The Committee reiterated a recommendation from its Phase 1 report regarding the study of dieselization of Class 2b through 7 vehicles.  The Committee stated that diesel engines present an opportunity for incremental fuel efficiency gains.  The NAS Committee recommended that NHTSA conduct a study of Class 2b to 7 vehicles to consider the incremental fuel consumption reduction of diesels, the price of diesel versus gasoline, and the diesel advantage in durability.
As part of the Phase 2 NPRM analysis, the agencies evaluated many potential fuel efficiency and greenhouse gas reduction (FE/GHG) technologies for both gasoline and diesel fueled vehicles.  As will be discussed in detail in later responses, NHTSA sponsored research at Southwest Research Institute (SwRI) included simulations of baseline and projected Phase 2 FE/GHG technologies for Class 2b through 7 vehicles over a range of appropriate duty cycles. A HD pickup truck (Class 2b), the Dodge Ram 2500, was modeled using a 385-hp 6.7-liter diesel engine as the baseline.  The vehicle's baseline performance and the effectiveness of FE/GHG technologies with the diesel engine were compared over identical duty cycles to two gasoline engines, a 6.2-liter naturally aspirated gasoline V-8 and 3.5-liter turbocharged direct injection V-6, with their corresponding engine technologies. Similarly, two medium-duty trucks (Class 6), the Ford F-650 and Kenworth T-270, were modeled using a 300-hp 6.7-liter diesel engine as the baseline and compared to the two aforementioned medium-duty V-8 and V-6 gasoline engines.
Many of the diesel engine technologies evaluated in supporting Phase 2 research are currently available, proven, and on the path to increased penetration across the fleet.  Other technologies are still in development and looking for the opportunity to enter the mainstream production lifecycle.  For the latter, the agencies believe, as informed through the NPRM development research, that costs, reliability, durability, and clear user benefits are important when determining potential future technology applications to achieve attainable standards resulting in real-world reductions.  As identified in the proposal, the agencies considered these important factors when developing the proposed standards and, included in the analysis, are technologies that recognize the value of the current and future fleet dieselization.
However, the agencies recognize that there are valid reasons for why medium and heavy-duty vehicle purchasers sometimes choose gasoline engines over diesels.  Gasoline engines are generally lighter and less expensive than diesels, although they typically do not last as long in heavy-service.  For applications in which the vehicle is not expected to travel many miles each year, gasoline engines may be the best choice.  On the other hand, for applications in which the vehicle is expected to travel many miles each year, diesels can be a more appropriate choice.
  (c) What Kind of Analyses are the Agencies Doing on Upstream Emissions Related to Natural Gas?
The NAS Committee discussed the potential natural gas presents for reducing fuel consumption and GHG emissions in medium- and heavy-duty vehicles.  The Committee stated that while tailpipe emissions are often the most observable instance of fuel consumption and tailpipe emissions, the fuel production, distribution, and processing components of obtaining natural gas for use in vehicles also factors into any calculation of overall benefits derived from natural gas vehicles.  The Committee recommended that NHTSA, in coordination with EPA, begin to consider the well-to-wheel, life-cycle energy consumption and greenhouse emissions associated with different vehicle and energy technologies to ensure future rulemakings best accomplish their overall goals.
The agencies recognize that understanding the life-cycle implications of vehicle and energy technologies is important to ensure that the rulemaking accomplishes its overall goals.  In the Draft and Final Environmental Impact Statement (EIS) prepared for the 2017 and Later Model Year Light-Duty Vehicle GHG Emissions and CAFE Standards rulemaking, NHTSA introduced a literature synthesis of life-cycle environmental impacts of certain vehicle materials and technologies.  Consistent with that approach, in the Draft EIS for Phase 2, NHTSA has again provided a literature synthesis of life-cycle environmental impacts, focusing on the unique vehicle technologies for the HD sector and incorporating by reference the literature synthesis prepared for the MY 2017 and beyond CAFE Final EIS.  The Draft EIS also uses the GREET fuel-cycle model to assess upstream emissions from extraction, refining, and transportation of medium- and heavy-duty vehicle fuels.  This information in the Draft EIS informs both the agency and the public about the potential life-cycle implications of the various technologies under consideration in this rulemaking.  NHTSA invites comments on the Draft EIS and its literature synthesis of life-cycle environmental impacts.
EPA has also evaluated the lifecycle impact of heavy-duty trucks being fueled with natural gas in comparison to other heavy-duty trucks.  This analysis is presented in Section XI along with a discussion of projections for future use of natural gas by heavy-duty trucks.
  (d) How Have the Agencies Evaluated Aerodynamic Testing Methods for the Phase 2 Program?
With regard to aerodynamic devices, the NAS Committee reviewed aerodynamic test procedures related to evaluating aerodynamic effectiveness.  The Committee found that industry testing procedures can vary widely because of the precision of the standards themselves.    Further, the Committee found that fidelity of test results from coastdown procedures versus results from a powered on-track test is not known.  The Committee recommended that NHTSA and EPA evaluate the relative fidelities of the coast-down procedure and candidate powered procedures to define and optimum prescribed full-vehicle test procedure and process and validate the improved procedure against real world vehicle testing.  It also recommended that NHTSA and EPA assess whether adding yaw loads provides significantly increased value to the Cd result.  The Committee recommended providing updated test data to manufacturers to increase consumer confidence in the accuracy (and real-world applicability) of the testing measures as related to aerodynamic devices.[,]
The agencies have undertaken a coordinated research program to inform the Phase 2 certification test procedure for aerodynamic drag and tire rolling resistance.  The U.S. EPA and its contractors have evaluated coast down, constant speed, CFD, and scale wind tunnel testing for tractors and trailers.  The goals of this research effort were to: assess variability between test methods; assess how yaw impacts aerodynamic performance; evaluate correlation of different test methods one to another; assess the impact of different tractor/trailer design attributes on the test results; examine how differences between manufacturers' products impact aerodynamics; and measure Cd improvements from a variety of aerodynamic devices in combination and alone.  NHTSA and its contractors conducted simulation modeling to: evaluate aerodynamic drag and tire rolling resistance improvements in combination with other vehicle and engine technologies, and determine the impact of different duty cycles on aerodynamic drag performance.  Finally, EPA has conducted an analysis to determine whether or not adding yaw adjustments to the certification process improves the Cd result.  As a result, the agencies are proposing to add yaw adjustments to the certification process for tractors.  The agencies are disseminating the results of these test programs and conclusions at association meetings and public meetings such as SAE COMVEC.
Through the research programs described above, the agencies have evaluated aerodynamic data that better reflects real-world experience.  And, to the extent available, the agencies have collected aerodynamic performance data that reflect real-world experience.  This information has informed the Phase 2 proposal.  For example, in addition to the agencies are proposing to account for yaw in the aerodynamic assessment for Cd, we are also proposing changes to vehicle speeds used in the aerodynamic reference test procedure to facilitate improved estimation of Cd.
  (e) What Kind of New Modeling Research has Been Conducted to Inform Phase 2?
With a wide range of potential fuel consumption- and GHG emissions reducing technologies, the NAS Committee found that it is proper to assess the various combinations of technologies in real-world testing and in modeling.  The Committee recommended that NHTSA conduct detailed simulation modeling in addition to physical testing.
In September 2012, NHTSA contracted with the Southwest Research Institute (SwRI) to conduct research in support of the next phase of Federal fuel efficiency (FE) and GHG standards.  Tasks included determining the baseline fuel efficiency and emissions levels and technologies of current model year commercial medium- and heavy-duty on-highway vehicles and work trucks, as well as projections of Phase 2 fuel efficiency and emission reduction technologies for diesel and gasoline powered vehicles.  The scope encompassed technologies for chassis and final-stage manufacturer vehicles and trailers, maintenance cost, material application, future design, capital investment, retail cost/payback and any other applicable advanced technologies.  Estimates of the costs, fuel savings effectiveness, availability, and applicability of technologies were done for each individual vehicle class category (e.g., segment).
Selection of FE/GHG technologies, engines, vehicles, drive-cycles, etc. for the simulation modeling at SwRI was done in coordination with EPA, which had complimentary HD research programs involving vehicle road testing and engine dynamometer testing that informed the simulation efforts.  The SwRI analysis relied on a technology list that was developed from recent NAS HD vehicle fuel consumption reports as well as an extensive literature review.  Four base engines and four vehicles spanning the class 2b to class 8 vehicle segments were selected for simulation.  Experimental data was available from other projects for all of the vehicles and engines simulated, and full use of experimental data was made to calibrate the models before additional technologies were evaluated.
SwRI used a vehicle simulation tool developed in-house to model vehicle performance over a range of drive cycles.  The commercial software GT-POWER (Gamma Technologies, Inc.) was used to model engine performance, fuel consumption, and CO2 emissions over the full speed-load range.  Results of the agency-sponsored simulation modeling at SwRI will be issued in peer-reviewed research reports.
  (f) How has GEM been Modified by EPA?
In its report, the NAS Committee focused many of its recommendations on EPA's GEM model.  The Committee concentrated on what features could be incorporated into GEM in order to improve the model's ability to provide outputs representative of real-world use.
More specifically, the Committee found that GEM output was unaffected by the actual use of a smaller or larger engine in the same subcategory because the engine map used by GEM is predefined.  The NAS Committee recommended that the agencies should assess whether a single steady-state speed-torque map is sufficient for GEM accuracy in engine efficiency prediction.  EPA has evaluated this question and is modifying GEM to allow for different maps as an input.
NAS also recommended that the agencies allow powertrain testing for certification.  As described in Section II, the agencies are doing so in conjunction with GEM.  See the proposed provisions in 40 CFR1037.550.
More generally, NAS recommended revising GEM to reflect the benefit of integrating an engines, aftertreatment, and transmissions and to cover as large a fraction of over-the-road tractor operation as possible without becoming overly cumbersome.  As described in Section II and in Chapter 4 of the draft RIA, the agencies believe the proposed revisions to GEM reflect this.
  (g) What have the Agencies Done to Validate GEM Testing?
The NAS Committee expressed concern over GEM's ability to translate to real world reductions in fuel consumption and GHG emissions.  In particular, the Committee found that GEM's current certification procedures have limited unbound variables that can be user-specified and do not allow for synergy between components.  Moreover, the NAS Committee found that GEM does not allow for the operation of components in the most efficient way or efficiency that could be gained by the operation of a component at a higher relative load, concluding that vehicle designs that are optimized for the conditions of the simulation might not be optimized in real world operation.  The Committee recommended that NHTSA conduct a real world evaluation to validate GEM inputs with the fuel consumption outputs.
Recently, EPA and NHTSA sponsored a technical workshop at the Southwest Research Institute (SwRI).  At this workshop, SwRI presented a multi-year research effort sponsored by EPA to validate GEM model.  The development version of GEM incorporates several engine, transmission, driveline, and vehicle technologies being considered to meet FE and GHG standards for MD/HD vehicles.  GEM (including the steady-state fuel map approach) was validated by the agencies against over 130 test cases (multiple runs) of different size vehicles.  See Section II of this notice and Chapter 4 of the draft RIA for details about this validation work.
  (h) Has NHTSA Considered Non-Vehicular Strategies to Reduce Fuel Consumption?
In examining the broader picture of reducing fuel consumption, the NAS Committee found that there are opportunities to reduce fuel consumption in ways that that exceed NHTSA's statutory authority.  The Committee recommended that NHTSA work with and encourage EPA, DOE, and FHWA to reduce fuel consumption and GHG emissions by exploring non-vehicle approaches.
NHTSA is jointly releasing this rulemaking with the EPA, and has involved EPA as a co-drafter throughout the development of this rule.  NHTSA has also worked with DOE, and has been in touch with FHWA about medium- and heavy duty fuel efficiency.  While the majority of NHTSA's work with these agencies has been vehicle-related, NHTSA supports research and development on nonvehicle methods to reduce fuel consumption.
     (1)  NAS Findings and Recommendations with Which the Phase 2 Standards Are Significantly Inconsistent and Why the Agencies Chose a Different Course
  (i) Should the Agencies Propose Separate Standards for Natural Gas Vehicles?
