
[Federal Register Volume 77, Number 20 (Tuesday, January 31, 2012)]
[Rules and Regulations]
[Pages 4678-4687]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-1937]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 86

[AMS-FRL-9623-8]


Nonconformance Penalties for On-Highway Heavy Heavy-Duty Diesel 
Engines

AGENCY: Environmental Protection Agency (EPA).

ACTION: Interim final rule.

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SUMMARY: EPA is taking final action to make nonconformance penalties 
(NCPs) available to manufacturers of heavy heavy-duty diesel engines in 
model years 2012 and 2013 for emissions of oxides of nitrogen 
(NOX). In general, the availability of NCPs allows a 
manufacturer of heavy-duty engines (HDEs) whose engines fail to conform 
to specified applicable emission standards, but do not exceed a 
designated upper limit, to be issued a certificate of conformity upon 
payment of a monetary penalty to the United States Government. The 
upper limit associated with these NCPs is 0.50 grams of NOX 
per horsepower-hour.

DATES: This rule is effective January 31, 2012. We will accept comments 
on this interim final rule until April 4, 2012.

ADDRESSES: Submit your comments, to Docket EPA-HQ-OAR-2011-1000, by one 
of the following methods: http://www.regulations.gov: Follow the on-
line instructions for submitting comments.
    Email: a-and-r-docket@epa.gov.
    Fax: EPA: (202) 566-9744.
    Mail: EPA: Air Docket, Environmental Protection Agency, EPA Docket 
Center, Mailcode: 2822T, 1200 Pennsylvania Ave. NW., Washington, DC 
20460.
    Hand Delivery: EPA: EPA Docket Center, (Air Docket), U.S. 
Environmental Protection Agency, EPA West Building, 1301 Constitution 
Ave. NW., Room: 3334, Mail Code: 2822T, Washington, DC. Such deliveries 
are only accepted during the Docket's normal hours of operation, and 
special arrangements should be made for deliveries of boxed 
information.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2011-1000. See the SUPPLEMENTARY INFORMATION section on ``Public 
Participation'' for additional instructions on submitting written 
comments.
    Docket: All documents in the docket are listed in the http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., confidential business 
information or other information whose disclosure is restricted by 
statute. Certain other material, such as copyrighted material, will be 
publicly available only in hard copy in the docket. Publicly available 
docket materials are available either electronically in http://www.regulations.gov or in hard copy at the following locations:
    EPA: EPA Docket Center, EPA/DC, EPA West, Room 3334, 1301 
Constitution Ave. NW., Washington, DC. The Public Reading Room is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The telephone number for the Air Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Chuck Moulis, U.S. EPA, National 
Vehicle and Fuel Emissions Laboratory, 2000 Traverwood, Ann Arbor, MI 
48105; Telephone (734) 214-4826; Email moulis.charles@epa.gov.

SUPPLEMENTARY INFORMATION: 

Regulated Entities

    This action affects you if you produce or import new heavy heavy-
duty diesel engines which are intended for use in highway vehicles such 
as trucks and buses or heavy-duty highway vehicles. The table below 
gives some examples of entities that may be affected by these 
regulations. But because these are only examples, you should carefully 
examine the regulations in 40 CFR part 86. If you have questions, call 
the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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                                 NAICS
           Category               \a\        Examples of potentially
                                 Codes          regulated entities
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Industry.....................    336112  Engine and truck manufacturers.
                                 336120
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\a\ North American Industry Classification System (NAICS).


[[Page 4679]]

Table of Contents

I. Statutory Authority and Regulatory Background
    A. Statutory Authority
    B. Background Regarding Nonconformance Penalty Rules
    C. 2007 and 2010 NOX Standards
II. Justification for This Interim Final Rule
III. Notice of Proposed Rulemaking
IV. Nonconformance Penalties for 2012 and Later Heavy-Duty Engines 
and Heavy-Duty Vehicles
    A. NCP Eligibility: Emission Standards for Which NCPs Are Being 
Established in This Interim Final Rule
    B. NCP Eligibility: Emission Standards for Which We Are Not 
Establishing NCPs in This Interim Final Rule
V. Penalty Rates
    A. Parameters
VI. Economic Impact
VII. Environmental Impact
VIII. Public Participation
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132 (Federalism)
    F. Executive Order 13175 (Consultation and Coordination With 
Indian Tribal Governments)
    G. Executive Order 13045: ``Protection of Children From 
Environmental Health Risks and Safety Risks''
    H. Executive Order 13211 (Energy Effects)
    I. National Technology Transfer Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    K. Congressional Review Act
X. Statutory Provisions and Legal Authority

I. Statutory Authority and Regulatory Background

A. Statutory Authority

    Section 206(g) of the Clean Air Act (the Act), 42 U.S.C. 7525(g), 
allows EPA to promulgate regulations permitting manufacturers of heavy-
duty engines (HDEs) or heavy-duty vehicles (HDVs) to receive a 
certificate of conformity for HDEs or HDVs that exceed a federal 
emissions standard, but do not exceed an upper limit associated with 
that standard, if the manufacturer pays a nonconformance penalty (NCP) 
established by rulemaking. Congress adopted section 206(g) in the Clean 
Air Act Amendments of 1977 as a response to a concern with requiring 
technology-forcing emissions standards for heavy-duty engines. The 
concern was if strict technology-forcing standards were promulgated, 
then some manufacturers might be unable to comply initially and would 
be forced out of the marketplace. NCPs were intended to remedy this 
concern. The nonconforming manufacturers would have a temporary 
alternative that would permit them to sell their engines or vehicles by 
payment of a penalty. At the same time, conforming manufacturers would 
not suffer a competitive disadvantage compared to nonconforming 
manufacturers, because the NCPs would be based, in part, on money saved 
by the nonconforming manufacturer.
    Under section 206(g)(1), NCPs may be offered for HDVs or HDEs. The 
penalty may vary by pollutant and by class or category of vehicle or 
engine. Section 206(g)(3) requires that NCPs:
     Account for the degree of emission nonconformity;
     Increase periodically to provide incentive for 
nonconforming manufacturers to achieve the emission standards; and
     Remove the competitive disadvantage to conforming 
manufacturers.
    Section 206(g) authorizes EPA to require testing of production 
vehicles or engines in order to determine the emission level upon which 
the penalty is based. If the emission level of a vehicle or engine 
exceeds an upper limit of nonconformity established by EPA through 
regulation, the vehicle or engine would not qualify for an NCP under 
section 206(g) and no certificate of conformity could be issued to the 
manufacturer. If the emission level is below the upper limit but above 
the standard, that emission level becomes the ``compliance level,'' 
which is also the benchmark for warranty and recall liability. The 
manufacturer who elects to pay the NCP is liable for vehicles or 
engines that exceed the compliance level in use. The manufacturer does 
not have in-use warranty or recall liability for emissions levels above 
the standard but below the compliance level.

