
3.3.
General
Cost
Study
Comments
SECTION
4:
Automatic
Adjustment
of
Fees
SECTION
5:
Effective
Date
and
Application
of
New
Fees
SECTION
6:
Reduced
Fees
6.1.
Reduced
Fee
of
One
Percent
Aggregate
Retail
Price
6.2.
Retroactive
Payment
Under
Reduced
Fee
Program
6.3.
Year
End
Report
6.4.
ICI
Owner­
Imported
Vehicles
(
Not
for
Resale)
6.5
$
300
Minimum
Fee
Payment
SECTION
7:
ICI
Issues
2/
12/
04
2
7.1.
Fee
Provisions
Specific
to
ICIs
7.2.
ICI
Vehicles
Imported
for
Resale
7.3.
Modification
and
Test
Cars
7.4.
ICI
Licensing
7.5.
ICIs
and
SBREFA
SECTION
8:
Other
Topics
8.1.
EPA
Services
8.2.
Fee
Payment
Timing
8.3.
Running
Changes
and
Carryovers
8.4.
Refunds
Less
than
$
500
and
Final
Fee
Payments
Less
than
$
500
8.5.
$
300
Minimum
Fee
Payment
8.6.
Reduced
Costs
for
California­
only
8.7
Fee
Payment
Suggestions
I.
Introduction
On
August
7,
2002,
EPA
published
in
the
Federal
Register
(
67
FR
51402)
a
Notice
of
Proposed
Rulemaking
(
NPRM)
titled
the
Motor
Vehicle
and
Engine
Compliance
Program
Fees
for:
Light­
Duty
Vehicles;
Light­
Duty
Trucks;
Heavy­
Duty
Vehicles
and
Engines;
Nonroad
Engines
and
Motorcycles.
A
public
hearing
on
the
proposal
was
held
in
Ann
Arbor,
Michigan
on
September
19,
2002.
The
proposal
announced
the
opportunity
for
written
public
comment
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.

Complete
transcripts
of
the
public
hearing
and
the
full
text
of
each
comment
letter,
along
with
supporting
information
used
in
developing
the
regulation,
are
found
in
Docket
No
A­
2001­
09.
The
docket
is
available
for
public
viewing
at
the
following
address:
EPA
Docket
Center
(
EPA/
DC),
Public
Reading
Room,
Room
B102,
EPA
West
Building,
1301
Constitution
Avenue,
NW,
Washington,
D.
C.
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
EPA
Docket
Center.
Once
in
the
system,
select
"
search,"
then
key
in
the
appropriate
docket
identification
number.

EPA
received
comments
from
11
organizations.
A
copy
of
each
comment
letter
is
included
in
the
rulemaking
docket.
All
of
the
comments
have
been
carefully
considered,
and
where
determined
to
be
appropriate,
changes
have
been
made
to
the
final
regulations.

This
document
summarizes
the
written
and
oral
comments
submitted
at
the
public
hearing
and
delivered
to
EPA
during
and
after
the
comment
period.
2/
12/
04
3
This
document
is
divided
into
eight
sections.
Each
section
comprises
issues
which
address
the
section
heading
or
topic.

EPA
published
in
the
Notice
of
Proposed
Rule
Making
(
NPRM)
fees
that
reflected
our
projected
test
plans
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
project
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.
The
changes
are
described
in
detail
in
the
preamble
to
the
final
rule,
section
III,
What
Are
the
Changes
Made
to
the
Proposed
Cost
Analysis?
The
issues
are
discussed
more
fully
in
the
sections
2
and
3
below.
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."

II.
List
of
Commenters
and
Abbreviations
Commenters
Abbreviations
Alliance
of
Automobile
Manufacturers
Alliance
Association
of
International
Automobile
Manufacturers
AIAM
Briggs
and
Stratton
Echo
Incorporated
Echo
Engine
Manufacturers
Association*
EMA
Motorcycle
Industry
Council
MIC
Mercury
Marine*

Outdoor
Power
Equipment
Institute
OPEI
Sierra
Research
SR
Vehicle
Services
Consulting,
Inc.*
VSC
2/
12/
04
4
*
Organization
presented
oral
testimony
at
the
public
hearing
2/
12/
04
5
III.
Comments
and
Responses
Section
1:
Legal
Authority
1.1
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,
off­
road
motorcycles
and
all
terrain
vehicles),
recreational
marine
and
compression­
ignition
engines,
large
spark­
ignition
engines
(
over
19
kilowatts
(
kW))
and
marine
spark­
ignition/
inboard­
sterndrive
engines.

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
2/
12/
04
6
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
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
nonroad
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
1
See,
for
example,
section
218:
"[
t]
he
Administrator
shall
promulgate
regulations
applicable
to
motor
vehicle
engines
and
nonroad
engines..."
42
USC
§
7553
(
emphasis
added).

2/
12/
04
7
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
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,"
1
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
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
2/
12/
04
8
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.
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
2
"
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).

2/
12/
04
9
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
beneficiaries2.
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.

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
2/
12/
04
10
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
nonroad
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
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
2/
12/
04
11
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.

We
also
do
not
believe
it
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
offroad
motorcycles
and
ATVs
emission
standards
in
section
1.2.
below.

1.2
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.

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
2/
12/
04
12
proposal.

We
explained
that
for
those
regulatory
programs
with
proposed
but
not
yet
finalized
emissions
standards
and
regulatory
programs
with
yet
to
be
proposed
emissions
standards,
the
associated
fees
would
only
apply
after
the
applicable
regulations
became
effective
or
in
other
words,
at
the
time
a
manufacturer
requests
certification
(
67
FR
at
51408).
We
also
explained
that
we
knew
enough
of
the
Agency's
anticipated
costs
for
these
programs.
Id.
We
further
explained
that
we
did
not
believe
our
fees
proposal
for
these
programs
would
prejudge
the
outcome
of
those
ongoing
rulemakings.
Id.
We
also
indicated
we
were
considering
where
to
finalize
fees
for
those
programs
with
no
emissions
standards.
[
67
FR
at
51410]

To
determine
our
projected
costs,
we
explained
that
the
Agency
conducted
an
in­
depth
analysis
of
the
costs
incurred
in
operating
the
MVECP
(
67
FR
at
51409).
We
also
set
forth
in
greater
detail
all
of
our
associated
direct
and
indirect
costs
in
the
Cost
Analysis
Document,
which
is
included
in
the
docket
of
this
rulemaking.

For
many
of
the
certification
request
types
in
the
"
Other"
fee
category,
which
primarily
consists
of
nonroad
groups,
EPA
projected
its
cost
based
on
a
minimum
level
of
effort
needed
to
effectively
review
and
process
certification
applications
and
some
limited
testing.
It
should
be
noted
that
EPA
also
recognized
that
many
of
the
emission
regulations
for
these
industries
include
the
authority
to
conduct
other
MVECP
type
activities
beyond
certification
but
EPA
chose
to
not
charge
for
such
activities
as
none
are
yet
envisioned
by
the
Agency.

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.
2/
12/
04
13
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
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.
2/
12/
04
14
As
noted
above
and
within
the
proposal,
EPA
has
based
its
costs
on
actual
2001
budget
expenditures
and
then
evaluated
what
the
same
levels
of
effort
would
cost
in
2003
or
later.
EPA
is
in
fact
no
longer
"
projecting"
what
its
lab
modernization
costs
will
be
and
whether
it
will
receive
necessary
appropriation
for
the
upgrades.
We
have
received
a
budget
allocation
in
fiscal
year
(
FY)
2003
and
plan
to
fully
fund
the
test
cell
upgrades
to
make
them
compliance
testing
ready.
To
some
extent
EPA
recognizes
that
it
continues
to
project
some
of
its
actual
costs.
However,
EPA
anticipates
that
it
will
receive
the
necessary
budget
for
fiscal
year
2004
(
during
which
time
this
new
fees
rule
will
now
become
effective)
and
will
spend
the
actual
amount
associated
with
its
"
expanded
programs."
Some
of
these
expanded
programs
include
new
certification
activities
which
EPA
must
perform
in
order
to
grant
certificates
to
newly
regulated
industries.
In
addition
EPA
will
also
be
conducting
some
new
certification
confirmatory
and
inuse
testing
for
the
heavy­
duty
industry.
These
costs
and
EPA's
expected
level
of
activities
are
further
discussed
in
sections
2
and
3.
EPA's
budget
request
to
Congress
includes
the
budget
for
these
new
testing
levels
and
EPA
continues
to
believe
this
expected
level
of
activity
of
cost
and
activity
is
reasonable.

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
$
20,675
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
­
$
827
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.
2/
12/
04
15
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
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.

1.3
Authority
to
Collect
Fees
for
Manufacturers
What
We
Proposed:

Currently,
EPA
requires
all
manufacturers
to
pay
fees
for
certification
applications.
We
proposed
the
continuation
of
the
fees'
requirement.
We
defined
"
manufacturer"
as
"
all
entities
or
individuals
requesting
certification,
including,
but
not
limited
to,
Original
Equipment
Manufacturers
(
OEMs),
Independent
Commercial
Importers
(
ICIs),
and
vehicle
or
engine
converters."
[
67
FR
51403].

What
Commenters
Said:

Section
1.3.1.
Vehicle
Services
Consulting
(
VSC)
argues
that
section
217
does
not
grant
the
Agency
authority
to
assess
fees
for
"
used
vehicles,"
because
it
references
"
new
vehicles"
and
not
"
new
motor
vehicles,"
as
defined
in
section
216.
VSC
further
contends
that
it
is
unclear
whether
all
ICI
motor
vehicle
importations
are
subject
to
"
certification"
and
hence
to
certification
fees.

VSC
notes
that
the
Agency's
certification
assessment
fees
authority
may
derive
from
sections
203(
b)(
2),
206(
a),
216(
1)
and
217,
and
argues
that
section
203(
b)(
2)
does
not
require
"
certification"
for
ICI
vehicles
but
instead
that
such
vehicles
be
"
brought
into
conformity
with
the
standards."
VSC
also
asserts
that
in
some
instances,
such
as
where
there
is
no
"
resale,"
an
ICI
may
not
be
a
"
manufacturer,"
as
contemplated
by
section
216,
and
therefore
should
not
be
subject
to
fees.
3
For
example,
a
1995
motor
vehicle
imported
in
2003
by
an
ICI
(
for
resale
or
on
behalf
of
current
owner)
is
a
"
new
motor
vehicle."

2/
12/
04
16
Our
Response:

As
noted
in
EPA's
response
in
section
1.1
above,
EPA
believes
that
it
is
appropriate
to
recover
the
costs
incurred
when
it
provides
unique
and
special
benefits
identified
with
a
private
entity
as
opposed
to
the
general
public.
Similarly,
EPA
also
believes
that
the
costs
EPA
incurs
to
ensure
that
vehicles
imported
in
to
the
United
States
meet
the
requirements
of
the
Clean
Air
Act
and
regulations
thereunder
should
also
be
recovered
both
under
the
authority
of
section
217
of
the
CAA
and
the
IOAA.
Because
EPA
is
also
guided
by
section
213(
d)
when
it
has
implemented
emission
regulations
for
nonroad
engines
and
vehicles
and
the
enforcement
scheme
under
section
206,
207
and
208
that
are
noted
in
section
213(
d),
we
have
also
applied
the
definition
of
"
new"
in
the
same
manner
to
the
nonroad
sector
and
thus
believe
the
requirements
for
certification
of
all
imported
nonroad
vehicles
is
the
same
as
for
motor
vehicles
and
engines.
Thus
the
definition
of
"
new"
found
at
40
CFR
§
89.2,
etc.
is
similar
to
that
at
Section
216(
3).

Under
section
217,
EPA
is
authorized
to
assess
fees
for
"
new
vehicle"
or
"
engine"
certification
and
compliance
activities
pursuant
to
section
206(
a),
206(
b)
and
207(
c).
In
section
216(
3),
Congress
defined
"
a
new
motor
vehicle,"
as
meaning
"
with
respect
to
imported
vehicles
or
engines,
.
.
.
a
motor
vehicle
and
engine,
respectively,
manufactured
after
[
September
25,
1987]."
42
U.
S.
C.
§
7550(
3).
3
(
Emphasis
added).
Sections
206(
a),
206(
b)
and
207(
c)
are
applicable
to
"
new
motor
vehicles"
and
"
engines,"
and
as
noted
above
to
nonroad
as
well.
Thus,
contrary
to
VSC's
contention,
imported
vehicles
and
engines
are
subject
to
the
provisions
of
sections
206(
a),
206(
b)
and
207(
c)
and
therefore,
fees'
assessment
under
section
217.
As
set
forth
at
40
CFR
§
85.1503(
a),
any
"...
nonconforming
vehicle
or
engine
offered
for
importation
into
the
United
States
must
be
imported
by
an
ICI
who
is
a
current
holder
of
a
valid
certificate
of
conformity
...."
Section
85.1502(
a)(
3)
defines
a
certificate
of
conformity
as
that
document
issued
by
EPA
under
section
206(
a)
of
the
Act.

In
addition,
Congress
defined
a
"
manufacturer,"
in
section
216(
1),
as
"
any
person
engaged
in.
.
.
.
importing
[
new
motor
or
nonroad]
vehicles
or
[
new
motor
or
nonroad]
engines
for
sale,
or
who
acts
for
and
is
under
the
control
of
any
such
person
in
connection
with
the
distribution
of
[
such]
vehicles
or
engines
.
.
.
"
42
U.
S.
C.
§
7550(
1).
Thus,
an
ICI
is
a
"
manufacturer,"
to
the
extent
it
imports
and
is
involved
in
the
"
distribution"
of
imported
vehicles
in
the
United
States.
Also,
EPA
has
historically
considered
ICIs
as
manufacturers
under
section
216(
1).
Consequently,
we
have
also
historically
considered
ICIs
eligible
to
make
certification
applications.
(
See
for
example,
52
FR
36136,
36142).
Further,
this
definition
contains
no
exclusion
of
"
used
vehicles"
or
vehicles
that
are
not
for
resale.
Legislative
history
also
indicates
that
Congress
intended
Title
II
to
apply
to
all
imported
vehicles
"
whether
or
not
new
and
whether
or
not
imported
for
sale
or
resale."
1970
U.
S.
C.
C.
A.
N.
5356,
5368.
Because
these
new
imported
vehicles
and
engines
are
covered
by
certificates
then
the
vehicles
are
also
subject
to
the
other
protections
and
requirements
provided
by
the
CAA
including
warranty
and
recall,
selective
enforcement
audits,
etc.
and
in
this
2/
12/
04
17
way
EPA
insures
that
such
vehicles
and
engines
do
in
fact
conform
with
the
requirements
of
the
Act
as
required
under
section
203(
b).

Legislative
history
of
section
217
also
indicates
that
the
Agency
is
to
"
recover
the
costs
associated
with
operating"
compliance
and
certification
programs
from
"
foreign
and
domestic
manufacturers."
(
H.
R.
101­
490,
May
1990,
1990
U.
S.
C.
C.
A.
N.
3355).
Clearly,
Congress
would
have
expressly
limited
the
reach
of
section
217
had
it
intended
that
imported
but
used
vehicles
not
be
subject
to
the
fee
requirement.
However,
there
is
no
apparent
intention
to
limit
either
our
certification
and
compliance
program
or
our
fees'
authority.
As
previously
stated
in
section
1.1.
above,
section
217
authorizes
EPA
to
recover
the
costs
of
its
certification
and
compliance
program
activities
from
manufacturers.
See
also,
EMA,
20
F.
3d
1177
(
D.
C.
Cir
1994).
Therefore,
we
believe
we
are
authorized
to
recoup
the
costs
associated
with
imported
vehicles
and
engine
certification
activities
from
ICIs.
Thus,
the
Agency
disagrees
with
the
contention
that
section
217
does
not
grant
EPA
authority
to
assess
fees
for
certification
and
other
compliance
activities
that
goes
with
the
importation
of
"
used
vehicles."
Further,
we
believe
that
VSC's
reading
of
section
217
would
result
in
imported
vehicles
and
engines
being
subject
to
the
certification
and
compliance
requirements
under
section
206(
a),
206(
b)
and
207(
c)
but
not
certification
fees.
Allowing
such
a
reading
would
not
comport
with
Congressional
directive
that
EPA
recover
the
costs
of
compliance
and
certification
activities.

VSC
also
argues
that
it
is
unclear
whether
imported
vehicles
are
subject
to
the
certification
requirements
and
therefore
certification
fees.
Section
203(
a)
bars
the
importation
of
motor
vehicles
or
engines
into
the
United
States
unless
covered
by
a
certificate
of
conformity
issued
by
EPA.
"[
T]
he
importation
into
the
United
States,
of
any
new
motor
or
new
motor
vehicle
engine,
manufactured
after
the
effective
date
of
regulations
under
this
part
which
are
applicable
to
such
vehicle
or
engine
unless
such
vehicle
or
engine
is
covered
by
a
certificate
of
conformity
[
is
prohibited]."
42
U.
S.
C.
§
7522(
a)
(
emphasis
added).
This
section
expressly
prohibits
the
importation
of
vehicles
unless
covered
by
a
certificate
of
conformity.
There
is
no
other
limitation
on
this
prohibition
that
can
be
discerned
in
section
203(
a).

