GUIDANCE FOR MOBILE EMISSION CREDIT
     GENERATION BY URBAN BUSES

          January, 1993

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      PROGRAM FOR GENERATION OF EMISSION CREDITS BY URBAN BUSES

  I .   Foreword

      The Clean Air Act, as amended in 1990, mandates market-based
  approaches in certain  Federal programs  and encourages  the use of
  such approaches at the  Federal, State, and local  levels, as well as
  by individual sources,  to facilitate the attainment of the mandated
  milestones and goals of Title I  of  the  Clean Air Act  Amendments.
  In response to the Act, the Agency  has  proposed and issued rules
  and  guidance that incorporate the use of market-based measures in
  Federal program areas  such as acid  rain  reduction and  clean fuel
  fleet vehicle purchases.

      To facilitate the development of market-based programs that go
 beyond  such   Federal  programs,   the   Agency  is   developina
 comprehensive rules and guidance  for States and individual sources
 to follow  in designing  and adopting market-based programs in State
 implementation Plans   (SIP' a).    The  pending Economic  Incentive
 ^ofT" (  iC'P)  UleS draw  upon the ^neral principles found in the
 1986  Emission Trading Policy Statement (see 51 FR 43631 December 4
 1986) while providing a broad framework for the development and use
 of a  wide  variety  of market-based control strategies.   For States
 to  take credit in their SIP's for emission reductions  based upon
 such  strategies,   reductions  must be quantifiable,   enforceable,
 surplus to other Federal  and  State retirements,  permanent within
 the timeframe specified by the  program,  and  consistent  with all
 ^£er0s?     ry and Federal regulatory requirements.   The proposed
 !JL^"i*a-arH  aPPl^le to  aH  types  of  sources  including
 stationary  and  mobile  sources  and  define  general   regulatory
 elements (e.g., program baseline,  auditing procedures, enforcement
        mt    Sh°Uld be included ±« the design of market-based
     In  addition to these broadly  applicable general rules,  the
Agency is also developing a more narrowly focused document entitled
 Guidance  on  the Generation of  Mobile Source Emission  Reduction
Credits  specifically for the development of market-based programs
involving the use of emission reduction credits generated by mobile
sources.   Such mobile  source emission reduction credits  (MERC's)
can be generated from  surplus  emission reductions over  and  above
Federal mobile source program requirements  and can potentially be
used to substitute for  stationary emission reduction  requirements
The general guidance on  the  generation of MERC's mentioned  above
addresses issues unique to emission reduction credits generated by
mobile sources,  including the  calculation of emissions  baselines
tor participating  sources,  the  projection of  future  emissions
levels, and the time-averaging of emission  reduction  credits that
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     To  exemplify how MERC's  can be  generated from  a  specific
category of mobile sources,  the  following guidance addresses clean
technology  urban buses,  and illustrates  how  surplus  purchases
 (i.e., beyond Federal program requirements)  can be used to generate
emission credits  in a mobile-stationary source trading  program.
While market-based mobile source programs must be consistent with
the  Economic Incentive  Program Rules  and the Guidance  on  the
Generation of Mobile Source Emission  Reduction Credits,  EPA does
not  intend  to  limit  flexibility  and  innovation  beyond  the
requirements found in these documents.  The following guidance is
intended  to  identify  key  elements  in the  design  of  a clean
technology urban  bus emission credit generation program,  not to
limit state initiative,  creativity,  or flexibility in developing a
program which best  meets  the state's needs within  the limits of
good environmental policy.

II.  Introduction

     EPA is developing innovative methods to encourage low emitting
and clean fuel technologies.  As part of this initiative, market-
based incentive  programs  are an effective means to promote this
technology and  to achieve  the  accompanying  emission reductions.
The overall regulatory burden is reduced because participation by
industry is voluntary.  Furthermore,  it is reasonable to believe
that  in  a broad  sense  the  reductions  are cost effective since
industry would not become  involved in  the program if participation
was not viewed as economically attractive.  Finally,  by a voluntary
shifting of  the compliance burden  to the  party with  the  lowest
cost, market based programs can reduce the cost of compliance for
the industry as a whole.

     Urban buses represent a significant source of ground  level NOx
and PM emissions within cities.   To help address this problem EPA
has two programs  to reduce the emissions  from urban  buses.  The
first, which applies to urban bus engine manufacturers,  involves
stringent NOx and PM emission standards  for new urban bus engines.
These emission standards can be  met  on an every engine basis or in
combination with  credit  programs such  as  averaging,  banking and
trading.   The second program, which is presently in the proposal
phase, applies  to  fleet operators and  involves in-use urban bus
engines.    This  program requires either application  of retrofit
technology to  reduce emissions  of  individual  rebuilt urban bus
engines or a  fleet  emissions averaging program to reduce  overall
fleet emissions from in-use urban bus engines  through one  or more
of several approaches.

