Comments on U.S. Environmental Protection Agency Proposed Rule, "Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards," RIN 2060-AQ86

   1) Preamble, Table I-1  -  Please explain the rationale for choosing the NMOG+NOx levels for each year?  Are these the limits and years that CA finalized in their LEV III program?   What cost/benefit analysis did EPA conduct to compare the various compliance options such as:

         a. setting the standards every 3 or 5 years apart 
         b. more gradually reducing the emissions over time as opposed to requiring a 46% reduction in the first year of the program.

   2) PM standards  -  Will EPA explain the rationale for making PM standards apply on a vehicle-by-vehicle basis?  Did EPA conduct an analysis to compare the costs/benefits of using a fleet average PM standard versus an individual vehicle standard?  
         a. Is this also what California used?
         b. Did EPA apply the same individual vehicle standards in Tier 2?
         c. What is the increment cost/benefit of obtaining additional PM reductions from vehicles going from Tier 2 to Tier 3?  How many tons of PM emissions reductions would be achieved on an annual basis through the vehicle PM standards compared to the fuel standards?

   3) What's the rational for making early reduction credits expire after 5 years?  This policy would seem to limit the amount of early reductions that manufacturers would try to make and therefore reduce the overall air quality and health benefits of the program?  Did EPA run any sensitivity analyses on different lengths of time for the expiration of early reduction credits such as 10 years, 15 years, or no limit?

   4) What are the CO and formaldehyde benefits for HDVs?  What are the air quality benefits in terms of bringing into attainment any areas with the CO NAAQS?         

RIA Questions
   * What would be the effect of including LD 2017 -- 2025 and HD GHG rules in the baseline for this rule?    
Executive Summary
   * How are the average fleet standards determined (referred to in Table ES-2)? 
Chapter 2
   * What is the source for projected vehicle sales presented in table 2-26 (Page 2-24)? 
   * It would be useful to revise or reorganize the discussion of industry learning-by-doing in Section 2.1.3.  As currently drafted, it is difficult to follow.
Chapter 3
   * Pg 3-2, According to AAM summer fuel surveys, the average octane of finished gasoline has remained constant around 89-90 (R+M)/2 over the past decade (refer to Figure 3-2). The reported octane is higher than expected because AAM takes roughly an equal number of regular and premium gasoline samples as part of their North American Fuel Survey. In reality, the majority of consumers fill up on 87 octane regular-grade gasoline based on price and other factors. According to EIA's Petroleum Marketing Annual, regular-grade gasoline represents over 85 percent of U.S. sales.2 Accordingly, we believe our proposed 87-88.4 R+M/2 specification for test fuel is representative of in-use gasoline. However, the AAM survey does tell us one important thing about octane  -  refiners are doing their best not to give it away. We anticipate that this trend will continue into the future as E15 replaces E10.  
         o Comment:  There is still large percentage of octane given in the mid-continent because of the operating practices of the pipeline system (Megallan) in the region, although they are attempting to changes this starting this year.
   * Pg 3-17, Shifting to E15 test fuel will result in a T50 range that's about 15 percent lower than today's E0 test fuel and about 10 percent lower than today's in-use E10. The proposed 170-190°F T50 range for E15 test fuel was determined by interpolating between the T50 of current 9-psi E10 market fuel which averages around 195°F (according to AAMB) and the estimated T50 of E20 which spans a narrow range of plus or minus several degrees Fahrenheit centered around165°F (according to our EPAct test program5). We believe the proposed T50 range adequately characterizes future 9-psi E15 market fuel. 
         o Comment:  EPA should seek comment on the applicability of this assumption.  This assumption presumes that another grade of CBOB and RBOB will and can be economically transported and stored in the existing infrastructure for an initially small volume of E15 sales
   * Pg 3-18, We expect that refiners will continue to back off on octane production once the transition from E10 to E15 has occurred.
         o Comment:  An full explanation of why this would occur needs to be presented.  This assumes that the transportation, storage and retail infrastructure could cost effectively accommodate multiple octane grades and RVP types where E10 RFG, 9psi, and 10psi Rvp CBOB exist.
Chapter 4
   * Pg 4-4, The average amount of sulfur in crude oil refined in the U.S. is about 10,000 ppm.
         o Comment:  EIA data indicates that the average crude sulfur content run in U.S. refineries is about 14,000 ppm.  See link: http://www.eia.gov/dnav/pet/pet_pnp_crq_dcu_nus_a.htm 
   * Please provide fuller discussion on the permitting analysis (4-31).
   * We suggest changing the title of the section 4.3.3 to distinguish from Chapter 9 and be consistent in using person-hour.

