Control of Air Pollution From New Motor Vehicles: Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements

Related Material

Other Related Documents

[Federal Register: February 10, 2000 (Volume 65, Number 28)]
[Rules and Regulations]
[Page 6697-6746]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10fe00-18]

[[Page 6697]]

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Part II

Environmental Protection Agency

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40 CFR Parts 80, 85, and 86

Control of Air Pollution From New Motor Vehicles: Tier 2 Motor Vehicle
Emissions Standards and Gasoline Sulfur Control Requirements; Final
Rule

[[Page 6698]]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 80, 85, and 86

[AMS-FRL-6516-2]
RIN 2060-AI23

Control of Air Pollution From New Motor Vehicles: Tier 2 Motor
Vehicle Emissions Standards and Gasoline Sulfur Control Requirements

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Today's action finalizes a major program designed to
significantly reduce the emissions from new passenger cars and light
trucks, including pickup trucks, vans, minivans, and sport-utility
vehicles. These reductions will provide for cleaner air and greater
public health protection, primarily by reducing ozone and PM pollution.
The program is a comprehensive regulatory initiative that treats
vehicles and fuels as a system, combining requirements for much cleaner
vehicles with requirements for much lower levels of sulfur in gasoline.
A list of major highlights of the program appears at the beginning of
the SUPPLEMENTARY INFORMATION section of this Federal Register.
The program we are finalizing today will phase in a single set of
tailpipe emission standards that will, for the first time, apply to all
passenger cars, light trucks, and larger passenger vehicles operated on
any fuel. This set of ``Tier 2 standards'' is feasible and the use of a
single set of standards is appropriate because of the increased use of
light trucks for personal transportation. The miles traveled in light
trucks is increasing and the emissions from these vehicles are thus an
increasing problem. This approach builds on the recent technology
improvements resulting from the successful National Low-Emission
Vehicles (NLEV) program.
To enable the very clean Tier 2 vehicle emission control technology
to be introduced and to maintain its effectiveness, we are also
requiring reduced gasoline sulfur levels nationwide. The reduction in
sulfur levels will also contribute directly to cleaner air in addition
to its beneficial effects on vehicle emission control systems. Refiners
will generally install additional refining equipment to remove sulfur
in their refining processes. Importers of gasoline will be required to
import and market only gasoline meeting the sulfur standards. Today's
action also introduces an averaging, banking, and trading program to
provide flexibility for refiners and ease implementation of the
gasoline sulfur control program.
The overall program focuses on reducing the passenger car and light
truck emissions most responsible for causing ozone and particulate
matter problems. Without today's action, we project that emissions of
nitrogen oxides from these vehicles will represent as much as 40
percent of this ozone-forming pollutant in some cities, and almost 20
percent nationwide, by the year 2030.
Today's program will bring about major reductions in annual
emissions of these pollutants and also reduce the emissions of sulfur
compounds resulting from the sulfur in gasoline. For example, we
project a reduction in oxides of nitrogen emissions of at least 856,000
tons per year by 2007 and 1,236,000 by 2010, the time frame when many
states will have to demonstrate compliance with air quality standards.
Emission reductions will continue increasing for many years, reaching
at least 2,220,000 tons per year in 2020 and continuing to rise further
in future years. In addition, the program will reduce the contribution
of vehicles to other serious public health and environmental problems,
including VOC, PM, and regional visibility problems, toxic air
pollutants, acid rain, and nitrogen loading of estuaries.
Furthermore, we project that these reductions, and their resulting
environmental benefits, will come at an average cost increase of less
than $100 per passenger car, an average cost increase of less than $200
for light trucks, and an average cost increase of about $350 for
medium-duty passenger vehicles, and an average increase of less than 2
cents per gallon of gasoline (or about $120 over the life of an average
vehicle).

DATES: This rule is effective April 10, 2000.
The incorporation by reference of certain publications contained in
this rule are approved by the Director of the Federal Register as of
April 10, 2000.

ADDRESSES: Comments: All comments and materials relevant to today's
action have been placed in Public Docket No. A-97-10 at the following
address: U.S. Environmental Protection Agency (EPA), Air Docket (6102),
Room M-1500, 401 M Street, S.W., Washington, D.C. 20460. EPA's Air
Docket makes materials related to this rulemaking available for review
at the above address (on the ground floor in Waterside Mall) from 8:00
a.m. to 5:30 p.m., Monday through Friday, except on government
holidays. You can reach the Air Docket by telephone at (202) 260-7548
and by facsimile at (202) 260-4400. We may charge a reasonable fee for
copying docket materials, as provided in 40 CFR Part 2.

FOR FURTHER INFORMATION CONTACT: Carol Connell, U.S. EPA, National
Vehicle and Fuels Emission Laboratory, 2000 Traverwood, Ann Arbor MI
48105; Telephone (734) 214-4349, FAX (734) 214-4816, E-mail
connell.carol@epa.gov.

SUPPLEMENTARY INFORMATION:

Highlights of the Tier2/Gasoline Sulfur Program

For cars, and light trucks, and larger passenger vehicles, the
program will--

Starting in 2004, through a phase-in, apply for the first
time the same set of emission standards covering passenger cars, light
trucks, and large SUVs and passenger vehicles. These emission levels
(``Tier 2 standards'') are feasible for these vehicles. The Tier 2
standards are also appropriate because of the increased use of light
trucks for personal transportation--the miles traveled in light trucks
is increasing and the emissions from these vehicles are thus an
increasing problem.
Introduce a new category of vehicles, ``medium-duty
passenger vehicles,'' thus bringing larger passenger vans and SUVs into
the Tier 2 program.
During the phase-in, apply interim fleet emission average
standards that match or are more stringent than current federal and
California ``LEV I'' (Low-Emission Vehicle, Phase I) standards.
Apply the same standards to vehicles operated on any fuel.
Allow auto manufacturers to comply with the very stringent
new standards in a flexible way while ensuring that the needed
environmental benefits occur.
Build on the recent technology improvements resulting from
the successful National Low-Emission Vehicles (NLEV) program and
improve the performance of these vehicles through lower sulfur
gasoline.
Set more stringent particulate matter standards.
Set more stringent evaporative emission standards.
For commercial gasoline, the program will--

Significantly reduce average gasoline sulfur levels
nationwide as early as 2000, fully phased in in 2006. Refiners will
generally add refining equipment to remove sulfur in their refining
processes. Importers of gasoline will be required to import and market
only gasoline meeting the sulfur limits.

[[Page 6699]]

Provide for flexible implementation by refiners through an
averaging, banking, and trading program.
Encourage early introduction of cleaner fuel into the
marketplace through an early sulfur credit and allotment program.
Apply temporary gasoline sulfur standards to certain small
refiners and gasoline marketed in a limited geographic area in the
western U.S.
Enable the new Tier 2 vehicles to meet the emission
standards by greatly reducing the degradation of vehicle emission
control performance from sulfur in gasoline. Lower sulfur gasoline also
appears to be necessary for the introduction of advanced technologies
that promise higher fuel economy but are very susceptible to sulfur
poisoning (for example, gasoline direct injection engines).
Reduce emissions from NLEV vehicles and other vehicles
already on the road.

Regulated Entities

This action will affect you if you produce new motor vehicles,
alter individual imported motor vehicles to address U.S. regulation, or
convert motor vehicles to use alternative fuels. It will also affect
you if you produce, distribute, or sell gasoline motor fuel.
The table below gives some examples of entities that may have to
comply with the regulations. But because these are only examples, you
should carefully examine these and existing regulations in 40 CFR parts
80 and 86. If you have questions, call the person listed in the FOR
FURTHER INFORMATION CONTACT section above.

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Examples of potentially
Category NAICS codes SIC Codes \b\ regulated entities
------------------------------------------------------\a\-------------------------------------------------------
Industry...................................... 336111 3711 Motor Vehicle Manufacturers.
336112
336120
Industry...................................... 336311 3592 Alternative fuel vehicle
converters.
336312 3714
422720 5172
454312 5984
811198 7549
541514 8742
541690 8931
Industry...................................... 811112 7533 Commercial Importers of Vehicles
and Vehicle Components.
811198 7549
541514 8742
Industry...................................... 324110 2911 Petroleum Refiners.
Industry...................................... 422710 5171 Gasoline Marketers and
Distributors.
422720 5172
Industry...................................... 484220 4212 Gasoline Carriers.
484230 4213
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\a\ North American Industry Classification System (NAICS).
\b\ Standard Industrial Classification (SIC) system code.

Access to Rulemaking Documents Through the Internet

Today's action is available electronically on the day of
publication from the Office of the Federal Register Internet Web site
listed below. Electronic copies of this preamble and regulatory
language as well as the Response to Comments document, the Regulatory
Impact Analysis and other documents associated with today's final rule
are available from the EPA Office of Mobile Sources Web site listed
below shortly after the rule is signed by the Administrator. This
service is free of charge, except any cost that you already incur for
connecting to the Internet.

Federal Register Web Site: http://www.epa.gov/fedrgstr/epa-air/
(Either select a desired date or use the Search feature.)
Office of Mobile Sources (OMS) Web Site: http://www.epa.gov/oms/ (Look
in ``What's New'' or under the ``Automobiles'' topic.)

Please note that due to differences between the software used to
develop the document and the software into which the document may be
downloaded, changes in format, page length, etc., may occur.

Outline of This Preamble

I. Introduction
A. What Are the Basic Components of the Program?
1. Vehicle Emission Standards
2. Gasoline Sulfur Standards
B. What Is Our Statutory Authority for Today's Action?
1. Light-Duty Vehicles and Trucks
2. Gasoline Sulfur Controls
C. The Tier 2 Study and the Sulfur Staff Paper
D. Relationship of Diesel Fuel Sulfur Control to the Tier 2/
Gasoline Sulfur Program
II. Tier 2 Determination
A. There Is a Substantial Need for Further Emission Reductions
in Order To Attain and Maintain National Ambient Air Quality
Standards
B. More Stringent Standards for Light-Duty Vehicles and Trucks
Are Technologically Feasible
C. More Stringent Standards for Light-Duty Vehicles and Trucks
Are Needed and Cost Effective Compared to Available Alternatives
III. Air Quality Need For and Impact of Today's Action
A. Americans Face Serious Air Quality Problems That Require
Further Emission Reductions
B. Ozone
1. Background on Ozone Air Quality
2. Additional Emission Reductions Are Needed To Attain and
Maintain the Ozone NAAQS.
a. Summary
b. Ozone Modeling Presented in Our Proposal and Supplemental
Notice
c. Updated and Additional Ozone Modeling
d. Results and Conclusions
e. Issues and Comments Addressed
f. 8-Hour Ozone
3. Cars and Light-Duty Trucks Are a Big Part of the
NO_X and VOC Emissions, and Today's Action Will Reduce
This Contribution Substantially
4. Ozone Reductions Expected From This Rule
C. Particulate Matter
1. Background on PM
2. Need for Additional Reductions to Attain and Maintain the
PM10 NAAQS
3. PM25 Discussion
4. Emission Reductions and Ambient PM Reductions
D. Other Criteria Pollutants: Carbon Monoxide, Nitrogen Dioxide,
Sulfur Dioxide
E. Visibility

[[Page 6700]]

F. Air Toxics
G. Acid Deposition
H. Eutrophication/Nitrification
I. Cleaner Cars and Light Trucks Are Critically Important to
Improving Air Quality
IV. What Are the New Requirements for Vehicles and Gasoline?
A. Why Are We Proposing Vehicle and Fuel Standards Together?
1. Feasibility of Stringent Standards for Light-Duty Vehicles
and Light-Duty Trucks a. Gasoline Fueled Vehicles i. LDVs and LDT1s-
LDT4s ii. Medium-Duty Passenger Vehicles (MDPVs) b. Diesel Vehicles
2. Gasoline Sulfur Control Is Needed To Support the Proposed
Vehicle Standards a. How Does Gasoline Sulfur Affect Vehicle
Emission Performance? b. How Large Is Gasoline Sulfur's Effect on
Emissions? c. Sulfur's Negative Impact on Tier 2 Catalysts d. Sulfur
Has Negative Impacts on OBD Systems
B. Our Program for Vehicles
1. Overview of the Vehicle Program a. Introduction b. Corporate
Average NOx Standard c. Tier 2 Exhaust Emission Standard ``Bins' d.
Schedules for Implementation i. Implementation Schedule for Tier 2
LDVs and LLDTs ii. Implementation Schedule for Tier 2 HLDTs e.
Interim Standards i. Interim Exhaust Emission Standards for LDV/
LLDTs ii Interim Exhaust Emission Standards for HLDTs iii. Interim
Programs Will Provide Reductions Over Previous Standards f.
Generating, Banking, and Trading NOx Credits
2. Why Are We Finalizing the Same Set of Standards for Tier 2
LDVs and LDTs?
3. Why Are We Finalizing the Same Standards for Both Gasoline
and Diesel Vehicles?
4. Key Elements of the Vehicle Program a. Basic Exhaust Emission
Standards and ``Bin'' Structure i. Why Are We Including Extra Bins?
b. The Program Will Phase In the Tier 2 Vehicle Standards Over
Several Years i. Primary Phase-in Schedule
ii. Alternative Phase-in Schedule
c. Manufacturers Will Meet a ``Corporate Average''
NO_X Standard
d. Manufacturers Can Generate, Bank, and Trade NO_X
Credits
i. General Provisions
ii. Averaging, Banking and Trading of NO_X Credits
Fulfills Several Goals
iii. How Manufacturers Can Generate and Use NO_X
Credits
iv. Manufacturers Can Earn and Bank Credits for Early
NO_X Reductions
v. Tier 2 NO_X Credits Will Have Unlimited Life
vi. NO_X Credit Deficits Can Be Carried Forward
vii. Encouraging the Introduction of Ultra Clean Vehicles
e. Interim Standards
i. Interim Exhaust Emission Standards for LDV/LLDTs
ii. Interim Exhaust Emission Standards for HLDTs
f. Light-Duty Evaporative Emission Standards
g. Passenger Vehicles Above 8,500 Pounds GVWR
C. Our Program for Controlling Gasoline Sulfur
1. Gasoline Sulfur Standards for Refiners and Importers
a. Standards and Deadlines That Refiners/Importers Must Meet
i. What Are the Per-Gallon Caps on Gasoline Sulfur Levels in
2004 and Beyond?
ii. What Standards Must Refiners/Importers Meet on a Corporate
Average Basis?
iii. What Standards Must Be Met by Individual Refineries/
Importers?
b. Standards and Deadlines for Refiners/Importers Which Provide
Gasoline to the Geographic Phase-in Area (GPA)
i. Justification for Our Geographic Phase-in Approach
ii. What Is the Geographic Phase-in Area and How Was It
Established?
iii. Standards/Deadlines for Gasoline Sold in the Geographic
Phase-in Area
iv. What Are the Per-Gallon Caps on Gasoline Sulfur Levels in
the Phase-in Area?
v. How Do Refiners/Importers Account for GPA Fuel in Their
Corporate Average Calculations?
vi. How Do Refiners/Importers Apply for the Geographic Phase-in
Area Standards?
vii. How Will EPA Establish the GPA in Adjacent States?
c. How Does the Sulfur Averaging, Banking, and Trading Program
Work?
i. Generating Allotments Prior to 2004
ii. Generating Allotments in 2004 and 2005
iii. Using Allotments in 2004 and 2005
iv. How Long Do Allotments Last?
v. Establishing Individual Refinery Sulfur Baselines for Credit
Generation Purposes
vi. Generating Sulfur Credits Prior to 2004
vii. Generating Sulfur Credits in 2004 and Beyond
viii. Using Sulfur Credits
ix. How Long Do Credits Last?
x. Conversion of Allotments Into Credits
d. How are State Sulfur Programs Affected by EPA's Program?
2. Hardship Provision for Qualifying Refiners
a. Hardship Provision for Qualifying Small Refiners
i. How Are Small Refiners Defined?
ii. Standards That Small Refiners Must Meet
iii. How Do Small Refiners Apply for Small Refiner Status?
iv. How Do Small Refineries Apply for a Sulfur Baseline?
v. Volume Limitation on Use of a Small Refinery Standard
vi. Extensions Beyond 2007 for Small Refiners
vii. Can Small Refiners Participate in the ABT Program?
b. Temporary Waivers From Low Sulfur Requirements in Extreme
Unforeseen Circumstances
c. Temporary Waivers Based on Extreme Hardship Circumstances
3. Streamlining of Refinery Air Pollution Permitting Process
a. Brief Summary of Proposal
b. Significant Comments Received
c. Today's Action
i. Major New Source Review
ii. Environmental Justice
D. What Are the Economic Impacts, Cost Effectiveness and
Monetized Benefits of the Tier 2 Program?
1. What Are the Estimated Costs of the Vehicle Standards?
2. Estimated Costs of the Gasoline Sulfur Standards
3. What Are the Aggregate Costs of the Tier 2/Gasoline Sulfur
Final Rule?
4. How Does the Cost-Effectiveness of This Program Compare to
Other Programs?
a. Cost Effectiveness of this Program
b. How Does the Cost Effectiveness of This Program Compare With
Other Means of Obtaining Mobile Source NO_X+NMHC
Reductions?
c. How Does the Cost Effectiveness of This Program Compare With
Other Known Non-Mobile Source Technologies for Reducing
NO_X+NMHC?
5. Does the Value of the Benefits Outweigh the Cost of the
Standards?
a. What Is the Purpose of This Benefit-Cost Comparison?
b. What Was Our Overall Approach to the Benefit-Cost Analysis?
c. What Are the Significant Limitations of the Benefit-Cost
Analysis?
d. How Was the Benefit-Cost Analysis Changed From Proposal?
e. How Did We Perform the Benefit-Cost Analysis?
f. What Were the Results of the Benefit-Cost Analysis?
V. Other Vehicle-Related Provisions
A. Final Tier 2 CO, HCHO and PM Standards
1. Carbon Monoxide (CO) Standards
2. Formaldehyde (HCHO) Standards
3. Use of NMHC Data To Show Compliance With NMOG Standards;
Alternate Compliance With Formaldehyde Standards.
4. Particulate Matter (PM) Standards
B. Useful Life
1. Mandatory 120,000 Mile Useful Life
2. 150,000 Mile Useful Life Certification Option
C. Supplemental Federal Test Procedure (SFTP) Standards
1. Background
2. SFTP Under the NLEV Program
3. SFTP Standards for the Interim and Tier 2 LDVs and LDTs: As
Proposed
4. Final SFTP Standards for Interim and Tier 2 LDVs and LDTs
5. Adding a PM Standard to the SFTP Standards
6. Future Efforts Relevant to SFTP Standards
D. LDT Test Weight
E. Test Fuels
F. Changes to Evaporative Certification Procedures to Address
Impacts of Alcohol Fuels
G. Other Test Procedure Issues
H. Small Volume Manufacturers
1. Special Provisions for Independent Commercial Importers
(ICIs)
2. Hardship Provision for Small Volume Manufacturers
I. Compliance Monitoring and Enforcement

[[Page 6701]]

1. Application of EPA's Compliance Assurance Program, CAP2000
2. Compliance Monitoring
3. Relaxed In-Use Standards for Vehicles Produced During the
Phase-in Period
4. Enforcement of the Tier 2 and Interim Corporate Average
NO_X Standards.
J. Addressing Environmentally Beneficial Technologies Not
Recognized by Test Procedures
K. Adverse Effects of System Leaks
L. The Future Development of Advanced Technology and the Role of
Fuels
M. Miscellaneous Provisions
VI. Gasoline Sulfur Program Compliance and Enforcement
Provisions
A. Overview
B. Requirements for Foreign Refiners and Importers
1. Requirements for Foreign Refiners With Individual Refinery
Sulfur Standards or Credit Generation Baselines
2. Requirements for Truck Importers
C. What Standards and Requirements Apply Downstream?
D. Testing and Sampling Methods and Requirements
1. Test Method for Sulfur in Gasoline
2. Test Method for Sulfur in Butane
3. Quality Assurance Testing
4. Requirement to Test Every Batch of Gasoline Produced or
Imported
5. Exceptions to the Every-Batch Testing Requirement
6. Sampling Methods
7. Gasoline Sample Retention Requirements
E. Federal Enforcement Provisions for California Gasoline and
for Use of California Test Methods to Determine Compliance
F. Recordkeeping and Reporting Requirements
1. Product Transfer Documents
2. Recordkeeping Requirements
3. Reporting Requirements
G. Exemptions for Research, Development, and Testing
H. Liability and Penalty Provisions for Noncompliance
I. How Will Compliance With the Sulfur Standards Be Determined?
VII. Public Participation
VIII. Administrative Requirements
A. Administrative Designation and Regulatory Analysis
B. Regulatory Flexibility
1. Potentially Affected Small Businesses
2. Small Business Advocacy Review Panel and the Evaluation of
Regulatory Alternatives
C. Paperwork Reduction Act
D. Intergovernmental Relations
1. Unfunded Mandates Reform Act
2. Executive Order 13084: Consultation and Coordination With
Indian Tribal Governments
3. Executive Order 13132 (Federalism)
E. National Technology Transfer and Advancement Act
F. Executive Order 13045: Children's Health Protection
G. Congressional Review Act
IX. Statutory Provisions and Legal Authority

I. Introduction

Since the passage of the 1990 Clean Air Act Amendments, the U.S.
has made significant progress in reducing emissions from passenger cars
and light trucks. The National Low-Emission Vehicle (NLEV) and
Reformulated Gasoline (RFG) programs are important examples of control
programs that are in place and will continue to help reduce car and
light-duty truck emissions into the near future.
Nonetheless, due to increasing vehicle population and vehicle miles
traveled, passenger cars and light trucks will continue to be
significant contributors to air pollution inventories well into the
future. In fact, the emission contribution of light trucks and sport
utility vehicles now matches that of passenger cars. (This is occurring
because of the combination of growth in miles traveled by light trucks
and the fact that their emission standards are currently less stringent
than those of passenger cars). The program we describe below builds on
the NLEV and RFG Phase II programs to develop a strong new national
program to protect public health and the environment well into the next
century. The program, while reducing VOC and other emissions, focuses
especially on NO_X, because that is where the largest air
quality gains can be achieved.
We have followed several overarching principles in developing this
final rule:
Design a strong national program that will assist states
in every region of the country to meet their air quality objectives and
that will ensure that cars and trucks continue to contribute a fair
share to our nation's overall air quality solutions;
View vehicles and fuels as an integrated system,
recognizing that only by addressing both can the best overall emission
performance be achieved;
Establish a single set of emission standards that apply
regardless of the fuel used and whether the vehicle is a car, a light
truck, or a larger passenger vehicle;
Provide compliance flexibilities that allow vehicle
manufacturers and oil refiners to adjust to future market trends and
honor consumer preferences;
Not preclude the development of advanced low emission or
fuel efficient technologies such as lean-burn engines; and
Ensure sufficient leadtime for phase-in of the Tier 2 and
gasoline sulfur program.
With these principles as background, we turn now to an overview of
the vehicle and fuel aspects of the program. Sections I and II of this
preamble will give you a brief overview of our program and our
rationale for implementing it. Subsequent sections will expand on the
air quality need, technological feasibility, economic impacts, and
provide a detailed description of the specifics of the program. A
public participation section reviews the process we followed in
soliciting and responding to public comment. The final sections deal
with several administrative requirements. You may also want to review
our Final Regulatory Impact Analysis (RIA) and our Response to Comments
document, both of which are found in the docket and on the Internet.
They provide additional analyses and discussions of many topics raised
in this preamble.

A. What Are the Basic Components of the Program?

The nation's air quality, while certainly better than in the past,
will nevertheless continue to expose tens of millions of Americans to
unhealthy levels of air pollution well into the future in the absence
of significant new controls on emissions from motor vehicles. EPA is
therefore finalizing a major, comprehensive program designed to reduce
emission standards for passenger cars, light trucks, and large
passenger vehicles (including sport-utility vehicles, minivans, vans,
and pickup trucks) and to reduce the sulfur content of gasoline. Under
the program, automakers will produce vehicles designed to have very low
emissions when operated on low-sulfur gasoline, and oil refiners will
provide that much cleaner gasoline nationwide. In this preamble, we
refer to the comprehensive program as the ``Tier 2/Gasoline Sulfur
program.''
1. Vehicle Emission Standards
Today's action sets new federal emission standards (``Tier 2
standards'') for passenger cars, light trucks, and larger passenger
vehicles. The program is designed to focus on reducing the emissions
most responsible for the ozone and particulate matter (PM) impact from
these vehicles--nitrogen oxides (NO_X) and non-methane
organic gases (NMOG), consisting primarily of hydrocarbons (HC) and
contributing to ambient volatile organic compounds (VOC). The program
will also, for the first time, apply the same set of federal standards
to all passenger cars, light trucks, and medium-duty passenger
vehicles. Light trucks include ``light light-duty trucks'' (or LLDTs),
rated at less than 6000 pounds gross vehicle weight and ``heavy light-
duty trucks'' (or HLDTs), rated at more than 6000

[[Page 6702]]

pounds gross vehicle weight).\1\ ``Medium-duty passenger vehicles'' (or
MDPVs) form a new class of vehicles introduced by this rule that
includes SUVs and passenger vans rated at between 8,500 and 10,000
GVWR. The program thus ensures that essentially all vehicles designed
for passenger use in the future will be very clean vehicles.
---------------------------------------------------------------------------

\1\ A vehicle's ``Gross Vehicle Weight Rating,'' or GVWR, is the
curb weight of the vehicle plus its maximum recommended load of
passengers and cargo.
---------------------------------------------------------------------------

The Tier 2 standards finalized today will reduce new vehicle
NO_X levels to an average of 0.07 grams per mile (g/mi). For
new passenger cars and light LDTs, these standards will phase in
beginning in 2004, with the standards to be fully phased in by 2007.\2\
For heavy LDTs and MDPVs, the Tier 2 standards will be phased in
beginning in 2008, with full compliance in 2009.
---------------------------------------------------------------------------

\2\ By comparison, the NO_X standards for the National
Low Emission Vehicle (NLEV) program, which will be in place
nationally in 2001, range from 0.30 g/mi for passenger cars to 0.50
g/mi for medium-sized light trucks (larger light trucks are not
covered). For further comparison, the standards met by today's Tier
1 vehicles range from 0.60 g/mi to 1.53 g/mi.
---------------------------------------------------------------------------

During the phase-in period from 2004-2007, all passenger cars and
light LDTs not certified to the primary Tier 2 standards will have to
meet an interim average standard of 0.30 g/mi NO_X,
equivalent to the current NLEV standards for LDVs and more stringent
than NLEV for LDT2s (e.g., minivans).\3\ During the period 2004-2008,
heavy LDTs and MDPVs not certified to the final Tier 2 standards will
phase in to an interim program with an average standard of 0.20 g/mi
NO_X, with those not covered by the phase-in meeting a per-
vehicle standard (i.e., an emissions ``cap'') of 0.6 g/mi
NO_X (for HLDTs) and 0.9 g/mi NO_X (for MDPVs). The
average standards for NO_X will allow manufacturers to comply
with the very stringent new standards in a flexible way, assuring that
the average emissions of a company's production meet the target
emission levels while allowing the manufacturer to choose from several
more- and less-stringent emission categories for certification.
---------------------------------------------------------------------------

\3\ There are also NMOG standards associated with both the
interim and Tier 2 standards. The NMOG standards vary depending on
which of various individual sets of emission standards manufacturers
choose to use in complying with the average NO_X standard.
This ``bin'' approach is described more fully in section IV.B. of
this preamble.
---------------------------------------------------------------------------

We are also setting stringent particulate matter standards that
will be especially important if there is substantial future growth in
the sales of diesel vehicles. Before 2004, we are establishing more
stringent interim PM standards for most light trucks than exist now
under NLEV. With higher sales of diesel cars and light trucks, they
could easily contribute between one-half and two percent of the PM10
concentration allowed by the NAAQS, with some possibility that the
contribution could be as high as 5 to 40 percent in some roadside
situations with heavy traffic. These increases would make attainment
even more difficult for 8 counties which we already predict to need
further emission reductions even without an increase in diesel sales,
and would put at risk another 18 counties which are now within 10
percent of a NAAQS violation. Thus, by including a more stringent PM
standard in the program finalized today, we help address environmental
concerns about the potential growth in the numbers of light-duty
diesels on the road--even if that growth is substantial. The new
requirements also include more stringent hydrocarbon controls (exhaust
NMOG and evaporative emissions standards). We will also monitor the
progress of the development of advanced technologies and the role of
fuels.
2. Gasoline Sulfur Standards
The other major part of today's action will significantly reduce
average gasoline sulfur levels nationwide. We expect these reductions
could begin to phase in as early as 2000, with full compliance for most
refiners occurring by 2006. Refiners will generally install advanced
refining equipment to remove sulfur during the production of gasoline.
Importers of gasoline will be required to import and market only
gasoline meeting the sulfur limits. Temporary, less stringent standards
will apply to a few small refiners through 2007. In addition,
temporary, less stringent standards will apply to a limited geographic
area in the western U.S. for the 2004-2006 period.
This significant new control of gasoline sulfur content will have
two important effects. The lower sulfur levels will enable the much-
improved emission control technology necessary to meet the stringent
vehicle standards of today's rule to operate effectively over the
useful life of the new vehicles. In addition, as soon as the lower
sulfur gasoline is available, all gasoline vehicles already on the road
will have reduced emissions--from less degradation of their catalytic
converters and from fewer sulfur compounds in the exhaust.
Today's action will encourage refiners to reduce sulfur in gasoline
as early as 2000. The program requires that most refiners and importers
meet a corporate average gasoline sulfur standard of 120 ppm and a cap
of 300 ppm beginning in 2004. By 2006, the cap will be reduced to 80
ppm and most refineries must produce gasoline averaging no more than 30
ppm sulfur. The program builds upon the existing regulations covering
gasoline composition as it relates to emissions performance. It
includes provisions for trading of sulfur credits, increasing the
flexibility available to refiners for complying with the new
requirements. We intend for the credit program to ease compliance
uncertainties by providing refiners the flexibility to phase in early
controls in 2000-2003 and use credits gained in these years to delay
some control until as late as 2006. As finalized today, the program
will achieve the needed environmental benefits while providing
substantial flexibility to refiners.

B. What Is Our Statutory Authority for Today's Action?

1. Light-Duty Vehicles and Trucks
We are setting motor vehicle emission standards under the authority
of section 202 of the Clean Air Act. Sections 202(a) and (b) of the Act
provide EPA with general authority to prescribe vehicle standards,
subject to any specific limitations otherwise included in the Act.
Sections 202(g) and (h) specify the current standards for LDVs and
LDTs, which became effective beginning in model year 1994 (``Tier 1
standards'').
Section 202(i) of the Act provides specific procedures that EPA
must follow to determine whether standards more stringent than Tier 1
standards for LDVs and certain LDTs \4\ are appropriate beginning
between the 2004 and 2006 model years.\5\ Specifically, we are required
to first issue a study regarding ``whether or not further reductions in
emissions from light-duty vehicles and light-duty trucks should be
required * * *'' (the ``Tier 2 Study''). This study ``shall examine the
need for further reductions in emissions in order to attain or maintain
the national ambient air quality standards.'' It is also to consider:
(1) The availability of technology to meet more stringent standards,
taking cost, lead time, safety, and energy impacts into consideration;
and (2) the need for, and cost effectiveness of, such standards,
including consideration of alternative methods of attaining or
maintaining the national ambient air quality standards. A certain set
of ``default'' emission

[[Page 6703]]

standards for these vehicle classes is among those options for new
standards that EPA is to consider.
---------------------------------------------------------------------------

\4\ LDTs with a loaded vehicle weight less than or equal to 3750
pounds, called LDT1s and LDT2s.
\5\ Section 202(b)(1)(C) forbids EPA from promulgating mandatory
standards more stringent than Tier 1 standards until the 2004 model
year.
---------------------------------------------------------------------------

After the study is completed and the results are reported to
Congress, EPA is required to determine by rulemaking whether: (1) There
is a need for further emission reductions; (2) the technology for more
stringent emission standards from the affected classes is available;
and (3) such standards are needed and cost-effective, taking into
account alternatives. If EPA answers ``yes'' to these questions, then
the Agency is to promulgate new, more stringent motor vehicle standards
(``Tier 2 standards'').
EPA submitted its report to Congress on July 31, 1998. Today's
final rule makes affirmative responses to the three questions above
(see Section II below) and sets new standards that are more stringent
than the default standards in the Act.
EPA is also setting standards for larger light-duty trucks and
MDPVs under the general authority of Section 202(a)(1) and 202(b) and
under Section 202(a)(3) of the Act, which requires that standards
applicable to emissions of hydrocarbons, NO_X, CO and PM from
heavy-duty vehicles \6\ reflect the greatest degree of emission
reduction available for the model year to which such standards apply,
giving appropriate consideration to cost, energy, and safety. We are
also setting standards for formaldehyde under our authority in sections
202(a) and (l).
---------------------------------------------------------------------------

\6\ LDTs that have gross vehicle weight ratings above 6000
pounds are considered ``heavy-duty vehicles'' under the Act. See
section 202(b)(3). For regulatory purposes, we refer to these LDTs
as ``heavy light-duty trucks'' made up of LDT3s and LDT4s.
---------------------------------------------------------------------------

2. Gasoline Sulfur Controls
We are adopting gasoline sulfur controls pursuant to our authority
under Section 211(c)(1) of the Clean Air Act.\7\ Under Section
211(c)(1), EPA may adopt a fuel control if at least one of the
following two criteria is met: (1) The emission products of the fuel
cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare; or (2) the emission
products of the fuel will significantly impair emissions control
systems in general use or which will be in general use were the fuel
control to be adopted.
---------------------------------------------------------------------------

\7\ We currently have regulatory requirements for conventional
and reformulated gasoline adopted under Sections 211(c) and 211(k)
of the Act, in addition to the ``substantially similar''
requirements for fuel additives of Section 211(f). These
requirements have the effect of limiting sulfur levels in gasoline
to some extent. See the Final RIA for more details.
---------------------------------------------------------------------------

We are adopting gasoline sulfur controls based on both of these
criteria. Under the first criterion, we believe that sulfur in gasoline
used in Tier 1 and LEV technology vehicles contributes to ozone
pollution, air toxics, and PM. Under the second criterion, we believe
that gasoline sulfur in fuel will significantly impair the emissions
control systems expected to be used in Tier 2 technology vehicles, as
well as emissions control systems currently used in LEVs. Please refer
to Section IV.C. below and to the Final Regulatory Impact Analysis
(RIA) for more details of our analysis and findings. The RIA includes a
more detailed discussion of EPA's authority to set gasoline sulfur
standards, including a discussion of our conclusions relating to the
factors required to be considered under Section 211(c).