     These emission  standards and other program requirements can
potentially be met  through  the  use  of either improved engine and
aftertreatment technology or the use  of clean  fuels.  For  ease of
reference  in  this document,  these  methods will  collectively be

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 referred to as "clean technologies".  Both approaches show promise
 for  providing additional emission  reductions,  but as  with most
 emerging technologies they are somewhat more expensive than current
 diesel-powered  urban  buses.    In  order  to provide  urban  bus
 operators with incentive to  purchase  clean technology urban buses,
 EPA  has developed a  program which  will allow trading  of  excess
 urban  bus  emission reductions  (credits)  with other sources.  As
 background, this document will describe the regulatory programs and
 current  credit  exchange  programs  for  urban buses as  mentioned
 above,  and then develop a credit generation program for new urban
 buses and bus fleets which exceed emission requirements using clean
 technologies.


 Ill.  Description of Currant Program*

A.   Averaging,  Trading and Banking Programs for Certification

     The current  averaging,  banking and  trading  (AB&T) programs
 apply  to  NOx and  PM emissions  from heavy  duty  engines  (HDEs) .
Under these  programs,  credits  may be  generated  and used only by
manufacturers of new engines.   Urban bus engines  meet the same HC,
CO, and NOx emission standards as other HDEs and are considered the
 same as any other HDE within their primary  intended service:class
 for NOx AB&T purposes.  However,  there  is a  unique  PM standard for
urban bus engines and PM AB&T programs  are thus restricted  to that
 specialized  subgroup.   Cross-fuel  credit  exchanges  (AB&T)  are
allowed between  petroleum and methanol-fueled urban bus  engines and
EPA recently proposed to extend this program to the gaseous fuels
 (CNG,  LNG,  and  LPG) .  The  trading  and banking  rule  lists  the
equation for calculation of credits:

     Cr = (Std-FEL)(CF)(UL)(Prod),  where

          Cr = total mass of emissions  credit for  family (grams)
         Std = NOx or PM emission standard  in g/bhp-hr
         FEL = Family emission limit in g/bhp-hr
          CF = Conversion factor for g/bhp-hr to g/mile;
               CF = BSFC x Fuel Economy x Fuel Density
          UL = useful life in miles
        Prod = Number of engines of the particular  family produced

     In summary, under this  program urban bus engine manufacturers
can generate  NOx  and/or PM credits  for .use in current  or future
certification or trading to other engine manufacturers.  However,
their use is currently limited to new  engine  certification.

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 B.   Retrofit/Rebuild

      EPA has proposed an urban bus retrofit/rebuild program aimed
 at reducing emissions from older urban buses  (57 FR 33141,  July 27,
 1992).   As required by the Clean Air Act (CAA),  the proposed urban
 bus retrofit/rebuild program would apply to 1,993 and earlier model
 year urban buses whose engines are rebuilt  or  replaced beginning
 January 1,  1995.  The CAA limits the program requirements  to urban
 buses  operated in  metropolitan areas with  a  1980 population  of
 750,000 or  more.   EPA  estimates  that nearly  80  percent  of  the
 nation's urban buses in approximately 100 cities could be  affected
 by the  program.   (See  Table 1)

     As proposed by EPA, urban bus operators would be allowed to
 choose   between  two   different   retrofit/rebuild  options   to
 demonstrate compliance.

     Under  the first option as  proposed, a bus  operator's  engines
 would have  to meet a 0.10 grams per brake-horsepower (g/bhp-hr)  FM
 emission standard at  time of  rebuild or replacement,  as  long  as
 aftertreatment  equipment certified to meet the  standard  can  be
 purchased for no more than $5,000.   If no aftertreatment equipment
 13  available that meets  the 0.10 g/bhp-hr PM standard at. the  cost
 limit requirements,  a bus operator would  be required to  install
 equipment  that  has  been certified  to  achieve  a  25  percent  or
 greater emission reduction on that  engine as long as such equipment
 can be purchased for no more than $2,000.  The 25 percent emission
 reduction is based on the original  certification emission standard
 for the engine.   If  not certified to a PM standard,  then the engine
must be rebuilt to the original configuration.   If  no equipment  is
available that meets these  requirements, a bus operator would  be
required to rebuild an engine  to its original configuration or a
configuration  that has   lower PM  emissions  than  the  original
configuration.