Chapter 5
   * The first part of the task is to attempt to determine how the refinery is meeting the 30 ppm sulfur gasoline limit as a basis for what needs to change.  Major portions of the data needed to accurately determine the current operation of a refinery is not publicly available and even with some information available to EPA from company-confidential EIA data there remains much data that must be estimated or obtained from refiners willing to cooperate.  The quality of the data estimations have a critical impact on the cost results developed.  It is suggested that EPA explicitly seek comment from refiner's where data was not available and assumptions were used.
   * Pg 5-1, When used to model the cost of nationwide fuel control programs on the entire refining industry, LP models are usually used to model groups of refineries in geographic regions called Petroleum Administration for Defense Districts (PADDs).
         o Comment:  LP models are more widely used by refiner's to help them optimize a particular refinery.  Very few refinery LP models are used to model the industry in aggregate.  The handful of LP models that exist are usually used by or for government entities such as EPA and DOE or NGOs that are reviewing regulation that impact the industry.  The commenter suggests that EPA reword this sentence and the next sentence to say that the aggregate industry LP models could potentially underestimate or overestimate the cost of the program depending on the accuracy of the input data and assumptions.
   * Pg 5-6, In 2017, we estimated that approximately half the gasoline would be 10 percent ethanol and the about the other half would be 15 percent. To model the emissions impact of the different ethanol blends, we modeled two reference cases, one with 100 percent E10 and the other with 100 percent E15.
         o Comment:  Suggest that EPA discuss the analysis and assumptions made regarding these estimates.  Did EPA consider the feasibility of the existing infrastructure of accommodating another octane and RVP grade for E15 gasoline blendstock that would be needed in order to implement these policies?  Did EPA estimate the cost of this additional infrastructure?  Please explain. 
   * Pg 5-24,We estimate that 66 percent of the volume of NGL and LSR are hydrotreated before being blended into gasoline and have a very low sulfur content of approximately 1 ppm.
         o Comment:  What is the basis for this estimate?  Please explain in the text.
   * Pg 5-24, For the Tier 3 control case we assumed that all of the NGLs and LSR were hydrotreated and therefore had an average sulfur content of 1 ppm. 
         o Comment:  Suggest EPA seek comment on this assumption.
   * Pg 5-29, Information we received from the vendors also indicated that refiners with both a pretreater and a postreater are producing FCC naphtha that ranges from 200 to 450 ppm before being processed by the postreater.
         o Comment:  Suggest that EPA seek comment from refiner's concerning this assumption.
   * Pg 5-29, After we have calculated the sulfur level of the FCC feed we must then take into consideration the impact the FCC unit itself has on the sulfur level of the FCC naphtha. We reviewed several literature sources7,8 and found that the FCC naphtha sulfur level can be accurately determined by dividing the FCC feed sulfur level by 20 for refineries with an FCC feed pretreating unit. For refineries without an FCC feed pretreater, the FCC naphtha sulfur levels can be calculated by dividing the desulfurized FCC feed sulfur level by 10. 
         o Comment:  Suggest EPA seek comment on this methodology to determine the level of variance there may be relative to the 1/20th estimate.
   * Pg 5-32, The costs for the FCC postreater revamps submitted by one of the vendors, however showed that for low (0  -  400 ppm) and...
         o Comment:  This is a key economic assumption.  How many refineries fall into this category?
   * Pg 5-32, According to this vendor these cases also had a 4 to 5 year catalyst cycle length, equivalent to the higher capital cost cases even though a second stage reactor was not required.
         o Comment:  EPA should seek comment on this assumption.  Axen's NPRA-12-08 paper indicates that adequate cycle length may not be achieved via revamp of pretreaters.
   * Pg 5-32, In our refinery-by-refinery model, however, we had multiple refineries with FCC feed sulfur levels in the 0  -  400 and >1,200 ppm categories that use this vendor's postreating technology. In order to apply this vendor's cost estimate to cases of low (0  -  400 ppm) and high (>1,200 ppm) sulfur feed categories we adjusted this vendors 400  -  1,200 ppm postreater revamp cost based on the cost differentials between the three FCC naphtha sulfur levels in the other vendors' revamp estimates. 
         o Comment:  Suggest EPA seek comment on this cost adjustment approach and other alternatives.
   * Pg 5-34, Table 5-26 - It would be helpful if there was a table that translated this table (5-26) to cents per gallon.  Also it would be helpful if EPA provided the number of refineries that fell into each revamp category.
   * How did EPA arrive at the cost estimates for varying fuel scenarios (e.g., no ABT, AB but not T, ABT)?  What does this imply about the price of the sulfur credits?
   * Please discuss why EPA assumed that refineries that did not produce 30 ppm fuels to produce 30 ppm fuels?  This seems inconsistent with other assumptions invoked in characterizing the baseline for the fuels section (e.g., CA mandates 15 ppm fuel with 20 ppm cap but the average sulfur level is 10 ppm).
   * Should compliance cushion be considered in the analysis (e.g., 5 ppm compliance cushion seen in CA fuel)?
   * Do different fuel scenarios have different implications for fuel volume or did EPA assume that identical fuel volumes would be produced under the varying scenarios?
   * EPA discarded information from one of the vendors in assessing the cost to revamp FCC postreaters.  Please discuss the implications of including and excluding this information.  How much will the cost estimates vary when the excluded vendor information is included?