B. Background Regarding Nonconformance Penalty Rules

    Since the promulgation of the first NCP rule in 1985, subsequent 
NCP rules generally have been described as continuing ``phases'' of the 
initial NCP rule. The first NCP rule (Phase I), sometimes referred to 
as the ``generic'' NCP rule, established three basic criteria for 
determining the eligibility of emission standards for nonconformance 
penalties in any given model year (50 FR 35374, August 30, 1985). As 
described in section IV.A.(1) of this Interim Final Rule, we have 
determined that these criteria have been met for one manufacturer. (For 
regulatory language, see 40 CFR 86.1103-87.) The first criterion is 
that the emission standard in question must become more difficult to 
meet. This can occur in two ways, either by the emission standard 
itself becoming more stringent, or due to its interaction with another 
emission standard that has become more stringent. Second, substantial 
work must be required in order to meet the emission standard. EPA 
considers ``substantial work'' to mean the application of technology 
not previously used in that vehicle or engine class/subclass, or a 
significant modification of existing technology, in order to bring that 
vehicle/engine into compliance. EPA does not consider minor 
modifications or calibration changes to be classified as substantial 
work. Third, EPA must find that a manufacturer is likely to be 
noncomplying for technological reasons (referred to in earlier rules as 
a ``technological laggard''). Prior NCP rules have considered such a 
technological laggard to be a manufacturer who cannot meet a particular 
emission standard due to technological (not economic) difficulties and 
who, in the absence of NCPs, might be forced from the marketplace. As 
described in section IV.A.(1) of this Interim Final Rule, we have 
determined that this criterion has been met for one manufacturer. This 
manufacturer notified us late in 2011 that it would not have enough 
emission credits for its model year 2012 heavy heavy-duty engines.
    The criteria and methodologies established in the 1985 NCP rule 
have since been used to determine eligibility and to establish NCPs for 
a number of heavy-duty emission standards. Phases II, III, IV, V, and 
VI published in the period from 1985 to 2002, established NCPs that, in 
combination, cover the full range of heavy-duty--from heavy light-duty 
trucks (6,000-8,500 pounds gross vehicle weight) to the largest diesel 
truck and urban bus engines. NCPs have been established for 
hydrocarbons (HC), carbon monoxide (CO), nitrogen oxides 
(NOX), and particulate matter (PM). The most recent NCP rule 
(67 FR 51464, August 8, 2002) established NCPs for the 2004 and later 
model year NOX standard for heavy-duty diesel engines 
(HDDEs). The NCP rulemaking phases are summarized in greater detail in 
the Interim and Proposed Technical Support Document for this 
rulemaking.

C. 2007 and 2010 NOX Standards

    The 0.20 g/hp-hr NOX standard that applies for current 
and future heavy-duty engines was adopted January 18, 2001 (66 FR 
5001), and first applied in the 2007 model year. However, because of 
phase-in provisions adopted in that

[[Page 4680]]

rule and use of emission credits generated by manufacturers for early 
compliance, manufacturers have been able to continue to produce engines 
with NOX emissions greater than 0.20 g/hp-hr. The phase-in 
provisions ended after model year 2009 so that the 0.20 g/hp-hr 
NOX standard was fully phased-in for model year 2010. 
Equally important, the cap applicable to Family Emission Limits (FELs) 
\1\ for credit using engine families was lowered to 0.50 g/hp-hr 
beginning in model year 2010. Because of these changes that occurred in 
model year 2010, the 0.20 g/hp-hr NOX emission standard is 
often referred to as the 2010 NOX emission standard, even 
though it applied to engines as early as model year 2007.
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    \1\ FELs are emission levels specified by the manufacturer that 
serve as the applicable emission standard for engines participating 
in the emission averaging program. The FEL cap is the highest FEL to 
which a manufacturer may certify an engine using emission credits.
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    While some manufacturers retain NOX emission credits 
that currently allow them to produce engines with NOX 
emissions as high as 0.50 g/hp-hr, we expect that one of these 
manufacturers could exhaust its supply of heavy heavy-duty engine 
NOX credits as early as this year.

II. Justification for This Interim Final Rule

    EPA is taking this action as an interim final rule without prior 
proposal and public comment because EPA finds for good cause under 
section 553(b)(B) of the Administrative Procedure Act (APA), 5 U.S.C. 
551 et seq. that notice-and-comment are impracticable, unnecessary or 
contrary to the public interest in this instance. Section 307(d) of the 
CAA states that in the case of any rule to which section 307(d) 
applies, notice of proposed rulemaking must be published in the Federal 
Register (CAA Sec.  307(d)(3)). The promulgation or revision of 
regulations under section 206 of the CAA is generally subject to 
section 307(d). However, section 307(d) does not apply to any rule 
referred to in subparagraphs (A) or (B) of section 553(b) of the APA.
    In reaching this determination, EPA considered several factors: (1) 
Taking interim final action avoids the possibility of an engine 
manufacturer from being unable to certify a complete product line of 
engines for model year 2012 and/or 2013; (2) the Agency is only 
amending limited provisions in existing NCP regulations in 40 CFR part 
86; (3) the rule's duration is limited (see, e.g., Small Refiner Lead 
Phase-Down Task Force v. EPA, 705 F.2d 506 (D.C. Cir. 1983)); and (4) 
there is no risk to the public interest in allowing manufacturers to 
certify using NCPs before the point at which EPA could make them 
available through a full notice-and-comment rulemaking.
    EPA is promulgating NCPs for heavy heavy-duty diesel engines in 
this Interim Final Rule because we have concluded that there is a 
significant likelihood that they will be needed during the 2012 model 
year. One manufacturer is currently using NOX credits to 
certify all of its heavy heavy-duty diesel engines at nearly 0.50 g/hp-
hr. Based on its current credit balance and projected sales for this 
service class, we do not expect this manufacturer to have sufficient 
credits to cover its entire model year 2012 production. Since we have 
not certified any of this manufacturer's model year 2012 heavy heavy-
duty diesel engines without the need for emission credits, we believe 
it is possible that it may need NCPs during this model year. We have 
concluded that the very earliest we could make NCPs available through a 
full notice-and-comment rulemaking, would be late in model year 2012, 
which would likely be after the manufacturer's credit supply has been 
depleted. Thus, making NCPs available through this Interim Final Rule 
is the only way to ensure that the manufacturer's depletion of its 
NOX credits will not force it to cease production of heavy 
heavy-duty engines this year.
    The second reason for invoking the good cause exemption is that EPA 
is establishing NCPs based on the existing regulatory provisions in 40 
CFR part 86, subpart L, and is only adding new penalty parameters to 
reflect the costs of compliance specific to the 2010 NOX 
standard. In this Interim Final Rule, EPA is not revisiting the 
regulatory provisions that specify how to calculate penalties from the 
penalty parameters, how to determine a compliance level, or how to 
report to EPA. Since these provisions have been established through 
notice-and-comment rulemaking several times before, interested parties 
have had opportunity to comment on them. Thus, it is unnecessary to 
provide an additional opportunity to comment prior to issuing this 
interim final rule.
    Third, at most, this interim final rule will address only heavy 
heavy-duty engines in model years 2012 and 2013, and by its own terms 
is applicable for less than two calendar years. It is thus limited in 
duration. EPA is publishing a parallel notice of proposed rulemaking 
simultaneously with this rule and EPA intends to take appropriate final 
action on that rule as soon as possible. With due consideration to 
comments, the interim NCPs being established in this IFR will cease to 
be applicable once the follow up Final Rule is effective.
    Finally, it is important to note that NCPs are set at a level that 
is intended to ensure that manufacturers only use them when there is no 
other path to certification. Thus, should EPA be incorrect in its 
projection that NCPs will be needed during model year 2012, the fact 
that they will be available on an interim basis will have no practical 
significance because manufacturers will not use them.
    For the reasons explained above, EPA finds that this constitutes 
good cause under 5 U.S.C. 553(b)(B). Nonetheless, EPA is providing 
until April 4, 2012 for submission of public comments following this 
action. EPA will consider all written comments submitted in the 
allotted time period in the context of the accompanying notice of 
proposed rulemaking.
    Section 553(d) of the Administrative Procedure Act (APA), 5 U.S.C. 
chapter 5, generally provides that rules may not take effect earlier 
than 30 days after they are published in the Federal Register. APA 
section 553(d) excepts from this provision any action that grants or 
recognizes an exemption or relieves a restriction. Since today's action 
can be considered to either effectively grant an exemption from meeting 
the current applicable NOX emission standard or relieve a 
restriction that would otherwise prevent a manufacturer from 
certifying, EPA is making this action effective immediately upon 
publication.