     The second retrofit/rebuild option would be a fleet  average
program that is  designed to  yield an emission reduction equivalent
to that expected from the performance based  (retrofit technology)
option  described above.   Under the  second option,   using the
approach spelled out by EPA in  the aforementioned proposal, a bus
fleet operator would calculate  an annual target level for his fleet
 (TLF)  for  PM  emissions based on  the  fleet makeup  and  the
availability of control options. The fleet operator could then use
any combination  of certified retrofit  technology, replacement with
used lower  emitting urban bus  engines, and early retirement  of
their urban buses such that  the average fleet level  attained (FLA)
for PM  emissions  is at or below the  required  target level  (TLF)
noted above.

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     The final rule will  include these points,  but may make changes
to provide for costs other than equipment which transit operators
mu.st consider.

     These two programs  serve as the starting basis for a program
to  permit  credit  generation  for  urban buses.   This program  is
discussed below.


IV.  Emission Credit Generation Program for Urban Buses

A.   Overview

     Under this  program, operators  of urban buses  may generate
credits in two ways .  The first stems from the averaging, trading
and  banking  regulations  and  applies to  purchases of  new urban
buses.  The  second stems from the retrofit/rebuild requirements,
and applies to any retrofitted clean technology bus which is used
to meet either the performance based option or the TLF option for
complying with the retrofit/rebuild requirements.  The specifics of
these programs are discussed below.

B.   Purchase of New Urban Buses

     Any clean technology urban bus which is purchased by a fleet
operator may receive NOx and/or PM emission credits in the amount
that the urban  bus has  lower emissions  than  the then applicable
NOx/PM urban bus emission standards.  As is discussed below, credit
calculations would be based on actual VMT for  the clean technology
bus in any given  year.   These emission credits would accrue over
the bus useful life (until retirement or rebuild) .  If there are no
rebuilds involved, credit generation could not exceed the average
urban bus lifetime of fifteen years  (see  Table  2) .   However,  in
most cases the  first rebuild occurs after  5  years of use (about
220,000 miles);  after this the bus must qualify for credits under
the retrofit/rebuild program.  Regardless of when retirement or any
subsequent  rebuild  occurs,  credit  generation is  based  on  the
presumption that the bus is meeting the emission standards at all
times prior to that point.
         additional  provision  is  suggested to  promote the early
retirement of higher emitting urban buses.  Referring  to the data
in Table 2, if a new clean technology urban bus is used to  replace
an older urban bus which is retired early, the clean technology bus
could  generate emission  credits  in the  amount  that  the clean
technology bus NOx and PM emissions are lower than the  retired bus
NOx and  PM emissions.   These benefits would accrue for the years
that the old urban bus would have been  in  operation.

     Under this  approach, credit  generation  would be  calculated
differently for the years when the new  bus life overlaps with the
presumed remaining life of the  old bus than for the years afterward

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when the old  bus  is presumed to have been  retired.   This method
requires reliance on the expected VMT of the old urban bus  as shown
in Table 2 and the credit calculation methodology as explained in
Section VII below.   For the overlapping years credit calculation
would  involve two  steps.    The  first step  would depend on the
difference between the emission standard applicable to the old bus
and the new bus for the overlapping miles of Table 2.  The second
step, 'if  applicable,  would depend on the  difference between the
emission standard applicable to the new bus and the family  emission
limit  of  the  new bus  and the actual  mileage  of  the  new bus.
Credits for the remainder  of the new bus life (after the  old bus is
presumed to have been retired) , would be calculated as in the  first
paragraph of this section using actual new bus VMT.

     Of course, as is mentioned in  element  9  below, credits cannot
be generated under this method if the retired bus is  also used to
achieve compliance under the requirements of the  retrofit/rebuild
program.
                             TABLE 2

           EXPECTED URBAN BUS VMT BY YEAR OF OPERATION
YEAR OF OPERATION
1
2
3
4
5*
6
7
8*
9
10
11*
12
13
14
15
EXPECTED VMT
45,000
4S,000
' 44,000
42,000
41,000
38,000
36,000
35,000
33,000
29,000
25,000
25,000
	 . 25,000
25,000
25,000
* «xp»ct«d rebuild point

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 C.   1995 Retrofit/Rebuild Urban Buses

      As   mentioned   above,  under   the  CAA   1995  urban   bus
 rebuild/retrofit programs,  there are two options for compliance.

      The first,  the retrofit/rebuild option,  is a performance based
 program which is implemented on a per bus basis.  Under this option
 an urban bus operator may receive emission credits for retrofitting
 an old urban  bus using clean technology.  This program would apply
 to both  PM and NOx.   Emission credits would be  the amount  the
 individual urban bus was below  the 1995 retrofit/rebuild emission
 PM standard and the  original  configuration NOx emission  standard.
 Credit calculations  would use the actual VMT of the bus  as  it is
 used,  not Table 2.

