Page
1
REVISED
MOTOR
VEHICLE
AND
ENGINE
COMPLIANCE
PROGRAM
COST
ANALYSIS
Contents
I.
Overview
of
the
MVECP
Fees
Cost
Analysis
II.
MVECP
Fees
Program
A.
Description
and
Background
B.
To
What
Industries
Will
the
Updated
Fees
Apply?
C.
Updating
the
MVECP
Fees
Program:
Overview
of
the
Proposed
Rulemaking
D.
Description
of
the
Five
(
5)
OTAQ
Divisions
E.
MVECP
Activities
III.
The
Fees
Cost
Analysis
Methodology
A.
Fees
Cost
Analysis
Methodology:
General
Steps
B.
Overall
Cost
Summary
IV.
Fees
Schedule
and
Structure
A.
Determination
of
the
Fee
B.
Types
of
Certification
Requests
C.
Description
of
Vehicle
Fee
Groupings
D.
Explanation
of
Fee
Structure
Table
V.
Fees
Cost
Analysis
Breakdown
by
Applicable
Division
A.
Laboratory
Operations
Division
(
LOD)
1.
Overview
of
LOD
Division
Structure
and
Functions
2.
LOD
Data
Collection
Steps
3.
Explanation
of
LOD
Summary
Sheet
B.
Certification
and
Compliance
Division
(
CCD)
1.
Overview
of
CCD
Functions
and
Division
Structure
2.
CCD
Data
Collection
Steps
3.
Explanation
of
CCD
Summary
Sheet
C.
Explanation
of
Worksheet
#
5
through
Worksheet
#
16
VI.
Conclusion
Appendices
A.
Acronyms
B.
Definitions
C.
Worksheets
Page
2
1
The
term
"
Nonroad"
is
used
in
some
places
in
this
document
to
capture
all
the
industry
categories
that
are
not
highway
categories,
such
as
marine,
recreational,
nonroad
CI
and
SI
engines,
locomotives,
etc.,
and
is
used
also
for
specific
categories
such
as
nonroad
CI
and
SI
engines.
I.
Overview
of
MVECP
Fees
Cost
Analysis
This
cost
analysis
describes
the
costs
incurred
by
the
Environmental
Protection
Agency
(
EPA)
in
conducting
the
Motor
Vehicle
and
Engine
Compliance
Program
(
MVECP).
The
MVECP
provides
certification
and
compliance
services
related
to
air
pollution
control
in
highway
and
nonroad1
vehicles
and
engines.
Along
with
background
information,
this
document
provides
an
overview
of
the
methodology
used
by
EPA
to
determine
and
allocate
the
cost
of
the
MVECP,
detailed
in
Appendix
C,
and
a
description
of
a
proposed
new
fee
schedule.

This
cost
analysis
will
be
used
for:
(
1)
developing
regulations
consistent
with
the
Clean
Air
Act
(
CAA),
the
Independent
Office
Appropriations
Act
(
IOAA),
the
Office
of
Management
and
Budget
Circular
No.
A­
25,
and
other
legal
authority;
and
(
2)
creating
a
Fee
program
that
will
result
in
the
MVECP
being
self­
sustaining
to
the
full
extent
possible.
In
order
to
preform
this
cost
analysis,
we
performed
the
following
methodology
steps:
(
1)
Examined
2001
OTAQ
budget
to
determine
which
OTAQ
programs
are
MVECP
related.
(
2)
Identified
and
specified
all
current
costs
associated
with
the
OTAQ
Divisions
that
conduct
or
support
the
MVECP
related
programs
[
these
Divisions
were
identified
as
the
Laboratory
Operations
Division
(
LOD)
and
the
Certification
and
Compliance
Division
(
CCD)],
and
identified
and
specified
all
projected
future
certification
and
compliance
program
costs
under
MVECP.
(
3)
Determined
the
appropriate
methods
to
allocate
certain
MVECP
costs
as
recoverable
or
non­
recoverable
(
Allocation
Type
1)
and
appropriate
methods
to
apportion
MVECP
costs
to
industry
categories
(
Allocation
Type
2).
(
4)
Categorized
all
the
MVECP
costs
into
three
major
categories­
direct
and
indirect
labor,
direct
and
indirect
operating
costs
and
overall
EPA
overhead
costs
and
determined
the
portion
of
these
costs
that
was
recoverable
by
using
a
method
under
Allocation
Type
1
(
associated
with
the
MVECP).
(
5)
Separated
industries
into
fee
categories
by
their
associated
and
similar
level
of
MVECP
costs
of
certification
and
compliance
services.
(
6)
Allocated
recoverable
costs
from
step
4
by
fee
category
by
using
a
method
under
Allocation
Type
2.
(
7)
Determined
a
fee
schedule
based
upon
recoverable
costs
for
each
certificate
type
under
the
fee
category
and
the
number
of
known
and
projected
certificates
issued
annually
for
that
certificate
type.

The
written
part
of
this
analysis
is
a
guide
to
understanding
the
worksheets
in
Appendix
C.
There
are
16
cost
analysis
worksheets
found
in
Appendix
C.
The
reader
should
review
the
primary
four
worksheets:
the
overall
cost
summary
(
worksheet
1),
the
proposed
fee
structure
by
industry
(
worksheet
2),
summary­
sheet
for
LOD
(
worksheet
3),
and
the
summary­
sheet
for
CCD
(
worksheet
4).
Beyond
these
four
primary
worksheets
each
subsequent
worksheet
supports
and
provides
greater
detail
of
the
costs
and
fees
shown
in
the
primary
worksheets.
Page
3
The
acronyms
used
in
the
cost
analysis
methodology
are
defined
and
listed
in
Appendix
A,
of
this
document.
Appendix
B
includes
definitions
of
terms
used
throughout
this
document.

II.
MVECP
Fees
Program
A.
Description
And
Background
On
July
7,
1992,
EPA
published
a
final
rule
(
57
FR
30055)
establishing
user
fees
to
recover
all
reasonable
costs
associated
with
certification
and
compliance
programs
of
highway
vehicles
and
engines
within
the
Office
of
Transportation
and
Air
Quality
(
OTAQ),
then
called
Office
of
Mobile
Sources
(
OMS).
Functioning
under
the
Office
of
Air
and
Radiation
(
OAR),
OTAQ
carries
out
a
broad
range
of
activities
to
help
reduce
pollutants
emitted
from
highway
and
nonroad
vehicles,
engines
and
their
fuels.
The
MVECP
includes
all
compliance
activities
performed
by
EPA
that
are
associated
with
certification,
fuel
economy,
selective
enforcement
auditing
(
SEA),
and
in­
use
compliance.
In
1999,
under
the
Compliance
Assurance
Program
(
CAP
2000)
regulations
(
64
FR
23906),
the
provisions
for
fees
were
updated
to
reflect
several
changes
in
the
costs
of
the
MVECP.
For
example,
the
fee
schedule
was
updated
to
reflect
the
change
in
the
anticipated
number
of
certificate
requests.
The
CAP
2000
regulations
apply
only
to
light­
duty
vehicles
(
cars
and
trucks).
At
that
time
EPA
also
recognized
the
need
for
updating
the
1991
cost
analysis
but
determined
that
the
appropriate
time
to
do
a
comprehensive
reevaluation
would
be
in
a
separate
rulemaking.

The
fee
regulations
were
further
modified
by
a
regulatory
amendment
published
on
March
7,
2000
(
65
FR
11904).
This
amendment,
applicable
to
original
equipment
manufacturers
(
OEMs)
and
aftermarket
conversion
manufacturers,
allows
a
fee
waiver
for
small
volume
alternatively
fueled
vehicles
and
engine
families
that
are
certified
to
the
Clean­
Fuel
Vehicle
standards
for
model
years
(
MY)
2000
through
2003
only.

EPA
has
conducted
a
complete
assessment
of
the
combined
changes
in
all
compliance
activities
and
programs
since
the
1991
cost
analysis
and
the
recent
implementation
of
CAP
2000
regulations.
Since
1991,
EPA
has
incurred
additional
costs
due
to
inflation
along
with
increased
costs
for
supporting
current
compliance
programs,
new
compliance
programs
and
testing
requirements
for
nonroad,
heavy­
duty
and
Tier
2
regulations.
The
fee
provisions
are
currently
being
updated
to
reflect
these
changes
and
will
be
presented
in
an
upcoming
Notice
of
Proposed
Rulemaking
(
NPRM)
for
the
MVECP
fees
program.

B.
To
What
Industries
Will
The
Updated
Fees
Apply?

The
proposed
fees
apply
to
manufacturers
of
the
following:

­
Light­
duty
vehicles
(
cars
and
trucks)
(
Reference
40
CFR
Part
86),
­
Medium
Duty
Passenger
Vehicles
(
Reference
40
CFR
Part
86),
Page
4
­
Complete
gasoline­
fueled
highway
heavy
duty
vehicles
(
Reference
40
CFR
Part
86),
­
Heavy­
duty
highway
diesel
and
gasoline
engines
(
Reference
40
CFR
Part
86),
­
On­
highway
motorcycles
(
Reference
40
CFR
Part
86),
­
Nonroad
compression
ignition
engines
(
Reference
40
CFR
Part
89),
­
Locomotives
(
Reference
40
CFR
Part
92),
­
Marine
diesel
and
gasoline
engines
(
Reference
40
CFR
Parts
91,
94,
or
1045
and
MARPOL
73/
78,
as
applicable),
­
Nonroad
spark
ignition
engines
(
Reference
40
CFR
Parts
90
or
1048,
as
applicable),
­
Recreational
vehicles
(
including,
but
not
limited
to,
snowmobiles,
all­
terrain
vehicles
and
off­
highway
motorcycles)
(
Reference
40
CFR
Part
1051),
and
­
Heavy­
duty
highway
gasoline
vehicles
(
evaporative
emissions
certification
only)
(
Reference
40
CFR
Part
86).

C.
Updating
the
MVECP
Fees
Program:
Overview
of
the
Proposed
Rulemaking
Under
our
current
MVECP
fees
program,
user
fees
are
collected
for
highway
vehicle
and
engine
compliance
and
fuel
economy
programs
and
are
applicable
to
manufacturers
of
light­
duty
vehicles,
light­
duty
trucks,
heavy­
duty
vehicles,
heavy­
duty
engines
and
highway
motorcycles.
In
the
upcoming
NPRM,
EPA
is
proposing
to
update
fees
for
these
current
industries
as
well
as
proposing
to
establish
fees
for
nonroad
manufacturers.
Fees
are
applicable
to
all
industry
types
listed
in
Section
II.
B.
of
this
document.

Under
the
MVECP,
fees
are
collected
to
recover
the
cost
of
services
associated
with:
(
1)
new
vehicle
or
engine
certification;
(
2)
new
vehicle
or
engine
compliance
monitoring;
and
(
3)
in­
use
vehicle
or
engine
compliance
monitoring
and
testing.
EPA
is
proposing
to
update
the
fees
regulation
due
to
increased
costs
to
the
Agency
in
running
the
MVECP.
More
specifically,
these
costs
are
associated
with
the
activities
that
support
the
MVECP's
certification,
fuel
economy,
SEA,
and
in­
use
compliance
programs.
For
example,
our
certification
activities
include:
providing
certification
assistance
during
the
pre­
production
phase;
pre­
certification
confirmatory
testing
of
vehicles;
laboratory
correlation;
certification
compliance
audits
and
investigations;
and
review
and
audits
of
manufacturers
test
data.
Fuel
economy
activities
include:
fuel
economy
selection,
testing,
and
labeling;
and
providing
manufacturers
and
ICIs
corporate
average
fuel
economy
(
CAFE)
calculations.
EPA's
Selective
Enforcement
Auditing
(
SEA)
activities
include
selecting
vehicles
or
engines
from
a
manufacturer's
production
line
for
testing
and
monitoring
and/
or
monitoring
the
testing
of
vehicles
or
engines
at
a
manufacturer­
selected
facility.
Finally,
our
inuse
compliance
activities
involve:
auditing
and
reviewing
the
in­
use
data
of
vehicles
and
engines;
monitoring
in­
use
testing;
and
conducting
Agency­
run
in­
use
surveillance
and/
or
recall
tests.

Our
proposed
fees
reflect
the
costs
in
administering
both
current
and
future
compliance
programs.
The
increased
costs
to
the
Agency
also
includes
costs
for:
testing
equipment
needed
for
measuring
emissions
from
vehicles
and
engines
that
meet
new
more
stringent
emissions
standards;
implementing
new
compliance
programs
such
as
heavy­
duty
nonroad,
marine,
small
nonroad
and
locomotive
engines
along
with
the
anticipated
compliance
programs
for
recreational
vehicles;
an
increased
emphasis
on
the
in­
use
performance
of
heavy­
duty
engines
and
inflation.
Page
5
The
cost
of
implementing
any
of
the
MVECP
activities
is
considered
a
recoverable
cost
that
may
be
collected
through
fees.
However,
it
should
be
noted
that
not
all
compliance
activities
are
associated
with
all
industries.
Costs
are
allocated
by
industry.
For
example,
fuel
economy
costs
only
apply
to
the
light­
duty
industry.

There
are
numerous
activities
related
to
mobile
source
air
pollution
control
that
are
not
included
in
the
MVECP,
and
for
which
EPA
does
not
anticipate
assessing
fees.
We
mention
this
because
although
these
activities
benefit
manufacturers
indirectly
by
facilitating
the
MVECP,
we
have
chosen
not
to
propose
fees
for
these
activities
which
might
be
viewed
as
non­
compliance
oriented.
Such
activities
include:
regulation
development,
determination
of
emission
factors,
air
quality
assessment,
advanced
technology
development,
and
support
of
inspection
and
maintenance
programs.
Since
most
of
the
OTAQ
regulations
set
emission
standards
for
vehicles
and
engines
and
do
not
specifically
assist
or
benefit
the
manufacturers
during
a
regulatory
process,
we
believe
that
most
of
our
regulatory
efforts
create
a
more
general
public
benefit
rather
than
a
specific
private
benefit,
and
therefore,
we
are
not
including
any
costs
associated
with
rulemaking
activity
within
the
costs
we
seek
to
recover
under
the
MVECP.

D.
Description
of
the
Five
(
5)
OTAQ
Divisions
EPA's
Office
of
Transportation
and
Air
Quality
(
OTAQ)
is
responsible
for
developing
and
implementing
programs
to
control
air
pollution
from
motor
vehicles,
engines,
and
their
fuels.
OTAQ's
mission
is
to
reconcile
the
transportation
sector
with
the
environment
by
advancing
clean
fuels
and
technology,
and
by
working
to
promote
more
liveable
communities.
OTAQ's
compliance
programs
focus
on
the
nonroad
and
highway
mobile
sources
which
include:
light­
duty
vehicles
(
cars
and
trucks),
medium
duty
passenger
vehicles,
complete
gasoline­
fueled
highway
heavy
duty
vehicles,
heavy­
duty
highway
diesel
and
gasoline
engines,
on­
highway
motorcycles,
nonroad
compression
ignition
engines,
locomotives,
marine
diesel
and
gasoline,
nonroad
spark
ignition
engines,
recreational
vehicles
(
including,
but
not
limited
to
,
snowmobiles,
all­
terrain
vehicles
and
off­
highway
motorcycles),
and
heavy­
duty
highway
gasoline
vehicles
(
evaporative
emissions
certification
only).

OTAQ
is
divided
between
EPA's
headquarters
in
Washington,
D.
C.
and
the
National
Vehicle
and
Fuel
Emission
Laboratory
(
NVFEL)
in
Ann
Arbor,
Michigan.
OTAQ
includes
the
Immediate
Office
of
the
Director
and
five
major
divisions:
Advanced
Technology
Division
(
ATD),
Assessment
and
Standards
Division
(
ASD),
Certification
and
Compliance
Division
(
CCD),
Laboratory
Operations
Division
(
LOD),
and
the
Transportation
and
Regional
Programs
Division
(
TRPD).
Below
is
a
description
of
the
activities
and
programs
in
each
division.

Advanced
Technology
Division
The
Advanced
Technology
Division
(
ATD)
is
responsible
for
the
development
of
automotive
technology
for
improving
fuel
economy
and
reducing
emissions
from
mobile
sources.
The
division's
projects
include
advanced
technology
development,
low
NOx
diesel
engines,
and
alternative
fuel
technologies.
ATD
is
also
responsible
for
climate
change
policies
and
strategies
related
to
vehicle
efficiency
and
fuels.
Page
6
Assessment
and
Standards
Division
The
Assessment
and
Standards
Division
(
ASD)
identifies
and
develops
future
emission
control
strategies
and
is
responsible
for
federal
rulemaking
and
policy
development
for
highway
and
nonroad
vehicles,
engines
and
fuels.
In
the
process,
ASD
determines
the
contribution
of
mobile
sources
to
pollutant
emission
inventories
and
assesses
the
feasibility,
cost,
and
in­
use
effectiveness
of
emission
control
technologies.
ASD
uses
an
integrated
approach
that
addresses
both
vehicle/
engine
classes
and
fuels
simultaneously.
ASD
also
develops
the
computer
models
EPA
uses
to
support
environmental
policy
decisions,
tests
their
assumptions,
analyzes
their
effectiveness,
makes
improvements
in
them
and
also
provides
modeling
support
to
other
OTAQ
Divisions.

Certification
and
Compliance
Division
The
Certification
and
Compliance
Division
(
CCD)
manages
federal
compliance
programs
for
all
highway
and
nonroad
vehicles
and
engines
including
pre­
production
certification
and
activities
that
assess
the
new
engine
and
in­
use
performance
of
these
vehicles
and
engines.
These
programs
include
certification,
fuel
economy,
selective
enforcement
audits,
and
in­
use
compliance
activities.
CCD
also
conducts
a
national
fuel
economy
and
CAFE
audit
program
for
light­
duty
passenger
cars
and
trucks.
This
division
plays
a
major
role
in
the
MVECP.
CCD
is
also
responsible
for
the
On­
Board
Diagnostics
(
OBD)
and
On­
Board
Vapor
Recovery
(
ORVR)
programs.
Approaches
to
compliance
have
been
reinvented
through
the
CAP
2000
rulemaking
by
setting
compliance
goals
and
focusing
more
on
in­
use
effectiveness.
CCD
staff
is
split
between
Ann
Arbor
and
Washington,
DC.

Laboratory
Operations
Division
The
Laboratory
Operations
Division
(
LOD)
provides
emission
testing
services
for
lightduty
vehicle,
highway
and
nonroad
CI
and
SI
heavy­
duty
engine,
and
nonroad
engine
programs
in
support
of
rulemaking
development,
enforcement
actions,
and
compliance
testing.
LOD
conducts
tests
for
certification,
fuel
economy,
in­
use
compliance,
fuels
and
fuel
additives
analysis,
and
exhaust
compounds
analysis.
LOD
is
also
responsible
for
providing
all
facility
services
and
upgrades,
computer
network
services,
and
administrative
support
services
to
OTAQ.

Transportation
and
Regional
Programs
Division
The
Transportation
and
Regional
Programs
Division
(
TRPD)
works
with
regions,
states,
local
government,
and
other
stakeholders
to
reduce
pollution
from
fuels,
transportation,
and
nonroad
sources.
TRPD
implements
national
and
regional
pollution
control
programs,
such
as
the
reformulated
gasoline
(
RFG)
program
and
a
transportation­
based
climate
change
program.
It
also
develops
and
supports
voluntary
initiatives
that
encourage
clean
air
and
liveable
communities
such
as
the
Commuter
Choice
Program.
State
and
local
government
agencies
and
EPA's
regional
offices
work
with
TRPD
and
are
key
partners
with
OTAQ
in
pursuing
its
goals
of
reducing
mobile
source
emissions
and
achieving
sustainable
transportation
systems.
TRPD
staff
is
split
between
Ann
Arbor
and
Washington,
D.
C.
Page
7
2Recoverable
costs
are
described
in
detail
in
Section
III,
below.
Immediate
Office
The
Immediate
Office
of
the
Director
in
Washington,
D.
C.
is
comprised
of
the
Director,
her
staff
and
OTAQ's
budgetary,
policy
and
communications
functions.
The
Immediate
Office
of
the
Deputy
Director,
located
in
Ann
Arbor
includes
the
Deputy
Director.
His
staff
oversees
Human
Resources
and
NVFEL
communications
functions.

E.
MVECP
Activities
The
following
compliance­
related
activities
comprise
the
bulk
of
EPA's
actions
that
incur
recoverable2
costs:

Certification
Before
a
manufacturer
can
distribute
into
commerce,
introduce
or
deliver
for
introduction
into
commerce,
import,
sell
or
offer
for
sale
a
regulated
vehicle
or
engine
in
the
United
States,
it
must
obtain
a
certificate
of
conformity
from
the
EPA.
To
obtain
a
certificate,
manufacturers
must
go
through
the
certification
process,
which
may
include
submitting
one
or
more
prototype
vehicles
or
engines
of
an
engine
family
or
test
group
to
EPA
for
emissions
confirmatory
testing.
The
CAA
requires
EPA
or
manufacturers
to
conduct
a
variety
of
tests
necessary
to
ensure
that
these
vehicles
and
engines
comply
with
established
standards.
In
addition
to
confirmatory
testing
and
compliance
inspections,
EPA's
certification
activities
include,
but
are
not
limited
to,
the
following:
review
of
applications
for
certification;
review
of
durability
justification;
emission
data
vehicle
and
engine
approval,
testing,
and
processing;
certification
request
processing;
review
of
manufacturer
application
for
certification
and
review
of
manufacturer
tests;
generating
and
issuing
certificates;
and
maintaining
a
vehicle
and
engine
test
database.

Fuel
Economy/
Corporate
Average
Fuel
Economy
(
CAFE)
EPA
administers
the
fuel
economy
program
for
passenger
cars
and
light­
duty
trucks,
which
includes
activities
such
as
fuel
economy
labeling
and
CAFE
auditing.
Fuel
economy
labeling
provides
fuel
economy
values
and
other
information
to
consumers.
These
labels
are
used
by
manufacturers
to
market
their
products
and
meet
the
requirements
of
the
Energy
Policy
and
Conservation
Act
(
EPCA).
Other
fuel
economy
activities
include
confirmatory
testing
of
vehicles,
and
reviewing
and
auditing
manufacturers'
vehicle
and
engine
tests,
calculations,
and
labels.
EPA
oversees
CAFE
activities
that
determine
each
manufacturer's
compliance
with
the
CAFE
standards
specified
in
the
EPCA.