III. Notice of Proposed Rulemaking

    EPA is also simultaneously publishing a parallel Notice of Proposed 
Rulemaking (NPRM) addressing NCPs for heavy-duty engines. Among other 
things, that NPRM seeks comment on NCPs for model year 2012 and later 
heavy heavy-duty diesel engines, as well as for medium heavy-duty 
diesel engines. The NCPs in the Final Rule for that NPRM will 
eventually supersede the NCPs being promulgated in this Interim Final 
Rule, especially for model year 2013 and later. For example, should the 
follow-up Final Rule be published by September 14, 2012, it would 
likely have an effective date of November 13, 2012. Should that Final 
Rule establish different NCPs for heavy heavy-duty engines, those new 
NCPs would be available for any engines produced on or after November 
13, 2012, instead of the interim NCPs being finalized today.
    Note that Docket Number EPA-HQ-OAR-2011-1000 is being used for both 
the Interim Final Rule and the parallel NPRM.

[[Page 4681]]

IV. Nonconformance Penalties for 2012 and Later Heavy-Duty Engines and 
Heavy-Duty Vehicles

A. NCP Eligibility: Emission Standards for Which NCPs Are Being 
Established in This Interim Final Rule

(1) Heavy Heavy-Duty Diesel NOX Standard
    As discussed in section I.B., EPA must determine that three 
criteria are met in order to determine that an NCP should be 
established in any given model year. For the 2010 NOX 
standard, we believe these criteria have been met for heavy heavy-duty 
diesel engines, and it is therefore appropriate to establish NCPs for 
this standard for the current model year and later.
    The first criterion requires that the emission standard in question 
must become more difficult to meet. This is the case with the 2010 
NOX standard. The previous emission standard for this 
category is a combined NMHC + NOX standard of 2.4 g[sol]hp-
hr, or optionally a 2.5 g[sol]hp-hr NMHC + NOX with a limit 
of 0.5 g[sol]hp-hr NMHC.\2\ The 2010 (i.e., current) standards are 0.20 
g[sol]hp-hr for NOX and 0.14 g[sol]hp-hr for NMHC. When 
promulgated, the Agency concluded that the 0.20 g[sol]hp-hr 
NOX standard was a technology forcing standard. Second, all 
heavy heavy-duty diesel engines currently certified to the 0.20 
g[sol]hp-hr standard without using credits are using new aftertreatment 
systems to meet this standard.\3\ It is therefore logical to conclude 
the standard is more difficult to meet and that substantial work was 
required to meet the emission standard.
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    \2\ NMHC stands for non-methane hydrocarbons, which is a measure 
of total hydrocarbons with the methane emissions subtracted out. For 
typical on-highway diesel fueled heavy-duty engines, methane 
emissions are on the order of 10 percent of the total hydrocarbon 
emissions.
    \3\ For this notice, EPA describes those manufacturers that have 
achieved the 0.20 g[sol]hp-hr emission standard as ``conforming'', 
``compliant'' or ``complying'' manufacturers, and those that have 
not as the ``nonconforming'', ``noncompliant'' or ``noncomplying'' 
manufacturers. However, it is important to clarify that 
manufacturers certifying above the 0.20 g[sol]hp-hr NOX 
emission standard using emission credits are in compliance with 
regulations as long as they have enough emission credits to offset 
their total NOX emissions above the standard.
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    Third, EPA is promulgating NCPs for heavy heavy-duty diesel engines 
because we have concluded that there is a significant likelihood that 
they will be needed by an engine manufacturer that has not yet met the 
requirements for technological reasons. One manufacturer is currently 
using NOX credits to certify all of its heavy heavy-duty 
diesel engines at nearly the FEL cap level of 0.50 g[sol]hp-hr. Based 
on its current credit balance and projected sales for this service 
class, we do not expect this manufacturer to have sufficient credits to 
cover its entire model year 2012 production. This manufacturer intends 
to use a different technology to meet the NOX standard but 
has not yet submitted an application for the 2012 model year with 
NOX emissions at or below the 0.20 g[sol]hp-hr standard. 
Since it has not yet submitted an application for certification for any 
model year 2012 heavy heavy-duty diesel engines that would not require 
emission credits, we believe it is a reasonable possibility that this 
manufacturer may not be able to comply for technological reasons with 
respect to the 2010 NOX standards for heavy heavy-duty 
diesel engines in the 2012 and 2013 model years. This manufacturer 
notified us late in 2011 that it would not have enough emission credits 
for its model year 2012 heavy heavy-duty engines.