In
addition,
section
206(
a)(
3)(
A)
states,
in
pertinent
part,
that
in
the
case
of
an
imported
vehicle
or
engine,
"[
a]
certificate
of
conformity
may
be
issued
only
if
the
Administrator
determines
that
[
a]
person
has
established
.
.
.
that
any
emission
control
device,
system,
or
element
of
design
installed
on
or
incorporated
in
such
a
vehicle
conforms
to
the
applicable
requirements
of
[
section
202]."
42
U.
S.
C.
§
7525(
a)(
3)(
A).
This
section
authorizes
the
Agency
to
issue
a
certificate
of
conformity
for
only
imported
vehicles
or
engines
that
comply
with
the
applicable
standards
prescribed
under
section
202.
In
this
section,
the
requirement
for
coverage
by
a
certificate
of
conformity
for
imported
vehicles
is
also
readily
apparent.
There
is
no
other
specific
provision
in
the
Act
that
can
be
read
as
precluding
EPA
from
issuing
a
certificate
of
conformity
for
imported
vehicles
and
engines.
Rather,
the
relevant
provisions
indicate
that
imported
vehicles
and
engines
must
be
covered
by
a
certificate
of
conformity.
Also,
as
previously
stated
above,
EPA
has
always
considered
ICIs
as
manufacturers
and
therefore,
eligible
to
make
certification
applications.

In
addition,
"[
t]
he
1970
amendments
made
the
requirements
of
Title
II
applicable
to
any
2/
12/
04
18
imported
vehicle
or
engine
(
whether
or
not
new
and
whether
or
not
imported
for
sale
or
resale)
if
the
vehicle
or
engine
was
subject
to
the
standards
when
manufactured
(
or
would
have
been
so
subject
had
it
been
manufactured
for
importation)."
1970
U.
S.
C.
C.
A.
N.
5356,
5368
(
emphasis
added).
Therefore,
all
imported
vehicles,
"
whether
or
not
new,
or
imported
for
sale
or
resale"
must
meet
Title
requirements
which
includes
coverage
by
a
certificate
of
conformity
and
fees'
assessment.

Thus,
even
though
VSC
argues
that
applicability
of
the
certification
requirements
to
imported
vehicles
is
unclear,
both
sections
203
and
206
explicitly
require
coverage
by
a
certificate
of
conformity
of
imported
vehicles
and
engines.
We
believe
this
requirement
is
clearly
discernable
from
the
plain
text
of
these
provisions.
Also,
the
coverage
by
a
certificate
of
conformity
requirement
is
intended
to
ensure
that
imported
vehicles
meet
federal
emissions
standards.
VSC's
contention
would
mean
that
an
imported
vehicle,
as
compared
to
vehicles
manufactured
in
the
United
States,
need
not
meet
emissions
standards
prior
to
introduction
into
commerce
and
during
the
useful
life
of
the
vehicle.
This
would
not
be
consistent
with
the
statutory
objective
to
address
and
control
mobile
source
emissions.

VSC
further
argues
that
section
203(
b)
only
requires
that
vehicles
be
"
brought
into
conformity
with
the
standards,"
and
does
not
authorize
EPA
to
require
certification
for
ICI
vehicles.
Section
203(
b)
grants
EPA
discretion
to
allow
importation
of
nonconforming
vehicles.
"[
T]
he
Secretary
of
the
Treasury
and
the
Administrator
may
.
.
.
provide
for
deferring
final
determination
as
to
admission
and
authorizing
the
delivery
of
a
[
new
motor
vehicle
or
new
motor
vehicle
engine
offered
for
importation
into
the
United
States
in
violation
of
the
applicable
standards]
.
.
.
upon
such
terms
and
conditions
.
.
.
to
insure
that
any
such
vehicle
or
engine
will
be
brought
into
conformity
with
the
standards.
.
.
."
42
U.
S.
C.
7522(
b)(
emphasis
added).
This
section
merely
allows
for
our
deferment
of
the
final
determination
as
to
admission
of
an
imported
vehicle
pending
the
vehicle
being
brought
into
conformity
with
applicable
emissions
standards.
Bringing
an
uncertified
vehicle
into
conformity
with
standards
includes
an
ICI
applying
for
and
receiving
a
certificate
of
conformity
pursuant
to
section
206.
Therefore,
this
section
also
does
not
lend
support
to
VSC's
contention
that
an
issuance
of
a
certificate
of
conformity
to
an
ICI
is
not
required
for
used
vehicles
or
imported
vehicles
that
are
not
for
resale.

Section
1.3.2.
The
Motorcycle
Industry
Counsel
(
MIC)
contends
that
there
is
nothing
in
the
CAA,
its
legislative
history,
or
in
EPA
regulations
to
show
that
the
MVECP
benefits
motorcycle
manufacturers.
MIC
also
contends
that
the
"
benefits"
manufacturers
derive
from
EPA's
certification
and
compliance
program,
if
any,
is
not
unlike
a
tariff
or
tax,
in
other
words
one
must
pay
in
order
to
play,
or
receive
a
certificate.

Our
Response:

EPA
disagrees
with
this
comment.
As
stated
in
section
1.1.
above,
section
217
authorizes
the
Agency
to
collect
fees
associated
with
our
certification
and
compliance
activities.
As
also
earlier
mentioned,
EMA
indicates
that
the
certification
and
compliance
activities
for
which
EPA
is
collecting
fees
do
confer
a
specific
private
benefit
to
on­
highway
vehicle
and
engine
2/
12/
04
19
manufacturers.
Because
"
the
[
Agency's]
Compliance
Program
confers
a
specific,
private
benefit
upon
the
manufacturers,
EPA
can
lawfully
recoup
.
.
.
the
reasonable
costs
of
the
program."
EMA,
20
F.
3d
at
1180.

As
also
previously
mentioned
in
section
1.1.
above,
governmental
agencies
are
authorized
by
the
IOAA,
to
recover
costs
whenever
an
identifiable
recipient
derives
a
benefit
from
services
rendered
by
the
Agency.
"
A
certificate
of
approval
is
deemed
a
benefit
specific
to
the
recipient."
Id.
Thus,
MIC
is
wrong
in
asserting
that
our
certification
and
compliance
activities
do
not
confer
benefits
on
manufacturers
and
as
a
result
that
we
have
no
authority
to
collect
fees
for
such
activities.

Further,
contrary
to
MIC's
contention,
fees
assessed
and
recovered
by
a
governmental
agency
under
the
IOAA,
is
neither
a
tax
nor
a
tariff.
"
It
would
be
such
a
sharp
break
with
our
traditions
to
conclude
that
Congress
had
bestowed
on
a
federal
agency
the
taxing
power
that
we
read
the
[
IOAA]
narrowly
as
authorizing
not
a
`
tax'
but
a
`
fee.'"
National
Cable
Television
Association,
Inc.,
v.
U.
S.,
415
U.
S.
336,
341,
94
S.
Ct.
1146,
1149.

Section
1.3.3.
EMA
considers
the
Agency's
in­
use
testing
for
"
older
model
engines
that
are
no
longer
produced
or
sold,"
improper
and
"
gold­
plating,"
since
manufacturers
do
not
derive
any
benefits
from
such
engines.

Our
Response:

EPA
disagrees
with
this
comment.
Our
emission
standards
apply
over
the
useful
life
of
the
engine.
Our
compliance
programs,
which
include
certification,
selective
enforcement
audits
and
in­
use
testing,
seek
to
ensure
that
the
emission
requirements
are
met
over
the
life
of
the
engine.
"[
M]
anufacturer[
s]
benefit[]
from
second
and
third
stage
compliance
testing
because,
.
.
.
such
testing
is
integral
to
the
regulatory
scheme
under
which
each
engine
or
vehicle
model
must
be
recertified
annually."
EMA,
20
F.
3d
at
1181.
Consequently,
EPA
believes
that
manufacturers
benefit
from
the
in­
use
testing
requirements
of
the
Agency's
MVECP.
"[
S]
elective
enforcement
audits
and
in­
use
compliance
testing
are
.
.
.
services
that
the
EPA
renders
to
each
manufacturer
in
order
for
the
manufacturer
to
comply
with
the
Clean
Air
Act
[
and]
it
follows
that
the
manufacturer
obtains
a
benefit
from
the
entire
compliance
program
not
just
from
the
annual
certification."
Id.
at
1180.
This
service
applies
whether
or
not
the
manufacturer
retools
an
engine
model
and
produces
a
different
engine
for
future
model
years.

Although
EMA
specifically
mentioned
a
benefit
for
on­
highway
vehicles,
the
reasoning
used
would
also
lend
itself
to
nonroad
vehicles
and
engines.
Thus,
similar
to
highway
vehicles,
nonroad
vehicles
and
engine
manufacturers
also
derive
a
benefit
for
the
latter
phases
of
our
certification
and
compliance
programs.

1.4.
Other
Authority
Issues
What
We
Proposed:
2/
12/
04
20
Section
1.4.1.
EPA's
current
fees
regulation
at
40
CFR
86.903­
93
states
in
part
that
"[
n]
othing
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
provide
in
section
208
of
the
Clean
Air
Act."
In
the
proposal
to
today's
rule
the
same
language
can
be
found
at
40
CFR
85.2401(
d).

What
Commenters
Said:

EMA
states
that
the
Act
does
not
authorize
EPA
to
compel
manufacturers
to
conduct
inuse
testing
and
therefore
that
proposed
85.2401(
d)
is
superfluous
and
should
be
deleted.

Our
Response:

We
believe
the
existing
language
in
section
208(
a)
of
the
CAA
gives
EPA
the
authority
to
reasonably
require
certain
things
in
order
for
EPA
to
determine
whether
a
manufacturer
or
other
person
has
acted
or
is
acting
in
compliance
with
Part
A
and
Part
C
of
Title
II
of
the
CAA,
and
regulations
issued
thereunder.
We
also
believe
that
nothing
in
today's
rulemaking
in
any
manner
affects
EPA's
authority
under
section
208(
a)
or
other
authority
found
elsewhere
within
the
CAA.
For
this
reason
EPA
chooses
to
keep
the
language
in
85.2401(
d)
for
the
final
rule.

What
We
Proposed:

Section
1.4.2.
We
proposed
recovery
of
all
costs
incurred
by
the
Agency
in
conducting
the
MVECP.
These
costs
included
labor,
operating
and
program
costs.
(
See,
section
III
of
the
NPRM,
(
67
FR
51409)
and
the
Cost
Analysis
Document,
section
III.
A.).

What
Commenters
Said:

MIC
asserts
that
EPA
may
recover
only
the
reasonable
amount
to
cover
the
appropriate
portion
of
reasonable
costs
of
the
services
that
benefit
manufacturers.
It
then
describes
as
too
liberal
EPA's
interpretation
of
the
associated
costs
that
can
be
collected
for
our
certification
and
compliance
activities.
MIC
also
states
that
the
acquisition
of
real
property,
laboratory
facilities
or
equipment
are
cost
items
that
are
more
appropriately
handled
by
the
Congressional
budget
process
and
scrutiny.

Our
Response:

Under
section
217,
EPA
is
"
to
recover
all
reasonable
costs
to
the
Administrator
associated
with
[
the
MVECP]."
42
U.
S.
C.
§
7552(
a)
(
emphasis
added).
In
addition,
the
IOAA
authorizes
"[
t]
he
head
of
each
agency
.
.
.
to
establish[]
the
charge
for
a
service
or
thing
of
value
provided
by
the
agency
.
.
.
based
on
the
costs
to
the
government,
value
to
the
recipient,
public
policy
or
interest
served
and
other
relevant
facts."
31
U.
S.
C.
§
9701(
b).

We
believe
these
provisions
authorize
us
to
recover
the
reasonable
costs
that
are
4
See
Cost
Analysis
Document
starting
at
page
16
(
step
5
of
"
general
steps").

2/
12/
04
21
associated
with
our
activities
for
the
certification
and
compliance
requirements
mentioned
in
section
217(
a).
Further,
in
EMA,
the
court
found
that
"
EPA
must
calculate
the
cost
basis
for
the
fee
by
allocating
its
direct
and
indirect
expenses
to
the
smallest
practical
units
of
service."
EMA,
20
F.
3d
at
1181.
We
consider
our
labor,
operating
and
program
costs
that
are
associated
with
these
requirements
as
recoverable
costs.
Thus,
the
costs
of
real
property
and
laboratory
equipment
are
recoverable
to
the
extent
they
are
associated
with
the
services
EPA
provides
to
manufacturers
as
part
of
the
certification
and
compliance
program.

Further,
OMB
Circular
No.
A­
25
(
Circular),
which
was
issued
pursuant
to
the
IOAA,
provides
guidance
on
fees
assessment
for
services
rendered
by
Agencies.
It
directs
Agencies
to
ensure
that
fees
are
sufficient
to
recover
the
"
full
cost"
to
the
Government
of
providing
services
to
identifiable
beneficiaries.
It
explains
"
full
cost"
as
including
all
direct
and
indirect
costs.
It
also
includes
physical
overhead,
materials
and
supplies,
utilities,
rents
or
imputed
rents
on
land,
buildings,
and
equipment
as
indirect
costs.
(
Circular
at
p.
4).
Therefore,
we
believe
the
costs
of
acquiring
real
property,
laboratory
facilities
or
equipment
that
are
associated
with
the
MVECP
are
recoverable
costs.

Section
2:
Assessment
of
Costs
2.1
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.
4
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.

We
proposed
three
"
fee
categories":
1.
Light­
Duty,
which
includes
light­
duty
vehicles
and
trucks,
motorcycles,
and
because
of
similar
compliance
programs
medium­
duty
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,
5
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."

2/
12/
04
22
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:

Section
2.1.1.
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
beneficiary5,
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
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
6
EMA
at
1180.

2/
12/
04
23
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
as
explained
in
section
2.2
(
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
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).
6
The
court
clearly
differentiates
between
the
regulated
industry
versus
the
general
public.
7
Not­
to­
exceed
requirements
specify
that
engine
emissions
must
not
exceed
a
specified
value
for
any
of
the
regulated
pollutants.

2/
12/
04
24
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
lightduty
vehicle
costs,
and
thus
EPA
believes
this
is
an
appropriate
way
to
implement
section
217(
a).

What
Commenters
Said:

Section
2.1.2
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
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)
7
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
heavyduty
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).
2/
12/
04
25
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
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.
As
further
explained
in
section
2.2
below,
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.

2.2
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.
2/
12/
04
26
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
heavyduty
highway
certification
type.

Worksheet
#
1
shows
a
total
recoverable
cost
of
$
3,956,759
of
which
$
769,448
is
designated
as
Certification
and
Compliance
Division
(
CCD)
direct
program
costs
and
$
275,431
of
Laboratory
Operations
Division
(
LOD)
direct
program
costs.
Various
costs
are
included
within
the
indirect
program
costs
including
$
193,000
for
lab
modernization.
The
labor
costs
include
$
1,404,646
of
direct
costs
and
$
345,509
of
indirect
costs.
Worksheet
#
3
(
the
summary
sheet
for
LOD
which
is
located
in
Ann
Arbor),
which
added
with
revised
worksheet
#
4
equal
the
costs
noted
in
worksheet
#
1,
shows
an
additional
(
or
projected)
direct
labor
cost
of
$
224,055
and
an
indirect
total
of
$
249,785.
Worksheet
#
4
(
the
summary
sheet
for
CCD
which
is
located
both
in
Ann
Arbor
and
DC)
shows
that
no
costs
for
labor
are
incurred
in
Ann
Arbor
and
$
1,276,315
of
labor
costs
in
DC.
Worksheet
#
7
breaks
down
LOD's
additional
labor
needs
and
shows
that
2.75
total
full
time
equivalent
employees
(
FTEs)
will
be
required
to
perform
and
process
tests
in
Ann
Arbor.

Worksheet
#
10
sets
forth
the
price
of
the
various
components
included
in
the
Office
of
Transportation
and
Air
Quality's
(
OTAQ's)
Laboratory
Modification
Budget
Request
for
the
National
Vehicle
and
Fuel
Emissions
Laboratory
(
NVFEL)
with
a
total
cost
of
$
14,130,000.
Within
this
worksheet
are
the
costs
associated
with
developing
two
heavy­
duty
test
engine
sites
or
test
cells
with
a
total
cost
of
$
3,030,000
of
which
EPA
proposed
$
385,000
to
be
recoverable
and
amortized
over
10
years
at
a
cost
of
$
38,500.
For
those
components
that
are
planned
to
be
used
for
any
compliance
oriented
activities
(
that
may
or
may
not
also
be
used
for
"
non­
recoverable"
activities
such
as
regulatory
development,
etc.)
we
proposed
to
recover
the
full
costs
of
such
components,
again
at
a
cost
of
$
385,000.

The
Cost
Analysis
at
page
33
explains
the
Laboratory
Modernization
(
Lab
Mod)
costs
on
worksheet
#
10.
Included
was
a
total
cost
estimate
of
$
14,130,000
of
which
$
10,030,00
was
deemed
recoverable.
This
recoverable
portion
was
amortized
over
10
years
for
an
annual
recoverable
cost
of
$
1,003,000.
These
costs
were
allocated
to
the
light­
duty
and
the
heavy­
duty
highway
industries
using
the
actual
cost
allocation
method
according
to
the
program
for
which
the
equipment
was
purchased.
The
"
actual
cost"
allocation
method,
as
explained
further
at
page
110
of
the
Cost
Analysis,
is
used
when
the
costs
can
be
directly
attributable
to
an
industry
category.
For
example,
for
the
HDE
HW
category,
EPA
attributed
$
193,000
per
year
in
lab
modernization
costs
for
the
test
cells
associated
with
testing
such
engines.
Thus
worksheet
#
10
breaks
down
the
costs
by
various
pieces
of
equipment
and
their
purpose.
For
example,
under
the
Heavy­
Duty
Test
Engine
Sites
various
pieces
of
equipment
are
listed,
whether
such
equipment
will
be
used
in
test
cell
number
1
or
number
2
(
HDE
#
1
and
HDE
#
2),
and
whether
the
costs
of
such
equipment
are
recoverable
or
not.
The
total
costs
associate
with
the
Lab
Mod
for
the
two
heavy­
duty
test
cells
is
$
3,030,000
of
which
EPA
proposed
$
1,930,000
as
recoverable,
and,
amortized
over
10
years,
resulted
in
annual
cost
(
and
proposed
fee
collection)
of
$
193,000.
At
the
time
of
the
proposal
EPA
anticipated
using
both
test
cells
for
MVECP
activities
as
well
as
other
activities
and
proposed
recovering
the
full
costs
of
any
equipment
related
to
MVECP
activities
regardless
of
2/
12/
04
27
their
potential
use
for
non­
MVECP
activities.
Worksheet
#
3
and
worksheet
#
1
both
include
the
$
193,000
figure
for
the
lab
mod
costs
associated
with
the
heavy­
duty
test
cells.