Selective
Enforcement
Auditing
(
SEA)
To
further
ensure
compliance
with
the
CAA,
EPA
has
the
authority
to
test
a
sample
of
new
vehicles
or
engines
covered
by
a
certificate
as
they
leave
a
manufacturer's
assembly
line
(
production
vehicles
and
engines)
and
to
revoke
or
suspend
any
certificate
of
conformity,
in
whole
or
in
part,
if
the
Administrator
determines
that
all
or
part
of
the
Page
8
vehicles
or
engines
covered
by
the
certificate
do
not
conform
with
the
regulations
under
which
the
certificate
was
issued.
SEAs
involve
selecting
vehicles
and
engines
off
of
the
assembly
line
and
monitoring
their
testing
at
various
production
plants
around
the
world
to
determine
compliance
with
emission
standards.

In­
Use
Compliance
Programs
A
manufacturer
may
be
held
required
to
remedy
the
nonconformance
of
certain
vehicles
or
engine
if
the
Administrator
determines
that
a
substantial
number
of
any
class
or
category
of
vehicles,
although
properly
maintained
and
used,
do
not
comply
with
applicable
emission
standards
throughout
their
useful
life.
EPA
conducts
a
number
of
in­
use
evaluation
and
testing
programs
to
ensure
that
vehicles
and
engines
continue
to
meet
emission
standards
throughout
their
useful
life.
In­
use
evaluation
includes
testing
and/
or
screening
in­
use
vehicles
and
engines
and
reviewing
manufacturers'
in­
use
vehicle
and
engine
test
data.
In­
use
testing
may
be
conducted
at
EPA's
facility
or
a
contracted
facility.

EPA's
costs
to
conduct
SEAs
and
these
various
in­
use
compliance
evaluation
and
testing
programs
vary
by
industry.
Where
the
regulations
require
manufacturers
to
provide
production
line
testing
data
or
in­
use
test
data,
EPA's
testing
costs
will
be
reduced.

III.
The
Fees
Cost
Analysis
Methodology
As
a
result
of
an
in­
depth
study
of
the
resources
expended
on
the
MVECP,
this
cost
analysis
provides
a
detailed
account
of
the
recoverable
costs
associated
with
the
program.
It
sets
forth
the
costs
of
the
MVECP
and
the
calculations
that
form
the
basis
for
each
fee.

A.
Fees
Cost
Analysis
Methodology:
General
Steps
The
methodology
for
the
cost
analysis
involved
completing
a
number
of
steps.
A
more
detailed
explanation
of
these
steps
along
with
a
breakdown
of
the
recoverable
costs
within
the
OTAQ
divisions
is
provided
later.
The
steps
below
provide
a
general
overview
of
the
method
used
to
set
each
of
the
proposed
fees.

1)
Examined
2001
OTAQ
budget
to
determine
which
OTAQ
programs
are
MVECP
related.

The
FY
2001
budget
lays
out
the
various
programs
within
the
OTAQ
divisions
and
the
actual
costs
associated
with
them.
We
examined
this
budget
to
determine
which
programs
in
OTAQ
are
compliance­
related.
The
FY
2001
budget
was
used
as
a
starting
point
because
it
contained
the
most
current
data
available
for
calculating
the
costs
of
any
compliance
activities.

2)
Identified
and
specified
all
current
costs
associated
with
the
OTAQ
Divisions
that
conduct
or
support
the
MVECP
related
programs
(
LOD
and
CCD),
and
identified
and
Page
9
specified
all
projected
future
certification
and
compliance
program
costs
under
MVECP.

We
found
that
the
majority
of
these
compliance
programs
were
and
still
are
conducted
by
the
Certification
and
Compliance
Division
(
CCD)
and
our
Laboratory
and
Operations
Division
(
LOD).
So
at
this
point
we
focused
primarily
on
CCD
and
LOD
compliance
activities
and
programs.
Other
divisions
that
currently
do
not
incur
any
compliancerelated
costs
were
not
considered.
The
cost
analysis
calculations
are
based
on
the
actual
dollar
amounts
from
the
budget.
As
stated
earlier,
the
FY
2001
OTAQ
budget
(
including
LOD
and
CCD
specific
budgets)
details
the
costs
of
running
current
compliance
programs
and
other
costs
associated
with
these
two
Divisions.
We
adjusted
those
costs
to
FY
2003
levels
for
our
current
programs
as
well
as
known
future
compliance
programs.
Cost
estimates
for
future
compliance
programs
are
based
on
the
cost
estimates
for
the
equipment
and
contract
needs
and
the
projected
job
functions
required
to
support
the
new
compliance­
related
regulations.
For
example,
due
to
new
requirements,
we
knew
heavyduty
testing
would
be
expanded
and
this
had
to
be
reflected
in
the
costs.
Our
projected
costs
are
detailed
in
the
cost
analysis
worksheets
described
later
in
this
document.

3)
Determined
the
appropriate
methods
to
allocate
certain
MVECP
costs
as
recoverable
or
non­
recoverable
(
Allocation
Type
1)
and
appropriate
methods
to
apportion
MVECP
costs
to
industry
categories
(
Allocation
Type
2).

We
used
two
types
of
allocation
in
this
cost
analysis.
Allocation
Type
1
was
used
to
determine
what
portion
of
a
general
budget
item
cost
is
recoverable
as
a
MVECP
cost.
The
recoverable
portion
of
a
cost
is
determined
by
the
amount
of
the
cost
that
is
dedicated
to
the
MVECP.
Allocation
Type
2
involved
allocating
the
recoverable
costs
to
industries
(
industry
categories)
that
are
covered
by
the
MVECP
as
determined
under
the
step
performed
under
Allocation
Type
1.
We
used
five
(
5)
allocation
methods
to
distribute
costs.
A
more
detailed
explanation
of
allocation
types
and
methods
are
described
below
and
later
in
these
general
steps.

Allocation
Type
1­
Apportioning
Costs
as
Recoverable
and
Non­
recoverable
The
costs
that
were
identified
as
related
to
the
MVECP,
as
discussed
in
step
2,
fell
into
three
different
categories,
1)
those
that
were
one
hundred
percent
MVECP
costs
and
,
therefore,
fully
recoverable,
2)
those
that
were
not
related
to
the
MVECP
and,
therefore,
non­
recoverable
and
3)
those
costs
that
were
partially
recoverable
and
partially
nonrecoverable
Allocation
Type
1
involved
separating
the
recoverable
cost
from
the
nonrecoverable
costs
for
each
budget
item.
The
recoverable
portion
of
a
cost
is
determined
by
the
amount
of
the
cost
associated
with
the
MVECP.

Allocation
Type
2­
Apportioning
Recoverable
Cost
by
Industry
Category
Allocation
Type
2
involved
allocating
the
recoverable
costs
to
industry
categories.
These
industry
categories
are
discussed
in
detail
in
Step
#
5
below.
We
based
these
categories
on
the
types
of
vehicle
and
engines
that
we
certify
and
the
types
of
compliance
activities
we
conduct
for
these
industries.
These
industry
categories
are
Light­
duty
(
ICIs
,
LDV
Page
10
3
Direct
Labor
consists
of
the
FTE
associated
with
LOD
and
CCD's
operations,
or
programs.
without
ICIs,
and
motorcycles),
Engines
(
heavy­
duty
highway
and
nonroad
compression
ignition)
and
Other
(
other
engines
and
vehicles).

The
Five
(
5)
Allocation
Methods
We
used
five
(
5)
different
allocation
methods
to
distribute
costs
under
both
Allocation
Type
1
and
Allocation
Type
2.
The
allocation
method
used
in
each
case
was
the
most
appropriate
for
allocating
the
cost
involved.
The
allocation
methods
all
involve
ratios
except
in
the
case
of
Actual
Count
and
Actual
Cost
methods.
Below
are
the
five
allocation
methods
followed
by
example
cases
of
how
we
used
each
method.

The
five
allocation
methods
are:

1)
Actual
Cost
2)
The
FTE
Method
3)
The
Square
Foot
Method
4)
The
Workstations
Method
5)
The
Ratio
of
Tests
Method
Explanation
and
Examples
of
the
Allocation
Methods
Used:

1)
Actual
Cost
The
first
allocation
method
is
the
actual
cost.
This
method
is
used
as
a
Type
1
allocation
method
for
which
the
recoverable
cost
may
be
directly
calculated.
An
example
of
an
actual,
recoverable
cost
is
the
Direct
Labor3
cost
that
is
calculated
by
counting
the
direct,
recoverable
FTE
and
multiplying
by
the
cost
per
FTE.

This
allocation
method
is
also
used
as
a
Type
2
allocation
method
when
costs
are
directly
attributable
to
individual
industry
categories.
An
example
of
the
actual
cost
allocation
to
the
industry
categories
are
CCD's
direct
program
costs
which,
as
shown
on
Worksheet
#
13,
have
totals
attributable
to
each
category
that
are
carried
directly
to
the
CCD
Summary
sheet,
Direct
Program
Cost
row.

2)
The
FTE
Method
The
FTE
Method
is
used
in
this
cost
analysis
as
a
Type
1
and
a
Type
2
allocation
method.
As
a
Type
1
allocation
method,
the
recoverable
portion
of
a
cost
is
determined
by
the
amount
of
the
cost
that
is
dedicated
to
the
MVECP.
The
portion
of
the
cost
that
is
dedicated
to
the
MVECP
is
determined
by
presuming
that
the
cost
is
evenly
distributed
to
the
total
FTE
in
a
group
and
the
recoverable
part
of
the
cost
is
that
associated
with
the
number
of
direct,
recoverable
people
in
the
group.
Therefore,
the
recoverable
portion
of
a
cost
may
be
calculated
by
multiplying
the
cost
by
the
ratio
of
direct,
recoverable
FTE
to
Page
11
total
FTE
in
that
group.
For
example,
if,
in
our
laboratory
division
(
LOD,)
there
are
100
people
and
20
of
those
people
are
working
on
compliance
programs,
the
recoverable
ratio
is
20
to
100,
or
20
percent.
So,
if
we
determine
the
recoverable
portion
of
an
indirect
cost
for
LOD,
we
would
multiply
the
cost
by
.2
or
take
20
percent
of
that
cost.
An
indirect
cost
of
$
100,000
would
be
multiplied
by
.2
for
a
recoverable
cost
of
$
20,000.

The
FTE
Method
may
also
be
used
as
a
Type
2
allocation
method
to
allocate
recoverable
costs
across
industry
categories.
This
method
was
used
to
reflect
the
cost
of
services
to
each
of
the
fee
categories.
This
allocation
method
presumes
that
the
portion
of
a
cost
to
be
allocated
to
each
industry
is
dependent
upon
the
number
of
direct,
recoverable
FTE
that
work
in
that
industry.
The
portion
of
a
cost
that
is
allocated
to
each
industry
is
calculated
using
a
ratio
of
the
direct,
recoverable
FTE
per
industry
to
the
total
number
of
direct
FTE.
The
example
shown
in
Table
III.
B­
1
below
was
used
for
allocating
LOD's
costs
across
industries:
Table
III.
B­
1
LOD
Direct
Recoverable
FTE
by
Industry
as
a
Percentage
of
Total
Direct
Recoverable
FTE
Total
Light­
Duty
Vehicles
(
LDV)
Motorcycles
(
MC)
Heavy­
Duty
Highway
(
HD
HW)
Nonroad
Diesel
(
NR
CI)
Other
Total
Recoverable
Direct
FTE
13
0
2.25
0
1.25
16.5
%
of
Total
79%
0
14%
0
8%
100%

Direct
Recoverable
FTE
by
Industry
as
a
percent
of
Total
Direct
Recoverable
FTE
is
used
as
an
allocation
unit
throughout
the
cost
analysis.
In
each
case
the
fraction
of
direct,
recoverable
FTE
by
industry
divided
by
total
direct
recoverable
FTE
is
applied
to
the
entire
cost
to
determine
the
recoverable
portion
to
each
industry.

3)
The
Square
Footage
Method
The
Square
Footage
method
is
used
as
a
Type
1
allocation
method.
This
method
is
used
to
determine
the
recoverable
portion
of
a
cost
by
multiplying
the
cost
by
a
ratio
of
recoverable
square
feet
divided
by
total
square
feet
applicable
to
the
cost.
This
method
is
used
three
times
in
this
cost
analysis,
to
determine
the
indirect
labor
cost
for
FTE
in
LOD's
Facilities
Services
Group,
and
to
determine
the
recoverable
portion
of
the
LOD's
Ann
Arbor
Facilities
costs
and
Building
and
Facilities
costs.

4)
Ratio
of
Workstations
Ratio
of
Workstations
is
an
allocation
method
used
to
determine
the
recoverable
portion
of
LOD's
Information
Management
Group
(
IMG).
The
FTEs
in
this
Group
spend
the
majority
of
their
time
servicing
workstations.
Therefore,
the
allocation
unit
used
for
this
Page
12
4An
FTPE
is
a
measure
of
work
used
by
the
lab
and
is
equivalent
to
the
amount
of
resources
needed
to
perform
a
standard
emissions
test
called
the
Federal
Test
Procedure.
All
test
procedures
are
expressed
in
terms
of
the
amount
of
resources
used
to
perform
the
Federal
Test
Procedure.
For
example,
the
amount
of
resources
need
to
conduct
the
Highway
Test
Procedure
are
half
of
that
needed
for
the
Federal
Test
Procedure.
Therefore,
the
Highway
Test
Procedure
requires
.5
FTPE.
group
was
workstations.
This
allocation
method
was
used
to
determine
the
number
of
LOD's
indirect
IMG
FTE.
To
determine
the
number
of
IMG
FTE
we
presumed
that
the
group
spends
an
equal
amount
of
time
servicing
each
workstation.
The
recoverable
number
of
FTE
from
this
group
is
the
number
that
service
recoverable
workstations.
A
recoverable
workstation
is
one
that
is
allocated
to
confirmatory/
compliance
testing,
compliance
related
activities
and
certification
review.
A
ratio
of
recoverable
workstations
serviced
to
total
workstations
serviced
was
multiplied
by
the
number
of
FTE
in
the
group
to
determine
the
IMG
recoverable,
indirect
FTE.

5)
The
Ratio
of
Tests
Method
The
Ratio
of
tests
Method
is
used
as
a
Type
2
allocation
method,
specifically
for
determining
the
allocations
for
ICI,
certification
and
Fuel
economy
and
in­
use
within
the
light­
duty
industry
category
for
LOD.
The
allocations
were
first
determined
by
separating
the
costs
into
1)
certification
and
fuel
economy
testing
and
2)
in­
use
testing.
The
Direct
FTE
in
LDV
were
then
allocated
to
the
subcategories
based
on
the
types
of
Federal
Test
Procedure
Equivalents
(
FTPEs)
4
performed.
Of
the
tests
performed,
60
percent
were
for
certification
and
fuel
economy
and
40
percent
were
for
in­
use.
Further
examination
of
the
test
data
revealed
that
10
percent
of
the
certification
and
fuel
economy
tests
were
conducted
on
ICI
vehicles.
Therefore,
the
costs
for
the
LOD
LDV
categories
were
allocated
by
multiplying
the
LDV
portion
of
each
recoverable
cost
by
the
percentage
of
tests
for
that
category;
6
percent
for
ICIs,
54
percent
for
certification
and
fuel
economy
and
40
percent
for
in­
use.
The
Total
LDV
w/
o
ICI
category
is
the
total
of
the
In­
use
and
Cert/
Fuel
Economy
costs.
Once
the
test
percentage
was
established,
it
was
used
to
allocate
the
FTE
to
the
ICI,
certification
and
fuel
economy
and
in­
use
subcategories.
Once
the
number
FTE
for
each
of
these
subcategories
was
established,
the
FTE
method
was
used
to
allocate
the
operating
costs
for
the
subcategories.

4)
Categorized
all
the
MVECP
costs
into
three
major
categories­
direct
and
indirect
labor,
direct
and
indirect
operating
costs
and
overall
EPA
overhead
costs
and
determined
the
portion
of
these
costs
that
was
recoverable
by
using
a
method
under
Allocation
Type
1
(
associated
with
the
MVECP).

All
of
the
costs
were
divided
into
three
major
categories:
Labor,
Operating
and
Overhead
Costs.
The
Labor
and
Operating
categories
include
both
direct
and
indirect
costs
associated
with
compliance
activities.
The
recoverable
portion
of
the
direct
and
indirect
Page
13
5
EPA
annually
calculates
the
cost
of
each
employee
by
office.
The
projected
OTAQ
PC&
B
rate
for
2003
is
based
on
the
FY
2001
actual
costs
per
FTE
and
includes
assumed
inflation
factors
for
FY
2002
and
2003.
The
inflation
factors
includes
increases
for
cost
of
living,
awards
and
pay
increases.
The
projected
total
cost
of
living
increase
for
2002
and
2003
is
7%.
The
total
awards
increase
for
2002
and
2003
is
1%.
The
projected
amount
for
pay
increases
was
1%
for
FY2002
and
could
be
between
1%
and
2.35%
for
FY
2003.
We
chose
to
use
the
more
conservative
figure
of
1%
resulting
in
a
total
PC&
B
rate
for
OTAQ
of
$
99,580.
Labor
and
Operating
costs,
those
costs
attributed
to
the
MVECP,
were
then
determined.
The
overall
overhead
costs
are
costs
incurred
by
other
parts
of
the
EPA
that
support
CCD
and
LOD
in
conducting
the
MVECP.
The
three
categories
are
further
described
below:

(
A)
Labor:
Labor
is
the
cost
associated
with
the
EPA
labor
force
(
salary,
health
benefits,
pension,
etc.)
Total
labor
costs
are
determined
by
two
factors
­­
Full
Time
Equivalents
(
FTEs)
and
the
Personnel,
Compensation
and
Benefits
(
PC&
B)
rate.
An
FTE
is
a
unit
of
measure
to
equate
a
full
year's
worth
of
work
for
one
employee.
The
PC&
B
rate
is
the
average
cost
of
an
FTE.
The
projected
2003
PC&
B
rate
for
an
FTE
that
works
in
the
Office
of
Air
and
Radiation
is
$
99,5805
which
is
the
rate
used
to
determine
the
recoverable
cost
of
labor
for
the
MVECP.
Total
labor
cost
is
the
product
of
the
number
of
FTEs
and
the
PC&
B
rate.
We
broke
the
labor
cost
into
two
categories
 
direct
and
indirect.

(
i)
Direct
Labor
Direct
Labor
consists
of
the
FTE
associated
with
LOD
and
CCD's
operations,
or
programs.
Direct
FTE
are
employees
who
perform
compliance/
confirmatory
testing,
compliance
related
activities,
certification
review,
regulatory
work
and
testing.
In
total
there
are
113.55
direct
FTE.
The
number
of
recoverable
direct
FTEs,
those
that
worked
directly
on
the
MVECP,
was
determined
by
discussions
with
Senior
management
and
in
some
cases
the
specific
employee.

The
costs
for
the
direct,
recoverable
FTEs
were
determined
by
examining
the
existing
OTAQ
2001
FTE
levels
and
projecting
them
to
the
2003
fiscal
year.
In
some
cases,
new
compliance
programs
are
being
planned.
The
FTE
for
these
programs
were
estimated
via
discussions
with
Senior
management.
The
recoverable,
direct
FTE
include
both
existing
FTE
of
the
current
programs
projected
to
2003
and
anticipated
FTE
for
the
new
compliance
programs
being
planned.

(
ii)
Indirect
Labor
Indirect
Labor
consists
of
the
FTEs
that
provide
support
to
LOD
and
CCD's
direct
FTEs.
In
total
there
are
64.2
indirect
FTEs.
Discussions
with
Senior
management
determined
methods
of
allocating
the
recoverable
portion
of
each
indirect
FTE,
that
portion
attributable
to
the
MVECP.
Page
14
The
recoverable
portion
of
each
indirect
FTE
was
determined
all
of
the
different
allocation
methods.
The
appropriate
allocation
method
was
determined
based
upon
the
driver
of
the
FTEs
time
which
was
determined
by
discussions
with
Senior
management.

(
B)
Operating
Costs:
Operating
costs
include
costs
associated
with
contracts,
equipment,
supplies
and
infrastructure
that
are
needed
for
the
EPA
FTE
to
conduct
compliance
activities.
These
costs
include
costs
for
Travel,
Training,
Communications
and
NVFEL
Laboratory
Modernization
but
do
not
include
Labor
costs.
Operating
costs
are
split
into
two
categories;
Indirect
Program
Costs
and
Direct
Program
Costs.

(
i)
Indirect
program
costs
are
those
costs
for
services
provided
to
FTEs
that
allow
them
to
perform
their
jobs.
These
include
but
are
not
limited
to
the
costs
of
office
space,
computer
support,
travel,
lab
modernization
and
training.
Recoverable,
indirect
program
costs
were
determined
by
assessing
the
portion
of
the
cost
that
was
attributable
to
the
MVECP.
The
recoverable
portion
of
each
indirect
program
costs
was
determined
using
different
allocation
methods.
In
most
cases,
the
recoverable
portion
of
a
cost
was
determined
by
using
the
FTE
allocation
method.
The
square
foot
method
was
also
used.

(
ii)
Direct
Program
Costs
are
EPA's
costs
for
compliance
work.
This
includes
the
cost
of
testing
either
at
EPA's
lab
or
a
contracted
testing
facility,
procurement
of
vehicles
or
engines
and
equipment
needed
to
conduct
the
tests
(
excluding
lab
modernization
costs).
Also
included
are
the
costs
of
computers
used
specifically
for
maintaining
test
data
and
maintenance
of
test
equipment
in
the
lab.

