United States       Air and Radiation       EPA420-R-00-027
          Environmental Protection                December 2000
          Agency
vxEPA    Heavy-Duty Engine and
          Vehicle Standards and
          Highway Diesel Fuel
          Sulfur Control
          Requirements:

          Response to Comments
                                > Printed on Recycled Paper

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0 CDA
EPA420-R-00-027
  December 2000
    Heavy-Duty Engine and Vehicle Standards and
 Highway Diesel Fuel Sulfur Control Requirements:

               Response to Comments
                 Assessment and Standards Division
                Office of Transportation and Air Quality
                U.S. Environmental Protection Agency

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                                                               December 21, 2000
                     RESPONSE TO COMMENTS DOCUMENT

                    Heavy Duty Engine and Vehicle Standards and
                   Highway Diesel Fuel Sulfur Control Requirements

                                Table of Contents
ISSUE 1: GENERAL POSITION STATEMENTS	  1-1
      Issue 1.1: Supports Rule  	  1-1
      Issue 1.2: Opposes Rule (Engine/Vehicle, Fuel or Both)  	  1-9
      Issue 1.3: Timing of Rule	  1-14

ISSUE 2: ENVIRONMENTAL AND AIR QUALITY ISSUES 	  2-1
      Issue 2.1: Public Health & Welfare Concerns	  2-1
      Issue 2.2: Air Quality Monitoring Data & Modeling Projections	  2-44
      Issue 2.3: Heavy-duty Vehicle Contribution	  2-83
      Issue 2.4: Anticipated Emission Benefits	  2-91

ISSUE 3: HEAVY DUTY ENGINE/VEHICLE STANDARDS	  3-1
      Issue 3.1: Engine and Vehicle Standards  	  3-1
             Issue 3.1.1:  Engine Exhaust Standards  	  3-1
             Issue 3.1.2:  Gasoline Vehicle Exhaust Standards 	  3-25
             Issue 3.1.3:  Gasoline Evaporative Standards	  3-26
             Issue 3.1.4:  Phase-ins & Implementation Schedules	  3-26
             Issue 3.1.5:  Scope of Standards	  3-42
      Issue 3.2: Technical Feasibility of Engine/Vehicle Standards	  3-45
             Issue 3.2.1:  Diesel Engine Exhaust Standards	  3-45
             Issue 3.2.2:  Gasoline Engine & Vehicle Exhaust Standards  	  3-97
             Issue 3.2.3:  Evaporative Standards	  3-106
      Issue 3.3: Sulfur Impact	  3-107
             Issue 3.3.1:  Sulfur's Effect on PM Trap	  3-107
             Issue 3.3.2:  Sulfur's Effect on NOX Adsorbers	  3-119
             Issue 3.3.3:  Effects of Lubricating Oil Sulfur	  3-120
             Issue 3.3.4:  Other After-treatment Technology	  3-122
             Issue 3.3.5:  Developments in  Sulfur Tolerance   	  3-124
      Issue 3.4: Fuel Economy Impacts 	  3-129
      Issue 3.5: Other Technology (inc. SCR)   	  3-135
      Issue 3.6: Other Issues - Engine and Vehicle Standards 	  3-145
      Issue 3.7: Technology Reassessment	  3-150
             Issue 3.7.1:  NOX  Control Technology Reassessment	  3-150
             Issue 3.7.2:  Diesel Fuel Sulfur Reassessment	  3-154
             Issue 3.7.3:  Role of Non-conformance Penalties 	  3-156
ISSUE 4: DIESEL FUEL STANDARDS	  4-1
      Issue 4.1: Level of Diesel Fuel Sulfur Standard  	  4-1
      Issue 4.2: Form of Standard (cap and/or average) 	 4-30
      Issue 4.3: Schedule  	 4-35
             Issue 4.3.1: Start Date   	 4-35
             Issue 4.3.2: Transition Schedule	 4-48
      Issue 4.4: Exemptions  	 4-50
      Issue 4.5: Fuel Lubricity	 4-50

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                      RESPONSE TO COMMENTS DOCUMENT

                    Heavy Duty Engine and Vehicle Standards and
                   Highway Diesel Fuel Sulfur Control Requirements

                             Table of Contents (cont.)
                                                                             Page

       Issue 4.6: Other Diesel Fuel Issues	  4-57

ISSUE 5: ECONOMIC IMPACT	  5-1
       Issue 5.1: Costs for New Diesel Vehicles 	  5-1
       Issue 5.2: "Learning Curve" Issues  	  5-12
       Issue 5.3: Diesel Vehicle Maintenance Cost Savings	  5-14
       Issue 5.4: Possible Influence of Proposal on HDV Sales	  5-15
       Issue 5.5: Costs for Gasoline Vehicles 	  5-17
       Issue 5.6: [Reserved]	  5-18
       Issue 5.7: Encouraging Innovative Technologies  	  5-18
       Issue 5.8: Costs of Fuel Change  	  5-25
             Issue 5.8.1:  Refinery Costs	  5-25
             Issue 5.8.2:  Cost of Lubricity Additives	  5-53
             Issue 5.8.3:  Distribution Costs	  5-54
             Issue 5.8.4:  Other Fuel Change Costs  	  5-59
       Issue 5.9: Cost Effectiveness of Program	  5-68
       Issue 5.10: Cost-Benefit Analysis  	  5-81

ISSUE 6: ALTERNATIVE PROGRAM OPTIONS 	  6-1
       Issue 6.1: Phase-in Approach  	  6-1
             Issue 6.1.1:  Supports Phase-in Approach (Fuel Standard)  	  6-1
             Issue 6.1.2:  Opposes Phase-in Approach (Fuel Standard)  	  6-4
             Issue 6.1.3:  Misfueling Concerns 	  6-14
             Issue 6.1.4:  Distribution System  Impacts and Costs  	  6-16
             Issue 6.1.5: Availability of 15 ppm Fuel	  6-21
             Issue 6.1.6:  Costs/Cost Savings   	  6-23
       Issue 6.2: Compliance Flexibility Option  	  6-25
             Issue 6.2.2: ABT 	  6-28
       Issue 6.3: Availability Requirements  	  6-34
             Issue 6.3.1:  Refiner-Assured Availability	  6-34
             Issue 6.3.2:  Retailer-Assured Availability  	  6-35
       Issue 6.4: Military Fuels	  6-38
       Issue 6.5: [Reserved]	  6-41
       Issue 6.6: Alaska  	  6-41
             Issue 6.6.1: Inclusion of Alaska in the Nationwide Cap	  6-41
             Issue 6.6.2: Development of an Alternative Transition Plan for Alaska
                      	  6-44
             Issue 6.6.3:  Extending Current 500 ppm Exemption  	  6-47
             Issue 6.6.4: Exemption from Emissions Liability 	  6-49
             Issue 6.6.5: Permanent Exemption from Dye Requirement  	  6-49
       Issue 6.7: US Territories	  6-51

ISSUE 7: ENGINE/VEHICLE MANUFACTURER REQUIREMENTS	  7-1
       Issue 7.1: Certification Fuel 	  7-1
       Issue 7.2: ABT  	  7-3
                                        11

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                     RESPONSE TO COMMENTS DOCUMENT

                    Heavy Duty Engine and Vehicle Standards and
                   Highway Diesel Fuel Sulfur Control Requirements

                            Table of Contents (cont.)
             Issue 7.2.1: Family Emission Limit (FEL) Caps  	  7-3
             Issue 7.2.2: Averaging Sets	  7-6
             Issue 7.2.3: Banking  	  7-8
             Issue 7.2.4: Other ABT Issues	  7-12
       Issue 7.3: Chassis Certification  	  7-17
       Issue 7.4: Test Procedures  	  7-18
             Issue 7.4.1: Regeneration 	  7-18
             Issue 7.4.2: OBD 	  7-20
             Issue 7.4.3: Supplemental Test Procedures	  7-29
             Issue 7.4.4: Ambient Conditions (Temperature/Humidity) 	  7-42
       Issue 7.5: Used Motor Oil as Fuel 	  7-52
       Issue 7.6: Other Compliance Issues  	  7-55

ISSUE 8: REFINERY/DISTRIBUTION ISSUES  	  8-1
       Issue 8.1: Supply and Distribution	  8-1
             Issue 8.1.1: Fuel Supply Reliability Impacts 	  8-1
             Issue 8.1.2: Technological/Logistical Considerations	  8-29
             Issue 8.1.3: Lead-time Required	  8-46
             Issue 8.1.4: Diesel Fuel Additives Issues  	  8-48
       Issue 8.2: Testing and Sampling  Requirements  	  8-56
       Issue 8.3: Permitting Issues	  8-65
       Issue 8.4: General Refiner/Distributor Issues 	  8-71
             Issue 8.4.1: Reporting and Recordkeeping	  8-71
             Issue 8.4.2: Compliance/Enforcement Issues	  8-73
             Issue 8.4.3: Other Refiner/Distributor Issues  	  8-83
       Issue 8.5: Small Refiners	  8-84
             Issue 8.5.1: Small Refiner Definition	  8-84
             Issue 8.5.2: General Impacts/Need for Flexibility	  8-90
             Issue 8.5.3: Sale of 500 ppm Fuel	  8-100
             Issue 8.5.4: Hardship Waiver 	  8-109
             Issue 8.5.5: Gasoline Sulfur Extension	  8-113
             Issue 8.5.6: Higher Sulfur Cap  	  8-117
             Issue 8.5.7: Farmer Cooperatives	  8-120
             Issue 8.5.8: Other Small Refiner Issues  	  8-128
       Issue 8.6: Other Small Business  Issues  	  8-130

ISSUE 9: RELATIONSHIP TO TIER 2 RULE 	  9-1

ISSUE 10: [RESERVED]  	  10-1

ISSUE 11: NONROAD FUEL/VEHICLE STANDARDS	  11-1

ISSUE 12: ADMINISTRATIVE,  PROCEDURAL AND LEGAL REQUIREMENTS  	  12-1
       Issue 12.1: SBREFA  	  12-1
       Issue 12.2: Other Administrative/Legal Issues 	  12-4
                                       in

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                    RESPONSE TO COMMENTS DOCUMENT

                  Heavy Duty Engine and Vehicle Standards and
                 Highway Diesel Fuel Sulfur Control Requirements

                          Table of Contents (cont.)
ISSUE 13: MISCELLANEOUS	  13-1

ISSUE 14: SUPPORTS OR INCORPORATES OTHER COMMENTS	  14-1
      Issue 14.1: Supports/Incorporates Prior Comments of Commenter	  14-1
      Issue 14.2: Supports/Incorporates Other Commenters	  14-2
                                    IV

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-1

ISSUE 1:  GENERAL POSITION STATEMENTS

      Issue 1.1:  Supports Rule

(A)    Expressed general support for EPA's fuels standards and engine and vehicle
      standards as proposed since the implementation of this program will lead to
      significant health benefits and/or environmental benefits.

      (1)    Most of the commenters to the NPRM supported the rule without providing
             any supporting information or detailed analysis. Commenters expressed their
             support by citing a variety of issues and studies related to environmental,
             health and visibility impacts. Specific comments on these issues are
             addressed in Issue 2. This comment was made by approximately 14,400
             private citizens.

             Letters:

             10th District PTA (IV-F-166, 190) p. 262
             20/20 Vision (IV-F-58, 117) p. 272
             Air Pollution Control District (IV-D-55) p. 1
             ALA, ED, and Clean Air Trust  (IV-D-282) p. (all)
             Alliance of Automobile Manufacturers (IV-F-9), (IV-G-50)
             American Lung Association (IV-D-270)  p. 2, (IV-F-60, 161, 164, 181, 192) p.
             8(IV-F-72,  191) p. 146
             American Lung Association of CT (IV-D-63) p. 1
             American Lung Association of NH (IV-D-116) p. 1
             American Lung Association of Wl (IV-D-32) p. 1
             American Lung Association of GA (IV-F- 117) p. 258
             American Lung Association of Metropolitan Chicago (IV-F-13)
             American Lung Association of TN (IV-D-19) p. 1, (IV-F-117)  p. 62
             Atlanta Bicycle Campaign  (IV-F-117) p. 231
             Bay Area Air Quality  Management District (IV-D-139) p. 1
             Bagnarol-Reyes, Carolina, et. al. (IV-G-24)
             Beaumont High School Environmental Club (IV-F-190) p. 141)
             Beeman,  Nora, et. al. (IV-G-09)
             Bellomo.A.  (IV-F-190) p. 89
             Berger, Paul (IV-F- 191) p. 66
             Bishop, Mark  (IV-F-12)
             Bottino, Maria  (IV-F-116) p. 326
             Boulder County Clean Air Consortium (IV-D-35) p. 1
             Bramble Berry, Inc.  (IV-G-35) p. 1
             Bressler,  Daniel J. (IV-D-104) p. 1
             Burns, Troy (IV-F-117) p. 260
             CA Air Resources Board (IV-F-190) p. 13
             CA PIRG (IV-F- 190) p. 175 (IV-F-190)  p. 280
             CA Transit Association  (IV-G-14) p. 1
             CA Trucking Association (IV-F-190) p. 38 (IV-F-116) p. 150 (IV-F-192) p. 34
             CO Allergy & Asthma Centers (IV-F- 191) p. 76
             CO Environmental Coalition (IV-F-191) p. 237
             CO People's Environmental and Economic Network (IV-F-191) p. 222
             CT DEP  (IV-F-49)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-2

             Caesar, M. (IV-D-339)
             Carson Forest Watch (IV-D-106)
             Cardona, Marina (IV-F-116) p. 291
             Carruthers, Hilary (IV-F-117) p. 60
             Cassara, Bob (IV-F-65)
             Center for Neighborhood Technology (IV-F-11)
             Chameides, Michael (IV-F-117) p. 262
             Chicago Asthma Consortium  (IV-F-22)
             Chicagoland Bicycle Federation (IV-F-19)
             Chicagoland Transportation and Air Quality Commission  (IV-F-10)
             Chin, Rocky (IV-F-39)
             Chuang, Henry  (IV-F-117) p. 265
             Chung, Payton,  et. al. (IV-D-133)
             Cimino, James  (IV-F-116) p. 343
             Citizens for a Better Environment (IV-F-3)
             CityofArcata (IV-D-200) p. 1
             City of Los Angeles Environmental Quality and Waste Man  (IV-F-190) p. 95
             City of NY, Borough of Manhattan  (IV-F-51)
             City of NY, Manhattan Community Board (IV-F-68)
             City of Portland  (IV-D-198) p. 1
             City of Seattle, Seattle Public Utilities (IV-D-66) p. 1
             Clean Air Council (IV-F-116) p. 333
             Clean Air Network  (IV-F-191) p. 84
             Clean Air Now Campaign (State PIRGs & citizens) (IV-D-357, 358)
             Clean Fuels Development Coalition  (IV-F-191) p. 225
             Coalition for Clean Air (IV-F-190) p. 177
             Coalition on the Environment and Jewish Life (IV-F-184)
             Commissioner of Clear Creek County (IV-F-191) p. 14
             Communities for a Better Environment (IV-F-190) p. 129
             Community Coalition for Change (IV-F-190) p. 74
             Congress  of the United States  (IV-D-294) p. 1
             Congressman Mark Udall (IV-F-191) p. 206
             Congresswoman Diana  DeGette (IV-F-191) p. 208
             Connor, Thomas, et. al.  (IV-D-132)
             Consumer Policy Institute (IV-D-186) p. 3
             Consumer Policy Institute, NY  (IV-F-116) p. 305)
             Corning, Inc.  (IV-F-77)
             Countrymark Cooperative (IV-F-191) p. 184
             Damitz, Kyle and Colleen (IV-F-20)
             Davidson, Karin, et. al.  (IV-D-79)
             Delsener,  Ron (IV-D-152)
             Dickson, Victoria, et. al.  (IV-D-77)
             Diesel Technology Forum (IV-F- 190) p. 190
             Dolman, Suzanne, et. al. (IV-D-341)
             Domac, Jacquiline  (IV-F-190) p. 249)
             Economic & Social Justice (IV-F- 117) p. 236
             Engine Manufacturers Association (IV-F-174)
             Ens and Outs, UUCA (IV-D-107)
             Environmental Advocates (IV-F-35)
             Environmental Defense  (IV-D-346) p. 14, (IV-F-169, 56), (IV-F-117) p. 81 (IV-
             F-191) p. 18
             Environmental Law & Policy Center of the Midwest  (IV-F-6)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-3

              Environmental Law and Policy Center (IV-D-331) p. 2
              Estler, Danielle (IV-F-21)
              Evans, Alexander J.  (IV-F- 116) p. 186
              Evans, David  (IV-F-116)
              Feeley, Dr. Jeryl and Zachariah  (IV-F-191) p. 50
              Firestone, Ross (IV-F-4)
              Fisher, Alexandra  (IV-F-116) p. 231
              Fleming, Scott, et.  al.  (IV-D-13)
              Fletcher, Robert E. (IV-F-117) p. 175)
              Flowers, Bobbie (IV-D-67)
              Fogel, Judy (IV-F-190) p. 68
              Foley, Deborah (IV-G-56)
              Ford, O.T.  (IV-F-117) p. 126
              Franceshini, Charles (IV-F-116)
              Franczyk, Catherine A., et. al. (IV-D-233)
              Freechild, Aquene, et. al.  (IV-G-60)
              Friedman, Jane (IV-F-2)
              Friends of the Children (IV-F-158)
              GA Coalition for Peoples' Agenda (IV-F-117) p. 241
              GA Department of Natural Resources (IV-D-268) p. 1
              GA House of Representatives (IV-F- 117) p. 56
              GA Legislator (IV-F-117) p. 136
              GA Public Interest  Research Group (IV-F-117) p. 43, 268
              GA State Senator  (IV-F-117) p.  179
              Gibbs, Nancy  (IV-F-116) p. 360
              Gill, Matthew (IV-F-191) p. 82
              Golland, Laurie, et. al. (IV-G-33)
              Gordon,  Ken  (IV-F- 191) p. 204
              Greene,  Richard (IV-G-57)
              Grider, Susan (IV-F-117) p. 143
              Hacienda Heights  Improvement Association  (IV-F-172)
              Hackel, Barbara, et al.  (IV-D-14) p. 1
              Hart/IRI Fuels Information Services  (IV-D-154) p. 2, (IV-F-190) p. 254 (IV-F-
              117) p. 206
              Health Committee  of Metro Seniors  in Action  (IV-F-81)
              Health Educator, Tenth District PTA (IV-F-190) p. 171
              Higginson, Norman, et. al.  (IV-D-196)
              Hinds, William  (IV-F-190) p. 202
              Holy Spirit Church  (IV-D-83)
              Hopkins, Steve, et. al. (IV-G-07)
              Hyatt, Robert E. (IV-D-94)
              IL House of Representatives (IV-F-24)
              IL Public Interest Research Group (IV-F-18)
              INFORM, Inc.  (IV-F-47)
              lhara, Karyn  (IV-F-190) p. 278
              Institute for Global  Solutions (IV-F-175)
              International Center for Technology Assessment (IV-D-313) p. 1-2, +all
              International Truck & Engine Corp.  (IV-F-34), (IV-F-117) p. 109
              Interstate Claims  (IV-F-190) p. 66
              Jack Jones Trucking, Inc.  (IV-F-190) p.  58
              Khalsa, Mha Atma S.  (IV-D-71)
              Kinyon, John, et. al. (IV-G-13)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-4

             Kotgal, Kalpana (IV-F-192) p. 17
             Kouba-Cavallo Associates (IV-F-1)
             Kwan, Jeffrey (IV-G-32)
             L.A. City Council (IV-F-176)
             L.A. County Bicycle Coalition  (IV-F- 190) p. 131
             L.A. Dept of Water & Power  (IV-F-190) p. 79
             Landrigan,  Philip (IV-D-37) p. 1
             Landrigan,  Philip [Duplicate of IV-D-37, without attach (IV-D-10) p. 1
             Lena, Tanya (IV-F-116) p. 314
             Levy, David (IV-F-37)
             Levy, Robyn (IV-F-117) p. 67
             Lind, Karen, et. al. (IV-D-121)
             Lindsay, Sally  (IV-F-116) p. 133
             Lipka, Richard P.  (IV-D-92)
             Little Village Environmental Justice Organization  (IV-F-192) p. 147
             Long, James A. (IV-D-101)
             Lu, Rong (IV-F-162)
             MD DOE (IV-D-59) p. 1
             MN Chamber of Commerce  (IV-D-28) p. 1
             Manufacturers of Emissions Controls Association (IV-F-187), (IV-F-190) p.
             108 (IV-F- 116) p.  47
             Marvin Hill  Environmental Justice  (IV-F-116) p. 282
             Mathews, Erik, et al (IV-D-24) p. 1
             Mayer Computer Services (IV-D-81)
             Mayor and  citizens of Fort Collins,  CO (IV-F-191) p. 211
             Mayor of Boulder  (IV-F- 191) p. 12
             Mayor of Denver (IV-F-191) p. 152
             Mclntosh, Alice  (IV-F-116)
             McMorran,  Maria  (IV-F-116) p. 122
             Metro Atlanta Transportation Equity Coalition  (IV-F-117) p. 132
             Metro Seniors in Action  (IV-F-192) p. 34
             Metropolitan Washington Air Quality Committee (IV-D-34,  58) p. 1 (both)
             Mexican-American Community Foundation  (IV-F-179)
             Mexican-American Legal Defense  & Educational Fund  (IV-F-160)
             Meyer, Edgar A. (IV-D-108)
             Montgomery, Jack, et. al. (IV-D-78)
             Moore, David (IV-F-117) p. 138
             Mothers for Clean  Air (IV-D-95)
             Mr. Martinez (IV-F-191) p. 266
             Ms. Purvis  (IV-F-191) p. 80
             NCDENR  (IV-D-151)p. 1
             NESCAUM (IV-D-315) p. 1-2, 4, (IV-F-63)
             NH DES (IV-D-150)p. 1
             NJ Environmental  Lobby  (IV-F-41)
             NJ PIRG (IV-F- 116) p. 314
             NY Assembly - Health Committee  (IV-F-38)
             NY City Comptroller  (IV-F-70)
             NY DEC (IV-D-239) p. 2, (IV-F-52)
             NYDEP (IV-F-116) p. 73
             NY PIRG (IV-F- 116) p. 244
             NY State Assembly (IV-D-266) p.  1, (IV-F-53, 116) p. 9
             NY State Assembly, Envr Conservation Committee  (IV-F-116) p. 6

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-5

              NY State Attorney General's Office (IV-F-61)
              NY State Senator (IV-F-50, 57, 83)
              NYC Council (IV-F- 116) p. 134 (IV-F-79, 80, 82)
              NYCDEP (IV-D-209) p. 1
              NYC Environmental Justice Alliance (IV-F-116) p. 317
              Nadine Garcia (IV-F-183)
              National Biodiesel Board (IV-F-191) p. 249
              National Park Service  (IV-D-180) p. 3, (IV-F-191) p. 108
              Natural Resources Defense Council (IV-D-110, 168) p. 1 (both), (IV-F-190)
              p. 98 (IV-F-190) p. 102 (IV-F- 191) p. 68
              Neighbors fora Safe Environment (IV-F-190) p. 133
              Nolan, Catherine  (IV-D-169) p. 1
              Nos Quedamos, NY (IV-F-116) p. 272
              O'Leary, Cathy and John Carey (IV-G-05)
              Onyx Environmental Services (Gavendi)  (IV-F-190) p. 62
              Organization of Waterfront Neighborhoods  (IV-F-116) p. 323
              Oregon DEQ (IV-D-145) p. 1
              Ozone Action and GA Airkeeper Campaign (IV-F-117) p. 229
              Ozone Transport Commission  (IV-D-249) p. 1, (IV-F-55)
              Packard, Josh (IV-G-54)
              Pandey, Anup (IV-F-117) p. 276
              Pandey, Stacey (IV-F-117) p. 274
              Pastor of Culver-Palms  United Methodist Church (IV-F-177)
              Pecoraro, Elizabeth (IV-F-117) p. 117
              Permanent Citizens Advisory Committee  (IV-D-318) p. 1
              Physicians for Social Responsibility  (IV-F-117) p. 256
              Poggi, Jeanlee (IV-F-66)
              Prabhu, Sudhir (IV-D-127) p. 1
              President of Bronx Borough (Fernando Ferrer) (IV-F-69)
              Prichard, Frank (IV-G-68)
              Public Advocate for the City of New York  (IV-D-222) p. 1
              Queens Senior Citizens Organization (IV-F-116) p. 130
              Quikway Trucking Company (IV-F-190) p. 60
              Rl Dept. of Environmental Management, et al (IV-D-61) p. 1
              Regional Air Pollution Control Agency (IV-D-103)  p. 2
              Rhubert,  Pamela J.  (IV-D-15) p. 1
              Richards, Donna and Bill, et. al. (IV-G-19)
              Riggles, Ruth, et. al. (IV-D-102)
              Robin, Susan (IV-D-302)
              Robinson, Yvonne (IV-F-116) p. 132
              Rock, Steve, et. al. (IV-G-22)
              Rodriguez, Dolores, et. al. (IV-D-91)
              Ruth, Richard T.  (IV-D-73)
              Rutherford, Jolene, et. al. (IV-D-347)
              Ruzuney, Beth (IV-D-114)
              STAPPA/ALAPCO (IV-D-295) p. 1, 9, (IV-F-32, 117) p. 29 (IV-F-191) p. 32
              Schmitz, Randy, et. al. (IV-D-46)
              Schwartz, Steve  (IV-D-85)
              Sherman, Scott (IV-F-190)  p. 87
              Sherrill, Faye (IV-G-30)
              Sibilano,  Helena, et. al. (IV-D-356)
              Sierra Club,  GA Chapter (IV-D-348) p. 1

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-6

              Sierra Club  (IV-F- 117) p. 215
              Sierra Club Rocky Mtn. Chapter (IV-F-191) p. 191
              Simon, Julie  (IV-F-117) p. 141
              Smith, Maria (IV-D-72)
              Southern California Ecumenical Council  (IV-F-178)
              South Bronx Clean Air Coalition (IV-F- 116) p. 125 (IV-F- 116) p. 231 (IV-F-
              116) p.301
              South Coast Air Quality Management District (IV-D-147) p. 1, (IV-F-185)
              Southwest Air Pollution Control Authority (IV-D-149) p. 1
              Stead, Craig (IV-F-116) p. 115
              StarQuest Leasing Company (IV-G-17)
              Stewart, Jim  (IV-F-170)
              Stuckey, Stephanie  (IV-D-182) p. 1
              Sullivan, Linda and Thullen, Angela (IV-F-23)
              TN Environmental Council  (IV-F- 117) p. 154
              Toltz, Ken (IV-F-191) p. 215
              Tosco (IV-D-304) p. 1
              Transportation Alternatives  (IV-D-332) p. 1
              Transportation Techniques  (IV-F-191) p. 246
              Tri-Met (IV-D-96) p. 1
              Tri-State Transportation Campaign (IV-F-116) p. 359
              Tseng, Joyce, et al (IV-D-3)
              Tulton, Leon  (IV-F-116) p. 307
              U.S. Department of Energy  (IV-G-28)  p. 1
              U.S. PIRG (IV-F- 190) p. 185 (IV-F- 192) p. 134 (F-IV- 71)
              Udall, Mark  (IV-D-173) p. 2
              Unidentified (IV-F-116) p. 280
              United Community Center (IV-F-116) p. 278
              Unity & Diversity World Council  (IV-F-190) p. 213
              Vasquez, Reyna  (IV-F-190) p. 72
              Vid, Da (IV-D-70)
              Vigo County Air Pollution Control (IV-D-137) p. 1
              Village of Burr Ridge  (IV-D-316) p. 2
              Village of Oak Park Dept. of Public Health (IV-F-8)
              Volusia-Flagler Environmental Action Committee (IV-D-120)  p. 1
              W. Houston St. (Manhattan) Block Association (IV-F-116) p.  268
              WA Department of Ecology  (IV-D-141) p. 1
              WA Environmental Council  (IV-D-164) p. 1
              Wl DNR (IV-D-144, 291) p. 1 (both), (IV-F-25)
              Wl Department of Transportation (IV-D-241) p. 1
              Western Independent Refineries Association (IV-F-190) p. 144
              Wanzer, Sidney  (IV-D-82)
              Washington Regional Network  (IV-D-18) p.  1
              West Harlem Environmental Action (IV-F- 116) p. 120 (IV-F-116) p. 237  (IV-
              F-116) p. 287
              Wettstein, Justin  (IV-F-191) p. 268
              White, Dr. Randall (IV-F- 117) p. 20
              Wilderness Society (IV-F-117) p. 217
              Williams, Mary, et. al.  (IV-D-122)
              Wilson, Clark (IV-F- 191) p. 222
              Zellers, Tim (IV-F-116) p. 209

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-7


       Response to Comment 1.1 (A)(1):

       A large number of commenters expressed general support for our proposed program.
After considering all of the comments, we are finalizing a comprehensive program that in
most respects matches the proposed program.  We believe that the resulting overall program
will achieve the necessary emissions reductions resulting in significant health and
environmental benefits.

       (2)     Some commenters noted that the implementation of EPA's proposed rule is
              crucial in order to ensure that the NAAQS for ozone and/or particulates in
              their areas are met.  One commenter added that attainment would have an
              important impact on conformity issues, and thereby an area's ability to
              proceed with new construction and road building.

              Letters:

              CA Air Pollution Control Officers' Association (IV-D-109) p. 1
              CA Trucking Association (IV-D-309) p. 3-4, (IV-F-190) p. 38
              CO Public Interest Research Group (IV-F-191) p. 219
              CT DEP  (IV-D-142, 320) p. 1 (both), (IV-F-49)
              City of Chicago (IV-D-240) p. 3
              City of Los Angeles Environmental Quality and Waste Man (IV-F-190) p. 95
              Consumer Policy Institute (IV-D-186) p. 2
              DaimlerChrysler (IV-F-167, 186)
              GA State Senator (IV-F- 117) p. 179
              Greater Houston Partnership  (IV-D-172) p. 1-2
              Mayor and citizens of Fort Collins, CO (IV-F-191) p. 211
              NY DEC (IV-D-138, 239) p. 1 (both)
              NY State Attorney General's Office  (IV-D-238) p. 6
              NY State Senator (IV-F-83)
              Nolan, Catherine (IV-D-169) p.  1
              ORDEQ (IV-F- 191) p. 164
              OR Environmental Council (IV-D-68) p. 1
              Ozone Transport Commission  (IV-D-249) p. 1
              PA DEP  (IV-D-100)p. 1
              Public Advocate for the City of New York (IV-D-222) p. 1
              South Coast Air Quality Management District (IV-D-147) p. 1
              TX Natural Resource Conservation Commission (IV-G-3) p. 1
              Wl DNR (IV-D-291) p. 1

       Response to Comment 1.1 (A)(2):

       Several commenters stated that the emission reductions of the program are needed
to ensure attainment of the ozone and/or PM NAAQS standards. We agree with this view, as
described in the preamble to this final rule. Also, to the  extent that this regulation promotes
local area attainment, it will also assist the area of conformity demonstration.

(B)    Expressed support for EPA's systems approach to controlling emissions by
       imposing both fuel sulfur standards along with engine and vehicle emission
       standards, without necessarily expressing a position on the specific proposed
       standards.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000                                                      PAGE 1-8
       (1)    Many commenters expressed support for EPA's approach to fuel and/or
             engine/vehicle standards. Several expressed no further reasons for their
             support.  Other commenters gave specific reasons for supporting the rule
             such as the cost-effectiveness of a systems approach and the need for low-
             sulfur fuel to enable new technologies that reduce emissions. Specific
             comments regarding engine standards and the need for low sulfur fuel are
             listed in Issue 3, below. Fuel standard comments are discussed specifically
             in Issue 4, below.

             Letters:

             AL State Office of the Governor (IV-D-158) p. 1
             Alliance of Automobile Manufacturers  (IV-F-9,190) p. 114 (IV-F-191) p. 89
             American Lung Association of CO (IV-D-98) p. 1
             Chicago  DEP/Chicago Metropolitan Mayors Caucus Clean Ai (IV-D-335) p. 3
             City of Chicago (IV-D-240) p. 3
             Citizen, physician  (IV-F-190) p. 76
             Citizens for a Better Environment (IV-F-3)
             Clean Fuels Development Coalition  (IV-F-191) p. 225
             Congressman Mark Udall (IV-F-191) p. 206
             DaimlerChrysler  (IV-F-15, 167,  186, 191) p. 173
             Detroit Diesel Corporation (IV-F-7, 168)
             Diesel Technology Forum (IV-F-14, 54, 190) p. 190 (IV-F- 117) p. 148 (IV-F-
             191) p. 179
             Engine Manufacturers Association (IV-F-33, 174)
             Fox, John (IV-F- 191) p. 75
             Hart/IRI Fuels Information Services (IV-F-117) p. 206
             Hinds, William (IV-F-190) p. 202)
             IL Environmental Protection Agency  (IV-D-308) p. 2
             International Truck &  Engine Corp.  (IV-F-27, 180, 191) p. 99
             Kern Oil & Refining Co. (IV-F-173)
             Lake Snell Perry & Associates (IV-D-321) p. 1
             MDDOE  (IV-D-163)p. 1
             Manufacturers of Emission Controls Association (IV-F-26, 187, 190) p. 108
             (IV-F-191) p. 120, (IV-G-53)
             NJ Transit (IV-G-4) p. 1
             NYCDEP (IV-D-159)p. 1
             National  Petrochemical & Refiners Association (IV-D-218) p. 13
             Ozone Transport Commission  (IV-D-249) p. 2
             PennFuture  (IV-D-225) p. 1
             Permanent Citizens Advisory Committee (IV-D-318) p. 1
             Regional Air Pollution Control Agency  (IV-D-103) p. 1
             STAPPA/ALAPCO  (IV-D-295) p. 1, (IV-F-32, 190) p. 21
             Swift Transportation Company (IV-D-263) p. 1
             Tri-Met (IV-D-96) p. 1
             DAW (IV-D-215)p. 2
             Wl DNR  (IV-D-144, 291) p. 1 (both)

       Response to Comment 1.1 (B)(1):

       We agree that the systems approach will enable promising new technologies for

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-9

cleaner highway diesel engines and maximize the emission benefits.  The fuel change, in
addition to enabling new technologies that will achieve lower emissions, will produce
emissions and maintenance benefits in the existing fleet of highway vehicles.

       Issue 1.2:  Opposes Rule (Engine/Vehicle, Fuel or Both)

(A)    Opposed generally the proposed regulations and suggested that EPA re-
       analyze the scientific data prior to making any significant environmental policy
       decision.

       (1)     Sulfur dioxide  is a gas known for its cooling qualities, and therefore removing
              it from gasoline and diesel could contribute significantly to global warming.
              This commenter suggests that EPA investigate unspecified fuel additives
              which eliminate noxious particles, decrease refining costs,  and increase fuel
              economy while allowing sulfur to remain in the fuel.

              Letters:

              Orr, David  (IV-F-191) p. 258

       Response to Comment 1.2(A)(1):

       Of all U.S. sources of  oxides of sulfur (SOX) emissions, the heavy duty trucks and
engines addressed by our proposal represent only about 1 percent. While our proposed
program would reduce this fraction substantially, the absolute reduction in  overall SOX will be
small relative to all sources. It appears that such a small change in overall U.S. SOX
emissions would not be likely  to make a significant difference in projected global warming
trends.

       Further, the Intergovernmental Panel on Climate Change has stated that sulfate
cooling is not a straightforward offset to CO2 warming. This is because CO2 concentrations
are globally very uniform (due to the long lifetime of CO2  in the atmosphere) while sulfate
concentrations differ considerably from region to region because sulfates are  relatively short-
lived in the atmosphere. Even if the direct radiative forcings of CO2 warming  and sulfate
cooling were to cancel one another out over  a certain region, it does not mean that the region
would be protected from climate changes caused by the net warming of the global
atmosphere.

       For further discussion  of SOX and global warming, see the response to comment
2.4(0).

       On the other hand, as discussed elsewhere, reductions in highway diesel fuel sulfur
will result in considerable quantifiable health benefit, which would be sacrificed under the
commenter's plan. Sulfur control in diesel fuel is a necessary component of any new
standards for control of emissions from heavy-duty engines/vehicles and trucks, given the
effects that fuel sulfur has on  emission control equipment. The commenter provides no data
to show that such effects can  be prevented, and there is considerable evidence to the
contrary.

       We also do not believe that fuel additives would get the same emissions benefits as
highway diesel fuel sulfur control because it would still allow the performance of emissions
control technology to be degraded by exposure to unreasonably high sulfur levels. We will

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-10

evaluate any data regarding fuel additives as it becomes available, but we continue to believe
that aftertreatment will be necessary to meet the standards in this rule and we do not expect
that any changes to the diesel sulfur program would result from information provided  about
diesel fuel additives.

       (2)     Commenters state that EPA should delay or withdraw and reconsider the
              proposed rule for a variety of reasons which include uncertainty in emissions
              control and measurement technology and its sensitivity to sulfur, refinery
              desulfurization technology and costs for engine/vehicle manufacturers, fuel
              refiners, distributers and the buying and operating public. EPA needs to
              accurately assess  costs and benefits of the rule as well as the impact of the
              rule on stakeholders including agribusinesses and farmer co-ops.
              Commenters also stated that the program should be delayed  until after the
              implementation of the gasoline rule or until EPA concludes its rulemaking for
              nonroad diesel and home heating oil.

              Letters:

              AL Farmers Federation  (IV-D-206) p. 1-2
              Agricultural Retailers Association (IV-D-178) p. 1-4
              Agricultural Retailers Association, et. al. (IV-D-148) p. 1
              Agricultural organizations as a group (IV-D-265) p. 1-2, (IV-G-26) p. 1
              American Petroleum Institute (IV-F-117) p. 161 (IV-D-343) p. 24, 68
              American Public Transportation Association (IV-D-275) p. 2
              Capellan, Claudia, et. al. (IV-D-338) p. 2
              Cenex Harvest States Cooperatives (IV-D-232) p. all
              Countrymark Cooperative (IV-F-30), (IV-D-333) p. 14
              Cummins Engine Company, Inc. (IV-D-352) p. 2, (IV-D-231) p. 4-5
              ExxonMobil (IV-D-228) p. 2, 5,17
              Food Marketing Institute  (IV-D-283) p. 3
              Higginson, Norman, etal (IV-D-196)
              ID Barley Commission (IV-D-312) p. 1
              IN Builders Association  (IV-D-208) p. 1-2
              IN Retail Council (IV-D-211) p. 2
              KS Cooperative Council (IV-D-187) p. 1-2
              MD Farm Bureau  (IV-D-192) p.  1-2
              MFA Oil Company (IV-G-16) p.  2
              Ml  Petroleum Assoc./MI Assoc. of Convenience Stores  (IV-D-202) p. 1-2
              MN Association of Cooperatives (IV-D-188) p. 1-2
              Marathon Ashland Petroleum  (IV-D-261) p. *3-*4, 4,10,17-18
              Mercatus Center at GMU (IV-D-219) p. 31-33
              Mid-Atlantic Petroleum Distributors' Association (IV-D-124) p. 1-2
              National Council of Farmer Cooperatives (IV-D-351) p.  1
              National Ready Mixed Concrete Association (IV-D-271) p. 2
              North American Equipment Dealers Association (IV-D-194) p. 1-4
              NE Farm  Bureau Federation (IV-D-153) p.  1
              National Federation of Independent Business (IV-D-243) p. 1-2
              OH Trucking Association (IV-D-190) p. 1
              Service Station Dealers of America (IV-D-253) p. 2
              Society of Independent Gasoline Marketers of America  (IV-D-328) p. 2
              Thomas, Bill; U.S.  House of Representatives  (IV-G-39) p. 1
              Tseng, Joyce, et al (IV-D-03)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-11

              U.S. Chamber of Commerce (IV-D-329) p. 3
              VA Aggregates Association (IV-D-177) p. 1-2
              VA Agribusiness Council  (IV-G-1) p. 1
              VA Trucking Association  (IV-D-191) p. 1 -2
              Village of Brookfield (IV-D-29) p. 1
              Western Governors' Association (IV-G-41) p. 3
              Wl Motor Carriers Association (IV-D-189) p. 1

       Response to Comment 1.2(A)(2):

       EPA considered all of the above comments  and provides responses to all of these
issues later in this document.  At this time, however, there are ozone areas in the United
States that need reductions as soon as possible to meet their Clean Air Act deadlines for
nonattainment. Diesel exhaust contributes to pollution which continues to cause
considerable damage. It will be several years before heavy-duty engines that meet today's
standards will displace older, dirtier engines. The sooner the provisions are completed and
implemented, the sooner the health and welfare affects of pollution from diesel engines  and
fuel can be reduced.  Refineries and engine manufacturers  need leadtime to meet the
standards by the implementation date. We received comments from EMA indicating that
manufacturers should receive more than  the statutorily-required leadtime when EPA
promulgates standards (IV-D-251, at 85). As discussed further in the RIA and preamble, the
technology necessary to meet the requirements of this rule are known and well defined,  and
postponing this rule will not appreciably change the analysis of feasibility for this rule.
Therefore, we believe that this rule is necessary and appropriate at this time.

(B)    Opposes the fuel and/or engine/vehicle standards as too stringent and/or
       unnecessary to enable technology or to protect public health and welfare.

       (1)     See detailed supporting information  under other applicable issues (especially
              in Issues 2, 3, 4, 5, 7, and 8) on why commenters oppose the fuel and/or
              engine/vehicle standards.

              Letters:

              Agricultural Retailers Association, et. al. (IV-D-148) p. 1
              Agricultural organizations as a group (IV-D-265) p. 2
              AL Farmers Federation (IV-D-206)
              American Bus Association (IV-D-330) p. 1-7
              American Farm Bureau Federation  (IV-F-5)
              American Petroleum Institute (IV-D-343)
              American Trucking Association (IV-D-269)
              CA Trucking Association  (IV-F-190) p. 38
              CO Petroleum Association (IV-D-323) p. 1, 4
              Cenex Harvest States Cooperatives (IV-D-232) p. 1
              Chevron (IV-D-247)
              Citgo Corporation  (IV-D-314) p. 7
              Coal Operators & Associates, Inc. (IV-D-64) p. 1
              Cooperative Refining,  LLC (IV-D-300) p. 1-2
              Conoco (IV-F-191) p. 154
              Countrymark Cooperative (IV-D-333) p. 2-6, (IV-F-30), (IV-F-117) p. 74  (IV-
              F-191) p. 184
              Cummins, Inc. (IV-D-231)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-12

              DaimlerChrysler (IV-D-284, 344)
              Detroit Diesel Corporation  (IV-D-276)
              Equiva Services (IV-D-226) p. 3
              Engine Manufacturers Association  (IV-D-251)
              Ergon & Lion Oil Co.  (IV-F-117) p. 183
              ExxonMobil (IV-D-228) p. 2, 5, (IV-F-800)
              Farmland Industries (IV-F-29)
              Food Marketing Institute (IV-D-283) p. 2
              Ford Motor Company (IV-D-293)
              Gary-Williams Energy Corporation (IV-F-43)
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256)
              Gorton, Slade  (IV-D-171) p. 2
              ID Barley Commission  (IV-D-312) p. 1-2
              IN Retail Council (IV-D-211)
              IN Builders Association  (IV-D-208)
              Independent Fuel Terminal Operators Association  (IV-D-217) p. 3-4
              International Truck & Engine Corp. (IV-D-257)
              Johnson  Petroleum, Inc. (IV-D-17) p. 1
              Kentuckians for Better Transportation (IV-D-16) p. 1
              Kern Oil & Refining (IV-D-310), (IV-F-173)
              Koch Industries  (IV-D-307) p. 7-9
              KS Cooperative Council (IV-D-187)
              MD Farm Bureau (IV-D-192)
              MFAOil(IV-G-16)
              Ml  Petroleum Association (IV-D-202)
              MN Chamber of Commerce (IV-D-28) p. 1
              Mack Trucks (IV-D-324)
              Marathon Ashland Petroleum (IV-D-57), (IV-D-261) p. 7,19, 55, (IV-F-74)
              Mercatus Center at GMU (IV-D-219)
              Mid-Atlantic Petroleum Distributors Association (IV-D-124)
              Murphy Oil (IV-D-274)
              NATSO  (IV-D-246) p. 8, (IV-F-17)
              National Alternative Fuels Foundation (IV-D-214) p. 2
              National  Ready Mixed Concrete Association (IV-D-271) p. 1
              National Association of  Convenience Stores (IV-F-191) p. 168
              National Council of Farmer Cooperatives  (IV-D-351) p. 3
              National Grain and Feed Association (IV-D-301) p. 1
              National  Petrochemical  & Refiners Assoc./CITGO (IV-F-117) p. 101
              National  Petrochemical  & Refiners Association (IV-D-218), (IV-F-31, 44)
              NE Farm Bureau Federation  (IV-D-153) p. 1
              New England Fuel Institute (IV-D-296)
              NY Assoc. of Service Stations & Repair Shops (IV-F-45)
              North American Equipment Dealers Association (IV-D-194)
              OH Trucking Association (IV-D-190)
              Paramount Petroleum Corporation (IV-F-190) p. 168
              PA Association  of Milk Dealers (IV-D-23)  p. 1
              Perfection Oil Company (IV-D-41) p. 1
              Petro-Star Inc. (IV-D-216)
              Petroleum Marketers Association of America (IV-F-67)
              Phillips Petroleum Company (IV-D-250) p. 3
              Placid Refining  Company, LLC (IV-D-230) p. 1
              Ports Petroleum Co., Inc., (IV-F-117) p. 190

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-13

              Remster, John (IV-F-28)
              Reusable Industrial Packaging Association (IV-D-129)
              Service Station Dealers of America (IV-D-253)
              Sinclair Oil Corporation (IV-D-255) p. 2
              Society of Independent Gasoline Marketers of America (IV-D-328) p. 1
              Stevens, Ted (IV-D-170) p. 2
              Ultramar Diamond Shamrock Corporation (IV-F-191) p. 136
              U.S. Chamber of Commerce  (IV-D-329) p. 1
              U.S. Oil & Refining (IV-F-190) p. 159
              VA Aggregates Association (IV-D-177)
              VA Agribusiness Council (IV-G-1)
              VA Trucking Association (IV-D-191)
              Western Governors'Association (IV-G-41) p.  1
              Welsh, Inc.  (IV-D-22) p. 1
              Western Independent Refineries Association  (IV-F-190) p. 144)
              Wl Motor Carriers Association (IV-D-189)
              WY Refining Company (IV-F-191) p. 58

       Response to Comment 1.2 (B)(1):

       As discussed in the  preamble to this rule and further supported in the Regulatory
Impact Assessment document, the engine and vehicle standards set forth will improve air
quality in the United States.  The fuel standards are necessary to enable emission control
equipment and will, themselves, reduce harmful emissions especially of sulfates.  Specific
comments regarding public  health and welfare impacts and the feasibility of the
vehicle/engine standards and fuel standards  are responded to in corresponding sections later
in this document.

       Issue 1.3: Timing of Rule

(A)     EPA should finalize the proposed rule in 2000 or as soon as possible.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Clean Air Council (IV-F-116)  p. 333
              IL Environmental Council  (IV-D-115) p. 1
              Ozone Transport Commission (IV-F-55)
              U.S. Department of Energy (IV-G-28) p. 1

       (2)     There should be no delay  in the decision to finalize EPA's proposal, since to
              do so would  also delay the reduction in health impacts due to  diesel exhaust
              emissions. Such a delay is unnecessary and would substantially jeopardize
              the prospects of reaching the  goal of truly clean diesel engines.  If the rule is
              delayed, the commitment and financial investment that have been  made by
              emission control manufacturers and other members of industry will most likely
              be scaled back and it is uncertain whether the same level of commitment will
              be resumed  at a later date. No investment in  technology development will
              occur based on the vague prospect that if technology is developed,
              regulations may be adopted and in the context of EPA's proposed  rule, clear
              technology pathways are defined for meeting the future standards  proposed

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 1-14

              by EPA.

              Letters:

              California Air Resources Board (IV-G-52)
              Corning, Inc. (IV-G-59)
              Manufacturers of Emission Controls Association  (IV-D-267) p. 1-2 (IV-G-53)

       Response to Comment 1.3(A)(1) and (2):

       In order for the benefits of this rule to be realized soon, it should be finalized as early
as possible.  EPA has reviewed all aspects of this program and carefully considered the
timing required to implement these regulations.  Therefore, we decided to finalize these
standards in today's action so that the resulting overall program will achieve the necessary
emissions reductions on a schedule that achieves them when they are needed while at the
same time appropriately considering the legal time necessary, for example, to allow full
developmental implementation of necessary engine redesign and of emission control
system/design and fuel changes. These considerations are all reflected in the
implementation schedules for this rule.

(B)    EPA should delay the finalization of the proposed rule.

       (1)     Commenters state that EPA should delay or withdraw and reconsider the
              proposed rule for a variety of reasons. See Issue 1.2 (A)(2) for further
              discussion.

              Letters:

              AL Farmers Federation (IV-D-206) p. 1-2
              Agricultural Retailers Association (IV-D-178) p. 1-4
              Agricultural Retailers Association, et. al.  (IV-D-148) p. 1
              Agricultural organizations as a group (IV-D-265) p. 1-2, (IV-G-26) p. 1
              American Petroleum  Institute (IV-F-117) p. 161, (IV-D-343) p. 24, 68
              American Public Transportation Association  (IV-D-275) p. 2
              Capellan, Claudia, et. al.  (IV-D-338) p. 2
              Cenex Harvest States Cooperatives (IV-D-232) p. all
              Countrymark Cooperative  (IV-F-30), (IV-D-333) p. 14
              Cummins Engine Company, Inc.  (IV-D-352) p. 2, (IV-D-231) p. 4-5
              ExxonMobil (IV-D-228) p. 2, 5,17
              Food Marketing Institute (IV-D-283) p. 3
              Higginson, Norman, etal (IV-D-196)
              ID Barley Commission  (IV-D-312) p. 1
              IN Builders Association (IV-D-208) p. 1-2
              IN Retail Council  (IV-D-211) p. 2
              KS Cooperative Council (IV-D-187) p. 1-2
              MD  Farm Bureau (IV-D-192) p. 1-2
              MFA Oil Company (IV-G-16) p. 2
              Ml Petroleum Assoc./MI Assoc. of Convenience Stores (IV-D-202) p. 1-2
              MN Association of Cooperatives (IV-D-188) p. 1-2
              Marathon Ashland Petroleum  (IV-D-261) p. *3-*4, 4,10,17-18
              Mercatus Center at GMU (IV-D-219) p. 31-33
              Mid-Atlantic Petroleum Distributors' Association  (IV-D-124) p. 1-2

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DECEMBER 21, 2000	PAGE 1-15

             National Council of Farmer Cooperatives (IV-D-351) p. 1
             National Ready Mixed Concrete Association (IV-D-271) p. 2
             North American Equipment Dealers Association (IV-D-194) p. 1-4
             NE Farm Bureau Federation  (IV-D-153) p. 1
             National Federation of Independent Business (IV-D-243) p. 1-2
             OH Trucking Association  (IV-D-190) p. 1
             Service Station Dealers of America (IV-D-253) p. 2
             Society of Independent Gasoline Marketers of America (IV-D-328) p. 2
             Thomas,  Bill; U.S.  House of Representatives  (IV-G-39) p. 1
             Tseng, Joyce, et al (IV-D-03)
             U.S. Chamber of Commerce  (IV-D-329) p. 3
             VA Aggregates Association  (IV-D-177) p. 1-2
             VA Agribusiness Council  (IV-G-1) p. 1
             VA Trucking Association  (IV-D-191) p. 1 -2
             Village of Brookfield  (IV-D-29) p. 1
             Western Governors' Association  (IV-G-41) p. 3
             Wl Motor Carriers Association (IV-D-189) p. 1

       Response to Comment 1.3(B):

       See response to Comment 1.2(A)(2).

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 2-1

ISSUE 2:  ENVIRONMENTAL AND AIR QUALITY ISSUES

      Issue 2.1:  Public Health & Welfare Concerns

(A)    The rule will help alleviate adverse ozone problems, and ozone has significant
      adverse health and environmental effects.

      (1)    A large body of evidence shows that ozone can cause harmful respiratory
             effects including chest pain, coughing, and shortness of breath, which affect
             people with compromised respiratory systems most severely and seriously
             aggravates asthma. [See also Issue 1.1, Point (A).]

             Letters:

             American Lung Association (IV-D-270) p. 3-4
             Children's  Environmental Health Network (IV-D-244) p. 1
             Environmental Defense (IV-D-748) p. 7-8
             Ml Environmental Council (IV-D-290) p. 1
             NESCAUM (IV-D-315)p. 2-3
             Natural Resources Defense Council (IV-D-168) p. 2
             Ozone Transport Commission (IV-D-249) p. 2
             STAPPA/ALAPCO (IV-D-295) p. 7

      Response to Comment 2.1(A)(1):

      We agree with the comment.

      (2)    Private citizen commenters argued generally that the rule is necessary
             because of the health problems caused by smog, soot, and air toxics.
             Approximately 13,800 commenters made this statement.

             Letters:

             20/20 Vision (IV-D-74)
             Acoff, Jeffrey,  et. al. (IV-G-11)
             American Lung Association of Colorado (IV-D-54)
             American Lung Association of Los Angeles (IV-D-47)
             Asamoah,  Nikiya  (IV-D-09)
             Bagnarol-Reyes, Carolina, et. al. (IV-G-24)
             Barrett, Bruce (IV-D-93)
             Beeman, Nora, et. al. (IV-G-09)
             Braun, Carl and Norma  (IV-D-69)
             Carson Forest Watch (IV-D-106)
             Chung, Payton, et. al. (IV-D-133)
             Connor, Thomas, et. al. (IV-D-132)
             Corcoran, Janet  (IV-D-128)
             Davidson,  Karin, et. al.  (IV-D-79)
             Delsener, Ron (IV-D-152)
             Dickson, Victoria, et. al. (IV-D-77)
             Dolman, Suzanne, et. al. (IV-D-341)
             Ens and Outs, UUCA (IV-D-107)
             Fleming, Scott, et. al. (IV-D-13)

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DECEMBER 21, 2000	PAGE 2-2

              Franczyk, Catherine A., et. al. (IV-D-233)
              Golland, Laurie, et. al. (IV-G-33)
              Malady, E. (IV-D-340)
              Hirschi, Alexander (IV-D-07)
              Hopkins, Steve, et. al. (IV-G-07)
              Kachik, Thomas (IV-D-11)
              Khalsa, Mha Atma S.  (IV-D-71)
              Kinyon, John,  et. al. (IV-G-13)
              Kryston, Sheila (IV-D-76)
              Landfall Productions, Inc. (IV-D-27)
              Lichtman, Elijah  (IV-D-08)
              Lind, Karen, et. al. (IV-D-121)
              Lipka, Richard P. (IV-D-92)
              Margolis, Benjamin  (IV-D-33)
              Meek, M. (IV-D-774)
              Meyer, Edgar A. (IV-D-108)
              Montgomery, Jack, et. al. (IV-D-78)
              Mothers for Clean Air  (IV-D-95)
              Nerode, Gregory, et. al.  (IV-D-04)
              O'Leary, Cathy and John Carey (IV-G-5)
              Oregon DEQ  (IV-D-145) p. 1
              Private citizen (IV-D-12)
              Riggles, Ruth, et. al.  (IV-D-102)
              Roberts, R. (IV-G-12)
              Robin, Susan  (IV-D-302)
              Rodriguez, Dolores, et. al.  (IV-D-91)
              Rutherford, Jolene, et. al. (IV-D-347)
              Schmitz, Randy, et. al.  (IV-D-46)
              Sherrill, Faye  (IV-G-30)
              Smith, Bryan R., et. al.  (IV-D-105)
              Smith, Curt, et. al. (IV-D-49)
              Smith, Maria (IV-D-72)
              Toxics Action Center (IV-G-02)
              Tseng, Joyce, et. al. (IV-D-03)
              Varsbergs, Krista, et. al. (IV-D-38)
              Wanzer, Sidney (IV-D-82)
              Williams, Mary, et. al.  (IV-D-122)
              Zweig, Robert (IV-D-30)

       Response to Comment 2.1(A)(2):

       We agree in general with comments supporting the rule due to adverse health effects
associated with heavy-duty engine emissions.

       (3)     Cities in New England have poor air quality which has created major
              problems with asthma and cancer in the area.

              Letters:

              CT Coalition for Environmental Justice (IV-D-131) p. 1

       Response to Comment 2.1(A)(3):

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000                                                     PAGE 2-3
       We agree with the comment.

(B)    Children are particularly at risk from ozone exposure because they typically are
       active outside.

       (1)    For example, summer camp studies in the eastern U.S. and southeastern
             Canada have reported clinically significant reductions in lung function in
             children who are active outdoors. Further, children are more at risk than
             adults from ozone exposure because their respiratory systems are still
             developing.

             Letters:

             American Lung Association (IV-D-270) p. 3

       Response to Comment 2.KBH1):

       We agree with the comment.

(C)    VOC emissions that would be addressed in part by this rule are detrimental not
       only for their role in forming ozone, but also for their role as air toxics.

       (1)    At elevated concentrations and exposures, human health effects from air
             toxics can range from respiratory effects to cancer. Other health impacts
             include neurological, developmental, and reproductive effects.

             Letters:

             American Lung Association (IV-D-270) p. 13

       Response to Comment 2.1(C)(1):

       We agree with this comment.

(D)    Besides their role as an ozone precursor, the NOX emissions that would be
       addressed in part by this rule produce a wide variety of adverse health and
       welfare effects.

       (1)    Nitrogen oxide can irritate the lungs and lower resistance to respiratory
             infection (such as influenza).

             Letters:

             American Lung Association (IV-D-270) p. 14
             NY State Attorney General's Office  (IV-D-238) p. 5

       Response to Comment 2.1(D)(1):

       We agree with the comment.

       (2)    Commenter provides no further supporting information or detailed analysis.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 2-4

              Letters:

              City of Chicago (IV-D-240) p. 4

       Response to Comment 2.1(D)(2):

       We agree with the comment.

       (3)     NOX also plays a role in the formation of particulate nitrate particularly in
              colder weather. The NPS has monitored increases in winter nitrate
              concentrations in western national parks, and these increases could decrease
              visibility and increase nitrogen deposition in these areas.  Thus, NOX
              reductions will have benefits other than ozone benefits (contrary to
              statements in the preamble), and thus continuous compliance standards are
              important.

              Letters:

              National Park Service (IV-D-180) p. 4

       Response to Comment 2.KDH3):

       We agree with the comment.

(E)     Particulate matter that would be addressed in part by this rule has adverse
       health effects.

       (1)     The effects are particularly adverse for those with respiratory illnesses, the
              elderly, and children. Diesel  particulate is especially hazardous.  One
              commenter cites the Health Effects Institute's Synopsis of the Particle
              Epidemiology Reanalysis Project and  National Morbidity,  Mortality, and Air
              Pollution Study Part II: Morbidity, Mortality, and Air Pollution in the United
              States (http://www.healtheffects.org/news.htm).

              Letters:

              American Lung Association (IV-D-270) p. 5-10
              American Lung Association of CT  (IV-D-63) p. 1
              Boulder County Clean Air Consortium (IV-D-35) p. 1
              Clean Air Coalition and AK organizations  (IV-D-350) p. 1
              Clean Air Network  (IV-D-292) p. 1
              Environmental Defense  (IV-D-748) p. 4-6
              Environmental Health Coalition (IV-D-286) p. 1
              Larand International, Inc. (IV-D-52) p. 1
              PennFuture (IV-D-225) p. 1
              STAPPA/ALAPCO  (IV-D-295) p. 8
              Sierra Club, PA Chapter (IV-D-53) p.  1
              Volusia-Flagler Environmental Action Committee  (IV-D-120) p. 1

       Response to Comment 2.1(E)(1):

       We agree with the comment.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 2-5

       (2)     Key health effects include premature mortality, aggravation of respiratory and
              cardiovascular disease, aggravated asthma, acute respiratory symptoms, and
              decreased lung function. One commenter provided copies of toxicological
              studies on the link between diesel exhaust and asthma. Another commenter
              cited a 1996 report which estimated that about 500 residents of metropolitan
              areas in Oregon die prematurely from breathing particulate pollution.

              Letters:

              American Lung Association of NH (IV-D-116) p. 1
              American Lung Association of Wl  (IV-D-32) p. 1
              Children's Environmental Health Network (IV-D-244) p. 1
              City of Portland (IV-D-198) p. 1
              Clean Air Coalition (IV-D-322) p. 2
              Clean Air Coalition and AK organizations (IV-D-350) p. 1
              Clean Air Network (IV-D-292) p. 1
              Landrigan, Philip (IV-D-37) p. 1
              Landrigan, Philip [Duplicate of IV-D-37, without attach  (IV-D-10) p. 1
              Ml Environmental Council (IV-D-290) p. 1
              NESCAUM  (IV-D-315)p. 2
              Natural Resources Defense Council (IV-D-110) p. 1
              OR Environmental Council (IV-D-68) p. 2
              Prabhu, Sudhir (IV-D-127) p. 1
              The Coalition for Sensible Energy (IV-D-264) p. 1

       Response to Comment 2.1(E)(2):

       We agree with the comment.

       (3)     Across the country there are neighborhoods and communities near highways
              that are exposed to serious risk of cancer as a result of diesel particulates.

              Letters:

              Environmental Defense (IV-D-748) p. 4
              Environmental Law and Policy Center (IV-D-331) p. 2

       Response to Comment 2.1(E)(3):

       EPA has found that  diesel exhaust, including diesel PM, is a likely human carcinogen
at environmental levels of exposure.  Ambient concentrations of diesel exhaust are likely to
be higher in urban areas than in  rural areas due to relative  traffic densities. The precise
magnitude of the risk posed by diesel exhaust exposure in  these areas cannot currently be
determined.

       (4)     NY DEC  requests EPA evaluate whether PM mass standards alone are
              adequate and urges EPA to consider requiring that manufacturers collect
              measurements to aid EPA's decision.

              Letters:

              NY DEC  (IV-D-239) p. 5

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DECEMBER 21, 2000	PAGE 2-6

       Response to Comment 2.1(E)(4):

       Almost all diesel PM can be considered fine PM. The regulations adopted today will
require emission control devices which will reduce the amount of PM across the range of
particle sizes. At this time, there is no evidence to support the need for a standard based on
the size or number of particles; a mass based standard will be effective in reducing the health
risk of diesel PM emissions.
       Regarding the requirement to have manufacturers supply addition size-based data,
the majority of PM emitted is produced during transient operation, in particular during
transient events that lead to fairly low excess-air ratios. There are currently no suitable
instrumentation packages capable  of capturing the entire particle size distribution of diesel
particulate matter during transient operation.  There are also considerable questions with
respect to the effects of dilution rate and dilution ratio on the formation of ultra-fine, nucleated
PM.  EPA is currently in the process of evaluating and developing transient particle size
measurement instrumentation, and a  number of independent studies (in particular the CRC
E-43 Study) are currently underway to investigate the role of dilution on particle formation
and particle size. It is premature to collect data on engine particle number emissions or
particle size distribution until a suitable,  standardized instrumentation for such measurements
is developed, and until dilution characteristics and effects are better understood. See also
comment 3.2.1(G).

       (5)     Public health studies have linked fine particulates to increased hospital
              admissions for cardiovascular disease, pneumonia, and pulmonary disease.

              Letters:

              WA Environmental  Council (IV-D-164) p. 1

       Response to Comment 2.1(E)(5):

       We agree with the comment.

(F)    Reducing diesel particulates through this rule will lower toxic and non-toxic
       threats to health.

       (1)     Diesel particulate is of particular concern because not only does  it contribute
              to traditional forms of morbidity and mortality, but many studies of workers
              exposed to diesel exhaust link such exposure to a 20-40% increase in lung
              cancer. A number of international, national, and state health agencies have
              identified diesel particulate as a  probable carcinogen.

              Letters:

              American Lung Association (IV-D-270) p.  16
              NYCDEP  (IV-D-209) p. 1
              Oregon DEQ  (IV-D-145) p. 1
              Ozone Transport Commission (IV-D-249)  p. 2

       Response to Comment 2.KFK1):

       We agree with the comment.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 2-7

(G)    Numerous environmental and health agencies have classified diesel exhaust as
       a toxic air contaminant and probable human carcinogen.

       (1)    Diesel engines emit over 40 known carcinogens and many other toxic
             substances with non-cancer health effects.

             Letters:

             CT DEP (IV-D-142) p. 1
             City of Portland (IV-D-198) p. 1
             Clean Air Coalition  (IV-D-322) p. 2
             NESCAUM (IV-D-315)p. 3
             NY State Attorney General's Office (IV-D-238) p. 5
             NYC DEP (IV-D-209) p. 1
             Udall, Mark (IV-D-173) p. 2

       Response to Comment 2.1(G)(1):

       We agree in general with the comments indicating health hazards due to diesel
particulate exhaust.

       (2)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             Boulder County Clean Air Consortium  (IV-D-35)

       Response to Comment 2.1(G)(2):

       We agree with the comment.

(H)    The importance of EPA's proposed rule is underscored by the apparent toxicity
       and hazard of diesel particulate emissions. Most of these commenters
       referenced recent studies indicating that there is a link between diesel
       emissions and cancer.

       (1)    Commenters provided general discussion on the harmful health impacts that
             can be attributed to diesel particulate emissions, but did not provide further
             supporting documentation. This comment was made by approximately
             13,800 private citizens.

             Letters:

             20/20 Vision (IV-D-74)
             Acoff, Jeffrey, et. al. (IV-G-11)
             American Lung Association  (IV-F-60, 72)
             American Lung Association of Colorado  (IV-D-54)
             American Lung Association of Los Angeles (IV-D-47)
             Asamoah, Nikiya (IV-D-09)
             Bagnarol-Reyes, Carolina, et. al. (IV-G-24)
             Barrett, Bruce  (IV-D-93)
             Beeman, Nora, et.  al. (IV-G-09)

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DECEMBER 21, 2000	PAGE 2-8

              Braun, Carl and Norma (IV-D-69)
              CA Environmental Protection Agency (IV-F-501)
              CA Natural Gas Vehicle Coalition (IV-F-535)
              Carson  Forest Watch  (IV-D-106)
              Children's Environmental Health Network (IV-D-244) p. 1
              City of NY, Manhattan Community Board  (IV-F-68)
              Clean Air Coalition (IV-D-322) p. 2
              Clean Air Coalition and AK organizations  (IV-D-350) p. 1
              Clean Air Council (IV-F-641)
              Clean Air Network (IV-D-292) p. 1
              Commissioner of Clear Creek County (IV-F-901)
              Congress of the United States  (IV-D-294) p. 2
              Chung,  Payton, et. al.  (IV-D-133)
              Connor, Thomas, et. al. (IV-D-132)
              Corcoran, Janet  (IV-D-128)
              Davidson, Karin, et. al. (IV-D-79)
              Delsener, Ron (IV-D-152)
              Dickson, Victoria, et. al. (IV-D-77)
              Dolman, Suzanne, et. al. (IV-D-341)
              Ens and Outs, UUCA  (IV-D-107)
              Environmental Advocates (IV-F-35)
              Environmental Defense (IV-F-812, 902)
              Environmental Health Coalition  (IV-D-286) p. 1
              Fleming, Scott, et. al. (IV-D-13)
              Fox, John (IV-F-911)
              Franceshini, Charles  (IV-F-604)
              Franczyk, Catherine A., et. al. (IV-D-233)
              Golland, Laurie, et. al. (IV-G-33)
              Hacienda Heights Improvement Association (IV-F-172)
              Halady, E.  (IV-D-340)
              Hirschi, Alexander (IV-D-07)
              Hopkins, Steve, et. al. (IV-G-07)
              INFORM, Inc. (IV-F-47)
              Kachik,  Thomas  (IV-D-11)
              Khalsa, Mha Atma S. (IV-D-71)
              Kinyon,  John, et. al.  (IV-G-13)
              Kryston, Sheila  (IV-D-76)
              LA Dept of Water & Power (IV-F-518)
              Landfall Productions,  Inc.  (IV-D-27)
              Levy, David  (IV-F-37)
              Lichtman, Elijah  (IV-D-08)
              Lind, Karen, et. al. (IV-D-121)
              Lipka, Richard P. (IV-D-92)
              Lu, Rong (IV-F-162)
              Ml Environmental Council (IV-D-290) p. 1
              Margolis, Benjamin (IV-D-33)
              Mayor and citizens of Fort Collins, CO (IV-F-942)
              Mclntosh, Alice  (IV-F-605)
              Meek, M. (IV-D-774)
              Meyer,  Edgar A.  (IV-D-108)
              Montgomery, Jack, et. al.  (IV-D-78)
              Mothers for Clean Air  (IV-D-95)

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DECEMBER 21, 2000	PAGE 2-9

              NJ PIRG  (IV-F-637)
              NY City Comptroller (IV-F-70)
              NY DEC  (IV-F-52)
              NYDEP  (IV-F-606)
              NY State Assembly (IV-F-601)
              NY State Attorney General's Office  (IV-F-61)
              NY State Senator (IV-F-50, 57)
              NYC Environmental Justice Alliance (IV-F-638)
              Natural Resources Defense Council (IV-D-168) p. 1, (IV-F-910)
              Nerode, Gregory, et. al.  (IV-D-04)
              O'Leary, Cathy and John Carey  (IV-G-5)
              Oregon DEQ  (IV-D-145) p. 1
              Pastor of Culver-Palms United Methodist Church (IV-F-177)
              Private citizen (IV-D-12)
              Riggles, Ruth, et. al. (IV-D-102)
              Roberts, R. (IV-G-12)
              Robin, Susan  (IV-D-302)
              Rodriguez, Dolores, et. al.  (IV-D-91)
              Rutherford, Jolene,  et. al. (IV-D-347)
              Schmitz, Randy, et. al.  (IV-D-46)
              Sherrill, Faye  (IV-G-30)
              Smith, Bryan R., et. al.  (IV-D-105)
              Smith, Curt, et. al. (IV-D-49)
              Smith, Maria (IV-D-72)
              South Bronx Clean Air Coalition  (IV-F-610)
              Stead, Craig (IV-F-607)
              Toxics Action Center (IV-G-02)
              Tseng, Joyce, et. al. (IV-D-03)
              U.S. PIRG (IV-F-71,546)
              Varsbergs, Krista, et. al. (IV-D-38)
              Wanzer, Sidney  (IV-D-82)
              West Harlem Environmental Action  (IV-F-608)
              West Harlem Environmental Action/Envr Justice Network (IV-F-76)
              Williams,  Mary, et. al.  (IV-D-122)
              Zellers, Tim (IV-F-619)
              Zweig, Robert (IV-D-30)

       Response to Comment 2.KHK1):

       We agree with the comment and we are in the process of finalizing a Health
Assessment Document for Diesel Exhaust that concludes that diesel exhaust is likely to be
carcinogenic to humans by inhalation.  On October 12-13, 2000 the Scientific Advisory
Boards' Clean Air Scientific Advisory Committee (CASAC)1 concurred with  the Agency
conclusions presented in  the draft Health Assessment for Diesel Exhaust.

       (2)     Along with a discussion regarding the estimated health impacts of diesel
              emissions, commenters referred to the final report of the South Coast Air
       1 EPA (2000) Review of EPA's Health Assessment Document for Diesel Exhaust (EPA 600/8-
90/057E). Review by the Clean Air Scientific Advisory Committee (CASAC) December 2000 EPA-SAB-
CASAC-01-003.

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              Quality Management District entitled "Multiple Air Toxics Exposure Study in
              the South Coast Air Basin (MATES II)" as documentation that supports their
              assertion that diesel exhaust can be toxic and cancerous.  This report
              includes extensive analysis and has concluded that of the  cancer risk posed
              by air pollution, 70 percent is attributable to diesel particulate emissions.
              STAPPA/ALAPCO has extended the analysis to other cities and has
              concluded that diesel emissions may be responsible for roughly 125,000
              cancers over a lifetime.

              Letters:

              Coalition for Clean Air  (IV-F-545)
              Environmental Defense (IV-F-169)
              GA Forest Watch  (IV-D-67) p. 1
              Grand Canyon Trust (IV-D-317) p. 1
              Natural Resources Defense Council (IV-F-75, 910)
              Northwest District Association  (IV-D-117) p. 1
              OH Environmental Council (IV-D-130) p. 1
              OR DEQ  (IV-F-930)
              OR Environmental Council (IV-D-68) p. 1
              OR Toxics Alliance (IV-D-175) p. 1
              STAPPA/ALAPCO (IV-F-32, 78, 502, 804,  904)
              Stewart, Jim (IV-F-170)
              U.S. PIRG (IV-F-704)

       Response to Comment 2.KHK2):

       The Agency recognizes the California MATES II report and has reviewed it in the
context of preparing the Agency's Health Assessment for Diesel Exhaust  Document, which is
discussed at section A.3 of the  RIA. The Agency does not believe that at this time the data
support a confident determination of a unit risk for diesel exhaust and therefore lifetime
mortality attributable to diesel exhaust exposure cannot be precisely determined.

       (3)     In 1998, California declared particulate emissions from diesel fueled engines
              a toxic air contaminant. Diesel exhaust has also been classified as a
              probable human carcinogen by the National Institute for Occupational Safety
              and Health (NIOSH) in 1988, the International Agency for  Research of Cancer
              (IARC) in  1989, the EPA in a draft report in  1994, the World Health
              Organization in  1996, the California EPA in 1998, and the  Department of
              Health and Human Service's National Toxicology Program in 2000 (9th
              edition of Report on Carcinogens).

              Letters:

              10th District PTA  (IV-F-166)
              American Lung Association  (IV-F-164)
              CA Air Resources Board (IV-F-500)
              Chicagoland Bicycle Federation (IV-F-19)
              Citizen, physician  (IV-F-517)
              Citizens for a Better Environment  (IV-F-3)
              Coalition for Clean Air  (IV-F-545)
              Environmental Defense (IV-D-748) p. 2-4,  (IV-F-56, 169)

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              NESCAUM  (IV-F-63)
              Natural Resources Defense Council (IV-F-524)
              OR Environmental Council (IV-D-68) p. 1
              South Coast Air Quality Management District (IV-F-185)
              WA Environmental Council  (IV-D-164) p. 1

       Response to Comment 2.KHH3):

       We agree with the comment and we are in the process of finalizing the Health
Assessment Document for Diesel Exhaust which concludes that diesel exhaust is likely to be
carcinogenic to humans by  inhalation.

       (4)     A 1998 report by EPA and a 1991 report by the Illinois Pollution Control Board
              (titles not specified) shows that diesel exhaust is linked to cancer, lung
              impairment,  and other adverse health effects.

              Letters:

              Village of Oak Park Dept. of Public Health (IV-F-8)

       Response to Comment 2.1(H)(4):

       We concur with the  commenters statement. The Agency position is that diesel
exhaust is likely to be carcinogenic to humans by inhalation and that acute and chronic
exposure to diesel exhaust  can lead to symptoms of irritation to the respiratory system as
well as lung impairment.2

       (5)     A risk assessment performed by the California Air Resources Board
              estimates that diesel particulates account for 70% of the cancer risk
              statewide.

              Letters:

              CA Air Resources Board  (IV-F-500)
              Environmental Law and Policy Center (IV-D-331) p. 3

       Response to Comment 2.1(H)(5):

       EPA recognizes CARB's estimates that diesel PM accounts for 70 percent of cancer
risk statewide, but notes that the Agency does not have a cancer unit risk factor for diesel
exhaust or diesel PM.

       (6)     The Health Effects Institute, which is jointly funded by EPA and industry,
              found that the risk of lung cancer among persons occupationally exposed to
              diesel exhaust generally increased 20-50%,  based on more  than 40
              epidemiological studies.

              Letters:
       2 U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C. The document is available
electronically at vwwv.epa.gov/ncea/dieslexh.htm.

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              Environmental Defense (IV-D-748) p. 2
              NY State Attorney General's Office  (IV-D-238) p. 2

       Response to Comment 2.KHH6):

       The Agency concurs with the findings of the Health Effects Institute in finding that
exposure to diesel exhaust is associated with an increase in the incidence of lung cancer in
occupationally exposed populations as reported in numerous epidemiological studies.
Accordingly, the Agency has concluded that diesel exhaust is likely to be carcinogenic to
the human lung.3  The Clean Air Scientific Advisory Committee (CASAC), in their public
meeting on the draft Health Assessment for Diesel Exhaust held on October 12-13, 2000,
concurred with the Agency position regarding the likely cancer hazard.4

       In the 1995 Health Effects Institute study, Cohen and Higgins reviewed 34
epidemiological studies and concluded that "the available  evidence suggests that
occupational exposure to diesel exhaust from diverse sources increases the rate of lung
cancer by 20% to  40% in exposed workers generally and to a greater extent among
workers with prolonged or intense exposure."5 In the same summary Cohen and Higgins
stated that "The studies reviewed above suggest that exposure to diesel exhaust in a
variety of occupational circumstances is associated with small to moderate relative
increases in  lung cancer occurrence and/or mortality. These elevations do not appear to
be fully explicable by confounding due to cigarette smoking or other sources of bias.
Therefore, at present,  exposure to diesel exhaust provides the most reasonable
explanation for these elevations."

       (7)     There are a number of articles that establish a link between diesel emissions
              and cancer:  Krewski et al., "Synopsis of the Particle Epidemiology
              Reanalysis Project," Health Effects Institute, Cambridge MA July 2000; The
              State and Territorial Air Pollution Program  Administrators and the Association
              of  Local Air Pollution Control Officers, "Cancer Risk from Diesel Particulate:
              National and Metropolitan Area Estimates  for the U.S.," March 15, 2000;
              Kaplan, "Dangers of Diesel" US PIRG, Washington DC July 2000; Zeger et
              al., "National Morbidity, Mortality and Air Pollution in the US, Report 94 Part II,
              Health  Effects  Institute, Cambridge MA, May 2000.

              Letters:

              NY State Attorney General's Office  (IV-D-238) p. 2

       Response to Comment 2.KHK7):
       3 U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C.  The document is available
electronically at vwwv.epa.gov/ncea/dieslexh.htm.

       4 EPA (2000) Review of EPA's Health Assessment Document for Diesel Exhaust (EPA 600/8-
90/057E). Review by the Clean Air Scientific Advisory Committee (CASAC) December 2000 EPA-SAB-
CASAC-01-003.

       5 Health Effects Institute (1995) Diesel Exhaust: A Critical Analysis of Emissions, Exposure, and
Health Effects.  Health Effects of Diesel Exhaust: Epidemiology; A.J. Cohen and M.W.P. Higgins. p. 268.

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DECEMBER 21, 2000	PAGE 2-13

       We agree that there are a number of articles that establish a link between diesel
exhaust emissions and lung cancer. The Agency has concluded that diesel exhaust is likely
to be carcinogenic to humans by inhalation based on the existing scientific evidence.6 On
October 12-13, 2000 the Scientific Advisory Boards' Clean Air Scientific Advisory
Committee (CASAC)7 concurred with the Agency conclusions presented in the draft Health
Assessment for Diesel Exhaust.

       (8)     Commenter cites an NRDC estimate that diesel pollution in Manhattan could
              yield 9000 potential cancers. Half of PM emissions in Manhattan are from
              diesel (10 times the national average); asthma rates in NYC are 4-6 times the
              national average; and one-third of smog forming nitrogen oxide emissions
              come from diesel in the Northeast.

              Letters:

              Transportation Alternatives (IV-D-332) p. 2

       Response to Comment 2.KHH8):

       The Agency recognizes that populations that live and work in densely-populated
urban areas such as Manhattan are typically subject to significantly greater concentrations of
air pollution than those populations that inhabit rural areas. The Agency does not believe
that, at this time, the data support the determination of a unit risk for diesel exhaust and
therefore lifetime mortality attributable to diesel exhaust exposure cannot be precisely
determined. Additional source apportionment studies are needed to understand potential
daily versus annual average contributions of diesel  exhaust to total ambient particulate matter
concentrations in the Manhattan  area.

       (9)     EPA should note the neurobehavioral impairment from diesel exhaust
              documented in Kilburn, Kaye, "Effects of Diesel  Exhaust on Neurobehavioral
              and Pulmonary Functions," Archives of Environmental Health, Jan/Feb. 2000.

              Letters:

              Consumer Policy Institute  (IV-D-186) p. 4

       Response to Comment 2.1(H)(9):

       The Agency is aware of the work by Kilburn (2000) and  will give this information
consideration in the development of the final Health Assessment Document for Diesel
Exhaust to be published early in 2001.  This reference is in docket A-99-06.

(I)     Supports EPA's use of source-receptor models, dispersion models, and
       elemental carbon measurements to evaluate ambient concentrations of diesel
       6  U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C. The document is available
electronically at vwwv.epa.gov/ncea/dieslexh.htm.

       7  EPA (2000) Review of EPA's Health Assessment Document for Diesel Exhaust (EPA 600/8-
90/057E). Review by the Clean Air Scientific Advisory Committee (CASAC) December 2000 EPA-SAB-
CASAC-01-003.

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DECEMBER 21, 2000	PAGE 2-14

       participate matter and the relative contribution of diesel engines to ambient
       particulate matter levels.

       (1)     Commenter provided discussion on the issue of health effects related to
              particulates and cited the Harvard Six Cities Study (1993), and the American
              Cancer Society Study (1995), which were released by HEI as well as the
              National Morbidity, Mortality and Air Pollution Study (NMMAPS) as
              commissioned by HEI as supporting documentation. Commenter provides
              significant discussion on these and other studies to support its position.

              Letters:

              American Lung Association  (IV-D-270) p. 5-9

       Response to Comment 2.1(l)(1):

       We agree with the comment.

(J)     EPA has failed to demonstrate that public health or welfare is sufficiently
       impacted by diesel emissions to justify the proposed rule.

       (1)     Because the NAAQS were established at a level to protect public health, EPA
              should not allege that serious health effects occur at PM levels below the
              NAAQS to justify the proposed diesel rule.  EPA  overstates the scientific
              certainty that PM is causing  mortality and morbidity. API incorporates its
              comments related to health effects submitted in the Tier 2  rulemaking, and
              provides further detail in its Attachment 1.

              Letters:

              American Petroleum Institute (IV-D-343) p. 5,16
              Marathon Ashland Petroleum (IV-D-261) p. 7,10

       Response to Comment 2.1(J)(1):

       EPA disagrees with this comment. In the review of the PM NAAQS that was
completed in 1997, EPA concluded that PM, alone or in combination with  other pollutants, is
associated with adverse effects at levels below those allowed by the current standards. As a
result, EPA revised the NAAQS to add  new standards for fine particles. The  revised
standards are now in litigation; however, as discussed further in  response to 2.1 (K) the
issues in the litigation do not include the scientific evidence  underlying EPA's decision to
establish new fine particle standards.

       EPA believes that health effects from fine PM (as well as diesel exhaust) occur at
levels that may exist even in areas where levels of coarse PM (PM10) are at  or below the
NAAQS for PM10. EPA has reviewed the substantial literature on this topic and believes that
health and welfare effects do result from levels of PM2.5 that occur even in areas that are in
attainment with the PM10 NAAQS.  Thus, we do not believe it is inconsistent to recognize
that health effects may be occurring at  levels below the levels of the PM10 NAAQS. In any
case, EPA has independent authority under section 202(a) to regulate PM emissions, as well
as emissions that indirectly cause PM,  based on these distinct health and welfare issues.

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       (2)     EPA cannot quantify the cancer benefits that will be achieved from
              reductions in diesel emissions of PM. The methodology used by EPA to
              assess the cancer risk uses the scientific data that CASAC determined was
              inadequate for assessing cancer risks. EPA ignores the scientific belief that
              90% of the background lung cancer risk in the US is attributable to smoking,
              radon  and ETS. One commenter (API) states that EPA misrepresents the
              available epidemiological data in developing their estimate of cancer risk by
              not considering the dose that occupational workers received or the change
              in fuels and engine technologies that have occurred since the exposures
              occurred.  This commenter adds that EPA did not evaluate the difference in
              risk between a 15 ppm and 50 ppm sulfur standard, and notes that EPA
              appears to base its rule on a "more is better" approach without regard to
              feasibility, costs, or proven health benefits.  API  cites to its comments related
              to this issue as submitted in response to the Tier 2 rulemaking and provides
              further detail in its Attachment 1.

              Letters:

              American Petroleum Institute (IV-D-343) p. 16-17
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256)  p. 32-33
              Marathon Ashland Petroleum  (IV-D-261) p. 7-8,11-12

       Response to  Comment 2.1(J)(2):

       Available data from numerous studies support the Agency conclusion that diesel
exhaust is likely to be carcinogenic to the human lung and that the potential for significant
environmental risks attributable to diesel exhaust exposure is of public health concern.  It is
on this basis that we are taking action to protect the public's health.

       The Clean Air Scientific Advisory Committee (CASAC),  in their public meeting on
the draft Health Assessment for Diesel Exhaust held on October 12-13, 2000, concurred
with the Agency position regarding the likely cancer hazard as well as the cancer risk
perspective that there is a reasonable potential that environmental lifetime cancer risks
from diesel exhaust may exceed 10~5 and could be as high as 10~3.8  The CASAC  panel
requested some clarifications regarding the uncertainties and limitations of the approach
used, but did not object to the Agency's method in developing the risk perspective using
the existing epidemiological  database. Fora further discussion please see section II of the
preamble.