The
core
testing
operations
costs
for
LOD
as
noted
on
worksheet
#
1
are
further
explained
on
worksheet
#
12,
including
a
breakdown
of
HDE
HW
costs
of
$
275,431
of
which
$
225,360
will
be
used
on
engine
procurement.
Separate
from
the
LOD
costs
for
lab
modification
and
core
testing
operations
costs
are
CCD's
programs
costs
as
listed
on
worksheet
#
13.
These
costs
include
"
In­
use
on­
vehicle
testing"
at
$
297,200
and
"
enhanced
engine
compliance
programs"
at
$
380,000.
The
enhanced
engine
compliance
program
costs
are
further
broken
down
in
worksheet
#
16
including
$
200,000
for
confirmatory
testing
for
certification,
$
30,000
for
selective
enforcement
audits,
and
$
150,000
for
in­
use
engine
dyno
testing.
This
program's
costs
are
discussed
again
and
further
clarified
within
section
2.3.

What
Commenters
Said:

Section
2.2.1.
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
revised
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.
Revised
worksheet
#
10
also
reflects
that
other
costs
associated
with
developmental
testing
are
not
labeled
as
recoverable.
As
further
noted
below,
2/
12/
04
28
EPA
has
further
refined
these
costs
and
has
eliminated
other
costs
not
determined
to
be
MVECP
related.

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:

Section
2.2.2.
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:

Section
2.2.3
addresses
the
issue
of
whether
EPA's
proposal
included
sufficient
information
regarding
whether
EPA
planned
to
conduct
HDE
compliance
testing
in
Ann
Arbor.
This
section
addresses
EMA's
concern
whether
EPA
actually
would
do
testing
at
Ann
Arbor
and
the
need
for
such
testing,
along
with
an
explanation
for
why
EPA
believes
the
cost
estimates
associated
with
such
testing
are
reasonable.

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
nonconformity
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
onhighway
industry.
This
amount
has
been
further
reduced
by
today's
final
rule.

As
also
explained
at
section
2.2.4,
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
2/
12/
04
29
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.

Section
2.2.3.
On
December
10,
2002,
EPA
met
with
EMA.
At
that
time,
EMA
once
more
sought
an
explanation
of
the
costs
attributed
to
HDE
testing
at
Ann
Arbor
which
are
reflected
in
LOD's
summarized
costs
on
worksheet
#
3
and
the
description
of
LOD's
core
testing
operations
description
on
worksheet
#
12.
As
explained
on
page
30
of
the
Cost
Analysis,
LOD's
direct
program
costs
include
the
costs
of
testing
and
vehicle
and
engine
procurement
for
such
tests,
including
those
costs
at
worksheet
#
12.
EMA
sought
clarification
of
worksheet
#
10
(
the
laboratory
modernization
costs
for
the
two
heavy­
duty
test
engine
sites)
and
how
those
costs
were
coordinated
with
the
LOD
costs
noted
above
and
with
LOD's
FTE
costs.

In
response
to
our
explanation,
EMA
submitted
additional
comments
contending
there
was
an
inadequate
explanation
on
the
HDE
testing
at
Ann
Arbor,
and
more
specifically
the
use
of
test
cells
at
Ann
Arbor.
EMA
further
contended
that
EPA
wrongly
seeks
to
recover
100
percent
of
the
costs
associated
with
the
advance
engine
test
cells
when
EPA
would
be
utilizing,
at
most,
only
25
percent
of
the
cells
for
compliance
activities.
EMA
stated
that
only
25
percent
of
the
costs
should
be
assessed
to
reflect
the
actual
amount
of
time
the
dyno
would
be
used
for
compliance
activities.
EMA
also
contended
that
our
proposal
does
not
evince
an
intent
to
conduct
HDE
testing
at
Ann
Arbor.

Our
Response
EPA's
original
cost
analysis
for
the
lab
modernization
plan
assessed
the
entire
cost
of
any
equipment
that
would
be
used
for
MVECP
services
and
this
plan
included
specifically
the
upgrading
of
two
heavy­
duty
engine
test
cells
(
HDE
#
1
and
HDE
#
2
on
worksheet
#
10)
and
the
allocation
of
the
upgrade
costs
to
the
heavy­
duty
highway
industry
which
EMA
now
questions.
At
the
time
of
the
proposal
EPA's
intent
was
to
use
each
of
two
test
cells
approximately
only
25
percent
of
the
time
for
compliance
activity
purposes.
In
their
pre­
modernization
condition
these
cells
were
not
suitable
to
perform
testing
that
could
be
used
for
compliance
or
certification
type
activities.
Since
the
two
cells
were
to
be
utilized
for
compliance
activities,
the
lab
equipment
and
facilities
of
each
test
cell
needed
to
be
upgraded
to
deliver
data
that
would
meet
requirements
for
certification
or
recall
purposes.
Since
the
upgrade
was
not
necessary
for
the
non­
compliance
test
activities
that
were
conducted
in
these
test
cells,
the
entire
costs
of
the
test
cells
were
included
in
the
fees
proposal
as
compliance
related
costs.

EPA
has
reexamined
its
plans
for
the
use
of
the
two
HDE
test
cells
and
has
determined
that
most
compliance
testing
will
occur
in
test
cell
HDE
#
2.
Although
EPA
had
originally
planned
to
use
both
test
cells,
HDE
#
1
and
HDE
#
2,
approximately
25
percent
of
the
time
for
compliance
testing,
EPA
has
determined
that
it
will
be
using
HDE
#
2
approximately
25
percent
for
compliance
testing.
Although
it
may
be
appropriate
to
assess
the
full
costs
of
the
test
equipment
in
the
Ann
Arbor
HDE
#
2
(
and
to
some
extent
that
equipment
shared
with
HDE
#
1
2/
12/
04
30
that
is
used
in
HDE
#
2)
to
fees
because
the
equipment
is
necessary
for
EPA's
enforcement
activities,
EPA
has
allocated
the
costs
as
noted
below.

EPA
is
guided
by
the
language
of
section
217(
a)
(
and
in
general
by
the
IOAA)
which
states
that
the
Administrator
may
establish
fees
based
on
such
factors
as
she
finds
appropriate
and
equitable,
and
in
this
instance
we
find
it
equitable
to
only
prorate
for
that
approximate
percentage
of
the
time
that
the
equipment
related
to
compliance
purposes
will
be
used
in
comparison
to
all
of
its
uses.
We
believe
that
prorating
the
costs
result
in
more
accurate
costs
than
those
presented
in
the
notice
of
proposed
rulemaking.

Most
of
the
HDE
HW
testing
will
take
place
in
HDE
#
2
test
cell
which
requires
the
additional
equipment
outlined
on
revised
worksheet
#
10.
In
cases
where
there
was
an
equipment
cost
solely
for
HDE
#
2,
such
as
the
heavy­
duty
engine
cell
controller
replacement,
the
analytical/
sampling
system
and
the
selective
catalytic
reduction
(
SCR)
load
controller,
one­
quarter
of
the
cost
was
assessed
to
the
heavy­
duty
fees
as
this
cell
will
be
used
for
compliance
purposes
one
quarter
of
the
time.
Therefore,
instead
of
$
1,150,000
being
recovered
by
EPA
for
these
pieces
of
equipment
as
proposed,
EPA
will
now
only
recover
$
287,500.

In
cases
where
there
was
an
equipment
cost
common
to
both
HDE
#
1
and
HDE
#
2,
such
as
the
diesel
engine
cell
cooling
control
and
the
oxides
of
nitrogen
(
NOx)
and
particulate
matter
(
PM)
measurement
methods
and
equipment,
one­
eighth
of
the
cost
was
assessed
to
determine
the
recoverable
portion.

EPA
disagrees
with
the
comment
that
our
proposal
does
not
evince
an
intent
to
conduct
HDE
testing
at
Ann
Arbor.
EMA
also
suggests
that
EPA
is
not
currently
conducting
any
such
testing
in
Ann
Arbor
and
questions
the
need
for
such
testing
in
light
of
EPA's
other
enhanced
compliance
programs
as
spelled
out
in
worksheet
#
16
and
because
the
manufacturers
themselves
will
be
conducting
their
own
in­
use
testing
program.
We
address
those
concerns
in
section
2.3
Our
Cost
Analyses
Document
contains
extensive
demonstration
of
costs
associated
with
HDE
HW
testing
at
Ann
Arbor
such
as
to
place
the
public
on
notice
of
our
intent
to
conduct
a
heavy­
duty
compliance
program.
For
example,
we
defined
"
direct
program
costs"
as
those
costs
for
compliance
work,
including
the
costs
of
testing
either
at
EPA's
lab
or
a
contracted
test
facility,
procurement
of
vehicles
or
engines
and
equipment
needed
to
conduct
the
tests
(
see
page
14
of
the
Cost
Analysis).
EPA
explained
that
in
some
cases
new
compliance
programs
are
being
planned.
We
also
explained
that
the
cost
of
testing
(
as
a
direct
program
cost)
to
be
performed
at
EPA's
lab
is
included
in
LOD's
portion
of
the
Cost
Analysis
and
are
not
included
in
CCD's
portion
(
see
page
40
of
Cost
Analysis).
EPA
provided
an
explanation
that
within
LOD
several
groups
exist,
including
the
"
Compliance
Development
and
Testing
Group"
and
the
"
Advance
Testing
Group"
and
that
recoverable
FTE
were
only
from
the
former
group
as
the
latter
group
conducts
work
based
on
developmental
testing
and
research
in
vehicle
technology,
thus
EPA
clearly
differentiated
between
the
two
and
provided
notice
for
the
types
of
labor
associated
with
compliance
testing
at
the
Ann
Arbor
facility.
(
See
page
44
of
the
Cost
Analysis).
In
addition,
additional
labor
needs
which
would
be
necessary
for
heavy­
duty
compliance
testing
in
Ann
Arbor
2/
12/
04
31
are
reflected
on
worksheet
#
7
(
now
replaced
by
revised
worksheet
#
7)
and
explained
at
page
46­
47
of
the
Cost
Analysis.
EPA
notes
that
in
its
revised
test
plan
fewer
FTE
will
be
required
to
conduct
compliance
testing
in
test
cell
#
2.

We
explained
that
the
NVFEL
laboratory
modernization
plan
includes
three
critical
testing
support
areas
requiring
new
instrumentation
and
upgrades,
including
critical
diesel
engine
standards
test
capability
(
including
testing
to
the
new
2004
HDE
standards
­
see
page
49
of
the
Cost
Analysis).
We
also
explained
that
the
"
critical
regulatory
development"
test
capability
is
not
involved
in
compliance
testing,
and
in
fact
the
intent
of
the
proposal
was
to
not
charge
fees
for
developing
that
capability.
We
provided
further
information
that
the
Ann
Arbor
heavy­
duty
engine
test
sites
will
be
required
to
test
not
only
the
2007
NTE
standards
but
also
both
the
current
emission
levels
and
the
new
2004
model
year
standards
(
see
page
50
of
the
Cost
Analysis).

EPA
also
disagrees
with
EMA's
contention
that
there
was
no
notice
of
the
amount
of
compliance
testing
to
be
conducted
at
the
upgraded
cells
since
we
clearly
set
forth
the
procurement
cost
of
HDE
HW
engines
as
a
component
of
LOD's
core
testing
operations
costs,
including
the
number
of
engines
to
be
procured
and
at
what
costs
(
see
page
52
of
the
Cost
Analysis).

What
Commenters
Said:

Section
2.2.4.
EMA
also
contends
that
EPA's
computation
of
expenses
at
Ann
Arbor
are
replicated
elsewhere
and
thus
result
in
"
double
dipping."
EMA
points
to
the
Agency
costs
for
conducting
HDE
confirmatory
tests,
by
outside
contractors,
which
is
reflected
as
$
20,000
or
$
30,000
per
engine
family
on
worksheet
#
16
of
the
Cost
Analysis,
and
questions
what
additional
certification/
compliance
activity
will
take
place
at
the
two
test
cells
in
Ann
Arbor.
In
addition,
EMA
asserts
that
the
use
of
contractors
renders
EPA's
attempt
to
collect
additional
facility
and
labor
costs
(
direct
program
costs)
for
such
testing
improper
since
EPA
will
not
incur
such
costs
when
outside
contractors
are
used.

Our
Response:

The
testing
listed
on
worksheets
#
10
and
#
16
is
not
double
counting
of
the
same
testing
but
represents
different
sets
of
testing
and
related
costs.
This
testing
will
allow
EPA
to
meet
its
testing
goals
for
the
heavy­
duty
industry.
See
further
discussion
of
this
in
section
2.3.

The
cost
analysis
reflects
the
costs
associated
with
EPA's
comprehensive
strategy
to
ensure
compliance
and
the
various
components
of
the
testing
plans
included
within
such
strategy.
EPA
plans
to
continue
with
the
heavy­
duty
screening
of
engines
in­
use
by
using
portable
emission
measuring
equipment
that
is
currently
being
conducted.
This
testing
is
designed
to
survey
the
industry
and
to
detect
possible
compliance
issues.
Independent
of
this
screening
testing,
we
will
also
be
conducting
confirmatory
certification
dyno­
testing
(
and
potentially
in­
use
dyno
testing
to
the
extent
it
is
not
conducted
elsewhere,
any
costs
estimated
to
be
incurred
at
Ann
Arbor
will
also
be
incurred
if
testing
is
conducted
elsewhere)
at
the
laboratory
in
Ann
Arbor.
This
testing
will
8
Note
that
the
final
costs
for
the
HDE
equipment
costs
is
$
38,500
per
year,
not
$
193,000
as
proposed.

2/
12/
04
32
consist
of
both
certification
confirmatory
testing
and
some
testing
of
in­
use
engines.
Because
of
possible
limitations
in
lab
accessibility
in
Ann
Arbor,
and
as
likely
follow
up
testing
to
the
screening
testing,
we
will
also
conduct
testing
at
a
contracted
facility.
Although
in
many
instances
EPA
believes
that
the
screening
testing
will
provide
a
sufficient
basis
for
making
compliance
determinations,
we
also
recognize
the
likely
necessity
of
continuing
to
test
engines
in
laboratory
conditions.
This
is
further
explained
in
section
2.3.

We
believe
that
this
testing
is
necessary
as
a
review
of
the
current
testing
plans
indicated
that
the
testing
for
the
heavy­
duty
industry
lags
behind
the
testing
that
is
conducted
on
the
lightduty
industry.
EPA
took
into
account
the
discrepancy
between
the
current
compliance
programs
for
the
two
industries,
the
need
for
additional
heavy­
duty
testing
based
on
recent
noncompliance
in
its
testing
plans
for
the
industry
and
on
the
degree
to
which
manufacturer
run
compliance
activities
programs
are
or
will
be
in
place
for
these
industries.
The
test
plans
include
the
screening
that
is
currently
being
conducted
as
well
as
additional
testing
that
would
be
conducted
at
the
Ann
Arbor
facility
and
testing
at
a
contracted
facility.

2.3
Costs
for
In­
use
Programs
What
We
Proposed:

We
proposed
continuance
of
the
Agency's
current
compliance
methods
for
light­
duty
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
in­
use
testing.
(
67
FR
at
51406­
51408).
Currently,
EPA
conducts
testing
of
in­
use
heavy­
duty
highway
engines
and
nonroad
compressionignition
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
proposed8
costs
for
the
in­
use
testing
conducted
at
EPA's
Ann
Arbor
facility
included
the
equipment
costs
listed
in
worksheet
#
10
($
193,000
per
year
for
heavy­
duty),
the
labor
listed
in
worksheet
#
7
(
2.75
FTE),
and
the
cost
of
procuring
in­
use
heavyduty
engines
listed
under
Engine
Procurement
­
Heavy­
Duty,
on
worksheet
#
12
($
225,360).
2/
12/
04
33
In
addition
to
the
new
testing
that
will
be
conducted
in
Ann
Arbor,
we
are
planning
an
Enhanced
Engine
Compliance
Program.
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
certification
confirmatory
testing,
selective
enforcement
testing,
and
in­
use
engine
dyno
testing
for
both
heavy­
duty
highway
engines
and
nonroad
CI
engines
at
costs
of
$
200,000,
$
30,000
and
$
150,000
respectively.

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.

Section
2.3.1.
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
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
9
Not­
to­
exceed
requirements
specify
that
engine
emissions
must
not
exceed
a
specified
value
for
any
of
the
regulated
pollutants.

2/
12/
04
34
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:

Section
2.3.2.
EMA
states
that
manufacturers
will
be
conducting
a
comprehensive
in­
use
not
to
exceed
(
NTE)
9
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
in­
use
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
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
compressionignition
engines
which
have
not
undergone
extensive
in­
use
scrutiny
and
assurances
of
durability.
Thus
we
believe
it
is
appropriate
to
establish
an
in­
use
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,
2/
12/
04
35
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
heavyduty
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
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:

Section
2.3.3.
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
2/
12/
04
36
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:

Section
2.3.4.
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:

As
noted
above
in
section
2.3.2,
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.

2.4
Costs
Too
High
for
Industry
What
We
Proposed:

As
earlier
mentioned
in
section
2.1,
the
Cost
Analysis
Document
contains
EPA's
in­
depth
analysis
of
the
recoverable
costs
associated
with
running
the
MVECP.

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
2/
12/
04
37
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
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:

Section
2.4.1.
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
heavy­
duty
engine
2/
12/
04
38
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:

Section
2.4.2.
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
lightduty
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
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
2/
12/
04
39
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:

Section
2.4.3.
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.