Chapter 7
   * Please provide the technical document on the MOVES updates.  Does this document include information on the survey of "in-use vehicles?"
   * If 80% of the vehicles and 90% of VMT have turned over by 2030, please discuss the need for conducting the analysis to 2050 (7-1).  Why not stop at 2030 especially knowing that EPA is very likely to issue another standard between now and then?
   * Please discuss the need to include CA in the analysis if the CA fuel is assumed to be 10 ppm in the baseline.  Are there differences in the vehicle standards being proposed compared to the existing CA standards?
   * How do the results of the analysis change when the mix of vehicles explicitly takes into account the LD GHG rule? (Presumably the emission profile would not change but the aggregate level of emissions should have dropped due to the LD GHG rule.)
   * How sensitive are the results to the various assumptions about fuel use (e.g., the use of E15, changes in RVP, octane loss)?
   * Pg 7-8, While E15 has only limited commercial availability currently, EPA believes it may compete favorably with E85 in the marketplace and could become a major gasoline blend in the future to meet the mandated RFS2 volumes. 
         o Comment:  Suggest EPA provide additional discussion concerning the analysis that the agency has conducted and assumptions made in order to support this statement.  
   * Pg 7-9, We assumed that E15 utilization for 2001 and later model year vehicles would ramp up to 50 percent by 2017, increasing to almost 100 percent utilization by 2030.
         o Comment:  Does this assume that consumers will refuel with E15 even though their owners manuals (almost all pre-2013 MY vehicles) only provide warranties for the vehicle fuel up to E10 blends not E15?  EPA should seek comment on this assumption.
   * Pg 7-9, As such, we assumed that E15 utilization in nonroad equipment would ramp up from zero percent in 2017 to almost 100 percent by 2030.
         o Comment:  Suggest EPA seek comment on this assumption.
   * Pg 7/12, Due to the additional actions needed to market E15 during the summer in CG areas, it makes sense that more E15 would be used in RFG areas, at least in the near term. Accordingly, we assumed that in 2017, 75 percent of RFG would be E15 and the balance of E15 would be used in CG (resulting in 25 percent E15 utilization and 75 percent E10 utilization in those areas).
         o Comment:  Suggest that EPA detail their analysis and assumptions made concerning how such a large penetration of E15 would occur in metropolitan areas by 2017.  There are a number of significant obstacles to E15 achieving market acceptance.  First, existing owners of MY 2001 and newer vehicles may not be receptive to E15 because manufacturer warranties are not provided for its use.  The transportation and distribution refueling infrastructure will have difficulty accommodating E15 gasoline blendstocks, octane, and RVP grades in addition to E10 octane and RVP gasoline blendstock grades.  Retail outlet owners have expressed concern about the compatibility of their equipment with E15 gasoline.  Additionally, if they do not invest in new refueling infrastructure retailers may be reluctant to forgo sales of a higher margin mid-grade and premium grade E10 gasoline for E15 with a potentially lower sales volume and margin associated with a product such as E15.
   * Please explain the error associated with the 10 ppm CA fuel baseline (7-15)?
   * What types of vehicles are in the Tier 2 Bin 2 (7-20)?
   * Please explain the cause(s) of the "sharp drop in emissions at the outset of Tier 3 phase in." (7-21, Figure 7-4).
   * Please provide the Kansas City Light duty vehicle emission study (7-32).
   * Please explain why EPA is projecting decreased lube oil consumption as a result of Tier 3 standards.
   * Please explain "prevalence of high evaporative emission vehicles in the Colorado field study." (7-34)  Does Tier 3 mandate an increase in the durability of evaporative/fuel systems?
   * What is the extent of reversible sulfur loading in Tier 2 vehicles (7-38)?
   * Please explain the 700 short ton PM increase and the conservative assumptions. (7-44).
   * How representative are the "representing counties" in assessing VMT? (7-48)
   * What is the magnitude of the difference between adjusted and unadjusted VMTs? (7-52)?
   * We suggest updating the discussion on PM NAAQS.
   * We suggest deleting "As mentioned in Section 7.2.4.3.1...to attain the NO2 NAAQS." (7-93)

