References to California LEV II Program Throughout this preamble, we make reference to California's LEV II program and its requirements. The LEV II program was approved by the California ARB at a hearing of November 5, 1998. Numerous draft documents were prepared by ARB staff in advance of that hearing and made available to the public. Those documents were referenced in our NPRM and included in the docket. Some of those documents were modified as a result of changes to the proposed program made at the hearing and due to comments received after the hearing. ARB prepared final documents without significant change. The final program was approved by California's Office of Administrative Law on October 28, 1999 and filed with the Secretary of State to become effective on November 27, 1999. We have placed copies of the latest available documents, some of which we used in the preparation of this final rule, in the docket. You may also obtain these documents and other information about California's LEV II program from ARB's web site: ( www. arb. ca. gov/ regact/ levii/ levii. htm). In the regulatory text that follows this preamble, we incorporate by reference a number of documents related to LEVII and California test procedures under VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00037 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6734 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 54 These bins are unlikely to be used in the Federal program because they contain the same NOX standard as the Federal bins, but contain more stringent NMOG standards than the Federal bins. These bins, which provide extra opportunity for a manufacturer to gain NMOG credits in California are not needed or useful in the Federal program where there is no NMOG corporate average standard. The two deleted bins are bin 4 from the proposed Tier 2 bins and bin 3 from the proposed interim bins for LDV/ LLDTs. Dropping these bins does not affect harmonization with California standards because the federal program includes bins having the same NOX standard with higher NMOG standards. LEVII. These documents are available in the docket for today's rulemaking.

b. Corporate Average NOX Standard The program we are finalizing today will ultimately require each manufacturer's average full life NOX emissions over all of its Tier 2 vehicles to meet a NOX standard of 0.07 g/ mi each model year. Manufacturers will have the flexibility to certify Tier 2 vehicles to different sets of exhaust standards that we refer to as `` bins,'' but will have to choose the bins so that their corporate sales weighted average full life NOX level for their Tier 2 vehicles is no more than the 0.07 g/ mi. ( We discuss the bins in the next subsection.) A corporate average standard enables the program's air quality goals to be met while allowing manufacturers the flexibility to certify some models above and some models below the standard. Manufacturers can apply technology to different vehicles in a more costeffective manner than under a single set of standards that all vehicles have to meet. Each manufacturer will determine its year end corporate average NOX level by computing a sales weighted average of the full life NOX standards from the various bins to which it certified any Tier 2 vehicles. The manufacturer will be in compliance with the standard if its corporate average NOX emissions for its Tier 2 vehicles meets or falls below 0.07 g/ mi. In years when a manufacturer's corporate average is below 0.07 g/ mi, it can generate credits. It can trade ( sell) those credits to other manufacturers or use them in years when its average exceeds the standard ( i. e. when the manufacturer runs a deficit). The averaging program is described in detail in later text.

c. Tier 2 Exhaust Emission Standard `` Bins''

We are finalizing a Tier 2 bin structure having eight emission standards bins ( bins 1   8), each one a set of standards to which manufacturers can certify their vehicles. Table IV. B.   2a shows the full useful life standards that will apply for each bin in our final Tier 2 program, i. e. after full phase in occurs for all LDVs and LDTs. Two additional bins, bins 9 and 10, will be available only during the interim program and will be deleted before final phase in of the Tier 2 program. Table IV. B.   2b shows all the bins from Table IV. B.   2a and also shows extra bins and higher available standards for certain pollutants that are available prior to full Tier 2 phase in. An eleventh bin, only for MDPVs is discussed in section IV. B. 4. g. Many bins have the same values as bins in the California LEV II program as a means to increase the economic efficiency of the transition to as well as model availability. Further, we added bins that are not a part of the California program to modestly increase the flexibility of the program for manufacturers without compromising air quality goals. As discussed in Section IV. B. 4. below, we believe these extra bins will help provide incentives for manufacturers to produce vehicles with emissions below 0.07 g/ mi NOX. The two highest of the ten bins shown in Table IV. B. 2b. are designed to provide flexibility only during the phase in years and will terminate after the standards are fully phased in, leaving eight bins in place for the duration of the Tier 2 program. The NPRM full life standards contained seven Tier 2 bins as well as two separate tables of bins for interim vehicles. We proposed that manufacturers would be able to use all the bins during the phase in years regardless of whether they were certifying Tier 2 vehicles or interim vehicles. The program we are finalizing today: · Combines the bins from the NPRM; · Omits two bins that were included in the NPRM for harmony with California but which are unlikely to be used; 54; · Adds 2 bins to increase compliance flexibility without reducing environmental benefits; · Adds a temporary bin only for MDPVs that expires after 2008. This bin is in addition to the 10 bins shown in tables of bins in this preamble; · Establishes a PM value for the highest bin available during the interim program ( bin 10) that is more stringent than the corresponding standard in the NLEV program; · Provides temporary higher NMOG standards that expire after 2006 for certain interim LDT2s and LDT4s produced by qualifying manufacturers. Tables IV. B.   2a and 2b show the bins for full life standards. Table IV. B.   2b is repeated later in the text where intermediate life standards are also shown. These tables omit the temporary bin for MDPVs. This bin is usable only by MDPVs and is addressed separately in section IV. B. 4. g.

TABLE IV. B.   2A.   FINAL TIER 2 LIGHT DUTY FULL USEFUL LIFE EXHAUST EMISSION STANDARDS [ Grams per mile]

Bin No. NOX NMOG CO HCHO PM 8 ............................................................................................................... 0.20 0.125 4.2 0.018 0.02 7 ............................................................................................................... 0.15 0.090 4.2 0.018 0.02 6 ............................................................................................................... 0.10 0.090 4.2 0.018 0.01 5 ............................................................................................................... 0.07 0.090 4.2 0.018 0.01 4 ............................................................................................................... 0.04 0.070 2.1 0.011 0.01 3 ............................................................................................................... 0.03 0.055 2.1 0.011 0.01 2 ............................................................................................................... 0.02 0.010 2.1 0.004 0.01 1 ............................................................................................................... 0.00 0.000 0.0 0.000 0.00 VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00038 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6735 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 55 In the NPRM, we proposed that hydrocarbon standards would be measured in terms of `` nonmethane organic gases'' ( NMOG) regardless of fuel. For reasons explained elsewhere in this preamble we will permit non methane hydrocarbons ( NMHC) as an option in the final rule for all fuels except alcohol fuels and compressed natural gas . NMHC and NMOG are very similar for gasoline and diesel fuel emissions. TABLE IV. B.   2B.   TIER 2 LIGHT DUTY FULL USEFUL LIFE EXHAUST EMISSION STANDARDS   INCLUDING BINS APPLICABLE DURING INTERIM PROGRAM ONLY [ Grams per mile]

Bin No. NOX NMOG CO HCHO PM Comments 10 ................................................ 0.6 0.156/ 0.230 4.2/ 6.4 ......... 0.018/ 0.027 0.08 a b c d 9 .................................................. 0.3 0.090/ 0.180 4.2 ............... 0.018 ........... 0.06 a b c 8 .................................................. 0.20 0.125/ 0.156 4.2 ............... 0.018 ........... 0.02 b f Notes: a Bin deleted at end of 2006 model year ( 2008 for HLDTs). b The higher of the two temporary NMOG, CO and HCHO values apply only to HLDTs. c An additional higher temporary bin restricted to MDPVs is discussed in section IV. B. 4. g. d Optional temporary NMOG standard of 0.280 g/ mi applies for qualifying LDT4s and MDPVs only, see text. e Optional temporary NMOG standard of 0.130 g/ mi applies for qualifying LDT2s only, see text. fHigher temporary NMOG value of 0.156g/ mi deleted at end of 2008 model year.

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

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

BILLING CODE 6560   50   P VerDate 27< JAN> 2000 23: 06 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00039 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm01 PsN: 10FER2 6736 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations BILLING CODE 6560   50   C As described in detail in the Response to Comments document, the Alliance proposal would have delayed final implementation of Tier 2 standards until 2011. We are not adopting the Alliance's time schedule, because we believe the shorter schedule we proposed is feasible and that there is no reason to delay the final benefits of the Tier 2 standards. In fact, numerous commenters representing state, environmental and health groups argued that our original proposal gave manufacturers too much time to bring the HLDTs into line with LDVs and LLDTs. We believe the two extra years proposed in the NPRM remain appropriate. HLDTs will face greater challenges than LDVs/ LLDTs because their emission control systems will need to be durable under potentially heavier loads and tougher operating conditions than LDV/ LLDTs. Their sales are small relative to the rest of the light duty fleet ( they will comprise about 14% of the light duty fleet in 2004), and they will benefit from industry experience with the lighter vehicles. In addition, HLDTs will not remain at high Tier 1 levels until they phase in to Tier 2. Rather, they will have to meet interim standards that impose a NOX cap of 0.60 g/ mi and phase in a corporate average NOX standard of 0.20 g/ mi. These standards represent a significant reduction from VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00040 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6737 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 56 Under Tier 1 standards, LDT3s are subject to a 0.98 g/ mi NOX standard while LDT4s are subject to an even higher NOX standard of 1.53 g/ mi. 57 The NLEV program imposes NMOG average standards that translate into full useful life NOX levels of about 0.3 g/ mi for LDV/ LDT1s and 0.5 g/ mi for LDT2s. 58 The NLEV program does not impose average NOX standards, but the NMOG average standards that it does impose will lead to full useful life NOX levels of about 0.3 g/ mi for LDV/ LDT1s. applicable Tier 1 standards. 56 Interim standards are discussed in detail later in this preamble.