      The second  retrofit/rebuild  option  is  an averaging  program
 that   is   set  up  to provide  the  bus  fleet operators  greater
 compliance flexibility while  still yielding  an emission  reduction
 equivalent to  that  expected from the performance  based  option
 outlined above.  Under  the second option,  a bus  operator  would
 calculate an annual target level for a fleet  (TLF)  for PM  emissions
 based  on the makeup of  the operator's  urban bus  fleet.    The  bus
 operator  could use any combination of certified retrofit  equipment
 (clean fuel or  low  emitting  technology)  and early retirement  of
 their  urban buses such that the average fleet level attained (FLA)
 for PM emissions is at or below  the target level (TLF)  noted above.

     Under this  option,  it  is possible that a company may elect to
 surpass their TLF requirement by retrefitting/rebuilding additional
 urban bus engines using  clean technology or  other means.   If this
 is  the case,   and the company  is  below its  TLF,  then any  clean
 technology urban buses in the fleet, after the fleet  meets the  TLF
 emission  level, may be used  for  credit generation by declaring that
 the extra clean technology buses are not to be included in the  TLF
 calculation (a TLF opt-out bus).  However,  the fleet  must meet  its
 TLF_ with  the  remainder  of the  buses  in  the  fleet.   This  is
 equivalent to allocating credits on a per engine basis as  under  the
 performance based option above  and credits for opt-out buses will
 be calculated  similarly.  As was  the  case  for that option, this
program would only apply to PM  and NOx  emissions.

     Under  either  option,  credits  are  calculated  using  the
 appropriate actual VMT and  emission differences.   Table  2 values
will not be used.

     In summary,  there are  three ways  in which urban  bus  engines
 can potentially generate NOx and PM emission  credits:

  -  purchase of new, clean  technology  urban  bus engines  certified
     to levels below the emission  standards.

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      retrofit  of in-use urban bus  engines  with clean technology
      kits certified to levels below the applicable retrofit/rebuild
      PM emission  standards  and  the  original  configuration  NOx
      standard.

      TLF opt-out urban bus engines using retrofit clean technology
      certified  to  below applicable standards  as above for PM and
      NOx.

V.    Program Elements

      In  an  overall  sense,  credits  for  urban  bus  NOx  and  PM
emissions will be generated as discussed above.   Suggested elements
of  a program that  would  allow  clean technology urban buses  to
generate emission  credits  are  described below.   It  will be up to
the states to develop a-proposal  to integrate the overall concepts
described above and these general elements into a specific program.

ELEMENT I.     Credit-generating  urban buses  must be in addition
               to  those required  to  be  purchased  by statute or
               must be certified to lower emission  standards.

     Clean  technology urban  bus  engines  may  generate emission
credits under one  of the three   options  listed above.  Emission
reductions must be  beyond  those  required by the new bus emission
standards or those of the  retrofit/rebuild program.   This element
is necessary to ensure that credits reflect  actual excess emission
reductions.

ELEMENT 2.     Clean  technology   buses   may   operate  on  clean
               alternative fuels or on petroleum-based  fuels

     Since the  focus of this  program is on  allowing the use of
clean technology urban buses to  generate emission  credits, it is
not necessary to require that the .affected urban buses  run on any
particular fuel.  It is only necessary that the urban bus emit at
a level lower  than the  then  applicable urban  bus  PM and/or NOx
emission standard or that required in the retrofit/rebuild program.
At the same time,  it should be  noted that  urban buses which run on
clean alternative fuels  (e.g., electricity, gaseous fuels,  and neat
alcohol) will tend  to be inherently cleaner and thus potentially
generate more emission credits  than those  that run on conventional
petroleum-based  fuels or  fuel blends  relying more on  advanced
emission control technology.

ELEMENT 3.     Clean  alternative   fuel   vehicles   need  not  be
               dedicated fuel vehicles.

     EPA is not averse  to  including dual-fuel, flexible-fuel, or
hybrid electric urban bus  engines  in  a credit generating program.
However, urban buses which  operate  on more than one fuel  complicate
the  calculation of tradeable  credits.    Since different  fuels

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 produce different emission rates,  it  is necessary to verify how
 much time the urban bus operates on  each  fuel in order to  calculate
 the correct amount of emission reduction.

      Therefore,  any program that includes dual-fuel, flexible- fuel,
 or hybrid electric vehicles must include  a provision to ensure that
 vehicle miles  on each fuel can be calculated reliably.   This will
 ensure that the calculation of the credit more closely reflects the
 actual reduction in emissions from operation on both fuels.  One
 way  to ensure  accurate  reporting is  by  equipping urban  bus
 refueling  facilities  with "fuel keys,"  which act  to  track,  by
 computer,  the fuel  type dispensed to each  urban bus.    Such a
 system can be expanded to permit  coding  of appropriate mileage
 records,  to enable  accurate calculation  of vehicle miles traveled
 on  each fuel.   Any system which accurately distinguishes between
 the different fuels  used  and vehicle miles  travelled  would be
 acceptable.  The ideal system would have minimal reliance on human
 factors.  Fuel and/or additive purchase receipts adequate to cover
 the mileage claimed may  also  be required.