The NAS Committee found that natural gas is a viable option to reduce fuel consumption and can also contribute to a reduction in GHG emissions, "unless additional findings of methane leakage alter this vision."  It noted that natural gas engines are well-developed and are ready for use for medium- and heavy-duty vehicles, including Class 8 trucks.  The Committee stated that while the load-specific CO2 emissions from natural gas engines are less than a comparable diesel engine, that benefit is partially negated by lower engine efficiency and methane emissions.  The NAS Committee recommended that NHTSA and EPA develop a separate standard for natural gas vehicles, similar to that in diesel- and gasoline-fueled engines.   We interpret this to mean standards that require natural gas-fueled engines to achieve similar thermal efficiency to diesel- and gasoline-fueled engines; in other words more stringent standards than would apply under a continuation of the Phase 1 approach.  Further, the Committee recommended the agencies do this without disrupting commercial transportation business models, though the Committee did not provide specific recommendations for how to achieve this goal.  It recommended that GEM certification tools need to include natural gas engine maps to accurately quantify the emissions and fuel economy of natural gas vehicles. The Committee also requested that EPA and NHTSA assemble a best estimate of well-to-tank GHG emissions to be used for developing future rulemakings.
The agencies closely evaluated the recommendation for NHTSA and EPA to develop a separate natural gas standard for HD vehicles.  The agencies are not proposing a separate standard for natural gas engines or for natural gas powered vehicles for the Phase 2 program primarily, because the current market share is still at or below one percent of the total heavy-duty fleet and we do not project a significant increase is natural gas use during the Phase 2 timeframe.  Given its current status, we do not want to inhibit the adoption of this potentially promising alternative fuel through more stringent standards.  Other reasons to hold back on potentially establishing separate natural gas fuel standards at this time include the fact that there is uncertainty in the quantification of methane emissions, both upstream emissions as well as potential leakage on a vehicle, particularly the LNG vehicle boil-off emissions, which makes it very difficult to perform a rigorous analysis regarding the potential impacts of a separate natural gas standard; the industry itself is in the process of developing its technology and as it matures there is potential for self-correction to address methane leaks in recognition of environmental concerns that might affect its status as a potential green alternative fuel.
With regard to well-to-tank or upstream emissions, the medium- and heavy-duty fuel efficiency program focuses on the tailpipe emissions of these vehicles for multiple reasons, including test measurement capabilities and the use of simulated output tools calibrated to test lab measurements. The agencies continues to evaluate the potential impacts and the benefits of a holistic approach for incorporating well-to-tank emissions into future rulemakings.
As data comes available a better estimate can be made on the emissions impact from any potential regulations.  The agencies will closely monitor developments in natural gas adoption over the course of the rulemaking timeframe and determine if additional action may be necessary to prevent methane emissions increases.  See Section XI of this preamble for additional discussion regarding the treatment of natural gas fuel, engines and vehicles in this proposal, as well as for a detailed discussion of lifecycle emissions.
  (j) How are the Agencies Handling Uniformity and Accuracy Regarding Tire Rolling Resistance Characteristics?
The NAS Committee expressed concern about the process by which rolling resistance values are established.  Specifically, the Committee noted that the process for determining tire rolling resistance is new and variability is not as well known.  The Committee recommended that the agencies implement a mechanism for obtaining accurate tire rolling resistance factors, including establishing a tire alignment laboratory.[,]  Additionally, the Committee recommended that this data be available in the through the Uniform Tire Quality Grading system.
In Phase 1, the agencies received comments from stakeholders highlighting a need to develop a reference lab and alignment tires for the HD sector.  The agencies noted the lab-to-lab comparison conducted in the Phase 1 EPA tire test program.  The agencies reviewed the rolling resistance data from the tires that were tested at both the STL and Smithers laboratories to assess inter-laboratory and test machine variability.  The agencies conducted statistical analysis of the data to gain better understanding of lab-to-lab correlation and developed an adjustment factor for data measured at each of the test labs. Based on these results, the agencies believe the lab-to-lab variation for the STL and Smithers laboratories would have very small effect on measured rolling resistance values.  Based on the test data, the agencies judge that it is reasonable to continue the HD Phase 2 program with current levels of variability, and consider the use of either Smithers or STL laboratories to be acceptable for determining the tire rolling resistance value in Phase 2.  Note that the agencies have not made similar findings for other laboratories.  However, we welcome comment on the need to establish a reference machine for the HD sector and interest from tire testing facilities to commit to developing a reference machine.
In the final rule for the Phase 1 program, the agencies stated that compliance values submitted to the agencies should be derived using the ISO 28580 test method for drive tires and steer tires planned for fitment to the vehicle being certified.  The agencies believe that following a defined, standardized test procedure will provide levels of consistency in submitted compliance values.  The agencies conducted substantive testing to develop the final tire Crr standards in the Phase 1 rule at two different testing laboratories for comparison to test for variability.  The agencies concluded that although laboratory-to-laboratory and test machine-to-test machine measurement variability exists, the level observed is not excessive relative to the distribution of absolute measured Crr performance values and relative to the proposed standards.  Based on this, the agencies concluded that the test protocol and the proposed standards are reasonable for this program.
The agencies are considering publishing the tire Crr levels from fuel efficiency and GHG emission program compliance data.  Because compliance data are submitted by vehicle manufacturers rather than directly from the tire manufacturers or agency directed testing they could vary for a given tire model among vehicle manufacturer submissions, or lag when tires are redesigned.  Based on considerations such as this, the agencies are not proposing to establish a public database for heavy-duty vehicle tire rolling resistance information at this time.
  (k) Have the Agencies Considered Industry Standards for Medium- and Heavy-Duty Tire Pressure Systems (TPS)?
The NAS Committee found that tire pressure monitoring systems and automatic tire inflation systems are being adopted by fleets at an increasing rate.  However, the Committee noted that there are no standards for performance, display, and system validation.  The Committee recommended that NHTSA issue a white paper to clarify the minimum performance needed from these systems from a safety perspective.  This recommendation addresses the effects of tire pressure systems on vehicle safety.  Because the recommendation for a white paper relates to safety, and is not directed at fuel efficiency or GHG emissions effects, the agencies are not responding to the NAS recommendation in this proposal.
Nevertheless, the agencies note that automatic tire inflation systems can improve fuel efficiency and greenhouse gas emissions (see Preamble Section III / draft RIA Chapter 2) by maintaining tire pressure close to the tire pressure specification.  The agencies are proposing to recognize automatic tire inflation systems as a technology that improves fuel efficiency for tractors, trailers and vocational vehicles in the GEM vehicle compliance model.
  (l) Will NHTSA Survey Private Fleets or Leverage Government Fleets to Gather Information for the Phase 2 Rulemaking?
In its report, the NAS Committee found that there are many additional methods by which NHTSA could gather fleet information to inform the Phase 2 rulemaking.   The Committee recommended that NHTSA gather data from private fleets, and work with the General Services Administration or United States Postal Service to evaluate the fleet of vehicles they possess.[,]
NHTSA understands that additional fleet information could be helpful for purposes of formulating medium- and heavy-duty fuel efficiency standards.  Due to the length of time necessary to capture useful, relevant data from fleets, NHTSA was unable to conduct public or private fleet studies to inform this rulemaking.  NHTSA will take these recommendations under advisement to inform the agency in the future.  For the time being, the agencies have utilized data from FHWA, EPA's SmartWay program, Polk, and other sources of fleet information.
  (m) GEM Inputs and Outputs
NAS recommended that the agencies configure GEM to be compatible with existing OEM order entry systems and provide a more useful output that includes graphs and other presentation methods.  However, the agencies believe these recommendations are beyond the scope of this rulemaking.
  (n) OEM-Specific Code
NAS recommended allowing OEMs to substitute OEM-specific models or code for the fixed models in the current GEM, including substituting a power pack (the engine, aftertreatment, transmission).  However, as described in Section II, we are not proposing to allow this for a number of reason.  NAS explained that its goal was to reflect real-world operation accurately.  We believe the powertrain test option could be used to achieve this goal.
     (1)  NAS Findings and Recommendations with Which the Phase 2 Standards Are Less-Significantly Inconsistent
  (o) What are the Agencies Doing with Respect to Fuel Specifications for Natural Gas?
The Committee found that natural gas provides a potential long-term price advantage backed by an abundant supply.  In addition to its other natural gas (NG) -specific recommendations, the Committee recommended government and the private sector should support further technical improvements in engine efficiency and operating costs, reduction of storage costs, and emission controls (as is done for diesel engines).   Further, it recommended that NHTSA and EPA should also evaluate the need for and benefits and costs of an in-use NG fuel specification for motor vehicle use.
The agencies recognize the value in evaluating an in-use NG fuel specification for motor vehicle use.  EPA has developed and promulgated fuel specifications for other motor vehicle fuel types, both for test fuels and for in-use fuels.  Such fuel specifications established by EPA usually complement fuel specifications established by third party organizations such as ASTM.
EPA has established fuel specifications for natural gas used as test fuels for emissions testing,  but has not adopted specifications for in-use natural gas used as a motor vehicle or off-highway fuel.  However, states have set natural gas quality limits on the natural gas sold within the state, and natural gas pipelines have established specifications for the natural gas either for their own purposes or to ensure that the natural gas being transported by its pipeline will be usable within the states to which the pipeline transports the natural gas.  These specifications would apply to natural gas used as a motor vehicle fuel.
EPA may consider establishing in-use specifications for natural gas used as a motor vehicle or off-highway fuel in the future.  However, because natural gas use within the transportation sector is currently so small (less than 1 percent of total natural gas demand and less than 1 percent of heavy-duty fuel demand), its use for transportation would not have a separate fuel supply system, and it would not make sense that such a small user segment should dictate fuel quality for the overall fuel supply.  Like other potential regulations that EPA might consider, EPA will consider establishing fuel quality regulations on natural gas if and when its use increases as a fuel for the transportation sector.
  (p) Have the Agencies Considered Low Rolling Resistance Standards for All New Tires?
With regard to low rolling resistance tires, the NAS Committee found that 70 percent of new tires sold in 2012 were for replacement of existing tires.  It found that although most new tractors and trailers come equipped with SmartWay verified tires, only 42 percent of replacement tires are SmartWay verified.  The Committee recommended that NHTSA and EPA evaluate rolling resistance of new tires, especially those sold as replacements.  It recommended that NHTSA adopt a regulation establishing a low rolling resistance standard for all new tires designed for tractor and trailer use.
The agencies are proposing to include low rolling resistance tires as a technology that may be used for compliance for fuel efficiency and GHG standards.  The agencies conducted tire rolling resistance testing and considered confidential business information data provided by several tire manufacturers, which is discussed in Preamble Sections III, IV, and V and draft RIA Chapter 2.  The agencies have focused our resources and attention to develop standards for new vehicles and engines.  NHTSA has not conducted work to consider a rolling resistance performance standard for replacement tires at this time and will take the Committee's recommendation under advisement.
  (q) Have the Agencies Considered A Protocol for Measuring And Reporting the Coefficient of Rolling Resistance to Aid In Consumer Selection?
The Committee recommended that the agencies consider establishing a protocol for measuring and reporting the coefficient of rolling resistance to aid in consumer selection, similar to passenger car tires.  At this time, the agencies are taking the Committee's recommendation under advisement.
  (r) How are the Agencies Revising GEM?
Consistent with the NAS recommendations, the agencies are proposing to make the following revisions to GEM, as also detailed Preamble Section II:
         * Allowing manufacturers to input parameters related to engines, transmissions, and axles
         * Basing GEM on a steady-state fuel map
         * Allowing separate fuel maps for alternative fuels
         * Including real-world road grade to highway cycles
         * Use of wind-average drag coefficients for aerodynamic inputs
However, the agencies are not making other changes recommended by NAS.  We are not making the user interface changes recommended by NAS on behalf of manufacturers.  Our recent discussions with manufacturers indicate that they have adopted ordering systems that are consistent with the current interface.  We are also not revising GEM to allow manufacturers to input their own shift strategies.  Instead, we are proposing a powertrain test option that would serve the same purpose.
NAS also recommended that we broaden GEM to allow for additional duty-cycles and actual vehicle weights.  However, we believe that such changes would not significantly improve the overall program, but would add significant complexity.
  (s) Vehicle Weight and Payload In GEM
NAS recommended that NHTSA evaluate the load specific fuel consumption (LSFC) at more than one payload to ensure there is not an undesirable acute sensitivity to payload by a particular truck power train and to reflect the fact that some states allow vehicles to operate with gross combination vehicle weight ratings well in excess of the values adopted for the simulation.  NAS also recommended that GEM allow manufacturers to input actual vehicle weights.