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.

What
Commenters
Said:

Section
2.4.4.
OPEI
and
ECHO
stated
that
there
are
a
lot
of
small
business
in
the
lawn
and
2/
12/
04
40
garden
engine
industry
and
these
businesses
may
be
unable
to
absorb
fees
costs
as
easily
as
other
industries.
OPEI
suggested
that
certification
fees
for
lawn
and
garden
engines
be
set
at
no
more
than
$
300
as
this
would
take
into
account
the
industries'
razor­
thin
profit
margin.
OPEI
further
stated
that
most
certificate
applications
are
carried
over
from
year
to
year
which,
OPEI
suggests,
costs
EPA
a
fraction
to
process
relative
to
a
new
certification
application.

Our
Response:

EPA
does
recognize
that
in
some
cases
the
full
fee
for
certification
may
present
an
unreasonable
burden
and
established
a
reduced
fee
to
provide
relief
to
manufacturers
of
smaller
engine
families.
The
reduced
fee
provision
should
help
small
business
that
certify
smaller
engine
families
for
a
limited
market.
Therefore,
EPA
does
not
see
fit
to
reduce
the
fee
for
the
lawn
and
garden
industry
to
$
300.

For
EPA's
response
to
the
relative
cost
of
carryover
applications,
see
section
8.3
below.

What
Commenters
Said:

Section
2.4.5.
The
Motorcycle
Industry
Council
stated
that
the
proposed
motorcycle
testing
is
adequately
funded
by
the
Agency's
existing
fee
and
that
even
considering
inflation,
EPA's
increased
costs
would
not
equal
the
proposed
fee.

Our
Response:

EPA's
future
plans
for
motorcycle
compliance
include
more
that
the
certification
screening
testing
that
is
being
conducted
today.
Worksheet
#
13
in
the
Cost
Analysis
includes
an
in­
use
motorcycle
compliance
program
which
includes
the
costs
of
motorcycle
procurement,
testing
and
computer
support.
The
cost
of
the
proposed
motorcycle
compliance
program
is
$
118,400.
The
motorcycle
fees
include
this
cost
as
well
as
the
costs
of
the
labor,
certification
and
other
services
all
outlined
in
the
Cost
Analysis
that
are
dedicated
to
the
motorcycle
industry.

Section
3:
Cost
Study
3.1
Number
of
Engine
Families
What
We
Proposed:

As
previously
mentioned
in
section
2.1,
we
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
2/
12/
04
41
request
type.
Thus,
for
example,
in
the
proposal
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.
(
Worksheet
#
2
of
the
revised
Cost
Analysis
available
in
Docket
A­
2001­
09
updated
the
cost
for
the
nonroad
CI
industry
to
$
1,205,895,
number
of
certificates
to
662
and
the
resulting
fee
for
that
industry
is
$
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
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:

Section
3.1.1.
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.

Our
Response:
2/
12/
04
42
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
reduction
of
fees
for
such
certificates.
For
NR
CI
we
have
also
revised
the
number
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
the
change
is
included
in
the
new
fees
shown
in
the
table
in
new
revised
worksheet
#
2
of
the
Revised
Cost
Analysis
available
in
Docket
A­
2001­
09
and
at
40
CFR
§
85.2405(
a).

Although
at
this
time,
EPA
believes
there
is
enough
certainty
with
regard
to
the
total
recoverable
costs
in
future
model
years,
EPA
recognizes
that
the
number
of
issued
certificates
"
divisor"
needs
to
be
adjusted
periodically
in
order
to
ensure
that
we
only
collect
the
appropriate
fee.
Therefore,
we
agree
with
the
suggestion,
made
by
the
Alliance/
AIAM,
that
EPA
monitor
the
number
of
certificates
issued
each
year
and
collect
a
fee
based
on
the
most
recent
information
and
2/
12/
04
43
an
average
of
several
years.
However,
we
do
not
believe
that
rulemaking
is
necessary
each
time
the
Agency
seeks
to
adjust
fees
based
on
the
number
of
issued
certificates.
Therefore,
in
this
rule,
we
are
setting
forth
the
methodology
by
which
future
calculations
will
be
made,
based
on
clearly
defined
criteria.
EPA
also
recognizes
that
the
industry
needs
to
know
the
applicable
fee
in
advance
of
the
effective
date.
Therefore,
by
today's
rulemaking,
EPA
is
implementing
a
fee
applicable
to
each
certification
request
type
that
is
applicable
from
the
effective
date
of
the
regulation
through
the
2005
calendar
year.
Starting
in
calendar
year
2006,
and
each
subsequent
year,
EPA
will
adjust
its
fees
based
on
both
changes
to
the
average
number
of
certificates
issued
from
the
prior
two
model
year
period
and
an
inflation
adjustment
factor.
The
inflation
adjustment
factor
is
discussed
in
section
4
below.

By
example,
for
any
certificate
received
in
the
2006
or
later
calendar
year
the
fee
will
be
adjusted
from
the
fee
applicable
to
the
previous
calendar
year.
Using
2006
calendar
year
as
an
example,
in
July
2004
EPA
will
examine
the
number
of
certificates
issued
for
each
certification
request
type
in
the
2002
and
2003
calendar
years,
average
the
two
years,
and
then
divide
this
new
number
into
the
fee
base
established
by
today's
rule.
The
fee
base
will
be
adjusted
by
the
inflation
factor
before
it
is
divided
by
the
new
certificates
number.
In
July
2005,
EPA
will
perform
the
same
task
for
any
certificate
submitted
in
the
2007
calendar
year,
and
so
on.
EPA
will
publish
the
new
fees
each
year
in
the
Federal
Register
and
will
issue
a
letter
to
the
manufacturers
notifying
them
of
the
new
fees.
See
section
4,
below,
for
a
further
discussion
of
how
this
annual
adjustment
regarding
the
number
of
certificates
will
be
made
for
each
certification
request
type,
including
those
for
nonroad
industries
in
the
"
Other"
category.

What
Commenters
Said:

Section
3.1.2.
EMA
stated
that
we
should
use
the
number
of
certificates
issued
in
2001
since
we
also
used
2001
fiscal
year
as
the
starting
point
for
determining
activities
and
costs
assessable
against
HDE
manufacturers.
EMA
further
stated
that
there
should
be
no
future
automatic
adjustments
for
certification
fees
based
on
whether
the
number
of
issued
certificates
varies
from
year
to
year
in
the
future.
Since
a
single
base
year
was
chosen
as
a
foundation
for
the
Agency's
cost
calculations,
the
marginal
cost
of
each
certificate
should
remain
similarly
fixed
based
on
the
number
of
issued
certificates
in
that
same
base
year.
Otherwise,
the
entire
cost
calculations
would
have
to
be
redone
based
not
only
on
future
numbers
of
annual
certificates
but
also
on
future
year
budgets
and
activity
allocations.
EMA
maintains
that
if
more
certificates
are
issued
in
one
year
than
another,
more
fees
will
be
received
and
if
less
certificates
then
less
fees
and
that
such
an
outcome
is
appropriate.

Our
Response:

EPA
disagrees
that
a
single
base
year
and
the
number
of
certificates
issued
that
year
should
be
chosen
as
a
foundation
of
the
fees
cost
calculation.
The
two
basic
components
of
certification
fees
are
labor
and
testing
costs.
These
costs
will
not
vary
each
year
as
a
result
of
the
number
of
certificates
that
are
issued
because
EPA
will
conduct
the
same
number
of
tests
that
are
outlined
in
the
cost
analysis
and,
furthermore,
the
same
number
of
FTE
will
be
dedicated
to
2/
12/
04
44
certification
review
and
testing.
The
FTE
will
adjust
the
amount
of
time
spent
on
each
application
to
the
number
of
applications
submitted.
Because
EPA
will
be
providing
the
same
services
it
is
important
for
EPA
to
collect
the
same
amount
of
fees
each
year.

EPA
will
be
adjusting
the
fees
annually
to
reflect
the
change
in
the
cost
of
labor
as
is
discussed
in
section
4.
The
costs
of
testing
and
the
indirect
costs
of
testing
and
labor
may
also
change,
most
likely
increase
with
inflation,
but
because
some
of
the
costs
are
fixed
by
contract
and
because
the
cost
changes
are
more
difficult
to
determine
each
year,
EPA
will
not
change
the
fees
based
upon
the
changes
to
these
costs.

3.2
Heavy­
duty
Highway
and
Nonroad
Compression­
ignition
Compliance
Activities
What
We
Proposed:

The
Cost
Analysis,
on
worksheet
#
16,
included
the
projected
costs
for
an
enhanced
engine
compliance
program
that
EPA
will
implement
for
heavy­
duty
highway
and
nonroad
compression­
ignition
engines.
It
includes
confirmatory
testing
for
certification,
selective
enforcement
audits
and
in­
use
dyno
testing
programs.
We
determined
the
costs
by
using
contractor
prices.

What
Commenters
Said:

Section
3.2.1.
EMA
described
the
costs
of
enhanced
testing
shown
on
worksheet
#
16
as
objectionable
and
improper
because
EPA
has
chosen
to
not
implement
such
programs
in
the
past
presumably
because
it
did
not
see
a
priority
or
clear
benefit;
nevertheless
EPA
now
chooses
to
do
so
at
the
manufacturers'
expense.
As
a
result,
the
commenter
further
asserted
that
EPA
must
demonstrate
the
need
and
cost­
effectiveness
of
these
new
programs
since
it
is
now
the
manufacturers
and
not
EPA
that
will
bear
the
expense.

Our
Response:

EPA,
in
planning
for
the
future,
determined
that
the
amount
of
compliance
oversight
devoted
to
the
heavy­
duty
industry
has
been
less
than
that
devoted
to
the
light­
duty
industry.
As
part
of
the
Agency's
plan
to
increase
compliance
oversight
for
this
industry,
we
intend
to
implement
additional
HDE
HW
and
NR
CI
compliance
programs
and
the
costs
of
these
programs
are
included
in
the
Cost
Analysis
Document.
The
procurement
of
in­
use
HDE
HW
engines
is
included
on
worksheet
#
12
and
the
enhanced
engine
compliance
program
is
outlined
in
worksheet
#
16.

Please
note
that
EPA
reassessed
its
testing
plans
from
those
set
forth
in
the
notice
of
proposed
rulemaking
to
a
level
that
is
more
representative
of
the
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.
EPA
has
used
the
information
on
resources
and
lab
capabilities
to
make
the
changes
and,
therefore,
the
current
rulemaking
more
2/
12/
04
45
accurately
represents
the
test
program
that
EPA
will
put
into
place.
The
changes
are
discussed
more
fully
in
the
Final
Rulemaking,
section
III.
B.
Revised
worksheets
in
the
updated
Cost
Analysis
reflect
the
new
costs
of
the
revised
testing
plan.

The
additional
compliance
activities,
the
in­
use
tests
that
will
be
conducted
at
NVFEL
and
those
outlined
on
revised
worksheet
#
16
that
will
be
performed
by
a
contractor
at
a
contracted
facility,
will
begin
to
level
the
playing
field
between
the
light­
duty
vehicle
and
engines
industries.
Furthermore,
recent
events
including
new
emission
standards
and
concerns
about
prior
noncompliance
with
existing
standards
have
caused
EPA
to
want
to
increase
the
oversight
devoted
to
this
industry.
New
standards
start
in
2004
and
2007
for
HDE
HW
and
call
for
use
of
types
of
emission
control
technology
not
previously
used
on
these
engines.
In
1998
consent
decrees
were
entered
into
with
almost
the
entire
HDE
HW
industry,
to
resolve
claims
of
several
cases
of
noncompliance.

In
view
of
the
new
standards
to
be
implemented
and
concerns
with
claims
of
noncompliance
and
the
lack
of
equity
in
testing
between
the
light­
duty
and
engine
industries,
EPA
determined
that
it
needed
to
devote
more
oversight
to
the
engine
industries.
We
believe
that
the
new
testing,
particularly
the
in­
use
tests,
will
be
an
effective
tool
for
promoting
compliance
with
EPA
emission
standards.
It
is
likely
that
in
the
future
EPA
will
conduct
more
engine
tests
than
outlined
in
the
cost
study.
Fees
will
not
be
changed
to
reflect
the
additional
cost
of
these
tests
without
a
new
rulemaking.

What
Commenters
Said:

Section
3.2.2.
EMA
states
that
EPA
estimated
the
costs
for
the
enhanced
testing
programs
listed
on
worksheet
#
16
to
be
$
380,000
for
HDE
HW
and
$
380,000
for
NR
CI.
EMA
notes
that
this
cost
element
alone
is
equivalent
to
$
2,723
per
HDE
HW
engine
family
and
$
630
per
NR
CI
engine
family.
In
addition,
EMA
states
that
the
extra
staffing
needed
to
plan
and
oversee
the
enhanced
testing
program
results
in
costs
of
$
5,093
per
certificate.

Our
Response:

As
discussed
in
the
response
to
Section
3.2.1.
above,
EPA
made
several
adjustments
to
the
projected
testing
listed
in
the
proposal
including
changes
to
the
Enhanced
Engine
Compliance
Programs
described
in
revised
worksheet
#
16.
The
revised
Enhanced
Engine
Compliance
Program
outlines
a
testing
programs
at
a
cost
of
$
165,000
for
the
HDE
HW
industry
and
$
300,000
for
the
NR
CI
industry.
The
cost
per
certificate
for
the
enhanced
engine
compliance
program
would
be
$
1,115
and
$
453
per
engine
family
for
the
HDE
HW
and
NR
CI
industries
as
proposed,
respectively.
EPA
believes
that
this
cost
is
justified
as
the
new
enhanced
compliance
program
is
needed
as
explained
in
the
response
to
section
3.2.1,
above.

EMA
also
referenced
and
expressed
concern
over
the
estimated
extra
staffing
costs
of
$
662,038.
However,
the
Agency
has
only
added
one
FTE
to
CCD
Washington,
DC,
at
a
cost
of
$
99,580
before
overhead
costs.
This
FTE
will
plan
and
oversee
the
enhance
engine
program.
2/
12/
04
46
Also
testing
will
be
conducted
at
contracted
facilities.

What
Commenters
Said:

Section
3.2.3.
With
regard
to
worksheet
#
7,
EMA
questioned
LOD's
added
expenses
of
2.25
direct
FTE
and
0.5
indirect
FTE
and
EMA
sought
clarification
as
to
how
and
why
the
Agency
allocated
these
FTE
to
the
HDE
HW
category
as
there
is
no
description
of
what
these
new
FTE
would
be
doing.
EMA
also
questioned
whether
the
additional
FTE
might
be
inappropriately
linked
to
the
contracted
out
testing
in
worksheet
#
16
or
whether
these
costs
are
already
incorporated
into
the
CCD
summary
sheet
at
worksheet
#
4.

Our
Response:

EPA
has
revised
LOD's
additional
labor
needs
to
1.25
direct
and
.25
indirect
FTE.
This
revision
reflects
the
labor
needed
to
conduct
the
revised
number
of
in­
use
HD
HW
tests
that
will
be
conducted
in
the
Ann
Arbor
laboratory.
The
1.25
direct
FTE
include
1.0
FTE
technician
to
conduct
the
testing
in
the
test
cells
and
0.25
FTE
to
provide
engineering
support.
The
indirect
FTE
of
0.25
reflects
the
need
for
data
management
support
for
the
test
cells.
The
FTE
are
not
linked
to
nor
duplicated
in
the
costs
for
the
enhanced
engine
testing
included
in
worksheet
#
16
as
the
additional
FTE
will
be
participating
in
testing
that
will
be
conducted
at
NVFEL.

What
Commenters
Said:

Section
3.2.4.
EMA
expresses
concerns
regarding
worksheet
#
12
and
the
entry
of
$
275,431
for
"
core
testing
costs"
for
HDE
HW
which
is
carried
over
to
worksheet
#
3
and
then
to
worksheet
#
1.
Of
these
costs
$
225,360
is
shown
for
heavy­
duty
engine
procurement.
EMA
contended
that
one
would
presume
that
this
cost
is
associated
with
an
in­
use
testing
program
even
though
the
nature
of
the
testing
is
not
described.
The
remaining
costs
appear
to
be
allocated
to
the
HDE
HW
category
using
the
FTE
method
and
this
cost
should
similarly
be
excluded
unless
EPA
provides
an
explanation
of
what
this
core
testing
is,
why
it
is
needed
and
how
it
complements
and
integrates
with
other
compliance
programs
that
exist
or
are
proposed
elsewhere
in
the
NPRM.
The
commenter
questions
whether
all
of
the
testing
programs
in
worksheet
#
12
and
worksheet
#
16
are
needed
in
addition
to
the
Agency's
existing
compliance
testing
protocols.

Our
Response:

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.
This
testing
will
be
conducted
at
the
Ann
Arbor
facility
and
will
be
conducted
in
addition
to
the
HD
HW
in
use
testing
listed
on
worksheet
#
16
in
which
one
in­
use
2/
12/
04
47
HD
HW
family
will
be
tested.
Therefore,
only
two
heavy­
duty
highway
engine
families
will
be
evaluated
out
of
the
estimated
148
that
are
certified
on
a
annual
basis.
Thus,
less
than
two
percent
of
the
certified
family
production
would
be
evaluated
for
in­
use
emissions
annually
by
EPA.
EPA
believes
that
this
in­
use
testing
is
justified
as
explained
in
the
response
to
section
3.2.1,
above.

3.3
General
Cost
Study
Comments
What
We
Proposed:

EPA's
cost
study
detailed
the
costs
the
Agency
incurred
in
implementing
the
MVECP.
We
set
forth
our
explanations
and
reasoning
in
detail
in
the
Cost
Analysis
Document.
For
example,
we
explained
how
we
translated
our
costs
into
the
proposed
fees.