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

ii. Implementation Schedule for Tier 2 HLDTs The Tier 2 phase in schedule for HLDTs is also being finalized as proposed. The phase in for final Tier 2 standards for HLDTs will start later and end later than that for LDVs and LLDTs. Fifty percent of each manufacturer's HLDTs must meet Tier 2 standards in 2008, and 100 percent must meet Tier 2 standards in 2009. As with the LDV/ LLDTs, the Tier 2 HLDTs must meet a corporate average NOX standard of 0.07 g/ mi. This delayed phase in schedule:

· Provides significant interim emission reductions starting in 2004 ( discussed separately below); · Recognizes the relatively high emission standards that currently apply to HLDTs; · Provides manufacturers with adequate lead time before they must bring HLDTs into compliance with final Tier 2 standards; · Provides manufacturers the opportunity to apply and evaluate Tier 2 technology on LDV/ LLDTs before having to apply it to HLDTs; and · Provides manufacturers the opportunity to apply and evaluate Tier 2 technology on HLDTs on a relatively small scale to meet California LEV II requirements before having to apply it to HLDTs nationwide. As with the LDV/ LLDTs above, to encourage early introduction of Tier 2 HLDTs and to provide manufacturers with greater flexibility, we are finalizing provisions to permit manufacturers to generate early Tier 2 NOX credits and to use alternative phase in schedules that still result in 100% phase in by 2009. ( See sections IV. B. 4. d. iv. and IV. B. 4. b. ii, respectively, below.)

e. Interim Standards The interim standards discussed below are a major source of emission reductions in the early years of the vehicle control program. The NOX emission standards for LDT2s and LDT4s, which comprise about 40 percent of the fleet, are more stringent than the corresponding standards in the NLEV and CAL LEV I programs. These standards also are important because they set the stage for a smooth transition to the final Tier 2 standards. The two groups of vehicles ( LDV/ LLDTs and HLDTs) will be approaching the Tier 2 standards from quite different emission `` backgrounds''. LDV/ LLDTs will be at NLEV levels, which require NOX emissions of either 0.3 or 0.5g/ mi on average, 57 while HLDTs will be at Tier 1 levels facing NOX standards of either 0.98 or 1.53 g/ mi, depending on truck size. These Tier 1 NOX levels for HLDTs are very high ( by a factor of 14   22) relative to our 0.07 g/ mi Tier 2 NOX average. To address the disparity in emission `` backgrounds'', while gaining air quality benefits from vehicles during the phase in period, we proposed and are finalizing separate interim average NOX standards for the two vehicle groups during the phase in period. The provisions described below will apply in 2004 for all LDVs and LDTs not certified to Tier 2 standards. The relationship of the interim programs to the final Tier 2 standards is shown in Table IV. B   3. Interim vehicles will certify to the same bins as Tier 2 vehicles. As described earlier in this preamble, we have merged the tables of bins from the NPRM for simplicity and added a few bins. Bins 9 and 10 were drawn from the tables of interim bins in the NPRM, and are intended only for use during the phase in years. Therefore, these two bins will be discontinued after 2006 ( 2008 for HLDTs).

i. Interim Exhaust Emission Standards for LDV/ LLDTs Beginning with the 2004 model year, all new LDVs, LDT1s and LDT2s not incorporated under the Tier 2 phase in will be subject to an interim corporate average NOX standard of 0.30 g/ mi. This is effectively the LEV NOX emission standard for LDVs and LDT1s under the NLEV program. 58 This interim program will hold LDVs and LLDTs to NLEV levels if they are not yet subject to Tier 2 standards during the phase in. By implementing these interim standards for LDVs and LLDTs we will ensure that the accomplishments of the NLEV program continue. Additionally, this program will bring about substantial and important NOX emission reductions from LDT2s in the early years of the program. LDT2s will be held to a 0.3 g/ mi NOX average in contrast to a 0.5 g/ mi average in the NLEV program. Because the Tier 2 standards are phased in beginning in the 2004 model year, the interim standards for LDVs and LLDTs apply to fewer vehicles each year, i. e., they are `` phase out'' standards. Table IV. B   2 shows the maximum percentage of LDVs and LLDTs subject to the interim standards each year   75% in 2004, 50% in 2005, 25% in 2006 and 0% in 2007. As mentioned above, the interim program for LDV/ LLDTs is designed to hold these vehicles to the NLEV NOX level for LDVs and LDT1s, and a few of our bins are derived from the NLEV program. Our proposal to bring LDT2s into line with the LDVs and LDT1s during the interim program by requiring all LDVs, LDT1s and LDT2s to meet the same average NOX standard ( 0.30) g/ mi was of concern to industry commenters. In the final rule, we are retaining this requirement, but we are providing an optional NMOG standard of 0.130 for LDT2s certified to bin 9 when the manufacturers of those LDT2s elect to bring all of their 2004 model year VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00041 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6738 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 59 In the Tier 1 program, exhaust hydrocarbon standards are in terms of NMHC, not NMOG. However, as we have explained elsewhere in this preamble, NMHC and NMOG results are very similar for gasoline and diesel fueled vehicles. HLDTs under our interim program and phase 25% of those HLDTs into the 0.20 g/ mi average NOX standard. ( See ii. below). These provisions are discussed in detail below and also in the Response to Comments document.

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

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

f. Generating, Banking, and Trading NOX Credits As proposed in the NPRM and finalized in this notice, manufacturers will be permitted to average the NOX emissions of their Tier 2 vehicles and comply with a corporate average NOX standard. In addition, when a manufacturer's average NOX emissions fall below the corporate average NOX standard, it can generate NOX credits for later use ( banking) or to sell to another manufacturer ( trading). NOX credits will be available under the Tier 2 standards, the interim standards for LDVs and LLDTs, and the interim standards for HLDTs. These NOX credit provisions will facilitate compliance with the fleet average NOX standards and be very similar to those currently in place for NMOG emissions under California and federal NLEV regulations. A manufacturer with an average NOX level for its Tier 2 vehicles in a given model year below the 0.07 gram per mile corporate average standard can generate Tier 2 NOX credits that it can use in a future model year when its average NOX might exceed the 0.07 standard. Manufacturers must calculate their corporate average NOX emissions at year end and then compute credits generated based on how far below 0.07 g/ mi the corporate average falls. Manufacturers will be free to retain any credits they generate for future use or to trade ( sell) those credits to other manufacturers. Credits retained or purchased can be used by manufacturers with corporate average Tier 2 NOX levels above 0.07 g/ mi. Under provisions described in Section IV. B. 4. d. iv., manufacturers can implement NOX emission reductions as early as the 2001 model year and earn early Tier 2 NOX credits to help LDVs and LLDTs meet Tier 2 standards. Similarly, manufacturers can earn early credits for HLDTs as early as the 2001 model year. In model years up through 2005, manufacturers can earn extra credits when they certify vehicles to bins 1 or 2. Banking and trading of NOX credits under the interim non Tier 2 standards will be similar to that under the Tier 2 standards, except that a manufacturer must determine its credits based upon the 0.30 or 0.20 gram per mile corporate average NOX standard applicable to vehicles in the interim programs. As we proposed in the NPRM, interim credits from LDVs/ LLDTs and interim credits from HLDTs will not be permitted to be used interchangeably due to the differences in the interim corporate average NOX standards. As proposed in the NPRM, there will be no provisions for early banking under the interim standards and manufacturers will not be allowed to use interim credits to address the Tier 2 NOX average standard. This is because we remain concerned that credits can be generated relatively easily under less stringent standards ( the Tier 1 or interim standards) and then used in such a way to delay implementation of the Tier 2 standards. Banking and trading of NOX credits and related issues are discussed in greater detail in Section IV. B. 4. d. below.

2. Why Are We Finalizing the Same Set of Standards for Tier 2 LDVs and LDTs? Before we provide a more detailed description of the vehicle program, we want to review two overarching principles of today's rule. The first is our goal to bring all LDVs and LDTs under the same set of emission standards. Historically, LDTs   and especially the heavier trucks in the LDT3 and LDT4 categories   have been subject to less stringent emission standards than LDVs ( passenger cars). In recent years the proportion of light truck sales has grown to approximately 50 percent. Many of these LDTs are minivans, passenger vans, sport utility vehicles and pick up trucks that are used primarily or solely for personal transportation; i. e., they are used like passenger cars. As vehicle preferences have increasingly shifted from passenger cars to light trucks there has been an VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00042 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6739 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 60 Because of the different phase in percentages and phase in schedules for the two groups, during the duration of the phase in ( through 2008), manufacturers will average Tier 2 LDV/ LLDTs separately from HLDTs. 61 The Alliance proposed NMHC standards in lieu of the NMOG standards we proposed and are finalizing today. We are including a provision in the final rule to accept NMHC results, subject to an adjustment factor, to demonstrate compliance with NMOG standards, although we are not adopting the fixed standards proposed by the Alliance. 62 The interim PM standard in this new bin, which represents a reduction from the NLEV PM standards, should be feasible without aftertreatment. The technologies needed to meet the PM standard we proposed for this bin would likely have required low sulfur diesel fuel, which may not be widely available during the interim program. This change is also discussed in section V. A. accompanying increase in emissions over what otherwise would have occurred because of the increase in miles traveled by LDTs and the less stringent standards for LDTs as compared to LDVs. As Section III. above makes clear, reductions in these excess emissions ( and in other mobile and stationary source emissions) are seriously needed. Since both LDVs and LDTs are within technological reach of the standards in the Tier 2 bin structure, and since none of the comments have been persuasive that manufacturers can not meet the standards, we are finalizing our proposal to equalize the regulatory useful life mileage for LDVs and LDTs and apply the same Tier 2 exhaust emission standard bins to all of them. This program will ensure that substantial reductions occur in all portions of the light duty fleet and that the movement from LDVs to LDTs will not counteract these reductions. Once the phase in periods end for all vehicles in 2009, manufacturers will include all LDVs and LDTs together in calculating their corporate average NOX levels. 60 As mentioned above and described in more detail in Section IV. B.   4. below, manufacturers can choose the emission bin for any test group of vehicles provided that, on a sales weighted average basis, the manufacturer meets the average NOX standard of 0.07 g/ mi for its Tier 2 vehicles that year. Some manufacturers have suggested that a program with different requirements is needed for heavy LDTs. Recognizing that compliance will be most challenging for HLDTs, the delay in the start of the phase in and the additional phase in years for those vehicles will allow manufacturers to delay the initial impact of the Tier 2 standards until the 2008 model year. This represents four additional model years of leadtime beyond the time when passenger cars and LDT1s and LDT2s will achieve Tier 2 standards in substantial numbers. We believe this phase in and other provisions of this rule respond to these concerns. Note that in the NPRM, we requested comments on the need for different hydrocarbon standards for these vehicles recognizing that a tradeoff often exists between HC and NOX emissions. We also proposed that several bins have higher hydrocarbon standards for HLDTs during the interim program. We are finalizing these bins as proposed. Also, as an option, we are permitting the use of NMOG values similar to those in the NLEV program for bins 9 and 10 only for certain LDT2s and LDT4s during the interim program ( see section IV. B. 1. e. ii. above for details). We are not adopting the Alliance's proposed phase in schedule which would have provided a phase in lasting until 2011. At the end of the Alliance's proposed phase in, all vehicles would comply with an average NOX standard of 0.07 g/ mi. A fixed 0.09 NMHC standard would apply to LDVs and LLDTs while a fixed 0.156 NMHC standard would apply to HLDTs. 61 Our final program provides HLDTs until 2008 before any have to meet 0.07 g/ mi on average and permits them to be averaged with LDV/ LLDTs beginning in 2009, when all must meet 0.07 g/ mi NOX on average. We believe that eight years is a significant amount of leadtime to apply Tier 2 technology. We heard clearly from the public hearings and written comments that the public sees no justification for and does not want even more time provided for HLDTs. Furthermore, we see no technological need for more time than we proposed. Indeed, many believe that HLDTs should meet the Tier 2 standards in step with the LDV/ LLDTs. We are not promulgating the fixed NMHC standards suggested by the Alliance, but are sticking with the concept of bins containing lower NMOG standards connected to lower NOX ( and other) standards. We believe that providing final exhaust emission standards for HLDTs that deviate from those for LDV/ LLDTs would violate one of the overarching principles of the Tier 2 program, i. e. that all LDVs and LDTs should be subject to the same exhaust emission standards. Further, the idea of NMOG values that differ from California's runs counter to other arguments raised by the Alliance that EPA should align bins with California's to promote 50 state certification of test groups.