       Contrary to the commenters assertion that the Agency ignores the important
contribution of smoking, radon and environmental tobacco smoke (ETS) to background
lung  cancer risk, the background lifetime lung cancer risk in the U.S. population that was
used in the Agency analysis includes lung cancer attributable to smoking, radon,
environmental tobacco smoke. In deriving the  risk perspective the Agency used a
technique to relate the increased relative risk of cancer observed in occupationally exposed
populations to the background rate of cancer.  The conversion of relative risk to population
risk is not specific to the diesel exhaust data as it would apply to any pollutant exposure for
       8  EPA (2000) Review of EPA's Health Assessment Document for Diesel Exhaust (EPA 600/8-
90/057E). Review by the Clean Air Scientific Advisory Committee (CASAC) December 2000 EPA-SAB-
CASAC-01-003.

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DECEMBER 21, 2000	PAGE 2-16

which cancer risk increases are observed and there is a known background rate for the
cancer in question.  In the case of diesel exhaust, an approximate relative risk of lung
cancer attributed to exposure to diesel exhaust in the workplace is 1.4.9 The relative risk of
1.4 means that occupationally exposed workers experience an extra risk that is 40 percent
higher than the 5 percent background lifetime lung cancer risk in the U.S. population.

        We disagree with the comment that we misrepresent the available epidemiological
data in developing the environmental cancer risk range. Among the 30 epidemiological
studies on diesel exhaust analyzed in the meta-analyses to which the relative risk of 1.4
refers, there is only one study that has information regarding the diesel exhaust dose.  We
have chosen not to use this study to develop a dose-response relationship for diesel
exhaust, a decision that CASAC supports.10 It is due to the absence of exposure (and
therefore dose) data that a unit risk has not been developed for diesel exhaust.  Regarding
the change in fuels and engine technologies overtime, there are insufficient data to
presume that these changes have resulted  in a decrease in risk. There are no data to
suggest that changes in the composition of diesel particulate matter or diesel exhaust in
the ambient air have resulted in an increase or a decrease in risk over time.

       In the draft Health Assessment for Diesel Exhaust,'1'1 EPA acknowledged the
limitations in confidently characterizing a  unit risk for diesel exhaust and instead provided a
perspective regarding the possible cancer risk consistent with  occupational epidemiological
findings of increased risk and relative exposure ranges in the occupational and
environmental  settings. The environmental risk estimates included  in the Agency's risk
perspective are meant to gauge the possible magnitude of risk with  the goal of
understanding the potential significance of the lung cancer hazard.  The environmental risk
estimates  are not to be construed as cancer unit risk estimates and are not suitable for use
in analyses which would estimate the number of possible lung cancer cases in exposed
populations, or to quantify health benefits. Accordingly, EPA did not evaluate the
difference in risk between a 15 ppm and 50 ppm sulfur standard.  In any case, analysis of
reduction in risk is based on reductions in emissions, which derive from the level of
emissions standards.  EPA discusses elsewhere the level of sulfur needed to meet the
level of emissions standards we are setting. It should be noted that EPA believes that PM
traps have not been shown to be reliable  at 50 ppm  sulfur.  See discussion at Section
III.F.I.a. of the preamble.

       The analysis presented by the Agency supports the conclusion that diesel exhaust
plays an important role in contributing to the lung cancer risk in the population.  Today's
action will  reduce exposure to the toxic gaseous and PM component of diesel exhaust as a
result of the new NMHC and PM standards. We expect that the  particulate matter
standard in today's action will result in the implementation of particulate matter control
technology (catalyzed particulate traps) that will significantly reduce particulate matter and
additionally remove  gaseous hydrocarbons.
       9 U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C.  The document is available
electronically at vwwv.epa.gov/ncea/dieslexh.htm. Specifically, see Chapter 8.

       10 EPA (2000) Review of EPA's Health Assessment Document for Diesel Emissions: Review by the
Clean Air Scientific Advisory Committee (CASAC). EPA-SAB-CASAC-00-004. www.epa.gov/sab.

       11 U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C.  The document is available
electronically at www.epa.gov/ncea/dieslexh.htm.

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DECEMBER 21, 2000                                                    PAGE 2-17
       (3)     For this rule, EPA relied on modeling performed for the Tier 2 rule which
              determined that the program would reduce peak ozone concentrations by 2
              ppb in 2007 and 5 ppb in 2030. Given the inherent uncertainties and
              inaccuracies in ozone modeling, this levels of benefit hardly seems to provide
              sufficient basis for concluding that additional mobile source controls are
              necessary for attainment of the NAAQS.

              Letters:

              American Petroleum  Institute (IV-D-343) p. 3-4

       Response to Comment 2.1(J)(3):

       EPA disagrees with the commenter. Today's rule will provide a substantial reduction
in emissions of ozone precursors, particularly NOx.  These emissions reductions will greatly
lower ozone concentrations which will help federal and State efforts to bring about attainment
with the current 1-hour ozone  standard.  As described in the Air Quality Modeling Technical
Support Document for this rule, EPA performed regional scale ozone modeling for the
Eastern U.S. to assess the impacts of the controls in this rule on predicted 1-hour ozone
exceedances. The results of this modeling were examined for those 37 areas in the East for
which EPA's modeling predicted exceedances in 2007, 2020 and/or 2030 and current 1-hour
design values are above the standard or within 10 percent of the standard. The results for
these areas combined indicate that there will be substantial reductions in the number of
exceedances and the magnitude of high ozone concentrations in both 2020 and 2030 due to
this rule.  The modeling also indicates that without the rule exceedances would otherwise
increase by 37 percent between 2020 and 2030 as growth in emissions offsets the reductions
from Tier 2  and other current control  programs.

       For all areas  combined, the rule is forecast to provide a 33 percent reduction in
exceedances in 2020 and a 38 percent reduction in 2030.  The total amount of ozone above
the standard is expected to decline by nearly 37 percent in 2020 and 44 percent in 2030.
Also, daily maximum ozone exceedances are lowered by 5 ppb on average in 2020 and
nearly 7 ppb in 2030. The modeling  forecasts an overall net reduction of 39 percent in
exceedances from 2007, which is close to the start of this program,  to 2030 when controls
will be fully  in place.  In addition, the  results for each individual area indicate that all areas are
expected to have fewer exceedances in 2030 with the HDV controls than without this rule.

       (4)     Section 211 (C)(2)(A)  requires EPA to assess all relevant evidence, and
              therefore EPA should complete its own diesel fuel health assessment before
              finalizing the rule.  Commenter cites issues raised by CASAC which is asking
              EPA to revise its report quantifying PM effects because EPA has not explicitly
              stated a case for dealing with diesel PM differently than with ambient PM;
              EPA should strengthen its discussion of the linkages between health hazards
              from diesel PM and other ambient PM; and EPA needs to discuss why the
              current ambient PM does not confer adequate protection from diesel PM.

              Letters:

              National Petrochemical & Refiners Association  (IV-D-218) p. 13

       Response to Comment 2.KJU4):

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DECEMBER 21, 2000                                                     PAGE 2-18
       The draft Health Assessment for Diesel Exhaust12 used in the current rulemaking,
summarizes the currently available scientific knowledge regarding the cancer and
noncancer health effects of exposure to diesel exhaust. On October 12-13, 2000 the
Scientific Advisory Boards' Clean Air Scientific Advisory Committee (CASAC)13 concurred
with the Agency findings presented in the draft Health Assessment for Diesel Exhaust. The
Agency is in the processes of preparing a final Health Assessment document that will
address the comments made by the CASAC panel in public session as well as written
comments received by committee members and the public.

       The Agency has satisfactorily addressed CASAC comments on an earlier draft
Health Assessment for Diesel Emissions (November 1999)14 to which the commenter
refers. To assess the noncancer impact for diesel PM, EPA uses data regarding chronic
health effects that are specific to diesel PM (as a surrogate for whole diesel exhaust
exposure) and also provides a discussion of diesel PM as a component of ambient PM. It
is the Agency position, as stated in the Health Assessment for Diesel Exhaust (July 2000),
that both acute and chronic exposure to diesel exhaust (as measured by diesel PM) can
result in adverse health effects.  For chronic diesel exhaust exposure, only a limited
amount of human data exist.  These data are suggestive of respiratory distress; however,
animal test data are quite definitive in providing a basis to anticipate a hazard to the human
lung  resulting from diesel exhaust exposure based on the irritant and inflammatory
reactions observed in test animals. Thus, EPA believes, and CASAC concurred, that it is
appropriate to use the animal data to determine a reference concentration of the
noncancer impacts of diesel exhaust (as measured by diesel PM).

       In the July 2000 Health Assessment for Diesel Exhaust, we  have strengthened the
discussion of linkages between the health hazards attributable to diesel PM and other
ambient PM. A qualitative comparison of adverse effects of exposure to ambient fine PM
and diesel exhaust particulate matter shows that the respiratory system is adversely
affected in both cases, although a wider spectrum of adverse effects has been  identified
for ambient fine PM. The primary health effects resulting from chronic exposure of
laboratory animals to diesel exhaust are pulmonary inflammation, functional  changes in the
pulmonary and tracheobronchial regions of laboratory animals, and  histopathological
changes, including fibrosis.  It is also important to note the emerging issue of allergenicity
caused or exacerbated by diesel exhaust, which may at some later  date, as more
information is collected, result in a re-assessment of the diesel exhaust reference
concentration. Relative to the diesel PM database, there is a wealth of human  data for fine
PM noncancer effects that can also be applied to understand the potential health effects of
exposure to diesel exhaust (as measured by diesel PM).  The primary health effects
reported in the epidemiological  literature resulting from chronic exposure to ambient PM
include mortality and morbidity (as measured by increased hospital  admissions, respiratory
symptom rates, and decrements in lung function).
       12U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C. The document is available
electronically at vwwv.epa.gov/ncea/dieslexh.htm.

       13 EPA (2000) Review of EPA's Health Assessment Document for Diesel Exhaust (EPA 600/8-
90/057E). Review by the Clean Air Scientific Advisory Committee (CASAC) December 2000 EPA-SAB-
CASAC-01-003.

       14 Environmental Protection Agency (1999) Health Assessment Document for Diesel Emissions:
SAB Review Draft. EPA/600/8-90/057D Office of Research and Development, Washington, D.C.

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       The ambient PM25 standard did not independently confer adequate protection from
diesel PM, although the Agency agrees that the fine PM health effects database can be
informative in characterizing protective levels because diesel PM is part of ambient fine
PM.  The Agency believes that animal test data are definitive in providing a basis on which
to calculate an  inhalation reference concentration for diesel exhaust which is a more direct
approach for delineating a protective level for diesel PM.  CASAC concurred with this
approach in public session October 12-13, 2000.

       (5)     Commenter points to the National Emissions Summary for 1998 to document
              that diesel vehicle emissions account for only small percentages of national
              emissions of PM (0.4%), SOx (0.4%), VOC (1%) and NOx (11%), and
              therefore  reductions in on-road emissions will be insignificant in relation to
              total emissions inventories and will not materially affect attainment status.

              Letters:

              Murphy Oil Corporation (IV-D-274) p. 11

       Response to Comment 2.1(J)(5):

       EPA disagrees with the comment. The primary air pollution problems targeted by this
rule are ambient concentrations of ozone, particulate matter and diesel exhaust.   Adverse
health effects from 1-hour ozone and PM10 are related to  concentrations above their
respective NAAQS. Also of concern are ambient concentrations of ozone at moderate levels
over prolonged and repeated exposures, and fine  PM. Diesel exhaust has recently been
determined to be a probable human carcinogen at environmental level of exposure.  National
inventories of NOx, PM and diesel exhaust are therefore of primary interest. Other HDV
emissions are also of concern, and their contributions and corresponding reductions, though
less than NOx and PM, are still important. Moreover, the heavy-duty portion of the inventory
is often greater in the cities, and the reductions in this rulemaking will have a relatively
greater benefit in those areas.

       A more detailed description of inventory contribution is found in the response to
comment 2.3(B)(2).  In short, heavy-duty vehicles are important contributors to the national
inventories of NOx emissions. Without NOx reductions from this rule, HDVs are expected to
contribute significantly (approximately 18 percent) to annual NOx emissions in 1996.  The
HDV contribution is predicted to fall to 15 percent in 2007 and 14 percent in 2020  due to
reductions from the 2004 heavy-duty rulemaking, and then rise again to 16 percent of total
NOx inventory by 2030 as VMT growth overwhelms the reductions of the 2004 HDV
program..

       The contribution of heavy-duty vehicles to  NOx inventories in many MSAs is
significantly greater than  that reflected  in the national average. NOx emissions also
contribute to the formation of fine particulate matter, especially in the West. In all  areas, NOx
also contributes to environmental and welfare effects such as regional haze, and
eutrophication and nitrification of water bodies.

       Nationally, we estimate that primary emissions of PM10 to be about 33 million
tons/year in 2007.  Fugitive dust, other miscellaneous sources and crustal material (wind
erosion) constitute approximately 90 percent of the 2007 PM10 inventory.  But there is little
opportunity to control these sources. Additionally, there is evidence from ambient studies
that emissions  of these materials may be overestimated and/or that once emitted they have

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less of an influence on monitored PM concentration than this inventory share would suggest.
Commenter's use of the PM inventory figure of 0.4% is apparently based on the HDV portion
of total PM, rather than that portion of PM excluding natural and miscellaneous sources.
Mobile sources account for 22 percent of the PM10 inventory (excluding the contribution of
miscellaneous and natural sources) and highway heavy-duty engines, the subject of today's
action, account for 20 percent of the  mobile source portion of national PM10 emissions in
2007.

       The contribution of heavy-duty vehicle  emissions to total mobile source PM emissions
in some metropolitan areas is substantially higher than the national average. This is not
surprising, given the high density of these engines operating in these areas.  For example, in
Los Angeles, Atlanta, Hartford, San Diego,  Santa Fe, Cincinnati, and Detroit, the estimated
2007 highway heavy-duty vehicle contribution to mobile source PM10 ranges from 25 to 38
percent, while the national percent contribution to mobile sources for 2007 is projected to be
about 20 percent.

       The city-specific investigations of ambient PM25 based on monitored and modeled
data indicate that the contribution of diesel  engines to  PM inventories in several urban areas
around the U.S. is much higher than indicated  by the national and city-specific PM emission
inventories presented in Table 2.3(C)(1)-c.  For example, diesel PM ranges up to as high was
68 percent as a portion of total PM in  Manhattan (1993); up to 38  percent in Brighton,
Colorado (1996-1997); and up to 27 percent in Phoenix, AZ (1994-1995). Reader should
refer to the chapter 2 of the RIA, Table II.A-21  and surrounding text for a compilation and
explanation of all such studies.

       One possible explanation for the higher contribution of diesel PM emissions to total
PM in these studies as compared to national inventories is the concentrated use of diesel
engines in certain local or regional  areas which is not well represented by the national, yearly
average presented in national PM emission inventories. Another  reason may be
underestimation of the in-use diesel PM emission rates. Our current modeling incorporates
deterioration only as would be experienced in properly maintained, untampered vehicles. We
are currently in the process of reassessing  the rate of  in-use deterioration of diesel engines
and vehicles which could significantly increase the contribution of HDVs to diesel PM.

       Whether or not HDVs are a large or small percentage of national inventories is not
determinative of the  need for emission control.  What is important is that HDV emissions
contribute to a significant health and welfare problem.  Thus while the HDV contribution  to
SOx, VOCs and air toxics in 2007 is less than 5 percent of their respective inventories, these
emissions do play a  role in secondary formation of fine particles, acid rain, ozone formation,
acid rain, POM deposition and other public health and  welfare effects. It is a fundamental
aspect of controlling pollution that comes from  many sources that it is important to review
emissions from all sources and attempt to reduce such emissions in order to achieve cleaner
air. Controlling emissions from this source allows us to cost-effectively gain large reductions
in a variety of pollutants.

       (6)     There is evidence that PM2.5 is more harmful than PM10 and the proposed
              standards may not adequately  address the health  issues associated with the
              smaller particles.  Also, in considering  the  sulfate portion of PM,  half of the
              measured sulfate mass is water vapor. These concerns, as well as the
              measurement technology used to determine PM levels, should be addressed
              before the health benefits are estimated and the rule  is finalized.

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              Letters:

              American Petroleum Institute (IV-D-343) p. 14

       Response to Comment 2.1(J)(6):

       Almost all PM emitted from diesel engines falls into the category of PM2.5 or below
(i.e., almost all diesel PM has a mass mean diameter less than 2.5 microns). Greater than
90 percent of the PM emissions from diesel engines have a mass mean diameter less than 1
micron. The phase 2 PM standard set here reduces the mass of PM emissions from diesel
engines by approximately 90% based upon the application of the catalyzed diesel particulate
filter (CDPF) technology. Therefore the mass of PM2.5 emissions from heavy-duty diesel
engines meeting the phase 2 standards will be reduced by 90 percent.

       It is true, as noted by the commenter, that aqueous sulfuric acid (sulfate PM) is made
up substantially of water whether in diesel exhaust or in the atmosphere.  However, if the
commenter means to infer that because some portion of a  solution is made up of water that
the solution is benign, we disagree.

       Sulfute PM is a public health concern as  evidenced by several morbidity and mortality
studies.15  Sulfate PM commonly exist as ultra-fine aerosols which have been implicated in
some studies as potentially more toxic than other fine PM.  Ultra-fine particles reach the
sensitive, deep airway tissues in the lung where they have  a long residence time compared
to gaseous compounds.  In addition to the toxic effects specific to sulfuric acid, these ultra-
fine particles can also act as carrier particles for other toxic species including hydrocarbons.
We have no evidence to suggest that sulfate PM is not linked to the carcinogenic concerns
with diesel PM in general. Finally, for purposes of SIP development, States have to consider
total PM including sulfate PM.

(K)    EPA should wait until the PM-2.5 litigation is resolved to move forward with the
       proposal because the health and welfare risks are most closely associated with
       fine PM and not the PM-10 concerns EPA is forced to rely on because of the
       fine PM litigation.

       (1)    Commenter provides no further supporting  information or detailed analysis.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232).  p.  4

       Response to Comment 2.1(K)(1):

       The commenter asks "why is EPA moving so far so fast on coarse PM10?" In fact,
PM10 includes both  fine and coarse fraction particles and in many areas of the U.S., fine
fraction particles predominate. Health  effects associated with PM10 may be associated with
either or both fine and coarse fraction particles. Thus, EPA does not agree that the PM10
NAAQS are limited to protection against coarse particle effects.  EPA also does not agree
that all regulatory activities should be placed on hold when some regulations are under
       15 Reanalysis of the Harvard Six Cities Study and the American Cancer Society Study of Particulate
Air Pollution and Mortality, 2000. Health Effects Institute:  Special Report of the Institute's Particle
Epidemiology Reanalysis Project.  Available on the web at vwwv.healtheffects.org/pubs-recent.htm.

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litigation. The scientific evidence that supported the establishment of new PM2.5 NAAQS
was not challenged in the U.S. District Court of Appeals decision; in fact, the panel of judges
stated that this evidence "amply justifies establishment of new fine particle standards." (May
14, 1999, p. 47) While EPA is not implementing the PM2.5 NAAQS in light of ongoing
litigation, we believe that it remains appropriate to recognize the scientific evidence of health
effects associated with PM10 and the benefits of reducing the fine fraction of PM10 in other
rulemaking proceedings.

(L)    The scientific evidence and epidemiology studies to date are insufficient to
       determine whether diesel exhaust is a cause of cancer in humans. EPA should
       not calculate a lung cancer risk from exposure to ambient levels of diesel
       exhaust and should withdraw its population risk estimates since they are
       scientifically unsupportable.

       (1)(a) The proposed rule provides an unbalanced view of the scientific evidence
             linking diesel exhaust to cancer. EPA's proposed rule incorrectly concludes
             that diesel exhaust causes lung cancer and the assumptions regarding this
             link  is  based on a revised HAD that has not passed independent review by
             CASAC. The scientific evidence and epidemiology studies to date are
             insufficient to determine whether diesel exhaust is a cause of cancer.
             Virtually all of the  studies lack quantitative data on exposure to diesel
             particulates or exhaust during the relevant time of exposure, did not
             adequately control for confounding with other environmental factors, and
             incorporate little or no historical information on the components of diesel
             exhaust at the time of exposure. One commenter notes that there have
             been dramatic changes in the diesel engine technology, particularly over the
             last  decade, that may have significantly changed the composition of diesel
             exhaust such that epidemiology studies evaluating the effects of diesel
             engines in the 1950's through the 1980's will not accurately predict human
             health effects from current diesel exhaust. One commenter states that
             EPA's application of the "Hill criteria" in the November 1999 draft Health
             Assessment Document for Diesel Emissions for evaluating the evidence of
             causality provided by epidemiological studies is flawed and refers to the
             critique of Dr. Vedal of the CASAC panel. One commenter cites two HEI
             publications [Diesel Exhaust: A Critical Analysis of Emissions, Exposure,
             and  Health Effects, April 1995; and Diesel Emissions and Lung Cancer:
             Epidemiology and Quantitative Risk Assessment, June 1999] and notes that
             HEI  has found that only a few studies are statistically significant and those
             studies lack sufficient data on exposure and confounding. To support their
             position, the commenter refers to Morgan, W.D.C., Reger, R.B., and
             Tucker, D.C. (1997).  "Health Effects of Diesel Emissions," Ann. Occup.
             Hyg. 41: 643-658; Muscat, J.E. and Wynder E.L. (1995).  "Diesel Engine
             Exhaust and Lung Cancer: An Unproven Association," Environ. Health
             Perspect. 103. 812-818.

             Letters:

             Engine Manufacturers Association  (IV-D-251) p. 75-79
             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 31-33
             International Truck & Engine Corp. (IV-D-25) p. 1-2
             International Truck & Engine Corp. (IV-D-257) p. 25-30
             Marathon Ashland Petroleum (IV-D-261) p. 7-8

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               Mercatus Center at GMU (IV-D-219) p. 10

       Response to Comment 2.1(L)(1)(a):

       We disagree with the comment that we provide an unbalanced view of the scientific
literature linking diesel exhaust to lung cancer in humans.  In the NPRM, we made the
statement that "Individual epidemiological studies numbering about 30 show increased
lung cancer risks of 20 to 89 percent within the study populations depending on the study."
Twenty eight of these studies are presented  by Cohen and Higgins in the 1995 Health
Effects Institute (HEI) study the commenter cites16 and additional studies have since been
published that report an increased risk for workers exposed to diesel exhaust.171819  The
draft Health Assessment for Diesel Exhaust evaluated only 22 of these studies because
those were identified as being the most relevant for risk assessment. Among  these 22
studies, 16 reported statistically significant increased lung cancer risks, ranging from 20 to
167 percent, associated with diesel exhaust exposure.  Of the remaining six studies, the
authors report either negative or inconclusive results. We conclude that the consistent
finding of elevated lung cancer risk across several different occupational workers (including
truck drivers, railroad workers, heavy equipment operators, and farm tractor drivers)
support our determination that diesel exhaust is likely to be carcinogenic to humans by
inhalation exposure.

       Contrary to the commenters assertion, our interpretation of the data is consistent
with that of several experts, including an expert  panel (the  Diesel Working Group) formed
by HEI. In the 1995 HEI study to which the commenter refers, Cohen and Higgins
reviewed 34 epidemiological studies and concluded that "The studies reviewed above
suggest that exposure to diesel exhaust in a variety of occupational circumstances is
associated with small to moderate relative increases in lung cancer occurrence and/or
mortality.  These elevations do not appear to be fully explicable by confounding due to
cigarette smoking or other known sources of bias. Therefore, at present, exposure to
diesel exhaust  provides the most reasonable explanation for these elevations."20  EPA and
HEI have concluded that the epidemiological database lacks sufficient data on exposure to
conduct a confident quantitative assessment of the cancer risk.2122 This issue is  discussed
       16 Health Effects Institute (1995) Diesel Exhaust: A Critical Analysis of Emissions, Exposure, and
Health Effects. Health Effects of Diesel Exhaust: Epidemiology; A.J. Cohen and M.W.P. Higgins.

       17 Steenland, K., Deddens, J., Stayner, L. (1998) Diesel Exhaust and Lung Cancer in the Trucking
Industry: Exposure-Response Analyses and Risk Assessment. Am. J Indus. Medicine 34:220-228.

       18 Hansen, J., Raaschou-Nielsen, O., Olsen, J.H., et al. (1998) Increased risk of lung cancer among
different types of professional drivers in Denmark. Occup. Environ. Med. 55:115-118.

       19 Bruske-Holfeld, I., Mohner, M., Ahrens, W., et al.  (1999) Lung cancer risk in male workers
occupationally exposed to diesel motor emissions in Germany. Am. J Ind. Med. 36:405-414.

       20 Health Effects Institute (1995) Diesel Exhaust: A Critical Analysis of Emissions, Exposure, and
Health Effects. Health Effects of Diesel Exhaust: Epidemiology; A.J. Cohen and M.W.P. Higgins. p. 268.

       21 U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C.  The document is available
electronically at www.epa.gov/ncea/dieslexh.htm.

       22 Health Effects Institute (1999) Diesel Emissions and Lung Cancer: Epidemiology and Quantitative
Risk Assessment.

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in greater detail in comment L(1)(b) below.

       The commenter asserts that the lack of quantitative exposure data render the
epidemiological data insufficient to assess the potential for a cancer hazard. While few of
the epidemiological studies measured worker exposures to diesel exhaust, the use of
surrogate estimates for exposure (e.g., worker years in a diesel-exposed job) provides a
useful exposure paradigm to determine the  relative risk in the occupational groups. The
use of surrogate estimates of exposure are  considered to provide adequate assessment of
exposure for purposes of identifying potential agents causally related to the disease under
investigation. The lack of exposure concentration estimates does not preclude the use or
importance of the epidemiological database in the qualitative weight of evidence
determination to identify a potential cancer hazard, but does significantly limit our ability to
calculate a unit risk or potency estimate.

       Regarding changes in engine technology and fuel composition overtime, available
data clearly indicate that toxicologically significant organic components of diesel exhaust
(e.g., polyaromatic hydrocarbons, polyaromatic hydrocarbon derivatives, nitro-polyaromatic
hydrocarbons) were present in diesel PM and diesel  exhaust in the  1970s and are still
present in diesel exhaust. There are insufficient data to provide insight into the changes in
total polyaromatic hydrocarbon emissions overtime or specific organic constituents such
as benzo[a]pyrene and 1-nitropyrene.  A significant fraction of diesel PM in  the ambient air
(possibly more than 50%) is emitted by non-road equipment and there are no data
available to characterize changes in the chemical composition of diesel PM from non-road
equipment overtime.  Given the variation in fuel, engine technology, and in-use operational
factors over the years, and the very important fact that we do not know the mode of action
for the cancer and noncancer health effects observed with exposure to diesel exhaust, we
cannot presume that changes in emissions or emission constituents have resulted in a
decrease in risk.

       In the November 1999 draft Health Assessment Document for Diesel Emissions we
summarized the application of the Hill criteria23 to inform our evaluation of the potential for
diesel exhaust to be causally related to lung cancer.  Dr. Vedal's concern, as expressed in
his most  recent comments on the draft Health Assessment Document for Diesel Exhaust,
is not the lack of evidence provided by the epidemiology data suggesting a causal
relationship between diesel exhaust exposure and  lung cancer,  but the application of the
Hill criteria to demonstrate causality.  Based on Dr. Vedal's comments on the application of
the Hill criteria in the November 1999 draft Health Assessment Document for Diesel
Emissions, we revised this discussion in the July 2000 draft Health Assessment Document
for Diesel Exhaust and include the modifications to the Hill criteria provided by Rothman.24
We state that none of the Hill criteria should be considered either necessary (except
temporality of exposure) or sufficient in itself to demonstrate causality and that the absence
of a positive finding for one or even several  of the criteria does not prevent a causal
interpretation.  Dr. Vedal's comments on the application of the Hill criteria in the July 2000
draft Health Assessment Document for Diesel Exhaust are provided here:

       "The application of the Hill criteria [(pp. 65-68) of the July 2000 Health Assessment
       Document for Diesel Exhaust] for assessing the likelihood of causation is improved
       23 Hill, A.B. (1965) The environment and disease: association or causation. Proceedings of the
Royal Society of Medicine 58:295-300.

       24 Rothman, K.J. (1986) Modern Epidemiology. Boston/Toronto: Little, Brown and Co. Pp. 16-21.

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RESPONSE TO COMMENTS DOCUMENT
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       in this version of the document.  It should be appreciated that modern views on the
       usefulness of the Hill criteria, such as those expressed by Rothman as referenced
       in the document, have significantly limited the usefulness of the criteria for this
       purpose. In  brief, the general point of these views is that none of the Hill criteria,
       except for temporality, need to be satisfied by an association that is, in fact, a
       causal  association.  That is, none are necessary. Specifically, neither a strong
       association,  specificity of effect,  dose-response, plausibility nor consistency are
       required. One wonders about the utility of applying the Hill criteria when so little is
       gained by their use....  The Hill criteria that are probably met are the consistency
       criterion and the biological plausibility criterion.  It is not clear that the dose-
       response criterion is met. Specificity is partially met, although studies have either
       not addressed other effects or have lacked power to do so.  The temporality
       criterion is assumed and not tested.... I would recommend basing arguments for
       causality, when using the epidemiological data, not on the Hill criteria, but rather on
       those characteristics of studies that determine validity."25

       Additional evidence supporting the identification of a cancer hazard for diesel
exhaust includes the observation tumors in animals following applications of various
fractions of the diesel exhaust mixture to skin, and implantation of diesel particles in
respiratory tissue. Recognizing that diesel exhaust is a complex mixture of carbon
particles and associated organics and other inorganics, it is unclear what fraction or
combination of fractions is  responsible for the carcinogenicity and other respiratory effects.
It has been shown, however, that the carbon particles as well as the organics have the
potential to be  active toxicological agents, either because of the potential to be irritants
which cause inflamation, or because of a capacity to produce mutagenic and/or
carcinogenic activity. In the case of the  organics (which exist both  in particle and gaseous
states in diesel exhaust) some have potent mutagenic and  carcinogenic properties.  In
addition, some evidence for the bioavailability of these particle adsorbed compounds has
been demonstrated which supports a hypothesis that the adsorbed organics are
bioavailable to the lung as well as being transported to sites distant from the lung.

       The commenter provides two references to support their view that the
epidemiological data do not support the  determination that diesel exhaust is likely to be
carcinogenic to humans by inhalation exposure.  Morgan et al., (1997) reviewed 23
epidemiological studies and employed the Hill criteria to conclude that the epidemiological
data do not provide convincing evidence that there is an increased risk of cancer from
diesel exhaust emissions.  Muskat and Wynder (1995) reviewed 14 epidemiological studies
and concluded, largely on the basis of possible confounding by cigarette smoking that the
epidemiological studies do not provide evidence fora carcinogenic effect of diesel exhaust.

       We disagree with the findings of these two assessments. They do not represent
the dominant view among the scientific bodies that have reviewed the epidemiological and
toxicological literature.  While the epidemiological studies are of varying quality in terms of
design and controlling for factors that might confound a lung cancer response, we  believe
that these data provide compelling evidence that diesel exhaust is  likely to be carcinogenic
to humans by inhalation.

       The Clean Air Scientific Advisory Committee (CASAC) of the Science Advisory
Board concurred with the Agency that the epidemiological literature form a basis for the
       25 Final Combined Panel Comments on the Health Assessment Document for Diesel Exhaust: SAB
Review Draft (EPA/600/8-90/057E).

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conclusion that diesel exhaust is likely to be carcinogenic to humans by inhalation.26

       EPA joins many other organizations in finding that diesel exhaust or diesel
particulate matter is a likely or probable human carcinogen. In the late 1980s, the
International Agency for Research on Cancer (IARC) determined that diesel exhaust is
"probably carcinogenic to humans" and the National Institute for Occupational Safety and
Health classified diesel exhaust a "potential occupational carcinogen."27 28  In 1996, the
International Programme  on Chemical Safety of the World Health Organization listed diesel
exhaust as a "probable" human  carcinogen.29 In 1998, the California Office of
Environmental Health Hazard Assessment (OEHHA, California EPA) identified diesel PM
as a toxic air contaminant due to the noncancer and cancer hazard and because of the
potential magnitude of the cancer risk.30 Most recently, the U.S. Department of Health and
Human Services National Toxicology Program designated diesel exhaust particles as
"reasonably  anticipated to be a human carcinogen" in its Ninth Report on Carcinogens.31
       The information provided by EPA in the Health Assessment for Diesel Exhaust and
in the preamble and RIA provide the proper scientific basis for establishment of PM and
NMHC standards for diesel engines based on the toxicity of diesel exhaust.

       (1)(b)  Commenters disagreed with EPA's intent (in the RIA) to publish the
              information in its revised Health Assessment Document for Diesel
              Emissions (HAD) and reviewed EPA's conclusions regarding the risk from
              diesel exhaust.  EPA's risk estimate is scientifically unsupportable given the
              weakness of the existing diesel epidemiology data-base and its unsuitability
              for quantitative risk assessment (QRA). A meta-analysis is only as reliable
              as the underlying studies from which it is derived and since EPA has
              acknowledged that none of the studies cited in the diesel meta-analysis
              could support QRA, using these studies as a whole to support QRA is
              scientifically unwarranted. One commenter notes that these analyses do
              not represent the overall epidemiological database, and that only two of the
              studies used to support EPA's QRA include exposure analysis and those
              studies have deficiencies that make them unsuitable for QRA. Therefore,
              the current epidemiological studies and state of the science are not
              sufficient to provide any quantitative relationship between exposure to
       26EPA (2000) Review of EPA's Health Assessment Document for Diesel Exhaust (EPA 600/8-
90/057E). Review by the Clean Air Scientific Advisory Committee (CASAC) December 2000. EPA-SAB-
CASAC-01-003.

       27 National Institute for Occupational Safety and Health (NIOSH) (1988) Carcinogenic effects of
exposure to diesel exhaust. NIOSH Current Intelligence Bulletin 50. DHHS, Publication No. 88-116. Centers
for Disease Control, Atlanta, GA.

       28 International Agency for Research on Cancer (1989) Diesel and gasoline engine exhausts and
some nitroarenes, Vol. 46. Monographs on the evaluation of carcinogenic risks to humans. World Heath
Organization, International Agency for Research on Cancer, Lyon, France.

       29 World Health Organization (1996) Diesel fuel and exhaust emissions: International program on
chemical safety.  World Health Organization, Geneva, Switzerland.

       30 Office of Environmental Health Hazard Assessment (1998) Health risk assessment for diesel
exhaust, April 1998. California Environmental Protection Agency, Sacramento, CA.

       31 U.S. Department of Health and Human Services (2000) Ninth report on carcinogens. National
Toxicology Program, Research Triangle Park, NC.  ehis.niehs.nih.gov/roc/toc9.html.

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              diesel exhaust and a risk of cancer. One commenter noted that EPA has
              concluded that the Garshick studies cannot be used for QRA since a
              negative dose-response curve was found in that study. One commenter
              refers to their previous comments (Navistar/International Truck and Engine
              Corp.) "Comments on the Clean Air Science Advisory Committee Draft of
              the November 1999 Revised Health Assessment Document of Diesel
              Emissions (November 24, 1999)" as well as "Supplemental Comments on
              the Clean Air Science Advisory Committee Draft of the November 1999
              Revised Health Assessment  Document of Diesel Emissions (December 15,
              1999)" that provides detailed explanation on why the Steenland study is
              unsuitable for QRA. The commenter asserts that other analyses of the
              diesel epidemiology database have concluded that quantitative risk
              estimates cannot be done. Two commenters state that the risk range
              serves no purpose but to misinform the public and that the inaccuracy of the
              calculation can be readily seen by comparing the reported risk range to
              reported incidence data of lung cancer.  The commenter cites National
              Cancer Institute reports that the annual incidence of lung and bronchus
              cancer reported in the United States during the 1990-1996 was
              approximately 150,000 cases.  The commenter states that when one
              considers the  lower end  of the range of lung cancer cases potentially
              attributable to  cigarette smoking, radon,  and environmental tobacco smoke
              and subtracts  these from the annual incidence rate, there are not enough
              cancer cases such that diesel exhaust could have an environmental lifetime
              risk of 10-3.
              Letters:

              Engine Manufacturers Association (IV-D-251) p. 80
              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 31-32
              International Truck & Engine Corp. (IV-D-25) p. 1-2
              International Truck & Engine Corp. (IV-D-257) p. 25-30
              Marathon Ashland Petroleum  (IV-D-261) p. 7-8
              Mercatus Center at GMU (IV-D-219) p. 10

       Response to Comment 2.1(L)(1)(b):

       The EPA agrees that the available data are currently considered inadequate to
confidently establish a cancer unit risk factor (cancer potency); however, significant
activities are underway to improve the epidemiologic database for dose-response
assessment and the Agency will monitor these activities to determine their potential use in
conducting dose-response analysis and deriving a unit risk.32  In the absence of a unit risk
estimate, we provide a perspective on the possible environmental cancer risk posed by
exposure to diesel exhaust to gain a better understanding of the potential significance of
the cancer hazard for the general population.  The Agency concluded in developing its
perspective on risk that, there is a reasonable potential that environmental lifetime cancer
       32 U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C. The document is available
electronically at vwwv.epa.gov/ncea/dieslexh.htm.

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risks from diesel exhaust may exceed 10~5 and could be as high as 10~3.33 This
environmental cancer risk range provided by EPA is significantly different from the
derivation of a unit risk factor. A unit risk estimate is derived from dose-response data in
the epidemiological ortoxicological literature.  The perspective on risk provided in the RIA
and the draft Health Assessment Document for Diesel Exhaust is based on the possible
cancer risk consistent with occupational epidemiological findings of increased risk and
relative exposure ranges in the occupational and environmental settings. Such an
approach does not produce estimates of cancer unit risk and are not suitable for use in
analyses which would estimate possible number of lung cancer cases in exposed
populations. Rather,  this approach provides a perspective on the possible magnitude of
environmental cancer risk and thus insight about the possible significance of the cancer
hazard. The Agency  believes that the risk estimation techniques that were used in the
draft Assessment to gauge the potential for and possible magnitude of risk are reasonable
and the CASAC panel has concurred with the Assessment's discussion of the possible
environmental risk range with an understanding that some clarifications and caveats would
be added to the final version of the Assessment.  This is discussed in greater detail in the
RIA.

       EPA recognizes that, as in all such risk assessments, there are uncertainties in this
assessment of the environmental risk range including limitations  in exposure data,
uncertainty with respect to the most accurate characterization of the risk increases
observed in the  epidemiological studies, chemical changes in diesel exhaust overtime,
and extrapolation of the risk from occupational to ambient environmental exposures. As
with any such risk assessment for a carcinogen, at this time EPA cannot rule out that the
possible lower end of the environmental cancer lifetime risk range includes zero.
However, it is the Agency's best scientific judgement that the assumptions and other
elements of this analysis are reasonable and appropriate for identifying the risk potential
based on the scientific information currently available.

       We disagree that the environmental risk range misinforms the public and is
inaccurate when compared to reported incidences of lung cancer. The commenter cites
National Cancer Institute reports that the annual incidence of lung and bronchus cancer
reported in the United States during the 1990-1996  was approximately 150,000 cases.
The majority of these cases are attributed to cigarette smoking, with additional cases
caused by environmental tobacco smoke, radon, and other causes. The absolute numbers
of cases of lung cancer attributable to each of these causes is highly uncertain. The
commenter correctly calculates that using the upper limit of the possible number of cancer
cases attributed to cigarette smoking, environmental tobacco smoke,  radon exceeds the
annual number of lung cancer cases reported. The commenter states that subtracting the
lower end of the ranges of lung cancer attributed to cigarette smoking, environmental
tobacco smoke, and radon suggests  there are approximately 7,000 cases of lung cancer
attributable to other causes.  From this annual value of 7,000 lung cancer cases, the
commenter incorrectly calculates the lifetime population risk potentially attributable to
diesel exhaust as 2 x 10~5 (this is the  annual risk that diesel exhaust exposure might pose if
one assumed it  accounted for the 7,000 deaths per year, calculated by dividing 7,000 by
the estimated population in 1996 of 272 million).  The lifetime population risk that diesel
       33 As used in this rule, environmental risk is defined as the risk (i.e. a mathematical probability) that
lung cancer would be observed in the population after a lifetime exposure to diesel exhaust. Exposure levels
may be occupational lifetime or environmental lifetime exposures.  An environmental risk in the magnitude of
10"5 translates as the probability of lung cancer being evidenced in one person in a population of one
hundred thousand having a lifetime exposure.

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exhaust might pose if exposure to this substance caused the remaining 7,000 lung cancer
cases per year is 2 x 10~3 (the lifetime risk is calculated by multiplying the number of annual
lung cancer cases by 70, the estimated lifetime, and dividing by the estimated population).
The population risk of 2 x 10~3 is clearly in agreement with the upper end of the
environmental risk range that EPA presents in the draft Health Assessment Document for
Diesel Exhaust and in the  RIA. For further information on the risk range, see section II of
the preamble.

       In addition, among the cancer cases attributed to radon, 85 percent of these are
estimated to be smokers and therefore a more accurate assessment of lung cancer
attributable to radon only is much lower than that used by the commenter.34 Calculation of
the lung cancer cases attributable to radon  only (as opposed to radon-exposed individuals
who are also smokers), indicates that there are thousands of additional lung cancer cases
for which a cause has not been determined (e.g., the lifetime population risk attributable to
diesel exhaust exposure may be as high  as 10~3 and still not account for all of the
unexplained cancer cases in the population).
       (2)     One commenter states that the 2007 HDE rulemaking is expressly designed
              to address ozone and PM air quality objectives, and not mobile source air
              toxics concerns and is not an appropriate forum for addressing any
              perceived cancer risks associated with diesel emissions.
              Letters:

              International Truck & Engine Corp.  (IV-D-25) p. 2

       Response to Comment 2.1(L)(2):

       We disagree with this comment. The EPA, under the authority granted in Section
202(a) and Section 211 (c) of the Clean Air Act Amendments is allowed to regulate engines
and their fuels that contribute to air pollution which reasonably may be anticipated to
endanger public health or welfare. This authority is not limited to compliance with the
NAAQS for ozone and PM, but includes any pollutant that may reasonably be anticipated to
endanger public health or welfare, including public heath or welfare concerns raised by
exposure to air toxics or likely human carcinogens.

(M)    EPA should revise and expand its discussion  of non-cancer health effects of diesel
       exhaust.

       (1)     The discussion of non-cancer health effects is misleading in that it neglects
              to report on the findings and conclusion of the HAD. Commenter cites to
              EPA's Draft 1999 document, Chapters, Noncancer Health Effects and
              notes that there is inadequate assurance that the reference concentration
              presented in the document was appropriate. The  absence of information  in
              the proposal from the HAD indicating that there appears to be little if any
              long term health effects from diesel emissions is misleading and needs
              correction.

              Letters:
       34 http://www.cdc.gov/tobacco/sgM 989/1989SGRChapter3.pdf

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              Engine Manufacturers Association (IV-D-251) p. 81

       Response to Comment 2.1(M)(1):

       We disagree with the commenter. The discussion of noncancer health effects in
the rulemaking document accurately and adequately summarizes the findings and
conclusions of the draft Health Assessment for Diesel Exhaust. The commenter cites the
1999 draft Health Assessment Document for Diesel  Emissions in which we stated that
noncancer effects in humans from long-term chronic exposure to diesel particulate matter
are not evident.  We also state in the 1999 and July  2000 Health Assessments that while
most of the epidemiologic data indicate an absence  of an excess risk of chronic respiratory
disease associated with exposure to diesel exhaust, a few studies report a higher
prevalence of respiratory symptoms, primarily cough, phlegm, or chronic bronchitis among
the exposed.  Relative to the diesel PM database, there is a wealth of human data for fine
PM noncancer effects, in part, possibly due to the fact that for chronic diesel exhaust
exposure, only a limited amount of human data exist. The fine PM database can also be
applied to understand the potential health effects of  exposure to diesel exhaust (as
measured by diesel PM). A qualitative comparison of adverse effects of exposure to
ambient fine PM and diesel exhaust particulate matter shows that the respiratory system is
adversely affected in both cases, although a wider spectrum of adverse effects has been
identified for ambient fine PM including increased hospital admissions, respiratory
symptom rates, decrements in lung function and increased mortality.

       We state in the final rulemaking document that the data specific to diesel exhaust
are suggestive of respiratory distress; however, the database regarding animal exposure to
diesel exhaust is robust enough to provide calculation of a reference concentration. It is
also noteworthy that we state in the 1999 and 2000 versions of the Health Assessments
that it is also apparent that diesel exhaust, as measured  by diesel particulate matter, has
the potential to stimulate allergen-induced allergic airway disease in sensitive humans, a
finding not reported in the ambient PM database.

       In their Review of EPA's 1999 draft Health Assessment Document for Diesel
Emissions35 CASAC questioned the use of allergenicity data in the derivation of the
reference concentration (RfC) because the critical effect  on which the RfC is based
focuses on pulmonary histopathology.  We subsequently have removed the  uncertainty
factor associated with the allergenicity data from the RfC derivation.  In  public session on
October 12-13, 2000, CASAC concurred with the calculation of the RfC presented in the
July 2000 Health Assessment Document with the addition of an uncertainty factor of three
to extrapolate the observed health effects in animals to humans.36 This additional
uncertainty factor is being used on the recommendation  of CASAC and will result in an RfC
of approximately 5 ug/m3.

       (2)     Non-cancer health effects from diesel should  not be a concern.  By 2007,
             under the current control program, ambient levels of diesel PM will average
             only 0.4 Mg/m3, which is an order of magnitude or more below the RfC range
       35 EPA (2000) Review of EPA's Health Assessment Document for Diesel Emissions: Review by the
Clean Air Scientific Advisory Committee (CASAC).  EPA-SAB-CASAC-00-004. www.epa.gov/sab.

       36 EPA (2000) Review of EPA's Health Assessment Document for Diesel Exhaust (EPA 600/8-
90/057E). Review by the Clean Air Scientific Advisory Committee (CASAC) December 2000. EPA-SAB-
CASAC-01-003.

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              currently being considered by EPA and CASAC. Since the RfC is a
              concentration at which there is no appreciable risk of non-cancer effects, this
              factor should not be a concern to the Agency.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 33

       Response to Comment 2.1(M)(2):

       Chronic and acute noncancer health effects attributed to diesel exhaust exposure
are of concern to the Agency.  For chronic noncancer health effects the Agency recognizes
that diesel PM is a ubiquitous component of ambient PM and therefore the health effects
attributed to ambient PM are of considerable concern to the Agency. As discussed in the
RIA, these health effects include increased hospital admissions, respiratory symptom
rates, decrements in lung function, and mortality.  The fact that diesel PM concentrations, if
considered in isolation, may be below the RfC, does not lessen  our concern about their
contribution to overall ambient PM levels and health effects. A threshold for noncancer
health effects attributed to ambient PM has not been established and therefore, the
contribution of diesel exhaust particulate matter to the ambient PM mixture is of concern to
the Agency.

       Regarding the reference concentration, while average ambient levels of diesel
particulate matter may be lower than the chronic reference concentration in the future, the
Agency acknowledges that some studies suggest there are locations in which people are
exposed to levels of diesel exhaust (as measured by diesel particulate matter) that exceed
the reference concentration ('hot spot' exposure situations such as near roadways and bus
depots).

       In addition, acute exposure to diesel exhaust can result in decreases in lung
function, wheezing, chest tightness, increases in airway resistance, and there is also
evidence of immunological effects including increased reaction to allergens and some
symptoms associated with asthma. These acute effects data currently lack sufficient detail
to permit the calculation of protective  levels for human exposure, however, the Agency will
revisit this issue as additional data become available. We believe that this information
provides sufficient cause for concern and accordingly, the Agency continues to collect
information regarding exposure to diesel exhaust, including short-term microenvironmental
exposures that may far exceed annual average exposures.

       See also our response to issues 2.1(M)(1) and 2.1(M)(3).

       (3)     EPA should use the draft reference concentration (RfC) for non-cancer
              endpoints for any quantitative health benefit analysis. Worst case estimates
              of diesel contribution to ambient PM are well below the proposed RfC of 5.0
              micrograms per cubic meter. As listed in Table II.A-22, California EPA
              determined worst-case exposures in 1990, 2007 and 2020 at 1.5, 1.3 and 1.2
              micrograms per cubic meter, respectively.

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              Letters:

              American Petroleum Institute (IV-D-343) p. 13,18
              Marathon Ashland Petroleum (IV-D-261) p. 8

       Response to Comment 2.1(M)(3):

       We disagree with the commenter that the draft reference concentration provides
the only tool  for assessing the noncancer endpoints attributable to diesel PM and ambient
PM of which  diesel PM is a ubiquitous component. As discussed above in the response to
comment 2.1(M)(1) and 2.1(M)(2) and in the preamble, relative to the diesel PM database,
there is a wealth of human data for fine PM noncancer effects that are relevant to the
quantitative assessment of benefits realized as a result of the implementation of this rule.
This approach  provides the advantage that in addition to direct diesel exhaust particulate
exposure, assessment of ambient PM includes the contribution of secondary PM attributed
to diesel exhaust emissions.

(N)    The association and causality between PM concentrations and mortality is
       uncertain.

       (1)     Existing epidemiological studies associate many factors with health  statistics
              including meteorological, environmental, social, and economic components
              and since all of those factors may contribute to the noted correlations, it is
              currently inappropriate to indicate, based on these studies, that there is a
              causal role in mortality from presently observed ambient PM concentrations.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 76

       Response to Comment 2.1(N)(1):

       EPA  does not agree with the commenter. EPA reviewed these issues in detail in the
Particulate Matter Criteria Document (US EPA  1996, Docket A-99-06/II-A-18,  19, 20) and
Response to Comments document for the 1997 PM NAAQS rulemaking (Docket number A-
95-54 and ECAO-CD-92-0671).  As stated in the  response to comments: "The causal
relationship of adverse human health effects due to exposure to ambient air containing high
concentrations of airborne particles was established beyond any reasonable scientific doubt
by high-level incidents such as those observed in the Meuse Valley of Belgium in 1930, in
Donora, PA in 1948,  and in London in 1952." (1997  PM NAAQS RTC, p. A-5) With regard to
the overall body of evidence for PM-related health effects at lower concentrations, EPA has
concluded: "While the lack of demonstrated mechanisms that explain the range of
epidemiologic findings is an important caution which limits conclusions as to causality,
qualitative information from laboratory studies of the  effects of particle components  at high
concentrations and dosimetry considerations suggest that the kinds of effects observed in
community studies (e.g., respiratory- and cardiovascular-related responses) are at least
plausibly related to particulate matter. Indeed,  the Criteria Document points to the
consistency of the results of the epidemiologic studies from a large number of different
locations and the coherent nature of the observed effects as being suggestive of a likely
causal role of ambient PM in contributing to the reported effects." (Staff Paper, p. VII-3,
Docket A-99-06/II-A-23)

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       (2)     The evidence correlating PM concentrations with mortality and morbidity
              remains uncertain. Commenter cites to recent publications by the Health
              Effects Institute (HEI) as supporting documentation. These studies have
              raised a number of questions and associations that argue against a causal
              role for PM.  [see Reanalysis of the Harvard Six Cities Study and the
              American Cancer Society Study of Particulate Pollution and Mortality; and
              The National Morbidity, Mortality, and Air Pollution Study Part II:  Morbidity,
              Mortality, and Air Pollution in the U.S. (NMMAPS)]. Commenter provides
              additional discussion on the conclusions and assumptions in these studies.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 77

       Response to Comment 2.1(N)(2):

       EPA does not agree with the commenter's interpretation of the Reanalysis of the
Harvard Six Cities Study and the American  Cancer Society Study of Particulate Air Pollution
and Mortality (Krewski et al., 2000). EPA has never claimed that one individual epidemiology
study can be the basis for determining a causal relation between air pollution and mortality.
In the 1996 PM CD, EPA evaluated the findings of many epidemiology studies, and found
them to provide a consistent and coherent body of evidence, and the two studies cited by the
commenter add further support to EPA's previous conclusions.

       With regard to the specific study findings, the authors report that "The risk estimates
reported  by the Original Investigators were remarkably robust to alternative specifications of
the underlying  risk models, thereby strengthening  confidence in the original findings.
Specifically, the inclusion of additional individual-level covariates beyond those considered  by
the Original Investigators had little impact on the original risk estimates." (Krewski et al.,
2000, p. 234)  Dozens of additional risk factor covariates were tested in these models, and
only education level was found to have a  modifying effect; the authors suggest that this
variable may be a marker for socioeconomic status which may in turn be correlated with fine
particle air pollution.

       The commenters include a quote from this study stating that more than one
component of air pollution may contribute to increased mortality  risk, and cite the findings
regarding associations between sulfur dioxide and mortality.  EPA has also never claimed
that PM was the only component of air pollution associated with  health effects; however, in
the 1996 PM CD it was found that PM was more consistently associated with mortality than
other gaseous  criteria pollutants. With regard to the associations found with sulfur dioxide,
the authors state "The absence of a plausible toxicological mechanism by which sulfur
dioxide could lead to increased mortality further suggests that it might be acting as  a marker
for other  mortality-associated pollutants."  (Krewski et al., 2000, p. 235)

       EPA also disagrees with the commenter's interpretation of the findings of the National
Morbidity, Mortality and Air Pollution Study (NMMAPS). The authors state clearly: "together,
the 2 sets of analyses - that of mortality in 90 cities and of hospitalization in persons 65 years
and older in 14 cities - provide new and strong evidence  linking particulate air pollution to
adverse health effects." (Samet et al., 2000, p. 42) While it is true that the magnitude and
direction  of the relative risks vary for each of the 90 cities, it is  also true that the risks are
predominantly  greater than 1.0, as reflected in  the positive, significant relative risk for all
cities combined. The authors also argue  against focusing on the single-city results: "We
caution against attempts to interpret estimates for any specific city, particularly if the goal is to

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DECEMBER 21, 2000	PAGE 2-34

gauge whether PM is having a greater or lesser effect than in other locations." (Samet et al.,
2000, p. 43).

       (3)     Most studies that have alleged an association between PM and health effects
              have measured PM-10 and diesel PM is only a very small fraction of PM-10.
              Even if there was a causal relationship between PM and health, the
              contribution of diesel would only represent an extremely small portion of any
              potential health  risk.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 77

       Response to Comment 2.1(N)(3):

       As summarized in the Health Assessment Document for Diesel Exhaust, diesel PM
constitutes about 23% of the total ambient PM2.5 inventory (excluding natural and
miscellaneous sources), with annual average estimates ranging up to 36% and daily
estimates ranging up to 68% in some urban areas. As noted in the PM CD, recent scientific
studies indicate that some of the serious health effects associate with PM, such as mortality,
are more strongly associated with the fine fraction of PM.  This conclusion was supported not
only by studies using directly measured fine particles, but PM10 in areas dominated by fine
particles. EPA believe that this evidence does not support the commenter's statement that
diesel particles "represent an extremely small portion of any potential health risk."

       (4)     The statement that diesel PM is unique is incorrect. Diesel PM is not known
              to be unique and cannot  be measured directly since it is indistinguishable
              from other sources of PM. No adequate case has been made to separate
              diesel PM and distinguish different health effects as compared to other
              sources of combustion PM.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 77

       Response to Comment 2.KNH4):

       We did not state in the NPRM that diesel PM is unique and disagree that diesel PM
cannot be distinguished from other sources  of PM. We stated that "While diesel  particulate
matter contributes to ambient levels of PM2 5, the high content of elemental carbon with the
adsorbed organic compounds and the high number of ultrafine particles (organic carbon
and sulfate) in diesel exhaust distinguish it from other noncombustion sources of PM25. In
addition, diesel particulate matter from mobile source diesel engines is emitted into the
breathing zone of humans and thus has  a greater potential for human exposure (per kg of
emissions) compared to other combustion particulates emitted out of stacks."

       Diesel PM is most accurately distinguished from other combustion sources of
ambient PM  based on extensive chemical source profiles that include speciation of organic

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000                                                        PAGE 2-35
components as well as elemental carbon, trace elements and inorganic ions.37 38 39

       The health effects database that distinguishes diesel exhaust from other sources of
combustion PM includes the rat animal studies from which the reference concentration for
diesel exhaust is developed and studies suggesting a role for diesel exhaust in the
stimulation of allergen-induced allergic airway disease in sensitive humans. Also of note
are the recent studies suggesting an association between ambient elemental carbon
concentrations (a large component of diesel exhaust particulate emissions) and
cardiovascular disease.40 41  Diesel exhaust is also of concern because it is emitted into the
breathing zone of people, unlike the majority  of other combustion sources which are emitted
higher into the atmosphere and therefore undergo greater dispersion and dilution before
being inhaled. Recent studies are suggesting an important role for mobile source
emissions in ambient PM-related health effects. In one study, factor analysis was used with
indicators of particulate matter from several sources, and the authors reported that among
these sources, particulate matter from mobile sources had the largest association with
mortality in six U.S. cities.42  An additional new analysis uses the results of a number of
new epidemiological studies to assess the public health impact of outdoor and traffic-
related pollution for three European countries. The authors  report findings of
"considerable" public health impacts for both  mortality and morbidity (e.g., bronchitis,
asthma) effects.43

       (5)    Because  ultrafine particles  are much more hazardous than PM-10 or PM-2.5,
              EPA's mass based standard is inappropriate, and a particle number standard
              is more protective of human health.

              Letters:

              Marathon Ashland Petroleum (IV-D-261). p. 12-13
       37 Fujita, E; Watson, JG; Chow, JC; et al. (1998) Northern Front Range Air Quality Study, volume C:
source apportionment and simulation methods and evaluation.  Prepared for Colorado State University,
Cooperative Institute for Research in the Atmosphere, by Desert Research Institute, Reno, NV.

       38 Schauer, JJ; Rogge, WF; Hildemann, LM; et al. (1996) Source apportionment of airborne
particulate matter using organic compounds as tracers. Atmos Environ 30(22):3837-3855.

       39 U.S. EPA (2000) Health Assessment Document for Diesel Exhaust: SAB Review Draft.
EPA/600/8-90/057E Office of Research and Development, Washington, D.C. The document is available
electronically at www.epa.gov/ncea/dieslexh.htm.

       40 Tolbert, P.E., Klein, M., Metzger, K.B. et al. (2000) Interim results of the study of particulates and
health in Atlanta (SOPHIA). J Exposure Analysis and Env. Epidemiology 10:446-460.

       41 MarTF, Morris GA, Koenig JQ, Larson TV. (2000) Associations between air pollution and
mortality in  Phoenix, 1995-1997. Environ Health Perspect 108:347-353.
       42 Laden F, Neas LM, Dockery DW, Schwartz J.  2000. Association of fine particulate matter from
different sources with daily mortality in six U.S. cities. Environ Health Perspect 108:941-947.

       43 Kunzli N, Kaiser R, Medina S, et al. 2000. Public-health impact of outdoor and traffic-related
pollution: a European assessment. Lancet 356:795-801.

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       Response to Comment 2.KNH5):

       EPA disagrees with the commenter's assertion; we believe that the currently available
scientific evidence on PM health effects does not lead one to conclude that ultrafine particles
are much more hazardous than  PM10 or PM-2.5.  During the last PM NAAQS review, the
Staff Paper included a brief discussion of the evidence on ultrafine particles that was
reviewed in the Criteria Document, and concluded "For these reasons, it is questionable
whether ultrafine aerosols could be playing a major role in the reported epidemiologic
associations between the measured mass of fine or PM10 particles and health effects in
sensitive populations." (Staff Paper, p. V-73) Newly published studies will be reviewed in the
PM Criteria Document that is now being prepared, and the findings will be assessed in
considering the adequacy of the current PM NAAQS.

       Regarding the assertion that a particle number standard would be more protective
of human health than the mass based standard being adopted today, the technology that
we expect industry to use to comply with the new PM standards will reduce PM mass and
number. Modern catalyzed diesel particulate filters (CDPF, also referred to as catalyzed
filters or catalyzed traps, along with the very similar continuously regenerating DPF or CR-
DPF) have been shown to be very effective at reducing PM mass, and recent data shows
that they are also very effective at reducing the overall number of emitted particles when
operated on low sulfur fuel. Hawker, et. al., found that a modern CDPF reduced  particle
count by over 95 percent, including some of the smallest measurable particles (< 50 nm),
at most of the tested conditions. The lowest observed efficiency in reducing particle
number was 86 percent.  No generation of particles by the CDPF was observed under any
tested conditions.44 Kittelson, et al., confirmed that ultra-fine particles can be reduced by a
factor of ten by oxidizing volatile organics, and by an additional factor of ten by reducing
sulfur in the fuel. CDPFs efficiently oxidize nearly all of the volatile organic PM precursors,
and elimination of as much fuel sulfur as possible will substantially reduce the number of
ultra-fine PM emitted from diesel engines. The combination of CDPFs with low sulfur fuel
is expected to result in very large reductions in both PM mass and the number of ultra-fine
particles. Therefore, the mass-based standard will also achieve the reduction in particle
contribution the commenters seems to wish to achieve.

(O)    In addition to primary health impacts, diesel pollution also contributes to
       adverse environmental impacts such as regional haze, acid rain, global
       warming, and the eutrophication of lakes and streams.

       (1)     Commenters provide no further supporting information or detailed analysis.

              Letters:

              Boulder County Clean Air Consortium (IV-D-35) p. 1
              Environmental Defense  (IV-D-748) p. 1, 8-9
              NESCAUM  (IV-D-315)p. 3
              STAPPA/ALAPCO (IV-D-140) p. 1
              The Mountaineers  (IV-D-184) p. 1

       Response to Comment 2.KOK1):
       44 Hawker, P., et. al., Effect of a Continuously Regenerating Diesel Particulate Filter on Non-
Regulated Emissions and Particle Size Distribution, SAE 980189.

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       EPA agrees that diesel pollution may contribute to ecosystem or welfare effects.
Discussion of those effects can be found in Chapter II of the RIA.

(P)     EPA has not quantified the proposal's impact on various environmental  issues
       such as visibility, acid deposition and eutrophication. These concerns are not
       sufficiently concrete to support a finding under CAA section 202(a)(1) that further
       HD emission reductions are necessary.

       (1)     Commenter provides no further detailed analysis or supporting information.

              Letters:

              General Motors Corp. and Isuzu Motors  America, Inc. (IV-D-256)  p. 34

       Response to Comment 2.1(P)(1):

       We agree that diesel exhaust emissions contribute to adverse environmental
impacts, but we disagree that we have not adequately quantified them.  We have  quantified
the benefits of those for which adequate methods and data exist in the RIA (see Table VII-
22).  These include visibility, eutrophication, agricultural impact and to some extent
commercial forestry.  However, a number of important effects cannot be quantified.  We
present these in the Table V-G.2 of the preamble to the final rule.  Nevertheless, our inability
to monetize all  environmental impacts does not lessen the impact that current diesel
emissions are having on these important resources. The scientific basis of the  effect of the
emissions are well established. We summarize some of the key effects below.

       Acid Rain

       Acid deposition primarily affects bodies of water that rest atop soil with a limited
ability to neutralize acidic compounds. The National Surface Water Survey (NSWS)
investigated the effects of acidic deposition in over 1,000 lakes larger than 10 acres and in
thousands of miles of streams. It found that acid deposition was the primary cause  of acidity
in 75 percent of the acidic lakes and about 50 percent of the acidic streams, and that the
areas most sensitive to acid rain were the Adirondacks, the mid-Appalachian highlands, the
upper Midwest and the high elevation West. The  NSWS found that approximately 580
streams in the Mid-Atlantic Coastal Plain are acidic primarily due to acidic deposition.
Hundreds of the lakes in the Adirondacks surveyed in the  NSWS have acidity levels
incompatible with the survival of sensitive fish species.  Many of the over 1,350 acidic
streams in the Mid-Atlantic Highlands (mid-Appalachia)  region have already experienced
trout losses due to increased stream acidity. Emissions from U.S. sources contribute to
acidic deposition in eastern Canada, where the Canadian  government has estimated that
14,000 lakes are acidic. Acid deposition also has been  implicated in contributing  to
degradation of  high-elevation spruce forests that populate the ridges of  the Appalachian
Mountains from Maine to Georgia. This area includes national parks such as the
Shenandoah and Great Smoky Mountain National Parks.

       A recent study of emissions trends and acidity of waterbodies in the Eastern United
States by the General Accounting Office (GAO) found that sulfates declined in 92  percent of
a representative sample of lakes from 1992 to  1999, nitrate levels increased in 48 percent of
the lakes sampled.  The decrease in sulfates is consistent with emissions trends,  but the
increase in nitrates is inconsistent with the stable levels of nitrogen emissions and deposition.
The study suggests that the vegetation and land surrounding these lakes have lost some of
their previous capacity to use nitrogen, thus allowing more of the nitrogen  to flow into the

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lakes and increase their acidity.  Recovery of acidified lakes is expected to take a number of
years, even where soil and vegetation have not been "nitrogen saturated," as EPA called the
phenomenon in a 1995 study. Acid Deposition Standard Feasibility Study: Report to
Congress, EPA 430R-95-001a, October, 1995.  This situation places a premium on
reductions SOx and especially NOx from all sources, including HDVs, in order to reduce the
extent and severity of nitrogen saturation and acidification of lakes in the Adirondacks and
throughout the United States.

       The SOx and NOx reductions from today's action will help reduce acid rain and acid
deposition, thereby helping to reduce acidity levels in lakes and streams throughout the
country and help accelerate the recovery of acidified lakes and streams and the revival of
ecosystems adversely affected by acid deposition. Reduced acid deposition levels will also
help reduce stress on forests, thereby accelerating reforestation efforts and improving timber
production. Deterioration of our historic buildings and monuments,  and of buildings, vehicles,
and other structures exposed to acid rain and dry acid deposition also will be reduced, and
the costs borne to prevent acid-related damage may also decline. While the reduction in
sulfur and nitrogen  acid deposition will be roughly proportional to the reduction in SOx and
NOx emissions, respectively, the precise impact of today's action will differ across different
areas.

       Eutrophication  and Nitrification

        Eutrophication is the accelerated production of organic matter,  particularly algae, in
a water body. This increased growth can cause numerous adverse ecological effects and
economic impacts,  including nuisance algal blooms, dieback of underwater plants due to
reduced light penetration, and  toxic plankton blooms.  Algal and plankton blooms can also
reduce the level of dissolved oxygen, which can also adversely affect fish and shellfish
populations.  In the RIA we quantified reduction in nitrogen loading for 12 eastern estuaries
(including two on the Gulf Coast).

       In 1999, NOAA published the results of a five year national assessment of the
severity and  extent of estuarine eutrophication. An estuary is defined as the inland arm of
the sea that meets the mouth of a river. The 138 estuaries characterized in the  study
represent more than 90 percent of total estuarine water surface area and the total number of
US estuaries. The  study found that estuaries with moderate to high eutrophication conditions
represented 65 percent of the estuarine surface area.  Eutrophication is of particular concern
in coastal areas with poor or stratified circulation patterns, such as the Chesapeake Bay,
Long Island Sound, or the Gulf of Mexico.  In such areas, the "overproduced" algae tends to
sink to  the bottom and decay, using all or most of the available oxygen and thereby reducing
or eliminating populations of bottom-feeder fish and shellfish, distorting the normal population
balance between different aquatic organisms, and in extreme cases causing dramatic fish
kills.

       Severe and persistent eutrophication often directly impacts human activities. For
example, losses in the nation's fishery resources may be directly caused by fish kills
associated with low dissolved oxygen and toxic blooms. Declines in tourism occur when low
dissolved oxygen causes noxious smalls and floating mats of algal blooms create
unfavorable aesthetic conditions.  Risks to human health increase when the toxins from algal
blooms accumulate in  edible fish and shellfish, and when toxins become airborne, causing
respiratory problems due to inhalation. According to the NOAA report, more than half of the
nation's estuaries have moderate to high expressions of at least one of these symptoms - an
indication that eutrophication is well developed in more than half of US estuaries.

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       In recent decades, human activities have greatly accelerated nutrient inputs, such as
nitrogen and phosphorous, causing excessive growth of algae and leading to degraded water
quality and associated impairments of freshwater and estuarine resources for human uses.
Deposition of Air Pollutants to the Great Waters, Third Report to Congress, June, 2000.
Since 1970, eutrophic conditions worsened in 48 estuaries and improved in 14.  In 26
systems, there was no trend in overall eutrophication conditions since 1970. Deposition  of Air
Pollutants to the Great Waters, Third Report to Congress, June, 2000. Great Waters are
defined as the Great Lakes, the  Chesapeake Bay, Lake Champlain, and coastal waters. The
first report to Congress was delivered in May, 1994; the second report to Congress in June,
1997. On the New England coast, for example, the number of red and brown  tides and
shellfish problems from nuisance and toxic plankton blooms have increased over the past
two decades, a development thought to be linked to increased nitrogen loadings in coastal
waters.  Long-term monitoring in the United States, Europe, and other developed regions of
the world shows a substantial rise of nitrogen levels in surface waters, which are highly
correlated with human-generated inputs of nitrogen to their watersheds.

       On a national basis, the  most frequently recommended control strategies by experts
surveyed by  National Oceanic and Atmospheric Administration (NOAA) between  1992-1997
were agriculture, wastewater treatment, urban runoff, and atmospheric deposition. Bricker,
Suzanne B.,  et al., National Estuarine Eutrophication Assessment, Effects of Nutrient
Enrichment in the Nation's Estuaries, National Ocean Service, National Oceanic and
Atmospheric Administration, September, 1999. In its Third Report to Congress on the Great
Waters, EPA reported that atmospheric deposition contributes from 2 to 38 percent of the
nitrogen load to certain coastal waters. Deposition of Air Pollutants to the Great Waters,  Third
Report to Congress, June, 2000. A review of peer reviewed literature in 1995 on the subject
of air deposition suggests a typical contribution of 20 percent or higher. Valigura,  Richard, et
al., Airsheds and Watersheds II: A Shared Resources Workshop, Air Subcommittee of the
Chesapeake Bay Program, March, 1997.  Human-caused nitrogen loading to the Long Island
Sound from the atmosphere was estimated at 14 percent by a collaboration of federal and
state air and  water agencies in 1997.  The Impact of Atmospheric Nitrogen Deposition on
Long Island Sound, The Long Island Sound Study, September, 1997. The National
Exposure Research  Laboratory, US EPA, estimated based on prior studies that 20 to 35
percent of the nitrogen loading to the Chesapeake Bay is attributable to atmospheric
deposition. Dennis, Robin  L., Using the Regional Acid Deposition Model to Determine the
Nitrogen Deposition Airshed of the Chesapeake Bay Watershed, SETAC Technical
Publications  Series,  1997.  The mobile source portion of atmospheric NOx contribution  to
the Chesapeake Bay was modeled at about 30% of total air deposition. Dennis, Robin L.,
Using the Regional Acid Deposition Model to Determine the Nitrogen Deposition Airshed of
the Chesapeake Bay Watershed, SETAC Technical Publications Series, 1997.

       Deposition of nitrogen from heavy-duty vehicles contributes to elevated nitrogen
levels in waterbodies. In the Chesapeake  Bay  region, modeling shows that mobile source
deposition occurs in  relatively close proximity to highways, such as the 1-95 corridor which
covers part of the Bay surface. The new standards for heavy-duty vehicles will reduce total
NOx emissions by  2.6 million tons in 2030. The NOx reductions will reduce the  airborne
nitrogen deposition that contributes to eutrophication of watersheds, particularly in aquatic
systems where atmospheric deposition of  nitrogen represents a significant portion of total
nitrogen loadings.

       POM Deposition

       POM is generally defined as a large class of chemicals consisting of organic
compounds having multiple benzene rings and a boiling point greater than 100 degrees  C.

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Polycyclic aromatic hydrocarbons are a chemical class that is a subset of POM. POM are
naturally occurring substances that are byproducts of the incomplete combustion of fossil
fuels and plant and animal biomass (e.g., forest fires).  Also, they occur as byproducts from
steel and coke productions and waste incineration.  Evidence for potential human health
effects associated with POM comes from studies in animals (fish, amphibians, rats) and in
human cells culture assays.  Reproductive, developmental, immunological, and endocrine
(hormone) effects have been documented in these systems. Many of the compounds
included in the class of compounds known as POM are classified by EPA as probable human
carcinogens based on animal data.

       EPA's  Great Waters Program has identified 15 pollutants whose deposition to water
bodies has contributed to the overall contamination loadings to the these Great Waters.
Deposition of Air Pollutants to the Great Waters-Third Report to Congress, June, 2000, Office
of Air Quality Planning and Standards Deposition of Air Pollutants to the Great Waters-
Second Report to Congress, Office of Air Quality Planning and Standards, June 1997, EPA-
453/R-97-011.   One of these 15 pollutants, a group known as polycyclic organic matter
(POM), are compounds that are mainly adhered to the particles emitted by mobile sources
and later fall to earth in the form of precipitation or dry deposition of particles. The mobile
source contribution of the 7 most toxic POM is at least 62 tons/year and represents only
those POM that adhere to mobile source particulate emissions. The 1996 National Toxics
Inventory, Office of Air Quality Planning and Standards, October 1999. The majority of these
emissions are produced by diesel engines.

       Evidence for potential human health effects associated with POM comes from studies
in animals (fish, amphibians, rats) and in human cells culture assays. Reproductive,
developmental, immunological, and endocrine (hormone) effects have been documented in
these systems. Many of the compounds included in the class of compounds known as POM
are classified by EPA as probable human carcinogens based on animal data.

       The particulate reductions from today's action will help reduce not only the particulate
emissions from highway diesel engines but also the deposition of the POM adhering to the
particles, thereby helping to reduce health effects of POM in lakes and streams, accelerate
the recovery of affected lakes and streams, and revive the ecosystems adversely affected.

       Visibility and Regional Haze

       Visibility impairment, also called regional haze, is a complex problem caused by a
variety of sources, both natural and anthropogenic (e.g., motor vehicles). Regional haze
masks objects  on the horizon and reduces the contrast of nearby objects.  The formation,
extent, and intensity of regional haze are functions of meteorological and chemical
processes, which sometimes cause fine particle loadings to remain suspended in the
atmosphere for several days and to be transported hundreds of kilometers from their sources
(NRC, 1993).

       Visibility has been defined as the degree to which the atmosphere is transparent to
visible light (NRC,  1993). Visibility impairment is caused  by the scattering and absorption of
light by particles and gases in the atmosphere.  Fine particles (0.1 to 2.5 microns in diameter)
are more effective per unit mass concentration at impairing visibility than either larger or
smaller particles (NAPAP, 1991). Most of the diesel particle mass emitted by diesel engines
falls within this fine particle size range. Light absorption is often caused by elemental
carbon, a product of incomplete combustion from activities such as burning diesel fuel or
wood.  These particles cause light to be scattered or absorbed, thereby reducing visibility.

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       Heavy-duty vehicles contribute a significant portion of the emissions of direct PM,
NOx, and SOx that result in ambient PM that contributes to regional haze and impaired
visibility. The Grand Canyon Visibility Transport Commission's report found that heavy-duty
diesel vehicles contribute 41% of fine elemental carbon or soot, 20% of NOx, 7% of fine
organic carbon, and 6% of SOx. The report also found that reducing total mobile source
emissions is an essential part of any program to protect visibility in the Western U.S. The
Commission identified mobile source pollutants of concern as VOC, NOx, and elemental and
organic carbon. The Western Governors Association, in later commenting on the  Regional
Haze Rule and on protecting the 16 Class I areas on the Colorado Plateau, stated that the
federal government, and particularly EPA, must do its part in regulating emissions from
mobile sources that contribute to regional haze in these areas. As described more fully later
in this section, today's action will result in large reductions in these pollutants. These
reductions are expected  to provide an important step towards improving visibility across the
nation. Emissions reductions being achieved to attain the 1-hour ozone and PM10 NAAQS
will assist in visibility improvements. Moreover, the timing of the reductions from the
standards fits very well with the goals of the regional haze program. We will work with the
regional planning bodies to make sure they have the information to take account of the
reductions from this final rule in their planning efforts.

       The Clean Air Act contains provisions designed to protect national parks and
wilderness areas from visibility impairment.  In 1999, EPA promulgated a rule that will require
States to develop plans to dramatically improve visibility in national parks. Although it is
difficult to determine natural visibility levels, we believe that average visual range in many
Class I areas in the United States is significantly less (about  50-66% of natural visual range
in the West, about 20% of natural visual range in the East) than the visual range that will exist
without anthropogenic air pollution. The final Regional Haze Rule establishes a 60-year time
period for planning purposes, with several near term regulatory requirements, and is
applicable to all 50 states.  One of the obligations is for States to representative conduct
visibility monitoring in mandatory Class I Federal areas and determine baseline conditions
using data for year 2000  to 2004. Reductions of particles, NOx, sulfur, and VOCs from this
rulemaking will have a significant impact on  moving all states towards achieving long-term
visibility goals, as outlined in the 1999 Regional Haze Rule.

       In the RIA we quantified the improvements in visibility for recreational values in Class
I areas. In 2030, the value is $3.26 billion (in 1999 dollars) from the HD Engine/Diesel Fuel
program. We were not able to quantify all visibility effects.

       In conclusion, the commenter is mistaken that the environmental benefits are not an
adequate basis for the rule. The total monetized benefits from the environmental effects we
are able to quantify alone is $4.38 billion, which alone exceeds the estimated cost of the rule
in 2030.

(Q)    Although EPA notes that reduced crop damage is one benefit of the proposal,
       ozone impacts on crops are almost not noticeable as separate factors in
       nature.

       (1)     Crop yields have been increasing over the last ten years, and the influence of
              man and  nature on crops mute any factor of air composition on crop yields.
              This negligible relationship between the proposal and crop concerns is further
              justification for providing increased flexibility to farmer co-op refiners.

              Letters:

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DECEMBER 21, 2000                                                     PAGE 2^42
             Cenex Harvest States Cooperatives (IV-D-232) p. 3-4

       Response to Comment 2.1(Q)(1):

       The Ozone Criteria Document notes that "ozone affects vegetation throughout the
United States, impairing crops, native vegetation, and ecosystems more than any other air
pollutant" (U.S. EPA, 1996).  Effects can include "(1) visible foliar injury; (2) premature
needle/leaf senescence; (3) reduced photosynthesis; (4) reduced carbohydrate production
and allocation; (5) reduced plant vigor; and (6) reduced growth or reproduction or both" (U.S.
EPA, 1996).  This can result in yield loss in agricultural crops.  Laboratory and field
experiments have shown reductions in yields for agronomic crops exposed to ozone,
including vegetables such as lettuce and field crops such as cotton and wheat.  The most
extensive field experiments, conducted under the National Crop Loss Assessment Network
(NCLAN) examined 15 species and numerous cultivars. These studies "were a tremendous
improvement over earlier studies because crops were grown 1) using typical farm practices
and 2) using open top chambers, which produce the least amount of environmental
modification of any outdoor chamber." (U.S. EPA, 1996). Based on the results of these
experiments, at least half of the species/cultivars showed a 10 percent yield loss at a 7-hour
seasonal mean ozone concentration of 0.05 ppm or more (U.S. EPA, 1996). The NCLAN
results show that "several economically important crop species are sensitive to ozone levels
typical of those found in the U.S." (U.S. EPA, 1996).  In addition, economic studies have
shown a relationship between observed ozone levels and crop yields (Garcia et al., 1986).

       While overall yields per acre have increased for most crops over time, the relevant
comparison is between crops exposed to high levels of ozone versus crops exposed to lower
levels of ozone in a given year, holding all else equal.  Thus, the expectation is that when
ozone levels are reduced relative to baseline conditions, then holding other factors constant,
crop yields will be increased. Thus, even though yields may be increasing over time, they will
increase more if ozone levels are reduced. And, while these increases in yields may not be
noticeable to the individual farmer, when added up over the entire farm sector, the increases
in production may be substantial. These aggregate changes in production can have real
impacts on farmer and consumer welfare which is a legitimate component of the benefits of
ozone reductions.  EPA provides quantified estimates of agricultural benefits associated with
ozone reductions as part of its benefits analysis in the Regulatory Impact Analysis for the
final rule.

Garcia, Philip; Dixon, Bruce L.; Mjelde, James W.; Adams, Richard M..  1986. "Measuring the
Benefits of Environmental Change Using a Duality Approach: The Case of Ozone and Illinois
Cash Grain Farms." Journal of Environmental Economics and Management, 13: 69-81.

U.S. Environmental Protection Agency. 1996. Air Quality Criteria for Ozone and Related
Photochemical Oxidants, Volume II. EPA/600/P-93/004bF, July 1996.

       Issue 2.2: Air Quality Monitoring Data & Modeling Projections

(A)     Without the anticipated emission reductions from the proposed rule, there is a
       significant risk that  the ozone standard will be violated in some areas.

       (1)    A number of areas with a population exceeding 100 million will violate the 1
             hour ozone standard within the time frame in which the standards would be
             imposed and  implemented. The anticipated emission reductions are

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              necessary to help attain the ozone NAAQS in many areas.

              Letters:

              American Lung Association (IV-D-270) p. 4-5,14

       Response to Comment 2.2(A)(1):

       We agree in general with the comment. The air quality modeling and other analyses
completed by EPA as part of the justification for the HDV rule concluded that an appreciable
number of 45 areas with 128 million people (1999) face a significant risk of continued, or
newfound, nonattainment during the period of analysis (2007 to 2030), even after the 2004 or
later model year standards for HDVs are taken  into account.  Furthermore, the analysis
showed that  the implementation of the HDV rule would significantly reduce the remaining
high concentrations of ozone over large areas of the U.S. For instance, the total number of
projected exceedances is projected to decline from 1226 to 756 one-hour ozone
exceedances nationwide in  2030, or a significant reduction in the number of 1-hour ozone
exceedances of 470.

(B)    EPA  generally relies on erroneous modeling assumptions in its demonstration
       of the need for the proposed rule.

       (1)     EPA should  develop measures that more accurately characterize population
              exposure to  concentrations in excess of the NAAQS.  Currently EPA relies on
              nonattainment status of an area based upon one monitor among a set of
              monitors in a given  metropolitan area. These monitors are often downwind of
              the urban core and  register readings that are significantly higher than the
              other monitors, and therefore the reliance  upon the metropolitan population
              overstates the accurate risk of exposure.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 4

       Response to Comment 2.2(B)(1):

       EPA's discussion of the number of areas not attaining the ozone and PM standards
was never characterized as a population exposure assessment.  Rather, it served as an
indication of  the substantial  proportion of the U.S. population that currently lives in areas
where NAAQS levels have been exceeded.  EPA notes that, for PM10, official nonattainment
determinations for the annual PM10 NAAQS are made based on the average of 12 quarterly
PM10 averages and are thus unlikely to be driven by individual high measurements. Also, in
Section II.B.Lb of the proposed rule, extensive  discussion is provided regarding the EPA's
review of the basis for ozone nonattainment area designations. These evaluations indicated
that these areas are indeed likely to be experiencing elevated levels of ozone or PM10 in
more than an isolated area or time  period at one monitor.

       More importantly, this discussion in the  preamble was never characterized as a
population exposure assessment nor was it characterized as a forecast of future
nonattainment areas; it was intended as a general indication of the U.S. population that may
be exposed to pollution levels exceeding the NAAQS.  In light of the regional nature of
pollutants like ozone and fine particles EPA believes that these data support the statement

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made in the preamble that millions of Americans live in areas with unhealthful air quality that
currently endangers public health and welfare.

       (2)     EPA inappropriately justifies the rule by relying upon an unsubstantiated
              assumption that there will be a potentially large future increase in the sales
              and operation of light-duty diesel-powered cars and trucks.  The needs of
              light-duty diesel vehicles should not drive fuel requirements because they
              consume a small fraction of diesel fuel.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 5, 40
              Marathon Ashland Petroleum (IV-D-261) p. 5, 34-35

       Response to Comment 2.2(B)(2):

       The diesel fuel sulfur standard is driven by the need in heavy-duty applications. We
do not rely on projecting an increase in the sales of light-duty diesel cars and trucks in the
emissions inventory analyses for this rule. We only presented a discussion in the
preamble for the proposed rule to point out that if,  as many commenters expect, there is
growth in the sales of light-duty diesel cars and trucks, then there would be additional
benefits to the low sulfur diesel requirements beyond what is claimed in this rule.

(C)    EPA relies on inaccurate data or modeling  assumptions regarding NOX
       reductions and the  attainment of the ozone NAAQS.