B. NCP Eligibility: Emission Standards for Which We Are Not 
Establishing NCPs in This Interim Final Rule

    This section identifies the emission standards for which we are not 
establishing NCPs in this Interim Final Rule. Note that EPA is issuing 
a parallel Notice of Proposed Rulemaking (NPRM) proposing and/or 
seeking comment on NCPs for certain other emission standards.
(1) Light and Medium Heavy-Duty Diesel NOX Standards
    EPA believes that the first two NCP criteria have been met for the 
2010 NOX standard for light and medium heavy-duty diesel 
engines. However, we have not determined that any manufacturer of light 
or medium heavy-duty diesel engines will be unable to certify to the 
2010 NOX standard for the 2012 and 2013 model years. We 
believe that any manufacturer unable to achieve 0.20 g[sol]hp-hr will 
have sufficient NOX emission credits to continue certifying 
light heavy-duty and medium heavy-duty engines through the 2013 model 
year. (See the parallel NPRM.)
(2) Heavy-Duty Gasoline Engine Standards
    In a final rule published on January 18, 2001 (66 FR 5001), EPA 
established more stringent emission standards for all heavy-duty 
gasoline (or ``Otto-cycle'') vehicles and engines. These standards took 
two forms: A chassis-based set of standards for complete vehicles under 
14,000 pounds GVWR (the chassis-based program), and an engine-based set 
of standards for all other Otto-cycle heavy-duty engines (the engine-
based program). Each of the two programs has an associated averaging, 
banking, and trading (ABT) program. The new standards generally took 
effect starting with the 2008 model year, and all manufacturers are in 
compliance with them.
(3) Heavy-Duty Diesel Engine NMHC, CO, and PM Standards
    EPA adopted new NMHC and PM for model year 2007 and later heavy-
duty engines in the same rule that set the 2010 NOX emission 
standard (66 FR 5001, January 18, 2001). The CO standard was not 
changed. We are not considering NCPs for any of these other standards 
because all manufacturers are already fully compliant with them.
(4) Heavy-Duty CO2 Standards
    In a final rule published on September 15, 2011 (76 FR 57106), EPA 
established new CO2 emission standards for all heavy-duty 
vehicles and engines. We are not considering NCPs for any of these 
standards at this time because we currently do not have a basis to 
conclude that a technological laggard is likely to develop.
    We are adding a new regulatory provision related to these 
CO2 emission standards. The provision prohibits generating 
CO2 emission credits from engines paying NCPs for 
NOX. Given the general tradeoff between CO2 and 
NOX emissions, we were concerned that a manufacturer capable 
of meeting the 0.20 g/hp-hr NOX emission standard could 
choose to pay an NCP in order to generate CO2 credits by 
recalibrating its engines for higher NOX emissions and lower 
CO2. There are two reasons this would be inappropriate. 
First, emission credits are supposed to provide an incentive for a 
manufacturer to go beyond what is normally required to meet emission 
standards. However, allowing manufacturers to generate CO2 
credits while paying NCPs would actually create an incentive for 
manufacturers to do less than is required to meet the emission 
standards. Equally important, NCPs have always been intended for 
manufacturers that cannot meet an emission standard for technological 
reasons rather than manufacturers choosing not to comply.

V. Penalty Rates

    This rulemaking is the most recent in a series of NCP rulemakings. 
These are referred to as Phases and are referenced below.\4\ The 
discussions of penalty rates

[[Page 4682]]

in those rulemakings are incorporated by reference. This section 
briefly reviews the penalty rate formula originally promulgated in the 
Phase I rule (currently found at 40 CFR 86.1113-87) and discusses how 
EPA arrived at the penalty rates in this Interim Final Rule.
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    \4\ The previous NCP rules include: The Phase VI rulemaking (67 
FR 51464, August 8, 2002), Phase IV rulemaking (58 FR 68532, 
December 28, 1993), Phase III rulemaking (55 FR 46622, November 5, 
1990), the Phase II rulemaking (50 FR 53454, December 31, 1985) as 
well as the Phase I rulemaking (50 FR 35374, August 30, 1985).
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    The penalty rates being established in this rule rely on the 
existing NCP regulatory structure. Thus, the only changes being made to 
the regulations are updates to the cost parameters to reflect the 
compliance costs for the 2010 standards, setting of the upper limit, 
and clarifying in Sec.  86.1104-91 that EPA may set the upper limit at 
a level below the previous standard if we determine that the lower 
level is achievable by all engines.
    Because these penalties are being adopted in an Interim Final Rule, 
we are limiting their applicability to model years 2012 and 2013. Prior 
to model year 2014, we will promulgate a Final Rule addressing NCPs 
following notice and comment. Note that we may promulgate the Final 
Rule as soon as later this calendar year, and as applicable, it would 
supersede the provisions of this Interim Final Rule after it becomes 
effective.
    The NCP rates being adopted in this IFR are specified for model 
year 2012. As required by the Clean Air Act, the existing regulations 
include a formula that increases the penalty rates with each new model 
year. We will apply this annual adjustment formula to the NCPs by 
setting the 2012 model year as year number one. Traditionally, NCPs are 
available the first year of the new emission standard and that becomes 
year one for purposes of the annual escalator. However, EPA believes 
the 2012 model year is the correct year for the first year of the 
escalator calculation even though the NOX emission standard 
began in 2010.