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

VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6740 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 63 A `` test group'' is the basic classification unit for certification of light duty vehicles and trucks under EPA certification procedures for the CAP2000 program. `` Test group'' is a broader classification unit than `` engine family'' used prior to the implementation of the CAP2000 program. We discuss the CAP2000 program in more detail in section V. A. 9. of this preamble. 64 The regulatory `` useful life'' value for Tier 2 vehicles is specifically addressed in Section V. A. 2. of this preamble. Full useful life will be 10 years or 120,000 miles for all vehicles except LDT3s and LDT4s, for which it is 11 years or 120,000 miles. Intermediate useful life, where standards are applicable, is 5 years or 50,000 miles.

65 EPA's current standards for Clean Fuel Vehicles are less stringent than the Tier 2 standards. See 40 CFR 88.104   94. The Tier 2 standards will supercede the current CFV standards, and the Agency intends to undertake a rulemaking to revise the CFV standards accordingly.

66 In some cases our bins do not match California's exactly, because they have higher NMOG standards. These bins `` cover'' the California bin in that a vehicle certified to the California standards will comply with the standards in these bins. Today, diesels comprise less than one half of one percent of all LDV/ LDT sales. While this is a small fraction, the potential exists for diesels to gain a considerable market share in the future. All one need do is review the dramatic increase in recent years of diesel engine use in the lightest category of heavy duty vehicles ( 8500   10,000 pounds GVWR) to see the potential for significant diesel engine use in LDTs, and perhaps LDVs, in the future. Just ten years ago, diesels made up less than 10 percent of this class of vehicles. In 1998, this fraction approached 50 percent. The potential impact of large scale diesel use in the light duty fleet underscores the need for the same standards to apply to diesels as other vehicles. Given the health concerns associated with diesel PM emissions ( see Section III. above), we believe that it is prudent to address PM emissions from diesel LDVs and LDTs while their numbers are relatively small. In this way the program can minimize the PM impact that would accompany significant growth in this market segment while allowing manufacturers to incorporate low emission technology into new light duty diesel engine designs. 4. Key Elements of the Vehicle Program The previous subsections IV. B.   1.2. and 3. provide an overview of the Tier 2 vehicle program and the two key principles it is built on. This subsection elaborates on the major vehicle related elements of today's rule. Later in this preamble, Section V. A. discusses the rest of the vehicle provisions.

a. Basic Exhaust Emission Standards and `` Bin'' Structure Our final Tier 2 program contains a basic requirement that each manufacturer meet, on average, a full useful life NOX standard of 0.07 g/ mi for all its Tier 2 LDVs and LDTs. Manufacturers will have the flexibility to choose the set of standards that a particular test group 63 of vehicles must meet. For a given test group of LDVs or LDTs, manufacturers will select a set of full useful life 64 standards from the same row (`` emission bin'' or simply `` bin'') in Table IV. B.   4. below. Each bin contains a set of individual NMOG, CO, HCHO, NOX, and PM standards. For technology harmonization purposes, our proposed emission bins include or otherwise cover all of those adopted in California's LEV II program. 65,66 In the NPRM, we proposed that interim vehicles and Tier 2 vehicles ( except for those Tier 2 vehicles in the lowest bins) would also have to meet intermediate useful life standards, i. e., standards that apply for 5 years or 50,000 miles. We are finalizing these intermediate useful life standards as proposed. Where we have added new full life bins, we have included corresponding intermediate life bins as appropriate. Our intermediate life standards are generally aligned with California's, they only impact the higher bins, and we do not believe they add substantial burden to the program. Further, they provide a check on the allowed emission deterioration during the life of the vehicle. For the final rule, we have made two changes involving intermediate life standards. First, we are providing that diesel vehicles, which will likely certify to bin 10 during the interim program, may opt not to meet the intermediate life standards associated with this bin. Low sulfur diesel fuel may be needed for diesels to meet our interim intermediate life standards and it is not likely to be widely available during the time frame of the interim program. Secondly, for all vehicles, we are finalizing a provision that will make intermediate life standards optional for any test group that is certified to a full useful life of 150,000 miles. This provision is described in more detail with other useful life issues in section V. B.

TABLE IV. B   4.   TIER 2 LIGHT   DUTY FULL USEFUL LIFE EXHAUST EMISSION STANDARDS [ Grams per mile]

Bin No. NOX NMOG CO HCHO PM Comments 10 ............................................... 0.6 0.156/ 0.230 4.2/ 6.4 ......... 0.018/ 0.027 0.08 ( a, b, c, d) 9 ................................................. 0.3 0.090/ 0.180 4.2 ............... 0.018 ........... 0.06 ( a, b, e)

The above temporary bins expire in 2006 ( for LDVs and LLDTs) and 2008 ( for HLDTs)

8 ................................................. 0.20 0.125/ 0.156 4.2 ............... 0.018 ........... 0.02 ( b, f) 7 ................................................. 0.15 0.090 ........... 4.2 ............... 0.018 ........... 0.02 6 ................................................. 0.10 0.090 ........... 4.2 ............... 0.018 ........... 0.01 5 ................................................. 0.07 0.090 ........... 4.2 ............... 0.018 ........... 0.01 4 ................................................. 0.04 0.070 ........... 2.1 ............... 0.011 ........... 0.01 3 ................................................. 0.03 0.055 ........... 2.1 ............... 0.011 ........... 0.01 2 ................................................. 0.02 0.010 ........... 2.1 ............... 0.004 ........... 0.01 1 ................................................. 0.00 0.000 ........... 0.0 ............... 0.000 ........... 0.00 Notes: a Bin deleted at end of 2006 model year ( 2008 for HLDTs). b The higher temporary NMOG, CO and HCHO values apply only to HLDTs and expire after 2008. c An additional temporary higher bin restricted to MDPVs is discussed in section IV. B. 4. g. d Optional temporary NMOG standard of 0.280 g/ mi applies for qualifying LDT4s and MDPVs only. e Optional temporary NMOG standard of 0.130 g/ mi applies for qualifying LDT2s only, see text. f Higher temporary NMOG standard is deleted at end of 2008 model year.

VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00044 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6741 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations TABLE IV. B.   5.   LIGHT DUTY INTERMEDIATE USEFUL LIFE ( 50,000 MILE) EXHAUST EMISSION STANDARDS [ Grams per mile]

Bin No. NOX NMOG CO HCHO PM Comments 10 ............................................... 0.4 0.125/ 0.160 3.4/ 4.4 ......... 0.015/ 0.018 ( a, b, c, d, f, h) 9 ................................................. 0.2 0.075/ 0.140 3.4 ............... 0.015 ........... ( a, b, e, h)

The above temporary bins expire in 2006 ( for LDVs and LLDTs) and 2008 ( for HLDTs)

8 ................................................. 0.14 0.100/ 0.125 3.4 ............... 0.015 ........... ( b, g, h) 7 ................................................. 0.11 0.075 ........... 3.4 ............... 0.015 ........... ( h) 6 ................................................. 0.08 0.075 ........... 3.4 ............... 0.015 ........... ( h) 5 ................................................. 0.05 0.075 ........... 3.4 ............... 0.015 ........... ( h)

Notes: a Bin deleted at end of 2006 model year ( 2008 for HLDTs). b The higher temporary NMOG, CO and HCHO values apply only to HLDTs and expire in 2008. c An additional higher temporary bin restricted to MDPVs is discussed in section IV. B. 4. g. d Optional temporary NMOG standard of 0.195 g/ mi applies for qualifying LDT4s and MDPVs only. e Optional temporary NMOG standard of 0.100 g/ mi applies for qualifying LDT2s only, see text. f Intermediate life standards are optional for diesels certified to bin 10. g Higher temporary NMOG value deleted at end of 2008 model year. h. Intermediate life standards are optional for any test group certified to a 150,000 mile useful life ( if credits are not claimed).

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

i. Why Are We Including Extra Bins? Compared to the CalLEV II program, our Tier 2 proposal included additional bins. The California program contains no bins that will allow NOX levels above the 0.07 g/ mi level. Therefore, under the California program, no engine family can be certified above 0.07 g/ mi, even with the application of offsetting credits. We proposed to add two bins ( with NOX values of 0.15 and 0.20) above the 0.07 bin and another below ( with a NOX value of 0.04) to provide manufacturers with additional flexibility. Based upon comments received from the Alliance and others that additional bins provide important added flexibility, we are finalizing a total of three bins above the LEV level ( the additional bin has a NOX value of 0.10 g/ mi) and are adding one more below the LEV level ( this additional bin has a NOX value of 0.03 g/ mi). Due to the NOX averaging requirement of this rule, these bins will not result in any increase in NOX emissions. Further, these bins will address concerns raised by some that a wider variety of bins, and bins with higher NOX values, are needed to avoid a situation where the Tier 2 program discourages the development of advanced technology high fuel economy vehicles, which may, at least in their earliest years, have NOX emissions higher than more conventional vehicles. In our NPRM we proposed that during the Tier 2 phase in years ( through 2006 for LDV/ LLDTs and 2008 for HLDTs), bins from the applicable interim program would be available to enhance the flexibility of the program by providing manufacturers with additional bins having NOX standards above 0.07 g/ mi. In the NPRM, we showed the interim bins in separate tables for LDV/ LLDTs and HLDTs. There was considerable overlap across the two tables and with the Tier 2 bins. In this final rule, we have consolidated the interim bins and the Tier 2 bins into one table for simplicity and ease of reference. The interim programs for non Tier 2 vehicles are described in detail in section IV. B. 4. e. While some commenters were concerned about the existence of bins above NOX = 0.07 g/ mi, we believe that the additional higher bins actually provide incentive for manufacturers to produce vehicles below 0.07 g/ mi of NOX. We believe this incentive exists because manufacturers will have some vehicles ( especially larger LDTs) that they might find more cost effective to certify to levels above the 0.07 g/ mi average standard. However, to do this they will have to offset those vehicles in our NOX averaging system with vehicles certified below 0.07 g/ mi. The bins at NOX = 0.04 g/ mi and NOX = 0.03 g/ mi will provide greater opportunity to do this. Thus, the extra bins serve two purposes; they provide additional flexibility to manufacturers to address technological differences and costs, and they provide those manufacturers with incentives to produce cleaner vehicles and thus advance emission control technology. We are finalizing a bins approach with the bins shown in Tables IV. B. 4 and 5 to provide adequate and appropriate emission reductions and manufacturer flexibility. This structure will help to accelerate technological innovation. We requested comment on whether we should include up to two additional bins between NOX = 0.07 and NOX = 0.15. Based upon manufacturer comment, we have added an additional bin ( bin 6 ) with NOX = 0.10. This bin will provide greater flexibility for manufacturers who may find it more cost effective to produce some vehicles slightly above 0.07 but have difficulties meeting a 0.07 g/ mi average NOX standard if they must certify them to a NOX level of 0.15 g/ mi. We requested comment on whether our Tier 2 bin in the NPRM with NOX = 0.20 ( our final bin 8) should be eliminated when the Tier 2 phase in is completed ( after 2007 for LDV/ LLDTs VerDate 27< JAN> 2000 22: 48 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00045 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm01 PsN: 10FER2 6742 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 67 For Tier 2 vehicles ( and for interim vehicles), the term `` U. S. sales'' means, for a given model year, those sales in states other than California and any states that have adopted the California program. and after 2009 for HLDTs). Numerous commenters argued that our highest bins were too lenient. Comments from manufacturers were opposed to eliminating bin 8 and we see little downside to having bins higher than the 0.07 NOX standard, given that, for all of the vehicles that will use this bin, manufacturers will have to offset the excess emissions by selling vehicles certified below 0.07 g/ mi NOX under the averaging requirement. Thus, we are retaining bin 8.