The
recoverable,
direct
costs
are
those
that
relate
directly
to
the
MVECP
and
were
determined
by
discussions
with
Senior
management
and
by
review
of
applicable
contracts.
The
costs
for
the
direct,
recoverable
programs
were
determined
using
the
actual
cost
allocation
method,
by
examining
the
OTAQ
2001
budget
and
projecting
the
costs
for
those
programs
to
the
2003
fiscal
year.
In
some
cases,
new
compliance
programs
are
being
planned.
The
costs
for
these
programs
were
estimated
using
contractor
estimates
and
equipment
(
such
as
on­
vehicle
testing
units)
prices.
The
recoverable
Direct
Program
Costs
include
both
the
cost
of
the
current
programs
projected
to
2003
and
the
planned
program
cost
estimates.

(
C)
Overall
EPA
Overhead
Costs
(
16.9
percent):

The
Overall
EPA
Overhead
Costs
are
costs
incurred
by
other
parts
of
the
EPA
that
support
CCD
and
LOD.
This
includes
but
is
not
limited
to
the
OTAQ
management
above
division
level
and
staff,
management
and
staff
of
OAR
and
EPA.
The
Overhead
Costs
are
determined
by
multiplying
all
recoverable
costs
by
a
rate
which
was
developed
by
EPA's
Office
of
the
Chief
Financial
Officer
(
OCFO),
Financial
Management
Division
(
FMD)
in
Page
15
6A
copy
of
this
document
has
been
placed
in
EPA
Air
Docket
No.
A­
2001­
09.
The
docket
is
located
at
The
Air
Docket,
401
M.
Street,
SW.,
Washington,
DC
20460
accordance
with
Federal
Accounting
Standard
#
46.
According
to
Federal
Accounting
Standard
#
4,
we
are
able
to
recover
a
prorated
share
of
all
applicable
overhead
costs.
The
rates
were
calculated
based
upon
the
FY2000
actual
overhead
costs
for
specified
units
and
the
total
FY2000
disbursements.
The
costs
come
from
three
levels
within
the
EPA.
The
rate
was
developed
based
upon
the
overhead
costs
incurred
by
the
following
units:

1)
National
EPA
General
and
Administrative
Costs
­
7.82%

2)
Office
of
Air
and
Radiation
G
&
A
Costs
­
5.56%

3)
Office
of
Transportation
and
Air
Quality
G
&
A
Costs
 
3.52%

The
above
three
costs
include
such
overhead
costs
as
EPA's
headquarters
building
and
facilities;
OTAQ's
Judiciary
Square
office
facility
in
Washington,
D.
C.;
supporting
services
for
information
technology;
guard
services;
telephone
and
computer
networks;
Human
Resources
offices
in
Washington
D.
C.;
and
other
general
support
activities.

The
total
16.9
percentage
was
used
to
develop
the
current
overhead
costs.
The
OCFO
used
this
same
methodology
to
develop
this
type
of
rate
system
for
other
programs
such
as
Superfund.
The
overall
overhead
costs
were
developed
by
multiplying
the
total,
recoverable
costs
by
the
16.9
percent
overhead
rate.
It
should
be
noted
that
this
overhead
cost
includes
the
facilities
operating
costs
for
OTAQ's
Washington,
D.
C.
staff,
but
not
for
OTAQ's
Ann
Arbor
staff.
As
a
result
there
are
no
other
facilities
operating
costs
for
OTAQ's
Washington,
D.
C.
group.
Only
OTAQ's
facility
operating
costs
for
Ann
Arbor
are
shown
in
the
cost
analysis
worksheets.

5)
Separated
industries
into
fee
categories
by
their
associated
and
similar
level
of
MVECP
costs
of
certification
and
compliance
services.

Our
next
step
in
the
cost
analysis
was
to
allocate
each
cost
(
ie.
labor
and
operating
costs)
to
industry
categories:
Light­
duty
(
ICIs,
LDV
without
ICIs
and
motorcycles),
Engines
(
heavy­
duty
highway
and
nonroad
compression
ignition)
and
Other
(
other
engines
and
vehicles).
The
categories
were
determined
by
separating
the
industries
by
the
testing
and
compliance
services
conducted
for
each
category
so
that
each
category
pays
fees
only
for
the
services
that
it
receives.

The
first
category
is
Light­
Duty.
It
includes
light­
duty
vehicles
and
trucks
and
motorcycles.
Also
included
in
this
category,
because
the
compliance
programs
are
so
similar
to
the
light­
duty
programs,
are
medium­
duty
passenger
vehicles
and
complete
heavy­
duty
highway
vehicles
that
are
tested
as
light­
duty
vehicles
and
certified
using
light­
Page
16
7
Manufacturers
have
the
option
of
having
heavy­
duty
engines
tested
on
an
engine
dynamometer
and
meeting
heavy­
duty
engine
standards
or
having
heavy­
duty
engines
tested
in
complete
vehicles
on
a
vehicle
dyno
and
meeting
light­
duty
vehicle
standards.
duty
procedures7.
ICI's
and
motorcycles
are
subcategories
under
light­
duty
because
the
amount
of
testing
and
in­
use
activity
is
different
for
these
industries
and,
therefore,
the
costs
for
these
industries
are
calculated
separately.

The
second
category
is
Engines
(
Heavy­
Duty
Highway
and
Nonroad
Compression
Ignition)
for
which
there
is
an
EPA
certification
testing
and/
or
in­
use
compliance
program.
This
category
includes
heavy­
duty
highway
engines,
and
nonroad
compression
ignition
engines
that
are
regulated
under
40
CFR
Part
89.

The
third
category
is
Other
engines
and
vehicles.
Currently,
certification
requests
for
these
industries
include
or
will
include
only
certification
review.
This
category
consists
of
small
spark
ignition
engines,
all
marine
engines,
locomotives,
large
nonroad
spark
ignition
engines,
recreational
vehicles
and
engines,
heavy­
duty
engine
evaporative
systems,
and
California­
only
heavy­
duty
engines.

A
further
discussion
of
the
categories
is
included
in
Section
IV,
Fees
Schedule
and
Structure,
below.

Within
each
of
the
categories
we
examined
the
compliance
activities
for
each
industry
to
more
directly
establish
the
costs
for
the
industries.
The
Light­
Duty
category
includes
light­
duty
vehicles
and
trucks,
motorcycles,
medium­
duty
passenger
vehicles,
and
complete
heavy­
duty
vehicles.
We
further
examined
light­
duty
vehicles
and
trucks
and
determined
that
this
category
could
be
further
broken
down
into
federal
light­
duty
vehicles
and
trucks,
California­
only
vehicles
and
trucks
and
ICIs
based
on
the
different
amount
of
resources
and
effort
(
labor
and
operations
costs,
etc.)
spent
on
each
category.

Currently,
the
EPA
program
for
federal
light­
duty
vehicles
and
trucks
includes
certification
review,
certification
testing
and
in­
use
testing.
The
program
for
Californiaonly
light­
duty
vehicles
and
trucks
includes
certification
review
and
certification
testing.
California
has
established
an
in­
use
program
to
which
these
vehicles
and
trucks
are
subject.
The
ICI
program
consists
of
certification
review
and
some
pre­
certification
testing.
We
currently
do
not
conduct
in­
use
tests
on
ICI
vehicles.
Engines
that
manufacturers
choose
to
test
as
compete
vehicles
are
tested
as
light­
duty
vehicles
under
this
category.

The
second
category
is
called
Heavy­
Duty
Highway
and
Nonroad
Compression
Ignition.
EPA's
compliance
programs
for
both
include
certification
review
and
testing,
selective
enforcement
audits
and
in­
use
testing.
Although
the
programs
are
similar,
the
industries
receive
a
different
amount
of
oversight
and,
therefore,
the
costs
of
the
programs
will
be
Page
17
examined
separately.

The
third
category,
Other,
currently
includes
or
is
projected
to
include
certification
review
and
in
some
cases,
review
of
production
line
test
data.
In
the
future,
as
the
compliance
programs
for
this
category
mature,
the
program
costs
for
this
category
may
significantly
change.
At
that
time,
the
Agency
will
revise
this
cost
study
and
may
propose
new
fees
under
a
separate
regulation.

6)
Allocated
recoverable
costs
from
step
4
by
fee
category
by
using
a
method
under
Allocation
Type
2.

Our
next
step
was
to
allocate
each
recoverable
cost
to
the
fee
categories.
Again,
recoverable
costs
are
expenses
associated
with
providing
a
unique
service
to
a
specified
set
of
customers
for
the
MVECP,
in
this
case
the
various
industry
types.

We
started
by
allocating
our
direct,
recoverable
labor.
Direct,
recoverable
labor
was
allocable
directly
to
each
fee
category
because
we
determined
from
Senior
management
and
through
interviews
with
individuals
the
amount
of
time
individuals
spent
working
on
each
industry
or
fee
category.

In
some
other
cases
we
could
directly
relate
a
specific
cost
to
a
category,
for
example
the
programs
(
and
their
associated
contracts,
etc.)
listed
on
Worksheet
#
13
are
designated
for
different
categories.
The
costs
for
these
projects
are
listed
for
each
fee
category
under
CCD
Compliance
Programs
in
the
Direct
Program
Costs
row
of
Worksheet
#
4.
In
most
cases,
though,
other
Type
2
allocation
methods
of
allocation
were
necessary.

Within
the
Light­
Duty
category,
the
costs
are
further
allocated
between
In­
use,
Certification
and
Fuel
Economy,
ICI
and
Motorcycle
costs.
The
columns
for
these
allocations
are
shown
specifically
in
the
LOD
and
CCD
worksheets
(
Worksheets
#
3
and
#
4).
The
allocations
for
these
costs
were
determined
differently
for
CCD
and
LOD
because
of
the
difference
in
the
divisions.
In
the
CCD
summary
sheet,
the
costs
for
the
ICI,
In­
use
and
Cert/
Fuel
Economy
were
determined
using
the
FTE
allocation
method,
by
applying
a
ratio
of
the
direct,
recoverable
FTE
that
work
on
each
category
to
the
direct,
recoverable
FTE
that
work
in
the
LDV
category.
The
number
of
FTE
were
determined
by
interviews
with
Group
Managers
as
shown
in
Worksheet
#
14
with
one
of
the
FTE
from
the
LD
Cert
category
devoted
specifically
to
ICI
work.
The
LDV
w/
o
ICI
fee
category
in
Worksheet
#
1
is
the
total
of
LOD's
and
CCD's
In­
use
and
Cert/
Fuel
Economy
costs.

Allocations
for
the
three
light­
duty
columns
for
LOD
was
determined
using
the
Ratio
of
Tests
allocation
method,
as
described
in
General
Step
3.

7)
Determined
a
fee
schedule
based
upon
recoverable
costs
for
each
certificate
type
under
the
fee
category
and
the
number
of
known
and
projected
certificates
issued
annually
for
that
certificate
type.
Page
18
After
the
direct
and
indirect
recoverable
costs
attributed
to
the
MVECP
were
allocated
to
the
various
industry/
fee
categories
we
determined
the
fee
schedule.
The
fee
schedule,
see
Worksheet
#
2,
presents
the
fee
payment
amount
for
each
certification
request
type.
The
certification
request
type
is
the
vehicle
or
engine
type
a
manufacturer
is
requesting
to
certify.
The
request
type
falls
under
one
of
the
three
industry
categories:
Light­
duty
(
ICIs,
LDV
without
ICIs
and
motorcycles),
Engines
(
heavy­
duty
highway
and
nonroad
compression
ignition)
and
Other
(
other
engines
and
vehicles).
The
fee
amount
was
determined
by
adding
up
the
recoverable
costs
for
each
certification
request
type
and
dividing
that
amount
by
the
number
of
certificates
issued
yearly
(
per
industry).
We
obtained
the
certificate
number
from
the
certification
database
which
stores
the
number
of
certificates
EPA
issues.
The
fee
schedule
is
shown
on
cost
analysis
Worksheet
#
2
and
is
also
presented
later
in
this
document.

B.
Overall
Cost
Summary
(
Worksheet
#
1)

The
overall
cost
summary
worksheet
reflects
the
EPA's
projection
of
total
annual
costs
incurred
for
the
Motor
Vehicle
and
Engine
Compliance
Program.
For
each
item,
except
the
Overall
EPA
Overhead
rate,
the
cost
for
each
item
represents
the
sum
of
the
costs
from
the
LOD
and
CCD
summary.
A
discussion
of
the
determination
of
the
Overall
EPA
Overhead
rate
is
located
in
the
Overview
of
Methodology
above.

Please
note
that
because
the
numbers
in
this
discussion
have
been
truncated
at
two
decimals,
the
numbers
discussed
below
may
be
slightly
different
than
the
totals
stated
on
the
Worksheets
#
3
and
#
4.
This
is
because
the
numbers
in
the
cost
analysis
may
be
carried
out
farther
than
two
decimals
and,
therefore,
the
product
of
these
numbers
may
be
slightly
different
than
that
of
truncated
numbers.

Labor:
Direct
Labor
are
the
FTE
associated
with
LOD
and
CCD's
operational
groups.
Operational
Groups
perform
compliance/
confirmatory
testing,
compliance
related
activities,
regulatory
work
and
testing.
In
total
there
are
113.55
FTE
in
LOD
and
CCD's
operational
groups.
The
number
of
recoverable
direct
FTEs
(
59.08)
is
multiplied
by
the
PC&
B
rate
of
$
99,580
which
results
in
the
recoverable
direct
labor
cost
of
$
5,883,186.
The
recoverable
direct
labor
costs
for
each
industry
are
the
sums
of
LOD
and
CCD's
costs
for
each
industry,
taken
from
Worksheets
#
3
and
#
4.

Indirect
Labor
are
the
costs
associated
with
LOD
and
CCD's
support
groups
that
provide
services
to
the
operational
groups.
The
64.2
FTE
are
the
sum
of
the
indirect
FTE
from
the
two
divisions.
The
recoverable
number
of
indirect
FTEs
(
21.39),
the
sum
of
the
LOD
and
CCD
indirect
FTE,
is
then
multiplied
by
the
PC&
B
rate
of
$
99,580,
which
results
in
the
recoverable
indirect
labor
cost
of
$
2,130,459.
The
recoverable
indirect
labor
industry
costs
are
the
sums
of
LOD
and
CCD's
costs
for
each
industry,
taken
from
Worksheets
#
3
and
#
4.
Page
19
Operating
Costs:
Includes,
but
are
not
limited
to,
contracts,
equipment,
supplies
and
infrastructure
that
are
needed
for
the
EPA
direct
recoverable
FTE
to
conduct
compliance
activities.
These
costs
do
not
include
labor
costs.
Operating
costs
are
split
into
two
categories;
Indirect
Program
Costs
and
Direct
Program
Costs.

Indirect
Program
Costs
are
those
costs
for
services
provided
to
FTEs
that
allow
them
to
perform
their
jobs.
These
include
but
are
not
limited
to
the
costs
of
travel,
office
space,
computer
support
and
training.

Travel
 
The
total
and
recoverable
travel
dollars
were
obtained
from
the
LOD
and
CCD
worksheets
#
3
and
#
4.

The
total
recoverable
travel
dollars
($
111,665)
industry
allocations
are
the
sums
of
the
LOD
and
CCD
allocations
for
the
industry
categories.

Seniors
(
SEEP
employees)­
EPA
participates
in
a
program
with
the
National
Senior
Citizens
Education
and
Research
Center
called
the
Senior
Environmental
Employment
Program
(
SEEP)
whereby
the
agency
contracts
with
an
organization
that
provides
qualified
retired
persons
to
perform
duties
for
the
agency
that
are
not
performed
by
the
existing
workforce.
The
costs
associated
with
this
grant
program
are
considered
operating
costs.
Each
division
allocates
money
for
the
SEEP
employees
that
work
for
the
division.
The
total
recoverable
cost
for
SEEP
employees
($
465,807)
is
the
sum
of
the
LOD
and
CCD
SEEP
recoverable
employee
costs.
The
allocations
are
the
sums
of
LOD
and
CCD's
costs
for
each
industry.
See
worksheets
3
&
4
for
more
detail.

Building
and
Facilities
Purchase
and
Repairs
 
The
total
recoverable
cost
for
Building
and
Facilities
Purchase
and
Repairs
is
the
unrounded
total
taken
from
Worksheet
#
11.
Industry
allocations
for
Building
and
Facilities
Purchase
and
Repairs
are
the
sums
of
the
LOD
and
CCD
costs
for
each
industry.

Miscellaneous
and
Office
Supplies­
The
total
for
this
category,
the
determination
of
the
recoverable
portion
and
the
industry
allocations
are
carried
forward
from
the
CCD
summary
sheet
and
is
discussed
in
greater
detail
in
the
CCD
section
(
Section
V.
B)
later
in
this
document.

Training
 
The
recoverable
training
costs
and
industry
allocations
are
the
sum
of
the
LOD
and
CCD
training
costs.

Laboratory
Modernization
 
The
laboratory
modernization
costs
and
industry
allocations
were
carried
forward
from
the
LOD
summary
sheet.
The
details
of
the
recoverable
portion
of
the
laboratory
modernization
and
the
allocation
to
the
industries
is
are
discussed
in
later
in
Section
V.
A
of
this
document
and
in
the
discussion
of
Worksheet
#
11.
Page
20
Communications­
The
communications
cost
is
the
sum
of
LOD's
and
CCD's
Communications
categories
in
Worksheets
#
3
and
#
4.
The
industry
allocations
are
sums
of
the
divisions'
allocations.
The
communications
costs
and
what
they
include
are
discussed
in
detail
in
the
discussion
of
LOD's
costs,
Section
V.
A
below.

Ann
Arbor
Facilities
Operating
Costs
and
Safety,
Health,
and
Environmental
categories
 
The
Ann
Arbor
Facilities
Operating
costs
are
carried
forward
from
Worksheet
#
9.
The
Safety
Health
and
Environmental
industry
allocations
are
the
sum
of
LOD's
and
CCD's
Ann
Arbor
Facilities
Operating
Costs.

Direct
Program
Costs
­
includes
the
cost
of
testing
either
at
EPA's
lab
or
a
contracted
testing
facility,
procurement
of
vehicles
or
engines
and
equipment
needed
to
conduct
the
tests.
Also
included
are
the
costs
of
computers
used
specifically
for
maintaining
test
data
and
costs
of
maintenance
of
test
equipment
in
the
lab:

CCD
Compliance
Programs­
These
costs
and
industry
allocations
consist
of
the
CCD
Program
Compliance
costs
carried
forward
from
the
CCD
Summary
Sheet
(
Worksheet
#
4)
for
each
of
the
respective
industries.

Core
Testing
Operations
 
These
costs
are
LOD's
core
testing
operations
costs
carried
forward
from
the
LOD
Summary
Sheet
(
Worksheet
#
3).
The
costs
are
discussed
in
detail
below
in
the
description
of
Worksheet
#
12.

IV.
Fees
Schedule
and
Structure
A.
Determination
of
the
Fee
The
event
that
triggers
EPA
costs
related
to
the
MVECP
is
the
certification
request.
By
seeking
certification,
a
manufacturer
potentially
becomes
involved
in
a
number
of
EPA
activities,
including
certification,
fuel
economy,
SEA,
and
in­
use
compliance.
The
proposed
fee
structure,
outlined
on
Worksheet
#
2,
is
based
on
activities
associated
with
the
MVECP
from
which
EPA
may
recover
costs.
The
following
is
a
detailed
description
of
the
development
of
the
proposed
fee
structure.

B.
Types
of
Certification
Requests
There
are
three
types
of
certification
requests
that
initiate
EPA
activities.
The
first
type
is
LDV,
which
includes
on­
highway
motorcycles,
LD
vehicles
and
trucks,
LD
ICI
vehicles
and
trucks,
medium­
duty
passenger
vehicles
and
complete
heavy­
duty
vehicles.
The
second
type
includes
heavy­
duty
highway
engines
that
are
highway
heavy­
duty
compression
and
spark
ignition
engines,
and
nonroad
compression
ignition
engines
that
are
regulated
by
40
CFR
part
89,
and
the
third
type
,
for
the
purpose
of
this
cost
analysis
is
referred
to
as
"
Other"
which
includes
marine
compression
and
spark
ignition
engines,
nonroad
spark
ignition
engines
and
locomotive
engines,
Page
21
all
California­
only
engine
certificates
submitted
for
engines
that
are
intended
for
sale
only
in
California
and
heavy­
duty
highway
gasoline
vehicle
evaporative
systems.
In
the
near
future
EPA
anticipates
additional
nonroad
certification
requests
from
the
all­
terrain
vehicle,
snowmobile,
large
gasoline,
and
recreational
diesel
engine
industries
which,
for
purposes
of
the
fee
determination,
are
included
in
the
Other
category.

A
LDV/
LDT
certification
request
type
may
also
include
an
evaporative
emission
family
certification
request.
While
a
separate
fee
could
be
charged
for
each
unique
evaporative
emission
family,
it
is
unnecessary
to
do
so.
This
is
because
the
certification
requests
for
evaporative
emission
families
closely
parallel
requests
for
engine­
system
combinations.
The
single
fee
that
is
proposed
for
LDVs
and
LDTs
includes
the
cost
of
both
evaporative
emission
family
compliance
and
engine­
system
combination
compliance.
The
proposed
fee
for
each
unique
engine­
system
combination
includes
all
combinations
of
evaporative
emission
families.

Conversely,
EPA
requires
a
separate
fee
for
HDV
evaporative
certification
requests.
HDV
evaporative
certification
requests
may
include
HDEs
that
were
certified
previously
by
a
manufacturer
different
than
the
one
requesting
HDV
evaporative
certification.
To
ensure
that
each
manufacturer
is
responsible
for
an
appropriate
portion
of
certification
costs,
EPA
believes
it
is
necessary
to
separate
the
activities
for
the
HDE
certification
request
from
the
HDV
evaporative
certification
request.
Separate
fees
for
evaporative
systems
may
also
apply
to
some
nonroad
engines.
For
the
purpose
of
this
fee
determination,
the
evaporative
system
certification
applications
are
included
in
the
Other
category.