A. Parameters

    As in the previous NCP rules, we are specifying the NCP formula for 
each standard using the following parameters: COC50, 
COC90, MC50, F, and UL. The NCP formula is the 
same as that promulgated in the Phase I rule. As was done in previous 
NCP rules, costs consider additional manufacturer costs and additional 
owner costs, but do not consider certification costs because both 
complying and noncomplying manufacturers must incur certification 
costs. COC50 is an estimate of the industry-wide average 
incremental cost per engine (references to engines are intended to 
include vehicles as well) associated with meeting the standard for 
which an NCP is offered, compared with meeting the upper limit. 
COC90 is an estimate of the 90th percentile incremental cost 
per-engine associated with meeting the standard for which an NCP is 
offered, compared with meeting the associated upper limit. 
Conceptually, COC50 represents costs for a typical or 
average manufacturer, while COC90 represents costs for the 
manufacturers with the highest compliance costs.
    MC50 is an estimate of the industry-wide average 
marginal cost of compliance per unit of reduced pollutant associated 
with the least cost effective emission control technology installed to 
meet the new standard. MC50 is measured in dollars per g/hp-
hr for heavy-duty engines. F is a factor used to derive 
MC90, the 90th percentile marginal cost of compliance with 
the NCP standard for engines in the NCP category. MC90 
defines the slope of the penalty rate curve near the standard and is 
equal to MC50 multiplied by F. UL is the upper limit above 
which no engine may be certified.
    The derivation of the cost parameters is described in a support 
document entitled ``Interim and Proposed Technical Support Document: 
Nonconformance Penalties for 2012 and later Highway Heavy-Duty Diesel 
Engines,'' which is available in the public docket for this rulemaking. 
All costs are presented in 2011 dollars.
(1) Upper Limit
    We are revising the regulations in Sec.  86.1104-91 to clarify that 
EPA may set (during rulemaking) the upper limit at a level below the 
previous standard if we determine that the lower level is achievable by 
all engines. As described below, we are also establishing the upper 
limit for this NCP rule at 0.50 g/hp-hr. These are the only regulatory 
changes being made with respect to the upper limit.
    The upper limit is the emission level established by regulation 
above which NCPs are not available and a heavy duty engine cannot be 
certified or introduced into commerce. CAA section 206(g)(2) refers to 
the upper limit as a percentage above the emission standard, set by 
regulation, that corresponds to an emission level EPA determines to be 
``practicable.'' The upper limit is an important aspect of the NCP 
regulations not only because it establishes an emission level above 
which no engine may be certified, but it is also a critical component 
of the cost analysis used to develop the penalty rates. The regulations 
specify that the relevant costs for determining the COC50 
and the COC90 factors are the difference between an engine 
at the upper limit and one that meets the applicable standards (see 40 
CFR 86.1113-87).
    The regulatory approach adopted under the prior NCP rules sets the 
default Upper Limit (UL) at the prior emission standard when a prior 
emission standard exists and is then changed to become more stringent. 
EPA concluded that the upper limit should be reasonably achievable by 
all manufacturers with vehicles in the relevant class. It should be 
within reach of all manufacturers of HDEs or HDVs that are currently 
allowed so that they can, if they choose, pay NCPs and continue to sell 
their engines and vehicles while finishing their development of fully 
complying engines. A manufacturer of a previously certified engine or 
vehicle should not be forced to immediately remove an HDE or HDV from 
the market when an emission standard becomes more stringent. The prior 
emissions standard generally meets these goals because manufactures 
have already certified their vehicles to that standard.
    In the past, EPA has rejected suggestions that the upper limit 
should be more stringent than the prior emission standard because it 
would be very difficult to identify a limit that could be met by all 
manufacturers. For this rule, however, all manufacturers are currently 
certifying all of their engines at or below the 0.50 g[sol]hp-hr FEL 
cap. Thus, since NCPs were not intended to allow manufacturers to 
increase emissions, we are setting the upper limit for this NCP rule at 
0.50 g[sol]hp-hr NOX. This will conform to the purpose of 
NCPs, which is to allow manufacturers to continue selling engines they 
are producing, but not to allow backsliding.
(2) Cost Parameter Values
    The regulations being adopted specify that the values in Table 1 
(in 2011 dollars) be used in the NCP formula for the 2012 and later 
model year NOX standard of 0.20 g[sol]hp-hr for diesel heavy 
heavy-duty engines. The basis is summarized here. The complete 
derivation of these parameters is described in the Interim Technical 
Support Document for this rulemaking.
    We also considered other methodologies for estimating the 
incremental compliance costs between the upper limit and the standard. 
We rejected these alternatives because we are not confident that we 
could estimate the costs with sufficient accuracy or describe our basis 
without revealing confidential business information. Moreover, we have 
no reason to believe

[[Page 4683]]

that these alternative methodologies would have been better with 
respect to the statutory requirement to remove the competitive 
disadvantage of the complying manufacturers.
(a) General Methodology
    Based on our review of the various hypothetical baseline engine 
designs, we selected a straightforward ``baseline engine'' technology 
package with associated costs that were determinable within a 
reasonably high degree of certainty. This approach best limited the 
sensitivity of the penalty rate versus small variations in any of the 
``baseline engine'' technology package elements. This cost stability 
mitigated the hypothetical nature of the ``baseline engine'' technology 
package, which, in turn, led to a penalty rate that we believe is 
reasonable. As is described in the TSD, we believe estimating costs by 
this approach is the least speculative method to determine compliance 
costs.
    We selected a baseline engine technology package that would employ 
the same basic emission controls used to meet the 2007 NOX 
and PM emission standards (e.g. cooled exhaust gas recirculation), 
optimized turbo-charging, optimized fuel injection, diesel particulate 
filters), plus liquid urea based Selective Catalytic Reduction (SCR) 
NOX emissions control technology with an appropriately sized 
tank for the diesel exhaust fluid (DEF). Further details are provided 
in this rule's TSD. While EPA selected the baseline engine (or upper 
limit engine) to be a fully optimized, SCR-equipped engine that 
complies with all other emission standards and requirements, the NCPs 
may be used for engines using other technologies.
    This approach differs slightly from that used in previous NCP 
rules, where EPA based the NCPs directly on an average of actual 
compliance costs for all manufacturers. This was appropriate in those 
prior rules because each of the manufacturers had actually produced 
engines at the upper limit (which was usually the previous emission 
standard). It was relatively straightforward for them to provide us 
with a confidential engineering analysis of the costs they actually 
incurred: The real costs of additional hardware and fluids and the 
differences in performance characteristics. We have always sought full 
understanding of the manufacturers' inputs, and for previous NCP rules 
it was also reasonable for EPA to conclude that the manufacturers' 
input accurately reflected the manufacturers' actual costs because the 
costs were derived directly from actual in-production engine 
information. In the case of this NCP rule, however, compliant 
manufacturers have not designed and optimized in-production engines for 
the U.S. market at 0.50 g[sol]hp-hr NOX (the upper limit). 
Thus, a compliance cost estimate based directly on actual experience 
for in-production engines was not available for this NCP rule.
    Instead of averaging actual costs (because none were available), 
the NCP penalty formulas for this rule are based primarily on EPA's 
estimate of the cost difference between an engine emitting at the upper 
limit (the ``baseline engine'') and one emitting at the standard (the 
``compliant engine''). We requested cost of compliance information from 
several engine manufacturers and used that information to inform our 
own analysis of compliance costs, as described in the Interim and 
Proposed Technical Support Document. The engine manufacturers we 
contacted approached this cost analysis in the same way we did. That 
is, the scenarios we and the manufacturers considered were all based 
upon hypothetical baseline engine designs that were intended to meet 
the 0.50 g[sol]hp-hr NOX upper limit.
    It is worth noting that each of the five engine manufacturers we 
contacted considered hypothetical baseline engines with different 
technology packages. Two complying manufacturers based their compliance 
costs on a baseline engine equipped with similar (but not identical) 
hardware as EPA; another on an SCR-equipped engine without exhaust gas 
recirculation, and a fourth on its estimation of the non-complying 
engines produced by a competitor. All four manufacturers meeting the 
0.20 g[sol]hp-hr NOX standard compared the costs for their 
hypothetical baseline engines to the costs for their actual compliant 
engines. The one non-SCR manufacturer we contacted (that has not yet 
certified any engines with NOX emissions at 0.20 g[sol]hp-
hr) provided its projections of what it will spend to bring its current 
2011 engine into compliance without the use of emission credits.
(b) Calculated Values
    The most significant of the NCP parameters is the 90th percentile 
costs of compliance, COC90, which defines the penalty for 
engines emitting at the upper limit. The value of COC50 only 
matters when EPA estimates that marginal compliance costs change as the 
compliance level approaches the standard. In such cases, 
COC50 defines that point on the curve at which the slope 
changes. We estimated COC90 and COC50 by assuming 
the baseline engine would have been an SCR equipped engine with 
NOX emissions at 0.50 g/hp-hr and that it looked very 
similar to an engine with NOX emissions at 0.20 g/hp-hr. 
However, the higher NOX emissions of the baseline engine 
would allow the use of less expensive hardware and would require less 
consumption of liquid urea (also known as diesel emission fluid or 
``DEF'').
    We estimated the marginal costs of compliance as being equal to the 
total incremental costs of compliance divided by 0.30 g/hp-hr (the 
difference between the upper limit and the standard). This assumes that 
the cost to reduce emissions from 0.30 g/hp-hr to 0.20 g/hp-hr is not 
significantly different from the cost to reduce emissions from 0.50 g/
hp-hr to 0.40 g/hp-hr. This results in a penalty curve that is a 
straight line, which in turn makes our estimate of the average cost of 
compliance irrelevant to the calculation of the penalty. In other 
words, the COC50 point lies directly between zero cost at 
0.20 g/hp-hr and COC90 at the Upper Limit of 0.50 g/hp-hr 
NOX. The penalty paid for engines at the upper limit would 
be equal to EPA's estimate of the highest marginal cost paid by a 
complying manufacturer for the same emission range.