What
Commenters
Said:

Section
3.3.1.
EMA
stated
that
without
detailed
knowledge
of
EPA's
budget
and
budgeting
process
it
is
difficult
to
comment
or
challenge
the
specific
cost
elements
in
EPA's
analysis.
As
stated
previously,
EPA
is
projecting
the
costs
of
future
programs
that
have
not
been
finalized
or
proposed.
As
such
EPA
has
failed
to
provide
commenters
with
the
"
necessary
information"
to
comment
in
an
adequately
informed
manner
on
the
NPRM.

Our
Response:

In
our
proposal,
we
explained
the
specific
components
of
the
MVECP.
(
See
67
FR
at
51406­
08).
As
earlier
mentioned
in
section
2
we
also
conducted
a
cost
analysis
to
determine
the
costs
associated
with
our
certification
and
compliance
program
and
set
forth
our
analysis
in
the
Cost
Analysis
Document.
It
describes
EPA's
current
costs
and
projected
costs
for
the
identified
program
components.
As
earlier
mentioned
in
section
2,
we
projected
our
costs
to
2003
using
the
best
information
available
at
the
time
that
the
cost
analysis
was
written.
Wherever
possible,
explanations
were
included
to
detail
the
source
of
the
information.
Thus,
we
believe
that
we
have
"
identif[
ied]
the
components
of
the
[
MVECP]
and
provide[
d]
a
brief
explanation
of
why
each
component
is
a
part
of
the
[
MVECP]
program."
American
Medical
Association
v.
Reno,
57
F.
3d
1129,
1135,
(
D.
C.
Cir.).

We
also
believe
that
the
Agency's
budget
is
too
general
in
nature
and
as
such
does
not
contain
the
level
of
specificity
and
explanations
we
have
set
forth
in
the
Cost
Analysis
Document.
This
is
because
the
Agency's
budget
is
prepared
to
reflect
the
divisional
levels
and
also
generally
entails
resource
allocation
issues.

What
Commenters
Said:

Section
3.3.2.
EMA
states
that
the
fee
assessments
would
recover
EPA's
total
cost
in
procuring
equipment
such
as
"
computer
hardware/
software",
"
in­
use
on­
vehicle
testing"
and
"
on­
vehicle
2/
12/
04
48
testing
units
purchase"
as
listed
on
worksheet
#
13.
EMA
states
that
it
presumes
that
this
is
for
the
initiation
of
portable
emission
testing
or
"
ROVER­
type"
in­
use
testing
to
enforce
the
Agency's
NTE
requirements
and
goes
on
to
state
that
this
is
inappropriate
because
the
NTE
requirements
do
not
take
effect
for
heavy­
duty
highway
engines
until
2007
and
have
not
been
proposed
for
NR
CI
engines.
EMA
further
contended
that
the
Agency
was
seeking
to
recover
these
"
one­
time"
procurement
costs
annually.

Our
Response:

The
costs
that
EMA
specifically
refers
to
are
for
equipment
required
for
EPA's
engine
emissions
in­
use
screening
testing.
EPA
currently
uses
portable
emissions
test
equipment
for
screening
in­
use
engines
for
compliance
with
the
applicable
emissions
standards
and
the
defeat
device
prohibition,
not
for
compliance
with
NTE
emission
standards
as
suggested
by
EMA.
EPA
plans
to
use
this
tool
to
refer
engines
that
are
suspected
of
noncompliance
to
be
tested
on
engine
dyno
either
in
the
AA
lab
or
at
a
contracted
facility.
For
this
reason,
the
cost
of
the
equipment
is
appropriate.

Portable
emissions
test
equipment
is
a
very
effective
screening
tool.
The
equipment
can
collect
a
significant
amount
of
data
from
engines
without
having
to
take
the
engines
out
of
service.
EPA
plans
to
increase
its
number
of
testing
units
and
expand
the
screening
program.
The
costs
of
the
equipment
included
in
the
cost
study
are
recurring
costs
as
EPA
will
need
to
buy
additional
testing
units,
replace
outdated
and
damaged
equipment
and
will
have
to
maintain
of
the
units
that
have
been
purchased.

Section
4:
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:
2/
12/
04
49
Section
4.1.1.
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:

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
10
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.

2/
12/
04
50
each
year
that
tracks
the
inflation
rate,
EPA
is
not
adjusting
such
direct
program
costs.

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
CPI10.
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
table
below
represents
the
labor
costs
and
the
fixed
costs
for
each
certificate
type.
The
fixed
costs,
represented
in
the
F
row,
are
those
items
in
the
cost
study
that
are
either
amortized
or
otherwise
may
be
affected
by
variables
beyond
inflation.
These
costs
are
determined
from
worksheet
#
1
and
include
a
total
of
all
"
operating
costs"
(
both
indirect
and
direct)
and
thus
does
not
include
the
labor
costs
and
overall
EPA
overhead
costs
on
worksheet
#
1.

The
labor
costs,
those
that
will
be
affected
by
the
CPI,
are
represented
in
the
L
row.
These
are
the
costs
that
will
increase
or
decrease
with
the
CPI.
These
labor
costs
were
determined
from
worksheet
#
1
and
the
total
labor
(
direct
and
indirect)
costs
associated
with
each
fee
category
ICI
LD
MC
HW
HD
HW
NR
CI
Other*

F
345,355
6,189,546
226,013
1,518,583
567,034
178,273
L
264,980
4,732,440
172,829
1,750,155
545,160
548,081
*
This
fee
category
continues
to
include
the
costs
associated
with
MVECP
services
for
the
marine
SI
inboard/
sterndrive
industry
although
the
certification
fees
are
not
being
finalized
for
that
marine
SI
inboard/
sterndrive
certification
type
by
today's
rule
(
see
section
1.2
for
further
discussion).
At
the
time
the
final
emissions
rule
for
this
certification
type
is
proposed
and
becomes
final,
EPA
will
reexamine
whether
approximately
25
certificates
per
year
will
be
issued
to
this
certification
type.
The
other
certification
types
covered
in
the
"
Other"
category
will
not
be
charged
for
any
costs
(
fixed
or
labor)
associated
with
the
marine
SI
inboard/
sterndrive
certification
type.

The
total
cost
for
each
certificate
type
commencing
in
2006,
and
each
year
thereafter,
will
be
determined
by
multiplying
the
labor
costs
(
as
noted
in
the
table
above)
for
each
fee
category
by
2/
12/
04
51
the
CPI
ratio
of
the
calender
year
(
CY)
that
the
fees
will
be
effective
(
minus
two
years)
to
the
CPI
of
calendar
year
2002,
then
adding
the
fixed
costs.
The
total
of
the
adjusted
labor
costs
plus
the
fixed
costs
are
then
multiplied
by
the
existing
overhead
rate
of
16.9
percent.
This
is
similar
to
our
proposed
method
except
that
we
will
now
be
adjusting
only
our
labor
costs.
EPA's
overall
overhead
costs
are
not
adjusted.
We
are
also
implementing
this
automatic
adjustment
in
the
2006
calendar
year
instead
of
the
proposed
2005
in
order
to
provide
a
stability
period
before
the
fees
are
adjusted.
As
explained
below
in
section
4.1.4,
for
administrative
simplicity,
EPA
will
make
annual
adjustments
by
"
calendar
year"
rather
than
"
model
year."

For
each
fee
category
EPA
will
determine
the
fee
for
applications
submitted
during
any
calendar
year
starting
in
2006
and
each
year
thereafter
using
the
formula
below:

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

The
first
year
that
the
fees
will
increase
is
2006.
That
year
EPA
will
determine
the
new
fees
using
the
following
formula:

Fee2006=
[
F
+
(
L
*
(
CPICY2004/
CPI2002))]
*
1.169
/
[(
cert#
2003
+
cert#
2002)
*
.5]

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
=
EPA's
16.90
percent
overall
overhead
cost
cert#
MY­
3
=
the
total
number
of
certificates
issued
for
a
fee
category
three
years
prior
to
the
model
year
for
applicable
fees
(
Feecy)
cert#
MY­
4
=
the
total
number
of
certificates
issued
for
a
fee
category
four
years
prior
to
the
model
year
for
the
applicable
fees
(
Feecy)

For
example
and
by
way
of
a
hypothetical,
to
determine
the
applicable
fee
for
LD
ICIs
for
any
certification
application
received
in
calendar
year
2006,
based
on
a
fixed
cost
of
$
345,355
and
a
labor
cost
of
$
264,980,
a
CPI
in
2002
(
December
2002)
of
"
180.9"
and
a
CPI
in
July,
2004
of
"
183.1"
(
this
number
represents
the
CPI
in
February
2003
and
EPA
will
use
the
actual
CPI
number
for
July
2003
once
it
as
been
determined
by
the
Dept.
of
Labor,
since
determined
to
be
183.9)
,
95
certificates
issued
in
2003
and
85
certificates
issued
in
2002,
the
formula
would
be:

Fees
2006(
LD
ICI)
=
[$
345,355

(
$
264,980
(
183.1/
180.9))]
*
1.169/
[(
95

85)
*
.5]
2/
12/
04
52
This
equals
$
7,969
(
all
rounding
of
numbers
should
occur
at
the
end
of
the
calculation
and
the
final
dollar
amount
of
the
new
fee
will
also
be
rounded
up
or
down
to
the
nearest
dollar)
and
represents
a
cost
decrease
per
ICI
certificate
of
$
425
from
the
fee
being
finalized
today
which
will
only
apply
from
the
effective
date
of
the
rule
through
the
2005
calendar
year.

Currently
one
can
determine
the
CPI
numbers
by
going
to
the
Bureau
of
Labor
Statistics
website:
(
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.

EPA
also
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.

What
Commenters
Said:

Section
4.1.2.
Some
commenters
argued
that
automatic
fee
increases
would
reduce
EPA's
incentive
to
provide
more
efficient
MVECP
services
and
thus
would
amount
to
"
gold
plating"
which
Congress
admonished
against.

Our
Response:

EPA
does
not
believe
that
automatic
fee
increases
would
amount
to
"
gold­
plating,"
rather
EPA
is
recognizing
that
annual
adjustments
to
its
labor
costs
are
a
reality
and
that
in
order
to
recover
its
actual
costs
in
a
timely
manner
that
an
automatic
adjustment
best
serves
this
function.
We
believe
that
the
intent
of
both
the
IOAA
and
section
217
is
for
EPA
to
continue
to
collect
its
full
actual
costs
and
to
do
so
in
a
reasonable
and
timely
manner;
EPA
does
not
believe
it
timely
to
periodically
evaluate
its
labor
costs
(
in
light
of
inflation)
and
issue
subsequent
new
fees
rules.
The
result
of
such
practice
would
be
for
EPA
to
forego
collecting
a
significant
portion
of
its
costs.
EPA
continues
to
strive
to
provide
its
services
in
an
efficient
manner
and
recognizes
that
other
cost
adjustments
may
be
necessary
in
the
future
and
will
at
that
time
conduct
an
additional
cost
study
and
rulemaking
if
significant
changes
in
its
costs
have
occurred.

What
Commenters
Said:

Section
4.1.3
Two
commenters
suggested
that
any
adjustments
to
fees
should
be
done
through
periodic
rulemaking
and
be
based
on
actual
rather
than
assumed
costs.
Otherwise
there
is
no
incentive
for
the
Agency
to
review
its
actual
program
to
determine
the
latest
actual
costs
of
the
2/
12/
04
53
program.
One
of
the
commenters
noted
that
even
the
number
of
certificates
that
are
issued
by
EPA
could
have
a
more
significant
effect
than
changes
due
to
inflationary
increase.

Our
Response:

EPA
agrees
with
the
comment
that
the
number
of
certificates
that
are
issued
could
have
a
significant
effect
on
the
amount
of
fees
that
should
be
charged
per
certificate
and
addresses
that
issue
in
section
3.1.

As
noted
in
the
discussion
in
section
3.1,
EPA
is
adopting
a
provision
to
adjust
fees
based
on
any
potential
change
in
the
number
of
certificates
starting
in
the
2006
calendar
year
and
will
employ
a
similar
methodology
as
the
annual
inflation
adjustment
and
will
perform
both
at
the
same
time.
The
fee
amount
per
certificate
will
be
determined
by
dividing
the
total
cost
for
each
certificate
type
(
as
determined
under
the
inflation
calculation
noted
above)
by
the
"
rolling
average"
of
the
number
of
certificates
issued
by
EPA
for
the
model
years
three
and
four
years
preceding
the
calendar
year
that
the
fees
will
become
effective.

EPA
is
committed
to
the
objectives
of
recovering
its
actual
costs
in
a
timely
manner
and
in
providing
fee
payers
proper
notice
of
the
amount
of
fees
that
are
required
when
they
apply
for
certification.
EPA
anticipates
that
it
will
have
an
opportunity
to
make
any
necessary
adjustments
to
the
fees
regulation
during
the
course
of
several
future
rulemakings.
However,
EPA
disagrees
with
the
commenters
suggestions
that
any
adjustments
should
be
done
through
a
periodic
rulemaking.
The
clear
formula
that
EPA
has
provided
by
today's
rulemaking
provides
a
predetermined
basis
by
which
to
determine
adjustments
to
fees
based
on
any
change
in
the
number
of
certificates
or
changes
in
the
costs
of
labor
to
provide
the
same
services
as
are
provided
currently.
The
changes
in
the
costs
of
labor
(
for
the
same
number
of
employees)
is
based
on
a
very
conservative
formula
of
the
annual
CPI.
EPA
believes
this
is
a
fair
and
reasonable
process
for
adjusting
fees
and
avoids
unnecessary
and
possibly
untimely
rulemaking
(
a
rulemaking
not
done
in
time
to
reflect
changes
in
the
number
of
certificates
or
labor
costs)
that
may
prove
inefficient.

In
addition,
EPA
will
issue
a
notice
at
least
15
months
before
the
calendar
year
in
which
new
fees
are
owed
which
will
notify
certification
applicants
of
the
new
fees.
As
discussed
in
section
3.1
regarding
the
number
of
engine
families
or
certificates
issued
within
a
certification
request
type,
EPA
plans
to
make
this
inflation
adjustment
calculation
at
the
same
time
as
the
calculation
of
the
number
of
certificates
and
will
announce
both
adjustments
together.
In
other
words,
EPA
will
analyze
the
adjusted
costs
based
on
inflation
and
also
determine
the
new
average
number
of
certificates.

What
Commenters
Said:

Section
4.1.4.
A
commenter
also
expressed
concern
with
EPA's
proposal
to
issue
notices
of
fee
adjustments
through
a
guidance
letter
on
grounds
that
the
letter
will
not
provide
adequate
notification
to
manufacturers
and
will
provide
no
adequate
opportunity
for
public
review
and
2/
12/
04
54
comment.
The
commenter
further
asserted
that
manufacturers
would
need
at
least
15
months
notice
prior
to
the
model
year
commencement.
EPA
notes
that
this
same
commenter
suggests
that
a
manufacturer
would
need
to
receive
notice
by
October
1,
2003
which
would
be
15
months
in
advance
of
January
1,
2005.
This
would
be
impractical
since
a
manufacturer
could
receive
a
certificate
for
model
year
2005
on
January
2,
2004
and
it
could
receive
such
certificate
if
it
submitted
its
application
by
November,
2003.

Our
Response:

EPA
wishes
to
clarify
that
the
fees
adjustment
formula
as
proposed
and
finalized
today,
is
a
self­
implementing
mechanism
(
in
fact,
the
fee
payer
is
able
to
perform
the
CPI/
labor
calculation
based
on
the
formula
set
forth
in
today's
regulation
and
the
effect
of
the
number
of
certificates
is
also
predetermined).
As
such,
EPA
plans
to
issue
a
letter
providing
information
to
the
manufacturers
of
the
upcoming
rates
approximately
16
months
before
they
become
effective
by
operation
of
today's
rule.
EPA
believes
this
will
provide
reasonable
opportunity
for
manufacturers
to
make
necessary
preparations
for
paying
any
adjusted
fees
at
time
of
application
for
certification..

Because
EPA
proposed
the
basis
(
and
formula)
by
which
fees
will
be
adjusted
for
inflation
and
it
involves
a
relatively
ministerial
collection
of
facts
and
application
to
the
formula
we
continue
to
believe
that
the
appropriate
mechanism
by
which
to
adjust
such
fees
is
by
this
mechanism
rather
than
a
new
rulemaking
which
would
only
perform
a
similar
task.
By
today's
rule
fee
payers
will
be
informed
of
the
fees
applicable
until
2006
and
will
know
how
fees
will
be
adjusted
on
an
annual
basis
(
for
variable
costs
as
explained
above)
by
operation
of
today's
rule.

However,
because
both
EPA
and
manufacturers
may
be
involved
in
the
submitting,
processing,
issuing
and
receiving
certificates
for
different
model
years
at
the
same
time,
and
because
EPA
is
attempting
to
recover
the
costs
for
actual
services
provided
at
a
given
point
in
time
we
believe
it
is
reasonable
to
adjust
fees
by
calendar
year
rather
than
by
model
year.
This
will
avoid
the
confusion
regarding
the
amount
of
fees
that
are
owed
and
whether
the
certification
applications
were
submitted
before
or
after
EPA's
adjustment.
Because
of
the
overall
timing
of
this
rule
we
also
believe
it
is
appropriate
to
implement
the
fee
adjustment
starting
in
the
2006
calendar
year.
Therefore,
starting
in
calendar
year
2006,
for
any
certification
application
that
is
received
on
January
1,
2006
and
thereafter
(
until
fees
are
adjusted
for
calendar
year
2007
and
certification
applications
are
submitted
on
January
1,
2007
and
thereafter,
etc.)
EPA
will
issue
a
letter
approximately
16
months
before
the
applicable
calendar
year
informing
manufacturers
of
the
adjustment
in
fees.