Within
the
LDV/
LDT
certification
request
type,
there
are
three
subcategories
of
requests
that
entail
different
amounts
of
Agency
oversight.
During
our
cost
analysis
we
identified
that
the
Agency
spends
less
effort
on
motorcycles,
California
vehicles
and
ICI
vehicles
than
on
Federal
(
or
50­
state)
certification
requests
in
this
category.
This
is
mainly
due
to
the
amount
of
effort
spent
by
the
Agency
conducting
in­
use
activities.

EPA
currently
conducts
very
little
motorcycle
testing.
A
limited
in­
use
testing
program
is
being
planned
for
motorcycles
which
is
addressed
in
the
description
of
Worksheet
#
12
below.
In­
use
testing
for
California
LDV/
LDTs
are
generally
conducted
by
the
state
of
California
and
not
EPA.
The
ICI
manufacturers
must
supply
the
Agency
emission
test
results
for
one­
out­
of­
three
vehicles
(
for
the
first
300
vehicles,
then
one­
out­
of­
five
beyond
300
vehicles)
imported
under
a
certificate;
this
testing
mitigates
the
need
for
traditional
Agency­
run
in­
use
testing.
Also,
ICIs
generally
import
too
few
vehicles
to
conduct
a
traditional
in­
use
testing
program
using
normal
procurement
methods.
Since
these
categories
entail
different
costs
to
the
Agency,
we
determined
that
these
categories
should
be
separated
from
the
general
LDV/
LDT
category
when
calculating
fees.

For
the
categories
other
than
Light­
Duty,
the
Agency
either
did
not
have
any
experience
with
ICI
certification
or
had
no
evidence
that
suggested
that
the
costs
to
handle
ICI
certification
requests
would
be
significantly
different
from
the
rest
of
the
certification
requests.
Consequently,
for
these
other
categories,
ICI
and
non­
ICI
certification
requests
were
included
in
the
same
analysis
and
both
types
of
manufacturers
would
pay
the
same
fee.
Page
22
Medium­
duty
passenger
vehicles
and
complete
heavy­
duty
vehicles,
while
heavier
than
light­
duty
vehicles,
are
tested
in
the
same
way
as
light­
duty
vehicles
and,
therefore,
the
compliance
programs
for
these
classes
of
vehicles
are
included
in
the
light­
duty
analysis.
The
manufacturers
of
these
vehicles
will
pay
light­
duty
fees.

The
Heavy­
Duty
Highway
engines
and
Nonroad
Compression
Ignition
engine
category
is
separated
into
two
different
fees
for
the
two
engine
types.
The
fees
differ
by
the
amount
of
effort
spent
by
the
agency
on
the
engine
types.
Currently,
EPA's
heavy­
duty
highway
engine
compliance
program
is
more
developed
than
the
program
for
nonroad
compression
ignition
engines.

The
Other
category
has
no
divisions
within
the
category
because
all
of
the
vehicle
and
engine
types
receive
the
same
amount
of
effort
from
the
Agency.

C.
Description
of
Vehicle
Fee
Groupings
The
Table
IV­
D.
1
below
shows
the
regulated
industries
and
the
compliance
activities
that
are
either
authorized
under
EPA
regulations
or
are
proposed.
Under
section
217
of
the
CAA,
EPA
is
authorized
to
establish
fees
for
specific
services
it
provides
to
vehicle
and
engine
manufacturers
for:
(
1)
new
vehicle
or
engine
certification;
(
2)
new
vehicle
or
engine
compliance
monitoring;
and
(
3)
in­
use
vehicle
or
engine
compliance
monitoring
and
testing.
In
being
consistent
with
the
CAA
our
compliance
activities
fall
under
(
4)
categories:
Certification,
Fuel
Economy,
SEA
and
In­
use.
Where
the
activity
is
normally
borne
by
the
manufacturer,
such
as
mandatory
production
line
testing
(
PLT)
or
in­
use
testing,
the
proposed
fees
include
only
the
costs
of
receiving,
reviewing
and
entering
the
submitted
data.
The
proposed
fees
are
based
on
the
compliance
activities
that
EPA
performs
in
each
category.
Page
23
Table
IV­
D.
1
Industry
Vehicle/
Engine
Types
Applicability
Compliance
Activities
LDV
LD
LD
ICI
Light­
duty
trucks
Light­
duty
passenger
cars,
medium­
duty
passenger
vehicles,
complete
HD
vehicles
Certification,
Fuel
Economy,
SEA,
and
In­
use
MC
Highway
motorcycles
Certification
In­
Use
HD
HW
&
NR
CI
Highway
Engines:
Heavy­
Duty(
HD)
Diesel
(
CI)&
Gas
(
SI)
(
HD)
Engines
for
Trucks
and
Buses
Certification,
SEA,
and
In­
use
Nonroad
(
NR):
Diesel
(
CI)
Engine
Engines
used
in
tractors,
dozers,
cranes,
generators,
forklifts,
lawn
tractors
Certification,
SEA,
and
In­
use
Other
Marine
CI
Engines
used
to
propel
a
marine
vessel
Certification,
SEA,
and
In­
Use
Marine
SI
Outboard
engines,
engines
used
in
personal
watercraft
Certification,
PLT,
and
In­
use
Marine
IMO
Engines
for
large
commercial
vessels
Certification
NR
SI
<
19
kW
Lawnmowers,
chainsaws,
generator
sets,
weed
wackers
Certification,
PLT,
and
In­
use
Locomotives
Locomotive
engines
Certification,
PLT,
and
In­
use
HD
HW
Evaporative
HD
HW
Trucks
Certification
California
Only
Engines
(
HD
HW
&
NR)
Engines
used
in
HD
HW
trucks,
tractors,
dozers,
cranes,
generators,
forklifts,
lawn
tractor
Certification
Recreational
Engines
Snowmobiles,
off­
road
Certification,
PLT,
and
Page
24
Large
SI
(
in
process)
Industrial
Engines
Certification,
PLT,
and
In­
use
Marine
SI
(
in
process)
In­
board
and
sterndrive
engines
under
review
Marine
Recreational
CI
(
in
process)
In­
board
for
recreational
vessels
Certification,
PLT,
and
In­
use
D.
Explanation
of
Fee
Structure
Table
Worksheet
#
2
is
the
Proposed
OTAQ
Compliance
Program
Fee
Structure
by
industry.
The
table
shows
proposed
fees
for
each
industry
and
the
estimated
fee
per
unit.
The
table
is
split
up
into
3
categories:
light­
duty
vehicles,
heavy­
duty
highway
and
nonroad
CI
engines,
and
other
engines.

Current
Fees
EPA
currently
collects
a
fee
for
highway
motorcycles,
light­
duty
vehicles
(
Federal
and
California
certification)
and
heavy­
duty
highway
engines
and
evaporative
systems
and
the
respective
amounts
are:

LD
Federal:$
27,211
LD
California:
$
8,956
HD
HW
Federal:
$
12,584
HD
HW
California:
$
2,145
HD
HW
Evap:
$
2,145
Motorcycle:
$
840
Our
fees
rulemaking
proposes
that
EPA
collect
fees
from
these
industries
as
well
as
nonroad
CI
engines,
marine
engines,
nonroad
SI
engines,
locomotive
engines
and
recreational
vehicles.
Proposed
fees
were
determined
by
dividing
the
total
recoverable
costs
for
each
industry
by
the
projected
number
of
certificates.

EPA
generally
has
the
authority
to
conduct
the
same
level
of
activity
for
each
certification
request.
The
amount
of
compliance
oversight
given
to
the
different
industries
varies
depending
on
the
history
of
the
industry
and
its
environmental
impact.
The
proposed
fees
are
based
on
the
compliance
activities
that
CCD
currently
conducts
and
plans
to
conduct
in
the
near
future.
In
2001,
we
reviewed
applications
for
certificates
of
conformity
for
all
certification
types.
In
addition,
we
performed
certification
compliance
testing
and
fuel
economy
confirmatory
testing
on
light­
duty
vehicles
and
selective
enforcement
audits
on
heavy­
duty
engines.
The
proposed
fees
are
based
on
the
current
level
of
activity
and
planned
programs
for
the
heavy­
duty
highway
engines,
nonroad
CI
engines
and
highway
motorcycles.
In
the
event
that
it
becomes
necessary
to
provide
more
scrutiny
to
an
industry,
EPA
will
address
the
change
in
costs
in
a
future
fees
rulemaking.

Light­
duty
and
Highway
Motorcycles
(
Worksheet
#
2,
Column
1)
Page
25
This
category
includes
fees
for
highway
motorcycles
and
light­
duty
vehicles.
Light­
duty
vehicles
are
passenger
cars
and
trucks.
In
addition,
light­
duty
fees
will
apply
to
medium­
duty
passenger
vehicles
and
complete
heavy­
duty
vehicles
because
these
vehicles
will
receive
the
same
services
for
certification
as
passenger
cars
and
trucks.
Medium­
duty
passenger
vehicles
and
complete
heavy­
duty
vehicles
were
recently
regulated.
Although
certification
is
not
yet
required
for
these
categories
of
vehicles,
we
are
including
them
in
anticipation
of
certification
requests
for
these
industries
in
the
near
future.

Highway
motorcycles­
The
Grand
Total
Recoverable
Cost
for
highway
motorcycles
indicated
on
the
Overall
Summary
(
Worksheet
#
1)
is
$
466,246.
The
number
of
certificates
granted
for
MY2000
is
193.
Dividing
the
total
cost
by
193
certificates
results
in
a
proposed
fee
per
certificate
of
$
2,416.
The
industry
sales
for
the
MY
were
386,127.
Dividing
$
466,246
by
386,127
yields
an
estimated
cost
of
$
1.21
per
motorcycle.

Light­
Duty
(
non­
ICI)­
The
Grand
Total
Recoverable
cost
for
light­
duty
is
$
12,767,802.
The
non­
ICI
certification
and
fuel
economy
portion
of
the
cost
is
determined
by
adding
the
grand
totals
for
those
columns
in
the
LOD
and
CCD
summary
sheets,
$
3,070,721
and
$
2,804,477
respectively,
and
multiplying
by
Overall
EPA
Overhead
cost
(
16.9%)
the
for
a
total
of
$
6,868,106.
This
number,
divided
by
the
number
of
requests
for
certification
and
fuel
economy
services
(
348
federal,
57
CA,
Total:
405)
results
in
$
16,958
per
certificate.

The
in­
use
portion
of
the
LDV
cost
was
determined
by
adding
the
grand
totals
for
those
columns
in
the
LOD
and
CCD
summary
sheets,
for
a
total
of
$
5,899,697.
This
number,
divided
by
the
number
of
certificates
that
receive
in­
use
services
(
348
federal)
results
in
$
16,953
per
certificate.
Federal
certificates
will
have
a
fee
of
$
33,911
that
includes
costs
for
certification,
fuel
economy
($
16,958)
and
in­
use
services
($
16,953).
California
certificates
that
only
receive
certification
and
fuel
economy
services
from
the
EPA
will
have
a
fee
of
$
16,958.

Dividing
the
total
recoverable
cost
to
the
light­
duty
industry
by
the
annual
industry
sales
(
15,000,000)
results
in
an
average
cost
of
$
0.85
per
vehicle.

ICI­
The
Grand
Total
of
recoverable
cost
for
LD
ICIs
is
the
sum
of
the
ICI
columns
on
the
LOD
and
CCD
worksheets,
$
713,482.
The
fee
per
engine
family
is
the
total
cost
divided
by
the
number
of
engine
families,
85,
for
a
total
proposed
fee
of
$
8,394
per
engine
family.
The
price
per
unit
was
determined
by
dividing
the
total
$
713,482
by
the
industry
sales
(
402)
for
a
total
of
$
1,775.

HD
Highway
and
Nonroad
CI
Engines
(
Worksheet
#
2,
Column
2)

The
second
category
includes
heavy­
duty
highway
diesel
and
gas
engines
as
well
nonroad
diesel
engines
regulated
under
40
CFR
part
89.
The
only
diesel
engines
not
included
in
this
category
are
marine
diesel
engines
and
locomotives.
Page
26
The
cost
of
the
compliance
programs
for
the
two
industries
is
$
3,956,759
and
$
1,300,155
as
shown
in
the
Overall
Summary
sheet
(
Worksheet
#
1).
These
industries
were
listed
together
in
this
category
because
the
EPA
has
the
authority
to
conduct
the
same
compliance
measures
in
both
industries
including
certification,
selective
enforcement
auditing
and
in­
use
testing.

Heavy­
duty
Highway
Diesel
and
Gas
Engines­
The
proposed
fees
for
the
highway
diesel
and
gas
engines
were
determined
by
dividing
$
3,956,759
by
the
number
of
certificates
issued
for
these
industries
in
model
year
2001
(
130).
This
results
in
a
proposed
fee
of
$
30,437
per
certificate.
The
fee
per
unit
was
determined
by
dividing
$
3,956,759
by
the
industry
sales
for
highway
diesel
and
gas
engines
in
MY
2000
resulting
in
a
per
unit
cost
of
$
2.45.

Nonroad
Diesel­
The
proposed
fee
for
nonroad
CI
engines
was
determined
by
dividing
$
1,300,155
by
the
number
of
certificates
issued
for
nonroad
CI
engines
in
model
year
2000
(
603).
This
results
in
a
proposed
fee
per
certificate
of
$
2,156.
The
fee
per
unit
was
determined
by
dividing
$
1,300,155
by
the
industry
sales
for
heavy­
duty
nonroad
diesel
in
MY
2000
resulting
in
a
per
unit
cost
of
$
1.48.

Other
(
Worksheet
#
2,
Column
3)

The
third
category
includes
all
nonroad
industries
not
covered
under
40
CFR
part
89.
This
includes,
marine
SI,
marine
CI
and
IMOs,
nonroad
spark
ignition
engines,
and
locomotives.
In
addition,
fees
are
being
considered
for
recreational
vehicles
and
other
classes
of
marine
engines,
and
large
nonroad
SI
engines,
in
conjunction
with
a
separate
rulemaking
controlling
emissions
from
those
nonroad
sources
that
is
currently
under
development.
In
anticipation
of
certification
requests
for
these
industries,
we
are
including
them
in
our
fee
calculation.
The
certificate
requests
for
heavy­
duty,
highway
evaporative
systems
and
California­
only
engines
are
also
being
considered
here
as
they
currently
receive
only
certification
services
from
EPA.
They
will
be
included
whenever
we
refer
to
the
Other
certificate
requests
below.

These
industries
were
put
together
in
this
category
because
they
receive
the
same
amount
of
compliance
services
from
the
EPA.
As
stated
above,
some
of
these
industries
conduct
their
own
production
line
and
in­
use
testing
and
EPA
provides
oversight
in
the
event
of
noncompliance.
Some
of
the
industries
are
newly
regulated
and
do
not
have
established
compliance
programs.
Still
other
industries
are
not
yet
subject
to
regulation
and
we
cannot
anticipate
our
need
to
test
these
engines
beyond
certification.

Because
each
certificate
from
these
industries
is
given
the
same
level
of
review,
it
is
appropriate
that
the
fee
per
certificate
for
each
industry
is
the
same.
Therefore,
to
determine
the
proposed
fee
per
certificate,
the
cost
for
the
category,
$
874,108,
was
divided
by
the
total
number
of
certificates
that
were
issued
in
model
year
2000
or
that
are
anticipated
when
the
industries
begin
certification
(
1,027)
for
a
fee
of
$
827
per
engine
family.

V.
Fees
Cost
Analysis
Breakdown
by
Applicable
Divisions
A.
Laboratory
Operations
Division
(
LOD)
Page
27
1.
Overview
of
LOD
Division
Structure
and
Functions
LOD
consists
of
two
operational
groups
and
four
support
groups.
The
operational
groups
are:

Advanced
Testing
Group
(
ATG)
 
conducts
research
for
advanced
engine
technologies.
Costs
associated
with
this
group
were
deemed
non­
recoverable.

Compliance/
Development
Testing
Group
(
CDTG)
 
performs
compliance
and
confirmatory
testing
for
light­
duty
vehicles,
and
heavy­
duty
and
nonroad
engines.
The
group
also
performs
testing
for
regulatory
work.
The
portion
of
the
groups's
work
on
compliance
and
confirmatory
testing
for
light­
duty
vehicles,
and
heavy­
duty
and
nonroad
engines
is
recoverable.
The
four
support
groups
of
LOD
are:

The
Testing
Services
Group
(
TSG)
is
comprised
of
three
smaller
teams:
Data
Team,
Chem
Lab
Team
and
Maintenance
Team.
A
portion
of
each
team's
work
is
recoverable.
TSG
supports
the
ATG
and
CDTG
groups
by
providing
data
collection,
chemical
analysis
and
maintenance
work
for
ATG
and
CDTG
test
sites.
TSG
also
provides
correlation
work
for
the
other
groups
and
provides
parts
and
supplies.

The
Data
Team
develops
and
maintains
computer
systems
for
the
operational
groups.

The
Maintenance
Team
calibrates
equipment
in
the
laboratory,
performs
minor
repairs,
performs
diagnostics
in
test
cells,
names
gases
and
does
other
ad­
hoc
work
required
to
keep
the
laboratory
running
smoothly.

The
Information
Management
Group
(
IMG)
provides
all
necessary
information
management
services
to
NVFEL
and
is
organized
into
two
sub­
groups
­­
The
Program
Management
Network
(
PMN)
and
the
Laboratory
Network
System
(
LNS).
A
portion
of
each
group's
work
is
recoverable.
The
PMN
provides
support
services
to
all
operations
except
for
laboratory
testing.
The
LNS
provides
support
services
for
laboratory
testing.

The
Facilities
Services
Group
(
FSG)
is
comprised
of
three
smaller
groups;
Facilities,
Purchasing
and
Quality
Control.
As
a
whole,
FSG
provides
basic
infrastructure
services
to
the
five
divisions
in
NVFEL
and
a
portion
of
the
costs
of
each
group
is
recoverable.
These
services
include
but
are
not
limited
to
management
of
housekeeping,
security
services,
HVAC
systems,
procurement,
and
quality
control.

Immediate
Office
(
IO)
 
performs
the
administrative
tasks
to
keep
the
LOD
operating
effectively
and
efficiently.

2.
LOD
Data
Collection
Steps
For
LOD,
the
general
methodology
steps,
two
through
six,
described
earlier
(
Section
III.
A.)
were
used
in
collecting
cost
and
program
information.
The
combined
steps
below
are
followed
by
Page
28
a
detailed
description
of
the
data
collection
process.

Our
steps
started
with
looking
at
the
fiscal
year
(
FY)
2001
LOD
budget
for
programs
and
costs.
Next,
we
pinpointed
only
compliance­
related
programs
and
costs
within
LOD.
After
projecting
the
cost
of
our
current
compliance
programs,
we
determined
the
costs
of
future
compliance
programs.
Senior
management
expertise
was
used
in
determining
our
labor
and
operating
costs
for
future
compliance­
related
program
including
LODs
compliance
testing
needs.
The
determination
of
the
fee
categories
were
completed
and
followed
by
the
allocation
of
the
costs
by
fee
categories.
A
more
detailed
explanation
involving
these
steps
is
given
below
with
references
to
the
LOD
costs
analysis
worksheets.

LOD's
costs
are
based
upon
annual
expenses
which
include
direct
and
indirect
labor;
travel;
Senior
Employee
contract
cost
(
which
is
discussed
below);
facilities
operating
costs
for
the
Ann
Arbor
facility;
training,
safety,
health
and
environmental
costs;
costs
of
lab
modernization;
communications
costs;
building
and
facility
costs;
and
core
testing
operations.
Senior
Management
was
asked
to
determine
the
number
of
recoverable
FTE
by
work
group
(
e.
g.
the
Compliance/
Development
Testing
Group,
Testing
Services
Group,
Facilities
Services
Group,
Information
Management
Group,
Advanced
Testing
Group
and
Immediate
Office
within
LOD)
and
recoverable
core
testing
operations
costs.
The
2001
Budget
was
used
as
a
guideline
for
costs
with
projections
made
to
future
years
when
the
current
costs
did
not
reflect
a
standard
or
constant
cost.
In
conjunction
with
the
2001
budget,
we
used
contracts
to
verify
indirect
program
costs
and
direct
program
costs
when
available
and
we
also
interviewed
Senior
management
when
the
recoverability
of
costs
was
not
easily
determined
with
respect
to
the
MVECP
fees
program.
The
combination
of
these
sources
was
used
to
develop
the
recoverable
costs
in
this
cost
analysis.

The
compliance­
related
costs
were
separated
into
two
categories:

LOD
Labor
­
consists
of
EPA
employee
labor
costs.
Using
labor
costs
from
previous
fiscal
years
and
projecting
to
2003,
the
costs
per
OTAQ
employee
are
an
average
of
$
99,580.

Direct
Labor­
Direct
labor
costs
allocated
to
this
study
were
developed
using
the
applicable
number
of
recoverable
FTEs,
which
were
determined
by
the
actual
count
allocation
method,
multiplied
by
the
PC&
B
rate
of
$
99,580
for
a
recoverable
total
of
$
697,060.

Actual
Count
 
used
as
an
allocation
unit
if
work
performed
directly
impacted
the
services
offered
by
the
Compliance
Development
and
Testing
Group.
This
type
of
allocation
was
used
for
the
Compliance
Development
Testing
Group
and
Advanced
Testing
and
Testing
Services
Group.
The
Senior
managers
were
able
to
directly
determine
the
total
amount
of
FTE
expended
on
compliance
and
confirmatory
testing
work.
Based
upon
the
recoverable
FTE,
labor
costs
were
calculated
by
multiplying
the
FTE
by
the
PC&
B
rate
of
$
99,580.

Indirect
Labor­
Based
upon
the
information
the
LOD
Senior
Management
shared,
the
Page
29
following
allocation
units
were
used
to
determine
recoverable,
indirect
PC&
B
costs
FTE:
Several
allocation
methods
were
used
if
FTE
did
not
have
a
unique
link
to
the
CDTG
and
it
was
not
possible
to
use
the
actual
count
allocation
method.
The
FTE
allocation
method,
the
workstation
allocation
method,
and
the
square
footage
allocation
method
were
used
to
determine
the
recoverable
number
of
FTE
in
the
Immediate
Office,
Facilities
Service
Group,
Testing
Services
Group
and
the
Information
Management
Group.