As described in Section III, the agencies are proposing to modify GEM to allow heavy-haul vehicles to be certified separately, to reflect their unique weight and payload attributes.  However, are not proposing to allow for other payloads or weights to minimize complexity during the compliance process.
  (t) Is NHTSA Conducting Any Campaigns Related to Fuel Efficient Driving Behaviors?
        In the NAS Committee's Phase 1 report, the Committee concluded that fuel saving opportunities exist if drivers are educated about fuel efficient driving techniques.  The Phase 2 reiterated this finding, and recommended NHTSA encourage and incentivize the dissemination of information related to the relationship between driver behavior and fuel savings.
Based on NHTSA's understanding of the medium- and heavy-duty segments, a large portion of the vehicles are driven professionally.  Professional drivers operate these vehicles as independent drivers and in trucking fleets.  In some instances, particularly larger fleet operations, management will track and encourage driver fuel efficiency.  It is not uncommon for professional drivers across all types of trucking operations to undergo private fuel efficiency training.  For these reasons, NHTSA has not yet undertaken dissemination of information related to the relationship between driver behavior and fuel savings.

I.  Amendments to Phase 1 Standards
The agencies are proposing revisions to the regulatory text specifying test procedures and compliance provisions used for Phase 1.  For the most part, these amendments would apply exclusively to the Phase 2 rules.  In a few limited instances, the agencies are proposing to apply some of these changes to Phase 1.  These limited changes to the Phase 1 program are largely conforming amendments, and are described below, along with other proposed minor changes to the Phase 1 compliance program.  We note, however, that we are not reopening the Phase 1 rules in a general sense, nor are we requesting comment on the stringency of the Phase 1 standards or other fundamental aspects of the Phase 1 program.
A.  EPA Amendments
     (1)  Pickups and Vans
EPA is proposing to relocate the GHG standards and other regulatory provisions for chassis-certified HD pickups and vans in the Code of Federal Regulations from 40 CFR 1037.104 to 40 CFR 86.1819.  Accordingly, NHTSA will modify any of EPA's references in 49 CFR 523 and 535 to accommodate the migration.  EPA is making this change largely to address ambiguities regarding the application of additional provisions from 40 CFR part 86, subpart S, for these vehicles.  The approach in 40 CFR 1037.104 was to state that all of 40 CFR part 86, subpart S, applies except as specified in 40 CFR 1037.104; however, the recent standards adopted for light-duty vehicles and light-duty trucks included several changes to 40 CFR part 86, subpart S, that should not apply for chassis-certified HD pickups and vans.  Based on our experience implementing the Phase 1 program, we believe it is appropriate to include the GHG standards for chassis-certified HD pickups and vans in the same part as light-duty vehicles (40 CFR part 86, subpart S).  All other certification requirements for these heavy-duty vehicles -- criteria exhaust standards, evaporative and refueling standards, provisions for onboard diagnostics, and the range of certification and compliance provisions -- are in that subpart.  We note that we have not experienced the same challenges for other heavy-duty vehicles, and are therefore not proposing to relocate the other provisions of 40 CFR part 1037.
This migration has highlighted a few areas where we need to clarify how the regulations apply for chassis-certified HD pickups and vans.  In particular, EPA is proposing to make the following changes:
         *        Clarify that the GHG standards apply at high-altitude conditions
         *        State that fleet-average calculation of carbon-related exhaust emissions (CREE) is not required for chassis-certified HD pickups and vans
         *        Clarify that requirements related to model types and production-weighted average calculation apply on any passenger automobiles and light trucks
         *        State that the credit and debit provisions of 40 CFR 86.1865-12(k)(5) do not apply for chassis-certified HD pickups and vans
         *        Clarify that the Temporary Lead Time Allowance Alternative Standards in 40 CFR 86.1865-12(k)(7) do not apply for chassis-certified HD pickups and vans
         *        State that the early credit provisions of 40 CFR 86.1866-12, 86.1867-12, 86.1868-12, 86.1869-12, 86.1870-12, and 86.1871-12 do not apply for chassis-certified HD pickups and vans

     (2)  Heavy-Duty Engines
As described in Section II, EPA is proposing to revise the approach to classifying gaseous-fuel engines with respect to both GHG and criteria emission standards.  This does not affect the vehicle-based standards that apply under 40 CFR part 1037.  The general approach would be to continue to divide these engines into spark-ignition and compression-ignition categories, but we propose to always apply the compression-ignition standards to gaseous-fuel engines that qualify as medium heavy-duty or heavy heavy-duty engines.  Currently, any gaseous-fuel engine derived from a gasoline engine would be subject to the spark-ignition standards no matter the weight class of the vehicle.  As described in Section II, EPA now believes this approach does not reflect the reality that gaseous-fuel engines used in Class 6, 7, or 8 vehicles compete with diesel engines rather than gasoline engines.  Such engines compete directly with diesel engines, and we believe they should be required to meet the same emission standards.  Because all current gaseous-fuel engines for these large vehicles are already being certified to the compression-ignition engine standards we can propose to also apply this approach to engines subject to the HD GHG Phase 1 standards without adverse impacts on any manufacturers
EPA is also proposing to revise the regulation to spell out how to apply enforcement liability for a situation in which the engine manufacturer uses deficit credits for one or more model years.  Simply put, any time an engine manufacturer is allowed to carry a deficit to the next year, all enforcement liability for the engines that generated the deficit are extended for another year.  These provisions are the same as what we have already adopted for heavy-duty vehicles subject to GHG standards under 40 CFR part 1037.
     (3)  Evaporative Emission Testing for LNG Vehicles
Heavy-duty vehicles fueled by natural gas have for many years been subject to evaporative emission standards and test procedures.  While fuel systems containing gasoline require extensive design features to handle vented fuel, fuel systems containing natural gas generally prevent evaporative losses by remaining sealed.  In the case of compressed natural gas, there is a voluntary consensus standard, ANSI NGV1-2006, that is designed to ensure that there are no leaks or losses during a refueling event.  Since compressed natural gas systems remain sealed indefinitely once the refueling event is complete, we understand that complying with the ANSI refueling standard is sufficient to demonstrate that the vehicle also complies with all applicable evaporative emission standards.  The Light-Duty Tier 3 final rule included provisions to clarify that compressed natural gas systems meeting the applicable ANSI standard are deemed to comply with EPA's evaporative emission standards.
Systems using liquefied natural gas (LNG) behave similarly, except that the cryogenically stored fuel needs to be vented to prevent an over-pressure situation if the vehicle is not used for an extended time, as described in Section XI.  Such vehicles are currently subject to evaporative emission standards and test procedures, though there are some substantial questions about how one can best apply the procedures to these systems; not all of the instructions about preconditioning the vehicle are straightforward for cryogenic fuel systems with no evaporative canister.  EPA is interested in pursuing an approach that is similar to what applies for compressed natural gas systems, which would need some additional attention to address boil-off emissions.  There are two voluntary consensus standards that specify recommended practices to lengthen the time before boil-off starts to occur for LNG systems.  SAE J2343 specifies a minimum five-day hold time and NFPA 52 specifies a minimum three-day hold time.  EPA is proposing to require that manufacturers of LNG vehicles meet the SAE J2343 standard as a means of demonstrating compliance with the evaporative emission standards.
While the hold-time requirements of SAE J2343 and NFPA 52 are clear, there appears to be very little description of the procedure to determine how much time passes between a refueling event and initial venting.  To ensure that all manufacturers are subject to the same set of requirements, we are proposing to include a minimal set of specifications corresponding to the demonstration under SAE J2343.  In particular, EPA proposes to specify that the vehicle must remain parked throughout the measurement procedure, ambient temperatures must remain between 20 and 30 °C, the refueling event must follow conventional procedures corresponding to the vehicle's hardware, and no stabilization step is allowed after the refueling event.
The proposed rule provides for relying on compliance with SAE J2343 as a means of demonstrating compliance with evaporative emission standards immediately upon completion of the final rule.  EPA is proposing to make this mandatory for vehicles produced on or after January 1, 2020.
EPA requests comment on all aspects of the proposed provisions for LNG vehicles.
     (4)  Compliance and Other General Provisions
EPA proposes the following changes that apply broadly for different types of vehicles or engines:
* Add a requirement for vehicle manufacturers that sell incomplete vehicles to secondary vehicle manufacturers to provide emission-related assembly instructions to ensure that the completed vehicle will be in a certified configuration.
* Specify parameters for determining a vehicle's curb weight, consistent with current practice for vehicles certified under 40 CFR part 86, subpart S.
* Revise the recordkeeping requirement to specify a uniform eight-year retention period for all data supporting an application for certification.  The provision allowing for one-year retention for "routine data" is no longer necessary now that data collection is all recorded in electronic format.  EPA is also clarifying that the eight-year retention period is calculated relative to the latest associated application for certification, not from the date the data were generated.
* Change the rounding for analytically derived CO2 emission rates and target values from the nearest 0.1 g/mile to the nearest 1 g/mile.
* Clarify that manufacturers may not amend an application for certification after the end of the model year, other than to revise maintenance instructions or family emission limits, as allowed under the regulations.  Remove the general recordkeeping provisions from 40 CFR 1037.735 that are already described in 40 CFR 1037.825.
* Require a different equation with a ratio of 0.8350 in 40 CFR 1037.521(f) when wind averaged drag is used for determining the yaw sweep correction.
B.  Other Compliance Provisions for NHTSA
     (1)  Standards and Credit Alignment
In Phase 1, the agencies intended GHG and fuel consumption standards for segments of the National Program to be in alignment so that manufacturers would not be required to build vehicles to meet in equivalent standards.  Despite the intent, NHTSA and EPA have identified several scenarios where credits and compliance to both sets of standards are not aligned.  This misalignment can have various impacts on compliance with the National Program.
For example, a manufacturer of tractors could have two vehicle families that with same number of vehicles but with opposite and equal compliance margins with standards.  In this scenario, the first family would over-comply with the GHG standard while the second family would under-comply with the GHG standard by the same amount of grams CO2/ton-mile.  In calculating credits, the manufacturer would have a net of zero GHG credits and exactly meet compliance; however, based on conversions and rounding of the standard and performance results that manufacturer could end up earning credits or having a credit deficit under NHTSA's fuel efficiency program.
In order to correct this misalignment, NHTSA is proposing to amend the existing fuel consumption standards and the method for calculating performance values for all compliance categories by increasing the significant digits in these conversion values.  Increasing the significant digits in these values will result in more precise alignment when converting from GHG consumption standards to fuel consumption standards.
The rounding approach differs for heavy-duty pickup trucks and vans set apart from other vehicle and engine compliance categories.  Heavy Duty Pickup Trucks and Vans (HD PUV) use the same approach for calculating standards and performance values as the LD CAFE and GHG programs.   As such, NHTSA proposes to increase the required significant values for each components used in these calculations.  More specifically, NHTSA proposes to increase the number of decimal places for sub-configuration target standards, the sub-configuration fuel consumptions, the fleet average target standard and the fleet average fuel consumption values from two fixed values and increases them by one additional significant digit.  The regulation currently specifies rounding to these values nearest 0.01 and under the proposed approach the values would be rounded to the nearest 0.001.
NHTSA is also proposing to modify the c and d target coefficients used for deriving HD PUV target standards.  These values are directly convertible from the EPA a and b target coefficients, respectively.  Currently, the c target coefficient contains six decimal places and the d target coefficient contains two decimal places. Each coefficient would be increased by one decimal -- meaning the c target coefficient would have seven decimal places, with the last four being significant digits -- and the d target coefficient would be increased to three decimal places, with there being a total of four significant digits. The modifications to the rounding and level of precision of these six values will not entirely eliminate the misalignment of the credits being calculated for EPA and NHTSA but will reduce it to an insignificant variance.
For other compliance categories, a similar approach can be used to address the misalignment of calculated credits as it pertains to vocational vehicles, tractors, and heavy duty engines.  NHTSA proposes to increase the number of significant digits by increasing the decimal places contained in the standards and the FEL for the vocational vehicle and tractor segments and the FCL for the engine segments to four decimal places. Currently, the vocational vehicle and tractor standards and FELs contain one decimal place while engines standards and FELs contain two decimal places. The standards will be identified directly in the regulation while the FEL and FCL will be a calculated value rounded to the nearest 0.0001.
The modifications to the rounding and level of precision of these values should eliminate the misalignment of the credits being calculated.