C. The Tier 2 Study and the Sulfur Staff Paper

On July 31, 1998, EPA submitted its report to Congress containing
the results of the Tier 2 study.\8\ The study indicated that in the
2004 and later time frame, there will be a need for emission reductions
to aid in meeting and maintaining the National Ambient Air Quality
Standards (NAAQS) for both ozone and PM. Air quality modeling showed
that in the 2007-2010 time frame, when Tier 2 standards will become
fully effective, a number of areas will still be in nonattainment for
ozone and PM even after the implementation of existing emission
controls. The study also noted the continued existence of carbon
monoxide (CO) nonattainment areas. It also found ample evidence that
technologies will be available to meet more stringent Tier 2 standards.
In addition, the study provided evidence that such standards could be
implemented at a similar cost per ton of reduced pollutants as other
programs aimed at similar air quality problems. Finally, the study
identified several additional issues in need of further examination,
including the relative stringency of car and light truck emission
standards, the appropriateness of identical versus separate standards
for gasoline and diesel vehicles, and the effects of sulfur in gasoline
on catalyst efficiency. Section IV of this preamble describes the steps
we have taken to follow up on the Tier 2 Study.
---------------------------------------------------------------------------

\8\ On April 28, 1998, EPA published a notice of availability
announcing the release of a draft of the Tier 2 study and requesting
comments on the draft. The final report to Congress included a
summary and analysis of the comments EPA received.
---------------------------------------------------------------------------

In addition, on May 1, 1998, EPA released a staff paper presenting
EPA's understanding of the impact of gasoline sulfur on emissions from
motor vehicles and exploring what gasoline producers and automobile
manufacturers could do to reduce sulfur's impact on emissions. The
staff paper noted that gasoline sulfur degrades the effectiveness of
catalytic converters and that high sulfur levels in commercial gasoline
could affect the ability of future automobiles--especially those
designed for very low emissions--to meet more stringent standards in
use. It also pointed out that sulfur control will provide additional
benefits by lowering emissions from the current fleet of vehicles.

D. Relationship of Diesel Fuel Sulfur Control to the Tier 2/Gasoline
Sulfur Program

In the NPRM, we raised the question of what if any changes to
diesel fuel may be needed to enable diesel vehicles to meet the Tier 2
standards or any future heavy-duty diesel engine standards.
Specifically, we raised the question of whether diesel sulfur levels
need to be controlled. Since diesel fuel controls of any kind would
have an impact on the refinery as a whole, and since in some cases
(including potential diesel sulfur limits) could have implications for
gasoline sulfur control, we requested comment on this issue in our
proposal. We also indicated that we planned to release an Advance
Notice of Proposed Rulemaking to solicit more information on this
subject.
We published the ANPRM on May 13, 1999 (64 FR 26142). We are in the
process of considering all of the comments received in response to the
ANPRM and plan to issue a Notice of Proposed Rulemaking (NPRM) in early
spring of 2000. We received many comments on the subject of diesel fuel
control along with the comments submitted on the proposed Tier 2/
Gasoline Sulfur regulations. We have prepared brief responses to some
of these comments in the Response to Comments document, and will deal
fully with these comments as part of the forthcoming NPRM on diesel
fuel. We are taking no action on diesel fuel as part of today's action.

II. Tier 2 Determination

Based on the statutory requirements described above and the
evidence provided in the Tier 2 Study and since its release, as
described elsewhere in this preamble, EPA has determined that new, more
stringent emission standards are indeed needed, technologically
feasible, and cost effective.

[[Page 6704]]

A. There Is a Substantial Need for Further Emission Reductions in Order
to Attain and Maintain National Ambient Air Quality Standards

EPA finds that there is a clear air quality need for new emission
standards, based on the continuing air quality problems predicted to
exist in future years. As the discussion in Section III.B. illustrates,
26 metropolitan areas are each certain or highly likely to need
additional reductions. These areas are distributed across most regions
of the U.S., and have a combined population of over 86 million. Section
III.B. also shows that an additional 12 areas each has a moderate to
significant probability of needing additional reductions, representing
another 25 million people. This provides ample evidence that further
emission reductions are needed to meet the 1-hour ozone NAAQS.
In addition to these ozone concerns, our analysis of
PM10 monitoring data and PM10 projections
indicates that 15 PM10 nonattainment counties violated the
PM10 NAAQS in recent years, and that 8 of them with a 1996
population of almost 8 million have a high risk of failing to attain
and maintain without more emission reductions. Eighteen other counties,
with a population of 23 million have a significant risk of failing or
are within 10 percent of violating the PM10 NAAQS. It is
also important to recognize that nonattainment areas remain for other
criteria pollutants (e.g., CO) and that non-criteria pollution (e.g.,
air toxics and regional haze) also contributes to environmental and
health concerns.

B. More Stringent Standards for Light-Duty Vehicles and Trucks Are
Technologically Feasible

We find that emission standards significantly more stringent than
current Tier 1 and National Low Emission Vehicle (NLEV) levels are
technologically feasible. This is true both for the LDVs and LDTs
specifically covered in section 202(i) and for the medium-duty
passenger vehicles also included in today's final rule. Manufacturers
are currently producing NLEV vehicles that meet more stringent
standards than similar Tier 1 models. Our analysis shows that mainly
through improvements in engine control software and catalytic converter
technology, manufacturers can build and are building durable vehicles
and trucks, including heavy light-duty trucks, which have very low
emission levels.\9\ Section IV.A. below discusses our feasibility
conclusions in more detail.
---------------------------------------------------------------------------

\9\ The Final RIA contains a more detailed analysis, and Section
IV.A. below has further discussion of the technological feasibility
of our standards including detailed discussions of the various
technology options that we believe manufacturers may use to meet
these standards.
---------------------------------------------------------------------------

Many current production vehicles are already certified at or near
the Tier 2 standards. For year 2000 certification (although not yet
complete), over 50 vehicle models have emissions at or below Tier 2
levels. In addition, we performed a demonstration program at our EPA
laboratory that showed that even large vehicles, which would be
expected to face the toughest challenges reaching Tier 2 emission
levels, can do so with conventional technology. Others, including the
Manufacturers of Emission Controls Association (MECA) and the State of
California, have also performed demonstration programs, with similar
results. Manufacturers have also certified LDVs and LDTs to NMOG and CO
levels as much as 80 percent below Tier 1 standards. Furthermore, for
passenger vehicles greater than 8500 lbs GVWR, we believe that by using
technologies and control strategies similar to what will be used on
lighter vehicles, manufacturers will be able to meet the Tier 2
emission standards.
Thus, we believe that, by the 2004-2009 time frame, manufacturers
will be fully able to comply with the new Tier 2 emission standard
levels. In addition, to facilitate manufacturers' efforts to meet these
new standards, the Tier 2 regulations include a phase-in over several
years and a corporate fleet average NO_X standard, which will
allow manufacturers to optimize the deployment of technology across
their product lines with no loss of environmental benefit. Our analysis
of the available technology improvements and the very low emission
levels already being realized on these vehicles leads us to find that
the standards adopted today are fully feasible for LDVs and LDTs.

C. More Stringent Standards for Light-Duty Vehicles and Trucks Are
Needed and Cost Effective Compared to Available Alternatives

In this action, we also find that more stringent motor vehicle
standards are both necessary and cost effective. As discussed above,
substantial further reductions in emissions are needed to help reduce
the levels of unhealthy air pollution to which millions of people are
being exposed; in particular, we expect that a number of areas will not
attain or maintain compliance with the National Ambient Air Quality
Standards for ozone and PM10 without such reductions. (We
describe this further in Section III below and in the RIA.)
Furthermore, mobile sources are important contributors to the air
quality problem. As we will explain more fully later in this preamble,
in the year 2030, the cars and light trucks that are the subject of
today's final rule are projected to contribute as much as 40 percent of
the total NO_X inventory in some cities, and almost 20
percent of nationwide NO_X emissions. This situation would
have been considerably worse without the NLEV program created by
vehicle manufacturers, EPA, the Northeastern states, and others.
These emission reductions are clearly necessary to meet and
maintain the 1-hour ozone NAAQS. We project that while the emission
reductions of this program will lead to substantial progress in meeting
and maintaining the NAAQS, many areas will still not come into
attainment even with this magnitude of reductions.
We find that the Tier 2/Gasoline Sulfur program is a reasonable,
cost-effective method of providing substantial progress towards
attainment and maintenance of the NAAQS, costing about $2000 per ton of
NO_X plus hydrocarbon emissions reduced. This program will
reduce annual NO_X emissions by about 2.2 million tons per
year in 2020 and 2.8 million tons per year in 2030 after the program is
fully implemented. By way of comparison, when EPA established its 8-
hour NAAQS for ozone, we identified several types of emission control
programs that were reasonably cost effective. If all of the controls
identified in that analysis costing less than $10,000/ton were
implemented nationwide, they would produce NO_X emission
reductions of about 2.9 million tons per year. (That is, to achieve
about the same emission reductions as the Tier 2/Gasoline Sulfur
program, other alternative measures would have a significantly higher
cost per ton). These emission reductions are clearly necessary to meet
and maintain the one-hour ozone NAAQS. We project that while the
emission reductions of this program will lead to substantial progress
in meeting and maintaining the NAAQS, many areas will still not come
into attainment even with this magnitude of reductions.
In addition, the magnitude of emission reductions that can be
achieved by a comprehensive national Tier 2/Gasoline Sulfur program
will be difficult to achieve from any other source category. Given the
large contribution that light-duty mobile source emissions make to the
national emissions inventory and the range of control programs ozone-
affected areas

[[Page 6705]]

already have in place or would be expected to implement, we believe it
will be very difficult, if not impossible, to meet (and maintain) the
ozone NAAQS in a cost-effective manner without large emission
reductions from LDVs and LDTs. We expect emissions from MDPVs to also
play an increasing role.
Furthermore, we project that the Tier 2/Gasoline Sulfur program
will significantly reduce direct and secondary particulate matter
coming from LDVs, LDTs, and MDPVs--by about 36,000 tons per year of
direct PM alone by 2030; large secondary PM reductions from
significantly lower NO_X and SO_X emissions will
add to the overall positive impact on airborne particles. These
reductions will be very cost-effective compared to other measures to
reduce PM pollution. Because direct PM emissions from gasoline vehicles
are related the presence of sulfur in gasoline, no new emission control
devices, beyond what manufacturers are expected to install to meet the
NO_X and NMOG standards, will be necessary to provide the
reductions expected for these pollutants under the program. The
standards will provide valuable insurance against increases in PM
emissions from LDVs, LDTs, and MDPVs.
Finally, the Tier 2/Gasoline Sulfur program will significantly
reduce CO emissions from LDVs, LDTs, and MDPVs. (See Chapter III of the
RIA for an analysis of these reductions.) The technical changes needed
to meet the NMOG standards will also result in CO reductions sufficient
to meet the CO standards. Thus, these CO reductions will be very cost-
effective since they will not require any new emission control devices
beyond what manufacturers are expected to install to meet the
NO_X and NMOG standards.
We conclude, then, that today's final rule is a major source of
ozone precursor, PM, and CO emission reductions when compared to other
available options. The discussions of cost and cost effectiveness later
in this preamble and in the RIA explain the derivation of cost
effectiveness estimates and compares them to the cost effectiveness of
other alternatives. That discussion indicates that this program will
have a cost effectiveness comparable to both the Tier 1 and NLEV
standards and will also be cost effective when compared to non-mobile
source programs.

III. Air Quality Need For and Impact Of Today's Action

In the absence of significant new controls on emission, tens of
millions of Americans would continue to be exposed to unhealthy levels
of air pollution. Emissions from passenger cars and light trucks are a
significant contributor to a number of air pollution problems. Today's
action will significantly reduce emissions from cars and light trucks
and hence will significantly reduce the health risks posed by air
pollution. This section summarizes the results of the analyses we
performed to arrive at our determination that continuing air quality
problems are likely to exist, that these air quality problems would be
in part due to emissions from cars and light trucks, and that the new
standards promulgated by today's final rule will improve air quality
and mitigate other environmental problems.

A. Americans Face Serious Air Quality Problems That Require Further
Emission Reductions

Air quality in the United States continues to improve. Nationally,
the 1997 air quality levels were the best on record for all six
criteria pollutants. \10\ In fact, the 1990s have shown a steady trend
of improvement, due to reductions in emissions from most sources of air
pollution, from factories to motor vehicles. Despite great progress in
air quality improvement, in 1997 there were still approximately 107
million people nationwide who lived in counties with monitored air
quality levels above the primary national air quality standards. \11\
There are also people living in counties outside of the air monitoring
network where violations of the NAAQS could have also occurred during
the year. Moreover, unless there are reductions in overall emissions
beyond those that are scheduled to be achieved by already committed
controls, many of these Americans will continue to be exposed to
unhealthy air.
---------------------------------------------------------------------------

\10\ National Air Quality and Emissions Trend Report, 1997, Air
Quality Trends Analysis Group, Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, N.C., December 1998 (available on the World Wide Web at http:/
/www/epa.gov/oar/aqtrnd97/).
\11\ U.S. Environmental Protection Agency, Latest Findings on
National Air Quality: 1997 Status and Trends. December 1998.
---------------------------------------------------------------------------

Ambient ozone is formed in the lower atmosphere through a complex
interaction of VOC and NO_X emissions. Cars and light trucks
emit a substantial fraction of these emissions. Ambient PM is emitted
directly from cars and light trucks; it also forms in the atmosphere
from NO_X, sulfur oxides (SO_X), and VOC, all of
which are emitted by motor vehicles. When ozone exceeds the air quality
standards, otherwise healthy people often have reduced lung function
and chest pain, and hospital admissions for people with respiratory
ailments like asthma increase; for longer exposures, permanent lung
damage can occur. Similarly, fine particles can penetrate deep into the
lungs. Results of studies suggest a likely causal role of ambient PM in
contributing to reported effects, such as: premature mortality,
increased hospital admissions, increased respiratory symptoms, and
changes in lung tissue. When either ozone or PM air quality problems
are present, those hardest hit tend to be children, the elderly, and
people who already have health problems.
The health effects of high ozone and PM levels are not the only
reason for concern about continuing air pollution. Ozone and PM also
harm plants and damage materials. PM reduces visibility and contributes
to significant visibility impairment in our national parks and
monuments and in many urban areas. In addition, air pollution from
motor vehicles contributes to cancer and other health risks,
acidification of lakes and streams, eutrophication of coastal and
inland waters, and elevated drinking water nitrate levels. These
problems impose a substantial burden on public health, our economy, and
our ecosystems.
In recognition of this burden, Congress has passed and subsequently
amended the Clean Air Act. The Clean Air Act requires each state to
have an approved State Implementation Plan (SIP) that shows how an area
plans to meet its air quality obligations, including achieving and then
maintaining attainment of all of the National Ambient Air Quality
Standards (NAAQS), such as those for ozone and PM. The Clean Air Act
also requires EPA to periodically re-evaluate the NAAQS in light of new
scientific information. Our most recent re-evaluation of the ozone and
PM NAAQS led us to revise both standards (62 FR 38856, July 18, 1997
and 62 FR 38652, July 18, 1997). These revised standards reflected
additional information that had become available since the previous
revision of the ozone and PM standards, respectively.
On May 14, 1999, a panel of the United States Court of Appeals for
the District of Columbia Circuit reviewed EPA's revisions to the ozone
and PM NAAQS and found, by a 2-1 vote, that sections 108 and 109 of the
Clean Air Act, as interpreted by EPA, represent unconstitutional
delegations of Congressional power. American Trucking Ass'n., Inc. et
al., v. Environmental Protection Agency, 175 F.3d 1027 (D.C. Cir.
1999). Among other things the Court remanded the record

[[Page 6706]]

for the 8-hour ozone NAAQS and the PM2.5 NAAQS to EPA. On
October 29, 1999, EPA's petition for rehearing by the three judge panel
was denied, with the exception that the panel modified its prior ruling
regarding EPA's authority to implement a revised ozone NAAQS under Part
D subpart 2 of Title I. EPA's petition for rehearing en banc by the
full Circuit was also denied, although five of the nine judges
considering the petition agreed to rehear the case.
As a result of the Court's decision, requirements on the States to
implement the new 8-hour ozone standard have been suspended although
the standard itself is still in force and the science behind it has
generally not been contradicted. The court also did not question EPA's
findings regarding the health effects of PM10 and
PM2.5. However, due to the uncertainty regarding the status
of the new NAAQS, we will rely on the preexisting NAAQS in determining
air quality need under section 202(i) of the Act.
Carbon monoxide (CO) can cause serious health effects for those who
suffer from cardiovascular disease, such as angina pectoris. There has
been considerable progress in attaining the longstanding NAAQS for
carbon monoxide, largely through more stringent standards for CO from
motor vehicles. This progress has been made despite large increases in
travel by vehicle. In 1997, there were about 9 million people living in
three counties with CO concentrations above the level of the CO NAAQS.
In the recent past, this figure has fluctuated up and down. At the
present time there are 15 counties classified as serious CO
nonattainment areas, all with a recent history of NAAQS violations. At
this time, prospects for these areas attaining by the serious CO area
attainment deadline of December 31, 2000 are uncertain. While
violations of the NAAQS have not occurred recently in most of the other
33 counties still classified as nonattainment, even these must
demonstrate that they will remain safely below the NAAQS for ten years
despite expected growth in vehicle travel and other sources of CO
emissions before they can be reclassified to attainment. Because of the
large role of motor vehicles in causing high ambient CO concentrations,
where there is reason to be concerned about CO attainment and
maintenance, local areas look to national emission standards for most
of the solution.
As discussed below, EPA has also finalized regulations that regions
and states implement plans for protecting and improving visibility in
the 156 mandatory Federal Class I areas as defined in Section 162(a) of
the Clean Air Act. These areas are primarily national parks and
wilderness areas.
To accomplish the goal of full attainment in all areas according to
the schedules for the various NAAQS, and to achieve the goals of the
visibility program, the federal government must assist the states by
reducing emissions from sources that are not as practical to control at
the state level as at the federal level. Vehicles and fuels move freely
among the states, and they are produced by national or global scale
industries. Most individual states are not in a position to regulate
these industries effectively and efficiently. The Clean Air Act
therefore gives EPA primary authority to regulate emissions from the
various types of highway vehicles and their fuels. Our actions to
reduce emissions from these and other national sources are a crucial
and essential complement to actions by states to reduce emissions from
more localized sources.
If we were not to adopt new standards to reduce emissions from cars
and light trucks, emissions from these vehicles would remain a large
portion of the emissions burden that causes elevated ozone and
continued nonattainment with the ozone NAAQS, which in turn would
affect tens of millions of Americans. Because the contribution of cars
and light trucks to both local emissions and transported pollution
would be so great, and the expected emission reduction shortfall in
many areas is so large, further reductions from cars and light trucks
will be an important element of many attainment strategies, especially
for ozone in the 2007 to 2010 time frame. The contribution of these
vehicles to PM exposure and PM nonattainment would also remain
significant, and would increase considerably if diesel engines are used
in more cars or light trucks. Furthermore, without new standards,
steady annual increases in fleet size and miles of travel would
outstrip the benefits of current emission controls, and would cause
ozone-forming emissions from cars and trucks to grow each year starting
about 2013.
The standards being promulgated by today's actions will reduce
emissions of ozone precursors and PM precursors from cars and light
trucks greatly. However, even with this decrease, many areas will
likely still find it necessary to obtain additional reductions from
other sources in order to fully attain the ozone and PM NAAQS. Their
task will be easier and the economic impact on their industries and
citizens will be lighter as a result of the standards promulgated by
today's actions. Following implementation of the Regional Ozone
Transport Rule, states will have already adopted emission reduction
requirements for nearly all large sources of VOC and NO_X for
which cost-effective control technologies are known. Those that remain
in nonattainment therefore will have to consider their remaining
alternatives. Many of the state and local programs states may consider
as alternatives are very costly, and the emissions impact from each
additional emissions source subjected to new emissions controls would
be considerably smaller than the emissions impact of the standards
being promulgated today. Therefore, the emission reductions from these
standards for gasoline, cars, and light trucks will ease the need for
states to find first-time reductions from the mostly smaller sources
that have not yet been controlled, including area sources that are
closely connected with individual and small business activities. The
emission reductions from the standards being promulgated today will
also reduce the need for states to seek even deeper reductions from
large and small sources already subject to emission controls.
We project that today's actions will also have important benefits
for carbon monoxide, regional visibility, acid rain, and coastal water
quality.
For these and other reasons discussed in this document, we have
determined that significant emission reductions will still be needed by
the middle of the next decade and beyond to achieve and maintain
further improvements in air quality in many, geographically dispersed
areas. We also believe that a significant portion of these emission
reductions will be obtained by reducing emissions from cars and light
trucks as a result of today's actions. We believe that such reductions
are necessary (since cars and light trucks are such large contributors
to current and projected ozone problems) and reasonable (since these
reductions can be achieved at a reasonable cost compared to other
alternative reductions).
The remainder of this section describes the health and
environmental problems that today's actions will help mitigate and the
expected health and environmental benefits of these actions. Ozone is
discussed first, followed by PM, other criteria pollutants, visibility,
air toxics, and other environmental impacts. The emission inventories
and air quality analyses are explained more fully in the Regulatory
Impact Analysis for today's actions.

[[Page 6707]]

B. Ozone

1. Background on Ozone Air Quality
Ground-level ozone is the main harmful ingredient in smog.\12\
Ozone is produced by complex chemical reactions when its precursors,
VOC and NO_X, react in the presence of sunlight.
---------------------------------------------------------------------------

\12\ Total column ozone, a large percentage of which occurs in
the stratosphere and a smaller percentage of which occurs in the
troposphere, helps to provide a protective layer against ultraviolet
radiation.
---------------------------------------------------------------------------

Short-term (1-3 hours) and prolonged (6-8 hours) exposures to
ambient ozone at levels common in many cities have been linked to a
number of health effects of concerns. For example, increased hospital
admissions and emergency room visits for respiratory causes have been
associated with ambient ozone exposures at such levels. Repeated
exposures to ozone can make people more susceptible to respiratory
infection, result in lung inflammation, and aggravate pre-existing
respiratory diseases such as asthma. Other health effects attributed to
ozone exposures include significant decreases in lung function and
increased respiratory symptoms such as chest pain and cough. These
effects generally occur while individuals are engaged in moderate or
heavy exertion.
Children active outdoors during the summer when ozone levels are at
their highest are most at risk of experiencing such effects. Other at-
risk groups include adults who are active outdoors (e.g., outdoor
workers), and individuals with pre-existing respiratory disease such as
asthma and chronic obstructive lung disease. In addition, longer-term
exposures to moderate levels of ozone present the possibility of
irreversible changes in the lungs which could lead to premature aging
of the lungs and/or chronic respiratory illnesses.
Ozone also affects vegetation and ecosystems, leading to reductions
in agricultural and commercial forest yields, reduced growth and
survivability of tree seedlings, and increased plant susceptibility to
disease, pests, and other environmental stresses (e.g., harsh weather).
In long-lived species, these effects may become evident only after
several years or even decades, thus having the potential for long-term
effects on forest ecosystems. Ground-level ozone damage to the foliage
of trees and other plants also can decrease the aesthetic value of
ornamental species as well as the natural beauty of our national parks
and recreation areas.
Many areas which were classified as nonattainment when
classifications were made under the 1990 Clean Air Act Amendments have
not experienced violations more recently. However, 50 metropolitan
areas had ozone design values above the NAAQS in either or both of the
1995-1997 and the 1996-1998 monitoring periods. In many urban areas,
the downward trend in ozone that prevailed earlier has become less
strong or stopped in the last few years, even when adjustments are made
for meteorological conditions. We believe that one factor that has
worked against ozone improvement in the last few years has been the
growing use of light trucks with higher emissions than the cars used
formerly. The predictions of future ozone concentrations used in
developing today's action take account of this growing use of light
trucks.
2. Additional Emission Reductions Are Needed To Attain and Maintain the
Ozone NAAQS
a. Summary
We have determined that additional emission reductions are needed
to attain and maintain the 1-hour ozone NAAQS. This overall conclusion
is based on our prediction that 26 metropolitan areas are each certain
or highly likely to need additional reductions, and that an additional
12 areas each have a moderate to significant probability of needing
them.
To determine whether additional reductions are needed in order to
attain and maintain the ozone NAAQS, we used ozone modeling to predict
what areas would not attain the NAAQS in the future. We accounted for
the emission reductions that have already been achieved, those that
will be achieved in the future by actions already underway, and
increases in emissions expected from increased use of sources of
pollution.
In our May 13, 1999 proposal, we presented information from
photochemical modeling we performed to predict what areas would meet
the ozone NAAQS in 2007. The year 2007 falls after the expected date of
most emission reductions which states are required to achieve or have
otherwise committed to achieve, and near the attainment deadline for
many ozone nonattainment areas. We presented additional information
from the same photochemical modeling work in two supplemental notices,
on June 30, 1999 (to better explain the basis for our proposal in light
of the Court's ruling on the 8-hour ozone NAAQS), and October 25, 1999
(to explain the implications for our Tier 2/Gasoline Sulfur proposal
from our more recent proposal, which we expect to make final shortly,
to re-instate the 1-hour ozone NAAQS in many areas). In Response to
Comments on these Federal Register notices, we made revisions to our
own ozone modeling. We also obtained ozone modeling results from a
number of state air planning agencies and from members of the
automobile manufacturing industry. We have considered all of this
information as part of our determination that the regulations
promulgated in this rule are needed and appropriate.
Based on the available ozone modeling and other information, we
project that there are 26 metropolitan areas which will be unable to
attain and maintain the NAAQS, in the absence of additional reductions.
These areas had a combined population of over 86 million in 1996, and
are distributed across most regions of the U.S. We have concluded that
each is certain or very likely to require additional reductions to
attain the NAAQS. Taken together and considering their number, size,
and geographic distribution, these areas establish the case that
additional reductions are needed in order to attain and maintain the 1-
hour standard.
In addition, our analysis suggests there will be other areas that
will have problems attaining and maintaining compliance with the one-
hour ozone standard in the future. There are 12 additional metropolitan
areas with a total 1996 population of over 25 million people in this
category. EPA's ozone modeling for 2007 predicts exceedances for each
of these areas. However, for six of them local recent monitoring
information is not indicating nonattainment. Given how close to
nonattainment these areas are, EPA believes it is likely that at least
a significant subset of this group of areas will face compliance
problems by 2007 or beyond if additional actions to lower air emissions
are not taken. This belief is based on historical experience with areas
that will undergo economic and population growth over time and that are
in larger regions that are also experiencing growth. The other six
areas in this group are nonattainment now, and local modeling shows
them reaching attainment by 2005 or 2007. Modeling uncertainties and
growth beyond the attainment date make it likely that at least some of
these areas will also face compliance problems if additional actions to
lower air emissions are not taken. This situation further supports our
determination that additional reductions in mobile source emissions are
needed for attainment and maintenance.
We would like to emphasize that the advantages of the Tier 2/
Gasoline Sulfur program will be enjoyed by the whole country. There are
important advantages for approximately 30 more metropolitan

[[Page 6708]]

areas, with close to 30 million people residing in them, whose ozone
levels are now within 10 percent of violating the 1-hour NAAQS.\13\
Most of these areas have been in nonattainment in the past. We believe
the emission reductions from the Tier 2/Gasoline Sulfur program are an
important component of an overall EPA-state approach to enable these
areas to continue to maintain clean air given expected growth. EPA
believes that the long term ability of the states to continue to meet
the NAAQS is extremely important. In the future, EPA will be
considering additional approaches for assisting in maintenance of the
NAAQS. Also, we believe that the Tier 2/Gasoline Sulfur program has
important benefits for other nonattainment areas which our modeling and
local modeling show to be on a path to come into attainment in the next
eight years. For these areas, the extra emission reductions from the
program will take some of the uncertainty out of their plan to attain
the standard and give them a head start on developing their plan to
stay in attainment.
---------------------------------------------------------------------------

\13\ As measured by ozone design value.
---------------------------------------------------------------------------

In every area of the country, the new standards will give
transportation planning bodies and industrial development leaders more
options within the area's overall emissions constraints. This will
allow local and state officials to better accommodate local needs and
growth opportunities. With these new standards for vehicles and
gasoline, unusually adverse weather or strong local economic growth
will be less likely to cause ozone levels high enough to trigger the
planning requirements of the Clean Air Act. In addition, by reducing
emissions and ozone levels across the nation as a whole, there will be
less transport of ozone between areas, reducing the amount of ozone
entering downwind areas. This will give the downwind areas a better
opportunity to maintain and attain the NAAQS through local efforts.
All of our determinations presented here about the need for the
Tier 2/Gasoline Sulfur program take into account the prior NO_X
reductions we expect from the Regional Ozone Transport Rule. This rule
is now in litigation. If the outcome of that litigation reduces the
NO_X reductions that will be achieved, the need for the Tier
2/Gasoline Sulfur program will be even greater.
b. Ozone Modeling Presented in Our Proposal and Supplemental Notices
The ozone modeling we presented in our proposal and the two
supplemental notices was originally conducted as part of our
development of the Regional Ozone Transport Rule. The ``revised
budget'' emission control scenario we modeled for the Regional Ozone
Transport Rule contained the right set of existing and committed
emission controls for it to serve as the starting point for making our
determination on the need for additional emission reductions. We added
a new ``control case'' to represent the effects of our proposed vehicle
and gasoline standards.
This ozone modeling provided predictions of ozone concentrations in
2007 across the eastern U.S., under certain meteorological conditions.
Predictions of attainment or nonattainment are based on these predicted
ozone concentrations. Two approaches to making attainment predictions
have been used or advocated in the past: a rollback approach and an
exceedance approach. In the NPRM of May 13, 1999, we presented
predictions of attainment and nonattainment using a rollback approach.
For the 1-hour standard, we reported that 8 metropolitan areas and two
rural counties were predicted to be in nonattainment in 2007 under the
rollback method. In the first supplemental notice of June 30, 1999 we
presented a prediction that 17 areas would be nonattainment based on
the exceedance method, and invited comment on all aspects of the
modeling and its interpretation. Our second and last notice on October
27, 1999, presented predictions of violations using the exceedance
method for additional areas which we had previously excluded because
the 1-hour standard did not apply to them. This was in anticipation of
the reinstatement of the 1-hour standard to these areas, which we
proposed on October 25, 1999 and expect to complete very soon. 64 FR
57524. We also announced that we were conducting another round of
modeling, described below. See the Response to Comments document for
more discussion of the rollback and exceedance approaches.
c. Updated and Additional Ozone Modeling
We have updated and expanded our ozone modeling. We updated the
ozone modeling so that it is now based on estimates of vehicle
emissions that reflect the most recent data and our best understanding
of several aspects of emissions estimation.\14\ We also changed most of
the episodes for which we modeled ozone concentrations, with all of our
final episode days coming from a single calendar year. By selecting
days from within a single year, we responded to a comment that the
original episode periods might together contain an atypically high
number of days favorable to ozone formation for some parts of the
country. The new episodes are also better at representing conditions
that lead to high ozone in areas along the Gulf Coast, whose ozone-
forming conditions were not well represented in the episodes used for
the original modeling.
---------------------------------------------------------------------------

\14\ While the use of these emissions estimates was new to our
baseline ozone modeling in the latest ozone modeling, they were not
new to this rulemaking, having already been used in calculations of
cost-effectiveness in the draft RIA. We therefore were able to
consider public comments on these estimates prior to using them in
the latest ozone modeling
---------------------------------------------------------------------------

While we considered these improvements necessary and appropriate in
light of comments and other information available to us, the actual
results of the two rounds of modeling with regard to the need for
additional reductions have turned out to be similar. The latest round
of modeling provided us ozone predictions for 2007 and 2030 in the
eastern U.S., and for 2030 in the western U.S. There are some
differences in specific results, where and when the two models can be
directly compared. However, the same conclusion would be reached from
either, namely that there is a broad set of areas with predicted ozone
concentrations in 2007 above 0.124 ppm, in the baseline scenario
without additional emission reductions.
We have compared and supplemented our own ozone modeling with other
modeling studies, either submitted to us as comments to this
rulemaking, as state implementation plan (SIP) revisions, or brought to
our attention through our consultations with states on SIP revisions
that are in development. The ozone modeling in the SIP revisions has
the advantage of using emission inventories that are more specific to
the area being modeled, and of using meteorological conditions selected
specifically for each area. Also, the SIP revisions included other
evidence and analysis, such as analysis of air quality and emissions
trends, observation based models that make use of data on
concentrations of ozone precursors, alternative rollback analyses, and
information on the responsiveness of the air quality model. For some
areas, we decided that the predictions of attainment or nonattainment
from our

[[Page 6709]]

modeling were less reliable than conclusions that could be drawn from
this additional evidence and analysis. For example, in some areas our
episodes did not capture the meteorological conditions that have caused
high ozone, while local modeling did so.
d. Results and Conclusions
As discussed in detail below, it is clear that the NO_X
and VOC reductions to be achieved through the Tier 2/Gasoline Sulfur
program are needed to attain and maintain compliance with the 1 hour
ozone NAAQS. Although the general pattern observed in our modeling
indicates improvements in the near term, growth in overall emissions
will lead to worsening of air quality over the long term.
Based on our ozone modeling, we have analyzed ozone predictions for
52 metropolitan areas for 1996, 2007, and 2030. In addition, we
reviewed ozone attainment modeling and other evidence covering 15 of
these areas, from SIP submittals or from modeling underway to support
SIP revisions. This local modeling addressed only the current or
requested attainment date in each area. We then made attainment and
nonattainment predictions from this information.
The general pattern we observed with the baseline scenario, i.e.,
without new emission reductions, is a broad reduction between 1996 and
2007 in the geographic extent of ozone concentrations above the NAAQS,
and in the frequency and severity of exceedances. This is consistent
with the national emissions inventory trend between these two years. At
the same time, we also found that peak ozone concentrations and the
frequency of exceedances in 2030 were generally somewhat higher than in
2007 for most areas analyzed. This too is consistent with our analysis
of emission inventory trends, which shows that the total NO_X
inventory from all sources will decline from 2007 to about 2015 and
then begin to increase due to growth in the activity of emission
sources. In 2030, our analysis predicts that NO_X emissions
from all sources will be about one percent higher than in 2007. While
we did not model ozone concentrations for years between 2007 and 2030,
we expect that they would track the national emissions trend by showing
a period of improvement after 2007 and then deterioration, although
individual areas will vary due to local source mix and growth
rates.\15\
---------------------------------------------------------------------------

\15\ EPA's modeling presumed that cars and light trucks will
continue to meet the emission levels of the National Low Emissions
Vehicle (NLEV) program after model year 2003, even though the
program will end in model year 2003 or shortly thereafter. Had our
modeling not included such levels in its inventory assumptions,
trends for ozone concentrations would have shown earlier increases
in ozone concentrations.
---------------------------------------------------------------------------

Within this general pattern of ozone attainment changes between
1996 and 2030, we have determined that 26 metropolitan areas are
certain or highly likely to need additional reductions to attain and
maintain the 1-hour ozone NAAQS. These 26 areas are those that have
current violations of the 1-hour ozone NAAQS and are predicted by the
best ozone modeling we have available to still be in violation without
a new federal vehicle program in 2007.\16\ Based on the general trends
described above, without further emissions reductions many of these
areas may also have violations continuously throughout the period from
2007 to 2030, while others may briefly attain and then return to
nonattainment on or before 2030. These 26 metropolitan areas are listed
in Table III.B-1, along with their 1996 population which totals over 86
million. The sizes of these areas and their geographical distribution
strongly support an overall need for additional reductions in order to
attain and maintain under section 202(i). Because ozone concentration
patterns causing violations of the 1-hour NAAQS are well established to
endanger public health or welfare, this determination also supports our
actions today under the general authority of sections 202(a)(1),
202(a)(3), and 202(b).
---------------------------------------------------------------------------

\16\ The date of the predicted violation was 2007 for most
areas, 2010 in the case of Los Angeles, CA, and 2030 in the case of
Portland-Salem, OR.
---------------------------------------------------------------------------

As indicated above, in reaching this conclusion about these 26
areas, we examined local ozone modeling in SIP submittals. These local
analyses are considered to be more extensive than our own modeling for
estimating whether there would be NAAQS nonattainment without further
emission reductions, when interpreted by a weight of evidence method
which meets our guidance for such modeling. One of the areas which
submitted a SIP revision was a special case. We have recently proposed
to approve the 1-hour ozone attainment demonstration for the
nonattainment area of Washington, D.C. (but not Baltimore). We have
nevertheless included this area on the list of 26 that are certain or
highly likely to require further reductions to attain and maintain,
because its SIP attainment demonstration assumed emission reductions
from vehicles meeting the National Low Emissions Vehicle (NLEV)
standards.
However, by its own terms, the NLEV standards would not extend
beyond the 2003 model year if we did not promulgate Tier 2 vehicle
standards at least as stringent as the NLEV standards. See 40 CFR
86.1701-99(c). Thus, the emission reductions relied upon from 2004 and
later model year NLEV vehicles are themselves ``further reductions''
for the purposes of CAA section 202(i).\17\ The local modeling
indicating attainment with these reductions is therefore strong
evidence that further reductions are needed past 2003, beyond those
provided by the Tier 1 program. Based on this, and on the fact that our
own ozone modeling showed the Washington, DC area to violate the NAAQS
in 2007 even with full NLEV emission reductions, we have concluded that
it should be included with areas that do require further reductions to
attain and maintain the 1-hour ozone NAAQS.
---------------------------------------------------------------------------

\17\ With regard to eventual final action on the 1-hour
attainment demonstration for Washington, DC, the issue of the
continuation of the NLEV standards is mooted by the promulgation of
the Tier 2/Gasoline Sulfur program. A portion of the emission
reductions from this program will replace the post-2003 model year
NLEV reductions assumed in the SIP.
---------------------------------------------------------------------------

The 1-hour ozone NAAQS presently does not apply in 12 of the 26
areas listed in Table III.B-1, but we have proposed to re-instate it
and expect to complete that action shortly. These areas are indicated
in the table. Our decision to include these areas on this list is based
on the contingency that we will re-instate the 1-hour standard in these
areas. However, even if we considered only the 14 areas where the 1-
hour standard applies as of the signature date of this notice, we have
concluded that our determination would be the same.