Section
5:
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
2/
12/
04
55
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:

Section
5.1.1.
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
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
MY2004,
or
2005)
submitted
and
received
on
or
after
March
1,
2004,
or
more
than
60
days
after
publication
11For
ICIs,
the
requirement
of
ORVR
and
OBD
systems
depend
on
the
age
of
vehicle
and
model
year.
ICIs
should
check
with
their
EPA
certification
representative
for
the
vehicle
or
engine
model
year
certification
requirements.

2/
12/
04
56
of
this
rule
in
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.

What
Commenters
Said:

Section
5.1.2.
One
commenter
expressed
concern
that
manufacturers
will
have
no
way
of
knowing
whether
their
applications
have
been
received
and
deemed
complete
before
the
rule
becomes
final,
and
that
potential
delays
in
EPA's
review
of
the
applications
could
result
in
an
undue
increase
in
fee
or
delays
in
determining
the
appropriate
fee.
Instead,
EPA
should
impose
new
fees
for
the
model
year
following
the
model
year
in
which
the
final
rule
is
published,
with
at
least
16
months
prior
to
the
January
1
of
the
same
model
year.

Our
Response:

Once
a
complete
application
is
submitted
to
EPA
the
length
of
time
it
takes
to
review
the
application
will
not
be
a
factor
in
meeting
the
effective
date
deadline.
Follow
up
questions
or
clarification
questions
pertaining
to
complete
applications
will
not
be
a
factor
in
meeting
the
effective
date
deadline.
As
long
as
a
complete
application
is
submitted
before
the
effective
date
the
manufacturer
may
pay
the
current
fee,
or
in
the
case
of
nonroad
manufacturers
no
fee
payment
would
be
required
at
that
time.

EPA
maintains
that
manufacturers
must
submit
a
complete
certification
application
in
order
to
be
considered
meeting
the
effective
date
deadline.
A
complete
application
may
slightly
vary
among
the
various
industry
types
but
in
general
a
complete
certification
application
includes
basic
information
about
the
engine
family/
test
group,
emissions
test
data,
certification
levels,
applicable
emission
standards,
and
information
on
emission
control
components.

For
light­
duty
vehicles
a
complete
application
includes
a
summary
sheet
of
emissions
test
data
and
basic
information
on
test
group,
certification
levels,
applicable
emission
standards,
carryover
information,
auxiliary
emission
control
device
(
AECD)
information,
description
of
emission
control
components
used,
descriptions
and
EPA
approvals
for
On­
Board
Vapor
Refueling
(
ORVR)
and
On­
Board
Diagnostics
(
OBD)
systems.

For
ICIs,
the
complete
application
for
certification
should
contain
a
summary
of
the
emissions
test
data,
city
and
highway
fuel
economy
(
mpg)
data,
evaporative
test
data,
test
vehicle
description,
a
description
of
vehicles
covered
by
a
certificate,
50K,
100K,
and
120K
Deterioration
Factors
(
DFs),
applicable
emissions
standards,
statements
of
compliance
for
Cold
CO
and
the
Supplemental
Federal
Test
Procedure
(
SFTP)
and
EPA
approvals
for
ORVR
and
OBD
systems11.
2/
12/
04
57
A
complete
heavy­
duty
vehicle
and
engine
application
includes
basic
information
on
the
engine
family,
emission
limits
for
Average,
Banking
&
Trading
(
AB&
T)
families,
emissions
test
data,
certification
levels,
applicable
emission
standards,
information
on
where
the
testing
was
performed,
carryover
information
(
if
applicable),
AECD
description,
a
detailed
description
of
all
emission
control
components,
parts
listing,
parts
numbers,
emission
control
components
description,
copy
of
maintenance
instructions
to
be
provided
to
the
purchaser,
copy
of
the
emissions
label,
and
a
signed
statement
of
compliance.

A
complete
nonroad
application
includes
basic
information
on
the
engine
family,
emission
limits
for
AB
&
T
families,
emissions
test
data
(
including
evaporative
data
where
required)
,
certification
levels,
deterioration
factors,
applicable
emission
standards,
information
on
where
the
testing
was
performed,
carryover
information
(
if
applicable),
AECD
description,
a
detailed
description
of
all
emission
control
components,
parts
listing,
parts
numbers,
listing
of
model
applicability,
emission
control
components
description
and
description
of
operation,
and
a
signed
statement
of
compliance,
description
of
the
test
procedure
used,
special
or
alternative
test
procedure
description
if
applicable,
operating
cycle
and
the
service
accumulation
period
necessary
to
break­
in
the
test
engines
and
stabilize
emission
levels,
scheduled
maintenance,
description
of
adjustable
operating
parameters,
copy
of
maintenance
instructions
to
be
provided
to
the
purchaser
and
a
copy
of
the
emissions
label,
and
a
durability
demonstration
for
any
after­
treatment
device
used
in
an
engine
family.

In
summary,
complete
applications
as
described
above
must
be
submitted
before
the
effective
date
in
order
to
fall
under
the
pre­
existing
fee
amounts.
In
addition,
the
time
required
for
EPA
to
review
the
application
will
not
be
a
factor
in
meeting
the
effective
date.
As
long
a
complete
application
is
submitted
before
the
effective
date
takes
place,
the
current
fee
regulations
would
still
apply
to
that
application.
Incomplete
applications
or
applications
with
major
pieces
of
information
missing
will
not
be
considered
complete.
If
an
incomplete
application
is
submitted
a
week
before
the
rule's
effective
date,
manufacturers
should
be
prepared
to
pay
the
new
fees
for
that
application.

What
Commenters
Said:

Section
5.1.3.
One
commenter
stated
that
the
title
to
40
CFR
85.2405(
a)
­
Fees
for
the
2003
and
2004
model
years
­
may
be
misleading
since
the
fees
proposed
apply
only
to
certain
2003
engine
families
(
those
submitted
after
the
effective
date
of
the
new
fees
rule).

We
have
revised
the
title
to
40
CFR
85.2405(
a)
to
read
"
Fees
for
the
2004
and
2005
calendar
years."
Because
of
the
different
certification
time
periods
during
the
calendar
year
in
which
various
industry
types
choose
to
certify
we
continue
to
believe
it
most
appropriate
to
make
the
new
fees
applicable
at
a
point
in
time
where
new
costs
are
incurred
and
regardless
of
what
model
year
any
manufacturer
may
be
certifying.
We
have
changed
the
title
to
also
include
the
2005
calendar
year
as
EPA
will
be
collecting
the
same
amount
of
fees
from
the
effective
date
through
the
2005
calendar
year
(
we
will
not
be
adjusting
fees
until
the
2006
calendar
year
and
have
thus
changed
the
title
to
40
CFR
85.2405(
b)
to
read
"
Fees
for
the
2006
calendar
year
and
2/
12/
04
58
beyond."

As
explained
in
section
5.1.2,
any
complete
certification
applications
(
submitted
for
model
year
2004,
or
2005)
which
is
submitted
and
received
on
or
after
March
1,
2004,
or
more
than
60
days
after
publication
of
this
rule
in
the
Federal
is
only
subject
to
EPA's
existing
fees
rule,
therefore
we
do
not
believe
it
necessary
to
provide
further
clarification
to
85.2405(
a).
For
example,
a
model
year
2004
nonroad
certification
application
received
before
the
new
fee
rule
becomes
effective
would
not
require
any
fee
to
be
paid
since
under
EPA's
existing
fee
rule
(
from
1992)
no
fees
are
required
for
nonroad
applications.

Section
6:
Reduced
Fees
6.1
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.
The
manufacturer's
evaluation
and
submission
of
a
fee
amount
under
this
reduced
fee
provision
would
be
subject
to
EPA
review
or
audit.
Id.
The
Agency
proposed
that
the
applicant
for
a
reduced
fee
also
subsequently
provide
EPA
with
a
report
(
called
a
"
report
card").
This
report
would
include
the
total
number
of
vehicles
ultimately
covered
by
the
certificate,
including
information
on
all
certificates
held
by
the
manufacturer
that
were
issued
with
a
reduced
fee,
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,
a
statement
of
the
total
initial
fees
paid
by
the
manufacturer,
and
the
total
final
fees
due
for
the
manufacturer.
Id.
We
also
proposed
that
manufacturers
would
also
be
required
to
"
true
­
up"
or
submit
the
final
reduced
fee
due
as
calculated
in
the
report
card
within
45
days
of
the
end
of
the
model
year.
Id.
2/
12/
04
59
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.
Examples
of
such
manufacturers
are
those
that
modify
customer­
owned
vehicles
(
as
done
by
some
ICIs
and
after­
market
alternative
fuel
converters)
since
they
are
uncertain
of
their
customer
base.
Under
this
pathway,
manufacturers
would
be
required
to
submit
the
same
report
card
and
true­
up
the
actual
amount
of
reduced
fee
due
similar
to
the
first
pathway,
described
above.
Id.

What
Commenters
Said:

Section
6.1.1.
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
are
as
follows:

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
one
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
one
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
12
Typically,
this
will
be
the
first
February
15
after
a
certificate
expires.
Certificates
generally
expire
on
December
31
of
the
model
year.

2/
12/
04
60
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
six
vehicles,
none
of
which
have
a
retail
price
of
more
than
$
75,000
each.
Manufacturers
seeking
a
reduced
fee
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.

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
five
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
also
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
one
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
year12,
EPA
believes
this
is
reasonable
as
manufacturers
should
have
final
figures
for
each
certificate
by
this
time.
2/
12/
04
61
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
"
true­
up"
or
submit
the
final
reduced
fee
due
as
calculated
in
the
report
card
within
45
days
of
the
end
of
the
model
year.
The
decision
to
eliminate
a
minimum
final
reduced
fee
of
$
300
was
made
as
a
result
of
comments
regarding
EPA's
proposed
policy
of
only
issuing
refunds
greater
than
$
500.
This
is
discussed
more
fully
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
five
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.

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.
2/
12/
04
62
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
one
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.)

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
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.
Manufacturers
that
request
revised
certificates
for
an
increased
number
of
vehicles
will
pay
the
additional
one
percent
fee
per
vehicle
at
the
time
the
revised
certificate
is
requested.

In
some
cases,
when
a
manufacturer
requests
a
certificate
under
the
first
pathway,
the
retail
price
of
five
vehicles
or
engines
covered
by
the
certificate
may
exceed
the
initial
payment.
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.
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.

What
Commenters
Said:

Section
6.1.2.
Sierra
Research
(
SR)
supported
our
reduced
fee
provision.
In
addition,
they
requested
clarification
of
the
term
"
retail
sales
price"
in
the
final
rule.
SR
sought
clarification
as
to
whether
the
"
retail
sales
price"
refers
to
the
engine
price
sold
by
the
engine
manufacturer
to
the
equipment
manufacturer
(
OEM)
or
the
engine
price
sold
to
the
"
consumer."
SR
noted
that
the
latter
is
often
referred
to
as
the
"
replacement
price,"
and
would
be
a
component
of
the
total
equipment
price.

SR
suggested
that
the
term
"
retail
sales
price"
refer
to
the
price
at
which
the
engine
is
sold
to
the
OEM,
and
not
the
replacement
price.
SR
suggested
that
this
term
not
refer
to
the
replacement
price
because
it
can
be
difficult
to
determine
what
the
replacement
price
is
at
the
time
of
certification
and
it
can
change
over
time.

Our
Response:

The
retail
sales
price
of
a
vehicle
or
engine
is
the
price
to
the
consumer,
or
the
replacement
price,
as
defined
by
SR.
This
price
is
the
easiest
to
determine
across
industries
as
all
2/
12/
04
63
of
the
vehicles
and
engines
are
either
made
for
sale
or
will
have
a
value
on
the
market
if
a
manufacturer
was
to
replace
its
own
product
by
one
of
another
manufacturer.
If
the
final
sales
price
is
different
than
the
price
projected
at
certification,
the
reduced
fee
can
be
adjusted
at
the
end
of
the
model
year
to
reflect
the
correct
retail
sales
price
and
additional
fees
may
be
paid
or
a
refund
request
may
be
made
by
the
manufacturer.

What
Commenters
Said:

Section
6.1.3.
SR
noted
that
the
regulations
do
not
address
how
to
aggregate
different
retail
sales
prices
and
requested
clarification
in
the
final
rule.

SR
suggested
using
the
average
sales
price
of
all
models
while
noting
that
EPA
would
prefer
a
sales­
weighted
price
where
the
manufacturer
multiplies
the
price
of
each
model
by
the
number
of
engines
projected
to
be
sold,
sums
the
results
for
all
models
and
then
divides
by
the
total
number
of
engines
for
all
models.

Our
Response:

The
aggregate
retail
price
of
an
engine
family
is
the
total
of
the
retail
sales
prices
of
each
of
the
engines
or
vehicles
in
the
family
added
together.
For
example,
if
a
manufacturer
wanted
to
certify
a
family
of
engines
that
included
five
engines
that
sold
for
$
100
each
and
four
engines
that
would
sell
for
$
150
each,
the
aggregate
retail
price
of
the
family
would
be
(
5
x
$
100)+(
4
x
$
150)
or
$
1,100.

What
Commenters
Said:

Section
6.1.4.
EMA
commented
on
proposed
40
CFR
85.2406(
b)(
5)(
i)
which
states
that
EPA
may
require
future
reduced
fee
eligibility
determinations
if
it
determines
that
a
manufacturer
has
not
properly
assessed
its
eligibility
for
reduced
fees
in
its
initial
application.
EMA
commented
that
this
was
unnecessary
because
EPA
always
has
the
final
authority
for
making
reduced
fee
determinations.

EMA
also
suggested
that
the
language
proposed
in
40
CFR
§
85.206(
b)(
5)(
ii)
which
allows
EPA
to
require
a
manufacturer
to
use
the
provisions
in
(
b)(
7)
rather
than
the
provisions
in
paragraphs
(
b)(
1)
through
(
b)(
4)
will
generally
not
provide
any
disincentive
for
improperly
requesting
reduced
fees.

This
commenter
further
stated
that
proposed
40
CFR
§
85.2406(
b)(
7)(
i)
was
inconsistent
with
proposed
40
CFR
§
85.2406(
b)(
5)(
ii).
Proposed
40
CFR
§
85.2406(
b)(
7)(
i)
states
that
a
manufacturer
must
use
the
"
second
pathway"
for
reduced
fees
"
if
EPA
makes
such
a
determination
under
paragraph
(
b)(
5)(
ii)
of
this
section"
but
subparagraph
(
i)
of
85.2406(
b)(
7)
states
that
the
request
to
use
reduced
fees
under
the
provisions
of
pathway
2
shall
be
made
prior
to
the
submission
of
an
application
for
certification.
The
commenter
observed
that
this
inconsistency
arises
when
a
manufacturer
uses
pathway
2
as
a
result
of
EPA
determination
under
2/
12/
04
64
(
b)(
5)(
ii).
To
the
commenter
this
appears
to
not
comply
with
the
provisions
of
85.2406(
b)(
7)(
i).

Our
Response:

EPA
agrees
with
these
comments
and
the
final
rule
has
been
amended
to
reflect
the
changes.
The
paragraph
stating
that
EPA
may
"
require
that
future
reduced
fee
eligibility
determinations
be
made
by
the
Agency"
is
unnecessary
and,
therefore,
the
language
is
not
included
in
the
reduced
fee
regulatory
language
set
forth
in
the
final
rule.

The
final
regulatory
language
does
not
state
that
EPA
will
require
a
manufacturer
to
use
one
reduced
fee
pathway
over
the
other.
The
price
and
the
number
of
vehicles
or
engines
to
be
covered
by
a
certificate
will
determine
the
pathway
manufacturers
will
use
to
determine
the
initial
reduced
fee
payment.

What
Commenters
Said:

Section
6.1.5.
EMA
sought
clarification
as
to
the
applicability
of
85.2406(
b)(
5)(
iii)
which
indicates
that
EPA
may
"
deny
future
reduced
fee
requests
and
require
submissions
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
the
final
fee
payments
are
made
within
45
days
of
the
end
of
the
model
year."
EMA
wondered
how
manufacturers
would
make
the
requisite
demonstrations
if
the
Agency
denied
all
future
requests
for
the
use
of
reduced
fees.

Our
Response:

If
EPA
denies
reduced
fee
requests
and
requires
submissions
of
full
fee
payment,
the
manufacturer
should
contact
the
EPA
and
demonstrate
that
its
reduced
fee
submissions
are
based
on
accurate
data
and
that
the
final
fee
payments
are
made
within
45
days
of
the
end
of
the
model
year
of
the
year
in
question.
This
can
be
done
by
providing
an
explanation
and
any
convincing
information
or
data
that
the
reduced
fee
submission
is
appropriate
and
that
reports
were
submitted
on
time.
Such
data
may
include
the
most
recent
production
data
for
the
previous
year,
proof
of
payment
of
correct
fees
amounts
for
the
previous
year,
and
recent
production
plans
for
the
current
year.
Upon
examining
the
data
submitted
by
the
manufacturer
for
the
model
year
in
question,
EPA
may
approve
the
reduced
fee
request
and,
at
that
time,
would
consider
any
future
reduced
fee
requests.

What
Commenters
Said:

Section
6.1.6.
OPEI
commented
that
the
proposed
reduced
fee
system
is
inadequate
for
existing
small
volume
engine
families.
OPEI's
example
of
this
was
the
following:
"
Assume
that
a
lawn
and
garden
engine
costs
$
100.
For
a
manufacturer
to
be
eligible
for
a
reduced
fee
(
i.
e.,
a
fee
less
than
$
827),
the
manufacturer
could
sell
no
more
than
827
engines
­­
13
Under
the
one
percent
of
total
sales
trigger,
engine
sales
would
have
to
be
less
than
$
82,700
to
take
effect;
assuming
a
per
unit
engine
cost
of
$
100,
the
manufacturer
could
sell
no
more
than
827
engines
($
82,700/$
100
=
827
engines).

2/
12/
04
65
one
sixth
of
the
existing
small
volume
cutpoint.
13
Thus
the
one
percent
sales
trigger
is
not
an
effective
solution
for
small
volume
lawn
and
garden
engines."