       (1)     Projected emission impacts of the  proposal are misleading due to the
              uncertainties and inaccuracies inherent in ozone modeling that make reliance
              on  such models insufficient to necessitate the rule for the attainment of the
              ozone NAAQS. Given the level of uncertainty, the ozone benefits estimated
              under Tier 2, used in part to justify this rule, are not significant enough to
              warrant additional mobile source reductions.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 3

       Response to Comment 2.2(C)(1):

       We disagree with the comment. The commenter correctly observes that the entire
process of air quality modeling, by definition, is based on assumptions and uncertain
approximations. However, the commenter follows this statement with the implication that
such models should then not be used in instances where model response is within the range
of uncertainty (e.g., Tier 2 modeling results). The  use of air quality models to assess the
potential effects of emissions reduction strategies  is well-established, even in instances
where the response may be  of a smaller magnitude than the aggregate uncertainty of the
modeling system.  The utility and need for such modeling analyses is affirmed in the
upcoming NARSTO Science Assessment Document (Roth, et al., 2000) which notes that
there  are no viable alternative approaches for estimating the impacts of a given control
strategy. However, the burden is on the modeler to ensure that the tool is: a) satisfactorily
replicating the processes involved in ozone formation, transport, and destruction, and b) not
being used in a manner inconsistent with its capabilities. Based on the model performance

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evaluation (discussed in the air quality TSD) and the consistency of the response signal with
other independent analyses (both modeling and non-modeling),  EPA believes that the UAM-
V tool is an appropriate means to estimate the future impacts of the HDV rulemaking.
Furthermore, the commenter mistakenly states that the model was used in the Tier 2 process
(and by inference states it will be used in the HDV process) to conclude that the "additional
mobile source controls are necessary for attainment of the NAAQS".  The model is not being
used in the HDV analyses, nor was it used in the Tier 2 effort, to assess future year
attainment/nonattainment determinations.  Instead, the modeling is being used for two main
purposes: 1) to estimate those areas which are expected to have a potential need for
additional ozone precursor controls in the future, and 2) to  assess the relative air quality and
economic benefits of the  HDV rule. These two goals are entirely consistent with the
capabilities of a successfully evaluated air quality grid model.  Regarding the significance of
the ozone reductions estimated for this rule, as well as the Tier 2 rule, EPA believes that
there are substantial reductions resulting from this rule.  No single strategy is likely to provide
all the reductions needed for all areas to attain the NAAQS. This is why continuing to  reduce
emissions from various different sources is a necessary strategy for attaining the NAAQS.

       (2)     EPA did not determine changes in ozone due to the proposed standards nor
              demonstrate any effect on attainment and maintenance of the ozone NAAQS.
              EPA did not calculate the incremental ozone benefits  or disbenefits and until
              this is completed, it is not possible to determine whether the proposed  HD
              emission standards will  actually improve air quality. The EPA claimed  risk of
              post-2007 nonattainment is based on the "exceedance" method. Commenter
              refers to their comments submitted in response to the Tier 2 Rule and the
              2004 HD rule, which explain in detail why this method greatly overestimates
              the risk of nonattainment. The use of this model along with an artificially
              inflated HD emissions inventory has led to an exaggeration of the risk of post-
              2007 nonattainment. Commenter provides significant discussion on this issue
              and notes inconsistencies regarding EPA's justification for using the
              exceedance method versus the rollback method. In the context of addressing
              problems related to the "exceedance" method, the commenter also
              challenges EPA's determination that certain areas are at "risk" of not being
              able to maintain compliance with the NAAQS in the absence of anticipated
              reductions under the proposed rule.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256)  p. 10-15

       Response to Comment 2.2(C)(2):

       As noted in the preamble to the final regulations, EPA has determined the estimated
changes  in ozone expected to occur by 2020 and 2030 due to the HDV standards. This was
accomplished through the use of a photochemical grid model. For more details on the
application of the ozone  model, please  see the Technical Support Document.

       The commenter advances  several arguments to support the idea that the  EPA air
quality modeling approach "severely exaggerates the risk of post-2007  ozone
nonattainment". First, the commenter notes that the number of ozone nonattainment areas
have declined over the past decade and that some of the remaining nonattainment areas are
close to attaining the NAAQS (i.e., expected exceedances are less than 2.0). Combining that
fact with EPA's own modeling which shows that the trend from 1996 to 2007 is a broad

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reduction in the geographic extent of high ozone values, the commenter questions how can
so many areas be at risk of future NAAQS violations. The commenter also notes an
inconsistency by EPA in the justification for using an exceedance-based approach versus a
rollback approach to quantify the future need for HDE controls relative to ozone attainment.

       EPA agrees with the commenter that substantial progress has been made in reducing
elevated levels of ozone over the past 10-15 years.  These reductions are presumably the
direct result of State  and Federal emissions control measures implemented in the 1990's.
However, when ozone trends are normalized for annual weather variations between 1989
and 1999, they reveal a downward trend in the early 1990's followed by a leveling off, or an
upturn in ozone levels, over the past several years in many urban areas.45

       EPA also agrees with the commenter that some additional progress in lowering
ambient ozone is expected between 1996 and 2007. Additionally, as noted in the preamble
to the final rule, national ozone precursor emissions are projected to decline for some time
after 2007, largely due to the penetration of Tier-2 compliant vehicles into the light duty
vehicle fleet. However, ozone precursor emissions are expected to begin increasing again
around 2015 or 2020, through 2030 due to economic growth. Thus, EPA believes that a) the
present-day meteorologically-adjusted ozone trends and b) the expected precursor emissions
trends actually support the model predictions of NAAQS exceedance risk.

       Regarding the comment about an exceedance-based versus rollback-based
approach, it is important to note first that EPA is not using this rule as an attainment
demonstration for the 1-hour ozone standard.  Rather,  the intent is to determine which areas
are expected to be at risk of having difficulty with attaining and/or maintaining the standard in
the future. EPA's approach to determining this risk is based on current ambient
measurements (i.e.,  areas with ambient 1-hour design values >=125 ppb and areas within
10% of the standard) coupled with a forecast of ozone exceedances in the future within these
areas based on modeling. It should  be noted that this  approach is consistent with  EPA's
current guidance for modeling to attain the 1-hour standard.

       The modeling attainment procedures in this guidance first require an exceedance-
based test which compares model predicted 1-hour daily maximum concentrations in all grid
cells for the attainment year to the level of the NAAQS. There is both a deterministic and a
statistical form of the exceedance-based test.  The deterministic form requires that predicted
1-hour daily maximum ozone concentrations be 124 ppb or less  in order for the area to
demonstrate attainment.  The statistical form of the test takes into account the fact that the
form of the 1 -hour ozone standard allows exceedances.  If, over a three-year period, the area
has an average of one or fewer exceedances per year, the area  is not violating the standard.
Thus, if a very extreme day is modeled, the statistical test provides that a prediction above
0.124 ppm up to a certain upper limit may be consistent with attainment of the standard.
(The form of the 1-hour standard allows for up to three readings above the standard over a
three-year period before an area is considered to be in violation.)

       When the modeling does not conclusively demonstrate that the area will  attain using
the exceedance-based test, additional analyses may be presented to help determine whether
the area will attain the standard. As  with other predictive tools, there are inherent
uncertainties associated with modeling and its results.  For example, there are uncertainties
in some of the modeling inputs, such as the meteorological and emissions data bases for
       45 USEPA(2000).  Latest Findings on National Air Quality: 1999 Status and Trends. EPA-454/F-
00-002, Office of Air Quality Planning and Standards, Research Triangle Park, NC, 27711, 28 pp.

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individual days and in the methodology used to assess the severity of an exceedance at
individual sites. The EPA's guidance recognizes these limitations, and provides a means for
considering other evidence to help assess whether attainment of the NAAQS is likely. The
process by which this is done is called a weight of evidence (WOE) determination.

       Under a WOE determination, the State can rely on and EPA will consider factors
such as other modeled attainment tests (e.g., a rollback analysis); other modeled outputs
(e.g., changes in the predicted frequency and pervasiveness of exceedances); actual
observed air quality trends; estimated emissions trends; analyses of air quality monitored
data; the responsiveness of the model predictions to further controls; and, whether there are
additional control measures that are or will be approved into the SIP but were not included in
the modeling analysis. This list is not an exclusive list of factors that may be considered and
these factors could vary from case to case.

       Consistent with the guidance, we have relied on an exceedance-based approach to
identify those areas are at risk of having an problem  attaining or maintaining the standard in
the future because they currently have a nonattainment problem or have measured
concentrations just below the standard and have  exceedances predicted in the future. We
have examined both the deterministic and  statistical  forms of this test and draw similar
conclusions. In addition, we have used a rollback technique based on  relative  reduction
factors calculated from our modeling and applied to ambient data in order to supplement this
analysis. This analysis indicates that 26 areas in the Eastern U.S. alone with a total
population of 78 million are projected to have 1-hour ozone design values greater than  the
standard or within 10 percent of the standard in 2030 without this rule.  Thus, using either the
exceedance-based or rollback-based approach leads to the same general result that a large
number of areas are at risk of a future 1 -hour ozone  problem and, therefore, need controls in
this rule to reduce ozone precursor emissions. Additional information about the exceedances
and relative reduction factors can be found in the Air Quality Modeling Technical Support
Document.

       (3)     EPA cannot base its need argument on the now-remanded 8-hour ozone
              NAAQS or a surrogate (i.e. 'prolonged and repeated exposures' to ozone).
              Commenter cites to the RIA (p. II-59) and the preamble (65  FR 35445) and
              notes that EPA is relying on health effects that occur below the ozone
              NAAQS. EPA's discussion of this issue focuses on the effects  of ozone
              exposure between 0.08 and 0.12  ppm, which is precisely the level of
              exposure that was to be addressed in EPA's proposed 8-hour ozone
              standard, which has been firmly rejected by the DC Circuit in ATA v. EPA,
              195 F.3d4(DCCir1999).

              Letters:

              American Petroleum Institute  (IV-D-343) p. 13
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 25-26
              Marathon Ashland Petroleum (IV-D-261) p. 8

       Response to Comment 2.2(C)(3):

       EPA disagrees with the commenters which suggest that we are relying on the 8-hour
NAAQS to justify this rule or that we are precluded from acting except to attain a NAAQS.
EPA has independent authority under section 202(a) to promulgate standards "applicable to
the emission of any air pollutant from any class or classes of new motor vehicles or...

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engines, which in his judgment cause, or contribute to, air pollution which may reasonably be
anticipated to endanger public health or welfare."  The commenters appear to claim that
standards promulgated under section 202(a) are restricted to what is needed to attain and
maintain a NAAQS. Yet nothing in section 202(a) so restricts it.  On its face, this provision
does not tie such standards to the attainment and maintenance of a NAAQS. Indeed, there
are numerous types of air pollution regulated under the Act that are not covered by the
section 109 NAAQSs. For example, EPA has authority under section 112 to regulate 189
"hazardous air pollutants," ("HAPs")  and may add to the list of HAPs any "pollutants which
present, or may present,...a threat of adverse human health effects ... or adverse
environmental effects."  The Clean Air Act also regulates visibility (section 169A and 169B),
acid rain (Title IV) and depletion of stratospheric ozone (Title VI). All of these air pollution
concerns can, by any measure, be "reasonably anticipated to endanger public health or
welfare."

       Further, it is clear from the language of the statute that section 202(a) was not
intended to be restricted to meeting the  NAAQSs.  Section 202(i) specifically references
attainment and maintenance of the NAAQS as a criterion for regulations. What this
evidences, however, is that Congress was well aware of its ability to confine EPA's review to
NAAQS attainment, and has so confined EPA when it wished to. However, unlike section
202(i), section 202(a) has no such restriction.

       Similarly, as the commenter  notes, section 202(a) was enacted in 1965, prior to
section 109 being added to the Act.  It therefore had to be a source of authority independent
from section 109 for determining the appropriateness of promulgating motor vehicle
standards.  When Congress added sections 108 and 109  in 1970, Congress could have
revised section 202(a) to restrict its review to meeting and maintaining NAAQSs, but
Congress did not so revise section 202(a), preserving the  independent authority provided in
1965.

       Section 202(1) also makes clear that section 202(a) is not restricted to NAAQSs.
Under section 202(1), EPA is required to promulgate standards under subsection (a),
containing reasonable requirements  to control hazardous air pollutants from motor vehicles
and fuels. If section 202(a) were restricted to NAAQS-related standards, then EPA could not
promulgate standards "under section 202(a)" regulating hazardous air pollutants, which are
not NAAQS related pollutants.

       The commenters also imply that the air quality test for promulgating a standard  under
section 109 is as stringent or more stringent than the test under section 202(a), so the air
quality need criteria under section 202(a) should not be more stringent than that under
section 109. EPA does  not agree that the language of section 109 and the level of air quality
control established under that section binds it in acting under section 202(a). Section 202(a)
does not refer to sections 108 or 109 and contains different language than those sections, in
particular, the standard-setting section 109. The judicial precedent and legislative history of
this section clearly show that EPA is not limited by sections 108 and 109 in promulgating its
rules under section  202(a).  See Ethyl Corp. v EPA, 541 F.2d 1 (D.C. Cir. 1976): Small
Refiner Lead Phasedown Task Force v. EPA, 705 F.2d 506 (D.C. Cir.  1983); HR Rep. 95-
294, Committee on  Interstate and Foreign Commerce, May 12, 1977, at 43-51.

       As the foregoing discussion demonstrates, EPA has made a decision under section
202(a) of the Act that emissions of ozone pollution from heavy duty engines "cause or
contribute to air pollution which may  reasonably be anticipated to endanger public health or
welfare," based on available scientific evidence relating to, among other things, prolonged
and repeated exposures to ozone pollution.  Although that evidence overlaps with

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information that EPA has reviewed in other contexts, such as the 8-hour ozone NAAQS
rulemaking, EPA has not based this decision on previous EPA findings as to the proper level
of a NAAQS  relating to exposure to these levels of ozone pollution but has acted under its
section 202(a) authority alone.  Accordingly, the current litigation relating to the 8-hour ozone
standard promulgated pursuant to section 108/109 of the CAA, is not legally relevant to this
standard setting process under section 202(a) of the Act, and relates to the specific language
in section 108/109.  Nor does EPA agree with the commenters' characterization of the
outcome of the litigation. The Court of Appeals remanded the ozone standard to EPA on the
basis of constitutional concerns and did not address the  issues relating to the scientific bases
for setting the 8-hour standard. The Court of Appeals did not vacate the standard and the
case is on  appeal to the Supreme Court.

(D)    EPA  should address the issue of NOX disbenefits in the context of the proposed
       rule.

       (1)     EPA's model for predicting future ozone levels is overly-sensitive to NOX
              reductions and is not sensitive to VOC reductions. If there are significant NOX
              disbenefits from the proposed HD rule, it may aggravate the nation's ozone
              situation rather than help maintain compliance. Commenter provides
              significant discussion on  the issue of NOX disbenefits and why EPA's methods
              have underestimated the impact of this phenomenon. The commenter
              references their comments as submitted  in response to Tier 2 on this issue
              and  notes that EPA has only selectively responded to the NOX disbenefit
              concerns raised in those comments. Commenter notes that EPA has not
              addressed the reason why horizontal grid size is important (see Morris, R.,
              "Review of Recent Ozone Measurement  and Modeling Studies in the Eastern
              United States," ENVIRON International Corporation, March 1996), the
              overestimation of isoprene emission in the high biogenic emission area of the
              Ozarks  (which changes the preferred ozone control strategy in downwind
              areas such as St. Louis), the fact that the model-response to precursor
              emissions is inconsistent with prior ozone and emission trends (see
              Zalewsky, et al., "Trends in Ozone and Its Precursors in the Northeastern
              United States," in Tropospheric Ozone: Nonattainment and Design Value
              Issues,  Air and Waste Management Association,  p. 459-476), or the fact that
              widespread improvements in ozone levels occurred between 1975 and 1981
              (see Air Quality and Emission Trends Report, EPA, 1981). Commenter notes
              that  in the context of biogenics,  EPA's BEIS2 model  overestimates the
              isoprene emissions and that a new methodology for  biogenic emissions,
              GLOBEIS, has been developed that has  updated emission factors and the
              ability to model the  seasonal variation in  biomass. Commenter concludes
              that  if EPA believes that the sensitivity to NOX and VOC in its latest modeling
              system  is different from the initial Tier 2 modeling system, they should
              demonstrate that the model can now accurately predict the air quality impact
              of the emission  reductions and should conduct sensitivity analyses to
              determine which areas are VOC-limited and which areas are NOx-limited,
              including analyses that incorporate a combination of reduced fine grids and
              altered  biogenic inventories.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 15-19

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       Response to Comment 2.2(D)(1):

       The Agency examined the above mentioned comments and responded to them in
detail in the Tier 2 Response to Comments. Given that the commenter largely based his
response on those earlier comments, EPA has included the response that it provided in the
Tier 2 RTC on NOx disbenefits in its record for the HDV rule. In addition to that, the
response below addresses the NOx disbenefits issue  in the specific context of the HDV
rule.

       Horizontal Grid Size

       EPA addressed the aforementioned comments regarding horizontal grid sizes in the
Tier 2 Response to Comments document.  For the sake of completeness, we will  reiterate
some of the main arguments which rebut the commenters' claims.

       According to  the commenter, "EPA does not address the reason (as explained) by
Morris why horizontal grid size is important." It goes on to reference a quote from Morris
(1996) which concludes that finer grid resolutions tend to yield lower VOC to NOx ratios
within urban  plumes  and that these lower ratios "result in more negative effects of NOx
reductions and more positive effects from VOC reductions".  EPA agrees with this statement
and states so on page 27-34 of the Tier 2 RTC by quoting from the OTAG Final Report.
"VOC reductions produce significant local ozone decreases with either the fine or the coarse
grid,  although the magnitude and spatial extent of the  decreases are greater with  the fine
grid.  NOx emissions reductions can also produce local ozone increases with the fine or the
coarse grid, although the magnitude and spatial extent of the increases are greater with the
fine grid."

       In the absence of other material to the contrary, one could advance the argument that
the general observations noted by Morris (1996) and OTAG (1997) suggest the 12 km Tier 2
(and  HDV) modeling underestimates disbenefits of NOx control (i.e., the isolated ozone
increases amidst the more widespread regional benefits). However, as pointed out in the
Tier 2 RTC there are at least two corroborating analyses that indicate the Tier 2 modeling
does not underestimate the magnitude of the disbenefits resulting in  isolated areas from NOx
control. The first is the 4 km  modeling submitted  by General Motors as part of the Tier 2
comments. Even with substantial differences in the base year inventories and a different
photochemical grid model (CAMx), the  spatial extent of the ozone increases are very similar
between the commenter's 4 km modeling and EPA's 12 km  model runs over the Houston,
Chicago, and New York areas. This does not support the commenter's claim that EPA's
modeling system is overly NOx sensitive. The second corroborating analysis is a  series of
UAM-V simulations completed for the Lake  Michigan region (LADCO, 2000) which indicated
that model response to the Tier 2/Low Sulfur controls was not highly sensitive to grid
resolution between 12 and 4  km.  Since the Chicago region  is one of the few areas in which
model-predicted NOx control disbenefits may be important, these results appear to moot the
commenter's generalized grid size criticisms.

	Biogenics:
       The commenter points to a single study which measured biogenic emissions for a
narrow region of the eastern U.S. It is difficult to extrapolate these results to large
generalizations about the possible overprediction of the biogenic VOC inventory. However,
even if EPA were to accept the argument that isoprene was overestimated in the HDV
modeling by a factor of two, we still do not believe it would necessarily leave the model overly
sensitive to NOx controls as the commenter claims. As noted in the Tier 2/Gasoline Sulfur

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RTC, several emissions sensitivity analyses were completed as part of the Ozone Transport
Assessment Group (OTAG) modeling comparing the effects of across the board VOC and
NOx reductions using biogenic emissions data sets derived from the Biogenic Emissions
Inventory System (BEIS) and BEIS2 methodologies. The isoprene estimates from BEIS2
were found to be 2-5 times higher than that of BEIS. The OTAG modeling concluded (OTAG,
1997) that the model response to reductions in VOC and NOx emissions were comparable
with either BEIS or BEIS2 emissions. Certainly the ozone improvements due to NOx control
were somewhat greater in the BEIS2 scenarios, but these tests do not appear to support the
commenters' claims of a fundamentally flawed modeling system.

       In terms of the new methodology for estimating biogenic emissions (GLOBEIS)
advocated by the commenters, EPA notes that in our modeling we used the best, peer-
reviewed, data and science available at the time of the modeling. At the start of the HDV
modeling, this was the BEIS2 methodology for the generation of biogenic emissions
estimates. While the BEIS-2 was the best tool available at the time for the quantification of
biogenic emissions, EPA has continued our longstanding research effort to improve biogenic
estimation. The next-generation biogenic model (BEIS-3) is expected to  be released in 2001.
       EPA agrees with the NARSTO Science Assessment that substantial uncertainties
exist in the estimation of biogenic VOC emissions, however, based on the OTAG sensitivity
tests we believe that even a substantial decrease (i.e., factor of two) in the amount of emitted
VOC would not change the basic conclusions of the HDV modeling which are: a) that a
significant number of areas are at risk of continuing exceedances of the ozone standard in
the future, and b) that the emissions reductions that will result from the HDV rulemaking will
substantially lower regional ozone levels over the eastern U.S. Ultimately, the commenter
has submitted no technical material which indicates otherwise.

       Prior ozone and emissions trends:

       The commenter cites the earliest pair of sensitivity simulations performed by EPA as
part of the Tier 2 modeling analysis to conclude that EPA's modeling system predicts virtually
the whole country is NOx-limited (i.e., NOx control would be  most effective path to lower
ozone).  These earliest sensitivity runs (OMS1  and OMS2) employed different emissions
estimates and different meteorological inputs than were used in both the final Tier 2 and HDV
modeling simulations and thus have no relevance to the final HDV rulemaking. The
commenter also cites data from a study by Zalewsky et al., in which ozone levels and VOC
concentrations in urban areas decreased between 1988 and 1993, while NOx concentrations
remained relatively constant. Given that the baseline emissions inventory in 1996 already
includes the mobile source VOC controls that yielded the ozone reductions in the late 1980's
and early 1990's, it is not be unexpected that the post-1996 response of the model differs
from the historical response with its different mix of initial VOC and NOx. Furthermore,
according to more  recent emissions trends data from the National  Emissions Trend
database, there were substantial reductions in  NOx emissions in the Northeast U.S. during
the period of decreasing ozone that occurred between 1990  and 1996. Table 2.2(D)(1)-a
compares percentage ozone precursor emissions reductions from 1990 to 1996 for States in
the Northeast  U.S. that have 1-hour ozone attainment problems.

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  Table 2.2(D)(1
-a: Ozone Precursor Emissions Reductions for Northeastern States
Percent Emissions
Change: 1990 vs. 1996

Connecticut
Delaware
Dist. Columbia
Maryland
Massachusetts
New Jersey
New York
Pennsylvania
Rhode Island
Total NE States
National Emissions Trends
(NET) Inventory
VOC
-5.8%
-13.2%
-11.3%
-30.1%
-1 1 .2%
-22.4%
-22.7%
-19.3%
-18.9%
-20.0%
NOx
-6.6%
-23.1%
-5.6%
-8.3%
-14.2%
-12.4%
-16.2%
-5.0%
-10.5%
-10.8%

       Contrary to the commenters' assertions above, EPA's modeling system frequently
does indicate a VOC-limited regime. For 86 urban areas in the eastern U.S., the model
indicated periods of VOC-limitation at some time during periods of high ozone at 12 of them
(14 percent). In most of these areas, the VOC-limited conditions occurred relatively
infrequently and were more localized than NOx-limited conditions. The premise that the EPA
modeling system uniformly predicts NOx-limited conditions is false, and thus the
commenters' assertions that the model predictions are rendered invalid by a presumed
inconsistency with prior ozone and emissions trends are unsupported.

       The commenter states that if "the Agency believes that the sensitivity to NOx and
VOC in its latest modeling system is different from the initial Tier 2 modeling system, it is
incumbent upon EPA to demonstrate that the model can now accurately model the air quality
impact of emissions reductions."  The commenter goes on to suggest that a suite of
sensitivity runs could be completed to identify areas that are VOC vs. NOx limited. EPA does
not believe that such diagnostic modeling was required as part of this analysis, for several
reasons.  First, the modeling results were evaluated against a large set of surface ozone
observations and found to replicate those ambient measurements fairly accurately for the
three 1995 episodes.  On average, the  model exhibited an under prediction bias of about 7
percent, with an average gross error value of about 23 percent.  Second,  based on existing
control strategy simulations and comparisons against Tier 2 base year model runs, it is
already fairly evident where the model is VOC-limited, NOx-limited, or in the "transition zone".
Generally, urban areas and grid cells immediately downwind of large utility plumes have the
strongest tendency for VOC-limitation while suburban and rural areas tend to be NOx-limited.
From a temporal perspective, the early morning hours tend to be VOC-starved in urban and
suburban areas.  The transition to NOx-starved conditions occurs in most locations in the
mid-morning hours and most (but not all) locations become fully NOx-starved by 2 pm. While
direct comparisons are not possible against observational modeling results for these episode
days, these results generally match the findings of observational studies like Blanchard
(1998).

       Summary of Modeling Results for HDV rule

       As noted in the preamble to the final regulations, EPA has analyzed the potential for
localized increases in ozone that  might occur as a result of this rule.  In so doing, EPA
carefully studied information provided by commenters as well as conducted its own analyses

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of this issue that are summarized below.  As indicated in the preamble, EPA's modeling of
the final rule shows that improvements in ozone levels and public health benefits are
expected because of the HDV rule.

       The rule will provide a substantial reduction in emissions of ozone precursors,
particularly, NOx. These emissions reductions will greatly lower ozone concentrations which
will help federal and State efforts to bring about attainment with the current 1 -hour ozne
standard. As described in the Air Quality Modeling Technical Support Document for this rule,
EPA performed regional scale ozone modeling for the Eastern  U.S. to assess the impacts of
the controls in this rule on predicted 1-hour ozone exceedances. The results of this modeling
were examined for those 37 areas in the East for which EPA's  modeling predicted
exceedances in 2007, 2020, and/or 2030 and current 1-hour design values are above the
standard or within  10 percent of the standard. The results for these areas combined indicate
that there will be substantial reductions in the number of exceedances and the magnitude of
high ozone concentrations in both 2020 and 2030 due to this rule.  The modeling also
indicates that without the rule  exceedances would otherwise increase by 37 percent between
2020 and 2030 as growth in emissions offsets the reductions from Tier 2 and other current
control programs.

       For all areas combined, the rule is forecast to provide a 33 percent reduction in
exceedances in 2020  and a 38 percent reduction in 2030.  The total amount of ozone  above
the standard is expected to decline by nearly 37 percent in 2020 and 44 percent in 2030.
Also, daily maximum ozone exceedances are lowered by 5 ppb on average in 2020 and
nearly 7 ppb in 2030.  The modeling forecasts an overall net reduction of 39 percent in
exceedances from 2007, which is close to the start of this program, to 2030 when controls
fully in place.  In addition, the results for each individual area indicates that all areas are
expected to have less exceedances in 2030 with the HDE controls than without this rule.

       There was one metropolitan area that EPA modeled as having exceedances with the
one-hour ozone standard under baseline conditions in 2007 through 2030, which the
Agency's modeling estimated could have small increases in its peak ozone levels in 2020
and 2030 and a small net increase in levels above the 1-hour standard in 2030. Yet, EPA's
air quality modeling did not predict an increase in the number of exceedances in this area in
2020 and a decrease  occurred in 2030. In another CMSA/MSA in another State, in 2030
there was less  than a  one percent increase in the summer peak level. Yet, this area had few
exceedances and lower ozone above the 1-hour standard in both 2020 and 2030 under the
rule.  EPA expects that the States will have State Implementation Plans that will consider
federal controls and complement them with State actions to provide attainment and will work
with the State to ensure this occurs.

       Collectively, EPA believes  its air quality modeling results for the  HDV rule indicate
that it will make it much easier for states to develop their State  Implementation Plans (SIPs)
which will attain and maintain  compliance with the one-hour ozone standard. (There are also
other upcoming federal measures to lower ozone precursors that will aid the States efforts.)
Furthermore, EPA's Regulatory Impact Analysis for this rule shows significant health and
welfare benefits occurring from the ozone reductions that the rule provides.

       Further details on these  conclusions are provided below.

Air Quality Modeling

       EPA conducted air quality modeling to consider the ozone air quality without the HDV

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RESPONSE TO COMMENTS DOCUMENT
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PAGE 2-54
rule in 2007, 2020, and 2030 and with the HDV rule in 2020 and 203046. The analysis
covered the Eastern U.S. and focused on the areas with current ambient design values
exceeding the 1 -hour standard or within 10 percent of the standard. EPA's air quality
modeling predicted that 37 of these CMSAs/MSAs are expected to have exceedences of the
ozone standard in 2007 without the HDV rule. For 2020 and 2030, the number of
CMSAs/MSAs with predicted exceedances without the HDV rule in effect was 35 areas and
36 areas, respectively. The  following discussion is based on the results of EPA's modeling
for 2020 and 2030 as quantified in terms of various "metrics" or measures of the impact of
the HDV controls on predicted exceedances in these CMSA/MSAs. Details on the
calculation of these metrics are in the Air Quality Modeling Technical Support Document for
this rule.

       Overall, EPA found that the final HDV rule substantially lowers model-predicted
exceedances of the ozone NAAQS in areas that are predicted to have exceedances in the
future without the rule. In  2020, the number of exceedances in CMSA/MSAs is forecasted to
decline by nearly 33 percent with the rule. In 2030, the program lowers such exceedances by
about 38 percent. Table 2.2(D)(1)-b is a summary of the changes from the base case in
predicted exceedances . In 2020 and 2030, respectively, about 91 percent and 100 percent
of the areas that EPA forecasts will have future exceedances in the base case have fewer
exceedances with the HDV rule. Table 2.2(D)(1)-c shows which CMSA/MSAs are predicted
to have less exceedances under the HDV rule.

                                Table 2.2(D)(1)-b:
             Summary of Changes in Exceedances  Due to the HDV Rule
          Based on Final Rule Air Quality Modeling for Eastern CMSA/MSAs
Effect of HDV Rule on
CMSA/MSA Ozone Exceedances
Areas with Exceedances in Base
No Longer Have Any Exceedances in
Control
Decrease in Exceedances in Control
No Change in Exceedances
Increase in Exceedances in Control
Number of Areas
in 2020
35
3
29
3
0
Number of Areas
in 2030
36
3
33
0
0
                                Table 2.2(D)(1)-c:
 List of CMSA/MSAs with Reductions in Exceedances and/or Reduction in Total Ozone
              above the Standard in 2020 and/or 2030 Due to HDV Rule
Metropolitan Areas
Atlanta
Reduction of NAAQS
Exceedances
2020
X
2030
X
Reduction of Ozone
above the NAAQS
2020
X
2030
X
       46 EPA's modeling covered 2020, because it would provide a sense of the early impacts of the HDV
rule and 2030, a year when the heavy duty vehicle fleet covered by HDV standards will have nearly turned
over completely under coverage with the rules.

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Barnstable
Baton Rouge
Beaumont
Benton Harbor
Biloxi
Birmingham
Boston
Charleston, WV
Charlotte
Chicago
Cincinnati
Cleveland
Detroit
Grand Rapids
Hartford
Houma
Houston
Huntington
Lake Charles
Louisville
Macon
Memphis
Milwaukee
Nashville
New London
New Orleans
New York City
Norfolk
Orlando
Pensacola
Philadelphia
N.A.1
X
X
X
X
X
X
N.C.2
X
X
X
N.C.2
N.C.2
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
N.A.
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
N.A
X
N.A.
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
N.A
X
X
X
X
X
X
X
X
X
X
X
X
X
I3
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
N.A
X

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Providence
Richmond
St. Louis
Tampa
Washington-Baltimore
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
1. "N.A." indicates that the area did not have any exceedances predicted in the base case for this scenario.
2. "N.C." indicates no change.
3. "I" indicates an increase.
       In these same metropolitan areas, the total amount of ozone above the standard is
forecasted to decline by about 37 percent in 2020 and by about 44 percent in 2030.  Table
2.2(D)(1)-c shows which areas have a reduction in total ozone above the standard as a result
of the HDV controls.  Table 2.2(D)(1)-d shows a summary of the types of net changes
occurring in the total amount of ozone above the standard in the areas where EPA's
modeling predicts exceedances in the base case.

 Table 2.2(D)(1)-d: Summary of Net Change  in Total Ozone above the Standard Due to
   the HDV Rule Based on Final Rule Air Quality Modeling for Eastern CMSA/MSAs
Effect of HDV Rule on Ozone Levels above
the NAAQS
Net Reduction of Ozone above NAAQS
No Net Change in Ozone above NAAQS
Net Increase of Ozone above the NAAQS
Number of Areas in
2020
35
0
0
Number of Areas
in 2030
35
0
1
       In the vast majority of areas, the air quality modeling predicts that the HDV rule will
lower peak summer ozone concentrations in both 2020 and 2030. The reduction in daily
maximum ozone is about 5 ppb, on average in 2020 and about 7 ppb, on average in 2030.
Table2.2(D)(1)-e shows a summary of the number of areas that have different types of
changes in peak 1-hour ozone predictions. Detroit is the only area with an increase in peak
ozone in 2020. However, as shown in Table 2.2(D)(1)-c, Detroit has no increases in
exceedances in this year and a small decrease in the total amount of ozone above the 1-hour
standard. In 2030, both Detroit and Louisville have increases in the peak ozone. Detroit also
has an increase in total ozone above the standard in 2030, but fewer exceedances of the
standard. Even though Louisville has an increase in peak ozone in 2030, there are fewer
exceedances and less ozone above the standard in this year.

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  Table 2.2(D)(1)-e:  Summary of Changes in Peak 1-Hour Ozone Due to the HDV Rule
          Based on Final Rule Air Quality Modeling for Eastern CMSA/MSAs
Effect of HDV Rule
on Ozone Peak Levels
Reduction
No Change
Increase
Number of Areas in
2020
33
1
1
Number of Areas
in 2030
34
0
2
       The more-detailed results of the changes that occur in each CMSA/MSA in Table
2.2(D)(1)-f show that nearly all areas experience only decreases in total ozone above the
standard. There are some areas which may have times and areas when ozone levels
increase in some portion of the area and other times and/or locations when ozone decreases
as a result of controls during the course of the episodes modeled. As indicated in Table
2.2(D)(1)-f, the net change is always a decrease, except in only one area, Detroit in 2030.

Table 2.2(D)(1)-f:  Summary of Increases and Decreases in Ozone Due to the HDV Rule
          Based on Final Rule Air Quality Modeling for Eastern CMSA/MSAs
Effect of HDV Rule on
Increases/Decreases in Ozone Levels
Only Increases
Only Decreases
Increase & Decrease - Net: Decrease
Increase & Decrease - Net: Increase
Increase & Decrease - Net: No Change
No Change
Number of Areas
in 2020
0
28
6
1
0
0
Number of Areas in
2030
0
29
6
1
0
0
       By-and-large, EPA's air quality analysis shows that the HDV rule substantially
improves ozone air quality for areas predicted to have exceedances of the NAAQS in the
base case.  Table 2.2(D)(1)-a shows no areas are forecast to have additional exceedances
as a result of the HDV rule in 2020 or 2030.  Considering all of the other metrics, EPA
expects widespread benefits in ozone reductions from the rule. There are only two areas
(i.e., Detroit and Louisville) where, based on EPA's modeling, that it is not entirely clear that
any increases will be far outweighed by the forecasted decreases in ozone above the
standard.

       Most importantly, this type of situation (isolated ozone  increases) should not occur
when other governmental actions beyond the scope of the HDV rule are considered.
Michigan and Kentucky are in the process of conducting local  modeling that will consider the
impacts of this rule and their own local programs that should be designed to complement this
and other national programs. We expect that the States will be able to design reasonable
programs to provide attainment, which means that even  in the case discussed directly above

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ozone levels will be reduced in the future.

       The Agency is also going to take further actions on both VOCs and NOx which we
expect will further lead to air quality improvements. For example, the planned non-road
programs include emissions standards for stern-drive recreational marine engines and for
commercial marine engines.

State Support

       We also note that no state responsible for achieving attainment of the ozone NAAQS
has commented that HDV rule will make achieving attainment harder, and many have
commented positively. For example, the Northeast States for Coordinated Air Use
Management (NESCAUM) and the State and Territorial Air Pollution Program
Administrators/Association of Local Air Pollution Control Officials (STAPPA/ALAPCO) have
strongly supported the rule.  Several individual states have also expressed support for the
rule, including New York State, Alabama, Toledo,  New Jersey, Pennsylvania, Oregon,
Connecticut, San Joaquin Valley, South Carolina,  Illinois, Ohio, Wisconsin, North Carolina,
Delaware, New Hampshire, Iowa, Alaska,  Rhode Island, Maryland, Guam, Texas (TNRCC),
and Georgia. The City of Chicago, which has often been cited by commenters as a place
where there can be counterproductive effects of NOx reduction, has submitted comments  in
favor of the rule. Other cities that have gone on record in support of the rule  are New York
City, Atlanta, Los Angeles, Houston, Ventura, Sacramento, San Francisco, Denver, and
Boulder.  Comments by  these organizations are in Air Docket A-99-06.

Ozone-related  Health and Welfare Improvements

       EPA has examined all of the important changes in ozone air quality predicted to
occur at the county level over the ozone season in its final analysis of the health and
environmental effects of this rule.  It has considered how areas experience both increases
and decreases in ozone levels throughout the course of the season. The Agency has
developed estimates of all the important ozone parameters that are necessary for estimating
health and environmental effects at the county level.  The Agency then used  county
population projections out to 2030 to estimate how many people will either experience, or
avoid different types of health effects due to the HDV rule. These results are then
aggregated to come up with  a national estimate of the benefits of the rule. The relevant
results are summarized  below and further details of this process can be found in the
Regulatory Impact Analysis (RIA) for the final rule  and the TSD for the health and welfare
effects estimation process.47

       EPA's RIA estimates that there will be substantial benefits to the public from the
ozone reductions that result from the NOx reductions that EPA is requiring in the HDV  rule.
As NOx reductions start in 2007 and increase over time this should lead to fewer hospital
admissions for respiratory and cardiovascular diseases, including emergency room
admissions for asthma, and reduce the occurrence of nonemergency asthma attacks and
other acute respiratory symptoms and minor restricted activity days. EPA's analysis of ozone
reductions also indicates that there should be increases in worker productivity and other
benefits to the public's welfare.

       By 2030 (when turnover of the vehicle fleet has occurred), in the Eastern US alone,
       47 U.S. Environmental Protection Agency, "Final Tier II Rule: Air Quality Estimation, Selected Health
and Welfare Benefits Methods, and Benefits Analysis Results," December 1999.

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the HDV rule NOx reductions will provide reductions in ozone concentrations that annually
lead to 300 fewer emergency room visits for asthma and 1,500 fewer hospital admissions
from other respiratory and cardiovascular diseases.  There is an estimated annual reduction
in 185,500 asthma attacks. There should also be an annual reduction of more than 1.8
million incidences  of minor restricted activity days.  Additionally, EPA estimates that there
will be increased worker productivity valued at $ 140 million annually and reductions in crop
damage valued at close to $ 1,120 million peryearas well as other significant, although
unquantified, public health and welfare benefits.  This  substantial level of health  and welfare
benefits from ozone-related improvements in air quality clearly rebuts the assertions by GM
et al that the HDV  rule's NOx reductions are counterproductive.

       Other Benefits Resulting from NQx Reductions

       Furthermore the NOx reductions in conjunction with the SOx and direct particulate
matter reductions leads to reduced fine particle concentrations in 2030 that EPA  estimates in
the RIA will prevent 8,300 premature deaths, 5,500 cases of chronic bronchitis, 17,600 cases
of acute bronchitis, 175,900 asthma attacks, and substantial reductions in other harmful
respiratory and cardiovascular effects. The fine particle reductions will lead to about $3.3
billion of visibility benefits in the West and Southeast alone, as well as many other types of
unquantified welfare benefits.

       EPA also found similar results in overall air quality improvement and health and
welfare benefits in comparable analysis of its Tier 2 program. The Agency's response to
similar comments  about the counterproductive effects of NOx reduction can be examined in
the docket (IV-A-08).

       (2)     There is growing evidence indicating that on weekends, ozone levels increase
              while NOX decreases.  Commenter notes that industry commented on this
              under the Tier 2 and acknowledged that there are ongoing efforts to improve
              understanding on the issue. EPA should work with other interested
              stakeholders to better understand the mechanisms that cause higher ozone
              as  an apparent by-product of NOX reductions.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 83

       Response to Comment 2.2(D)(2):

       All issues related to weekend/weekday studies are addressed in the  response to
Issue  2.2 (D)(3), below.

       (3)     Observational evidence from weekday/weekend studies indicates that the
              spatial extent of the VOC-limitation/NOx-disbenefit effect is larger than EPA's
              model predicts. The reduction in NOX emissions during the weekend is due in
              part to the reduced emissions of the HD trucks during this time. Commenter
              provides significant discussion on this issue and references their comments
              on  this issue in response to the Tier 2 rulemaking as well as the draft report
              issued by CARB "The Ozone Weekend Effect in California" April 2000.
              Commenter cites to the data and conclusions in this report, which supports
              the conclusion that NOX reductions on the weekend are a likely cause of
              increased ozone levels.  Commenter also cites to an independent analysis
              that also supports this conclusion (see "Spatial Mapping of VOC and NOX-

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              Limitation of Ozone in Central California," Blanchard, Charles, R., report to
              the Bay Area Air Quality Management District, 1999). Commenter notes that
              EPA has not adequately addressed the comments on this issue as submitted
              in response to the Tier 2 rulemaking (and suggests that EPA meet with
              industry representatives to discuss this issue) and asserts that failing to
              determine whether a proposed rule will improve or degrade air quality before
              finalization would be arbitrary and capricious. Commenter asserts that any
              potential for ozone nonattainment past 2007 is precisely in those areas where
              the HD NOX reductions are most likely to  be counterproductive and concludes
              that the proposed NOX reductions will aggravate, rather than help reduce,
              ozone levels in (and downwind of) the nation's large cities.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 19-25

       Response to Comment 2.2(D)(3):

       As stated previously in comments on the Tier 2 rulemaking, GM asserts that, because
some monitoring locations exhibit higher ozone levels on weekends than  on weekdays, we
should conclude that further NOx reductions from Tier 2 will produce increases in ozone
concentrations in future years. As EPA responded to this comment previously, the state of
current scientific understanding is insufficient to support this conclusion.

       As part of their comments, GM frequently cites a  draft California Air Resources Board
(CARB) report in establishing the existence of the so-called "weekend effect". EPA does not
dispute the existence of generally higher levels of elevated ozone48 (and lower measured
VOC/NOx ratios) on the weekend, but disagrees with the commenters' conclusions  arising
from this "weekend effect". Significantly, the introductory chapter of the draft CARB  report
directly addresses the conclusion GM reached from the data within the report's analyses.

       "From the Weekend Effect, some conclude that NOx reductions could be
       counterproductive as an ozone control strategy in the California. However, ARB staff
       maintain that the pattern of variable ozone precursor reductions during the day are
       not representative of the uniform reduction  (for all hours of the day and days of the
       week) that would occur under an ozone control plan."

       "Furthermore, ozone concentrations have declined for all days of the week at all sites
       in the (South Coast Air Basin) and the (San Francisco Bay Area Air Basin).  Although
       aggressive VOC control plans are in place in both of these air basins, the NOx control
       plan  in the (South Coast Air Basin) is more aggressive than the one in the (San
       Francisco Bay Area Air Basin)."

       The draft report lists four possible hypotheses to  explain the phenomena of  higher
weekend ozone, only one of which  is consistent with the  concept of extrapolating these
results to determine the effects of a general NOx reduction strategy.  The other three
hypotheses,  if true, would not allow weekend/weekday ozone trends to be used as a
surrogate for identifying areas of NOx control disbenefits. One hypothesis is that due to the
lack of a marked morning rush hour on the weekend, the timing of NOx emissions into the
       48 Although the day of the week with the most ozone exceedances in the South Coast Air Basin is
Thursday.  Followed by Friday, then Saturday. (CARB, 2000).

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airshed is much different on a weekend than a weekday. Without the NOx titration which
occurs in the early morning hours on weekends, the system becomes NOx-limited earlier in
the day and any fresh NOx injected at that point will lead to higher ozone. A second
hypothesis is that there is a carryover of ozone  precursors aloft from the preceding weekdays
which when mixed with surface layer emissions from a weekend results in a more ozone
conducive state. The third hypothesis is based on the known uncertainty in emissions
estimates and postulates that there are weekend-specific activities which result in higher
VOC and NOx emissions on weekends. CARB, industrial representatives, and other
interested parties are presently engaged in a multi-year data collection and analysis study to
determine which of the  hypotheses accounts for the weekend effect phenomenon.

       The commenter also resubmitted several pieces of information that were addressed
within the Tier 2/Low Sulfur RTC. First, the commenter cites 1996-1998 ozone data and
concludes that more sites had higher ozone on the weekends (373) than lower ozone on the
weekends (132).  This analysis is apparently based on mean ozone values as opposed to
exceedance-level values and therefore has no relevance to the issue of whether NOx
controls would aggravate ozone concentrations on the highest ozone days, even if one
assumed that weekend/weekday data could be used as a proxy for the NOx control signal.

       The commenter questioned a comprehensive regional study related to this issue
done for the Air Quality Analysis Workgroup of the Ozone Transport Assessment Group
(OTAG) in September 1996. (Husar, 1996) This group was composed of nationally-known
air quality analysis experts from the federal and state government, industry, and major
university research centers. In the study, Husar used monitoring  data from EPA, States, and
other sources from 1988 to 1995 to examine the weekly pattern of ozone over the eastern
United States. The study concluded that daily exceedances (ozone values >120 ppb) are
reduced on Sundays to one-third of the exceedances on Fridays. The study also concluded
that the strongest differences between Friday ozone levels and Sunday ozone levels
occurred in major metropolitan areas.  These conclusions are consistent with the expectation
that NOx reductions are beneficial over large geographical scales, even if the benefits vary
on a local scale. The commenter speculated that Fridays were not a representative day of
the week because "a substantial fraction" of the populations travels to recreational areas in
advance of the weekend. EPA believes the central point of the argument (i.e., over a large
part of the eastern U.S., no compelling evidence of a weekend effect has yet been advanced)
still exists, independent of any small mobile source emissions differences between Friday
and other weekdays
       In summary,  EPA continues to maintain that the NOx reductions associated with the
HDV rulemaking will have wide-ranging air quality benefits over the entire United States. PM
concentrations and regional ozone levels, in particular, will be significantly reduced.  It is
possible that transitory  ozone increases in some areas may be related to NOx reductions, but
the extent and applicability of such results is confounded at best. No compelling air quality
evidence has yet been  submitted that past NOx reductions have led to any widespread ozone
increases. In fact, the data shows the opposite. According to the emissions trends listed
CARB report, total VOC and NOx decreased by approximately: 13 and 1 percent from 1985-
1990, 20 and 12 percent from 1990-1995, and 20 and 15 percent from 1995-2000. This
entire period has been  characterized by a consistent trend to fewer ozone exceedances and
lower mean ozone values (weekends as well as weekdays).

(E)    The proposed  rule is necessary to reduce PM levels,  which are high according
       to air quality monitoring data.

       (1)     In the East, upwards of 65% of PM fine mass is composed of primary and

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             secondary products of combustion and other anthropogenic sources. Chief
             constituents of fine particles include elemental and organic carbon,
             ammonium, sulfates, and nitrates. In urban areas such as New York City and
             Boston, monitoring data show elevated levels of PM2.5. This is of special
             concern because low income communities are disproportionately impacted by
             the high levels of PM and toxic air pollution found in urban areas.

             Letters:

             NESCAUM (IV-D-315)p. 2

       Response to Comment 2.2(E)(1):

       EPA agrees with the commenter that monitoring data for fine PM demonstrates a
significant contribution from anthropogenic sources. This is of particular concern in urban
areas with high population  densities and low income neighborhoods.

       (2)    Commenter provided detailed supplemental information on HD emissions in
             New York.

             Letters:

             NY DEC (IV-D-239) p. 7

       Response to Comment 2.2(E)(2):

       EPA recognizes the elevated levels of fine PM found in ambient air in New York City.

       (3)    Prevailing winds carry PM 2.5 and ozone into Mt. Ranier National Park, and a
             reduction in PM 2.5 would lead to improved regional visibility and would
             reduce the  effects of acid rain on the environment.

             Letters:

             WA Environmental Council (IV-D-164) p. 1,2

       Response to Comment 2.2(E)(3):

       EPA recognizes the environmental impacts of emissions from heavy-duty vehicles,
and appreciates the location-specific examples provided by the commenter.

       (4)    Particulates impair visibility up to 70%.

             Letters:

             OR Environmental Council  (IV-D-68) p. 2

       Response to Comment 2.2(E)(4):

       EPA agrees with the commenter that particulate matter impairs visibility.

       (5)    At Acadia National Park, the primary source of visibility impairment is from

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              fossil fuel particles.  Some plants at Acadia are suffering damage from
              acidification.  This is also true at other northeast states and eastern Canadian
              provinces.

              Letters:
              The Coalition for Sensible Energy (IV-D-264) p. 1

       Response to Comment 2.2(E)(5):

       Adverse environmental impacts from heavy-duty vehicle emissions are well-
established and described in detail in the rulemaking documents. EPA appreciates the
location-specific examples provided by the commenter.

(F)    EPA relies on inaccurate data or modeling assumptions regarding PM
       reductions and the attainment of the PM NAAQS.

       (1)     Reducing sulfur from diesel fuel will not significantly reduce coarse particles
              from diesel exhaust because 80-90% of particles emitted from diesel engines
              are fine or ultrafine particles; and PM traps form larger numbers of the ultra-
              fine particulates. Commenter provides additional data and discussion on this
              issue to support their position that reductions in diesel emissions are
              unnecessary to prevent exceedances of the PM10 standard and  notes that
              since only a couple areas in California currently exceed the PM10 standard
              and very few other areas are in danger of exceeding the standard, a national
              approach based on reduced diesel emissions cannot be justified, (cites to
              W.G. Tucker, Fuel Processing Technology 65-66 (2000) 379-392).

              Letters:

              American Petroleum Institute (IV-D-343) p.  13-15
              Marathon Ashland Petroleum  (IV-D-261) p. 9

       Response to Comment 2.2(F)(1):

       The commenters assert that these  regulations are not justified based on  health
concerns related to PM10 nonattainment areas for three reasons: (1) diesel PM  is a small
fraction of PM10, (2) there are only a few PM10 nonattainment areas, most of which are
located in California; (3) reducing sulfur from diesel fuel will not significantly reduce coarse
particles of diesel exhaust since 80-90% of particles emitted from diesels are in the fine or
ultrafine range.

       EPA disagrees with the commenters.

       The regulations address emissions from heavy-duty vehicles (diesel and gasoline).
Ambient concentrations of PM are composed, in part, of direct particles emitted from  HDVs,
and from gaseous emissions that form particles in the atmosphere.  The standard that must
be met to justify this rule is whether heavy-duty vehicle  emissions cause or contribute to air
pollution that may reasonably be anticipated to occur in the future.  The fact that these
sources may not be the only or the largest  sources of contribution does not change the  legal
justification of the rule, although in many cases the inventory contribution from HDVs is
substantial.  In the case of PM10 nonattainment areas,  while HDV emissions may not be the

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dominant reason for the nonattainment status, it is well-established that heavy -duty vehicle
emissions contribute to the current levels of ambient PM10.

       Second, the Agency finds that there are ten PM10 nonattainment areas currently
violating the  PM10 NAAQS and that inventory increases from 1996 to 2030 demonstrate that
these areas face a significant risk of exceeding the standard in the future without additional
reductions.  The ten areas are not only in California,  but across the nation in six states:
California, Nevada, Arizona, Ohio, Texas, and New York.  Moreover there is no reason to
exclude emission reductions in California since California will benefit significantly from this
national rule.

        Importantly, there are also 25 unclassifiable  areas that have recently recorded
ambient concentrations of PM10 above the PM10 NAAQS. EPA adopted a policy in 1996
that allows areas with PM10 exceedances that are attributable to natural events to retain their
designation as unclassifiable if the State is taking all reasonable measures to safeguard
public health regardless of the sources of PM10 emissions. Areas that remain unclassifiable
areas are not required under the Clean Air Act to submit attainment plans, but we work with
each of these areas to understand the nature of the PM10 problem and to determine what
best can be done to reduce it. With respect to the monitored violations reported in 1997-99 in
the 25 areas designated as unclassifiable, we have not yet excluded the possibility that
factors such  as a one-time monitoring upset or natural events, which ordinarily would not
result in an area being designated as nonattainment for PM10, may be responsible for the
problem. Emission reductions from today's action will assist these currently unclassifiable
areas to achieve ambient PM10 concentrations below the current PM10 NAAQS.

       Third, We also disagree with the assertion in the comment that PM traps  (CDPFs)
increase ultra-fine  PM emissions  which contribute to PM10. As we explain in response to
issue 3.2.1(G)  ultra-fine  PM emissions are reduced substantially through the application of
CDPFs and low sulfur diesel fuel. The new heavy-duty vehicle standards and low sulfur
diesel fuel requirements will enable the use of new aftertreatment technologies that will result
in significant reductions  in a number of pollutants that directly (diesel PM) or indirectly
(secondary formation of ambient PM from NOx, SOx, and VOCs) affect ambient
concentrations of PM10.

       (2)     EPA provides no data or evidence to support the claim that PM emissions will
              rise steadily in the absence of new controls and in fact, these emissions  are
              likely to decline in future years. EPA's prediction that emissions of PM-10 will
              rise steadily unless new controls are  implemented is misleading since
              ambient concentrations of PM-10 have been declining steadily over the past
              decade (cites to EPA National air Quality and Emission Trends Report, 1998).
              Also, direct PM-10 emissions are just one portion of the total PM-10
              inventory.  EPA's estimates of gaseous precursors of secondary PM (in the
              final Tier 2 rule) indicate that emissions of SOX, NOX, and VOC are all
              projected to be below 1996 levels in 2030 under the current control program.
              One commenter also noted that EPA cannot justify the rule by assuming that
              PM emissions will rise based on estimates of future increases in the number
              of light-duty diesel engines sold and operated.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 5
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 28-29

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              Marathon Ashland Petroleum (IV-D-261) p. 5,10

       Response to Comment 2.2(F)(2):

       The central issue in this comment is EPA's assertion  that at least 10 areas across the
nation face a significant risk of exceeding the PM10 NAAQS  between 2007 and 2030.
Commenters make several arguments.

       First, commenters assert that EPA has not provided any data to substantiate the
claim that PM inventories for relevant areas will rise in the future. This is not accurate.  In the
proposal, EPA based its assertion on "control case" inventories prepared for the Tier 2
rulemaking.  We updated our inventories for the final rule, and placed those inventories into
the docket as they became available.  The areas that face a significant risk of future
violations of the PM10 NAAQS have significant increases in particulate matter emissions
projected from 1996 to 2007. This information is presented in Table II.A-14 in the Regulatory
Impact Analysis for the final rule.

       Second, commenters note that PM10 ambient concentrations have declined over the
last decade.  This is true. Ambient concentrations and particulate matter emissions
inventories have declined over the last ten years (EPA Trends, 1998, at 40, and Table A-6).
However, particulate matter emissions are projected to increase between 1996 and 2030,
and thus the ten nonattainment areas  that are currently violating the standard, or and those
areas that are within  10  percent of exceeding the standard, face a significant risk of
exceeding the standard  between 2007 and 2030.

       Third, the commenters point out that gaseous compounds such as NOx, SOx, and
VOCs also contribute to the formation  of PM10  concentrations. While this is accurate, in
most areas these gaseous pollutants represent only a small fraction of PM10.  In the west, 70
percent of PM10 particles are comprised of particulate matter composed of minerals from
natural and anthropogenic sources. The sulfate portion (SO4) is 3.1 percent and the NH4
portion is 0.8%. There was insufficient data available to determine the proportion of nitrate,
organic carbon and elemental carbon. This inventory data shows that the critical data set
related to prospects of future nonattainment is the PM inventories.  That said, it is important
to note that SOx inventories for the  10 areas that the Agency predicts face a significant risk of
nonattainment in the future  are projected to increase substantially from 2007 to 2030.  See
table below.

         Table 2.2(F)(2) - SOx Emissions for Areas Facing a Significant Risk
               of Exceeding the  PM10 NAAQS between 2007 and 2030.
Area
Percent Increases in SOx
Emissions
(2007-2030)
Areas Currently Exceeding the PM10 standard
Clark Co., NV (Las Vegas)
El Paso, TX*
Hayden/Miami, AZ
Los Angeles South Coast Air Basin, CA
Nogales, AZ
Phoenix, AZ
9%
22%
21%
20%
55%
30%
Areas within 10% of Exceeding the PM10 Standard

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Cuyahoga Co., OH (Cleveland)
Harris, Co., TX (Houston)
New York Co., NY
San Diego Co., CA
-1%
28%
5%
25%
       Finally, commenters state that it is not appropriate for the Agency to include projected
increases in diesel emissions due to penetration of diesels into the LDV fleet. The Agency
concurs and has not done so. The paragraph in the preamble was included to show that
emissions from diesels would be even higher if diesels penetrated the LDV market in
significant numbers.

       (3)     EPA provides no explanation or documentation for its revised approach in
              determining the PM inventory. EPA has failed to explain the increases in the
              base case emission inventory and has provided inadequate information,
              which prevents stakeholders from developing their own analyses.

              Letters:

              Engine  Manufacturers Association  (IV-D-251) p. 83

       Response to Comment 2.2(F)(3):

       We disagree with the commenter. As discussed in the NPRM, the primary revision to
the PM inventory is in the estimate of vehicle miles traveled (VMT) by heavy-duty diesel
engines. Although the  Tier 2 and this analysis both base VMT estimates on the Federal
Highway Administration total VMT for motor vehicles, our new analysis uses updated VMT
splits by class and by fuel type.  These new VMT splits were developed in our efforts to
create an updated version of MOBILE and were presented in a memo to the docket prior to
the publication of the NPRM.49 As a  result,  our VMT projections increased by 40 percent for
HDVEs. Because we use the same growth rate projections as in the Tier 2 analysis this
increase is constant into the future.

       The PM inventory is also affected by the use of lower emission factors than were
used in the Tier 2 inventory analysis. These new emission factors are also due to our efforts
to update MOBILE50 We discussed the emission factor updates in detail in the NPRM and in
the docket. These emission factor updates result in about a 12 percent decrease in PM in
the 2007 calendar year. The combined effect of the VMT increase and emission factor
decrease is about a 23 percent increase in  exhaust PM projections. This rough calculation
shows a similar result as is presented below in Table 2.2(F)(3).

       In its comments, EMA presents a table (Table 2) which incorrectly presents the
increase from the Tier 2 PM inventory to the PM inventory we presented in our NPRM. The
mistake in the EMA table is that  EMA presents the total 2007 PM inventory from heavy-duty
gasoline and diesel (and  motorcycle) engines as 52,600 tons. This number should have
       49 "VMT Estimates for the 2007 Heavy-Duty Final Rule Analysis,"  EPA memorandum from Penny
Carey and Michael Sklarto Docket A-99-06, May 9, 2000.

       50 "Update of Heavy-Duty Emission Levels (Model Years 1988-2004+) for Use in MOBILE6," U.S.
Environmental Protection Agency, EPA420-R-99-010, April 1999.

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been 97,300 tons. Table 2.2(F)(3) presents the Tier 2 and HD 2007 FRM inventories for
PM10.  In this table, we only present the contribution of HDDEs so that a direct comparison
can be made. Crankcase PM is not included here because it was not included in the Tier 2
PM inventory.

    Table 2.2(F)(3): Comparison of HOPE Baseline PM Inventories (short tons/year)
Rule
Tier 2 FRM
HD 2007 FRM
Vehicles
HDDEs
HDDEs
Percent Increase, Tier 2 to HD 2007
2007
89,800
109,500
22%
       As discussed in the response to issue 2.2(F)(8), other commenters have expressed
concern that we have significantly underestimated our PM inventories because we did not
include tampering and malmaintenance in our PM inventory calculations.  We did not include
tampering and malmaintenance in our analysis, so we may be conservatively low in
projecting PM emissions from heavy-duty engines.

       (4)     EPA's analysis of the HD emission inventory is flawed since the PM inventory
              analysis ignores indirect PM reductions. EPA's model (PARTS) estimates
              that 12% of the SO2 reacts to form sulfate PM on an annual average basis.
              However, analyses referenced by EPA in its June 1990 RIA on Control of
              Diesel Sulfur and Aromatic Content indicate that the reaction rate during the
              summer months is much higher - as much as 6% per hour. If EPA had
              estimated indirect PM emissions, either on an annual average or episodic
              basis, the sulfate PM reductions of its proposed rule would be much greater
              and the SO2 emission reductions would have been less. EPA should take
              indirect sulfate reductions into account in its final rule and should also
              estimate the amount of SO2 converted to SO4 during more episodic
              conditions.  Including indirect PM sulfates in the analysis would increase the
              estimated overall PM reductions of the diesel fuel sulfur portion of the
              proposal.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 6-7

       Response to Comment 2.2(F)(4):

       We include indirect sulfate PM in our air quality modeling of particulates for the FRM.
Because the NPRM used a spreadsheet model to calculate a single national emission factor,
we were not able to calculate indirect PM emissions which are a function of local area inputs.
In addition, our NPRM inventory analysis was only intended to project emissions directly
emitted from heavy-duty engines and was not intended to perform complex atmospheric
modeling such as analyzing indirect PM or ozone formation.

       (5)     There is no national need for additional PM-10 reductions in the 2007 to  2030
              time period. The arguments EPA uses to demonstrate that there is a national
              PM-10 attainment problem are flawed. The current PM-10 attainment
              problem is not a national issue since it is limited to 24-hour violations in
              California and  a few other western states.  Also, the projection technique EPA

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              used for PM-10, the source-receptor matrix approach, is not appropriate to
              model specific PM 24-hour exceedances and is not suitable for determining
              whether a current nonattainment area is at risk of PM-10 nonattainment at a
              future date.  This model is overly simplistic and cannot be used to obtain
              accurate projections of PM-10 attainment status, particularly when
              questionable emission inventories projected to 2030 are used.  EPA should
              evaluate the areas potentially at risk using SIP-quality models for projecting
              24-hour PM-10 concentrations.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 26-28

	Response to Comment 2.2(FH5):
       EPA disagrees with the commenter's assertion that the scope of the nation's PM10
nonattainment problem is spread among too few states to justify a national-scale control
program. Based on analyses of projected increases in emissions in areas which are
currently violating or are within 10% of the 24-hour PM10 NAAQS, there are ten areas that
the Agency finds face a significant risk of exceeding the PM10 NAAQS between 2007 and
2030. These areas are located in six states spread throughout the nation - California,
Nevada, Arizona, Texas, Ohio, New York.

       Although the S-RM was used at the time of proposal for initially estimating future
particulate concentrations, we have not  relied on these results for the final rule.  While it
would be preferable to use state-of-the-science air quality modeling to estimate the degree of
reductions needed to meet the NAAQS  in any particular location, for areas which are already
measuring air quality close to or above the level of the NAAQS, it is sufficient to rely on
projected increases in emissions to ascertain the potential risk of future violations of the
PM10 NAAQS.

       Typically, concentrations  of PM10 are more significantly affected by direct emissions
of particles. This is in contrast with ozone, which involves a number of complex
photochemical processes to convert precursor emissions into ozone and other products, and
PM2.5, which involves a combination of individual pollutant species, several of which
undergo intermediate transformation in the atmosphere.  For this reason, it is more
reasonable to make judgments about ambient air quality from assessments of PM 10
emissions than from ozone precursors or intermediate components of PM2.5. Given that
current air quality in many areas is close to or above the level of the PM10 NAAQS, and
given that emissions of PM10 in a number of these areas are  projected to increase  over time,
it is reasonable to conclude that many of these areas may experience future  air quality that is
worse than  currently measured.  Thus, for the final rule, the Agency examined the emissions
inventories  for each of the PM10  nonattainment areas that are currently measuring  violations
of the PM10 standard, and for areas that have measured concentrations within 10% of the
standard. Of these 18 areas, there were ten areas that are projected to have increases in
emissions inventories of PM from all sources. As a consequence, these ten  areas were then
determined by the Agency to face a significant risk of future nonattainment.

       (6)    Attainment of the  NAAQS constitutes adequate protection of public health
             and welfare with a margin of safety (CAA Section 109(b)(1)).  However, EPA
             has proposed these additional regulations despite the lack of evidence and
             certainty that PM  NAAQS violations will occur  in the future. This is an
             arbitrary and capricious interpretation  of EPA's obligation under the  CAA to

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              determine which emissions endanger public health and welfare and to
              establish health based standards for these emissions.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 5
              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 29

       Response to Comment 2.2(F)(6):

       First, as discussed elsewhere in this docket and the RIA and preamble, there is a
significant risk of future violation of the PM10  NAAQS in several areas of the country without
the reductions in this rule.  As described in the RIA and preamble for this rule, we believe the
reductions from the program completed today are fully justifiable based on the continuing
need for further reductions in PM (as well as NOx) from mobile sources in the coming
decades to attain and maintain the current PM10 NAAQS.

       Second, section 202(a) provides EPA with independent authority to regulate
"emission of any air pollutant from ... motor vehicles  ... which in his judgment cause, or
contribute to, air pollution which may reasonably be anticipated to endanger public health or
welfare."  On its face, this provision does not tie such standards to the attainment and
maintenance of a NAAQS.  Indeed, there are  numerous types of air pollution regulated under
the Act that are not covered by the section 109 NAAQSs.  For example, EPA has authority
under section 112 to regulate 189 "hazardous air pollutants," ("HAPs") and may add to the list
of HAPs any "pollutants which  present, or may present,... a threat of adverse human health
effects ... or adverse environmental effects." The Clean Air Act also regulates visibility
(section 169A and 169B), acid rain (Title IV) and depletion of stratospheric ozone (Title VI).
All of these air pollution concerns can, by any measure, be "reasonably anticipated to
endanger public health or welfare."

       EPA believes that consideration of air quality need under section 202(a) is not limited
to consideration of pollutants for which a NAAQS has been established. EPA has provided
independent information regarding the health  effects of fine PM and diesel exhaust which
also justify the standards promulgated today.

       (7)     EPA cannot base its need determination on the now-remanded PM2.5
              NAAQS. Commenter cites to  EPA's consideration of fine particulates in
              justifying the proposed rule (RIA at p. II-67 and 65 FR 45449) and notes that
              this intention is inconsistent with President Clinton's Memorandum to the EPA
              Administrator (7/16/97) which  directs EPA to complete the next periodic
              review of particulate matter by July 2002 so that "the determination of whether
              to revise or maintain  the standards will  have been made before any areas
              have been designated as "nonattainment" and before imposition of any new
              controls related to the PM2.5 standards." To justify the proposed rule based
              in part on fine PM also conflicts with EPA's finding of need for the recent Tier
              2 rulemaking.  It is currently inappropriate to attempt to promulgate the
              proposed standards on the basis of fine PM effects.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 30-31

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       Response to Comment 2.2(F)(7):

       EPA's use of information regarding the health effects of fine PM does not contradict
the President's Memorandum. That memorandum refers to actions taken regarding labeling
areas as not attaining the PM2.5 NAAQS. EPA is taking no action today regarding the
PM2.5 NAAQS. EPA is acting under its independent authority under section 202(a) to
regulate pollutants from motor vehicles. Nor does today's action contradict the action of the
D.C. Circuit remanding the PM2.5 NAAQS. EPA is taking no action to implement the PM
NAAQS in this rule.  Though we use scientific data that was also relied on in support of the
NAAQS, today's action is separate and based on our authority under a different section of the
statute. It should be noted that, though the D.C. Circuit remanded (but did not vacate) the
PM2.5 NAAQS on legal grounds, the court did not take issue with the scientific findings of
that rule; in fact, the  panel of judges stated that the evidence "amply justifies establishment of
new fine particle standards." ATA, slip  op. at 47.

       In addition, the fact that we did not base our Tier 2 rulemaking on fine PM  concerns
does not prevent us  from taking our concerns regarding fine PM into account when
determining whether this heavy duty engine regulation is appropriate under section 202(a).
In fact, we stated at the time of the Tier 2 rule that we had authority to take fine PM into
account in regulating heavy duty engines, but chose not to do so for the purposes of the Tier
2 rule.

       (8)     EPA  underestimates emissions due to  in-use deterioration and needs to
              consider in-use tampering and maintenance. The commenter recognizes the
              severe shortage of in-use HDV emissions data, but cites a study showing
              large deterioration  rates (EFEE Inc., 9/30/98).

              Letters:

              STAPPA/ALAPCO (IV-D-295) p. 6

       Response to Comment 2.2(F)(8):

       We are also  concerned that current modeling may not fully represent in-use
tampering or malmaintenance. However, we have not fully evaluated the limited data
currently available and we are in the process of collecting  more data on in-use emission
deterioration. If it becomes apparent that we need to revise our particulate model, we intend
to do so in a timely manner.

       In Chapter 2  of the Regulatory  Impact Analysis, we present a sensitivity analysis
using PM in-use deterioration rates from the EMFAC2000 emission model developed by the
California Air Resources Board.51  These deterioration  rates are derived, in part, from the
EFEE Report cited by the commenters. This sensitivity analysis gives PM results that are
about 50% higher than we project in our inventory analysis.  We are still investigating the
accuracy of the EFEE report, but this report still gives an indication that we may be
underestimating deterioration. In any case, this suggests that our analysis is conservative in
that using the EMFAC2000 deterioration  rates would increase  emissions projections which
would indicate an even greater need for our new standards. It is unlikely, however, that
       51 "Public Meeting to Consider Approval of the Revisions to the State's On-Road Motor Vehicle
Emissions Inventory: Technical Support Document," California Air Resources Board, Chapter 10, May
2000.

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higher emission inventories would cause EPA to adopt different regulations.  These
regulations set PM standards for diesel engines at the lowest level we believe are feasible
beginning in 2007.

(G)    EPA bases the rule on models that are known to be flawed or that are
       undocumented and have not been subject to peer-review.

       (1)     EPA has indicated that it intends to rely upon a modified version of the
              MOBILESb model for the development of emissions inventories and air
              quality analyses for the final rule. However, MOBILESb is almost universally
              recognized as a model that is extremely outdated in terms of both the inputs
              on which it relies and the outputs that it generates. MOBILES will not be
              available until January 1, 2001.

              Letters:

              American Petroleum Institute  (IV-D-343)  p. 10
              Marathon Ashland Petroleum (IV-D-261) p. 5

       Response to Comment 2.2(G)(1):

       We disagree with this comment and believe our modeling assumptions and analyses
are generally well documented and have been adequately reviewed to assume their credible
use.  We have used the latest version of MOBILE that is  publically available. For the FRM
analyses, we apply adjustment factors to the MOBILESb  output to account for updated
information that was collected as part of the MOBILES development effort. These
adjustments are described in the Regulatory Impact Analysis and are discussed further in the
response to issue 2.2(G)(2).

       (2)     Engine manufacturers have worked extensively with EPA, ARB,  NESCAUM
              and OTAG to develop robust,  peer-reviewed inventory models that currently
              exist, are generally well accepted and provide accurate results.
              Unfortunately, EPA did not use any of these models.  EPA relied on HD
              emission factors from a spreadsheet type model not previously used
              elsewhere. Even though elements of this model were incorporated within a
              report that was published as part of the MOBILES process, EPA did not
              subsequently address the comments it received on that report.  MOBILES is
              not scheduled for release until January of 2001; therefore, EPA is unfairly
              using results of an air burden model in the proposal using a tool that is not
              widely available nor peer reviewed.  Stakeholders cannot with certainty
              determine the effects of the underlying assumptions and/or modeling
              techniques used by EPA. There was no peer review of the spreadsheet
              model.  Consequently, the calculations upon which EPA is basing its final rule
              may change significantly by the time the models are finalized. EPA should
              not finalize a rule based on benefits that are subject to such uncertainty.

              Letters:

              American Petroleum Institute  (IV-D-343)  p. 10
              Cummins, Inc. (IV-D-231) p. 41-42
              Engine Manufacturers Association (IV-D-251) p. 81-82
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 7-9

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              Marathon Ashland Petroleum (IV-D-261) p. 5

       Response to Comment 2.2(G)(2):

       As is discussed above in the response to issue 2.2(G)(1), there is concern that our
current emission factor models are outdated and need to be updated.  The spreadsheet
model used for the NPRM was intended to incorporate the most recent information available
so that we could essentially update the calculations in the MOBILES and PARTS emission
factor models to conform to those being developed for MOBILES.52 All of the new information
used to update our inventory calculations was collected as part of the MOBILES development
process, and the spreadsheet model is intended to be consistent with the upcoming
MOBILES model. All of this data has not only been placed in the docket for this rule prior to
the rulemaking, but has been available for stakeholder review for years.  Because the
upcoming MOBILES model will not be available until January, we were not able to use it for
the inventory calculations in this rule.

       The spreadsheet model was placed in the docket concurrent with the publication of
the NPRM.  In addition, the Draft RIA provided a detailed description of the calculations and
data used in the spreadsheet model. This description provides citations for the documents
which contain the data, developed for the  upcoming  MOBILES model, that were used in the
spreadsheet model.  We  address specific comments received on the calculation
methodology used in the  spreadsheet model  in the responses to issues 2.2(F)(3) and
2.2(G)(3).  We are not aware of any unaddressed comments that would significantly affect
the results of the emission factor calculations, and we expect that the emission factors used
in the  inventory analysis for this rule will be similar to those generated by the upcoming
MOBILES model.

       In the FRM, we used MOBILES and PARTS emission factor models with  adjustment
factors to generate our emissions inventory.  This analysis was built from the county level
and summed into a national total, and we  used the adjustment factors to account for the new
information discussed above. The development of these adjustment factors is described  in a
memo which was placed  in the docket concurrent with  the publication of the NPRM.53
Chapter 2 of the RIA presents more detail on the methodology for the FRM inventory
analysis.

       (3)     EPA's analysis of the HD emission inventory is flawed because the baseline
              HD inventory is inappropriately inflated  by  100% in 2007 to 140% in 2030  as
              compared to the HD inventory recently  estimated for the final Tier 2 emission
              standards. Even when the HD inventories are appropriately adjusted to
              account for slight differences in the sources and areas covered and EPA's
              reasons why the new HD inventory is higher  are considered, it remains clear
              that the HD inventory used for this rule  is inflated. Commenter provides
              significant discussion on this issue and attempts to refute each one of EPA's
              reasons why the inventory is  higher (i.e. additional 3 states, 2004 emission
              factors, conversion factors, speed correction factors, VMT and PM inventory).
       52 We also used a spreadsheet model with updated information in developing the emissions
inventory for the Tier 2 rule to address stakeholder comments that MOBILES was outdated and that we
should use the most recent data available.

       53 Memorandum from Michael Samulski and John Koupal to Docket A-99-06, "Heavy-Duty Vehicle
Emission Factors and Adjustment Factors for the Final 2007 Heavy-Duty Rule Inventory Analysis," May 26,
2000.

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             EPA has not provided an adequate explanation for the changes in the model.
             The removal of the speed correction factors and the changes in VMT have
             had the greatest impact and EPA appears to have eliminated these factors
             simply because the spreadsheet model was incapable of incorporating
             detailed speed effects. For VMT, EPA provides no explanation or justification
             for the change in VMT between the Tier 2 rule and the proposed rule.

             Letters:

             Engine Manufacturers Association  (IV-D-251) p. 82-83
             General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 7-9

       Response to Comment 2.2(G)(3):

       The NPRM NOx inventory was 93% higher than Tier 2 inventory for 2007, and 124%
higher in 2030. The reasons for the changes in inventory were discussed in detail in the
Draft RIA and are repeated in the final RIA. In the FRM rule inventory, the NOx projections
have changed only slightly due mostly to the addition of a speed correction factor which was
not included in the NPRM inventory.  Table 2.2(G)(3) presents a comparison of the Tier 2 and
HD 2007  FRM NOx inventories. Although we do not claim benefits from medium-duty
passenger vehicles from this rule, we include them in the HDGV inventory presented below
to be consistent with the Tier 2 inventory.

    Table 2.2(G)(3):  Comparison of HDV Baseline NOx Inventories (short tons/year)
Inventory Analysis
(Rule)
Tier2 FRM
HD 2007 FRM
Vehicles
HDDE+
HDGV
HDDE+
HDGV
% Increase, Tier 2 to HD 2007
2007
1,670,000
3,030,000
81%
2030
1,410,000
2,940,000
1 08%
% change
2007 to 2030
-16%
-3%

       The commenter disputes the effects of the inventory updates described in the Draft
RIA. These inventory updates are discussed separately followed by a discussion of the net
effects on the NOx emissions inventory.

47 vs 50 States

       Table 2.2(G)(3) above includes 50 state estimates for both the Tier 2 and HD 2007
inventories. Therefore, this is not an issue for the comparison presented here.

2004 and Later Model Year Emission Factors

       The NMHC and NOx emission factors for 2004 and later model years HDDEs are
intended to represent a combined NMHC+NOx standard of 2.5 g/bhp-hr. The Tier 2 analysis
used our earlier assumption that this would be about equivalent to designing to a 2.0 g/bhp-hr

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NOx standard and a 0.5 g/bhp-hr NMHC standard. Under the new emission factor study,54
we found that NMHC levels are already around 0.2-0.3 g/bhp-hr. We also now believe that
HDDE manufacturers will design for very low NMHC in 2004 to allow them more relaxed NOx
levels.  Therefore we are now considering the combined standard to be equivalent to a 2.3
g/bhp-hr NOx standard and a 0.2 g/bhp-hr NMHC standard. This was discussed in detail in
the draft RIA for the NPRM. We recognize that this is an analytical approach and individual
manufacturers will design their engines differently according to their own constraints. This
assumption results in a 15 percent increase in projected NOx emissions from 2004 and later
model year HDDEs.

       HDGVs are projected to account for only 13 percent of baseline HDV NOx emissions
in 2007 and 6 percent in 2030.  Because they are a small  part of the HDV NOx inventory, our
NOx inventory is not as sensitive to our new assumptions  for these engines. However, we
use significantly lower emission factors for 2005 and later model year HDGVs than were
used in the Tier 2 inventory. This is because we have reproposed (and finalized) new
standards for these engines beginning in 2005 of 1.0  g/bhp-hr NMHC+NOx. The Tier 2
inventory considers a 2.5 g/bhp-hr NMHC+NOx standard (although the engines were
assumed to certify well below this standard).

Conversion Factors

       The commenter correctly points out that the new conversion  factors used in the  NOx
inventories for this rule change  little for each of the HDDE classes from those used in the Tier
2 rule.  However, the weighted average conversion factor  from g/bhp-hr to g/mile increases
about 25  percent compared to MOBILE5 when the newVMT splits between LHDDE,
MHDDE,  HHDDE, and urban buses are considered. This is because the conversion factors
are much higher for heavier vehicles and we now estimate that a higher fraction of the VMT
is from heavier vehicles. MOBILE5 lumps all HDDE engines together into one class and
uses a conversion factor of 2.03 bhp-hr/mile. This was discussed in detail in the draft RIA for
the NPRM. Using the updated VMT splits,55 we calculate  a weighted average conversion
factor of 2.54 bhp-hr/mile.

Speed Correction Factors

       In the FRM inventory, we use the MOBILE5 speed correction factors. Because these
correction factors are a function of speed, we did not include them in the top-down national
inventory spreadsheet used for the NPRM inventory estimates.  However, the FRM inventory
is calculated from the ground up by roadway type for each county using MOBILE5 updated
with data  developed for use in MOBILE6.  Therefore, we were able to include the effect of
speed on NOx. We estimate that the speed correction reduces the NOx inventory by 5-10
percent nationally. Because the same speed corrections are used in Table 2.2(G)(3) for both
inventories, they are not an issue for this comparison.

Vehicle Miles Traveled
       54 "Update of Heavy-Duty Emission Levels (Model Years 1988-2004+) for Use in MOBILE6," U.S.
Environmental Protection Agency, EPA420-R-99-010, April 1999.

       55 "Fleet Characterization Data for MOBILE6: Development and Use of Age Distributions, Average
Annual Mileage Accumulation Rates and Projected Vehicle Counts for Use in MOBILE6," U.S.
Environmental Protection Agency, EPA420-P-99-011, April 1999.

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       As is discussed in the draft RIA for the NPRM, we adjusted our estimates of the VMT
fraction of highway miles traveled for heavy-duty vehicles to make use of the most recent
data available.  As discussed in the response to issue 2.2(F)(3), this resulted in a 40 percent
increase in our projections of HDDE VMT. This analysis also showed a 60 percent increase
in our projections of HDGV VMT. As discussed in the response to issue 2.4(E)(3), we
compared our fuel consumption estimates (based on our new VMT projections) with those
projected by the Energy Information  Administration (EIA). In 2007, we are within 4 percent of
the EIA projection of highway diesel  fuel consumption; in 2030, we are within 2 percent. This
comparison provides some confirmation of the accuracy of our VMT projections.

Summary

       For HDGVs, the impact of the increased projection in VMT and decreased emission
factor assumptions nearly offset each other.  As a net result, we see an increase in HDGV
NOx, compared to Tier 2, of 20 percent in 2007 and of only 6 percent in 2030 when the fleet
has a larger fraction of 2005 and later model year engines.  Because HDGVs are only a
small part of the HDV NOx inventory, this is only a minor effect on the differences  presented
above in Table 2.2(G)(3).

       The major differences between the two HDV NOx inventories are due to the 15
percent increase in the  HDDE NOx emission factors for 2004 and later model year engines,
the 25 percent increase in the weighted average conversion factor for HDDEs, and the 40
percent increase in HDDE VMT.  The increase in the NOx emission factor results  in the
difference in the percent change from 2007 to 2030 shown in Table 2.2(G)(3) above.  The  net
effect of all three of these factors is an 82 percent increase in HDDE NOx in 2007  and a 101
percent increase in 2030. The overall effects of these changes on the inventories  can be
seen in Table 2.2(G)(3), presented above.

       The other change presented in Table 2.2(G)(3) is the percent reduction in  annual
NOx between 2007 and 2030. In both cases, the VMT growth is the same, and the
difference is due to the  change in the NOx emission factor.  This is consistent with the
change in the 2004 and later model year NOx emission factor.  The Tier 2 analysis uses a 50
percent reduction in HDDE NOx due to the 2004 standards while the FRM analysis only
produces a 42 percent reduction in NOx. This is equal to a 15 percent difference,  between
the two analyses, in the reduction in  NOx from full turnover of a fleet meeting the 1998 NOx
standard to a fleet meeting the 2004 standard.

       (4)     EPA has indicated that it intends to use the NONROAD model for the
              development of emissions inventories  and air quality analyses for the final
              rule. The current version of the NONROAD model is still in draft from and
              there are significant data gaps that remain to be filled before the model can
              be finalized.

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              Letters:

              American Petroleum Institute  (IV-D-343) p. 10
              Marathon Ashland Petroleum (IV-D-261) p. 5

       Response to Comment 2.2(G)(4):

       Although the NONROAD model is in draft form, it represents our current best
understanding of the emission contributions of nonroad engines. The version of the model
used for the proposed 2007 Rule was released for public comment in June 2000 with full
documentation. This version is a refinement of the model used for the Tier 2 rulemaking,
which itself has been available for public comment since May 1999.  Furthermore, the
methodology and many data inputs for the current model have already been peer reviewed.
We are working and will continue to work to improve this draft model, including peer review,
in the future and would continue to do so even if it were a "final" model.

(H)    Air quality benefits are small to nonexistent for the air toxics examined.

       (1)     The discussion on page 11-108 of the draft RIA misrepresents Table II.A-24 by
              stating that the proposal will reduce air toxics exposure in 2020 by 37% for
              benzene, 74% foracetaldehyde, 73% for formaldehyde, and 70% for 1,3-
              butadiene. The Table reports that in fact the proposal will reduce the year
              2020 nationwide average ambient exposure to benzene, acetaldehyde,
              formaldehyde and 1,3-butadiene by only 3.7%, 16.7%, 28.6% and 0%
              respectively.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 18-19
              Marathon Ashland Petroleum (IV-D-261) p. 5

       Response to Comment 2.2(H)(1):

       The reference in the discussion on page 11-108 of the NPRM refers to reductions in
exposure to gaseous toxics attributed to heavy-duty vehicles only while Table II.A-24
reported exposure to gaseous toxics (and reductions) from all on-highway motor vehicle
sources.  Additional explanation has been added to the text to clarify this point and an
additional column has been added to the table to report the reductions in gaseous toxics
from all on-highway motor vehicle sources in 2020 when the regulations in  today's program
are in effect.

       (2)     EPA estimates of HDDE toxics emissions are outdated and not
              representative of current technology.  The EPA's estimates of reductions in air
              toxic emissions for HDDE in the Draft RIA for the proposed rule rely on data
              from trucks tested in the 1970s, which is not  representative of those HDDE
              certified to MY 1998 or later emissions standards. Data from only  one
              modern engine was meshed with data from the older vehicles to arrive at the
              average air toxics exhaust fractions cited in the draft RIA. Adding to the
              complexity of the emissions estimates are the fact that test  procedures and
              fuel properties have changed over the last 25 years.  EPA should expand the
              database used for developing air toxics emissions benefits, and the
              commenter recommends using the VE-10 project performed by Southwest

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              Research Institute for the Coordinating Research Council (CRC) titled
              "Effects of Fuel Oxygenates, Cetane Number, and Aromatic Content on
              Emissions from 1994 to 1998 Prototype HDDE."

              Letters:

              American Petroleum Institute  (IV-D-343) p. 18-19
              Marathon Ashland Petroleum (IV-D-261) p. 14-15

       Response to Comment 2.2(H)(2):

       EPA's estimates of the reductions in gaseous air toxics emissions for heavy-duty
diesel engines (HDDE) are based on applying the percent reductions in hydrocarbon
emission due to the heavy-duty engine 2007 standards to base case inventories of the air
toxics.  The base case inventories are derived from data in a 1999 EPA technical report
(EPA, 1999). Analysis of the Impacts of Control Programs on Motor Vehicle Toxic
Emissions and Exposure in Urban Areas and Nationwide. Report No.
EPA420-R-99-029/030).  The inventories for HDDE have also been revised to reflect
changes in projected VMT, and other updates discussed in the response to comment
2.2(G)(3), since the time the report was issued.  The toxic fractions used to develop the
inventories in the 1999 report are actually obtained from two modern engines, one tested at
Southwest Research and one tested at University of California, College of Engineering,
Center for Environmental Research and Technology, along with data  from two older
engines in a 1979 study done at Southwest Research.