Table III.B-1.--Twenty-Six Metropolitan Areas Which Are Certain or
Highly Likely To Require Additional Emission Reductions in Order To
Attain and Maintain the 1-Hour Ozone NAAQS
------------------------------------------------------------------------
1996
Metropolitan area Population
(millions)
------------------------------------------------------------------------
Atlanta, GA MSA............................................ 3.5
Barnstable-Yarmouth, MA MSA \a\............................ 0.2
Baton Rouge, LA MSA........................................ 0.6
Beaumont-Port Arthur, TX MSA............................... 0.4
Birmingham, AL MSA......................................... 0.9
Boston-Worcester-Lawrence, MA-NH-ME-CT CMSA \a\............ 5.6
Charlotte-Gastonia-Rock Hill, NC-SC MSA \a\................ 1.3

[[Page 6710]]

Cincinnati-Hamilton, OH-KY-IN CMSA......................... 1.9
Dallas-Fort Worth, TX CMSA................................. 4.6
Houma, LA MSA \a\.......................................... 0.2
Houston-Galveston-Brazoria, TX CMSA........................ 4.3
Huntington-Ashland, WV-KY-OH MSA \a\....................... 0.3
Indianapolis, IN MSA \a\................................... 1.5
Los Angeles-Riverside-San Bernardino CA CMSA............... 15.5
Louisville, KY-IN MSA...................................... 1.0
Macon, GA MSA \a\.......................................... 0.3
Memphis, TN-AR-MS MSA \a\.................................. 1.1
Nashville, TN MSA \a\...................................... 1.1
New York-Northern New Jersey-Long Island, NY-NJ-CT-PA CMSA. 19.9
Philadelphia-Wilmington-Atlantic City, PA-NJ-DE-MD CMSA.... 6.0
Pittsburgh, PA MSA......................................... 2.4
Portland-Salem, OR-WA CMSA \a\............................. 2.1
Providence-Fall River-Warwick, RI-MA MSA \a\............... 1.1
Richmond-Petersburg, VA MSA \a\............................ 0.9
St. Louis, MO-IL MSA....................................... 2.5
Washington-Baltimore, DC-MD-VA-WV CMSA..................... 7.2
Total Population..................................... 86.3
------------
------------------------------------------------------------------------
Notes:
\a\ The 1-hour ozone NAAQS does not currently apply, but we have
proposed and expect to re-instate it shortly.

There are 12 additional metropolitan areas, with another 25.3
million people in 1996, for which the available ozone modeling suggests
significant risk of failing to attain and maintain the 1-hour ozone
NAAQS without additional emission reductions. Table III.B-2 lists the
areas we put in this second category. Our own ozone modeling predicted
these 12 areas to need further reductions to avoid violations in 2007.
For six of these areas, recent air quality monitoring data indicate
violation, but we have reviewed local ozone modeling and other evidence
indicating attainment in 2007.\18\ Based on this evidence, we have kept
these areas separate from the previous set of 26 areas which we
consider certain or highly likely to need additional reductions.
However, we still consider there to be a significant risk of failure to
attain and maintain in these six areas because this local modeling has
inherent uncertainties, as all ozone modeling does. Moreover, the local
modeling did not examine the period after initial attainment.
---------------------------------------------------------------------------

\18\ The SIP revisions for Chicago and Milwaukee demonstrated
that these two areas as well as Benton Harbor and Grand Rapids areas
in Michigan (which are maintenance areas but have experienced ozone
NAAQS violations recently) would not experience NAAQS violations in
2007, with a strategy that relied only on Tier 1 vehicle emission
standards. We have also recently proposed to approve the 1-hour
attainment demonstration for Greater Connecticut, covering the
Hartford and New London areas, which assumed full NLEV emission
reductions. However, Connecticut is committed in its SIP to adopt
California vehicle standards if NLEV does end with the 2003 model
year if a more stringent federal program is not promulgated. The
California standards are more stringent than NLEV. The case of one
additional area whose attainment demonstration we recently proposed
to approve, Western Massachusetts (Springfield), should be explained
here to avoid possible confusion. Our own ozone modeling predicted
that Springfield would attain the NAAQS in 2007. Massachusetts has
adopted the California vehicle emission standards, so there is no
issue of the continuation of the NLEV standards.
---------------------------------------------------------------------------

For the other six of the 12 areas, the air quality monitoring data
shows current attainment but with less than a 10 percent margin below
the NAAQS. This suggests these areas may remain without violations for
some time, but we believe there is still a moderate risk of future
violation of the NAAQS because meteorological conditions may be more
severe in the future.
It is highly likely that at least some of these 12 areas will
violate the NAAQS without additional reductions, and it is a distinct
possibility that many of them will do so. We consider the situation in
these areas to support our determination that, overall, additional
reductions are needed for attainment and maintenance. However, we
reiterate that our predictions for the 26 areas listed in Table III.B-
1, and even our predictions for only the 14 of those 26 for which the
1-hour standard now applies, are a sufficient basis for our
determination of an overall need for additional reductions and for our
actions today.

Table III.B-2.--Twelve Metropolitan Areas With Moderate to Significant
Risk of Failing To Attain and Maintain the 1-Hour Ozone NAAQS Without
Additional Emission Reductions
------------------------------------------------------------------------
1996
Metropolitan area Population
(millions)
------------------------------------------------------------------------
Benton Harbor, MI MSA \a\.................................. 0.2
Biloxi-Gulfport-Pascagoula, MS MSA \a\..................... 0.3
Chicago-Gary-Kenosha, IL-IN-WI CMSA........................ 8.6
Cleveland-Akron, OH CMSA \a\............................... 2.9
Detroit-Ann Arbor-Flint, MI CMSA \a\....................... 5.3
Grand Rapids-Muskegon-Holland, MI MSA \a\.................. 1.0
Hartford, CT MSA........................................... 1.1
Milwaukee-Racine, WI CMSA.................................. 1.6
New London-Norwich, CT-RI MSA \a\.......................... 1.3
New Orleans, LA MSA \a\.................................... 0.3
Pensacola, FL MSA \a\...................................... 0.4
Tampa, FL MSA \a\.......................................... 2.2
------------
Total Population..................................... 25.3
------------------------------------------------------------------------
Notes:
\a\ The 1-hour ozone NAAQS does not currently apply, but we have
proposed and expect to re-instate it shortly.

e. Issues and Comments Addressed
We received detailed comments from the automobile industry related
to ozone modeling and the need for additional emission reductions in
order to attain and maintain. These were of three types.
Accuracy of modeling ozone concentrations.--The automobile industry
commenters pointed out that in the modeling presented with our
proposal, the ozone model and exceedance predicted violations of the
NAAQS in 1995 in areas where monitoring data indicated no violations.
They cited these cases as examples of model inaccuracy. We have made
improvements to our emissions estimates, our episodes, and other
aspects of the modeling system. These changes have improved the
accuracy of the predicted ozone concentrations. Also, as stated above,
our list of 26 areas that support our finding that additional
reductions are needed does not include any areas where recent
monitoring data shows no violations. The final RIA addresses issues of
model accuracy in more depth.
As explained in the final RIA, our very latest estimates of car and
light truck emissions without the benefits of our new standards are
actually somewhat higher than the estimates used in the final round of
ozone modeling, because the most recent data indicate even more serious
adverse emissions effects from sulfur in

[[Page 6711]]

gasoline. Thus, we think our predictions of ozone nonattainment using
emission estimates prepared before this most recent data on sulfur was
considered, may be conservative. This topic is discussed in more detail
in section III.B.3.
Prediction of attainment/nonattainment.--For most areas, we
predicted 2007 or 2030 attainment or nonattainment based on the
exceedance method. The exceedance method predicts an area to be in
attainment only if there are no predicted exceedances of the NAAQS
during any episode day. However, for the areas for which we have
received 1-hour attainment demonstrations in SIP revisions, our
predictions were based on a larger and more robust set of data. When a
state's modeling shows an exceedance that would otherwise indicate
nonattainment, we allow the state to submit a variety of other evidence
and analysis, such as locality specific meteorological conditions,
analysis of air quality and emissions trends, observational based
models that make use of data on concentrations of ozone precursors, a
rollback analysis, and information on the responsiveness of the air
quality model. We then make a weight-of-evidence determination of
attainment or nonattainment based on consideration of all this local
evidence. We did this in forming the set of 26 areas we consider
certain or highly likely to need additional reductions to attain or
maintain, in some cases concluding that attainment was demonstrated and
in others that it was not.
The auto industry commenters recommended the use of rollback as the
single method for making attainment and nonattainment predictions from
predicted ozone concentrations. They stated that the rollback method
would be more consistent than the exceedance method with the NAAQS's
allowance of three exceedances in a three year period. They also
believed that the rollback method would compensate for what they
considered to be model over predictions of ozone concentrations. We
believe that the rollback method is not appropriate for use as the
sole, or even a primary, test of 1-hour ozone attainment or
nonattainment. A rollback analysis may overlook violations that occur
away from ozone monitors, and it may inappropriately project the effect
of a recent period of favorable weather into the prediction of future
attainment. In determining the attainment and maintenance prospects of
numerous areas, as here, it is not possible to assemble and consider
the full set of local evidence that should accompany any consideration
of a rollback analysis. In such a situation, we believe that the
exceedance method is the appropriate choice. A fuller explanation of
our reasons for considering the exceedance method more appropriate than
rollback is given in our Response to Comments document.
We have not completely excluded the rollback approach from the
determinations in this rulemaking. We have considered it for those
areas for which we had enough information to allow us to consider it in
its proper context, i.e., for those areas covered by recent 1-hour SIP
submissions. Of these areas, we concluded that some will not attain
without additional reductions and some will.
While we disagree with the use of the rollback method, we have
conducted a hypothetical analysis of 2007 attainment in all areas based
only on our own ozone modeling, applying the rollback method
recommended by the commenters. We calculated in this analysis that 15
metropolitan areas and three other counties with nearly 56 million in
population in 1996 would violate the NAAQS in 2007. Moreover, these 15
metro areas are geographically spread out \19\. We believe that this
result using the rollback method does not fully capture the likely
nonattainment that would exist in 2007 in the absence of additional
emission reductions. However, even if we were to consider the use of
rollback valid, we consider this set of areas to also be an adequate
basis for making the same determinations we have made based on the more
appropriate exceedance-based analysis. The details of our hypothetical
analysis using the rollback method are given in the final RIA and the
technical support document for our ozone modeling analyses.
---------------------------------------------------------------------------

\19\ We did not include the Los Angeles-Riverside-San Bernardino
area in this analysis, since it was not covered by our 2007
modeling, but we do believe it is rightly part of the basis for a
determination on the need for additional reductions.
---------------------------------------------------------------------------

Ozone modeling and predictions.--Members of the automobile
manufacturing industry submitted two modeling studies: (1) a repetition
of our first round of modeling of the 37-state eastern U.S. domain but
with their recommendations regarding estimates of motor vehicle
emissions in 2007 and with the rollback method used to predict 2007
nonattainment, and (2) finer grid modeling for three smaller domains,
also with their recommended estimates of emissions and with
nonattainment predicted using a rollback method. Both modeling efforts
showed less widespread nonattainment than we have determined and
described here. Taken together, these studies predicted 2007 violations
by the rollback method in or downwind of New York City, Chicago,
Milwaukee, western Michigan, Baton-Rouge, and Houston.
The main difference between the automobile industry's ozone
modeling and ours is in the emission estimates. We have reviewed the
emissions estimates used in the industry studies. We concluded that the
industry's emissions estimates employ inappropriate analytical steps in
the calculation. Among the problems are that the adjustments for the
benefits of inspection and maintenance programs were not consistent
with the base estimate of in-use emissions, and the sales trend towards
light trucks and SUVs was not properly captured. Also, as stated, we
disagree with the use of the rollback approach as the sole test of
attainment. As a consequence, we conclude that the industry's ozone
modeling is not an appropriate basis for making predictions of future
attainment or nonattainment. The final RIA explains in detail how we
have addressed these and other emissions modeling issues in a manner
which is more technically consistent and correct,\20\ and how we have
considered the results from rollback analyses but only as part of broad
weight-of-evidence determinations for areas for which this was possible
at this time. Our point-by-point review is given in our Response to
Comments document.
---------------------------------------------------------------------------

\20\ As explained in the final RIA, our very lastest estimates
of car and light truck emissions without the benefits of our new
standards are actually somewhat higher than the estimates used in
the final round of ozone modeling, because more recent data indicate
even more serious adverse emissions effects from sulfur in gasoline.
Thus, we think our predictions of ozone nonattainment may be
conservative.
---------------------------------------------------------------------------

The material on ozone modeling submitted by the commenters, having
been prepared by the rollback method, was difficult to re-interpret
according to our preferred exceedance method. However, it appears that
if this modeling were interpreted by the exceedance method, it would
indicate 2007 nonattainment in Baltimore and Washington, D.C. in
addition to New York City, Chicago, Milwaukee, western Michigan, Baton-
Rouge, and Houston. Overall, we conclude that the material submitted by
the automobile industry does not contradict the facts we have used to
make our determinations or the actions we are taking today.
f. 8-Hour Ozone
The predictions of ozone concentrations from the ozone modeling

[[Page 6712]]

can be used to make predictions of attainment or nonattainment with the
8-hour ozone NAAQS. In our draft RIA, we estimated that 28 metropolitan
areas and 4 rural counties with a combined population of 80 million
people would violate the 8-hour ozone NAAQS in 2007 without additional
emission reductions. Commenters noted differences between exact
rollback procedure we had used in this projection and the steps
specified in recent draft guidance we have issued on 8-hour ozone
modeling. We agree with the commenters that the steps specified in our
guidance are the correct ones to use. However, since we are not basing
our promulgation of the Tier 2/Gasoline Sulfur Program on the 8-hour
ozone NAAQS, we have not made any new predictions of 8-hour ozone
nonattainment areas in 2007. Based on our findings in previous analyses
of this sort, however, we believe that in the absence of the Tier 2/
Gasoline Sulfur program there would be 8-hour nonattainment areas that
are not also areas which we have concluded are certain or highly likely
to violate the 1-hour NAAQS. If we considered it appropriate to proceed
with implementation of the 8-hour standard, these areas would support
our determination on the need for emission reductions, and the
appropriateness and necessity of the vehicle and gasoline standards we
are establishing.
3. Cars and Light-duty Trucks Are a Big Part of the NO_X and
VOC Emissions, and Today's Action Will Reduce This Contribution
Substantially
Emissions of VOCs and NO_X come from a variety of
sources, both natural and man-made. Natural sources, including
emissions that have been traced to vegetation, account for a
substantial portion of total VOC emissions in rural areas. The
remainder of this section focuses on the contribution of motor vehicles
to emissions from human sources. Man-made VOCs are released as
byproducts of incomplete combustion as well as evaporation of solvents
and fuels. For gasoline-fueled cars and light trucks, approximately
half of the VOC emissions come from the vehicle exhaust and half come
from the evaporation of gasoline from the fuel system. NO_X
emissions are dominated by man-made sources, most notably high-
temperature combustion processes such as those occurring in automobiles
and power plants. Emissions from cars and light trucks are currently,
and will remain, a major part of nationwide VOC and NO_X
emissions. In 1996, cars and light trucks comprised 25 percent of the
VOC emissions and 21 percent of the NO_X emissions from human
sources in the U.S.\21\ The contribution in metropolitan areas was
generally larger.
---------------------------------------------------------------------------

\21\ Emission Trend Report, 1997.
---------------------------------------------------------------------------

We have made significant improvements in the analysis used to
estimate the emission inventory impacts of this action, including
improving the emission factor modeling, using more detailed local
modeling input, and using a more conservative (lower) estimate of VMT
growth. These changes are detailed in the Regulatory Impact Analysis
for this rule. The following discussion is based on this improved
analysis.
In addition to the improvements which are incorporated in this
analysis, we also made further improvements in the emission factor
modeling after analyzing comments which we did not have time to
incorporate into the detailed inventory analysis described here. The
most notable change is related to data which indicates that
NO_X and NMOG emissions are even more sensitive to gasoline
sulfur than previously thought. This change and others are described in
detail in the Response to Comments. Our early analysis of these changes
indicates that incorporating them into this analysis would provide
further support for this action because these changes result in both
increases in the baseline emissions without Tier 2 and in the
reductions that would result from Tier 2. For example, in the detailed
inventory analysis we report below, we project nationwide Tier 2/
Gasoline Sulfur control NO_X reductions from cars and light
trucks of 856,471 tons per year in 2007. Using the version of the
emission factor model that incorporates these additional changes
increases the estimated Tier 2 reductions to approximately 1.0 million
tons per year in 2007 (estimated baseline emissions without Tier 2
increase from 3.1 million tons per year in 2007 to approximately 3.7
million tons per year using the version of the emission factor model
that incorporates these additional changes). Therefore, the estimates
of the inventory reductions given here (and used as the basis for the
ozone air quality analysis) are clearly conservative.
Motor vehicle emission controls have led to significant
improvements in emissions released to the air (the ``emission
inventory'') and will continue to do so in the near term \22\. In the
current analysis, we continue to find that total emissions from the car
and light truck fleet would continue to decline for a period, even if
we were not establishing the Tier 2/Gasoline Sulfur program. This
decline would result from the introduction of cleaner reformulated
gasoline in 2000, the introduction of National Low Emission Vehicles
(NLEVs) and vehicles complying with the Enhanced Evaporative Test
Procedure and Supplemental Federal Test Procedures, and the continuing
removal of older, higher-emitting vehicles from the in-use vehicle
fleet. On a per mile basis, VOC and NO_X emissions from cars
and light trucks combined would have continued to decline well beyond
2015, reflecting the continuing effect of fleet turnover under existing
emission control programs. However, projected increases in vehicle
miles traveled (VMT) will cause total emissions from these vehicles to
increase. With this increase in travel and without additional controls,
we project that combined NO_X and VOC emissions for cars and
light trucks without the Tier 2/Gasoline Sulfur program would increase
starting in 2013 and 2016, respectively, so that by 2030 they would
return to levels above or nearly the same as they will be in 2000. In
cities experiencing rapid growth, such as Charlotte, North Carolina,
the near-term trend towards lower emissions tends to reverse
sooner.\23\ With additional improvements in the modeling done in
Response to Comments, we now estimate that without the Tier 2/Gasoline
Sulfur program, there will be a constant increase in these emission
over time.
---------------------------------------------------------------------------

\22\ The auto manufacturer and northeastern state commitments to
the NLEV program are scheduled to end in 2004 without further EPA
action on Tier 2 standards, although continued voluntary compliance
by automobile manufacturers and the affected states is a
possibility. Our analysis of emission trends and the emission
benefits expected from today's action assumes for the base scenario
a continuation of the NLEV program past 2004. If the NLEV program
does not continue beyond 2004, the reductions resulting from Tier 2
would be larger than what is shown here. It also includes all other
control measures assumed to be implemented in local areas, such as
reformulated gasoline in all required and opt-in areas and enhanced
I/M where required.
\23\ Also, if the NLEV program ends in model year 2004 or
shortly thereafter, as scheduled, this trend would reverse more
quickly in all areas.
---------------------------------------------------------------------------

Figure III-1 illustrates this expected trend in car and light truck
NO_X emissions in the absence of today's action. The figure
also allows the contribution of cars to be distinguished from that of
light trucks. The figure clearly shows the impact of steady growth in
light truck sales and travel on overall light-duty NO_X
emissions; the decrease in overall light-duty emission levels is due
solely to reductions in LDV emissions. In 2000, we project that

[[Page 6713]]

trucks will produce about 50 percent of combined car and light truck
NO_X emissions. We project that truck emissions would
actually increase after 2000, and over the next 30 years, trucks would
grow to dominate light-duty NO_X emissions. By 2010, we
project trucks would make up two-thirds of light-duty NO_X
emissions; by 2020, nearly three-quarters of all light-duty
---------------------------------------------------------------------------
NO_X emissions would be produced by trucks.

BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TR10FE00.000

BILLING CODE 6560-50-C
Today's action will significantly decrease NO_X and VOC
emissions from cars and light trucks, and will delay the date by which
NO_X and VOC emissions will begin to increase due to
continued VMT growth. With Tier 2/Gasoline Sulfur control, light-duty
vehicle NO_X and VOC emissions are projected to continue
their downward trend past 2020. Table III.B-3 shows the annual tons of
NO_X that we project will be reduced by today's action.\24\
These projections include the benefits of low sulfur fuel and the
introduction of Tier 2 car and light truck standards.
---------------------------------------------------------------------------

\24\ Today's action for both vehicles and fuels will apply in 49
states and the U.S. territories, excluding only California. There
will also be emissions reductions in California from vehicles that
relocate or visit from other states. However, much of the emissions
inventory analysis for this action was made for a 47-state region
which excludes California, Alasks, and Hawaii. The latter two states
were not included in the scope of ozone, PM and economic benefits
modeling.

Table III.B-3.--NO_X Emissions From Cars and Light Trucks as Percent of Total Emissions, and Reductions Due to
Tier 2/Gasoline Sulfur Control (tons per year) \a\
----------------------------------------------------------------------------------------------------------------
Light-duty
Light-duty percent of Light-duty
Year tons-- without total without tons reduced
tier 2 tier 2 by tier 2 ^b, ^c
----------------------------------------------------------------------------------------------------------------
2007............................................................ 3,095,698 16 856,471
2010............................................................ 2,962,093 16 1,235,882
2015............................................................ 2,968,707 17 1,816,767
2020............................................................ 3,160,155 17 2,220,210

[[Page 6714]]

2030............................................................ 3,704,747 19 2,795,551
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Estimates exclude California, Alaska, and Hawaii, although reductions will occur in all three.
\b\ Does not include emission reductions from heavy-duty gasoline vehicles.
\c\ These numbers represent a conservative estimate of the benefits of the Tier 2/Sulfur program. Based on the
updated emission factor model developed in response to comments, the program will result in significantly
larger benefits. For example, our new model projects NO_X reductions of 1,100,000 tons in 2007.

The lower sulfur levels in today's action will produce large
emission reductions on pre-Tier 2 vehicles as soon as low-sulfur
gasoline is introduced, in addition to enabling Tier 2 vehicles to
achieve lower emission levels. Among the pre-Tier 2 vehicles, the
largest per vehicle emission reductions from lower sulfur in gasoline
will be achieved from vehicles which automobile manufacturers will have
sold under the voluntary National Low Emission Vehicle program. These
vehicles are capable of substantially lower emissions when operated on
low sulfur fuel. Older technology vehicles experience a smaller but
significant effect.
In 2007, when all gasoline will meet the new sulfur limit and when
large numbers of 2004 and newer vehicles meeting these standards will
be in use, the combined NO_X emission reduction from vehicles
and fuels will be over 850,000 tons per year. After 2007, emissions
will be reduced further as the fleet turns over to Tier 2 vehicles
operating on low sulfur fuel. By 2020, NO_X emissions will be
reduced by 70% from the levels that would occur without today's action.
This reduction equals the NO_X emissions from over 164
million pre-Tier 2 cars and light trucks. This reduction represents a
12 percent reduction in NO_X emissions from all manmade
sources.
VOC emissions will also be reduced by today's action, with
reductions increasing as the fleet turns over. We estimate that the
reductions as a percent of emissions from cars and light trucks will be
7 percent in 2007 and grow to 17 percent in 2020.
As discussed earlier, in California, smaller but still substantial
reductions in both NO_X and VOC will be achieved because
vehicles visiting and relocating to California will be designed to meet
these standards. Also, vehicles from California visiting other states
will not be exposed to high sulfur fuel. California Air Resources Board
staff have estimated that Tier 2/Sulfur will reduce NO_X
emissions in the South Coast Air Quality Management District by
approximately 4 tons per day in 2007.\25\ CARB staff plan to
incorporate these reductions in their revised attainment plan for this
district, which includes most of the Los Angeles-Long Beach region.
---------------------------------------------------------------------------

\25\ California Air Resources Board, Executive Order G-99-037,
May 20, 1999, Attachment A, 6-7, 10. These NO_X reductions
represent a small fraction of the emission reductions needed in the
South Coast to attain the NAAQS.
---------------------------------------------------------------------------

These estimates of emission reductions reflect a mixture of urban,
suburban, and rural areas. However, cars and light trucks generally
make up a larger fraction of the emission inventory for urban and
suburban areas, where human population and personal vehicle travel is
more concentrated than emissions from other sources such as heavy-duty
highway vehicles, power plants, and industrial boilers. We have
estimated emission inventories for three cities using the same methods
as were used to project the nationwide inventories, and we present the
results for 2007 below in Table III.B-4.
These results confirm that light-duty vehicles make up a greater
share of the NO_X emission inventories in urban areas than
they do in the nationwide inventory. While these vehicles' share of
national NO_X emissions in 2007 is about 16 percent, it is
estimated to be about 34 percent in the Atlanta area. There is also a
range in VOC contributions, with Atlanta again being the area with the
largest car and light truck contribution at 17 percent. In metropolitan
areas with high car and light truck contributions, today's action will
represent a larger step towards attainment since it will have a larger
effect on total emissions.

Table III.B-4--Proportion of the Total Urban Area NO_X and VOC Inventory
in 2007 Attributable to Light-Duty Vehicles^a
------------------------------------------------------------------------
NO_X VOC
Region (percent) (percent)
------------------------------------------------------------------------
Nationwide.................................... 16 13
New York urban area........................... 18 6
Atlanta urban area............................ 34 17
Charlotte urban area.......................... 24 15
------------------------------------------------------------------------
Notes:
^a The estimates reflect continuation of NLEV beyond 2004.

Another useful perspective from which to view the magnitude of the
emission reductions from today's proposal is in terms of the additional
emission reductions from all human sources that areas will need to
attain the 1-hour ozone standard. For this analysis, we reviewed our
proposals for action on the 1-hour attainment demonstrations submitted
by the states. With these proposals, EPA identified estimates of
additional emission reductions (measures in addition to those submitted
by the state in their plans) necessary for attainment for some

[[Page 6715]]

of the areas. These estimates of additional emission reductions are
documented in the individual Federal Register Notices. Using these
estimates and the estimates of Tier 2 reductions developed for today's
action, we have determined what portion of these additional emission
reductions would be accounted for by today's action. These estimates
are reported in Table III.B-5, which shows the contribution of Tier 2/
Sulfur NO_X reductions to the additional emission reduction
necessary for attainment for three metropolitan areas. For example, for
the New York nonattainment area, 89% of the additional NO_X
emission reductions needed for attainment are provided for with today's
action. This leaves 11% of the additional NO_X emission
reductions to be addressed by the State through other local sources.
EPA and the States already have significant efforts underway to
lower ozone precursor emissions through national regulations and State
Implementation Plans. Table III.B-5 shows the contribution of Tier 2 to
the substantial State-led efforts to provide attainment with the ozone
NAAQS. Since the Tier 2 program has evolved in the past year after much
of the States' efforts were completed, many of the States were unable
to estimate the benefits of Tier 2 in their areas. EPA's proposal
actions on these SIPs for the ozone NAAQS addresses the need for Tier 2
in many areas. More specifically, Tier 2 is being used to help States
identify additional measures, in addition to those in their plans,
necessary for attainment.
These estimates are subject to change as the states review and
comment on our proposed action on the SIPs. These figures show that
today's proposal would make a very substantial contribution to these
cities' attainment programs, but that there will still be a need for
additional reductions from other sources. The emission reductions from
today's proposal would clearly not exceed the reductions needed from an
air quality perspective for these areas.

Table III.B-5.--Contribution of Tier 2/Sulfur NO_X Reductions to Ozone
Attainment Efforts of Selected Nonattainment Areas
------------------------------------------------------------------------
Percent of additional
NO_X reductions necessary
for attainment
Nonattainment area (attainment date) -------------------------
Needed
From tier 2 after tier
2
------------------------------------------------------------------------
Baltimore (2005).............................. 100 0
New York (2007)............................... 89 11
Philadelphia (2005)........................... 87 13
------------------------------------------------------------------------

4. Ozone Reductions Expected From This Rule
The large reductions in emissions of ozone precursors from today's
standards will be very beneficial to federal and state efforts to lower
ozone levels and bring about attainment with the current one-hour ozone
standard. The air quality modeling for the final rule shows that
improvements in ozone levels are expected to occur throughout the
country because of the Tier 2/Gasoline Sulfur program.\26\ EPA found
that the program significantly lowers model-predicted exceedances of
the ozone standard. In 2007 the number of exceedances in CMSA/MSAs is
forecasted to decline by nearly one-tenth and in 2030, when full
turnover of the vehicle fleet has occurred, the program lowers such
exceedances by almost one-third. In these same areas, the total amount
of ozone above the NAAQS is forecasted to decline by about 15 percent
in 2007 and by more than one-third in 2030. In the vast majority of
areas, the air quality modeling predicts that the program will lower
peak summer ozone concentrations for both 2007 and 2030. The reduction
in daily maximum ozone is nearly 2 ppb on average in 2007 and over 5
ppb on average in 2030. These reductions contribute to EPA's assessment
that the program will provide the large set of public health and
environmental benefits summarized in Section IV.D of the Preamble. The
forecasted impacts of the program on ozone in 2007 and 2030 are further
described in the Tier 2 Air Quality Modeling Technical Support
Document.
---------------------------------------------------------------------------

\26\ EPA assessment of air quality changes for 2007 and 2030
focused on 37 states in the East because these states cover most of
the areas with 1-hour nonattainment problems.
---------------------------------------------------------------------------

During the public comment period on the proposed rule, EPA received
several comments that expressed concern about potential increases in
ozone that might occur as a result of this rule. As indicated above,
the air quality modeling results indicate an overall reduction in ozone
levels in 2007 and 2030 during the various episodes modeled. In
addition to ozone reductions, a few areas had predicted ozone increases
in portions of the area during parts of the episodes modeled. In most
of these cases, we observed a net reduction in ozone levels in these
areas due to the program. In the very small number of exceptions to
this, the Agency did find benefit from reduction of peak ozone levels.
Based upon a careful examination of this issue, including EPA's
modeling results as well as consideration of the modeling and analyses
submitted by commenters, it is clear that the significant ozone
reductions from this rule outweigh the limited ozone increases that may
occur. Additional details on this issue are provided in the Response to
Comments document and in the Tier 2 Air Quality Modeling Technical
Support Document.
Taken together, EPA believes these results indicate that it will be
much easier for States to develop State Implementation Plans which will
attain and maintain compliance with the one-hour ozone standard. EPA
will work with States conducting more detailed local modeling of their
specific ozone situation, to ensure that their SIPs will provide
attainment. Notably, there are also other upcoming federal measures to
lower ozone precursors that will aid these efforts. If the State
modeling of local programs shows a need, the Agency will work with
states to plan further actions to produce attainment with the NAAQS in
order to protect the public's health and the environment. Further
details on EPA's modeling results can be found in the Agency's Response
to Comments and technical support documents.