·
Immediate
Office
used
the
FTE
allocation
method
since
it
is
the
primary
driver
of
the
labor
costs
of
the
Immediate
Office.
The
Immediate
Office
FTE
expend
their
time
ensuring
FTE
are
properly
deployed
and
have
the
necessary
resources
to
achieve
the
goals
of
the
laboratory.
Thus
EPA
used
the
Direct
Recoverable
LOD
FTE
divided
by
LOD's
Total
Direct
FTE
to
obtain
the
allocation
of
time
spent
that
is
recoverable
to
the
MVECP.

·
Information
Management
Group
 
Based
on
an
interview
with
the
Information
Management
group
manager,
the
Ratio
of
Workstations
was
used
to
allocate
the
recoverable
portion
of
this
group.
The
allocation
is
discussed
in
detail
in
the
General
Methodology
Steps,
number
3,
Section
III­
A
above.

·
Facilities
Service
Group
­
This
group
does
not
provide
any
unique
service
to
the
Compliance
and
Confirmatory
Process,
therefore
FTE
were
allocated
using
the
square
footage
allocation
method.
Square
footage
serviced
is
the
unit
of
measure
is
the
standard
measure
of
work
used
by
this
Group.
Recoverable
FTE
were
determined
by
multiplying
the
percentage
of
recoverable
square
footage
by
the
number
of
FTE.
The
percent
of
recoverable
square
footage
was
determined
by
examining
which
areas
were
allocated
for
activities
directly
related
to
compliance
and
confirmatory
activities
and
dividing
by
total
square
footage.

LOD
Operating
Costs
 
consists
of
Indirect
Program
Costs
and
Direct
Program
Costs.
These
costs
are
the
costs
of
contracts,
parts,
supplies,
and
infrastructure,
excluding
PC&
B
costs.
These
costs
were
obtained
from
budgets,
contracts
and
interviews
with
subject
matter
experts.

Indirect
Program
Costs
are
non­
labor
related
costs
that
are
incurred
by
LOD
that
are
not
directly
associated
with
confirmatory
and
compliance
activities
but
are
required
to
assure
daily
business
operations.
These
costs
include
travel,
training,
senior
costs,
facilities
and
safety,
health
and
environmental
costs.

Each
cost
was
examined
separately
to
determine
the
recoverable
portion
using
the
allocation
methods
discussed
above.
The
individual
costs
are
discussed
below
and
are
also
explained
in
the
individual
worksheets.
Once
costs
were
categorized,
we
determined
the
portion
of
the
cost
that
was
recoverable.
Then
the
recoverable
cost
was
allocated
to
the
industry
categories.

Direct
Program
Costs
are
the
costs
of
testing,
vehicle
and
engine
procurement
and
equipment
needed
to
conduct
tests.
Each
program
cost
was
examined
to
determine
the
recoverable
portion
Page
30
as
explained
in
Worksheet
#
12.
Then
the
recoverable
cost
was
allocated
to
the
industry
categories.

3.
Explanation
of
LOD
Summary
Sheet
(
Worksheet
#
3)

This
worksheet
provides
a
summary
of
the
LOD's
calculation
of
recoverable
costs.
It
brings
forth
data
collected
on
the
more
detailed
background
worksheets.
This
sheet
is
divided
into
two
main
cost
categories:
Labor
and
Operating
Costs.
Labor
costs
are
split
between
direct
and
indirect
labor.
Operating
costs
are
also
split
into
two
categories;
Indirect
Program
Costs
and
Direct
Program
Costs.
The
grand
total
recoverable
costs
are
carried
over
to
the
Overall
Cost
Summary,
Worksheet
#
1.
The
summary
sheet
also
allocates
the
recoverable
cost
to
their
respective
industry
categories
(
e.
g.
LDV
(
including
IC
and
LDV
w/
o
ICI,)
MC
HW,
HD
HW,
NR
CI,
and
Other.
The
costs
for
each
fee
category
are
also
carried
over
to
the
Overall
Cost
Summary
Worksheet
(#
1).

Please
note
that,
as
discussed
above,
because
the
numbers
in
this
discussion
have
been
truncated
at
two
decimals,
the
numbers
discussed
below
may
be
slightly
different
than
the
totals
stated
below
and
those
on
the
worksheets.
This
is
because
the
numbers
in
the
cost
analysis
may
be
carried
out
farther
than
two
decimals
and,
therefore,
the
product
if
these
numbers
may
be
slightly
different
than
that
of
truncated
numbers.

Labor:

Direct­
These
are
the
costs
associated
with
LOD
employees
who
perform
regulatory,
compliance
and
confirmatory
related
work.
The
39
total
direct
FTE
represent
the
current
FTEs
as
of
FY
2001.
Worksheet
#
5
shows
the
total
number
of
FTE
per
operational
group
(
CDTG
and
ATG)
and
the
portion
that
is
recoverable
to
the
MVECP.
The
recoverable
number
(
as
opposed
to
the
total
direct
FTE
of
39
for
LOD)
of
direct
FTEs
(
7)
is
then
multiplied
by
the
PC&
B
rate
of
$
99,580
which
results
in
the
recoverable
direct
labor
cost
of
$
697,060.
The
recoverable
direct
labor
cost
is
allocated
to
each
industry
using
the
actual
cost
allocation
method,
based
upon
work
performed
by
recoverable
FTEs
for
that
industry.

The
entire
recoverable,
direct
labor
cost
was
allocated
only
to
the
light­
duty
industry
because
the
direct,
recoverable
FTE
in
LOD
currently
test
only
light­
duty
vehicles
and
light­
duty
trucks.
As
discussed
in
General
Methodology
Step
#
3
above,
of
those
FTE,
6
percent
work
on
ICI
testing,
54
percent
work
on
certification
and
fuel
economy
while
40
percent
work
on
recall
activities,
based
upon
review
of
Federal
Test
Procedure
Equivalents
(
FTPEs)
performed
as
described
in
the
General
Steps
section
above.
The
labor
cost
for
ICI
was
determined
by
multiplying
the
compliance
cost
$
697,060
by
.06
for
a
total
of
$
41,824.
The
certification
and
fuel
economy
was
determined
by
multiplying
the
compliance
cost,
$
697,060
by
0.54
to
calculate
the
Certification/
Fuel
Economy
cost
of
$
376,412.
The
In­
use
cost
was
calculated
in
the
same
way
using
0.4
as
the
multiplier,
resulting
in
a
cost
of
$
278,824.
The
Total
LDV
without
ICI
column
shows
the
totals
of
the
Cert/
Fuel
Economy
and
the
In­
use
columns.
Page
31
Additional
Direct
and
Indirect­
The
description
of
Worksheet
#
7
contains
an
account
of
the
additional
LOD
labor
needs
 
9.5
direct
and
1.5
indirect
FTE.
Since
these
FTE
are
specifically
for
compliance
programs
as
shown
in
Worksheet
#
7,
all
of
the
labor
costs
for
these
FTE
are
recoverable.
The
labor
costs
are
determined
by
multiplying
the
FTE
by
the
PB&
B
rate
of
$
99,580.
Worksheet
7
shows
that
6
direct
FTE
and
0.5
indirect
FTE
are
needed
for
LD.
The
LD
direct
and
indirect
additional
FTE
costs
are
distributed
between
ICI
(
6%),
Cert/
FE
(
54%)
and
Recall
(
40%)
for
direct
totals
of
$
35,849,
$
322,639
and
$
238,992,
respectively
and
indirect
totals
of
$
2,987,
$
26,887
and
$
19,916,
respectively.

The
additional
FTEs
needed
for
heavy­
duty
highway
are
2.25
direct
and
0.5
indirect
resulting
in
costs
of
$
224,055
and
$
49,790,
respectively.
Testing
for
Other
engines
requires
1.25
additional
direct
and
0.5
indirect
FTEs
with
costs
of
$
124,475
and
$
49,790
respectively.

Indirect
Labor­
are
the
costs
associated
with
LOD
support
groups
that
provide
services
to
the
operational
groups.
The
54
total
indirect
FTE
represent
current
FTE
as
of
FY
2001.
Worksheet
#
6
shows
the
total
number
of
current
FTE
per
support
group
and
the
portion
which
is
recoverable
to
the
MVECP.
A
discussion
of
the
methods
of
determining
the
recoverable
number
of
FTE
follows
in
the
explanation
of
Worksheet
#
6
below.
The
recoverable
number
of
indirect
FTEs
(
14.7)
is
multiplied
by
the
PC&
B
rate
of
$
99,580
to
get
the
recoverable
direct
labor
cost
of
$
1,466,629.
The
recoverable
indirect
labor
cost
is
allocated
to
each
industry
using
the
Ratio
of
Full
Time
Employee(
FTE)
of
Recoverable
FTE/
Total
FTE
allocation
method
discussed
above.

The
total
annual
recoverable
labor
cost
is
$
3,259,069.

Operating:

Indirect
Program
Costs
are
non­
labor
related
costs
that
are
incurred
by
LOD
that
are
not
directly
associated
with
confirmatory
and
compliance
activities
but
are
required
to
assure
daily
business
operations.
These
costs
include
travel,
training,
senior
costs,
facilities
and
safety,
health
and
environmental
costs.

Travel
and
Training
LOD's
budget
includes
travel
and
training
for
the
division.
These
items
are
provided
to
employees
as
they
are
needed
for
the
employee
to
perform
his
or
her
job
effectively.
LOD
does
not
record
or
estimate
what
portion
of
these
funds
is
used
in
support
of
compliance
activities.
Therefore,
the
recoverable
portions
of
these
budget
items
were
determined
the
FTE
allocation
method.
The
recoverable
cost
was
then
allocated
across
industry
categories
using
the
FTE
method.

Travel:
The
total
recoverable
travel
dollars
($
10,206)
were
determined
using
the
FTE
allocation
method.
The
recoverable
cost
was
then
allocated
across
industry
categories
using
the
FTE
method.
Page
32
Seniors:
As
stated
above,
the
EPA
participates
in
the
SEEP
program
whereby
the
agency
contracts
with
an
organization
that
provides
qualified
retired
persons
to
perform
duties
for
the
agency
that
are
not
performed
by
the
existing
workforce.
The
costs
associated
with
this
grant
program
are
considered
operating
costs.
The
total
cost
for
the
LOD
SEEP
employees
contract
is
$
672,000.
The
recoverable
cost,
determined
in
the
discussion
of
Worksheet
#
8
below,
is
$
140,305.
The
recoverable
cost
for
SEEP
employees
is
allocated
across
industries
using
the
FTE
method.

Facilities
Operating
Costs
Ann
Arbor:
This
category
includes
the
cost
of
operating
the
Ann
Arbor
facility
and
all
of
the
budget
items
outlined
in
the
Ongoing
Facilities
Costs
Table
(
Worksheet
#
9).

The
entire
cost
for
FY
2001
is
$
6,540,074.
The
cost
for
the
entire
Ann
Arbor
facility
is
included
in
LOD's
budget.
Please
see
discussion
on
Worksheet
#
9
for
determination
of
recoverable
costs
and
allocation
of
recoverable
costs
by
industry.
The
overall
recoverable
amount
for
LOD
and
CCD
is
$
1,603,231.
LOD's
recoverable
portion
of
the
cost
is
$
665,995.
CCD's
portion
of
the
cost,
$
937,236
was
carried
over
to
the
CCD
summary
sheet
as
a
recoverable
cost.

Training:
The
total
recoverable
training
dollars
($
32,252)
were
also
allocated
across
industries
based
on
the
ratio
of
direct,
recoverable
Full
Time
Employee(
FTE)
/
total
direct
LOD
FTE
allocation
method.

Safety
Health
and
Environmental:
The
Safety,
Health
and
Environmental
budget
for
the
Ann
Arbor
campus
is
$
650,000
for
FY
2001.
The
recoverable
portion
of
the
budget
for
each
division
was
determined
using
the
FTE
allocation
method
using
the
ratio
of
FTEs
in
LOD
and
CCD,
individually,
to
the
Total
FTEs
in
the
Ann
Arbor
campus.
This
ratio
was
used
since
LOD
manages
the
SHE
budget
for
all
the
OTAQ
divisions
housed
in
Ann
Arbor.
CCD's
portion
of
the
cost,
$
100,261
was
carried
over
to
the
CCD
summary
sheet
as
a
recoverable
cost.

The
LOD
portion
of
the
recoverable
budget,
$
70,964
was
allocated
across
industries
using
the
FTE
allocation
method.

Lab
Modernization:
The
Laboratory
Modernization
undertaking,
as
discussed
in
detail
under
Worksheet
#
10,
has
a
total
cost
estimate
of
$
14,130,000
of
which
$
10,030,000
$
8,845,000
is
recoverable.
The
recoverable
portion,
determined
on
Worksheet
#
10
is
amortized
over
10
years,
a
conservative
number
of
years
for
this
type
of
equipment,
for
an
annual
recoverable
cost
of
$
1,003,000
$
848,500.
The
costs
are
allocated
to
the
light­
duty
and
the
heavy­
duty
highway
industries
using
the
actual
cost
allocation
method
according
to
the
program
for
which
the
equipment
is
purchased.

Communications:
The
communications
category
includes
the
Working
Capital
Fund
(
WCF),
IT
Support
and
Computer
Support.
The
Working
Capital
Fund
expenses
are
for
the
AA
and
DC
OTAQ
facilities.
This
category
covers
workforce­
related
information
technology
services
Page
33
including
but
not
limited
to
E­
mail,
Internet
connectivity,
Wide
Area
Network
(
WAN)
and
Local
Are
Network
(
LAN)
access,
long
distance
services
and
teleconferencing.
In
addition
to
the
above,
the
Working
Capital
Fund
also
covers
the
OTAQ
DC
facilities
telephone,
voice
mail
and
miscellaneous
services.
IT
support
are
expenses
related
to
contracted
services
for
the
OTAQ
Ann
Arbor
facility.
These
services
include
help­
desk
support,
desktop
installations,
moves,
repairs
and
voice
and
data
services
(
e.
g.
phone
and
video
conferencing).
Computer
Support
applies
to
AA
and
DC
OTAQ
facilities
and
are
comprised
of
items
needed
to
keep
our
computer
systems
operational.
This
includes,
but
is
not
limited
to,
licenses
for
hardware
and
software,
equipment,
parts
and
supplies.

The
recoverable
portions
of
the
WCF
and
Computer
Support
in
the
2001
budget
was
determined
by
the
FTE
method,
multiplying
the
total
cost
by
the
ratio
of
recoverable,
direct
and
indirect
FTEs
in
LOD
and
CCD
to
the
Total
FTEs
in
OTAQ.
This
ratio
was
used
since
LOD
manages
the
budget
but
provides
services
to
all
OTAQ
FTE.
The
total
recoverable
amounts
were
then
allocated
to
LOD
and
CCD
using
the
ratio
of
each
divisions'
direct,
recoverable
FTE.
LOD's
recoverable
cost
was
then
allocated
across
industry
categories
using
the
FTE
method.

The
recoverable
portion
of
IT
support
costs
for
Ann
Arbor
in
the
2001
budget
was
determined
by
using
the
FTE
method,
multiplying
the
total
cost
by
the
ratio
of
total
recoverable
FTEs
in
LOD
and
CCD's
Ann
Arbor
location
to
the
Total
FTEs
in
the
Ann
Arbor
campus.
This
ratio
was
used
since
LOD
manages
the
budget
but
provides
services
to
all
FTE
housed
in
Ann
Arbor.
The
total
recoverable
amounts
were
then
allocated
to
LOD
and
CCD
using
the
ratio
of
each
divisions'
recoverable
FTE
to
the
Total
recoverable
FTE.
LOD's
recoverable
cost
was
then
allocated
across
industry
categories
using
the
FTE
method.

The
recoverable
costs
for
WCF,
Computer
Support
and
IT
Support
were
summed
and
the
recoverable
portions
for
LOD
and
CCD
were
listed
under
the
Communications
heading.
The
recoverable
cost
for
LOD
is
$
223,839,
the
recoverable
cost
for
CCD
is
$
470,671
and
is
listed
on
the
CCD
summary
sheet.
The
LOD
recoverable
Communication
cost
was
allocated
to
the
industry
categories
based
on
the
ratio
of
LOD
direct,
recoverable
FTE
/
Total
direct
LOD
FTE
allocation
method.

Buildings
&
Facilities:
Buildings
and
Facilities
costs
are
non­
recurring
costs
that
are
included
but
not
limited
to
the
laboratory
building
purchase,
office
building
expansion
and
necessary
repairs
and
improvements
to
both
buildings
as
discussed
in
detail
in
Worksheet
#
11.

The
total
for
Buildings
and
Facilities
is
$
21,427,000,
with
an
amortized
annual
recoverable
cost
of
$
236,559.
An
discussion
of
the
determination
of
the
recoverable
costs
is
included
in
the
explanation
of
Worksheet
#
11.
The
recoverable
cost
was
then
allocated
across
industry
categories
using
the
FTE
method.
Total
Indirect
Program
Costs:
The
total
indirect
costs
are
a
sum
of
the
columns
in
the
Indirect
Program
Costs
portion
of
the
table.

Direct
Program
Costs:
includes
the
cost
of
testing
either
at
EPA's
lab
or
a
contracted
testing
Page
34
facility,
procurement
of
vehicles
or
engines
and
equipment
needed
to
conduct
the
tests.
These
are
costs
directly
associated
with
EPA's
compliance
programs.
LOD's
direct
program
costs
are
all
associated
with
testing
at
the
NVFEL.

Core
Testing
Operations­
Core
Testing
Operations
include
the
costs
for
instrumentation
repair,
lab
maintenance
contracts,
vehicle
and
engine
procurement,
and
other
aspects
of
conducting
tests.
The
total
and
the
determination
of
the
recoverable
costs
are
described
in
more
detail
in
the
description
of
Worksheet
#
12.
The
total
cost
is
$
2,274,460
and
the
recoverable
cost
is
$
1,592,545.
The
recoverable
cost
was
then
allocated
across
industry
categories
using
the
FTE
method.
Total
Direct
Program
Costs
consists
of
the
Core
Testing
costs.

Grand
Total
Recoverable
Costs:
The
Grand
Total
Recoverable
Costs
is
the
total
of
all
of
Labor
and
Operating
costs
described
above.
The
total
recoverable
cost
for
LOD
is
$
7,234,735
B.
Certification
and
Compliance
Division
(
CCD)

The
Certification
and
Compliance
Division
(
CCD),
implements
the
motor
vehicle
and
engine
standards,
thereby
ensuring
that
manufacturers
can
meet
their
Clean
Air
Act
obligations
and
enable
themselves
to
sell
regulated
vehicles
and
engines
within
the
United
States.
CCD
uses
a
three
part
program
to
assure
compliance
with
EPA
emissions
regulations.
The
four
part
compliance
program
consists
of
vehicle
and
engine
certification;
fuel
economy;
selective
enforcement
auditing
and
production
line
testing;
and
in­
use
testing
and
recall.

1.
Overview
of
CCD
Functions
and
Division
Structure
Certification
Before
a
manufacturer
can
distribute
into
commerce,
introduce
or
deliver
for
introduction
into
commerce,
import,
sell
or
offer
for
sale
a
regulated
vehicle
or
engine
in
the
United
States,
it
must
obtain
a
certificate
of
conformity
from
the
EPA.
Each
model
year,
EPA
receives
certification
requests
for
LDV/
LDTs,
heavy­
duty
compression
ignition
(
CI)
and
spark
ignition
(
SI)
engines,
heavy­
duty
vehicle
evaporative
systems,
motorcycles,
heavy­
duty
highway
engines,
nonroad
spark
ignition
(
SI)
engines,
nonroad
diesel
(
CI)
engines,
locomotives
and
marine
engines.
EPA
processes
these
applications
and
makes
a
determination
of
conformance
with
the
CAA
and
related
regulations.
If
the
vehicles
or
engines
satisfy
the
prescribed
emission
standards,
EPA
issues
a
Certificate
of
Conformity
for
the
relevant
vehicles
or
engines.

The
certification
process
includes
but
is
not
limited
to
an
application
for
certification
review,
a
durability
justification
review,
an
onboard
refueling
vapor
recovery
system
review
(
where
applicable),
emission­
data
vehicle
approval
and
processing,
certification
request
processing
and
computer
support.
Other
activities
related
to
the
certification
process
include
auditing
an
applicant's
testing
and
data
collection
procedures,
laboratory
correlation,
and
EPA
confirmatory
testing
and
compliance
inspections
and
investigations
related
to
certification.
Page
35
8Definitions
of
vehicle
and
engine
useful
life
are
included
in
sections
202
and
207
of
the
CAA,
as
amended.
Fuel
Economy/
Corporate
Average
Fuel
Economy
(
CAFÉ)

CCD
administers
EPA's
fuel
economy
program
for
passenger
cars
and
light­
duty
trucks,
which
includes
activities
such
as
fuel
economy
labeling
and
CAFE
auditing.
Fuel
economy
labeling
provides
fuel
economy
values
and
other
information
to
consumers.
These
labels
are
used
by
manufacturers
to
market
their
products
and
meet
the
requirements
of
the
Energy
Policy
and
Conservation
Act
(
EPCA).
Other
fuel
economy
activities
include
confirmatory
testing
of
vehicles,
and
reviewing
and
auditing
manufacturers'
vehicle
and
engine
tests,
calculations,
and
labels.
EPA
oversees
CAFE
activities
that
determine
each
manufacturer's
compliance
with
the
CAFE
standards
specified
in
the
EPCA.

Selective
Enforcement
Auditing
and
Production
Line
Testing
To
further
ensure
compliance
with
the
CAA,
EPA
has
the
authority
to
test
a
sample
of
new
vehicles
or
engines
covered
by
a
certificate
as
they
leave
a
manufacturer's
assembly
line
(
production
vehicles
and
engines)
and
to
revoke
or
suspend
any
certificate
of
conformity,
in
whole
or
in
part,
if
the
Administrator
determines
that
all
or
part
of
the
vehicles
or
engines
covered
by
the
certificate
do
not
conform
with
the
regulations
under
which
the
certificate
was
issued.
SEAs
involve
selecting
vehicles
and
engines
off
of
the
assembly
line
and
monitoring
their
testing
at
various
production
plants
around
the
world
to
determine
compliance
with
emission
standards.