       We agree there would be benefit to expanding the database for quantifying air
toxics emission benefits obtained by controlling heavy duty diesel engines, and we are
currently funding work at the  Colorado School of Mines to quantify toxic emissions from
HDDE.  However, we believe the available data is sufficient to support the conclusion that
this rule will significantly reduce gaseous air toxics emissions from heavy-duty engines and
vehicles.

       One commentor recommended supplementing the toxic emissions data above with
some additional data from the VE-10 project performed by the Southwest Research
Institute for the Coordinating  Research Council (CRC) titled "Effects of Fuel Oxygenates,
Cetane Number, and Aromatic Content on Emissions from 1994 to 1998 Prototype HDDE."
We have reviewed these data and concluded that incorporating them into gaseous toxic
emission estimates for the rule would not have a major impact, although the  formaldehyde
estimates would increase somewhat.

       (3)     As documented in Table II.A-24  in the RIA, even without the proposed
              standards, the reductions are between 65 and 75 percent in ambient
              exposures between 1990 and 2020 for each toxic compound evaluated. The
              addition of the proposed rules results in little or no additional  reduction in
              exposure by 2020.  In addition, EPA is currently addressing air toxics from
              mobile sources in a separate rulemaking, and given the incomplete state of
              that rulemaking, it is inappropriate to justify this proposed rule on the basis of
              the marginal effects it will have on air toxics.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 33

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              Marathon Ashland Petroleum  (IV-D-261) p. 14-15

       Response to Comment 2.2(H)(3):

       The standards adopted in this rule will lead to reductions in gaseous air toxics.
These reductions are large for formaldehyde and acetaldehyde and will result in about a
15% reduction  in acetaldehyde exposure from on-highway vehicles in the year 2020, and a
18% reduction  in formaldehyde exposure from on-highway vehicles. Thus, it is inaccurate
to say that the addition of the adopted rules will result in little or no additional reduction in
exposure to gaseous air toxics.

(I)     Because EPA does not project any area in PADD IV or the Central Plains to
       exceed or be within 10 percent of current ozone and PM NAAQS in 2007 and
       2030, EPA has room to be flexible with regulatory approaches for refiners
       serving these areas.

       (1)     Commenter provides no further detailed analysis on this point.

              Letters:

              Sinclair Oil Corporation  (IV-D-255) p. 10

       Response to Comment 2.2(l)(1):

       EPA disagrees with commenters assertion that, in essence, diesel fuel produced for
the Central Plains may receive some flexibility without adversely impacting the environment
or public health. There are several  reasons for our disagreement. First, the public health
and welfare concerns that form the  basis for this rulemaking are broader than those areas
and populations exposed to ambient concentrations above the 1-hour ozone and PM10
NAAQS. Studies have found that there are health effects associated with  prolonged and
repeated exposures to moderate  levels of ozone, to levels of fine particulates, and from
diesel exhaust  and other toxic pollutants in heavy-duty vehicle emissions.  Health effects
from these types of pollution are well established.

       Diesel exhaust, for example, has been recently determined to be a probable human
carcinogen at environmental levels  of exposure. There are also environmental and welfare
impacts such as visibility impairment that affect many areas across the nation, including the
Central Plains.

       Finally,  heavy-duty vehicles travel across the nation on a routine basis, and refilling
on high-sulfur fuel in  the Central Plains will  severely impact the ability of the emission control
systems required by  this rule. This  will have a profound impact on public health and welfare
not only in the Central Plains, but throughout the United States.

(J)     The proposed standards are not necessary to satisfy the NAAQS.

       (1)     EPA identified 42  areas as having sufficient risk of future violations of the 1-
              hour NAAQS.  Of the first group (10 areas w/ attainment demonstrations),
              EPA has approved or proposed to approve eight of the areas attainment
              plans. These SIPs did not rely on emissions reductions from the proposed
              rule (for attainment or maintenance). The few areas with defined shortfalls do
              not require extensive NOX reductions. It is likely that even these few

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              remaining areas will attain the NAAQS without a need for the proposed
              emissions reductions.  Of the second group (26 presently-violating areas w/o
              active attainment demonstrations), many have approved (or have been
              proposed to approve) attainment demonstrations.  Given that motor vehicle
              emissions trends are down,  including the HD component, and projected to be
              for at least another decade,  the CAA provisions for contingency measures
              and maintenance plans (or targeted, cost effective local/regional controls)
              should be allowed to govern local nonattainment problems.  For the third
              group (6 areas w/ model exceedances, but with recent design values within
              10% of the standard), EPA provides unquantified speculation that
              meteorological conditions may be more severe in the future which would lead
              to potential violations.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 4-28

       Response to Comment 2.2(J)(1):

       Commenter asserts that EPA's basis for finding that an appreciable  number of 42
areas (in the proposal, 45 in the final rule) face a significant risk of exceeding the 1-hour
ozone NAAQS is not well justified,  and thus new standards on heavy-duty vehicles are not
warranted.  EPA disagrees with this assertion, and will address commenter's concerns
related to each group of area.

       The Agency's conclusions about the risk of future exceedances of the 1 -hour ozone
standard for 45 areas (listed in Table II.B-1  in the preamble) are based on photochemical
ozone modeling conducted for this rule which predicted that 37 areas are likely to exceed the
1-hour ozone standard in 2007, 2020,  or 2030 after accounting for emission reductions from
all programs that have been adopted.  In addition, there are 8 other areas for which ozone
model performance was  inadequate, but other evidence such as local air quality modeling,
transport from upwind areas with later attainment dates, and the magnitude  and persistence
of historic ozone levels provides sufficient basis for the Agency's determination that these
areas also face a risk of future exceedances between 2007 and 2030.56  For purposes of
clarity of presentation, these areas are separated into two broad groups: (1) those areas with
attainment dates in 2007 or 2010 that will benefit from reductions from this rule to attain and
maintain the standard; and (2) those areas with attainment dates prior to 2007 that will
benefit from reductions from this rule to maintain the standard after their attainment dates.
The following paragraphs discuss these areas in turn.

       Ten metropolitan areas that fall within ozone nonattainment areas have statutorily-
defined  attainment  dates of 2007 or 2010, or have requested attainment date extensions to
2007. These 10 areas are New York City, Houston, Hartford, New London,  Chicago,
Milwaukee, Dallas,  Beaumont-Port Arthur, Los Angeles, and Southeast Desert.

       Each of these areas needs additional emission reductions in order to reach
       56 In the proposal, we relied on photochemical ozone modeling performed for recently promulgated
standards on light duty vehicles, or Tier 2. The results presented in this final rulemaking for heavy-duty
vehicles and diesel fuel are largely consistent with the findings presented in the proposal, with small
differences due to updated emissions inventories. As stated in the proposal, the ozone modeling
methodologies used in the proposal and presented here in the final rule are identical.

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attainment by 2007, and to maintain the standards in the future. Some of these areas have
emission reduction shortfalls that are identified in their attainment demonstrations (i.e., South
Coast Air Basin, New York and Houston), and reductions from this rule will assist State
efforts to reach attainment.57 Three other areas - Southeast Desert, Hartford, New London -
are subject to ozone transport from upwind areas with identified shortfalls (South Coast and
New York), and depend upon attainment from these upwind these areas to reach attainment
themselves.  We have received attainment plans for two areas in Texas (Dallas and
Beaumont-Port Arthur), and the Agency is likely to consider the reductions from this rule in its
proposed approval of these attainment plans in Federal Register notices.  Finally, there are
two areas in  the Midwest - Chicago and Milwaukee - that have incorporated reductions from
this rule into  their regional ozone modeling, and plan to  rely on reductions from this rule to
support their 2007 attainment demonstration.58

       For all ten areas, even if all shortfalls were filled by  the States, there is some risk that
at least some of the areas will not attain the standards by their attainment dates of 2007, or
2010 for  Los Angeles. In that event, the reductions associated with this program, which
increase  substantially after 2007, will help assure that any residual failures to attain are
remedied. Finally, there is also some risk that the areas will be unable to maintain  attainment
after 2007. Considered collectively, there is a significant risk that some areas will not be in
attainment throughout the period when the new standards  will reduce heavy-duty vehicle
emissions.

       The rest of the areas have  required attainment dates prior to 2007, or have no
attainment date but are subject to a general obligation to have a SIP that provides for
attainment and maintenance. These 34 areas, according to our modeling, are at risk of
exceeding the ozone NAAQS between 2007 and 2030.  These areas will be able to rely  on
reductions from this rule to continue to maintain the standard after attainment is reached, and
will be able to take credit for this program in their maintenance plans when they seek
redesignation to attainment of the ozone standard.  If any of these areas reach attainment,
and then fall back into nonattainment, or fail to reach attainment by 2007, reductions from
this rule will assist these areas in achieving the ozone standard.  If an area does not choose
to seek redesignation, the continuing reductions from this rulemaking will  help ensure
maintenance (i.e., prevent future exceedances) with the 1-hour standard after initial
attainment is reached.

       Finally, there are 14 additional metropolitan areas for which the available ozone
modeling and other evidence is less clear regarding the need for additional reductions. Our
ozone modeling predicted these areas to  need further reductions to avoid exceedances in
2007, 2020 or 2030. The recent air quality monitoring data for these areas shows ozone
levels with less than a 10 percent margin  below the NAAQS. We believe there is a risk that
future ozone levels will be above the NAAQS because of the year-to-year variability of
meteorological conditions conducive to ozone formation, or because local emissions
inventories may increase faster than national inventories.
       57 The South Coast's "additional measures" which rely on new technologies, are located in its 1994
SIP.

       58 Technical Support Document, Midwest Subregional Modeling: 1-Hour Attainment Demonstration
for Lake Michigan Area and Emissions Inventory, Illinois Environmental Protection Agency, Indiana
Department of Environmental Management, Michigan Department of Environmental Quality, Wisconsin
Department of Natural Resources, September 27, 2000, at 14 and at 8.

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       Issue 2.3:  Heavy-duty Vehicle Contribution

(A)    Heavy-duty vehicle emissions of VOC, CO, NOx, SOx, and PM currently
       contribute a substantial percentage to ambient concentrations of a number of
       pollutants, including one or more of the following:  ozone, PM, sulfur, and
       nitrogen compounds, aldehydes, and substances known or considered likely to
       be carcinogens.

       (1)    Inventory data indicate that heavy duty diesel vehicles and engines emit one
             third of all NOX pollution in the NESCAUM region and up to 80 percent of
             mobile source particulate pollution. In addition,  ambient monitoring and
             modeling data show that up to 60 percent of aldehyde emissions result from
             diesel engine pollution.

             Letters:

             Environmental Law and Policy Center  (IV-D-331) p. 3
             NESCAUM (IV-D-315)p. 1
             NH DES  (IV-D-150)p. 1

       Response to Comment 2.3(A)(1):

       While we have not verified the specific estimates, we agree that heavy-duty
vehicles are a large part of the emissions inventory from on-highway vehicles and that
emission control from these vehicles is necessary to achieve our air quality goals.

       (2)    CARB estimates that a typical onroad heavy-duty truck in 2004 will emit 104
             times more NOX and 26 times more PM than a typical car. Even on the basis
             of work performed, the typical line haul truck will emit 200 times more NOX
             and 25 times more PM per horsepower-hour.

             Letters:

             STAPPA/ALAPCO (IV-D-295) p. 5-6
             Transportation Alternatives  (IV-D-332) p. 1

       Response to Comment 2.3(A)(2):

       While we have not verified the specific estimates, we agree that heavy-duty
vehicles are a large part of the emissions inventory from on-highway vehicles and that
emission control from these vehicles is necessary to achieve our air quality goals.

       (3)    When coupled with the emission reductions projected to result from the
             Phase  I (model year 2004) HDV standards, the emission reductions from
             heavy-duty vehicles are predicted to be as large as the substantial reductions
             EPA expects from light-duty vehicles as a result of the recently promulgated
             Tier 2 rule.

             Letters:

             American Lung Association  (IV-D-270) p. 14-16

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 2-82

       Response to Comment 2.3(A)(3):

       We agree that the emissions reductions from this rule will be significant in
comparison to the recently promulgated Tier 2 rule and will result in significant air quality
benefits.
       (4)     The percentage of highway emissions from HD diesel vehicles will increase
              as Tier II standards come into effect.

              Letters:

              PADEP (IV-D-100)p. 1

       Response to Comment 2.3(A)(4):

       We agree, that without further emission control, the emissions fraction from HD
diesel vehicles would increase as the Tier II standards come into effect. This supports the
need for our new standards.

       (5)     The increase in truck speed and miles traveled contributed to the San
              Joaquin Valley's failure to meet the ozone NAAQS.

              Letters:

              San Joaquin Valley Air Pollution Control District (IV-D-56) p. 1-2

       Response to Comment 2.3(A)(5):

       While we have not verified the specific estimates, we agree that heavy-duty
vehicles are a large part of the emissions inventory from on-highway vehicles and that
emission control from these vehicles is necessary to achieve our air quality goals.

       (6)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Arab Community Center for Economic and Social Services (IV-D-112) p. 1
              IL Environmental Council (IV-D-115) p. 2
              NY State Assembly  (IV-D-266) p. 1
              Stuckey, Stephanie  (IV-D-182) p. 1
              Udall, Mark (IV-D-173) p. 1

       Response to Comment 2.3(A)(6):

       We agree that heavy-duty vehicle emissions currently contribute a substantial
percentage to ambient concentrations of a number of pollutants, including those listed by the
commenters.

       (7)     Diesel trucks emit three times as much pollution as coal-fired power plants
              per unit energy. Citing "Rolling Smokestacks: the Next Battle for Clean Air,"
              Nucleus, Vol 22, No. 2 (summer 2000).

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 2-83

             Letters:

             Environmental Law and Policy Center (IV-D-331) p. 2

       Response to Comment 2.3(A)(7):

       While we have not verified the specific estimates, we agree that heavy-duty
vehicles are large contributers to air pollution.

(B)    The contribution of emissions from heavy duty vehicles to overall NOx
       pollution is expected to increase in the future since heavy duty VMT continues
       to grow rapidly.

       (1)    Future increases in heavy-duty diesel VMT and light duty diesel vehicle
             penetration could offset any emissions reductions resulting from the existing
             federal control program unless more stringent standards are adopted.

             Letters:

             Bay Area Air Quality Management District  (IV-D-139)  p. 1
             Consumer Policy Institute  (IV-D-186, 289) p. 2 (both)
             NCDENR (IV-D-151)p. 1
             NESCAUM  (IV-D-315)p. 1
             NY State Attorney General's Office  (IV-D-238) p. 11
             NYCDEP (IV-D-209) p. 2
             San Joaquin Valley Air Pollution Control District (IV-D-56) p. 1
             Southwest Air Pollution Control Authority (IV-D-149) p. 1
             Wl  DNR  (IV-D-144)p. 1
             Wl  Department of Transportation (IV-D-241) p. 1

       Response to Comment 2.3(B)(1):

       We agree that these new standards, coupled with the recent Tier 2 light-duty
standards, are necessary to reduce emissions increases in the future  due to increased VMT
from highway vehicles.


       (2)    In Washington D.C. total VMT are expected to increase at an annual rate of
             1.5%, causing tremendous air quality challenges in future years. Commercial
             VMT is growing much faster in Wisconsin than personal VMT and is expected
             to increase 94% from 1995 to 2020.  In the northeast,  heavy-duty VMT is
             increasing at approximately 5% per year.

             Letters:

             Metropolitan Washington Air Quality Committee (IV-D-34, 58) p. 2 (both)
             Wisconsin Department of Transportation (IV-D-241) p. 1
             NESCAUM  (IV-D-315)p. 1

       Response to Comment 2.3(B)(2):

       These projections for growth in heavy-duty vehicle VMT are consistent with the

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DECEMBER 21, 2000	PAGE 2-84

projections in our inventory analysis. However, we use a linear growth rate in VMT rather
that a compounded growth rate so the growth rate effectively decreases over time.  In 2007
we project an annual growth rate of about 3% and in 2030 we project an annual growth rate
of about 1.5%.  This translates to a 96% increase in VMT from 1995 to 2020. As discussed
later in the response to issue 2.4(E)(3), our VMT projections are also consistent with
projections used by the Energy Information Administration.

(C)     Heavy-Duty on-highway emissions are only minor contributors to current
       inventories and will continue to decrease absent further controls.

       (1)     EPA's general claim that HD  emissions will continue to contribute greatly to
              serious air pollution problems absent further controls is misleading.  One
              commenter (GM) noted that EPA's Final Tier 2 Regulatory Impact Analysis
              (RIA) indicates that HD on-highway NOX emissions are less than one-tenth of
              the U.S. (excluding CA) ozone season NOX emissions in 1996 and that
              modest contribution is projected to decrease 39% by 2007 and 47% by 2030
              without further controls. This commenter added that the Tier 2 RIA also
              indicates that PM-10 from HD on-highway vehicles is less than 0.5% of the
              U.S. (excluding CA) PM-10 emissions inventory in 1996 and is also  projected
              to decrease 46% by 2007 with the current control program.

              Letters:

              American Petroleum Institute (IV-D-343), p. 7-10
              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 5-6

       Response to  Comment 2.3(C)(1):

       EPA agrees with the commenter that HDV emissions are projected to decline in the
near-term absent additional controls.  However, as described  in greater detail in the response
to comments 2.4(D)(3), we have taken these reductions into account in our air quality
modeling analyses for ozone (1-hour and prolonged  and repeated exposures to moderate
levels of ozone) and particulate matter (PM10 and fine PM) and have determined that even
with reductions expected from all controls currently in place, a significant number of areas
and populations are expected to face a significant risk being exposed to unhealthy levels of
air pollution between 2007 and 2030.  Additionally, we predict that the benefit of controls
already in place (including 2004 standards) will be overwhelmed by expected VMT increases
and emissions from HDVs will start to increase in the 2015-2020 time frame absent today's
rule.

       Commenters also claim that the contribution  from heavy-duty vehicles is relatively
insignificant to national emissions inventories provided in the Tier 2 rulemaking. We have
updated our inventories for this rulemaking, and will discuss these changes below.  Based on
the inventories used for this rule, nationwide, heavy-duty vehicles are projected to contribute
about 15 percent of the total NOx inventory, and 28 percent of the mobile source inventory in
2007. Heavy-duty NOx emissions also contribute to fine particulate concentrations in
ambient air due to the transformation in the atmosphere to nitrates.  The NOx reductions
resulting from today's standards will therefore have a considerable impact on the national
NOx inventory. All highway vehicles account for 34 percent and heavy-duty highway vehicles
account for 20 percent of the mobile source portion of national PM10 emissions in 2007.  The
heavy-duty portion of the inventory is often greater in the cities, and the reductions in this
rulemaking will have a relatively greater benefit in cities where air quality tends to be worse

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PAGE 2-85
than in rural areas.

NQx Emissions

       Heavy-duty vehicles are important contributors to the national inventories of NOx
emissions. Without NOx reductions from this rule, HDVs are expected to contribute
approximately 18 percent of annual NOx emissions in 1996, which are predicted to fall to 15
percent in 2007 and 14 percent in 2020 due to reductions from the 2004 heavy-duty
rulemaking, and then rise again to 16 percent of total NOx inventory by 2030 (Table
2.2(C)(1)-a).  Annual NOx reductions from this rule are expected to total  2.6 million tons in
2030.

                   Table 2.3(C)(1)-a:  NOx Emissions from HDVs
                    With and Without Reductions from this Rule

Year
1996
2007
2020
2030
Without this Rule (Base Case)
HDV annual
NOx tons
4,810,000
3,040,000
2,560,000
2,960,000
HDV annual NOx tons
as a percent of total
NOx.
18%
15%
14%
16%
With this Rule
(Control Case)
Reductions in annual HDV
NOx tons.
n/a
58,000
1,820,000
2,570,000
       The contribution of heavy-duty vehicles to NOx inventories in many MSAs is
significantly greater than that reflected in the national average. For example, HDV
contributions to total annual NOx is greater than the national average in the eight
metropolitan statistical areas listed in Table 2.3(C)(1)-b.  Examples of major cities with a
history of persistent ozone violations that are heavily impacted by NOx emissions from HDVs
include: Los Angeles, Washington, DC, San Diego, Hartford, Atlanta, Sacramento.  As
presented in the table below, HDVs contribute from 22% to 33% of the total NOx inventories
in these selected cities.  NOx emissions also contribute to the formation of fine particulate
matter, especially in the West.  In all areas, NOx also contributes to environmental and
welfare effects such as regional haze, and eutrophication and nitrification of water bodies.

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             Table 2.3(C)(1)-b:  Heavy-Duty Vehicle Percent Contribution
                 to NOx Inventories in Selected Urban Areas in 2007
MSA, CMSA / State
National
Sacramento, CA
Hartford, CT
San Diego, CA
San Francisco, CA
Atlanta, GA
Los Angeles
Dallas
Washington-Baltimore, MSA
HDV NOx as Portion of
Total NOx
15%
33%
28%
25%
24%
22%
22%
22%
22%
HDV NOx as Portion of
Mobile Source NOx
28%
37%
38%
28%
29%
34%
26%
28%
36%
PM Emissions

       Commenters point out that based on the Tier 2 inventories, PM10 emissions
inventory for on-highway vehicles is less than 0.5% of the US (excluding California)
emissions inventory in 1996. EPA does not dispute that the fact that fugitive dust, other
miscellaneous sources and  crustal material (wind erosion) constitute approximately 90
percent of the PM10 inventory. This category of PM10 emissions is called "natural and
miscellaneous sources" in our emissions inventories. However, as EPA points out in the RIA
to this rule, ambient samples of PM10 show that emissions of these "natural and
miscellaneous" materials  may be overestimated and/or that once emitted they have less of
an influence on monitored PM10 concentrations than this inventory share would suggest.

       The results of ambient PM  studies show that the contribution of HDD emissions to
ambient PM concentrations  is heavily dependent on the location. One modeling study at a
Manhattan street corner in 1993 found that on-road and off-road heavy-duty diesel PM
emissions contribute up to 68 percent of total ambient PM concentrations (Manhattan,
Source Receptor Model, 1993).  Other studies in less urban areas- Lennox, CA(13%);
Claremont, CA (8%); Rochester, NY (2-9), and Welby, CO (0-26%) - found lower but still
significant contributions from HDVs.  Nationally, on-highway heavy-duty diesel emissions are
approximately one-third of total HDDV emissions. On a local level, HDV emissions may
contribute a much higher  fraction to total PM.  For greater detail about each approach to
measuring the contribution of HDV emissions to ambient concentrations of PM,  the reader
should refer to section A.3(c)(i) of chapter 2 of the RIA.

Inventory Estimates

       Nationally, we estimate that primary emissions of PM10 to be about 33 million
tons/year in 2007.  Mobile sources account for 22 percent of the PM10 inventory (excluding
the contribution of miscellaneous and natural sources) and highway heavy-duty engines, the
subject of today's action,  account for 20 percent of the mobile source portion of national PM10

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emissions in 2007.

       The contribution of heavy-duty vehicle emissions to total PM emissions in some
metropolitan areas is substantially higher than the national average. This is not surprising,
given the high density of these engines operating in these areas. For example, in  Los
Angeles, Atlanta, Hartford, San Diego, Santa Fe, Cincinnati, and Detroit, the estimated 2007
highway heavy-duty vehicle contribution to mobile source PM10 ranges from 25 to 38 percent,
while the national percent contribution to mobile sources for 2007 is projected to be about 20
percent. As illustrated in Table 2.3(C)(1)-c, heavy-duty vehicles operated in El Paso,
Indianapolis, San Francisco, and Minneapolis also account for a higher portion of the mobile
source PM inventory than the national average.  These data are based on updated
inventories developed for this rulemaking .  Importantly, these estimates do not include the
contribution from secondary PM, which is an important component of diesel PM.

                                Table (2.3)(C)(1)-c:
     2007 Heavy-Duty Vehicle Contribution to Urban Mobile Source PM Inventories
MSA State
National (48 State)
Atlanta, GA MSA
Cincinnati-Hamilton, OH-KY-IN CMSA
Detroit-Ann Arbor-Flint, Ml CMSA
El Paso, TX MSA
Hartford, CT MSA
Indianapolis, IN MSA
Los Angeles-Riverside-Orange County, CA CMSA
Minneapolis-St. Paul, MN-WI MSA
San Diego, CA MSA
San Francisco-Oakland-San Jose, CA CMSA
Santa Fe, NM MSA
HDVPM Contribution to
Mobile Source PM a
20%
25%
26%
25%
23%
30%
23%
25%
23%
27%
24%
38%
       ' Direct exhaust emissions only; excludes secondary PM.
       The city-specific emission inventory analysis and investigations of ambient PM25
summarized in the RIA indicate that the contribution of diesel engines to PM inventories in
several urban areas around the U.S. is much higher than indicated by the national PM
emission inventories only. One possible explanation for this is the concentrated use of diesel
engines in certain local or regional areas which is not well represented by the national, yearly
average presented  in national PM emission inventories. Another reason may be
underestimation of the in-use diesel PM emission rates. Our current modeling incorporates
deterioration only as would be experienced in properly maintained, untampered vehicles. We
are currently in the process of reassessing the rate of in-use deterioration of diesel engines
and vehicles which  could significantly increase the contribution of HDVs to diesel PM.

(D)    EPA needs to document more clearly the relationship of HDV (and other mobile
       source) emissions and projected nonattainment so that EPA does not overstate
       the contribution from the HDV sector.

       (1)     Not  all of the  current 12 (projected  10) PM nonattainment areas are in
              nonattainment because of mobile sources; three of the current areas face
              nonattainment because of point sources.  EPA should publish the
              percentages  of each major PM-10 source to help focus on the largest

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             contributors. This type of demonstration would also show that rural America
             does not face nonattainment problems, which would help justify flexibility to
             farmer co-op refiners in these rural areas.

             Letters:

             Cenex Harvest States Cooperatives  (IV-D-232) p. 3

       Response to Comment 2.3(D)(1):

       Commenter attempts to make the point that because HDV emissions are not the
dominant reason for an area's PM10 nonattainment, the reductions from this rulemaking are
not warranted. EPA disagrees. The PM10 NAAQS finds that there are adverse health
effects to populations exposed to concentrations of PM10 above the standard. HDV
emissions contribute to PM10 nonattainment to various degrees depending on the area, the
particular location (e.g., streetcorner or agricultural land), and the measurement method
employed. Emission reductions from this rule will lower ambient concentrations of PM10,
and will have a positive impact on public health and welfare in PM10 nonattainment areas.
EPA does not disagree that reductions from other sources would also be helpful, particularly
in areas where PM10 emissions are dominated by point or area sources.

       However, one of the fundamental aspects of controlling pollution that comes from
numerous sources is that it is important to review emissions from all sources and attempt to
reduce such emissions  in order to achieve cleaner air.

       (2)    EPA fails to differentiate between on-road and off-road sources in
             documenting the source of PM and NOX emissions. EPA should wait until it
             publishes dispersion modeling of county-specific concentrations that would
             clarify the contributions of on-road versus off-road sources.

             Letters:

             Cenex Harvest States Cooperatives  (IV-D-232) p. 4

       Response to Comment 2.3(D)(2):

       The contribution of on-road vehicles compared with total PM and NOx has been
provided in this rule. The inventories  created for this rulemaking do differentiate between on-
road and  non-road sources of PM and NOx. The contribution from nonroad engines are
significant. The benefits from controlling on-road heavy-duty engine emissions are clear and
significant and present a compelling case for finalizing these rules now.

       Issue 2.4: Anticipated Emission Benefits

(A)    EPA's proposed engine/vehicle and fuel standards are necessary since they
       will allow States to provide adequate SIPs demonstrating attainment
       nationwide. [See also Issue 1.1, Point (A).]

       (1)    There are  numerous States that are developing SIPs to address their
             nonattainment status for ozone and/or PM levels and others that will be
             developing SIPs to address nonattainment in the year 2007.  In order to
             ensure that these States are able to achieve attainment under the CAA,

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              pollution control must be obtained from the manufacturers of fuel and heavy
              duty engines and vehicles. EPA must adopt the cleanest possible standards
              for all diesel engines as early as technologically and economically feasible.

              Letters:

              CA Trucking Association  (IV-D-309) p. 3-4

       Response to Comment 2.4(A)(1):

       We agree that the emission reductions resulting from this rule will assist states in
attaining or maintaining attainment. We also believe the standards adopted today are the
most stringent standards available with timely implementation.

(B)    The proposed sulfur standard will result in immediate PM reductions from
       existing engines.

       (1)     A technical analysis presented in an SAE paper concluded that every .1%
              increase in diesel fuel sulfur results in a 0.025 g/bhp-hr particulate matter
              increase (Baranescu, 1988).  Decreasing fuel sulfur levels can reduce
              particulate emissions from 11 to 30 percent in existing diesel engines. Thus
              the proposed diesel fuel  sulfur cap will result in  a substantial and immediate
              reduction in diesel particulate emissions from existing engines.

              Letters:

              NESCAUM  (IV-D-315)p. 9

       Response to Comment 2.4(B)(1):

       We agree. Our estimates of the direct sulfate PM reductions from existing engines
are presented in Chapter 2 of the Regulatory Impact Analysis.

       (2)     A national low-sulfur diesel fuel will provide direct sulfate emission reductions
              in pre-2007 diesel vehicles that do not have PM or NOx aftertreatment,
              helping reduce sulfate particulate matter, acid deposition (due to reduced
              sulfur dioxide emissions) and other harmful air pollution.

              Letters:

              Natural Resources Defense Council (IV-D-168) p. 6

       Response to Comment 2.4(B)(2):

       We agree. Our estimates of the SOx reductions from pre-2007 vehicles are
presented in Chapter 2 of the Regulatory Impact Analysis.

(C)    The proposed heavy-duty vehicle and engine emission standards, along with
       the diesel fuel sulfur standard, would have a dramatic impact in reducing the
       large contribution of heavy-duty vehicles to air pollution.

       (1)     The new engine and vehicle standards will result in national reductions of 2.8

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              million tons NOx, and 110,000 tons PM.  In addition, it will reduce
              approximately 336,000 tons of NOx in the NESCAUM region by 2030.

              Letters:

              American Lung Association (IV-D-270) p. 14-16
              NESCAUM (IV-D-315)p. 2, 4
              Texas Natural Resource Conservation Commission  (IV-G-03) p. 1

       Response to Comment 2.4(C)(1):

       We agree. It should be noted, however, that we have revised our estimates slightly
in the FRM.  These revisions are discussed in Chapter 2 of the Regulatory Impact Analysis.

       (2)     With a dual fuel approach, emissions reductions will be drastically reduced in
              future years because truck users will hold on to their older vehicles to avoid
              higher fuel costs.

              Letters:

              CA Trucking Association  (IV-D-309) p. 1

       Response to Comment 2.4(C)(2):

       We do not believe that the low sulfur fuel temporary compliance option that we are
finalizing will result in significantly higher fuel prices for 15 ppm sulfur diesel compared to 500
ppm sulfur diesel fuel. Therefore we do not expect the program to cause delayed purchases
of new vehicles. This is discussed below under Issue 6.1. As a result, we do not model this
effect in our emissions inventory calculations.

(D)     EPA has failed to provide an adequate assessment of the air quality benefits
       resulting from  its proposed rule.

       (1)     The only items in the Docket that address air quality issues of the proposal
              are those which describe the methodologies that EPA intends to use for
              developing the final emissions inventories. There  is no information on actual
              emission inventory estimates  or air quality modeling outputs.  Commenter is
              concerned that there will not be adequate time to constructively review and
              comment on the modeling efforts given EPA's timetable for finalizing the rule
              by the end of 2000.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 4

       Response to Comment 2.4(D)(1):

       As outlined in the proposal, EPA provided its methodologies and notice that as soon
as emissions inventories and air quality modeling results were available, they were placed in
the public docket. Beginning  in October, 2000, various EPA memoranda were placed in the
public docket and posted to the OTAQ web page titled "Special Modeling in Support of the
Heavy Duty Engine/Vehicle and Highway Diesel Fuel Final Rule", providing additional

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information on the emissions inventories and air quality characterizations that have been
performed. EPA believes that the public has adequate notice and time to review and
comment on the modeling efforts and inputs.

       (2)     EPA does not predict that implementation of their proposal will yield
              significant national reductions in  PM and ozone precursors. Most areas of the
              U.S. are expected to meet the PM and ozone standards under existing
              regulatory programs and both ozone and PM can be characterized as a
              regional, rather than a national, problem. EPA suggests but fails to
              demonstrate that the propose rule would substantially reduce ozone levels in
              any of the areas predicted to be out of attainment in 2030. In addition, EPA
              has not fully addressed the issue of NOX disbenefits in  evaluating expected
              ozone reductions. (See also Issue 2.2.)

              Letters:

              Mercatus Center at GMU  (IV-D-219) p. 8-9

       Response to Comment 2.4(D)(2):

       EPA disagrees with the comment. Extensive information on emission reductions of
PM and ozone  precursors (NOx and VOCs) can  be found in chapter 2 of the preamble and
the RIA to the proposal and the final rule. As an example of the information provided in these
chapters, in 2030, we estimate a NOx reduction  of 2.6 million tons, VOC reductions  of
115,000 tons, and PM reductions of 109,000 tons.

       The Agency conducted ozone and PM modeling, as well as an analysis of PM10
emissions, and based on this work has determined that many areas across the nation face a
significant risk of exceeding health-based standards for 1-hour ozone  and PM10,  as well as
moderate levels of ozone and PM fine. A more detailed discussion of these comments is
presented in response to comments 2.2(F) [PM10 nonattainment], 2.2(J) [1-hour ozone
nonattainment], 2.3(C)(1) [inventory trends].  For disbenefits, refer to response to 2.2(D).

       Reductions in emissions of ozone precursors are expected to result in significant
reductions in peak ozone levels and number of exceedance days even for those areas that
are still predicted to have exceedances in 2007,  2020  and 2030. See  response to comment
2.4(E)(4) fora description of this type of ozone reduction.

       (3)     EPA has failed to show that a 97 percent reduction in diesel fuel sulfur is
              necessary to achieve national air quality objectives particularly since the
              technologies for which this level of reduction is required have not been
              adequately demonstrated to be commercially available for use in HD vehicles.
              In addition, EPA has not demonstrated that a 90 percent decrease in PM and
              NOX emissions from HD vehicles as opposed to a lesser degree of reduction,
              is essential to meet national air quality objectives. EPA has  not persuasively
              demonstrated that further reductions in HD vehicle emission will play any
              major role in bringing current and projected nonattainment areas into
              compliance. The reductions promised by this rule constitute only a very small
              part of the overall PM and NOX reduction effort now being conducted under
              the CAA.

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              Letters:

              U.S. Chamber of Commerce (IV-D-329) p. 1-3

       Response to Comment 2.4(D)(3):

       Heavy-duty vehicle emissions contribute to air pollution with a wide range of adverse
health and welfare impacts, including, but not limited to, adverse health effects associated
with exceedances of national ambient air quality standards.  Emissions of VOC, CO, NOx,
SOx, and PM from HD vehicles contribute a substantial percentage of the precursors or
direct components of ambient concentrations of ozone, PM, sulfur and nitrogen compounds,
aldehydes, and substances known or considered likely to be carcinogens.  Emissions of
VOCs include some specific substances known or suspected to cause cancer. Of particular
concern is human epidemiological evidence linking diesel exhaust to an increased risk of
lung cancer, and the Agency is also concerned about the noncancer health effects of diesel
exhaust  Heavy-duty vehicle emissions also cause adverse environmental effects including
visibility reductions, acid rain, nitrification and eutrophication of water bodies.

       For each of the pollutants addressed in the public health and welfare justification for
the rule, as described in detail in chapter 2 of the preamble and RIA, heavy-duty vehicle
emissions are a significant portion of total inventories, especially in urban areas with air
pollution problems.  Importantly, the air quality modeling performed for this rulemaking
demonstrates that even with the reductions expected from 15 ppm sulfur level in diesel fuel,
there will still be a significant number of areas and population that are expected to be
exposed to unhealthy levels of ozone and particulate matter.  Thus, given that they are both
feasible and cost-effective, the reductions resulting from this rule are fully justified.

        The Agency conducted  ozone and PM modeling to predict future ambient
concentrations of ozone and PM after accounting for emissions reductions from this rule. In
2030, the Agency's photochemical ozone modeling predicts exceedances of the 1-hour
ozone standard in 32 areas with a total of 89 million people in 2030.  For prolonged and
repeated exposure to moderate  ozone concentrations, the modeling predicts 125 million are
likely to live in areas with at least 2 days with model-adjusted 8-hour average concentrations
of 0.08 ppm to 0.119 ppm.

       For PM fine, the Agency's relied on the REMSAD model.  However, the most
appropriate method of making these projections relies on the model to predict changes
between current and future  states. Thus, we have estimated future conditions only for the
areas with current PM2.5 monitored data (which covers about a third of the nation's
counties).  For these counties, REMSAD predicts the current level of 37 percent of the
population living in areas where  fine PM levels are at or above 16 ug/m3 to increase to 49
percent in 2030 even after reductions from new standards on HDVs and diesel fuel sulfur
levels.

(E)    EPA's demonstration of the emissions inventory impacts of its proposal is
       misleading and problematic.

       (1)     The NPRM equates the proposed standards with air-quality benefits; yet this
              representation is misleading because it assumes that reductions in NOX will
              automatically translate into lower ozone levels. Such an assumption ignores
              the non-linearity  of ozone-formation processes and the role of meteorology.
              EPA must reassess the direction and magnitude of ozone changes resulting

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             from anticipated NOX reductions.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 6-10
             Marathon Ashland Petroleum (IV-D-261) p. 4

       Response to Comment 2.4(E)(1):

       As requested by the commenter, EPA assessed the direction and magnitude of
ozone changes resulting from the emissions reductions (including NOx) in this rule. This
assessment was based on photochemical modeling for the Eastern U.S. using the UAM-V
model which includes the Carbon Bond IV chemical mechanism that reflects the non-
linearities in ozone formation processes.  The model applications were made using
meteorological conditions typically associated with the formation and transport of high ozone
concentrations in the Eastern U.S. The results  of this modeling, as documented in the Air
Quality Modeling Technical Support Document, demonstrate the large reductions  in ozone
that are expected to occur from the emissions reductions required by this rule. See also
response to comment 2.2(D).

       (2)    The timing of the air quality "need" is not in accordance with the phase-in of
             the NOX standard or the timing of the expected emissions benefits. EPA's
             assessment of need focuses on the ability of urban areas to meet the NAAQS
             in 2007-2010, but the emissions benefits from the proposal are minuscule
             during that time period. A phase-in results in 24% fewer NOX emissions
             benefits in 2010 than full implementation beginning in 2008, based on EPA
             spreadsheet models referenced in the RIA. There is no indication  in the
             NPRM or the RIA that EPA has  considered other options that may be more
             cost effective. Another commenter also raised concerns that the discussion
             of benefits ignores the fact that the proposal achieves very little emission
             reduction in the early years of the program (such as only 32,000 tons of NOX
             nationwide in 2007), and thus is not suited to addressing the stated risk of
             urban areas not meeting the 1-hour ozone standard in 2007 and later.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 6-7
             Marathon Ashland Petroleum (IV-D-261) p. 4
             Murphy Oil Corporation  (IV-D-274) p. 11

       Response to Comment 2.4(E)(2):

       The commenter implies that because the timing of the reductions fall largely beyond
the current 1 -hour ozone attainment deadlines,  the basis for this rule is questionable.  EPA
disagrees with the commenter.

       Ten metropolitan areas that fall  within ozone nonattainment areas have statutorily-
defined attainment dates of 2007 or 2010, or have requested  attainment date extensions to
2007. These 10 areas are New York City, Houston, Hartford, New London, Chicago,
Milwaukee, Dallas, Beaumont-Port Arthur, Los Angeles, and Southeast Desert.

       Each of these areas needs additional emission reductions in order to reach

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attainment by 2007, and to maintain the standards in the future. Some of these areas have
emission reduction shortfalls that are identified in their attainment demonstrations (i.e., South
Coast Air Basin, New York and Houston), and reductions from this rule will assist State
efforts to reach  attainment.59 Three other areas - Southeast Desert, Hartford, New London -
are subject to ozone transport from upwind areas with identified shortfalls (South Coast and
New York), and depend upon attainment from these upwind these areas to reach attainment
themselves.  We have received attainment plans for two areas in Texas (Dallas and
Beaumont-Port Arthur), and the Agency is likely to consider the reductions from this rule in its
proposed approval of these attainment plans in Federal Register notices.  Finally, there are
two areas in  the Midwest - Chicago and Milwaukee - that have incorporated reductions from
this rule into  their regional ozone modeling, and plan to  rely on reductions from this rule to
support their 2007 attainment demonstration.60

       For all ten areas, even if all shortfalls were filled by  the States, there is some risk that
at least some of the areas will not attain the standards by their attainment dates of 2007, or
2010 for  Los Angeles. In that event, the reductions associated with this program, which
increase  substantially after 2007, will help assure that any residual failures to attain are
remedied. Finally, there is also some risk that the areas will be unable to maintain attainment
after 2007. Considered collectively, there is a significant risk that some areas will not be in
attainment throughout the period when the new standards  will reduce heavy-duty vehicle
emissions.

       The rest of the areas have  required attainment dates prior to 2007, or have no
attainment date but are subject to a general obligation to have a SIP that provides for
attainment and  maintenance. These 34 areas, according to our modeling, are at risk of
exceeding the ozone NAAQS between 2007 and 2030.  These areas will be able to rely on
reductions from this rule to continue to maintain the standard after attainment is reached, and
will be able to take credit for this program in their maintenance plans when they seek
redesignation to attainment of the ozone standard.  If any of these areas reach attainment,
and then fall back into nonattainment, or fail to reach attainment by 2007, reductions from
this rule will assist these areas in achieving the ozone standard.  If an area does not choose
to seek redesignation, the continuing reductions from this rulemaking will  help ensure
maintenance (i.e., prevent future exceedances) with the 1-hour standard after initial
attainment is reached.

       Finally, there are 14 additional metropolitan areas for which the available ozone
modeling and other evidence is less clear regarding the need for additional reductions. Our
ozone modeling predicted these areas to need further reductions to avoid exceedances in
2007, 2020 or 2030. The recent air quality monitoring data for these areas shows ozone
levels with less  than a 10 percent margin  below the NAAQS. We believe there is a risk that
future ozone levels will be above the NAAQS because of the year-to-year variability of
meteorological conditions conducive to ozone formation, or because local emissions
inventories may increase faster than national inventories.

       In addition, this rule is designed to reduce several types of air pollution. The timing of
       59 The South Coast's "additional measures" which rely on new technologies, are located in its 1994
SIP.

       60 Technical Support Document, Midwest Subregional Modeling: 1-Hour Attainment Demonstration
for Lake Michigan Area and Emissions Inventory, Illinois Environmental Protection Agency, Indiana
Department of Environmental Management, Michigan Department of Environmental Quality, Wisconsin
Department of Natural Resources, September 27, 2000, at 14 and at 8.

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this rule is compatible with the need to reduce all types of pollution as soon as possible.

       (3)     EPA's projections of HDDE emissions are misleading and inconsistent with
              EIA data. EPA has overstated the emissions benefits of the proposal by
              relying on overly optimistic projections of the increase of diesel vehicle use.
              The Energy Information Administration (EIA) projections of VMT growth rates
              are lower, calling into question the reasonableness of EPA's estimates. EPA
              used ElA's Annual Energy Outlook to forecast highway diesel consumption,
              yet the difference in projected growth rates is significant. EPA has not
              adequately justified the growth projections of new vehicle HDDEs. Similarly,
              EPA's projected diesel production  estimates are also out of line with EIA data.
              EPA overstated highway diesel demand and baseline emissions, and as a
              result, has overstated the emissions reductions benefits of the rulemaking.

              Letters:

              Marathon Ashland Petroleum (IV-D-261) p. 34
              National Petrochemical & Refiners Association (IV-D-355) p. 1-3

       Response to Comment 2.4(E)(3):

       We disagree that our HDDE emission projections are misleading and inconsistent
with EIA data.  We base our on-highway diesel fuel consumption estimates on our
assumptions of vehicle miles traveled (VMT) and fuel economy of heavy-duty diesel engines.
Our methodology for determining VMT is described above in response to  issue 2.2(F)(3).
Historical fuel consumption estimates (1987-1996) come from a report performed to support
the upcoming MOBILES model.61  These historical fuel consumption estimates suggest that
fuel economy is improving.  For future fuel consumption estimates, we extrapolate the
historical estimates into the future using a constant,  linear improvement in terms of miles per
gallon. Chapter 2  of the Regulatory Impact Analysis presents per-vehicle HDDE fuel
economy estimates and diesel fuel consumption estimates for selected years.

       As a check on our diesel fuel consumption estimates, we used ElA's 1999 Annual
Energy Outlook (AEO) to project highway diesel fuel production for use in the U.S. According
to AEO 1999, highway fuel consumption was projected to increase 1.5% per year.
Commenters correctly point out that this is inconsistent with AEO 2000 which projects the
lower growth rate of 1.0% per year. This change in growth rate projections is based on
calculations using  the gross domestic product index which are described in the EIA report.
EIA is currently in the process of completing the analyses for AEO  2001 which is expected to
show even  higher  diesel fuel growth projections than AEO 1999. Based on the early release
of AEO 200162, transportation diesel fuel consumption is expected  to increase by 2.3%
annually from 1999 to 2020. Based on these estimates, we  believe that our fuel consumption
projections are supported by the projections made by EIA.
       61 "Update Heavy-Duty Engine Emission Conversion Factors for MOBILE6: Analysis of Fuel
Economy, Non-Engine Fuel Economy Improvements, and Fuel Densities," U.S. Environmental Protection
Agency, EPA-420-P-98-014, May 1998.

       62 "Early Release of the Annual Energy Outlook 2001,"
vwwv.eia.doe.gov/oaif/aeo/earlyrelease/index.html, Energy Information Administration, downloaded from EIA
web site on 12/7/00.

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       AEO 2001  projects annual growth in VMT from freight trucks to be 2.6% from 1999 to
2020. Over this same period, we project an annual growth rate of 2.8% for heavy-duty diesel
vehicles. Based on these estimates, we believe that our emission inventory projections, and
therefore our emission reductions benefits,  are supported by the projections made by EIA.

       (4)     EPA has not adequately calculated the ozone reductions it anticipates from
              the proposal or the number  of nonattainment areas that will become
              attainment as a result of this rule. In addition, EPA's ozone calculations
              ignore the fact that ozone is primarily a summertime urban problem, which
              results in an emissions benefit calculation that may be off by a factor of three.
              To address these and other concerns related to emissions benefits and
              resulting ozone reductions,  EPA should conduct detailed ozone modeling and
              should make those results publicly available.

              Letters:

              American Petroleum Institute (IV-D-343) p. 7, 75-77
              Marathon Ashland Petroleum (IV-D-261) p. 4

       Response to Comment 2.4(E)(4):

       EPA has performed photochemical  modeling for the Eastern U.S. to quantify the
ozone reductions expected  from the emissions reductions in this rule. This modeling was
performed for three summertime episodes in 1995 during which there were high ozone
concentrations measured in many urban, suburban and rural locations in the Eastern U.S.
Collectively, these episodes cover 30 days  in June, July, and August 1995. The emissions
used in this modeling reflect summertime emissions levels and patterns, including the effects
of ambient temperatures on temperature-sensitive mobile source and biogenic emissions.
Thus, for the final rule, EPA has adequately determined the extent that emissions reductions
are expected to reduce ozone concentrations in the Eastern U.S. For all areas combined,
the rule  is forecast to provide a 33 percent reduction in exceedances in 2020 and a 38
percent  reduction in 2030. The  total amount of ozone above the standard is expected to
decline by nearly 37 percent in 2020 and 44 percent in 2030.  Also, daily maximum ozone
exceedances are lowered by 5 ppb on average in 2020 and nearly 7 ppb in 2030. The
modeling forecasts an overall net reduction of 39 percent in exceedances from 2007, which
is close  to the start of this program, to 2030 when controls fully in place. In addition, the
results for each individual area indicates that alareas  are expected to have less exceedances
in 2030 with the HDV controls than without this rule.  The results of this modeling are
described in more detail in the Air Quality Modeling Technical Support Document for this rule.
See also the response to comment 2.2(D).

       The commentor implies  that we are using the direct results from our episodic UAM-
V modeling to estimate environmental benefits of ozone reductions.  However, we do not
directly employ these model results. Instead, we convert the eposidic modeling results into
full ozone season profiles. In this process, we calibrate the predicted hourly ozone
concentrations to develop 2030  ozone profile at monitor sites by normalizing the
observations to the actual 1996  ozone data from each monitor site.  For areas without
ozone monitoring data, we interpolated ozone values using data from surrounding
monitors. We the use the 2030  base and control profiles to calculate the relevant daily and
seasonal ozone metrics for our benefits estimation. Details on this method may be found
in the technical support document prepared by Abt Associates, "Final Heavy Duty Vehicle
Standards:  Air Quality Estimation, Selected Health and Welfare Benefits Methods, and

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Benefit Analysis Results" December, 2000.

       (5)     One commenter notes that EPA must account for aftermarket replacement of
              catalyst devices because reduced emission control performance will
              undermine the environmental benefits claimed by EPA.

              Letters:

              Marathon Ashland Petroleum (IV-D-261) p. 34

       Response to Comment 2.4(E)(5):

       We do not have sufficient information suggesting how aftermarket replacement of
catalyst devices would affect emissions reductions, and such information was not provided by
the commenter. Therefore, we have not included this effect in our inventory modeling. This
issue is discussed in more detail later in response to issue 3.2.1(E)(3).

(F)    EPA has greatly overestimated the SOX reductions to be achieved by its
       proposal.

       (1)     EPA has assumed an average of 7 ppm sulfur but the exhaust system will
              see the equivalent of 17 ppm sulfur after contamination and lubricating oil are
              factored in. EPA also underestimated by a factor of four the  amount of
              oxidation of sulfur into sulfates by  the CDPF technology.  Both EMA and
              MECA have stated that 40-60% of the sulfur will be oxidized.

              Letters:

              American Petroleum Institute (IV-D-343) p. 76

       Response to Comment 2.4(F)(1):

       We agree that SOx reductions and direct sulfate PM reductions are linked and
assumptions that we make about the proportion of one pollutant effects the amount of the
other (mass is conserved). In the inventory analysis in the RIA we have assumed that the
fuel sulfur level on average for modeling purposes would be eight ppm constituted of a seven
ppm refinery average plus one ppm for oil contamination.  For simplicity the  inventory
analysis does not include contamination of the fuel during distribution, although for the
technology feasibility case we assumed that the average fuel sulfur level would be between
seven and 10 ppm. We believe that the one  ppm sulfur contribution from lube oil
contamination is the right assumption based upon the observed PM rates from modern diesel
engines as described in chapter III of the RIA. Therefore, we believe  that the actual average
fuel sulfur level will be between eight and 11 ppm. The difference between the SOx
reduction estimates based upon an eight ppm average fuel sulfur level and an 11 ppm fuel
sulfur level would not be significant since the reductions are from a baseline of 341  ppm (340
ppm from the fuel plus one ppm from the oil). The potential SOx reductions among any of
the three estimates (the limits of our range, 8 and 11 and the commenters suggested  level of
17 ppm) vary by less than three percent. The difference between the limits of the
assumptions which we  believe to be most accurate is less than one percent.

       In our inventory analysis we assume that 30  percent of sulfur  in the exhaust will be
oxidized to sulfate PM on vehicles meeting the phase 2 PM standard. As noted by  the

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commenter, a variety of assumptions can be made as to the appropriate level of average
sulfur oxidation to sulfate. As described in the RIA, under some conditions sulfur oxidation
can be as low (or lower) than 10 percent while under other conditions it can be as high as the
40 to 60 percent levels  suggested in the comment. We believe that by assuming 30 percent
oxidation of sulfur to sulfate PM we have made a reasonable estimation of the amount of
direct sulfate PM from vehicles meeting the phase 2 PM standard. Changes to this
assumption simply shift the fraction of sulfur assumed to enter the atmosphere as SOx
versus direct PM.

(G)    EPA's calculation of emission benefits from the 50 ppm cap/30 ppm average
       sulfur as proposed by the oil industry is questionable and the basis on which
       EPA determined the benefits of a 50 ppm standard is unclear.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              ExxonMobil  (IV-D-228) p. 21

       Response to Comment 2.4(G)(1):

       See response to 2.4(G)(2), below.

       (2)     The commenter references Section IX.C. of the draft RIA and notes that the
              draft RIA totally ignores the real world experience of thousands of vehicles in
              Europe, which are already demonstrating the ability to meet Euro 5 standards
              on 50 ppm sulfur diesel fuel.  The commenter notes that the industry's
              proposed 50 ppm/30 ppm average sulfur level enables virtually the same PM
              benefits as EPA's proposal of a 15 ppm sulfur cap. Over 8,000 European
              diesel vehicles, both light and heavy duty, are currently operating catalyzed
              diesel particulate filters (CDPFs) satisfactorily on 50 ppm sulfur fuel. Both
              Johnson-Matthey and Engelhard have publicly released data showing  that
              PM emissions below EPA's proposed FTP PM standard of 0.01 gm/bhp-hr
              can be achieved  using 50 ppm sulfur. In this context, this commenter
              addresses some of EPA's concerns including the failure of fourteen retrofitted
              buses in Finland  (which were due to the inability to maintain the required
              temperature levels to assure regeneration), sulfate make and PM compliance
              over the SS and NTE test procedures, and the use of SCR. The commenter
              adds that the "DEC-SE" study shows that on 30 ppm fuel, current traps can
              meet PM levels of 0.02 g/bhp-hr over the OICA cycle - an 80% reduction from
              today's levels. In addition, EPA's proposal with its 5 percent loss in fuel
              economy and the loss in BTUs resulting from the desulfurization process will
              cause an increase in overall CO2 emissions, while API's 50 ppm cap/30 ppm
              average diesel fuel standards along with an SCR/CDPF system has only a 1
              percent fuel economy penalty,  minimizes the loss of BTUs in the
              desulfurization process, and will lead to  lower CO2 emissions overall.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 28-29
              Marathon Ashland Petroleum  (IV-D-57) p. 1-2

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       Response to Comment 2.4(G)(2):

       In the NPRM we estimated the emission benefits possible from the use of 50 ppm
capped sulfur fuel based upon enabling diesel oxidation catalysts and lean NOx catalysts as
explained in the Preamble of the NPRM. The reductions we estimated for these technologies
are explained in the draft RIA.

       We disagree with the assumptions made here by the commenters that with a 30 ppm
fuel sulfur average (50 ppm cap) substantial NOx and PM reductions would be  possible. As
we detail in responses to issues 3.3.1 (A-F) we do not believe that catalyzed diesel
particulate filters CDPFs are enabled through the use of fuel with a sulfur content above 15
ppm.  Further, as we explain in responses to issues 3.2.1(C) and 3.5(A-E) we do not believe
that there are acceptable means to ensure widespread compliance under an SCR program
where an entirely new fluid needed to be added in order to ensure proper emission control
system function. Therefore, we continue to believe that setting a fuel sulfur standard with a
30 ppm average / 50 ppm cap would only enable the modest emission  reductions we
estimated in the NPRM.
       (3)    API's proposal of a 30 ppm average/ 50 ppm cap sulfur content achieves
             almost the same emissions benefits as EPA's 15 ppm cap. EPA's rule
             anticipates 110,000 tons of PM reductions; while API's generates 104,000
             tons of PM reductions.  EPA's proposal and a SCR/CDPF system will have
             the same VOC reductions benefit. API's proposal will have the same
             reductions as EPA's for those toxic compounds emitted as VOC or PM.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 75-76
             Marathon Ashland Petroleum (IV-D-261) p. 80-81

       Response to Comment 2.4(G)(3):

       We disagree with the assumptions made here by the commenters that with a 30 ppm
fuel sulfur average (50 ppm cap) substantial NOx and PM reductions would be possible. As
we detail in responses to issues 3.3.1 (A-F) we do not believe that catalyzed diesel
particulate filters CDPFs are enabled through the use of fuel with a sulfur content above 15
ppm.  Further, as we explain in responses to issues 3.2.1(C) and 3.5(A-E) we do not believe
that there are acceptable means ensure widespread compliance under an SCR program
where an entirely new fluid needed to be added in order to ensure proper emission control
system function. Therefore,  we continue to believe that setting a fuel sulfur standard with a
30 ppm average / 50 ppm cap would only enable the modest emission reductions we
estimated in the  NPRM.

       (4)    EPA acknowledges that a 50 ppm sulfur cap for highway diesel will deliver a
             corresponding reduction in PM and NOX from control  technology, even if the
             reduction is somewhat less than it would otherwise be at the 15 ppm level.
             EPA has not demonstrated that the lower sulfur cap is essential in order to
             meet the nation's air quality goals and has provided no evidence that the
             emission reductions derived from a 50 ppm sulfur diesel cap, in addition to
             other ongoing air quality measures, would be insufficient to bring
             nonattainment areas into  compliance.

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              Letters:

              U.S. Chamber of Commerce  (IV-D-329) p. 2-3

       Response to Comment 2.4(G)(4):

       We believe the emission reductions achieved with a 50 ppm sulfur cap on diesel fuel
would be minimal compared to a 15 ppm sulfur cap; see response to comment 2.4(G)(2).
We further believe the emission reductions enabled by the 15 ppm sulfur cap will have
significant impact on the ability of many area  to reach or maintain attainment; see response
to comment 2.2(D), and 2.4(D)(3).

(H)    Expressed support for an evaluation of the impact or effectiveness of this rule
       as soon as it is feasible.

       (1)     Commenter provided no supporting information or detailed analysis.

              Letters:

              West Harlem Environmental Action/Envr Justice Network (IV-F-76)

       Response to Comment 2.4(H)(1):

       In the RIA, we provide a detailed cost-effectiveness and benefit-cost analysis of this
rule. This analysis looks at the projected emission reductions, costs of compliance, and the
impact of the projected emission reductions on society. We find it most useful to evaluate the
effects of the standards prior to finalizing the  rule so that we can make informed decisions on
appropriate standards.  However, we will continue in our efforts to refine our emission
inventory projections in the future. This will help us make informed decisions in the future on
the need for further pollution control.

(I)     EPA fails to discuss the negligible  benefits to rural areas.

       (1)     This is important, because the lack of benefits in rural America is one reason
              to justify flexibility measures provided to small refiners (especially farm refiner
              co-ops) that operate in and serve rural America.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 2-3

       Response to Comment 2.4(l)(1):

       In Section IV of the preamble, we present the rationale for our conclusion that it is not
necessary or appropriate to provide separate treatment for farmer cooperative refiners as a
class. Farmer cooperatives, while unique in structure, are not unique compared to privately
held refiners in terms of their ability to raise capital.  Furthermore, the health and
environmental benefits of the program in rural areas are important. In the  absence of
compelling economic or programmatic reasons for such special treatment of farmer
cooperative refiners as a class, reasons which we have concluded do not exist, then there is
also no reason to give  up real benefits of the program. See also response to 2.2(l)(1).

(J)     EPA should account for the additional reductions from LDVs and diesel autos

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       because those reductions will be significant in rural areas, and provide further
       justification for providing flexibility to farmer co-ops.

       (1)     Commenter provides no detailed analysis on this point.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 4

       Response to  Comment 2.4(J)(1):

       As the commenter observes, we do not claim emission benefits for the effect of the
rule on light-duty diesel vehicles and trucks. Any additional emission impact resulting from
light-duty diesel vehicles would have no effect on our conclusion that it is not necessary or
appropriate to provide farmer cooperative refiners, as a class, with separate regulatory
treatment.  See also the response to Issue 2.4(1).

(K)    EPA's proposal will not lead to reductions in diesel smoke.

       (1)     A reduction in sulfur levels in diesel fuel will have very little impact on diesel
              smoke given that modern diesel engines are virtually smokeless using current
              fuels.  Older, poorly maintained vehicles are the cause of diesel smoke and
              better vehicle maintenance is the key to improvements in this area.

              Letters:

              American Bus Association (IV-D-330) p. 4

       Response to  Comment 2.4(K)(1):

       We agree with the commenter that modern diesel engines are virtually "smokeless"
when appropriately maintained (have little to no visible smoke). Likewise, we agree with the
commenter that improvements in vehicle maintenance could reduce visible smoke emissions
as well as  PM emissions.  However, we disagree with any implication that just because
modern diesels are "smokeless" that further control of diesel emissions are unwarranted.
Modern diesel engines still produce substantial amounts of PM emissions which can be
reduced dramatically through the application of catalyzed diesel particulate filters (CDPFs).
These PM emission reductions are needed in order to address the PM10 nonattainment
areas, areas with elevated levels of PM fine, and the serious health concerns associated
with diesel PM.  Further, it should be noted that because CDPFs are highly effective at
controlling PM emissions, CDPF equipped vehicles continue to be smokeless even when
engine out PM emission levels increase due to malmaintenance.

(L)    EPA should provide information to clarify the anticipated emissions benefits,
       particularly since the aftertreatment technologies are not yet available.

       (1)     Commenter requests that EPA provide additional information regarding a
              comparison of the exhaust emissions of the current diesel fuel and the low-
              sulfur diesel fuel as well as an update on the development status of the
              technologies that will be used to meet the standards.

              Letters:

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             American Public Transportation Association (IV-D-275) p. 4

       Response to Comment 2.4(L)(1):

       Please see our response to issue 3.2.1(C) which details the emission benefits of the
advanced emission control technologies enabled through the application of diesel fuel.
There you will see that PM and NOx emissions can be reduced by more than 90 percent
through the application of these technologies coupled with low sulfur diesel fuel. For a more
detailed discussion of the technologies please refer to chapters of the RIA.

(M)    EPA's claim that there will be additional environmental benefits beyond
       reductions in ozone precursors and PM is unsubstantiated.

       (1)    The assumption that the proposed standards would result in reductions in
             carbon monoxide, SOX, and air toxics is misleading since the ambient levels
             of these pollutants are already at low levels. Commenter provides a
             discussion of the assumptions associated with each of these pollutants and
             concludes in each case that the anticipated reductions as a result of the
             proposed rule would lead to minimal benefits.

             Letters:

             Mercatus Center at GMU  (IV-D-219)p. 11

       Response to Comment 2.4(M)(1):

       We disagree with the comment. There  are 28 areas in nonattainment with the SO2
standard, and 17 areas designated as CO nonattainment areas. Ambient concentration and
exposure to air toxics emitted by heavy-duty vehicles have been found at levels of regulatory
concern, especially in  urban areas.  The standards being finalized today will reduce ambient
concentrations of these three pollutants, and thus lead to reductions in adverse health
effects. For those populations exposure to unhealthful ambient concentrations of these
pollutants,  the benefits of this rule are significant.

       (2)    EPA has suggested that the proposed rule would provide substantial benefits
             by reducing visibility/haze, acid deposition, eutrophication/nitrification, and
             polycyclic organic matter (POM) deposition, but does not quantify the benefits
             in any of these cases.

             Letters:

             Mercatus Center at GMU  (IV-D-219)p. 12

       Response to Comment 2.4(M)(2):

       See response  to comment 2.2(P)(1).

(N)    EPA should evaluate the impact to air quality if small refiners are allowed to
       take advantage of a delayed implementation schedule.

       (1)    The question of the potential air quality impact of allowing small refiners to

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DECEMBER 21, 2000	PAGE 2-103

              delay compliance with the proposed rule deserves EPA analysis, as required
              by the Regulatory Flexibility Act.  However, given that small refiners represent
              only 4 percent of the market for highway diesel fuel and contribute little to PM
              and/or ozone nonattainment, it is likely that a delayed implementation
              schedule will have a negligible impact on air quality.

              Letters:

              U.S. Small Business Administration (IV-G-20) p. 2

       Response to Comment 2.4(N)(1):

       We agree with the commenterthat small refiners represent a small fraction (our
current estimate is 5 percent) of diesel fuel production nationally, and that any direct emission
impacts of small refiner relief provisions - positive or negative - will be small. The strong
need for the air quality benefits of this rule requires even small refiners, the refiners most likely
to be financially stressed by this rule, comply expeditiously. However, by providing additional
temporary options that small refiners can pursue, the program can be implemented for other
refiners on the fastest possible schedule.  In this way, the overall program will achieve the
most air quality benefit in the shortest possible time.

(O)    EPA has underestimated the adverse effects that its regulations will have on
       global climate change.

       (1)    The continuous reduction of atmospheric sulfur can now be directly correlated
              to rising global warming temperatures. Sulfur has served a vital role  in our
              planet's biogenic and atmospheric system since its formation. The beneficial
              attributes of sulfur aerosols should not be ignored when formulating
              environmental regulations. Reductions in fuel sulfur translate into reductions
              of atmospheric sulfur.  Commenter notes that sulfur's positive and  negative
              attributes must both be evaluated and balanced in any environmental
              regulation and provides significant discussion and analysis on this issue.
              Commenter cites to several scientific papers and documents to support their
              position on this issue.  Commenter recommends that to address this  issue,
              EPA should consider pursuing a strategy that would include the use of diesel
              fuel additives along with sulfur trap technology instead of reducing the sulfur
              levels in fuel.

              Letters:

              National Alternative Fuels Foundation  (IV-D-214) p. 5-16

       Response to Comment 2.4(O)(1):

       EPA is aware of the issues raised in this comment.

       EPA monitors climate change research and current scientific analysis of greenhouse gas
emissions and impacts. The role of aerosols in the atmosphere is not new, nor is it well
understood. As the comment states, there is data suggesting that aerosols play a significant role
in cloud formation, which does play a role in climate change.  However, the direct results of these
interactions are not well known and there is not yet clear evidence that sulfur-based aerosols are
responsible for significant climate cooling.  In response to the comment, these impacts have not
been ignored, but the  science is not so well known as to allow us to draw the conclusions given in

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DECEMBER 21, 2000	PAGE 2-104

the comment. In addition, the data presented in the comment are not scientifically significant or
rigorous enough to adequately support the conclusions.

       The basic science involved can be readily described. Aerosols are liquid or solid particles
small enough to stay suspended in the air. Both human and non-human processes generate
aerosols. Different aerosol types have different impacts upon the climate. Sulfate aerosols will
tend to reflect light or cause clouds to brighten, exerting a cooling effect on the atmosphere. Most
particulate matter also increases the formation and lifetime of clouds, further affecting the
reflection of incoming solar radiation  back to space. However, unlike greenhouse gases which
remain in the atmosphere for decades to  centuries, aerosols do not remain in the atmosphere for
long periods of time, tending to be "rained out" regularly.  For this reason, sulfate  cooling cannot
be considered a straightforward offset to greenhouse gas warming. The offsetting impact varies
geographically depending on local aerosol concentrations. Therefore, aerosol cooling and
greenhouse warming do not directly offset each other because their effects occur at different
times and in different parts of the  atmosphere. Aerosols  have greater impact regionally, with
more limited impact on global  climate.

       Estimates of the possible cooling effect of all tropospheric aerosols of anthropogenic
origin indicate a small effect (estimated at a direct forcing of about -0.4 to -0.5 W/m2), offsetting
perhaps 20 percent of the greenhouse gas warming effect.63 64 Anthropogenic sulfates are  only
about 4% of total aerosol particulate, the largest source of which is SO2 emissions. Further, our
emission inventories indicate that the heavy-duty SO2 emissions affected by this  rule are less
than 1 percent of national SO2 emissions. Clearly, any effect on total tropospheric aerosols and
any reductions in global cooling effect due to the SO2 reductions from this rule would be
extremely small.

       In addition to the impact of the SO2 reductions from this rule we also note that there are
likely global warming benefits  (i.e., reductions in global warming) from other emission reductions
that will result from this rule. First, tropospheric ozone, unlike stratospheric ozone, is a known
contributor to global warming, contributing a positive forcing of about 0.4 W/m2,65 which is nearly
as large as the negative direct aerosol effect and which makes it the third largest  climate forcing
factor among the greenhouse  gases.66 Thus, the ozone  reductions expected from this rule,
which are one of the primary motivations  for its adoption, will also act to reduce global warming
effects.

       A second global warming benefit of this rule comes from the reductions of non-sulfate
diesel PM which it will produce (approximately 25,000 tons per year in 2010, growing to almost
90,000 tons per year by 2030). While sulfate aerosol tends toward global cooling, as noted by
the commenter, carbon aerosol such as diesel PM, acts in the opposite direction. These
aerosols act by heating the atmosphere and thereby reducing large-scale cloud cover, and  by
decreasing cloud brightness.67 The  balancing positive and negative characteristics of aerosols
are such that it is unclear at the present time which dimensions drive the overall trend in aerosol
       63 "IPCC Second Assessment - Climate Change 1995" A Report of the Intergovernmental Panel on
Climate Change (IPCC 1995). Page 21

       64 "Global warming in the twenty-first century: An alternative scenario" James Hansen et al., NASA
Goddard Institute for Space Studies.. June 16, 2000 (Hansen et al. 2000). Page 2

       65 Hansen et al.  2000, page 5

       66 "An Open Letter on Global Warming," James Hansen, Goddard Institute for Space Studies, Oct
25,2000.  Page 2.
       67
         Hansen et al. 2000, page 2

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forcing.68

       Finally, this rule will produce reductions in methane from the reductions in the HD
gasoline-fueled engine and vehicle hydrocarbon standards which it contains.  Methane, of
course, is an extremely potent greenhouse gas, being the second largest source of
anthropogenic climate forcing.69  Methane reductions from this rule will exceed 2,000 tons per
year by 2015, and will exceed 6,500 tons per year by 2030.

       Producing an assessment of the overall global warming impact of this rule would be a
complex and difficult task.  Clearly the effects of SO2 reductions cannot be considered in
isolation from the other changes the rule will  produce. We have not done such an analysis
because we believe that, whatever the directional nature of the outcome, it would be extremely
small. Furthermore, given the scientific uncertainties that would be involved in modeling the
global effects of a  regional  United States program, any results would be expected have a degree
of uncertainty that would exceed the magnitude of the results.

       The known health and welfare benefits which this rule will produce stand in clear contrast
to this rather uncertain global warming effect. Our benefit-cost analysis presented in Chapter VII
of the RIA has identified and quantified benefits that will  have a value of over  $70 billion once
complying vehicles have been phased-in to the HD vehicle fleet. These benefits come  from
reductions in premature mortality, reductions in hospital  admissions and emergency room visits,
reductions in acute bronchitis, lower respiratory symptoms and upper respiratory symptoms in
children, reductions in asthma attacks, reductions in work loss days and a variety of other health
effects and welfare effects (e.g.,  reductions in agricultural crop damage).  The benefits of the
rule are discussed at length in Chapters II and VII of the  RIA.

       The sulfur reductions we are requiring in diesel fuel are an indispensable component of
all of the health and welfare benefits we expect from this rule. This is because we have
determined that removing most of the sulfur from diesel  fuel is an essential requirement for the
engine technology needed to produce the NOx and PM reductions that, along with SO2
reductions, result in these benefits.

       In summary, we believe that any concern about  global warming due to SO2  reductions
would be offset by the other global warming benefits which this rule will produce, such that it is
not possible to claim that the  rule will have adverse effects on global warming. Furthermore,  in
the context of the clearly identified benefits of the rule, the concerns about a possible negative
effect on global warming become insignificant.

       The commented also recommended  the EPA consider an alternative  strategy based
upon diesel fuel additives along with sulfur trap technology instead of low sulfur diesel fuel. This
issue is addressed in our responses to issues 3.5(G), 3.3.5(A) and 3.3.5(E).
       68 "We do not even know the sign of the current trend of aerosol forcing, because such information
would require knowledge of the trends of different aerosol compositions." Hansen et al 2000, page 4.
       69 Hansen et al.  2000, page 3

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ISSUE 3:  HEAVY DUTY ENGINE/VEHICLE STANDARDS

      Issue 3.1:  Engine and Vehicle Standards

             Issue 3.1.1: Engine Exhaust Standards

(A)    Expressed support specifically for the engine standards as proposed by EPA.

      (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Air Pollution Control District (IV-D-55) p. 1
             American Lung Association (IV-D-270) p. 17, (IV-F-181, 191) p. 146
             American Lung Association of Metropolitan Chicago (IV-D-237) p. 1
             American Lung Association of NH (IV-D-116) p. 1
             American Lung Association of NJ  (IV-D-224) p. 1
             American Lung Association of OR (IV-D-165) p. 1
             American Lung Association of Orange County (CA) (IV-D-176) p. 1
             American Lung Association of SD (IV-D-31) p. 1
             American Lung Association of VA (IV-D-205) p. 1
             American Lung Association of Wl  (IV-D-32) p. 1
             Bay Area Air Quality Management District (IV-D-139) p. 1
             Bressler, Daniel J.  (IV-D-104) p. 1
             CA Air Pollution Control Officers' Association (IV-D-109) p. 1
             CA Air Resources Board (IV-D-203) p. 2
             CA Environmental Protection Agency (IV-F-190) p. 18
             CT DEP (IV-D-142, 320) p. 1  (both)
             Center for Environmental Health  (IV-D-89) p. 1
             Chicago DEP/Chicago Metropolitan Mayors Caucus Clean Ai (IV-D-335) p. 3
             CityofArcata  (IV-D-200) p. 1
             City of Portland (IV-D-198) p. 1
             City of Seattle (IV-D-297) p. 1
             Clean Air Network  (IV-D-292) p. 2
             DE Dept. of Natural Resources & Environmental Control (IV-D-146) p. 1
             DE Nature Society (IV-D-285) p. 1
             Downtown Community Association  (IV-D-118) p. 1
             Environmental Health Watch (IV-D-212) p. 1
             GA Department of Natural Resources (IV-D-268) p. 1
             Grand Canyon Trust (IV-D-317) p. 1
             Hinds, William (IV-F-190) p. 202
             Hoosier Environmental Council  (IV-D-281) p. 1
             Kern Oil & Refining Co. (IV-F-173)
             League of Women Voters of New Orleans (IV-D-210) p. 1
             Legal Environmental Assistance Foundation (IV-D-126) p. 1
             MD DOE (IV-D-59, 163) p. 1 (both)
             MO Coalition for the Environment  (IV-D-235) p. 1
             Manufacturers of Emission Controls Association  (IV-F-191) p. 120
             Mayor and citizens of Fort Collins, CO (IV-F-191) p. 211
             NCDENR  (IV-D-151)p. 1
             NC Waste Awareness and Reduction Network (IV-D-51) p. 1

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              NESCAUM (IV-D-315) p. 4-5, (IV-F-63)
              NH DES (IV-D-150)p. 1
              NH State Governor's Office (IV-D-156) p. 1
              NY DEC (IV-D-138, 239) p. 1 (both)
              NY State Assembly (IV-D-266) p. 1
              NY State Attorney General's Office (IV-D-238) p. 1
              NYCDEP (IV-D-159)p. 1
              Natural  Resources Defense Council (IV-F-75,  191) p. 68
              Office of the Governor, Guam (IV-D-60) p. 1
              Rl Dept. of Environmental Management, et al (IV-D-61) p. 1
              STAPPA/ALAPCO (IV-F-32, 78, 117) p. 29 (IV-F-191) p. 32
              San Joaquin Valley Air Pollution Control District (IV-D-56) p. 1
              Sierra Club, GA Chapter (IV-D-348) p. 1
              Sierra Club, Lone Star Chapter  (IV-D-287) p. 2
              Sierra Club, PA Chapter (IV-D-53) p. 1, (IV-D-197) p. 2, (IV-D-204) p. 1
              Southern Queens Park Association, Inc.  (IV-D-36) p. 1
              Southwest Air Pollution Control Authority (IV-D-149) p. 1
              U.S. Oil & Refining Co.  (IV-F-190) p. 159)
              Udall, Mark (IV-D-173) p. 1
              Unity Center  (IV-D-75) p. 1
              Vigo County Air Pollution Control (IV-D-137) p. 1
              Village of Burr Ridge  (IV-D-316) p. 1
              WA Department of Ecology (IV-D-141) p. 1
              Wl DNR (IV-D-291) p. 1

       (2)     The standards are feasible. MECA believes the proposed standards are
              achievable in  a cost-effective manner within the time allotted, if very low sulfur
              diesel fuel is available. EPA and others have successfully relied on MECA's
              sound forecasts in the past and should do so in this matter.

              Letters:

              City of Chicago  (IV-D-240) p. 4
              IL Environmental Protection Agency (IV-D-193, 308) p. 1 (both)
              Metropolitan Washington Air Quality Committee (IV-D-34, 58) p. 2 (both)
              NY DEC (IV-D-239) p. 2
              Natural  Resources Defense Council (IV-D-168) p. 6-8
              Ozone Transport Commission  (IV-D-249) p. 2
              STAPPA/ALAPCO (IV-D-295) p. 2, 9-10

       (3)     Supports the engine standards as proposed but notes that EPA should
              eliminate the four-year phase-in of the NOX standard, [see Issue 3.1.4]

              Letters:

              Natural  Resources Defense Council (IV-D-168) p. 6-7
              Nolan, Catherine (IV-D-169) p. 1
              PADEP (IV-D-100)p. 2
              Stuckey, Stephanie (IV-D-182) p. 1
              Wl DNR (IV-D-144)p. 1

       (4)     Supports the engine standards as proposed but believes the standards can

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DECEMBER 21, 2000	PAGE 3-3

              be met with a 30 ppm average sulfur fuel, [see Issue 4.1]

              Letters:

              Kern Oil & Refining Co. (IV-D-310) p. 2, 4

       Response to Comment 3.1.1 (A):

       We agree with commenters that the diesel engine standards as proposed are indeed
feasible in the 2007 model year timeframe.  Furthermore, we believe the standards can be
achieved in a cost effective manner. Our reasoning behind the feasibility of the diesel engine
standards is  the topic of Chapter III.A of the final RIA contained in the docket for this rule.
The economic impacts and cost effectiveness of the standards are discussed in detail in
Chapters V and VI of the final RIA.  Some commenters suggested that we eliminate the
proposed phase-in and require compliance to the proposed NOX standard on 100 percent of
new engines in the 2007 model year. As discussed in the preamble to this rule and below in
our Response to Comment 3.1.4, we disagree with those commenters.  Lastly, one
commenter suggested that the proposed NOX standard was feasible but that it could be met
with a diesel  fuel having a 30 ppm average sulfur requirement. As discussed at length in the
preamble and in Chapter III.A of the final RIA, we firmly believe that the standards we have
put forth for Phase 2 of our highway diesel program can only be  met if diesel fuel  sulfur levels
are capped at 15 ppm.

(B)    It will be a significant challenge for diesel engines to meet the PM and NOX
       emission standards at the same time.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Alliance of Automobile Manufacturers  (IV-F-9, 59,190) p. 114 (IV-F-117) p.
              168(IV-F-191)p. 89

       (2)     The DECSE program on which EPA relies did not test integrated systems
              with NOX and PM control functions. Without data on integrated systems there
              is no basis for the proposed standards.

              Letters:

              ExxonMobil  (IV-D-228) p. 8

       Response to Comment 3.1.1(6):

       Engine and vehicle manufacturers have historically overcome significant challenges
in the past in order to cost effectively reduce vehicle and engine  emissions and in the
process have simultaneously provided improvements in engine efficiency, durability, and
driveability. The diesel emissions standards finalized are technology forcing, thus they are
inherently challenging. EPA believes that the challenge can be met using a combination of
technologies as described in Chapters, section A of the RIA and that sufficient leadtime is
available for  refining these technologies and integrating them into the engine/vehicle system.

       EPA  tested  a system integrating both NOX and PM control functions (see Chapter 3,

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section A3 of the RIA) demonstrating simultaneously greater than 90% NOX reduction and
greater than 95% PM reduction efficiencies. Toyota has demonstrated an exhaust
aftertreatment device that integrates both a NOX adsorber catalyst and a catalyzed diesel
particulate filter into a single monolithic device (see document number IV-E-31 in the docket
for this Final Rule).

(C)    EPA should implement a combined standard for NOX and NMHC, which would
       be consistent with the approach taken under the 2004 HD rule.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             Environmental Defense (IV-F-169)

       (2)    EPA has proposed separate NOX and NMHC standards for HDEs in this
             proposal.  However, this is inconsistent with the 2004 HD rule, which imposes
             a singe NOX + NMHC combined standard.  Separating the standards make
             them more stringent since a feasible control strategy must be designed for
             individual criteria pollutants and does not provide as much flexibility in
             emission compliance  planning for manufacturers. With this proposal, EPA
             has failed to rationalize why the standards have been separated.  If EPA
             chooses to finalize separate standards, then EPA should  prove that these
             standards are feasible across the board. Commenters provided significant
             discussion on this issue and noted that EPA should work with industry to
             determine an appropriate combined standard. Commenters  suggested a
             combined standard of 1.0 g/bhp-hr and noted that if a lower standard is
             adopted, then separate standards for different classifications should be
             adopted that are proven feasible for all groups. One commenter
             recommended a combined standard of 1.0 g/bhp-hr for HD gasoline and
             diesel engines greater than 14,000 GVWR and a combined standard of 0.8
             g/bhp-hr for HD gasoline  and diesel engines and incomplete  vehicles less
             than or equal to 14,000 GVWR. Another noted that a combined standards of
             0.6 g/bhp-hr would represent a reasonable target.  (See also Issue 3.2.1 and
             3.2.2.)

             Letters:

             DaimlerChrysler (IV-D-284) p. 9
             Detroit Diesel Corporation (IV-D-276) p. 12-13
             Engine Manufacturers Association (IV-D-251) p. 40
             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 41-42,
             51
             International Truck &  Engine Corp.  (IV-D-257) p. 16

       (3)    EPA provides no explanation why, just three years after implementation of a
             combined standard, EPA proposed separate standards.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 20
             Marathon Ashland Petroleum (IV-D-261) p. 16

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       (4)    EPA should set a combined standard at 0.5 g/bhp-hr, which is still 5 times
             lower than the 2004 standard, would be technology forcing, would address
             environmental needs and may be technologically feasible.

             Letters:

             Mack Trucks (IV-D-324) p. 2

       Response to Comment 3.1.KC):

       We have chosen to move back to the approach of having separate NOX and NMHC
standards, as opposed to the combined NOX+NMHC standards required by the Phase 1 rule,
to ensure that very low NOX levels are achieved in the real world. When the combined
standards were first promulgated back in 1997we placed less emphasis on NOX emissions
and more emphasis on total NOX and NMHC emissions. (See 62FR54694, October 21,
1997) Since that time, as evidenced by the focus on NOX in our light-duty Tier 2 rule we have
begun to place more emphasis on NOX emission  reductions because of the critical
importance of reducing NOX for both ozone and ambient particulate matter reductions. (See
65 FR6698, February 10, 2000). The separation of NOX and NMHC standards for the Phase
2 rule allows us to be sure that very low levels of  NOX are achieved in the real world. If the
standard were combined, say at 0.34 g/bhp-hr  NOX+NMHC, it is conceivable that engines
would emit at levels as high as ~0.3 g/bhp-hr NOX, fully 50 percent above the standard we are
finalizing. Therefore, we believe that the separation of the standards provides a more
effective emission control program.

       As for comments on feasibility, we believe the 0.20, 0.14, and 0.01 g/bhp-hr NOX,
NMHC, and PM standards are indeed feasible, as discussed in detail in Chapter III.A of the
final RIA contained in the docket. Regarding the  suggestions for higher standards, such  as
0.6, 0.8, and 1.0 g/bhp-hr NOX+NMHC, because we believe the standards being finalized are
feasible, that they can be met in a cost effective way, and that they are needed to protect
public health, we do not believe that any standards set higher than those we are finalizing
would satisfy our responsibility under the Clean Air Act.

(D)    EPA's proposal  to limit exhaust emissions to the Maximum Allowable Emission
       Limits (MAELs) would be costly and  adds no value to EPA's program.

       (1)    Commenter refers to their comments submitted in response to the 1999
             Feasibility Review (2004 rule), p. 35-38 for additional information and
             comments on this issue.

             Letters:

             Engine Manufacturers Association (IV-D-251) p. 62

       Response to Comment 3.1.1(D):

       We have concluded that the  anticipated emission reductions will result without the
added compliance burden of the MAEL requirements as they apply to the  standards
established in this rule and considering the technologies likely to be used. Therefore, we
have eliminated the MAEL requirements from the Phase 2 program. The regulations for
model year 2007 have been changed such that the MAEL requirements do not apply to
engines certified to the standards established in this rule.