C. Particulate Matter

The need to control the contribution of cars and light trucks to
ambient concentrations of particulate matter (PM) is the basis for our
adoption of the new PM emission standards for vehicles. PM is also a
supplemental consideration in our promulgation of

[[Page 6716]]

the vehicle emission standards for NO_X and VOC, and for the
limits on sulfur in gasoline, because SOx, NO_X, and VOC are
PM precursors.
For cars and for light trucks under 3750 pounds loaded vehicle
weight, we are establishing new emission standards under the provisions
of CAA section 202(i), which ties our action to the need for additional
emission reductions in order to attain and maintain the NAAQS. The
NAAQS relevant to the PM emission standards is the PM10
NAAQS. The PM10 NAAQS also provides additional but not
essential support to our promulgation of the NO_X and VOC
standards, since these standards are fully supportable on the basis of
the 1-hour ozone NAAQS.
For the vehicles not subject to CAA 202(i), and for the gasoline
sulfur limits, our actions are tied to determinations regarding public
health and welfare risks more broadly, under CAA sections 202(a),
202(b), and 211(c). The role of NO_X, VOC, and PM emissions
in contributing to atmospheric concentrations of PM10 is an
important element of the risk that these emissions pose to public
health and welfare.
PM also poses risks to public health not fully reflected in the
PM10 NAAQS. Though EPA has not relied on the adverse health
impacts of fine PM to promulgate this rule, it is well established that
such impacts exist. A summary of these effects is given in the next
section. In addition, based on the available science, EPA's Office of
Research and Development has recently submitted to a committee of our
Science Advisory Board a draft assessment document which contains a
proposed conclusion that diesel exhaust is a likely human cancer hazard
and is a potential cause of other nonmalignant respiratory effects. The
scientific advisory committee has met to discuss this document, and we
are awaiting written review comments from the committee. We expect to
submit a further revision of the document to the advisory committee
before we make the document final.
1. Background on PM
Particulate matter (PM) represents a broad class of chemically and
physically diverse substances that exist as discrete particles (liquid
droplets or solids) over a wide range of sizes. The NAAQS that
regulates PM addresses only PM with a diameter less than or equal to 10
microns, or PM10. The coarse fraction of PM10
consists of those particles which have a diameter in the range between
2.5 and 10 microns, and the fine fraction consists of those particles
which have a diameter less than or equal to 2.5 microns, or
PM2.5. These particles and droplets are produced as a direct
result of human activity and natural processes, and they are also
formed as secondary particles from the atmospheric transformation of
emissions of SO_X, NO_X, ammonia, and VOCs.
Natural sources of particles in the coarse fraction of
PM10 include windblown dust, salt from dried sea spray,
fires, biogenic emanation (e.g., pollen from plants, fungal spores),
and volcanoes. Fugitive dust and crustal material (geogenic materials)
comprise approximately 80% of the coarse fraction of the
PM10 inventory as estimated by methods in use today.\27\
Manmade sources of these coarser particles arise predominantly from
combustion of fossil fuel by large and small industrial sources
(including power generating plants, manufacturing plants, quarries, and
kilns), wind erosion from crop land, roads, and construction, dust from
industrial and agricultural grinding and handling operations, metals
processing, and burning of firewood and solid waste. Coarse-fraction
PM10 remains suspended in the atmosphere a relatively short
period of time.
---------------------------------------------------------------------------

\27\ U.S. EPA (1998) National Air Pollutant Emission Trends
Update, 1970-1997. EPA-454/E-98-007. There is evidence from ambient
studies that emissions of these materials may be overestimated and/
or that once emitted they have less of an influence on monitored PM
concentrations (of both PM10 and PM2.5) than
this inventory share would suggest.
---------------------------------------------------------------------------

Most of the emission sources listed for coarse particles also have
a substantial fine particle fraction. Their share of the
PM2.5 inventory is somewhat smaller, however, because of the
role of other sources that give rise primarily to PM2.5. The
other sources of PM2.5 include carbon-based particles
emitted directly from gasoline and diesel internal combustion engines,
sulfate-based particles formed from SO_X and ammonia,
nitrate-based particles formed from NO_X and ammonia, and
carbonaceous particles formed through transformation of VOC emissions.
PM2.5 particles from fugitive dust and crustal sources
comprise substantially less than their share of coarse PM emissions,
approximately one-half of the directly emitted PM2.5
inventory as estimated by methods in use today. The presence and
magnitude of crustal PM2.5 in the ambient air is much lower
even than suggested by this smaller inventory share, due to the
additional presence of secondary PM from non-crustal sources and the
removal of a large portion of crustal emissions close to their source.
This near-source removal results from crustal PM's lack of inherent
thermal buoyancy, low release height, and interaction with surrounding
vegetation (which acts to filter out some of these particles).
Secondary PM is dominated by sulfate particles in the eastern U.S.
and parts of the western U.S., with nitrate particles and carbonaceous
particles dominant in some western areas. Mobile sources can reasonably
be estimated to contribute to ambient secondary nitrate and sulfate PM
in proportion to their contribution to total NO_X and
SO_X emissions.
The sources, ambient concentration, and chemical and physical
properties of PM10 vary greatly with time, region,
meteorology, and source category. A first step in developing a plan to
attain the PM10 NAAQS is to disaggregate ambient
PM10 into the basic categories of sulfate, nitrate,
carbonaceous, and crustal PM, and then determine the major contributors
to each category based on knowledge of local and upwind emission
sources. Following this approach, SIP strategies to reduce ambient PM
concentrations have generally focused on controlling fugitive dust from
natural soil and soil disturbed by human activity, paving dirt roads
and controlling soil on paved roads, reducing emissions from
residential wood combustion, and controlling major stationary sources
of PM10 where applicable. The control programs to reduce
stationary, area, and mobile source emissions of sulfur dioxide, oxides
of nitrogen, and volatile organic compounds in order to achieve
attainment with the sulfur dioxide and ozone NAAQS also have
contributed to reductions in the fine fraction of PM10
concentrations. In addition, the EPA standards for PM emissions from
highway and nonroad engines are contributing to reducing
PM10 concentrations. As a result of all these efforts, in
the last ten years, there has been a downward trend in PM10
concentrations, with a leveling off in the later years.
Particulate matter, like ozone, has been linked to a range of
serious respiratory health problems. Scientific studies suggest a
likely causal role of ambient particulate matter in contributing to a
series of health effects. The key health effects categories associated
with particulate matter include premature mortality, aggravation of
respiratory and cardiovascular disease (as indicated by increased
hospital admissions and emergency room visits, school absences, work
loss days, and restricted activity days), changes in lung function and
increased respiratory symptoms, changes to lung tissues and structure,
and altered respiratory defense

[[Page 6717]]

mechanisms. PM also causes damage to materials and soiling. It is a
major cause of substantial visibility impairment in many parts of the
U.S.
Motor vehicle particle emissions and the particles formed by the
transformation of motor vehicle gaseous emissions tend to be in the
fine particle range. Fine particles are a special health concern
because they easily reach the deepest recesses of the lungs. Scientific
studies have linked fine particles (alone or in combination with other
air pollutants), with a series of significant health problems,
including premature death; respiratory related hospital admissions and
emergency room visits; aggravated asthma; acute respiratory symptoms,
including aggravated coughing and difficult or painful breathing;
chronic bronchitis; and decreased lung function that can be experienced
as shortness of breath.
These effects are discussed further in EPA's ``Staff Paper'' and
``Air Quality Criteria Document'' for particulate matter.\28\
---------------------------------------------------------------------------

\28\ U.S. EPA, 1996, Air Quality Criteria for Particulate
Matter, EPA/600/P-95/001aF. Review of the National Ambient Air
Quality Standards for Particulate Matter: Policy Assessment of
Scientific and Technical Information, OAQPS Staff Paper, EPA-452 R-
96-013, July 1996.
---------------------------------------------------------------------------

EPA first established primary (health-based) and secondary
(welfare-based) National Ambient Air Quality Standards for
PM10 in 1987. The annual and 24-hour primary PM10
standards were set at 50 g/m\33\, and 150 g/m\3\,
respectively.\29\ In July 1997, the primary standards were revised to
add two new PM2.5 standards. At the same time, we changed
the statistical form of the primary PM10 standard and set
all the secondary standards to be the same as the primary.
---------------------------------------------------------------------------

\29\ The annual average PM10 NAAQS is based on a three-year
average, and the 24-hour NAAQS is based on expected exceedances over
a three-year period.
---------------------------------------------------------------------------

On May 14, 1999, a panel of the U.S. Court of Appeals for the
District of Columbia Circuit reviewed EPA's revisions to the ozone and
PM NAAQS and found, by a 2-1 vote, that sections 108 and 109 of the
Clean Air Act, as interpreted by EPA, represent unconstitutional
delegations of Congressional power. American Trucking Ass'ns, Inc., et
al., v. Environmental Protection Agency, 175 F.3d 1027 (D.C. Cir.
1999). Among other things the Court remanded the record for the 8-hour
ozone NAAQS and the PM2.5 NAAQS to EPA. On October 29, 1999,
EPA's petition for rehearing by the three judge panel was denied, with
an exception regarding the revised ozone NAAQS. EPA's petition for
rehearing en banc by the full Circuit was also denied, although five of
the nine judges considering the petition agreed to rehear the case.
The pre-existing PM10 NAAQS remains in effect (except
for one area--Boise, ID--where prior to the court's decision we had
determined it no longer to apply). We believe that given the uncertain
status of the new PM2.5 NAAQS, it is most appropriate to
rely primarily on the pre-existing PM10 NAAQS in
establishing the Tier 2/Gasoline Sulfur program's vehicle emission
standards and limits on sulfur in gasoline. However, because we
believe, and the Court did not dispute, that there are very substantial
public health risks from PM2.5 and substantial health and
economic benefits from reducing PM2.5 concentrations, we
have conducted analyses of the PM2.5 changes likely to occur
from the Tier 2/Gasoline Sulfur program. These analyses are summarized
in the section of this preamble dealing with the economic benefits of
the new standards, section IV.D.5, and corresponding sections of the
final RIA.
There is additional concern regarding the health effects of PM from
diesel vehicles, apart from the health effects which were considered in
setting the NAAQS for PM10 and PM2.5. Diesel PM
contains small quantities of chemical species that are known
carcinogens, and diesel PM as a whole has been implicated in
occupational epidemiology studies. EPA's Office of Research and
Development has considered these studies, and has recently submitted to
a committee of our Science Advisory Board a draft conclusion that
diesel exhaust is a ``highly likely'' human cancer hazard.\30\ Because
we are awaiting a formal response from our advisory committee before
revising and finalizing our assessment document, we are not relying on
the conclusions in this document as formal support for our action
today. More information about this aspect of PM air quality is given in
section III.F of this preamble.
---------------------------------------------------------------------------

\30\ Health Assessment Document for Diesel Emissions, SAB Review
Draft EPA/600/8-90/057D. November 1999. The document is available
electronically at http://www.epa.gov/ncea/diesel.htm.
---------------------------------------------------------------------------

2. Need for Additional Reductions to Attain and Maintain the
PM10 NAAQS
The most recent PM10 monitoring data indicates that 15
designated PM10 nonattainment counties, with a population of
almost 9 million in 1996, violated the PM10 NAAQS in the
period 1996-1998. The areas that are violating do so because of
exceedances of the 24-hour PM10 NAAQS. No areas had
monitored violations of the annual standard in this period. Table
III.C-1 lists the 15 counties. The table also indicates the
classification for each area and the status of our review of the State
Implementation Plan.

Table III.C-1.--Fifteen PM10 Nonattainment Areas Violating the PM10 NAAQS in 1996-1998 a
----------------------------------------------------------------------------------------------------------------
1996
Area Classification SIP approved? Population
(millions)
----------------------------------------------------------------------------------------------------------------
Clark Co., NV................................. Serious.............. No....................... 0.93
El Paso, TX................................... Moderate............. Yes...................... 0.67
Gila, AZ...................................... Moderate............. No....................... 0.05
Imperial Co., CA.............................. Moderate............. No....................... 0.14
Inyo Co., CA.................................. Moderate............. No....................... 0.02
Kern Co., CA.................................. Serious.............. No....................... 0.62
Mono Co., CA.................................. Moderate............. No....................... 0.01
Kings Co., CA................................. Serious.............. No....................... 0.11
Maricopa Co., AZ.............................. Serious.............. No....................... 2.61
Power Co., ID................................. Moderate............. No....................... 0.01
Riverside Co., CA............................. Serious.............. No....................... 1.41
San Bernardino Co., CA........................ Serious.............. No....................... 1.59
Santa Cruz Co., AZ............................ Moderate............. No....................... 0.04
Tulare Co., CA................................ Serious.............. No....................... 0.35

[[Page 6718]]

Walla Walla Co., WA........................... Moderate............. Yes...................... 0.05
Total Population........................ ................... ....................... 8.61
------------------------
----------------------------------------------------------------------------------------------------------------
\a\ Although we do not believe that we are limited to considering only designated nonattainment areas in
implementing CAA section 202(i), we have focused on the designated areas in the case of PM10. An official
designation of PM10 nonattainment indicates the existence of a confirmed PM10 problem that is more than a
result of a one-time monitoring upset or a results of PM10 exceedances attributable to natural events. In
addition to these designated nonattainment areas, there are 15 unclassified counties in 12 geographically
spread out states, with a 1996 population of over 4 million, for which the state has reported PM10 monitoring
data for this period indicating a PM10 NAAQS violation. We have not yet excluded the possibility that a one-
time monitoring upset or a natural event(s) is responsible for the monitored violations in 1996-1998 in the 15
unclassified counties. We adopted a policy in 1996 that allows areas whose PM10 exceedances are attributable
to natural events to remain unclassified if the state is taking all reasonable measures to safeguard public
health regardless of the source of PM10 emissions. Areas that remain unclassified areas are not required to
submit attainment plans, but we work with each of these areas to understand the nature of the PM10 problem and
to determine what best can be done to reduce it. The Tier 2/Gasoline Sulfur program will reduce PM10
concentrations in these 15 unclassified counties, because all have car and light truck travel that contributes
to PM10 and precursor emissions loadings. This reduction will assist these areas in reducing their PM10
nonattainment problem, if a problem is confirmed upon closer examination of each local situation. Boise, ID,
had also been classified as a PM10 nonattainment area at one time and was monitored to have a PM10 NAAQS
violation in 1996-1998. However, the pre-existing PM10 NAAQS does not presently apply in Boise, ID, because in
the period between our revision of the old PM10 NAAQS and the Court's decision to vacate the revised PM10
NAAQS, we determined that Boise was in attainment with the old PM10 NAAQS and that it therefore no longer
applied in that area.

Because the types and sources of PM10 are complex and
vary from area to area, the best projections of future PM10
concentrations are the local emission inventory and air quality
modeling analyses that states have developed or are still in the
process of developing for their PM10 attainment plans. We do
employ a modeling approach, known as the source-receptor matrix
approach, for relating emission reductions to PM10
reductions on a national scale. This approach is one of our established
air quality models for purposes of quantifying the health and welfare
related economic benefits of PM reductions from major regulatory
actions. One application of this modeling approach was for the
Regulatory Impact Analysis for the establishment of the new PM NAAQS
\31\. This model is also the basis for the estimates of PM10
(and PM2.5) concentrations reductions we have used to
estimate the economic benefits of the Tier 2/Gasoline Sulfur program in
2030. Its use for this purpose is described in the final RIA. In both
applications, we modeled an emissions scenario corresponding to
controls currently in place or committed to by states. As such, this
scenario is an appropriate baseline for determining if further
reductions in emissions are needed in order to attain and maintain the
PM10 NAAQS.
---------------------------------------------------------------------------

\31\ Regulatory Impact Analyses for the Particulate Matter and
Ozone National Ambient Air Quality Standards and Proposed Regional
Haze Rule, Innovative Strategies and Economics Group, Office of Air
Quality Planning and Standards, U.S. Environmental Protection
Agency, Research Triangle Park, N.C., July 16, 1997.
---------------------------------------------------------------------------

In the RIA for the establishment of the PM NAAQS, we projected that
in 2010 there will be 45 counties not in attainment with the original
PM¹⁰ NAAQS . We cited these modeling results in our proposal
for the Tier 2/Gasoline Sulfur program and in our first supplemental
notice. After reviewing public comments on our presentation of these
modeling results, we have concluded that while the source-receptor
matrix approach is a suitable model for estimating PM concentration
reductions for economic benefits estimation, it is not a tool we can
use with high confidence for predicting that individual areas that are
now in attainment will become nonattainment in the future. However, we
believe the source-receptor matrix approach is appropriate for, and is
a suitable tool for, determining that a current designated
nonattainment area has a high risk of remaining in PM10
nonattainment at a future date. Therefore, we have cross-matched the
results for 2030 from our final RIA for Tier 2 and the list of current
PM10 nonattainment areas with monitored violations in 1996
to 1998 shown in Table III.C-1.\32\ Based on this, we conclude that the
8 areas shown in Table III.C-2 have a high risk of failing to attain
and maintain without further emission reductions. These areas have a
population of nearly 8 million. Included in the group are the counties
that are part of the Los Angeles, Phoenix, and Las Vegas metropolitan
areas, where traffic from cars and light trucks is substantial.
California areas will benefit from the Tier 2/Gasoline Sulfur program
because of travel within California by vehicles originally sold outside
the state, and by reduced poisoning of catalysts from fuel purchased
outside of California.
---------------------------------------------------------------------------

\32\ We used the more recent modeling for 2030 rather than the
earlier modeling for 2010, because the modeling the 2030
incorporates more recent estimates of emissions inventories. Our
emission estimates in our final RIA indicate that PM10
emissions under the basline scenario increase steadily between 1996
and 2030, for 47 states combined and for four specific cities,
suggesting that areas in nonattainment in both 1996-1998 and 2030
will be in nonatainment in the intermediate years as well assuming
no further emission reductions. A factor tending to make Table
III.C-2 shorter is that we have not relied on the source-receptor
matrix model's prediction of 24-hour nonattainment, as those
predictions on an individual areas basis are less reliable than the
predictions of annual average nonattainment.

Table III.C-2.--Eight Areas With a High Risk of Failing To Attain and
Maintain the PM10 NAAQS Without Further Reductions in Emissions
------------------------------------------------------------------------
1996
Area population
(millions)
------------------------------------------------------------------------
Clark Co., NV.............................................. 0.93
Imperial Co., CA........................................... 0.14
Kern Co., CA............................................... 0.62
Kings Co., CA.............................................. 0.11
Maricopa Co., AZ........................................... 2.61
Riverside Co., CA.......................................... 1.41
San Bernardino Co., CA..................................... 1.59
Tulare Co., CA............................................. 0.35
------------
Total population..................................... 7.76
------------------------------------------------------------------------

Table III.C-2 is limited to designated PM10
nonattainment areas which both had monitored violations of the
PM10 NAAQs in 1996-1998 and are predicted to be in
nonattainment in 2030 in our PM10 air quality modeling. This
gives us high confidence that these areas require further emission
reductions to attain and maintain, but does not fully

[[Page 6719]]

consider the possibility that there are other areas which are now
meeting the PM10 NAAQS which have at least a significant
probability of requiring further reductions to continue to maintain it.
Our air quality modeling predicted 2030 violations of the annual
average PM10 NAAQS in five additional counties that in
either 1997 or 1998 had single-year annual average monitored
PM10 levels of at least 90 percent of the NAAQS, but did not
exceed the formal definition of the NAAQS over the three-year period
ending in 1998 \33\. These areas are shown in Table III.C-3. They have
a combined population of almost 17 million, and a broad geographic
spread. Unlike the situation for ozone, for which precursor emissions
are generally declining over the next 10 years or so before beginning
to increase, we estimate that emissions of PM10 will rise
steadily unless new controls are implemented. The small margin of
attainment which these areas currently enjoy will likely erode; the PM
air quality modeling suggests that it will be reversed. We therefore
consider these areas to each individually have a significant risk of
failing to maintain the NAAQS without further emission reductions.
There is a substantial risk that at least some of them would fail to
maintain without further emission reductions. The emission reductions
from the Tier 2/Gasoline Sulfur program will help to keep them in
attainment.
---------------------------------------------------------------------------

\33\ In fact, in two of these areas, New York Co., NY and Harris
Co., TX, the average PM10 level in 1998 was above the 50
g/m³ value of the NAAQS. These two areas are not
included in the Table III.C-2 list of areas with a high risk of
failing to attain and maintain because lower PM10 levels
in 1996 and 1997 caused their three-year average PM10
level to be lower than the NAAQS. Official nonattainment
determinations for the annual PM10 NAAQS are made based
on the average of 12 quarterly PM10 averages.

Table III.C-3.--Five Areas With a Significant Risk of Failing to Attain
and Maintain the PM10 NAAQS Without Further Reductions in Emissions
------------------------------------------------------------------------
1996
Area population
(millions)
------------------------------------------------------------------------
New York Co., NY........................................... 1.33
Cuyahoga Co., OH........................................... 1.39
Harris, Co., TX............................................ 3.10
San Diego Co., CA.......................................... 2.67
Los Angeles Co., CA........................................ 8.11
------------
Total population..................................... 16.6
------------------------------------------------------------------------

Taken together and considering their number, size, and geographic
distribution, these 13 areas are sufficient to establish the case that
additional reductions are needed in order to attain and maintain the
PM10 NAAQS. This determination provides additional support
for the NOx and VOC standards and for the limits on gasoline sulfur,
which are also fully supported on ozone attainment and health effects
considerations. The sulfate particulate, sulfur dioxide,
NO_X, and VOC emission reductions from the Tier 2/Gasoline
Sulfur program will help the 8 areas in Table III.C-2 and the 5 areas
in Table III.C.-3 to attain and maintain the PM10 NAAQS. The
new PM standards for gasoline and diesel vehicles are also supported by
this PM10 determination.
We are also establishing the new PM emissions standard today to
avoid the possibility that PM10 concentrations in these and
other areas do get even worse due to an increase in sales of diesel
vehicles, which could create a need for further reductions which would
be larger and would affect more areas of the country. At the present
time, virtually all cars and light trucks being sold are gasoline
fueled. The ambient PM10 air quality data for 1996 to 1998
reflects that current situation, and this data was an important factor
in what areas are listed in Tables III.C-2 and III.C-3. Also, the
predictions of future PM10 air quality, used to develop the
Tables III.C-2 and III.C-3 lists of areas with high or significant risk
of being unable to attain and maintain, are based on an assumption that
this will continue to be true. However, we are concerned over the
possibility that diesels will become more prevalent in the car and
light-duty truck fleet, since automotive companies have announced their
desire to increase their sales of diesel cars and light trucks. Because
current diesel vehicles emit higher levels of PM10 than
gasoline vehicles, a larger number of diesel vehicles could
dramatically increase levels of exhaust PM10, especially if
more stringent PM emissions standards are not in place. The new PM
emissions standards will ensure that an increase in the sales of diesel
cars and light trucks will not increase PM emissions from cars and
light trucks so substantially as to endanger PM10 attainment
and maintenance on a more widespread basis. Given this potential, it is
appropriate to establish the new PM emissions standards now on the
basis of the increase in sales of diesel vehicles being a reasonable
possibility without such standards. Establishing the new PM emissions
standards now avoids the public health impact and industry disruption
that could result if we waited until an increase in sales of diesels
with high PM emissions had already occurred.
In order to assess the potential impact of increased diesel sales
penetration on PM emissions, we analyzed the increase in
PM10 emissions from cars and trucks under a scenario in
which the use of diesel engines in cars and light trucks increases. We
used projections developed by A.D. Little, Inc. as part of a study
conducted for the American Petroleum Institute. The ``Most Likely''
case projected by A.D. Little forecasts that diesel engines'' share of
the light truck market will grow to 24 percent by the 2015 model year.
Diesel engines' share of the car market would grow somewhat more
slowly, reaching 9 percent by 2015. The A.D. Little forecasts did not
address the period after 2015; we have assumed that diesel sales
stabilize at the level reached in 2015, with the fraction of in-use
vehicles with diesel engines continuing to increase through turnover.
We believe these projections are more realistic than the scenario of
even higher sales of diesels described in the notice for the proposed
Tier 2/Gasoline Sulfur program, though the A.D. Little forecasts still
show much higher percentages of diesel vehicles in the light-duty fleet
than have ever existed historically in the U.S.
The A.D. Little scenario of increased diesels, and even more so the
scenario described in our proposal, would result in dramatic increases
in direct PM10 emissions from cars and light trucks, if
there were no change in these vehicles' PM standards. The increase in
diesel exhaust PM10 emissions would more than overcome the
reduction in direct PM10 attributable to the sulfur
reduction in gasoline. With no change in the existing PM standards for
cars and light trucks, our analysis of this scenario shows that direct
PM10 emissions in 2020 would be approximately 98,000 tons
per year, which is nearly two times the 50,000 tons projected if diesel
sales do not increase. The portion of ambient PM10
concentrations attributable to cars and light trucks would climb
steadily. The final RIA presents alternative estimates of the amount by
which future PM10 concentrations could increase due to such
an emissions increase, based on extrapolations from several studies'
estimates of the contribution that heavy-duty diesel vehicles have made
to recent or PM10 concentrations. The increase is estimated
to range from 0.6 to 20 g/m3.
The added PM10 emissions from cars and trucks due to an
increase in diesel sales without action to reduce PM10 from
new diesel vehicles would exacerbate the PM10 nonattainment
problems of the areas listed in Tables

[[Page 6720]]

III.C-2 and III.C-3, for which our air quality modeling predicted
future nonattainment even without an increase in diesel sales.
Moreover, it might cause PM10 nonattainment in additional
areas. In addition to the counties already listed in Tables III.C-2 and
III.C-3, there are other areas for which 1997 and 1998 data indicate
that maintenance of the PM10 NAAQS is at risk if diesel
sales of cars and light truck increase. Table III.C-4 lists additional
counties for which either 1997 or 1998 monitoring data, or both,
indicated a second-high PM10 concentration for the single
year within 10 percent of the PM10 24-hour NAAQS or an
annual average PM10 concentration within 10 percent of the
annual average PM10 NAAQS. Only counties which are part of
metropolitan statistical areas are listed in Table III.C-4, in order to
focus on those in which traffic densities are high. Considering both
the annual and 24-hour NAAQS, there were 13 areas within 10 percent of
the standard. Increases in PM10 emissions from more diesel
vehicles would put these areas in greater risk of violating the
PM10 NAAQS, especially if growth in other sources is high or
meteorological conditions are more adverse than in the 1996 to 1998
period.

Table III.C-4.--Thirteen Metropolitan Statistical Area Counties With
1997 and/or 1998 Ambient PM 10 Concentrations Within 10 Percent of the
Annual or 24-Hour the PM 10 NAAQS a
------------------------------------------------------------------------
1996
population
(millions)
------------------------------------------------------------------------
Areas within 10 percent of the annual PM10 NAAQS:
------------------------------------------------------------------------
Lexington Co., SC....................................... 0.20
Union Co., TN........................................... 0.02
Washoe Co., NV.......................................... 0.30
Madison Co., IL......................................... 0.26
Dona Ana Co., NM........................................ 0.16
El Paso Co., TX......................................... 0.68
Ellis Co., TX........................................... 0.97
Fresno Co., CA.......................................... 0.74
Philadelphia Co., PA.................................... 1.47

------------------------------------------------------------------------
Areas within 10 percent of the 24-hour PM10 NAAQS:
------------------------------------------------------------------------
Lexington Co., SC....................................... 0.20
El Paso Co., TX......................................... 0.68
Union Co., TN........................................... 0.02
Mobile Co., AL.......................................... 0.40
Dona Ana Co., NM........................................ 0.16
Lake Co., IN............................................ 0.48
Philadelphia Co., PA.................................... 1.47
Pennington Co., SD...................................... 0.09
Ventura Co., CA......................................... 0.71
Total Population of all 13 areas.................. 6.48
---------------
------------------------------------------------------------------------
Notes:
\a\ These areas are listed based on their second high 24-hour
concentration and annual average concentration in 1997, 1998, or both.
Official nonattainment determinations are made based on three years of
data, and on estimates of expected exceedances of the 24-hour
standard.

Fortunately, the standards included in today's actions will result
in a steady decrease in total direct PM10 from cars and
light trucks even if this increase in the use of diesel engines in
these vehicles were to occur. If the A.D. Little ``Most Likely''
scenario for increased diesel engines in light trucks were to occur,
today's actions would reduce diesel PM10 from cars and light
trucks by over 75 percent in 2020. Stated differently, by 2030 today's
actions would reduce 98,000 tons of the potential increase in
PM10 emissions from passenger cars and light trucks. The
result would be less direct PM10 than is emitted today,
because the increase in diesel PM10 would be more than
offset by the reduction in PM10 emissions from gasoline
vehicles resulting from lower gasoline sulfur levels.
We are establishing tighter PM standards for cars and light trucks
to help avoid the adverse impact of greater diesel PM emissions on
PM10 attainment and public health and welfare if diesel
sales increased in the future without the protection of the tighter
standards. Because diesel vehicles will essentially be performing the
same functions as the gasoline vehicles they will replace, it is
appropriate for the new PM standards to also apply equally to gasoline
and diesel vehicles. We expect that gasoline vehicles will need little
or no redesign to meet the new PM standards when free of defects and
properly operating. However, the new vehicle and gasoline sulfur
standards may achieve some reduction in real world PM emissions from
gasoline vehicles by encouraging more durable designs and by ensuring
that these vehicles are operated on lower-sulfur fuel. The new
standards for PM will also prevent any changes in gasoline engine
design which would increase PM emissions. These changes would otherwise
be possible because the current PM standard is so much higher than the
current performance on the gasoline vehicles.
3. PM2.5 Discussion
We are not basing our promulgation of the Tier 2 vehicle standards
on a finding on the need for additional emission reductions in order to
attain and maintain the NAAQS for PM2.5. We are providing
this information to explain that this program will result in
substantial benefit in reduction of PM2.5 concentrations, to
an even broader set of geographic areas than will benefit in terms of
PM10 attainment.
The annual and 24-hour PM2.5 NAAQS set in 1997 are
numerically much lower than the corresponding PM10
standards: 15 versus 50 g/m³ for the annual average
standards and 65 versus 150 g/m³ for the 24-hour
average standards. While geographically broad PM2.5
monitoring is just now reaching the end of the first of three years of
operation needed to determine compliance, our best analysis from the
more limited PM2.5 conducted in some areas indicates that
many areas that are in compliance with the PM10 standards
will be found to be in violation of the annual average PM2.5
standard. Violations of the 24-hour PM2.5 standard appear to
be infrequent.
Therefore, if we considered it appropriate to proceed with
implementing the PM2.5 NAAQS, we are confident that there
would be a larger set of areas for which we would determine that
further reductions in emissions are needed in order to attain and
maintain the NAAQS.
Moreover, gasoline and diesel cars and light trucks have a more
important contributing role for ambient PM2.5
concentrations, and other emission sources that play a major role in
ambient PM10 concentrations will be relatively less
important. Cars and light trucks contribute essentially the same
absolute amount to ambient concentrations of PM10 and of
PM2.5. However, most other sources contribute much more to
PM10 than to PM2.5, so the relative contribution
from cars and light trucks is larger. In addition, the absolute
contribution from cars and light trucks is larger in relationship to
the numerically lower PM2.5 standard, making them more
important to attainment and maintenance. This is also true for the
potential contribution that more diesel cars and light trucks would
make to ambient PM2.5 concentrations.
4. Emission Reductions and Ambient PM Reductions
The NO_X and VOC emission reductions from the Tier 2/
Gasoline Sulfur program are presented in the ozone section above. The
SO_X and PM reductions are presented in our final RIA, and
are essentially unchanged from those presented in our proposal, except
for the revision of the diesel sales scenario discussed above.
Because virtually all of the PM reduction from the Tier 2/Gasoline

[[Page 6721]]

Sulfur program is in the fine fraction of PM10, our
estimates of the PM2.5 and PM10 reductions are
essentially the same. Estimates of the ambient PM reductions in 2030 in
different parts of the nation, after full phase in of the vehicle
standards, are presented in the final RIA. The reductions in ambient PM
are largest in the parts of the country with more vehicle travel, i.e,
larger in the east than in the west and larger in urban areas than in
rural areas. In the eastern half of the nation, the reductions in
annual average PM concentrations range from 0.2 to over 1.2 micrograms
per cubic meter.

D. Other Criteria Pollutants: Carbon Monoxide, Nitrogen Dioxide, Sulfur
Dioxide

The standards being promulgated today will help reduce levels of
three other pollutants for which NAAQSs have been established: carbon
monoxide (CO), nitrogen dioxide (NO2), and sulfur dioxide
(SO2). As of 1998, every area in the United States has been
designated to be in attainment with the NO2 NAAQS. As of
1997, one area (Buchanan County, Missouri) did not meet the primary
SO2 short-term standard, due to emissions from the local
power plant. There are currently 20 designated CO nonattainment areas,
with a combined population of 33 million. There are also 24 designated
maintenance areas with a combined population of 22 million. However,
the broad trends indicate that ambient levels of CO are declining. In
1997, 6 of 537 monitoring sites reported ambient CO levels in excess of
the CO NAAQS.
The reductions in SO2 precursor emissions from today's
actions are essentially equal to the SO_X reductions
described in Section III.B. and III.C., respectively. The impact of
today's actions on NO2 emissions depends on the specific
emission control technologies used to meet the Tier 2 vehicle emission
standards. However, essentially all of the NO_X emitted by
cars and light trucks converts to NO2 in the atmosphere;
therefore, it is reasonable to assume that today's actions will
substantially reduce ambient NO2 levels by the same
proportion. Today's rule also will require light trucks to meet more
stringent CO standards. These more stringent standards will help extend
the trend towards lower CO emissions from motor vehicles and thereby
help the remaining CO nonattainment areas reach attainment while
helping other areas remain in attainment with the CO NAAQS. Our
analysis of CO reductions from today's program is found in Chapter III
of the RIA. The analysis of economic benefits and costs found in
Section IV.D.-5. does not account for the economic benefits of the CO
reductions expected to result from today's proposal.

E. Visibility

Visibility impairment occurs as a result of the scattering and
absorption of light by particles and gases in the atmosphere. It is
most simply described as the haze that obscures the clarity, color,
texture, and form of what we see. The principal cause of visibility
reduction is fine particles between 0.1 and 1 m in size. Of
the pollutant gases, only NO2 absorbs significant amounts of
light; it is partly responsible for the brownish cast of polluted
skies. While the contribution of NO2 to visibility
impairment varies from area to area, it is generally responsible for
less than ten percent of visibility reduction.
The CAA requires EPA to protect visibility, or visual air quality,
through a number of programs. These programs include the national
visibility program under Sections 169a and 169b of the Act, the
Prevention of Significant Deterioration program for the review of
potential impacts from new and modified sources, and the secondary
NAAQS for PM10 and PM2.5. The national visibility
program established in 1980 requires the protection of visibility in
156 mandatory federal Class I areas across the country (primarily
national parks and wilderness areas). More than 65 million visitors
travel each year to these parks and wilderness areas. The CAA
established as a national visibility goal, ``the prevention of any
future, and the remedying of any existing, impairment of visibility in
mandatory federal Class I areas in which impairment results from
manmade air pollution.'' The Act also calls for state programs to make
``reasonable progress'' toward the national goal. In addition, a recent
national opinion poll on the state of the national parks found that
more than 80 percent of Americans believe air pollution affecting these
parks should be cleaned up for the benefit of future generations.\34\
---------------------------------------------------------------------------

\34\ ``National Parks and the American Public: A National Public
Opinion Survey on the National Park System,'' Summary Report,
National Parks and Conservation Association, June 1998.
---------------------------------------------------------------------------

There has been improvement in visibility in the western part of the
country over the last ten years. However, visibility impairment remains
a serious problem in Class I areas. Visibility in the East does not
seem to have improved. As one part of addressing this national problem,
EPA has required states to adopt and implement effective plans for
protecting and improving visibility in Class I federal areas (64 FR
35714, July 1, 1999).
Today's actions will result in visibility improvements due to the
reduction in local and upwind PM and PM precursor emissions. Since
mobile source emissions contribute to the formation of visibility-
reducing PM, control programs that reduce the mobile source emissions
of direct and secondary PM would have the effect of improving
visibility. The Grand Canyon Visibility Transport Commission's final
recommendations report \35\ found that reducing total mobile source
emissions is an essential part of any program to protect visibility in
the Western U.S. The Commission found that motor vehicle exhaust is
responsible for about 14 percent of human-caused visibility reduction
(excluding road dust). A substantial portion of motor vehicle exhaust
comes from cars and light trucks. In light of that impact, the
Commission's recommendations in 1996 supported federal Tier 2/Gasoline
Sulfur standards, as EPA is proposing today. More recently, a number of
Western Governors noted the importance of controlling mobile sources as
part of efforts to improve visibility in their comments on the Regional
Haze Rule and on the need to protect the 16 Class I areas on the
Colorado Plateau. In their joint letter dated June 29, 1998, they
stated that, ``* * * the federal government must do its part in
regulating emissions from mobile sources that contribute to regional
haze in these areas. * * *'' and called on EPA to make a ``binding
commitment * * * to fully consider the Commission's recommendations
related to the * * * federal national mobile source emission control
strategies.'' These recommendations included Tier 2 vehicle standards
and reductions in gasoline sulfur levels.
---------------------------------------------------------------------------

\35\ ``Recommendations for Improving Western Vistas,'' Report of
the Grand Canyon Visibility Transport Commission to the United
States Environmental Protection Agency, June 10, 1996.
---------------------------------------------------------------------------

The recent Northern Front Range Air Quality Study provides another
indication of how important car and light truck emissions can be to
fine PM and visibility. This study reported findings that indicate that
cars and light trucks are responsible for 39 percent of fine PM at a
site within the metropolitan Denver area, and for 40 percent at a
downwind rural site. This contribution includes both direct PM and
indirect PM formed from sulfur dioxide and NO_X from these
vehicles.