               Table 1--Interim NCP Calculation Parameters
------------------------------------------------------------------------
             Parameter                 Heavy heavy-duty diesel engines
------------------------------------------------------------------------
COC50..............................  $1,561.
COC90..............................  $1,919.
MC50...............................  $5,203 per gram per horsepower-
                                      hour.
F..................................  1.23.
UL.................................  0.50 g/hp-hr.
------------------------------------------------------------------------

(3) Resulting Penalties
    The calculation parameters listed in Table 1 are used to calculate 
the penalty rate. These parameters are used in the penalty rate 
formulas which are defined in the existing NCP regulations (See 40 CFR 
86.1113(a)(1) and (2)). Using the parameters in Table 1, and the 
equations in the existing NCP regulations, we have plotted penalty 
rates versus compliance levels in Figure 1 below. This penalty curve is 
for the first year of use of the NCPs (i.e., the annual adjustment 
factors specified in the existing NCP regulations have been set equal 
to one).

[[Page 4684]]

[GRAPHIC] [TIFF OMITTED] TR31JA12.020

    The Clean Air Act NCP provisions require that the penalty be set at 
such a level that it removes any competitive disadvantage a complying 
manufacturer by requiring non-complying manufacturers to pay NCPs. Our 
methodology for developing the NCP is detailed in the Interim and 
Proposed Technical Support Document. Our technology approach includes 
relatively minor hardware upgrades, calibration changes, and increased 
use of DEF. For the reasons described in the Interim and Proposed 
Technical Support Document, we believe that the NCPs being established 
in this rulemaking will remove any competitive disadvantage that 
complying manufacturers may face.

VI. Economic Impact

    Because the use of NCPs is optional, manufacturers have the 
flexibility and will likely choose whether or not to use NCPs based on 
their ability to comply with emissions standards. If no manufacturer 
elects to use NCPs, these manufacturers and the users of their products 
will not incur any additional costs related to NCPs. NCPs remedy the 
potential problem of having a manufacturer forced out of the 
marketplace due to that manufacturer's inability to conform to new, 
strict emission standards in a timely manner. Without NCPs, a 
manufacturer which has difficulty certifying HDEs in conformance with 
emission standards or whose engines fail a Selective Enforcement Audit 
(SEA) has only two alternatives: fix the nonconforming engines, perhaps 
at a prohibitive cost, or prevent their introduction into commerce. The 
availability of NCPs provides manufacturers with a third alternative: 
continue production and introduce into commerce upon payment of a 
penalty an engine that exceeds the standard until an emission 
conformance technique is developed. Therefore, NCPs represent a 
regulatory mechanism that allows affected manufacturers to have 
increased flexibility. A decision to use NCPs may be a manufacturer's 
only way to continue to introduce its products into commerce.

VII. Environmental Impact

    When evaluating the environmental impact of this rule, one must 
keep in mind that, under the Act, NCPs are a consequence of enacting 
new, more stringent emissions requirements for heavy duty engines. 
Emission standards are set at a level that most, but not necessarily 
all, manufacturers can achieve by the model year in which the standard 
becomes effective. Following International Harvester v. Ruckelshaus, 
478 F. 2d 615 (DC Cir. 1973), Congress realized the dilemma that 
technology-forcing standards could potentially cause, and allowed 
manufacturers of heavy-duty engines to certify nonconforming vehicles/
engines upon the payment of an NCP, under certain terms and conditions. 
This mechanism was intended to allow manufacturer(s) who cannot meet 
technology-forcing standards immediately to continue to manufacture 
nonconforming engines while they tackle the technological problems 
associated with meeting new emission standard(s). Thus, as part of the 
statutory structure to force technological improvements without driving 
manufacturers or individual engine models out of the market, NCPs 
provide a flexibility that fosters long-term emissions improvement 
through the setting of lower emission standards at an earlier date than 
could otherwise be feasible. Because NCPs are designed to increase with 
time, manufacturers using NCPs are likely to reduce emission levels to 
meet the standard as quickly as possible, which minimizes the 
environmental impact.
    As is always the case with NCPs, the potential exists for there to 
be more extensive use of NCPs beyond what may be expected to be used by 
the manufacturer that we believe will need them. For example, depending 
upon the penalty rate and other factors, some otherwise fully compliant 
manufacturers could elect to pay the NCP in order to reconfigure their 
0.20 g/hp-hr NOX compliant engines to emit up to 0.50 g/hp-
hr so that they can re-optimize engine hardware and vehicle operating 
costs. This potential action is not without R&D and other financial 
costs to the manufacturer and thus is not a decision which would be

[[Page 4685]]

taken lightly, given the short-term nature of the NCPs allowed for in 
this interim final rule. Furthermore, we believe that any such impacts 
would be short-term and self-limiting in nature because the NCP annual 
adjustment factor, established via prior NCP rules, increases the 
levels of the penalties over time and based on the extent of the use of 
NCPs by all manufacturers. In other words the NCP program is structured 
such that the incentives to produce engines that meet the standard 
increase year-by-year and increase upon NCP use. The practical impact 
of this adjustment factor is that the NCPs will rapidly become an 
undesirable option for all manufacturers that may elect to use them. 
However, while we expect their use to be limited, we have no way of 
predicting at this time how many manufacturers will make use of the 
NCPs, or how many engine families would be subject to the NCP program. 
Because of these uncertainties we are unable to accurately quantify the 
potential impact the NCPs might have on emission inventories, although, 
as stated above, any impacts are expected to be short-term and self-
limiting in nature.