These changes are planned for implementation retroactively starting for the model year 2013 standard.  However, because the stringency of the Phase 1 fuel consumption standards may be adversely impacted for certain manufacturers who have already developed engineering plans considering previous credit balance, we propose to seek comments on whether optional compliance should be allowed.
     (2)  Off-road Exclusion Petition Process for Tractors and Vocational Vehicles
In the Phase 1 final rule, the agencies added provisions for certain types of vocational tractors and vocational vehicles that operate off-road to be exempt from standards, although standards would still apply to the engines installed in these vehicles.  An exemption was warranted because these vehicles operate in a manner essentially making them incompatible with fuel saving and emission reduction technologies, such as performing work in an off-road environment, being speed restricted, or having off-road components or other features making them incompatible for roadways.   For the Phase 1 program, off-road vehicle manufacturers meeting the exemption provisions are required to provide EPA and NHTSA, through the EPA database, a report within 90 days after the end of each model year identifying its off-road vehicles.   The report must provide a description of each excluded vehicle configuration, including an explanation of why it qualifies for the exclusion and the production volume.  A manufacturer having an off-road vehicle failing to meet the criteria under the agencies' off-road exemptions explained in 40 CFR 1037.631 and 49 CFR 523 is allowed to submit a petition as required in 49 CFR 535.8(h)(6) describing how and why its vehicles should qualify for exclusion.
Under Phase 1 compliance processes, manufacturers have not been using the petitioning process when seeking clarification on off-road vehicles not meeting the strict interpretation of the provision.  Instead, manufacturers are submitting information to EPA in advance of the end of the model year to determine whether or not these vehicles are exempted and to determine whether it is necessary to submit any applications for certificates of conformity as required by 40 CFR 1037.201.  EPA and NHTSA collaboratively determine whether manufacturers are exempted and EPA shares the decision with the manufacturer.  The current process followed by the agencies makes it unnecessary to use the petitioning process and has the added advantage of providing a joint determine early enough in the model year whereas disapproved manufacturer have adequate enough time to submit applications for certificates of conformity.
For the Phase 1 standards, the agencies are proposing to delete the petitioning process and add provisions for manufacturers seeking clarification on the qualifications of an off-road vehicle exemption to send information to the agencies through EPA in advance of the model year in order for us to make an appropriate determination.  EPA plans to add these provisions into its regulations as a part of 40 CFR 1037.210.  Removal of the formal petition process is intended to minimize the impact on manufacturers that are seeking an off-road exemption while allowing the agencies to be proactive in making a determination based on the criteria and individual merits of the vehicles being requested for an exemption.  Collaboration between the agencies in making a decision about exemptions outside a formal petition process should streamline the timing for a response and reduce the burden upon the agencies and manufacturers.
     (3)  Innovative Technology Request Documentation Specifications
For vehicle and engine technologies that can reduce GHG and fuel consumption, but for which there is not yet an established method for quantifying reductions, the agencies encourage the development of such technologies through providing "innovative technology" credits. Manufacturers seeking innovative technology credits must quantify the reductions in fuel consumption and GHG emissions that the technology is expected to achieve, above and beyond those achieved on the existing test procedures.
Manufacturers submitting innovative technology requests must send a detailed description of the technology and a recommended test plan to EPA as detailed in 40 CFR 1036.610 and 40 CFR 1037.610.  The test plan must include whether the manufacturer is applying for credits using the improvement factor method or the separate-credit method.  It is recommended that manufacturers not conduct testing until the agencies can collaboratively approve the test plan in which a determination is made on the qualification of the technology as innovative.   EPA and NHTSA also make the decision at that time whether to seek public comments on the test plan if there are unknown factors in the test methodology.
Under the current regulations, EPA and NHTSA have reviewed several test plans from manufacturers seeking innovative technology credits.  The agencies have received feedback from manufacturers that the final approval process is not clearly defined, which has caused a substantial time commitment from manufacturers.  To address this feedback, the agencies are proposing to add further clarification in 40 CFR 1036.610 and 40 CFR 1037.610 defining the steps manufacturers must follow after an approval is granted for a test plan.  This includes specifications for submitting the final documentation to the agencies for final approval and for determining credit amounts.  The agencies are adding the same level of detail as required for the final documentation required in EPA's light duty off-cycle program in 40 CFR 86.1869-12(e)(2).  These specifications should provide manufacturers with a clear understanding of the required documentation and approval process to reduce the time burden placed on manufacturers.
NHTSA also proposes to add similar provisions from its light duty CAFE program specified in 49 CFR 531.6(b)(2) and 533(c)(2) for limiting the approval of innovative technologies under its program for those technologies related to crash-avoidance technologies, safety critical systems or systems affecting safety-critical functions, or technologies designed for the purpose of reducing the frequency of vehicle crashes.  NHTSA prohibited credits for these technologies under any circumstances in its CAFE program (see 77 FR 62730).  NHTSA believes a similar strategy is warranted for heavy-duty vehicle as well.  Further, the evaluation of crash avoidance technologies is better addressed under NHTSA's vehicle safety authority than under a case-by-case innovative technology credit process.
     (4)  Credit Acquisition Plan Requirements
The National Program was designed to provide manufacturers with averaging, banking and trading (ABT) flexibilities for meeting the GHG and fuel efficiency standards to optimize the effectiveness of the program.  As a part of these flexibilities, manufacturers generating a shortfall in fuel consumption credits for a given model year must submit a credit plan to NHTSA describing how it plans to resolve its deficits within 3 models year.  To assist manufacturers, NHTSA is proposing to modify 49 CFR 535.9(a)(6) of its regulation to clarify and provide guidance to manufacturers on the requirements for a credit allocation plan which contains provisions to acquire credits from another manufacturer which will be earned in future model years.
The current regulations do not specify if future credit acquisition is permitted or not and the revision is intended to clarity that it is, with respect to the limitation a credit shortfall can only be carried forward three years.  Providing this clarification is intended to increase transparency within the program and ensure all manufacturers are aware of its available flexibilities.
In addition to providing this clarification, the regulation is also being amended to outline the requirement that in order for a credit allocation plan containing this provision to be reviewed for approval, NHTSA will require an agreement signed by both manufacturers.  This requirement will assist NHTSA with its determination that the credits will become available to the acquiring manufacturer given they are earned.
     (5)  New Vehicle Field Inspections and Recordkeeping Requirements
Previously, NHTSA decided not to include recordkeeping provisions in its regulations for the Phase 1 program.  EPA regulations include recordkeeping requirements in 40 CFR 1036.250, 1036.735, 1036.835, 1037.250, 1037.735 and 1037.835.  For the Phase 2 program, NHTSA is proposing to add recordkeeping provisions to facilitate its compliance validation program.  For the Phase 1 program, manufacturers test and conduct modeling to determine GHG emissions and fuel consumption performance, and EPA and NHTSA perform validation testing. EPA uses the results of the validation tests to create a finalized report that confirms the manufacturer's final model year GHG emissions and fuel consumption results.  Each agency will use this report to enforce compliance with its standards.
NHTSA assesses compliance with fuel consumption standards each year, based upon EPA final verified data submitted to NHTSA for its heavy-duty vehicle fuel efficiency program established pursuant to 49 U.S.C. 32902(k).  NHTSA may also conduct verification testing throughout a given model year in order to validate data received from manufacturers and will discuss any potential issues with EPA and the manufacturer.  See 49 CFR 535.9.  After the end of the model year, NHTSA may also decide to conduct field inspections in order to confirm whether or not a new vehicle was manufactured as originally certified.  NHTSA may conduct field inspections separately or in coordination with EPA.  To facilitate inspections, the agencies propose to add additional provisions to the EPA recordkeeping provisions to require manufacturers to keep build documents for each manufactured tractor or vocational vehicle.  Each build document would be required to contain specific information on the design, manufacturing, equipment and certified components for a vehicle.  NHTSA would request build documents through EPA and the agencies would collaborate on the finding of all field inspections.  Manufacturers would be required to keep records of build documents for a period of 8 calendar years.

II.  Other Proposed Regulatory Provisions
In addition to the new GHG standards proposed in this rule, EPA and NHTSA are proposing to amend various aspects of the regulations as part of the HD GHG Phase 1 standards for heavy-duty highway engines and vehicles.  EPA is also taking the opportunity to propose to amend regulatory provisions for other requirements that apply for heavy-duty highway engines, and for certain types of nonroad engines and equipment.
A.  Proposed Amendments Related to Heavy-Duty Highway Engines and Vehicles
This section describes a range of proposed regulatory amendments for heavy-duty highway engines and vehicles that are not directly related to GHG emission standards.  Section XIV.D describes additional changes related to test procedures that affect heavy-duty highway engines.
     (1)  Alternate Emission Standards for Specialty Heavy-Duty Vehicles
Motor vehicles conventionally comprise a familiar set of vehicles within a relatively narrow set of parameters  --  motorcycles, cars, light trucks, heavy trucks, buses, etc.  The definition of "motor vehicle;" however, is written broadly to include a very wide range of vehicles.  Almost any vehicle that can be safely operated on streets and highways is considered a motor vehicle.  Development of EPA's emission control programs is generally focused on a consideration of the technology, characteristics, and operating parameters of conventional vehicles, and typically includes efforts to address concerns for special cases.  For example, the driving schedule for light-duty vehicles includes a variation for vehicles that are not capable of reaching the maximum speeds specified in the Federal Test Procedure.
Industry innovation in some cases leads to some configurations that make it particularly challenging to meet regulatory requirements.  We are aware that plug-in hybrid-electric heavy-duty vehicles are an example of this.  An engine for such a vehicle would be expected to have a much lower power rating and duty cycle of engine speeds and loads than a conventional heavy-duty engine.  The costs of regulatory compliance and the mismatch to the specified duty cycle can make it cost-prohibitive for engine manufacturers to certify such an engine under the heavy-duty highway engine program.  EPA's nonroad emission standards have reached a point that involves near parity with the level of emission control represented by the emission standards for heavy-duty highway engines.
To address concerns about certifying heavy-duty engines to highway standards for use in hybrid vehicles, we are therefore proposing to allow manufacturers of heavy-duty highway vehicles the option to install limited numbers of engines certified to alternate standards.  Qualifying engines would be considered motor vehicle engines, but they would be certified to standards that are equivalent to those adopted for comparable nonroad engines.  Vehicles with hybrid powertrains would be a focus of this allowance.  EPA believes the same principles apply for amphibious vehicles and for vehicles with maximum speed at or below 45 miles per hour and we are therefore proposing to apply the same provisions to these additional vehicles.
Under this approach, compression-ignition engines could be certified to alternate standards that are equivalent to the emission standards under 40 CFR part 1039, and spark-ignition engines could be certified to alternate standards that are equivalent to the Blue Sky emission standards under 40 CFR part 1048.  Engines meeting these alternate emission standards would generally be expected to use the same technologies to control emissions as engines certified to the applicable emission standards for heavy-duty highway engines.  EPA would disallow this approach for compression-ignition engines below 56 kW since the nonroad standards for those engines are substantially less stringent than the standards that apply for heavy-duty highway engines.  Also, since the nonroad duty cycles would generally better represent the in-use operating characteristics of these vehicles, we would expect the nonroad test procedures to be at least as effective in achieving effective in-use emission control.  The regulations at 40 CFR part 1048 include a simplified form of diagnostic controls, and we are proposing in this rule to include simplified diagnostic controls for 40 CFR part 1039.  These engine-based diagnostic controls would substitute for the diagnostic requirements that would otherwise apply under 40 CFR part 86.010-18.
It may also be appropriate to allow manufacturers of such heavy-duty vehicles to use an engine from a smaller vehicle that is already covered by chassis-based certification under 40 CFR part 86, subpart S.  Many of the heavy-duty vehicles described under this section would be adequately powered by lower-displacement automotive engines, and the level of emission control would clearly be expected to match or exceed that of engines certified to the heavy-duty standards that would otherwise apply.  However, engines used in chassis-certified vehicles involve some degree of calibration that relates engine operation to vehicle parameters.  Adapting these engines to heavy-duty vehicles would therefore require some recalibration, which could involve changing the effectiveness of emission controls.  It is also unclear how the heavy-duty vehicle would be designed for onboard diagnostic controls.  EPA requests comment on the technical and regulatory issues surrounding the use of engines from chassis-certified vehicles in certain heavy-duty vehicles.
These alternate standards relate only to the engine certification-based emission standards and certification requirements.  All vehicle-based requirements for evaporative and greenhouse gas emissions would continue to apply as specified in the regulation.