[[Page 6722]]

The analysis of economic benefits and costs found in Section
IV.D.5. accounts for the economic benefits of the visibility
improvements expected to result from today's actions.

F. Air Toxics

Section 202(a) provides that EPA may promulgate standards
regulating any air pollutants that in the Administrator's judgment,
cause or contribute to air pollution which may reasonably be
anticipated to endanger public health or welfare. Section 202(l)
provides specific provisions for regulation of hazardous air pollutants
from motor vehicles and fuels, and states that at a minimum such
regulations should apply to emissions of benzene and formaldehyde.
Emissions from cars and light trucks include a number of air
pollutants that are known or suspected human or animal carcinogens or
that are known or suspected to have other, non-cancer health impacts.
These pollutants include benzene, formaldehyde, acetaldehyde, 1,3-
butadiene, and diesel particulate matter. For several of these
pollutants, motor vehicle emissions are believed to account for a
significant proportion of total nation-wide emissions. All of these
compounds are present in exhaust emissions; benzene is also found in
evaporative emissions from gasoline-fueled vehicles.
The health effects of diesel particulate matter are of particular
relevance to today's actions, because of the possibility for increased
diesel-powered truck sales and the more stringent PM standard that will
apply to these trucks as a result of today's actions. While we have not
finalized our decision about the carcinogenicity of diesel exhaust, we
are in the process of addressing this question. The Agency's recently
released draft assessment \36\ concludes that diesel exhaust is a
highly likely human lung cancer hazard, but that the data are currently
unsuitable to make a confident quantitative statement of risk. The
draft report concludes, however, that this risk is applicable to
ambient exposures and that the risk may be in the range of regulatory
interest (greater than one in a million over a lifetime). Several other
agencies and governing bodies have designated diesel exhaust or diesel
PM as a ``potential'' or ``probable'' human carcinogen.\37\ The
California Air Resources Board (ARB), for example, found that diesel
particulate matter constituted a toxic air contaminant and estimated a
potency range of 1.3 x 10^-4 to 2.4 x 10^-3 per
g/m\3\.\38\ The ARB's findings suggest that 130 to 2400
persons in one million exposed to 1 g/m\3\ of diesel exhaust
particulate continuously for their lifetime (70 years) would develop
cancer as a result of their exposure.
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\36\ EPA's diesel health assessment (Health Assessment Document
for Diesel Emissions, SAB Review Draft, U.S. Environmental
Protection Agency, Washington, DC. EPA/600/8-90/057D, November 1999)
can be found at the following EPA website: http://www.epa.gov/ncea/
diesel.htm.
\37\ National Institute for Occupational Safety and Health
(1988) Carcinogenic effects of exposure to diesel exhaust. NIOSH
Current Intelligence Bulletin 50. DHHS (NIOSH) Publication No. 88-
116. Centers for Disease Control, Atlanta, GA.
International Agency for Research on Cancer (1989) Diesel and
gasoline engine exhausts and some nitroarenes, Vol. 46. Monographs
on the evaluation of carcinogenic risks to humans. World Health
Organization, International Agency for Research on Cancer, Lyon,
France.
World Health Organization (1996) Diesel fuel and exhaust
emissions: International program on chemical safety. World Health
Organization, Geneva, Switzerland.
California Environmental Protection Agency, Office of
Environmental Health Hazard Assessment: Proposed Identification of
Diesel Exhaust as a Toxic Air Contaminant, Part B Health Risk
Assessment for Diesel Exhaust. April 22, 1998.
\38\ California Environmental Protection Agency, Office of
Environmental Health Hazard Assessment: Proposed Identification of
Diesel Exhaust as a Toxic Air Contaminant, Part B Health Risk
Assessment for Diesel Exhaust. April 22, 1998.
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Because our assessment for diesel exhaust is not complete, we are
not presenting absolute estimates of how potential cancer risks from
diesel particulate matter could be affected by today's rule. However,
we can offer a qualitative or relative discussion of these risks.
Diesel engines used in nonroad equipment and heavy-duty highway
vehicles currently constitute a far larger source of diesel PM than
cars and light-duty trucks, since diesel engines are used in a very
small portion of the cars and light-duty trucks in service today.
However, engine and vehicle manufacturers have projected that diesel
engines are likely to be used in an increasing share of cars and light
trucks, and some manufacturers have announced capital investments to
build such engines.
If these projections are valid, then the proportion of cars and
light trucks powered by diesel engines, and the associated potential
health risks from diesel PM, could increase substantially. We modeled
the most likely level of increase in light duty diesel engine sales
developed for the American Petroleum Institute.\39\ We found that the
greater diesel engine usage in cars and light trucks resulted in an 80
percent increase in emissions from all diesel-powered highway vehicles
by 2020--emissions that have been implicated in potential cancer
risks--assuming no change in the current light-duty diesel PM
standards.
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\39\ ``U.S. Light-Duty Dieselization Scenarios--Preliminary
Study'', report to the American Petroleum Institute, July 2, 1999.
Prepared by Arthur D. Little, Inc.
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Today's rule would limit the increase in the potential cancer risks
from cars and light trucks associated with any potential increase in
light-duty diesel engines. Using the same sales projections discussed
above, we have estimated that today's rule would limit the increase in
total highway diesel PM emissions in 2020 due to growth in light duty
diesels to under 10 percent, in contrast to the 80 percent increase
projected to occur without the Tier 2 PM standards. An analogous
analysis that accounted for exposure patterns, but that assumed even
more widespread use of diesels in the car and light truck fleet, found
that today's rule would limit the increase in total highway diesel PM
exposure to about 8 percent. This analysis is discussed more fully in
Chapter III.F.2 of the Regulatory Impact Analysis. In addition, the VOC
emission reductions resulting from today's rule would reduce the
potential cancer risk posed by air pollutants other than diesel PM
emitted by cars and light trucks, since many of these pollutants are
themselves VOCs. Furthermore, the rule would align the formaldehyde
standards for all Tier 2 LDVs and LDTs with the formaldehyde standards
for LDVs and LDT1s from the NLEV program, thereby helping to harmonize
the Federal and California formaldehyde standards.
The analysis of economic benefits and costs found in Section
IV.D.5. does not account for the economic benefits of the reduction in
cancer risk from air toxics that could result from today's rule.
Although we have completed a peer reviewed assessment of the impact of
today's rule on exposure to toxic emissions, we have not engaged in a
peer-reviewed assessment of the baseline air toxics risks (including a
final quantitative risk assessment of the diesel particulate risks) or
of the reductions that would be achieved by today's rule.
We plan to complete our analysis of air toxics risks as part of our
responsibilities under section 202(l)(2) of the Clean Air Act, which
requires EPA to establish regulations for the control of hazardous air
pollutants from motor vehicles. The regulations may address vehicle
emissions or fuel properties that influence emissions, or both. We plan
to issue a proposal to address this requirement in April 2000, and a
final rule in December 2000.

[[Page 6723]]

G. Acid Deposition \40\
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\40\ Much of the information in this section was excerpted from
the EPA document, Human Health Benefits from Sulfate Reduction,
written under Title IV of the 1990 Clean Air Act. Amendments, U.S.
EPA, Office of Air and Radiation, Acid Rain Division, Washington,
DC, November 1995.
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Acid deposition, or acid rain as it is commonly known, occurs when
SO2 and NO_X react in the atmosphere with water,
oxygen, and oxidants to form various acidic compounds that later fall
to earth in the form of precipitation or dry deposition of acidic
particles. It contributes to damage of trees at high elevations and in
extreme cases may cause lakes and streams to become so acidic that they
cannot support aquatic life. In addition, acid deposition accelerates
the decay of building materials and paints, including irreplaceable
buildings, statues, and sculptures that are part of our nation's
cultural heritage. To reduce damage to automotive paint caused by acid
rain and acidic dry deposition, some manufacturers use acid-resistant
paints, at an average cost of $5 per vehicle--a total of $61 million
per year if applied to all new cars and trucks sold in the U.S. The
general economic and environmental effects of acid rain are discussed
at length in the RIA.
Acid deposition primarily affects bodies of water that rest atop
soil with a limited ability to neutralize acidic compounds. The
National Surface Water Survey (NSWS) investigated the effects of acidic
deposition in over 1,000 lakes larger than 10 acres and in thousands of
miles of streams. It found that acid deposition was the primary cause
of acidity in 75 percent of the acidic lakes and about 50 percent of
the acidic streams, and that the areas most sensitive to acid rain were
the Adirondacks, the mid-Appalachian highlands, the upper Midwest and
the high elevation West. The NSWS found that approximately 580 streams
in the Mid-Atlantic Coastal Plain are acidic primarily due to acidic
deposition. Hundreds of the lakes in the Adirondacks surveyed in the
NSWS have acidity levels incompatible with the survival of sensitive
fish species. Many of the over 1,350 acidic streams in the Mid-Atlantic
Highlands (mid-Appalachia) region have already experienced trout losses
due to increased stream acidity. Emissions from U.S. sources contribute
to acidic deposition in eastern Canada, where the Canadian government
has estimated that 14,000 lakes are acidic. Acid deposition also has
been implicated in contributing to degradation of high-elevation spruce
forests that populate the ridges of the Appalachian Mountains from
Maine to Georgia. This area includes national parks such as the
Shenandoah and Great Smoky Mountain National Parks.
The SO_X and NO_X reductions from today's
actions will help reduce acid rain and acid deposition, thereby helping
to reduce acidity levels in lakes and streams throughout the U.S. These
reductions will help accelerate the recovery of acidified lakes and
streams and the revival of ecosystems adversely affected by acid
deposition. Reduced acid deposition levels will also help reduce stress
on forests, thereby accelerating reforestation efforts and improving
timber production. Deterioration of our historic buildings and
monuments, and of buildings, vehicles, and other structures exposed to
acid rain and dry acid deposition, also will be reduced, and the costs
borne to prevent acid-related damage may also decline.
While the reduction in sulfur and nitrogen acid deposition will be
roughly proportional to the reduction in SO_X and
NO_X emissions, respectively, the precise impact of today's
vehicle and fuel standards will differ across different areas. Each
area is affected by emissions from different source regions, and the
mobile source contribution to the total SO_X and
NO_X emission inventory will differ across different source
regions. Nonetheless, the projected impact of today's actions on
SO_X and NO_X emission inventories provides a rough
indicator of the likely effect of the Tier 2/Gasoline Sulfur standards
on acid deposition. Our analysis indicates that today's actions will
reduce SO_X emissions by 1.8 percent and NO_X
emissions by 14.5 percent in 2030.
The analysis of economic benefits and costs found in Section
IV.D.5. did not account for the economic benefits of the reduction in
acid deposition expected to result from today's actions.

H. Eutrophication/Nitrification

Nitrogen deposition into bodies of water can cause problems beyond
those associated with acid rain. The Ecological Society of America has
included discussion of the contribution of air emissions to increasing
nitrogen levels in surface waters in a recent major review of causes
and consequences of human alteration of the global nitrogen cycle in
its Issues in Ecology series \41\. Long-term monitoring in the United
States, Europe, and other developed regions of the world shows a
substantial rise of nitrogen levels in surface waters, which are highly
correlated with human-generated inputs of nitrogen to their watersheds.
These nitrogen inputs are dominated by fertilizers and atmospheric
deposition.
---------------------------------------------------------------------------

\41\ Vitousek, Peter M., John Aber, Robert W. Howarth, Gene E.
Likens, et al. 1997. Human Alteration of the Global Nitrogen Cycle:
Causes and Consequences. Issues in Ecology. Published by Ecological
Society of America, Number 1, Spring 1997.
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Human activity can increase the flow of nutrients into those waters
and result in excess algae and plant growth. This increased growth can
cause numerous adverse ecological effects and economic impacts,
including nuisance algal blooms, dieback of underwater plants due to
reduced light penetration, and toxic plankton blooms. Algal and
plankton blooms can also reduce the level of dissolved oxygen, which
can also adversely affect fish and shellfish populations. This problem
is of particular concern in coastal areas with poor or stratified
circulation patterns, such as the Chesapeake Bay, Long Island Sound, or
the Gulf of Mexico. In such areas, the ``overproduced'' algae tends to
sink to the bottom and decay, using all or most of the available oxygen
and thereby reducing or eliminating populations of bottom-feeder fish
and shellfish, distorting the normal population balance between
different aquatic organisms, and in extreme cases causing dramatic fish
kills.
Collectively, these effects are referred to as eutrophication,
which the National Research Council recently identified as the most
serious pollution problem facing the estuarine waters of the United
States (NRC, 1993). Nitrogen is the primary cause of eutrophication in
most coastal waters and estuaries \42\. On the New England coast, for
example, the number of red and brown tides and shellfish problems from
nuisance and toxic plankton blooms have increased over the past two
decades, a development thought to be linked to increased nitrogen
loadings in coastal waters. Airborne NO_X contributes from 12
to 44 percent of the total nitrogen loadings to United States coastal
water bodies. For example, approximately one-quarter of the nitrogen in
the Chesapeake Bay comes from atmospheric deposition.
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\42\ Much of this information was taken from the following EPA
documenta: Deposition of Air Pollutants to the Great Waters-Second
Report to Congress, Office of Air Quality Planning and Standards,
June 1997, EPA-453/R-97-011.
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Excessive fertilization with nitrogen-containing compounds can also
affect terrestrial ecosystems \43\. Research suggests that nitrogen
fertilization can alter growth patterns and change the

[[Page 6724]]

balance of species in an ecosystem. In extreme cases, this process can
result in nitrogen saturation when additions of nitrogen to soil over
time exceed the capacity of the plants and microorganisms to utilize
and retain the nitrogen. This phenomenon has already occurred in some
areas of the U.S.
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\43\ Terrestrial nitrogen deposition can act as a fertilizer. In
some agricultural areas, this effect can be beneficial.
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Deposition of nitrogen from cars and light trucks contributes to
these problems. As discussed in Section III.B. above, today's actions
will reduce total NO_X emissions by 4.5 percent in 2007 and
by 14.5 percent in 2030. The NO_X reductions should reduce
the eutrophication problems associated with atmospheric deposition of
nitrogen into watersheds and onto bodies of water, particularly in
aquatic systems where atmospheric deposition of nitrogen represents a
significant portion of total nitrogen loadings. Since air deposition
accounts for 12-44 percent of total nitrogen loadings in coastal
waters, the reduction in NO_X from today's actions is
projected to reduce nitrogen loadings by 0.5-2.0 percent in 2007 and
1.7-6.4 percent in 2030. To put these reductions in perspective, the
reductions expected in the Chesapeake Bay area would amount to about 9
percent of the total reduction in nitrogen loading needed to maintain
the reduction in nutrient loads agreed to by the signatory states in
the Chesapeake Bay Agreement (40 percent of ``controllable nutrient
loads'' by the year 2000).
The analysis of economic benefits and costs found in Section
IV.D.5. does not account for the economic benefits of reduced
eutrophication or reduced terrestrial nitrogen deposition expected to
result from today's actions.

I. Cleaner Cars and Light Trucks Are Critically Important to Improving
Air Quality

Despite continued progress in reducing ozone and PM levels, tens of
millions of Americans are still exposed to levels of these pollutants
that exceed the National Ambient Air Quality Standards. Our projections
show that without further action to reduce these pollutants, tens of
millions of Americans will continue to breathe unhealthy air for
decades to come. Our projections also show that emissions from cars and
light trucks will continue to contribute a substantial share of the
ozone and PM precursors in current and projected nonattainment areas,
and in upwind areas whose emissions contribute to downwind
nonattainment, unless additional measures are taken to reduce their
emissions. Cars and light trucks also contribute substantially to
ambient concentrations of CO. These vehicles will also continue to
contribute to the ambient PM that affects visibility in Class I federal
areas and some urban areas. Emissions from cars and light trucks also
play a significant role in a wide range of health and environmental
problems, including known and potential cancer risks from inhalation of
air pollutants (a problem that could become more significant if sales
of diesel-powered cars and light trucks were to increase), health risks
from elevated drinking water nitrate levels, acidification of lakes and
streams, and eutrophication of inland and coastal waters.
Today's actions will reduce NO_X, VOC, CO, PM, and
SO_X emissions from these vehicles substantially. These
reductions will help reduce ozone levels nationwide and reduce the
extent and severity of violations of the 1-hour ozone standard. These
reductions will also help reduce PM levels, both by reducing direct PM
emissions and by reducing emissions that give rise to secondary PM. The
CO reductions will help extend the downward trend in carbon monoxide
levels, thereby helping the remaining CO nonattainment areas attain the
CO standard and helping other areas stay in attainment with the CO
standard despite continued increases in vehicle miles traveled. The
NO_X and SO_X reductions will help reduce
acidification problems, and the NO_X reductions will help
reduce eutrophication problems and drinking water nitrate levels. The
PM standards included in today's actions will help improve visibility
and would help mitigate adverse health effects in the event of
increases in light-duty diesel engine sales.

IV. What Are the New Requirements for Vehicles and Gasoline?

A. Why Are We Proposing Vehicle and Fuel Standards Together?

1. Feasibility of Stringent Standards for Light-Duty Vehicles and
Light-Duty Trucks.
a. Gasoline Fueled Vehicles
We believe that the standards being promulgated today for gasoline-
fueled vehicles are well within the reach of existing control
technology. Our determination of feasibility is based on the use of
catalyst-based strategies that are already in use and are well proven
on the existing fleet of vehicles. In fact, as you will see below, many
current engine families are already certified to levels at or below the
new final Tier 2 requirements. All of the certification and research
testing discussed below was performed on low-sulfur test fuel
(nominally 30 ppm).

i. LDVs and LDT1s-LDT4s

Certainly, larger vehicles and trucks, which are heavier and have
larger frontal areas, will face the biggest challenges in meeting the
final Tier 2 standards. However, conventional technology will be
sufficient for even these vehicles, especially in light of the extra
leadtime we have provided before LDT3s and LDT4s have to meet Tier 2
levels. We are also changing the test conditions for these trucks from
``adjusted loaded vehicle weight'' to ``loaded vehicle weight.''
Adjusted loaded vehicle weight, suitable for commercial truck
operation, loads the truck to half of its full payload. Loaded vehicle
weight, on the other hand, represents curb weight plus 300 pounds. This
change more accurately reflects how these vehicles are used and makes
heavy LDT testing consistent with passenger car and light LDT testing.
This change is consistent with treating these vehicles as they were
designed, i.e., for light-load use.
Emission control technology has evolved rapidly in recent years.
Emission standards applicable to 1990 model year vehicles required
roughly 90 percent reductions in exhaust HC and CO emissions and a 75
percent reduction in NO_X emissions compared to uncontrolled
emissions. Today, some vehicles currently in production are well below
these levels, showing even greater overall emissions reductions of all
three of these pollutants. These vehicles' emissions are well below
those necessary to meet the current federal Tier 1 and even California
Low-Emission Vehicle (LEV-I) standards. The reductions have been
brought about by ongoing improvements in engine air-fuel management
hardware and software plus improvements in catalyst designs, all of
which are described fully in the RIA.
The types of changes being seen on current vehicles have not yet
reached their technological limits, and continuing improvement will
allow both LDVs and LDTs to meet the final standards. The RIA describes
a range of specific techniques that we believe could be used. These
range from improved computer software and engine air-fuel controls to
increases in precious metal loading and other exhaust system/catalyst
system improvements. All of these technologies are currently used on
one or more production vehicle models. There is no need to invent new
approaches or technologies. The focus of the effort is primarily
development,

[[Page 6725]]

application, and optimization of these existing technologies.
We can gain significant insight into the difficulty of meeting the
final new standards by looking at current full-life certification data.
There are at least 48 engine family-control systems combinations, out
of approximately 400, certified in 1999 at levels below the Tier 2
NO_X standard of 0.07 g/mi. Of these, 35 also have
hydrocarbon levels of 0.09 g/mi or below. Looking at a somewhat higher
threshold to identify vehicles certified near the final standard, there
are an additional 113 car and light truck families certified at levels
between 0.07 g/mi and 0.10 g/mi NO_X. Although not yet
complete at this time, we also examined the 2000 model year
certification data and found that there are at least 60 engine family-
control systems combinations certified at levels below the Tier 2
NO_X standard of 0.07 g/mi and of those, 52 also have
hydrocarbon levels of 0.09 g/mi or below.
All of the above vehicles are already able, or close to being able,
to certify to our final standards. The further reductions needed are
those to provide a compliance margin, or cushion, between the certified
level and the emission standard. The degree of compliance margin
required is a function of a variety of factors designed to provide the
manufacturer a high confidence that production vehicles will meet the
standards in-use over their useful life. Historically, these
determinations are manufacturer specific, with cushions generally
growing smaller as standards decline (reflecting more precision and
repeatability in vehicle performance as more sophisticated controls are
developed). The certification data reflects compliance cushions from as
little as 20 percent below the standard to as high as 80 percent below
the standard.
The manufacturers commented that the most difficult vehicles to
bring into compliance with the Tier 2 standards would be the larger
light-duty trucks, specifically those trucks currently certified under
the LDT3 and LDT4 weight categories. Because of this, we undertook a
technology demonstration program aimed at lowering the emissions of
several large 1999 light-duty trucks. Two LDT3 Chevrolet Silverado
pick-up trucks were tested, one internally and one under contract. Two
LDT4 Ford Expedition sport-utility vehicles were also tested, also with
one tested internally and one under contract. Both types of vehicles
were tested with optional high horsepower engines (270 hp for the
Silverado and 230 hp for the Expedition) and were equipped with four-
wheel drive. The vehicles had curb weights of 4,500 pounds (GVWR of
6,100 lbs) for the Silverados and 5,800 pounds (GVWR of 7,200 lbs) for
the Expeditions.
Figures IV.A.-1 and IV.A.-2 show the results to date of the
emissions tests performed during this demonstration program at our
National Vehicle and Fuel Emissions Laboratory (NVFEL) and also for
emissions tests conducted in parallel by and under contract at
Southwest Research Institute (SwRI) using similar Ford Expeditions and
GM Chevrolet Silverados. During the evaluation, the trucks were
equipped with a variety of catalysts that typically featured higher
volume, higher precious metal loading, and higher cell-densities than
the original hardware used by the vehicles to meet California LEV-I
standards. Details of the catalysts tested are included in the RIA.
Different exhaust manifolds featuring an insulating air-gap and low
thermal mass were also evaluated. Finally, calibration changes were
made to the powertrain control modules \44\ to better match engine
operating characteristics to the new catalyst systems, and to lower
engine-out NOx emissions. The Silverado and Expedition had very similar
results. Similar results were also achieved by us and SwRI, but by
fairly different methods. The SwRI work on both trucks relied primarily
on engine calibration changes and secondary air injection. The advanced
catalyst systems used by SwRI contained advanced washcoat formulations
with only minor changes to catalyst volume and precious metal content
compared to the manufacturer's original configuration. The work we
conducted on the Expedition also relied primarily on engine calibration
changes with no secondary air injection. The catalyst system also
contained advanced washcoat formulations with modest changes to
catalyst volume and precious metal content. The work we conducted on
the Silverado relied primarily on an advanced catalyst system with
volume and precious metal content changes, with only minor changes to
engine calibration.
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\44\ Powertrain control modules are computers used to control
engine, transmission, and other vehicle functions on newer
automobiles and trucks. The changes involved software changes in the
case of the EPA-NVFEL work, or the use of alternate means of engine
control in the case of the SwRI work.
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As can be seen in the charts, the emissions of the vehicles tested
clearly show the feasibility of the Tier 2 standards on the most
difficult to certify vehicle categories. All vehicles reached emission
levels well below the Tier 2 full-life NOx and NMOG standards. At the
same time, there were no significant impacts on either fuel economy or
performance of the vehicles.
Compared to the intermediate (50,000 mile) standards, the Ford
Expedition tested at NVFEL consistently emitted NOx at less than one-
third of the intermediate useful life standard.\45\ NMHC/NMOG emissions
were slightly below the intermediate standard level with no use of
secondary-air-injection for cold-start hydrocarbon control. The
Silverado tested at NVFEL met the intermediate standards with primarily
hardware (catalyst) changes and only very minor calibration changes.
The trucks tested at SwRI differed from those tested at NVFEL in their
combination of emissions control hardware and calibration strategies,
but achieved approximately the same emissions levels.
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\45\ Although this testing was done on vehicles with catalysts
aged to 50,000, we belive the overall experiments also strongly
suggest that the Tier 2 full-life standards would be achieved by
high-mileage vehicles.
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The above results point out that not only are the Tier 2 standards
feasible for larger trucks, but there are multiple means that can be
taken in order to achieve the necessary emissions levels. All of those
paths involve fairly simple enhancements to current technology systems.
Furthermore, the testing was conducted with a very limited budget over
a limited amount of time. With the interim program for heavy trucks
under Tier 2, the manufacturers will have 9 years from the publishing
of the Tier 2 rule to bring the largest trucks into compliance with the
Tier 2 standards. Manufacturers will also have considerably more
resources with respect to calibration changes and hardware design to
bring trucks of this type within compliance than were available within
this limited, but successful, demonstration.

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BILLING CODE 6560-50-C
The Manufacturers of Emission Controls Association (MECA) sponsored
a program that took two LDVs (a Crown Victoria and a Buick LeSabre) and
one LDT2 (a Toyota T100) certified to the federal Tier 1 standards and
replaced the original catalytic converter systems with more advanced
catalytic converters, thermally aged to approximately 50,000 miles.
With these systems and some related emission control modifications, the
LeSabre and T100 emissions were well below our intermediate (50,000
mile) useful life standards, and the Crown Victoria was well below the
NMOG standard and very close to the NO_X standard.
Finally, the California Air Resources Board (ARB) tested five
different production LEV light-duty vehicle models. Three of the five
models met the Tier 2 standards for NMOG and NO_X prior to
any modifications. After installing low mileage advanced catalytic
converters and making some minor adjustments to fuel bias, air
injection, and spark timing, all of the vehicles had emission levels
well below the Tier 2 intermediate useful life NMOG and NO_X
standards. ARB also tested several Ford Expeditions (LDT4) equipped
with advanced catalytic converters. By adjusting several parameters,
they were able to reduce NO_X emissions to 0.06 g/mi and NMOG
to 0.07 g/mi with a catalyst aged to 50,000 miles of use.
A more expanded analysis of the feasibility of the Tier 2 standards
for gasoline fueled vehicles can be found in the RIA, considering the
types of changes that will allow manufacturers to extend effective new
controls to the entire fleet of affected vehicles. That analysis
includes discussion of gasoline direct-injection engines, as well as
the feasibility of the CO, formaldehyde and evaporative emission
standards. The conclusion of all of our analyses is that the standards
are feasible for gasoline-fueled vehicles. As gasoline-fueled vehicles
represent the overwhelming majority of the LDV and LDT population
(i.e., over 99%), EPA concludes that the Tier 2 standards are feasible
overall for LDVs and LDTs under 8500 lbs GVWR.

ii. Medium-Duty Passenger Vehicles (MDPVs)

The technologies and emission control strategies that will be used
for LDT3 and LDT4 vehicles with a GVWR less than 8,500 pounds should
apply directly to MDPV vehicles that have a GVWR greater than 8,500
pounds. In our LDT technology demonstration program discussed above, we
found that a combination of calibration changes and improvements to the
catalyst system resulted in emission levels for NO_X well
below and NMHC/NMOG approximately at the Tier 2 intermediate useful
life standards. The catalyst improvements consisted of increases in
volume and precious metal loading, and higher cell-densities than those
found in the original hardware. We are confident that the use of
secondary-air-injection will greatly help cold-start hydrocarbon
control, making the NMOG standards achievable.
The most significant difference between LDT4s less than 8,500
pounds GVWR and MDPVs greater than 8,500 pounds GVWR is that MDPVs have
a vehicle weight up to 800 pounds more than LDT4s. MDPVs will also be
typically equipped with larger displacement engines. The potential
impact of these differences is higher engine-out emissions than LDT4s
due to the larger engine displacement and

[[Page 6728]]

greater load that the engine will be operated under due to the extra
weight. However, neither of these preclude manufacturers from applying
the same basic emission control technologies and strategies as used by
LDVs and LDTs. The only difference will likely be the need for larger
catalysts with higher precious metal loading than found in LDT4s. We
are confident that MDPVs will be capable of meeting the final Tier 2
standards.
We are currently testing a Ford Excursion as part of our LDT
technology demonstration program. Preliminary baseline results with a
`green'' (i.e., nearly new) catalyst indicate that emission levels are
higher than baseline emissions for the Ford Expedition. These results,
although with a green catalyst, are well below our interim Tier 2 upper
bin standards. In fact, the majority of these vehicles certified on the
chassis dynamometer in California have certification levels well below
our interim upper bin standards. While this testing is ongoing, we feel
that the preliminary results are encouraging since they suggest that
the difference in emissions between the Excursion and Expedition
suggest that the strategies used on the Expedition can be successful
with the Excursion. Therefore, we believe that by using technologies
and control strategies similar to what will be used by LDVs and LDTs,
combined with larger catalysts, MDPVs will be able to meet our Tier 2
emission standards.
b. Diesel Vehicles
As discussed above, the Tier 2 standards are intended to be ``fuel
neutral.'' In today's document, we establish that the Tier 2 standards
are technologically feasible and cost-effective for LDVs and LDTs
overall, based on the discussion in Section IV.A.1.a. above. Under the
principle of fuel neutrality, all cars and light trucks, including
those using diesel engines, will be required to meet the Tier 2
standards. Contrary to some of the comments received on our proposal,
given that the overwhelming majority of vehicles in these classes are
gasoline-fueled, we do not believe it is appropriate to provide less
stringent standards for diesel-fueled vehicles. Manufacturers of LDVs
and LDTs today provide consumers with a wide choice of vehicles that
are overwhelmingly gasoline-fueled. Less stringent standards for
diesels would create provisions that could undermine the emission
reductions expected from this program, especially given the expectation
that some manufacturers may intend to greatly increase their diesel
sales.
As with gasoline engines, manufacturers of diesels have made
abundant progress over the past 10 years in reducing engine-out
emissions from diesel engines. In heavy trucks and buses, PM emission
standards, which were projected to require the use of exhaust
aftertreatment devices, were actually met with only engine
modifications. Indeed, emissions and performance of lighter diesel
engine are rapidly approaching the characteristics of gasoline engines,
while retaining the durability and fuel economy advantages that diesels
enjoy. Against this background of continuing progress, we believe that
the technological improvements that would be needed could be made in
the time that would be available before diesels would have to meet the
new Tier 2 standards.
Manufacturers may take advantage of the flexibilities in today's
rulemaking to delay the need for diesel LDVs and LDTs to meet the final
Tier 2 levels until late in the phase-in period (as late as 2007 for
LDVs/LLDTs and 2009 for HLDTs), giving manufacturers a relatively large
amount of leadtime. In a recent public statement, Cummins Engine
Company has indicated that the interim Tier 2 standards in effect for
vehicles and trucks in the early years of the Tier 2 program are
feasible for diesel equipped models through further development of
currently available engine and exhaust aftertreatment technology.\46\
---------------------------------------------------------------------------

\46\ ``Cummins Sees Diesel Feasible for Early Years of Tier 2''.
Hart Diesel Fuel News, Sept. 20, 1999, p.2.
---------------------------------------------------------------------------

While reductions in ``engine-out'' emissions, including
incorporation of EGR strategies, may continue to be made, increasing
emphasis is being placed on various aftertreatment devices for diesels.
We believe that the use of aftertreatment devices will allow diesels to
comply with the Tier 2 standards for NO_X and PM.
For NO_X emissions, potential aftertreatment technologies
include lean NO_X catalysts, NO_X adsorbers and
selective catalytic reduction (SCR). Lean NO_X catalysts are
still under development, but generally appear capable of reducing
NO_X emissions by about 15-30%. This efficiency is not likely
to be sufficient to enable compliance with the final Tier 2 standards,
but it could be used to meet the interim standards that would begin in
2004, with current diesel fuel.
NO_X adsorbers appear capable of reaching efficiency
levels as high as 90%. Efficiency in this range is likely to be
sufficient to enable compliance with the proposed Tier 2 standards.
NO_X adsorbers temporarily store the NO_X and thus
the engine must be run periodically for a brief time with excess fuel,
so that the stored NO_X can be released and converted to
nitrogen and oxygen using a conventional three-way catalyst, like that
used on current gasoline vehicles.
There is currently a substantial amount of development work being
directed at NO_X adsorber technology. While there are
technical hurdles to be overcome, progress is continuing and it is our
judgement that the technology should be available by the time it would
be needed for the final Tier 2 standards.
One serious concern with current NO_X adsorbers is that
they are quickly poisoned by sulfur in the fuel. Some manufacturers
have strongly emphasized their belief that, in order to meet the final
Tier 2 levels, low sulfur diesel fuel would also be required to
mitigate or prevent this poisoning problem. In its comments on the
NPRM, Navistar indicated that the Tier 2 standards may be achievable
given low sulfur fuel and other programmatic changes such as those
included in this Final Rule. Navistar has also been quoted publically
as describing the Tier 2 standards as ``challenging but achievable''
given appropriate low sulfur fuel.\47\ We intend to issue a Notice of
Proposed Rulemaking early in the year 2000 intended to reduce sulfur in
highway diesel fuel as a step to enable the technology most likely to
be used to meet the Tier 2 standards.
---------------------------------------------------------------------------

\47\ Harts Diesel Fuel News, August 9, 1999, p4.
---------------------------------------------------------------------------

SCR has been demonstrated commercially on stationary diesel engines
and can reduce NO_X emissions by 80-90%. This efficiency
would be sufficient to enable compliance with the proposed Tier 2
standards. However, SCR requires that the chemical urea be injected
into the exhaust before the catalyst to assist in the destruction of
NO_X. The urea must be injected at very precise rates, which
is difficult to achieve with an on-highway engine, because of widely
varying engine operating conditions. Otherwise, emissions of ammonia,
which have a very objectionable odor, can occur. Substantial amounts of
urea are required, meaning that vehicle owners would have to replenish
their vehicles' supply of urea frequently, possibly as often as every
fill-up of fuel. As the engine and vehicle would operate satisfactorily
without the urea (only NO_X emissions would be affected),
some mechanism would be needed to ensure that vehicle owners maintained
their supply of urea. Otherwise, little NO_X emission
reduction would be expected in-use.