VIII. Public Participation

    We are opening a formal comment period by publishing this document. 
We will accept comments for the period indicated under DATES above. If 
you have an interest in the program described in this document, we 
encourage you to comment on any aspect of this rulemaking.
    Your comments will be most useful if you include appropriate and 
detailed supporting rationale, data, and analysis. If you disagree with 
parts of the interim program, we encourage you to suggest and analyze 
alternate approaches to meeting the goals described in this Interim 
Final Rule. You should send all comments, except those containing 
proprietary information, to our Air Docket (see ADDRESSES) before the 
end of the comment period.
    If you submit proprietary information for our consideration, you 
should clearly separate it from other comments by labeling it 
``Confidential Business Information.'' You should also send it directly 
to the contact person listed under FOR FURTHER INFORMATION CONTACT 
instead of the public docket. This will help ensure that no one 
inadvertently places proprietary information in the docket. We will 
disclose information covered by a claim of confidentiality only through 
the application of procedures described in 40 CFR part 2. If you do not 
identify information as confidential when we receive it, we may make it 
available to the public without notifying you.

IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is not a ``significant regulatory action'' under the 
terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is 
therefore not subject to review under Executive Orders 12866 and 13563 
(76 FR 3821, January 21, 2011).

B. Paperwork Reduction Act

    This action does not impose any new information collection burden. 
It only updates the penalty amounts to correspond to the current 
emission standards. However, the Office of Management and Budget (OMB) 
has previously approved the information collection requirements 
contained in the existing regulations 40 CFR part 86, subpart L under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
and has assigned OMB control number 2060-0132. The OMB control numbers 
for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act

(1) Overview
    The Regulatory Flexibility Act generally requires an agency to 
prepare a regulatory flexibility analysis of any rule subject to notice 
and comment rulemaking requirements under the Administrative Procedure 
Act or any other statute, unless the agency certifies that the rule 
will not have a significant economic impact on a substantial number of 
small entities. Small entities include small businesses, small 
organizations, and small governmental jurisdictions.
    For purposes of assessing the impacts of these rules on small 
entities, small entity is defined as: (1) A small business as defined 
by SBA regulations at 13 CFR 121.201; (2) a small governmental 
jurisdiction that is a government of a city, county, town, school 
district or special district with a population of less than 50,000; and 
(3) a small organization that is any not-for-profit enterprise which is 
independently owned and operated and is not dominant in its field.
(2) Summary of Potentially Affected Small Entities
    After considering the economic impacts of this rule on small 
entities, I certify that this action will not have a significant impact 
on a substantial number of small entities.
    When these emission standards were established, the final 
rulemaking (66 FR 5001, January 18, 2001) noted that we were not aware 
of ``any manufacturers of heavy-duty engines that meet SBA's definition 
of a small business.'' Based on an updated assessment, EPA has 
identified a total of about 14 manufacturers that produce diesel cycle 
heavy-duty motor vehicle engines. Of these, none of these are small 
businesses that are producing engines with NOX emissions 
above 0.20 g/hp-hr. Based on this, we are certifying that this rule 
will not have a significant economic impact on a substantial number of 
small entities.
(3) Conclusions
    I therefore certify that this Interim Final Rule will not have a 
significant economic impact on a substantial number of small entities.

D. Unfunded Mandates Reform Act

    This rule does not contain a Federal mandate that may result in 
expenditures of $100 million or more for State, local, and tribal 
governments, in the aggregate, or the private sector in any one year. 
The agency has determined that this action does not contain a Federal 
mandate that may result in expenditures of $100 million or more for the 
private sector in any one year. Because the use of NCPs is optional, 
manufacturers have the flexibility and will likely choose whether or 
not to use NCPs based on their ability to comply with emissions 
standards. The availability of NCPs provides manufacturers with a third 
alternative: To continue production and introduce into commerce upon 
payment of a penalty an engine that exceeds the standard until an 
emission conformance technique is developed. Therefore, NCPs represent 
a regulatory mechanism that allows affected manufacturers to have 
increased flexibility. Thus, this action is not subject to the 
requirements of sections 202 or 205 of the UMRA. This action is also 
not subject to the requirements of section 203 of the UMRA because it 
contains no regulatory requirements that might significantly or 
uniquely affect small governments.

E. Executive Order 13132 (Federalism)

    Executive Order 13132, entitled ``Federalism'' (64 FR 43255, August 
10, 1999), requires EPA to develop an accountable process to ensure 
``meaningful and timely input by State and local officials in the 
development of regulatory policies that have federalism implications.'' 
``Policies that have federalism implications'' is defined in

[[Page 4686]]

the Executive Order to include regulations that have ``substantial 
direct effects on the States, on the relationship between the national 
government and the States, or on the distribution of power and 
responsibilities among the various levels of government.''
    This action does not have federalism implications. It will not have 
substantial direct effects on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government, as 
specified in Executive Order 13132. These rules will apply to 
manufacturers of on-highway engines and not to State or local 
governments. Thus, Executive Order 13132 does not apply to this action.

F. Executive Order 13175 (Consultation and Coordination With Indian 
Tribal Governments)

    This IFR does not have tribal implications, as specified in 
Executive Order 13175 (65 FR 67249, November 9, 2000). This rule will 
be implemented at the Federal level and impose compliance costs only on 
engine manufacturers who elect to use the NCP regulatory flexibility to 
comply with emissions standards. Tribal governments would be affected 
only to the extent they purchase and use engines and vehicles to which 
an NCP has been applied. Thus, Executive Order 13175 does not apply to 
this rule.

G. Executive Order 13045: ``Protection of Children From Environmental 
Health Risks and Safety Risks''

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62FR19885, April 23, 1997) applies to 
any rule that: (1) Is determined to be ``economically significant'' as 
defined under Executive Order 12866, and (2) concerns an environmental 
health or safety risk that EPA has reason to believe may have a 
disproportionate effect on children. If the regulatory action meets 
both criteria, the agency must evaluate the environmental health or 
safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the agency.
    EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that are based on health or safety risks, such that 
the analysis required under section 5-501 of the Order has the 
potential to influence the regulation. This rule is not subject to 
Executive Order 13045 because it does not establish an environmental 
standard intended to mitigate health or safety risks.

H. Executive Order 13211 (Energy Effects)

    This action is not subject to Executive Order 13211 (66 FR 28355 
(May 22, 2001)), because it is not a significant regulatory action 
under Executive Order 12866.