b. The Program Will Phase in the Tier 2 Vehicle Standards Over Several Years i. Primary Phase In Schedule We are finalizing as proposed our plan to phase in the Tier 2 standards for LDV/ LLDTs over a four year period beginning in 2004 and we are also finalizing as proposed a delayed two year phase in beginning in 2008 for HLDTs. These phase in schedules are shown in Table IV. B.   2 and are also shown separately in Tables IV. B.   6 and 7. We believe the flexibility of this dual phase in approach is appropriate because the Tier 2 program will encompass all light duty vehicles and trucks and will result in widespread applications of upgraded and improved technology across the fleet. The program will require research, development, proveout, and certification of all lightduty models, and manufacturers may need longer lead time for some vehicles, especially HLDTs. Also, manufacturers may wish to time compliance with the Tier 2 standards to coincide with other changes such as the roll out of new engines or new models. In order to begin the introduction of very clean vehicles as soon as possible while avoiding imposing unnecessary inefficiencies on vehicle manufacturers, we believe this practical but aggressive phase in schedule effectively balances air quality, technology, and cost considerations. In each year, manufacturers will have to ensure that the specified fraction of their U. S. sales: 67 · Meets Tier 2 standards for exhaust emissions, including Supplemental Federal Test Procedure ( SFTP) standards ( discussed in Section V. A.   3. below); · Meets Tier 2 standards for evaporative emissions ( discussed in Section IV. B.   4. f. below); and · Meets the corporate average Tier 2 NOX standard. Manufacturers will have to meet the Tier 2 exhaust requirements ( i. e., all the standards of a particular bin plus the SFTP standards) using the same vehicles. Vehicles not covered by the Tier 2 standards during the phase in years ( 2004   2008) will have to meet interim standards described in Section IV. B. 4. e. below and the existing evaporative emission as well as the applicable SFTP standards. Manufacturers can elect to meet the percentage phase in requirements for evaporative and exhaust emissions using two different sets of vehicles. We believe that because of interactions between evaporative and exhaust control strategies, manufacturers will generally address the Tier 2 evaporative phase in with the same vehicles that they use to meet the exhaust phase in. However, the primary focus of today's proposal is on exhaust emissions, and the flexibility for manufacturers to use different sets of vehicles in complying with the phase in schedule for evaporative standards and for the exhaust standards will have no environmental down side that we are aware of. It is possible that some exhaust emission improvements might even occur sooner than they otherwise would if a manufacturer is able to move ahead with the roll out of a model with cleaner exhaust emissions without having to wait for the development of suitable evaporative controls to be completed for that model.

TABLE IV. B.   6.   PRIMARY PHASE IN SCHEDULE FOR SALES OF TIER 2 LDVS AND LLDTS Model year Required percentage of light duty vehicles and light light duty trucks ( percent)

2004 ...................................... 25 2005 ...................................... 50 2006 ...................................... 75 2007 ...................................... 100 TABLE IV. B.   7.   PRIMARY PHASE IN SCHEDULE FOR SALES OF TIER 2 HLDTS Model year Required percentage of heavy lightduty trucks ( percent)

2008 ...................................... 50 2009 ...................................... 100 We are finalizing our proposed phasein approach, in which vehicle sales will be determined according to the `` point of first sale'' method outlined in the NLEV rule. Vehicles with points of first sale in California or a state that has adopted the California LEV II program ( if any) will be excluded from the calculation. The `` point of first sale'' method recognizes that most vehicle sales will be to dealers and that the dealers' sales will generally be to customers in the same geographic area. While some sales to California residents ( or residents of states that adopt California standards) may occur from other states and vice versa, we believe these sales will be far too small to have any significant impact on the air quality benefits of the Tier 2 program or the manufacturers' ability to demonstrate compliance.

ii. Alternative Phase In Schedule We are finalizing, as proposed, that manufacturers may introduce vehicles earlier than required to earn the flexibility to make offsetting adjustments, on a one for one basis, to the phase in percentages in later years. However, they will still need to reach 100% of sales in the 2007 model year ( 2009 for HLDTs). Manufacturers will have the option to use this alternative to meet phase in requirements for LDV/ LLDTs and/ or HLDTs. They can use separate alternative phase in schedules for exhaust and evaporative emissions, or an alternative phase in schedule for one set of standards and the primary ( 25/ 50/ 75/ 100% or 50%/ 100%) schedule for the other. Under these alternative schedules, manufacturers will have to introduce vehicles that meet or surpass the 0.07 g/ mi Tier 2 NOX average standard before they are required to do so, or else introduce vehicles that meet or surpass the 0.07 standard in greater quantities than required. Alternative phase in schedules essentially credit the manufacturer for its early or accelerated efforts and allow the manufacturer greater flexibility in subsequent years during the phase in. Thus, the alternative phase in schedule provisions provide incentive and flexibility to manufacturers to introduce Tier 2 vehicles before 2004 ( or 2008 for HLDTs). As outlined in the NPRM, an alternative phase in schedule will be acceptable if it passes a specific mathematical test. We have designed the test to provide manufacturers benefit from certifying to the Tier 2 standards early while ensuring that significant numbers of Tier 2 vehicles are introduced during each year of the alternative phase in schedule. To test an alternative schedule, a manufacturer VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00046 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6743 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 68 For interim vehicles, this average NOX standard will be 0.20 for HLDTs and 0.30 for LDV/ LLDTs. Compliance with these interim average standards will be calculated in the same manner as compliance with the 0.07 standard. must sum its yearly percentages of Tier 2 vehicles beginning with model year 2001 and compare the result to the sum that results from the primary phase in schedule. If an alternative schedule scores as high or higher than the base option, then the alternative schedule is acceptable. The mathematical technique to evaluate alternative phase in schemes is somewhat similar to that used in our NLEV rule and in California rules. For LDV/ LLDTs, the final sum of percentages must equal or exceed 250   the sum that results from a 25/ 50/ 75/ 100 percent phase in. For example, a 10/ 25/ 50/ 65/ 100 percent phase in that begins in 2003 will have a sum of 250 percent and is acceptable. In this example, assuming constant levels of production, each Tier 2 vehicle sold early ( i. e. in 2003) will permit the manufacturer to sell one less Tier 2 vehicle in the last phase in year ( 2006). A 10/ 20/ 40/ 70/ 100 percent phase in that begins the same year has a sum of 240 percent and is not acceptable. For HLDTs, the sum must equal or exceed 150 percent. To ensure that significant numbers of Tier 2 vehicles are introduced in the 2004 time frame, manufacturers will not be permitted to use alternative phase in schedules that delay the implementation of the Tier 2 LDV/ LLDT requirements, even if the sum of the phase in percentages meets or exceeds 250. Such a situation could occur if a manufacturer delayed implementation of its Tier 2 production until 2005 and began a 75/ 85/ 100 percent phase in that year. To protect against this possibility, we are finalizing the proposed requirement that for any alternative phase in schedule, a manufacturer's phase in percentages from the 2004 and earlier model years sum to at least 25%. In the final rule we are including an additional measure of flexibility to the requirements for alternative phase in schedules. We will permit manufacturers to achieve a 2004 phasein of less than 25%, but no less than 20%, provided that in 2005 they make up the shortfall in a two for one manner. So, as an example, a manufacturer that phased in 5% in 2003 and 15% in 2004 would achieve a total of 20% through the 2004 model year and would need to comply with Tier 2 requirements for at least 60% of its LDV/ LLDTs in 2005. We believe that this flexibility is appropriate because the required response for 2005 model year vehicles more than makes up for the environmental loss from the 2004 model year vehicles. We requested comment on whether alternative phase in schedules should be structured to permit manufacturers to extend phase in past the final year of the primary phase in schedule ( 2007 or 2009). While the Alliance proposal and comments clearly support phase ins that run past 2007 and 2009, other commenters were opposed to any extensions of the phase in period. In fact most commenters who addressed the length of the phase in indicated, as previously discussed, that the phase in for HLDTs should be moved ahead to 2007 to coincide with LDV/ LLDTs. We are not finalizing any provisions that will permit alternative phase in schedules to provide additional time for manufacturers to meet any final 100% compliance year. In the NPRM, we pointed out that phase in schedules, in general, add little flexibility for manufacturers with limited product offerings because a manufacturer with only one or two test groups can not take full advantage of a 25/ 50/ 75/ 100 percent or similar phasein For manufacturers meeting EPA's definition of `` small volume manufacturer,'' we proposed to exempt those manufacturers from the phase in schedules and require them to simply comply with the final 100% compliance requirement. We are finalizing this provision for small volume manufacturers. This provision is only intended to apply to small volume manufacturers and not to small test groups of larger manufacturers. For larger manufacturers having a limited product line, we recognize that our phase in schedule may lack flexibility, however, we are not including any provisions to address this issue as we are for small volume manufacturers because we do not believe these manufacturers need the relief and we do not want to sacrifice any air quality benefits of the program.

c. Manufacturers Will Meet a `` Corporate Average'' NOX Standard While the manufacturer will be free to certify a test group to any applicable bin of standards in Table IV. B.   2, it will have to ensure that the sales weighted average of NOX standards from all of its test groups of Tier 2 vehicles meet a full useful life standard of 0.07 g/ mi. 68 Using a calculation similar to that for the NMOG corporate average standard in the California and NLEV programs, manufacturers must determine their compliance with the corporate average NOX standard at the end of the model year by computing a sales weighted average of the full useful life NOX standards from each bin. Manufacturers must use the following formula:

Corporate total Tier Average NO Tier 2 NO std for each bin) ( sales for each bin)

sales X X = ´ å (

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

d. Manufacturers Can Generate, Bank, and Trade NOX Credits i. General Provisions As mentioned in the Overview above, we are finalizing our proposal that manufacturers with year end corporate average NOX emissions for their Tier 2 vehicles below 0.07 g/ mi can generate Tier 2 NOX credits. Credits can be saved ( banked) for use in a future model year VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00047 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6744 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations or for trading ( sale) to another manufacturer. Manufacturers can use credits if their corporate average NOX emissions are above 0.07 g/ mi. As proposed, the Tier 2 standards will apply regardless of the fuel the vehicle is designed for, and there will be no restrictions on averaging, banking or trading of credits across vehicles of different fuel types. Consequently, a gasoline fueled LDV might help a manufacturer generate NOx credits in one year that could be banked for the next year when they could be used to average against NOX emissions of a diesel fueled LDT within the appropriate averaging structure. Because of the split phase in and the different interim programs we are finalizing for the two different groups of vehicles ( LDV/ LLDTs and HLDTs), we are also finalizing the proposed requirement that manufacturers compute their corporate Tier 2 NOX averages separately for LDV/ LLDTs and HLDTs through 2008. As we proposed, credit exchanges between LDVs/ LLDTs and HLDTs will not be allowed nor will credit exchanges across the interim programs or between the interim programs and the final Tier 2 program be allowed. These restrictions will end with the 2009 model year at which time both phase ins and all interim standards will have ended and the program will permit free averaging across all Tier 2 vehicles. As noted in the NPRM, we are concerned that allowing cross trading between interim and Tier 2 vehicles will reduce the expected benefits of the program and delay fleet turnover to Tier 2 emission levels. For this reason we did not propose and are not finalizing to permit such exchanges.