[[Page 6729]]

Regarding PM, applicable aftertreatment devices tend to fall into
two categories: Oxidation catalysts and traps. Diesel oxidation
catalysts can reduce total PM emissions by roughly 15-30%. They would
need to be used in conjunction with further reductions in PM engine-out
emissions in order to meet the proposed Tier 2 standards. Diesel
particulate traps, on the other hand, can eliminate up to 90% of diesel
PM emissions. However, some of the means of accomplishing the
regeneration of particulate traps involve catalytic processes that also
convert sulfur dioxide in the exhaust to sulfate. These techniques, if
used, would also require a low sulfur fuel.
In summary, we believe that the structure of our final program,
including the available bins and phase-in periods, will allow the
orderly development of clean diesel engine technologies. We believe
that the interim standards are feasible for diesel LDV/LDTs, within the
bin structure of this rule and without further reductions in diesel
fuel sulfur levels. And, as indicated earlier, at least one major
diesel engine manufacturer (Cummins) has publicly agreed with this
assessment. We further believe that in the long-term, the final
standards will be within reach for diesel-fueled vehicles in
combination with appropriate changes to diesel fuel to facilitate
aftertreatment technologies. Manufacturers have argued that low sulfur
diesel fuel will be required to permit diesels to meet the final Tier 2
standards, and we agree. At least one major manufacturer (Navistar) has
indicated its belief that the final Tier 2 standards may be achievable
for diesel engines with low sulfur diesel fuel.
2. Gasoline Sulfur Control Is Needed to Support the Proposed Vehicle
Standards
As we discussed in the previous section, we believe that the
stringent standards in this final rule are needed to meet air quality
goals and are feasible for LDVs and LDTs. At the same time, we believe
that for these standards to be feasible for gasoline LDVs and LDTs, low
sulfur gasoline must be made available. The following paragraphs
explain why we think gasoline sulfur control must accompany Tier 2
vehicle standards.
Catalyst manufacturers generally use low sulfur gasoline in the
development of their catalyst designs. Vehicle manufacturers then equip
their vehicles with these catalysts and EPA certifies them to the
exhaust emission standards, usually based on testing the manufacturer
does using low sulfur gasoline. However, fundamental chemical and
physical characteristics of exhaust catalytic converter technology
generally result in a significant degradation of emission performance
when these vehicles use gasoline with sulfur levels common in most of
the country today. This sensitivity of catalytic converters to gasoline
sulfur varies somewhat depending on a number of factors, some better
understood than others. Clearly, however, as we discuss in the
following paragraphs, gasoline sulfur's impact is large, especially in
vehicles designed to meet very low emission standards.
This is the reason EPA has decided to adopt a comprehensive
approach to addressing emissions from cars and light trucks, including
provisions to get low sulfur gasoline into the field in the same time
frame needed for Tier 2 vehicles.
a. How Does Gasoline Sulfur Affect Vehicle Emission Performance?
We know that gasoline sulfur has a negative impact on vehicle
emission controls. Vehicles depend on the catalytic converter to reduce
emissions of HC, CO, and NO_X. Sulfur and sulfur compounds
attach or ``adsorb'' to the precious metal catalysts that are required
to convert these emissions. Sulfur also blocks sites on the catalyst
designed to store oxygen that are necessary to optimize NO_X
emissions conversions. While the amount of sulfur contamination can
vary depending on the metals used in the catalyst and other aspects of
the design and operation of the vehicle, some level of sulfur
contamination will occur in any catalyst.
Sulfur sensitivity is impacted not only by the catalyst formulation
(the types and amounts of precious metals used in the catalyst) but
also by factors including the following:
The materials used to provide oxygen storage capacity in
the catalyst, as well as the general design of the catalyst,
The location of the catalyst relative to the engine, which
impacts the temperatures inside the catalyst,
The mix of air and fuel entering the engine over the
course of operation, which is varied by the engine's computer in
response to the driving situation and affects the mix of gases entering
the catalyst from the engine, and
The speeds the car is driven at and the load the vehicle
is carrying, which also impact the temperatures experienced by the
catalyst.
Since these factors vary for every vehicle, the sulfur impact
varies for every vehicle to some degree. There is no single factor that
guarantees that a vehicle will be very sensitive or very insensitive to
sulfur. We now believe that there are not (and will not be in the
foreseeable future) emission control devices available for gasoline-
powered vehicles that can meet the proposed Tier 2 emission standards
that would not be significantly impaired by gasoline with sulfur levels
common today.
b. How Large Is Gasoline Sulfur's Effect on Emissions?
High sulfur levels have been shown to significantly impair the
emission control systems of cleaner, later technology vehicles. The
California LEV standards and Federal NLEV standards, as well as
California's new LEV-II standards and our Tier 2 standards, require
catalysts to be extremely efficient to adequately reduce emissions over
the full useful life of the vehicle. In the NPRM we estimated that,
based on data from test programs conducted by EPA and the automotive
and oil industries, LEV and ULEV vehicles could experience, on average,
a 40 percent increase in NMHC and 134 percent increase in
NO_X emissions when operated on 330 ppm sulfur fuel (our
estimate in the NPRM of the current national average sulfur level)
compared to 30 ppm sulfur fuel. New data generated since the NPRM on
similar LEVs and ULEVs show that when these vehicles were driven on
high sulfur (330 ppm) fuel for a few thousand miles (as opposed to less
than 100 miles for the previous data), the NMHC and NO_X
emission increase due to high sulfur fuel increased by 149 percent and
47 percent, respectively. In other words, instead of the previous
estimated 40 percent and 134 percent increases in NMHC and
NO_X emissions, respectively, more realistic estimates would
be 100 percent and 197 percent, respectively.\48\ Also, new data
generated since the NPRM for late model LEV and ULEV vehicles that meet
the federal and California supplemental federal test procedure (SFTP)
standards and also have very low FTP emission levels, indicate that, on
average, a 51 percent increase in NMHC and a 242 percent increase in
NO_X emissions when operated for a short period of time on
330 ppm compared to 30 ppm could be realized.
---------------------------------------------------------------------------

\48\ The air quality impacts discussed above under Section III
above do not reflect these new estimates.
---------------------------------------------------------------------------

This level of emissions increase is significant enough on its own
to cause a vehicle to exceed the full useful life emission standards
when operated on sulfur levels that are substantially higher than the
levels required by today's rule, even with the margin of

[[Page 6730]]

safety that auto manufacturers generally include. Average sulfur levels
in the U.S. are currently high enough to significantly impair the
emissions control systems in new technology vehicles, and to
potentially cause these vehicles to fail emission standards required
for vehicles up through 100,000 miles (or more) of operation.
For older vehicles designed to meet Tier 0 and Tier 1 emission
standards, the effect of sulfur contamination is somewhat less. Still,
testing shows that gasoline sulfur increases emissions of NMHC and
NO_X by almost 17% when one of these vehicles is operated on
gasoline for less than 100 miles containing 330 ppm sulfur compared to
operation on gasoline with 30 ppm sulfur. Thus, Tier 0 and Tier 1
vehicles can also have higher emissions when they are exposed to sulfur
levels substantially higher than the proposed sulfur standard. This
increase is generally not enough to cause a vehicle to exceed the full
useful life emission standards in practice, but it can result in in-use
emissions increases since the vehicle could emit at levels higher than
it would if it operated consistently on 30 ppm sulfur gasoline.
As discussed in the RIA, NLEV and Tier 2 vehicles are significantly
more sensitive to sulfur poisoning than Tier 1 and Tier 0 vehicles.
Because of this, even in the absence of Tier 2 standards, gasoline
sulfur control to 30 ppm would achieve about 700,000 tons of
NO_X reductions per year from LDVs and LDTs by 2020. This
represents about a third of the national NO_X emission
reductions otherwise available from these vehicles. Without these
potential emission reductions, many states would face the potentially
unmeetable challenge of finding enough other cost-effective sources of
NO_X emission reductions to address their ozone nonattainment
and maintenance problems.
Sulfur reductions will result in reductions of other pollutants as
well. For example, the increase in CO emissions at 330 ppm compared to
30 ppm were very similar to the results above for NMHC. Thus, sulfur
reductions would greatly reduce CO emissions. Another example is sulfur
reductions will help reduce emissions of particulate matter, providing
some benefit to PM nonattainment areas (which may or may not coincide
with ozone nonattainment areas) as well as with visibility problems.
Sulfur reductions will also have benefits for areas across the country
with acid deposition problems. Furthermore, sulfur reduction, by
enabling tighter Tier 2 standards and by improving emissions
performance of the vehicles already on the road, will lead to fewer
NMOG emissions, since, as explained in the RIA, NMOG emissions are also
impacted by gasoline sulfur (although to a lesser extent than
NO_X emissions). Some of the NMOG emissions reduced are air
toxics. As described in Section III above, air toxics, also known as
hazardous air pollutants, or HAPs, contribute to a variety of human
health problems.
c. Sulfur's Negative Impact on Tier 2 Catalysts
As we discussed in the last section, sulfur contaminates the
catalyst. In addition, essentially all vehicles that have been tested
show that this effect is not reversible for one or more pollutants. The
ability to reverse sulfur's negative effect on catalyst performance is
dependent on a number of factors. The same factors that impact sulfur
sensitivity also impact the irreversibility of the sulfur effect. For
example, the location of the catalyst relative to the engine, the
materials used to provide oxygen storage capacity in the catalyst, and
the general design of the catalyst and the mix of air and fuel (A/F)
entering the engine over the course of operation affect
irreversibility, to name a few.
Perhaps the most significant factors for reversibility are the
mixture of air and fuel entering the engine and catalyst temperature.
The results of numerous studies and test programs show that rich
exhaust (absence of oxygen) mixtures in addition to high catalyst
temperatures (in excess of 700 deg.C) can remove sulfur from the
catalyst. Rich exhaust mixtures can occur intentionally and
unintentionally, depending on the level of sophistication of the fuel
control system. An intentional rich exhaust mixture is known as fuel
``enrichment.'' There are different types of enrichment. For example,
there is ``commanded'' enrichment, which is used to provide extra power
when the engine is under a load (e.g., accelerations), as well as a
means to cool the catalyst. Also, there is enrichment which results
from the normal fluctuations in A/F that occur during typical ``closed-
loop'' FTP operating conditions. The amount of enrichment necessary for
sulfur removal is a function of several factors: the ``magnitude'' of
the enrichment event, the duration of the enrichment event, and the
frequency of which the enrichment event occurs.
While the amount of fuel enrichment is critical in the removal of
sulfur from the catalyst, high catalyst temperature is equally as
important. In order to meet strict Tier 2 standards, manufacturers are
going to have to balance tight A/F control with improved catalyst
performance, with an eye towards better catalyst thermal management.
Many manufacturers are going to have to depend more on the precious
metal palladium for oxidation of NMOG and CO emissions, as well as the
reduction of NO_X, because palladium is more tolerant to high
temperatures. Since the vast majority of emissions still occur
immediately following a cold start when the catalyst is still cool,
further reductions to cold start emissions can be achieved by locating
the catalysts very close to the engine. The closer proximity to the
engine helps to activate the catalyst sooner by taking advantage of the
additional heat supplied to the catalyst by the exhaust manifolds.
Palladium is very sensitive to sulfur and, consequentially, catalyst
systems that rely heavily on this metal tend to be more sensitive to
sulfur and less reversible. The precious metal platinum, although
usually a little more effective at oxidizing NMOG and CO and slightly
less sensitive to sulfur than palladium, is too sensitive to high
temperature to survive the close proximity to the engine and is not
anticipated to be used for close-coupled applications.
As discussed above, manufacturers will need to make modifications
to their emission system calibrations by optimizing fuel control, spark
timing, EGR and other parameters in conjunction with improvements to
catalyst systems, in order to meet Tier 2 emission standards. This
combination of emission control strategies can result in significant
trade-offs between NMOG and NO_X control. There can be
considerable uncertainty associated with balancing these trade-offs at
very low emissions levels if the vehicle is periodically operated on
high sulfur fuels.
Our federal supplemental federal test procedure (SFTP) standards,
as well as California's SFTP standards, both of which take effect in
the 2001 model year, can further exacerbate this problem. The SFTP
standards are intended to better address and control emissions under
driving conditions not captured when compliance with our FTP-based
exhaust emissions standards is demonstrated, such as operation with the
air conditioning turned on or driving at very high rates of
acceleration and vehicle speeds (hereafter referred to simply as
aggressive driving). This is an important factor in assessing sulfur
irreversibility, because Tier 2 vehicles will have to meet more
stringent exhaust emission standards and will have to meet these
standards over the wider variety of operating conditions

[[Page 6731]]

included in the SFTP provisions. Hence, they will have to be designed
to meet the emission standards under all such operating conditions;
these design changes may influence how irreversible the sulfur effect
will be, as explained below.
Since wide variations in the A/F ratio help to remove sulfur from
the catalytic surface, there is concern that vehicles which meet the
SFTP standards, when driven aggressively, will experience insufficient
enrichment to purge sulfur from the catalyst. Currently, when driven
aggressively, the A/F ratio for most vehicles (those not certified to
SFTP standards) is quite variable. Meeting the SFTP standards will
ensure that manufacturers carefully control the A/F ratio over
essentially all in-use driving conditions. This absence of widely
varying A/F could therefore inhibit the removal of sulfur from the
catalyst once operation on high sulfur fuel ceased.
In order to quantify how irreversible the sulfur effect would be
when catalysts exposed to high sulfur fuel are then exposed to lower
sulfur fuel, several test programs were developed by EPA and industry.
The vehicles in these test programs consisted of LDVs and LDTs that met
either EPA Tier 1 or California LEV and ULEV emission standards. All of
the vehicles were first tested at a low sulfur level (e.g., 30 or 40
ppm) to establish a baseline. The vehicles were then re-tested with
high sulfur fuel (e.g., 350 to 540 ppm). After emission results had
stabilized, the vehicles were again re-tested with low sulfur fuel.
Prior to each of the second series of low sulfur tests, the vehicles
were operated over a short driving cycle to help purge (i.e., remove)
sulfur from the catalyst. Two different cycles were used to purge
sulfur, representing different types of driving: moderate urban
conditions and aggressive conditions. The FTP cycle, which represents
moderate urban driving, and the REP05 \49\ cycle, which represents very
aggressive driving (e.g., hard accelerations, high speed cruises), were
the two cycles used.
---------------------------------------------------------------------------

\49\ The FTP (Federal Test Procedure) is the basic driving cycle
used for federal emissions testing; the LA4 cycle is a component of
the FTP. The REP05 cycle developed by EPA is representative of all
driving that occurs outside the LA4 or FTP cycle. All but one of the
aggressive accelerations found in the US06 cycle were taken from the
REP05. While each segment of the US06 cycle was taken from actual
in-use driving, the timing and combination of these segments is not
representative of in-use driving in the way REP05 is representative.
---------------------------------------------------------------------------

The vehicles tested exhibited a wide range of irreversibility, for
reasons that are not fully understood. The data published in the NPRM,
showed that the effect of operation on high sulfur fuel was
irreversible on one or more pollutants after operation on low sulfur
fuel. NO_X emissions were 15 percent irreversible. None of
the vehicles were designed or modified to meet either the California or
federal SFTP emissions standards. The only data used in an attempt to
quantify the effect of aggressive operation on sulfur reversibility was
from a catalyst manufacturer that performed some vehicle testing with
catalysts which were bench aged with low and high sulfur fuel that
appeared to closely approximate the impact aggressive operation would
have on sulfur irreversibility. It was this data on which we based our
projection of sulfur irreversibility for Tier 2 vehicles at 50 percent
for NMHC and NO_X emissions. Subsequent comments on the
validity of these estimates after the publishing of the NPRM prompted
several additional test programs on sulfur irreversibility.
The sulfur irreversibility test programs that followed the NPRM
focused on vehicles that had emission levels that met or were close to
Tier 2 emission standards and also met the US06 or aggressive driving
portion of the SFTP emission standards. Although numerous vehicles were
tested, only four met both of the above criteria. (We had tried to
supplement the data base, but we were only able to add a limited number
of vehicles.) We also decided to quantify irreversibility for NMHC and
NO_X emissions together instead of independently, because per
our discussion above, sensitivity and irreversibility of either
pollutant appears to be very dependent on the particular strategy
chosen to reduce these emissions (particularly engine calibration and
catalyst loading of precious metals and oxygen storage).
The new data exhibited a range of variability among vehicles and
pollutants, similar to the data presented in the NPRM. The most
important distinction between the new FRM data and the old NPRM data
was that the new data showed that, on average, NMHC+NO_X
emissions in three out of four vehicles were not fully reversible after
aggressive driving. Based on this data, we project that
NMHC+NO_X emissions will be 20 to 65 percent irreversible for
Tier 2 vehicles under typical in-use driving, including aggressive
driving.
As discussed above, the combination of calibration changes and
emission system hardware modifications needed to meet our stringent
Tier 2 emissions standards, can result in significant trade-offs
between NMHC/NMOG and NO_X control. There can be considerable
uncertainty associated with balancing these trade-offs at very low
emissions levels if the vehicle is periodically operated on high sulfur
fuels, making the ability to remove sulfur from the catalyst highly
uncertain. For example, a given catalyst today may be fully reversible
for one pollutant and only partially reversible for another. However,
because of the trade-off in NMOG and NO_X performance, the
modifications necessary to get that vehicle to meet both emission
standards may result in the opposite effect for reversibility; i.e.,
full reversibility for NMOG and partial reversibility for
NO_X. There is no technical certainty that both the NMOG and
NO_X emission standards can be met without compromising
reversibility performance. Therefore, we continue to believe that
sulfur's negative impact on Tier 2 catalysts is a substantial concern.
The preceding discussion focused on the irreversibility of the
sulfur impact on emissions from current gasoline engine technologies.
There are new technologies under development, which could be sold in
the U.S. in the middle of the next decade (the same time that Tier 2
vehicles are being introduced), which also appear to be very sensitive
to sulfur and largely unable to reverse this sulfur impact. One of
these technologies is the direct injection gasoline (GDI) engine. These
engines utilize much more air than is needed to burn the fuel, unlike
conventional gasoline engines that operate under conditions where only
just enough air to completely burn the fuel is introduced into the
engine. This GDI technology allows these engines to be up to 25% more
fuel efficient than current gasoline engines and to emit up to 20% less
carbon dioxide. GDI engines are currently being introduced in both
Japan and Europe (which have or will soon require low sulfur
gasolines). Because of the significant operating differences with GDI
engines, these vehicles will likely require emission control technology
substantially different from that used on conventional gasoline
engines. For example, a GDI engine may require a NO_X
adsorber to meet the proposed Tier 2 NO_X standard. High fuel
sulfur levels quickly and permanently degrade the performance of these
NO_X adsorbers. Thus, to enable the sale of advanced, high
efficiency GDI engines in the U.S. under the Tier 2 standards, it
appears that low sulfur gasoline would have to be available nationwide
by the time this technology becomes available.
The fuel cell is another promising propulsion system that is being
developed for possible introduction to

[[Page 6732]]

consumers early in the next century. Fuel cells are being designed to
operate on a variety of fuels, including gasoline and diesel fuel. The
basic fuel cell technology is highly sensitive to sulfur. Almost any
level of sulfur in the fuel will disable the fuel cell. One possible
solution is to install a technology that essentially filters out the
sulfur before it enters the fuel cell. However, such sulfur ``guards''
are costly and could not practically be used like a disposable filter
(requiring the vehicle owner to change the sulfur guard frequently,
much like changing an oil filter) in situations where constant exposure
to high sulfur levels occurs. (Even exposure to relatively low sulfur
levels will likely require periodic replacement of the sulfur guard to
ensure adequate protection for the fuel cell.) Therefore, the amount of
sulfur in the fuel must be limited to that which can be removed by one
or at most two sulfur guards over the life of the vehicle. Thus, in
order for fuel cells operating on gasoline to be feasible in the U.S.,
low sulfur fuels would have to be available nationwide by the time this
technology becomes available.
d. Sulfur Has Negative Impacts on OBD Systems
As discussed in more detail in the RIA, EPA believes that sulfur in
gasoline can adversely impact the onboard diagnostic (OBD) systems of
current vehicles as well as vehicles meeting the Tier 2 standards. This
is an important factor supporting the need for a national sulfur
control program. EPA's onboard diagnostics (OBD) regulations require
that all vehicles be equipped with a system that monitors, among other
things, the performance of the catalyst and warns the owner if the
catalyst is not functioning properly. The OBD catalyst monitor is
designed to identify those catalysts with pollutant conversion
efficiencies that have been reduced to the extent that tailpipe
emissions would exceed a specified multiple of the applicable
hydrocarbon emissions standard. For California LEV and federal NLEV
vehicles, that multiple is 1.75 times the applicable hydrocarbon
emissions standard; for federal Tier 1 vehicles, that multiple is 1.5
times the applicable hydrocarbon standard added to the 4,000 mile
emission level.
We want to ensure that OBD systems operate correctly, and thus the
possibility that gasoline sulfur may interfere with these systems was
another consideration when evaluating the need for a national sulfur
program. Our evaluation of sulfur's effect on OBD systems was
summarized in a staff paper in 1997.\50\ We concluded that sulfur can
affect the decisions made by the OBD systems. Sulfur appears to affect
the oxygen sensor downstream of the catalyst, which is used in the OBD
systems, and it is not clear that the conditions that seem to reverse
sulfur's effect on the catalyst will also reverse any sulfur impact on
the downstream oxygen sensors. Indirectly, sulfur impacts OBD systems
because it can impair a catalyst that would otherwise be operating
satisfactorily, thereby triggering the OBD warning lights. While this
would indicate a properly operating OBD system, auto manufacturers have
expressed the concern that consumers using high sulfur fuel may
experience OBD warnings much more frequently than they would if
operating on low sulfur gasoline, and that this could lead to a loss of
consumer confidence in or support for OBD systems. Consumers may then
ignore the OBD warning system and drive a potentially high emitting
vehicle (which may have nothing to do with exposure to sulfur),
contributing even more to air quality problems. Another possible
scenario is that the OBD system may be impaired by sulfur in such a way
that it does not register an improperly functioning catalyst, even if
the catalyst is impaired for reasons unrelated to exposure to sulfur.
This would defeat the purpose of OBD systems.
---------------------------------------------------------------------------

\50\ U.S. EPA, ``OBD & Sulfur Status Report: Sulfur's Effect on
the OBD Catalyst Monitor on Low Emission Vehicles,'' March 1997,
updated September 1997.
---------------------------------------------------------------------------

The reduction of sulfur levels for gasoline should resolve any
concerns over the ability of the OBD system to make proper decisions.
The use of low sulfur fuel should ensure that the OBD warning light
goes on when it is supposed to and is not influenced by sulfur
contamination of the catalyst and/or OBD system.

B. Our Program for Vehicles

The program we are establishing today for cars, light trucks, and
large passenger vehicles will achieve the same large NO_X
reductions that we projected for the proposed program. The program is
very similar to our proposed program in all major respects. We have
been able to retain the general structure, stringency, and emissions
benefits of the proposal in this final rule. Where we have made
adjustments to the proposed program, we have done so in ways that
improve the implementation of the program without changing the overall
environmental benefits that the program will achieve. And by creating a
new category of vehicles subject to the Tier 2 standards, medium-duty
passenger vehicles, the final rule will ensure that all passenger
vehicles expected to be on the road in the foreseeable future will be
very clean.
We have seriously considered the input of all stakeholders in
developing our final rule and believe the program finalized below
balances the concerns of all stakeholders while achieving the needed
air quality benefits. In general, the adjustments we have made are
aimed at improving the implementation efficiency of the program by
better aligning the federal Tier 2 program with the NLEV program and
with California's program especially during the interim program. \51\
Extensive comments from manufacturers led us to conclude that better
harmony between the two programs would reduce the engineering, testing
and certification workload related to our interim program. Where we
could make changes to increase the overlap of the two programs while
maintaining the NO_X reductions of the proposal, we have done
so. These changes are discussed in detail in this section IV.B. and in
sections V.A. and V.B.
---------------------------------------------------------------------------

\51\ In this section and also in section V, we make various
references to the Tier 2 program, the interim program (or standards)
and the final Tier 2 standards. The Tier 2 program includes the
interim program (or standards) and the final Tier 2 standards. Some
discussion is applicable to the entire Tier 2 program, some to the
interim program (or standards) only and some is only applicable to
the final Tier 2 standards. As the program is complex, we advise you
to read carefully to discern the applicability of the text to the
proper model years and categories of vehicles.
---------------------------------------------------------------------------

Our final rule also includes provisions to regulate complete heavy-
duty passenger vehicles (primarily SUVs and passenger vans) of less
than 10,000 pounds GVWR within the Tier 2 program. Standards for these
vehicles were not included in the Tier 2 NPRM, but were proposed in a
subsequent NPRM on October 29, 1999 (64 FR 58472). The final provisions
for these vehicles are addressed in section IV.B.4.g. These heavier
vehicles have been recategorized as medium duty passenger vehicles
(MDPVs). They are included in the Tier 2 program starting with model
year 2004 and will be treated similarly to HLDTs, unless otherwise
noted.
The next sections of the preamble describe our final program in
detail and include changes and adjustments from the NPRM that we
believe address many concerns raised by the Alliance and others. While
these changes ease the burden on manufacturers, they have little or no
impact on the air quality benefits of the Tier 2 program.

[[Page 6733]]

In a number of places in the following text, we mention that
changes are being made ``in response to comments''. For a full summary
of the comments and for our responses to those comments, we refer you
to the Response to Comments document contained in the docket for this
rulemaking or available from the Office of Mobile Sources web site (see
web address at the beginning of this document).
1. Overview of the Vehicle Program
The vehicle-related part of today's final rule covers a wide range
of standards, concepts, and provisions that affect how vehicle
manufacturers will develop, certify, produce, and market Tier 2
vehicles. This Overview subsection provides readers with a broad
summary of the major vehicle-related aspects of the rule. Readers for
whom this Overview is sufficient may want to move on to the discussion
of the key gasoline sulfur control provisions (Section IV.C.). Readers
wishing a more detailed understanding of the vehicle provisions can
continue beyond the Overview to deeper discussions of key issues and
provisions (Sections IV.B.-2, 3, and 4) as well as discussions of
additional provisions (Section V.A.). Readers should refer to the
regulatory language found at the end of this preamble for a complete
compilation of the requirements.
To understand how the program will work, it is useful to review
EPA's classification system for light-duty vehicles and trucks. The
light-duty category of motor vehicles includes all vehicles and trucks
at or below 8500 pounds gross vehicle weight rating, or GVWR (i.e.,
vehicle weight plus rated cargo capacity). Table IV.B.-1 shows the
various light-duty categories and also shows our new medium-duty
passenger vehicle (MDPV) category, discussed in section IV.B.4.g.. In
the discussion below, we make frequent reference to two separate groups
of light vehicles: (1) LDV/LLDTs, which include all LDVs and all LDT1s
and LDT2s; and (2) HLDTs, which include LDT3s and LDT4s. We also make
mention of MDPVs although the details of our program for those vehicles
are deferred to IV.B.4.g. at the end of section IV.B.

Table IV.B.--1 Light-Duty Vehicles and Trucks and Medium-Duty Passenger
Vehicles; Category Characteristics
------------------------------------------------------------------------
Characteristics
------------------------------------------------------------------------
LDV....................................... A passenger car or passenger
car derivative seating 12
passengers or less.
Light LDT (LLDT).......................... Any LDT rated at up through
6,000 lbs GVWR. Includes
LDT1 and LDT2.
Heavy LDT (HLDT).......................... Any LDT rated at greater
than 6,000 lbs GVWR.
Includes LDT3 and LDT4s.
MDPV...................................... A heavy-duty passenger
vehicle rated at less than
10,000 lbs GVWR. (The
inclusion of MDPVs is
discussed primarily in
Section IV.B.4.g.)
------------------------------------------------------------------------

a. Introduction
Today's final rule incorporates concepts from the federal NLEV
program which began phase-in in the 1999 model year for LDV/LLDTs.\52\
The program in today's rule takes the corporate averaging concept and
other provisions from NLEV but changes the focus from NMOG to
NO_X and applies them to all LDVs and LDTs. The final rule is
compatible with the California LEV II (CalLEV II) program scheduled to
take effect in 2004. The emission standard ``bins'' used for this
average calculation are different in several respects from those of the
CalLEV II program, yet still allow harmonization of federal and
California vehicle technology.
---------------------------------------------------------------------------

\52\ The NLEV program is a voluntary program, adopted by all
major LDV and LDT manufacturers. It applies only to LDVs, LDT1s and
LDT2s. It does not apply to HLDTs.
---------------------------------------------------------------------------

The Tier 2 corporate average NO_X level to be met through
these requirements ultimately applies to all of a manufacturer's LDVs
and LDTs (subject to two different phase-in schedules) regardless of
the fuel used. Meanwhile, until the final Tier 2 standards are
completely phased in, separate interim standards apply to LDV/LLDTs and
HLDTs.
As proposed in the NPRM and finalized in today's document, the Tier
2 program will take effect in 2004, with full phase in occurring by
2007 for LDV/LLDTs and 2009 for HLDTs. During the phase-in years of
2004-2008, vehicles not certified to Tier 2 requirements will meet
interim requirements also using a bins system, but with less stringent
corporate average NO_X standards.
In the discussions below, we set forth different Tier 2 phase-in
schedules for the two different groups of vehicles (LDV/LLDTs and
HLDTs) as well as two different interim fleet average NO_X
standards for 2004 and later model year vehicles awaiting phase-in to
the Tier 2 standards.
In the NPRM, we set forth separate tables of full life standard
bins for the interim programs and the final Tier 2 program, but we
proposed that manufacturers could use all bins for interim or Tier 2
vehicles during the phase-in years.\53\ We also proposed similar sets
of tables for intermediate life standards. In this final rule, for
simplicity and to accommodate additional bins, including some suggested
by the Alliance, we have combined all of the full life bins into one
table and all of the intermediate life bins into one table. The bins
system and the choice of the individual bins is discussed in detail
below.
---------------------------------------------------------------------------

\53\ Throughout this text, the term ``full life'' is used in
reference to vehicle standards to mean ``full useful life'' which is
currently 10 years/100,000 miles for LDVs and LLDTs, but 11 years/
120,000 miles for HLDTs. Similarly, ``intermediate life'' refers to
intermediate useful life standards which apply for the period of 5
years/50,000 miles. In this rulemaking we are retaining the current
full useful life period for interim LDVs and LLDTs, but raising it
for Tier 2 vehicles to 10 years/120,000 miles.
---------------------------------------------------------------------------

References to California LEV II Program

Throughout this preamble, we make reference to California's LEV II
program and its requirements. The LEV II program was approved by the
California ARB at a hearing of November 5, 1998. Numerous draft
documents were prepared by ARB staff in advance of that hearing and
made available to the public. Those documents were referenced in our
NPRM and included in the docket. Some of those documents were modified
as a result of changes to the proposed program made at the hearing and
due to comments received after the hearing. ARB prepared final
documents without significant change. The final program was approved by
California's Office of Administrative Law on October 28, 1999 and filed
with the Secretary of State to become effective on November 27, 1999.
We have placed copies of the latest available documents, some of
which we used in the preparation of this final rule, in the docket. You
may also obtain these documents and other information about
California's LEV II program from ARB's web site: (www.arb.ca.gov/
regact/levii/levii.htm).
In the regulatory text that follows this preamble, we incorporate
by reference a number of documents related to LEVII and California test
procedures under

[[Page 6734]]

LEVII. These documents are available in the docket for today's
rulemaking.
b. Corporate Average NO_X Standard
The program we are finalizing today will ultimately require each
manufacturer's average full life NO_X emissions over all of
its Tier 2 vehicles to meet a NO_X standard of 0.07 g/mi each
model year. Manufacturers will have the flexibility to certify Tier 2
vehicles to different sets of exhaust standards that we refer to as
``bins,'' but will have to choose the bins so that their corporate
sales weighted average full life NO_X level for their Tier 2
vehicles is no more than the 0.07 g/mi. (We discuss the bins in the
next subsection.)
A corporate average standard enables the program's air quality
goals to be met while allowing manufacturers the flexibility to certify
some models above and some models below the standard. Manufacturers can
apply technology to different vehicles in a more cost-effective manner
than under a single set of standards that all vehicles have to meet.
Each manufacturer will determine its year-end corporate average
NO_X level by computing a sales-weighted average of the full
life NO_X standards from the various bins to which it
certified any Tier 2 vehicles. The manufacturer will be in compliance
with the standard if its corporate average NO_X emissions for
its Tier 2 vehicles meets or falls below 0.07 g/mi. In years when a
manufacturer's corporate average is below 0.07 g/mi, it can generate
credits. It can trade (sell) those credits to other manufacturers or
use them in years when its average exceeds the standard (i.e. when the
manufacturer runs a deficit). The averaging program is described in
detail in later text.
c. Tier 2 Exhaust Emission Standard ``Bins''
We are finalizing a Tier 2 bin structure having eight emission
standards bins (bins 1-8), each one a set of standards to which
manufacturers can certify their vehicles. Table IV.B.-2a shows the full
useful life standards that will apply for each bin in our final Tier 2
program, i.e. after full phase-in occurs for all LDVs and LDTs. Two
additional bins, bins 9 and 10, will be available only during the
interim program and will be deleted before final phase-in of the Tier 2
program. Table IV.B.-2b shows all the bins from Table IV.B.-2a and also
shows extra bins and higher available standards for certain pollutants
that are available prior to full Tier 2 phase-in. An eleventh bin, only
for MDPVs is discussed in section IV.B.4.g.
Many bins have the same values as bins in the California LEV II
program as a means to increase the economic efficiency of the
transition to as well as model availability. Further, we added bins
that are not a part of the California program to modestly increase the
flexibility of the program for manufacturers without compromising air
quality goals. As discussed in Section IV.B.4. below, we believe these
extra bins will help provide incentives for manufacturers to produce
vehicles with emissions below 0.07 g/mi NO_X. The two highest
of the ten bins shown in Table IV.B.2b. are designed to provide
flexibility only during the phase-in years and will terminate after the
standards are fully phased in, leaving eight bins in place for the
duration of the Tier 2 program.
The NPRM full life standards contained seven Tier 2 bins as well as
two separate tables of bins for interim vehicles. We proposed that
manufacturers would be able to use all the bins during the phase in
years regardless of whether they were certifying Tier 2 vehicles or
interim vehicles.
The program we are finalizing today:
Combines the bins from the NPRM;
Omits two bins that were included in the NPRM for harmony
with California but which are unlikely to be used; \54\;
---------------------------------------------------------------------------

\54\ These bins are unlikely to be used in the Federal program
because they contain the same NO_X standard as the Federal
bins, but contain more stringent NMOG standards than the Federal
bins. These bins, which provide extra opportunity for a manufacturer
to gain NMOG credits in California are not needed or useful in the
Federal program where there is no NMOG corporate average standard.
The two deleted bins are bin 4 from the proposed Tier 2 bins and bin
3 from the proposed interim bins for LDV/LLDTs. Dropping these bins
does not affect harmonization with California standards because the
federal program includes bins having the same NO_X
standard with higher NMOG standards.
---------------------------------------------------------------------------

Adds 2 bins to increase compliance flexibility without
reducing environmental benefits;
Adds a temporary bin only for MDPVs that expires after
2008. This bin is in addition to the 10 bins shown in tables of bins in
this preamble;
Establishes a PM value for the highest bin available
during the interim program (bin 10) that is more stringent than the
corresponding standard in the NLEV program;
Provides temporary higher NMOG standards that expire after
2006 for certain interim LDT2s and LDT4s produced by qualifying
manufacturers.
Tables IV.B.-2a and 2b show the bins for full life standards. Table
IV.B.-2b is repeated later in the text where intermediate life
standards are also shown. These tables omit the temporary bin for
MDPVs. This bin is usable only by MDPVs and is addressed separately in
section IV.B.4.g.