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (``NTTAA''), Public Law 104-113, 12(d) (15 U.S.C. 272 note) 
directs the agencies to use voluntary consensus standards in its 
regulatory activities unless to do so would be inconsistent with 
applicable law or otherwise impractical. Voluntary consensus standards 
are technical standards (e.g., materials, specifications, test methods, 
sampling procedures, and business practices) that are developed or 
adopted by voluntary consensus standards bodies. NTTAA directs EPA to 
provide Congress, through OMB, explanations when the EPA decides not to 
use available and applicable voluntary consensus standards.
    This rule does not involve technical standards. Therefore, EPA is 
not considering the use of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA has determined that this action will not have 
disproportionately high and adverse human health or environmental 
effects on minority or low-income populations. The overall 
environmental impacts of this action are expected to be small and of 
limited duration. Moreover, there is no reason to believe that trucks 
using NCP engines will be more likely to operate near any minority or 
low-income populations than other trucks.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. Section 808 allows the issuing agency to make a rule 
effective sooner than otherwise provided by the CRA if the agency makes 
a good cause finding that notice and public procedure is impracticable, 
unnecessary or contrary to the public interest. This determination must 
be supported by a brief statement. 5 U.S.C. 808(2). As stated 
previously in Section II above, EPA has made such a good cause finding, 
including the reasons therefore, and established an effective date of 
January 31, 2012. EPA will submit a report containing this rule and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. This action is not 
a ``major rule'' as defined by 5 U.S.C. 804(2).

X. Statutory Provisions and Legal Authority

    Statutory authority for the vehicle controls in these rules is 
found in CAA section 206(g), of the CAA, 42 U.S.C. 7525(g).

List of Subjects in 40 CFR Part 86

    Administrative practice and procedure, Confidential business 
information, Motor vehicle pollution, Reporting and recordkeeping 
requirements.

    Dated: January 20, 2012.
Lisa P. Jackson,
Administrator.
    For the reasons set forth in the preamble, the Environmental 
Protection Agency is amending 40 CFR chapter I of the Code of Federal 
Regulations as follows:

PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES 
AND ENGINES

0
1. The authority citation for part 86 continues to read as follows:

    Authority: 42 U.S.C. 7401-7671q.

Subpart L--[Amended]

0
2. Section 86.1104-91 is revised to read as follows:

[[Page 4687]]

Sec.  86.1104-91  Determination of upper limits.

    EPA shall set a separate upper limit for each phase of NCPs and for 
each service class.
    (a) The provisions of this section specify a default approach for 
determining the upper limit values.
    (1) The default upper limit applicable to a pollutant emission 
standard for a subclass of heavy-duty engines or heavy-duty vehicles 
for which an NCP is established in accordance with Sec.  86.1103-87, 
shall be the previous pollutant emission standard for that subclass.
    (2) If a manufacturer participates in any of the emissions 
averaging, trading, or banking programs, and carries over certification 
of an engine family from the prior model year, the upper limit for that 
engine family shall be the family emission limit of the prior model 
year, unless the family emission limit is less than the upper limit 
determined in paragraph (a) of this section.
    (b) If no previous standard existed for the pollutant under 
paragraph (a) of this section, the upper limit will be developed by EPA 
during rulemaking.
    (c) EPA may set the upper limit during rulemaking at a level below 
the default level specified in paragraph (a) of this section if we 
determine that a lower level is achievable by all engines.

0
3. Section 86.1105-87 is amended by revising paragraph (e) and adding 
paragraph (j) to read as follows:


Sec.  86.1105-87  Emission standards for which nonconformance penalties 
are available.

* * * * *
    (e) The values of COC50, COC90, and MC50 in paragraphs (a) and (b) 
of this section are expressed in December 1984 dollars. The values of 
COC50, COC90, and MC50 in paragraphs (c) and (d) of this section are 
expressed in December 1989 dollars. The values of COC50, COC90, and 
MC50 in paragraph (f) of this section are expressed in December 1991 
dollars. The values of COC50, COC90, and MC50 in paragraphs (g) and (h) 
of this section are expressed in December 1994 dollars. The values of 
COC50, COC90, and MC50 in paragraph (i) of this section are expressed 
in December 2001 dollars. The values of COC50, COC90, and MC50 in 
paragraph (j) of this section are expressed in December 2011 dollars. 
These values shall be adjusted for inflation to dollars as of January 
of the calendar year preceding the model year in which the NCP is first 
available by using the change in the overall Consumer Price Index, and 
rounded to the nearest whole dollar in accordance with ASTM E29-67 
(reapproved 1980), Standard Recommended Practice for Indicating Which 
Places of Figures are to be Considered Significant in Specified 
Limiting Values. This method was approved by the Director of the 
Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. 
This document is available from ASTM International, 100 Barr Harbor 
Drive, P.O. Box C700, West Conshohocken, PA 19428-2959, and is also 
available for inspection as part of Docket A-91-06, located at the U.S. 
EPA, Air and Radiation Docket and Information Center, 1301 Constitution 
Ave., NW., Room 3334, EPA West Building, Washington, DC 20004, (202) 
202-1744or at the National Archives and Records Administration (NARA). 
For information on the availability of this material at NARA, call 
(202) 741-6030, or go to:  http://www.archives.gov/federal-register/cfr/ibr-locations.html. These materials are incorporated as they exist 
on the date of the approval and a notice of any change in these 
materials will be published in the Federal Register.
* * * * *
    (j) Effective in the 2012 and 2013 model years, NCPs will be 
available for the following emission standard:
    (1) Diesel heavy-duty engine oxides of nitrogen standard of 0.20 
grams per brake horsepower-hour in Sec.  86.007-11(a)(1)(i).
    (i) [Reserved].
    (ii) For heavy heavy-duty diesel engines:
    (A) The following values shall be used to calculate an NCP in 
accordance with Sec.  86.1113-87(a):
    (1) COC50: $1,561.
    (2) COC90: $1,919.
    (3) MC50: $5,203 per gram per brake horsepower-hour NOX.
    (4) F: 1.23.
    (5) UL: 0.50 grams per brake horsepower-hour NOX.
    (B) The following factor shall be used to calculate the engineering 
and development component of the NCP for the standard set forth in 
Sec.  86.007-11(a)(1)(i) in accordance with Sec.  86.1113-87(h): 0.004.
    (2) Manufacturers may not generate emission credits for any 
pollutant from engines for which the manufacturer pays an NCP.
    (3) The penalty shall be adjusted annually as specified in Sec.  
86.1113-87 with 2012 as the first year. Note that this means 
AAF2012 is equal to 1.

[FR Doc. 2012-1937 Filed 1-30-12; 8:45 am]
BILLING CODE 6560-50-P