OPEI
quotes
40
CFR
§
90.3.:
"
In
the
lawn
and
garden
context,
a
small
volume
engine
family
means":

[
A]
ny
handheld
engine
family
or
any
non­
handheld
engine
family
whose
eligible
production
in
a
given
model
year
are
projected
at
the
time
of
certification
to
be
no
more
than
5,000
engines.

OPEI
requested
that
EPA
include
an
additional
provision
that
eliminates
certification
fees
for
small
volume
small
spark­
ignition
(
SSI)
engine
families
with
less
than
5,000
units.
OPEI
further
stated
that
eliminating
the
fee
for
small
engine
families
is
critical
because
there
is
inadequate
revenue
from
small
volume
engine
family
sales
to
adequately
spread
the
costs
of
the
proposed
certification
fees.
OPEI
commented
that
if
EPA
imposes
a
certification
fee
on
lawn
and
garden
engines,
the
agency
should
reconcile
that
fee
with
the
5,000
unit
cutpoint
definition
of
small
volume
engine
families
in
40
CFR
part
90.

Our
Response:

EPA
established
a
reduced
fee
provision
for
instances
to
alleviate
the
economic
burden
that
may
be
imposed
by
the
full
fee
requirement.
The
reduced
fee
payment
of
one
percent
of
the
aggregate
retail
price
of
the
engines
or
vehicles
will
assure
that
all
manufacturers
will
be
treated
equitably
and
that
none
will
be
required
to
pay
more
than
one
percent
of
the
projected
aggregate
retail
price
of
small
volume
families
of
the
engines
or
vehicles.

Emissions
regulations
have
specified
small
volume
engine
family
sizes
for
different
industries.
The
small
engine
family
sizes
were
specified
to
differentiate
from
larger
engine
families
for
purposes
such
as
technology
application
or
regulatory
implementation.
The
fees
rule
differs
from
these
rules
as
it
does
not
distinguish
the
need
for
a
reduced
fee
by
the
size
of
the
family
but,
rather,
by
the
amount
of
fees
that
the
manufacturer
of
the
family
would
have
to
pay.

6.2
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.
14Typically,
this
will
be
the
first
February
15
after
a
certificate
expires.
Certificates
generally
expire
on
December
31
of
the
model
year.

2/
12/
04
66
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.

6.3
Year
End
Report
What
We
Proposed:

We
proposed
that
each
applicant
for
a
reduced
fee
must
provide
EPA
with
a
report
card
within
30
days
of
the
end
of
the
model
year
14(
67
FR
51411­
51412)
.
We
stated
that
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,
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,
a
statement
of
the
total
initial
fees
paid
by
the
manufacturer
and
the
total
final
fees
due
for
the
manufacturer.
Manufacturers
would
be
required
to
"
true
­
up"
or
submit
the
final
reduced
fee
due
as
calculated
within
the
report
card
within
45
days
of
the
end
of
the
model
year.
Id.

What
Commenters
Said:

VSC
stated
there
is
no
need
for
a
year­
end
settlement,
but
a
year­
end
audit
would
be
appropriate
under
the
pay­
as­
you­
go
system
because
EPA
is
getting
its
money
at
the
time
of
certification
or
importation.
The
commenter
also
stated
that
because
ICI
must
file
EPA
form
3520­
8,
a
Final
Admission
Form,
for
each
imported
vehicle,
the
payment
of
the
additional
fees
can
be
easily
tracked.

Our
Response:

EPA
believes
that
a
year­
end
settlement
is
needed
for
some
manufacturers
undergoing
the
reduced
fee
process.
A
true­
up
requirement
at
the
end
of
the
year
ensures
that
any
outstanding
15
See
EPA
docket
number
A­
2001­
09
for
letter
from
Jane
Armstrong
dated
April
14,
1999
to
Peter
Di
Bernardi
regarding
ICI
owner­
imported
vehicles
and
certification.

2/
12/
04
67
fee
payments
owed
to
the
government
are
paid.
Under
the
first
reduced
fee
provision
discussed
above
in
section
6.1,
a
manufacturer
can
receive
a
conditional
certificate
for
five
vehicles,
engines
or
motorcycles
and
pay
$
750
at
certification
time
and
true­
up
with
a
report
card
at
the
end
of
the
year.
Manufacturers
utilizing
the
second
pathway
will
not
be
required
to
submit
the
report
card
and
true­
up
as
required
under
the
first
pathway.

The
initial
information
that
manufacturers
submit
in
the
report
card
for
reduced
fees
under
the
first
pathway
will
be
necessary
for
EPA
to
establish
all
of
the
vehicles
made
or
imported
under
each
certificate
and
the
fee
payments
that
have
been
made
by
the
manufacturer
as
well
as
the
final
reduced
fee.
We
agree
that
audits
and
information
provided
on
the
3520­
8
forms
may
be
helpful
to
confirm
the
information
submitted
by
manufacturers
but
cannot
be
solely
relied
upon
for
all
of
the
information
submitted
in
the
report
card.

6.4
ICI
Owner­
Imported
Vehicles
(
Not
for
Resale)

What
We
Proposed:

We
proposed
that
the
cost
basis
for
calculating
a
reduced
fee
for
an
ICI
certification
be
based
upon
the
full
cost
of
the
vehicle
or
engine
rather
than
the
cost
or
value
of
the
conversion.
We
explained
that
EPA
has
not
received
a
fee
payment
for
the
"
base
vehicle"
or
the
vehicle
imported
before
its
conversion
to
meet
United
States'
emissions
requirements.
For
alternative
fuel
converted
vehicles
or
engines
that
have
been
originally
certified
by
an
OEM,
we
proposed
the
reduced
fee
cost
basis
as
the
value
added
by
the
conversion.(
67
FR
51412)

What
Commenters
Said:

VSC
argued
that
the
standard
ICI
fee
should
not
apply
to
owner­
imported
vehicles.
VSC
suggested
that
the
fee
for
owner­
imported
vehicles
(
not
for
resale)
should
be
five
percent
of
the
cost
of
conversion
of
the
vehicle
to
meet
EPA
emission
standards.
VSC
cited
a
letter
sent
to
Mr.
Di
Bernardi
of
Liphart
&
Associates
by
Jane
Armstrong
of
EPA
(
dated
April
14,
1999)
which
discusses
a
class
of
ICI
vehicles
that
are
described
as
owner­
imported
(
not
for
resale)
and
are
modified
through
the
installation
of
OEM
parts
to
be
identical
to
a
certified
OEM
vehicle
sold
in
the
United
States.
VSC
called
these
vehicles
"
Di
Bernardi
vehicles15."

According
to
VSC,
EPA
would
recoup
more
money
under
a
fee
based
on
five
percent
of
a
conversion
of
such
vehicles
than
the
one
percent
cost
of
conversion
rule
applicable
to
alternative
fuel
vehicles.
VSC
stated
that
the
average
owner­
imported
vehicle
conversion
costs
approximately
$
8000,
and
five
percent
of
this
amount
would
mean
a
fee
of
$
400.
VSC
stated
2/
12/
04
68
that
this
amount
would
be
400
times
more
than
the
per­
vehicle
cost
for
OEMs.
VSC
further
noted
a
fee
based
on
cost
of
conversion
was
appropriate
in
light
of
the
fact
that
our
certification
and
compliance
activities
for
these
types
of
vehicles
were
limited.

VSC
also
stated
that
EPA
was
recouping
additional
fees
from
ICIs
by
requiring
ICIs
to
recertify
each
year
owner­
imported
vehicles
of
a
given
model
year
already
certified
by
an
ICI
for
one
MY.

Our
Response:

EPA
disagrees
with
the
suggestion
that
fees
for
owner­
imported
vehicles
should
be
only
five
percent
of
the
cost
of
conversion
because
EPA's
services
are
limited
in
these
cases
as
opposed
to
an
OEM
vehicle.
We
require
modification
of
owner­
imported
vehicles
through
installation
of
OEM
parts
in
order
for
these
vehicles
to
be
identical
to
a
certified
OEM
vehicle
sold
in
the
United
States.
This
includes
vehicles
for
resale,
and
modification
and
test
vehicles
options
included
in
40
CFR
85.1509
and
40
CFR
89.609
and
those
imported
on
behalf
of
a
private
or
another
owner
(
not
for
resale).
EPA
believes
that
an
owner­
imported
vehicle
under
an
engine
family/
test
group
certified
by
EPA
must
meet
the
same
emission
standards/
requirements
as
vehicles
and
engines
imported
for
resale.
As
a
result,
each
model
year
owner­
imported
and
other
ICI
vehicles
are
subject
to
services
such
as
extensive
pre­
certification/
certification
assistance,
application
review,
processing
and
approval
to
ensure
that
they
meet
the
certification
criteria
and
allowed
final
importation.
Other
services
include
recall,
maintenance
instruction,
warranty,
running
changes,
emissions
testing
and
labeling,
and
fuel
economy
testing
and
labeling.
EPA
recoups
costs
in
providing
these
type
of
MVECP
services
for
these
vehicles.

In
addition,
EPA
addressed
in
the
abovementioned
letter
to
Mr.
Di
Bernardi
of
Liphart
&
Associates
the
alternative
methods
of
compliance
demonstration
for
ICI
owner­
imported
vehicles
but
did
not
grant
exemptions
for
compliance
with
the
standards.

EPA
believes
that
all
ICI
vehicles
are
subject
to
a
standard
fee.
If
there
is
an
unreasonable
economic
burden
in
adhering
to
the
fees
regulations,
manufacturers
including
ICIs
may
apply
for
a
reduced
fee.
Therefore,
EPA
believes
the
reduced
fee
process
for
these
vehicles
and
engines
is
applicable
as
proposed.

6.5
$
300
Minimum
Fee
Payment
What
We
Proposed:

As
part
of
the
proposed
reduced
fee
provision,
we
proposed
a
minimum
fee
of
$
300.
We
believed
this
amount
represented
the
lowest
level
of
fee
that
is
cost
effective
for
the
Agency
to
collect
and
still
representative
of
the
actual
costs
incurred
by
the
Agency
in
providing
MVECP
services.
What
Commenters
Said:
2/
12/
04
69
OPEI
commented
that
if
the
Agency
believes
(
for
administrative
reasons)
that
anything
less
than
$
300
is
not
cost
effective
then
the
certification
fee
for
lawn
and
garden
small
engine
families
should
simply
be
waived.

Our
Response:

The
purpose
of
the
fees
rulemaking
is
to
recover
the
costs
for
the
services
that
EPA
provides
to
manufacturers.
Because
EPA
realizes
that
the
costs
of
the
fees
may
represent
an
unreasonable
burden
for
manufacturers
of
small
engine
families
EPA
is
adopting
reduced
fee
provisions
(
see
discussion
in
section
6)
whereby
manufacturers
of
small
engine
families
will
have
to
pay
no
more
than
one
percent
of
the
aggregate
retail
price
of
the
vehicles
or
engines
sold
under
the
certificate.
To
waive
the
fee
completely
is
not
in
keeping
with
the
core
purpose
of
section
217
of
the
CAA
and
the
IOAA
to
recover
the
costs
for
the
services
it
provides.
EPA
also
believes
that
the
likelihood
of
such
reduced
fees
dropping
below
$
300
is
very
low
and
in
such
cases
it
is
still
appropriate
to
collect
such
a
fee
to
keep
an
equitable
and
level
playing
field
among
those
manufacturers
that
have
sales
above
or
below
$
300,000
under
a
certificate
($
300
would
represent
one
percent
of
$
300,000
in
that
instance).

Section
7:
ICI
Issues
7.1
Fee
Provisions
Specific
to
ICIs
What
We
Proposed:

We
proposed
separate
and
lower
fees
for
ICI
light­
duty
on
highway
certificate
requests.
We
examined
the
costs
associated
with
ICIs
and
OEM
and
found
that
the
costs
associated
with
administering
the
light­
duty
ICI
program
was
lower
that
the
costs
associated
with
administering
the
light­
duty
ICI
program
was
lower
than
the
costs
for
light­
duty
original
equipment
manufacturers
(
OEMs).
We
proposed
a
fee
of
$
8,394
for
light­
duty
ICI
certificates
with
no
limit
on
the
number
of
vehicles
to
be
covered
by
the
certificate.
For
all
other
ICI
categories,
we
explained
that
our
certification
and
compliance
activities
were
no
different
for
ICIs
than
OEMs
and,
therefore,
we
established
the
same
fees
for
ICIs
and
OEMs.
Id.
As
discussed
in
section
6.1,
above,
we
also
proposed
reduced
fee
provisions
to
alleviate
any
economic
burden
imposed
by
the
full
standard
fee.

What
Commenters
Said:

VSC
suggested
that
the
Agency
should
promulgate
specific
fee
provisions
for
ICIs
especially
in
light
of
the
fact
that
most
of
the
services
the
Agency
is
seeking
to
recover
the
associated
costs
are
inapplicable
to
ICIs.
As
examples,
VSC
cited
the
Agency's
CFEIS
system,
certification
compliance
audits,
selective
enforcement
audits,
monitoring
of
in­
use
data,
review
of
in­
use
testing,
or
Agency­
run
in­
use
or
recall
tests.
VSC
also
stated
that
a
multi­
part
ICI
fee
system
was
necessary
due
to
the
lack
of
similarity
between
ICI
importations.
2/
12/
04
70
VSC
further
stated
that
ICI
specific
provisions
would
still
meet
the
government's
need
to
collect
fees
that
offsets
its
costs,
while
taking
into
account
the
fact
that
ICIs
are
small
businesses.

Our
Response:

Under
the
certification
and
compliance
program
ICIs
must
meet
certain
requirements
and
the
fees
reflect
the
costs
incurred
in
providing
services
that
assist
ICIs
in
meeting
those
certification
and
compliance
requirements.
As
explained
earlier
in
sections
under
2.4,
we
grouped
the
various
industries
into
categories
based
on
the
similarity
in
the
type
of
services
we
provide
under
the
MVECP
then
separated
the
categories
into
subcategories
if
the
levels
of
service
within
a
category
differed
as
is
the
case
with
light­
duty
vehicles,
motorcycles
and
ICIs
within
the
Lightduty
category
(
worksheet
#
2.)

ICIs
do
not
receive
all
of
the
services
that
are
provided
to
the
light­
duty
subcategory.
As
pointed
out
by
VSC,
ICIs
do
not
use
CFEIS,
receive
selective
enforcement
audits
or
services
that
involve
in­
use
testing.
The
fees
for
ICIs
do
not
include
the
costs
of
these
services.
That
is
why
the
fees
for
ICIs
are
lower
than
the
fees
for
the
LD
manufacturers.
ICIs
fees
include
the
cost
of
providing
the
services
of
certification
and
fuel
economy
testing,
extensive
assistance
with
precertification
activities,
application
preparation
and
application
review.

In
addition,
EPA
believes
no
multi­
part
fee
system
is
necessary
for
the
various
ICI
importations
because
of
the
complexity
of
the
vehicle
models,
ages,
and
types
of
ICI
work
performed
on
ICI
vehicles
and
engines.
Furthermore,
the
reduced
fee
provisions
allows
some
flexibility
and
adjustments
in
fees
for
ICIs
and
other
manufacturers.

The
EPA
believes
that
this
fee
adequately
reflects
the
time,
labor
and
expenses
spent
on
ICI
pre­
certification
and
certification
activities.
ICI
certification
process
is
very
time
and
resource
intensive
yet
as
a
category
ICIs
request
less
certificates
and
cover
fewer
vehicles
per
certificate
than
OEMs
or
industry
categories.

7.2
ICI
Vehicles
Imported
for
Resale
What
We
Proposed:

EPA
proposed
a
fee
of
$
8,394
for
light­
duty
ICI
certificates
as
EPA
has
determined
that
this
recovers
the
costs
of
MVECP
services
provided.

What
Commenters
Said:

VSC
argued
that
this
fee
of
$
8,394
should
be
applicable
to
only
ICI
cars
imported
for
16EPA
Form
3520­
1,
known
as
the
Declaration
Form,
is
called
the
Importation
of
Motor
Vehicles
and
Motor
Vehicle
Engines
Subject
to
Federal
Air
Pollution
Regulations
form.
This
form
is
collected
by
customs
to
ensure
that
motor
vehicles
and
engines
imported
into
the
U.
S.
conform
with
applicable
emission
requirements.
Code
A
is
described
under
the
Independent
Commercial
Importer
(
ICI)
Imports
section
of
the
form
as
any
vehicle
or
engine
imported
by
an
ICI
for
modifications
in
accordance
with
a
valid
EPA
certificate
of
conformity
issued
for
the
specific
make,
model,
and
model
year
in
accordance
with
40
CFR
85.1505.
17Currently,
EPA
Form
3520­
1
contains
codes
A,
C,
J,
and
Z
under
the
ICI
section.
These
codes
describe
the
type
of
vehicles
that
are
imported.
EPA
believes
the
vehicles
imported
under
a
certificate
does
not
only
include
code
A,
certification
vehicles
and
code
J,
pre­
certification
test
vehicles.
It
also
includes
code
C,
modification
and
test
vehicles
and
code
Z,
vehicles
that
are
modified
to
be
identical
to
an
OEM
with
permission.
This
does
not
include
vehicles
or
engines
that
may
be
excluded
or
exempted
by
the
Administrator
per
section
203
of
the
CAA
and/
or
U.
S.
customs.