This allowance is intended to lower the barrier to introducing innovative technology for motor vehicles.  It is not intended to provide a full alternative compliance path to avoid certifying to the emission standards and control requirements for highway engines and vehicles.  To accomplish this, EPA is proposing to allow a manufacturer to produce no more than 1,000 hybrid vehicles in a single model year under this program, and no more than 200 amphibious vehicles or speed-limited vehicles.
California ARB is in the process of developing similar provisions for a reduced compliance burden for a limited number of highway vehicles toward the goal of incentivizing hybrid vehicles and other advanced technology.  EPA expects to be involved in that policy development and would be interested in aligning programs as much as possible.  It may be necessary or appropriate for the final rule to include a reference to any new policy that has been adopted by California ARB in the meantime.
EPA requests comment on all aspects of this program to create alternate motor-vehicle emission standards that allow certified nonroad engines to be used in the identified types of heavy-duty highway vehicles.
     (2)  Chassis Certification of Class 4 Heavy-Duty Vehicles
In the HD Phase 1 rule, the agencies included a provision allowing manufacturers to certify Class 4 and larger heavy-duty vehicles to the chassis-based emission standards in 40 CFR part 86, subpart S.  This applied for greenhouse gas emission standards, but not criteria emission standards.  EPA revisited this issue in the recent Tier 3 final rule, where we revised the regulation to allow this same flexibility relative to exhaust emission standards for criteria pollutants.  However, this change to the regulation conflicted with our response to a comment in that rulemaking that EPA should not change the certification arrangement for criteria pollutants.
Manufacturers have taken opposing views of the proper approach for vehicles above 14,000 lbs GVWR.  EPA requests comment on how best to address this issue in a way that resolves the various and competing concerns.  In particular, EPA requests comment on the following specific areas of interest:
         * Should EPA treat 14,000 lbs as a bright line to disallow any certification of larger vehicles to the chassis-based exhaust emission standards?
         * Should EPA allow for certifying the larger vehicles to the chassis-based standards, but identify certain criteria to narrow the scope of this allowance?  For example, EPA could limit this to compression-ignition or spark-ignition engines, we could identify a maximum GVWR value above which chassis-based certification is not allowed, or EPA could limit this allowance to vehicles that share design characteristics with chassis-certified vehicles below 14,000 lbs GVWR (as California ARB has done).
         * If EPA allows for certifying the larger vehicles to the chassis-based standards, what additional amendments are needed to clarify how to apply the requirements of 40 CFR part 86, subpart S?  For example, some further specification may be needed to identify how to apply requirements related to emission standards, driving schedule, and emission credits?
     (3)  On-Board Diagnostics for Heavy-Duty Vehicles
EPA defines the onboard diagnostic requirements for heavy-duty vehicles above 14,000 lbs GVWR in 40 CFR 86.010-18, but we allow manufacturers to meet OBD requirements based on the requirements adopted by the California Air Resources Board.  Manufacturers in almost all cases certify based on the California procedures instead of EPA procedures.  Certification based on EPA procedures is limited to certain spark-ignition engine families whose certification is limited to states other than California.  EPA requests comment on a change to EPA regulation that simply requires that manufacturers meet the California requirements.  EPA has taken a similar approach for vehicles at or below 14,000 lbs GVWR, as described in 40 CFR 86.1806-17.  Under this approach, EPA would recognize California ARB's approval as valid for EPA certification.  EPA requests comment on this approach.  In particular, EPA requests comment on the need to preserve EPA specifications for on-board diagnostics for any special situations, and on the need to make any adjustments or allowances from the California ARB regulations to work for EPA implementation.
     (4)  Nonconformance Penalties (NCPs)
The Clean Air Act requires that heavy-duty standards for criteria pollutants such as NOx must reflect the greatest degree of emission reduction achievable through the application of technology that EPA determines will be available.  Such "technology-forcing" standards create the risk that one or more manufacturers may lag behind in the development of their technology to meet the standard and, thus, be forced out of the marketplace.  Recognizing this risk, Congress enacted CAA section 206(g) (42 U.S.C. 7525(g)), which requires EPA to establish "nonconformance penalties" to protect these technological laggards by allowing them to pay a penalty for engines that temporarily are unable to meet the applicable emission standard, while removing any competitive advantage those technological laggards may have.
On September 5, 2012, EPA adopted final NCPs for heavy heavy-duty diesel engines that could be used by manufacturers of heavy-duty diesel engines unable to meet the current oxides of nitrogen (NOx) emission standard.  On December 11, 2013, the U.S. Court of Appeals for the District of Columbia Circuit issued an opinion vacating that Final Rule.  It issued its mandate for this decision on April 16, 2014, ending the availability of the NCPs for the current NOx standard, as well as vacating certain amendments to the NCP regulations due to concerns about inadequate notice.  In particular, the amendments revise the text explaining how EPA determines when NCP should be made available.  EPA is proposing to remove the vacated regulatory text specifying penalties, and re-proposing most of the other vacated amendments to provide fuller notice.  Finally, EPA is proposing a new 40 CFR 86.1103-2016 to replace the existing 40 CFR 86.1103-87.
  (a) Vacated Penalties
In EPA's regulations, NCP penalties are calculated from inputs specific to the standards for which NCPs are available.  The input values are specified in 40 CFR 86.1105-87.  EPA is proposing to remove paragraph (j) of this section which specifies the vacated inputs for the 2010 NOx emission standard.  EPA does not request comment on this change because this text has already been vacated by the Court.  Since all manufacturers are currently complying with these standards, the text also no longer has any purpose.
  (b) Re-proposed Text
The 2012 rule made amendments to four different sections in 40 CFR part 86.  The amendments to 40 CFR 86.1104-91 and 86.1113-87 were supported during the rulemaking and were not questioned in the Court's decision.  Nevertheless, these revisions were vacated along with the rest of the rule.  EPA is re-proposing these changes. Since we are proposing to vacate and restore the regulatory text, the proposal consists of leaving these sections of the regulations unchanged.
    (i) Upper Limits
The changes to 40 CFR 86.1104-91 affected the upper limit.  The upper limit (UL) is the emission level established by regulation above which NCPs are not available.  A heavy duty engine cannot use NCPs to be certified for a level above the upper limit.  CAA section 206(g)(2) refers to the upper limit as a percentage above the emission standard, set by regulation, that corresponds to an emission level EPA determines to be "practicable."  The upper limit is an important aspect of the NCP regulations not only because it establishes an emission level above which no engine may be certified using NCPs, but it is also a critical component of the cost analysis used to develop the penalty rates.  The regulations specify that the relevant costs for determining the COC50 and the COC90 factors are the difference between an engine at the upper limit and one that meets the applicable standards (see 40 CFR 86.1113-87).
The regulatory approach adopted under the prior NCP rules sets the upper limit at the prior emission standard when a prior emission standard exists and is then changed to become more stringent.  EPA concluded that this upper limit should be reasonably achievable by all manufacturers with engines or vehicles in the relevant class.  It should be within reach of all manufacturers of HD engines or HD vehicles that are currently allowed so that they can continue to sell their engines and vehicles while finishing their development of fully complying engines.  A manufacturer of a previously certified engine or vehicle should not be forced to immediately remove a HD engine or vehicle from the market when an emission standard becomes more stringent.  The prior emission standard generally meets these goals because manufactures have already certified their vehicles to that standard.
EPA proposes to revise the regulations in 40 CFR 86.1104-91 to clarify that EPA may set the upper limit at a level below the previous standard if we determine that the lower level is achievable by all engines or vehicles in the relevant subclass.  This was the case for the vacated NCP rule.  EPA also proposes that we may set the upper limit at a level above the previous standard in unusual circumstances, such as where a new standard for a different pollutant or other requirement effectively increases the stringency of the standard for which NCPs would apply.  This occurred for heavy heavy-duty engines with the 2004 standards.
    (ii) Payment of Penalties
The proposed changes to 40 CFR 86.1113-87 correct EPA organizational units and mail codes to which manufacturers must send information.  The previous information is no longer valid.
  (c) Criteria for the Availability of NCPs
Since the promulgation of the first NCP rule in 1985, subsequent NCP rules generally have been described as continuing "phases" of the initial NCP rule.  The first NCP rule (Phase I), sometimes referred to as the "generic" NCP rule, established three basic criteria for determining the eligibility of emission standards for nonconformance penalties in any given model year (50 FR 35374, August 30, 1985).  (For regulatory language, see 40 CFR 86.1103-87).  The first criterion is that the emission standard in question must become more difficult to meet.  This can occur in two ways, either by the emission standard itself becoming more stringent, or due to its interaction with another emission standard that has become more stringent.  Second, substantial work must be required in order to meet the emission standard.  EPA considers "substantial work" to mean the application of technology not previously used in that vehicle or engine class/subclass, or a significant modification of existing technology, in order to bring that vehicle/engine into compliance.  EPA does not consider minor modifications or calibration changes to be classified as substantial work.  Third, EPA must find that a manufacturer is likely to be noncomplying for technological reasons (referred to in earlier rules as a "technological laggard").  Prior NCP rules have considered such a technological laggard to be a manufacturer who cannot meet a particular emission standard due to technological (not economic) difficulties and who, in the absence of NCPs, might be forced from the marketplace.  During the 2012 rulemaking, some commenters raised issues relating to EPA's interpretation of these criteria:
         * The extent to which the criteria are intended to constrain EPA's ability to set NCPs
         * The timing for evaluating the criteria
         * The meaning of technological laggard
    (i) Constraints on EPA
Several commenters argued (implicitly or explicitly) that EPA cannot establish NCPs unless all of the regulatory criteria for NCPs (in 40 CFR 86.1103-87) are met.  Some went further to argue that EPA must demonstrate that the criteria are met.  However, the actual regulatory text has never stated that EPA may establish NCPs only if all criteria are met, but rather that EPA shall establish NCPs "provided that EPA finds" the criteria are met.  These criteria were included in the regulations to clarify that manufacturers should not expect EPA to initiate a rulemaking to establish NCPs where these criteria were not met.  Moreover, the regulations clearly defer to EPA's judgment for finding that the criteria are met.  While EPA must explain the basis of our finding, the regulatory language does not require us to prove or demonstrate that the criteria are met.
This interpretation is consistent with the text of the Clean Air Act, which places no explicit restrictions on when EPA can set NCPs.  In fact, it seems to create a presumption that NCPs will be available.  The Act actually requires EPA to allow certification of engines that do not meet the standard unless EPA determines the practicable upper limit to be equal to the new emission standard.
To address this confusion, the new proposed regulatory text would explicitly state that where EPA cannot determine if all of the criteria have been met, we may presume that they have.  In other words, EPA does not have the burden to prove they have been met.
    (ii) Timing for Evaluating Criteria
In order to properly understand the appropriate timing for evaluating each of the NCP criteria, it is necessary to understand the purpose of each.  When considered together, these criteria evaluate the likelihood that a manufacturer will be technologically unable to meet a standard on time.  However, when EPA initially proposed the NCP criteria, we noted that the first two criteria addressed whether there was a possibility for a technological laggard to develop.   When the first criterion is met, it creates the possibility for a technological laggard to exist.  When manufacturers must perform substantial work, it is possible that at least one will be unsuccessful and will become a laggard.  Thus, when evaluating these first two criteria, the purpose is to determine whether the standard created the possibility for a laggard to exist.  The third criterion is different because it asks whether that possibility has turned into a likelihood that a technological laggard has developed.  For example, a standard may become significantly more stringent and substantial effort might be required for compliance, but all manufacturers may be meeting the applicable standard.  In that situation, a technological laggard is not likely and penalties would be unnecessary.
In this context, it becomes clear that since the first two of these criteria are intended to address the question of whether a given standard creates the possibility for this to occur, they are evaluated before the third criterion that addresses the likelihood that the possibility will actually happen.  In most cases, it is possible to evaluate these criteria at the point a new standard is adopted.  This is the value of these criteria, that they can usually be evaluated long before there is enough information to know whether a technological laggard is actually likely.  For example, where EPA adopts a new standard that is not technology-forcing, but rather merely an anti-backsliding standard, EPA could determine at the time it is adopted that the second criterion is not met so that manufacturers would know in advance that no NCPs will be made available for that standard.