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       The Phase 1  HDDE rule (see 65 FR 59896, October 6, 2000) established the MAEL
requirements beginning in model year 2007 as a means to ensure that the engine calibration
strategies used to comply with the FTP and SET tests were used across the engine speed-
torque zone, not just the 13 test points which comprise the SET.  The NTE requirements
apply to the same engine operating conditions as many of the individual steady-state modes
which make-up the SET,  however, the Phase 1  NTE standard is on the order of 0.625 g/bhp-
hr NMHC+NOX greater than the Phase 1 SET standard. To ensure compliance with the
Phase 1 MAEL, the regulations allow EPA, at the time of certification, to select up to  three
additional test points (referred to as "mystery points" in the regulations). The measured
emissions from these mystery points must comply with the MAEL standard.  The MAEL
standard is determined as described here. The Phase 1 regulations define a region  of the
engine's torque map which is bounded by the 12 non-idle modes of the SET, this area of the
engine  map is defined as the "steady-state control area."  The Phase 1 regulations specify
that gaseous emissions within the steady-state control area, when tested under steady-state
laboratory conditions, must comply with a value determined by a  mathematical interpolation
process defined in the regulations. The interpolation  process defines the "Maximum
Allowable Emission Limit" (MAEL), which the measured emission values must comply with.
The MAEL interpolation process includes a 10 percent cushion value, that is, the MAEL value
is 10 percent higher than  the value determined from the mathematical interpolation
equations.

       The MAEL and mystery point requirements were established in the context of the
2004 FTP emission standards (e.g., 2.4 g/bhp-hr NMHC+NOX, 0.1 g/bhp-hr PM). The MAEL
ensures that the emission control strategies manufacturers utilize to comply with the  SSS
standard are also used as the steady-state modes not specifically included in the 13  modes
which constitute the SSS test. The MAEL provides for a 10 percent cushion, roughly
equivalent to 0.25 g/bhp-hr NOX and 0.01 g/bhp-hr PM for 2004 technology engines.  This 10
percent allowance provides needed flexibility within the  context of the 2004 FTP standards,
and it recognizes that not every point within the steady-state control area could comply with
the mathematical interpolation value.

       In the context of the 2007 FTP and SET emission standards (i.e., 0.20 g/bhp-hr NOX,
0.14 g/bhp-hr NMHC, and 0.01 g/bhp-hr PM), the MAEL interpolation process,  even with the
10 percent allowance, is overly restrictive and is not needed to ensure that emission  control
technologies which are used to comply with the FTP and SET are used across the engine
map. For Phase 1 engines the MAEL was necessary to ensure this potential for gaming did
not occur because the difference between the FTP and  SET standards and the NTE standard
could be large, on the order of 0.625 g/bhp-hr for NMHC+NOX. However, for Phase 2
engines the NTE requirements are a mere 0.10 g/bhp-hr NOX greater than the FTP and SET
standard. Considering this small increment, we have eliminated the MAEL for  Phase 2
engines because it is redundant with the NTE. For the same reasons, we have eliminated
the certification "mystery points" for engines complying with today's diesel engine standards.

(E)     EPA's definition  of "defeat device" increases the stringency of the proposed
       standards.

       (1)    The change to the scope of the defeat device prohibition in the 2004  rule is
             unnecessarily restrictive and operates to increase the stringency of those
             standards as well as the proposed 2007 standards. For light duty vehicles,
             manufacturers "must show to the satisfaction of the Administrator that the
             vehicle design does not incorporate strategies that unnecessarily reduce
             emission control effectiveness exhibited during the [FRP] when the vehicle is

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              operated under conditions which may reasonably be expected to be
              encountered in normal operation and use." [40 CFR 86.094-16(d)(1)] Under
              this language, if a vehicle design necessarily reduces emission control
              effectiveness, then its design is not considered to be a defeat device, which
              insulates manufacturers that must institute certain design features that could
              result in minor emissions impacts. However, for HDEs, EPA has not included
              the "unnecessarily" modifier in its regulatory language and should do so in the
              final rule.  It is not immediately apparent that any of the exceptions included in
              the proposed rule [see 40 CFR 86.004-2] extend to emissions control
              strategies that are "necessary" notwithstanding that they may result in small
              emissions increases that are still below applicable FTP levels.  This could
              present a compliance problem for manufacturers,  [see also Issue 3.2.1 for
              discussion of this issue in the context of NTE feasibility]

              Letters:

              International Truck & Engine Corp. (IV-D-257) p. 24-25

       Response to Comment 3.1.KE):

       We have not changed the definition of defeat device in this rule. Therefore, the
comment is not appropriately made within the context of this rule; however, we believe it is
appropriate to respond to the substance of the  comment. We disagree that the definition of
defeat devices contained in the Phase 1 final rule, or the language in 40 CFR 86.004-16 on
the prohibition of defeat devices, increases the stringency of the standards.  The commenter
suggests that the revisions made to 40 CFR 86.004-16 in the Phase 1 rule, as compared to
40 CFR 86.094-16, prevents emission control strategies which would normally be used
during the FTP to trade-off control of one emission for another, while keeping both below the
applicable emission standard, and therefore increases the stringency of the rule  by
prohibiting such well know emission control strategies.  This is not the case. 40  CFR 86.004-
16(d)(1) states:

              "The manufacturer must show to the satisfaction of the Administrator that the
              vehicle or engine design does not incorporate strategies that reduce emission
              control effectiveness exhibited during the Federal emissions test procedures,
              described in subpart N of this part, when the vehicle or engine is operated
              under conditions which may reasonably be expected to be encountered in
              normal operation and use, unless one of the specific exceptions set forth in
              the definition of "defeat device" in § 86.004-2 has been met."

       40 CFR 86.004-2 states:

              "Defeat device means an auxiliary emission control device (AECD) that
              reduces the effectiveness of the emission control system under conditions
              which may reasonably be expected to be encountered in normal vehicle
              operation and use, unless:
                     (1) Such conditions are substantially included in the applicable
                     Federal emission test procedure for heavy-duty vehicles and
                     heavy-duty engines described in subpart N of this part:
                     (2) The need for the AECD is justified in terms of protecting the
                     vehicle against damage or accident; or
                     (3) The AECD does not go beyond the requirements of engine

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                     starting."

       The commenter implies the three exclusions in 86.004-2 are narrowly defined, and
could exclude many control strategies. This is incorrect.  The first provision 40 CFR 86.004-2
for an AECD to be excluded from consideration as a defeat device are conditions which are
substantially included in the applicable Federal emission  test procedure for HDDEs, which in
2007 includes the pre-existing transient FTP, the SET, and the NTE.  Emission control
strategies which are substantially included in these test procedures would not be considered
a defeat device. Emission control strategies which trade  off NOX for PM emissions control
during the FTP, SET,  and NTE are widely expected to be used, and therefore if such
strategies are substantially used during the FTP, SET, or NTE, such strategies would not be
considered to be a defeat device.  Therefore, we disagree with the comment that the
prohibition of defeat device  regulatory language in 40 CFR 86.004-16 impacts the stringency
of the emission standards.

(F)     In setting the standards, EPA should consider emissions legislation in Europe
       and Japan.

       (1)     EPA has failed to take into consideration the Euro 4/2 emissions standards
              set forth in Europe for 2008 (PM standard of 0.02 g/bhp-hr). These standards
              are very demanding,  require the introduction of advanced engine and
              aftertreatment technology, and will considerably improve air quality. Contrary
              to EPA's proposal, they are considered to be technologically feasible and
              should be used as the "Initial"  standards for HDDE emissions.

              Letters:

              DaimlerChrysler (IV-D-344) p. 6

       Response to Comment 3.1.1(F):

       We disagree with the commenter. We have specifically considered the Euro
standards for 2008 (0.02 g/bhp-hr PM) in setting our 0.01 g/bhp-hr PM standard and  have
generally considered the existing and anticipated emission control legislation in both Europe
and Japan.  However, we have concentrated on our Clean Air Act responsibility to set
standards as low as can be reasonably achieved considering factors such as feasibility, cost,
and safety.  In so doing, we have reached the conclusion that the standard should be set at
0.01  g/bhp-hr, a level we believe is feasible and cost effective. The rationale behind that
belief is discussed in full in Chapter III.A of the final RIA for this rule.

(G)    EPA should reduce the formaldehyde standard to .01 grams per brake-
       horsepower hour, instead of 0.16.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              CA Air Resources  Board  (IV-D-203)  p. 3
              Coalition for Clean Air  (IV-F-190) p. 177
              NY DEC (IV-D-239) p. 2
              Natural Resources Defense Council  (IV-F-190) p. 102
              Ozone Transport Commission (IV-D-249) p. 3

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       (2)    This standard was determined to be feasible by CARB in its recent Transit
             Bus Rule.

             Letters:

             American Lung Association (IV-D-270) p. 18-19
             STAPPA/ALAPCO (IV-D-295) p. 2, 16

       (3)    Ambient monitoring and modeling data demonstrate that formaldehyde levels
             exceed the 1 in 100,000 cancer risk benchmark in almost all urban areas in
             the U.S.

             Letters:

             American Lung Association (IV-D-270) p. 18
             NESCAUM (IV-D-315)p. 3, 5

       Response to Comment 3.1.1(G):

       We have decided to eliminate the formaldehyde standard from the final requirements
for diesel and gasoline engines.  We believe these engines will emit well below the standard
level we proposed and, importantly, that they will do so not because of the formaldehyde
standard, but because they will be indirectly controlled via the stringent  NMHC standard
being finalized. We plan to monitor the issue of formaldehyde emissions from diesel engines
to ensure that formaldehyde emissions continue at very low  levels. If we find that
formaldehyde emissions are indeed a concern, we would reconsider the possibility of setting
a formaldehyde standard.

       We are adopting the CARB LEV II formaldehyde standards for chassis-certified
heavy-duty vehicles. We believe that since manufacturers will already be complying with
these standards for CARB  certification, their inclusion in this federal rulemaking will not be
burdensome. We are not adopting more stringent formaldehyde standards for these
vehicles. The primary value of these formaldehyde standards would be  for methanol-fueled
engines, since they can tend to have high engine-out emissions of formaldehyde. However,
since there is no averaging program available for compliance with the formaldehyde
standards, we must set the standards to be feasible for the broad variety of heavy-duty
engines that will be produced in 2007 and later, including methanol-fueled vehicles.

       The Agency shares the commenters'  concern about  potential  adverse health affects
from exposure to  ambient concentrations of formaldehyde. Monitoring and modeling data
suggest that exposure to formaldehyde in 1990 exceeded health benchmark cancer risk
levels of 10 in 100,000 in many census tracts across the nation.

       Agency action to reduce  emissions and exposure to  air toxics, including
formaldehyde, has been informed by the relative contribution of formaldehyde emissions
from various mobile source categories. In 1996, for example, mobile  sources accounted for
about 50 percent  of total formaldehyde emissions from all sources. Within the mobile source
inventory, the contribution was split roughly in half between gasoline-powered passenger
cars and light duty trucks, and nonroad vehicles and equipment.  On-highway heavy-duty
vehicles accounted for about 3 percent of total formaldehyde emissions.

       Since the  passage  of the Clean Air Act Amendments in 1990, the Agency has

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focused primarily on controlling air toxic emissions from light duty vehicles.  By 2020, these
vehicle and fuel-based controls are expected to result in a 54 percent reduction in
formaldehyde emissions from 1996 levels.  Most recently, the Agency proposed a mobile
source air toxics rule that proposes to cap fuel benzene content at current levels, and finds
that more stringent vehicle-based controls on air toxics, including formaldehyde, are not
available in the near term.  Importantly, the proposed rule commits the Agency to re-evaluate
the need for, and feasibility of, additional air toxic controls (including controls on nonroad) in
a future rulemaking in 2003 - 2004.
(H)    EPA has stated that diesel engines emit significantly below the proposed
       formaldehyde standard, and therefore no such standard should be established
       for HDDE.

       (1)     EPA should not set a formaldehyde standard without meeting the criteria of
              section 202(a).

              Letters:

              American Petroleum Institute  (IV-D-343) p. 21

       Response to Comment 3.1.KH):

       See Response to Comment 3.1.1 (G).

(I)     EPA should apply the NTE limits as currently contained in the Consent Decree
       between the U.S. and a number of diesel manufacturers, to all heavy-duty
       engines and vehicles, regardless of the fuel used.

       (1)     Commenter also  opposes any revisions to the NTE limits currently in the
              Consent Decree.

              Letters:

              Natural Resources Defense Council (IV-D-168) p. 9-11, (IV-F-75, 191) p. 68

       (2)     Basing the emissions standards on a distinct cycle and  using the NTE zone to
              help ensure in-use control creates a comprehensive program.

              Letters:

              NESCAUM (IV-D-315)p. 8
              STAPPA/ALAPCO  (IV-D-295) p. 19-21

       Response to Comment 3.1.1(1):

       We did not propose to apply NTE emission limits to HD gasoline engines or HD
vehicles, and this final rule does  not contain NTE limits for these categories of HD engines &
vehicles.  As discussed in the proposal (see 65  FR 35463 and  65 FR 35465, June 2, 2000)
we intend to purse under separate rulemaking actions means of appropriately addressing off-
cycle emissions both for HD gasoline engines (such as  NTE requirements), and for HD
vehicles (such as supplemental FTP requirements), and we do not rule out the possibility that

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these provisions could be implemented by model year 2007 or earlier.

       We generally agree with the comments under (2). We also believe that the
somewhat limited type of driving conditions reflected in the pre-existing FTP for HDDE in
combination with the defeat device prohibition is not the most effective approach in the long
term to ensure appropriate emission control from HDDEs under all conditions in use, and
therefore the NTE requirements are necessary and appropriate for HDDEs. As mentioned
above in this response, the appropriate measures to ensure control for gasoline-fueled HD
engines will be considered in a separate rulemaking.

(J)     Agrees with EPA proposal to add a steady-state test cycle.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             American Lung Association (IV-D-270) p. 29

       (2)    The proposed supplemental steady-state test cycle is needed so that the FTP
             reflects a greater range of driving conditions experienced on the road,
             especially those relying on the increased use of electronic engine
             management systems. The mid-speeds and mid-to-high loads represented
             by the proposed steady-state test are the speeds and loads at which these
             engines are designed to operate for maximum efficiency and durability.

             Letters:

             NESCAUM (IV-D-315)p. 6
             STAPPA/ALAPCO (IV-D-295) p. 19-20

       Response to Comment 3.1.1(J):

       We agree that the steady-state test cycle helps ensure emission performance across
the typical  range of in-use operation. As discussed in the Phase 1 rule, the supplemental
emission test (SET, formerly  referred to as the supplemental steady-state test) tests an
engine under standard FTP laboratory conditions over engine operation which is not well
represented by the pre-existing FTP. Together with the FTP, NTE and prohibition of defeat
devices, the SET forms a comprehensive set of emission tests and regulations which  ensure
the emission reduction benefits the FTP standard is intended to provide actually occur in-use.

(K)     The supplemental NTE and steady-state provisions have a very significant
       impact on the stringency and feasibility of the proposed standards.

       (1)    Since the final provisions remain unclear, it is difficult to comment on how
             they would impact the technical feasibility of the proposed  standards.
             Commenter suggested that EPA provide assurances that there will be
             adequate time for public review and comments on these supplemental
             provisions after the 2004 rule has been finalized.

             Letters:

             Detroit Diesel Corporation (IV-F-168, 116) p. 198

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       Response to Comment 3.1.KKK1):

       We disagree with the comment that commenters were uncertain how to respond to
the proposed supplemental requirements (not-to-exceed standard, supplemental steady state
standard, MAEL requirements, and load response test requirements). As discussed in the
proposal (see 65 FR 35463, June 2, 2000) we proposed to apply the supplemental
requirements contained in the October 29, 1999 Phase 1 proposal (64 FR 58472) to the 2007
Phase 2 engines. The Phase 1 proposal contained a detailed description of all aspects of
the supplemental requirements, which afforded all commenters ample detail on which to
comment on the application of these supplemental requirements to the Phase 2 engines.
The Phase 1 final rule was signed on July 31, 2000, and a copy of the final rule was posted
on the EPA web site on August 1, 2000, 13 days before the close of the comment period for
this rule. An e-mail message notifying interested parties of the signing and posting of the
final rule was sent out on August 1, 2000 (see copy of e-mail message from William
Charmley, US EPA, with subject line "U.S. EPA final rule for model year 2004/5 on-highway
heavy duty engine and vehicle rule signed", available in EPA Air Docket A-99-06).  A notice
of availability of the Web posting of the final rule was published in the Federal Register on
August 3, 2000, 11 days before the close of the comment period for this rule (see 95 FR
47706, August  3, 2000).  Finally, the Agency sent letters to all parties who provided the
Agency with  a written request for an extension of the comment period, expressing our
willingness to make every effort to assess information which we receive after the close of the
comment period (see various letters available in EPA Air Docket A-99-06). While there were
changes made  to the supplemental requirements in the final Phase 1 rule as  compared to the
October 29, 1999 proposal, these changes all moved supplemental requirements
directionally in favor of the comments submitted by engine manufacturers on  the Phase 1
rule (e.g., 3 years of additional lead time for NTE and SET compliance, NTE deficiencies),
and all commenters were provided at least 13 days on which to comment on these changes
before the close of the comment period, in addition to opportunity to comment even after the
close  of the comment period.

       (2)     The NTE requirements appear to have no basis, provide no benefit and thus,
              are not necessary until EPA establishes an in-use program. EPA should
              withdraw the NTE requirements and should not incorporate them into any
              final rule.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 61

       (3)     Given the inherent variability associated with both  engine-out  emissions and
              the reduction efficiency of advanced emission control technologies required
              under the 2007 standards, it will not be possible to eliminate variability in the
              emission rates over all engine conditions.  Commenter notes that in the
              context of another attempt by EPA to impose a not-to-exceed cap, the D.C.
              Circuit cautioned that reasoned decision making requires EPA to "explain
              how the standard proposed  is achievable under the range of relevant
              conditions which may affect the emissions to be regulated." [National Lime
              Ass'n v. EPA, 627 F.2d 416, 433 (D.C. Cir. 1980)]. In  this case, as in National
              Lime, EPA has not accounted for routine variations, and has not provided any
              cost basis for doing so. Commenters provided significant discussion on this
              issue. (See also Issue 3.2.1.)

              Letters:

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DECEMBER 21, 2000                                                    PAGE 3-13
              Cummins, Inc. (IV-D-231) p. 22-26
              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 54-56

       Response to Comment 3.1.1(K)(2)and(3):

       We disagree with the comments under (2). The Phase 1 final rule is clear regarding
the enforcement provisions which apply to the NTE standard.  65 FR 59911 states:

       "As noted above, we are adding two supplemental sets of requirements forHDDEs:
       (1) a supplemental steady-state test (SSS); and (2) Not-To-Exceed requirements
       (NTE).  Like current emission requirements, these new requirements apply to
       certification, production line testing,  and vehicles in actual use.  These supplemental
       requirements will take effect with the 2007 model year.  All existing compliance
       provisions (e.g., warranty, certification, production line testing, recall) are applicable
       to these new requirements as well, except as noted in the regulations. The
       supplemental requirements establish new emission standards for HDDEs, and these
       new standards will be enforced in the same manner as the preexisting FTP standard.
       The new SSS will become part of the Agency's existing selective enforcement audit
       (SEA) program; however, as discussed in the Response to Comments document, the
       NTE, as well as the MAEL and EPA selected steady-state "mystery points" discussed
       below have been excluded from the SEA regulations."

       These statements contain no ambiguity or uncertainty, it is clear how and when
engines must comply with the NTE; the NTE is an emission standard, and it will be enforced
as an emission standard in the same way the  pre-existing FTP standard has been enforced,
unless  noted otherwise in the  regulations. The only place noted otherwise in the regulations
is the selective enforcement audit program (SEA). Engines tested under the regulatory
(SEA) program will not be tested against the NTE at this time, but engines must be certified
to the NTE. Engines produced for the 2007 and later model years must comply with the
NTE, and engines in-use must comply with the NTE. The fact that a regulatory requirement
for a manufacturer-run in-use  testing program  (such as the CAP 2000 program for light-duty
vehicles) does not currently exist for HD diesel engines does not mean  a manufacturer does
not understand their  clear obligations under the regulations to produce engines which  comply
with the applicable emission standards throughout the engines regulatory useful life. HD
diesel engine manufacturers do not have a regulatory responsibility to perform manufacturer
run in-use testing program(s) to demonstrate compliance with the pre-existing FTP, but their
obligations to produce engines which comply with the FTP in-use are clear.

       We disagree with the comment that the NTE has no basis and provides no clear
benefit. The basis and benefits of the NTE were clearly articulated in the Phase 1 final rule
which established the NTE standard, and will not  be repeated here (see 65 FR 59896). See
also the Response to Comments for the Phase 1  rule, IV-A-11, Issue 8.  The reasons
provided in the Phase 1 final rule are equally applicable to the regulations promulgated in this
rule.

       We disagree with the comments regarding variability  in emission rates overall engine
conditions.  It should be noted the commenters provide no relevant data or discussion to
support their assertion regarding the "inherent variability" associated with the advanced
emission control technologies required under the  Phase 2 diesel standards (GM/lsuzu cite
data  provided in their written comments on the Phase 1 rule regarding heaw-dutv gasoline
engines). The commenters imply that the NTE standard requires them to remove the

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variability associated with the advanced emission controls expected to be used to meet the
Phase 2 standards. This is incorrect.  The NTE does not require engine manufacturers to
eliminate engine emissions variability.  In fact, the NTE clearly recognizes the variability
which can be expected from the technology we anticipate will be used to achieve the 2007
standards. The NTE standard for this rule is 1.5 x the FTP standard. This means that during
engine operation subject to the NTE, emissions can be as high as 50 percent above the FTP
standard. In the final RIA for this rule we discuss the variability of emissions across the NTE
control zone, and we discuss how engines will be able to comply with the NTE standard in
2007. In addition, as discussed in the final RIA, we made changes to the minimum NTE
emissions sample time specifically to address the variability of emissions associated with the
advanced emission control devices for NOX and for NMHC.

       With regard to the citation to National Lime Ass'n v.  EPA, the Agency has in-fact
explained in this final rule how the NTE emission standard is achievable under the range of
conditions during which the engine must comply with the NTE (see Chapter III of final RIA).

(L)     Opposes the SS and NTE standards since these standards would force
       compliance far below the stated emission standards and since it is unclear
       whether they provide any benefits.

       (1)     EPA is claiming no environmental benefits associated with these standards
              beyond ensuring adequate in-use control. EPA could achieve the same in-
              use  control through design and implementation of an effective EPA
              compliance and enforcement program.

              Letters:

              Marathon Ashland Petroleum (IV-D-57) p. 2, (IV-D-261) p. 35-36

       (2)     EPA has performed no modeling of the benefits of the proposed SS and NTE
              standards, and has presented no credible evidence to support the need for
              the proposed standards. It is not clear whether EPA believes the SS and
              NTE provide any environmental benefits and thus whether any costs
              associated with meeting these standards is justified. If EPA does not believe
              these standards provide any benefits, they should not be adopted. If EPA
              believes they do provide benefits, then it should revise the emission modeling
              to take credit for these benefits. Also, the multipliers EPA proposes had their
              genesis in a settlement agreement, and were not established  in  a rulemaking
              process; EPA needs to apply a cost-effectiveness analysis to these
              multipliers and not simply carry them over. EPA also needs to provide a
              rationale for the standards as required by section 202(a)(3), or the standards
              are arbitrary.

              Letters:

              American Petroleum Institute (IV-D-343) p. 20, 21-23
              Marathon Ashland Petroleum (IV-D-261) p.  16, 28, 35

       (3)     Of any benefits that the standards may have, according to the DEC-SE report
              the differences between a 15 ppm or 30 ppm sulfur fuel are negligible: only
              about 0.01 g/bhp-hr. In fact, raising the SSS and NTE  standards would
              achieve more of EPA's proposed benefits.

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              Letters:

              American Petroleum Institute  (IV-D-343) p. 22

       (4)     SSS and NTE standards are not necessary to preserve air quality in urban
              areas, and are too stringent to apply in rural areas that do not require NOX and
              particulate reductions. The NTE specifications are an artifact of testing to
              ensure that there is no cycle beating on the part of the engine manufacturers,
              and the petroleum industry should not have to pay to achieve this goal.
              Commenter asserts that additional in-use testing by EPA, not complicated
              and unnecessary regulations, is the best way to ensure reasonable in-use
              emissions.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 23

       Response to Comment 3.1.1(L):

       We disagree with the comment that an EPA run in-use testing program would replace
the need for the supplemental emissions requirements (NTE & SET). As discussed in the
Phase 1 rule, the NTE and SET requirements serve several important goals which would not
be addressed by an EPA run in-use testing program. The SET and the NTE include engine
operation which is  not well represented by the pre-existing FTP, such as highway cruise
operation (as represented by the SET) and transient operation during mid-speed operation
(as represented by the  NTE). The NTE requires compliance with  an emission standard
under broader ambient operating conditions (e.g., humidity and temperature) than the pre-
existing FTP or the SET. The NTE and SET requirements, when combined with the pre-
existing FTP and the prohibition of defeat devices provides the manufacturers with certainty
regarding the legality of a large number of auxiliary emission control devices (AECDs) which
previously would have been determined by EPA on a case-by-case basis.  Finally, the NTE
test can be run in-use, on-the-road, in a vehicle, which strengthens the ability of the Agency
to perform real world in-use testing, while it would not be possible to perform the SET or the
pre-existing FTP test on-the-road.  An EPA run  in-use testing program would not provide any
of the these benefits. Therefore, we disagree with this comment.  This is not to say we don't
see a benefit in an in-use testing program for on-highway heavy-duty engines; in fact, the
NTE requirements would complement an in-use testing program.

       We disagree with the suggestion that the NTE and SET standards are not needed.
The commenter implies that the Agency must perform a separate  emissions benefits
modeling analysis  for the supplemental emission requirements (SET & NTE), and a separate
cost-effectiveness  analysis for the supplemental requirements in order to justify the need for
the NTE and the SET requirements.  This is incorrect. We have clearly articulated the need
for the SET and the NTE requirements. As discussed in the Phase 1 rule, the SET and the
NTE requirements complement the pre-existing FTP and the prohibition of defeat devices in
order to ensure the emission benefits which we model based on the pre-existing FTP
standard actually occur in-use. The commenters suggest that if we finalize the supplemental
emission requirements we should revise our emissions modeling to take credit for the
additional environmental benefit which occurs from the supplemental tests.  However, our
current and historical modeling has estimated that on average, in-use, HDDEs emit near the
FTP  emission standard. One purpose of the  NTE and SET requirements is to ensure this
happens.  The commenter implies the emission benefits of the NTE and the SET can easily

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be separated from the emission benefits of the preexisting FTP; however, this is not the case.
The FTP applies to engine operation that is included in the NTE and the SET (though the
FTP also covers engine operation which is not covered by the NTE or the SET
requirements). In addition, the defeat device prohibition is designed to protect against
reduced emission control outside of FTP conditions. It is difficult, if not impossible, to
determine  how much emission reduction could be attributed separately to the NTE and the
SET requirements as  compared to the preexisting FTP, or the defeat device prohibition.  The
Agency is  not required to perform a cost-effectiveness analysis of the supplemental
requirements.  The CAA requires the Agency to consider a number of factors, including
costs, which we have  done. As discussed in the RIA for this final rule, the emission control
technology which manufacturers will use to comply with the FTP is the same control
technology which will  be used to comply with the NTE and the SET.  The only additional
costs associated with  the supplemental tests are additional development and calibration
testing, as well as certification costs, which we have accounted for in this final rule. The
comments regarding the genesis of the supplemental requirements in the October 1998
heavy-duty diesel engine consent decrees are not relevant to this rulemaking.  In this rule we
have met our obligations regarding  notice and comments requirements, and have
established emission standards for the SET and the NTE for model year 2007 HDDEs which
are technologically feasible and are otherwise appropriate under the CAA.  Moreover, we
have revised the multiplier for the NTE requirements related to the standards promulgated in
this rule.

       We disagree with the comment that 30 ppm sulfur is sufficient for on-highway diesel
fuel.  As discussed  in  the preamble and the RIA for this final rule, there are many reasons
why a 15ppm sulfur cap is necessary to achieve the standards established  in this rule. This
includes, but is not  limited to: the ability to meet the NOX and PM standards, not just for the
supplemental requirements, but also the pre-existing FTP, for the full useful life of the
engines. As discussed in the RIA, the long term durability of both the NOX adsorber
technology as well as  catalyzed diesel particulate filters is dependent on the availability of a
15ppm sulfur cap diesel fuel (see Chapter III of the RIA).  The commenter implies that the
level of the standard set for the NTE and/or the SET is the driving factor for the Agency's
decision that a 15 ppm sulfur cap is required.  This is incorrect. Even if the SET and the  NTE
requirements did not exist, a 15 ppm sulfur cap would be necessary in order for the FTP
standards  promulgated in this rule to be technologically feasible for the full  useful life of
HDDEs. Given the need fora 15 ppm cap sulfur fuel to enable the FTP standards to be met,
we have established the FTP, SET  and the NTE standards at levels which are technologically
feasible and appropriate considering the use of 15 ppm sulfur fuel.  Please  see the preamble
and the RIA for this final rule regarding the justification for low sulfur diesel  fuel and the
environmental need for the 0.01 g/bhp-hr FTP PM standard and the supplemental PM
standards  promulgated in this rule.  The commenters  provided no rational explanation or
data regarding the comment that raising the SET and the NTE standards would achieve more
of EPA's proposed  benefits, and we do not believe raising the SET or the NTE standard
would result in an increased emissions benefit.

       We disagree with the comment that the supplemental requirements are not
necessary to preserve air quality in  urban areas. The commenters present no data to support
such a statement.  The commenters suggest the Agency should set one set of standards for
HDDEs for urban areas, and one set for rural areas, yet such an approach would be unwise
as it ignores the well known air quality issues associated with pollutant transport, as well  as
the fact that heavy-duty vehicles are by their very nature mobile, and go from urban areas to
rural areas on a regular basis.  Moreover, this rule will have considerable air quality benefits
in many areas that are not urban. In addition, we disagree with the suggestion that the SET
and NTE tests would not produce emission benefits in urban areas.  Urban areas across the

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country include roadways which HDDEs travel on during which they would exercise the
engine over operating conditions represented by both the SET and the NTE test.  We
disagree that the NTE requirements are an artifact of "cycle beating" issues on the part of
engine manufacturers. As discussed above, the NTE and SET requirements are  needed for
a number of  reasons, not only as a means to strengthen the existing prohibition of defeat
devices, but  also to strengthen several modes of engine operation not currently covered  by
the existing FTP, and to ensure that the emission reductions anticipated by the FTP standard
occur in-use  over a broad range of operating and ambient conditions, not just those
conditions represented by the FTP laboratory test.  We also disagree with the comment
regarding the replacement of the supplemental requirements with an EPA run in-use testing
program. As discussed in more detail above, the commenter incorrectly assumes that the
supplemental requirements and an EPA run in-use testing program  could serve the same
purpose, which they do not.
(M)    EPA has no authority to promulgate and enforce the high altitude requirements
       for HDDEs and vehicles as proposed.

       (1)     EPA must set specific high altitude emission standards for HDDEs and
              vehicles in order to enforce any high altitude requirements, [cites to CAA
              Section 202(f)(2); 42 USC Section 7521 (f)(2)]  EPA has failed to do so and
              the proposed rule does not contain any analysis or determination of the  need
              for and technological feasibility of the standards proposed.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 87

       Response to Comment 3.1.1(M):

       The commenter misreads the statute.  Section 202(f)(2) clearly applies only to
engines manufactured before model year 1984. In any case, we provided clear evidence in
the Phase 1 rule that the NTE, which explicitly applies at all altitudes up to 5,500 feet, is
feasible for all altitudes covered by that requirement.  As discussed at length in Chapter III.A
of the final RIA contained in the docket for this rule, we believe the NTE PM standard is
technologically feasible across the required range of ambient conditions.  CDPFs are
mechanical filtration devices, and ambient altitude will have minimal, if any, effects on CDPF
filtration efficiencies. Particulate sulfate  make is sensitive to high exhaust gas temperatures;
however, at sea-level conditions, the NTE requirements apply up to ambient temperatures
which are only 14°F greater than standard test cell conditions  (100°F under the NTE, versus
86°F for HD FTP laboratory conditions).  At an altitude of 5,500 feet above sea-level, the NTE
applies only up to an ambient temperature within the range of standard laboratory conditions
(i.e., 86°F).  These small or non-existent differences  in ambient temperature should have little
effect on the sulfate make of CDPFs, and even when tested under conditions representative
of worst case (extended peak-torque operation) engine conditions at 15 ppm S, we believe
the engine would comply with the PM NTE standard. Based on the  available test data and
the expected impact of the expanded, but constrained, ambient conditions under which
engines must comply with the NTE, we conclude that the PM NTE standard is technologically
feasible by 2007, provided low sulfur diesel fuel (<15 ppm) is available.

       Regarding NOX, the NTE requirements apply not only during laboratory conditions
applicable to the transient FTP and the SET tests, but also under the wide range of ambient

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-18

conditions for altitude, temperature and humidity specified in the regulations. These
expanded conditions will have minimal impact on the emission control systems expected to
be used to meet the NTE NOX standard contained in this final rule. In general, it can be said
the performance of the NOX adsorbers are only affected by the exhaust gas stream to which
the adsorbers are exposed. Therefore, the impact of ambient altitude will only effect the
performance of the adsorber to the extent the ambient conditions change the exhaust gas
conditions (i.e., exhaust gas temperature and gas constituents).  The effect of altitude on NOX
adsorber performance should  be minimal, if any. The NTE test procedure regulations specify
an upper bound on NTE testing for altitude at 5,500 feet above sea-level. The decrease in
atmospheric pressure at 5,500 feet should have minimal impact on the NOX adsorber
performance. Increasing altitude can decrease the air-fuel ratio for HDDEs which can in turn
increase exhaust gas temperatures; however, as discussed in the Phase 1 final rule, Phase 1
technology HDDEs can be designed to target air-fuel ratios at altitude which will maintain
appropriate exhaust gas temperatures, as well as maintain engine-out PM levels near the
0.10 g/bhp-hr level, within the ambient conditions specified by the NTE test procedure.

       The commenter has provided no data regarding the ability or inability of engines to
meet these standards at altitude.

(N)    Expressed support for closing the crankcases on turbocharged engines since
       this is a significant source of toxins.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             NY DEC (IV-F-52)
             Natural Resources Defense  Council (IV-D-168) p. 7

       (2)    Crankcase ventilation PM emissions are becoming an increasingly important
             source of PM emissions as EPA continues efforts to reduce exhaust PM
             emissions from diesel engines.  Nearly all turbocharged and aftercooled
             diesel engines vent their blow-by gases from their crankcase. One
             commercially available technology option to meet EPA's proposed control
             requirements is a multi-stage filter system designed to collect, coalesce  and
             return the lube oil to the engine's sump, thereby protecting the turbocharger
             and the aftercooler and eliminating virtually all PM emissions.

             Letters:

             Manufacturers of Emission Controls Association  (IV-D-267) p. 3,9
             NY DEC (IV-D-239) p. 4
             Ozone Transport Commission (IV-D-249) p. 2

       (3)    Commenter provided as an appendix a report on closing road draft tubes.

             Letters:

             NY DEC (IV-D-239) p. 12

       Response to Comment 3.1.KN):

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-19

       We agree with these commenters and are finalizing the requirement that crankcase
emissions be controlled, although the final requirement is slightly different than the proposed
requirement. The final requirement will allow manufacturers to continue with their typical
current practice of venting crankcase emissions into the engine compartment. However, any
such crankcase emissions must be measured and added into the measured exhaust
emissions during any compliance test (whether in the lab or on the road).  The total of the
exhaust and  crankcase emissions would have to be below the standards finalized in this rule.
Alternatively, the crankcase emissions could be routed  into the exhaust stream either
upstream or downstream of the exhaust emission control devices.  This way, the crankcase
emissions would be directly measured during any compliance test. However, given the low
levels of the standards being established in this FRM, we believe that this will not be a
practical option, and that today's regulations will effectively require manufacturers to close
the crankcases of all of their engines by routing them into the air intake. Regardless of the
approach taken by the manufacturer, crankcase emissions will be controlled.

(O)    All crankcase emissions should  be eliminated by the 2005 model year.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              American Lung Association (IV-D-270)  p. 19
              City of Seattle (IV-D-297) p. 1
              Clean Air Agency (IV-D-207) p. 1
              NESCAUM  (IV-D-315)p. 8-9
              STAPPA/ALAPCO (IV-D-295) p. 3, 17

       (2)     With the advent of closed crankcase filtration  systems, there is no longer a
              need to wait until MY 2007  to control crankcase emissions. A single truck can
              emit over 100 Ibs. of NOX, NMHC & PM  from the crankcase over the lifetime
              of the engine.

              Letters:

              CA Air Resources Board (IV-D-203) p.  6
              TX Natural Resource Conservation Commission  (IV-G-3)  p. 2

       Response to Comment 3.1.1(0):

       The final requirement to control crankcase emissions from turbocharged  engines
allows for maximum flexibility in how to do  so (See Response to Comment 3.1.1 (N)).
Requiring that crankcase emissions be controlled prior  to the requirement that engines be
certified to emission levels expected to  require exhaust emission control devices would
eliminate some of the flexibility provided by the final crankcase emission requirement.
Therefore, we believe that the timing for the control of crankcase emissions must coincide
with the expected application of exhaust emission control devices, i.e., the 2007 model year
timeframe.

(P)    Opposes the elimination of the exemption for turbocharged engines from the
       closed crankcase requirement.

       (1)     The vast majority of the crankcase emissions  are in the form of lube oil vapor

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-20

              and do not represent an air quality problem. Recirculating this effluent to the
              engine intake will, on the other hand, have a number of adverse effects which
              will degrade engine performance and emission control. The deposition of oil
              vapors on the turbocharger compressor and in the charge cooler will result in
              fouling and loss of effectiveness.  Build-up of deposits in the intake ports and
              on intake valves is also likely with additional loss in performance.  Also, sulfur
              and ash from the breather oil will accelerate the sulfur poisoning and ash
              plugging of exhaust catalyst and particulate filter systems. The increased
              emissions as a result of these effects may more than offset the 100 pound
              emission reduction that EPA claims is achievable by closing the breather.  It
              is not technologically feasible to achieve the proposed NOX and PM emission
              standards for the full useful life of a HD engine in the face of a  requirement to
              recirculate crankcase emissions.  One commenter noted that if EPA proceeds
              with this requirement, it should simply require manufacturers to combine
              crankcase emissions with exhaust emissions for test purposes and for
              demonstrating compliance with applicable standards. Another commenter
              added that EPA has not adequately justified the need for or analyzed  the
              technological feasibility of, any type of crankcase emissions control and
              should develop a proposal for the control of these emissions that addresses
              the justification, practicality and feasibility  of the controls. (See also Issue
              3.2.1.)

              Letters:

              Cummins, Inc. (IV-D-231) p. 28-29
              Detroit Diesel Corporation (IV-D-276) p. 21-23
              Engine Manufacturers Association (IV-D-251) p. 52-53

       Response to Comment 3.1.KP):

       We disagree with the commenters.  We believe that crankcase emissions can be
controlled in  a manner that will not adversely impact durability.  We agree with MECA that
there are systems that can remove nearly all of the lube oil vapor from the crankcase gases.
Such systems allow the gases to then be routed into the air intake without causing damage to
the turbo compressor or charge air cooler, and will likely also allow the gases to be routed
into the exhaust upstream of the exhaust emission control systems. Either one of these
approaches would essentially eliminate the  crankcase emissions and would address  any
lube oil vapor concern. As suggested by commenters, we have revised our final requirement
to provide manufacturers with maximum flexibility in controlling crankcase emissions  (please
refer to our response to comment 3.1.1(N)).

       We also do not agree that crankcase emissions do not represent an air quality
concern. As we noted in our proposal, a diesel engine can emit as much as 100 pounds of
NOX, NMHC, and PM from the crankcase during its lifetime. As noted in Chapter II of the
RIA, based on limited engine testing, we estimate that crankcase emissions of NMHC and
PM from HDDEs are each about 0.01  g/bhp-hr. NOX data varies, but crankcase NOX
emissions may be as high as NMHC and PM. Therefore, we use the same crankcase
emission factor of 0.01 g/bhp-hr for each of the three constituents.  With our new crankcase
emission control requirements, we assume that these crankcase emissions will be eliminated
on Phase 2 engines. Table II.B-10 of  the RIA shows our estimated crankcase emission
reductions.  For the year 2010, these are 3.7 tons each of NOX, NMHC, and PM.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-21

(Q)    An NTE standard for gasoline engines is needed to ensure compliance with the
       standards overall operating conditions.

       (1)     The NTE approach takes all of the benefits of a numerical standard and test
              procedure and expands it to cover a broad range of conditions.  With the NTE
              approach, in-use testing and compliance become much easier, since
              emissions may be sampled during normal vehicle use.

              Letters:

              CA Air Resources Board (IV-D-203) p. 5
              NESCAUM (IV-D-315)p. 7-8

       Response to Comment 3.1.1(Q):

       We agree that an NTE approach may be appropriate for HD gasoline engines, for the
reasons articulated by the commenters.  However, as discussed in response to comment
3.1.1 (I), we did not propose to apply NTE emission limits to HD gasoline engines or vehicles,
and this final rule does not contain NTE limits for these categories of HD engines & vehicles.
As discussed in the proposal (see 65 FR 35463 and 65 FR 35465, June 2, 2000) we intend
to pursue under separate rulemaking actions means of appropriately addressing off-cycle
emissions both for HD gasoline engines (such as NTE requirements), and for HD vehicles
(such as supplemental FTP requirements), and we do not rule out the possibility that these
provisions could be implemented by model year 2007 or earlier.

(R)    EPA should eliminate the idle CO emissions standard.

       (1)     The idle CO emission standard is a completely unnecessary requirement for
              HD gasoline engines and vehicles, and EPA has proposed no justification for
              the continuation of such a requirement. Engine manufacturer data to date
              indicate that idle CO  emissions are near zero. There is no air quality benefit
              from retaining this requirement and the vast majority of the nation is
              essentially in attainment with respect to the ambient CO concentrations.
              Elimination of this  requirement would be consistent with EPA's action in the
              Tier 2 rulemaking.

              Letters:

              Ford Motor Company (IV-D-293) p. 11
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 42

       Response to Comment 3.1.1(R):

       EPA is  not required to justify the continuation of an existing requirement, as
suggested by the commenters.  However, we agree that the idle CO requirement is being
met with levels near zero.  For that reason, it appears that the idle CO requirement may not
be necessary.  We did not  propose eliminating this requirement and are concerned about
doing so unless there is some way to ensure that idle CO emissions will not be a problem
during in-use operation.  We believe that a properly designed and operating on-board
diagnostics (OBD) system provides  this assurance because it would detect problems  likely
to cause high idle CO emissions.  For this reason, we believe it is appropriate to eliminate the
idle CO requirement for any engines and vehicles certified to the OBD requirements finalized

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-22

in our Phase 1 rule. Those OBD requirements apply to all heavy-duty engines and vehicles
up to 14,000 pounds. Therefore, engines greater than 14,000 pounds will still have to meet
the idle CO requirements.  We plan to address OBD requirements for engines greater than
14,000 pounds in the future and, with such requirements in place, the idle CO requirement for
those engines might be eliminated provided we are confident that idle CO emissions will
remain at very low levels.

(S)    EPA should revise the PM standard for HD diesel engines.

       (1)     EPA should impose the following more feasible PM standards for HD diesel
              engines: 0.03 g/bhp-hr for vehicles greater than 14,000 GVWR and 0.02
              g/bhp-hr for vehicles less than or equal to 14,000 GVWR. These are based
              on an estimate of the lowest feasible standards given PM trap efficiencies
              and the different durability requirements for engines above and below 14,000
              GVWR.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 51-52

       Response to Comment 3.1.1(8):

       EPA disagrees with the suggestion that the 0.01 g/bhp-hr PM standard being
finalized in this rule is not feasible. However, diesel fuel sulfur levels must be capped at 15
ppm in order for the 0.01 g/bhp-hr standard to be feasible for many reasons including sulfate
make and PM trap durability. This issue is discussed in detail in Sections III.E and III.F of
the final preamble for this rule and Chapter III.A of the final RIA contained in the docket for
this rule.

(T)    EPA's proposed emission standards are arbitrary.

       (1)     EPA does not provide any justification in the proposed rule for the  NOX and
              PM emission  standards and yet, these standards drive the need for the
              experimental  emissions control devices EPA is seeking to mandate as part of
              the proposal.

              Letters:

              Society of Independent Gasoline Marketers of America  (IV-D-328) p. 2

       (2)     There is no evidence that EPA's proposed standards were calculated based
              on quantifiable health effects (see Issue 2.1) or that they are necessary to
              achieve NAAQS (see Issue 2.2).

              Letters:

              Marathon Ashland Petroleum (IV-D-261) p.  16, 91-92

       Response to Comment 3.1.1(1):

       EPA disagrees with these comments.  EPA's standards are based on health risks
clearly identified in the proposed and final preambles and RIAs. The levels of the standards

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-23

are governed by section 202 of the Act, and are justified, as well, based on the need for the
emission reductions that they will achieve.  We respond to the issues raised by these
commenters in detail under Issue 2.

(U)    Current certification levels do not provide justification for EPA's proposed
       standards.

       (1)     Manufacturers must certify to levels well below the standard to ensure in-use
              compliance.  The proposed emission levels would require certification levels
              roughly half the standard using worst-case DFs to ensure in-use compliance
              for the expected useful life of the vehicle, which would put the measurement
              equipment at the limit of capability and decrease the ability of determining an
              adequate emission safety margin.  EPA has not accounted for manufacturers'
              responsibilities in this case.

              Letters:

              Ford Motor Company (IV-D-293) p. 7

       Response to Comment 3.1.1(11):

       The comment and this response refer to the proposed heavy-duty gasoline emission
standards.  We understand that current durability requirements are for typical, or average,
deterioration while future requirements will call for worst-case deterioration.  Nonetheless, we
do not believe that worst-case deterioration will result in a significantly higher certified
emission level. We expect that  recent advances in catalyst technology will result in far more
durable catalysts and that catalyst deterioration, even at worst case levels, will not result in
significant emissions deterioration.

       As for pushing the measurement equipment to the  limit of its capability, we believe
that the gasoline standards being finalized are consistent in stringency to the Tier 2 light-duty
standards. And, more importantly, they do not require measurement to  levels as low as the
Tier 2 standards or the California LEV II standards. Therefore, we believe that measurement
equipment will be able to measure emissions at these low levels and have demonstrated this
in our own laboratory.

              Issue 3.1.2:  Gasoline Vehicle Exhaust Standards

(A)    Expressed support specifically for the vehicle standards as proposed by EPA.

       (1)     Commenters provided no further supporting information  or detailed analysis.

              Letters:

              NESCAUM (IV-D-315) p. 10-11, (IV-F-63)
              Natural Resources Defense Council (IV-F-75), (IV-|F-191) p. 68
              STAPPA/ALAPCO (IV-F-32, 78) (IV-F-117) p. 29 (IV-F-191) p. 32

       (2)     Supports the more stringent gasoline HDE standards since  the Tier 2
              technologies and the availability of low sulfur gasoline will allow these
              engines to comply with the proposed standards by 2007.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-24

             Letters:

             National Automobile Dealers Association (IV-D-280) p. 3

       Response to Comment 3.1.2(A):

       EPA concurs with these comments.

(B)    The same supplemental steady state testing should be applied to both diesel
       and gasoline fueled engines and vehicles.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             NESCAUM (IV-D-315)p. 8
             Wl DNR  (IV-D-291) p. 2

       Response to Comment 3.1.2(6):

       We disagree with the comment that the supplemental emission test (the 13-mode
steady-state test) is appropriate for HD gasoline engines. We did not propose to apply this
test to HD gasoline engines, and this final rule does not apply this test to HD gasoline
engines.  As discussed in the Phase 1 rule, the SET test is based on the European Euro-Ill
steady-state test, which was developed specifically for heavy-duty diesel engines. With
respect to applying the NTE concept to HD gasoline engines, see response to comments
3.1.1(1) and 3.1.1(Q).

       As for applying these requirements to gasoline vehicles, we do not believe that would
be appropriate given that the supplemental steady-state requirements apply to engine
certified systems (vehicles are chassis certified). However, we believe it may be appropriate
to require heavy-duty vehicles to comply  with an alternative chassis-based test such as the
supplemental federal test procedure (SFTP) which  is a transient,  chassis based procedure
analogous to the supplemental steady-state  requirements for engines.  We hope to address
this issue in a future rulemaking.


             Issue 3.1.3: Gasoline Evaporative Standards

(A)    Expressed general support for the evaporative standards.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             NESCAUM (IV-D-315)p. 11, (IV-F-63)
             National Automobile Dealers Association (IV-D-280) p. 4

       Response to Comment 3.1.3(A):

       EPA concurs with these comments.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-25

             Issue 3.1.4: Phase-ins & Implementation Schedules

(A)     Opposes the proposed phase-in of the diesel engine standards since this delay
       will further compromise efforts to improve air quality with respect to ozone,
       participates, and other toxic substances.  All engines and vehicles should be
       required to meet the standard by 2007.

       (1)    Commenters provided no further supporting information or detailed analysis.
             This comment was made by approximately 13,900 private citizens.

             Letters:

             Acoff, Jeffrey, et. al. (IV-G-11)
             American  Lung Association (IV-F-72)
             American  Lung Association of Colorado (IV-D-54)
             American  Lung Association of Los Angeles  (IV-D-47)
             American  Lung Association of TN (IV-D-19) p. 1
             Asamoah, Nikiya (IV-D-09)
             Bagnarol-Reyes, Carolina, et. al. (IV-G-24)
             Beeman, Nora, et. al.  (IV-G-09)
             Braun, Carl and Norma  (IV-D-69)
             CO Environmental Coalition  (IV-F-191) p. 237
             CO People's Environmental and Economic Network (IV-F-191) p. 222
             CO Public Interest Research Group (IV-F-191) p. 219
             CTDEP  (IV-F-49)
             Cassara, Bob (IV-F-65)
             Chicago Asthma Consortium  (IV-F-22)
             Chuang, Henry  (IV-F-117) p. 265
             Chung, Payton,  et. al. (IV-D-133)
             CityofArcata (IV-D-200) p. 1
             Clean Air Council (IV-F-116) p. 333
             Clean Air Network (IV-D-292) p. 1, (IV-F-191) p. 84
             Clean Air Now Campaign (State PIRGs & citizens) (IV-D-357, 358)
             Coalition for Clean Air (IV-F-190) p. 177
             Coalition on the Environment and Jewish Life  (IV-F-184)
             Communities for a Better Environment (IV-F-190) p. 129
             Community Coalition for Change (IV-F-190) p. 74
             Congress  of the United States  (IV-D-294) p. 4
             Connor, Thomas, et. al. (IV-D-132)
             Corcoran, Janet (IV-D-128)
             Davidson, Karin, et. al. (IV-D-79)
             Dickson, Victoria, et. al. (IV-D-77)
             Dolman, Suzanne, et. al. (IV-D-341)
             Economic & Social Justice (IV-F- 117) p. 236
             Environmental Defense (IV-F-56, 117) p. 81
             Environmental Law & Policy Center of the Midwest (IV-F-6)
             Environmental Law and Policy Center (IV-D-331)
             Estler, Danielle  (IV-F-21)
             Firestone, Ross (IV-F-4)
             Fleming, Scott, et. al.  (IV-D-13)
             Fletcher, Robert E.  (IV-F-117) p. 175
             Flowers, Bobbie (IV-G-67)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-26

              Franczyk, Catherine A., et. al.  (IV-D-233)
              Freechild, Aquene, et. al.  (IV-G-60)
              GA Forest Watch (IV-D-67) p. 1
              GA Public Interest Research Group (IV-F-117) p. 268
              Glendale-La Crescenta Advocates (IV-D-80) p. 1
              Hackel, Barbara, et al.  (IV-D-14) p. 1
              Higginson, Norman, et.  al. (IV-D-196)
              Hirschi, Alexander  (IV-D-07)
              Hopkins, Steve, et. al. (IV-G-07)
              Hyatt, Robert E.  (IV-D-94)
              IL Environmental Protection  Agency (IV-D-193) p. 1
              IL Public Interest Research Group  (IV-F-18)
              INFORM, Inc.  (IV-F-47)
              Institute for Global Solutions (IV-F-175)
              Kachik, Thomas  (IV-D-11)
              Khalsa, Mha Atma  S. (IV-D-71)
              Kinyon, John, et. al. (IV-G-13)
              Kotgal, Kalpana  (IV-F-192)  p. 17
              L.A. County Bicycle Coalition (IV-F- 190) p. 131
              La Grange Park  (IV-D-39) p. 1
              Landfall Productions, Inc.  (IV-D-27)
              Lichtman, Elijah  (IV-D-08)
              Lind, Karen, et. al.  (IV-D-121)
              Lu, Rong  (IV-F-162)
              Margolis,  Benjamin  (IV-D-33)
              Mathews, Erik, et al (IV-D-24) p. 1
              Mayer Computer Services (IV-D-81)
              Mayor and citizens of Fort Collins, CO (IV-F-191) p. 211
              Mexican-American Community Foundation (IV-F-179)
              Mexican-American Legal Defense & Educational Fund  (IV-F-160)
              Montgomery, Jack, et. al.  (IV-D-78)
              Mothers for Clean Air (IV-D-95)
              NESCAUM (IV-D-315)p. 5
              NJ  PIRG  (IV-F-116) p.  244  (IV-F-116) p. 314
              NY Assembly - Health Committee (IV-F-38)
              NY State Assembly (IV-F-53)
              NY State Attorney General's Office (IV-D-238) p. 1
              NY State Senator (IV-F-50)
              NYC Council  (IV-F-80)
              NYCDEP (IV-D-159)p. 1
              NYC Environmental Justice  Alliance (IV-F-116) p. 317
              Nadine Garcia (IV-F-183)
              National Petrochemical &  Refiners Association (IV-F-31)
              Nerode, Gregory, et. al. (IV-D-04)
              Nolan, Catherine (IV-D-169) p. 1
              Northwest District Association  (IV-D-117) p. 1,2
              OH Environmental  Council  (IV-D-130) p. 1,2
              OR Toxics Alliance  (IV-D-175) p. 1,2
              O'Leary, Cathy and John Carey (IV-G-05)
              Packard, Josh (IV-G-54)
              Pandey, Stacey  (IV-F-117)  p. 274
              Physicians for Social Responsibility (IV-F-117) p. 256

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-27

              President of Bronx Borough (Fernando Ferrer) (IV-F-69)
              Private citizen  (IV-D-12)
              Rhubert, Pamela J. (IV-D-15) p. 1
              Richards, Donna and Bill, et. al. (IV-G-19)
              Riggles, Ruth, et. al.  (IV-D-102)
              Rock, Steve, et. al. (IV-G-22)
              Rodriguez, Dolores, et. al. (IV-D-91)
              Rutherford, Jolene, et. al. (IV-D-347)
              STAPPA/ALAPCO (IV-F-191) p. 32
              Schmitz, Randy, et. al.  (IV-D-46)
              Schwartz, Steve (IV-D-85)
              Sherrill, Faye (IV-G-30)
              Sierra Club  (IV-F-159)
              Smith, Bryan R., et. al.  (IV-D-105)
              Smith, Curt, et. al.  (IV-D-49)
              South Coast Air Quality Management District  (IV-D-147) p. 1
              Southwest Air Pollution Control Authority (IV-D-149) p. 1
              Stuckey, Stephanie (IV-D-182) p. 1
              Sullivan, Linda and Thullen, Angela  (IV-F-23)
              TN Environmental Council (IV-F- 117) p. 154
              Tacha, Athena and Richard Spear (IV-G-06)
              Toltz, Ken  (IV-F-191) p. 215
              Toxics Action Center (IV-G-02)
              Tseng, Joyce, et. al.  (IV-D-03)
              U.S.  PIRG (IV-F-71)
              Union of Concerned Scientists (IV-F-165)
              Varsbergs, Krista, et. al. (IV-D-38)
              Vigo  County Air Pollution Control (IV-D-137) p. 1
              Village of Burr Ridge (IV-D-316) p. 1
              Village of Oak Park Dept. of Public Health (IV-F-8)
              WA Department of Ecology (IV-D-141) p. 1
              Wl DNR (IV-D-144)
              Washington Regional Network (IV-D-18) p. 1
              West Harlem Environmental Action/Envr Justice Network (IV-F-76)
              Wilderness Society (IV-F-117) p. 217
              Williams, Mary, et. al.  (IV-D-122)
              Wilmington North Neighborhood Association (IV-F-190)  p. 265
              Zellers, Tim  (IV-F- 116) p. 209
              Zweig, Robert  (IV-D-30)

       (2)     Some commenters noted generally that the implementation of all engine and
              vehicle standards at the same time is technically feasible provided low sulfur
              fuel will be readily available by 2006 and would be easier logistically.  One
              commenter added that if sufficient quantities of low sulfur fuel are available
              for selected fleets prior to 2006, manufacturers will  be able to selectively
              introduce low NOX technologies early enough to gain experience prior to
              2007.

              Letters:

              American Lung Association (IV-D-270) p. 17, (IV-F-161,  164)
              CAPIRG (IV-F-190) p. 280

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DECEMBER 21, 2000	PAGE 3-28

              CTDEP (IV-D-142) p. 1
              Chicago DEP/Chicago Metropolitan Mayors Caucus Clean Ai (IV-D-335) p. 5
              DE Dept. of Natural Resources & Environmental Control (IV-D-146) p. 1
              Estler, Danielle (IV-F-21)
              Friends of the Children  (IV-F-158)
              GA Public Interest Research Group (IV-F-117) p. 43
              International Center for Technology Assessment (IV-D-313) p. 2
              Manufacturers of Emission Controls Association (IV-F-190) p. 108
              Manufacturers of Emissions Controls Association (IV-F-187)
              NY DEC (IV-D-239) p. 5
              Natural Resources Defense Council  (IV-D-168) p. 7, (IV-F-75, 190) p. 102
              (IV-F-191) p. 68
              Stewart, Jim (IV-F-170)
              U.S. PIRG  (IV-F- 190) p. 185

       (3)     Commenter noted that a delay beyond 2007 in implementing the rule is
              untenable because hundreds of thousands of new engines will be built in the
              interim, and diesel's long life will  ensure that these engines will continue to
              pollute at today's levels for decades to come.

              Letters:

              Environmental Defense (IV-F-169)
              SC Dept. of Health and Environmental Control  (IV-D-143) p. 1
              The Coalition for Sensible Energy (IV-D-264) p. 1

       (4)     A number of major metropolitan areas across the country-including New York
              City, Philadelphia, Baltimore, Atlanta, Houston, Chicago, Dallas, and
              Washington D.C.-have statutory attainment deadlines to achieve the smog
              health standard well before 2010. It is untenable for EPA to delay putting  in
              place NOX reductions that are in fact achievable and could deliver critical NOX
              reduction benefits to help these metropolitan areas meet important statutory
              obligations to remedy harmful levels of smog.

              Letters:

              CTDEP (IV-D-320) p. 1
              Environmental Defense (IV-D-346) p. 7
              NY DEC (IV-D-239) p. 2
              NYCDEP  (IV-D-209) p. 2
              South Coast Air Quality Management District (IV-D-147) p. 1
              TX Natural Resource Conservation Commission (IV-G-3) p. 2

       (5)     Some commenters referred to the Manufacturers of Emission Control
              Association's (MECA) statement that it strongly believes that NOX adsorber
              technology and catalyst-based diesel particulate filters will be commercially
              available by 2007 provided the proposed 15 ppm sulfur standard is achieved.
              These commenters added  that advanced technology vehicles will be more
              readily available in  2007, which will further assist manufacturers with meeting
              the proposed standards by this date without a phase-in period.

              Letters:

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DECEMBER 21, 2000                                                     PAGE 3-29
              American Lung Association (IV-F-181, 191) p. 146
              City of Chicago (IV-D-240) p. 5
              Environmental Defense  (IV-D-346) p. 6
              GA Public Interest Research Group (IV-F-117) p. 43
              Natural Resources Defense Council (IV-D-168) p. 7-8, (IV-F-75), (IV-F-191)
              p. 68
              Ozone Transport Commission  (IV-D-249) p. 2
              U.S. PIRG (IV-F- 190) p. 185 (IV-F-192) p. 134

       (6)     One commenter added that the implementation of the standards all at the
              same time would minimize the cost of compliance since engine
              manufacturers and after-treatment companies could distribute new equipment
              all at the same time without maintaining and tracking the manufacture and
              commercialization of engines that meet separate standards.

              Letters:

              Natural Resources Defense Council (IV-D-168) p. 7, (IV-F-75), (IV-F-191) p.
              68

       (7)     One commenter noted that the implementation of other low-emission HDV
              standards and programs, such as CARB's urban bus standards and the EC's
              upcoming requirements, will create incentives for the creation and
              implementation of technology that could easily meet the proposed standards
              by 2007 without a phase-in period.

              Letters:

              Natural Resources Defense Council (IV-D-168) p. 7, (IV-F-75), IV-F-191) p.
              68

       (8)     One commenter suggested accelerating the implementation schedule to
              2005.

              Letters:

              Firestone, Ross (IV-F-4)

       Response to Comment 3.1.4(A):

       We strongly believe, as explained in the preamble for this rule, that a phase-in of the
NOX standard is the most appropriate course of action. As stated in the final preamble for
this rule, we believe that  industry should be provided the flexibility of having a phase-in of the
new NOX standard. While we believe the 0.20 gram NOX standard is feasible in the 2007 time
frame, we also believe a  phase-in is appropriate for a couple of reasons. First, the phase-in
will provide industry with  the flexibility to roll out the NOX control technology on only a portion
of their fleet. This will allow them to focus their resources on that half of their fleet being
brought into compliance in 2007.  This ability to focus their efforts will increase both the
efficiency and the effectiveness of those efforts. Second, a phase-in allows industry the
ability to introduce the new technology on those engines it believes are  best suited for a
successful implementation which, in turn, provides a valuable opportunity to "field test" and

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DECEMBER 21, 2000	PAGE 3-30

refine that technology on only a portion of their product line prior to the next push toward full
implementation.

       As we discuss in Chapter III.A of the final RIA, we believe that NOX adsorbers are the
most attractive technology for complying with these new standards and that NOX adsorbers
will be feasible in the 2007 timeframe.  However, we do not believe this will be an  easy task
as suggested by some of these commenters.  While it is true that MECA has stated their
belief that NOX adsorbers will be commercially available by 2007, MECA does not argue for
100 percent compliance to the 0.20 g/bhp-hr NOX standard in that year. We do not believe
that the phase-in will create logistical problems as suggested by one comment, but we do
agree that having sufficient supplies of 15 ppm sulfur fuel prior to 2006  might allow
manufacturers to selectively introduce low NOX technologies early to gain experience prior to
2007. We have created some early introduction incentives in hopes that they encourage
manufacturers to do exactly that. However, those incentives are voluntary and we do not
believe it would be appropriate to make them mandatory given the arguments put forth in
favor of a phase-in.

       Some commenters suggested that it is untenable to delay implementation of the
standards beyond 2007 because hundreds  of thousands of new engines will be built in the
interim that will emit at higher levels for their long lifetimes. This is a valid concern, but we
believe that the need for a  phase-in to this new technology is sufficient to overcome those
concerns. We have created incentives to encourage manufacturers to introduce low NOX and
low PM engines prior to the 2007 model year,  but we cannot require low NOX engines and 15
ppm sulfur fuel prior to 2007 given technology/leadtime concerns, fuel supply and refining
concerns, and Clean Air Act leadtime and stability provisions.  This speaks also to the
comments regarding major metropolitan areas and their attainment deadlines. While 100
percent compliance to the  NOX standard in 2007 would help these areas, we must weigh that
against the overall success of the program.  These areas run the risk of not being helped at
all if the program we are requiring is not successfully implemented, which could lead to the
loss of the emission reductions we have projected. We have carefully considered many
factors in developing our final phase-in of the diesel engine standards and believe that the
50/50/50/100 percent phase-in strikes the proper balance between all of these.

(B)    Opposes a phase-in schedule since it violates the 3-year stability requirement
       of the CAA.

       (1)    Full implementation of the PM  standard in 2007 cannot be followed by
             implementation of a new NOX standard in 2008 or 2009.  In addition, the SSS
             and NTE applicable to engines meeting the 2.0/2.5 g/bhp-hr NOX standard in
             2007 cannot be revised in 2008 or 2009 as proposed without violating the 3-
             year stability requirement. EPA is obligated to provide a 3-year period of
             stability and four years leadtime for introduction of the standards and must
             delay implementation of the  standards until 2010. (see also Issue 12.2)

             Letters:

             American Petroleum Institute (IV-D-343) p. 21
             Cummins, Inc. (IV-D-231) p. 54
             Marathon Ashland Petroleum  (IV-D-261) p. 17

       Response to Comment 3.1.4(6):

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RESPONSE TO COMMENTS DOCUMENT
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       Several commenters indicated concerns pertaining to the interaction of the proposed
phase-in schedule with the final implementation schedule for the new supplemental
requirements (the Supplemental Emission Test, SET, and the Not-to-Exceed, NTE).  These
requirements, finalized in the Phase 1  heavy-duty final rule, will be implemented in the 2007
model year on all heavy-duty diesel engines. (See 65 FR 59896, October 6, 2000.) Under a
25/50/75/100 percent phase-in schedule of new diesel engine emission requirements, 25
percent of engines in the 2007 model year would meet 0.20 and 0.01  g/bhp-hr NOX and PM,
while 75 percent would meet 2.5 and 0.01 g/bhp-hr NOX+NMHC and PM. Further, all of
those engines would be required, beginning in the 2007 model year, to meet the
supplemental requirements based on the FTP emission standards to which they were
certified. A 25/50/75/100 percent phase-in schedule would change the supplemental
requirements for those 25 percent of engines in the 2008 model year that would have to
change to meet the new 50 percent compliance requirement. This change would be required
even though  the supplemental requirements on those 25 percent of engines were first
implemented only one model year earlier, in model year 2007. The commenters believe that
this schedule violates the stability provision of section 202(a)(3)(C) of the Act.

       The final phase-in schedule, 50/50/50/100 percent, addresses any concerns about
violating the stability requirement of the Act. (We need not decide whether the proposed
schedule would have violated the stability requirement.)  Under the final phase-in, 50% of a
manufacturer's fleet would have to meet the 0.2 g/bhp-hr NOX standard and 0.01 g/bhp-hr PM
standard, and the associated SET and NTE requirements, beginning in model year 2007.
Those standards would not change. The other 50% of the manufacturer's fleet would have to
meet the 2.5 g/bhp-hr NOX + NMHC standard and 0.01 g/bhp-hr PM standard, and the
associated SET and NTE requirements, beginning in model year 2007. Those standards
would be stable for three model years, until the 2010 model year, when the engines must
meet the 0.20 NOX standard.

(C)    Opposes the proposed phase-in schedule since it is not commercially
       manageable.

       (1)    Heavy duty truck customers are influenced in large part by life cycle cost,
             which is substantially affected by initial product cost. If a manufacturer were to
             select a particular market segment or customer to receive the new, more
             costly, engines, they would be at a competitive disadvantage to any other
             manufacturer that chose to offer similar engines that were not manufactured
             to meet the standards.  It would be very difficult to manage engine sales to
             achieve the required volumes each year and still remain cost competitive.

             Letters:

             Mack Trucks (IV-D-324) p. 2

       (2)    The marketplace today consists of several independent engine manufacturers
             and several vehicle OEMs. Since the cost and fuel economy impact of
             engines meeting the lower standards are yet to be determined, it is difficult to
             predict the future make-up of the marketplace.  It is unlikely that OEMs would
             offer two different vehicles to accommodate two different engine designs
             since there would be substantial physical and cost differences.

             Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-32

              Cummins, Inc. (IV-D-231) p. 46

       Response to Comment 3.1.4(C):

       EPA agrees that the proposed phase-in could have created difficulties for
manufacturers given that one manufacturer's engines in a given weight class may have
emission control hardware and another manufacturer's  engines may not. This could make it
difficult for the first manufacturer to sell its engines given their presumed higher cost.
However, it may also make those engines more attractive to some buyers (e.g., city bus
fleets). Our final phase-in should provide some measure of control over such a situation
given that it becomes more difficult to ignore an entire weight class when 50 percent of
engines must comply in 2007 as opposed to only 25 percent under our proposal.  Further,
with the averaging, banking, and trading provisions we are finalizing, we fully expect
manufacturers to equip most, if not all, of their engines with exhaust emission control
hardware to take full advantage of the flexibilities provided.

(D)    Does not necessarily oppose the concept of a phase-in for the diesel engine
       standards, but recommends that the phase-in schedule be accelerated.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Bishop, Mark (IV-F-12)
              CA Natural Gas Vehicle Coalition (IV-F-190) p. 135
              Center for Neighborhood Technology (IV-F-11)
              Chicagoland Transportation and Air Quality Commission  (IV-F-10)
              DaimlerChrysler (IV-F-15)
              Environmental Defense (IV-F-169)
              Hinds, William (IV-F-190) p. 202
              Little Village Environmental Justice Organization  (IV-F-192) p. 147
              Mayor of Glendale, CO (IV-F- 191) p. 177
              NESCAUM (IV-D-315)p. 4
              Ozone Transport Commission (IV-F-55)
              South Bronx Clean Air Coalition  (IV-F-116) p. 301

       Response to Comment 3.1.4(0):

       See our response to comment 3.1.4(A).

(E)    If EPA decides that a phase-in is necessary, a two-, or, for one commenter,
       three-year time frame should be implemented.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Consumer Policy Institute (IV-D-186) p. 7
              GA Public Interest Research Group (IV-F-117) p. 43
              IL Environmental Protection Agency (IV-D-193, 308) p. 1 (both)
              Kotgal, Kalpana  (IV-F-192) p. 17
              PADEP (IV-D-100)p. 3

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             STAPPA/ALAPCO (IV-D-295) p. 2, 14-15
             U.S. PIRG  (IV-F-  190) p. 185

       Response to Comment 3.1.4(E):

       See our response to comment 3.1.4(A).

(F)     Generally supports providing flexibility to manufacturers in the form of phased-
       in standard(s), but suggests an alternative approach.

       (1)    Commenters suggested a phase-in schedule that would set a single NOX
             emissions standard for all engines in 2007, which would be "stepped-down"
             between 2007 and 2010. Some noted that the phase-in approach as
             proposed by EPA will not be as effective at providing relief to manufacturers
             since customer preferences, cost factors, competition between engine
             manufacturers and issues related to truck design will make it impossible for
             manufacturers to manage sales to meet the phase-in schedule. Commenters
             provided significant discussion regarding the potential technological,
             compliance, logistical and competitive issues associated with EPA's approach
             and suggested that instead  of the phase-in schedule as proposed, EPA
             should follow a two-step implementation process that would substantially
             reduce the NOX and NMHC  standard in 2007 and then again in 2010. Some
             commenters outlined their proposed approach in detail  and in this context,
             one commenter specifically recommended that EPA set a combined NOX +
             NMHC standard of 1.5 g/bhp-hr in 2007 and reduce this standard to 0.6
             g/bhp-hr in 2010.  Another commenter recommended that EPA set "initial"
             standards starting  in 2008 of 1.5 g/bhp-hr for NOX and 0.02 g/bhp-hr for PM.
             These standards should remain in place for at least four years before more
             stringent "ultimate" standards would apply. The timing of this schedule
             should be dependent on the availability of a suitable test and measurement
             procedure.  A two-step implementation would address issues associated with
             competitive obstacles, market disruptions, excessive costs (for testing,
             development, and  certification), the 3-year stability requirement, and would be
             more aligned with  technology readiness and can achieve the same emission
             reductions as EPA's proposal.

             Letters:

             Daimler Chrysler (IV-D-344) p. 7
             Detroit Diesel Corporation (IV-D-276) p. 13-17,  (IV-F-7, 168), (IV-F-116) p.
             198
             Engine Manufacturers Association (IV-D-251) p. 42-48
             Ford Motor Company (IV-D-293) p. 1-2
             International Truck & Engine Corp. (IV-D-257) p. 12-17, (IV-F-27, 34, 180,
             117) p. 109(IV-F-191)p. 99

       (2)    EPA's proposed phase-in of NOX, NMHC and formaldehyde standards is not
             feasible or practical and must not be finalized. The phase-in proposal is
             based on EPA's assumption that the proposed standards can be achieved in
             2007, which is  not the case. One commenter (EMA) provides significant
             discussion regarding why the current proposal would be burdensome and
             unworkable for manufacturers. This commenter notes that EPA's proposal

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             wrongly assumes that manufacturers are able to control their product mix
             between 2006 and 2007, fails to recognize that most engine manufacturers
             have a relatively small number of engine families,  and creates the potential
             for competitive issues among engine manufacturers.  EPA should implement
             an alternative initial standard that is less stringent  along with greater stability
             periods and phase-in of more stringent standards  as suitable test and
             measurement procedures are developed.

             Letters:

             DaimlerChrysler (IV-D-344) p. 5-6
             Engine Manufacturers Association (IV-D-251) p. 42-48
             International Truck & Engine Corp. (IV-D-257) p.  12-17

       (3)    One commenter recommended EPA delay the new engine requirements by
             two years and compress the phase-in to two years in  order to provide lower
             cost fuel to truckers not subject to the 15 ppm standard, and to give EPA time
             to complete its rulemaking for nonroad diesel.

             Letters:

             Conoco  (IV-F-191)p. 154

       (4)    Another commenter proposed a 3 year implementation schedule consisting of
             25% in 2007, 75% in 2008, and 100% in 2009, resulting in an almost 20%
             reduction in 2010.

             Letters:

             CA Air Resources Board  (IV-D-203) p. 3,  (IV-F-190) p. 13

       (5)    EPA should phase-in the standards in a three year rollout beginning in 2008,
             which would provide rapid introduction and conversion of the fleet while
             providing manufacturers with sufficient lead time to meet these aggressive
             standards. EPA should implement a 40/80/100 phase-in schedule for the
             diesel engine standards (which should also apply  to the gasoline engine
             standards).

             Letters:

             General Motors Corp. and Isuzu Motors America,  Inc.  (IV-D-256) p. 52

       (6)    The alternative cumulative phase-in  approach as suggested by EPA has merit
             but does not offer flexibility with respect to manufacturers with limited product
             lines nor does it offer manufacturers a chance to significantly alter their
             phase-in schedule to obtain  more flexibility.  A better approach is a
             requirement that at the end of the  phase-in period, the cumulative sum of the
             vehicle percentage phase-in times the number of years that the vehicles meet
             the 2007 standard during the phase-in period be at least equal to that
             generated under the standard phase-in schedule.  For example, a phase-in
             schedule of 0/50/50/100 would be acceptable under the cumulative sum of
             the years/percentages approach.  This approach also has the merit of

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              maintaining total emissions equivalent to the standard phase-in schedule.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 52

       (7)     Supports a fixed annual percentage to ensure all manufacturers are in full
              compliance by 2010 and to simplify air quality planning.

              Letters:

              Wl Department of Transportation (IV-D-241) p. 2

       (8)     Commenters stated the proposed phase-in schedule of the 0.2 g/bhp-hr NOX
              standard and the 0.01 g/bhp-hr PM standard is not feasible. Commenters
              states no technology gives confidence of reliable NOX control to 0.20 g/bhp-hr
              NOX for the commercial life of the engine.  Commenters suggest there will be
              substantial differences in both cost and emission performance between
              Phase 1 engines manufacturer by companies not bound to the heavy-duty
              diesel consent decrees signed in 1998, and those engines manufacturer by
              the Consent Decree (CD) companies which must meet the 2004 FTP
              standards as well as the supplemental emission requirements (NTE and
              SET). Commenters state consent decree  manufacturers, once the decrees
              have ended  in October, 2004, will be forced to reduce the effectiveness of
              their emission control systems in order to compete with non-CD companies
              which must only meet the Phase 1 FTP  standards, which will result in 5.5
              million tons of excess NOX between 2004 and 2007.  Commenters propose an
              alternative HDDE emission standards phase-in schedule which they comment
              would result in a benefit to the environment of 4.05 million  tons of NOX beyond
              the Phase 2  proposal.  This alternative proposal includes:  voluntary adoption
              of the supplemental emission tests for 2005 and 2006, for  2007 - 2009, NOX
              standard of 1.5 g/bhp-hr and PM standard of 0.03 g/bhp-hr, for 2010 - 2012,
              NOX standard of 0.5 g/bhp-hr and PM standard of 0.03 g/bhp-hr PM, and for
              2013 and beyond, NOX standard of 0.2 g/bhp-hr and PM standard of 0.01
              g/bhp-hr PM. Commenter attached additional information  and spread-sheet
              analysis to support their comments.

              Letters:

              Caterpillar Inc., Cummins Inc., Detroit Diesel Corporation,  Mack Trucks,  Inc,
              and Volvo Truck Corporation (IV-G-94)

       Response to Comment 3.1.4(F):

       We have already responded to the comments regarding competitiveness and
logistics under Issue 3.1.4(A). As for suggestions to "step down" the standard from 1.5
g/bhp-hr NOX+NMHC in 2007 to an "ultimate" standard in a later year, we considered such an
approach during development of our final rule. Such an "interim" standard would be
attractive in that all engines  would  meet that standard in 2007 and presumably all engines
would be equipped with exhaust emission control devices. However, we must show that both
the interim and the ultimate  standards are cost effective and fulfill our statutory requirements
when setting new standards. We do not believe that the 1.5 g/bhp-hr level, or any level  at

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that general stringency, adequately fulfills our statutory requirement because it is not
stringent enough. This is evidenced by our belief that the 0.20 g/bhp-hr NOX level is indeed
feasible, and test and measurement procedures are available to warrant 2007 model year
implementation. Therefore, we do not believe we can set an interim standard in the 2007
timeframe as suggested but must set the NOX standard at the level being finalized.

       However, EPA is modifying our averaging, banking and trading program in the final
rule to allow manufacturers some amount of flexibility in meeting the 0.20 g/bhp-hr NOX
standard during the phase-in years. Manufacturers may create credits in those years by
certifying some or all of the engines meeting the Phase 1 standards to levels below 2.5
g/bhp-hr NOX+NMHC. The manufacturers may then use such credits, with a 20 percent
discount, to meet the 0.20 g/bhp-hr NOX standard for the remainder of their engines.  This will
allow manufacturers greater flexibility in introducing the new technologies needed to  meet the
Phase 2 standards by allowing them to certify to higher levels for some or all of their engines
during the phase-in years.

       One commenter suggested delaying the standards for two years and then limiting the
phase-in to a two year period. This suggestion seems focused on providing EPA with more
time to set the non-road fuel sulfur requirement. While this is an interesting suggestion, we
do not believe it would be appropriate to delay the NOX standard and we believe that many
others agree (See comments summarized under Issue 3.1.4(A)). We do believe that the
issue of non-road diesel fuel sulfur level is important and are working toward a resolution, but
we do not believe resolution of that issue merits a two year delay in the highway NOX
standard.

       At least one commenter suggested an alternative cumulative phase-in approach in
response to our request for comment on the proposed cumulative phase-in approach. While
we appreciate the thought given to that request, the comments we received in total suggest
little interest in or support of such an approach, and we have decided not to finalize a
cumulative phase-in option. We are finalizing some early introduction incentives that could
be used to serve the same purpose, but we are not placing such constrictive boundaries on
the possible approaches manufacturers might take in using those incentives.

       Another commenter suggested a three year 25/75/100 percent phase-in beginning in
2007, while another suggested 40/80/100 percent beginning in 2008.  We believe that many
commenters would find such a phase-in to be inconsistent with the stability provisions of the
Act, claiming that the 75 percent of engines not meeting the 0.20 g NOX standard in 2007
would not be provided three years of stability by 2009 in the context of the  NTE requirements
(based on the 2.5 g NOX+NMHC and new 0.01 g PM  standards) to which they would  need to
certify in the 2007 model year. As discussed in the preamble, our final phase-in does not
create any such stability problem.

       We have made no changes in this  final rule in response to the late comments
submitted as Docket Item  IV-G-94. The commenters provided these comments on
December 5, 2000,  nearly 4 months after the close of the comment period, and only a few
weeks before the finalization of this rule. There is no new information or data  cited in the
comments which warrant the very late nature of these comments, i.e., the commenters could
have submitted these comments within the time period afforded by the official comment
period.  Due  to the lateness of this submission we were unable to perform  a full analysis of
their comments. Nevertheless, even a straightforward reading and short analysis of the
comments allows us to respond to the basic components of the comments - i.e., the
proposed alternative phase-in schedule for HDDE NOX and PM standards. This final rule
requires 100 percent compliance with a 0.01 g/bhp-hr PM standard  in  2007. The commenter

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proposes delaying this standard a full six years, and between 2007 and 2012. They propose
a standard three times as high as the standard contained in this final rule. Clearly the
commenters proposal does not provide the emission benefits of the PM standards
promulgated in this final rule. The commenters proposal delays implementation of the 0.2
g/bhp-hr NOX level until 2013, while the standards set in this rule require 50 percent
compliance in 2007, and 100 percent compliance in 2010. Again, clearly no detailed analysis
is necessary to see the commenters proposal does not provide the same emission benefits
as the program established in today final rule.

       In addition, the commenter suggests the average off-cycle NOX emissions from
HDDEs in 2004 - 2006 will be 5 g/bhp-hr, more than two times the FTP standard. The
majority of the emission benefits claimed by the commenters  in their alternative  proposal is
from the elimination of these estimated off-cycle emissions from Phase 1 engines. This
suggestion of large off-cycle emissions and the emission calculation is purely speculative,
and it ignores the existence of the Agency's long standing regulatory prohibition  on defeat
devices. We believe the prohibition on defeat devices will prevent manufacturers from
employing emission control systems and strategies which  have such blatant increases in
emission  performance off-cycle.

       With respect to the commenters suggestion that a NOX standard of 0.2 g/bhp-hr NOX
is not feasible in 2007, we disagree with this comment, and the commenter provided no
additional data to support this comment. See Chapter III of the RIA for this final  rule, and our
responses to the comments to Issue 3.2 of this document.

       As for comments under 3.1.4(F)(2), please refer to our responses to comments
3.1.4(A) through (C).

(G)    EPA should delay implementation of the NOX, NMHC, and formaldehyde
       standards.

       (1)     EPA should require all engine manufacturers to meet the same standards for
              all engine families at the same time.  As an alternative to the proposed phase-
              in schedule, EPA should require the  implementation of the NOX,  NMHC and
              formaldehyde standards in July 2008 for 100 percent of the fleet. PM
              standards should be implemented in 2007  as proposed.

              Letters:

              Mack Trucks  (IV-D-324) p. 2-3

       Response to Comment 3.1.4(G):

       See our responses to comments 3.1.4(A) through (F), and 3.1.1(G).

(H)    Opposes phase-in of gasoline vehicle standards because the technology to
       meet the proposed standards is currently available.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              American Lung Association  (IV-D-270) p. 17

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              STAPPA/ALAPCO (IV-D-295) p. 15-16

       Response to Comment 3.1.4(1-1):

       We did not propose a phase-in of the gasoline vehicle standard and assume that the
commenters merely meant to express their desire that we not finalize one. However, after
considering the light-duty Tier 2 phase-in for medium-duty passenger vehicles (MDPVs - the
phase-in for which is 50 percent in 2008 and 100 percent in 2009), we have decided that it is
most appropriate to phase-in the heavy-duty gasoline vehicle standards on the same
schedule.  We have decided this for the  same reasons as argued in the Tier 2 final rule which
were: "The program will require research, development, proveout, and certification of all light-
duty models, and manufacturers may need longer lead time for some vehicles, especially
HLDTs. Also, manufacturers may wish to time compliance with the Tier 2 standards to
coincide with other changes such as  the roll out of new engines or new models.  In order to
begin the introduction of very clean vehicles as soon as possible while avoiding imposing
unnecessary inefficiencies on vehicle manufacturers, we believe this practical but aggressive
phase-in schedule effectively balances air  quality, technology, and cost considerations."
(See 65 FR 6742, February 10, 2000). The engines and emission control systems for these
vehicles are very similar and often identical. We have decided that requiring the heavy-duty
gasoline vehicles to comply 100 percent in 2007 to similarly stringent standards as MDPVs,
while providing the MPDVs until 2009 to comply, was not consistent. Therefore, the final
gasoline vehicle (and engine) phase-in schedule is 50/100 percent beginning in the 2008
model year.

(I)     EPA should delay implementation of the HDG standards.

       (1)     The implementation of the  HD gasoline standards should be delayed since
              the CAA provides assurance to HD manufacturers that adequate time will be
              available for the development of technologies needed to meet future
              standards and protects the  investment in new technologies made by
              manufacturers by assuring  that three years of stability will be available to
              allow a manufacturer time to recover investment costs made in achieving
              compliance with the same standards. Commenters refer to the CAA (Section
              202(a)(3)(C)) and note that since the "Control of Air Pollution for 2004 and
              Later Model Year Highway  and Vehicles" final rule (or "2004 HD rule") was
              not finalized until July 31, 2000 and is still awaiting publication in  the Federal
              Register, there is a glaring  discrepancy with the implementation of the
              proposed  standards for HDG in the 2007 model year. Since the HDG
              standards will not be  implemented until the 2005 model year, the CAA period
              of stability prevents EPA from imposing standards for HDG until after the
              2007 model year.  (See also comments on period of stability and lead time in
              Issue 12.2.)

              Letters:

              DaimlerChrysler (IV-D-284) p. 6-7
              Engine Manufacturers Association  (IV-D-251) p. 48-49

       (2)     EPA should adopt a phase-in approach for compliance with the 2007 HDG
              exhaust and evaporative emission standards, since these standards could not
              be effective until model year 2008 at the very earliest. Under the Tier 2 rule,
              manufacturers expect that the final roll-out for HLDTs and  MDPVs will  be in

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             the 2008-2009 model year. Under EPA's proposal, HDG engines and
             vehicles would have to meet lower emission standards earlier than MDPVs.
             In order to provide some consistency with the Tier 2 schedule, a three-year
             phase-in of the new 2007 HDG standards is recommended: 40% in 2008,
             80% in 2009 and 100% in 2010. (See also comments on period of stability
             and lead time in Issue 12.2.)