Under
some
regulations,
and
in
some
cases
voluntarily,
manufacturers
submit
their
own
production
line
test
data
to
the
EPA.
In
these
cases,
manufacturers
routinely
select
and
test
vehicles
or
engines
from
the
assembly
line
and
then
submit
the
data
to
the
EPA.
The
data
is
reviewed
to
assure
that
the
vehicles
and
engines
conform
to
the
applicable
standards.

In­
use
Testing
and
Recall
In­
use
compliance
activities
ensure
that
vehicles
and
engines
continue
to
meet
emission
standards
throughout
their
useful
lives.
8
In­
use
compliance
relies
upon
testing
performed
by
the
EPA
and
manufacturers
to
assure
that
the
vehicles
and
engines
are
meeting
the
applicable
standards
in
the
field.
If
the
tests
indicate
that
a
vehicle
or
engine
group
does
not
meet
the
applicable
in­
use
emission
standards,
then
a
manufacturer
may
be
required
to
remedy
the
nonconformity.

Division
Structure
for
CCD
CCD
consists
of
three
program
groups
and
a
division
office
group.
CCD
is
geographically
split
between
Ann
Arbor,
MI
and
Washington,
D.
C.
with
two
groups
in
each
location.
The
following
are
the
responsibilities
of
the
individual
groups.
Page
36
1)
Vehicle
Programs
Group
(
VPG)
­
VPG
performs
most
of
the
compliance
work
for
light­
duty
vehicles.
VPG
activities
include
the
certification
and
fuel
economy
programs,
selective
enforcement
auditing,
in­
use
testing
and
recall
for
these
vehicles.

2)
Outreach
and
Planning
Group
(
OPG)
­
OPG
is
split
between
Washington,
DC
and
Ann
Arbor,
MI.
Each
geographical
location
has
a
group
manager.
This
group
is
responsible
for
outreach,
planning,
budgeting
and
assessment,
enforcement
development
and
policy
coordination.
OPG
also
contributes
to
regulation
development
and
coordination,
information
management,
and
other
programs.

3)
Engine
Programs
Group
(
EPG)
­
EPG
performs
most
of
the
heavy­
duty
and
nonroad
engine
compliance
activities.
This
includes
certification,
selective
enforcement
auditing,
in­
use
testing
and
recall
for
heavy­
duty
engines,
heavy­
duty
trucks
and
nonroad
engines.

4)
Division
Office
Group
­
This
group
performs
both
program
work
and
the
administrative
tasks
to
keep
the
division
operating
effectively
and
efficiently.

2.
CCD
Data
Collection
Steps
For
CCD
the
following
general
methodology
steps
two
through
six
described
earlier
(
Section
III.
A.)
were
used
in
collecting
cost
and
program
information.
Below
is
a
detailed
description
of
this
data
collection
process.

1)
Examined
2001
OTAQ
budget
to
determine
which
OTAQ
programs
are
MVECP
related.
We
examined
the
CCD
budget
to
determine
the
programs
in
CCD
and
the
costs
of
these
programs.

2)
Identified
and
specified
all
current
costs
associated
with
CCD
that
conduct
or
support
the
MVECP
and
identified
and
specified
all
projected
future
compliance
program
costs
under
MVECP.
Within
CCD,
all
costs
associated
with
the
certification,
fuel
economy,
selective
enforcement
auditing
and
in­
use
testing
and
recall
programs
for
new
vehicles
and
engines
were
determined
to
be
recoverable
because
they
contribute
directly
to
the
MVECP.

The
FY
2001
CCD
budget
details
the
costs
of
running
current
compliance
programs.
The
FY
2001
budget
was
used
as
a
starting
point
because
it
contained
the
most
current
data
available
for
calculating
the
costs
of
compliance
activities.
We
adjusted
those
costs
to
FY
2003
levels
for
our
current
programs.

CCD
also
examined
its
plans
for
future
compliance
programs
and
estimated
the
costs
for
those
programs.
Cost
estimates
for
the
future
compliance
programs
are
based
on
the
cost
estimates
for
the
equipment
and
contract
needs
and
the
projected
job
functions
required
to
support
the
new
compliance­
related
regulations.
Included
in
plans
for
future
program
are
an
in­
use
motorcycle
compliance
program
and
an
enhanced
engine
compliance
program.
These
projected
programs
and
Page
37
the
associated
costs
are
discussed
more
fully
later
in
this
document
and
in
the
description
of
Worksheets
#
13
and
#
16.

3)
Determined
the
cost
allocation
type
and
methods
for
apportioning
MVECP
costs.
The
allocation
methods
used
by
CCD
are
discussed
in
the
Step
#
3
of
the
General
Methodology
steps
in
Section
III.
A
above.

4)
Categorize
all
these
costs
into
two
major
categories­
direct
and
indirect
labor,
direct
and
indirect
operating
costs
and
determined
the
portion
of
these
costs
that
was
recoverable
(
associated
with
the
MVECP).
The
CCD's
portion
of
the
costs
to
run
the
MVECP
was
divided
into
two
categories:
Labor
and
Operating
Costs.
The
Labor
and
Operating
categories
include
both
direct
and
indirect
costs
associated
with
CCD's
compliance
activities.
This
is
described
in
detail
below.

CCD
Labor
CCD
labor
was
determined
in
the
same
way
as
discussed
in
the
overall
summary,
using
FTE
as
a
unit
of
labor
for
CCD
employees
and
a
PC&
B
rate
of
$
99,580.
The
labor
costs
were
divided
into
two
categories­
direct
and
indirect.
The
breakdown
of
CCD's
labor
force
is
on
Worksheet
#
14.

Direct
labor­
are
the
FTE
associated
with
CCD's
programs.
The
number
of
recoverable,
direct
FTE,
those
that
work
directly
on
certification
and
compliance
programs,
were
determined
by
interviews
with
Senior
Management
and,
in
some
cases,
specific
employees
to
determine
the
amount
of
time
each
employee
spent
of
certification
and
compliance
programs
and
on
which
industries.

Indirect
Labor­
are
the
FTE
that
provide
support
to
CCD's
direct
FTEs.
The
indirect
FTE
were
determined
via
discussions
with
Senior
management
.
The
recoverable
portion
of
the
indirect
FTEs'
time
was
determined
by
assessing
the
portion
of
the
indirect
FTEs'
time
that
that
was
attributable
to
supporting
CCD's
direct,
recoverable
FTE.
Because
the
indirect
FTE
in
the
division
provide
support
equally
to
the
direct
FTE
in
the
division,
the
recoverable
portion
of
the
indirect
FTEs'
time
was
determined
by
multiplying
the
number
of
indirect
FTE
by
the
number
of
CCD
recoverable,
direct
FTE
over
the
total
number
of
CCD
direct
FTE.

CCD
Operating
Costs
Operating
costs
include
such
things
as
contracts,
equipment,
supplies
and
infrastructure
that
are
needed
for
the
CCD
FTE
to
conduct
compliance
activities.
These
costs
do
not
include
Labor
costs.
Operating
costs
are
split
into
two
categories;
Direct
Program
Costs
and
Indirect
Program
Costs.
CCD's
Direct
Program
Costs
are
detailed
on
Worksheet
#
13.

Indirect
program
costs
are
those
costs
for
services
provided
to
FTEs
that
allow
them
to
perform
their
jobs.
These
costs
include
but
are
not
limited
to
the
costs
of
office
space,
computer
support,
travel
and
training.
These
costs
are
taken
from
CCD's
budget
with
the
exception
of
Ann
Arbor
Page
38
Facilities
Operating
Costs;
Safety,
Health
and
Environmental;
and
Communications.
The
cost
for
these
three
categories
are
CCD's
portion
of
costs
that
come
from
LOD's
budget,
as
discussed
in
the
LOD
Summary
section
above,
(
Section
V.
A­
3.)

Recoverable,
indirect
program
costs
were
determined
by
assessing
the
portion
of
the
cost
that
was
attributable
to
the
MVECP.
The
recoverable
portion
of
each
indirect
program
costs
was
determined
using
different
methods.
In
most
cases,
the
recoverable
portion
of
a
cost
was
determined
by
applying
the
fraction
of
direct,
recoverable
CCD
FTE
to
the
total,
direct
CCD
FTE
for
each
program
item
as
discussed
below:

1)
Travel,
Training,
Office
Supplies
and
Miscellaneous
CCD's
budget
includes
travel,
training
and
office
supplies
for
the
division.
These
items
are
provided
to
employees
as
they
are
needed
for
the
employee
to
perform
his
or
her
job
effectively.
CCD
does
not
record
or
estimate
what
portion
of
these
funds
is
used
in
support
of
compliance
activities.
Therefore,
the
recoverable
portions
of
these
budget
items
were
estimated
using
the
FTE
allocation
method,
by
multiplying
CCD's
budget
amount
for
these
items
by
the
ratio
of
recoverable,
direct
CCD
FTE
to
total,
direct
CCD
FTE.

2)
CCD
SEEP
Employees
As
stated
above,
the
EPA
participates
in
the
SEEP
program
whereby
the
agency
contracts
with
an
organization
that
provides
qualified
retired
persons
to
perform
duties
for
the
agency
that
are
not
performed
by
the
existing
workforce.
The
costs
associated
with
this
grant
program
are
considered
operating
costs.
Each
division
allocates
money
for
the
SEEP
employees
that
work
for
the
division.

The
CCD
budget
includes
a
contract
item
for
hiring
SEEP
employees.
The
average
wage
for
each
full
time
CCD
SEEP
is
$
29,800.
Actual
wages
may
vary
depending
on
an
employee's
duties
and
work
schedule.
This
average
assumes
that
each
employee
works
full
time.
To
estimate
how
much
of
the
SEEP
budget
is
dedicated
to
supporting
recoverable
compliance
activities
we
interviewed
supervisors
and
asked
them
to
estimate
how
much
of
each
employee's
time
is
spent
on
compliance
activities.
For
employees
who
work
directly
on
recoverable
programs,
we
used
the
actual
cost
allocation
method,
and
directly
converted
the
employee's
time
into
a
cost.

SEEP
employees
that
provide
services
to
the
entire
division,
such
as
secretarial
support,
provide
indirect
support
to
the
direct
FTE.
To
determine
the
portion
of
the
budget
for
indirect,
recoverable
SEEP
employees,
we
used
FTE
allocation
method
to
determine
the
indirect
FTE
for
CCD.
We
calculated
the
percentage
of
recoverable,
direct
CCD
FTE
to
the
total,
direct
CCD
FTE
and
multiplied
this
by
the
number
of
senior
employees
that
provide
indirect
support
to
the
division.
Worksheet
#
15
shows
the
recoverable
portion
of
the
senior
budget.

3)
Ann
Arbor
Facilities
Operating
Costs;
Safety,
Health
and
Environmental;
and
Communications
Page
39
9
The
cost
of
testing
that
is
performed
at
EPA's
lab
is
included
in
LOD's
portion
of
the
cost
analysis
and
are
not
included
in
CCD's
portion
of
the
analysis.
The
cost
for
these
three
categories
are
CCD's
portion
of
costs
that
come
from
LOD's
budget,
as
discussed
in
the
LOD
Summary
section
above,
(
Section
V.
A­
3.)
The
recoverable
costs
for
the
categories
were
carried
from
the
Overall
Summary
to
the
CCD
summary
sheet.
The
recoverable
totals
for
these
categories
are
listed
in
the
Compliance
Costs
Column.

Direct
Program
Costs
are
CCD's
costs
for
compliance
work.
This
includes
the
cost
of
testing
at
contracted
testing
facilities9,
procurement
of
vehicles
or
engines
and
equipment
needed
to
conduct
the
tests.
Also
included
are
the
costs
of
computers
used
specifically
for
FTEs
compliance
activities
and
for
maintaining
test
data.

The
recoverable,
direct
costs,
those
that
relate
directly
to
the
MVECP,
were
determined
by
discussions
with
Senior
management
and
by
review
of
contracts.
The
costs
for
the
direct,
recoverable
programs
were
determined
by
examining
the
CCD
2001
budget
and
projecting
the
costs
for
those
programs
to
the
2003
fiscal
year.
In
some
cases,
new
compliance
programs
are
being
planned.
The
costs
for
these
programs
were
estimated
using
contractor
estimates
and
equipment
prices.
The
recoverable
Direct
Program
Costs
include
both
the
cost
of
the
current
programs
projected
to
2003
(
Worksheet
#
13)
and
the
planned
program
cost
estimates,
(
Worksheet
#
16).

5)
Separated
industries
by
testing
and
compliance
services.
The
Fees
categories
used
in
CCD
are
the
same
as
those
for
the
General
Steps
description.

6)
Allocated
recoverable
costs
by
fee
category.
The
allocation
of
costs
by
fees
categories
is
explained
in
the
General
Steps
description.
For
Direct
Labor
Costs
and
Direct
Program
Costs
items
the
costs
were
directly
allocated
to
individual
categories.
In
all
other
cases,
though,
the
costs
were
allocated
using
a
ratio
of
FTE
that
work
in
a
category
to
the
total,
direct,
recoverable
FTE.
3.
Explanation
of
CCD
Summary
Sheet
(
Worksheet
#
4)

The
CCD
summary
sheet
illustrates
the
distribution
of
CCD's
recoverable
budget
dollars.
The
left­
most
column
lists
each
of
the
recoverable
budget
items.
The
calculation
of
the
total
compliance
costs
and
the
distribution
of
the
costs
among
different
industries
is
shown
across
the
page.

As
stated
above,
please
note
that
because
the
numbers
in
this
discussion
have
been
truncated
at
two
decimals,
the
numbers
discussed
below
may
be
slightly
different
than
the
totals
stated
and
those
on
the
worksheets.
This
is
because
the
numbers
in
the
cost
analysis
may
be
carried
out
farther
than
two
decimals
and,
therefore,
the
product
of
these
numbers
may
be
slightly
different
than
that
of
the
truncated
numbers.
Page
40
Labor
DC
Direct
and
Indirect,
AA
Direct
and
Indirect
­
The
first
heading
in
the
left
column
is
labor.
The
labor
FTEs
are
taken
from
Worksheet
#
14.
Labor
categories
are
split
between
direct
employees
and
indirect
employees
in
Ann
Arbor,
MI
and
Washington,
DC.
The
compliance
costs
column
shows
FTE
for
each
category
multiplied
by
the
standard
OTAQ
PC&
B
rate
of
$
99,580.

DC
Direct
and
Ann
Arbor
Direct
compliance
costs
are
the
product
of
the
recoverable,
direct
FTE's
in
those
geographical
areas
times
the
PC&
B
rate.

DC
Indirect
and
AA
Indirect
costs
were
determined
by
applying
the
ratio
of
direct
recoverable
FTE
to
total
FTE
for
each
geographic
location
number
of
indirect
FTE
in
that
location
(
See
Worksheet
#
14
for
a
breakdown
of
CCD
FTE).
The
ratio
of
19.36/
37
was
applied
to
the
DC
indirect
FTE
(
3)
and
the
ratio
of
23.22/
36.8
was
applied
to
the
AA
indirect
FTE
(
5.7)
to
determine
the
recoverable
indirect
FTE
(
1.57
in
DC
and
3.6
in
AA,
as
represented
in
the
second
column
of
Worksheet
#
4).
Indirect
labor
for
DC
and
Ann
Arbor
was
determined
using
the
FTE
allocation
method,
by
multiplying
the
number
of
recoverable
indirect
FTE
for
the
two
locations,
indicated
in
the
second
column
as
1.57
and
3.6,
by
the
standard
PC&
B
rate
of
$
99,580
resulting
in
compliance
costs
for
DC
and
Ann
Arbor
of
$
156,314
and
$
358,147,
respectively.
The
recoverable
portion
of
the
indirect
labor
cost
was
determined
by
the
FTE
allocation
method,
by
multiplying
the
indirect
labor
cost
by
the
ratio
of
CCD
direct,
recoverable
FTE
over
the
total,
direct
CCD
FTE.

The
Total
Labor
Cost
was
determined
by
totaling
the
DC
and
AA
indirect,
recoverable
FTE
(
5.17)
and
adding
them
to
the
direct,
recoverable
FTE
for
DC
and
AA
(
42.58)
for
a
total
of
47.75
FTEs,
shown
in
bold
in
the
second
column
of
Worksheet
#
4.
The
total
recoverable
labor
cost
for
CCD
is
the
total
number
of
FTE
times
the
PC&
B
rate
of
$
99,580
for
a
total
labor
cost
of
$
4,754,578
shown
in
bold
in
the
Compliance
Cost
column
of
Worksheet
#
4.

The
next
two
columns
show
the
costs
specifically
for
light­
duty
vehicles
and
trucks
with
subcategories
for
certification
and
fuel
economy,
in­
use
and
ICI.
Note
that
there
are
no
light­
duty
costs
for
Washington,
DC.
because
light­
duty
compliance
work
is
done
only
in
Ann
Arbor.
To
determine
the
specific
costs
for
the
light­
duty
industry,
managers
of
CCD
were
interviewed
and
asked
to
identify
the
people
who
worked
directly
on
light­
duty.
The
number
of
direct,
recoverable
FTE
working
in
Ann
Arbor
are
23.22
as
shown
on
Worksheet
#
14.
The
FTE
that
work
directly
on
certification
and
fuel
economy
were
6.02,
one
of
which
works
specifically
on
ICIs.
The
total
for
in­
use
was
5.4
making
the
total
FTE
for
LD
certification
and
fuel
economy
equal
to
11.42.
The
labor
cost
for
LD
FTE
who
work
on
ICIs
is
$
99,580.
The
labor
cost
for
LD
FTE
who
work
on
cert
and
fuel
economy
is
$
99,580
times
the
FTE
for
a
total
of
$
1,037,624.
The
in­
use
portion
is
determined
the
same
way
using
the
LD
FTE
who
work
on
in­
use
for
a
total
of
$
1,025,674.
The
Total
LD
column
without
ICIs
shows
the
total
of
the
previous
two
columns,
$
2,063,298.

The
indirect
costs
for
the
light­
duty
industries
(
ICI,
Cert/
FE
and
ICI)
were
determined
using
the
Page
41
FTE
method,
by
multiplying
the
total
compliance
costs
by
the
percentage
of
recoverable,
direct
FTE
working
in
each
industry
divided
by
the
total
recoverable,
direct
FTE.
The
result
is
split
between
ICI,
Cert
&
FE
and
In­
Use
by
multiplying
by
the
ratios
of
FTE
that
work
in
those
areas.

The
column
entitled
MC
shows
the
costs
for
the
motorcycle
compliance
program.
The
labor
cost
for
the
program
is
the
PC&
B
for
1.5
FTE
and
the
staff
that
indirectly
supports
those
FTE.
The
indirect
PC&
B
was
determined
using
the
FTE
allocation
method,
by
multiplying
the
fraction
of
motorcycle
FTE
to
total,
direct,
recoverable
CCD
FTE
by
the
compliance
costs
for
AA
direct
labor
and
indirect
labor.
The
cost
of
direct
labor
is
$
149,370
and
the
cost
of
the
indirect
labor
is
$
23,459.

The
next
columns
show
the
costs
for
heavy­
duty
highway
diesel
and
gas
engines,
nonroad
CI
engines
and
other
engines.
Because
the
heavy­
duty
and
nonroad
CI
and
Other
compliance
programs
take
place
in
Washington,
DC,
there
are
no
labor
costs
for
these
programs
in
Ann
Arbor.

The
labor
cost
associated
with
these
categories
of
vehicles
and
engines
is
determined
using
the
FTE
method.
The
PC&
B
cost
is
multiplied
by
the
number
of
FTE
who
work
on
each
category.
We
determined
that
11.86
FTE
work
on
HD
HW
engine
compliance,
5.06
direct
FTE
work
on
NR
CI
compliance
and
that
2.44
FTE
work
on
compliance
for
other
engines
and
evaporative
systems.
The
FTE
labor
fraction
of
the
overall,
recoverable,
direct
labor
cost
for
the
HD
HW
engine
industry
is
11.86/
42.58.
The
labor
fraction
of
the
total,
recoverable
FTE
for
the
nonroad
CI
industries
is
5.06/
42.58.
The
labor
fraction
of
the
overall
recoverable
FTE
for
the
Other
industries
is
2.44/
42.58.
The
total
labor
costs
for
the
industries
are
the
respective
fractions
multiplied
by
the
CCD
total,
recoverable,
direct
labor
compliance
costs
for
a
total
of
$
1,180,591,
$
504,273
and
$
243,005
respectively.

We
calculated
the
indirect
labor
cost
for
each
category
using
the
FTE
method,
as
was
done
for
the
direct
labor
costs.
We
applied
the
HD
HW,
NR
CI
and
Other
industry
ratios
discussed
above
to
the
indirect
FTE
compliance
cost.
The
result
is
$
95,724,
$
40,887
and
$
19,703,
respectively.

Operating
Costs
Travel­
The
first
item
in
the
operating
cost
section
of
the
worksheet
is
the
travel
allowance
for
CCD.
The
entire
travel
budget
for
the
division
is
$
155,000.
We
determined
the
applicable
compliance
costs
using
the
FTE
allocation
method,
by
applying
the
percentage
of
direct,
recoverable,
CCD
FTEs
to
total,
direct
CCD
FTEs,
resulting
in
a
total
compliance
cost
of
$
101,459.
We
allocated
the
travel
costs
to
the
different
industries
by
the
FTE
allocation
method,
determining
the
percentage
of
the
FTEs
that
work
on
those
industries
to
the
total,
direct,
recoverable
FTEs
and
applying
those
percentages
to
the
total
compliance
travel
cost.