 ELEMENT .4.     Urban  buses  can be new  or converted.
     _     converted urban buses/engines  are  eligible to generate
credits  as  long  as  they comply  with  the  same  provisions  and
emission    standards    which   apply   to   new   urban   buses.
Retrofit /rebuild conversions must be certified in  accordance with
the provisions of the urban bus retrofit/rebuild program and meet
the appropriate emission  standards and durability  requirements.

ELEMENT 5.     Urban buses should pass an annual I/M test.

     A test is desirable to insure the vehicle is running correctly
in use.   Urban buses  should pass an annual emissions performance
check where available.  States may require a decentralized testing
program if  they desire, or  require other means,  such as in house
testing, to insure compliance.

ELEMENT 6.     Credits will be calculated annually, preferably on
               a calendar year basis .

     This element  is  necessary to ensure that  the generation of
credits coincides on  a  time  period basis with the purchase, use,
and compliance decisions  which normally  occur.   The normal model
year for heavy-duty engines  is the calendar  year and credits  for
trading can easily be determined on a yearly basis.  Furthermore,
the parameters for that year should be the same as used in credit
use  programs to  simplify enforcement,  ensure consistency,   and
discourage  gaming.    Therefore,  for  the. purpose  of calculating
emission reduction credits, vehicle miles traveled will be measured
from January  1 through  December 31 of each  year  for each credit
generating vehicle in service,  and the  credit will be  calculated

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 for that period.  However, other annual periods would probably be
 acceptable depending on state preference.

 ELEMENT 7.     Credits shall be calculated on a pollutant specific
               basis.

     This program will focus on reductions in emissions from NOx,
 and PM.  Testing must be conducted to show that no other regulated
 pollutant emission rates increase; in cases of pollutants for which
 there  is no  standard,  emissions must not be worse  than  those of
 urban bus engines of the  model  year  not  in  the program.   Credits
 may not be generated for urban bus HC and CO emissions due to the
 fact that HC  and CO emissions from current diesel urban bus engines
 (the dominant  technology now  in  use)  are  already  significantly
 below the respective standards.


 ELEMENT 8.     Credits can only be generated by urban buses which
               states choose to include in the program.

     Urban buses are a special  sub-category of heavy-duty engines.
 The federal emission standards apply to all urban buses while the
 retrofit/rebuild program  applies only  to urban bus  fleets in the
 larger metropolitan  areas.   States  have the  option  of choosing
whether to participate  in the program and whether  to extend the
 credit  program  to  all  urban buses  used  within their  state
 regardless of whether  or not they are in an  area covered by the
 retrofit/rebuild program.  This potentially increases the pool of
 credits available.

ELEMENT 9.     Urban bus  engines  used in the  certification AB&T
               programs   or  in TLF  calculations   cannot  also
               generate credits for trading.

     The AB&T credit exchange programs are designed to be used by
 engine  manufacturers  during certification.    To  avoid . double-
 counting,  new clean  technology urban  bus engines which generate
 credits for certification cannot also be claimed by the bus fleet
 operators to generate  credits for  this trading program.   The
 ownership of these credits must be  determined between the engine
manufacturer and the bus  fleet owner and records kept.

 Retrofit clean fuel technology urban bus  engines cannot be used in
 the TLF calculation and also generate  credits under this program.
 To generate credits they must be declared as TLF opt-out engines.

 VI.  Conversion Factor Requirements

     Credit  generation  and transactions will  likely  be based on
 mass  emissions.   However,  heavy-duty  engine testing produces
 emission rates  in terms  of g/bhp-hr.   These emission  rates in
 g/bhp-hr need to be converted  into  g/mile  figures  to facilitate

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calculating the equivalent mass of emission reductions for purposes
of trading with other sources.  Thus bhp-hr/mile conversion factors
need to be developed for vehicle/engine configurations which are to
be used to generate credits.   Because the bhp-hr/mile  conversion
factor is engine specific,  it must be developed experimentally by
testing.  For new or retrofit/rebuild urban bus engines using clean
technology, this  calculation may be  done using the  information
developed as part  of the  certification process as is prescribed in
the heavy-duty AB&T programs.

VII.  Cradit Calculation

     Credits will  be  calculated based  on  the  number of  miles
traveled by each vehicle each year, adjusted  by the degree to which
the vehicle is cleaner than a conventional vehicle.   States  may          c]
calculate credits in one of two  ways:   projected or year-end,  as          3|
described below.   A state's choice of method will  depend on  the
needs of its program.  However, under either  method, the state must
have a method to verify that credits given reflect actual emissions
savings.