             Letters:

             DaimlerChrysler  (IV-D-284) p. 9-10
             Engine Manufacturers Association (IV-D-251) p. 51-52
             Ford Motor Company (IV-D-293) p. 9
             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 43

       Response to Comment 3.1.4(1):

       EPA agrees with the comments regarding stability. Therefore, we have delayed
implementation of the heavy-duty gasoline standards until the 2008 model year. Regarding
the comments on consistency with  the Tier 2 MDPV phase-in, please refer to our response to
comment 3.1.4(1-1).  Regarding the suggested three year 40/80/100 percent phase-in
beginning in 2008, the commenters revised their stance on this suggestion in a meeting with
EPA on October 19, 2000, and suggested a 50/100 percent phase-in beginning in 2008 for
gasoline vehicles. (See docket item IV-E-36.)

(J)     EPA should allow small volume manufacturers to come into compliance in the
       final year of the phase-in.

       (1)    Traditionally, EPA has recognized the special problems faced by small
             volume manufacturers (SVM) in developing and implementing new control
             strategies and in  the Tier 2  rule, has provided additional flexibility in allowing
             SVMs to come into  compliance at the 100 percent level in the final year of the
             phase-in. This provision will be critical  to the survival of independent SVMs
             as they are typically certifying only one  engine family and are thus unable to
             take advantage of the benefits that a phase-in has to offer. A phase-in
             schedule without special considerations for SVMs would put these types of
             manufacturers at a  clear competitive disadvantage since it would force them
             to come into full compliance during the  first year of the phase-in while larger
             manufacturers with  more resources receive an extra two to three years to
             reach full compliance.  Commenter recommends that the following specific
             regulatory language be added to the proposed rule: "86.007-11(f)(1)(iv) -
             Provisions for small volume manufacturers - In lieu of the optional phase-in
             requirements specified in this section, small volume manufacturers, as
             defined in 40 CFR 86.094-14, may comply at the 100 percent level beginning
             with the 2010 model year."

             Letters:

             General Engine Products,  Inc.  (IV-D-185) p. 1-2

       Response to Comment 3.1.4(J):

       The commenter requests that small volume manufacturers be given until the final

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DECEMBER 21, 2000	PAGE 3^40

year of the phase-in prior to complying. We do not believe this is a necessary element to our
rule. Small volume manufacturers are given considerable flexibilities under existing
regulations with respect to testing burden and durability demonstration procedures.  Further,
our final averaging, banking, and trading program provides considerable flexibility in meeting
the new standards. A manufacturer selling only one engine family is allowed to effectively
split that family and average across the virtual split in determining its family emission limit.
Lastly, we have provided seven years of lead time prior to the first year of the phase-in.

(K)    Opposes a phase-in schedule since this approach would not lead to significant
       emissions benefits.

       (1)     The proposal to phase in the NOX standard actually reduces the total
              nationwide NOX emission benefits by 110,000 tons or 24 percent in 2010
              relative to a scenario  in which the standard is delayed by one year and then
              fully implemented in 2008.

              Letters:

              American  Petroleum Institute (IV-D-343) p. 6

       Response to Comment 3.1.4(K):

       See our responses to comments 3.1.4(A) through (F).
              Issue 3.1.5: Scope of Standards

(A)    EPA should incorporate into this proposed rule or a similar rulemaking,
       standards for trucks and buses greater than 14,000 GVWR.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Gostafson, Keith (IV-F-117) p. 200

       Response to Comment 3.1.5(A):

       The standards finalized in this rule apply to all heavy-duty highway vehicles and
engines over 8,500 pounds. Therefore, these standards do indeed apply to trucks and buses
greater than 14,000 pounds GVWR.  The commenter may be confusing  the heavy-duty
engine and vehicle provisions. Complete heavy-duty gasoline vehicles between 8,500 and
14,000 pounds must be chassis certified (i.e., certified on a chassis dynamometer).
Incomplete heavy-duty gasoline vehicles between 8,500 and 14,000 pounds have the option
of chassis or engine certification.  Heavy-duty gasoline vehicles over 14,000 pounds must be
engine certified. For diesels, traditionally all heavy-duty highway diesel vehicles over 8,500
pounds must have a certified engine and that engine must be certified on an engine
dynamometer.  This rule allows, as an option, that complete heavy-duty vehicles under
14,000 pounds may certify to the chassis standards. Therefore, all heavy-duty highway
vehicles are covered by this final rule.

(B)    EPA should clarify whether any new requirements would apply to "classic"

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DECEMBER 21, 2000	PAGE

       cars (i.e. cars built prior to 1973).

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Tseng, Joyce, et al  (IV-D-3)

       Response to Comment 3.1.5(B):

       The standards finalized in this rule do not apply to classic cars or any cars built prior
to 1973 or any cars regardless of when they are built. The standards apply only to heavy-
duty highway engines and vehicles.

(C)     EPA should enact strict control regulations covering existing diesel engines.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Center for Neighborhood Technology  (IV-F-11)
              Chicagoland Transportation and Air Quality Commission (IV-F-10)
              Kouba-Cavallo Associates (IV-F-1)

(D)     EPA should require the retrofit of older engines so that they can be in
       compliance with the proposed standards as well.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Clean Air Council (IV-F-116) p. 333
              Environmental Law & Policy Center of the Midwest (IV-F-6)
              Hinds, William (IV-F-190) p. 202
              Kouba-Cavallo Associates (IV-F-1)
              South Coast Air Quality Management District (IV-F-185)

       (2)     EPA should also immediately initiate a program requiring the phased retrofit
              of existing heavy duty diesel trucks. Unlike passenger vehicles which have a
              useful life of approximately 100,000 miles,  diesel trucks are  driven vastly
              more miles, often undergoing multiple engine rebuilds.

              Letters:

              American Lung Association (IV-D-270) p. 25-26

       (3)     EPA should establish a mandatory retrofit program such as that which
              currently exists in the Urban Bus Program.

              Letters:

              NESCAUM  (IV-D-315)p. 9, 11-12

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       Response to Comment 3.1.5(C) and (D):

       We discuss the issue of retrofit programs in section I of the final preamble to this rule.
In that section we note that, in March 2000 we announced our Diesel Retrofit Initiative to
support and encourage fleet operators, air quality planners, and retrofit manufacturers in
creating effective retrofit programs. These programs are appealing because the slow
turnover of the diesel fleet to the new low-emitting engines makes it difficult to achieve near-
term air quality goals through new engine programs alone.  Some of the exhaust emission
control technologies discussed in this final rule are especially appealing for use in retrofits
because they can be fitted to an existing vehicle as add-on devices without major engine
modifications, although some  of the more sophisticated systems that require careful control
of engine parameters may be  more challenging.  Because of the uncertainty at this  time in
how and when such programs may be implemented, this rule does not calculate any benefits
from them. Nevertheless, we  believe that this program can enhance the viability of these
retrofit technologies. We expect that large emission benefits from the existing fleet could be
realized as a result of the fuel  changes we are finalizing here, combined with retrofit versions
of the PM technologies that will be developed in response to the finalized engine standards.
These benefits will be especially important in the early years of the program when new
vehicles standards are just beginning to have an impact, and when States and  local areas
need to gain large  reductions to attain air quality goals.

(E)     EPA should encourage or require the retrofit of existing HDDEs instead of
       imposing a 15 ppm sulfur standard or allowing similar State-imposed sulfur
       standards.

       (1)    Commenter notes that a retrofit program would be more effective at reducing
             PM than the proposed 15 ppm sulfur standard and would be less disruptive to
             the economy, [see also 3.6(F)]

             Letters:

             American Petroleum Institute (IV-D-343), p. 6, 83

       Response to Comment 3.1.5(E):

       As noted in our response to comment 3.1.5(C), we announced our Diesel Retrofit
Initiative in March of 2000.  However, we are not addressing diesel retrofit programs in the
context on the Phase 2 rule. Despite our efforts on retrofit programs, we currently know of no
NOX emission control device that could be implemented on a retrofit basis that would be
capable of delivering NOX emission control of the same magnitude as that delivered by the
Phase 2 standards.  Moreover, to ensure long-term emission reductions, in the future, EPA
had to adopt more stringent standards for new engines. Since engine-based emission
reduction technology has basically reached its limit, sulfur sensitive exhaust emission
controls are required to achieve significant reductions from new heavy-duty diesel engines
(please see our response to comment 3.2.1 (D)).  As for PM retrofits, they appear to work in
England with a 50 ppm cap fuel (as discussed in Chapter III of the RIA), but we have serious
concerns regarding their ability both to work in the US given the greater temperature
extremes experienced here, and to work on a very wide variety of vehicles. Please refer to
Chapter III.A of the RIA for more detail  on PM traps and NOX control devices and their need
for low sulfur fuel.

       Issue 3.2:  Technical  Feasibility of Engine/Vehicle Standards

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DECEMBER 21, 2000	PAGE 3^43

              Issue 3.2.1: Diesel Engine Exhaust Standards

(A)    The achievement of all engine and vehicle standards is technically feasible
       provided low sulfur (i.e. 15 ppm) fuel will be readily available by 2006.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Alliance of Automobile Manufacturers (IV-F-59)
              American Lung Association of Metropolitan Chicago (IV-D-237) p. 1
              American Lung Association of NJ (IV-D-224) p. 1
              American Lung Association of Orange County (CA) (IV-D-176) p. 1
              American Lung Association of SD (IV-D-31) p. 1
              American Lung Association of VA (IV-D-205) p. 1
              Center for Environmental Health (IV-D-89) p. 1
              Corning, Inc. (IV-F-77)
              DaimlerChrysler (IV-F-117) p. 96 (IV-F-191) p. 173
              Downtown Community Association (IV-D-118) p. 1
              Engelhard Corp. (IV-F-188)
              Engine Manufacturers Association  (IV-F-174, 116) p. 43 (IV-F- 117) p. 39
              Environmental Health Watch (IV-D-212) p. 1
              Grand Canyon Trust (IV-D-317) p. 1
              Hoosier Environmental Council  (IV-D-281) p. 1
              IL Public Interest Research Group  (IV-F-18)
              La Grange Park (IV-D-39) p. 1
              MO Coalition for the Environment (IV-D-235) p. 1
              Manufacturers of Emission Controls Association (IV-F-26(, (IV-F-191) p. 120
              Metropolitan Washington Air Quality Committee (IV-D-58) p. 2
              NC Waste Awareness and Reduction Network (IV-D-51) p. 1
              NESCAUM  (IV-F-63)
              Natural  Resources  Defense Council (IV-F-75)
              Oregon DEQ (IV-D-145) p. 1
              PADEP (IV-D-100) p. 2
              STAPPA/ALAPCO  (IV-F-190) p. 21
              Sierra Club, GA Chapter (IV-D-348) p. 1
              Sierra Club, Lone Star Chapter  (IV-D-287) p. 2
              Sierra Club, PA Chapter (IV-D-197) p. 2
              Unity Center (IV-D-75) p. 1

       (2)     Commenters provided significant discussion and analysis regarding the
              technological feasibility of the standards based on the use of both particulate
              filters and NOX adsorber technology. Commenters note that the standards
              are achievable using these technologies provided low sulfur fuel is available.
              Some commenters noted that catalyst-based diesel particulate filters can be
              used for PM control and are commercially available today - the only remaining
              engineering effort is to optimize the filter systems for the specific engine in
              which they will be installed. One of these commenters added that in parts of
              Europe, where diesel fuel with sulfur levels below 10 ppm is available, a
              number of diesel filters have operated successfully and have led to significant
              reduction in  PM emissions. The development and optimization of the NOX
              adsorber technology for NOX control is progressing at a rapid rate and with the

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             availability of low sulfur fuel, is capable of meeting the proposed NOX
             standards and could be commercialized in the 2007 time frame. One
             commenter cites to the DECSE report "Phase I Interim Data Report No. 2:
             NOX Adsorber Catalysts," October, 1999 to support their position on this
             issue. This commenter added that the results of the Diesel Vehicle Emission
             Control - Sulfur Effects (DVECSE) program at Oak Ridge National Laboratory
             showed NOX adsorber technology can achieve NOX emission reductions in
             excess of 90% for a light-duty diesel powered vehicle (DVECSE Project,
             Phase I  Final Report, March 2000).  Commenters conclude that there are no
             significant barriers to the commercialization of either catalyst based diesel
             particulate filters or NOX adsorber technology. Some also noted that SCR
             technology is being developed for commercial application and will be
             available for vehicles in the near future. (See also Issue 3.5 for further
             discussion on SCR technology.)

             Letters:

             American Lung Association of OR (IV-D-165) p. 1
             Environmental Law & Policy Center of the Midwest (IV-F-6)
             Johnson Matthey  (IV-F-117) p. 94,  (IV-G-55)
             Manufacturers of Emission Controls Association (IV-D-267) p. 2-6, (IV-F-26,
             187, 190) p. 108 (IV-F-116) p. 47 (IV-F- 117) p. 89 (IV-F-191) p. 120, (IV-G-
             53)
             NESCAUM  (IV-D-315)p. 5
             NY DEC (IV-D-239) p. 3
             Natural Resources Defense Council (IV-F-190) p. 98 (IV-F-190) p. 102
             STAPPA/ALAPCO (IV-D-295) p. 9

       (3)    One commenter noted that it will commercialize "green diesel" engine
             technology in 2001, which will meet or exceed EPA's proposed 2007 NMHC
             and PM emission standards, because some refiners are already producing 15
             ppm diesel fuel.

             Letters:

             International Truck & Engine Corp.  (IV-D-257) p. 2, (IV-F-27, 34, 180), (IV-F-
             117) p. 109, (IV-F-191) p. 99

       (4)    Existing NOX trap or adsorber technology is capable of reducing NOX
             emissions by over 90 percent.

             Letters:

             Johnson Matthey  (IV-F-117) p. 94
             Manufacturers of Emission Controls Association (IV-F-190) p. 108

       (5)    One commenter noted that technology will blossom with the secure
             knowledge that there will  be a market to recover the costs spent on research
             and development.

             Letters:

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              Hacienda Heights Improvement Association (IV-F-172)

       (6)     One commenter cited to their report "Catalyst-Based Diesel Particulate Filters
              and NOX Adsorbers: A Summary of the Technologies and the Effects of Fuel
              Sulfur," August 14, 2000, and provided a copy of this report as documentation
              supporting the conclusion that the PM and NOX standards are feasible and
              can be met with anticipated control technologies.  This report provides
              significant discussion, data and analysis regarding the design, effectiveness,
              development, commercial status, and technological feasibility of diesel
              particulate filters employing catalyst technology or catalyst-based diesel
              particulate filters (CB-DPFs) and NOX adsorbers.  In this report, the
              commenter concludes that new production facilities or modifications to
              existing facilities for both PM filters and NOX adsorbers will require 6 to  18
              months to be operational. The commenter acknowledges that PM filters are
              currently produced in limited volumes but that substrate manufacturers and
              catalyst manufacturers are currently considering  methods for large scale
              manufacturing. NOX adsorber technology will not be significantly different
              from current catalyst emission control products with the exception of size and
              can take advantage of existing production facilities. This report also contains
              detailed discussion on the effect of fuel sulfur on these technologies. (See
              Issues 3.3.1 and 3.3.2.) The report concludes that the technologies are
              technologically feasible and are capable of achieving the proposed PM and
              NOX standards  provided low sulfur fuel is available in the proposed time
              frame.

              Letters:

              Manufacturers of Emission Controls Association  (IV-D-267) p. 2-6, att.

       (7)     Assuming a reasonable rate of technology development before 2006, diesel
              fuel sulfur levels averaging 10 ppm or less will enable emission control
              devices to operate effectively over the full useful vehicle life and will allow
              vehicles/engines to meet the standards. However, the emission control
              devices are still under development and inadequate testing has been
              completed to define the tolerance of NOX emission control devices to limited
              variations in sulfur levels. However, these issues can be addressed with a
              thorough technology review prior to implementation. (See  Issues 3.7.1  and
              3.7.2.)

              Letters:

              U.S. Department of Energy (IV-G-28) p. 2-3

       Response to Comment 3.2.1 (A):

       We agree with the points raised by the commenters as detailed in chapter 3 of the
RIA, that provided low sulfur diesel fuel with a cap  of 15 ppm and an expected refinery
average sulfur level of 7 ppm, the emission standards proposed  in the NPRM are feasible by
2007 for the reasons  stated in the comments.

       We agree with the commenter that an average fuel sulfur level of 10 ppm or less will
enable emission control devices to operate effectively over the full useful vehicle life and will

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allow vehicles/engines to meet the standards. The 15 ppm sulfur cap we finalized in this
rulemaking is expected to have an average sulfur level below 10 ppm (of approximately 7
ppm at the refinery gate) as detailed in chapter 4 of the RIA.  Likewise we agree with the
commenter at the difficulty in defining precisely the tolerance of the technologies to variations
above this fuel sulfur level. This is why we feel it is prudent to set a fuel sulfur cap of 15 ppm,
that will ensure that fuel sulfur perturbations above the average levels are necessarily small.

(B)    The proposed standards are feasible by 2004.

       (1)     NOX absorbers are expected to be  available, the cost is expected to be
              reasonable, and NOX emissions are expected to be reduced by more than 70
              percent.  However, a critical element of this technology and other
              aftertreatment technologies is the necessity to have low-sulfur fuels.

              Letters:

             American Lung Association (IV-D-270) p. 17-18

       Response to Comment 3.2.KB):

       We appreciate the concerns raised by the  commenter regarding the need for the
large NOX emission reductions which NOX adsorbers can provide as quickly as possible.
However, as discussed in response to 3.1.4(A), in  this rule we have implemented the Phase
2 NOX standard phase-in scheduled as aggressively as we believe is technologically feasible,
giving appropriate  consideration to the current state of development of NOX adsorbers,
among other factors.  In addition, CAA Section 202(a)(3) requires the Agency to provide at
least three years of stability for any new HDDE standards. Therefore, considering the
existence of new FTP NMHC+NOX  standards for HDDEs which will be implemented in model
year 2004, model year 2007 is the earliest time in which new FTP NOX standards can be
implemented, which is what we have done in this rule  (see response to comments under
issue 3.1.4(A) for additional discussion).

(C)    It is unclear whether the proposed standards will  be technologically feasible by
       2007 and it is not certain that the standards could be met even with the
       availability of 15 ppm sulfur diesel fuel.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

             American Petroleum Institute (IV-F-16, 182, 117) p. 161
              Detroit Diesel Corporation (IV-F-7)

       (2)    The after-treatment technologies and controls that are necessary to reduce
              PM and NOX together do not currently exist outside of the lab.  EPA should
              delay the implementation of this rule to allow for additional assessment of
             technological feasibility. Active regenerative controls which will permit the
              continued use  of the catalysts have not been developed and a determination
             that these systems are effective would be premature. Given the  knowledge  of
              current control technologies as well as those currently under development, it
              is difficult to determine whether the proposed standards can actually be met.
              One commenter notes that the aftertreatment systems that will be used to

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DECEMBER 21, 2000	PAGE 3^47

              reduce NOX and PM emissions have the potential for assisting HDDEs in
              meeting the standards but only after 2007.  Some commenters (Daimler,
              EMA, GM, Cummins) provided significant discussion on the NOX and PM
              standards and the technological feasibility of the technologies that may be
              used to meet these standards. Some commenters noted that contrary to the
              mandates of the CAA, EPA has failed to provide any analysis of the
              technological feasibility of the proposed standards.

              Letters:

              American Petroleum Institute (IV-D-343) p. 24-26
              American Trucking Association  (IV-D-269) p. 34-37
              Cooperative Refining, LLC  (IV-D-300) p. 2
              Cummins Engine Company, Inc. (IV-D-352) p. 1-2
              Cummins, Inc. (IV-D-231) p. 6-20, (IV-F-64)
              DaimlerChrysler  (IV-D-344) p. 7-12
              Engine Manufacturers Association (IV-D-251) p. 35-39
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 43-49
              National  Ready Mixed Concrete Association (IV-D-271) p. 2

       (3)     The aftertreatment technology for meeting the NOX standards is not yet known
              or fully developed.  The proposed NOX standard will require the development
              and use of an after-treatment system with over 90% effectiveness over a
              broad range of operating conditions and there are currently no systems that
              have achieved this level of effectiveness in the lab.  In  this context,  one
              commenter (EMA) asserts that EPA has failed to carry out its congressional
              mandate to propose standards that achieve the greatest degree of emission
              reduction achievable through the application of technology that EPA
              "determines will be available for the model year to which such standards
              apply." (CAA Section 202(a)(3)(A)).  Another commenter noted that in
              addition to having inadequate efficiencies to meet the proposed NOX
              standards when new, NOX adsorbers can be expected  to deteriorate over
              time, which will lead to increased emissions. One commenter added that
              achieving the NOX standard over the FTP will not only require effective
              catalyst systems, but sensor and control technology which is yet to  be
              invented. This commenter noted that a NOX standard of 0.5 g/bhp-hr would
              be feasible.  Commenters provided significant discussion and analysis
              concerning the feasibility of meeting the NOX standard.

              Letters:

              American Petroleum Institute (IV-D-343) p. 79-81
              Detroit Diesel Corporation (IV-D-276) p.  10-11, (IV-F-116) p. 198
              Engine Manufacturers Association (IV-D-251) p. 36-38, 84-85
              ExxonMobil (IV-D-228) p. 6
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 43-49
              Mack Trucks  (IV-D-324) p. 1-2

       (4)     EPA's standards are based on unproven, uncertain and effectively unknown
              after-treatment technological advances. EPA is overly optimistic about the
              development of the technology, and is willing to impose a 15 ppm standard on
              refiners without any showing that the aftertreatment technologies could meet

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              the emissions standards.  One commenter added that the agency provides
              little support for either the technological feasibility (or cost-effectiveness) of
              the proposed reductions versus less stringent standards.  One commenter
              provides detailed discussion of the risks that the proposed rule will not
              function properly, estimating that there is only a 27% chance of all the
              components working together. EPA should complete a cumulative risk
              analysis of potential control strategies and should select the alternative (i.e.
              combination of control technologies) with the largest chance of success. The
              SCR/CDPF system has a greater likelihood of success and is expected to
              generate more benefits.

              Letters:

              American Petroleum Institute (IV-D-343) p. 20, 24, 79-81
              American Trucking Association (IV-F-191) p. 42
              Marathon Ashland  Petroleum (IV-D-261)  p. 2,17-18, 84-85
              Murphy Oil Corporation (IV-D-274) p. 12
              Society of Independent Gasoline Marketers of America (IV-D-328) p. 3

       (5)     The proposed PM standard is not feasible with diesel fuel having 15 ppm
              sulfur. One commenter noted that despite EPA's view of the success of PM
              traps, no known  PM aftertreatment system has demonstrated the level of
              reductions that will be necessary to comply with the PM standard over the
              range of exhaust temperatures encountered by a diesel engine during normal
              operation and use and at 435,000 miles useful life.  Nor has any known PM
              aftertreatment system demonstrated the necessary reductions under those
              conditions in combination with the NOX emission limit. The efficiency of PM
              traps in any case will depend on the specific engine family and engine
              application. However, commenters acknowledge that the PM standards could
              be achieved if ultra low (5 ppm) diesel is used and if the PM trap is operating
              at peak efficiency.  One commenter provides significant discussion on this
              issue and reviews the studies upon which EPA relies to make its conclusions
              regarding this technology.

              Letters:

              Detroit Diesel  Corporation  (IV-D-276) p. 10
              Engine Manufacturers Association (IV-D-251) p. 38-39

       (6)     EPA should not finalize the proposed formaldehyde standard since it has
              failed to demonstrate either the need for or the technological feasibility of, the
              proposed standards. Engine manufacturers typically do not have the
              emissions testing capability to measure formaldehyde emissions in their labs.
              In addition, diesel engines are not considered to be  a substantial source of
              formaldehyde emissions.  EPA should delay implementation  of this standard
              until additional data is gathered to evaluate the need and feasibility.

              Letters:

              American Petroleum Institute (IV-D-343) p. 21
              Cummins, Inc. (IV-D-231) p. 28
              Detroit Diesel  Corporation  (IV-D-276) p. 20-21

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              Engine Manufacturers Association (IV-D-251) p. 41-42
              International Truck & Engine Corp.  (IV-D-257) p. 30
              Marathon Ashland Petroleum (IV-D-261) p. 16

       (7)     After consulting with a cadre of specialists in catalysis, the Cummins Science
              and Technology Council, which is made up of academics who are noted in
              their respective fields, has not come to an agreement on the approach to low
              level NOX control and  does not have confidence that the low emission levels
              as proposed by EPA in the 2007 timeframe can be achieved.  Since many of
              the aftertreatment technologies are in the earliest stages of research and
              have far to go in development, they are beyond reach for accurate evaluation.

              Letters:

              Cummins Engine Company, Inc.  (IV-D-352) p. 1-2

       (8)     Commenter suggests EPA talk to diesel engine manufacturers about their
              effort to build a cleaner burning engine, and how those engines will operate
              on ultra low diesel fuels.

              Letters:

              Swain, Edward (IV-D-162) p. 3

       (9)     Commenter suggests that conclusions dran by EPA based upon testing at
              NVFEL are invalid and not reflective of the actual technology potential

              Letters:

              American Petroleum Institute (IV-G-160)

       Response to Issue 3.2.KC):

       All of the comments summarized here address concerns with EPA's assessment of
the technical feasibility of the NOx, PM and NMHC standards proposed in the NPRM. The
commenters raise issues with the primary technologies identified in the draft RIA, NOx
adsorbers and Catalyzed Diesel  Particulate Filters (CDPFs)  that can be grouped into the
following issues:

       1.      The technologies exist only in the "laboratory."
       2.      The technologies can not achieve >90 percent reductions in NOx and PM.
       3.      The technologies have not been shown to give simultaneous NOX, PM and
              NMHC control.
       4.      The systems (sensors and control) required for application of these
              technologies (in order to regenerate the systems) are unknown.
       5.      The system operation of the  PM and NOx control technologies are
              incompatible.
       6.      The technologies are  not enabled by 15 ppm sulfur fuel, but CDPFs would be
              enabled by five ppm and  NOx adsorbers might be enabled at five ppm.
       7.      The technologies have not been proven over the full life of heavy-duty
              vehicles.
       8.      EPA has  been "overly optimistic" in assessment  of the technology potential.

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       9.      There is not a consensus technology to meet these standards (among a
              cadre of specialists in technology).
       10.     It would be better to wait to finalize this rule until the technology is better
              understood.

       All of these issues have been expressly addressed in Chapter III of the RIA
associated with the rulemaking.  There, we show that greater than 90 percent reductions of
NOx and PM have been demonstrated in a variety of settings utilizing CDPFs, NOx
adsorbers, and low sulfur diesel fuel. For instance in our draft RIA, we noted that NOx
adsorbers had been  shown to provide over 90 percent NOx reduction in stationary
applications  and that Volkswagen had already demonstrated very low NOx emissions on a
NOx adsorber equipped diesel passenger car.  Moreover, recent testing at NVFEL on a
combined system with a CDPF/NOx Adsorber system documented in chapter III of the RIA
shows greater than 90 percent reductions in both NOx and PM emissions. In fact, PM
emissions were controlled to a level less than half of the Phase 2 PM standard when
operated on  six ppm sulfur diesel fuel. Seven ppm sulfur fuel is the expected refinery
average under the 15 ppm sulfur cap program. These results show that greater than 90
percent reductions are, in fact, possible through the application of the technology.  These
results also show that the technologies can be integrated into a total emission control system
to provide simultaneous control of all of the regulated pollutants.  Further, Toyota Motor
Corporation has announced that they will produce a similar integrated emission control
system beginning in  2003, a full four years before these standards go into effect. The
demonstration at NVFEL, along with Toyota's expressed intent to market  a similar system,
shows clearly that the system technologies (sensors, actuators and system engineering)
required to integrate  these technologies  are known, although further development and
refinement is expected before 2007.  It is important to note further, contrary to the comments
raised here, that testing at NVFEL and information provided by Toyota on their DNPR system
show that the combination of the CDPF and the NOx adsorber into a single system can be
beneficial due to several synergies between the technologies. The CDPF can serve to
protect the NOx adsorber from diesel PM which can foul the catalyst, it can "pre-treat" the
NOx reductants (HCs derived from diesel fuel) to make the NOx regeneration event more
effective, and the CDPF can oxidize some fraction of the NO to NO2  prior the exhaust
entering the  NOx adsorber improving the NOx adsorber NOx storage efficiency. See
response to comment 3.2.1 (F).

       It should be noted that one commenter suggested that a 0.5 g/bhp-hr NOx standard
would be appropriate. Clearly this commenter recognizes that the technology is both feasible
and highly effective,  only raising a lesser concern as to its precise effectiveness.  We  believe
that for the reasons outlined above, this commenter's estimate of the appropriate NOx
standard falls short of the actual ability of the technology.

       Regarding the diesel fuel sulfur level, chapter III section 7 of the RIA provides a
detailed analysis of both the impact of fuel sulfur  on emission control technology performance
and long term durability. The analysis shows that the necessary emission control and
durability are both possible provided fuel sulfur levels are maintained at or below 15 ppm.
While lower fuel sulfur levels would provide incrementally better emission control, the test
results and our analysis show that the emission standards can be met with a fuel sulfur cap
of 15 ppm.

       Comments regarding the need for lower fuel  sulfur levels with regard to the PM
control technology appear to be primarily concerned  with high sulfate PM  emissions
experienced  over some portions of the SET and potentially the  NTE. See issue 3.2.1  (N&O)
for our response to feasibility issues on PM and NOx emission limits over the supplement

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emissions requirements like the NTE and the SET.

       While fleets of complete vehicles equipped with both an integrated system including
both a CDPF and a NOx adsorber do not yet exist and as such have not demonstrated
assured compliance with the standards over the regulated life, there is considerable evidence
that shows that these technologies can be durable for the required life of the vehicle.
Chapter III of the RIA details the extensive field experience with catalyzed diesel particulate
filters in markets with  low sulfur diesel fuel. Some of the vehicles in the test fleets have
accumulated in excess of 300,000 miles  of operation without significant deterioration of PM
or HC control.

       Further the RIA details why we believe that NOx adsorber catalysts will prove to be
equally durable. The  analysis shows, based on an overwhelming body of data from
laboratory testing and gasoline vehicle testing, that sulfur in fuel is the primary factor limiting
NOx adsorber durability. The data and analysis further shows that the sulfur can be removed
from the catalyst so that the NOx reduction efficiency is recovered by performing a
desulfation step.  Unfortunately, experience in several test programs indicates that the
desulfation function itself can lead to thermal degradation (precious metal sintering)
degrading catalyst performance.  However, this degradation in performance can be limited by
controlling the peak temperatures reached during desulfation.  As detailed in section
III.A.S.b.vii of the RIA and in our response to comment summary 3.2.1(J), some researchers
have already shown that the desulfation event can be accomplished in a manner which does
not degrade  the NOx  adsorber performance unacceptably provided that  the frequency and
number of desulfation events is limited. The best way to limit the  number and frequency of
desulfation events is by decreasing the amount of sulfur that the catalyst must handle. By
lowering the  diesel fuel sulfur level to an  average level well below 15 ppm, we can conclude
with confidence that the frequency and number of desulfation events will allow for the NOx
adsorber catalyst to be durable. The data show that NOx adsorbers are poisoned by sulfur in
diesel fuel and from the data we can conclude that, with a fuel sulfur level at or below 15
ppm, NOx adsorbers  will be durable over the life of heavy-duty vehicles.

       While the commenters raise legitimate questions about these technologies and show
concern that it is difficult to  predict the future maturation of these technologies with absolute
certainty, we have addressed all issues raised by commenters in the RIA.  Specifically, the
commenters do not raise theoretical objections to the technology but instead identify
engineering  refinements that will need to happen in order for the technology to work. In the
RIA, we address our reasons why we believe that these steps  can indeed occur.  Primary
among the steps will be the need to  have widely available low sulfur diesel fuel. Moreover,
the rapid improvements already shown in these technologies indicate that our assessment of
the potential  of the devices had not been overly optimistic.

       Concerns that there is not a consensus among all parties  as to the best technology
path are not  surprising given the significant lead time provided by this rulemaking.  The fact
that there are multiple ways in which these technologies can be applied helps to ensure that
the technologies can  be tailored to particular applications in the future. EPA has been
working actively with industry to understand all of the issues involved with these advanced
technologies. There have been more than 20 meetings between EPA and engine
manufacturers in the period from August 2000 through December 2000 alone. Further, the
RIA shows that there  is adequate information available  today for EPA to  predict with
confidence that these technological solutions can be applied to meet the emission standards
provided that diesel fuel with sulfur levels below 15 ppm is widely available. In addition, EPA
has committed to biannual  reviews of these technologies in order to monitor their
development and will  issue reports through the 2008 model year.  Should these reviews

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reveal unexpected limitations in the technologies, EPA has indicated it will address these
issues through appropriate modifications of the standards or test procedures.

       As for the comment that EPA should not finalize the formaldehyde standard
(comment 6), we have decided not to do so. Please refer to our response to Issue 3.1.1 (G)
for more detail on that decision.

       With regards to the comment that EPA has failed in its Clean Air Act obligation to
show technical feasibility, EPA is not obligated to promulgate standards based solely on
technology that has already been proven and matured in-use. The standards under section
202(a)(3) may require advancements from current technology so long as EPA provides a
reasoned explanation of its basis for projecting that the standards can be met by technology
that will be available at that time.  EPA's NPRM and  draft RIA contains a detailed description
of the technologies that could be used to meet the standards, the current state of these
technologies, and the expected developments that would allow the technologies to meet the
proposed standards, including the proposed supplemental requirements. The proposal also
discusses the manner in which these technologies can work together to meet the standards.
The final rule contains further information regarding technological feasibility, including the
results of EPA testing of these technologies on current engines.  The final rule also
addresses the  commenters' concerns regarding the  ability of these technologies to meet the
standards throughout their useful lives.  We have provided a clear roadmap toward the
achievement of the final standards. We have met our obligation to show that the standards,
though requiring advancements from current technology, are technologically feasible within
the timeframe provided.

       The comment that "cumulative risk analysis"  shows that an SCR based  NOx control
strategy would be more appropriate is a fundamentally flawed argument due to  the inherent
issues with compliance under an SCR based technology program. While we believe it may
be possible to apply SCR to selected centrally fueled fleets under this program, we have
concluded that it would be impossible to ensure widespread compliance under an SCR
program where an entirely new fluid  needed to be added in order to ensure proper emission
control system function.  EPA promulgates standards providing the greatest reduction in
emissions that is feasible considering specific factors, including cost.  Basing a  rule on the
cumulative risk analysis  provided by the commenter  does not appear to be consistent with
this statutory requirement. Moreover, the cumulative risk analysis is an inherently
questionable approach, because it attempts to quantify unquantifiable subjective beliefs. As
evidenced by the flawed analysis provided in the comment, simple errors or different
assumptions made in this type of subjective analysis can completely skew the "results" of
such an analysis. While qualitative analyses are needed in order to make decisions, to
pretend that these can be  presented in a quantitative manner is simply insupportable. In
addition, the particular analysis provided is unsubstantiated based on incorrect assumptions
regarding the relative risk of the approaches presented. As discussed elsewhere, we are
confident that the final rule will be implemented in full in the time frame provided.  NOx
adsorbers have been shown to achieve 90% NOx reductions using low sulfur diesel fuel.  We
are  less confident that an approach based on the widespread use of SCR can be
implemented successfully in an enforceable manner in the time frame provided. We believe
there are significant barriers to its general use for meeting the 2007 standards. SCR
systems require vehicles to carry a supply of urea. The infrastructure for delivering urea at
the diesel fuel pump would need to be in place for these devices  to be feasible in the
marketplace; and before development of the infrastructure could  begin, the industry would
have to decide upon a standardized  method of delivery for the urea supply.

       In addition to this, there would need to be adequate safeguards in place to ensure the

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urea is used throughout the life of the vehicle since, given the added cost of urea and the fact
that urea depletion would not normally affect driveability, there would be an incentive not to
refill the urea tank.  This could lead to considerable uncertainties regarding the effectiveness
of SCR, even if EPA were to promulgate the regulations that likely would be needed to
require the regular replenishment of urea.  Some commenters have suggested that this is the
key issue with regard to urea SCR systems. One commenter further concludes that this
issue could be addressed by designing engines with on-board diagnostic systems utilizing a
NOx sensor that would observe a loss of NOx control. When observed, the engine would be
designed to reduce power gradually until a 50 percent loss of power was realized.  This
power loss would serve to encourage the user to replenish the urea tank.  While such an
approach may be possible, it raises concerns  for public safety as poor engine performance
could lead to inadequate power for safe merging onto highways and other related driving
situations. We remain hesitant to mandate such a program on a national  scale when
important issues such as driver training on the need to refill the urea tank and the
consequences of failure to do so cannot be appropriately controlled. This approach would
seem to suggest a need for EPA-mandated spot checks of individual vehicles to ensure
compliance with the NOx standard. How such a program would work and the burden that it
might place on small business entities was not addressed in the comments.  In testimony
given at the public hearing held for this rulemaking in Los Angeles, the  California Trucking
Association raised concerns about the appropriateness of putting this regulatory burden on
truckers when a simpler technology such as a diesel NOx adsorber was available instead.
Without measures similar to these, we would expect that a substantial number of users would
not remember to fill their urea tanks.  Since failure to provide urea for a vehicle would lead to
a total loss of NOx control for that vehicle, we  would need to model  the loss of NOx control to
be expected from an SCR based program.  Such a loss in NOx control  most likely would be
appreciable and, in effect, the NOx standard would not be met on a fleetwide basis.

       The assertion that NOx adsorbers have only been proven in the lab misses the fact
that NOx adsorbers are used for NOx control on a production basis for  lean  burn gasoline
engines (primarily in Japan where  premium gasoline has an average sulfur level of 6 ppm)
and in stationary power applications. Both of these examples show that NOx adsorbers can
be used to control NOx emissions  on a continuous basis over an extended period of time.
Further, the lean burn gasoline vehicles show clearly that the technology can work in mobile
sources applications.  The differences between these current applications of the NOx
adsorber technology and the future use of NOx adsorbers to control NOx emission from
diesel engines lies only in the need to adapt the diesel engine operation to the NOx adsorber
performance. The RIA and the previous discussion in this response and the response to
comment 3.2.1(M) clearly show that these engineering issues can be addressed. No
commenter has suggested that there are theoretical limitations of the NOx adsorber
technology which must be overcome.

       EPA received a letter on December 20 (Air Docket A-99-06  Item IV-G-160)
commenting on the NOx adsorber testing completed at EPA's NVFEL testing laboratory (test
report contained in Air Docket A-99-06 item IV-A-29).

       The letter asks "are the results (of the  testing) confounded by the use of different
regeneration strategies across different test modes and  NOx adsorbers?" The commenter is
correct in noting that during the testing the  NOx regeneration strategy was adjusted for
different engine operating modes and for different NOx adsorber formulations. This
approach was used as a surrogate for the control systems that would need to be applied in
order to use a NOx adsorber on an engine.  Specifically the control system (whether
automated, as it was for some testing, or manually-controlled by a test engineer, as it was for
some of the test modes) triggered  NOx regeneration events based upon observed  NOx slip

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from the adsorber. The NOx slip was observed using a NOx/O2 sensor as EPA expects the
manufacturers to use.  Additionally the NOx regeneration fuel rate and duration (the quantity
of fuel injected) was adjusted  again by observing NOx slip and by observing relative air to
fuel ratios (lambda) using the  O2 function on the combined NOx/O2 sensor. This approach
even when done manually by  an engineer is representative of the type of engineering
optimization that would be done by the engine electronic control system.  Most of these
algorithms are similar to fuel trim and on board diagnostic (OBD) algorithms used today for
gasoline three-way-catalyst equipped cars (although the fuel trimming is done on O2 and not
NOx). The testing method does not confound the results,  but rather reflects the appropriate
control response that would be expected when applying the NOx adsorber technology.

      The commenter additionally suggests that the test system developed at NVFEL was
unrealistically over-designed and used idealized test conditions in order to achieve the lowest
emissions without consideration of commercial viability. The test system used at NVFEL is
representative of the type of laboratory equipment that would  be typically used to validate a
concept and to demonstrate projected future effectiveness. Chapter III of the RIA contains a
significant discussion of how EPA arrived at this type of design, and our projections for how
this design must evolve in order to be commercially viable. There we show a schematic
representation of the type of system we believe can be viable and representative of what we
estimated the cost would be.  The resulting system is very similar to the Diesel Particulate
NOx Reduction (DPNR) technology recently announced by Toyota. Toyota expects to
introduce diesel powered trucks using this DPNR technology, a combination of a catalyzed
diesel particulate filter (CDPF) and a NOx adsorber,  for the MY2003.  Based on Toyota's
planned introduction date and the DPNR's substantial similarity to the system that we believe
can provide the necessary reduction efficiencies to meet the Phase 2 standards, we have
concluded that the system tested at NVFEL is appropriately representative and that the
results are indicative of potential NOx and PM reductions.

      Similarly the commenter emphasizes that the results limited to standard laboratory
conditions do not demonstrate that under all conditions the NOx adsorber system can
perform as needed.  Specifically the commenter raises concerns about extended idle
conditions, extended ambient conditions and other test conditions that weren't fully
represented in the test program.  All of these issues are addressed in the RIA and in
response to comments raised on the SET and NTE test provisions in issues 3.2.1 (C,J,M,N,O
and P). The commenter is correct to note that the testing, while covering a significant fraction
of the NTE zone as well as the conditions represented over the FTP and SET procedures,
does not coverall possible ambient conditions and potential vehicle driving situations.
However, the testing provides significant insight into  how these systems can be expected to
operate under a wide range of driving conditions based  upon  its ability to store and release
NOx emissions. The NVFEL  results show for example that NOx emissions can be controlled
even outside of the range of the best steady-state results due to the dynamic characteristics
of the NOx adsorber catalyst.  We therefore believe that the testing provides significant
insight into the way the NOx adsorber technology will function in the future. This, along with
the other substantial information in the public docket on NOx adsorbers including the DOE
DECSE program, provides a firm basis to draw conclusions about the feasibility of the Phase
2 standards across all of the applicable test conditions.

      The commenter raises further questions about how the test results were averaged
and reported in the referenced test report. The confusion  seems to lie in how to compare the
averaged results presented for the testing at individual test modes.  The NOx and HC results
for the steady state testing were calculated by averaging the aggregate emissions over a
single NOx regeneration cycle to generate one data point. Several of these aggregated
emissions values were then used to calculate an average  and a standard deviation for each

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of the test points. The standard deviations between each of the data points taken at a single
test condition were all very small due to the high repeatability of the NOx adsorbers during
regeneration. The commenter is apparently specifically concerned about whether or not
statistically significant differences can be observed between the results from different NOx
adsorber technologies. Although such comparisons can be made based upon the data, we
would caution against using these results to compare the relative effectiveness of any one of
the NOx adsorbers to another. Because the control system used for NOx regeneration
improved throughout the test program the NOx reduction efficiency of the total system
improved as well. Therefore, the NOx adsorbers evaluated during the initial testing  phases
were disadvantaged with regards to their potential performance.  A better conclusion to draw
among the four NOx adsorbers tested is that all of the adsorbers were highly effective at
controlling NOx in spite of the rudimentary control system used and the trial and error manual
tuning approach.
(D)    EPA should adopt standards based on emission control technologies that
       could withstand higher sulfur levels if necessary.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Petroleum Marketers Association of America (IV-F-67)

       (2)     Requiring ultra-low sulfur levels  based only on specific sulfur-sensitivity
              technology such as NOX adsorbers, may lead to poor market response and
              high social costs.  EPA is underestimating the capabilities and ingenuity of
              engine and emission control hardware designers since they may be able to
              develop more sulfur sensitive  technologies.

              Letters:

              Phillips Petroleum Company  (IV-D-250) p. 4

       Response to Comment 3.2.1(0):

       We agree that emission control technologies that are robust with regard to any fuel
property are more desirable than technologies which are sensitive to fuel properties such as
sulfur.  We have carefully reviewed technologies which are capable of providing the
substantial emission reductions that we need in order to achieve the air quality goals
described in the rulemaking.  Our analysis of  these technologies, described in detail in
chapter 3 of the RIA, revealed that all of the technologies which offer promise of substantial
reductions of NOX and PM emissions are highly sulfur sensitive.  While there  are
technologies available which are less sensitive to sulfur, such as lean  NOX catalysts and
diesel oxidation catalysts, the emission reductions allowed through the application of these
technologies are minimal. We have great confidence in the capabilities and ingenuity of
engine and emission control designers to solve  engineering hurdles which limit current
success with technologies. However absent substantive information to suggest that less
sulfur sensitive technologies are capable of substantial emission reductions,  it would be
irresponsible of us to assume that engineers can develop new sulfur insensitive technologies.
Given the substantial need for reductions in emissions from diesel engines (see chapter 2 of

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the RIA), and our analysis which shows that the most promising technologies that can deliver
the needed emission reductions are all very sulfur sensitive, we have concluded that setting a
15 ppm cap on sulfur in diesel fuel and setting technology forcing emission standards based
upon the technologies that low sulfur diesel fuel enables is the best way to ensure that our air
quality goals are met in the future.

(E)    The control technologies that will be used to comply with the rule should be
       evaluated further to determine their long term durability.

       (1)     Successful industry experience with the aftertreatment systems is limited to
              vehicles operating to 100K miles and even at this limited operation, severe
              problems are encountered with respect to catalyst plugging and increased
              fuel consumption. EPA should give long term durability of the new
              technologies a more thorough review before implementing the proposed
              standards.

              Letters:

              DaimlerChrysler (IV-D-344) p. 7-8

       (2)     Transit bus diesel engines currently have a life expectancy of 300,000 miles.
              Transit agencies would like EPA to require that all emission-related devices
              have the same warranty life expectancy.

              Letters:

              American Public Transportation Association  (IV-D-275) p. 4

       (3)     EPA has not addressed  the significant aftermarket and replacement parts
              issues surrounding the widespread use of after-treatment devices on HDEs.
              Given the multiple rebuilds, high mileage accumulation rates, and long life
              spans of HD trucks, it is  unlikely that aftertreatment systems will function
              effectively for the full life of the truck.  Because HDEs are generally operated
              significantly beyond the original warranty period, truckers will not receive the
              same consumer protection absent an EPA program or policy to facilitate
              aftermarket catalyst devices. EPA may not be justified in claiming full life
              emission reductions absent some assurance that catalyst devices will
              continue to operate for the full life or will be replaced as necessary with
              devices that are fully effective.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 39-40
              Marathon Ashland Petroleum  (IV-D-261) p.  34

       Response to Comment 3.2.1(E):

       See response to comments 3.2.1 (C) and (J).

       We are not modifying  the warranty provisions in this rulemaking. However, we are
making a change to the allowable maintenance regulations. This change will require that
manufacturers either design their new exhaust emission control devices to not normally need

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repair or replacement during the full useful life, or pay for scheduled repair or replacement
that is required by the manufacturer to ensure continued emission performance throughout
the useful life of the engine.  While, in effect, this will not necessarily require manufacturers
to pay for an occasional failure, it will require them to pay for any repairs that would be
expected to be so frequent as to require scheduled repair of the devices.

       We believe that our rebuild regulations contained in §86.004-40 adequately address
concerns about engines not being rebuilt correctly.  Those regulations require that someone
rebuilding an engine must have "a reasonable technical basis" for believing that the rebuilt
engine is equivalent (with respect to emissions) to an appropriate certified configuration.
Moreover, we believe that the anti-tampering  provisions of section 203(a)(3) will effectively
prohibit the use of inadequate replacement parts for emission controls. For these reasons,
as well as for the reasons  described in Response 3.2.1(E)(2), we believe that the emission
reductions projected here  are appropriate.  Regarding replacement parts that may be
installed on engines after their full useful life,  EPA has existing aftermarket part certification
regulations that allow part suppliers and purchasers to determine whether the part will
continue to allow satisfactory emission performance.  EPA may consider amending these
regulations in the future to address unique concerns that may arise on engines  certified to the
Phase 2 standards.

(F)     The conditions required for regeneration of NOX or SOX adsorbers conflict with
       the conditions required for the regeneration of participate filters.

       (1)     Adsorber regenerations require low (zero) oxygen partial pressures, a
              supplement of reductant (for NOX adsorbers), low space velocities, and
              moderated temperatures.  However, the regeneration of particulate filters and
              DOCs require high temperatures, high oxygen partial pressures, high NO2
              concentrations and moderate  space velocities. It is not practical to combine
              the regeneration of particulate filters or NOX adsorbers with the regeneration
              of sulfur traps.  Commenter provides significant discussion on this issue
              including a detailed discussion on how the control systems need to be
              configured as a whole given their individual limitations. Commenter concludes
              that the system of aftertreatment devices required to simultaneously reduce
              PM, remove the remaining sulfur, reduce NOX and prevent slip is more
              complex than EPA estimates and notes that EPA has failed to address these
              trap/adsorber systems issues  in its own analysis.

              Letters:

              Cummins,  Inc.  (IV-D-231) p. 18-19

       Response to Comment 3.2.1(F):

       While it is true that the conditions for NOX adsorber regeneration and CDPF
regeneration are different (primarily that for NOX adsorber regeneration low oxygen content is
desirable, while for CDPF  regeneration high oxygen and NO concentrations are desirable) it
is erroneous to assume that this will prevent NOX adsorbers and CDPFs from being
integrated into  a single system. NOX adsorbers and CDPFs can work in a single system
because the NOX regeneration function is a discontinuous event which occurs for only a
fraction of the time (a brief period of low oxygen content operation).  The bulk of emission
control system operation can therefore occur  under oxygen rich conditions which favor CDPF
regeneration.  Further, there are real synergies that make the integration of these

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technologies into a single system desirable as shown in the testing at NVFEL and in the
DNPR system being developed by Toyota. For a complete description of these synergies
please refer to our response to comment 3.2.1(C) and to the RIA.

(G)    PM trap oxidizers can be effective at controlling PM emissions but there are
       some technological issues associated with this type of control that need to be
       resolved.

       (1)     Commenter provides a detailed discussion of PM trap technology along with
              data and various pictures and diagrams that illustrate the limitations
              associated with this type of control. Commenter notes that NO2-based PM
              oxidation (CRT) is the most promising method so far for filter regeneration but
              this method requires an expensive catalyst and requires the use of fuel with
              an extremely low sulfur content in order to prevent  contamination of the
              oxidation catalyst. Commenter provides discussion on the problem of filter
              plugging due to oil ashes and of fuel additives and  the associated reductions
              in fuel efficiency after a certain amount of engine use. Commenter notes that
              because of these limitations, they (DaimlerChrysler) have revised the
              specifications for trap oxidizers (from 100 mbarto 200 mbar admissible
              exhaust back pressure) and that EPA's fuel specifications must be consistent
              with these changes.

              Letters:

              DaimlerChrysler  (IV-D-344) p. 10-12

       (2)     Commenter provides a detailed description of PM trap technology and
              discussion on the issue of lubricating oil ash in diesel particulate filters.
              These filters typically require maintenance to remove accumulated ash after
              about 100,000 kilometers of vehicle operation. The frequency of this
              maintenance will depend on the size and type of the filter, the quality of the
              lubricating oil, lubricating oil consumption, and the  sulfur level in the diesel
              fuel. The less sulfur present in the diesel fuel may  allow for the use of
              lubricating oil formulations that contain less calcium which is a significant
              contributor to ash build-up in diesel particulate filters.  Other lubricating oil
              reformulations that would also reduce the ash content could be used to
              further decrease  ash accumulation in diesel particulate filters. Filter cleaning
              is very simple and quick and methods currently exist for the safe cleaning and
              proper disposal of accumulated ash. The backpressure of the filter system
              returns to normal after cleaning.

              Letters:

              Manufacturers of Emission Controls Association (IV-D-267) p. 4

       (3)     Commenter provides a detailed discussion on the feasibility of diesel
              particulate filters  and notes that the filter regeneration will need to overcome
              numerous technical challenges and limitations. Commenter notes that an
              active regeneration system will be required for instances where exhaust
              temperature is below 675 degrees F for significant  periods of time and that
              the following devices either have not been developed or are not currently
              available: a durable delta-pressure sensor, an exhaust mass air flow sensor

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              (MAP), a reliable variable position exhaust valve system, a wide range
              NOx/Oxygen sensor, EGR systems capable of compensating for high
              backpressure swings, a reliable and feasible heat addition source, and a
              robust and comprehensive control algorithm.  In light of these concerns, EPA
              has failed to appreciate the need for a failsafe active DPF regeneration
              system and without this component, failure of the control technology will
              occur.

              Letters:

              Cummins, Inc. (IV-D-231) p. 11-12

       (4)     PM trap technology actually forms larger numbers of ultra-fine particulates
              and therefore, may not be the appropriate solution to EPA's defined problem.
              Commenter cites to data from AVL/CONCAWE to support their assertion.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 14-15
              Marathon Ashland Petroleum  (IV-D-261) p. 13

       (5)     EPA's conclusions regarding the in-use application of PM traps are based on
              extrapolations from field experiences associated with the operation of
              advanced particulate filters  on heavy-heavy duty diesel applications to light-
              heavy and light-duty diesel vehicles.  The extrapolation is based on EPA's
              observation that the lower operating temperatures of light-heavy and light-
              duty diesel vehicles will require lower diesel fuel sulfur levels in order to
              facilitate PM trap regeneration. These  observations ignore two important
              facts:  that there are no field data on light-heavy and light-duty diesel engines
              to support a sulfur level below 50 ppm and that field data on retrofit
              installations of the  catalyzed particulate trap on existing vehicle/engines
              technology are not relevant to a rulemaking that is targeted at "new" or
              "advanced" technology that will be meeting more stringent emissions
              standards in the 2007 model year.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 26
              Marathon Ashland Petroleum  (IV-D-261) p. 19

       Response to Comment 3.2.1(G):

       We agree  that the most promising technology for controlling PM emissions is
catalyzed diesel particulate filters which oxidize NO to  NO2 to promote filter regeneration,
such as the CRT technology mentioned in the comment. Further we agree that these types
of technology are highly sulfur sensitive as detailed in chapter 3 of the RIA and do have some
cost associated with their application as detailed in chapter 5 of the RIA. Catalyzed diesel
particulate filters (CDPFs) can provide substantial PM and NMHC reductions in a cost
effective and durable manner provided that they are operated on diesel fuel with sulfur
content at or below 15 ppm.

       The commenters raise concerns, in spite of the substantial positive experience with

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this technology in Europe where thousands have been applied successfully as detailed in
Chapter III of the final RIA contained in the docket, that the technology may not be reliable
under certain cold ambient conditions and would require the application of some form of
active filter regeneration. Further, the commenter suggests that active systems to regenerate
the PM filter can not be devised or are too complicated to be applied. We disagree with the
assessment of the commenter and, as detailed extensively in chapter III of the RIA, have
concluded that diesel particulate filters will function as required throughout the life of a heavy-
duty diesel vehicle provided that diesel fuel with sulfur content at or below 15 ppm is used.
We have reached this conclusion based on the extensive experience in Europe on retrofit
technologies which shows that catalyzed diesel particulate  filters are reliable without the use
of active regeneration technologies provided that low sulfur diesel fuel is used.  This
experience includes more than 3,000 vehicles in Sweden where the winter ambient
conditions are quite severe.  Of course engine or vehicle manufacturers could choose to
apply active regeneration should they desire,  however based on the extensive retrofit
experience with CDPFs we do not believe that this will be necessary.

       The comments expressed about CDPF maintenance are consistent with our
understanding of the technology as described in Chapters 3 and 5 of the RIA. However,
while the commenter notes that current retrofit applications perform maintenance of the
CDPFs on 100,000 km intervals, we have estimated that future CDPFs will be able to extend
that interval substantially for the very reasons outlined in the comment.  It is our
understanding that the engine manufacturers and the engine  lubricating oil suppliers are
already discussing potential changes to engine oil formulations for 2007 in anticipation of the
Phase 2 fuel sulfur level and CDPF based emission  standards.

       The assertion in the comment that CDPFs will require an active regeneration system
for instances where the exhaust temperature  is below 675°F (357° C) for significant periods
of time is contradicted by the substantial experience with retrofit CDPFs in Europe. SAE
paper 970182 "Experience with a New Particulate Trap Technology in Europe," documents
real in-use operation with the CDPF technology.  Figures 5.2 and 5.3 in the paper document
the exhaust temperatures typically seen by a  garbage truck in Hannover and a city bus  in
Paderborn equipped with the CDPF technology.  In both instances the vast majority of the
vehicle operation occurs with exhaust temperatures well below 350°C. In spite of these low
temperatures the CDPFs on  these vehicles regenerated passively in the retrofit applications.
This was accomplished without the need for the additional hardware mentioned in the
comment. The paper concludes with "To date (the paper was published in 1997), some 1800
vehicles with a wide variety of application have been equipped with this technology in Europe
and operational experience has confirmed the stable and low back-pressure characteristic
predicted for a system which is continuously regenerating above 250°C".

       Lastly, PM trap technology in combination with ultra low sulfur diesel fuel has been
shown to greatly reduce the numbers of ultrafine particulate matter (see Chapters, section
A2b of the RIA). Sub-50 nm diameter ultrafine particulate matter is composed chiefly of
semi-volatile compounds, primarily organic compounds nucleated onto sulfuric acid aerosol.
The paper cited in the comment makes the correct assumption that passing higher sulfur
content fuels over a catalyzed trap produces sulfate  PM (chiefly sulfuric acid). This is one of
the reasons that the use of PM trap technology requires the use of ultra-low sulfur diesel.

       Fundamental to the use of CDPFs is the need for the  low sulfur diesel fuel mandated
by this program. To understand the role that sulfur plays in CDPF feasibility please refer to
the responses to issue 3.3.1  and to the RIA associated with this rulemaking.

(H)    EPA should also address the ultra-fine particles that are generated by modern,

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       clean burning diesel engines since these are capable of being suspended in
       the air for up to a week, are absorbed into the lungs very efficiently, and are
       associated with the onset of asthma.

       (1)    This commenter added that the only method that has been found to control
             ultra-fine particles in diesel engine exhaust from a modern, clean burning
             engine is a particulate trap with an oxidation catalyst to remove what is called
             "soluble organics fraction" and also noted that the reduction of these ultra-fine
             particles cannot be achieved without the availability and use of very low-sulfur
             fuel.

             Letters:

             Stead, Craig  (IV-F-116) p. 115

       Response to Comment 3.2.1(1-1):

       This is functionally the same as control of PM emissions using a CDPF.  Please see
Chapters, section A2bof the RIAand the response to comment 3.2.1 (G).

(I)     Disagrees with EPA's proposal to limit allowable repairs or replacement of filter
       elements in particulate traps  or trap oxidizer systems and related components.

       (1)    Under EPA's current proposal, the only  allowable maintenance for filter
             elements in particulate traps or trap oxidizer systems and related components
             would be cleaning and adjustment of the filter element [cites to Section
             86.007-25(b)(4)(iii)]. These proposed restrictions are a significant departure
             from current allowable maintenance procedures, which allow the adjustment,
             cleaning, repair,  or replacement of critical emissions-related components at
             100,000 miles (or 3,000 hours of use) and at 100,000 mile/3,000 hour
             intervals thereafter for light H DDEs-or at 150,000 (or 4,500 hour) intervals
             for medium and heavy HDDEs. Commenter provides additional detailed
             discussion on expected deterioration  of the emissions control equipment, the
             risks of not allowing such repairs, and asserts that EPA has failed to consider
             the difference between  HDDE owners and LDV owners in terms of
             maintenance when it proposes such limitations.

             Letters:

             DaimlerChrysler (IV-D-344) p. 13-14
             Engine Manufacturers Association  (IV-D-251) p. 71-72

       (2)    EPA's proposed  limitations on maintenance and repair could have an adverse
             effect on the development of new technologies.  Engine manufacturers
             already have strong incentives to minimize  required maintenance and placing
             restrictions on allowable maintenance will only restrict the use of promising
             emission control technologies that may  not be able to meet the allowable
             maintenance requirements.

             Letters:

             DaimlerChrysler (IV-D-344) p. 14

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              Engine Manufacturers Association (IV-D-251) p. 72

       Response to Comment 3.2.1(1):

       Our existing regulations contain provisions that limit the amount of maintenance to
emission-related components that the manufacturer is allowed to conduct during durability
testing (or specify in the maintenance instructions that it gives to operators). We believe that,
with very low fuel sulfur levels, these technologies will be very durable in use and will last the
full useful life with little or no scheduled maintenance other than cleaning. The durability of
these technologies is described in more detail in the RIA.

       As the commenters noted, we are modifying these provisions for traps and adsorbers.
The old regulations would have allowed a manufacturer to specify something as drastic as
replacement of the adsorber catalyst bed or the trap filter after as little as 100,000-150,000
miles if there merely was a "reasonable likelihood" that the maintenance would get done.
However, because the new emission control technologies will reduce emissions by 90
percent or more, even 10 percent non-compliance of the maintenance specifications by a
vehicle owner could result in very large  emission increases. Thus, to ensure that no
manufacturer underdesigns their adsorbers or traps (compared to the level of durability that is
achievable), we are requiring that these technologies be designed to last for the full useful life
of the engine unless the manufacturer is willing to pay for the maintenance.  More
specifically, the final regulations state that scheduled replacement of the PM filter element,
NOX adsorber, or other catalyst module  bed is not allowed during the useful  life, unless the
manufacturer can show that the replacement will in  fact occur and pays for the replacement.
Otherwise, only cleaning and adjustment will  be allowed as scheduled maintenance. We
believe that this revised requirement will ensure that manufacturers make every effort to
design durable emission controls, and that if it were  necessary to schedule maintenance to
the exhaust emission control devices, the maintenance would be performed for virtually all
engines.  We do believe this requirement will promote the development of improved
technologies rather than have an adverse impact on their development as suggested by the
commenter.

(J)     EPA's conclusions regarding  the feasibility of NOX adsorber technology are  not
       supported by data in the public record, nor has the technology  been sufficiently
       proven in the field.

       (1)     Adsorber performance regardless of the sulfur level falls significantly short of
              what is needed to meet  EPA's proposed standards. The technology fails in
              issues relating to durability, low temperature performance, high temperature
              performance, not-to-exceed standards, regeneration, desulfation cycles,
              tampering and driveability. The  technology is in such an  early state of
              development that there is no substantive scientific evidence  that they can
              meet the proposed NOX  standards at any sulfur level. No data  are available
              for EPA to draw such broad conclusions regarding the technology as to
              require a 15 ppm sulfur cap in the hope that the technology will work. Cites a
              study  by Engine, Fuel and Emissions Engineering, Inc. (EF&EE) "Selective
              Catalytic Reduction and NOX Adsorption Catalyst Technologies for Heavy-
              Duty Diesel Vehicles," Aug. 2000, which concludes that the feasibility of NOX
              adsorbers has yet to be  established.  EPA provides no basis for its  projection
              that the durability of the technology will be  such as to meet the standards
              throughout the  useful life of the vehicles.  In fact, the DECSE study reports
              that regardless of sulfur level, NOX adsorbers  lose 50% of their effectiveness

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              after a mere 250 hours of service accumulation.  Nor does EPA provide any
              basis for its conclusions that improvements can be made to optimize the
              adsorber technology to function at lower exhaust temperatures. Similarly,
              EPA's expectation of improved NOX performance at higher temperatures is
              unfounded, and EPA provides no information on the type of chemistry
              modifications required, nor the timeframe or cost of such modifications.
              Moreover, EPA had yet to finalize the NTE standards before it concluded that
              NOX adsorber performance will be within the NTE, which action is highly
              inappropriate and gives the public no basis upon which to evaluate EPA's
              assessment.  Nor has EPA provided any meaningful evidence that the
              obstacles it identifies in NOX adsorber technology will or can be overcome and
              at what cost.  EPA must address the issue of tampering with NOX
              regeneration and desulfation controls, as it has addressed the issue in regard
              to SCR. And EPA must address the issue of driveability impacts resulting
              from NOX adsorber regeneration and desulfation cycles.

              Letters:

              American Petroleum Institute (IV-D-343) p. 31-36
              Marathon Ashland Petroleum (IV-D-261) p. 25-31, 92-93

       (2)     Commenter provides significant discussion and data regarding the
              effectiveness of NOX adsorption technology. NOX adsorbers are extremely
              sensitive to any amount of sulfur in the exhaust stream (see Issue 3.3.2).
              There has been no successful demonstration of a NOX adsorber which can be
              desulfurized periodically and maintain sufficient activity to meet the NOX
              emission reduction requirements for the full useful life of a HDE and there has
              been  no demonstration of a regenerable sulfur trap that can survive to full
              useful life (see Issue 3.3.5). In addition to the issue of sulfur sensitivity,
              current catalyst formulations do not have the capability to  provide sufficient
              NOX conversion over the entire range of engine operating  conditions.
              Commenter provides data and analysis that show NOX conversion at various
              exhaust temperatures using several catalyst formulations  and the percentage
              of NOX reduction obtained during the various modes of the EURO test cycle.
              Commenter asserts that numerous technical challenges will need to be
              addressed adding that a reductant  delivery system with the required
              atomization capabilities in the limited  space available remains a significant
              system integration problem; that the durability of a reductant delivery system
              has not been proven; that a low range NOX sensor, sulfur trap, and
              comprehensive control algorithms are not available; and that the cost, weight
              and size of the control system will present additional logistical problems and
              implementation issues.  Commenter concludes that the observed efficiencies
              will not allow meeting the proposed level of NOX emissions on the standard
              tests and are far from obtainable on the proposed SST, particularly under
              expanded ambient conditions.

              Letters:

              Cummins, Inc. (IV-D-231) p. 12-16
              Marathon Ashland Petroleum (IV-D-261) p. 24-25, 92-93

       (3)     Commenter cites to a study done for API by AVL List GmbH, which indicates

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             that the NOX adsorber has not been demonstrated to enable HDDEs to meet
             EPA's proposed NOX emission standards at any sulfur level, including near
             zero.

             Letters:

             Mercatus Center at GMU  (IV-D-219) p. 13-14

       Response to Comment 3.2.KJ):

       The majority of the issues raised here are addressed in responses to comments
3.2.1(C), 3.2.1(F), 3.2.1(M), 3.2.1(N), and 3.2.1(O).

       With regards to the issues raised on low temperature and high temperature
performance of the NOX adsorber technology we disagree with the commenters' assessment
of the available information on NOX adsorber performance. A substantial portion of the RIA
discussion on NOX adsorbers (Chapter III.A.S.b.iv) focuses on this very issue, defining both
the constraints on performance at low and high temperatures, and the effect of these
constraints on the feasibility of the standards.  The RIA shows that these constraints can be
understood and that while  they limit NOX adsorber performance on the margins, the NOX
adsorber catalyst can enable the Phase 2 NOX standards. Testing at NVFEL shows that NOX
adsorbers can meet both the steady-state SET standard and the transient FTP standard.
Further as noted in the  RIA, NOX adsorber developers are known to be working on means to
increase the upper temperature limit of the NOX adsorber catalyst.

       Heavy-duty diesel engines rarely operate continuously under high load steady-state
conditions (the highest exhaust temperatures) but instead normally operate under steady
moderate loads (highway cruise) or transiently with periods of light, moderate and heavy
loads.  The lower and upper temperature limits of the technology are  based upon  the steady-
state performance of the NOX adsorber in  a test cell. Transient testing of the NOX  adsorber
catalyst done at NVFEL and described in the RIA shows that transient operation tends to
average out the lowest and highest temperatures to more moderate temperatures where the
NOX adsorber performs better. This is because of the  thermal inertia  of the emission control
system itself. Thermal inertia describes that fact that when transitioning from operation at
moderate temperatures to  low temperatures the catalyst temperature will remain higher than
the inlet exhaust temperature until the catalyst cools down. Similarly when transitioning from
moderate exhaust temperature operation to high temperature exhaust operation the catalyst
temperature will lag the exhaust temperature, meaning that the catalyst will remain somewhat
cooler. Since typical engine operation is somewhere between these extremes, average NOX
reductions can be higher under transient conditions than what would  be predicted from
continuous steady-state NOX reduction levels.  In fact,  that is exactly what was observed in
emission testing at NVFEL. Based upon observed engine-out emission rates over the
transient FTP test cycle and observed steady-state NOX conversion efficiencies, an estimate
of the transient FTP NOX reduction was made.  The estimated reduction level was 84 percent.
When an actual transient FTP was completed, the real emission reduction level was 93
percent. This difference was most likely due to the thermal inertia of the system.  For a more
in-depth discussion of high temperature and low temperature performance, as well as a
discussion of why even with these limitations NOX adsorber catalysts  are capable  of meeting
the Phase 2 NOX standards, please  refer to chapter III  of the RIA.  For a discussion of how
these issues effect compliance with the NTE standards please see our response to
comments 3.2.1(N) and 3.2.1(O).

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       The tampering issue is raised by the commenter in context of the significant
compliance issues with the urea SCR technology. We think that this comparison is
inaccurate and that a better comparison can be made to the closely related three-way
catalyst technology. Both the NOX adsorber and the gasoline three-way catalyst technology
employed for the vast majority of light-duty vehicles in the U.S. rely on careful controlled
exhaust conditions  in order to function properly. These functions are controlled by the
vehicles computer without intervention by the user. Since the actions of the emission control
system are transparent to the user and because modification of the emission control system
requires significant  sophistication on the part of the modifier, tampering of these systems is
unlikely.  This is contrasted with the urea SCR technology which can only work properly when
the user remembers to "fill-up" the urea supply tank. Absent urea, SCR based NOX control is
not realized. Since proper operation of the system relies on user intervention the likelihood of
"tampering" (including simply failing to add urea either accidently or to avoid paying for urea)
is significantly increased.

       The assertion by the commenter that there has been no successful demonstration of
a NOX adsorber which can be desulfurized (desulfated)  periodically and maintain sufficient
activity to meet the  NOX emission reduction requirements for the full useful life of a HDE is
misleading.  In fact, researchers at Ford have shown that a NOX adsorber can be desulfated
periodically (90 times in their test) while maintaining NOX conversion efficiencies in excess  of
90 percent (SAE 982595).  Chapter III of the RIA  has a significant section devoted to NOX
adsorber durability. There we show that sulfur in diesel fuel is the primary cause of NOX
adsorber deterioration.  Further we show that there are means to remove the sulfur from the
NOX adsorber catalyst (desulfation) while recovering NOX control effectiveness. We also
document that when done incorrectly the desulfation event can lead to thermal degradation of
the catalyst.  We show the mechanism for this degradation (thermal sintering of the catalytic
metals) and means to control this process. The issue of thermal sintering of NOX adsorber
catalyst components is similar to the thermal sintering issues faced by light-duty three-way
catalysts  for vehicles developed to meet current California LEV and future Federal Tier 2
standards using platinum-rhodium (Pt-Rh) catalysts.  Initial designs were marked by
unacceptable levels of platinum sintering which limited the effectiveness of Pt-Rh catalysts.
This problem was overcome through modifications to the catalyst supports and surface
structures that stabilize the precious metals at high temperatures (>900 °C)  (Brisely et
al.,SAE 1999-01-3627). A similar approach  to the stabilization of NOX adsorber catalyst
components should reduce thermal sintering of components during desulfation.  Further, by
controlling the maximum temperature experienced during desulfation the amount of thermal
degradation can be controlled to acceptable levels. This appears to be the reason for the
good results reported in SAE 982595,  mentioned above. We believe for the reasons
mentioned above, that the best way to ensure long term NOX adsorber durability is to
decrease the fuel sulfur level as much as possible in order to decrease the number and
frequency of NOX adsorber desulfation events. From the data presented in the RIA, we can
conclude that NOX adsorbers will be durable over the life of heavy-duty diesel engines.

       The study done for API by AVL referenced in the comment provides the basis for the
comments raised and addressed in 3.2.1(M).

       The commenters raise concerns that the NOX regeneration  (and presumably the
desulfation event) may cause unacceptable  driveability  issues.  We agree with the
commenters that maintaining acceptable driveability is an important constraint on the design
of any emission control system. If, during  regeneration  events, torque fluctuations were
noted that were large enough to cause a change in engine/vehicle speed this would be
problematic. While we agree that this  is an important consideration, we disagree with the
implication in the comment that these issues can not be addressed. To the contrary research

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programs are already showing that this issue can be addressed. In DOE's Diesel Emission
Control Sulfur Effects (DECSE) program work was done on NOX adsorber regeneration
(DECSE "Phase I"). There the researchers showed that torque variation can be limited during
NOX regeneration concluding that "the minimal torque fluctuations observed indicate that
rich/lean modulation strategies would not significantly impact driveability."  Further, positive
test results in DECSE Phase II, lead the researchers to conclude, "The desulfurization
(desulfation) procedure developed has the potential to meet in-service engine operating
conditions and acceptable driveability conditions." The DECSE work shows clearly that this
issue can be addressed.  For additional information on the DECSE work please refer to
chapter III of the RIA or to the numerous DECSE reports contained in EPA docket A-99-06.

       For the dual leg approach to NOX adsorber regeneration, where the exhaust flow is
partitioned and where the reductant (diesel fuel) is added to the exhaust, driveability issues
are not expected to be problematic. This is because the dual leg approach does not require
changes to base engine operation to work.  For the NVFEL testing described in chapter III of
the RIA, the engine used for testing was a current production heavy-duty diesel engine.  No
changes to the engine's combustion system or the engine's electronic control system were
made that would be expected to change driveability in a noticeable way. Yet NOX reductions
in excess of 90 percent were noted in the testing.

(K)    The use of diesel oxidation catalysts (DOC) is complicated when used in
       conjunction with other after-treatment devices since DOC must be placed at the
       end of the system components.

       (1)    The application of DOCs presents numerous challenges.  During the
             regeneration of one of the two NOX adsorbers, the effluent from the
             regenerating adsorber is oxygen free and DOCs cannot oxidize in an oxygen
             free environment. The streams from both paths are joined upstream of the
             DOC and the stream from the nonadsorber regeneration side provides the
             oxygen to oxidize the products. Without proper mixing of the two streams, the
             proposed  NMHC standard will not be achievable.  DOCs require high exhaust
             gas inlet temperatures in order to function properly but when used in
             conjunction with other devices, the exhaust gas temperature entering the
             DOC will be at their lowest values. This presents a challenge since the DOCs
             ability to function is jeopardized under low ambient conditions.

             Letters:

             Cummins, Inc. (IV-D-231) p. 16

       Response to Comment 3.2.KK):

       The comment presupposes that these functions will not be integrated. In fact the
integration of catalyst monoliths, each having somewhat different function, in series in one
catalyst housing is very common in current light-duty gasoline vehicle applications  in the
United States. Toyota has demonstrated a flow-switching capability within a single  catalyst
housing, and the capability to integrate both catalyzed diesel particulate filter and NOX
adsorber catalyst functions into a single wall-flow monolith device (see  document number IV-
E-31 in the docket for this final rule). Chapter III.A discusses integration of catalyzed diesel
particulate filters and multiple NOX adsorbers into one housing, and discusses reduction of
thermal inertia through use of an integrated approach to the exhaust emission control
system. Document number IV-G-98 in docket A-99-06 describes catalyst systems already

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developed for the light-duty market that mount an additional monolith in the catalyst cone
(see presentation titled, "Gasoline-Powered Emission Control Systems: Advanced
Technologies for ULEV and SULEV," page 27 of item IV-G-98), which is a logical approach
to integrating a  DOC (if necessary) into the emissions control system in a manner that
conserves heat while still positioning the DOC downstream of where the regenerating and
adsorbing flows converge.

(L)     EGR systems are capable of significantly reducing NOX emissions, but there are
       some technological issues that need to be resolved that will prevent the
       effective use of this technology by 2007.

       (1)     Exhaust gas recirculation systems are currently under development and could
              be capable of significantly reducing NOX emissions. However, development
             work to date (as completed by Daimler along with cooler suppliers) has
              shown that cooler performance decreases rapidly after only a few hours of
              service, which negatively impacts  the EGR system's ability to reduce NOX.
             According to cooler suppliers, this phenomenon is of physical origin and
              cannot be solved technically. Increased soot and excessive engine wear
              increase in engines that use EGR systems and as a result, HDDEs equipped
             with EGR systems must also be fitted with changed charge-cycle systems as
             well as other modifications.  Commenter provides additional detailed
              discussion and data regarding the limitations associated with EGR technology
              and asserts that there is  nothing in the record to suggest that this technology
             will be available for introduction by 2007.

              Letters:

              DaimlerChrysler (IV-D-344) p. 12-13

       Response to Comment 3.2.KL):

       We disagree with these comments.  First, these comments raise concerns regarding
the technical feasibility of EGR equipped HDDEs, and their ability to achieve both a 2.5
g/bhp-hr NMHC+NOX level and a 0.01 g/bhp-hr PM level, without the use of CDPFs. These
issues were dealt within in the context of the Phase 1 rule, and are not at issue in this rule.  In
the Phase 1 rule, we demonstrated the technological feasibility of the 2004 standards (2.5
g/bhp-hr NMHC+NOX and 0.1  g/bhp-hr PM), which was based on the use of HDDEs using
cooled  EGR systems, without the need for CDPFs. The commenter suggests that EGR
equipped HDDEs will have PM emissions far in excess of the 0.10 g/bhp PM level, and
therefore the CDPFs will not be able to achieve the 2007 0.01 g/bhp-hr PM standard because
there won't be sufficient NO2 to oxidize the PM. Specifically, the commenter suggest it
requires 10 times the mass of NOX to oxidize a given mass of PM. As discussed above, we
have already demonstrated in the  Phase 1 rule that an EGR equipped  HDDE can achieve
both a 2.5 g/bhp-hr NMHC+NOX standard and a 0.10 g/bhp-hr PM standard. We have
estimated that the NOX emission rate will be on the order of 2.2 to 2.3 g/bhp-hr NOX.
Therefore, there will be more than the 10 times NOX/PM mass ratio the commenter suggests
is needed for CDPFs to achieve the PM  standard promulgated in this rule.

(M)    Advanced after-treatment systems together with highly reduced fuel sulfur
       content could be required in addition to cooled exhaust gas recirculation (EGR)
       and other diesel engine technologies to meet the proposed diesel engine
       standards.

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       (1)    Commenter provides as supporting documentation, a report and presentation
             entitled "Evaluation of Future Diesel Engine Technologies" as submitted by
             Paul Zelenka and Wolfgang Cartellieri of AVL List BmbH, Graz, Austria, to
             the NPRA at their 2000 annual meeting. This report outlines the technologies
             that could be  used to meet the standards and the issues associated with use
             and implementation.

             Letters:

             National Petrochemical & Refiners Association (IV-D-26) p. 1-23

       Response to Comment 3.2.KM):

       The report summarized here lists technologies which AVL feels are most likely to be
used in order to meet a presumed HD 2007 emission standard. The report did not address
the use of a NOX adsorber catalyst in order to meet the standard because AVL presupposed
that a NOX adsorber catalyst would be unable to provide the required NOX reductions. As
documented by the test programs completed by DOE and EPA (in our RIA), this assumption
is erroneous as NOX adsorbers have been shown to be more than 90 percent effective in
controlling NOX emissions over the regulated test procedures.

       AVL additionally listed several statements, suppositions and conclusions about the
NOX storage catalyst (NOX adsorber) that bear addressing here.

       1. Fundamental research and application work primarily concentrating on LDV
       engines is ongoing at AVL and other places. - AVL apparently does not feel that
       there is a  theoretical flaw with the technology since it is already working on
       applications (presumably for the  EURO IV LDV standards).  Their concerns for Heavy
       Duty vehicles appear to be based upon engineering hurdles and not on theoretical
       limits of the technology.

       2. Desorption at rich conditions without any disadvantages (soot increase, secondary
       emissions, driveability etc.) is being developed by the use of some kind of
       homogeneous diesel combustion. - Here AVL suggests yet another means of NOX
       adsorber  regeneration unanticipated by EPA in its analysis (the RIA identifies two
       methods for NOX adsorber regeneration, in-cylinder post injection and in-exhaust dual
       leg systems). That engineers will continue to find new and novel ways to develop the
       exhaust conditions needed for NOX adsorber regeneration seems to be self evident
       from AVL's statement.

       3. Main obstacle to be overcome is desulphurization (desulfation,) of stored sulfates.
       This requires temperatures in the range of 450 to 700 °C,  which are hardly achievable
       during sufficient long period in daily use.  At these high temperatures catalyst ageing
       is promoted impairing system durability. - AVL reaches the same conclusion that
       EPA has about the primary issues with NOX adsorber durability. First that sulfur
       poisons the NOX adsorber catalyst.  Secondly that desulfation is possible but only at
       elevated temperatures (although we disagree with AVL that these conditions can not
       be met in  daily use).  And lastly that elevated temperatures promote catalyst aging
       (thermal degradation).

       However, we depart from AVL's conclusions on two points. The high exhaust

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       temperatures can in fact be generated for desulfation in a manner that has the
       potential to meet in-service engine operating conditions and acceptable driveability
       conditions as shown by the DOE DECSE Phase II work documented in the RIA.
       Second, we document in the RIA that although thermal degradation is a serious
       problem, it can be managed.  Please see our responses to issues 3.2.1 (C) and
       3.2.1 (J).

       4.  For high load operation being typical for heavy-duty diesel engines lean-rich
       switching inevitably produces heavy smoke peaks because of lack of oxygen at these
       conditions.  The higher the load, the more frequent will be the need for regeneration
       of the adsorber (due to the higher NOX mass flow rates and limited NOX storage
       capacity at reasonable adsorber size).  Upon switching to rich conditions more
       frequently also the fuel consumption penalty will be higher, and the thermal load of
       engine components (piston, cylinder head, valves, exhaust system incl. catalyst) will
       also increase dramatically with HD diesel engines at high engine loads. - This
       appears to be AVL's primary reason for concluding that NOX adsorbers will not be
       viable for heavy-duty diesels in the 2007 timeframe. The concerns they raise here
       appear to assume that the rich engine operation is accomplished via a late cycle in-
       cylinder injection event which could potentially cause the concerns raised here. We
       disagree with AVL's conclusion here, not in that they have not raised important
       issues, but in that they have failed to look to potential remedies which are clearly
       available. The concerns with increased smoke (PM) can be addressed as shown in
       the NVFEL testing through the application of a CDPF,  which is already needed to
       meet the Phase 2 PM standard. As to the thermal loading concern, this is clearly  not
       an issue for a split catalyst (dual leg) system such as the one described in the RIA. It
       is also unlikely to be a concern for the homogenous diesel combustion approach
       suggest by AVL. Lastly, we should  note that DOE is already doing late cycle injection
       based NOX regeneration and NOX adsorber desulfation in their Phase II DECSE work
       and have not reported issues or problems with thermal loading. Rather they conclude
       about the more severe desulfation cycle that "The desulfurization (desulfation)
       procedure developed has the potential to meet in-service engine operating conditions
       and acceptable driveability conditions".

       In contrast to AVL's assertion that NOX adsorbers can  not be applied successfully  to
heavy-duty diesel engines in the timeframe of this rulemaking  is  a wide range of comments
received by EPA that say clearly that NOX adsorbers can be applied in that timeframe. Some
examples of those comments are:

       1.  The Department (the U.S.  Department of Energy) is confident that, assuming a
       reasonable rate of technology development before 2006, diesel fuel sulfur levels
       averaging 10 ppm or less will enable emission control devices (NOX adsorbers and
       CDPFs) to operate effectively over the full useful vehicle life and, therefore, allow the
       vehicles/engines to meet the future  standards (the Phase 2 standards)." - letter from
       DOE to Bob Perciascepe 6 September 2000, EPA Docket A-99-06 Item IV-G-28.

       2.  ... the technological challenges posed by the proposed 2007 HDD standards are
       achievable.  .. with the surety of specific standards at a known date, along with a
       concerted effort by the engine manufacturers and the emission control technology
       industry, once again we will "make it happen" with technology and integrated systems
       that meet the standards and are durable,  letter from Martin Lassen - Johnson
       Matthey Catalytic Systems division 19 October 2000,  EPA Docket A-99-06 Item IV-
       G-55.

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       3.  We believe all NOX adsorber development issues have been identified and the
       technology is proceeding according to schedule.  Letter from John Mooney Director,
       Technology Development and Business Systems Engelhard Corporation to Margo
       Oge, U.S. EPA 3 October 2000, EPA Docket A-99-06 Item IV-G-38.

       EPA's own laboratory testing program (documented in the RIA) indicates that the NOX
adsorber technology has already made large technological leaps and apparently could be
implemented in the relatively near future.

       The AVL report does substantiate our assertion that low pressure loop EGR may be a
desirable technology given low sulfur diesel fuel and the use of CDPFs. AVL estimates that
the use of low pressure loop EGR enabled by this rulemaking would result in a three percent
improvement in fuel economy when compared to the more conventional high pressure loop
solution (EPA made no estimate of this potential savings, although we agree that this savings
may be possible). Further AVL substantiates our conclusion that the application of CDPFs
will as stated by AVL "reduce the number of nano-particles in the exhaust to a negligible
level."