Seniors
AA,
Seniors
DC­
The
next
items
under
Operating
Costs
are
Seniors­
AA
and
Seniors­
DC.
As
discussed
above,
EPA
uses
a
contract
to
fund
the
hiring
of
senior
employees
under
the
SEEP
program.
The
recoverable
portion
of
the
SEEP
employees
budget
item
is
determined
by
adding
Page
42
the
hours
that
each
SEEP
works
on
compliance
activities
(
either
directly
or
as
support
to
the
recoverable,
direct
FTEs)
and
converting
that
into
a
certain
number
of
full
time
senior
employees
and
multiplying
that
by
the
salary
for
a
full­
time
SEEP.
The
average
salary
for
a
full
time
SEEP
is
$
29,800.
The
number
of
SEEP
employees
and
the
recoverable
cost
of
each
SEEP
employee
is
shown
in
Worksheet
#
15.
The
resulting
costs
are
$
220,929
for
AA
and
$
104,573
for
DC.
The
recoverable
costs
are
allocated
to
the
industries
using
the
FTE
allocation
method
as
was
done
in
Travel
above.

Ann
Arbor
Facilities
Operating
Costs;
Safety,
Health
and
Environmental
Costs
and
Communication
Costs­
These
costs
are
paid
by
LOD's
budget.
The
total
costs
for
these
items
are
listed
in
LODs
Summary
Sheet
(
Worksheet
#
4).
The
recoverable
portion
of
these
costs
was
determined
as
described
in
the
LOD
discussion
of
these
costs
in
Section
V.
A­
3,
above.
CCD's
portion
of
the
costs
was
determined
by
multiplying
the
total
recoverable
cost
by
the
number
of
direct
CCD
FTE
divided
by
the
number
of
total
recoverable,
direct
FTE
for
LOD
and
CCD.

The
Ann
Arbor
Facilities
Operating
Costs
and
Safety,
Health
and
Environmental
Costs
are
incurred
while
operating
the
Ann
Arbor
facility.
Therefore,
these
costs
are
only
divided
among
the
light­
duty
and
motorcycle
industries.
The
costs
are
split
between
the
ICI,
Cert
&
FE,
In­
use
and
Motorcycle
categories
using
the
FTE
allocation
method.

Communications
costs
include
Working
Capital;
IT
Support;
and
Computer
Support
as
discussed
above
in
the
LOD
section.
The
costs
the
Communications
item
were
also
determined
in
the
LOD
section
because
that
division
manages
the
finance
of
these
services.
CCD's
recoverable
costs
are
allocated
to
the
industries
using
the
FTE
allocation
method
as
was
done
in
Travel
above.
Miscellaneous
and
Office
Supplies
AA
&
DC
and
Training
DC
&
AA­
The
next
categories
of
operating
costs
are
Miscellaneous
and
Office
Supplies,
and
Training
for
DC
and
Ann
Arbor.
These
are
budget
items
from
CCD's
2001
budget.
The
recoverable
costs
of
these
budget
items
were
determined
using
the
FTE
allocation
method,
by
applying
the
cost
of
each
budget
items
to
the
percentage
of
CCD
direct,
recoverable
FTE
to
CCD
direct
FTE.
The
recoverable
costs
are
allocated
to
the
industries
using
the
FTE
allocation
method
as
was
done
in
Travel
above.
Direct
Program
Costs
The
program
costs
for
heavy
and
light­
duty
vehicles
and
engines
come
from
the
CCD
Programs
(
Worksheet
13).
The
total
compliance
cost
is
$
3,158,400.

The
totals
for
this
row
come
directly
from
the
respective
categories
on
Worksheet
#
13.
A
discussion
of
the
categories
and
the
programs
for
the
industries
follows
in
the
discussion
of
Worksheet
#
13.

The
light­
duty
cost
$
1,790,000,
from
the
Light­
Duty
Compliance
section
of
Worksheet
#
13,
is
allocated
over
the
ICI,
Cert/
FE
and
In­
use
columns
using
the
FTE
allocation
method
by
multiplying
the
LD
cost
by
the
fraction
of
direct,
recoverable
FTE
in
each
industry
category
to
the
total,
LD,
direct,
recoverable
FTE.

The
Motorcycle
Subtotal,
the
Heavy­
Duty
Highway
Engine
Compliance
Total,
the
Nonroad
CI
Page
43
Engine
Compliance
Total
and
the
Other
Compliance
Total
in
Worksheet
#
13
are
all
carried
forward
to
the
respective
industry
category
cells
in
the
CCD
Compliance
Programs
row
in
the
CCD
Summary
Sheet.

Grand
Total
Recoverable
Costs
Grand
Total
Recoverable
Costs
for
CCD
are
the
total
of
the
labor
(
direct
and
indirect),
and
operating
program
costs
tot
total
of
which
is
$
9,919,715.

C.
Explanation
of
Worksheets
#
5
Through
#
16
LOD
Direct
Labor
(
Worksheet
#
5)

This
worksheet
shows
the
FTE
from
LOD's
Compliance
Development
and
Testing
Group
(
CDTG)
and
the
Advanced
Testing
Group
(
ATG)
that
work
directly
on
compliance
testing.
The
table
illustrates
how
we
counted
recoverable
FTEs
for
LOD
in
terms
of
direct
labor.
The
recoverable
FTEs
are
only
from
the
CDTG
group.
This
group
performs
compliance
and
in­
use
testing.
ATG
has
no
recoverable
FTE
because
the
work
is
based
on
developmental
testing
and
research
in
vehicle
technology
and
not
compliance
testing.
Below
is
an
explanation
of
the
breakdown
as
shown
in
worksheet
#
5.

Of
the
19
FTE
in
CDTG,
10
FTE
work
on
vehicle
testing.
According
to
the
Senior
manager,
70
percent
of
their
work
is
compliance­
related,
resulting
in
7
recoverable
FTE.
Because
there
are
no
recoverable
tests
performed
by
ATG,
the
number
of
recoverable
direct
FTE
is
7.

LOD
Indirect
Labor
Cost
(
Worksheet
#
6)

LOD
Indirect
Labor
costs
are
incurred
by
the
work
of
four
support
groups
 
Testing
Services,
Facility
Services,
Information
Management,
and
the
Immediate
Office.
The
recoverable
costs
for
each
of
these
support
functions
were
determined
based
on
interviews
with
group
managers.

Testing
Services
Group
­
provides
three
distinct
services
listed
below.
These
services
were
reviewed
separately
to
determine
how
much
time
the
FTEs
in
each
of
these
groups
spend
supporting
the
compliance
and
confirmatory
testing
process.

1)
The
Data
Team
develops
and
maintains
computer
systems
for
the
operational
groups.
Out
of
the
four
FTE
in
this
group,
one
works
solely
on
the
development
of
vehicle
test
data
which
is
fully
recoverable.
The
remainder
of
the
group
supports
the
Advanced
Technology
Group
and
performs
the
development
testing
of
vehicles
and
engines
which
is
considered
non­
recoverable.
There
is
1
recoverable
FTE
in
this
group.

2)
The
Chemistry
Laboratory
Team
performs
various
chemical
analyses
for
compliance
testing
and
regulatory
development.
The
chemistry
laboratory
has
five
FTE
two
of
which
are
recoverable.
One
FTE
solely
does
compressed
natural
gas
work,
which
is
100
Page
44
percent
compliance
related.
The
chemistry
laboratory
has
another
FTE
that
works
on
the
fuels
needs
for
the
laboratory.
That
FTE
spends
approximately
40
percent
of
his/
her
time
supporting
fuel
confirmatory
testing
needs.
The
rest
of
the
FTEs
perform
non­
recoverable
work.
There
are
1.4
recoverable
FTE
in
this
group
3)
The
Maintenance
Team
which
calibrates
equipment
in
the
laboratory,
performs
minor
repairs,
performs
diagnostics
in
test
cells,
provides
calibration
gases
and
does
other
ad­
hoc
work
required
to
keep
a
laboratory
running
smoothly.
There
are
seven
FTE
in
this
group
of
which
2.2
support
confirmatory
testing
and
are,
therefore,
recoverable.

The
Testing
Services
Group
has
a
total
of
4.6
recoverable
FTE.

Facilities
Services
Group
1)
Facilities
employs
4.75
FTE
and
provides
housekeeping,
security,
and
HVAC
management
services.
This
group
does
not
provide
any
unique
service
to
the
Compliance
and
Confirmatory
Process,
therefore
FTE
were
allocated
by
the
standard
measure
of
work
facilities
uses,
square
footage
serviced.
The
procurement
group
uses
"
Purchase
Requests
processed"
as
a
standard
measure
of
work.
Recoverable
FTE
were
determined
using
the
square
footage
allocation
method,
by
multiplying
the
percentage
of
recoverable
square
footage
by
the
number
of
FTE.
The
percent
of
recoverable
square
footage
was
determined
by
examining
which
areas
were
allocated
for
activities
directly
related
to
compliance
and
confirmatory
activities
and
dividing
by
total
square
footage.
These
calculations
resulted
in
a
total
of
1.4
recoverable
facilities
FTE.

2)
Purchasing
provides
procurement
services
and
employs
3
FTEs.
This
group
does
not
provide
any
unique
service
to
the
Compliance
and
Confirmatory
Process.
Therefore
FTE
were
allocated
by
the
standard
measure
of
work
that
the
Purchasing
group
uses­
Purchase
Requests
(
PR's)
processed
for
procurement.
(
Note:
because
this
is
the
only
instance
of
using
purchase
requests
as
an
allocation
method,
it
is
not
listed
in
Section
III,
A
as
an
allocation
method.)
An
interview
with
the
group
manager
and
review
of
PR's
indicated
that
approximately
75
percent
of
requests
were
from
the
LOD
and
CCD.
Of
the
portion
from
LOD
and
CCD,
9
percent
were
allocable
to
confirmatory
and
compliance
testing.
The
net
result
is
6.8
percent
(
75%*
9%)
of
3
FTEs
time
is
recoverable
(.
20
FTE).

3)
Quality
Control
employs
2
FTE
and
provides
unique
services
to
each
of
its
customers.
Based
on
interview
with
the
group's
manager,
the
quality
control
group
spends
approximately
90
percent
of
its
time
with
the
Compliance
and
Development
Testing
Group.
Approximately
70
percent
of
that
time
is
related
to
compliance
and
confirmatory
testing.
As
a
result,
63
percent
of
the
2
FTE
(
1.3)
is
recoverable.

The
Facilities
Services
Group
has
a
total
of
2.9
recoverable
FTE.

The
Information
Management
Group
(
IMG)
provides
communication
infrastructure
services
to
Page
45
the
six
OTAQ
divisions.
Based
on
an
interview
with
the
group
manager,
this
group
does
not
provide
any
unique
service
to
the
compliance
and
confirmatory
process.
Therefore,
FTE
were
allocated
using
the
workstations
serviced
allocation
method.
The
IMG
is
broken
into
two
groups:
Program
Management
Network
and
Laboratory
Network
System.

1)
Program
Management
Network
(
PMN)
provides
support
services
to
all
operations
except
laboratory
testing.
This
group
employs
a
total
of
nine
FTE.
The
recoverable
portion
of
FTE
was
determined
by
dividing
the
number
of
workstations
serviced
(
450)
by
the
number
of
recoverable
workstations
(
63)
in
LOD
and
CCD.
This
quotient
is
multiplied
by
the
number
of
FTE
in
the
PMN
group
(
9)
to
determine
the
recoverable
portion
of
PMN,
1.3
FTE.

2)
Laboratory
Network
System
(
LNS)
provides
support
services
for
laboratory
testing.
This
group
employs
a
total
of
2.25
FTE
and
services
300
workstations
of
which
40
are
for
The
CDTG
group.
Per
discussion
with
the
group
manager
of
CDTG
70%
of
the
work
performed
on
these
workstations
is
for
compliance
and
confirmatory
testing.
28
Workstations
were
deemed
recoverable.
The
quotient
(
28/
300)
is
multiplied
by
the
number
of
FTE
in
the
LNS
group
(
2.25)
to
determine
the
recoverable
portion
of
LNS
FTE
is
0.2.

The
total
recoverable
FTE
for
the
Information
Management
Group
is
1.5.

LOD
Immediate
Office
employs
17
FTE,
which
handle
the
managerial
and
administrative
functions
of
LOD.
The
Immediate
staff
does
not
provide
a
unique
service
to
the
Compliance
and
Development
Testing
Group
thus
its
labor
costs
are
allocated
using
Direct
Recoverable
FTE/
Total
Direct
FTE.
As
a
result,
34
percent
of
the
17
LOD
Immediate
Office
FTE
is
recoverable,
5.8
FTE.

LOD
Additional
Labor
Needs
(
Worksheet
#
7)

This
worksheet
describes
the
LOD
additional
labor
needs
for
compliance
testing
services
the
EPA
will
implement
by
FY
2003.
EPA
will
be
performing
new
or
additional
confirmatory,
in­
use
and
highway
testing
for
light­
duty
vehicles
(
including
medium­
duty
chassis
testing),
heavy­
duty
engines
and
nonroad
gasoline
engines.
The
worksheet
shows
the
FTE
that
Senior
Management
state
will
be
required
for
light­
duty
portable
emissions
system
testing,
medium­
duty
chassis
testing
under
the
light­
duty
program,
heavy­
duty
highway
engine,
and
nonroad
engine
testing
programs.
Both
direct
and
indirect
FTEs
are
utilized
in
these
areas.
Direct
FTE
are
involved
in
conducting
and
performing
tests.
Indirect
FTE
provides
computer
support
by
processing
the
data
collected.
Based
upon
interviews
with
group
managers
in
LOD
and
CCD,
the
following
FTE
are
needed
in
the
following
test
areas
as
shown
in
Table
III.
B­
2
below:
Page
46
Table
III.
B­
2
Additional
LOD
FTEs
Needed
for
Compliance
Testing
Services
Industry
Direct
FTE
Needed
Indirect
FTE
Needed
Light­
duty
6
0.5
Heavy­
duty
Highway
2.25
0.5
Other
1.25
0.5
TOTAL
9.5
1.5
The
total
FTE
for
LOD's
additional
labor
needs
are
9.5
direct
FTE
and
1.5
indirect
FTE
for
a
total
of
11
additional
FTE.

SEEP
Employee
Costs
LOD
(
Worksheet
#
8)

EPA
participates
in
the
Senior
Environmental
Employee
Program
(
SEEP)
program
whereby
the
agency
contracts
with
an
organization
that
provides
qualified
retired
persons
to
perform
duties
for
the
agency
that
are
not
performed
by
the
existing
workforce.
The
costs
associated
with
this
grant
program
are
considered
operating
costs.
We
interviewed
Senior
managers
in
each
of
the
LOD
groups
to
determine
whether
each
SEEP
employee
performs
any
work
that
specifically
benefits
confirmatory
and
compliance
testing.

In
cases
where
a
SEEP
employee
works
directly
on
confirmatory
and
compliance
testing,
that
portion
of
his
or
her
time
was
directly
allocated,
using
the
actual
cost
allocation
method,
to
the
cost
analysis
and
multiplied
by
the
average
contract
cost
of
a
SEEP.

In
cases
where
an
indirect
benefit
was
provided
to
the
program,
the
FTE
allocation
method
was
used
to
determine
the
FTEs
to
be
allocated
to
the
MVECP.
The
indirect
allocation
was
determined
by
applying
the
percentage
of
LOD
and
CCD
recoverable
FTE
(
for
the
facilities,
S,
H,
E
and
IMG
seniors
who
service
all
of
OTAQ)
to
total
Ann
Arbor
FTE
multiplied
by
the
average
contract
cost
per
SEEP
of
$
32,000.
The
total
recoverable
cost
for
senior
employees
is
$
140,305.

Ann
Arbor
Facilities
(
Worksheet
#
9
)

The
Ann
Arbor
Facilities
costs
are
expenses
associated
with
the
maintenance
and
security
of
the
(
NVFEL)
Laboratory
Building
and
the
Office
Building
in
Ann
Arbor.
Some
of
the
costs
included
in
the
facilities
line
items
are
rent,
utilities,
housekeeping
and
security.
Recoverable
costs
were
determined
based
on
interviews
with
the
Facilities
and
Compliance
Development
and
Testing
Group
managers.

Recoverable
facilities
costs
for
the
laboratory
building
were
allocated
using
the
square
footage
Page
47
allocation
method
calculating
the
square
footage
that
is
used
by
the
Compliance
and
Development
Testing
group
for
confirmatory
and
compliance
testing
only.
The
office
building
costs
were
allocated
by
the
square
footage
allocation
method,
by
determining
the
square
footage
occupied
by
the
recoverable
FTE
housed
in
that
building.

The
ongoing
costs
of
the
lab
building
are
35
percent
recoverable
based
on
the
square
footage
that
is
used
for
recoverable
activities.
By
the
same
method,
11
percent
of
the
office
building
operation
costs
are
recoverable.

The
amount
allocated
by
industry
is
based
on
CCD
and
LOD
recoverable
direct
FTE
by
industry
divided
by
the
overall
CCD
and
LOD
recoverable
direct
FTE.
These
percentages
multiplied
by
the
recoverable
amount
of
$
1,603,231
equals:
$
1,401,415
(
LDV),
$
60,545
(
MC),
$
90,817
(
HD
HW),
and
$
50,454
(
Other).
These
amounts
are
pulled
forward
to
the
Overall
Summary
Worksheet
#
1.

CCD
and
LOD's
portion
by
industry
was
determined
using
the
FTE
allocation
method,
by
taking
the
total
recoverable
amount
per
industry
multiplied
by
the
ratio
of
CCD
or
LOD
Direct
Recoverable
FTE
by
the
Total
Recoverable
Direct
FTE
by
industry.
For
Example:

LDV
Amt
$
1,401,415
CCD
FTE
­
LDV/
Toal
FTE
­
LDV
­
(
21.72/
34.72)
*
.6256
CCD
LDV
Amount
$
876,692
Special
Case:
Security
Services
are
available
to
both
the
office
building
and
the
laboratory
building.
The
recoverable
cost
is
determined
using
a
weighted
average
of
square
footage
occupied
in
the
laboratory
and
Office
buildings
related
to
compliance
and
confirmatory
testing.
The
square
footage
percentages
for
the
lab
and
office
buildings
were
weighted
75
percent
and
25
percent,
respectively.
This
reflects
the
usage
rate
of
services
by
both
buildings.
This
percentage
is
multiplied
by
the
annual
contract
cost
of
$
650,000
which
results
in
a
recoverable
cost
of
approximately
$
188,036.

NVFEL
Laboratory
Modernization
Budget
Request
(
Worksheet
#
10)
The
NVFEL
Laboratory
Modernization
Plan
consists
of
equipment
and
upgrades
necessary
to
ensure
that
the
National
Vehicle
and
Fuel
Emissions
Laboratory
in
Ann
Arbor,
has
the
necessary
tools
to
perform
all
the
testing
that
is
required
for
new
rules
and
regulations
regarding
mobile
sources
and
air
quality.
The
portion
deemed
recoverable
are
determined
using
the
actual
cost
allocation
method,
because
the
pieces
of
equipment
and
upgrades
are
related
to
compliance
and
confirmatory
testing.
All
laboratory
modernization
costs
were
amortized
on
a
straight­
line
basis
over
a
10­
year
period
based
on
the
useful
life
of
the
equipment.
Page
48
To
prepare
for
testing
of
these
new
regulatory
standards,
OAR
developed
a
"
Laboratory
Equipment
Modernization
Program"
for
the
Ann
Arbor
Laboratory.
The
principle
functions
that
require
upgrading
at
the
laboratory
are:
­
testing
of
vehicles
at
very
low
emission
levels
using
a
variety
of
fuels;
­
testing
of
heavy­
duty
engines;
­
fuel
and
chemical
analysis
capabilities
The
NVFEL
Laboratory
Modernization
Plan­
Budget
Submission
consists
of
three
critical
testing
support
areas
requiring
new
instrumentation
and
upgrades.
These
critical
areas
are:
­
Critical
Tier
II
LDV
Test
Capability
(
recoverable
costs)
­
Critical
Diesel
Engine
Standards
Test
Capability
(
recoverable
costs)
­
Critical
Regulatory
Development
Test
Capability
(
non­
recoverable)

The
critical
testing
areas,
shown
on
the
Worksheet
#
10,
indicate
the
required
upgrades
needed
to
support
compliance
testing.
Note
that
the
Critical
Regulatory
Development
test
capability
area
is
not
involved
in
compliance
testing.
The
instrumentation
required
in
this
area
will
support
developmental
testing
and
research
and
is
therefore
non­
recoverable.

Critical
Tier
II
LDV
Test
Capability:

Standard
Tier
II
LDV
Test
Capacity
This
category
includes
gasoline
fueled,
2WD
car
and
truck
compliance
testing.
EPA
must
accurately
and
reliably
measure
emissions
from
Tier
2
level
cars
and
trucks.
The
equipment
listed
in
Worksheet
#
10
includes
low
range
analytical
instruments,
exhaust
sampling
and
conditioning
systems
and
instruments
needed
for
the
new
gas
standards
and
support
systems
required
to
operate
these
systems
in
a
reliable
manner.
Worksheet
#
10
also
lists
the
laboratory
equipment
required
to
operate
these
cells
in
compliance
with
the
revised
federal
test
procedures.

Diesel
and
4WD
Car/
Truck
Test
Site
This
category
includes
gasoline
fueled
4WD
car,
truck
and
hybrid
compliance
testing,
and
all
diesel
fueled
car
and
truck
compliance
testing.
NVFEL
will
upgrade
current
laboratory
equipment
to
test
4WD
vehicles
and
trucks.
Currently
the
laboratory
is
only
capable
of
testing
4WD
designs
in
2WD
mode.
In
addition,
upgrades
will
allow
the
testing
of
hybrid
vehicle
designs
that
also
have
4WD
capability.
Requests
have
been
made
for
instrumentation
that
is
needed
to
test
medium­
duty
passenger
vehicles
powered
by
engines
that
comply
with
Tier
2
emission
standards.
The
laboratory
modernization
budget
worksheet
lists
all
of
the
test
equipment
upgrades
required
to
measure
diesel
emissions
at
the
Tier
2
levels.

The
total
recoverable
cost
for
this
category
is
$
8,100,000.
There
were
no
non­
recoverable
items.