     The  projection  method  of  credit  calculation ensures  that
credits  are used during   the  same  year  they  are  generated.
According to this method, credits are estimated and allocated at
the beginning of the year they are generated, based on an estimate
of how many miles  the vehicle will travel that year.  Then, at the
end of  the year,  the  states  must  follow up with  a verification
procedure based on actual vehicle miles traveled,  to verify that
estimated  emission  reductions  are  the  same  actual  emission
reductions.  States using this  method must provide a  remedy to
correct estimation errors
     The year-end method of credit calculation can be used to avoid
the extra burden and paperwork associated  with the verification
procedure required by the first method.   In the year-end'method,         jj
states calculate and allocate credits at the end of the year, based         |f
on actual vehicle  miles traveled.   Under  this method,  emission         It
credits are used during the year after they are generated.                &
                          . .   . '                                            H
     Under either program, credits are to be calculated  according
to the following formula, in grams per year of each pollutant.  For
the two  different  methods of calculation,  VMT represents either
estimated or actual mileage, depending on which method is  used and,
if the  first  method is  used,  whether the  calculation  is  the
beginning of the year estimate or the year-end  verification.

     To calculate the credits generated by the purchase of a new
urban bus or retrofit/rebuild of  an  old- urban bus,  the  following
formula will be applied for each pollutant.
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       IU  x  [(engine imp) x CF x VMT] - credit [grams/year]

               where

      (engine  imp) = (applicable   NOx/PM   standard)   -   (Family
                    Emission  Limit  to  which  the  urban bus  is
                    actually   certified)    applicable   standard
                    depends  on the  model year  and  whether  the
                    engine  is generating credits  as  a new  or
                    retrofit/rebuild model

             VMT =  vehicle miles traveled in one year  (actual or
                    estimated, depending  on  the  method of credit
                    calculation adopted)

              CF =  conversion factor  (BSFC x  Fuel  Econ x Fuel
                    Density), where
                    BSFC = brake specific fuel consumption

              IU =  adjustment  to   account   for  the  emissions
                    difference    caused  by  calculating  credits
                    based on standards or FELs rather than in use
                    performance

     The heavy-duty engine AB&T program  uses  the  concept of Family
Emission Limit (FEL) as a surrogate for the emission  standard for
credit generating/using engine families.  A similar concept will be
applied here; credits  will  be calculated  based  on the difference
between the emission  standard and  the  FEL not  the difference
between the emission standard and the engine certification level.
Presumably,  the FEL will be greater than the certification level to
account for deterioration, variability,  etc.

     In these calculations it  is necessary to take into account the
emissions performance of buses in use relative to the performance
predicted by the  emission standards/FELs alone.   Changes can occur
for several  reasons.    These  include differences  in  low mileage
targets   with   more    stringent   standards/FELs,   unexpected
deterioration  in   the   emission  control   system  efficiency,
malmaintenance,  hardware defects,  and tampering.    The credits
calculation includes a term (IU) to adjust for the effects of these
factors.  Present best  estimates are that IU should have a value of
0.79 for  NOx  and 0.6  for  PM.   However,  it  should be noted that
there  are only  a  few  certified urban bus  engine  families  and
identifying one NOx and PM value  to apply to the entire group is
problematic especially if the  potential exists for a broad range in
values  depending on the  fuel or  technology used. As  more data
becomes available these values are subject to change.

     When electric vehicles  are  used,  the credit calculation may
need to be adjusted to account for additional NOx and  PM emissions
related to generating electricity.  Such a calculation will need to

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take into consideration how electricity is generated in that area.
It will be up to the affected states to determine the size of the
offset, depending on local electricity generating factors.

VIII.     Special Issues

     A trading program such as the one described in this  document
poses at  least  two  special problems.   The first  is  that credits
could be given for an urban bus that does not actually have reduced
emissions.   The second is  the  case when  urban buses  are driven
additional miles to generate extra credits.

     The first case, when an urban bus is given credits even though
it does not have reduced emissions,  is the more serious  problem.
This may occur if the bus is not properly  maintained and/or it is
defective.  Since it is proposed that credits be calculated based
on the projected in-use emission  levels derived in part  from the
standards to  which the engine is  certified,  and not on actual
emissions from an emission test on each engine, this problem would
be discovered  only  as  a result of emission  tests/inspections of
that urban bus configuration.