Table IV.B.-2a.--Final Tier 2 Light-Duty Full Useful Life Exhaust Emission Standards
[Grams per mile]
----------------------------------------------------------------------------------------------------------------
Bin No. NO_X NMOG CO HCHO PM
----------------------------------------------------------------------------------------------------------------
8.............................................. 0.20 0.125 4.2 0.018 0.02
7.............................................. 0.15 0.090 4.2 0.018 0.02
6.............................................. 0.10 0.090 4.2 0.018 0.01
5.............................................. 0.07 0.090 4.2 0.018 0.01
4.............................................. 0.04 0.070 2.1 0.011 0.01
3.............................................. 0.03 0.055 2.1 0.011 0.01
2.............................................. 0.02 0.010 2.1 0.004 0.01
1.............................................. 0.00 0.000 0.0 0.000 0.00
----------------------------------------------------------------------------------------------------------------

[[Page 6735]]

Table IV.B.-2b.--Tier 2 Light-Duty Full Useful Life Exhaust Emission Standards--Including Bins Applicable During Interim Program Only
[Grams per mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin No. NO_X NMOG CO HCHO PM Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
10................................ 0.6 0.156/0.230........... 4.2/6.4.............. 0.018/0.027.......... 0.08 ^a ^b ^c ^d
9................................. 0.3 0.090/0.180........... 4.2.................. 0.018................ 0.06 ^a ^b ^c
8................................. 0.20 0.125/0.156........... 4.2.................. 0.018................ 0.02 ^b ^f
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Bin deleted at end of 2006 model year (2008 for HLDTs).
\b\ The higher of the two temporary NMOG, CO and HCHO values apply only to HLDTs.
^c An additional higher temporary bin restricted to MDPVs is discussed in section IV.B.4.g.
\d\ Optional temporary NMOG standard of 0.280 g/mi applies for qualifying LDT4s and MDPVs only, see text.
\e\ Optional temporary NMOG standard of 0.130 g/mi applies for qualifying LDT2s only, see text.
\f\Higher temporary NMOG value of 0.156g/mi deleted at end of 2008 model year.

The corporate average concept using bins will provide a program
that gets essentially the same emission reductions we would expect from
a straight 0.07 g/mi standard for all vehicles because all
NO_X emissions from Tier 2 vehicles in bins above 0.07 g/mi
will need to be offset by NO_X emissions from Tier 2 vehicles
in bins below 0.07 g/mile. This focus on NO_X allows NMOG
\55\ emissions to ``float'' in that the fleet NMOG emission rate
depends on the mix of bins used to meet the NO_X standard.
However, as you can see by examining the bins, any combination of
vehicles meeting the 0.07 g/mi average NO_X standard will
have average NMOG levels below 0.09 g/mi. The actual value will vary by
manufacturer depending on the sales mix of the vehicles used to meet
the 0.07 g/mi average NO_X standard. In addition, there will
be overall improvements in NMOG since Tier 2 incorporates HLDTs, which
are not covered by the NLEV program. Tier 2 also imposes tighter
standards on LDT2s than the NLEV program by making them average with
the LDVs and LDT1s. NLEV has separate, higher standards for LDT2s. We
did not adopt any bins for LDVs and LDTs with standards higher than we
proposed.
---------------------------------------------------------------------------

\55\ In the NPRM, we proposed that hydrocarbon standards would
be measured in terms of ``non-methane organic gases'' (NMOG)
regardless of fuel. For reasons explained elsewhere in this preamble
we will permit non-methane hydrocarbons (NMHC) as an option in the
final rule for all fuels except alcohol fuels and compressed natural
gas . NMHC and NMOG are very similar for gasoline and diesel fuel
emissions.
---------------------------------------------------------------------------

d. Schedules for Implementation
We recognize that the Tier 2 standards pose greater technological
challenges for larger light duty trucks ( HLDTs) than for LDVs and
smaller trucks (LDT1s and LDT2s). We believe that additional leadtime
is appropriate for HLDTs. HLDTs have historically been subject to less
stringent vehicle-based standards than lighter trucks and LDVs. Also,
HLDTs were not subject to the voluntary emission reductions implemented
for LDVs, LDT1s and LDT2s in the NLEV program. Consequently we are
finalizing as proposed, separate phase-in programs for HLDTs and LDV/
LLDTs . Our phase-in approach will provide HLDTs with extra time before
they need to begin phase-in to the final Tier 2 standards and will also
provide two additional years for them to fully comply. Table IV.B-3
provides a graphical representation of how the phase-in of the Tier 2
program will work for all vehicles. This table shows several aspects of
the program:
Phase-in of the Tier 2 standards;
Phase-in/phase-out requirements of the interim programs;
Phase-in requirements of new evaporative standards;
Years that can be included in alternative phase-in
schedules;
Years in which manufacturers can bank NO_X
credits through ``early banking'' and
``Boundaries'' on averaging sets in the Tier 2 and interim
programs.
Averaging provisions for MDPVs (see section IV.B.4.g. for
discussion)
We discuss each of these topics in detail below and make numerous
references to Table IV.B-3.

BILLING CODE 6560-50-P

[[Page 6736]]

[GRAPHIC] [TIFF OMITTED] TR10FE00.003

BILLING CODE 6560-50-C
As described in detail in the Response to Comments document, the
Alliance proposal would have delayed final implementation of Tier 2
standards until 2011. We are not adopting the Alliance's time schedule,
because we believe the shorter schedule we proposed is feasible and
that there is no reason to delay the final benefits of the Tier 2
standards. In fact, numerous commenters representing state,
environmental and health groups argued that our original proposal gave
manufacturers too much time to bring the HLDTs into line with LDVs and
LLDTs. We believe the two extra years proposed in the NPRM remain
appropriate. HLDTs will face greater challenges than LDVs/LLDTs because
their emission control systems will need to be durable under
potentially heavier loads and tougher operating conditions than LDV/
LLDTs. Their sales are small relative to the rest of the light duty
fleet (they will comprise about 14% of the light duty fleet in 2004),
and they will benefit from industry experience with the lighter
vehicles. In addition, HLDTs will not remain at high Tier 1 levels
until they phase-in to Tier 2. Rather, they will have to meet interim
standards that impose a NO_X cap of 0.60 g/mi and phase-in a
corporate average NO_X standard of 0.20 g/mi. These standards
represent a significant reduction from

[[Page 6737]]

applicable Tier 1 standards.\56\ Interim standards are discussed in
detail later in this preamble.
---------------------------------------------------------------------------

\56\ Under Tier 1 standards, LDT3s are subject to a 0.98 g/mi
NO_X standard while LDT4s are subject to an even higher
NO_X standard of 1.53 g/mi.
---------------------------------------------------------------------------

i. Implementation Schedule for Tier 2 LDVs and LLDTs

We are finalizing the implementation schedule for the Tier 2
standards as proposed in the NPRM. Thus, the standards will take effect
beginning with the 2004 model year for light duty vehicles and trucks
at or below 6000 pounds GVWR (LDV/LLDTs). Manufacturers will phase
their vehicles into the Tier 2 standards beginning with 25 percent of
LDV/LLDT sales that year, 50 percent in 2005, 75 percent in 2006, and
100 percent in 2007. Manufacturers will be free to choose which
vehicles are phased-in each year. However, in each year during (and
after) the phase-in, the manufacturer's average NO_X for its
Tier 2 vehicles must meet the 0.07 g/mi corporate average standard.
This phase-in schedule, which is consistent with that of the California
LEV II program, provides between four and seven years of leadtime for
the manufacturers to bring all of their LDV/LLDT production into
compliance. These vehicles constitute about 86 percent of the light
duty fleet.
To increase manufacturer flexibility and provide incentives for
early introduction of Tier 2 vehicles, we are also finalizing
provisions from the NPRM that permit manufacturers to use alternative
phase-in schedules that will still require 100 percent phase-in by
2007, but recognize the benefits of early introduction of Tier 2
vehicles, and allow manufacturers to adjust their phase-in to better
fit their own production plans. (See section IV.B.4.b.ii. below.)

ii. Implementation Schedule for Tier 2 HLDTs

The Tier 2 phase-in schedule for HLDTs is also being finalized as
proposed. The phase-in for final Tier 2 standards for HLDTs will start
later and end later than that for LDVs and LLDTs. Fifty percent of each
manufacturer's HLDTs must meet Tier 2 standards in 2008, and 100
percent must meet Tier 2 standards in 2009. As with the LDV/LLDTs, the
Tier 2 HLDTs must meet a corporate average NO_X standard of
0.07 g/mi. This delayed phase-in schedule:
Provides significant interim emission reductions starting
in 2004 (discussed separately below);
Recognizes the relatively high emission standards that
currently apply to HLDTs;
Provides manufacturers with adequate lead time before they
must bring HLDTs into compliance with final Tier 2 standards;
Provides manufacturers the opportunity to apply and
evaluate Tier 2 technology on LDV/LLDTs before having to apply it to
HLDTs; and
Provides manufacturers the opportunity to apply and
evaluate Tier 2 technology on HLDTs on a relatively small scale to meet
California LEV II requirements before having to apply it to HLDTs
nationwide.
As with the LDV/LLDTs above, to encourage early introduction of
Tier 2 HLDTs and to provide manufacturers with greater flexibility, we
are finalizing provisions to permit manufacturers to generate early
Tier 2 NO_X credits and to use alternative phase-in schedules
that still result in 100% phase-in by 2009. (See sections IV.B.4.d.iv.
and IV.B.4.b.ii, respectively, below.)
e. Interim Standards
The interim standards discussed below are a major source of
emission reductions in the early years of the vehicle control program.
The NO_X emission standards for LDT2s and LDT4s, which
comprise about 40 percent of the fleet, are more stringent than the
corresponding standards in the NLEV and CAL LEV I programs. These
standards also are important because they set the stage for a smooth
transition to the final Tier 2 standards.
The two groups of vehicles (LDV/LLDTs and HLDTs) will be
approaching the Tier 2 standards from quite different emission
``backgrounds''. LDV/LLDTs will be at NLEV levels, which require
NO_X emissions of either 0.3 or 0.5g/mi on average, \57\
while HLDTs will be at Tier 1 levels facing NO_X standards of
either 0.98 or 1.53 g/mi, depending on truck size. These Tier 1
NO_X levels for HLDTs are very high (by a factor of 14-22)
relative to our 0.07 g/mi Tier 2 NO_X average. To address the
disparity in emission ``backgrounds'', while gaining air quality
benefits from vehicles during the phase-in period, we proposed and are
finalizing separate interim average NO_X standards for the
two vehicle groups during the phase-in period. The provisions described
below will apply in 2004 for all LDVs and LDTs not certified to Tier 2
standards. The relationship of the interim programs to the final Tier 2
standards is shown in Table IV.B-3.
---------------------------------------------------------------------------

\57\ The NLEV program imposes NMOG average standards that
translate into full useful life NO_X levels of about 0.3
g/mi for LDV/LDT1s and 0.5 g/mi for LDT2s.
---------------------------------------------------------------------------

Interim vehicles will certify to the same bins as Tier 2 vehicles.
As described earlier in this preamble, we have merged the tables of
bins from the NPRM for simplicity and added a few bins. Bins 9 and 10
were drawn from the tables of interim bins in the NPRM, and are
intended only for use during the phase-in years. Therefore, these two
bins will be discontinued after 2006 (2008 for HLDTs).

i. Interim Exhaust Emission Standards for LDV/LLDTs

Beginning with the 2004 model year, all new LDVs, LDT1s and LDT2s
not incorporated under the Tier 2 phase-in will be subject to an
interim corporate average NO_X standard of 0.30 g/mi. This is
effectively the LEV NO_X emission standard for LDVs and LDT1s
under the NLEV program.\58\ This interim program will hold LDVs and
LLDTs to NLEV levels if they are not yet subject to Tier 2 standards
during the phase-in. By implementing these interim standards for LDVs
and LLDTs we will ensure that the accomplishments of the NLEV program
continue. Additionally, this program will bring about substantial and
important NO_X emission reductions from LDT2s in the early
years of the program. LDT2s will be held to a 0.3 g/mi NO_X
average in contrast to a 0.5 g/mi average in the NLEV program.
---------------------------------------------------------------------------

\58\ The NLEV program does not impose average NO_X
standards, but the NMOG average standards that it does impose will
lead to full useful life NO_X levels of about 0.3 g/mi for
LDV/LDT1s.
---------------------------------------------------------------------------

Because the Tier 2 standards are phased-in beginning in the 2004
model year, the interim standards for LDVs and LLDTs apply to fewer
vehicles each year, i.e., they are ``phase-out'' standards. Table IV.B-
2 shows the maximum percentage of LDVs and LLDTs subject to the interim
standards each year-- 75% in 2004, 50% in 2005, 25% in 2006 and 0% in
2007.
As mentioned above, the interim program for LDV/LLDTs is designed
to hold these vehicles to the NLEV NO_X level for LDVs and
LDT1s, and a few of our bins are derived from the NLEV program. Our
proposal to bring LDT2s into line with the LDVs and LDT1s during the
interim program by requiring all LDVs, LDT1s and LDT2s to meet the same
average NO_X standard (0.30) g/mi was of concern to industry
commenters. In the final rule, we are retaining this requirement, but
we are providing an optional NMOG standard of 0.130 for LDT2s certified
to bin 9 when the manufacturers of those LDT2s elect to bring all of
their 2004 model year

[[Page 6738]]

HLDTs under our interim program and phase 25% of those HLDTs into the
0.20 g/mi average NO_X standard. (See ii. below). These
provisions are discussed in detail below and also in the Response to
Comments document.

ii. Interim Exhaust Emission Standards for HLDTs

Our interim standards for HLDTs will begin in the 2004 model year
similar to our proposal in the NPRM. The Interim Program for HLDTs will
require compliance with a corporate average NO_X standard of
0.20 g/mi that will be phased in between 2004 and 2007. The interim
HLDT standards, like those for LDV/LLDTs will make use of the bins in
Tables IV.B. -4 and -5. We believe that our interim standards, which
start in 2004, will produce significant emission reductions from HLDTs
produced during the interim period. For example, HLDTs will have to
reduce emissions in the interim program relative to the NLEV program.
These standards, by themselves, represent a major reduction in emission
standards and we believe it is likely that some manufacturers will
apply their Tier 2 technology to HLDTs in order to comply with the
interim standards.
As shown in Table IV.B.-3, the phase-in schedule for HLDTs to the
0.20 g/mi corporate average NO_X standard will be 25 percent
in the 2004 model year (except as noted below), 50 percent in 2005, 75
percent in 2006, and 100 percent in 2007. As for the Tier 2 standards,
alternative phase-in schedules (see Section IV.B.4.b.ii.) will be
available. The interim program will remain in effect through 2008 to
cover those HLDTs not yet phased into the Tier 2 standards (a maximum
of 50%). Interim HLDTs not subject to the interim corporate average
NO_X standard during the applicable phase-in years (2004-2006
or 2005-2006) will be subject to the least stringent bins so their
NO_X emissions will be effectively capped at 0.60 g/mi. These
vehicles will be excluded from the calculation to determine compliance
with the interim 0.20 g/mi average NO_X standard.
This approach will allow more time for manufacturers to bring the
more difficult HLDTs to Tier 2 levels while achieving real reductions
from those HLDTs that may present less of a challenge.
Due to statutory leadtime considerations, we were not able to
finalize the HLDT standards to be in effect by the time the 2004 model
year begins. For this reason, we are providing incentives for HLDTs to
comply with the Tier 2 standards for all 2004 model year HLDTs. This
change and the leadtime issue are discussed further under section
IV.B.4.e. below and also in the Response to Comments document.

iii. Interim Programs Will Provide Reductions Over Previous Standards

As is the case with the primary Tier 2 standard structure, the
interim programs will focus on NO_X but will also provide
reductions in NMOG beyond the NLEV program. This is because the interim
programs will reduce emissions from LDT2s and HLDTs compared to their
previous standards. Without the interim standards, HLDTs could be
certified to the Tier 1 NMHC levels (0.46 g/mi or 0.56 g/mi). With the
interim standards, however, exhaust NMOG \59\ should average
approximately 0.09 g/mi for all non-Tier 2 LDV/LLDTs and 0.24 g/mi or
less for HLDTs. CO under Tier 1 could be as high as 7.3 g/mi for LDT4s.
Under the interim program, CO standards for most bins will be well
below 7.3 g/mi.
---------------------------------------------------------------------------

\59\ In the Tier 1 program, exhaust hydrocarbon standards are in
terms of NMHC, not NMOG. However, as we have explained elsewhere in
this preamble, NMHC and NMOG results are very similar for gasoline
and diesel-fueled vehicles.
---------------------------------------------------------------------------

f. Generating, Banking, and Trading NO_X Credits
As proposed in the NPRM and finalized in this notice, manufacturers
will be permitted to average the NO_X emissions of their Tier
2 vehicles and comply with a corporate average NO_X standard.
In addition, when a manufacturer's average NO_X emissions
fall below the corporate average NO_X standard, it can
generate NO_X credits for later use (banking) or to sell to
another manufacturer (trading). NO_X credits will be
available under the Tier 2 standards, the interim standards for LDVs
and LLDTs, and the interim standards for HLDTs. These NO_X
credit provisions will facilitate compliance with the fleet average
NO_X standards and be very similar to those currently in
place for NMOG emissions under California and federal NLEV regulations.
A manufacturer with an average NO_X level for its Tier 2
vehicles in a given model year below the 0.07 gram per mile corporate
average standard can generate Tier 2 NO_X credits that it can
use in a future model year when its average NO_X might exceed
the 0.07 standard. Manufacturers must calculate their corporate average
NO_X emissions at year end and then compute credits generated
based on how far below 0.07 g/mi the corporate average falls.
Manufacturers will be free to retain any credits they generate for
future use or to trade (sell) those credits to other manufacturers.
Credits retained or purchased can be used by manufacturers with
corporate average Tier 2 NO_X levels above 0.07 g/mi. Under
provisions described in Section IV.B.4.d.iv., manufacturers can
implement NO_X emission reductions as early as the 2001 model
year and earn early Tier 2 NO_X credits to help LDVs and
LLDTs meet Tier 2 standards. Similarly, manufacturers can earn early
credits for HLDTs as early as the 2001 model year. In model years up
through 2005, manufacturers can earn extra credits when they certify
vehicles to bins 1 or 2.
Banking and trading of NO_X credits under the interim
non-Tier 2 standards will be similar to that under the Tier 2
standards, except that a manufacturer must determine its credits based
upon the 0.30 or 0.20 gram per mile corporate average NO_X
standard applicable to vehicles in the interim programs. As we proposed
in the NPRM, interim credits from LDVs/LLDTs and interim credits from
HLDTs will not be permitted to be used interchangeably due to the
differences in the interim corporate average NO_X standards.
As proposed in the NPRM, there will be no provisions for early banking
under the interim standards and manufacturers will not be allowed to
use interim credits to address the Tier 2 NO_X average
standard. This is because we remain concerned that credits can be
generated relatively easily under less stringent standards (the Tier 1
or interim standards) and then used in such a way to delay
implementation of the Tier 2 standards.
Banking and trading of NO_X credits and related issues
are discussed in greater detail in Section IV.B.4.d. below.
2. Why Are We Finalizing the Same Set of Standards for Tier 2 LDVs and
LDTs?
Before we provide a more detailed description of the vehicle
program, we want to review two overarching principles of today's rule.
The first is our goal to bring all LDVs and LDTs under the same set of
emission standards. Historically, LDTs--and especially the heavier
trucks in the LDT3 and LDT4 categories--have been subject to less
stringent emission standards than LDVs (passenger cars). In recent
years the proportion of light truck sales has grown to approximately 50
percent. Many of these LDTs are minivans, passenger vans, sport utility
vehicles and pick-up trucks that are used primarily or solely for
personal transportation; i.e., they are used like passenger cars.
As vehicle preferences have increasingly shifted from passenger
cars to light trucks there has been an

[[Page 6739]]

accompanying increase in emissions over what otherwise would have
occurred because of the increase in miles traveled by LDTs and the less
stringent standards for LDTs as compared to LDVs. As Section III. above
makes clear, reductions in these excess emissions (and in other mobile
and stationary source emissions) are seriously needed. Since both LDVs
and LDTs are within technological reach of the standards in the Tier 2
bin structure, and since none of the comments have been persuasive that
manufacturers can not meet the standards, we are finalizing our
proposal to equalize the regulatory useful life mileage for LDVs and
LDTs and apply the same Tier 2 exhaust emission standard bins to all of
them. This program will ensure that substantial reductions occur in all
portions of the light-duty fleet and that the movement from LDVs to
LDTs will not counteract these reductions.
Once the phase in periods end for all vehicles in 2009,
manufacturers will include all LDVs and LDTs together in calculating
their corporate average NO_X levels.\60\ As mentioned above
and described in more detail in Section IV.B.-4. below, manufacturers
can choose the emission bin for any test group of vehicles provided
that, on a sales weighted average basis, the manufacturer meets the
average NO_X standard of 0.07 g/mi for its Tier 2 vehicles
that year.
---------------------------------------------------------------------------

\60\ Because of the different phase-in percentages and phase-in
schedules for the two groups, during the duration of the phase-in
(through 2008), manufacturers will average Tier 2 LDV/LLDTs
separately from HLDTs.
---------------------------------------------------------------------------

Some manufacturers have suggested that a program with different
requirements is needed for heavy LDTs. Recognizing that compliance will
be most challenging for HLDTs, the delay in the start of the phase-in
and the additional phase-in years for those vehicles will allow
manufacturers to delay the initial impact of the Tier 2 standards until
the 2008 model year. This represents four additional model years of
leadtime beyond the time when passenger cars and LDT1s and LDT2s will
achieve Tier 2 standards in substantial numbers. We believe this phase-
in and other provisions of this rule respond to these concerns. Note
that in the NPRM, we requested comments on the need for different
hydrocarbon standards for these vehicles recognizing that a tradeoff
often exists between HC and NO_X emissions. We also proposed
that several bins have higher hydrocarbon standards for HLDTs during
the interim program. We are finalizing these bins as proposed. Also, as
an option, we are permitting the use of NMOG values similar to those in
the NLEV program for bins 9 and 10 only for certain LDT2s and LDT4s
during the interim program (see section IV.B.1.e.ii. above for
details).
We are not adopting the Alliance's proposed phase-in schedule which
would have provided a phase-in lasting until 2011. At the end of the
Alliance's proposed phase-in, all vehicles would comply with an average
NO_X standard of 0.07 g/mi. A fixed 0.09 NMHC standard would
apply to LDVs and LLDTs while a fixed 0.156 NMHC standard would apply
to HLDTs.\61\ Our final program provides HLDTs until 2008 before any
have to meet 0.07 g/mi on average and permits them to be averaged with
LDV/LLDTs beginning in 2009, when all must meet 0.07 g/mi
NO_X on average. We believe that eight years is a significant
amount of leadtime to apply Tier 2 technology. We heard clearly from
the public hearings and written comments that the public sees no
justification for and does not want even more time provided for HLDTs.
Furthermore, we see no technological need for more time than we
proposed. Indeed, many believe that HLDTs should meet the Tier 2
standards in step with the LDV/LLDTs.
---------------------------------------------------------------------------

\61\ The Alliance proposed NMHC standards in lieu of the NMOG
standards we proposed and are finalizing today. We are including a
provision in the final rule to accept NMHC results, subject to an
adjustment factor, to demonstrate compliance with NMOG standards,
although we are not adopting the fixed standards proposed by the
Alliance.
---------------------------------------------------------------------------

We are not promulgating the fixed NMHC standards suggested by the
Alliance, but are sticking with the concept of bins containing lower
NMOG standards connected to lower NO_X (and other) standards.
We believe that providing final exhaust emission standards for HLDTs
that deviate from those for LDV/LLDTs would violate one of the
overarching principles of the Tier 2 program, i.e. that all LDVs and
LDTs should be subject to the same exhaust emission standards. Further,
the idea of NMOG values that differ from California's runs counter to
other arguments raised by the Alliance that EPA should align bins with
California's to promote 50 state certification of test groups.
3. Why Are We Finalizing the Same Standards for Both Gasoline and
Diesel Vehicles?
The second overarching principle of our vehicle program is the use
of the same Tier 2 standards for all LDVs and LDTs, regardless of the
fuel they are designed to use. The same exhaust emission standards and
useful life periods we are finalizing today will apply whether the
vehicle is built to operate on gasoline or diesel fuel or on an
alternative fuel such as methanol or natural gas. Diesel powered LDVs
and LDTs tend to be used in the same applications as their gasoline
counterparts, and thus we believe they should meet the same standards.
Less stringent standards for diesels could create incentives for
manufacturers to build more diesel vehicles, thus endangering the
emission reductions expected by this program.
Manufacturers have expressed concerns that diesel-fueled vehicles
would have difficulty meeting NO_X and particulate matter
levels like those contained in today's rule. Clearly, these standards
will be challenging. As discussed in Section IV.A.-1. above, we expect
that the Tier 2 NO_X and NMOG standards will be challenging
for gasoline vehicles, but that major technological innovations will
not be required. For diesels, however, the final Tier 2 NO_X
and PM standards will likely require applications of aftertreatment,
most likely accompanied by changes in diesel fuel as such devices are
sensitive to diesel fuel quality, particularly sulfur content. We do
not believe such devices will be necessary to meet the top bin for our
interim standards.\62\ Given the small percentage of diesel vehicles
and the phase-in of the standards, that bin should be sufficient for
any manufacturer to market diesels and still comply with the interim
program. We anticipate that manufacturers that choose to build diesel
vehicles for the final Tier 2 standards will adopt aftertreatment
technologies such as NO_X adsorber catalysts and continuously
regenerating particulate traps to meet Tier 2 requirements. We issued
an Advanced Notice of Proposed Rulemaking to seek input on potential
diesel fuel quality changes on May 13, 1999 (64 FR 26142). We
anticipate issuing a Notice of Proposed Rulemaking to reduce the sulfur
limit on diesel fuel in the spring of 2000 followed by a final rule in
late 2000. Our goal in that rulemaking is to have low sulfur diesel
fuel available which will allow diesel vehicles to meet the Tier 2
standards, within the bin structure, by the time the Tier 2 standards
are required for the entire fleet.
---------------------------------------------------------------------------

\62\ The interim PM standard in this new bin, which represents a
reduction from the NLEV PM standards, should be feasible without
aftertreatment. The technologies needed to meet the PM standard we
proposed for this bin would likely have required low sulfur diesel
fuel, which may not be widely available during the interim program.
This change is also discussed in section V.A.

---------------------------------------------------------------------------

[[Page 6740]]

Today, diesels comprise less than one-half of one percent of all
LDV/LDT sales. While this is a small fraction, the potential exists for
diesels to gain a considerable market share in the future. All one need
do is review the dramatic increase in recent years of diesel engine use
in the lightest category of heavy duty vehicles (8500-10,000 pounds
GVWR) to see the potential for significant diesel engine use in LDTs,
and perhaps LDVs, in the future. Just ten years ago, diesels made up
less than 10 percent of this class of vehicles. In 1998, this fraction
approached 50 percent.
The potential impact of large-scale diesel use in the light-duty
fleet underscores the need for the same standards to apply to diesels
as other vehicles. Given the health concerns associated with diesel PM
emissions (see Section III. above), we believe that it is prudent to
address PM emissions from diesel LDVs and LDTs while their numbers are
relatively small. In this way the program can minimize the PM impact
that would accompany significant growth in this market segment while
allowing manufacturers to incorporate low-emission technology into new
light-duty diesel engine designs.
4. Key Elements of the Vehicle Program
The previous subsections IV.B.-1.2. and 3. provide an overview of
the Tier 2 vehicle program and the two key principles it is built on.
This subsection elaborates on the major vehicle-related elements of
today's rule. Later in this preamble, Section V.A. discusses the rest
of the vehicle provisions.
a. Basic Exhaust Emission Standards and ``Bin'' Structure
Our final Tier 2 program contains a basic requirement that each
manufacturer meet, on average, a full useful life NO_X
standard of 0.07 g/mi for all its Tier 2 LDVs and LDTs. Manufacturers
will have the flexibility to choose the set of standards that a
particular test group \63\ of vehicles must meet. For a given test
group of LDVs or LDTs, manufacturers will select a set of full useful
life \64\ standards from the same row (``emission bin'' or simply
``bin'') in Table IV.B.-4. below. Each bin contains a set of individual
NMOG, CO, HCHO, NO_X, and PM standards. For technology
harmonization purposes, our proposed emission bins include or otherwise
cover all of those adopted in California's LEV II program.\65,\\66\
---------------------------------------------------------------------------

\63\ A ``test group'' is the basic classification unit for
certification of light-duty vehicles and trucks under EPA
certification procedures for the CAP2000 program. ``Test group'' is
a broader classification unit than ``engine family'' used prior to
the implementation of the CAP2000 program. We discuss the CAP2000
program in more detail in section V.A.9. of this preamble.
\64\ The regulatory ``useful life'' value for Tier 2 vehicles is
specifically addressed in Section V.A.2. of this preamble. Full
useful life will be 10 years or 120,000 miles for all vehicles
except LDT3s and LDT4s, for which it is 11 years or 120,000 miles.
Intermediate useful life, where standards are applicable, is 5 years
or 50,000 miles.
\65\ EPA's current standards for Clean Fuel Vehicles are less
stringent than the Tier 2 standards. See 40 CFR 88.104-94. The Tier
2 standards will supercede the current CFV standards, and the Agency
intends to undertake a rulemaking to revise the CFV standards
accordingly.
\66\ In some cases our bins do not match California's exactly,
because they have higher NMOG standards. These bins ``cover'' the
California bin in that a vehicle certified to the California
standards will comply with the standards in these bins.
---------------------------------------------------------------------------

In the NPRM, we proposed that interim vehicles and Tier 2 vehicles
(except for those Tier 2 vehicles in the lowest bins) would also have
to meet intermediate useful life standards, i.e., standards that apply
for 5 years or 50,000 miles. We are finalizing these intermediate
useful life standards as proposed. Where we have added new full life
bins, we have included corresponding intermediate life bins as
appropriate. Our intermediate life standards are generally aligned with
California's, they only impact the higher bins, and we do not believe
they add substantial burden to the program. Further, they provide a
check on the allowed emission deterioration during the life of the
vehicle. For the final rule, we have made two changes involving
intermediate life standards. First, we are providing that diesel
vehicles, which will likely certify to bin 10 during the interim
program, may opt not to meet the intermediate life standards associated
with this bin. Low sulfur diesel fuel may be needed for diesels to meet
our interim intermediate life standards and it is not likely to be
widely available during the time frame of the interim program.
Secondly, for all vehicles, we are finalizing a provision that will
make intermediate life standards optional for any test group that is
certified to a full useful life of 150,000 miles. This provision is
described in more detail with other useful life issues in section V.B.

Table IV.B-4.--Tier 2 Light-Duty Full Useful Life Exhaust Emission Standards
[Grams per mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin No. NO_X NMOG CO HCHO PM Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
10................................ 0.6 0.156/0.230.......... 4.2/6.4.............. 0.018/0.027.......... 0.08 (^a,b,c,d)
9................................. 0.3 0.090/0.180.......... 4.2.................. 0.018................ 0.06 (^a,b,e)
--------------------------------------------------------------------------------------------------------------------------------------------------------
The above temporary bins expire in 2006 (for LDVs and LLDTs) and 2008 (for HLDTs)
--------------------------------------------------------------------------------------------------------------------------------------------------------
8................................. 0.20 0.125/0.156.......... 4.2.................. 0.018................ 0.02 (^b,f)
7................................. 0.15 0.090................ 4.2.................. 0.018................ 0.02
6................................. 0.10 0.090................ 4.2.................. 0.018................ 0.01
5................................. 0.07 0.090................ 4.2.................. 0.018................ 0.01
4................................. 0.04 0.070................ 2.1.................. 0.011................ 0.01
3................................. 0.03 0.055................ 2.1.................. 0.011................ 0.01
2................................. 0.02 0.010................ 2.1.................. 0.004................ 0.01
1................................. 0.00 0.000................ 0.0.................. 0.000................ 0.00
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Bin deleted at end of 2006 model year (2008 for HLDTs).
\b\ The higher temporary NMOG, CO and HCHO values apply only to HLDTs and expire after 2008.
\c\ An additional temporary higher bin restricted to MDPVs is discussed in section IV.B.4.g.
\d\ Optional temporary NMOG standard of 0.280 g/mi applies for qualifying LDT4s and MDPVs only.
\e\ Optional temporary NMOG standard of 0.130 g/mi applies for qualifying LDT2s only, see text.
\f\ Higher temporary NMOG standard is deleted at end of 2008 model year.

[[Page 6741]]

Table IV.B.-5.--Light-Duty Intermediate Useful Life (50,000 Mile) Exhaust Emission Standards
[Grams per mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin No. NO_X NMOG CO HCHO PM Comments
--------------------------------------------------------------------------------------------------------------------------------------------------------
10................................ 0.4 0.125/0.160.......... 3.4/4.4.............. 0.015/0.018.......... (\a,b,c,d,f,h\)
9................................. 0.2 0.075/0.140.......... 3.4.................. 0.015................ (\a,b,e,h\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
The above temporary bins expire in 2006 (for LDVs and LLDTs) and 2008 (for HLDTs)
--------------------------------------------------------------------------------------------------------------------------------------------------------
8................................. 0.14 0.100/0.125.......... 3.4.................. 0.015................ (\b,g,h\)
7................................. 0.11 0.075................ 3.4.................. 0.015................ (\h\)
6................................. 0.08 0.075................ 3.4.................. 0.015................ (\h\)
5................................. 0.05 0.075................ 3.4.................. 0.015................ (\h\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes:
\a\ Bin deleted at end of 2006 model year (2008 for HLDTs).
\b\ The higher temporary NMOG, CO and HCHO values apply only to HLDTs and expire in 2008.
\c\ An additional higher temporary bin restricted to MDPVs is discussed in section IV.B.4.g.
\d\ Optional temporary NMOG standard of 0.195 g/mi applies for qualifying LDT4s and MDPVs only.
\e\ Optional temporary NMOG standard of 0.100 g/mi applies for qualifying LDT2s only, see text.
\f\ Intermediate life standards are optional for diesels certified to bin 10.
\g\ Higher temporary NMOG value deleted at end of 2008 model year.
\h.\ Intermediate life standards are optional for any test group certified to a 150,000 mile useful life (if credits are not claimed).