2/
12/
04
71
resale
under
Declaration
A
on
EPA
form
3520­
1.16
Our
Response:

We
disagree
with
this
comment.
The
EPA
believes
that
the
ICI
fee
applies
to
all
ICI
certificates.
This
includes
certificates
that
cover
vehicles
and
engines
for
sale,
vehicles
and
engines
not
for
sale
(
i.
e.,
owner­
imported)
and
those
modified
under
the
modification
and
test
provisions.
Therefore
the
standard
fee
is
applicable
to
each
certificate
that
covers
these
types
of
ICI
importations.
EPA
believes
the
type
of
vehicles
ICIs
should
pay
fees
for
are
also
specified
on
the
EPA
Declaration
form
3520­
1.17
7.3
Modification
and
Test
Cars
What
We
Proposed:

The
proposed
reduced
fees
provision
required
inclusion
of
all
vehicles
sold
by
a
manufacturer
in
the
aggregate
retail
price,
67
FR
51411.
EPA
proposed
that
when
calculating
the
aggregate
retail
sales
price
of
vehicles
or
engines
under
the
reduced
fee
provisions,
such
calculation
must
not
only
include
vehicles
and
engines
actually
sold
by
the
ICI
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,
67
FR
51412.

What
Commenters
Said:

Section
7.3.1.
VSC
argues
that
EPA
recognized
the
"
Mod
and
Test"
procedure
as
an
alternative
to
the
full
certification
procedure
for
modification
and
test
vehicles
(
also
known
as
Declaration
18
Imported
vehicles
are
described
by
codes
selected
on
the
EPA
Form
3520­
1.
Code
"
C"
which
is
listed
under
the
ICI
imports
category
means
that
the
vehicle
is
being
imported
by
an
ICI
for
modification
and
testing
in
accordance
with
40CFR
§
85.1509.
Such
vehicles
or
heavy­
duty
engine
must
be
at
least
6
years
old.

2/
12/
04
72
`
C'
cars)
18,
in
the
1987
ICI
Rule,
and
stated
that
this
was
a
"
clear
reason"
why
the
fees
rule
should
not
be
applicable
to
such
vehicles.
VSC
also
stated
that
the
process
applicable
to
modification
and
test
cars
should
not
even
be
called
"
certification."
In
addition,
VSC
argued
that
EPA
had
failed
to
justify
the
combination
of
modification
and
test
cars
with
other
ICI
imports
since
the
Agency's
regulations
treat
them
differently.
VSC
further
stated
that
the
fact
that
these
vehicles
have
historically
been
included
in
the
fee
regulation
was
insufficient
to
justify
their
continued
inclusion.

Our
Response:

We
disagree
with
this
comment.
We
believe
that
ICI
modification
and
test
vehicles
must
meet
the
applicable
emissions
standards
and
undergo
the
certification
process.
As
certificate
holders,
ICIs
are
required
to
perform
all
of
the
necessary
modifications
and
emissions
testing
to
ensure
the
vehicles
they
import
comply
to
EPA
emissions
standards
and
requirements.
Under
EPA's
import
regulations,
modification
and
test
cars
must
be
covered
by
a
certificate
(
unless
otherwise
exempted
by
the
EPA
Administrator
or
Customs).
Furthermore,
Section
206
of
the
CAA
allows
the
EPA
Administrator
to
test
any
emission
control
system
incorporated
in
a
motor
vehicle
or
engine
to
determine
whether
such
system
enables
the
vehicle
or
engine
to
conform
to
the
required
emission
standards.
In
addition,
a
certificate
of
conformity
may
be
issued
under
this
section
only
if
the
Administrator
determines
that
the
importer
(
or
any
person)
has
established
to
the
satisfaction
of
the
Administrator
that
any
emission
control
device,
system
or
element
installed
on
or
incorporated
in
such
vehicle
or
engine
conforms
to
the
emission
requirements.
Section
217
of
the
Act
and
the
IOAA
authorize
EPA
to
recover
the
costs
of
compliance
and
certification
services
it
provides
to
manufacturers.
Hence,
we
believe
ICIs
must
pay
fees
that
represent
the
costs
involved
in
assuring
that
modification
and
test
cars
meet
emission
standards.

The
1987
Rule
for
Importation
of
Noncomforming
Motor
Vehicles
and
Motor
Vehicle
Engines
(
52
FR
36136,
September
25,
1987)
that
VSC
mentioned
provides
a
more
enhanced
modification
and
test
program
in
part
due
to
previous
noncompliance
issues.
As
a
result,
these
vehicles
have
been
historically
included
in
the
fee
regulation
because
they
are
imported
under
a
certification­
based
program.
Being
certificate
holders
makes
ICIs
responsible
for
complying
with
all
the
emission
requirements
for
these
vehicles
which
may
or
may
not
be
owned
by
the
certificate
holder.

We
agree
with
VSC
that
EPA
has
allowed
alternative
methods
of
compliance
demonstration
for
ICIs
(
that
meet
certain
criteria)
however
they
are
required
to
comply
with
applicable
emission
standards
and
to
properly
install
required
emission
related
components
that
are
fully
functional.
By
requiring
ICIs
to
adhere
to
the
test/
modification
provisions
while
19Form
3520­
1,
EPA
Declaration
Form
has
codes
describing
the
types
of
vehicles
and
engines
that
are
to
be
imported
into
the
U.
S.
that
must
be
declared
by
the
manufacturer.
Codes
"
Z"
listed
under
the
ICI
imports
category
means
imported
by
an
ICI
for
the
purpose
of
modifying
to
be
identical
to
an
original
equipment
manufacturer
(
OEM)
certified
version
in
accordance
with
written
instructions
from
the
OEM
that
are
specific
to
the
vehicle
or
heavy­
duty
engine
being
imported.
Codes
"
E"
and
"
M"
fall
under
the
EPA
exempted
vehicles
category
and
mean
vehicle
or
engine
at
least
21
years
old
and
Canadian
vehicle/
miscellaneous
exemption,
respectfully.
Codes
"
B"
and
"
EE"
fall
under
the
U.
S.
conforming
and
"
identical"
vehicles
category.
More
specifically,
code
"
B"
indicates
that
the
vehicle
is
U.
S.
certified
and
is
unmodified
bearing
a
U.
S.
EPA
emission
control
label
in
the
engine
compartment
or
motorcycle
frame
in
English.
Code
"
EE"
indicates
that
the
vehicle
is
identical
in
all
material
respects
to
a
U.
S.
certified
version
either
as
a
Canadian
vehicle
(
with
the
proper
Canadian
emission
control
label
and
other
customs­
EPA
requirements
as
listed
on
form
3520­
1),
or
as
a
vehicle
from
any
country
(
requiring
a
letter
from
the
manufacturer's
U.
S.
representative
(
not
dealer
or
mechanic)
on
letterhead
stating
the
vehicle
is
identical
to
a
U.
S.
EPA
certified
version
with
respect
to
emissions,
is
not
being
imported
for
resale
or
lease,
and
other
requirements
as
listed
on
form
3520­
1).

2/
12/
04
73
undergoing
the
certification
process
ensures
that
this
happens.

ICI
vehicles
or
engine
certificates
cover
vehicles
or
engines
which
are
imported
into
U.
S.
but
was
not
originally
certified
by
an
OEM.
EPA
recovers
costs
associated
with
providing
various
MVECP
services
to
ensure
that
these
vehicles
and
engines
meet
emission
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
are
required
to
comply.
In
addition,
ICIs
receive
extensive
assistance
with
pre­
certification
activities,
application
preparation
and
application
review.
The
EPA
import
team
reviews
numerous
applications
for
import
exemptions
due
to
hardship
or
other
forms
of
exemptions.
EPA
incurs
costs
for
conducting
these
types
of
services.
Therefore,
we
believe
ICIs
must
pay
fees
that
represent
the
costs
involved
in
assuring
that
modification
and
test
cars
meet
emission
standards.

What
Commenters
Said:

Section
7.3.2.
VSC
also
commented
that
vehicles
declared
on
EPA's
Declaration
Form
3520­
1
under
categories
"
Z"
"
E",
"
M",
"
EE",
and
"
B"
19
should
likewise
not
have
to
pay
any
fee.
They
asserted
that
EPA
has
not
established
that
it
has
any
costs
to
recoup
in
regard
to
these
vehicles.

Our
Response:

EPA
disagrees
with
this
comment.
Under
EPA's
import
regulations,
including
section
203
of
the
CAA
these
vehicles
may
not
be
imported
into
the
U.
S.
unless
covered
under
a
certificate
of
conformity,
exempted
by
the
Administrator
or
otherwise
authorized
by
EPA
and
2/
12/
04
74
U.
S.
Customs
Service
regulations.
Based
on
the
EPA
Declaration
form
3520­
1
codes
"
E"
and
"
M"
fall
under
the
exemption
category.
Although
the
vehicles
imported
under
the
exemption
category
must
meet
certain
government
requirements,
we
agree
that
certification
fee
costs
currently
do
not
apply
to
these
vehicles.
In
addition,
certification
fees
currently
do
not
apply
to
vehicles
indicated
as
codes
"
B"
and
"
EE"
on
Declaration
form
3520­
1.
The
codes
"
B"
and
"
EE"
fall
under
the
U.
S.
conforming
and
"
identical"
vehicles
category
and
cover
vehicles
that
are
required
to
conform
to
EPA
emissions
standards.
Proof
must
be
provided
to
Customs
that
these
vehicles
comply
as
indicated
on
the
Declaration
form
3520­
1.
Furthermore,
the
"
Z"
code
indicates
that
the
vehicle
or
engine
is
imported
by
an
ICI
for
the
purpose
of
modifying
it
to
be
identical
to
an
OEM
certified
version
(
with
written
OEM
instructions)
and
this
requires
undergoing
the
certification
process
and
submitting
a
fee
payment.
Currently,
EPA
Form
3520­
1
contains
codes
A,
C,
J,
and
Z
under
the
ICI
section.
These
codes
describe
the
type
of
vehicles
that
are
generally
imported
by
ICIs.
EPA
believes
the
vehicles
imported
under
a
certificate
does
not
only
include
code
A,
certification
vehicles
and
code
J,
pre­
certification
test
vehicles.
It
also
includes
code
C,
modification
and
test
vehicles
and
code
Z,
vehicles
that
are
modified
to
be
identical
to
an
OEM
with
permission.
Under
these
ICI
categories
vehicles
and
engines
for
resale,
modification
and
test
vehicles
and
engines,
or
owner­
imported
vehicles
(
not
for
resale)
must
undergo
the
certification
process
and
therefore,
pay
fees,
as
discussed
earlier
in
the
response
to
section
7.2
above.

7.4
ICI
Licensing
What
We
Proposed:

ICI
licensing
was
not
proposed
in
the
NPRM.

What
Commenters
Said:

VSC
suggested
that
EPA
offer
through
the
fees
program
an
ICI
license
that
is
renewed
annually,
similar
to
the
National
Highway
Traffic
Safety
Administration
(
NHTSA)
Registered
Importer
program.
VSC
further
stated
that
in
addition
to
raising
revenue,
an
ICI
licensing
program
will
provide
a
control
on
companies
seeking
to
become
ICIs.

Our
Response:

This
comment
is
beyond
the
scope
of
this
rulemaking.

7.5
ICIs
and
SBREFA
What
We
Proposed:

In
section
VIII.
B.
of
the
proposed
rule
we
certified
our
proposed
fees
as
having
no
significant
economic
impacts
on
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
2/
12/
04
75
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:

Section
7.5.1.
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.

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:
2/
12/
04
76
Section
7.5.2.
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
that
light­
duty
OEMs
are
required
to
comply
to.
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.

Section
8:
Other
Topics
8.1
EPA
Services
What
We
Proposed:

As
previously
mentioned
in
sections
2
and
3,
our
proposed
fees
were
based
on
the
costs
the
Agency
incurs
in
providing
certification
and
compliance
services
to
the
various
certification
groups.

What
Commenters
Said:

Mercury
Marine
stated
that
the
office
that
handles
marine
SI
certification
and
compliance
was
understaffed
and
required
follow
up
calls
to
encourage
timely
processing
of
applications.
Mercury
Marine
sought
an
explanation
from
EPA
as
to
how
fees
would
be
used
to
improve
the
level
of
service,
or
more
specifically,
to
improve
the
processing
of
requests
in
a
timely
fashion.

Our
Response:

The
fees
schedule
is
based
on
the
type
of
services
provided
to
each
category
as
well
as
the
amount
of
services
that
each
category
receives.
It
is
also
based
on
the
current
and
projected
costs
for
each
industry.
The
projected
costs
for
the
"
Other"
category
does
include
the
cost
of
2/
12/
04
77
additional
personnel
to
assist
in
processing
applications.
EPA
will
continue
to
ensure
the
timely
processing
of
applications.

8.2
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.

8.3
Running
Changes
and
Carryovers
What
We
Proposed:

We
did
not
propose
any
special
provisions
for
running
changes
and
carryover
applications.

What
Commenters
Said:

Sierra
Research
noted
that
the
Agency
did
not
propose
any
provisions
for
running
changes
and
requested
clarification
that
running
change
were
not
certification
requests
and
therefore,
would
not
trigger
fees.

OPEI
suggested
that
certification
for
lawn
and
garden
engines
be
set
at
no
more
than
$
300
since
most
certificate
applications
for
this
category
were
carryover
applications,
which
generally
costs
less
time
and
effort
to
process
as
compared
to
new
certification
applications.

Our
Response:
2/
12/
04
78
We
are
responding
for
purposes
of
providing
information
only.
Running
changes
are
those
changes
in
a
vehicle
or
engine
configuration,
equipment
or
calibration
which
are
made
by
an
OEM
or
ICI
in
the
course
of
a
motor
vehicle
or
engine
production.
The
cost
of
a
running
change
is
included
in
the
fees
cost
for
an
engine
family
or
test
group
within
the
same
engine­
emissions
control
system
combination.
Therefore,
they
do
not
trigger
additional
fees.

Carryover
applications
are
certification
applications
that
use
data
from
a
prior
year's
application.
When
a
manufacturer
elects
to
carry
over
test
data
from
a
previous
model
year,
its
certification
effort
may
be
reduced.
Further,
such
carryover
test
data
may
reduce
some
of
our
efforts.
However,
such
potential
reductions
are
offset
by
additional
activities
necessitated
by
the
carryover
request.
The
application
for
a
carryover
is
usually
not
an
exact
duplicate
of
the
MY
being
carried
over.
For
example,
carryover
applications
may
involve
changes
(
e.
g.
additional
test
weight
and
horsepower)
which
could
change
the
test
vehicle
or
engine
selection.
In
such
cases,
EPA
must
conduct
additional
review
of
carryover
requests
to
ensure
that
they
meet
EPA
requirements
and
that
the
test
vehicles
or
engines
were
properly
selected
for
the
carryover
application.
Further,
EPA
must
review
a
carryover
application
to
determine
the
applicability
for
the
regulations
for
the
new
model
year
as
compared
to
the
carryover
model
year.
Thus,
carryover
applications
do
not
necessarily
result
in
lower
costs
than
a
certification
request
for
a
new
engine
family/
test
group.
As
a
result,
the
fee
schedule
will
remain
as
proposed.
Carryover
certification
requests
will
not
be
distinguished
from
new
certification
requests.

8.4
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)
and
86.908­
01(
b)(
2)).
We
also
invited
comments
on
whether
to
limit
refund
requests
to
$
500.
(
67
FR
51412).

As
earlier
discussed
in
section
6
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:
2/
12/
04
79
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.
Also,
40
CFR
§
85.2407(
a)
and
(
b)
have
been
changed
to
read:

(
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
certification
request.

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
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
"
trueup
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.

8.5
Reduced
Costs
for
California­
only
2/
12/
04
80
What
We
Proposed:

EPA
proposed
a
separate
California­
only
fee
for
only
the
light­
duty
and
heavy­
duty
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
the
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
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
Californiaonly
fee
is
less
than
the
standard
fee
because
EPA
does
not
incur
the
cost
of
the
in­
use
program.
The
CARB
conducts
an
in­
use
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
California­
only
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
2/
12/
04
81
from
receiving
a
certificate,
EPA
should
recover
the
costs
of
providing
this
service
as
directed
by
the
CAA
and
the
IOAA.

8.6
Fee
Payment
Suggestions
What
We
Proposed:

We
invited
comments
on
methods
of
streamlining
the
fee
payment
process
while
still
maintaining
the
requirement
that
fees
be
paid
in
advance
of
certification
services.
(
67
FR
51411).

What
Commenters
Said:

One
commenter
suggested
that
EPA
allow
manufacturers
to
submit
fees
for
"
undesignated"
families.
This
commenter
noted
that
as
long
as
prepaid
funds
existed
for
a
given
manufacturer,
fee
payments
for
specific
families
could
be
designated
when
the
manufacturer
subsequently
submitted
an
application.

In
addition,
the
commenter
suggested
that
EPA
modify
the
fee
filing
form
by
deleting
the
requirement
for
manufacturers
to
specify
family
names
at
the
time
of
fee
submission.

Our
Response:

EPA
believes
the
process
of
collecting
and
tracking
fee
payments
by
engine
families
or
test
groups
has
been
very
effective.
This
process
has
been
especially
useful
for
handling
fee
refunds
and
other
transactions.
However,
EPA
is
also
exploring
other
ways
to
collect,
track
and
process
fee
payments.
As
suggested,
we
are
now
looking
at
other
ways
manufacturers
can
submit
upfront
fee
deposits
for
undesignated
families.
We
anticipate
that
in
such
instances,
manufacturers
should
be
able
to
draw
from
this
deposit
to
pay
for
engine
families
or
test
groups
perhaps
designated
later
in
the
model
year
or
for
which
certification
applications
are
submitted.
Prior
to
the
effective
date
of
this
rule,
we
are
planning
to
issue
a
manufacturers'
guidance
letter
describing
how
to
submit
fee
payments
and
conduct
other
fee
transactions.

In
addition,
we
are
exploring
the
idea
of
a
banking
or
accounting
system
to
handle
fee
payments
and
transactions.
If
utilized,
a
banking
or
an
accounting
mechanism
would
be
useful
in
streamlining
the
fee
collection
process
and
other
transactions.
EPA
may
explore
how
this
accounting
system
would
work
for
future
fee
adjustments.