       We disagree with AVL's conclusion that the Urea SCR technology is the only means
to  meet the  Phase 2 NOX standards. While we agree with their technical assessment that the
technology can be further developed to deliver effective  NOX control, we have concluded as
explained in issue 3.2.1(C) that a successful program based on the widespread use of SCR
is questionable for the 2007 timeframe.

(N)    The proposed supplemental emission requirements and tests (SERTs) are not
       technologically feasible and should not be adopted for Model Year 2007 and
       later engines.

       (1)    The SERTs are not mere add-on tests to ensure compliance with the
             proposed standards but constitute separate and more stringent emission
             control standards in and of themselves.  EPA has failed to provide analysis
             that the SERTs (which were developed on the basis of retarded timing
             (finalized to apply to EGR) and are now proposed for implementation with
             aftertreatment), are technologically feasible with respect to the proposed NOX,
             NMHC, PM,  and formaldehyde standards. In this context, EPA has failed to
             meet its statutory mandate.  (See also Issue 7.4.3 and  Issue 12.2.)  In
             addition, EPA should fully analyze the impacts of the use of the aftertreatment
             technology that is necessary for meeting the proposed 2007 standards on
             engine manufacturers' ability to comply with the now-finalized SERTs.  EPA
             has failed to analyze the aftertreatment impact on the FTP and has not
             addressed the issue in the context of the supplemental emission
             requirements.

             Letters:

             Cummins, Inc.  (IV-D-231) p. 21-28
             Detroit Diesel Corporation (IV-D-276) p. 23-26
             Engine Manufacturers Association (IV-D-251) p. 57-58

       Response to Comment 3.2.1(N)(1):

       Commenters  suggest we have not met our statutory requirements regarding the NTE

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and the SET tests. We disagree with this comment. As discussed in Chapter 3 of the RIA
for this final rule, we examined the technological feasibility of the supplemental standards,
and we have concluded they are technologically feasible and otherwise appropriate by model
year 2007.  We highlight the key issues and data contained in the RIA below.

       With respect to the supplemental emission test (SET) requirements, we have
demonstrated in our laboratory that the NOx, NMHC, and PM standards can be achieved with
the combination of CDPFs and NOx adsorbers.  Chapter 3 of the RIA contains a detailed
discussion of the PM reduction capabilities of CDPFs, and includes a discussion of data
which shows that CDPF equipped HDDEs can achieve a PM level of 0.01 g/bhp-hr when
operated on 15 ppm fuel (see specifically Chapter lll(A)(2)(a) of the RIA,  and the discussion
surrounding Figure III-A.2. and Table III-A.1.). Based on available data, Table III-A.1. of the
RIA shows that a HDDE equipped with a CDPF can achieve a PM emission rate over the
SET test of 0.009 g/bhp-hr, which would meet the SET PM standard promulgated today, i.e.,
1.0 x FTP standard. In the RIA, Tables III.A.-7 through III.A.-10 shows NOx and HC emission
data over the SET from our NVFEL test program for a HDDE equipped with both a CDPF
and a NOx adsorber using a single-bed test arrangement. This data shows NOx reductions
from four different adsorbers of greater than 90 percent, and HC emissions for three of the
four adsorbers are below the 0.14 g/bhp-hr NMHC SET standard contained in this rule (i.e.,
the SET standard is 1.0 x FTP standard).  Table III-A.2 of the RIA shows test data from our
NVFEL test program using a dual bed NOx adsorber system. This data also shows a 90
percent reduction in NOx emissions is achievable using a NOx adsorber, though HC
emissions were reduced only a small amount to a level of 0.27 g/bhp-hr.  As discussed in
Chapters of the RIA, these HC emissions could be reduced significantly beyond this level
with an optimized clean-up diesel oxidation catalysts, as well as with an optimized NOx
adsorber regeneration method, to a level sufficient to meet the SET NMHC standard.  The
Phase 1 rule established an SET NOx standard of 2.5 g/bhp-hr NMHC+NOx (1.0 x 2004 FTP
standard). We estimate that 2.2  to 2.3 g/bhp-hr of these emissions will be NOx, therefore, an
emission reduction on the order of 90 percent or more will be required to achieve the SET
standard promulgated in this rule. Considering the level of reductions we have already
demonstrated and the lead time available to engine manufacturers to optimize these control
technologies, the SET standards are feasible by model year 2007. (See chapters of the RIA
fora detailed discussion of the feasibility of the SET standards)

       Regarding the feasibility of the NTE standard, in response to comments and other
information available since the proposal, we have changed the NTE standard in this final rule
from the proposal in order to address technological issues associated with the anticipated
use of exhaust emission control devices such as CDPFs and NOx adsorbers, as discussed
here.  First, we have finalized an NTE emission standard of 1.5 x FTP standard, which is
slightly higher than the 1.25 x FTP standard we proposed. For PM emissions, the NTE
requirement, unlike the HD FTP or SET standard, is not a composite test (i.e., the 20 minute
transient HD FTP cycle or the 13-steady-state SET modes).  In fact, a  number of the
individual modes within the SET  test fall within the NTE engine control zone. As discussed in
Chapter 3 of the RIA, CDPFs are very efficient at capturing elemental carbon  PM (>95
percent), but sulfate-make under certain operating conditions may exceed the FTP or SET
standard, which is part of the reason the  PM NTE standard is greater than the FTP and SET
PM standards. If carbon PM, generated by HDDEs were the only contributor to PM (i.e.,
particulate sulfate generation was zero), then a PM NTE standard on the order of 1.0 x FTP
standard could very well be considered feasible. However, as discussed in the  RIA, CDPFs
themselves generate PM  from the sulfur in the fuel.  Even at the low diesel fuel sulfur levels
which will be available as a result of the diesel fuel sulfur requirements established in  this
rule, particulate sulfate generation will be  significant. The DECSE test program discussed in
the RIA, in addition to testing CDPFs and reporting data from the SET test, also reported PM

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performance results at two individual steady-state modes, the peak-torque condition and a
"road-load" condition. The peak-torque test mode produces very high exhaust gas
temperature (and would therefore be representative of the highest sulfate particulate
generating conditions) and the road-load condition is intended to be representative of a
typical HD diesel engine line-haul cruise operation (75 percent load, Euro B speed).  A linear
fit of the DECSE PM emission results for the road-load and peak-torque conditions between
the three ppm sulfur test fuel and the 30 ppm sulfur test fuel point shows that the two CDPFs
which were tested produced an 88-94 percent or greater reduction at a linear interpolated
sulfur level of seven ppm (near the expected in-use average) and an 83-90 percent reduction
at a linear interpolated sulfur level of 15 ppm (capped level), for both test operating points.
For both CDPFs, the road-load condition resulted in lower sulfate make and higher overall
PM reduction than the peak-torque condition.  Based on this information, under very high
particulate sulfate formation conditions, at 15 ppm sulfur a CDPF can produce at least an 83
percent reduction, and at the expected refinery average sulfur level of seven ppm, when
operated at very high sulfate conversion engine conditions a CDPF can produce at least an
88 percent reduction. It should be noted that a prolonged steady-state test condition at the
peak-torque mode fora HDDE is representative of the highest exhaust gas temperature
producing engine operating conditions.  The DECSE testing conditions for these two steady-
state points prescribed a five minute warm-up and a 20 minute sample collection, fora total
of 25 minutes of operation at peak-torque.  The peak-torque test data described above could
be considered representative of the worst case particulate sulfate generating conditions.  The
data show that even under these test conditions, an 83 percent reduction would be sufficient
to comply with the NTE provisions, even considering PM sulfate make, when tested on 15
ppm sulfur fuel. Under the Phase 1 rule, a HDDE could emit PM emissions subject to the
NTE requirements as high as 0.13 g/bhp-hr (1.25 x 0.10 g/bhp-hr). An 83 percent reduction
from this engine would result in a PM emission rate of 0.022 g/bhp-hr, which would comply
with the 2007 NTE PM standards contained in this final rule.70

       Under the Phase 1  HDDE provisions (which includes the Phase 1 FTP standards and
the 2007 NTE provisions as they apply to the Phase 1 FTP standards), emission "carve-out"
zones of the NTE control zone were defined.  These carve-out zones are areas within the
defined NTE control zone which  are excluded from meeting the  NTE standards for specific
emissions.  The Phase 1 rule defined two types of carve-out zones, one which applied to all
regulated emissions (gaseous emissions and PM), and one carve-out zone which only
applied to PM. The PM only carve-out zone was specified to exclude low load, high speed
engine operation from the NTE requirements.  During these conditions,  HDDEs not equipped
with CDPFs can produce higher PM emission  rates, and it was decided within the Phase 1
rule to exclude HDDEs from complying with the PM NTE requirements when operated within
the defined PM  carve-out zones. With the application of CDPFs to HDDEs, these PM only
carve-out zones are not needed. As discussed previously, CDPFs are very effective at
reducing engine-out PM.  During the recent NVFEL test program which evaluated the
effectiveness of diesel CDPFs on low sulfur diesel fuel, we included one steady-state test
point which was within the Phase 1 rule's PM carve-out zone.  Specifically, the test point was
228 ft-lbs torque and 2,415 rpm (listed as Mode 6 in Figure III.A-6 of the RIA), which places
the test condition near the center of the Phase 1  rule's PM carve-out zone for this engine. At
       70 The PM NTE standard contained in this final rule is 1.5 x FTP standard, or 1.5 x 0.01 g/bhp-hr.
40 CFR 86.007-11(a)(4)(v) specifies that the rounding procedures in ASTM E29-90 should be applied to the
NTE emission standard, therefore, the NTE standard is rounded to the same number of significant digits as
the FTP standard,  i.e., 1.5 x 0.01g/bhp-hr is rounded to 0.02 g/bhp-hr. An engine with a  measured NTE PM
emission rate of 0.022 g/bhp-hr would also be rounded using ASTM rounding provisions,  and would be
rounded to the same number of significant digits as the standard, so 0.022 g/bhp-hr would round to 0.02
g/bhp-hr, and would meet the NTE PM standard.

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this operating condition, one of the CDPFs reduced engine-out PM by more than 95 percent,
from 0.068 g/bhp-hr to 0.003 g/bhp-hr, the second CDPF produced similar results.  Based on
the high PM reduction capability of CDPFs when operated on low sulfur diesel fuel, and their
demonstrated ability to achieve >90 percent reductions when operated inside the Phase 1
PM carve-out zones, we have eliminated the PM-only carve-out zones from the NTE
requirements.

       The PM NTE requirements apply not only during standard laboratory conditions, but
also during the expanded ambient temperature, humidity, and altitude limits defined in the
regulations.  We believe the NTE PM standard is technologically feasible across this range of
ambient conditions. As discussed above, CDPFs are mechanical filtration devices, and
ambient temperature changes will have minimal effect on CDPF performance. Ambient
altitude will also have minimal, if any, effects on CDPF filtration efficiencies, and ambient
humidity should have no effect on CDPF performance. As discussed above, particulate
sulfate make is sensitive to high exhaust gas temperatures, however, at sea-level conditions,
the NTE requirements apply up to ambient temperatures which are only 14°F greater than
standard test cell conditions (100°F under the NTE, versus 86°F for HD FTP laboratory
conditions). At an altitude of 5,500 feet above sea-level, the NTE applies only up to an
ambient temperature within the range of standard laboratory conditions (i.e., 86°F). These
small or non-existent differences in ambient temperature should have little effect on the
sulfate make of CDPFs, and as discussed above, even when tested under at an engine
operating test mode representative of the highest particulate sulfate generating conditions
(25 minutes at peak-torque operation) with 15 ppm sulfur diesel fuel, we predict the engine
would comply with the PM NTE standard. Based on the available test data and the expected
impact of the expanded, but constrained, ambient conditions under which engines must
comply with the NTE, we conclude that the PM NTE standard is technologically feasible by
2007, provided low sulfur diesel fuel (<15 ppm) is available.

       Regarding the feasibility of the NTE NOx standard, under the Phase 1HDDE rule,
NTE emission requirements for NMHC+NOx specify the NTE standard as 1.25 x FTP
standard. The Phase  1 FTP standard for NMHC+NOx is 2.5 g/bhp-hr, therefore the Phase 1
NMHC+NOx NTE standard is 3.1 g/bhp-hr. As discussed in the Phase 1 final rule, we would
expect the break-down between NMHC and NOx emissions for the Phase 1 NTE standard to
be mostly NOx emissions, on the order of 3.0 g/bhp-hr NOx, with the remainder being
NMHC.  In this rule, we have promulgated the Phase 2 engine NOx NTE standard as 1.5 x
FTP standard, i.e., 1.5 x 0.20 g/bhp-hr, which is 0.30 g/bhp-hr NOx. Therefore, a 90 percent
reduction in NOx emissions is necessary from Phase 1 engines in order to achieve the
Phase 2 NTE NOx standard in this final rule. As discussed here and in the RIA for this rule,
this 90 percent reduction is technologically feasible by model year 2007 across the  range of
engine operating conditions and ambient conditions subject to the NTE standards specified in
the regulations. Also as discussed below, some modifications to the NTE provisions to
address technical issues which arise from the application of advanced NOx catalyst systems
have been included in this final rule. Section III.A.S.b.v.c of the RIA ("NVFEL's NOx Adsorber
Evaluation Program"), contains a description of the NOx adsorber evaluation test program
run by our EPA laboratory. Included in that section is test data on four different NOx
adsorbers for which extensive steady-state mapping was performed in order to calculate the
SET and AVL composites (See Figures III.A-7 through III.A-10 of the RIA).  Several of the
test modes presented  in these figures are not within the NTE NOx control zone, and would
not be subject to the NTE standard. The following modes listed in these four figures are
within the NTE NOx control zone, EPA modes 6 -13, 15, 17, 19, 20.  For all of the adsorbers,
efficiencies of 90 percent  or greater were achieved across the majority of the NTE zone. The
region of the NTE zone for which efficiencies less than 90 percent were achieved were
concentrated on or near the torque curve (EPA modes 8, 9, 15 and 17) with the exception  of

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Adsorber D, for which EPA modes 6 and 7 achieved 87 percent and 89 percent NOx
reduction respectively. However, Adsorber D was able to achieve NOx reductions greater
than 90 percent along the torque curve. The test modes along the torque curve represent the
highest exhaust gas temperature conditions for this test engine, on the order of 500°C.  As
discussed in Section III.A.S.b.iv.cof the RIA, 500°C is near the current upper temperature
limit of the peak NOx reduction efficiency range for NOx adsorbers, therefore it is not
unexpected that the NOx reductions along the torque curve for the test engine are not as high
as in other regions of the NTE zone. We would expect manufacturers to choose a NOx
adsorber formulation which matches the exhaust gas temperature operating range of the
engine.  In addition, the steady-state mode data in section III.A.S.b.v.cof the RIA were
collected under stabilized conditions.  In reality, actual in-use operation  of a heavy-duty diesel
vehicle would likely not see periods of sustained operation along the torque curve, and
therefore the likelihood the NOx adsorber bed itself would achieve temperatures in excess of
500°C would be diminished.  Regardless, as discussed in Section III.A.S.b.iv.a & c of the RIA,
we expect incremental improvements in the high temperature NOx reduction capabilities of
NOx adsorbers between now and model year 2007 will be achieved through improvements in
NOx adsorber formulations. As discussed above, only small  improvements in the current
characteristics are necessary in order to achieve 90 percent NOx reductions or greater
across the NTE control zone. Considering the available  lead time, we expect these
improvements will occur and enable the NTE to be achieved.

      As discussed in section III.A.S.b.vi.a, the use of advanced NOx reduction catalyst
systems on HDDEs will present cold-start challenges for HDDEs similar to what light-duty
gasoline manufacturers have faced in the past, due to the light-off characteristics of the NOx
adsorber. We have previously  discussed the tools available to HDDE manufacturers to
overcome these challenges in order to achieve the Phase 2 FTP NOx standard.  The majority
of engine operation which occurs within the NTE control  zone will occur at exhaust gas
temperatures well above the light-off requirement of the NOx adsorbers. Figures III.A-7
through III.A-10 in section III.A.S.b.v.cof the RIA  ("NVFEL's NOx Adsorber Evaluation
Program") show that all test modes which are within the NTE control zone have exhaust gas
temperatures greater than  300°C which, as discussed in section III.A.S.b.ivof the RIA, is well
within the peak NOx reduction efficiency range of current generation NOx adsorbers.
However, though the NTE does not include engine start-up conditions, it is conceivable that a
HDDE vehicle which has not been warmed  up could be started and very quickly be operated
under conditions which are subject to the NTE standard; for example, within a minute or less
of vehicle operation after the vehicle has left an idle state. The NTE regulations specify a
minimum emissions sampling period of 30 seconds.  Conceivably the vehicle emissions
could  be measured against the NTE provisions during that first minute of operation, and in all
likelihood it would not meet the NTE NOx standard set in this final rule.  Given that the FTP
standards will require  control of cold-start emissions, manufacturers will be required to pay
close attention to cold start to comply with the FTP.  As discussed above, operation with the
NTE will be at exhaust gas temperatures within the optimum  NOx reduction operating
window of the NOx adsorbers, that is,  even under cold ambient conditions, NTE engine
operation will generally occur at exhaust gas temperatures greater than 300°C. In addition,
as discussed in Chapter 3 of the RIA, a NOx adsorber is capable of adsorbing NOx at lower
exhaust gas temperatures, on the order of 100°C, but they have not been shown to be able to
reduce the stored NOx at this low temperature. Figures III.A-7 through II.A.-10 of the RIA all
show NOx emission reductions on the order of 70 - 80 percent are achieved at temperatures
as low as 250°C.  Therefore, we have established a low temperature exhaust gas threshold
of 250°C, below which specified the NTE NOx and NMHC requirements do not apply.

      The minimum emissions sample time established under the  Phase 1 rule for NTE
testing is 30 seconds. This testing requirement was premised on the use of Phase 1  HDDE

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emission control technology such as EGR and fuel injection timing. These emission control
devices tend to produce brake-specific mass emission rates of exhaust pollutants which do
not have periodic,  orders of magnitude changes in brake-specific emission rates within the
NTE control zone when averaged over a 30 second sample time.  However, this is not the
case for the NOx adsorber catalysts. As discussed throughout this Chapter, NOx adsorbers
require active regeneration events, which can produce near zero mass emission rates during
the adsorption phase, followed by relatively large spikes in NOx and HC emissions during the
regeneration phase.  This is illustrated in Figure III.A-11 of the RIA, which shows that engine
out NOx under steady-state conditions on the order of 640 ±15 ppm, which is fairly
continuous.  However, the NOx emissions downstream  of the NOx adsorber are both much
lower and are characterized by periodic, orders of magnitude changes in emissions.  The
NOx concentration downstream of the adsorber shows periods of near zero ppm  NOx lasting
approximately 10 seconds, followed by a NOx peak with a maximum concentration of
approximately 40 ppm, with the spike lasting approximately four seconds.  A similar
phenomenon can be seen in  Figure III.A-11 of the RIA for hydrocarbon emissions. Because
of this unique periodic nature of the NOx adsorber system, we have modified the  NTE
sample time  provisions in the regulations, to ensure that the emission spikes described
above are not measured in isolation during NTE  testing. The regulations specify that for any
emission control system which requires discreet  regeneration events, if a regeneration event
occurs within the emissions sample, the emissions averaging time must be at least as long at
the time between regenerations events (i.e., a regeneration period), multiplied by the number
of full regeneration events within the sample period. This  provision to account for
regeneration events ensures that the unique operation of the  NOx adsorber system will not
cause an inappropriate exceedance of the  NTE limits.

       The NTE requirements apply not only during laboratory conditions  applicable to the
transient FTP and the SET tests, but also under the wider range of ambient conditions for
altitude, temperature and humidity specified in the regulations. These expanded  conditions
will have minimal impact on the emission control systems  expected to be used to meet the
NTE NOx standard contained in this final rule. Under the  Phase 1 rule, NTE emissions under
the expanded NTE testing conditions can be as high as 3.1 g/bhp-hr NMHC+NOx (1.25 x
2004 FTP standard). Therefore, we assume here that engines in the 2007 time frame are
capable of achieving 3.1 g/bhp-hr NMHC+NOx over the NTE without the use of the NOx
control devices needed to achieve the standards contained in this rule. Thus, we analyze the
impact of the NTE expanded testing conditions on the NOx adsorber, not on the base engine
which is capable of achieving the Phase 1 NTE requirements. In general,  it can be said that
the performance of the NOx adsorbers are only effected by the exhaust gas stream to which
the adsorbers are exposed. Therefore, the impact of ambient humidity, temperature, and
altitude will only effect the performance of the adsorber to the extent these ambient
conditions change the exhaust gas conditions  (i.e., exhaust gas temperature and gas
constituents). The ambient humidity conditions subject to the NTE requirement will have
minimal, if any, impact on the performance of the NOx adsorbers. The exhaust gas  itself,
independent of the ambient humidity, contains a  very high concentration of water vapor, and
the impact of the ambient humidity on top of the products of dry air and fuel combustion are
minimal. The effect of altitude on NOx adsorber performance should also  be minimal, if any.
The NTE test procedure regulations specify an upper bound on NTE testing for altitude at
5,500 feet above sea-level. The Phase 1 regulations require compliance with an  NTE
NMHC+NOx limit of 1.25 x the Phase 1 FTP standard up to this altitude. As discussed
above, a 90 percent reduction in NOx emissions  from the  Phase  1 technology engines is,
therefore, necessary to comply with the NTE standard established in this rule.

The decrease in atmospheric pressure at 5,500 feet should have minimal impact on  the NOx
adsorber performance.  Increasing altitude can decrease the air-fuel ratio for HDDEs which

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can in turn increase exhaust gas temperatures; however, as discussed in the Phase 1 final
rule, Phase 1 technology HDDEs can be designed to target air-fuel ratios at altitude which
will maintain appropriate exhaust gas temperatures, as well as maintain engine-out PM levels
near the 0.1 g/bhp-hr level and NOx emissions can be maintained within the Phase 1 NTE
standard (1.25 x 2.5 g/bhp-hr NMHC+NOx), within the ambient conditions specified by the
NTE test procedure.  Finally, the NTE regulations specify ambient temperatures which are
broader than the FTP temperature range of 68-86°F. The NTE test procedure specifies no
lower ambient temperature bounds.  However, as discussed above, we have limited NTE
requirements on NOx (and HC) for engines equipped with NOx (and/or HC) catalysts to
include only engine operation with exhaust gas temperatures greater than 250°C. Therefore,
low ambient temperatures will not present any difficulties for NTE NOx compliance. The NTE
also applies under ambient temperatures which are higher than the FTP laboratory
conditions.  The NTE applies up to a temperature of 100°F at sea-level, and up to 86°F at
5,500 feet above sea-level. At altitudes in between, the upper NTE ambient temperature
requirement is a linear fit between these two conditions. At 5,500 feet, the NTE ambient
temperature requirement is the same as the upper end of the FTP temperature range (86°F),
and therefore will have no impact on the performance of the NOx adsorbers, considering that
majority of the test data described throughout this chapter was collected under laboratory
conditions.  The NTE upper temperature limits at sea-level is 100°F, which is 14°F. (7.7°C)
greater than the FTP range. This increase is  relatively minor, and while it will increase the
exhaust gas temperature, in practice the increase should be passed through the engine to
the exhaust gas, and the exhaust gas would be on the order of 8°C higher. Within the
exhaust gas temperature range for a HDDE during  NTE operation, an 8°C increase is very
small. As discussed in detail in Chapters of the RIA, we expect manufacturer to choose an
adsorber formulation which is matched to a particular engine design,  and we would expect
the small increase  in exhaust gas temperature which can occur from  the expanded ambient
temperature requirements for the NTE will be taken into account by the manufacturer when
designing the complete emission control system.

       As discussed in the RIA, we  have demonstrated that reductions in NMHC emissions
are possible useing both CDPFs and NOx adsorber, in combination with a clean-up diesel
oxidation catalysts. Considering the 0.2 to 0.3 g/bhp-hr HC emission levels of todays
HDDEs, we anticipate that 2007 technology HDDEs equipped with CDPFs, NOx adsorbers,
and a clean-up  DOC, will be capable of achieving the NTE NMHC standard promulgated in
this final rule (0.21  g/bhp-hr, i.e. 1.5  x 0.14 g/bhp-hr), provided the following constraints are
placed on NTE  NMHC testing. The  minimum emission sample time provisions for the NTE
test have been changed to reflect the potential for short-duration high HC emissions which
can occur following a regeneration event, as described above for NTE NOx emissions.  This
change to the NTE minimum sample time approach will address any feasibility concerns
which could arise because of the short-term increase in HC emissions immediately following
a regeneration event, by increasing the  sample time to include the time period until the next
regeneration. In addition, the NMHC NTE provisions do not apply until the hydrocarbon
emission control device (e.g., DOC)  has achieved a warmed up exhaust gas temperature of
at least 250°C on the outlet of the device. As discussed above, this same provision applies
to the NOx NTE standard.  With these additional constraints placed on NTE testing, we
conclude the NTE  standard for NMHC can be achieved by model year 2007.

       Regarding  the comments on an  NTE formaldehyde standard, we  have not
established an NTE formaldehyde standard in this rule.  Please see response to comment
3.1.1(G) for more detail on this issue.

       (2)    EPA has not specifically addressed expanded ambient conditions in the
             proposed rule.  However, based on  EPA's statements that the just-finalized

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             SERTs also would be applicable to HDEs under the proposed rule, it is
             assumed that the SERTs include requirements for expanded ambient
             conditions. Commenters provided significant discussion, data and analysis
             on this issue with respect to the technological feasibility of aftertreatment at
             low ambient temperatures and at high altitude conditions, as well as the need
             to protect the aftertreatment system at extreme ambient temperatures.
             Commenters also note that EPA has not given adequate consideration to the
             impact of combining the required technologies into one emissions control
             system at FTP conditions or with the new SERTs at expanded ambient
             conditions and provide additional discussion on this issue.

             Letters:

             Cummins, Inc. (IV-D-231) p. 22-25
             Engine Manufacturers Association (IV-D-251) p. 64-66

       Response to Comment 3.2.KNH2):

       We disagree with the comment that we have not addressed the feasibility of the
supplemental emission requirements over the expanded ambient conditions.  First,  it should
be noted that the SET test procedure is a laboratory based tested, applicable to the same
conditions which apply to the pre-existing NTE standard.  Therefore, any comments
regarding the "expanded ambient conditions" are not relevant to the SET standard.  With
respect to the NTE requirements, as discussed in response to comment 3.2.1(N)(1) above
and in more detail in Chapters of the RIA, we have considered the effects of ambient
temperature  and altitude as they apply to the  NTE test procedures, and as discussed above
we have concluded the NTE standard is technologically feasible over the range of ambient
conditions which during which the NTE standard is applicable.
       The commenters suggest that exhaust emission control  devices are effected by
exhaust gas  temperature, and they raise a concern with the impact of low ambient
temperatures on NTE performance. As discussed in response to comment 3.2.1(N)(1)
above, we have considered this impact in our feasibility analysis, and we have addressed it
by placing a  constraint on NTE compliance, i.e., the  regulations  specify that for NTE NOx and
NMHC compliance, HDDEs do not need to comply with the NTE requirements when the
exhaust gas  temperature  on the outlet side of the aftertreatement device(s) is less than 250
degrees Celsius.

       The commenters raise concerns regarding compliance with the NTE PM standard at
altitude. EMA's comments includes PM data on electronically controlled and mechanically
controlled HDDEs manufactured between 1980 and 1995, which indicates PM emissions
increase with altitude.  This data is not relevant to the 2007 technology engines. First, no
mechanical engines are produced today for on-highway HDDEs. Second, there is no
indication that manufacturers attempted to meet PM standards at altitude for any of the data
provided, so the data does not show that engines can't comply with the PM standard at
altitude. Finally, these engines were  not equipped with CDPFs.  In this rule, we have
discussed the large reductions in PM emissions which can be achieved with the use of
CDPFs, and as discussed in response to comment 3.2.1 (N)(1) and in Chapter 3 of the RIA,
we have considered the impact of altitude on  the emission performance of Phase 2
technology engines, and we have concluded the PM NTE  standards are technologically
feasible by model year 2007.

       With regard to the comment on the need to protect the exhaust emission control

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system at extreme ambient temperatures, the commenter does not suggest what "extreme"
is. The NTE requirements, under the NTE ambient operation conditions option 2 in the
regulations, apply at ambient temperatures up to 100 deg. F at sea-level, and at 86 deg. F at
5,500 feet above sea-level. We consider these ambient temperatures to be typical,
especially during high ozone days when emissions control is critical, rather than "extreme",
as suggested by the commenter.  As discussed in response to comment 3.2.1(N)(1) above
and in the RIA, the NTE is achievable within these bounds.  For temperatures above these
levels, the manufacturers will of course have the right to apply to the Agency for auxiliary
emission control devices to protect the engine/vehicle from damage, which could include
protection of the exhaust emission control device from extreme exhaust gas temperatures. In
addition, within the temperature/altitude bounds described above and defined in the
regulations, the NTE only applies "under conditions which can reasonably be expected to be
encountered in normal vehicle operation and use" (see 40 CFR 86.1370(a)). Therefore,
manufacturers  would also  be allowed to receive AECDs for engine/vehicle protection during
abnormal and/or extreme vehicle operation, provided they can demonstrate to the Agency's
satisfaction  that such vehicle operation should not be subject to the NTE standard.

       We  disagree with the comment we have not given adequate consideration  to the
combination of the required technologies with respect to their ability to achieve the FTP
standards or the supplemental emission requirements (NTE and SET). Such analysis has
been performed, and there is a detailed discussion in Chapters of the RIA (see specifically
the discussion  under section (A)(3)(b)(iii) of Chapter 3 of the RIA, and the text discussion
Figure III-A.4 of Chapter 3), as well as a discussion with respect to the NTE and SET
standards in response to comment 3.2.1 (N)(1) above.

       (3)     EPA has not analyzed the impact of the SERTs on the proposed
              formaldehyde standard. The SERTs only add additional uncertainty about the
              need for and appropriate limits of a possible formaldehyde standard and EPA
              should not finalize a standard until an appropriate technological feasibility
              analysis is completed that would address these issues.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 67

       Response to  Comment 3.2.1 (N)(3):

       Regarding the comments on an NTE formaldehyde standard, we have not
established  an  NTE formaldehyde standard in this rule.  However, we  expect significant
formaldehyde control over the NTE operation just as we do during FTP operation.

       (4)     Supplemental testing data collected with respect to the 2004 emission
              standards does not support the feasibility of the proposed standards.  When
              evaluating the 2004 data, it is important to consider the context in which the
              supplemental testing requirements were met. The techniques that  could be
              employed to meet the NTE requirements and reduce emissions well below
              the 2004 standards are not available under the 2007 standards.  The low
              2007 standards do not allow substantial operation well below the FTP-based
              standards and there is little or no margin to accommodate variability in the
              overall efficiency of the engine emission control system.  The 2007 HD diesel
              engine standards are just 10 percent of the 2004 standards. Therefore, the
              25 percent variability allowance under the 2007 standards is equivalent to a

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              mere 2.5 percent of the 2004 standards. It is extremely unlikely that these
              engines could maintain emissions under various conditions within such a
              small range.  To the extent that the supplemental testing data for the 2004
              standards is relevant, it suggests that the standards cannot be met.

              Letters:

              General Motors Corp. and Isuzu Motors America, lnc.(IV-D-256) p. 50-51

       Response to Comment 3.2.1 (N)(4):

       The commenters present a detailed discussion of why data from 2004 technology
HDDEs does not demonstrate the  feasibility of the 2007 NTE standards contained in this
rule. As discussed in response to  comment 3.2.1 (N)(1) above, and in more detail in the RIA,
we have not relied solely on data from 2004 technology HDDEs in  making our determination
the 2007 NTE standards for Phase 2 engines are technologically feasible. As discussed in
response to comment 3.2.1(N)(1) and in the RIA,  we have analyzed data from NOX adsorbers
and CDPFs, which are clearly not the emission control technology  which will be used to
achieved the 2004 HDDEs standards. As discussed in detail in the Phase 1 rule, we expect
the 2004 HDDE standards will be achieved primarily through the use of cooled EGR.

(O)     The proposed NTE limits are not technologically feasible.

       (1)     The proposed NTE zone establishes a 1.25 factor over the base standard.
              However, this does not provide any additional flexibility because of
              measurement inaccuracy and rounding procedures. A 0.25 g/bhp-hr standard
              that must be met over all points of the engine operating map is not
              technologically feasible.  In addition, for the proposed PM standard, the NTE
              limit and the standard on the FTP  are essentially the same which does not
              make any sense and EPA has failed to show that such an NTE standard is
              technologically feasible.  The NTE is fundamentally inconsistent with the FTP
              and therefore, violates the testing  provisions of the  CAA.  Slight changes in
              the efficiency of the emission control system that are acceptable when
              attempting to meet the "2004" standards, would have ten times the
              percentage effect on emissions from a "2007" technology engine. Therefore,
              a 3 percent decrease in converter efficiency that is  barely noticed under the
              2004 standards could easily cause emissions to increase over 125 percent of
              the 2007 standards, resulting in an NTE violation.  Without data correlating
              the NTE emission limits with the standard FTP transient test protocol, it is not
              even clear how stringent the NTE  limits are, or whether they are technically
              feasible.  EPA should eliminate the NTE requirements from its proposed rule
              or modify the supplemental testing requirements in  a way that renders them
              technologically feasible and cost effective for manufacturers. Commenters
              provided significant discussion on this issue describing in detail why the NTE
              limits are not feasible.

              Letters:

              Cummins, Inc. (IV-D-231) p. 23-26
              Engine Manufacturers Association (IV-D-251) p. 59
              General Motors Corp. and Isuzu Motors America, lnc.(IV-D-256) p. 56-60
              International Truck & Engine Corp.(IV-D-87) p. 1-2, (IV-D-257) p. 20-23

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       Response to Comment 3.2.KOH1):

       We agree with the comment that an NTE standard of 1.25 x FTP standard in the
context of the Phase 2 2007 FTP standards for NOx, NMHC, and PM is not appropriate, and
in this final rule we have established an NTE standard of 1.5 x FTP standard.  The
technological feasibility basis for this decision is discussed in response to comment 3.2.1 (N)
above, as well as in the RIA for this final rule.

       The commenters raise concerns regarding the appropriateness of an NTE level of
1.25 x FTP standard due to emission measurement procedures and  mathematical rounding
issues. Regarding emission measurement procedures, EMA provides no detail regarding the
comment, other than stating that "The 'headroom' purportedly made  available by the NTE
limits is meaningless because of measurement inaccuracy."  EMA also mentions the NTE
limit cannot be discerned from the FTP standard due to measurement resolution issues for
NOx, though no data is provided. As we discuss in response to comments under issue
7.4.5(A), emission measurement equipment is currently available which is capable of
accurately measuring the low emission levels required  by these standards.  Please see our
responses to the comments under issue 7.4.5(A). Regarding the comment on rounding, we
have incorporated standard ASTM rounding procedures into the NTE regulations, and these
provisions make it clear that the NTE standard does not round down  to the FTP standard.
Specifically, the NTE standard of 1.5 x FTP standard results in an NTE standard of 0.30
g/bhp-hr NOx, 0.21 g/bhp-hr NMHC, and 0.02 g/bhp-hr PM, all of which are numerically
higher than the FTP standard.

       Regarding the comment that the NTE is fundamentally inconsistent with the FTP and
therefore, violates the testing provisions of the CAA, we disagree with this comment.
International's comments along this  line implies that the NTE violates the CAA's testing
provisions because the NTE does not test compliance with the FTP.  This comment is not
logical. The  NTE emission standard is a standard in and of itself, and it does not  rely on the
FTP test procedure for determining compliance with the NTE standard. The regulations
define test procedures for NTE testing which are separate and distinct from the FTP
standard, and the purpose of the NTE test procedure is to determine compliance with the
NTE standard, not to determine compliance with the FTP standard. The CAA does not
restrict the Agency from setting separate and distinct standards and test procedures
applicable to HDDEs.  For example, the Agency has had smoke standards for a number of
years which have their own emission test procedure which is distinct and separate from the
FTP test procedure.

       Regarding the comments from General Motors/lsuzu on 2004 vs. 2007 NTE
requirements and conversion efficiencies, the relevance of this discussion to the 2007 NTE
standards is  unclear. First, the 2004 standards are based on the feasibility of EGR
technology, not on exhaust emission control technology. Second, with respect to  the
feasibility of the 2007 NTE standards, as discussed in response to comment 3.2.1(N) above
and in the RIA, we have considered  the application of exhaust emission control devices (e.g.,
NOx adsorbers and CDPFs) to HDDEs, and we have made a  number of changes to the
proposal which address the feasibility issues for model year 2007. In the Chapter 3 of the
RIA, we discuss the data available regarding NOx conversion efficiencies which NOx
adsorbers are capable of producing  across the NTE engine control zone. Considering the
near 90 percent or greater NOx reduction capabilities across the NTE engine, the NTE
standard of 1.5 x FTP standard is achievable by model year 2007.

       Regarding the comment on the need for the Agency to correlate the NTE standard to

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the FTP standard in order to determine the stringency and feasibility of the NTE standard, the
intent of this comment is unclear. As discussed in the proposal and in this final rule, the
Agency has evaluated all of the proposed requirements and as promulgated in this final rule
the requirements are appropriate under the Agency's authority under the Clean Air Act.  In
this final rule we have established separate FTP and NTE standards which we have
determined are technologically feasible by model year 2007 and are otherwise appropriate
under the Clean Air Act.  The commenter suggested that without information regarding how
the pre-existing FTP correlates to the NTE, it is not possible to know how stringent the NTE
is, or if the NTE is feasible.  We disagree with these comments. The issue of whether or not
the NTE is more or less stringent than the  pre-existing FTP is not relevant to the Agency's
standard setting process. Based on the information presented in this final rulemaking we
have determined the NTE standards are feasible and appropriate for model year 2007. The
issue of how the NTE compares in stringency to the pre-existing FTP, or how the NTE
correlates to the pre-existing FTP is not relevant to the critical question the Agency must
answer - which is whether or not the NTE, FTP, and the SET requirements contained in this
final rule are technologically feasible and otherwise appropriate under the CAA by model
year 2007, and the Agency  has determined that the answer to this critical question is yes for
each of these test procedures and standards.

       Regarding the comment that EPA should eliminate the NTE requirements from its
proposed rule or modify the supplemental testing requirements in a way that renders them
technologically feasible and cost  effective for manufacturers. We agree with the comment
that the NTE requirements should be technologically feasible. As discussed in response to
comment 3.2.1(N) above, we have made a number of changes in this final rule which make
the NTE feasible by model year 2007. Regarding the comment that the NTE must be cost-
effective, please see response to comment 5.10(D).

       (2)    The proposed "NTE deficiencies" will not be as helpful as EPA expects and
             cannot be used as a substitute for establishing the technological feasibility of
             the proposed NTE limits. These provisions would give little help to engine
             manufacturers in attempting to comply with the NTE limits alone and would
             give no help with the other supplemental emission requirements. The time
             frame  in which manufacturers would be allowed to apply for and obtain
             deficiencies is very limiting. In addition, these provisions could lead to an
             uneven playing field in the industry. One of the commenters  notes that these
             provisions should not be used as a substitute for conducting a thorough
             analysis of the technological feasibility of the NTE zone and limits.

             Letters:

             Cummins, Inc. (IV-D-231)  p. 25
             Engine Manufacturers Association (IV-D-251) p. 60-61

       Response to  Comment 3.2.1 (O)(2):

       Regarding NTE deficiencies, as discussed in response to comment 3.2.1(N) above,
and in more detail in the RIA, we  have determined the feasibility of the NTE standards based
on the data available and our analysis of this data, and we have not considered the
availability or the in-availability of NTE deficiencies in making this determination.  However,
the availability of deficiencies can only help manufacturers in attempting to meet the NTE
requirements when they are initially implemented.

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       Regarding the comment that the NTE deficiencies will not be as helpful as the
Agency expects, the NTE deficiencies are an option available to engine manufacturers, not a
requirement. Manufacturers who do not believe they are helpful can ignore this optional
regulatory provision. However, during conversations with several engine manufacturers
during the course of this rulemaking, many manufacturers stated the deficiencies would be
helpful, and in fact presented verbal arguments for why the deficiencies should not be limited
to model years 2007 through 2009.71 Based on the input of these manufacturers we have
decided to extend the availability of the NTE deficiencies from the proposed 2007  -2009 time
frame to 2007 - 2012. This extension is appropriate because, considering the phase-in of the
NOx standard,  manufacturers may be introducing new Phase 2 engine technology equipped
engines beginning in 2010. However, we have limited the number of deficiencies  for 2010 -
2012 to three per engine family, because of the long lead time available.

       Regarding the comments on level playing field, the EPA NTE deficiency allowance
are equally available to all manufacturers. The NTE deficiencies are only an allowance for
minor deviations from the NTE requirements. The NTE deficiency provisions will allow a
manufacturer to apply for relief from the NTE emission requirements under limited conditions.
 EPA expects that manufacturers should have the necessary functioning emission control
hardware in place to comply with the NTE, especially given the lead time afforded to the NTE
requirements in this final rule.  Nonetheless,  we recognize that there may be situations where
a deficiency(ies) is necessary and appropriate. Deficiencies will be approved on an engine
model basis, for a single model year, though a manufacturer may request a deficiency for all
models and/or  horsepower ratings within an  engine family, if appropriate.   These limitations
are intended to prevent a manufacturer from using the deficiency allowance as a means to
avoid compliance or delay implementation of any emission control hardware or to
compromise the overall effectiveness of the NTE emission  requirements. Given these
constraints, and the limited nature of the NTE deficiency  provision, we do not believe
competitiveness between engine manufacturers will be an issue. Manufacturers must
comply with the FTP and the SET, and they are expected to comply with the NTE, and
therefore we expect any NTE deficiencies to be minor, and certainly to have minor
implications, if any, on engine cost and performance.  The Agency's light-duty on-board
diagnostics deficiency provisions have been  implemented fora number of years, and no
light-duty vehicle manufacturer has raised concerns regarding level-playing field or
competitive issues.

       (3)     The NTE provisions were originally developed based on manufacturer data
              and experience from "old" engine technology, which used retarded injection
              timing as the primary emission control. EPA has failed to provide any
              analysis  of the technological feasibility of  the proposed shape,  size and
              limitations of the NTE zone as well as the "carve-out" area of the zone as
              applied to the aftertreatment technology.

              Letters:

              Cummins, Inc.  (IV-D-231) p. 24
              Engine Manufacturers Association (IV-D-251) p. 61

       Response to Comment 3.2.1 (O)(3):
       71 EPA meeting with the Engine Manufacturers Association, December 1, 2000, EPA Air Docket A-
99-06, Docket Item IV-E-46.

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       In the RIA for this rule, and as discussed in response to comment 3.2.1(N) above, we
have analyzed the available data and determined the NTE standard promulgated in this rule
is technologically feasible in the context of the engine and emission control systems we
expect to be produced to meet these standards. Included in this analysis was the limitations
of the expected control technologies (e.g., CDPFs and NOx adsorbers). In response to
technical issues associated with the application of these technologies to HDDEs, we in-fact
have made a number of changes to the NTE requirements, including the carve-out zones.
Specifically: we have eliminated the PM carve-out zone (as discussed in response to
comment 3.2.1(N)); we have set the NTE standard at 1.5 x FTP standard; we have changed
the minimum NTE sample time approach (as discussed  in response to  comment 3.2.1 (N)),
we have provided a minimum exhaust gas temperature requirement for NOx and NMHC NTE
compliance ((as discussed in response to comment 3.2.1 (N)).

       (4)    The stringency of the NTE requirements  is impacted by the definition of
             defeat device, which is different in the current rules, in the 2004 NPRM, the
             2004 final rule, and in the consent decrees. Engine manufacturers have not
             yet had the opportunity to assess the differing impacts on stringency of those
             different definitions.  One  commenter (EMA) adds in this context that EPA
             should retain the current definition of defeat device and  refers to their
             comments on this issue as submitted in response to the 1999 Feasibility
             Review (2004 rule),  p. 17-18. This commenter added that if EPA does not
             retain its existing definition, then at a minimum it must provide clearly
             understandable direction to manufacturers and should not prohibit the
             necessary use of auxiliary emission  control devices (AECDs) to address
             engine operating conditions. Another commenter noted that EPA will need to
             fully recognize that continuous modulation of the emission control system is
             absolutely required for compliance, and does not automatically represent a
             defeat device. (See also Issue 3.1.1.)

             Letters:

             Cummins, Inc. (IV-D-231) p. 27
             Engine Manufacturers Association (IV-D-251) p. 61, 65-66

       Response to  Comment 3.2.KOH4):

       See our response to comment 3.1.1(E).

       (5)    The NTE limits are not suited to diesel engines employing catalysts.
             Commenter cites to  their letter submitted in response to the "2004" rule in
             which they provided detailed discussion regarding why the NTE limits are not
             suited to gasoline engines employing catalysts and notes that the problems
             associated with applying NTE limits to gasoline HD engines are also
             applicable to diesel engines that will employ advanced catalyst based NOX
             and PM emission control systems. The catalyst itself is not a dynamic system
             with active control and moving parts that can respond to the changes in
             engine operating conditions.  Rather, under some conditions, such as high-
             power, high-speed operation, the flow through the catalyst will necessarily be
             higher than at other  times. Under an NTE limit, a manufacturer of HD
             engines must work to reduce emissions during these high emitting operating
             conditions at the expense of controls during other operating modes.  Because
             the advanced diesel engine will require catalyst using precious metals, it may

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              also be subject to the need for protected circuits and will also experience
              varied exhaust gas residence times in the catalyst under different load
              conditions.

              Letters:

              General Motors Corp. and Isuzu Motors America, lnc.(IV-D-256) p. 59-60

       Response to Comment 3.2.1(O)(5):

       We disagree with these comments. The commenter incorrectly applies their
knowledge of gasoline 3-way catalysts technology to HD diesel technology.  We do not
respond to their comments here regarding the appropriateness of an NTE approach for HD
gasoline engines, as we did not propose any NTE for HD gasoline, and this final rule
contains no NTE requirements for HD gasoline.

       The commenter states the NTE approach is not suitable for HD diesels with
aftertreatment devices, based on several issues associated with HD gasoline engines.  First,
the commenter states the catalyst is not a dynamic device.  While not a mechanical device
with operating points, this statement in other ways is incorrect as it applies to HD diesels.  In
Chapter 3 of the RIA, we discuss in detail the technology of NOx adsorbers, which is in fact
an active device, which will require active regeneration and de-sulfation events. With respect
to CDPFs, we have demonstrated in Chapter 3 of the RIA, and as discussed in response to
comment 3.2.1(N), we have demonstrated the PM NTE standard is technologically feasible
by model year 2007. The commenter suggests there will be a need for engine protection and
aftertreatment protection within the NTE requirements.  We disagree with this statement.
The NTE requirements apply during normal engine operation and during typical ambient
conditions which are widely experienced by HDDEs. Manufacturers will still be able to apply
for AECDs for engine protection during  truly extreme or abnormal engine/vehicle operation
and extreme ambient conditions, i.e., conditions not subject to the NTE standard.  The
commenter discusses HD gasoline catalysts data and calibration techniques, including
engine enrichment and concerns regarding high CO and NMHC emissions, as well as the
need to protect catalysts with precious metals from extremely high temperatures.  This data
is not relevant to HD diesel engines equipped with CDPFs and NOx adsorbers. As
discussed in the RIA, HD diesel engines under heavy-load have exhaust gas temperatures in
the 500 - 600 deg. Celsius . However, HD gasoline engines, with enrichment protection
strategies, can easily have exhaust gas temperatures under high load  in  the 850 - 900 deg.
Celsius range.  Clearly data which may be relevant to HD gasoline engine/catalyst systems
regarding high exhaust gas temperatures and the need for catalyst protection strategies can
not be compared to HD diesel engines.

       We also disagree with the comments regarding the design of the catalyst system to
accommodate the NTE due to high-power, high-speed operation,  and that such a design is at
the expense  of other operating modes.  The HD diesel FTP includes operation under high-
power, high-speed conditions, and the SET contains a number of high-load and high-speed
test modes.  A manufacturer who designs a system to pass the HD diesel FTP and the SET
must already design the system to operate under these conditions.  In  addition, the NTE
standard is higher than the FTP and the SET standard,  which therefore decreases the need
to focus only on the NTE standard, and appropriately requires manufacturers to focus on
robust hardware and calibration strategies which will control emissions over both the FTP
and the supplemental requirements (NTE and SET).

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       (6)     The ambient conditions over which the NTE requirements apply are
              essentially unbounded, which is a major deficiency in the formulation of the
              rule.  The undefined correction factors are intended to take account of the
              natural effects of ambient temperature on the mechanisms of NOX and
              particulate production inside the engine and are not intended to account for
              the changing performance, or physical limits to operation,  of engine emission
              control systems such as cooled EGR or exhaust aftertreatment. With future
              low emission technologies, no simple relationship exists between the ambient
              conditions and the emissions output of the engine. In determining correction
              factors, relying on manufacturers to use 'good engineering judgment' is too
              vague and would present a barrier to ensuring a "level playing field" for all
              manufacturers.  EPA should clarify on what basis  correction factors are
              defined for engines having complex emission control systems.

              Letters:

              Cummins, Inc. (IV-D-231) p. 25-26

       Response to Comment 3.2.KOH6):

       We disagree with this comment. The NTE ambient conditions in fact our bounded.
The regulations specify two ambient operating conditions during which the engine is subject
to the NTE provisions, see 40 CFR 86.007-11 (a)(4)(ii).  Under Option 2 in the regulations, the
NTE does not apply above 5,500 feet above-sea level, and the NTE does not apply above a
defined temperature at each elevation below 5,501 feet above-sea level.  The commenter
states that this is a major deficiency with the rule, yet this contradicts the commenters
supplemental comments, which indicate they support the NTE provisions with respect to
2004 technology engines (see EPA docket A-99-06, docket item IV-G-94, which states
"Manufacturers would have supported inclusion in the 2004 rule of the supplemental tests
proposed to take effect in 2007"). With regard to the comments regarding the NTE
provisions for humidity and temperature, these are optional provisions, and there is no
requirement for manufacturers to use correction factors. We do not believe it is appropriate
to establish correction factors for the industry as a whole, as the standards will not take effect
until model year 2007 and it is likely manufacturers will employ different combinations of
hardware can control strategies in order to comply with the standards, and these variations
may make a  single set of correction factors for the industry inappropriate.

(P)     The supplemental steady-state requirements are not technologically feasible.

       (1)     Even though EPA presents the supplemental steady state (SSS)
              requirements as an addition only of "test procedures," the SSS emission
              requirements as proposed by EPA would create a new and unnecessary
              standard for HDDEs.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 61

       Response to Comment 3.2.1(P)(1):

       We disagree with the comment that the supplemental emission test standard (SET,
the 13-mode steady-state test) is unnecessary. The  commenter provides little discussion to

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DECEMBER 21, 2000	PAGE 3-86

support this statement,  but rather they refer to their comments on the Phase 1 rule, in which
the commenter states the SET and the NTE appear to have the same purpose, and therefore
the SET should be eliminated. We disagree with these statements.  The SET has a purpose
distinct from the NTE. The SET is a steady-state test, consisting of 13 specific modes, and 4
of the 13 modes fall outside of the NTE control zone.   The emission standard for the SET is
1.0 times the engine's PEL or the emission standard,  compared to the NTE standard of 1.5
times the PEL or the emission standard.  The NTE is  designed as a cap on emissions at any
time, where as the SET is a test of average emissions over various steady-state operating
conditions.  Thus, the emission levels that must be met under the SET is lower than the level
to meet the NTE.  These differences clearly indicate the SET and the NTE do not cover the
same type of engine operation for the same purpose.  The NTE and SET, in combination with
the pre-existing transient FTP, are necessary to provide EPA with assurance that appropriate
emission control is occurring across the broad range  of operation which heavy-duty diesel
engines encounter

       (2)    The supplemental steady-state test (Euro-Ill test) and emission limits are
             infeasible. The supplemental SS test is not correlated with the FTP and EPA
             has not developed a method of comparing the relative stringency of the two
             tests. Therefore, it is not possible to determine the stringency of the
             proposed standards or whether those standards are feasible. (See also Issue
             7.4.3.)

             Letters:

             General Motors Corp. and Isuzu Motors America, lnc.(IV-D-256) p. 60-61

       Response to Comment 3.2.KPH2):

       Regarding the comment that the SET standard is infeasible,  please see the response
to comment 3.2.1 (N). Regarding the comment that the SET is not correlated to the pre-
existing FTP, and therefore  it is not possible to determine the stringency of the SET standard,
this comment is not relevant. As discussed in response to comment 3.2.1(O)(1) regarding a
similar comment on the NTE, the issue of whether or not the SET is  more or less stringent
than  the pre-existing FTP is not relevant to the Agency's standard setting process. Based
on the information presented in this final rulemaking we have determined the SET standards
are feasible and appropriate for model year 2007. The issue of how the SET compares in
stringency to the pre-existing FTP, or how the SET correlates to the pre-existing FTP is not
relevant to the critical question the Agency must answer - which is whether or not the SET
requirements contained in this final rule are technologically feasible and otherwise
appropriate under the CAA by model year 2007, and  the Agency has determined that the
answer to this critical question is "Yes."

(Q)    The proposed  closed crankcase  requirement will lead to a loss of engine
       performance and an overall increase in emissions.

       (1)    Commenter notes that the engines used in the DECSE study, on which EPA
             relies, were not equipped with closed  crankcase control and contrary to EPA's
             assertions, 15 ppm sulfur diesel fuel does not make the standard "feasible."
             To address this issue, a 5 ppm cap on sulfur fuel is essential, since there will
             be an increased engine oil sulfur contribution as a result of the closed
             breather requirement.

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DECEMBER 21, 2000	PAGE 3-87

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 13

       (2)     EPA's suggestion that breather gas can be routed to the exhaust system
              upstream of the aftertreatment systems is impractical. Exhaust back pressure
              is on the order of 2-4 inches of mercury under fully loaded operating
              conditions whereas crankcase pressure is normally kept to a few inches of
              water. Routing breather gas to the exhaust would result in increased
              pressurization of the crankcase and exhaust gas flow in and out of the
              crankcase with changing speed and load conditions. Higher crankcase
              pressure effects piston ring seating and dynamics, influencing in-cylinder oil
              control and piston ring and liner wear.  Exhaust flow into the crankcase will
              result in sooting of the oil and a need for more frequent oil changes.
              Therefore, routing the breather gas to the  engine intake is the only practical
              solution but in this case, oil vapor carried over with the breather gas can form
              harmful deposits on the turbocharger compressor and the engine intake
              system, foul the heat transfer surfaces of the charge air cooler, and place an
              additional sulfur and ash burden  on the exhaust aftertreatment system.
              Deposits can cause a loss of engine performance and increased emissions
              and fouling of the charge air cooler will result in loss of charge cooling
              effectiveness leading directly to increases in NOX and PM emissions.
              Commenter provides additional discussion on this issue and concludes that a
              requirement to close the breather system will lead to increased emissions
              over the engine's lifetime and that the proposed emission standards are not
              feasible with this added requirement.

              Letters:

              Detroit Diesel Corporation (IV-D-276) p. 21-23

       Response to Comment 3.2.1(Q):

       The commenters assert that the data we have analyzed, derived from open
crankcase systems, does not apply when determining the feasibility of the Phase 2 standards
with closed crankcase systems.  We disagree. We anticipate that the heavy-duty diesel
engine manufacturers will be able to close the crankcase using one of two methods, the first,
by using closed crankcase filtration systems. We are aware of at least two companies which
produce closed crankcase filtration systems for the heavy-duty diesel market today, as
described in more detail below.72 73 Second, the blow-by gases could be  routed directly into
the exhaust system upstream of the emission control equipment. Finally, if the manufacturer
chooses not to close the crankcase, the manufacturer must add the emission from the open
crankcase ventilation system to the emissions from the engine downstream of any emission
control equipment, e.g., the open-crankcase emissions would be added into  the FTP
emission results. Thus, the regulatory provision  has been written such that if adequate
       72 "Crankcase Emissions & Closed Crankcase Filtration", presented by Marty Barris, Donaldson
Corporation, Society of Automotive Engineers TOPTEC, September, 2000, copy available in EPA Air Docket
A-99-06.

       73 "Advances In The Control of Crankcase Emissions From Diesel Engines", G. Dickson & K. Edge,
Diesel Progress, Nov.  1995, copy available in EPA Air Docket A-99-06.

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control can be  had without "closing" the crankcase then the crankcase can remain "open."
(Please see our response to Issue 3.1.1 (N).)

       As noted in Chapter III of the RIA, there may be a need to remove, clean, and reverse
CDPFs at regular intervals to remove ash build-up resulting from engine oil. Small amounts
of oil can enter the exhaust via the combustion chamber (past the pistons rings and valve
seals), and via the crankcase ventilation system.  This can lead to ash build-up, primarily as a
result of the metallic oil additives used to provide pH control.  This pH control is necessary, in
part, to neutralize sulfuric acid produced as a byproduct of burning fuel containing sulfur.
However, with  reduced fuel sulfur, these oil additives could be reduced, thereby reducing the
rate of ash build-up and lengthening any potential cleaning intervals. The use of oil additives
which are less  prone to ash formation would also extend periodic maintenance intervals. The
combination of low sulfur fuel and oil additives with  reduced ash formation will reduce the
need for periodic maintenance to at least those specified in CFR 86.004-25 (100,000 miles or
3,000 hours for light heavy-duty vehicles, and 150,000 miles or 4,500 hours for medium- and
heavy-duty engines). Periodic maintenance would consist of reversing the CDPF and/or
washing it out with compressed air or water. Consequently, we conclude that CDPFs will be
able to meet the required emission life with minimal maintenance.

       We expect that, in order  to meet the stringent tailpipe emission standards set in this
rule, manufacturers will choose to utilize closed crankcase approaches.  Closed crankcase
filtration systems work by separating oil and particulate matter from the blow-by gases
through single  or dual stage filtration approaches, routing the blow-by gases into the engine's
intake manifold and  returning the filtered oil to the oil sump.  As we note  in Chapter III of the
RIA, closed crankcases are required for new heavy-duty diesel vehicles  in Europe starting in
2000. Oil separation efficiencies in excess of 80  percent have been demonstrated with
production ready prototypes of two stage filtration systems after more than 500 hours  of
testing.74 75 By eliminating 80 percent or more of the oil that would normally be vented to the
atmosphere, the system works to reduce oil consumption and to eliminate concerns over
fouling of the intake  system when the gases are routed through the turbocharger. Mercedes-
Benz currently utilizes this type of system on virtually all of its heavy-duty diesel engines sold
in Europe, and Mercedes-Benz has certified at least one on-highway HDDE in the U.S.
equipped with such a system since at least 1999.76  Many of these closed crankcase
ventilation systems include a replaceable filter element which is serviced on a fixed interval.
Since this is the approach we think that industry is most likely to take we have accounted for
the cost of this maintenance in the cost estimates described in chapter V of the RIA.

       An alternative approach could be to route the blow-by gases into the exhaust system
upstream of the CDPF which would be expected  to effectively trap and oxidize the engine  oil
and diesel PM.  One commenter argues that such an approach will not work given the
pressure differential between the crankcase and the exhaust system upstream of the CDPF.
We disagree that such an approach will  not work. We believe that the system could be
designed to circulate crankcase  gases into the exhaust stream during pulses generating
       74 Letter from Marty Barris, Donaldson Corporation, to Byron Bunker US EPA, March 2000.  EPA
Air Docket A-99-06.

       75 "Crankcase Emissions & Closed Crankcase Filtration", presented by Marty Barris, Donaldson
Corporation, Society of Automotive Engineers TOPTEC, September, 2000, copy available in EPA Air Docket
A-99-06.

       76 "Documentation of Closed Crankcase Systems for Model Year 1999 Daimler-Benz On-highway
Heavy-duty Diesel Engine Family",  EPA Memorandum, Byron Bunker, available in EPA Air Docket A-99-06.

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vacuum in the exhaust. We also believe that a venturi system, like those sometimes used in
EGR system to facilitate EGR flow, could be used to generate a low pressure capable of
facilitating crankcase gas flow.  We agree that this approach may require the use of low
sulfur engine oil to ensure that oil carried in the blow-by gases does not compromise the
performance of the sulfur-sensitive emission control equipment as discussed in Chapter III
section 5 of the RIA.

       Please seethe comment summarized as Issue 3.2.1(R) for the opinion of the
Manufacturers of Emissions Control Association regarding closed crankcase control systems.
(See docket item IV-D-334.)

(R)    It is feasible to control crankcase emissions in the range of 80 to 90 percent.

       (1)    Commenter provides data generated on crankcase emissions and crankcase
             emission control. Commenter notes that in June 2000, tests were conducted
             on the crankcase blow-by emissions from two popular HD on-road diesel
             engines. The resulting data based on blow-by physical and chemical analysis
             show that controlling crankcase emissions significantly below current levels is
             feasible. Filtration system technology exists that is capable of collecting and
             coalescing 80 to 90 percent of the blow-by aerosol with which it is challenged.
             A closed crankcase filtration system removes 100  percent of the blow-by PM
             normally emitted into the atmosphere.

             Letters:

             Manufacturers of Emissions Controls Association  (IV-D-334) p. 1-4

       Response to Comment 3.2.KR):

       We concur with this comment.

(S)    An H2S catalyst will be required to  minimize odor in the exhaust.

       (1)    An  H2S catalyst will be required in order to convert the H2S in the exhaust
             downstream of the NOX, SOX and DPF components to prevent odor
             associated with  H2S. These devices are used extensively in the light duty
             industry but at much lower sulfur quantities. However, this device will add
             cost, space needs, weight and complexity to an already overburdened
             system.

             Letters:

             Cummins, Inc. (IV-D-231) p. 16

       Response to Comment 3.2.1(5):

       The formation of H2S comes from the lean-rich cycling of the NOX adsorber catalyst.
SO2 from combustion of fuel sulfur is efficiently oxidized to SO3 over platinum when oxidizing
conditions are present in the exhaust.  The SO3 reacts with the NOX storage components on
NOX adsorber catalysts to form  stable metallic sulfates. The sulfates must be periodically
released since they occupy sites that can be used for NOX storage. This is accomplished
similar to NOX regeneration (rich operation - reducing conditions) except that it must be done

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at a higher temperature. Sulfate released under such conditions could be reduced to H2S.
This can be minimized or virtually eliminated by:

       1.      Reducing the amount of ceria used
       2.      Changing the crystal structure of the ceria through thermal treatment to
              reduce its retention of sulfur oxides (Lox et al.).
       3.      Using a metallic scavenger, such as Nickel, copper, or manganese (Golunski
              and Roth, Dettling etal.)
       4.      Use of a DOC function in the integrated system as described in the response
              to comment 3.2.1 (K) and in Chapter 3A of the RIA.

       Formation  of H2S is also an issue with spark-ignition gasoline engines that use three-
way catalysts.  It is typically controlled via the use of nickel scavenging.  Nickel binds sulfur
under reducing conditions, subsequently releasing it as SO2 under oxidizing conditions.
Three-way catalysts containing nickel have demonstrated greater than 95% suppression of
H2S (Dettling etal.).

       We agree that during a desulfation event it may be possible that a NOX adsorber or a
SOX adsorber will release sulfur as hydrogen sulfide, H2S (see full description of this
phenomena  in RIA Chapter III).  Given this possibility, we have included the cost of a
downstream oxidation catalyst designed to oxidize the undesirable H2S emissions to more
desirable SO2 emissions.  While the catalyst will increase the size and weight of the system
to some extent, we disagree with the assertion that this will add further complexity to the
emission control system. To the contrary, by providing a downstream oxidation function
which can clean up hydrocarbon (HC) and H2S emissions, which may occur during some
specific operating conditions such as NOX adsorber regeneration and NOX adsorber
desulfation, the overall emission system can be made to be more robust and less complex.
This is because the clean up function allows for less precise control of the NOX regeneration
and desulfation events since any fugitive emissions can  be cleaned up by the downstream
oxidation catalyst.

References:
Dettling, J., Hwang, H., Pudick, S., Tauster, S., "Control  of H2S Emissions from High-Tech
TWC Converters", SAE Technical Paper Series, No. 900506, 1990.

Lox, E., Engler, B., Koberstein, E., "Development of Scavenger-Free Three-Way Automotive
Emission Control Catalysts with Reduced Hydrogen Sulfide Formation", SAE Technical
Paper Series, No.  890795, 1989.

Golunski, S., Roth, S., "Identifying the Functions of Nickel in the Attenuation of H2S
Emissions from Three-Way Catalysts", 1991 Catalysis Today 9:105-112.

(T)     The PM standard may not be feasible since the technology capable of meeting
       the standard has yet to become commercially available.

       (1)     Real world experience with PM traps that use precious metal catalysts has yet
              to move beyond field trials.  Commenter acknowledges the supporting
              documentation offered by EPA to conclude that this technology can be used
              to meet the standards but notes that conclusions regarding its ability to
              enable manufacturers to meet the proposed PM standard cannot be based on
              a limited number of field tests. The fact that this technology is not yet
              commercially available and has not been tested on a wider scale in the real

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             world, leads to considerable uncertainty regarding whether the PM standard
             can in fact be met.

             Letters:

             Mercatus Center at GMU (IV-D-219) p. 15

       Response to Comment 3.2.1(T):

       See our response to comment 3.2.1(C).

(U)    The NOX adsorber will be an effective tool for reducing emissions since
       development issues have been identified and the technology is proceeding
       according to schedule.

       (1)    Commenter notes that the status of the NOX adsorber technology has come
             into question in the context of this proposed rule and that any concerns
             regarding the technology can be addressed. Samples of current NOX
             adsorber development have shown excellent performance results. The
             development paths leading toward product optimization have been identified
             and there are no technical barriers that cannot be addressed in the time
             frame proposed by EPA.

             Letters

             Engelhard Corporation (IV-G-38),  p.1

       Response to Comment 3.2.1(11):

       EPA concurs with  this comment.

             Issue 3.2.2:  Gasoline Engine & Vehicle Exhaust Standards

(A)    The gasoline engine and vehicle standards are technically feasible.

       (1)    One commenter asserted that gasoline-powered highway engines will be able
             to achieve the proposed  emissions standards within the suggested time-
             period using advanced emission control strategies now being employed on
             passenger cars and light duty trucks. Recent advances in thermal durability of
             three-way  catalyst technology will assist in using this technology for heavy-
             duty vehicles with higher catalyst temperatures than typical lighter vehicles.

             Letters:

             Manufacturers of Emission Controls Association  (IV-D-267) p. 3,10-11, (IV-
             F-26, 116) p. 47 (IV-F-117) p. 89 (IV-F-191) p. 120

       Response to Comment 3.2.2(A):

       EPA concurs with  this comment.

(B)    The proposed 2007 HDG standards will be feasible only if a gasoline sulfur

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       standard that is more stringent than the Tier 2 standard is imposed and
       implemented.

       (1)     Since  EPA has proposed standards for HDG engines and vehicles in 2007
              that are similar to and in some cases more stringent than, the standards
              adopted by California under the LEV II program, an ultra low sulfur fuel is
              necessary. The  availability of only 80 ppm sulfur gasoline causes the
              proposed 2007 HDG standards to be significantly more stringent than the
              California LEV II standards. One commenter noted that EPA should adopt
              the California Phase III  reformulated gasoline fuel standards nationwide with
              a sulfur cap of 30 ppm to be effective no later than mid-2006. Another
              recommended that EPA impose a 5 ppm sulfur standard for gasoline
              nationwide by mid-2006, since this level is currently under consideration in
              California and would lead to significant additional NOX reductions. (See also
              Issue 9.)

              Letters:

              DaimlerChrysler (IV-D-284) p.  9
              Engine Manufacturers Association (IV-D-251) p. 49
              Ford Motor Company (IV-D-293) p. 2
              General Motors Corp. and  Isuzu Motors America, Inc.  (IV-D-256) p. 37-38

       Response to  Comment 3.2.2(B):

       EPA disagrees with these comments. First, the standards being finalized for heavy-
duty gasoline vehicles are equivalent to the California LEV-II LEV levels, with the exception
of the PM standard (0.02 g/mi for these final standards and 0.12 g/mi for LEV-II LEVs). The
LEV-II PM standard was set with non-PM trap equipped diesel vehicles in mind and should
not represent a problem for gasoline vehicles.

       We know that gasoline sulfur has a negative impact on gasoline vehicle emission
controls.  Gasoline vehicles depend on the catalytic converter to reduce emissions of HC,
CO, and NOX. Sulfur and sulfur compounds attach or "adsorb" to the precious  metal catalysts
that are required to convert these emissions. Sulfur also blocks sites on the catalyst
designed to store oxygen that are necessary to optimize NOX emissions conversions. While
the amount of sulfur contamination  can vary depending on the metals used in the catalyst
and other aspects of the design  and operation  of the vehicle, some level of sulfur
contamination will occur in any catalyst. In fact, in our Tier 2 final rule we stated that, "We
now believe that there are not (and  will not be in the foreseeable future) emission control
devices available for gasoline-powered vehicles that can  meet the proposed Tier 2  emission
standards that would not be significantly impaired by gasoline with sulfur levels common
today." (See 65 FR 6729, February 10, 2000.)  In our Tier 2 rule, we concluded that a 30  ppm
average and 80 ppm cap are necessary and appropriate to enable the emissions reductions
needed from Tier 2 vehicles.  We stated our belief that Tier 2 vehicles that operate on
gasoline will, on average over their  long-term operation, have to use fuel with sulfur levels no
greater than 30 ppm to avoid significant impairment of their emissions control systems.
Furthermore, we noted that short-term operation on gasoline with sulfur levels  higher than 80
ppm will have a significant adverse  effect on the desired emission performance and will
significantly impair the emissions control system. The vast majority of test data we  reviewed
during the Tier 2 rulemaking process showed that sulfur has a negative impact on catalyst
operation even at these low levels.  Most of the data from test programs that looked at the

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emissions impacts of various sulfur levels tested a minimum sulfur level of approximately 30
ppm.  However, while there was little data demonstrating the emissions impact of even lower
sulfur levels, we concluded that sulfur levels below 30 ppm are not necessary to allow
manufacturers to meet the Tier 2 standards, since we were able to demonstrate compliance
with the standards using 30 ppm gasoline.

       These reasons served as the basis for our decision to control the gasoline sulfur level
in order to enable the Tier 2 standards.  The Phase 2 gasoline emission standards are
consistent with the upper bins of our final light-duty Tier 2 standards (i.e., those final bins that
few Tier 2 vehicles will be able to utilize due to the NOX averaging requirement).  This
gasoline sulfur control results in heavy-duty gasoline  vehicles being fueled by the same low
sulfur gasoline required for Tier 2 vehicles, thereby enabling the Phase 2 heavy-duty gasoline
standards.  We believe this because the same basic technology will be used on  both light-
duty and heavy-duty gasoline vehicles - the three-way catalyst. The three-way catalyst and
the precious metals used in the three-way catalyst are adversely affected by sulfur in the
same ways regardless of vehicle size.  Therefore, the emission standards in both our Tier 2
rule and our Phase 2 heavy-duty rule can  and will be  met using the 30 ppm  average/80 ppm
cap sulfur gasoline required by the Tier 2 rule.

       Further, in a  letter from Tom Cackette,  California ARB, to Margo Oge, EPA, dated
February 8, 1999, Mr. Cackette expresses the  ARB opinion that compliance with the LEV II
standards will not require a further reformulation of their current cleaner burning  gasoline
(i.e., the Phase II gasoline having a sulfur specification of 30 ppm average, 80 ppm cap,
which is equivalent to the Tier 2 gasoline specification).  (See Air Docket A-99-06, docket item
IV-G-97) Mr. Cackette also explains that,  while the ARB is planning to revisit its reformulated
gasoline specifications, it was doing so  "with the objective of lowering emissions from all on-
road, catalyst-equipped vehicles, and not because we believe it is necessary to allow future
compliance with the  LEV II standards."  In conclusion, Mr. Cackette states that any fuel
changes would not provide evidence that they  "believe the feasibility of LEV II requires a
cleaner gasoline" and, in fact, their "belief is that it does not."

(C)    EPA's proposed NOX standard for HDG engines is not technologically feasible.

       (1)     EPA  has provided little basis or analysis for the technological feasibility of the
              proposed NOX standard  for HDG engines, which is not feasible. The
              technology that engine manufacturers are developing in order to meet the
              Tier 2 gasoline engine standards cannot be assumed to be sufficient to
              achieve the levels of reductions sought for heavy duty gasoline engines in
              2007. One commenter noted that EPA cannot assume that the same
              standard is appropriate for HD gasoline engines as may be appropriate for
              HD diesel engines. Because of the deterioration realities of  gasoline engine
              aftertreatment technology, engine manufacturers must design gasoline
              engine and aftertreatment systems to  achieve emissions performance  at least
              50%  below the standard in order to ensure that in-use engines will comply
              with the standard for their full useful life.  As an alternative to EPA's proposal,
              these commenters suggests that EPA adopt a combined NMHC  and NOX
              standard of 1.0 g/bhp-hr.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 50
              Ford  Motor Company  (IV-D-293) p. 3-7

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              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 38-40

       (2)     The proposed standards do not recognize differences in vehicle weight,
              usage, and duty cycles.  HD Otto cycle vehicles, with their wide and varied
              usage in the field, experience a wide range of load duty cycles from light to
              very heavy. Mandating a single emission standard for all HD gasoline
              engines is costly and inefficient and such standards  do not comply with CAA
              202(a)(3), which requires that EPA establish standards based on certain
              characteristics (i.e. weight, horsepower, type of fuel, and other factors) within
              specific classes or categories of vehicles or engines. In addition, EPA has
              failed to justify its proposal to require emissions from incomplete vehicles to
              meet more stringent standards than those proposed for complete vehicles.  It
              is arbitrary and capricious to mandate standards that vary in stringency
              without any discussion or justification for the disparity.  Commenter provides
              significant discussion on this issue and notes several differences between
              incomplete and complete vehicles, and vehicles less than  and greater than
              14,000 GVWR, such as catalyst configuration,  catalyst washcoat durability,
              higher in-use temperatures for higher GVWR vehicles, and secondary air and
              exhaust gas recirculation effectiveness on the  HD gasoline engine cycle as
              opposed to the chassis cycle. This commenter recommends that EPA
              address these issues and finalize the following two sets of combined NOX +
              NMHC standards for HD gasoline engines: 1.0 g/bhp-hr for HD gasoline
              engines greater than 14,000 GVWR and 0.8 g/bhp-hr for HD gasoline
              engines and incomplete vehicles  less than or equal to  14,000 GVWR.

              Letters:

              Engine Manufacturers Association (IV-D-251)  p. 51
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 40-42

       (3)     Catalyst efficiency/durability is the only significant control for tailpipe
              emissions on  HDG engines.  However, during the FTP and during in-use
              operation, very high exhaust gas temperatures are generated, which
              adversely impact the durability of the catalyst. In the  context of these
              concerns, the assumption that a 6 g/bhp-hr engine-out NOX level can  be
              achieved is overly optimistic. To achieve this level, NOX efficiency will need  to
              be  maintained at 98.3 percent over 120,000 miles and if engine-out levels are
              higher, then NOX efficiencies will need to be maintained at an even higher
              level.  Regardless of the engine-out level, this type of conversion efficiency
              capability and durability  is simply not available  and is not expected to be
              available in the near future. EPA has suggested that new catalyst
              technologies have the ability to withstand 1100 degrees C, which may be true
              on  a limited basis but catalysts are not capable of operating at these
              temperatures  for any extended period of time.  Thermal degradation is not the
              only means of reducing catalyst efficiency.  There are chemical effects, such
              as  phosphorous, lead, zinc, sulfur and manganese, which  also degrade
              catalyst performance. EPA has not presented  data demonstrating that the
              level of catalyst performance needed to meet the proposed standard  is
              feasible, or will be feasible over the useful life for the majority of commercial
              trucks in-use.

              Letters:

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              Ford Motor Company (IV-D-293) p. 6

       (4)     Current "light duty" technology cannot be applied directly to incomplete HDG
              vehicles with the assumption that the proposed emission levels will be
              achieved.  Higher levels of hardware capability need to be invented to
              overcome conditions that light duty components are not subjected to (i.e. high
              temperatures for long periods of time).

              Letters:

              Ford Motor Company (IV-D-293) p. 6-7

       Response to Comment 3.2.2(C):

       All of these comments question the ability of heavy-duty gasoline engines to meet the
Phase 2 standards of 0.2 g/bhp-hr NOX and 0.14 g/bhp-hr NMHC.  Commenters note that
EPA should not assume that emission standards appropriate for diesel  engines are
necessarily appropriate  for gasoline engines, basing that statement on the deterioration
realities of gasoline aftertreatment devices versus the deterioration realities of diesel
aftertreatment devices.  However, the useful life of a HD gasoline engine is 120,000 miles,
which compares very favorably (from the gasoline engine manufacturer's viewpoint)  to the
useful life of  a heavy HD diesel engine at 435,000 miles. We do not believe it would be
appropriate for gasoline engines to have a higher standard than diesel engines, particularly
given the relatively low useful life of the gasoline engine. It is important to note that most HD
gasoline engines are placed in incomplete vehicles in the 10,000 to 14,000 pound range, a
weight range within which diesel engines have a 110,000 mile useful life. Nonetheless, the
same types of diesel exhaust emission control devices will be placed on the lighter diesel
engines as on the  heavier diesel engines with useful lives of 435,000 miles.

       Regarding the feasibility of the Phase 2 standards for HD gasoline engines, as
discussed in Chapter III of the RIA, we believe the standards are feasible. Our Tier 2
standards and the California LEV-II standards will require that catalysts deliver 95 to 99
percent conversion efficiencies over a 120,000 mile useful life. This is being accomplished
through close-coupling of catalysts, improved precious metal dispersion, and through control
of precious metal sintering from the high temperatures experienced in the close-coupled
location.  So, catalyst efficiency in and of itself should not be an issue. That leaves two
primary elements to meeting the Phase 2 standards:

       •  Reducing engine-out emissions to the point where 95 to 99 percent catalyst
       efficiency results in compliance; and,
       •  Maintaining 95 to 99 percent catalyst efficiency during 120,000 miles of operation in
       a  heavy-duty vehicle.

       As for engine-out levels, while the typical current gasoline engine has engine-out NOX
emissions of roughly 9 to 10 g/bhp-hr, we believe that engine-out NOX emissions can be
reduced to the 6 to 8 g/bhp-hr level using EGR. In fact, it could be argued that engine-out
NOX emissions could be reduced to the 5 g/bhp-hr range using very aggressive EGR
strategies. In comparison, current diesel engines have engine-out NOX levels  in the 4 to  5
g/bhp-hr range, with that level falling to the 2 to 2.3 g/bhp-hr range in the 2004 timeframe
through use of EGR.  However, applying EGR in an effort to deliver <4 to 5 g/bhp-hr engine-
out NOX on a HD gasoline engine would result, as commenters correctly note,  in dramatically

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reduced power from the engine.

       Nonetheless, current HD gasoline engines either use no EGR at all, or the EGR rates
are relatively low (-5%), or the conditions under which EGR is active are severely restricted,
on the order of five to 10 percent. By using approximately 7 to 15 % EGR, engine-out NOX
levels can be driven down to the  6 to 8 g/bhp-hr range without considerable loss in power and
performance. Through improved cold start strategies and heat managed exhaust, along with
improved catalyst designs through better precious metal dispersion, a 99 percent catalyst
efficiency can be achieved. This would deliver tailpipe NOX levels of 0.06 to 0.08 g/bhp-hr.
Such a NOX level would allow for substantial deterioration  and compliance  headroom with a
full three times the 0.06 level (i.e., 0.18 g) still falling below the 0.20 g NOX  standard.

       Similar arguments can be made regarding NMHC emissions.  Typical current engine-
out NMHC levels are 1.5 to 2.0 g/bhp-hr NMHC.. Through improved cold start strategies and
heat managed exhaust, along with improved catalyst designs through better precious metal
dispersion, a 99 percent catalyst efficiency can be achieved.  This would deliver tailpipe
NMHC levels of approximately 0.02 g/bhp-hr.  As for NOX, such a NMHC level would allow for
substantial deterioration and compliance headroom with a full three times the 0.02 level (i.e.,
0.06 g) still falling well below the  0.14 g NMHC standard.  It should also be pointed out that
the cold-start portion of the heavy-duty FTP is  weighted considerably less than the light-duty
FTP75.

       However, commenters have expressed considerable concern with  regard to durability
and catalyst deterioration. A 99 percent catalyst efficiency that deteriorates to 95 percent
efficiency after 120,000 miles would result in tailpipe NOX  levels of 0.30 to 0.40 g - exceeding
the standard. As argued in our light-duty Tier 2 rule, recent advances in catalyst technology
will reduce the amount of deterioration experienced by gasoline three-way catalysts. The
commenter appears to imply that the catalyst would need  to sustain 1100 °C temperatures.
Such high temperatures would be extremely unlikely. Engine calibration (spark timing,
enrichment strategy) is sufficient to maintain exhaust temperatures below 850 to 900 °C even
under extreme conditions. Furthermore, it is likely that sustained 1100 °C  exhaust
temperatures would result in catastrophic failure of engine components.  If the
manufacturers' engine calibration allowed sustained operation of this sort without
intervention, it would likely lead to a considerable warranty issue for the manufacturer, so this
does not appear to be likely.

       As noted above, precious metal dispersion becomes more advanced every year
providing improvements in conversion efficiencies. Also, precious metal sintering from high
temperatures is being minimized through recent advances in stabilization of both precious
metal and oxygen  storage components.  Initial designs meant to address thermal sintering
that resulted from close coupling of catalysts were marked by a switch away from Pt-Rh
catalysts in favor of more thermally durable Pd-only and Pd-Rh catalysts. Concerns over the
cost of Pd in the world market has lead to the development of advanced Pt-Rh three-way
catalysts that are considerably more durable and  are now roughly equivalent in performance
to advanced Pd-Rh designs (Brisely et al.). This was accomplished through modifications to
the catalyst supports and surface structures that stabilize the precious metals at high
temperatures (>900 °C), allowing their use in severe-duty under-floor configurations. For our
analysis, we have  assumed a Pd focused approach to address thermal sintering, although
the recent advances noted here suggest that similar or better results will be possible from Pt
based designs for all but the most close-coupled catalyst position.  Given current precious
metal prices, our cost analysis would  not be affected by either outcome because the precious
metal prices we used for Pt and Pd are essentially equivalent ($13.25/gram of Pt;
$12.54/gram of Pd). We have also assumed that fully 50  percent of the gasoline engine fleet

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will move toward close-coupled catalyst systems, where none were assumed for the Phase 1
standards.  Lastly, we have assumed a rather large increase in both the catalyst system
volumes and the precious metal loadings for HD gasoline engines. This results in roughly a
20 percent increase in the amount of precious metals that will be used in three-way catalysts
for HD gasoline engines. This increase in precious metals, the recent advances in precious
metal dispersions, and the recent advances in catalyst durability noted here, along with the
Tier 2 gasoline in place well before 2008, will enable the Phase 2  gasoline engine standards.

       We disagree with the comment that the  Phase 2 standards do not comply with CAA
202(a)(3). That section, under paragraph (a)(3)(A)(ii), states that, "In establishing classes or
categories of vehicles or engines for purposes of regulations under this paragraph, the
Administrator may base such classes or categories on gross vehicle weight, horsepower,
type of fuel  used, or other appropriate factors."  This does not require the Administrator to
promulgate different standards for different classes or weights.  In this case, since the
standards promulgated are equally appropriate  for gasoline  and diesel engines, there was no
reason to distinguish between them especially given the fact that both gasoline and diesel
engines are used for vehicle applications affected by this rule. Thus, there are environmental
reasons for not allowing either engine type  to have a less stringent standard.

       Another commenter argued that we had failed to justify our proposal to require
emissions from incomplete vehicles (i.e., gasoline engines) to meet more stringent standards
than those proposed for complete vehicles. Commenters stated their belief that we had been
arbitrary and capricious in mandating standards that vary in stringency without justification
for the disparity. We believe we had  provided very good reasoning for this in our proposal,
and rebut consistently here. The gasoline engine standards have been chosen to provide a
fuel-neutral program for HD engines.  This way, all HD engine certified systems meet the
same set of standards regardless of the fuel used. This approach is consistent with our
approach taken under Tier 2 and, ironically, is consistent with public comments received in
response to the Phase 1 proposal arguing that diesel engines should be required to meet the
same emission standards as gasoline engines (which were lower for Phase 1  engines).
These levels, in considering both gasoline and diesel engines, were chosen to satisfy our
CAA requirement to set standards which reflect the greatest degree of emission reduction
achievable through the application of technology which the Administrator determines will be
available for the model year to which  such standards apply,  giving appropriate consideration
to cost, energy, and safety factors. (See CAA 202(a)(3).)  Further, we consider the gasoline
vehicle standards to be roughly equivalent in stringency to the gasoline engine standards and
expect engines complying with either standard will use the same emission  control
technologies. We are providing the most effective program that can be delivered, while also
delivering a program with attractive synergy to both the Tier 2 and California LEV-II programs
by going forth with the vehicle standards we have chosen. Therefore, we disagree that we
have been arbitrary and capricious.

(D)    EPA has not demonstrated  that lower NOX levels can be achieved for HDG
       engines without significant tradeoffs, including reduced emission component
       durability, engine performance, and fuel consumption.