Under a ``bins'' approach, a manufacturer may select a set of
emission standards (a bin) to comply with, and a test group must meet
all standards within that bin. Ultimately, the manufacturer must also
ensure that the emissions of a targeted pollutant--NO_X in
this case--from all of its vehicles taken together meet a ``corporate
average'' emission standard. This corporate average emission standard
ensures that a manufacturer's production yields the required overall
emission reductions. (See Section IV.B.-4.c. below for more discussion
of the corporate average NO_X standard.)
In addition to the Tier 2 standards described above, we are also
finalizing an interim average NO_X standard derived from the
LDV/LDT1 NLEV program to cover all non-Tier 2 LDVs and LLDTs during the
Tier 2 phase-in. We are finalizing a separate interim average
NO_X standard for HLDTs. As in the Tier 2 program,
manufacturers will select bins from Table IV.B.-4 to use to comply with
the interim standards. Bins with NO_X values at or above 0.07
g/mi also have associated intermediate life standards which are shown
in Table IV.B.-5. (We describe the interim standards in detail in
Section IV.B.4.e. below.)

i. Why Are We Including Extra Bins?

Compared to the CalLEV II program, our Tier 2 proposal included
additional bins. The California program contains no bins that will
allow NO_X levels above the 0.07 g/mi level. Therefore, under
the California program, no engine family can be certified above 0.07 g/
mi, even with the application of offsetting credits. We proposed to add
two bins (with NO_X values of 0.15 and 0.20) above the 0.07
bin and another below (with a NO_X value of 0.04) to provide
manufacturers with additional flexibility. Based upon comments received
from the Alliance and others that additional bins provide important
added flexibility, we are finalizing a total of three bins above the
LEV level (the additional bin has a NO_X value of 0.10 g/mi)
and are adding one more below the LEV level (this additional bin has a
NO_X value of 0.03 g/mi). Due to the NO_X averaging
requirement of this rule, these bins will not result in any increase in
NO_X emissions. Further, these bins will address concerns
raised by some that a wider variety of bins, and bins with higher
NO_X values, are needed to avoid a situation where the Tier 2
program discourages the development of advanced technology high fuel
economy vehicles, which may, at least in their earliest years, have
NO_X emissions higher than more conventional vehicles.
In our NPRM we proposed that during the Tier 2 phase-in years
(through 2006 for LDV/LLDTs and 2008 for HLDTs), bins from the
applicable interim program would be available to enhance the
flexibility of the program by providing manufacturers with additional
bins having NO_X standards above 0.07 g/mi. In the NPRM, we
showed the interim bins in separate tables for LDV/LLDTs and HLDTs.
There was considerable overlap across the two tables and with the Tier
2 bins. In this final rule, we have consolidated the interim bins and
the Tier 2 bins into one table for simplicity and ease of reference.
The interim programs for non-Tier 2 vehicles are described in detail in
section IV.B.4.e.
While some commenters were concerned about the existence of bins
above NO_X = 0.07 g/mi, we believe that the additional higher
bins actually provide incentive for manufacturers to produce vehicles
below 0.07 g/mi of NO_X. We believe this incentive exists
because manufacturers will have some vehicles (especially larger LDTs)
that they might find more cost effective to certify to levels above the
0.07 g/mi average standard. However, to do this they will have to
offset those vehicles in our NO_X averaging system with
vehicles certified below 0.07 g/mi. The bins at NO_X = 0.04
g/mi and NO_X = 0.03 g/mi will provide greater opportunity to
do this. Thus, the extra bins serve two purposes; they provide
additional flexibility to manufacturers to address technological
differences and costs, and they provide those manufacturers with
incentives to produce cleaner vehicles and thus advance emission
control technology.
We are finalizing a bins approach with the bins shown in Tables
IV.B.4 and 5 to provide adequate and appropriate emission reductions
and manufacturer flexibility. This structure will help to accelerate
technological innovation. We requested comment on whether we should
include up to two additional bins between NO_X = 0.07 and
NO_X = 0.15. Based upon manufacturer comment, we have added
an additional bin (bin 6 ) with NO_X = 0.10. This bin will
provide greater flexibility for manufacturers who may find it more
cost-effective to produce some vehicles slightly above 0.07 but have
difficulties meeting a 0.07 g/mi average NO_X standard if
they must certify them to a NO_X level of 0.15 g/mi.
We requested comment on whether our Tier 2 bin in the NPRM with
NO_X = 0.20 (our final bin 8) should be eliminated when the
Tier 2 phase-in is completed (after 2007 for LDV/LLDTs

[[Page 6742]]

and after 2009 for HLDTs). Numerous commenters argued that our highest
bins were too lenient. Comments from manufacturers were opposed to
eliminating bin 8 and we see little downside to having bins higher than
the 0.07 NO_X standard, given that, for all of the vehicles
that will use this bin, manufacturers will have to offset the excess
emissions by selling vehicles certified below 0.07 g/mi NO_X
under the averaging requirement. Thus, we are retaining bin 8.
b. The Program Will Phase in the Tier 2 Vehicle Standards Over Several
Years

i. Primary Phase-In Schedule

We are finalizing as proposed our plan to phase in the Tier 2
standards for LDV/LLDTs over a four year period beginning in 2004 and
we are also finalizing as proposed a delayed two year phase-in
beginning in 2008 for HLDTs. These phase-in schedules are shown in
Table IV.B.-2 and are also shown separately in Tables IV.B.-6 and 7. We
believe the flexibility of this dual phase-in approach is appropriate
because the Tier 2 program will encompass all light-duty vehicles and
trucks and will result in widespread applications of upgraded and
improved technology across the fleet. The program will require
research, development, proveout, and certification of all light-duty
models, and manufacturers may need longer lead time for some vehicles,
especially HLDTs. Also, manufacturers may wish to time compliance with
the Tier 2 standards to coincide with other changes such as the roll
out of new engines or new models. In order to begin the introduction of
very clean vehicles as soon as possible while avoiding imposing
unnecessary inefficiencies on vehicle manufacturers, we believe this
practical but aggressive phase-in schedule effectively balances air
quality, technology, and cost considerations.
In each year, manufacturers will have to ensure that the specified
fraction of their U.S. sales: \67\
---------------------------------------------------------------------------

\67\ For Tier 2 vehicles (and for interim vehicles), the term
``U.S. sales'' means, for a given model year, those sales in states
other than California and any states that have adopted the
California program.
---------------------------------------------------------------------------

Meets Tier 2 standards for exhaust emissions, including
Supplemental Federal Test Procedure (SFTP) standards (discussed in
Section V.A.-3. below);
Meets Tier 2 standards for evaporative emissions
(discussed in Section IV.B.-4.f. below); and
Meets the corporate average Tier 2 NO_X
standard.
Manufacturers will have to meet the Tier 2 exhaust requirements
(i.e., all the standards of a particular bin plus the SFTP standards)
using the same vehicles. Vehicles not covered by the Tier 2 standards
during the phase-in years (2004-2008) will have to meet interim
standards described in Section IV.B.4.e. below and the existing
evaporative emission as well as the applicable SFTP standards.
Manufacturers can elect to meet the percentage phase-in
requirements for evaporative and exhaust emissions using two different
sets of vehicles. We believe that because of interactions between
evaporative and exhaust control strategies, manufacturers will
generally address the Tier 2 evaporative phase-in with the same
vehicles that they use to meet the exhaust phase-in. However, the
primary focus of today's proposal is on exhaust emissions, and the
flexibility for manufacturers to use different sets of vehicles in
complying with the phase-in schedule for evaporative standards and for
the exhaust standards will have no environmental down side that we are
aware of. It is possible that some exhaust emission improvements might
even occur sooner than they otherwise would if a manufacturer is able
to move ahead with the roll-out of a model with cleaner exhaust
emissions without having to wait for the development of suitable
evaporative controls to be completed for that model.

Table IV.B.-6.--Primary Phase-In Schedule for Sales of Tier 2 LDVs and
LLDTs
------------------------------------------------------------------------
Required
percentage of
light-duty
Model year vehicles and
light light-
duty trucks
(percent)
------------------------------------------------------------------------
2004.................................................... 25
2005.................................................... 50
2006.................................................... 75
2007.................................................... 100
------------------------------------------------------------------------

Table IV.B.-7.--Primary Phase-In Schedule for Sales of Tier 2 HLDTs
------------------------------------------------------------------------
Required
percentage of
Model year heavy light-
duty trucks
(percent)
------------------------------------------------------------------------
2008.................................................... 50
2009.................................................... 100
------------------------------------------------------------------------

We are finalizing our proposed phase-in approach, in which vehicle
sales will be determined according to the ``point of first sale''
method outlined in the NLEV rule. Vehicles with points of first sale in
California or a state that has adopted the California LEV II program
(if any) will be excluded from the calculation. The ``point of first
sale'' method recognizes that most vehicle sales will be to dealers and
that the dealers' sales will generally be to customers in the same
geographic area. While some sales to California residents (or residents
of states that adopt California standards) may occur from other states
and vice-versa, we believe these sales will be far too small to have
any significant impact on the air quality benefits of the Tier 2
program or the manufacturers' ability to demonstrate compliance.

ii. Alternative Phase-In Schedule

We are finalizing, as proposed, that manufacturers may introduce
vehicles earlier than required to earn the flexibility to make
offsetting adjustments, on a one-for one basis, to the phase-in
percentages in later years. However, they will still need to reach 100%
of sales in the 2007 model year (2009 for HLDTs). Manufacturers will
have the option to use this alternative to meet phase-in requirements
for LDV/LLDTs and/or HLDTs. They can use separate alternative phase-in
schedules for exhaust and evaporative emissions, or an alternative
phase-in schedule for one set of standards and the primary (25/50/75/
100% or 50%/100%) schedule for the other.
Under these alternative schedules, manufacturers will have to
introduce vehicles that meet or surpass the 0.07 g/mi Tier 2
NO_X average standard before they are required to do so, or
else introduce vehicles that meet or surpass the 0.07 standard in
greater quantities than required. Alternative phase-in schedules
essentially credit the manufacturer for its early or accelerated
efforts and allow the manufacturer greater flexibility in subsequent
years during the phase-in. Thus, the alternative phase-in schedule
provisions provide incentive and flexibility to manufacturers to
introduce Tier 2 vehicles before 2004 (or 2008 for HLDTs).
As outlined in the NPRM, an alternative phase-in schedule will be
acceptable if it passes a specific mathematical test. We have designed
the test to provide manufacturers benefit from certifying to the Tier 2
standards early while ensuring that significant numbers of Tier 2
vehicles are introduced during each year of the alternative phase-in
schedule. To test an alternative schedule, a manufacturer

[[Page 6743]]

must sum its yearly percentages of Tier 2 vehicles beginning with model
year 2001 and compare the result to the sum that results from the
primary phase-in schedule. If an alternative schedule scores as high or
higher than the base option, then the alternative schedule is
acceptable. The mathematical technique to evaluate alternative phase-in
schemes is somewhat similar to that used in our NLEV rule and in
California rules.
For LDV/LLDTs, the final sum of percentages must equal or exceed
250--the sum that results from a 25/50/75/100 percent phase-in. For
example, a 10/25/50/65/100 percent phase-in that begins in 2003 will
have a sum of 250 percent and is acceptable. In this example, assuming
constant levels of production, each Tier 2 vehicle sold early (i.e. in
2003) will permit the manufacturer to sell one less Tier 2 vehicle in
the last phase-in year (2006). A 10/20/40/70/100 percent phase-in that
begins the same year has a sum of 240 percent and is not acceptable.
For HLDTs, the sum must equal or exceed 150 percent.
To ensure that significant numbers of Tier 2 vehicles are
introduced in the 2004 time frame, manufacturers will not be permitted
to use alternative phase-in schedules that delay the implementation of
the Tier 2 LDV/LLDT requirements, even if the sum of the phase-in
percentages meets or exceeds 250. Such a situation could occur if a
manufacturer delayed implementation of its Tier 2 production until 2005
and began a 75/85/100 percent phase-in that year. To protect against
this possibility, we are finalizing the proposed requirement that for
any alternative phase-in schedule, a manufacturer's phase-in
percentages from the 2004 and earlier model years sum to at least 25%.
In the final rule we are including an additional measure of flexibility
to the requirements for alternative phase-in schedules. We will permit
manufacturers to achieve a 2004 phase-in of less than 25%, but no less
than 20%, provided that in 2005 they make up the shortfall in a two-
for-one manner. So, as an example, a manufacturer that phased in 5% in
2003 and 15% in 2004 would achieve a total of 20% through the 2004
model year and would need to comply with Tier 2 requirements for at
least 60% of its LDV/LLDTs in 2005. We believe that this flexibility is
appropriate because the required response for 2005 model year vehicles
more than makes up for the environmental loss from the 2004 model year
vehicles.
We requested comment on whether alternative phase-in schedules
should be structured to permit manufacturers to extend phase in past
the final year of the primary phase-in schedule (2007 or 2009). While
the Alliance proposal and comments clearly support phase-ins that run
past 2007 and 2009, other commenters were opposed to any extensions of
the phase-in period. In fact most commenters who addressed the length
of the phase-in indicated, as previously discussed, that the phase-in
for HLDTs should be moved ahead to 2007 to coincide with LDV/LLDTs. We
are not finalizing any provisions that will permit alternative phase-in
schedules to provide additional time for manufacturers to meet any
final 100% compliance year.
In the NPRM, we pointed out that phase-in schedules, in general,
add little flexibility for manufacturers with limited product offerings
because a manufacturer with only one or two test groups can not take
full advantage of a 25/50/75/100 percent or similar phase-in. For
manufacturers meeting EPA's definition of ``small volume
manufacturer,'' we proposed to exempt those manufacturers from the
phase-in schedules and require them to simply comply with the final
100% compliance requirement. We are finalizing this provision for small
volume manufacturers. This provision is only intended to apply to small
volume manufacturers and not to small test groups of larger
manufacturers.
For larger manufacturers having a limited product line, we
recognize that our phase-in schedule may lack flexibility, however, we
are not including any provisions to address this issue as we are for
small volume manufacturers because we do not believe these
manufacturers need the relief and we do not want to sacrifice any air
quality benefits of the program.
c. Manufacturers Will Meet a ``Corporate Average'' NO_X
Standard
While the manufacturer will be free to certify a test group to any
applicable bin of standards in Table IV.B.-2, it will have to ensure
that the sales-weighted average of NO_X standards from all of
its test groups of Tier 2 vehicles meet a full useful life standard of
0.07 g/mi.\68\ Using a calculation similar to that for the NMOG
corporate average standard in the California and NLEV programs,
manufacturers must determine their compliance with the corporate
average NO_X standard at the end of the model year by
computing a sales weighted average of the full useful life
NO_X standards from each bin. Manufacturers must use the
following formula:
---------------------------------------------------------------------------

\68\ For interim vehicles, this average NO_X standard
will be 0.20 for HLDTs and 0.30 for LDV/LLDTs. Compliance with these
interim average standards will be calculated in the same manner as
compliance with the 0.07 standard.
[GRAPHIC] [TIFF OMITTED] TR10FE00.004

Manufacturers must exclude vehicles sold in California or states
adopting California LEV II standards from the calculation. As indicated
above, manufacturers must compute separate NO_X averages for
LDV/LLDTs and HLDTs through model year 2008.
The corporate average NO_X standards of the primary Tier
2 program and the interim programs for LDV/LLDTs and HLDTs will ensure
that expected fleet-wide emission reductions are achieved. At the same
time, the corporate average standards allow us to permit the sale of
some vehicles above the levels of the average standards to address the
greater technological challenges some vehicles face and to reduce the
overall costs of the program. We discuss how manufacturers can
generate, use, buy and sell NO_X credits under the interim
and Tier 2 programs in the next subsection.
Given the corporate average NO_X standards, we do not
believe a corporate average NMOG standard as used by California is
essential because meeting the corporate average NO_X standard
will automatically bring the NMOG fleet average to approximately 0.09
g/mi or below.
d. Manufacturers Can Generate, Bank, and Trade NO_X Credits

i. General Provisions

As mentioned in the Overview above, we are finalizing our proposal
that manufacturers with year-end corporate average NO_X
emissions for their Tier 2 vehicles below 0.07 g/mi can generate Tier 2
NO_X credits. Credits can be saved (banked) for use in a
future model year

[[Page 6744]]

or for trading (sale) to another manufacturer. Manufacturers can use
credits if their corporate average NO_X emissions are above
0.07 g/mi.
As proposed, the Tier 2 standards will apply regardless of the fuel
the vehicle is designed for, and there will be no restrictions on
averaging, banking or trading of credits across vehicles of different
fuel types. Consequently, a gasoline fueled LDV might help a
manufacturer generate NOx credits in one year that could be banked for
the next year when they could be used to average against NO_X
emissions of a diesel fueled LDT within the appropriate averaging
structure.
Because of the split phase-in and the different interim programs we
are finalizing for the two different groups of vehicles (LDV/LLDTs and
HLDTs), we are also finalizing the proposed requirement that
manufacturers compute their corporate Tier 2 NO_X averages
separately for LDV/LLDTs and HLDTs through 2008. As we proposed, credit
exchanges between LDVs/LLDTs and HLDTs will not be allowed nor will
credit exchanges across the interim programs or between the interim
programs and the final Tier 2 program be allowed. These restrictions
will end with the 2009 model year at which time both phase-ins and all
interim standards will have ended and the program will permit free
averaging across all Tier 2 vehicles. As noted in the NPRM, we are
concerned that allowing cross-trading between interim and Tier 2
vehicles will reduce the expected benefits of the program and delay
fleet turnover to Tier 2 emission levels. For this reason we did not
propose and are not finalizing to permit such exchanges.

ii. Averaging, Banking, and Trading of NO_X Credits Fulfills
Several Goals

We explained in the NPRM why we believe the provisions for
averaging, banking, and trading of NO_X credits (ABT) will be
valuable. In short:
An ABT program is an important factor that EPA takes into
consideration in setting emission standards that are appropriate under
section 202 of the Clean Air Act. ABT allows us to consider a more
stringent emission standard than might otherwise be appropriate under
the CAA, since ABT reduces the cost and improves the technological
feasibility of achieving the standard;
ABT enhances the technological feasibility and cost
effectiveness of the proposed standard and allows the standard to be
attainable earlier than might otherwise be possible;
ABT provides manufacturers with additional product
planning flexibility and the opportunity for a more cost effective
introduction of product lines;
ABT creates incentive for early introduction of new
technology, allowing certain engine families to act as trail blazers
for new technology;
We view the ABT provisions in today's rule as environmentally
neutral because the use of credits by some vehicles is offset by
credits generated by other vehicles. However, when coupled with the new
standards, ABT will have environmental benefits because it allows the
new standards to be implemented earlier than would otherwise be
appropriate.

iii. How Manufacturers Can Generate and Use NO_X Credits

Manufacturers will determine their year-end corporate average
NO_X emission level by computing a sales-weighted average of
the NO_X standard from each bin to which the manufacturer
certifies any LDVs or LDTs. Tier 2 NO_X credits will be
generated when a manufacturer's average is below the 0.07 gram per mile
corporate average NO_X standard, according to this formula:

NO_X Credits=(0.07 g/mi-Corporate Average
NO_X) x Sales

The manufacturer can use these NO_X credits in future
years if its corporate NO_X average is above 0.07, or it can
trade (sell) the credits to other manufacturers. Tier 2 credits can be
generated via this mechanism beginning in the first phase-in year,
i.e., 2004 for LDV/LLDTs and 2008 for HLDTs. The use of NO_X
credits will not be permitted to address Selective Enforcement Auditing
or in-use testing failures.
The enforcement of the NO_X averaging standard will occur
through the vehicle's certificate of conformity. A manufacturer's
certificate of conformity will be conditioned upon compliance with the
averaging provisions. The certificate will be void ab initio if a
manufacturer fails to meet the corporate average NO_X
standard and does not obtain appropriate credits to cover its shortfall
in that model year or in the next three model years (see deficit
carryforward provision below). Manufacturers will need to track their
certification levels and sales unless they produce only vehicles
certified to bins containing NO_X levels of 0.07 g/mi or
below and do not plan to bank NO_X credits.

iv. Manufacturers Can Earn and Bank Credits for Early NO_X
Reductions

In the NPRM, we proposed that to the extent a manufacturer's
corporate average NO_X level of its ``early Tier 2'' vehicles
was below 0.07 g/mi, the manufacturer could bank NO_X credits
for later use. We recognize (and the comments assert) that this
provision may be lightly used, because it requires a large reduction
from prior standards to produce any credits. However, our goal is to
bring vehicles to Tier 2 levels as quickly as possible and we are
concerned that any other approach could provide credits for reductions
manufacturers would make relatively easily from previous, higher
standards. Such credits would then be used to delay the impact of the
0.07 g/mi NO_X standard. Further, we believe that our
provision for alternative phase-in schedules provides what is
essentially a supplemental, or perhaps even primary, early banking
program, in that it permits manufacturers to trade-off earlier phase-in
percentages for later phase-in percentages. To provide manufacturers
with greater flexibility and with incentives to certify, produce and
sell Tier 2 vehicles as early as possible, we are finalizing the
alternative phase-in provisions. (See IV.B.4.b.ii above.) Under such
schedules, a manufacturer can certify vehicles to an average
NO_X level of 0.07 g/mi or below in years prior to the first
required phase-in year and then phase its remaining vehicles in over a
more gradual phase-in schedule that will still lead to 100% compliance
by 2007 (2009 for HLDTs).
Thus, we are finalizing our provision for early NO_X
credits essentially as proposed. To the extent that a manufacturer's
corporate average NO_X level of its ``early Tier 2'' vehicles
is below 0.07 g/mi, the manufacturer can bank NO_X credits
for later use. Manufacturers will compute these early credits by
calculating a sales-weighted corporate average NO_X emission
level of their Tier 2 vehicles, as in the basic Tier 2 program
described above. In section IV.B.4.d.vii. below, we describe provisions
we are adding to the final rule that will enable manufacturers to
generate extra credits from vehicles certified to very low levels. In
addition to encouraging production of very clean vehicles, these
provisions, which apply beginning in 2001, will enhance the abilities
of manufacturers to generate early credits.
Early Tier 2 credits will have all the same properties as credits
generated by vehicles subject to the primary phase-in schedule. We
proposed that these credits could not be used in the NLEV, Tier 1 or
interim program for non-Tier 2 vehicles in any way. We are finalizing
this restriction as proposed. We are also finalizing as proposed that
the NMOG emissions of these vehicles (LDVs and LLDTs only) can be used
in the

[[Page 6745]]

calculation of the manufacturer's corporate average NMOG emissions
under NLEV through 2003.
To provide manufacturers with maximum flexibility in the period
prior to 2004, when LDV/LLDT useful lives will still be at 100,000
miles, we proposed and are finalizing that manufacturers may choose
between the Tier 2 120,000 mile useful life or the current 100,000 mile
useful life requirement for early Tier 2 LDV/LLDTs. (HLDTs already have
a 120,000 mile useful life.) Early LDV/LLDT NO_X credits for
100,000 mile useful life vehicles will have to be prorated by 100,000/
120,000 (5/6) so that they can be properly applied to 120,000 mile Tier
2 vehicles in 2004 or later.
We proposed to restrict early banking of HLDT Tier 2 NO_X
credits to the four year period from 2004-2007. This restriction was
due to a concern about excessive credits generation if a longer credit
generation period was available. Based on our review of the comments
and from reconsideration of the restrictive nature of our approach for
early credits, we are much less concerned that allowing generation of
early HLDT Tier 2 credits in years prior to 2004 will result in
excessive credits. Prior to 2004, manufacturers will only be required
to meet the Tier 1 standards which are much higher than the final Tier
2 standards. Manufacturers will have to make large cuts in emissions to
bank the small amount of credits offered by our early banking
provision. Further, we recognize that vehicles that meet the Tier 2
standards early provide an environmental benefit, and the earlier that
benefit occurs, the earlier that areas can use such benefits to reach
or come close to attainment. Lastly, we believe it is appropriate to
match the period of early credit generation with the years in which we
will permit alternative phase-in schedules. Consequently, we are
finalizing our provisions for early banking such that manufacturers may
bank early Tier 2 NO_X credits in model years 2001-2007.
We recognize that vehicles generating early Tier 2 NO_X
credits may be doing so without the emissions benefit of low sulfur
fuel, and thus these vehicles may not achieve the full in-use emission
reduction for which they received credit. When these credits are used
to permit the sale of higher-emitting vehicles, there may be a net
increase in emissions. For the most part, this is a problem anyway,
since NLEV vehicles are also sensitive to gasoline sulfur. We believe
that the benefits of early introduction of Tier 2 technology described
above are significant enough that they are worth the risk of some
emission losses that might occur if and when the early credits are
used. Also, we believe that some fuel sulfur reductions will occur
prior to 2004 as refiners upgrade their refineries or bring new
refining capacity on stream in anticipation of the 2004 requirements
and take advantage of the phase-in proposed in the gasoline sulfur ABT
program (described in Section IV.C. below).

v. Tier 2 NO_X Credits Will Have Unlimited Life

We discussed in the preamble to the NPRM why we did not propose to
apply the California schedule of discounting unused credits adopted for
NMOG credits in the NLEV program. This schedule serves to limit credit
life throughout the program by reducing unused credits to 50, 25 and 0
percent of their original number at the end of the second, third and
fourth year, respectively, following the year in which they were
generated. We agree that such a scheme may be appropriate in the
California program with its declining NMOG average standard, but in the
federal program, once the phase-in period ends in model year 2009, all
LDVs and LDTs will comply on average with a fixed Tier 2 NO_X
standard.
Credits allow manufacturers flexibility to meet standards cost
effectively and to address unexpected shifts in sales mix. When matched
with a NO_X average standard, credits provide flexibility
constrained by the requirement that all vehicles, on average, must
comply with a fixed standard. Defined bins of standards prevent any one
vehicle from having extremely high emissions, while the need to offset
higher vehicles with lower vehicles to meet an average NO_X
standard prevents large numbers of vehicles from utilizing the higher
bins.
We requested comment in the NPRM on the need for discounting of
credits or limits on credit life and what those discount rates or
limits, if any, should be. The 0.07 NO_X emission standard in
the Tier 2 program is quite stringent and does not present easy
opportunities to generate credits. The degree to which manufacturers
invest the resources to achieve extra NO_X reductions
provides environmental benefit for years to come and it is appropriate
that the manufacturer get credits. We do not want to take measures to
reduce the incentive for manufacturers to bank credits nor do we want
to take measures to encourage unnecessary credit use. Consequently we
are finalizing our proposal that Tier 2 NO_X credits,
including early credits, have unlimited lives.

vi. NO_X Credit Deficits Can Be Carried Forward

When a manufacturer has a NO_X deficit at the end of a
model year--that is, its corporate average NO_X level is
above the required corporate average NO_X standard--we
proposed that the manufacturer could carry that deficit forward into
the next model year. Such a carry-forward could only occur after the
manufacturer used any banked credits. If the deficit still existed and
the manufacturer chose not to or was unable to purchase credits, the
deficit could be carried over. At the end of that next model year,
according to our proposal, the deficit would need to be covered with an
appropriate number of NO_X credits that the manufacturer
generated or purchased. Any remaining deficit would be subject to an
enforcement action. To prevent deficits from being carried forward
indefinitely, the manufacturer would not be permitted to run a deficit
for two years in a row.\69\
---------------------------------------------------------------------------

\69\ Because of the limited duration of the interim programs, we
proposed that a manufacturer could carry a credit deficit in the
interim program forward until the 2006 model year (2008 for HLDTs).
The interim program, in its entirety, lasts only five years and
therefore we saw little risk of prolonged deficits.
---------------------------------------------------------------------------

Manufacturers made the persuasive case that by the time they can
tabulate their average NO_X emissions for a particular model
year, the next model year is likely well underway and it is too late to
make calibration, marketing or sales mix changes to adjust that year's
credit generation. Therefore, based upon comments, we are finalizing a
modified approach to credit deficits such that a manufacturer having a
credit deficit in the interim or Tier 2 program can carry that deficit
forward for a total of three years, but the manufacturer must apply all
its available credits to that deficit on a one-for-one basis in each of
the first two succeeding model years. If the deficit is not covered by
the third model year, the manufacturer must apply credits at a rate of
1.2:1. No deficit may be carried into the fourth year. In order to
accommodate this modification to our proposal, we must also modify our
proposed provision that would have prevented manufacturers from running
a deficit in two consecutive model years so that deficits can not be
shifted from one year to the next and thus carried forward
indefinitely. Because we are permitting, in this final rule, deficits
to be carried forward for as long as three years we are finalizing that
manufacturers can not run a deficit in any year in which it is paying
off a deficit from a previous year. The effect of this provision is the
same as that in

[[Page 6746]]

the NPRM-- to keep manufacturers from shifting deficits forward
indefinitely.
We note that under our modified final approach, manufacturers will
have the flexibility to carry deficits from the interim program forward
into the final Tier 2 program. This feature is likely to be used only
in an extreme situation since the Tier 2 credits needed to offset the
interim credit deficit will be more difficult to generate.
Consequently, we do not believe this provision is inconsistent with our
approach of segregating interim and Tier 2 credits. In fact,
manufacturers electing to cover an interim credit deficit with Tier 2
credits will likely have to accelerate the introduction of Tier 2
vehicles to get the necessary credits to cover the deficit.
We are finalizing that small volume manufacturers may not use the
credit deficit carryforward provision until they have been in
compliance with the relevant average NO_X standard for one
model year. In section V of this preamble we explain that we are not
requiring small volume manufacturers to comply with intermediate phase-
in requirements under our interim or Tier 2 phase-ins. Rather, they
will just have to comply for all of their vehicles in the last phase-in
year. Because they do not have to comply with intermediate phase-in
requirements, small volume manufacturers effectively get more time to
comply (as much as three years). We do not want to create a situation
where they could get even more time to comply by using the credit
deficit carryforward provision.

vii. Encouraging the Introduction of Ultra-Clean Vehicles

We requested comment in the NPRM as to whether we should provide
additional NO_X credits for vehicles that certify to very low
levels. We stated in the NPRM that we believe it is appropriate to
provide inducements to manufacturers to certify vehicles to very low
levels and that these inducements may help pave the way for greater
and/or more cost effective emission reductions from future vehicles. We
believe it is important in a rule of this nature to provide extra
incentive to encourage manufacturers to produce and market very clean
vehicles. We believe this is especially important in the earliest years
of the program when manufacturers must make resource commitments to
technologies and vehicle designs that will have multi-year life spans.
We believe this program provides a strong incentive for manufacturers
to maximize their development and introduction of the best available
vehicle/engine emission control technology, and this in turn provides a
stepping stone to the broader introduction of this technology soon
thereafter. Early production of cleaner vehicles enhances the early
benefits of our program and vehicles certified to these lowest bins
produce not just lower NO_X but also lower NMOG, CO and HCHO
emissions. If a manufacturer can be induced to certify to a lower bin
by the promise of reasonable extra credits, the benefits of that
decision to the program may last for many years.
We are finalizing provisions to permit manufacturers, at the
beginning of the program, to weight LDV/Ts certified to the lowest two
bins more heavily when calculating their fleet average NO_X
emissions. Under this provision, which applies through the 2005 model
year, manufacturers may apply a multiplier to the number of LDV/Ts sold
that are certified to bins 1 and 2 (ZEVs and SULEVs in California
terms). This adjusted number will be used in the calculation of fleet
average NO_X emissions for a given model year and will allow
manufacturers having vehicles certified to these bins to generate
additional credits (or use fewer credits) that year.
The multipliers that manufacturers may use are found in Table
IV.B.-8 below:

Table IV.B.-8.--Multipliers for Additional Credits for Bin 1 and 2 LDV/T
------------------------------------------------------------------------
Bin Model year Multiplier
------------------------------------------------------------------------
2................................. 2001, 2002, 2003, 1.5
2004, 2005.
1................................. 2001, 2002, 2003, 2.0
2004, 2005.
------------------------------------------------------------------------

e. Interim Standards

i. Interim Exhaust Emission Standards for LDV/LLDTs

The NLEV program referenced throughout this discussion is a
voluntary program in which all major manufacturers have opted to
produce LDVs and LLDTs to tighter standards than those required by
EPA's Tier 1 regulations. Under the NLEV program, manufacturers must
meet an NMOG average outside of California that is equivalent to
California's current intermediate-life LEV requirement--0.075 g/mi for
LDVs and LDT1s (0.10 g/mi for LDT2s). NLEV requirements apply only to
LDVs and LLDTs, not to HLDTs.
The NLEV program is effective beginning in the northeastern states
in 1999 and in the remaining states in 2001, except that the program
does not apply to vehicles sold in California or in states that adopted
California's LEV program. The program runs at least through model year
2003 and can run through model year 2005.
Under the Tier 2 phase-in we are finalizing today, not all LDV/
LLDTs covered under NLEV will be subject to Tier 2 standards in the
2004 to 2006 period. Without a program for full Tier 2 compliance in
2004 (i.e., because of the phase-in), these vehicles could revert to
Tier 1 standards. The NLEV program, moreover, is a voluntary program
that contains several provisions that restrict EPA's flexibility and
that could lead to a manufacturer or a covered Northeastern state
leaving the program in or prior to 2004. To resolve these concerns we
are finalizing the proposed interim program for all non-Tier 2 LDV/
LLDTs for the 2004-2006 model years. Our interim program will replace
the NLEV program, which will terminate at the end of 2003. The
transition from NLEV to the interim program should be smooth because
the interim program will employ several bins derived from the NLEV
standards for LDVs, LDT1s and LDT2s. The interim program will ensure
that all LDVs, LDT1s and LDT2s that are not certified to Tier 2 levels
during the 2004-2006 phase-in period remain at levels at least as
stringent, on average, as NLEV levels. The interim program will also
bring the emission standards for LDT2s more into line with those for
the LDVs and LDT1s by requiring that they be averaged under the same
NO_X standard rather than under separate standards as is the
case in the NLEV program.
In the NPRM, we included separate sets of bins for the interim
program and Tier 2 program. However, we indicated that manufacturers
could use either set for interim vehicles. In today's final rule we
have combined all bins into one table for simplicity. We have also
added two new bins having NO_X values of 0.03 g/mi and 0.10
g/mi.

[[Continued on page 6747]]

Notices For
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2007
2006
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2004
2003
2002
2001
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Control of Air Pollution From New Motor Vehicles: Tier 2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements

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