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

iii. How Manufacturers Can Generate and Use NOX Credits Manufacturers will determine their year end corporate average NOX emission level by computing a salesweighted average of the NOX standard from each bin to which the manufacturer certifies any LDVs or LDTs. Tier 2 NOX credits will be generated when a manufacturer's average is below the 0.07 gram per mile corporate average NOX standard, according to this formula: NOX Credits=( 0.07 g/ mi ¥ Corporate Average NOX) ´ Sales The manufacturer can use these NOX credits in future years if its corporate NOX average is above 0.07, or it can trade ( sell) the credits to other manufacturers. Tier 2 credits can be generated via this mechanism beginning in the first phase in year, i. e., 2004 for LDV/ LLDTs and 2008 for HLDTs. The use of NOX credits will not be permitted to address Selective Enforcement Auditing or in use testing failures. The enforcement of the NOX averaging standard will occur through the vehicle's certificate of conformity. A manufacturer's certificate of conformity will be conditioned upon compliance with the averaging provisions. The certificate will be void ab initio if a manufacturer fails to meet the corporate average NOX standard and does not obtain appropriate credits to cover its shortfall in that model year or in the next three model years ( see deficit carryforward provision below). Manufacturers will need to track their certification levels and sales unless they produce only vehicles certified to bins containing NOX levels of 0.07 g/ mi or below and do not plan to bank NOX credits.

iv. Manufacturers Can Earn and Bank Credits for Early NOX Reductions In the NPRM, we proposed that to the extent a manufacturer's corporate average NOX level of its `` early Tier 2'' vehicles was below 0.07 g/ mi, the manufacturer could bank NOX credits for later use. We recognize ( and the comments assert) that this provision may be lightly used, because it requires a large reduction from prior standards to produce any credits. However, our goal is to bring vehicles to Tier 2 levels as quickly as possible and we are concerned that any other approach could provide credits for reductions manufacturers would make relatively easily from previous, higher standards. Such credits would then be used to delay the impact of the 0.07 g/ mi NOX standard. Further, we believe that our provision for alternative phase in schedules provides what is essentially a supplemental, or perhaps even primary, early banking program, in that it permits manufacturers to trade off earlier phasein percentages for later phase in percentages. To provide manufacturers with greater flexibility and with incentives to certify, produce and sell Tier 2 vehicles as early as possible, we are finalizing the alternative phase in provisions. ( See IV. B. 4. b. ii above.) Under such schedules, a manufacturer can certify vehicles to an average NOX level of 0.07 g/ mi or below in years prior to the first required phase in year and then phase its remaining vehicles in over a more gradual phase in schedule that will still lead to 100% compliance by 2007 ( 2009 for HLDTs). Thus, we are finalizing our provision for early NOX credits essentially as proposed. To the extent that a manufacturer's corporate average NOX level of its `` early Tier 2'' vehicles is below 0.07 g/ mi, the manufacturer can bank NOX credits for later use. Manufacturers will compute these early credits by calculating a sales weighted corporate average NOX emission level of their Tier 2 vehicles, as in the basic Tier 2 program described above. In section IV. B. 4. d. vii. below, we describe provisions we are adding to the final rule that will enable manufacturers to generate extra credits from vehicles certified to very low levels. In addition to encouraging production of very clean vehicles, these provisions, which apply beginning in 2001, will enhance the abilities of manufacturers to generate early credits. Early Tier 2 credits will have all the same properties as credits generated by vehicles subject to the primary phase in schedule. We proposed that these credits could not be used in the NLEV, Tier 1 or interim program for non Tier 2 vehicles in any way. We are finalizing this restriction as proposed. We are also finalizing as proposed that the NMOG emissions of these vehicles ( LDVs and LLDTs only) can be used in the VerDate 27< JAN> 2000 22: 48 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00048 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm01 PsN: 10FER2 6745 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 69 Because of the limited duration of the interim programs, we proposed that a manufacturer could carry a credit deficit in the interim program forward until the 2006 model year ( 2008 for HLDTs). The interim program, in its entirety, lasts only five years and therefore we saw little risk of prolonged deficits. calculation of the manufacturer's corporate average NMOG emissions under NLEV through 2003. To provide manufacturers with maximum flexibility in the period prior to 2004, when LDV/ LLDT useful lives will still be at 100,000 miles, we proposed and are finalizing that manufacturers may choose between the Tier 2 120,000 mile useful life or the current 100,000 mile useful life requirement for early Tier 2 LDV/ LLDTs. ( HLDTs already have a 120,000 mile useful life.) Early LDV/ LLDT NOX credits for 100,000 mile useful life vehicles will have to be prorated by 100,000/ 120,000 ( 5/ 6) so that they can be properly applied to 120,000 mile Tier 2 vehicles in 2004 or later. We proposed to restrict early banking of HLDT Tier 2 NOX credits to the four year period from 2004   2007. This restriction was due to a concern about excessive credits generation if a longer credit generation period was available. Based on our review of the comments and from reconsideration of the restrictive nature of our approach for early credits, we are much less concerned that allowing generation of early HLDT Tier 2 credits in years prior to 2004 will result in excessive credits. Prior to 2004, manufacturers will only be required to meet the Tier 1 standards which are much higher than the final Tier 2 standards. Manufacturers will have to make large cuts in emissions to bank the small amount of credits offered by our early banking provision. Further, we recognize that vehicles that meet the Tier 2 standards early provide an environmental benefit, and the earlier that benefit occurs, the earlier that areas can use such benefits to reach or come close to attainment. Lastly, we believe it is appropriate to match the period of early credit generation with the years in which we will permit alternative phasein schedules. Consequently, we are finalizing our provisions for early banking such that manufacturers may bank early Tier 2 NOX credits in model years 2001   2007. We recognize that vehicles generating early Tier 2 NOX credits may be doing so without the emissions benefit of low sulfur fuel, and thus these vehicles may not achieve the full in use emission reduction for which they received credit. When these credits are used to permit the sale of higher emitting vehicles, there may be a net increase in emissions. For the most part, this is a problem anyway, since NLEV vehicles are also sensitive to gasoline sulfur. We believe that the benefits of early introduction of Tier 2 technology described above are significant enough that they are worth the risk of some emission losses that might occur if and when the early credits are used. Also, we believe that some fuel sulfur reductions will occur prior to 2004 as refiners upgrade their refineries or bring new refining capacity on stream in anticipation of the 2004 requirements and take advantage of the phase in proposed in the gasoline sulfur ABT program ( described in Section IV. C. below).

v. Tier 2 NOX Credits Will Have Unlimited Life We discussed in the preamble to the NPRM why we did not propose to apply the California schedule of discounting unused credits adopted for NMOG credits in the NLEV program. This schedule serves to limit credit life throughout the program by reducing unused credits to 50, 25 and 0 percent of their original number at the end of the second, third and fourth year, respectively, following the year in which they were generated. We agree that such a scheme may be appropriate in the California program with its declining NMOG average standard, but in the federal program, once the phasein period ends in model year 2009, all LDVs and LDTs will comply on average with a fixed Tier 2 NOX standard. Credits allow manufacturers flexibility to meet standards cost effectively and to address unexpected shifts in sales mix. When matched with a NOX average standard, credits provide flexibility constrained by the requirement that all vehicles, on average, must comply with a fixed standard. Defined bins of standards prevent any one vehicle from having extremely high emissions, while the need to offset higher vehicles with lower vehicles to meet an average NOX standard prevents large numbers of vehicles from utilizing the higher bins. We requested comment in the NPRM on the need for discounting of credits or limits on credit life and what those discount rates or limits, if any, should be. The 0.07 NOX emission standard in the Tier 2 program is quite stringent and does not present easy opportunities to generate credits. The degree to which manufacturers invest the resources to achieve extra NOX reductions provides environmental benefit for years to come and it is appropriate that the manufacturer get credits. We do not want to take measures to reduce the incentive for manufacturers to bank credits nor do we want to take measures to encourage unnecessary credit use. Consequently we are finalizing our proposal that Tier 2 NOX credits, including early credits, have unlimited lives. vi. NOX Credit Deficits Can Be Carried Forward When a manufacturer has a NOX deficit at the end of a model year   that is, its corporate average NOX level is above the required corporate average NOX standard   we proposed that the manufacturer could carry that deficit forward into the next model year. Such a carry forward could only occur after the manufacturer used any banked credits. If the deficit still existed and the manufacturer chose not to or was unable to purchase credits, the deficit could be carried over. At the end of that next model year, according to our proposal, the deficit would need to be covered with an appropriate number of NOX credits that the manufacturer generated or purchased. Any remaining deficit would be subject to an enforcement action. To prevent deficits from being carried forward indefinitely, the manufacturer would not be permitted to run a deficit for two years in a row. 69 Manufacturers made the persuasive case that by the time they can tabulate their average NOX emissions for a particular model year, the next model year is likely well underway and it is too late to make calibration, marketing or sales mix changes to adjust that year's credit generation. Therefore, based upon comments, we are finalizing a modified approach to credit deficits such that a manufacturer having a credit deficit in the interim or Tier 2 program can carry that deficit forward for a total of three years, but the manufacturer must apply all its available credits to that deficit on a one for one basis in each of the first two succeeding model years. If the deficit is not covered by the third model year, the manufacturer must apply credits at a rate of 1.2: 1. No deficit may be carried into the fourth year. In order to accommodate this modification to our proposal, we must also modify our proposed provision that would have prevented manufacturers from running a deficit in two consecutive model years so that deficits can not be shifted from one year to the next and thus carried forward indefinitely. Because we are permitting, in this final rule, deficits to be carried forward for as long as three years we are finalizing that manufacturers can not run a deficit in any year in which it is paying off a deficit from a previous year. The effect of this provision is the same as that in VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00049 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6746 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations the NPRM   to keep manufacturers from shifting deficits forward indefinitely. We note that under our modified final approach, manufacturers will have the flexibility to carry deficits from the interim program forward into the final Tier 2 program. This feature is likely to be used only in an extreme situation since the Tier 2 credits needed to offset the interim credit deficit will be more difficult to generate. Consequently, we do not believe this provision is inconsistent with our approach of segregating interim and Tier 2 credits. In fact, manufacturers electing to cover an interim credit deficit with Tier 2 credits will likely have to accelerate the introduction of Tier 2 vehicles to get the necessary credits to cover the deficit. We are finalizing that small volume manufacturers may not use the credit deficit carryforward provision until they have been in compliance with the relevant average NOX standard for one model year. In section V of this preamble we explain that we are not requiring small volume manufacturers to comply with intermediate phase in requirements under our interim or Tier 2 phase ins. Rather, they will just have to comply for all of their vehicles in the last phase in year. Because they do not have to comply with intermediate phase in requirements, small volume manufacturers effectively get more time to comply ( as much as three years). We do not want to create a situation where they could get even more time to comply by using the credit deficit carryforward provision.