One question that arose in the 2012 rule involved how to evaluate the second criterion if significant time has passed and some work toward meeting the standard has already been completed.  To address this question, the proposed regulations would clarify that this criterion is to be evaluated based on actual work needed to go from meeting the previous standard to meeting the current standard, regardless of the timing of such changes.  EPA looks at whether "substantial work" is or was required to meet the revised standard at any time after the standard was issued  -  the important question is whether manufacturers who were using technology that met the previous standard would need to build upon that technology to meet the revised standard.  Other interpretations would seem to be directly contrary to the purpose of the statute, which is designed to allow technological laggards to be able to certify engines even if other manufacturers have met the standard.
    (iii) Technological Laggards
Questions also arose in 2012 about the meaning of the term "technological laggard".  While the regulations do not define "technological laggard", EPA has previously interpreted this as meaning a manufacturer who cannot meet the emission standard due to technological difficulties, not merely economic difficulties (67 FR 51464 - 51465, Aug. 8, 2002).  Some have interpreted this to mean that NCPs cannot be made available where a manufacturer tries and fails to meet a standard with one technology but knew that another technology would have allowed them to meet the standard.  In other words, that it made a bad business decision.  However, EPA's reference to "economic difficulties" applies where a technological path exists  -  at the time EPA is evaluating the third criterion  -  that would allow the manufacturer to meet the standard on time, but the manufacturer chooses not to use it for economic reasons.  The key question is whether or not the technological path exists at the time of the evaluation.  To address this confusion, the proposed regulations would clarify that where there is uncertainty about whether a failure to meet the standards is a technological failure, EPA may presume that it was.  Note that this does not mean that EPA might declare any failure to meet standards as a technological failure.  It would only apply where it is not clear.
     (1)  In-use Testing
EPA and manufacturers have gained substantial experience with in-use testing over the last four or five years.  This has led to important insights in ways that the test protocol can be adjusted to be more effective.  EPA is accordingly proposing to make the following changes to the regulations in 40 CFR part 86, subparts N and T:
* Revise the NTE exclusion based on aftertreatment temperature to associate the exclusion with the specific aftertreatment device that does not meet the temperature criterion.  For example, there should be no NOx exclusion if a diesel oxidation catalyst is below the temperature threshold.  EPA is also proposing to revise the exclusion to include accommodation of CO emissions when there is a problem with low temperatures in the exhaust.
* Clarify that exhaust temperatures should be measured continuously to evaluate whether those temperatures stay above the 250 °C threshold.
* Add specifications to describe where to measure temperatures for exhaust systems with multiple aftertreatment devices.
* Revise the requirement to accumulate shift-hours for a valid test result.  The original approach required manufacturers to aim for three shift-hours of operation in the NTE zone in a day, with a second day required if that was not achieved. EPA agrees with manufacturers that two hours of NTE operation is sufficient for successful data collection, and that a second day of operation with the same vehicle is not likely to be successful if the first day involved insufficient NTE operation.  EPA is therefore proposing to drop the requirement for the second day of testing with such a vehicle.
* Include a provision to add 0.00042 g/hp-hr to the PM measurement to account for PM emissions vented to the atmosphere through the crankcase vent.
* Increase the time allowed for submitting quarterly reports from 30 to 45 days after the end of the quarter.
     (2)  Miscellaneous Amendments to 40 CFR Part 86
As described elsewhere, EPA is proposing to make several changes to 40 CFR part 86.  This includes primarily the GHG standards for Class 2b and 3 heavy-duty vehicles in subpart S.   EPA is also proposing changes related to hearing procedures, adjustment factors for infrequent regeneration of aftertreatment devices, and the testing program for heavy-duty in-use vehicles.  In addition, EPA is proposing to make several minor amendments to 40 CFR part 86, subpart A.  One of these amendments is to revise 40 CFR 86.1823 to extend the default catalyst thermal reactivity coefficient for Tier 2 vehicles to also apply for Tier 3 vehicles.  This change was inadvertently omitted from the recent Tier 3 rulemaking.  EPA is also interested in a broader review of the appropriate default value for the catalyst thermal reactivity coefficient.  EPA would be interested in reviewing any available data related to this issue.  In any case, EPA would plan to revisit this question in the future.  EPA is also proposing several amendments to remove obsolete text, update cross references, and streamline redundant regulatory text.  For example, paragraph (f)(3) of Appendix I includes a duty cycle for heavy-duty spark-ignition engines that is no longer specified as part of the certification process.
     (3)  Applying 40 CFR Part 1068 to Heavy-duty Highway Engines and Vehicles
As part of the Phase 1 standards, EPA applied the exemption and importation provisions from 40 CFR part 1068, subparts C and D, to heavy-duty highway engines and vehicles.  EPA also specified that the defect reporting provisions of 40 CFR 1068.501 were optional.  In an earlier rulemaking, EPA applied the selective enforcement auditing under 40 CFR part 1068, subpart E (75 FR 22896, April 30, 2010).  EPA is proposing in this rule to adopt the rest of 40 CFR part 1068 for heavy-duty highway engines and vehicles, with certain exceptions and special provisions.
40 CFR part 1068 captures a range of compliance provisions that are common across our engine and vehicle programs.  These regulatory provisions generally provide the legal framework for implementing a certification-based program.  40 CFR part 1068 works in tandem with the standard-setting part for each type of engine/equipment.  This allows EPA to adopt program-specific provisions for emission standards and certification requirements for each type of engine/equipment while taking a uniform approach to the compliance provisions that apply generally.
Many of the provisions in 40 CFR part 1068 were originally written to align with the procedures established in 40 CFR part 85 and part 86.  EPA expects the following provisions from 40 CFR part 1068 to not involve a substantive change for heavy-duty highway engines and vehicles:
* Part 1068, subpart A, describes how EPA handles confidential information, how the Administrator may delegate decision-making within the agency, how EPA may enter manufacturers' facilities for inspections, what information manufacturers must submit to EPA, and how EPA may require testing or perform testing.  There is also a description of labeling requirements that apply uniformly for different types of engines/equipment.
* The prohibited acts, penalties, injunction provisions, and related requirements of 40 CFR 1068.101 and 1068.125 correspond to what is specified in Clean Air Act sections 203 through 207 (also see section 213(d)).
* 40 CFR 1068.103 describes how a certificate of conformity applies on a model-year basis.  With the exception of the stockpiling provisions in paragraph (f), as described below, these provisions generally mirror what already applies for heavy-duty highway engines.
* 40 CFR 1068.115 describes manufacturers' warranty obligations.  EPA is proposing to amend this section to more carefully conform to the warranty provisions in Clean Air Act section 207, as described below.  Note that EPA also includes a provision identifying the warranty requirements from Clean Air Act section 203(a)(4), which are specific to motor vehicles.
* 40 CFR 1068.120 describes requirements that apply for rebuilding engines.  This includes more detailed provisions describing how the rebuild requirements apply for cases involving a used engine to replace a certified engine.
* 40 CFR part 1068, subpart F, describes procedural requirements for voluntary and mandatory recalls.  As noted below, EPA is proposing to modify these regulations to eliminate a few instances where the part 1068 provisions differ from what is specified in 40 CFR part 86, subpart S.
* 40 CFR part 1068, subpart G, describes how EPA would hold a hearing to consider a manufacturer's appeal of an adverse compliance decision from EPA.  These procedures apply for penalties associated with violations of the prohibited acts, recall, nonconformance penalties, and generally for decisions related to certification.  As noted below, EPA is proposing to migrate these procedures from 40 CFR part 86, including an effort to align with EPA-wide regulations that apply in the case of a formal hearing.
Manufacturers are already required to use good engineering judgment in many cases related to certifying engines under 40 CFR part 86, Section 1068.5.
As noted above, the exemption provisions of 40 CFR part 86, subpart C, already apply for heavy-duty highway engines.  EPA is proposing to add a clarification that the exemption from the tampering prohibition for competition purposes does not apply to heavy-duty highway vehicles.  This aligns with the statutory provisions for the racing exemption.
EPA is proposing to require that manufacturers comply with the defect-reporting provisions in 40 CFR 1068.501.  Defect reporting under 40 CFR 1068.501 involves a more detailed approach for manufacturers to track possible defects and establishes thresholds to define when manufacturers must perform an investigation to determine an actual rate of emission-related defects.  These thresholds are scaled according to production volumes, which allows us to adopt a uniform protocol for everything from locomotives to lawn and garden equipment.  Manufacturers that also produce nonroad engines have already been following this protocol for several years.  These defect-reporting requirements are also similar to the rules that apply in California.
40 CFR part 1068 includes a definition of "engine" to clarify that an engine becomes subject to certification requirements when a crankshaft is installed in an engine block.  At that point, a manufacturer may not ship the engine unless it is covered by a certificate of conformity or an exemption.  Most manufacturers have opted into this definition of "engine" as part of the replacement engine exemption as specified in 40 CFR 85.1714.  We are proposing to make this mandatory for all manufacturers.  A related provision is the definition of "date of manufacture", which we use to establish that an engine's model year is also based on the date of crankshaft installation.  To address the concern that engine manufacturers would install a large number of crankshafts before new emission standards start to apply as a means of circumventing those standards, we state in 40 CFR 1068.103(f) that manufacturers must follow their normal production plans and schedules for building engines in anticipation of new emission standards.  In addition to that broad principle, we state that we will consider engines to be subject to the standards for the new model year if engine assembly is not complete within 30 days after the end of the model year with the less stringent standards (a longer time frame applies for engines with per-cylinder displacement above 2.5 liters).
40 CFR part 1068 also includes provisions related to vehicle manufacturers that install certified engines.  EPA states in 40 CFR 1068.105(b) that vehicle manufacturers are in violation of the tampering prohibition if they do not follow the engine manufacturers' emission-related installation instructions, we approve as part of the certification process.
40 CFR part 1068 also establishes that vehicles have a model year and that installing certified engines includes a requirement that the engine be certified to emission standards corresponding to the vehicle's model year.  An exception to allow for normal production and build schedules is described in 40 CFR 1068.105(a).  This "normal-inventory" allowance is intended to allow for installation of previous-tier engines that are produced under a valid certificate by the engine manufacturer shortly before the new emission standards start to apply.  Stockpiling such engines would be considered an unlawful circumvention of the new emission standards.  The range of companies and production practices is much narrower for heavy-duty highway engines and vehicles than for nonroad engines and equipment.  EPA is therefore proposing a further set of specifications to define or constrain engine-installation schedules that would be considered to fall within normal-inventory practices.  In particular, vehicle manufacturers are limited to three months of production, once new emission standards start to apply, to install previous-tier engines without EPA approval.  For any subsequent installation of previous-tier engines, EPA is proposing to require that vehicle manufacturers get EPA approval based on a demonstration that the excess inventory was a result of unforeseeable circumstances rather than circumvention of emission standards.  EPA is proposing that approval in those circumstances would be limited to a maximum of 50 engines to be installed for up to three additional months for a single vehicle manufacturer.
The existing prohibitions and exemptions in 40 CFR part 1068 related to competition engines and vehicles need to be amended to account for differing policies for nonroad and motor vehicle applications.  In particular, we generally consider nonroad engines and vehicles to be "used solely for competition" based on usage characteristics.  This allows EPA to set up an administrative process to approve competition exemptions, and to create an exemption from the tampering prohibition for products that are modified for competition purposes.  There is no comparable allowance for motor vehicles.  A motor vehicle qualifies for a competition exclusion based on the physical characteristics of the vehicle, not on its use.  Also, if a motor vehicle is covered by a certificate of conformity at any point, there is no exemption from the tampering and defeat-device prohibitions that would allow for converting the engine or vehicle for competition use.  There is no prohibition against actual use of certified motor vehicles or motor vehicle engines for competition purposes; however, it is not permissible to remove a motor vehicle or motor vehicle engine from its certified configuration regardless of the purpose for doing so.
It is relatively straightforward to apply the provisions of 40 CFR part 1068 to all engines subject to the criteria emission standards in 40 CFR part 86, subpart A, and the associated vehicles.  Manufacturers of comparable nonroad engines are already subject to all these provisions.  Class 2b and 3 heavy-duty vehicles subject to criteria emission standards under 40 CFR part 86, subpart S, are covered by a somewhat different compliance program.  EPA is therefore proposing to apply the provisions of 40 CFR part 1068 only as described in the next section for light-duty vehicles, light-duty trucks, medium-duty passenger vehicles, and chassis-certified Class 2b and 3 heavy-duty vehicles.