Chapter 8
   * Where is the projected annual consumption referred to in Section 8.1 (Page 8-2)? 
   * What is assumed rate of income growth between 2000 and 2030 (Table 8-14)?  Assumed to grow linearly?
   * 8.1.4:  Will EPA provide the need for including this section in the RIA?  
   * 8.2: this section is inconsistent with the guidance in A-4.  With the current framework, this type of analysis would be more useful if used to look at provision by provision effects.  We suggest using this "version" of cost effectiveness analysis to compare the fuel provision vs. vehicle exhaust provisions vs. vehicle evaporative provisions (and move the discussion to Chapter 7).

Chapter 9
   * Cost effect on auto manufacturers: since the agency is not presenting an estimate of employment effects, we suggest deleting Table 9-2 and modifying the discussion appropriately.
   * Refinery employment impacts: what is the source for the 1000 engineering jobs and 6000 construction jobs?

Chapter 10
   * What are the sources of sulfur after the refinery gate?  What are the associated costs of reducing after the refinery gate sulfur?
   * What are the reasons for restricting the use of credits to comply with Tier 2?  In section III. B. of the preamble, it states that Tier 2 vehicle program would go on indefinitely but the limitation on the use of credits should be clarified.  
   * Have any of the flexibilities applicable to small businesses been considered for the large manufacturers? Implications for costs and benefits?
   * What are the costs associated with testing the recordkeeping?