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

TABLE IV. B.   8.   MULTIPLIERS FOR ADDITIONAL CREDITS FOR BIN 1 AND 2 LDV/ T Bin Model year Multiplier 2 .................................................................................................. 2001, 2002, 2003, 2004, 2005 ................................................... 1.5 1 .................................................................................................. 2001, 2002, 2003, 2004, 2005 ................................................... 2.0 e. Interim Standards i. Interim Exhaust Emission Standards for LDV/ LLDTs The NLEV program referenced throughout this discussion is a voluntary program in which all major manufacturers have opted to produce LDVs and LLDTs to tighter standards than those required by EPA's Tier 1 regulations. Under the NLEV program, manufacturers must meet an NMOG average outside of California that is equivalent to California's current intermediate life LEV requirement   0.075 g/ mi for LDVs and LDT1s ( 0.10 g/ mi for LDT2s). NLEV requirements apply only to LDVs and LLDTs, not to HLDTs. The NLEV program is effective beginning in the northeastern states in 1999 and in the remaining states in 2001, except that the program does not apply to vehicles sold in California or in states that adopted California's LEV program. The program runs at least through model year 2003 and can run through model year 2005. Under the Tier 2 phase in we are finalizing today, not all LDV/ LLDTs covered under NLEV will be subject to Tier 2 standards in the 2004 to 2006 period. Without a program for full Tier 2 compliance in 2004 ( i. e., because of the phase in), these vehicles could revert to Tier 1 standards. The NLEV program, moreover, is a voluntary program that contains several provisions that restrict EPA's flexibility and that could lead to a manufacturer or a covered Northeastern state leaving the program in or prior to 2004. To resolve these concerns we are finalizing the proposed interim program for all non Tier 2 LDV/ LLDTs for the 2004   2006 model years. Our interim program will replace the NLEV program, which will terminate at the end of 2003. The transition from NLEV to the interim program should be smooth because the interim program will employ several bins derived from the NLEV standards for LDVs, LDT1s and LDT2s. The interim program will ensure that all LDVs, LDT1s and LDT2s that are not certified to Tier 2 levels during the 2004   2006 phase in period remain at levels at least as stringent, on average, as NLEV levels. The interim program will also bring the emission standards for LDT2s more into line with those for the LDVs and LDT1s by requiring that they be averaged under the same NOX standard rather than under separate standards as is the case in the NLEV program. In the NPRM, we included separate sets of bins for the interim program and Tier 2 program. However, we indicated that manufacturers could use either set for interim vehicles. In today's final rule we have combined all bins into one table for simplicity. We have also added two new bins having NOX values of 0.03 g/ mi and 0.10 g/ mi.

VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00050 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6747 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations In the NPRM, we proposed that, for LDV/ LLDTs, all bins with NOX values over 0.20 g/ mi would expire at the end of the 2006 model year when there are no longer any interim LDV/ LLDTs. Table IV   B.   4 shows that the two highest bins, bins 9 and 10, which were derived from NLEV and included to smooth the transition from NLEV to the interim program will be unuseable for LDV/ LLDTs after 2006   the last year of the LDV/ LLDT phase in. Otherwise all bins will remain viable for the duration of the Tier 2 program unless altered by another rulemaking. We proposed to align the useful life periods for interim standards with those of the Tier 2 standards ( full useful life of 120,000 miles), as discussed in Section V. B. below. The end result of this proposal would have been that all LDV/ LLDTs   whether in the Tier 2 program or interim program   would go from 100,000 mile useful lives to 120,000 mile useful lives in 2004. However, manufacturers were extremely concerned about the certification workload burden for 2004. They commented that they would be unable to carry any of their LDV/ LLDTs over from 2003 and that they would have to recertify all of their vehicles in 2004 and then likely recertify them again as they were phased into the Tier 2 standards. Therefore, based upon comments, we are finalizing that useful lives of the interim LDV/ LLDTs may remain at 100,000 miles. Our reasons for this change are discussed in greater detail in Section V. B. We are finalizing as proposed a corporate average full useful life NOX standard of 0.30 g/ mi for this interim program. This standard is derived from the NLEV program and represents the full useful life NOX standard in NLEV that is associated with LEV LDVs and LDT1s. LDVs and LDT1s will already be at this level, on average, under the NLEV program. LDT2s are subject to standards that effectively impose a NOX average standard of 0.5 g/ mi under NLEV, but we believe they should readily be able to meet the 0.30 g/ mi average especially since they can be averaged with the LDVs and LDT1s. To aid LDV/ LLDTs in meeting the 0.30 g/ mi corporate average NOX standard in the interim program, we are providing an optional NMOG value for LDT2s certifying to bin 9 ( where the NOX standard= 0.3 g/ mi). This option is only for LDT2s, and only for those produced by manufacturers that elect to comply with the interim requirements for all of their HLDTs for the 2004 model year ( see next section). The optional NMOG values for qualifying LDT2s are 0.130 g/ mi at full useful life and 0.100 at intermediate useful life. The 0.30 g/ mi corporate average NOX standard will apply only to non Tier 2 ( interim) LDV/ LLDTs and only for the 2004   2006 model years. Manufacturers will compute, bank, average, trade, account for, and report interim NOX credits via the same processes and equations described in this preamble for Tier 2 vehicles, substituting the 0.30 g/ mi corporate average standard for the 0.07 g/ mi corporate average standard in the basic program. Also, EPA will condition the certificates of conformity on compliance with the corporate average standard, as described for Tier 2 vehicles. These NOX credits will be good only for the 2004   2006 model years and will only apply to the interim non Tier 2 LDV/ LLDTs. Credits will not be subject to any discounts, and credit deficits can be carried forward as described under Section IV. B. 4. d. vi. above. NMOG credits from the NLEV program can not be used in this interim program in any way. NOX credits generated under this interim program will not be applicable to the Tier 2 NOX average standard of 0.07 g/ mi because of our concern that a windfall credit situation could occur. This could happen because credits are relatively easy to generate under a 0.30 g/ mi standard compared to generating credits under a 0.07 g/ mi standard. As we indicated in the preamble to the NPRM we believe the application of credits earned under the interim standard to the Tier 2 standards could significantly delay the fleet turnover to Tier 2 vehicles. We do not believe there is a need or that it would be appropriate to allow such a delay. The requirements of the interim program will be monitored and enforced in the same fashion as for Tier 2 vehicles. For the reasons cited above, we believe it is appropriate to extend interim, NLEV like standards beyond 2003 as a mandatory program and to bring all LDVs and LLDTs within its scope. Manufacturers have already demonstrated their ability to make LDVs and LLDTs that comply at levels well below these standards. As the interim standards for LDV/ LLDTs are essentially ` phase out'' standards, we did not propose and are not finalizing early banking provisions for the interim LDV/ LLDTs.

ii. Interim Exhaust Emission Standards for HLDTs We believe these interim standards are necessary and reasonable for HLDTs. While these trucks make up a fairly small portion of the light duty fleet ( about 14%), their current standards under Tier 1 are far less stringent than the NLEV standards that apply to current model year LDVs and LLDTs. Given the delayed phase in we are finalizing for HLDTs, we believe it is appropriate to require some interim reductions from these vehicles. Further, manufacturers have already demonstrated their ability to meet these interim standards with HLDTs. These standards are a reasonable first step toward the Tier 2 program and will provide meaningful reductions in the near term relative to current certification levels under the Tier 1 emission standards. We also proposed interim standards to begin in 2004 for HLDTs. These vehicles are not included in the NLEV program and will be subject only to the Tier 1 standards prior to today's rule taking effect. Tier 1 standards permit NOX emissions of 0.98 g/ mi for LDT3s and 1.53 g/ mi for LDT4s. We are finalizing these standards generally as proposed; to address statutory lead time requirements, we are offering two options for the phase in of HLDTs to the interim standards. Manufacturers can choose between either of these two options: ( Option 1) Like we proposed in the NPRM, manufacturers must bring their entire production of 2004 model year HLDTs under the interim requirements and phase 25% of them into the 0.20 g/ mi fleet average NOX requirement, followed by 50% in 2005, 75% in 2006, and then 100% in 2007; or ( Option 2) We are including this option to address statutory lead time requirements for HLDTs. In the case of 2004 model year test groups whose model years commence before the fourth anniversary of the signature date of today's rule, the manufacturer may exclude those test groups from the interim HLDT provisions of the rule. In the case of 2004 model year test groups whose model years commence on or after the fourth anniversary of this rule's signature, the manufacturer must bring all such HLDTs under the requirements of our interim program, and all such vehicles or 25% of the manufacturer's sales of 2004 model year HLDTs, whichever is less, must comply with the corporate average NOX standard of 0.20 g/ mi. The manufacturer must then bring all of its HLDTs into the interim requirements beginning with the 2005 model year including a 50%, 75%, 100% phase in to the 0.20 g/ mi fleet average NOX standard beginning that year. The beginning of a test group's model year is determined under section 202( b)( 3) of the Act and 40 CFR Part 85 Subpart X.

VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00051 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6748 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 70 Manufacturers must cite this declaration in their LDT2 certification applications for the 2004   2006 model years and in their LDT4 applications for the 2004   2008 model years. If manufacturers employ alternate phase in schedules that begin prior to 2004, they must also make the declaration in each applicable year before 2004. Our final rule is consistent with the requirements of the Act because manufacturers won't have to phase in HLDTs until the model year that commences four years from the signature of this rule if they don't want to. However, to provide incentive for manufacturers to comply with the interim requirements for all of their HLDTs beginning with the 2004 model year, i. e. to elect Option 1, we are finalizing a provision to permit those manufacturers to use higher NMOG values in two situations. Manufacturers electing to meet the interim requirements for all of their 2004 model year HLDTs including the 25% phase in number must so declare in their 2004 model year HLDT certification applications. They may then: · Use a full useful life NMOG value, through the 2008 model year, of 0.280 g/ mi for LDT4s certified to bin 10 ( 0.195 g/ mi at intermediate life); and · Use a full useful life NMOG value, through the 2006 model year, of 0.130 g/ mi for LDT2s certified to bin 9 ( 0.100 g/ mi at intermediate life). 70 In the case of the LDT4s, the optional NMOG standard will enable manufacturers to more easily meet our interim HLDT NOX standards, the highest of which ( 0.6 g/ mi) is one third tighter than what will be required in California under Cal LEV I through 2006. For the LDT2s, the optional NMOG standard will help manufacturers certify more LDT2s to bin 9 ( 0.3 g/ mi) than they likely would otherwise ( they would probably certify some LDT2s to bin 10 where NOX= 0.6 g/ mi). Therefore, both of these optional standards are consistent with our goal to achieve important early NOX benefits from our program. Except for the application of the new option described above, the interim standards for HLDTs will apply as proposed, and will phase in through the 2007 model year, as shown in Table IV. B.   2. We are finalizing the proposed corporate average full life NOX standard of 0.20 g/ mi for interim HLDTs. Manufacturers will comply with the corporate average HLDT NOX standard by certifying their interim HLDTs to any of the full useful life bins shown in Table IV   B.   4. Where applicable, manufacturers will also comply with the intermediate useful life standards shown in Table IV. B.   5. Interim HLDTs not needed to meet the phase in percentages during model years 2004   2006 will have to be certified to the standards of one of the bins in Table IV. B.   4 ( and   5), and NOX will thus be capped at 0.60 g/ mi. These trucks will not be included in the calculation to demonstrate compliance with the 0.20 g/ mi average. At the end of each model year, manufacturers will determine their compliance with the 0.20 NOX standard by calculating a sales weighted average of all the bins to which they certified any interim HLDTs, excluding those not needed to meet the applicable phase in requirements during 2004   2006. The excluded trucks must comply with the standards from one of the bins in Table IV B   4 ( and   5) which effectively caps their emissions at 0.60 g/ mi. For HLDT test groups that are not subject to the phase in in model year 2004 under Option 2 above, the same requirements as described above apply except that there are no new standards for these vehicles in the 2004 model year. Also, the optional higher NMOG values for LDT2s and LDT4s do not apply for any manufacturer that uses Option 2. Given that the interim HLDT standards are `` phase in'' standards through 2007 ( as opposed to the interim LDV/ LLDT standards, which are `` phase out'' standards), we are including provisions that manufacturers may employ alternative phase in schedules as proposed for the Tier 2 standards and described in detail in section IV. B. 4. b. ii. of this preamble. These schedules provide manufacturers with greater flexibility and we believe they also provide incentive for manufacturers to introduce advanced emission control technology at an earlier date. Alternative phase in schedules will have to provide 100% phase in by the same year as the primary phase in schedule ( 2007). Manufacturers will be eligible for alternate phase in schedules to the extent that they produce HLDTs that meet or surpass the NOX average standard for interim HLDTs of 0.20 g/ mi in 2001   2003 or to the extent that they produce more HLDTs than required that meet the 0.20 average standard in 2004 or later. Where manufacturers elect not to meet the phase in requirements for all of their 2004 model year HLDTs, as discussed above under Option 2, they may still employ alternate phase in schedules, but the sum of 225 percent is required rather than the 250 percent required for alternate phase ins described in section IV. B. 4. b. ii. In this case, the sum of phase in percentages up through the 2005 model year must total to at least 50%. Also, manufacturers must raise the 225% value to the extent that any of their 2004 HLDTs' model years commence on or after the fourth anniversary of the signature date of this rule and are brought into compliance with the 0.20 g/ mi average NOX standard. Lastly, note that for bin 10, which is only usable during the interim program, we have established a PM standard of 0.08 g/ mi, which is more stringent than the Tier 1 standard previously in effect for these vehicles. We do not expect low sulfur diesel fuel to be widely available during the time frame of the interim program but we expect that bin 10 levels can be reached by diesel technology on current diesel fuel. As a part of this overall approach, we are making the intermediate life standards optional for diesels for this bin.

f. Light Duty Evaporative Emission Standards We are finalizing as proposed a set of more stringent evaporative emission standards for all Tier 2 light duty vehicles and light duty trucks. The standards we are finalizing are shown in Table IV. B.   9 and represent, for most vehicles, more than a 50% reduction in diurnal plus hot soak standards from those that will be in effect in the years immediately preceding Tier 2 implementation. The higher standards for HLDTs provide allowance for greater non fuel emissions related to larger vehicle size.

VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00052 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6749 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 71 The heavy duty definition also includes vehicles that weigh over 6000 lbs curb weight regardless of their GVWR. We are not aware that any vehicles currently produced have curb weights above 6,000 lbs, but GVWRs of 8,500 lbs or less. Nevertheless, this discussion and our requirements includes such vehicles. TABLE IV. B.   9.   FINAL EVAPORATIVE EMISSION STANDARDS [ Grams per test]

Vehicle class 3 day diurnal + hot soak Supplemental 2 day diurnal + hot soak LDVs and LLDTs ................................................................................................................................................... 0.95 1.2 HLDTs .................................................................................................................................................................... 1.2 1.5 Evaporative emissions from LDVs and LDTs represent nearly half of the light duty VOC inventory projected for the 2007   2010 time frame, according to MOBILE5 projections. Manufacturers are currently certifying to levels that are, on average, about half of the current standards, and in many cases, much less than half the standards. Thus, meeting these standards appears readily feasible. Even though manufacturers are already certifying at levels much below the current standard, we believe that reducing the standards will result in emission reductions as all manufacturers seek to certify with adequate margins to allow for in use deterioration. Further, we believe that tighter standards will prevent `` backsliding'' toward the current standards as manufacturers pursue cost reductions. As mentioned in section IV. B.   4. b above, we will phase in the Tier 2 evaporative standards by the same mechanism as the Tier 2 exhaust standards; e. g., 25/ 50/ 75/ 100 percent beginning in 2004 for LDV/ LLDTs and 50/ 100 percent beginning in 2008 for HLDTs ( as shown in Table IV. B.   2). As for the exhaust standards, alternative phase in plans will also be available. The evaporative emission standards we proposed and are finalizing today are the same as those that manufacturers' associations proposed during the development of California's LEV II proposal. California ultimately opted for more stringent standards; we believe that our standards are appropriate for federal vehicles certified on higher volatility federal test fuel.

g. Passenger Vehicles Above 8,500 Pounds GVWR Historically, we have categorized all vehicles above 8,500 pounds GVWR as heavy duty vehicles regardless of their application and they have been subject to standards and test procedures designed for vehicles used in heavier work applications. 71 In the Tier 2 NPRM, we requested comment on whether some portion of vehicles above 8,500 pounds GVWR should be included in the Tier 2 program, based on vehicle use or design characteristics. The Tier 2 proposals, however, applied to light duty vehicles and light duty trucks and did not cover any vehicles above 8,500 pounds GVWR. On October 29, 1999, after carefully considering all of the comments on this issue, we proposed to include all personal use passenger vehicles ( both gasoline and diesel fueled) between 8,500 and 10,000 pounds GVWR in the Tier 2 program. This group of vehicles would include large SUVs and passenger vans and may include other types of `` crossover'' multipurpose vehicles in the future, depending on new vehicle designs. We proposed this Tier 2 program change in our NPRM concerning emissions standards for 2004 and later heavy duty vehicles and engines, ( 64 FR 58472). Specifically, we proposed to revise the definition of light duty truck to include any complete vehicle between 8,500 and 10,000 pounds GVWR that is designed primarily for the transportation of persons and has a capacity of not more than 12 persons. We expected that this definition would exclude vehicles that have been designed for a legitimate work function as their primary use, such as the largest pick up trucks, the largest passenger vans, and cargo vans; these vehicles would continue to be categorized as heavy duty and would be subject to applicable heavy duty standards. We requested comment on whether the proposed definition would adequately exclude these vehicles, or whether additional criteria may be needed and how that criteria might be used. Today, we are finalizing Tier 2 standards for passenger vehicles above 8,500 pounds GVWR. These vehicles are included in the Tier 2 program beginning in 2004 and are required to meet the final Tier 2 standards in 2009 and later. As we intended in the proposal, these vehicles will generally be subject to the same requirements as HLDTs. We have made modifications to the program, primarily in response to comments we received in two areas: ( 1) Changing the definition of light duty truck and ( 2) the interim program requirements.

New Vehicle Category: Medium Duty Passenger Vehicles ( MDPVs)

The mechanism we proposed to bring the passenger vehicles over 8,500 pounds into the Tier 2 program, was to modify the definition of light duty truck to include those vehicles. The objective of this proposal was to have these vehicles treated as HLDTs within Tier 2. We are finalizing requirements which remain consistent with our objective of including these vehicles in Tier 2 beginning in 2004. However, the approach we are finalizing is somewhat different than that proposed. Rather than finalizing the revised definitions for light duty truck as we proposed, we are creating a new category of heavy duty vehicles termed `` medium duty passenger vehicles'' ( MDPVs). These vehicles will generally be grouped with and treated as HLDTs in the Tier 2 program. The MDPV category is defined along the lines of the proposed definition change for the LDT category, with some modification, as described below. Our decision to create a new sub category of heavy duty vehicles rather than modify the existing LDT definition does not, in and of itself, change the way in which Tier 2 standards are applied to the vehicles. We decided upon the above approach because section 216 of the CAA establishes the definition for LDT as having the meaning contained in the CFR as of 1990. We received several comments that EPA may not change the definition and must instead devise a way to categorize the vehicles for purposes of Tier 2 which does not change the definition of light duty truck. Rather than adopt a change to the LDT definition that would be questionable from a legal perspective, we are adopting an approach that we believe is clearly legally acceptable. Under this approach ( as with the proposed approach), the standards for these vehicles are promulgated under VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00053 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6750 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 72 Vehicles that are `` designed'' to accommodate more than nine passengers in the rearward seating area in their standard configuration but that have some of the standard rear seating removed to accommodate two or more wheel chair tie downs would usually not be considered MDPVs. 73 Currently, diesel heavy duty engines are certified to heavy duty engine standards rather than vehicle standards. 74 ALVW is the average of curb weight and GVWR. The test weight is sometimes refered to as `` half payload''. section 202( a)( 3), which applies to heavy duty vehicles/ engines. We are defining medium duty passenger vehicles as any complete heavy duty vehicle less than10,000 pounds GVWR designed primarily for the transportation of persons including conversion vans ( i. e., vans which are intended to be converted to vans primarily intended for the transportation of persons. The conversion from cargo to passenger use usually includes the installation of rear seating, windows, carpet, and other amenities). We are not including any vehicle that ( 1) has a capacity of more than 12 persons total or, ( 2) that is designed to accommodate more than 9 persons in seating rearward of the driver's seat or, ( 3) has a cargo box ( e. g., a pick up box or bed) of six feet or more in interior length. We would consider vehicles designed primarily for passenger use to be those that have seating available behind the driver's seat. We have added the rear passenger seating capacity criterion to exclude large passenger vehicles which are primarily used in heavy load passenger applications. We do not believe vehicles designed primarily for personal use passenger transportation would be equipped with rear seating for more than 9 passengers. 72 We have added the pick up bed length criterion to the definition to clearly distinguish standard pick ups from other vehicles meeting the GVWR and seating capacity criteria. We received several comments that although the proposal clearly states our intention not to include heavy duty pick up trucks in the Tier 2 program, the proposed regulatory definition was unclear. Currently, heavy duty pick ups have beds in excess of six feet. Any future offerings of vehicles that are equipped with significantly shorter beds would be included in the MDPV category, if the vehicle also met the weight and seating capacity criteria. EPA is making a distinction based on bed length because a vehicle introduced with a shorter bed would have reduced cargo capacity and would likely have increased seating capacity relative to current pick ups, making it more likely to be used primarily as a passenger vehicle.