     (4)  Glider Kits
As noted in Sections III, and V the agencies are proposing not to exempt glider kits from the Phase 2 GHG emission and fuel consumption standards.   Gliders and glider kits are exempt from NHTSA's Phase 1 fuel consumption standards.  For EPA purposes, the CO2 provisions of Phase 1 in 40 CFR 1037.150 exempted gliders and glider kits produced by small businesses but did not include such a blanket exemption for other gliders and glider kits.  EPA is proposing to amend its rules applicable to engines installed in glider kits, a proposal which would affect emission standards not only for GHGs but for criteria pollutants as well.  NHTSA is also considering including gliders under its Phase 2 standards.  Finally, EPA believes glider manufacturers may not understand how existing EPA regulations apply to them, resulting in a number of uncertified vehicles.  Therefore, EPA is also proposing to clarify its requirements for certification and revise its definitions for glider manufacturers as described below.
  (d) Background under the Clean Air Act
EPA notes that under the anti-tampering provisions of the Clean Air Act, and EPA's regulatory requirements applicable to rebuilding engines (see 40 CFR 86.004-40), rebuilt engines must continue to comply with emissions standards applicable to the model year for which they were originally certified.  These regulations specifically apply to rebuilt engines independent of the vehicle into which they are installed or reinstalled. As a general matter, EPA has considered the question of whether the vehicle into which the rebuilt engine is installed is a "new motor vehicle" separately from the status of the engine.  The use of a rebuilt or other previously used engine in an otherwise newly manufactured vehicle (such as a glider kit) does not keep the vehicle from being "new" under the Clean Air Act.   Prior to MY 2014, EPA did not have separate (i.e., non-engine) standards for vehicles over 14,000 pounds GVWR.  However, EPA Phase 1 GHG vehicle standards apply for new MY 2014 and later vehicles over 14,000 pounds.  Thus, EPA generally considers glider kits to be subject to the Phase 1 vehicle standards.
However, with respect to engines installed in glider kits, an EPA Phase 1 provision in 40 CFR 1037.150(j) provided an exception allowing the use of used or rebuilt engines that were certified to model year 2013 or earlier (or model year 2015 or earlier for spark ignition engines).  The effect of this transition provision during Phase 1 was to allow glider kits to use engines not certified to meet the engine GHG or fuel consumption standards, although the glider kits were still required to have an EPA vehicle certificate with respect to GHG emissions.  In addition, another provision of Phase 1 in 40 CFR 1037.150(c) exempted gliders and glider kits produced by small businesses from the need to obtain a vehicle certificate, but did not include such a blanket exemption for other gliders and glider kits.  Thus, depending on the size of the business producing the glider kit, gliders and glider kits may currently be subject to the requirement to obtain a vehicle certificate prior to introduction into commerce as a new vehicle.
  (e) Proposed Amendment to EPA Vehicle Standards.
EPA is proposing to end both 40 CFR 1037.150 provisions.  EPA's proposed program would generally treat glider vehicles the same as other new vehicles.  As a result, glider vehicles would have to be certified to the Phase 2 vehicle standards, which (among other things) would require a fuel map for the actual engine in order to run GEM.  In other words, manufacturers producing glider kits would need to meet the applicable GHG vehicle standards and, as part of its compliance demonstration, would need to have a fuel map for each engine that would be used.
EPA is proposing this provision because we believe there has been adequate time for glider manufacturers to transition to a compliance regime.  Moreover, as noted more fully below, with increased numbers of glider kits being produced, perpetuation of the interim exemption from Phase 1 would turn a transition provision into an on-going loophole.  Nevertheless, EPA is proposing to replace this provision with a limited allowance for small manufacturers.
  (f) Proposed Change to EPA Engine Standards
EPA is also proposing to amend its rules to require that engines used in glider vehicles must be certified to the standards applicable to the calendar year in which assembly of the glider vehicle is completed.  This requirement would apply to all pollutants, and thus would encompass criteria pollutant standards as well as GHG standards.  Used or rebuilt engines could be used, as long as they had been certified to the same standards as apply for the calendar year of assembly.  For example, if assembly of a glider vehicle was completed in calendar year 2020, and the engine standards for model year 2020 were the same as for model years 2017 through 2019, then any model year 2017 or later engine could be used.
EPA is proposing to amend these rules because, with the advent in MY 2007 of more stringent HD diesel engine criteria pollutant standards, continuation of provisions allowing rebuilt and reused engines to meet earlier MY criteria pollutant standards results in unnecessarily high in use emissions.  GHG emissions from these engines also are controllable.  As more glider kits are produced, EPA believes that these emissions should be controlled to the same levels as other new engines.
Since EPA has already justified the criteria pollutant emission standards for heavy duty diesel engines pursuant to CAA section 202 (a)(3)(C), it is not clear that any further justification for applying those standards to engines used in glider kits is needed.  The GHG engine standards for Phase 1 have likewise already been justified, and the proposed Phase 2 standards' justification is set out in Section II above.  If any further justification is required, EPA notes that the emission benefits of applying current criteria pollutant standards would be substantial, and at low cost.  Glider vehicle production is not being reported to EPA, and we cannot determine precisely how much of an emission impact these vehicles are having.  Nevertheless, since the current standards for NOx and PM are at least 90 percent lower than the most stringent previously applicable standards, we can be certain that the NOx and PM emissions of any glider vehicles using pre-2007 engines are at least ten times as high as emissions from equivalent vehicles being produced with brand new engines. Thus, each glider vehicle that is purchased instead of a new vehicle with a current MY engine results in significantly higher in-use emissions.  These impacts are being compounded by the increasing sales of these vehicles. Estimates provided to EPA indicate that production of glider vehicles has increased by an order of magnitude from what it was in the 2004-2006 time frame  -  from a few hundred each year to thousands.  While the few hundred glider vehicles produced annually in the 2004-2006 timeframe may have been produced for arguably legitimate purposes such as salvaging powertrains from vehicles otherwise destroyed in accidents, EPA believes the tenfold increase in glider kit production since the MY 2007 criteria pollutant emission standards took effect reflects an attempt to circumvent these more stringent standards and the Clean Air Act.
The cost for manufacturers to comply with the vehicle-based GHG standards is similar for gliders as for other new vehicles.  Similar to EPA's analysis of emissions above, although we cannot precisely quantify the cost of complying with the proposed engine requirements for criteria pollutant standards because it is dependent on which engines would be used and which would have otherwise been used, EPA nevertheless believes that cost-effectiveness (dollars per ton) of the proposed requirement relative to any pre-2007 engine would be similar to the cost-effectiveness of the NOx and PM standards for current model year engines, which EPA has already found to be cost effective.
The agencies (as well as the broader SBAR Panel) are, however, concerned about adverse economic impacts on small businesses that assemble gliders and build glider kits, and we recognize that production of a smaller number of gliders  by these small manufacturers may be appropriate for salvaged engines or other noncircumvention purposes.   Therefore, EPA is proposing a new provision that would preserve its regulatory status quo for existing small businesses, but cap annual production based on recent sales.  Thus, a limited number of glider kits produced by small businesses would not have to meet the GHG vehicle standards, and could use rebuilt or used engines provided those engines were certified to the year of the engine's manufacture.  For example, an existing small business that produced between 100 and 200 glider vehicles per year would be allowed to produce up to 200 glider vehicles per year under without having to certify them to the GHG standards, or re-certifying the engines to the now-applicable EPA standards for criteria pollutants and GHGs (so long as the engine is certified to criteria pollutant standards for the year of its manufacture). To be eligible for this provision, EPA is also proposing that no small entity could produce more than 300 glider vehicles in any given model year without certifying (or recertifying) to any  EPA standards.  EPA believes that this level reflects the upper end of the range of production that occurred before significant circumvention of the 2007 criteria pollutant standards began.  We request comment on the appropriate caps and on whether any other special provisions would be needed to accommodate glider kits.
  (g) Lead Time for Amended Standards
EPA is proposing that this requirement for gliders to meet engine and vehicle standards applicable to other new vehicles and engines take effect in MY 2018.  EPA believes this provides sufficient time to "permit the development and application of the requisite control measures" (CAA section 202 (a)(3)(D)) because compliant engines are available today, although manufacturers would need several months to change business practices to comply.
  (h) Legal authority and Definitions under the Clean Air Act
With respect to statutory authority under the Clean Air Act, EPA notes first that it has broad authority to control all pollutant emissions from "any" rebuilt heavy duty engines (including engines beyond their statutory useful life).  See CAA section 202 (a)(3)(D).  EPA is to give "appropriate" consideration to issues of cost, energy, and safety in developing such standards, and to provide necessary lead time to implement those standards.  As noted above, if a used engine is placed in a glider kit, the engine would be considered a "new motor vehicle engine" because it is being used in a new motor vehicle (as explained in the following paragraph).  See CAA section 216 (3).  With respect to the vehicle-based GHG standards, there is no question that the completed glider is a "motor vehicle" under the Clean Air Act (as well as under NHTSA's safety provisions).    Some in the trucking industry have questioned whether a glider kit (without an engine) is a motor vehicle.  However, EPA considers glider kits to be incomplete motor vehicles, and EPA has the authority to regulate incomplete motor vehicles, including unmotorized chassis.
Under the CAA, it is also important that "new" is determined based on legal title and does not consider prior use.  Thus, glider kits that have a new vehicle identification number (VIN) and new title are considered to be "new motor vehicles" even if they incorporate previously used components.  Note that EPA under the Clean Air Act would not consider the fact that a vehicle retained the VIN of the donor vehicle from which the engine was obtained determinative of whether or not the vehicle is new.
The CAA also defines "manufacturer" to include any person who assembles new motor vehicles.  EPA is proposing to revise its regulatory definitions of these terms in 40 CFR 1036.801 and 1037.801 to more clearly reflect these aspects of the CAA definitions  -  that glider kits are "new motor vehicles", previously used engines (whether rebuilt or not) installed into glider kits are "new motor vehicle engines", and any person who completes assembly of a glider is a "manufacturer".  EPA also notes that under the existing 40 CFR 1037.620, glider kit assemblers would generally be considered to be secondary vehicle manufacturers.  That section, which EPA is proposing to redesignate as 40 CFR 1037.622, allows secondary vehicle manufacturers that have a valid certificate or exemption to receive incomplete vehicles (such as glider kits) from OEMs.
  (i) Relation to NHTSA Fuel Efficiency Program
As stated above, NHTSA is considering including gliders under its Phase 2 standards.  However, NHTSA may consider limiting the conditions for which manufacturers may use or qualify components as used.  NHTSA seeks comments from glider manufacturers on this consideration.
We note that the agencies potentially having different policies for glider vehicles under the Phase 2 program would not result in significant disharmony between the NHTSA and EPA programs because of the small number of vehicles that would be involved.  EPA believes that its proposed changes would result in the glider market returning to the pre-2007 levels in which fewer than 1,000 glider vehicles would be produced in most years.  A large fraction of these vehicles would be exempted from EPA regulations because they would be produced by qualifying small businesses, and thus would be treated the same under EPA and NHTSA regulations.  Only non-exempt glider vehicles would be subject to different requirements under the NHTSA and EPA regulations.  However, this is unlikely to exceed a few hundred vehicles in any year, which would be few enough not to result in any meaningful disharmony between the two agencies.

B.  Applying the General Compliance Provisions of 40 CFR Part 1068 to Light-Duty Vehicles, Light-Duty Trucks, Chassis-certified Class 2b and 3 Heavy-Duty Vehicles and Highway Motorcycles
As described above, EPA is proposing to apply all the general compliance provisions of 40 CFR part 1068 to heavy-duty engines and vehicles.  EPA proposes to also apply the recall provisions and the hearing procedures from 40 CFR part 1068 for highway motorcycles and for all vehicles subject to standards under 40 CFR part 86, subpart S.  See the preceding section for a description of how the provisions from 40 CFR part 1068 compare to those in 40 CFR part 85 and part 86.
EPA also requests comment on applying the rest of the provisions from 40 CFR part 1068 to highway motorcycles and to all vehicles subject to standards under 40 CFR part 86, subpart S.  EPA particularly requests comment on applying the defect-reporting provisions in 40 CFR 1068.501 to these vehicles.  The general approach is to replace a fixed threshold of 25 defects as the basis for defect reporting with a scaled approach that would require defect reporting only after the manufacturer finds some larger number of actual emission-related defects.  The regulation calls for manufacturers to monitor possible emission-related defects as evidenced by warranty claims, in-use testing, and other indicators, and to start investigating for actual defects once possible defects exceed an established threshold.  The existing regulation in 40 CFR 1068.501 generally calls for investigating once possible defects exceed 5 to 10 percent of production, with a requirement to report defects if confirmed defects exceed a rate of 1 to 2 percent of production.  The percentage thresholds that apply for a given engine/vehicle model decrease with increasing production volumes.  This approach is similar to defect-reporting requirements that already apply in California.  Manufacturers may be interested in complying with a single set of defect-reporting provisions nationwide; EPA therefore also requests comment on simply requiring manufacturers to follow the California defect-reporting scheme for their EPA-certified vehicles.