Critical
Diesel
Engine
Standards
Test
Capability:

Heavy­
duty
Engine
Test
Sites
Page
49
This
category
covers
testing
equipment
needed
to
perform
quality
compliance
testing
of
heavyduty
highway
engines
at
the
current
standards,
at
the
2004
MY
standards
and
at
the
even
tighter
2007
MY
standards.
Low
range
analytical
instruments
and
a
sophisticated
exhaust
sampling
and
conditioning
system
will
be
required
to
reliably
measure
the
lower
levels
of
HC,
NOx
and
particulate
matter.
Worksheet
#
10
lists,
in
this
category,
the
equipment
necessary
for
EPA
to
test
heavy­
duty
engines
that
meet
the
current,
2004
MY,
and
2007
MY
standards.

EPA
has
two
HDE
test
cells
that
it
will
use
to
conduct
most
of
the
recoverable
heavy­
duty
testing.
We
determined
that
most
compliance
testing
will
occur
in
HDE
#
2.
Although
EPA
originally
planned
to
use
both
HDE
#
1
and
HDE
#
2
approximately
25
percent
of
the
time
for
compliance
testing,
EPA
determined
that
it
will
be
using
HDE
#
2
approximately
50
percent
for
compliance
testing.

HDE
#
2
test
cell
requires
the
additional
equipment
outlined
in
this
section.
In
cases
where
there
is
an
equipment
cost
solely
for
HDE
#
2
one­
half
of
the
cost
was
assessed
to
the
heavy­
duty
fees
as
this
cell
will
be
used
for
compliance
purposes
half
of
the
time.
The
new
costs
for
these
items
are:

heavy­
duty
engine
cell
controller
replacement
$
150,000
analytical/
sampling
system
$
365,000
selective
catalytic
reduction
(
SCR)
load
controller
$
60,000
Therefore,
instead
of
$
1,150,000
being
recovered
by
EPA
for
these
pieces
of
equipment
as
proposed,
EPA
will
now
only
recover
$
575,000.

In
cases
where
there
was
an
equipment
cost
common
to
both
HDE
#
1
and
HDE
#
2
onequarter
of
the
cost
was
assessed
to
determine
the
recoverable
portion.
The
new
costs
for
these
items
are:

diesel
engine
cell
cooling
control
$
7,500
NOx
and
PM
$
187,500
The
total
recoverable
cost
for
this
section
is
$
1,930,000
$
770,000.
The
non­
recoverable
costs
total
$
1,100,000.

The
Critical
Regulatory
Development
Test
Capability
This
capability
is
not
immediately
or
directly
necessary
for
the
current
MVECP.
Therefore,
for
purposes
of
this
analysis,
we
did
not
include
these
costs
for
conducting
the
MVECP.

The
Advanced
Technology
Division
(
ATD)
is
responsible
for
all
automotive
technology
research
and
development
programs
to
improve
fuel
economy
and
to
reduce
vehicle
and
fuel
emissions
from
mobile
sources.
The
major
focus
of
the
division
is
the
development
of
new
and
emerging
technologies
such
as
Clean
Car
(
Partnership
for
a
New
Generation
of
Vehicles),
low
NOx
diesel
Page
50
engines,
and
alternative
fuel
technologies.
ATD
is
also
responsible
for
climate
change
policies
and
strategies
related
to
vehicle
efficiency
and
fuels.

The
total
non­
recoverable
cost
for
this
category
is
$
3,000,000.
The
total
Lab
Modernization
Equipment
Costs
are
$
14,130,000
of
which
$
10,030,000
are
recoverable.
The
recoverable
annual
cost,
when
amortized
over
10
years
is
$
1,003,000.

Building
and
Facilities
Costs
for
NVFEL
(
Worksheet
#
11)

The
building
and
facilities
costs
that
are
described
in
this
worksheet
are
non­
recurring
facilities
expenditures
which
include
but
are
not
limited
to:
the
purchase
of
the
laboratory
building,
the
office
building
expansion,
furniture
and
necessary
repairs
and
improvements
to
both
buildings
which
are
listed
on
Worksheet
#
11.

These
costs
are
amortized
over
their
useful
life
on
a
straight­
line
basis.
Useful
lives
were
extracted
from
IRS
Publication
946,
Appendix
B
The
IRS
Publication
946,
Appendix
B,
gives
the
recovery
periods
for
types
of
assets.
It
is
a
standard
document
that
most
accountants
use
as
a
resource
recovery
period
information.
which
gives
descriptions
of
different
types
of
assets
and
their
useful
lives.
For
example
in
Appendix
B­
1
office
furniture
shows
a
useful
life
of
10
years.
The
recoverable
portion
of
the
Building
and
Facilities
costs
were
calculated
using
square
footage
as
a
common
unit
of
measure
since
none
of
these
projects
are
directly
allocable
to
compliance
and
confirmatory
testing.
The
grand
total
of
costs
incurred
is
$
21,427,000
with
an
amortized
annual
recoverable
cost
of
$
236,559.

Core
Testing
Operations
(
Worksheet
#
12)

Core
Testing
Operations
consists
of
three
groupings:
1.
Testing
Support
Services
2
Laboratory
Maintenance
Contracts
3.
Vehicle
and
Engine
Procurement
The
recoverable
portions
of
these
groups
are
allocated
to
light­
duty,
heavy­
duty
and
Other
industries
using
the
FTE
allocation
method,
by
applying
a
percentage
to
the
total
cost
of
each
group.
(
The
light­
duty
cost
is
further
allocated
to
ICI,
Cert
&
FE,
and
In­
use
in
the
LOD
Summary
Sheet
using
the
ratio
of
test
allocation
method)
The
percentage
applied
is
the
number
of
LOD
FTE
that
work
directly
on
compliance
testing
to
the
number
of
direct
LOD
FTE.
The
percentages
allocable
to
LDV,
HD
HW,
and
Other
fee
categories
are
79
percent,
14
percent,
and
8
percent,
respectively.
Please
note
that
there
are
no
Core
Testing
Operations
costs
for
LOD
for
the
highway
motorcycle
and
nonroad
CI
categories
because
LOD
does
not
currently
test
vehicles
and
engines
from
these
industries.

Testing
Support
Services
repairs
equipment
and
tests
fuels
and
gases.
Testing
Support
Services
has
total
costs
of
$
782,800.
Based
on
interviews
with
Senior
managers
we
determined
that
50
percent
of
testing
support
services
benefit
the
Compliance/
Development
Testing
Group
(
CDTG).
Page
51
Of
that
amount
70
percent
is
related
to
compliance
and
confirmatory
testing,
and
the
remaining
30
percent
is
for
regulatory
development
testing
work
(
we
have
only
included
the
70
percent
of
the
50
percent
in
our
cost
analysis).
The
total
recoverable
cost
of
these
services
is
$
273,980.
These
cost
incurred
are
based
on
the
FY
2001
budget.

Laboratory
Maintenance
Contracts
are
utilized
for
the
upkeep
of
laboratory
equipment.
The
total
costs
for
Laboratory
Maintenance
Contracts
is
$
266,300.
Based
on
interviews
with
Senior
managers
we
determined
50
percent
of
laboratory
maintenance
contracts
benefit
the
CDTG.
Of
that
amount,
70
percent
is
related
to
compliance
and
confirmatory
testing,
and
the
remaining
30
percent
is
for
regulatory
development
testing
work
(
we
have
only
include
the
70
percent
of
the
50
percent
in
our
cost
analysis).
The
total
recoverable
cost
of
these
services
is
$
93,205.

Vehicle
and
Engine
Procurement
is
all
compliance
and
confirmatory
testing
related,
thus
fully
recoverable.
Total
vehicle
procurement
is
$
1,000,000.
The
procurement
cost
of
Heavy­
duty
highway
(
HD
HW)
engines
for
recall
testing
is
based
on
an
estimate
obtained
from
a
contractor
who
performs
these
type
of
services.
The
procurement
of
HD
HW
engines
would
cost
~
$
25,000
for
the
first
engine
in
an
engine
family
and
$
22,000
for
each
additional
engine.
Tests
can
be
performed
on
two
engine
families
annually,
five
engines
per
engine
family.
The
procurement
costs
for
vehicles
is
$
1,000,000
and
for
engines
is
$
225,360.
The
procurement
costs
are
100
percent
recoverable
at
$
1,225,360.
The
vehicle
and
engine
procurement
costs
are
directly
allocated
to
the
light­
duty
and
heavy­
duty
highway
engine
categories.

The
Core
Testing
Operations
total
costs
is
$
2,274,460,
of
which
$
1,592,545
is
recoverable.

CCD
Programs
(
Worksheet
#
13)

The
CCD
programs
sheet
lists
direct
program
costs
that
CCD
expects
to
fund.
The
worksheet
lists
the
compliance
related
programs
that
are
recoverable
through
fees
and
is
divided
into
five
parts,
which
are
described
below.

The
first
group
of
recoverable
areas
is
Light­
Duty
Compliance;
it
includes
all
of
CCD's
light­
duty
compliance
budget
items.
The
first
item
is
the
certification
and
fuel
economy
information
system
(
CFEIS)
which
collects
manufacturer
and
EPA
emissions
test
data
for
certification
purposes.
Also
included
in
this
section
are
coast
down
audits
and
fuel
economy
audits
that
will
be
conducted
to
confirm
the
data
submitted
by
manufacturers
for
certification.
Highway
testing
and
industry
workshops
are
recoverable
costs
as
both
the
printing
and
the
workshops
cover
material
that
will
clarify
EPA
regulations
for
manufacturers.

The
next
section
under
Light­
duty
Compliance
is
Motorcycle
Compliance.
CCD
is
planning
to
supplement
its
motorcycle
compliance
program
by
conducting
some
in­
use
tests.
The
tests
will
either
be
conducted
at
a
contracted
facility
or
at
the
NVFEL
test
facility.
The
total
for
this
program
will
cover
the
procurement
of
the
in­
use,
highway
motorcycles
from
members
of
the
public,
the
testing
of
the
highway
motorcycles,
and
the
computer
support
needed
to
establish
and
Page
52
maintain
the
databases
for
storing
the
test
data.

The
next
three
sections
of
recoverable
costs
listed
in
Worksheet
#
13
are
Heavy­
Duty
Highway
Engine
(
HD
HW)
Compliance,
Nonroad
CI
(
NR
CI)
Engine
Compliance
and
Other
Compliance.
The
first
item
in
each
of
the
categories
is
computer
hardware
and
software
costs
for
the
FTE
that
work
on
the
programs.
The
rest
of
the
budget
items
are
the
same
for
the
Heavy­
Duty
Highway
Engine
Compliance
and
Nonroad
CI
Engine
Compliance
and
will
be
described
together
a
further
discussion
of
these
programs
is
in
the
description
of
Worksheet
#
16,
below.
In­
use
on­
vehicle
testing
is
the
contract
cost
of
testing
HD
HW
and
NR
CI
engines
to
determine
in­
use
emissions.
The
next
item
is
the
cost
of
equipment
that
will
measure
real
on­
road
field
operating
emissions.
CCD
is
planning
to
purchase
commercial
emission
detection
units
that
can
monitor
engine
emissions
during
use.
The
last
item
under
the
Engine
Compliance
categories
is
the
new
HD
and
NR
Compliance
Program
which
will
be
a
more
robust
compliance
program
for
testing
new
and
inuse
heavy­
duty
and
nonroad
CI
engines.
The
estimated
total
cost
of
the
program
is
given
in
Worksheet
#
16
and
is
discussed
later
in
this
methodology.
The
enhanced
engine
program
cost
is
split
evenly
between
the
HD
HW
and
NR
CI
engine
categories
because
the
testing
will
be
evenly
split
between
the
categories.
The
total
cost
was
estimated
assuming
that
testing
would
take
place
at
a
contracted
facility.

CCD
Labor
(
Worksheet
#
14)

Worksheet
#
14
illustrates
the
CCD
labor
breakdown
of
recoverable
and
non­
recoverable
FTE.
Column
number
1
of
Worksheet
#
14
shows
the
fraction
of
time
that
each
employee
works
at
the
EPA,
for
example,
1
means
a
full
time
FTE
who
works
40
hours
a
week,
.5
means
a
person
who
works
20
hours
a
week
for
the
EPA.
As
discussed
above,
Senior
management
and
employees
were
interviewed
to
determine
what
amount
of
each
employee's
time
was
spent
directly
on
recoverable
and
non­
recoverable
programs
and
whether
the
employee
worked
directly
on
programs
or
indirectly
support
the
direct
FTE.
Senior
Management
also
indicated
what
portion
of
each
person's
time
was
spent
working
in
each
industry.

Direct,
recoverable
FTE
are
those
employees
who
work
directly
on
certification,
selective
enforcement
auditing
,
in­
use
or
fuel
economy
audits
or
other
compliance
activities.
Also
counted
as
direct,
recoverable
FTE
are
certain
CCD
group
managers
and
employees
who
work
with
manufacturers
to
input
data
into
CFEIS
and
IO
staff
who
work
directly
with
compliance
issues.
If
a
group
manager's
recoverable
time
could
not
be
determined
directly,
it
was
calculated
based
on
the
overall
percent
of
the
direct
recoverable
FTE
in
the
manager's
staff.

The
CCD
Labor
table
shows
a
total
of
73.8
FTE
in
CCD.
The
top
part
of
the
table
shows
the
FTE
that
work
in
Ann
Arbor,
MI.
The
bottom
part
of
the
table
shows
those
that
work
in
Washington,
DC.
The
total
FTE
that
work
directly
on
recoverable
subject
matter
is
42.58,
while
the
number
that
work
directly
on
non­
recoverable
subject
matter
is
22.47.
The
indirect
FTE
that
support
both
recoverable
and
non­
recoverable
programs
is
8.7.
The
number
of
indirect
FTE
that
supported
recoverable
programs
was
determined
by
multiplying
the
number
of
indirect
FTE
by
the
fraction
of
CCD
direct
recoverable
FTE
to
the
number
of
CCD
direct
FTE.
Page
53
Senior
(
SEEP
Employee)
Cost
­
CCD
(
Worksheet
#
15)

The
Senior
Cost
Summary
shows
the
percentage
of
time
worked
by
individual
SEEP
employees.
The
average
cost
for
individual
CCD
SEEP
employees
is
$
29,800.
This
number
was
determined
by
dividing
the
CCD
SEEP
budget
by
the
number
of
seeps.
The
recoverable,
direct
total
is
determined
using
the
percentage
of
time
each
individual
employee
works
directly
on
recoverable
programs,
shown
in
the
second
column.
The
indirect
number
of
Senior
employees
was
determined
by
multiplying
the
number
of
indirect
FTE
by
the
fraction
of
recoverable
FTE
in
the
program.
The
recoverable
total
for
SEEP
employees
is
$
220,929
for
AA
and
$
104,573
for
DC.

Large
Engine
Highway
and
Nonroad
Compliance
Program
(
Worksheet
#
16)

This
worksheet
describes
an
engine
compliance
program
that
EPA
plans
to
implement.
This
new
program
will
help
to
identify
engine
families
or
test
groups
that
may
fail
to
meet
EPA's
large
engine
highway
and
nonroad
CI
engine
standards.
Listed
on
the
page
are
aspects
of
the
program
that
include
Confirmatory
Testing
for
Certification,
Selective
Enforcement
Audits,
and
In­
Use
Dyno
Testing
programs.
The
number
of
tests
planned
for
highway
and
nonroad
CI
engines
is
listed
with
the
price
per
test
and
the
total
cost
for
each
compliance
activity.
The
test
prices
are
determined
by
using
projected
contractor
prices.

The
CCD
Staff
column
is
the
number
of
people
needed
to
plan
and
oversee
the
testing.
The
labor
cost
for
the
required
staff
is
included
in
the
CCD
Labor
worksheet.

VI.
Conclusion
When
a
manufacturer
decides
to
market
a
vehicle
or
engine
in
the
United
States,
EPA
is
required
to
provide
certain
services
to
assure
that
manufacturers
meet
emission
compliance
regulations.
In
doing
so,
EPA
incurs
costs
that
are
recoverable
as
authorized
by
the
CAA
and
the
IOAA.

Upon
examining
the
costs
incurred
by
EPA
in
conducting
MVECP
activities,
an
updated
fee
schedule
was
proposed.
The
methodology
process
described
in
this
document
sets
forth
a
userfee
program
that
is
equitable
and
reasonable.
As
a
result
EPA's
goal
of
making
the
MVECP
fee
program
as
self­
sustaining
as
possible
will
be
accomplished.
Page
54
Appendix
A
Acronyms
ASD
Assessment
and
Standards
Division
ATD
Advanced
Technology
Division
ATG
Advanced
Technology
Group
CAA
Clean
Air
Act
CAAA
Clean
Air
Act
as
Amended
CAFE
Corporate
Average
Fuel
Economy
CCD
Certification
and
Compliance
Division
CDTG
Compliance
Development
&
Testing
Group
Cert
Certification
CFEIS
Certification
and
Fuel
Economy
Information
System
CFO
Chief
Financial
Officer
CI
Compression
Ignition
DOD
Deputy
Office
Director
Dyno
Dynamometer
EPA
Environmental
Protection
Agency
EPCA
Energy
Policy
and
Conservation
Act
EPG
Engines
Programs
Group
FE
Fuel
Economy
FMD
Financial
Management
Division
FSG
Facilities
Services
Group
Page
55
FTE
Full
Time
Equivalent
FTP
Federal
Testing
Procedure
FY
Fiscal
Year
HC
Hydrocarbons
HD
Heavy­
duty
HDE
Heavy­
duty
Engine
HDV
Heavy­
duty
Vehicle
HW
Highway
(
on­
highway)

ICI
Independent
Commercial
Importer
IMG
Information
Management
Group
IO
Immediate
Office
IOAA
Independent
Office
of
Appropriations
Act
LD
Light­
duty
LDV
Light­
duty
Vehicle
LOD
Laboratory
Operations
Division
LNS
Laboratory
Network
System
K
Thousand(
s)

MVECP
Motor
Vehicle
and
Engine
Compliance
Program
MC
Motorcycle
MY
Model
Year
NOx
Oxides
of
Nitrogen
NPRMNotice
of
Proposed
Rulemaking
Page
56
NR
Nonroad
NVFEL
National
Vehicle
and
Fuel
Emissions
Laboratory
O&
M
Operations
and
Maintenance
OAR
Office
of
Air
and
Radiation
OBD
On­
board
Diagnostics
OCFO
Office
of
the
Chief
Financial
Officer
OEM
Original
Equipment
Manufacturer
OMS
Office
of
Mobile
Sources
OPG
Outreach
Programs
Group
ORVR
On­
board
Vapor
Recovery
OTAQ
Office
of
Transportation
and
Air
Quality
PC&
B
Personnel,
Compensation
&
Benefits
PMN
Program
Management
Network
PNGV
Partnership
for
a
New
Generation
of
Vehicles
PLT
Production
Line
Testing
RFG
Reformulated
Gasoline
SEA
Selective
Enforcement
Audit
SEEP
Senior
Environmental
Employee
Program
(
also
used
to
describe
the
actual
employee)

SI
Spark­
Ignition
TRPD
Transportation
and
Regional
Programs
Division
VPG
Vehicle
Programs
Group
Page
57
Page
58
Appendix
B
Definitions
Amortize
­
to
provide
a
gradual
extinguishment
by
contributing
periodic
payments;
liquidate
gradually.
EPA
usually
divides
a
significant,
one
time
cost
over
a
10
year
period
of
time;

Direct
Costs
 
expenses
that
can
be
specifically
identified
with
an
output
or
specifically
identifiable
to
a
particular
program
such
as
the
cost
in
administering
activities
associated
with
the
Mobile
Source
Compliance
Program
MVECP.

Direct
FTE
percent
of
Total
 
is
the
percentage
used
in
allocating
certain
overhead
costs
across
the
various
industries
that
are
being
charged
fees.
It
is
calculated
separately
for
the
Laboratory
Operations
Division
and
Certification
and
Compliance
Division.
The
numerator
signifies
how
many
direct
recoverable
FTE
perform
work
for
the
industry
we
are
charging
fees.
The
denominator
is
the
total
number
of
direct
recoverable
FTEs,
which
can
be
found
in
worksheet
#
5,7,13
and
15.

FTE
­
Full
Time
Equivalent
is
a
unit
of
measure
to
equate
a
full
year's
worth
of
work
for
one
employee.

Full
Cost
­
The
full
cost
of
programs
includes
both
those
costs
specifically
identifiable
with
each
particular
program
(
direct
costs)
and
those
costs
which
collectively
support
many
programs
(
indirect
costs).

Indirect
Costs
 
are
expenses
common
to
multiple
outputs
but
cannot
be
specifically
identified
with
any
particular
output.
Those
costs
which
collectively
support
the
many
programs.
Some
examples
of
indirect
costs
are
facilities,
computer
support,
transportation,
travel,
etc.

Motor
Vehicle
and
Engine
Compliance
Programs
(
MVECP)­
OTAQ
program
that
incorporates
all
activities
involved
the
certification
and
compliance
assurance
of
vehicles
and
engines.

Motor
Vehicle
and
Engine
Compliance
Programs
Fees
Program
­
a
user­
fee
program
that
charges
manufacturers
for
direct
and
indirect
services
related
to
the
MVECP.

Non­
recoverable
Costs
 
are
expenses
that
serve
an
independent
public
social
interest.
Such
costs
are
not
included
in
the
MVECP
yet
contributes
to
cleaning
the
air.

Personnel
Compensation
and
Benefits
(
PC
&
B)­
are
all
costs
associated
with
the
EPA
Labor
force
(
salary,
health
benefits,
pension,
etc).
The
rate
for
PC&
B
used
is
$
99,580
per
FTE.
This
is
the
average
PC&
B
cost
for
the
Office
of
Air
and
Radiation
Recoverable
Costs
 
are
expenses
associated
with
providing
a
unique
service
to
a
specified
set
of
customers
for
the
Motor
Vehicle
and
Engine
Compliance
Program
(
MVECP).
Page
59
Senior
Environmental
Employee
Program
(
SEEP)
 
an
employee
program
that
EPA
participates
in
which
the
agency
contracts
the
work
of
qualified
retired
persons.

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