Interim Standards As noted above, the MDPVs and HLDTs must meet the final Tier 2 standards by 2009 at the latest. Prior to 2009, HLDTs and MDPVs are required to meet interim standards. The interim standards, as described earlier in section IV. B. 4, are based on a corporate average full life NOX standard of 0.20 g/ mile which is phased in 25/ 50/ 75/ 100 percent in 2004   2007. MDPVs must be grouped with HLDTs for the interim standards phase in. We received several comments from manufacturers that requiring these larger vehicles to meet a new, unique standard prior to phase in to the interim program would worsen the workload burden created by the Tier 2 program. Manufacturers do not currently have facilities available for chassis testing diesel vehicles and there is not enough time to fold diesel vehicles into a chassis based program by 2004.73 To address this situation, we are providing the following temporary additional flexibilities for MDPVs. We are finalizing an additional upper bin for MDPVs for the interim program ( effective in model years 2004 through 2008). This bin would only be available for MDPVs. The bin, shown in Table IV. B   10, is equivalent to the California LEV I standards that are applicable to these vehicles prior to 2004. Vehicles certified to this bin must be tested at adjusted loaded vehicle weight ( ALVW), consistent with California program testing requirements. 74 Including this upper bin provides manufacturers with the ability to carry over their California vehicles to the federal program prior to their phase in to the interim and final Tier 2 standards. Once phased in to the interim standards manufacturers may continue to use the upper bin but the vehicles must be included in the 0.20 g/ mi NOX average. The upper bin is not available to manufacturers for the final Tier 2 program.

TABLE IV. B.   10.   TEMPORARY INTERIM EXHAUST EMISSION STANDARDS BIN FOR MDPVS a NOX NMOG CO HCHO PM Full Useful Life ( 120,000 mile) ................................................................. 0.9 0.280 7.3 0.032 0.12 Notes: a Bin expires after model year 2008.

We proposed that HLDTs not needed to meet the phase in percentages for the interim program during model years 2004   2006 would be required to meet one of the interim bins. Such vehicles, however, would not be included in the calculation to demonstrate compliance with the 0.20 g/ mile average. Thus, we proposed that the emissions of all interim HLDTs would be capped at a NOX value of 0.6 g/ mile. We are retaining the bin structure and requirements which effectively cap NOX emissions at 0.6 g/ mile for all HLDTs below 8,500 pounds GVWR, as described in section IV. B. Similarly, for MDPVs, the 0.9 g bin described above is the highest bin available and acts as the cap for vehicles not yet phased in to the interim standards. In addition, for diesel MDPVs prior to 2008, we are allowing manufacturers the option of meeting the heavy duty engine standards in place for the coinciding model year. Diesels meeting the enginebased standards would be excluded from the interim program averaging pool. In 2008, the manufacturers must chassis certify diesel vehicles and include them either in the interim program or in the final Tier 2 program. In 2009 and later, all MDPVs, including diesels, must be brought into the final Tier 2 program. As with the higher bin of chassis based standards, the purpose of this diesel provision is to provide the option of carry over of vehicles until they are brought into the Tier 2 program. We believe these modifications to the program will substantially ease the workload concerns of manufacturers in the interim years by allowing them to carryover vehicle models and engine families. The provisions also remain consistent with EPA's goal of including the vehicles in the overall Tier 2 program structure.

VerDate 27< JAN> 2000 21: 29 Feb 09, 2000 Jkt 190000 PO 00000 Frm 00054 Fmt 4701 Sfmt 4700 E:\ FR\ FM\ 10FER2. SGM pfrm08 PsN: 10FER2 6751 Federal Register / Vol. 65, No. 28 / Thursday, February 10, 2000 / Rules and Regulations 75 As with HLDTs, the California OBDII compliance option is available for MDPVs. 76 For Tier 2 MDPVs, evaporative standards will be 1.4 g/ test for the 3 day diurnal+ hot soak test and 1.75 g/ test for the supplemental 2 day diurnal+ hot soak test. 77 ORVR requirements are phased in for HLDTs, at 40/ 80/ 100 percent in 2004   2006 ( see 40 CFR 86.1810   01 ( k)). For diesel engines that are engine certified and used in MDPVs, as allowed through model year 2007, we are requiring those engines to comprise a separate averaging set under the averaging, banking and trading requirements applicable to heavy duty diesel engines. We are permitting engine based certification for these diesel vehicles to provide time and flexibility for manufacturers who may have limited experience with chassis certifying vehicles containing such engines. However, we do not want to create a situation where engines above applicable engine standards could be used in these vehicles, when other MDPVs are being brought under stringent standards. Therefore we believe it is appropriate to constrain the application of credits to these engines. We note that we are not permitting credits from other programs ( like NLEV) to be applied in any way to Tier 2 or interim vehicles. For LDT4s, we have finalized an optional higher NMOG level of 0.280 g/ mile for bin 10 ( 0.6 g/ mile NOX), as described in section IV. B. 4. a of the preamble. MDPVs placed in bin 10 may also certify to the higher NMOG level of 0.280 g/ mile. This provision provides manufacturers with the incentive of selecting the lower NOX bin for MDPVs, since the NMOG level is not an obstacle to compliance. As described in section IV. B. 4. e. ii., manufacturers have two options for the start of the program requirements. In Option 1, the program begins with the 2004 model year for 25 percent all vehicles. In Option 2, manufacturers can exempt 2004 model year vehicle test groups whose model years begin on or after the fourth anniversary of this rule's signature. These options are also available for MDPVs for the same reasons we are providing them for HLDTs. However, the additional 0.9 g bin contained in Table IV. B.   10, the optional higher NMOG standard of 0.280 g/ mile for bin 10, and the option of certifying to the engine based standards for diesels are available only with Option 1.

Other Emission Control Requirements We are requiring all non diesel MDPVs to be OBDII compliant beginning in 2004. California requires OBDII for their LEV I program and therefore, the new OBDII requirements are consistent with the approach of allowing vehicles to be carried over from California. 75 Diesel vehicles which are carried over from the California program are required to be equipped with the OBD system as the system is certified in California. Diesel vehicles not carried over from California are not required as part of this rulemaking to be equipped with OBDII. However, we have proposed OBDII requirements for heavy duty diesel engines in our heavyduty engines NPRM ( 64 FR 58472). If OBDII requirements are finalized for heavy duty engines and vehicles as part of that rulemaking the OBDII requirements would likewise apply to diesels in the MDPV category. As proposed, we are applying Tier 2 evaporative emissions standards and existing HLDT ORVR requirements to MDPVs. MDPVs must be grouped with HLDTs for purposes of phasing in to the Tier 2 evaporative emission standards contained in this rule. We have added somewhat higher standards for the MDPVs to account for their larger fuel tanks and vehicle sizes. 76 However, the stringency of the standards remains similar to that for HLDTs. These standards are described in section IV. B. 4. f of the preamble. ORVR requirements currently exist for HLDTs and are to be phased in through model years 2004   2006.77 We proposed to apply the same standards and phase in requirements to vehicles over 8,500 pounds GVWR. We are finalizing these ORVR requirements for MDPVs, which must be grouped with HLDTs for purposes of phased in to the ORVR requirements. For those manufacturers electing option 2, OBD is required when the vehicle family is covered under these new requirements ( i. e., 2004 or 2005 depending on when certification occurs). For ORVR, the situation is similar. The phase in is 40 percent of any 2004 certifications which occur four years after this rule is promulgated, 80 percent in 2005, and 100 percent in 2006. As before, the vehicles covered by these phase ins must be combined with those in the LDT3/ 4 phase in for purposes of calculating compliance. We are finalizing Cold CO and Certification Short Test requirements for Tier 2 MDPVs. However, we are not finalizing SFTP standards for MDPVs in today's rulemaking. Currently, SFTP standards do not apply to any vehicles above 8,500 pounds GVWR, including those in the California LEV I and LEV II programs. We are concerned, therefore, that finalizing SFTP requirements in today's rulemaking would prevent manufacturers from carrying over vehicle models during the phase in years of the program. We are currently contemplating a new SFTP rulemaking which would consider `` Tier 2'' SFTP standards for all vehicles, including MDPVs. California is also interested in developing more stringent SFTP standards within the context of their LEV II program and we are coordinating with California on these new SFTP standards.

Sustained Severe Use; In Use Testing of MDPVs While we are confident that MDPVs can comply in use with the standards we are finalizing, manufacturers are concerned about in use liability for MDPVs that are in sustained severe use. In our in use emission testing program, we generally screen vehicles for proper maintenance and use and delete vehicles that we believe may have been misused or malmaintained. Also, in the regulations for manufacturer in use testing, we permit manufacturers to delete vehicles from samples if they have been used for `` severe duty ( trailer towing for passenger cars, snow plowing, racing)'', and we provide that vehicles may be deleted for other reasons upon EPA approval. We recognize that MDPVs will be marketed and used for carrying many passengers, carrying heavy loads and trailer towing. While it is not our intention to exempt vehicles from in use liability that have been used for their intended purposes, we understand that some MDPVs may be subject to sustained severe service applications, such as frequent overloading or frequent towing beyond manufacturer's advertised capacity and could not be considered to be representative of properly maintained and used vehicles. Furthermore, we would not necessarily consider to be representative MDPVs which are routinely or regularly used in heavy load hauling application or towing even within the manufacturers limits. Thus, for example, an SUV MDPV used on a daily basis to haul a work crew and tow equipment to a distant work site may not be representative while the same SUV used to haul the family and tow a boat to the lake on weekend excursions would be representative. MDPVs in sustained severe operations should not be included in manufacturer or EPA in use test programs, while those that see less frequent severe operation should be included.