Note that EPA is proposing to amend 40 CFR 85.1701 to specify that the exemption provisions apply to heavy-duty engines subject to regulation under 40 CFR part 86, subpart A.  This is intended to limit the scope of this provision so that it does not apply for Class 2b and 3 heavy-duty vehicles subject to standards under 40 CFR part 86, subpart S.  This change corrects and inadvertently broad reference to heavy-duty vehicles in 40 CFR 85.1701.
C.  Amendments to General Compliance Provisions in 40 CFR Part 1068
The general compliance provisions in 40 CFR part 1068 apply broadly too many different types of engines and equipment.  This section describes how EPA is proposing to amend these procedures to make various corrections and adjustments.
     (1)  Hearing Procedures
EPA is proposing to update and consolidate its regulations related to formal and informal hearings in 40 CFR part 1068, subpart G.  This will allow us to rely on a single set of regulations for all the different categories of vehicles, engines, and equipment that are subject to emission standards.  EPA also made an effort to write these regulations for improved readability.
The hearing procedures specified in 40 CFR part 1068 apply to the various categories of nonroad engines and equipment (along with the other provisions of part 1068).  EPA is proposing in this rule to apply these hearing procedures also to heavy-duty highway engines, light-duty motor vehicles, and highway motorcycles.  EPA believes there is no reason to treat any of these sectors differently regarding hearing procedures.
EPA is proposing an introductory section that provides an overview of requesting a hearing for all cases where a person or a company objects to an adverse decision by the agency.  In certain circumstances, as spelled out in the regulations, a person or a company can request a hearing before a Presiding Officer.  Statutory provisions require formal hearing procedures for administrative enforcement actions seeking civil penalties.  The Clean Air Act does not require a formal hearing for other agency decisions; EPA is therefore proposing to specify that informal hearing procedures apply for all such decisions.
The introductory section also adds detailed provisions describing the requirements for submitting information to the agency in a timely manner.  These provisions accommodate current practices for electronic submission, distinguish between postal and courier delivery and provide separate requirements for shipments made from inside and outside the United States.  The specified deadlines are generally based on the traditional approach of a postmark determining whether a submission is timely or not.  Fax, e-mail and courier shipments are similarly specified as needing to be sent by close of business on the day of the deadline.  A different approach applies for shipments originating from outside the United States.  Because time in transit can vary dramatically, we are proposing to specify that foreign shipments need to be received in our office by the specified deadline to be considered timely.  Given the option to send documents by e-mail or by fax, EPA expects this approach would not pose any disadvantage to anyone making an appeal from outside the United States.
EPA is proposing to replace the current reference to 40 CFR 86.1853-01 for informal hearings with a full-text approach that captures this same material.  EPA attempted to write these proposed regulations in a way that would not change the underlying hearing protocol.
The regulations currently reference the formal hearing procedures in 40 CFR 85.1807, which were originally drafted to apply to light-duty motor vehicles.  After we adopted the hearing procedures in 40 CFR 85.1807, EPA's Office of Administrative Law Judges finalized a set of regulations defining formal hearing procedures that were intended to apply broadly across the agency for appeals under every applicable statute.  See 40 CFR part 22, "Consolidated Rules of Practice Governing the Administrative Assessment of Civil Penalties and the Revocation/Termination or Suspension of Permits."  EPA is therefore revising the regulations in 40 CFR part 1068 to simply refer to these formal hearing procedures in 40 CFR part 22.
     (2)  Miscellaneous Changes
EPA is also proposing to make numerous changes across 40 CFR part 1068 to correct errors, to add clarification, and to make adjustments based on lessons learned from implementing these regulatory provisions.  This includes the following proposed changes:
* §1068.1: Clarify applicability of part 1068 with respect to legacy parts (such as 40 CFR parts 89 through 94).
* §1068.20: Clarify that EPA's inspection activities do not depend on having a warrant or a court order.  As noted in the standard-setting parts, EPA may deny certification or suspend or revoke certificates if a manufacturer denies EPA entry for an attempted inspection or other entry.
* §1068.27: Clarify that EPA confirmatory testing may properly be performed before issuance of a certificate of conformity.  We are also making an addition to state that we may require manufacturers to give us any special components that are needed for EPA testing.
* §1068.30: Add definitions of "affiliated companies", "parent company", and "subsidiaries" to clarify how small-business provisions apply for a range of business relationships.
* §1068.30: Clarify that a manufacturer can be considered a certificate holder based on the current or previous model year (to avoid problems from having a gap between model years).
* §1068.30: Spell out contact information for the "Designated Compliance Officer" to clarify how manufacturers should submit information to the agency.  This includes e-mail addresses for the various sectors.
* §1068.32: Add discussion to establish the meaning of various terms and phrases for EPA regulations; for example, we distinguish between standards, requirements, allowances, prohibitions, and provisions.  EPA is also clarifying terminology with respect to singular/plural, inclusive lists, notes and examples in the regulatory text, and references to "general" or "typical" circumstances.  EPA also describes some of the approach to determining when "unusual circumstances" apply.
* §1068.45: Allow manufacturers to use coded dates on engine labels; allow EPA to require the manufacturer to share information to read the coded information.
* §1068.45: Clarify that engine labels are information submissions to EPA.
* §§1068.101 and 1068.125: Update penalty amounts to reflect changes to 40 CFR part 19.
* §1068.101: Revise the penalty associated with the tampering prohibition to be an engine-based penalty, as opposed to assessing penalties per day of engine operation.  This correction aligns with Clean Air Act section 205.
* §1068.103: Clarify the process for reinstating certificates after suspending, revoking, or voiding.
* §1068.103: Clarify that the prohibition against "offering for sale" uncertified engines applies only for engines already produced.  It is not a violation to invite customers to buy engines as part of an effort to establish the economic viability of producing engines, as would be expected for market research.
* §1068.105: Require documentation related to "normal inventory" for stockpiling provision.  EPA is also clarifying that there is no specific deadline associated with producing "normal-inventory" engines under this section, but emphasizing that vehicle/equipment manufacturers may not delay engine installation beyond their normal production schedules.  EPA is also clarifying that the allowance related to building vehicles/equipment in the early part of a model year, before the start of a new calendar year corresponding to new emission standards, applies only in cases where vehicle/equipment assembly is complete before the start of the new calendar year.  This is intended to prevent manufacturers from circumventing new standards by initiating production of large numbers of vehicles/equipment for eventual completion after new standards have started to apply.
* §1068.115: Clarify warranty provisions to align with statute.
*  §1068.120: Describe how the rebuilding provisions apply in the case of engine replacements where the new and old engines are subject to standards under different standard-setting parts (such as switching from spark-ignition to compression-ignition nonroad engines).
* §1068.201: Describe how someone may sell an engine under a different exemption than was originally intended or used.
* §1068.210: Remove the requirement for companies getting approval for a testing exemption to send us written confirmation that they meet the terms and conditions of the exemption.  We do not believe this submission is necessary for implementing the testing exemption.
* §1068.220: Add description of how we might approve engine operation under the display exemption.  This is intended to more carefully address circumstances in which engine operation is part of the display function in question.  We would want to consider a wide range of factors in considering such a request; for example, we could be more inclined to approve a request for a display exemption if the extent of operation is very limited, or if the engine/equipment has emission rates that are comparable to what would apply absent the exemption. EPA is also removing the specific prohibition against generating revenue with exempted engines/equipment, since this has an unclear meaning and we can take any possible revenue generation into account in considering whether to approve the exemption on its merits.
* §1068.230: Add provision allowing for engine operation under the export exemption only as needed to prepare it for export (this has already been in place in part 85, and in part 1068 for engines/equipment imported for export).
* §1068.235: Clarify that the standard-setting part may set conditions on an exemption for competition engines/equipment.
* §1068.240: Describe the logistics for identifying the disposition of engines being replaced under the replacement engine exemption.  In particular, manufacturers would need to identify the disposition of each engine by the due date for the report under §1068.240(c) to avoid counting them toward the production limit for untracked replacement engines.  We are proposing to delay the due date for the report until September 30 following the production year to allow more time for manufacturers to make these determinations.
* §1068.240: Clarify the relationship between paragraphs (d) and (e).
* §1068.250: Simplify the deadline for requesting small-volume hardship.
* §1068.255: Clarify that hardship provisions for equipment manufacturers are not limited to small businesses, and that a hardship approval is generally limited to a single instance of producing exempt equipment for up to 12 months.
* §1068.260: State that manufacturers shipping engines without certain emission-related components need to identify the unshipped components either with a performance specification (where applicable) or with specific part numbers.  We are also listing exhaust piping before and after aftertreatment devices as not being emission-related components for purposes of shipping engines in a certified configuration.
* §1068.262: Revise text to align with the terminology and description adopted for similar circumstances related to shipment of incomplete heavy-duty vehicles under 40 CFR part 1037.
* §1068.305: Remove the provision specifying that individuals may need to submit taxpayer identification numbers as part of a request for an exemption or exclusion for imported engines/equipment.  We do not believe this information is necessary for implementing the exemption and exclusion provisions.
* §1068.315: Allow for destroying engines/equipment instead of exporting them under the exemption for importing engines/equipment for repairs or alterations.
* §1068.315: Remove the time constraints on approving extensions to a display exemption for imported engines/equipment.  EPA would continue to expect the default time frame of one year to be appropriate, and extension of one to three years is sufficient for most cases; however, we are aware that there are occasional circumstances calling for a longer-term exemption.  For example, an engine on display in a museum might appropriately be exempted indefinitely once its place in a standing exhibition is well established.
* §1068.315: Specify that engines under the ancient engine exemption must be substantially in the original configuration.
* §1068.360: Clarify the provisions related to model year for imported products by removing a circularity regarding "new" engines and "new" equipment.
* §1068.401: Add explicit statement that SEA testing is at manufacturer's expense.  This is consistent with current practice and the rest of the regulatory text.
* §1068.401: Allow for requiring manufacturers other than the certificate holder to perform selective enforcement audits in cases where multiple manufacturers are cooperatively producing certified engines.
* §1068.401: State that SEA non-cooperation may lead to suspended or revoked certificate (like production-line testing).
* §1068.415: Set up new criteria for lower SEA testing rate based on engine power to allow for a reduced testing rate of one engine per day only for engines with maximum engine power above 560 kW, but keep the allowance to approve a lower testing rate; that may be needed, for example, if engine break-in (stabilization) and testing are performed on the same dynamometer.  EPA believes it is more appropriate to base reduced testing rates on engine characteristics rather than sales volumes, as has been done in the past.
* §1068.415: Revise the service accumulation requirement to specify a maximum of eight days for stabilizing a test engine.  This is necessary to address a situation where an engine operates only six hours per day to achieve stabilization after well over 50 hours.  For such cases, we would expect manufacturers to be able to run engines much more than six hours per day.  As with testing rates, manufacturers may ask for our approval to use a longer stabilization period if circumstances don't allow them to meet the specified service accumulation targets.
* §1068.501, and Appendix I: Clarify that "emission-related components" include components whose failure would commonly increase emissions (not might increase), and whose primary purpose is to reduce emissions (not sole purpose); current regulations are not consistent.
* §1068.501: Add "in-use testing" to list of things to consider for investigating potential defects.
* §1068.505: Clarify that manufacturers subject to a mandatory recall must remedy noncompliant target vehicles without regard to their age or mileage at the time of repair, consistent with provisions that already apply under 40 CFR part 85.
* §1068.505: Revise the requirement for submitting a remedial report from a 60-day maximum to a 45-day minimum (or 30-day minimum in the event of a hearing). This adjusted approach already applies to motor vehicles under 40 CFR part 85.
* §1068.515: Clarify an ambiguity to require that manufacturers identify the facility where repairs or inspections are performed.
* §1068.530: Specify that recall records must be kept for five years, rather than three years.  This is consistent with longstanding recall policy for motor vehicles and motor vehicle engines under 40 CFR part 85.