Rule Making by the EPA

¶ … Rule making by the EPA

Statutory Authority and Regulatory Background

Statutory Authority

The Clean Air Act of 1970 and the amendments made to it in 1977 give authority to the EPA to constantly test and monitor the emissions of heavy duty vehicle engines to ensure that its emission level are below the federal limit. There are two kinds of limits available for the purpose of testing and they are the federal limit and the upper limit. Vehicles that have their emission levels below the federal limit are conforming manufacturers whereas those engine manufacturers who have emission levels above the federal limit, but below the upper limit have to pay a nonconforming penalty (NCP) to get a certificate of conformity. This was done with the intention to help the nonconforming manufacturers to continue to be in business and at the same time, give them a fair amount of time to produce engines that comply with the federal limits. If the emission levels exceed the upper limit or conforming limit, then the manufacturers are liable for those vehicles or engines.

B. Background Regarding Nonconformance Penalty Rules

The nonconformance penalty (NCP) rules began in 1985 and since then there has been five phases with the last one in 2002. The NCP uses three citeria to determine if a manufacturer is eligible for a certificate of conformance or not. The first criiterion is related to the emission standards itself. It should be proved that it is difficult to meet on its own or in conjunction with another related standard. According to the second criterion, the manufacturer must have to do extensive work to ensure that the engines meet the emission standards. The third criterion states that the manufacturer should prove that the vehicle cannot meet the emission standards because of technological reasons. The different phases have made the NCP comprehensive to include emissions related to hydrocarbon, carbon monoxide and particulate matter.

C. 2007 and 2010 NOX Standards

The emission standard for NOX was fixed at 0.20 g / hp-hr in Janurary 2001, but it began to be implemented only in models produced after 2007. This is because many manufacturers had credits and the phase-in period took a while. All vehicles began to follow this standard only from the model year 2010 and this is why it is often referred to as 2010 NOX standards. Only a handful of manufacturers produce engines that vehicles that emit up to 0.50 g/hp-hr and these manufacturers are likely to run out of their credits soon.

II. Interim Final Rule

The Interim Final Rule is being applied to NCPs for a temporary period of time and if the final rule is different from the intermin final rule, then the final rule is what remains applicable from the effective date.

III. Nonconformance Penalties for 2012 & Later Heavy-Duty Engines & Heavy- Duty Vehicles

Emission standards are being established by the Interim Rule by the EPA for the following categories:

Heavy Duty Diesel NOX standard

While deciding on the NOX 2010 standards, the EPA took into consideration the three criteria mentioned earlier pertaining to NCPs. The first criterion requires that the manufacturer should prove that the criterion is difficult to meet. The earlier standard is 2.4 g / hp-hr for a combination of Non-Methane Hydrocarbons (NMHC) + NOX. The EPA proved that it is a mere technology upgradation that is not impossible to meet. However, it required extensive work on the part of the manufacturers, but nevertheless, many manufacturers were meeting the standard of 0.20 g/hp-hr and this made it easier to enforce this standard. Finally, only one manufacturer cannot meet the standards and since this company was running out of credits for 2012, it is estimated that they would need an alternate technology to compete in the market from 2012 onwards.

Medium Heavy Duty Diesel NOX standard

The EPA estimated that the first two criteria have been met for the medium heavy duty diesel vehicles. As with the previous category, only one manufacturer does not meet these standards and they are running out of credits. However, they have not submitted an application for alternate technology for its 2012 models.

Emission standards are currently not being proposed for light heavy-duty diesel NOX standard, heavy-duty gasoline engine standards, heavy-duty diesel engine NMHC, CO and PM standards and heavy duty CO2 standards.

IV. Penalty Rates

The NCP penalty rates are applicable for the model year 2012 and is calculated using a formula that was applied to the previous NCPs.

A. Parameters

The NCP formula takes into account the same parameters that were established in the earlier phases such as COC50, COC90, MC50, F and UL. Besides, it also takes into account the additional costs incurred by the manufacturer as well as the extra owner costs that come with it. However, it does not include certification costs because it is the same for complying and noncomplying manufacturers. The proposed calculation for COC50 is $462 for medium heavy-duty and $1,561 for heavy-duty engines; COC90 is $682 for medium heavy-duty and $1,919 for heavy-duty engines; MC50 is $1,540 per gram per horsepower hour for medium heavy-duty and $5,203 for heavy-duty engines; F. is 1.30 for medium heavy-duty and 1.23 for heavy-duty engines and finally, the upper limit (UL) is 0.50 g/hp-hr for both the categories.

B. Issues and Alternatives for NCPs

There are many issues that come up with this penalty structure and they include competitive advantage for non-complying manufacturers, baseline engine technology, hardware and other costs that are not included in the computation, the projected increase in fuel and discount costs, the future value of the costs, escalator adjustment factor for the first year and the calculation of the F. parameter.