     While urban bus emission failures would seriously undermine
the credit program, EPA does  not  believe  it  will occur at such a
rate that more than annual tests should be retired.  All  new 1994
and later bus engine families  will be part  of an EPA in  use testing
program as required by the Clean Air Act.   Since urban buses will
ideally be subject  to  some in use  test, EPA believes  that it is
unlikely that credits would be allocated for  urban buses that fail
to reduce emissions.   Credits are calculated  annually  and most
emission  failures would be brought to the attention of the owner
during that  year through  the test programs.   In cases  where an
urban bus configuration fails an  emission test/inspection, those
urban buses would either not be allocated credits for that year, or
would be  allocated a prorated share of credits  based on actual
emissions.   In  cases  where  a formal state I\M  program is not
available, a substitute  program   may  be  acceptable.    Similarly
emission  credits would  need  to   be  adjusted  if the  engine is
involved  in an emission recall program.

     EPA  believes  that the second .case,  where  a bus is driven
additional miles to generate credits, is  unlikely to  occur.   The
additional costs of generating those credits,  in both  fuel  and
time, may not be worth the extra  credits generated.  Furthermore,
if  urban  bus  operators   allocate more  miles  to  their  credit
generating bases and fewer to their other  buses for the purpose of
generating more credits, this is in keeping with the spirit of both
programs,  which  is to  generate  fewer  emissions.    Urban  bus
operators that  adopt  this  strategy are  entitled  to the  extra
credits they generate.
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         However,  to ensure  against  misrepresentations,  states may
    consider comparing miles  traveled  on a  year-to-year basis, to
    detect unlikely  increases in number of miles traveled.  Audits of
    mileage and fuel use  records may  also  be  used  as  a  check  against
    tampered odometers on vehicles.

    IX.   Administration of th« Program

         As noted  above,  states would be  required to  design and
    administer their own programs.  However, EPA advises that all state
    programs contain elements and methods of  calculation similar to
    those described above to ensure that emission reductions are being
    achieved.   If  a state  does  not  follow  this  guidance,   it  must
    demonstrate that the emission reductions  are achieved.

         Finally,  it should be  noted that the  states  in which the
    program will be  run have the ultimate  responsibility  of  ensuring
    that  both the  urban bus  credit generating provisions  and trading
    programs  are  implemented in  accordance  with their  respective
    requirements.
r
                              TABLE -  1
   Areas Affected by the Urban Bus Retrofit/Rebuild Program
Area
          1'980
          Population
Albany-Schenectady-Troy N.Y.
Atlanta (Marietta) , Ga.
Baltimore, Md.
Birmingham (Bessemer) , Al.
Boston-Lawrence-Salem Ma. -N.H. CMSA
- Boston (Cambridge, Framingluun, Lynn, Waltham) PMSA
- Brockton PMSA
- Lawrence-Haverhill PMSA
- Lowell PMSA
- Nashua N.H. PMSA
T- Salem-Glouchest«r PMSA
Buffalo-Niagra Falls, N.Y. CMSA
- Buffalo PMSA
- Niagra Falls PMSA
Charlotte-Gastonia-Rock Hill
N.C.-S.C.
835,880
2,138,231
2,199,531
883,946
3,971,376
1,242,826
971,391
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Chicago-Gary-Lake 111. -Ind. -Wis . CMSA
- Aurora-Elgin 111. PMSA
- Chicago (Evanston, Chicago Heights) 111. PMSA
- Gary-Hammond (East Chicago) , Ind. PMSA
- Joliet 111. PMSA
Kenosha, Wis. PMSA
Lake County (North Chicago, Waukegan only)
Cincinnati, Oh. -Ky . -Ind. CMSA
- Cincinnati, Oh.-Ky.-Ind. PMSA
- Hamilton-Middletown, Oh. PMSA
Cleveland- Akron-Lorraine, Oh. CMSA
- Akron (Barberton, Kent) PMSA
- Cleveland PMSA
- Lorain-Elyria, PMSA
Columbus, Oh.
Dallas-Forth Worth Tx. CMSA
- Dallas (Denton, Irving) PMSA
- Fort Worth-Arlington PMSA
Dayton-Springfield Oh.
Denver-Boulder, Co. CMSA
- Coulder— Longmont PMSA
- Denver PMSA .
Detroit-Ann Arbor, Mi. CMSA
- Ann Arbor PMSA
- Detroit (Dearborn, Pontiac, Port Huron) PMSA
Greensboro-Winston-Salem-High Point, N.C.
Hartford-New Britain-Middletown Ct. CMSA
- Bristol PMSA
- Hartford PMSA
- Middletown PMSA
- New Britain PMSA
Honolulu, Hawaii
Houston-Galveston-Brazoria, Tx. CMSA
- Brazoria PMSA
- Galveston-Texas City PMSA
- Houston (Baytotm) PMSA
Indianapolis/ Ind.
Kansas City, Mo.-Ks. CMSA
- Kansas City (L«*tr«n*orth, Olathe) , Ks . PMSA
- Kansas City, Mo. PMSA
Los Angeles-Anaheim-Riverside, Ca. CMSA
- Anaheim-Santa Ana PMSA
- Los Angeles-Long Beach (Burbank, Pasedena, Pomona, Palm
Springs) PMSA
- Oxnard-Ventura PMSA
- Riverside-San Bernardino PMSA
Louisville, Ky.-lnd.
7,937,326
1,401,491
2,834,062
1,243,833
2,930,516
942,083
1,618,461
4,752,820
851,851
1,013,508
762,565
3,101,293
1,166,575
1,433,458
11,497,568
956,756
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                                       I
Memphis, Tenn. -Ark. -Miss .
Miami-Fort Lauderdale, Fla. CMSA
- Fort Lauderdale-Hollywood-Pompano Beach PMSA
- Miami-Haileah (Miami Beach) PMSA
Milwaukee-Facine (Waukesha) , Wi . CMSA
- Milwaukee PMSA
- Racine PMSA
Minneapolis-St. Paul, Mn.-Wi.
Nashville, Tn.
New Haven-Waterbury-Meriden, Ct.
New Orleans (Slidell) , La.
New York-Northern New Jersey-Long Island, N.Y.-
N.J.-Ct.
- Bergen-Paasaic, N.J. PMSA
- Bridgeport-Milford, Ct . PMSA
- Danbury, Ct. PMSA
- Jersey City (Hoboken) , N.J. PMSA
- Middleaex-Someraet-Hunterdon (Mew Bruswick, Perth Amboy) ,
N.J. PMSA
- Monmouth-Ocean, N.J. PMSA
- Nassau-Suffolk, N.J. PMSA
- New York, N.Y. PMSA
- Newark, N.J. PMSA
- Norwalk, Ct . PMSA
- Orange County, PMSA
- Stamford, Ct . PMSA
Norfolk-Virginia Beach-Newport News (Hampton,
Portsmouth, Suffolk) , Va.
Oklahoma City (Norman, Shawnee) , Okla.
Philadelphia-Wilmington-Trenton, Pa. -N.J. -Del. -
Md. CMSA
- Philadelphia (Norristown) , Pa. -N.J. PMSA
- Trenton (Camden) , N.J. PMSA
- Vineland-Milville-Bridgeport, N.J. PMSA
- Wilmington, Del.-N. J.-Md. PMSA
Pheonix (Mesa-Scottsdale-Tempe) , Az.
Pittsburg-Beaver Valley, Pa. CMSA
- Beaver County PMSA
- Pittsburg (McK««aport) PMSA
Port land- Vancouver, Or.-Wa. CMSA
- Portland, Or. PMSA
- Vancouver, Wa. PMSA
Providence-Pawtucket-Fall River, R.I. -Ma. CMSA
- Fall River, R.I. -Ma. PMSA
- Pawtucket-Woonsocket-Attleboro, R.I. -Ma. PMSA
- Providence, R.I. PMSA
913,472
2,643,981
1,570,275
2,137,133
850,505
761,337
1,256,256
17,539,324
1,160,311
860,969
5,680,768
1,509,052
2,423,311
1,297,926
1,083,139
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Richmond-Petersburg, Va.
Rochester, N.Y.
Sacramento, Ca.
St. Louis-East St. Louis-Alton, Mo. -111. CMSA
- Alton-Granite City, 111. PMSA
- East St. Louis-Belleville, 111. PMSA
- St. Louis (St. Charles), Mo. -111. PMSA
Salt Lake City-Ogden, Utah
San Antonio, Tx.
San Diego (Escondido) , Ca.
San Francisco-Oakland-San Jose, Ca. CMSA
- Oakland (Berkely, Livermore) PMSA
- San Francisco PMSA
- San Jose (Palo Alto) PMSA
- Santa Cruz PMSA
- Santa Rose-Petaluma PMSA
- Vallejo-Fairfield-Mapa PMSA
Seattle-Tacoma, Wa. CMSA
- Seattle (Auburn, Everett) PMSA
- Tacoma PMSA
Tampa-St.-Petersburg-Clearwater Fla.
Washington, D.C.-Md.-Va.
- Washington D.C.
- Frederick Md.
- Arlington Vi.

761,311
971,230
1,099,814
2,346,998
910,220
1,071,954
1,861,840
3,606,100
2,093,112
1,613,603
3,250,822

Note:. Affected Areas Include all consolidated metropolitan statistical areas
(CMSAs) or metropolitan statistical areas  (MSAs)  with a  1980  population of
750,000 or more.

G:\srpb\passavan\bus.jl3
Last reviewed by G. Passavant:1/13/93
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