       (1)     There will be interactions between some technology items that will reduce the
              effectiveness of others.  In general, catalyst systems with high conversion
              efficiencies and durability, well beyond what  is available today, will be needed
              to meet the proposed  standards. There are several concerns that should be
              addressed by EPA in  considering the potential interactions  and emission
              reductions associated with the anticipated control technologies.

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              Letters:

              Ford Motor Company (IV-D-293) p. 3

       Response to Comment 3.2.2(D)(1):

       See our responses to comments 3.2.2(D)(2), (3), (4), (5), and (6).

       (2)     The use of EGR technology at wide-open throttle reduces total power output,
              and depending on the amount of EGR being delivered and the specific engine
              knock limit, the decrease in wide-open throttle power output with EGR can be
              as much as 15%.  In this case, manufacturers would need to increase the
              displacement of the engine to gain back the power lost, which would
              decrease expected reductions in tailpipe emissions. In addition, larger
              engines would result in an overall loss in fuel economy at part throttle
              operation.

              Letters:

              Ford Motor Company (IV-D-293) p. 4

       Response to Comment 3.2.2(D)(2):

       While the decrease in power may  be as much as 15% at wide open throttle (WOT), it
is not necessary to have EGR engaged at all  at WOT conditions to achieve NOX emissions
well below the standard.  During testing at EPA-NVFEL of a 6.8L, 260 h.p. V-10 HDG engine
over the FTP cycle, only 20 seconds of operation (~1.7% of the cycle) occurred at WOT.
Approximately 30 seconds of operation (~ 2.5% of the cycle) exceeded 90% throttle position,
and approximately 90% of the cycle  time was spent below 70% throttle position. Many light-
duty spark ignition  engine calibrations restrict EGR above approximately 70% throttle
position.  It appears to be clear that such a strategy can be used with HD gasoline engines
while still complying with the NOX standard with a considerable compliance margin.

       (3)     Using large percentages of EGR cannot be done without contributing to
              combustion instability.  High EGR rates require significant changes to engine
              architecture to enable sufficient intake charge motion to allow stable
              combustion without having a negative impact on HC emissions.  Fast burn
              combustion chamber design can improve this situation but at the expense of
              increased NOX emissions.  High levels of EGR also contribute to intake
              charge air heating.

              Letters:

              Ford Motor Company (IV-D-293) p. 4

       Response to Comment 3.2.2(D)(3):

       Large percentages of EGR will not be required to meet the standard with a
considerable compliance margin.  Testing at EPA-NVFEL with a 1998 5.4L V8 spark ignition
engine confirmed that engine out NOX emissions can be reduced by half or more over a
broad range of operating conditions  using 5 to 14% EGR (SAE Technical Paper 2000-01-
1957). This is below an EGR level where combustion instability becomes an issue, and this

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DECEMBER 21, 2000	PAGE 3-99

was confirmed via measurement of pre-catalyst CO and HC emissions, which were
unchanged from the additional EGR.

       (4)     Multi-valve engine technology could provide additional HC and NOX control
              but the tradeoff is a greater crevice area (valve seat area) compared with a
              two-valve engine, which creates higher engine-out HC levels.  Basic engine,
              brake- specific engine-out NOX levels also increase as the  Break Mean
              Effective Pressure (BMEP) of the engine increases. These tradeoffs reduce
              the benefits of multi-valve technology.

              Letters:

              Ford Motor Company  (IV-D-293) p. 5

       Response to Comment 3.2.2(DH4):
       Other manufacturers have relied heavily on multi-valve technology with good results.
All current certified California ULEV and proposed SULEV light-duty vehicles use this
technology. Obviously, there are trade-offs that push different manufacturers in different
directions. One light-duty manufacturer offers a number of engines with two intake valves
and one exhaust valve per cylinder to reduce exhaust port heat rejection and improve
catalyst light-off. The use of or lack of multi-valve technology will not be the primary factor in
the ability of a HDG engine manufacturer to meet the heavy-duty exhaust emission
standards.

       (5)     The use of better atomization (air assisted) fuel injections to improve
              combustion as a way of reducing base-engine emission levels could have a
              negative impact at operating conditions other than warm up depending on the
              exhaust constituent being considered. HC levels may be reduced during
              warm up,  but that will come at the expense of increase NOX levels due to the
              improved  combustion (higher cylinder pressures and temperatures).

              Letters:

              Ford Motor Company  (IV-D-293) p. 5

       Response to Comment 3.2.2(D)(5):

       The manufacturer did not supply sufficient data to compare the trade-off of NOX with
air-assisted injection, or supply data on the effects of EGR, spark timing, and other engine
control parameters on this trade-off.  It is possible that the trade-offs versus NOX emissions
could be a net benefit.

       (6)     It is possible to develop a calibration with lower engine out NOX.  However,
              this would not represent the best calibration "optimization/balance," and
              would result in severely "de-tuning" the engine to achieve reduced NOX levels.
              This would create a number of problems, including reduced powertrain
              performance, increased fuel consumption, and greater heat generation
              (resulting  in reduced durability of emission components).

              Letters:

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DECEMBER 21, 2000	PAGE 3-100


              Ford Motor Company  (IV-D-293) p. 5

       Response to  Comment 3.2.2(D)(6):

       This is not necessarily the case. Use of moderate EGR rates at part load conditions
actually improves fuel efficiency by forcing a larger throttle opening and reducing pumping
losses (Nakajima et al., Heywood et al., McDonald and Jones).  WOT performance will not
need to change to meet the standards (see our response to comment 3.2.2 (D)(2)). The
sophistication of currently available engine control systems allows a much greater degree of
flexibility in the  control of EGR, spark  timing, and other parameters than previously possible.
Careful calibration of these engine control parameters will be sufficient to manage exhaust
heat, driveability, torque output,  and engine durability.

Issue 3.2.3:  Evaporative Standards

(A)    The technologies and strategies EPA assumes for evaporative control may not
       be appropriate.

       (1)     The evaporative control strategies for light duty vehicles fail to translate
              directly to the larger vehicles due to factors such as more injectors in the
              engine (10 vs. 4  to 8) and a significantly larger fuel tank. Developing a
              canister that is large enough to trap evaporative emissions from a large tank
              and  that can still be purged effectively presents a significant engineering
              challenge.  It is possible that additional hardware to trap bleed emissions will
              be necessary and new, unique  purge strategies will have to developed.

              Letters:

              Ford Motor Company  (IV-D-293) p. 10

       Response to  Comment 3.2.3(A):

       EPA disagrees that evaporative control strategies for light-duty vehicles fail to
translate directly to  the larger  vehicles. While it may be necessary to incorporate a larger
evaporative emission  canister or different purge strategies for heavy-duty vehicles, the same
basic technologies and approaches can be used for both light- and heavy-duty. Further, the
fact that most heavy-duty vehicles are certifying today with emission levels at or below the
Phase 2 evaporative emission standards suggests that evaporative emissions can be
effectively controlled on these larger vehicles.  Nonetheless, we agree that there may be
some  changes  made to heavy-duty vehicles to improve upon evaporative emissions
compliance margins, but only  those with the largest fuel tanks and out-dated materials. As a
result, and as noted in Chapter V of the RIA and in our response to comment 5.5, we have
increased our final estimated cost of compliance, relative to the proposed cost,  in the context
of the  Phase 2  evaporative emission standards.

       Issue  3.3: Sulfur Impact

              Issue  3.3.1: Sulfur's  Effect on PM Trap

(A)    Participate  filter technology could be effective at reducing PM emissions  to low
       levels,  provided the sulfur level in the fuel is greatly reduced.

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       (1)    Commenters provided discussion on the diesel participate filter, or
             continuously regenerative trap (CRT) technology, and why low sulfur fuel is
             important. Engine manufacturers expect that the use of advanced catalysts in
             particulate filter systems will increase the sulfate conversion rate of emission
             control systems to 40% or more, depending on engine operating conditions
             and that this increase would represent a significant portion of the PM
             emissions from HDDEs and vehicles. Sulfur in the fuel can inhibit the NO to
             NO2 conversion process causing regeneration light-off temperature to
             increase outside the normal exhaust temperature range leaving the filter
             susceptible to plugging. This issue is particularly critical for applications that
             generally operate at lighter loads and lower speeds and exhaust
             temperatures.  One commenter noted that it has been demonstrated that one
             measure of the regeneration temperature, called the "balance point
             temperature" is increased by 20 to 30 degrees C when going from 3 ppm to
             30 ppm sulfur diesel. Ultra-low sulfur fuel (and the resulting lower
             regeneration temperature) is required to enable the effective use of
             particulate filter technology.  Some commenters refer to the "DECSE"
             program and study as supporting documentation.  One commenter
             (International) noted that they have conducted a demonstration of a CPF
             system on a school bus using a HDDE and a  3 ppm fuel. In this case, PM
             levels were reduced to below 0.01 g/bhp-hr, NMHC emissions were reduced
             below measurable levels, and CO emissions were reduced by more than 90
             percent. Another commenter noted that operating experience with filter
             technology in Europe with less than 10 ppm sulfur diesel fuel has
             demonstrated that proper filter regeneration will occur even when vehicles are
             operated in areas such as Sweden, where low seasonal ambient
             temperatures are similar to those found in  the northern U.S. One commenter
             provided the DOE report "Impact of Diesel Fuel Sulfur on CIDI  Engine
             Emission Control Technology," August 2000, which includes test data and
             supporting information that illustrates the adverse impact of higher sulfur
             levels on catalyzed diesel particle filters and continuously regenerating diesel
             particle filters.

             Letters:

             Alliance of Automobile Manufacturers (IV-D-262) p. 3-4
             CA Trucking Association (IV-D-309) p.  7
             DaimlerChrysler (IV-D-344) p. +24-27
             Detroit Diesel Corporation (IV-D-276) p. 1-5
             Engine Manufacturers Association  (IV-D-251) p. 9-10
             General Motors Corp. and Isuzu  Motors America, Inc. (IV-D-256) p. 46, 48
             International Truck & Engine Corp.  (IV-D-257) p. 6
             Mack Trucks (IV-D-324) p. 3
             Manufacturers of Emission Controls Association (IV-D-267) p. 7-8
             U.S. Department of Energy  (IV-G-28) p. 2-3, Att. 2
             UAW (IV-D-215)p. 4

       (2)    EPA should  not rely on the argument that a 15 ppm sulfur cap is not needed
             to meet EPA's proposed PM standard since catalyst-based diesel particulate
             filter technology has operated in  limited engine applications where sulfur
             levels have exceeded 15 ppm. This argument is misplaced for two  reasons.

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              First, participate filter technology was applied in limited situations only after a
              careful assessment of the engine operating conditions and a conclusion was
              made that the technology could successfully operate in those situations.  One
              cannot conclude based on these studies that particulate filter technology
              could be applied to all the highway diesel HDEs covered by EPA's proposed
              rule with various engine performance parameters, usage patterns, and
              ambient conditions. Second, in these limited situations, the design control
              target was nowhere close to EPA's proposed standard.

              Letters:

              Manufacturers of Emission Controls Association  (IV-D-267) p. 8

       (3)     Continuously regenerating PM traps  (CRT) use a catalyst to reduce the
              regeneration temperature, allowing regeneration to occur during normal
              operation. However, the reliance on  a catalyst requires that fuel
              contaminants  such as sulfur be eliminated from the diesel fuel and therefore,
              near-zero sulfur diesel will be necessary to ensure that the application of PM
              trap technology is successful.  Engine operation under sustained low
              temperature conditions will also  increase the difficulty of PM trap regeneration
              and under these conditions, it is quite possible that regeneration will be
              prevented given the combination of 15 ppm sulfur fuel and sustained low
              temperature operation.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 46

       (4)     Diesel particulate filter (DPF) technology has very high filtration efficiency but
              requires periodic regeneration since  exhaust back pressure increases with
              particulate loading.  Sulfur has a detrimental effect on this type of particulate
              filter.  Sulfate forms in the oxidation catalyst which is located upstream of the
              DPF, which  increases the back pressure requiring regeneration and has an
              adverse effect on fuel consumption.  In steady state conditions at speeds
              higher than  100-120 kph, the SOS remains as a gas, which allows it to pass
              through the  DPF and condense downstream forming secondary particles.
              However, this could be prevented by using diesel fuels with a sulfur content
              less than 50 ppm.  In addition, when  regeneration occurs, sulfate stored in the
              filter is decomposed and partially converted to SO2. If a  catalytic device is
              placed downstream of the filter, the SO2 is oxidized to SOS, which can react
              with water to form white smoke.  This only occurs when fuels with more than
              30 ppm sulfur are used.

              Letters:

              DaimlerChrysler (IV-D-344) p. 23

       Response to Comment 3.3.1 (A):

       We agree  with the commenters assessment that catalyzed diesel particulate filters
(CDPFs) can be highly effective at controlling particulate matter (PM) emissions provided
they are operated  on low sulfur diesel fuel. We further agree with the commenters that the

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main issues with regard to sulfur in diesel fuel and CDPFs are the formation of sulfate PM
from sulfur in diesel fuel and CDPF regeneration (durability).

       The commenters correctly note that sulfur in diesel fuel forms sulfur dioxide in the
exhaust which can be oxidized across the CDPF further to form sulfuric acid which
condenses in the atmosphere (and in the CFR test procedure) to form sulfate PM. Further
the commenters are correct to note that the fraction of the total PM made up from sulfate PM
increases significantly when the CDPF technology is applied to control the  elemental carbon
and soluble organic fraction (SOF) portions of diesel PM.  The formation of sulfate PM as
noted by several of the commenters is such that with fuel sulfur levels greater than 15 ppm
the Phase 2  PM standards are not attainable. While some commenters suggest that even
lower fuel sulfur levels are needed in order to ensure compliance with the Phase 2 PM
standard, data from the DECSE program presented in the draft RIA for the  NPRM shows that
the Phase 2  PM standard can, in fact, be met with a fuel sulfur cap of 15 ppm. The ability of
CDPFs to meet the specific supplemental standards is addressed in our response to
comments 3.2.1 (N), (O) and (P).

       The commenters also provide substantial information, similar to that described by
EPA in the draft RIA from the NPRM, that shows CDPFs may not regenerate when operated
on fuel with anything but very low fuel sulfur levels. CDPFs "trap" (filter) solid particles in the
exhaust, primarily elemental carbon along with hydrocarbons which are adsorbed onto the
surface of the particle.  The trapped PM will quickly clog the CDPF causing it to fail unless
the trapped PM is removed, typically by oxidation of the PM to form carbon dioxide (CO2) and
water (H2O). CDPFs rely on the formation of a strong oxidant, nitrogen dioxide (NO2), in
order to ensure that CDPF regeneration occurs under normal operating conditions. The
needed NO2 is formed by oxidation  of NO in the diesel exhaust across a platinum based
oxidation catalyst.  The platinum catalyst can exist either in front of the filter portion of the
CDPF on its own flow through catalyst substrate, or can be applied to the surface of the filter
portion of the CDPF directly. Sulfur in the exhaust poisons these platinum  catalysts,  no
matter their location, inhibiting the formation of NO2 as noted by the commenters. This
inhibition of NO2 leads to an eventual failure of the CDPF unless fuel sulfur levels are very
low as noted by the commenters.

       As shown clearly in the draft RIA from the NPRM and from  the data provided  by the
commenters, there is an overwhelming body of evidence that shows that sulfur from the fuel
poisons the CDPF leading to failure to form NO2 and subsequently leading to failure  of the
CDPF. The commenters point out data from both controlled experimental data such as from
the DECSE report that demonstrates clearly that sulfur inhibits CDPF regeneration as
measured by the balance point temperature and real world retrofit applications such as the
substantial fleet experience in regions that already have low sulfur  diesel fuel.  The fact that
there is substantial laboratory data to show the mechanism by which  sulfur poisons the
CDPF and substantial field experience with CDPFs on different fuel sulfur levels that shows
increased frequency of failures with  increasing fuel sulfur levels means that the commenters
were able to come to a consensus on the problems with sulfur and CDPF regeneration.

       We agree with the commenters who suggest that even lower fuel sulfur levels (below
the 15 ppm cap we are mandating) would provide even lower PM emission levels and
somewhat improved CDPF regeneration. However, we disagree with the suggestion that
lower levels are required in order to  meet the Phase 2 PM standard or to ensure reliable
CDPF regeneration. Analysis of the DECSE data referenced by the commenters and the
additional data summarized in the draft RIA, shows that fuel with a  15 ppm sulfur cap
enables the Phase 2 PM standard.  Further the extensive  successful  CDPF field experience
chronicled in the RIA and in the comments on fuel with a sulfur cap of 10 ppm, and given

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International's commitment to produce a CDPF equipped diesel bus in markets where 15
ppm can be made available (as described in their comments summarized here), makes us
confident that CDPFs will regenerate reliable when operated on the mandated fuel under this
program which is expected to have an in-use average level between seven and 10 ppm.

       We agree with the commenter about the danger in assuming that because a single
vehicle or fleet of vehicles equipped with CDPFs has been able to operate on higher than  15
ppm sulfur fuel that all CDPF equipped heavy-duty vehicles will be  able to operate on high
sulfur fuel. As noted by the commenter since the engine operating conditions determine the
amount of heat available for regeneration, and since for limited vehicles this heat level can be
significantly higher than would be expected on average for all vehicles, some carefully
chosen CDPF equipped vehicles can operate on sulfur levels higher than 15 ppm. Of course
as noted by the commenter, these vehicles when operated on  higher than 15 ppm sulfur fuel
will be unable to meet the PM emission standards set in this rulemaking due to sulfate PM
formation.  Most importantly we agree with the commenter that demonstration of CDPF
durability when operating on fuel with a sulfur level above 15 ppm on a limited cross-section
of vehicle types and narrowly constrained operating conditions can not be the basis for
demonstrating the general performance of CDPF technology on higher fuel sulfur levels
across other vehicle types and the wide range of operating conditions normally expected in
use. This is especially  true when there are known mechanisms by which fuel sulfur  inhibits
CDPF regeneration and when there is conflicting data that shows failures of some vehicles
when operated on fuel sulfur levels higher than 15 ppm.

(B)    Under the oil industry proposal of 50 ppm, PM traps are likely to suffer  high
       failure  rates, leaving oxidation catalysts that yield only  a 20 percent PM
       reduction as the most likely PM after-treatment technology.

       (1)     Although some PM traps (including the most promising continuously
              regenerating traps) can operate at 50 ppm, trap clogging and failure  is a
              serious  problem at this level due to the formation of sulfate PM. Fuel
              economy also suffers, as a result of increased regeneration needs. This
              would be difficult-if not impossible-for engine, aftertreatment, and/or vehicle
              manufacturers and/or sellers to warrant such a trap for the full useful life of
              the vehicle, and fuel economy-sensitive vehicle users might not welcome the
              technology. Consequently, in the  event EPA adopts a 50 ppm sulfur cap,
              manufacturers and sellers would be likely to opt for the less effective
              oxidation catalyst, rendering the proposed 0.01 g/bhp-hr PM standard
              unachievable.

              Letters:

              Natural  Resources Defense Council (IV-D-168) p. 4

       Response to Comment 3.3.KB):

       We agree with the issues raised by the commenter, who makes clear why setting a
50 ppm diesel fuel sulfur cap would be  unacceptable.

(C)    EPA has not accounted for the fact that the continuously regenerating trap, on
       which EPA primarily relies, may not regenerate itself in cold climates if  diesel
       fuel at 15 ppm  sulfur is used.

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       (1)     Commenter cites to the RIA (p. III-26) and notes that EPA fails to recognize
              that the typical sulfur level of the diesel fuel in Sweden is 3 ppm, with few
              samples exceeding a 5 ppm level.  EPA admits that 50 ppm does not work in
              colder climates and does not present any evidence that a 15 ppm cap is
              sufficient for proper operation of continuously regenerating particulate traps in
              cold ambient conditions.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 13-14

       Response to Comment 3.3.KC):

       The commenter raises concerns that the exceptionally good results  with 10 ppm
sulfur diesel fuel, even in extremely cold climates like Sweden's, may not necessarily indicate
that similarly good results (in terms of CDPF regeneration) are ensured in the U.S. with the
15 ppm sulfur cap mandated by EPA (with an  expected in-use average of seven to 10 ppm).
While we do not have data with a fine enough resolution to differentiate the  small difference
between 10 ppm and 15 ppm sulfur caps, we can apply engineering judgement to the
question. Our own engineering judgement augmented by the submissions from the various
catalyst development companies  leads us  to believe that a 15 ppm fuel sulfur cap will allow
for reliable regeneration of the CDPF even under the harsh winter conditions experienced in
portions of the U.S. and Canada.  We received comments on this rulemaking from the
Manufacturers of Emission  Control Association (MECA)  and several of its members including
the two largest CDPF manufacturers, Johnson Matthey and Englehard Corporation indicating
that a 15 ppm fuel sulfur level (with a lower in  use average) would allow them to develop
CDPF systems which would be reliable in-use. Please see EPA docket A-99-06 items IV-F-
100, IV-F-188, andll-G-80.

(D)    EPA data on PM Traps provide no evidence to correlate trap failures to sulfur
       content.

       (1)     The Johnson-Matthey letter notes a handful of particulate trap failures on its
              systems in  Finland and Denmark, using  50 ppm and 200 ppm fuel,
              respectively, while there were no failures in Sweden using 10 ppm fuel. The
              letter attributes the lack of failures to low sulfur fuel.  This conclusion is
              questionable, however, because Johnson-Matthey provided absolutely no
              data to positively correlate failures to diesel fuel sulfur levels. The failures
              could be attributable to engine malfunction, their state of maintenance, or the
              type of lubricants used. Andrew Walker of Johnson-Matthey noted during the
              February SAE International Congress that many of the PM trap failures were
              caused by the fact that the  vehicles were not driven over duty cycles that were
              conducive to efficient trap operation. The lack of trap failures in Sweden is
              more likely attributable to the fact that the Mk1 fuel used there has fewer of
              the heavier diesel components that PM traps usually remove. This light-duty
              work of the PM traps in Sweden is a more likely explanation for the lack of
              failures than is the sulfur content of the fuels.

              Letters:

              American Petroleum Institute (IV-D-343) p. 28-29
              Marathon Ashland Petroleum  (IV-D-261) p. 21-22

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       (2)     EPA's claim that DPFs require low sulfur fuel ignores the success of the
              retrofit applications of this technology at sulfur levels higher than 50 ppm.
              EPA's concern about sulfate formation during the use of an NO oxidation
              function to promote DPF soot burn-off ignores the fact that sulfate formation
              is greatest at high exhaust temperatures. A DPF system would meet the
              proposed PM standards over the urban HD transient cycle with 50 ppm fuel.
              The currently available emission data clearly show that EPA's proposed FTP
              PM standards can be achieved with current trap designs and a 50 ppm fuel.
              Commenters cite to data from MECA, EF&EE, Sierra Research and
              Engelhard to support their position on this issue (see Attachments 2, 3, and 4
              to API letter).

              Letters:

              American Petroleum Institute  (IV-D-343) p. 11, 25-26
              ExxonMobil  (IV-D-228) p. 7-8
              Marathon Ashland Petroleum  (IV-D-261) p. 19, 93

       (3)     EPA inappropriately relied on the DECSE report, in that no effort was made to
              test DPF systems that were optimized to minimize sulfate formation.  Modest
              exhaust heating would address concerns about the low temperature durability
              of DPF systems with 50 ppm fuels that were raised in the NPRM. The
              heating would improve DPF performance and would reduce the need for DPF
              oxidation activity thereby lowering sulfate formation.

              Letters:

              ExxonMobil  (IV-D-228) p. 8

       Response to Comment 3.3.1(D):

       The comments summarized suggest that fuel with a 50 ppm cap, 30 ppm average
could enable the CDPF technology to both function reliably (regenerate) and to control PM
emissions to meet  the Phase 2 PM standard.  The comments are contrasted by the
substantial comments we received saying that an in-use average below 15 ppm was required
in order to ensure reliable CDPF regeneration not to mention the comments suggesting that
even 15 ppm was not low enough (issue 3.3.1.(C)).  We disagree with  the commenters
suggestion that 50 ppm sulfur fuel would enable the CDPF technology.

       The commenters reach their conclusion by failing to recognize  the inherent trade-offs
between encouraging CDPF regeneration while suppressing sulfate PM formation and by
looking past the lessons learned from the substantial fleet experience in Europe.

       The formation of NO2 across a platinum oxidation catalyst is fundamental to the
regeneration of the CDPF as discussed at length in the  RIA and in response 3.3.1 (A).
Unfortunately the same oxidation function serves to oxidize sulfur in the exhaust (originally
from sulfur in the fuel) to sulfuric acid which condenses  to form sulfate  PM. The formation
rates of NO2 and sulfate PM across a platinum oxidation catalyst both  increase with
temperature, with sulfate formation rates typically higher than NO2 formation rates at all but
the lowest temperatures (see figure 10 in SAE 890404). This chemical phenomena sets  up a
paradox which  has frustrated emission control development engineers for more than a
decade. Actions designed to improve CDPF regeneration such as higher catalyst loadings,

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higher exhaust temperatures, insulating the catalyst and including all of the ones suggested
by the commenters inherently increase the formation of sulfate PM.  Actions intended to
suppress the formation of sulfate PM such as moving the catalyst further from the engine,
lowering catalyst loadings, and including all of the ones suggested by the commenters all
suppress the formation of NO2 leading to poor CDPF regeneration and in most cases failure
of the CDPF. The commenters ignore this paradox when they suggest that the results from
the DECSE program are misleading because the PM formation rates noted in DECSE could
be decreased through mechanisms designed to suppress sulfate formation, but which  will
certainly also suppress NO2 formation and CDPF regeneration. The simple fact is the only
way to ensure both CDPF regeneration and low PM emissions is to use a highly catalyzed
CDPF with very low sulfur diesel fuel.

       The commenters also raise questions about our reliance on field experience in
setting the fuel sulfur level.  That experience documented in the RIA bears summarizing
here.  The experience gained in field tests in regions where low sulfur fuel is already
available helps to clarify the need for very low sulfur diesel fuel. In Sweden and some
European city centers where below 10 ppm diesel fuel sulfur is readily available, more than
3,000 CDPFs have been introduced into retrofit applications without a single failure. This
success on 10 ppm sulfur fuel is all the more  impressive as some of these units have been in
operation for more than six years.  The field experience in areas where sulfur is capped at 50
ppm has been less definitive. In regions without extended periods of cold ambient conditions
(such  as the United Kingdom) field tests on 50 ppm cap sulfur fuel have been positive, with
no reported durability issues (although PM emissions would certainly be above the Phase 2
PM standard).  These good results in the UK are contrasted with field tests in Finland where
colder winter conditions are sometimes encountered (similar to many northern regions of the
United States). The testing in Finland revealed a failure rate of 10 percent (14 failures in the
test program) when operated on fuel with a sulfur cap of 50 ppm. This 10 percent failure rate
has been attributed to insufficient CDPF regeneration due to fuel sulfur in combination with
low ambient temperatures.  Other possible reasons for the high failure rate in Finland when
contrasted with the Swedish experience appear to be unlikely. The Finnish and Swedish
fleets were substantially similar, with both fleets consisting of transit buses powered by Volvo
and Scania engines in the 10 to 11 liter range. Further, the buses were operated in city areas
and none of the vehicles were operated in northern extremes such as north of the Arctic
Circle. As the ambient conditions in Sweden  are expected to be no less harsh than those in
Finland, and since the vehicles and engines were substantially similar, we believe the
increased failure rates noted here are due to the higher fuel sulfur level in a 50 ppm cap fuel
versus a 10 ppm cap fuel. Testing on an even higher fuel sulfur level of 200 ppm was
conducted in Denmark on a fleet of 9 vehicles. In less than six months, all of the vehicles in
the Danish fleet had failed due to plugging of the CDPFs.  We believe that this real world
testing clearly indicates that increasing diesel fuel sulfur levels limit CDPF regeneration,
leading to plugging of the CDPF even at fuel sulfur levels as low as 50 ppm.

       The commenters suggest that other factors contribute to failures experienced in some
fleets when operated on higher fuel sulfur levels (higher than 10 ppm) in spite of the fact that
there are clear mechanistic reasons that show higher sulfur levels lead to lower CDPF
regeneration (see comments and our response in 3.3.1 (A)).  We disagree with the
commenters assertion that  other factors were more important because of the substantial
similarities between the fleets operated in each of the regions mentioned here and because
there is a clear mechanistic description (suppressed NO2 formation) that explains the higher
failure rates experienced with higher fuel sulfur levels.

       The commenters also suggest that the Phase 2 FTP PM standard might be able to be
met with a CDPF equipped engine operated on 50 ppm sulfur diesel fuel. This comment

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highlights the very reason we feel it is appropriate to set standards that both control
emissions under some typical transient operations and control emissions under extended
near steady-state operation as typified by much of heavy duty vehicle operation and the SET
procedure. The FTP test does not capture the extended loaded operation which can
characterize some heavy-duty vehicle driving and because of this it does not capture the
potentially significant sulfate PM emissions from some CDPF equipped vehicles. The FTP
hot start test lasts for only 20 minutes and does not operate continuously under conditions
which would be representative of on highway driving for a heavy-duty truck. For these
reasons temperatures are relatively low over the FTP, suppressing sulfate PM formation.
Where we to set a 50 ppm fuel sulfur limit as suggested by the commenter, the real PM
emissions realized from the in-use vehicle fleet would be substantially higher than what is
predicted from the FTP test procedure alone. It is only by testing compliance against both
the FTP procedure and the SET procedure that we ensure the emission reductions sought by
this program. Further, even  if our air quality needs weren't as great as they are, and we were
able to accept a higher PM emissions rate in-use, the simple fact is that 50 ppm cap fuel will
not ensure reliable CDPF operation for all of the vehicles in the fleet.  Experience shows that
some CDPF equipped vehicles when operated on 50 ppm cap fuel fail due to poor CDPF
regeneration due to sulfur in the fuel.

       Please refer also to issues 3.3.1 (A-C and E).

(E)    Johnson-Matthey data show no significant effect of sulfur content on
       temperature requirements for trap regeneration.

       (1)     Relying on charts included in the Johnson-Matthey letter cited in the NPRM,
              commenters  assert that the data do not suggest there exists a significant
              difference in  NOX conversion  efficiency for particulate traps operated on diesel
              fuel containing 10 ppm, 30 ppm, or 50 ppm sulfur.

              Letters:

              American Petroleum Institute (IV-D-343) p. 27-28
              Marathon Ashland  Petroleum  (IV-D-261) p. 20-21

       (2)     Based upon findings of the DOE DECSE program, Johnson-Matthey claim
              that a PM trap cannot be used with fuel of 50 ppm sulfur because the catalytic
              process used to promote particulate combustion in the exhaust also
              preferentially oxidizes fuel sulfur to sulfate. API claims that the DECSE report
              is not a relevant basis on which to support a rulemaking that focuses on
              future engines and aftertreatment technology because the engine used in the
              DECSE program did not represent future technology.  It was calibrated to
              meet the 1998 NOX standards of 4.0 g-bhp-hr, and the engine and PM trap
              were not optimized to function as  an integrated "system."  Moreover, the
              DECSE program used the steady-state OICA cycle, which creates engine
              temperatures significantly higher than the HD transient FTP cycle.  The
              temperature difference could explain the high conversion  rates of sulfur to
              sulfate. API questions EPA's rationale of setting emissions standards based
              on the driving cycle that exhibits the highest sensitivity to sulfur content. Also,
              the location of the traps in the test cell configuration could have lead to
              elevated exhaust temperatures and sulfate concentrations.  Regardless, a
              systems approach to engine and aftertreatment devices could lower the
              conversion rates of sulfur.

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              Letters:

              American Petroleum Institute (IV-D-343) p. 27-28

       Response to Comment 3.3.KE):

       The data mentioned in the comment from Johnson Matthey shows the affect of sulfur
on the NO to NO2 oxidation rate across a platinum catalyst. The data can be somewhat
confusing to understand and the results can vary somewhat depending upon the test
sequence order and the length of time allowed for the results to stabilize. This is because the
data represents the amount of NO oxidation inhibition caused by cumulative sulfur poisoning
of the platinum catalyst. The importance of test order and test duration can be best
explained by a hypothetical example.  If the NO oxidation rate of a fresh (no sulfur poisoning
yet) catalyst is measured at a single temperature with 50 ppm sulfur fuel overtime the NO
oxidation rate will decrease.  The NO oxidation rate at 100 hours will be substantially lower
than it was after 1 hour. The length of time allowed for stabilization at any one temperature
and one fuel sulfur level can be easily understood to change the results due to the different
amounts of accumulated sulfur poisoning of the catalyst.  Similarly the test order can be
understood to have an effect on the results. If after extended exposure to 50 ppm sulfur fuel
the same catalyst is then exposed to 10 ppm sulfur fuel, the NO oxidation rate would be
expected to remain low. This is because the sulfur poisoning has already occurred before
the fuel switch. Operating on lower sulfur fuels can not change this fact. Therefore, the
sequence of fuel sulfur levels in the testing is important.

       For the previously mentioned reasons the test results mentioned in the comment
must be viewed in the context of how they were tested and can not necessarily be used to
determine the exact degree of inhibition at one sulfur level or the amount of difference
between two sulfur  levels. However, the results can be understood to show that the lower the
sulfur level, the less the amount of sulfur the catalyst is exposed to, the lower the degree of
sulfur poisoning and thus the less NO inhibition due to sulfur. Whether or not the differences
are "significant" can not be determined from this testing. The significance of the difference
between various sulfur levels is determined by whether or not the inhibition of NO oxidation  is
large enough to suppress CDPF regeneration causing CDPF failure. The DECSE balance
point data described in issue 3.3.1 (A) clearly shows that the CDPF regeneration is
significantly inhibited at fuel sulfur levels as low as 30 ppm. The extensive European field
experience discussed in the RIA and in issue 3.3.1 (D) shows that the degree of CDPF
regeneration suppression caused by operation on 50 ppm cap fuel can be enough to cause
CDPF failures.

       To state more clearly: the Johnson Matthey data mentioned in the comment shows
that there is a mechanistic cause for NO oxidation inhibition due to sulfur poisoning of the
platinum catalyst. The DECSE balance point temperature results described in comments
summarized in 3.3.1 (A) show that NO oxidation inhibition due to sulfur even at levels as low
as 30 ppm can suppress CDPF regeneration. Finally, real world experience in Europe on 50
ppm cap fuel shows that for some vehicles this degree of NO oxidation inhibition is enough  to
cause CDPF failures. For these reasons, we have concluded that a fuel sulfur level of 50
ppm is not an appropriate level for a CDPF based PM control program.

       See also the responses to comments 3.3.1 (A) through (D).

(F)    EPA has failed to address techniques other than sulfur reduction for managing
       PM control.

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       (1)     There exist other means, such as insulation of exhaust piping, to manage the
              effects of cold temperature ambient conditions on the efficiency of catalyzed
              PM filter traps, rather than lowering sulfur content of fuels as suggested in the
              Johnson-Matthey letter. Another technique to lower the creation of sulfate
              even with higher sulfur fuels would be to use EGR and variable turbo controls
              to elevate exhaust temperatures at lower loads.

              Letters:

              American Petroleum Institute (IV-D-343) p. 29-31
              Marathon Ashland Petroleum (IV-D-261) p. 22

       (2)     EPA has failed to consider recent research to develop sulfur resistant PM trap
              schemes, including Sierra Research report on "Future Diesel-Fueled Engine
              Emission Control Technologies and Their Implications for Diesel Fuel
              Properties-A Review," Aug. 18, 1999; and AVL List Paper presented at
              NPRA Annual Meeting, March 2000.  Commenter also noted developments
              by Steyr Nutzfahrzueg Ag of a SO catalyst which cut diesel HC emissions by
              over 90%, oxidized CO by over 70%, and reduced cold start emissions.
              Compared to oxy-cats, it avoided oxidation  of SO2 to SOS,  did not cause PM
              increases, and will not oxidize NO to NO2, and the catalyst is resistant to
              sulfur. Commenter cites a report by K. Richter, "Hydrocarbon  Sorption  and
              Oxidation Catalyst for HDE," Society of Automotive Engineers, Paper#1999-
              01-3560. Commenter also notes new metallic additives to decrease PM
              emissions and reduce control technology's  sensitivity to sulfur. Renault and
              PSA/Peugeot-Citroen are employing such additives with  success.
              Commenter cites O. Salvat et al, "Passenger Car Serial Application of a
              Particulate Filter System on a Common Rail Direct Injection Engine, SAE,
              Paper #2000-01-0473.

              Letters:

              American Petroleum Institute (IV-D-343) p. 29-31
              Marathon Ashland Petroleum (IV-D-261) p. 22-23

       Response to Comment 3.3.KF):

       The commenters raise two separate issues with regards to allowing less sulfur
sensitive technologies to meet the Phase 2 PM standard. The first suggestion is that CDPF
sulfur sensitivity can be decreased by the application of "other means" such as insulation of
exhaust piping or different engine management techniques in order to raise exhaust
temperatures.  This issue is addressed fully in response to comment 3.3.1(0).

       The second suggestion raised here is that there are some less sulfur sensitive
technologies which could be applied as alternatives to the CDPF technology  in order to
control PM emissions. The  non-filter based technologies suggested in the  comment, such as
new diesel oxidation catalyst technologies and new hydrocarbon adsorber technologies, do
not offer the amount of control necessary in order to meet our significant air quality concerns.
These technologies provide minimal control of the bulk of diesel PM (the elemental carbon
portion i.e., the black soot) and thus typically offer less than 30 percent reductions in total
PM. CDPFs operated on low sulfur diesel fuel provide total PM reductions in excess of 90

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percent. Without control of all of the constituents of diesel PM (soot, hydrocarbons, and
sulfate) we can not realize the substantial reductions that are needed to meet the Phase 2
PM standards.

       The other set of alternative technologies are diesel particulate filters (DPFs) which
promote the  oxidation of diesel PM with fuel additives in conjunction with active fuel heaters
such as the PSA system mentioned by the commenter.  The fuel additive catalysts
mentioned here do reduce the temperature at which the oxidation of trapped PM in the DPF
can occur.  For CDPF regeneration without precious metals, temperatures of around 650°C
must be obtained. At such high temperatures, elemental carbon will burn provided sufficient
oxygen is present.  However, diesel engines rarely if ever operate with such high exhaust
temperatures.  For example, exhaust temperatures on the HDE  Federal Test Procedure cycle
typically range from 100°C to 450°C. The fuel additive technologies mentioned in the
comment can reduce the temperature at which the carbon is oxidized to approximately
450°C. Precious metal CDPFs use platinum to oxidize NO in the exhaust to NO2, which is
capable of oxidizing carbon at temperatures as low as 250°C to  300°C.  The difference
between the 450°C temperature for the additive  based technologies and the 250°C
temperature  for the CDPF technology is important because for much of diesel engine
operation exhaust temperatures are below 450° C. For example since exhaust temperatures
are typically  below 450°C during the HD FTP test procedure, a fuel additive based DPF
system would not be expected to regenerate over the test.

       PSA attempts to overcome the problem of inadequate exhaust temperatures (even
with the fuel  additive) by adding excess fuel to the exhaust which then is oxidized over a
diesel oxidation catalyst raising the exhaust temperature high enough to promote PM
oxidation with the fuel additive.  Using this approach PSA claims that PM emissions are
reduced by as much as 60%.  The use of fuel additives and supplemental exhaust heat in
order to ensure regeneration leads to increased fuel consumption and increased system
maintenance. The fuel additive produces a metallic ash which is collected in the filter and
which must be cleansed from the filter every 50,000 miles. Further the additional fuel used to
promote PM  oxidation is not directly offset by other savings through the application of this
technology.

       While such a technology might work in some applications, we do not believe that a
technology solution that requires the use of an additional fuel additive, increases
maintenance cost over that for a CDPF, and provides only two-thirds of the benefits of the
CDPF is an acceptable approach fora national heavy-duty diesel emission control program.

       We are unaware of viable technology solutions to the substantial air quality problems
of the diesel  engine that can be applied without reducing diesel fuel sulfur levels
substantially. Please see our response to comment 3.2.1 (D).

              Issue 3.3.2: Sulfur's Effect on  NO¥ Adsorbers
                                             X '
(A)    NOX adsorbers are extremely sensitive to the presence of sulfur in diesel fuel.

       (1)     The sulfate formed during the combustion process will block the storage sites
              in the adsorbers needed for effective NOX adsorption. This will have a
              negative influence on the reduction of NOX emissions but will also cause an
              increase in the fuel consumption of the engine. NOX adsorbers are likely to
              require near-zero sulfur levels since their ability to effectively store NOX is
              extremely sensitive to the presence of any fuel sulfur. Some commenters
              provided significant discussion and data regarding the reduction in the NOX

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              conversion rate with higher sulfur fuel and the fuel economy impacts of
              operating the catalyst at higher temperatures as necessary for effective
              desulfating. At sulfur levels above the proposed 15 ppm cap, companies
              developing NOX adsorber technology question the ability to commercialize
              systems that would be effective for the extended useful  life of HDDEs.  One
              commenter cites to the "ACEA Data of the Sulfur Effect  on Advanced
              Emission Control Technologies" study, which shows that near zero sulfur
              levels are required to enable advanced aftertreatment technologies to enter
              the market.  Others referred to the DECSE program and study as supporting
              documentation. One commenter provided the DOE report "Impact of Diesel
              Fuel Sulfur on CIDI Engine Emission Control Technology," August 2000,
              which includes test data and supporting information that illustrates the impact
              of higher sulfur levels on NOX adsorbtion technologies.

              Letters:

              CA Trucking Association (IV-D-309) p. 7
              Cummins, Inc. (IV-D-231) p. 12
              DaimlerChrysler  (IV-D-344) p. 4, 8,  +18-21
              Detroit Diesel Corporation  (IV-D-276) p. 1-5
              Engine  Manufacturers Association  (IV-D-251) p. 10-11
              General Motors Corp. and Isuzu  Motors America, Inc. (IV-D-256) p.  47-48
              International Truck & Engine Corp. (IV-D-257) p. 6
              Mack Trucks (IV-D-324) p. 3
              Manufacturers of Emission Controls Association  (IV-D-267) p. 8
              U.S. Department of Energy (IV-G-28) p. 2-3, Att. 2
              UAW (IV-D-215)p. 4-5

       Response to Comment 3.3.2(A):

       We agree with the  commenters who note that sulfur from diesel fuel poisons the NOX
adsorber catalyst by blocking the storage sites in the adsorber.  Further we agree with the
commenters that the lower the fuel sulfur level the better for the NOX adsorber catalyst.
However, we disagree with the assertion by some commenters, that average fuel sulfur
levels below the seven  to 10 ppm level expected from our 15 ppm fuel sulfur  cap will be
necessary in order to make NOX  adsorbers feasible  over the life of a heavy-duty vehicle.
Please refer to our responses also on issues 3.2.1(A,C,D,J,M).

              Issue 3.3.3: Effects of Lubricating Oil Sulfur

(A)    EPA must address the sulfur content in lube oils to avoid problems with
       emission control equipment.

       (1)     The metallic ash  content of lube oils may cause plugging of particulate traps
              which must then be removed and the ash blown off every  100,000 to 150,000
              kilometers.  The proposed voluntary low-sulfur lube program in the rule may
              undermine the significant financial investments in the new technologies.
              European Automobile Manufacturers Association recommend certain
              balances of sulfated ash for new technology engines.

              Letters:

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              DaimlerChrysler (IV-F-186)

       (2)     EPA has not considered the effect of engine oil sulfur contamination.  Industry
              sources predict engine oil sulfur contamination will be a major factor under
              the proposed sulfur standard.  Various scientists predict such contamination
              may represent sulfur levels of 10 to 20 ppm in engine exhaust gases (cites to
              Prof. David Kettleman, University of Minnesota, Diesel Fuel News, 10/18/99).
              EPA cannot require ultra-low sulfur standards absent consideration of real
              world effect of engine oil contamination on sulfur sensitive emission reduction
              devices.

              Letters:

              National Alternative Fuels Foundation (IV-D-214) p. 16

       Response to  Comment 3.3.3(A):

       The comments summarized here raise two concerns with the lubricating oils used in
diesel engines equipped with  CDPFs and NOX adsorbers,

       1)  Metallic ash from engine oil can lead to CDPF plugging

       2)  Sulfur in engine oil can contribute to poisoning of CDPFs and  NOX adsorbers just
       as sulfur in fuel can.

       While we agree with the commenters  that these are important issues which must be
considered, we disagree with  the commenters on the magnitude of the problems raised by
these issues and the appropriate means to address these issues.

       Metallic ash from lubricating oil is captured by the filtering mechanism of the CDPF
and can eventually accumulate in the CDPF causing increased backpressure and a need to
clean the ash from the CDPF  as described in the RIA and in the comment.  The rate of ash
accumulation and thus the interval at which a cleaning  event will need to  occur is determined
by the quantity of metallic additives in the lubricating oils and the engine oil consumption rate.
As described in the RIA we expect that there will be a need to clean the accumulated ash
from CDPFs at regular intervals and have therefore estimated a cost for this cleaning.
Further, we expect that the oil industry and the engine manufacturers will work together (in
fact already are as noted in comment summary 3.3.3(B)) in order to define the best oil
formulation consistent with the emission control systems being developed to meet the Phase
2 standards. We believe that industry working together to develop new oil formulations as
needed to address all of the needs of the engine/vehicle systems is the best way to address
this issue.

       Sulfur in engine oil can also contribute to  sulfur in the  exhaust which poisons the
function of both CDPFs and NOX adsorbers.  Current engine lubricating oils have sulfur
contents which can range from 2,500 ppm to as high as 8,000 ppm by weight. Since engine
oil is consumed by heavy-duty diesel engines in normal operation, it is important to account
for the contribution of  oil derived sulfur.  The approach  that we used in the RIA to give a
straightforward comparison of this effect is to  express the sulfur consumed  by the engine as
an equivalent fuel sulfur level.  Using this approach in the RIA we showed that the fuel
equivalent amount of sulfur expected from engine oil was approximately one ppm.  We also
showed in the RIA why estimates of this fuel equivalent sulfur levels made for vehicles with

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open crankcase ventilation systems can be misleading.  Given the relatively low amount of oil
derived sulfur expected to enter the exhaust system as described in the RIA we do not feel
that it is necessary to set a sulfur limit on engine oil.  However, we believe that the use of low
sulfur diesel fuel may allow for engine oil formulations to be developed with a lower sulfur
content. As we mentioned previously the engine manufacturers and the oil industry are
already working together to address these issues.  Therefore we think it is both inappropriate
and more importantly unnecessary for us to set standards for engine lubricating oils.

(B)    EPA has failed to address the need for low sulfur/low ash lube oil.

       (1)     Presently, fully formulated HDDE oils contain between 0.3 and 0.8 percent
              sulfur. With ultra low sulfur fuel,  the lube oil sulfur contribution becomes more
              significant. Commenter provides additional discussion on this issue noting
              that the formulation of lube oil requires a delicate balance of components to
              serve the multiple and often conflicting demands of routine engine operation.
              Current research is underway on this issue through a cooperative effort
              between engine manufacturers, DOE, emission control system suppliers and
              the petroleum industry. EPA should participate in these efforts. Commenter
              does not recommend any specific requirements for lube oil but notes that
              EPA  should assess whether the requisite changes  to lube oil to reduce the
              sulfur and ash content will occur voluntarily and, if not, then specifications
              should be set.

              Letters:

              Cummins, Inc. (IV-D-231) p. 45

       Response to Comment 3.3.3(6):

       See response to comment 3.3.3(A).

(C)    Since engine lubricating oils containing sulfur do not contribute to exhaust
       sulfur, there should be no requirement to reformulate the product.

       (1)     Commenter (Motor and Equipment Manufacturers Association and
              Automotive Chemical Manufacturers Council) notes that given that lubricating
              oils do not contribute to exhaust sulfur and that EPA's proposed rule requires
              that the crankcase be closed and that crankcase ventilation systems be put in
              place by engine manufacturers, it is unnecessary to require lubricating oil
              manufacturers to reformulate their products at this time.  Additional
              investigation by EPA is necessary before any reformulation measures are
              adopted.

              Letters

              Motor and Equipment Manufacturers Association (IV-D-258), p. 9

       Response to Comment 3.3.3(C):

       While we agree with the commenter that reformulating engine oils in order to
accommodate new exhaust emission control technologies, such as NOX adsorbers and
CDPFs, are not required, we do believe that it may be beneficial to reformulate engine oils

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giving consideration to the changes brought on by the application of the emission control
technologies and low sulfur diesel fuel. See also response to comment 3.3.3(A).

              Issue 3.3.4:  Other After-treatment Technology

(A)    Some of the aftertreatment systems that are currently under development
       contain an oxidation catalyst, which is likely to produce a high amount of
       additional participates in the presence of high sulfur fuel.

       (1)     The oxidation catalyst in aftertreatment systems will oxidize carbon monoxide
              and SO2 converting it to SO4, which, as a result, produces a high amount of
              additional particulates if high sulfur fuel is used. This could limit the
              introduction of otherwise beneficial aftertreatment systems. If a 15 ppm sulfur
              fuel is used, the sulfur contribution is minimal for engines without
              aftertreatment systems. However, when an oxidation catalyst is used, the
              conversion rate can drastically increase to between 30% and 100%
              depending on the efficiency of the catalytic converter.  Commenter provides
              additional data to support their assertion and asserts that a sulfur cap of 5
              ppm is necessary for future HDDEs to be reliably certified to a 0.01 g/bhp-hr
              PM standard.

              Letters:

              DaimlerChrysler (IV-D-344) p. 3-4, +15-16

       (2)     Even though EPA has indicated in the RIA that oxidation catalyst technology
              is not sufficient to achieve the  necessary levels of PM reductions, if ultra low
              sulfur fuel is available nationwide, this technology can be more efficient and
              can be retrofitted to existing engines to allow substantial emissions benefits.
              Oxidation catalysts also can be very durable with little or no deterioration in
              effectiveness over time. Commenter refers to the "DECSE" program and
              study as supporting documentation.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 9-10

       Response to Comment 3.3.4(A):

       We recognize the impact of fuel sulfur on particulate generation over oxidizing
systems. The feasibility of the PM standard using highly oxidizing exhaust emission controls
such as CDPFs containing precious metals is discussed in Chapter III of the RIA, section
(A)(2). Precious metal CDPFs behave similarly with respect to SO2 oxidation to the DOCs
discussed by the commenter. Some incorporate a precious metal DOC upstream of the wall-
flow filter media, others incorporate the DOC function onto the surface of the filter media.
The data summarized in table III.A-1 of the final  RIA show that the 0.01  standard can be met
using such a device with a 15 ppm sulfur diesel fuel based on data from the DECSE
Program.

       As for retrofits using DOCs, even  with increased efficiency, DOC technology alone is
not sufficient to meet the PM standards.  DOCs remove gas-phase semi-volatile organic
compounds, with  little or no interaction with elemental carbon  PM. These contribute to PM

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emissions after they are cooled via dilution with air and either adsorb to elemental carbon PM
or form a nucleated organic aerosol.  As mentioned in Chapter III of the RIA, section (A)(2),
semi-volatile organic compounds comprise only 10 to 30 % of total PM mass.  Even with an
efficiency of 100% and no formation of sulfate PM, DOC technology would at best only
provide ~30% reduction in PM emissions. This would not be sufficient to meet the new PM
standard; however, PM emissions below the pre-2007 PM  standard of 0.10 g/bhp-hr could be
achieved. But, a retrofit program incorporating a DOC would be enhanced through the
availability of low sulfur fuel.

Reference:
Diesel Emission Control Sulfur Effects (DECSE) Program - Phase  II Interim Data Report No.
4, Diesel Particulate Filters-Final Report, January 2000, Table C1,  www.ott.doe.gov/decse.

(B)     The NOX reduction capability of DeNOx (lean-NOx) catalyst loading is limited by
       the  presence of sulfur in the fuel.

       (1)    Very low sulfur levels are necessary to maximize the effectiveness of deNOx
             catalysts. Even though EPA has determined that use of lean-NOx catalyst
             technology will not achieve the necessary levels of NOX reduction, it is  a
             technology that could potentially be retrofitted to existing engines to achieve
             substantial NOX reductions if ultra low sulfur fuel is available nationwide.
             Commenter refers to the "DECSE" program and study as supporting
             documentation.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 10

       (2)     DeNOx passive catalysts show high sulfur sensitivity in terms of NOX
             conversion efficiency.  When the catalyst is operated with sulfur free fuel, the
             optimal operating temperature is lower and therefore, is better suited to
             modern exhaust temperatures.  Even a switch from zero to 10 ppm sulfur
             content lowers the conversion efficiency by approximately 25 percent.  The
             relatively low NOX conversion efficiency of DeNOx passive catalysts give
             limited prospects for its use in the long term but could be used as an interim
             solution for some applications, such as passenger cars and light duty
             commercial vehicles.

              Letters:

              DaimlerChrysler (IV-D-344) p. 17-18 (att.)

       Response to Comment 3.3.4(B):

       As noted by the commenters, reducing fuel sulfur levels is  beneficial to many types of
exhaust emission controls in addition to those that are likely to be used to meet the new
standards.  These controls include deNOx catalysts, SCR,  non-thermal plasma, and DOCs.
These benefits were not directly accounted for in the rulemaking, but are acknowledged by
EPA.

(C)     Low-sulfur diesel fuel would be required for the application of the non-thermal
       plasma assisted catalyst.

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       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             UAW (IV-D-215)p. 5

       Response to Comment 3.3.4(C):

       See our response to comment 3.3.4(B).

             Issue 3.3.5: Developments in Sulfur Tolerance

(A)    Sulfur traps remain a possibility to protect advanced after-treatment systems
       but may not be feasible or commercially viable by 2007.

       (1)    Sulfur traps remain in the research stage and the question remains as to how
             the trap would be emptied and how to dispose of the effluent.

             Letters:

             Engine Manufacturers Association  (IV-D-251) p. 11-12

       (2)    Sulfur traps could potentially mitigate the need for ultra-low sulfur diesel fuel
             but this technology is unproven and there is currently no practical onboard
             system that has been demonstrated to be effective.

             Letters:

             U.S. Department of Energy (IV-G-28) p. 2


       Response to Comment 3.3.5(A):

       SOX traps (or SOX adsorbers) are catalyst systems designed to store sulfur
compounds under lean operating conditions and then to release the stored sulfur emissions
periodically as SO2. The catalytic compounds and processes are essentially the same as for
NOX adsorbers, although some ratios of storage compounds may change in order to promote
an easier release of the sulfur compounds. The NOX adsorber technology that we believe will
be applied in order to meet the  Phase 2 NOX standards is itself a SOX adsorber. It will store
sulfur under lean operating conditions and then release the sulfur during periodic desulfation
events.  In this way the NOX adsorber technology is expected to be able to manage diesel
fuel sulfur levels that are on average below 15 ppm. However, as we explain further in
responses to comments 3.2.1(C), (J), and (M), these desulfation events cause some thermal
degradation of the NOX adsorber catalyst making it impossible to meet the Phase 2  NOX
standard over the useful life of a heavy-duty vehicle on fuel sulfur levels higher than 15 ppm.
This type of integrated SOX trap / NOX adsorber (or more simply a NOX adsorber capable of
periodic desulfation events) will be possible by 2007 provided the development steps outlined
in the RIA are met.  Primary among these are the availability of diesel fuel with an average
sulfur level less than 15 ppm and the development of control systems capable of providing
the necessary conditions for NOX adsorber desulfation (similar to those already demonstrated
in the DECSE Phase II work described in the RIA).

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       There are two other approaches to SOX traps that have more ambitious goals for
sulfur control. These are:

       1)     "sacrificial" SOX traps that store sulfur and are periodically replaced
              (disposable)

       2)     regenerating SOX traps with by-pass architectures (by-pass SOX traps)

       With regards to both of these approaches we agree with the commenters that while
these approaches are theoretically capable of controlling sulfur, they will not be available,
effective or practical for application in order to meet the Phase 2 standards.

       Disposable SOX traps would work to control sulfur by adsorbing sulfur compounds
onto the surface of the SOX trap under all conditions (again these are simply sulfur optimized
NOX adsorbers) and then would never release the stored sulfur while installed on a vehicle.
Periodically these devices would need to be replaced in order to control sulfur. As described
in more detail in the RIA, we have two reasons why we believe that this approach will only be
possible if fuel sulfur levels are well below 15 ppm.  Primary among these reasons is SOX
trap size. We estimate in the RIA that in order to allow a heavy heavy-duty vehicle to operate
on a one year service interval using this approach and 50 ppm sulfur diesel fuel,  the SOX trap
would need to have a volume of 710 liters! Typical heavy heavy-duty diesel engines
themselves have a displacement of normally only 10-15 liters. A means to package this kind
of system on a heavy-duty vehicle appears to be impossible.  Further as explained in the
RIA, this approach can only provide some sulfur protection.  Inevitably some amount of sulfur
would get past the device requiring that the downstream components be somewhat sulfur
tolerant.  The downstream NOX adsorber would need to be capable of periodic desulfation
events itself. Therefore we agree with the commenters that SOX traps applied  in  this manner
would not be practical or available in the timeframe of the Phase 2 standards.

       We agree with the commenters that regenerating SOX traps with by-pass
architectures as suggested by other commenters in issues 3.3.5(D), (E), and (F), are not
practical and add unnecessary system constraints while failing to provide fully effective sulfur
control. This concept is overly complex essentially requiring the application of redundant NOX
adsorber systems.  One called a "sulfur trap" and installed in front of a downstream "primary"
NOX controlling NOX adsorber. The up-front NOX adsorber/sulfur trap would store sulfur under
most conditions while providing a periodic means to release the stored sulfur and then by-
pass it around the remaining sulfur sensitive emission  control technologies. There are
several fundamental issues with this approach for which we do not see satisfactory solutions.
If the SOX trap stores NOX under lean conditions (it most likely would at some exhaust
temperatures), it would the face the problem of "NOX poisoning", NOX filling the intended
sulfur storage sites, forcing frequent NOX purge cycles. One potential "solution" to this would
be to perform a NOX regeneration of both the  up-front SOX trap and the primary downstream
NOX adsorber at the same time and on a frequent basis (before the upfront SOX trap was full
of NOX).  Unfortunately the NOX regeneration is not capable of fully removing the  stored sulfur
and would cause some sulfur release that could then poison the downstream NOX adsorber.
Therefore this solution would not work. The only approach put forth that would seem to have
any potential to theoretically address this problem is to reverse flow through the primary NOX
adsorber and the up-front SOX trap/NOx adsorber every NOX  regeneration event.  In order to
make this approach work a system similar to that described in the comments provided by
Cummins Engine Company (docket A-99-06 item IV-D-231)  would  be necessary. As noted
by Cummins in their comments, this approach is unacceptably complex and cannot be
expected to work over the full useful life of a heavy-duty vehicle.  Further, as noted in the
preceding discussion of the disposable SOX trap, SOX traps do allow some sulfur past causing

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gradual poisoning of the downstream emission control components.  Therefore, this
approach may only delay the inevitable.

       For all of the reasons given above, we agree with the comments summarized here
and echoed in summary 3.3.5(B) that SOX traps do not offer a practical on-board means to
control sulfur from diesel fuel.

(B)    Sulfur traps are not a viable substitute for significantly reducing the level of
       sulfur in diesel fuel.

       (1)    At sulfur levels higher than EPA's proposed standard, the technology would
             add a considerable measure of complexity to the NOX control system. A SOX
             trap would require its own regeneration system and likely would require a by-
             pass to protect the downstream  NOX control unless it were 100% effective.
             The size of the SOX trap would also be a consideration because even at levels
             of 50 ppm sulfur it would quickly become saturated.   Regenerating the SOX
             trap would also have adverse impacts on fuel economy and may produce
             other undesirable emission by-products.

             Letters:

             Manufacturers of Emission Controls Association (IV-D-267) p. 8-9

       Response to Comment 3.3.5(B):

       See our response to comment 3.3.5(A).

(C)    If sulfate formation is a problem for integrated SCR/DPF, a sulfur trap could be
       added between the DPF and the SCR.

       (1)    NOX traps capture sulfur oxides and absorb essentially all the sulfate
             downstream of the DPF.  The NOX/SOX trap would release sulfur in the form of
             SO2 during regeneration  thereby eliminating the sulfate PM issue.  While the
             SOX trap system is not proven technology, the developments required are
             similar to that required for the NOX adsorber system.

             Letters:

             ExxonMobil  (IV-D-228) p. 9

       Response to Comment 3.3.5(C):

       We agree with the commenterthat it is possible to store sulfur emissions (SOX) under
lean conditions on a SOX trap (or a NOX adsorber for that matter) and then to release the
stored sulfur compounds under rich operating conditions.  Further, we agree that if the sulfur
compounds released under rich conditions were able to be emitted as SO2, then this
approach could significantly reduce sulfate PM emissions.  This possibility is one advantage
that NOX adsorbers and SOX traps have over systems such as Urea SCR which do not store
sulfur under lean conditions and instead oxidize sulfur compounds forming sulfate PM which
is emitted into the atmosphere.

       However, we disagree with implication that this approach could be used to allow a

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Compact SCR (Urea SCR) based control system (including a CDPF) to meet the Phase 2
PM standard. Our concern about this conclusion is based upon the fact that we do not
believe that a practical SOX trap can be developed in order to control sulfur at levels above 15
ppm.  Our analysis in the chapter III of the RIA shows that either the SOX trap must be
unacceptably large or must be desulfated periodically in order to maintain  acceptable sulfur
capture efficiency. The use of a sulfur storage catalyst that is periodically  desulfated is the
same as using a NOX adsorber.  Therefore, since a NOX adsorber system would be required
in order to allow a compact SCR based system to meet the Phase 2 PM standard, we
wonder why someone would choose to use the compact SCR system. Further, as we
explain in the RIA, the SOX/NOX adsorber (trap) would need 15 ppm in order to allow it to
continue to function well over the full useful life of a heavy-duty vehicle. Please refer also to
our response to comment 3.3.5(A).

(D)    Sulfur trap devices will be necessary since the NOX adsorber cannot tolerate
       any sulfur from the fuel or engine lube oil. However, there are some technical
       feasibility issues associated with this technology that are unresolved.

       (1)    SOX trap devices will be essential for ensuring that the NOX adsorber
             technology is not exposed to any sulfur. However, the technological and
             logistical issues associated with an emission control system that incorporates
             a particulate trap, SOX trap and NOX adsorption system have not been
             completely resolved.  The rejuvenation of a sulfur trap may require cleaning
             or replacement by the operator. The cost of such a sulfur trap will likely be
             between $500 and $1,000 per vehicle.

             Letters:

             Cummins, Inc.  (IV-D-231) p. 9-10
             Marathon Ashland Petroleum (IV-D-261) p. 74

       Response to Comment 3.3.5(D):

       See our response to comment 3.3.5(A).

(E)    EPA has not considered a viable sulfur trap technology that protects diesel
       aftertreatment systems from all engine exhaust sulfur emissions.

       (1)    The poisoning of sulfur-sensitive emission reduction devices may be solved
             without the removal of fuel sulfur by using a device known  as the Protection of
             Aftertreatment Systems from Sulfur (PASS) system. This system prevents
             sulfur from reaching sulfur-sensitive emission reduction devices, allowing
             these devices to operate  at peak efficiency. Commenter provides additional
             data and technical discussion regarding the PASS system  design and notes
             that the development and confirmation  testing will be completed later this year
             (2000).  As further documentation supporting the development status of this
             technology, commenter provides a copy of a preproposal to the Southwest
             Research Institute.

             Letters:

             National Alternative Fuels Foundation  (IV-D-214) p. 4,18-21

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       Response to Comment 3.3.5(E):

       We are aware of the PASS concept mentioned in the comment and believe that it is
substantially similar to the by-pass regeneration approach discussed in response to issue
3.3.5(A).  The PASS concept employs multiple SOx traps that work to by-pass the emission
control equipment such as a NOx adsorber or CDPF. It contains two SOx traps, an upfront
"lean" SOx trap that stores sulfur under lean operating conditions and a downstream "rich"
SOx trap that exists in parallel with the primary emission control equipment and stores sulfur
under rich conditions. The system is designed such that the main emission control
equipment is taken "off-line" occasionally to allow for the SOx traps to be purged. There is no
explanation of how emissions are controlled when the emission control technology is off-line.
Further as described  in  response to issue 3.3.5(A) such an approach is unnecessarily
complicated while only providing partial protection of the sulfur sensitive emission control
technologies.  SOx traps do allow some sulfur past causing gradual poisoning of the
downstream emission control components. Therefore, this approach only delays the
inevitable.  For all of the reasons listed there we do not feel that the PASS concept could be
effectively applied for all heavy-duty vehicles as would be required for a national program.

(F)     Rapid advancement in SOX traps will allow for the use of NOX adsorber systems
       on higher sulfur fuel.

       (1)    There are promising new developments in SOX traps that can be  periodically
             regenerated.  Diesel engine systems have been tested that combine a SOX
             trap with a NOX trap (cites to J.E. Parks,  et al "Sulfur-Resistant NOX Sorbate
             Catalyst for Increasing Longevity in  Diesel Exhaust", Society of Automotive
             Engineers Paper Number 2000-01-1012, February 2000). While EF&EE
             expressed serious concerns about whether NOX adsorber systems are
             feasible on any sulfur level, they have stated that 30 ppm average/50 ppm
             cap fuel would be as feasible as 15 ppm cap fuel due to rapid advancement
             in SOX traps.

             Letters:

             American Petroleum Institute (IV-D-343) p. 39, 69-70
             Marathon Ashland Petroleum (IV-D-261) p. 33-34

       Response to Comment 3.3.5(F):

       See our response to comment 3.3.5(A).

       Issue 3.4: Fuel Economy Impacts

(A)     A 15 ppm sulfur content will result in a loss of fuel economy.  Thus additional
       volumes of diesel will be needed to match the energy content of current diesel
       consumption.

       (1)    Refiners are likely to cut the heaviest portion of the diesel fuel fraction from
             the ultra low sulfur diesel fuel. Because of its relatively higher BTU content,
             heavier material increases fuel economy but contains sulfur compounds that
             are more difficult to remove.  This necessary strategy will result in lower
             production volumes and reduced fuel economy.

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              Letters:

              National Petrochemical & Refiners Association  (IV-D-218) p. 2, 9
              Western Independent Refiners Association (IV-D-273) p. 3

       Response to Comment 3.4(A):

       EPA assessed the techniques by which refiners might comply with the new sulfur
cap. Cutting out the heaviest portion of the diesel fuel fraction from the material to be
processed into ultra low sulfur diesel fuel would reduce the cost of hydrotreating.  However, it
would also decrease the volume of highway diesel fuel produced, decreasing revenues.
Also, the refiner would then have to sell the heavier material. As summarized in Chapters IV
and V of the Final RIA, the markets for this heavier material would quickly become saturated
with product if refiners followed this route, and the prices available for this material would
drop precipitously. Thus, we do not expect refiners  to consider this a viable compliance
technique.  However, the desulfurization process itself does tend to increase fuel volume and
reduce fuel density.  Overall, there is a small decrease (on the order of 1%)  in the total
amount of energy leaving the hydrotreater, though some gasoline and LPG  is produced. The
refiner can then decrease his overall gasoline to distillate ratio elsewhere in  the refinery to
recover this small loss in diesel fuel energy.

       The decrease in fuel density does mean that fuel economy will decrease slightly.
EPA included this cost in its refining costs by requiring its modeled refineries to produce the
same amount of energy in the form of diesel fuel as was produced prior to the rule.  In other
words, refiners were assumed to produce and distribute slightly more volume of diesel fuel
after the new rule than before.

(B)    The use of participate filters will not have a significant impact on fuel economy.

       (1)     Fuel economy impacts will vary somewhat with the filter designs, applications
              and operating modes. However, recent studies show a small effect.
              Commenter cites to the DECSE program which found a fuel  economy impact
              of 1  to 2 percent, and to the ARCO EC Diesel program, which retrofitted a
              variety of vehicles and found no significant impact on fuel economy as a
              result of using filter technology.

              Letters:

              Manufacturers of Emission Controls Association (IV-D-267) p. 5

       Response to Comment 3.4(B):

       We agree with the commenter that based on the ARCO EC diesel program and other
test programs, the fuel economy impact of CDPFs will be small, if there are  any at all.

(C)    NOX adsorbers will have an adverse impact on fuel economy.

       (1)     The higher the sulfur levels, the more frequent and intense the desulfurization
              phase resulting in adverse impacts on fuel economy.  There  may be some
              opportunities to off-set some of the fuel economy impacts of NOX adsorber
              technology. If the technology can function at very high efficiencies, then  in
              certain driving modes, the engines can be calibrated to achieve a fuel

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             economy improvement with the associated increase in engine-out NOX
             emissions being controlled by the adsorber.  This and other types of systems
             development will continue over the next six years to improve the effectiveness
             of NOX adsorbers and minimize its impact on fuel economy.

             Letters:

             Manufacturers of Emission Controls Association  (IV-D-267) p. 5-6

       (2)    NOX adsorber catalyst regeneration will cause a fuel penalty between 4 and 9
             percent depending on engine duty cycle and NOX reduction targets. Modal
             fuel penalty values range from 5.5 percent at the higher exhaust temperatures
             to 16 percent at the lower exhaust temperature. One commenter noted that
             DECSE targeted a 4 percent fuel economy penalty and went over this level in
             some tests, and that Cummins and Volkswagen have reported fuel economy
             losses of up to 7 percent.  This commenter adds that EPA's proposed vehicle
             system will have a fuel economy penalty of 5 percent, which will cost the
             consumer an additional 5 cpg, and that in contrast, the SCR/CDPF system
             would lead to a minimal fuel economy penalty resulting in only a 1 cpg cost to
             the consumer.

             Letters:

             American  Petroleum Institute  (IV-D-343) p. 69, 74
             Cummins, Inc.  (IV-D-231) p. 14
             Marathon Ashland Petroleum (IV-D-261) p. 3, 30

       Response to Comment 3.4(C):

       There are two issues with regard to NOX adsorbers and fuel economy which are
raised in the comments summarized here:

(A)     Desulfation events consume fuel, so higher fuel sulfur levels lead to higher fuel use
       and
(B)     NOX adsorbers use diesel fuel as a reductant therefore fuel consumption levels will be
       inherently higher (much higher according to some commenters).

       NOX adsorbers will have to undergo a periodic desulfation event in order to remove
sulfur which has poisoned the  catalyst in order to maintain high NOX conversion efficiencies.
The desulfation event requires controlled operation under hot and net fuel rich exhaust
conditions.  These conditions,  which are  not part of a normal diesel engine operating cycle,
can be created through the addition of excess fuel to the exhaust.  This addition of excess
fuel causes an increase in fuel consumption.  Since  the frequency of this desulfation event is
based upon the sulfur level in the fuel (higher fuel sulfur levels require more frequent
desulfation events) increasing the fuel sulfur level inherently leads to higher fuel consumption
levels.  We agree with the commenter that higher fuel sulfur levels lead to increased fuel
consumption and we believe that this is one more reason why the fuel sulfur level should be
as low as possible.

       While NOX adsorbers, as noted by the commenters, require non-power producing
consumption of diesel fuel in order to function properly and, therefore, have an impact on fuel
economy, they are not unique  among NOX control technologies in this way.  In fact NOX

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adsorbers are likely to have a very favorable NOX to fuel economy trade-off when compared
to other NOX control technologies like cooled EGR and injection timing retard that have
historically been used to control NOX emissions. Today, most diesel engines rely on injection
timing control (retarding injection timing) in order to meet the 4.0 g/bhp-hr NOX emission
standard.  For 2004 model year compliance, we expect that engine manufacturers will use a
combination of cooled EGR and injection timing control to meet the 2.0 g/bhp-hr NOX
standard.  Because of the more favorable fuel economy trade-off for NOX control with EGR
when compared to timing control, we can forecast that less reliance on timing control will be
needed in 2004. Therefore, fuel economy will not be changed even at this lower NOX level.

       NOX adsorbers have a significantly more favorable NOX to fuel economy trade-off
when compared to cooled EGR or timing retard alone, or even when compared to cooled
EGR and timing retard together.77 Current NOX adsorber data from NVFEL show greater than
90 percent reduction in NOX emissions over the SET and FTP, while only increasing fuel
consumption by a very reasonable two percent as documented in the RIA. Further the data
show that, for significant portions of the engine's typical operating range, NOX control in
excess of 98 percent is possible even with engine-out emissions as high as 5 g/bhp-hr.78
Further at this point in the development of the NOX adsorber technology it would be
premature to expect no further improvement in fuel economy with the application of the NOX
adsorber.  Therefore, we expect manufacturers to take full advantage of the NOX control
capabilities of the NOX adsorber and project that they will decrease reliance on technologies
with a less favorable emissions to fuel economy trade-off, especially injection timing retard,
when operating at conditions where the NOX adsorber performance is significantly greater
than 90 percent. We have therefore predicted that the fuel economy impact currently
associated with NOX control from timing retard would be decreased by at least three percent.
In other words, through the application of  advanced NOX emission control technologies,
which are enabled by the use of low sulfur diesel fuel, we expect the NOX trade-off with fuel
economy to continue to improve significantly when compared to today's technologies. This
will result in both much lower NOX emissions, and  potentially overall improvements in fuel
economy. Improvements could easily offset the fuel consumption of the NOX adsorber itself
and, in addition, the one percent fuel economy loss projected to result from the application of
PM filters. Consequently, we  have projected no fuel economy penalty will result from this
rule.

       Therefore we disagree with the commenter's assertion that the application of NOX
adsorbers will lead to a significant increase in fuel consumption.

(D)    Fuel sulfur levels need to be very low to avoid adverse impacts on fuel
       economy.

       (1)     NOX adsorber sulfur regeneration can consume significant amounts of fuel
              unless the fuel sulfur levels are very low.  As sulfur levels increase above 15
              ppm, the fuel economy penalty doubles with each doubling of the sulfur level.
              At 15 ppm the fuel economy penalty is  1% and at 30 ppm the penalty is 2%.
       77 Zelenka, P. et al, Cooled EGR - A Key Technology for Future Efficient HD Diesels,  SAE 980190,
Society of Automotive Engineers 1998.  Figure 2 from this paper gives a graphical representation of how
new technologies (including exhaust emission control technologies) can shift the trade-off between NOX
emissions and fuel economy.

       78  Memorandum from Charles Schenk to Air Docket A-99-06, dated October 30, 2000.

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              Letters:

              CA Trucking Association (IV-D-309) p. 7

       Response to Comment 3.4(D):

       We agree with the commenterthat higher fuel sulfur levels lead to higher fuel
consumption for NOX adsorber desulfation. See our response to comment 3.4(C).

(E)     The oil industry's 50 ppm sulfur limit would have a negative effect on the fuel
       economy of the nation's trucks and buses.

       (1)     For example, NOX adsorbers are expected to consume diesel fuel as they
              cleanse themselves of stored sulfates.  Also, PM trap regeneration is inhibited
              by diesel fuel's sulfur-leading to increased PM loading, increased exhaust
              backpressure, and decreased fuel economy.

              Letters:

              Natural Resources Defense Council  (IV-D-168)  p. 4

       Response to Comment 3.4(E):

       We agree with the commenter that fuel sulfur levels at 50 ppm sulfur as proposed by
some in the industry would lead to increased fuel consumption due to increased frequency of
desulfation and due to increased average CDPF backpressure when compared to a 15 ppm
fuel sulfur cap. This is one reason why we feel that 15 ppm sulfur cap is the right level. See
also our response to comment 3.4(C).

(F)     There are intake air restrictions for diesel engines that may have an impact on
       the effectiveness of various control technologies and fuel consumption.

       (1)     Diesel engines are operated with excess air, which leads to a low gas
              temperature in the cylinder in comparison to operation at the stoichiometric
              air/fuel ratio. This ensures a thermal load for the engines components that is
              necessary for the high specific performance of diesel engines. Operation at
              an excess air ratio of 1.0 is not typical for a diesel engine and will impose an
              excessive thermal load on engine components close to the combustion
              chamber. The application of the NOX adsorber catalyst technology to HDDEs
              requires the excess air ratio to be between 0.9 and 1.0 for denitration of the
              adsorber catalyst and reduction of NOX. Commenter provides additional
              discussion and data to illustrate the relationship  between the excess air ratio,
              NOX controls and fuel consumption.

              Letters:

              DaimlerChrysler  (IV-D-344) p. 8-9

       (2)     A considerable increase of PM is observed when the excess air ratio is
              changed from 1.9 to 1.5, which poses a problem for HDDEs as those engines
              increase fuel consumption with a decreasing excess air ratio.  Commenter
              provides discussion and data to illustrate this correlation.

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              Letters:

              DaimlerChrysler (IV-D-344) p. 9

       (3)     The intake air restriction for diesel engines is critical for turbo-charger
              behavior since it can cause the turbo-charger's speed to drop. Turbocharged
              engines are very susceptible to the effects of a change in the excess air ratio.
              This issue has not been adequately addressed by EPA in the proposed rule.

              Letters:

              DaimlerChrysler (IV-D-344) p. 9

       Response to Comment 3.4(F):

       The commenter correctly points out that there are considerable challenges to
operating heavy-duty diesel engines at an excess air ratio of 0.9 to 1.0.  These are among
the primary reasons (along with fuel economy considerations) that EPA took a different
approach to NOX adsorber regeneration during its laboratory evaluation. Using a dual-bed or
multiple-bed approach with direct-exhaust fuel injection for adsorber regeneration provides
the necessary reducing environment for NOX desorption without the need for reducing the
engine's excess air ratio. Restriction of excess air ratio for regeneration is also an unlikely
means of regeneration of the NOX adsorber for a heavy-duty diesel application since the fuel
economy penalty is considerably higher than using a dual-bed or multiple-bed NOX adsorber
approach. Please refer to chapter III of the RIA for a detailed discussion of dual-bed and
multiple-bed NOX adsorber catalysts.

(G)    The proposed standards will lead to an overall loss of fuel economy.

       (1)     The new emission control systems will add weight, complexity, and
              operational constraints that will prevent achieving the same fuel economy in
              the absence of these components. SCR systems will require a sizeable urea
              tank, NOX adsorber systems will require frequent rich air-to-fuel ratio
              excursions, and the PM trap will also require additional components and
              catalysts. Even if advance engine controls compensate to  a certain degree
              for the loss in fuel economy, a net loss will still occur.

              Letters:

              General Motors Corp.  and Isuzu Motors America, Inc. (IV-D-256) p. 76

       Response to Comment 3.4(G):

       We disagree with the assertion of the commenter that overall the fuel economy of
new vehicles will decrease relative to today's level due to the application of new emission
control technologies.  The commenter does acknowledge that the application  of new more
efficient control technologies can offset fuel economy changes, but suggests that in spite of
this fact, the fuel consumption for engines will increase. The conclusion the commenter
reaches appears to be based upon  the same assumptions made by in the  comments
summarized in 3.4(C). Specifically  that NOX adsorbers will require an increase in fuel
consumption between four and 10 percent. We disagree with that assumption. The
theoretical fuel consumption need for  NOX adsorbers is less than one percent (see docket A-

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99-06 item IV-D-267) and testing at NVFEL has shown that actual fuel consumption levels
can be less than two percent, even given a five gram/bhp-hr engine out NOX emission level.
We believe it is more appropriate to assume that NOX adsorbers will consume fuel at a rate of
one to two percent of the total fuel consumption and that the net fuel economy impacts of all
changes in the vehicle will be zero.

       We expect manufacturers to take full advantage of the NOX control capabilities of the
NOX adsorber and project that they will decrease reliance on technologies with a less
favorable emissions to fuel economy trade-off, especially injection timing retard, when
operating at conditions where the  NOX adsorber performance is significantly greater than 90
percent. We have therefore predicted that the fuel economy impact currently associated with
NOX control from timing retard would be decreased by at least three percent. In other words,
through the application of advanced NOX emission control technologies, which are enabled
by the use of low sulfur diesel fuel, we expect the NOX trade-off with fuel economy to continue
to improve significantly when compared to today's technologies.  This will result in both much
lower NOX emissions, and potentially overall improvements in fuel economy. Improvements
could easily offset the fuel consumption of the  NOX adsorber itself and, in addition, the one
percent fuel economy loss projected to result from the application of PM filters.
Consequently, we disagree with the comment raised here and continue to believe that, no
fuel economy penalty will  result from this rule.

       Issue 3.5: Other Technology (inc.  SCR)

(A)    SCR technology  is currently being developed for commercial application and
       will be available for some vehicles in the near future.

       (1)    SCR technology is capable of achieving significant NOX reductions and is also
             capable of reducing HC emissions and PM. On-road demonstrations of SCR
             have established excellent NOX reduction performance after over 325,000
             miles of vehicle  operation with over 6 million miles of accumulated
             commercial fleet operation.

             Letters:

             Manufacturers of Emission Controls Association  (IV-D-267) p. 6, (IV-F-187)

(B)    EPA should consider SCR as a control technology for HDDEs since this NOX
       reduction process is the only way to reduce effectively NOX emissions through
       exhaust gas aftertreatment and ensure the positive characteristics of diesel
       engine operation.

       (1)    SCR as a  NOX reduction process is well known and has proven success in the
             area of stationary source air emissions reduction technology. This system
             could also be applied to  HDDEs and even though it will require the availability
             of an additional  substance for engine operation (NH3 in the form of urea), it is
             capable of reducing NOX emissions, ensuring the  positive operational
             characteristics of diesel engines and meeting the  fuel efficiency limitations
             under consideration. With SCR, a conversion efficiency of 80% can be
             achieved.  However, SCR as an aftertreatment technology is still under
             development and further research is  necessary.

             Letters:

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             DaimlerChrysler  (IV-D-344) p. 10

(C)    EPA should not completely dismiss SCR as a NOX control technology, which is
       the technology of choice in Europe and like the CDPF has been tested and
       proven on thousands of European diesel vehicles using 50 ppm and higher
       sulfur diesel fuel.

       (1)    SCR technology easily achieves NOX levels of 0.5 gm/bhp-hr and EPA has
             noted in the RIA that this technology may be capable of meeting the proposed
             0.2 g/bhp-hr standard by 2007. SCR can be used immediately and does not
             need a four year phase-in or a technology review. SCR's ability to be
             operating in 100% of 2007 new diesel vehicles allows SCR technology to
             generate more early NOX emission reduction benefits than EPA's proposal.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 11
             Marathon Ashland Petroleum  (IV-D-57) p. 2

       (2)    Heavy duty engine SCR is relatively insensitive to diesel sulfur levels  but the
             compact SCR technology to be used in smaller vehicles is reportedly
             somewhat sulfur sensitive. However, the compact SCR technology
             incorporates platinum-based oxidation catalysts, which are very similar to
             current gasoline oxidation catalysts, which can successfully operate at sulfur
             levels up to 80 ppm. This technology would be capable of meeting the 0.5
             g/bhp-hr standard for the life of the vehicle given a 50 ppm sulfur level in
             diesel fuel.

             Letters:

             Marathon Ashland Petroleum  (IV-D-57) p. 2

       (3)    EPA should not ignore  a proven, ready-to-go technology, such as SCR, in
             favor of a totally unproven technology such as NOX adsorbers. EPA should
             quantify the risks associated with SCR and should calculate the risk-corrected
             expected benefits of each technology path. This would demonstrate that the
             NOX adsorber technology, even if given a very optimistic risk factor of  50%,
             plus its 15 ppm diesel requirement, is too risky and has a much lower
             expected benefit value. Commenter notes that an SCR/CDPF system could
             be a viable alternative to EPA's proposed control strategy.

             Letters:

             Marathon Ashland Petroleum  (IV-D-57) p. 2-3, (IV-D-261) p. 3,17

       (4)    Engine Fuel and Emissions Engineering, Inc. concluded that SCR should be
             capable of controlling NOX to the required levels without the use of precious
             metal catalysts that could hinder the ability of the system to meet the
             proposed PM standards, and without the use of a downstream catalyst for
             ammonia slip. SCR systems may even reduce PM emissions by a small
             amount.  Moreover, the life cycle costs for SCR technology are lower than the

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              costs for NOX adsorber systems, even accounting for the cost of urea.  The
              urea infrastructure is not an issue because if commercial demand exists,
              truck stops and distributors will carry it.  Tampering concerns with SCR
              technology also exist with NOX adsorber technology; but may be easily
              overcome through urea sensors which could limit engine power or retard
              injection timing, creating a severe disincentive to not filling the urea tank. A
              urea dispenser could automatically fill the tank at refueling and would require
              no additional operator effort.  Dismissal of SCR due to tampering and
              maintenance concerns would also require dismissal of the other NOX control
              technologies that are the basis of the proposed rule. One commenter notes
              that EPA's concern that 50 ppm would poison the NO to NO2 function is
              unfounded in that the modest poisoning is not expected to have a significant
              effect on SCR performance. Commenter further notes that the exhaust
              heating required for SCR is less than the heating required for NOX adsorbers.
              Commenter cites to a report, "Selective Catalytic Reduction Technology for
              Heavy-Duty Diesel Vehicles," prepared for API by Engine Fuel and Emissions
              Engineering, Inc., to support its  assertion that SCR has considerable lifecycle
              cost advantage over NOX adsorber systems, and can tolerate higher sulfur
              fuels.

              Letters:

              American Petroleum Institute (IV-D-343) p. 37-39
              ExxonMobil (IV-D-228) p. 6-7, 9
              Marathon Ashland Petroleum (IV-D-261)  p. 31-33

(D)    EPA should be cautious regarding SCR technology because it is a sensitive
       technology and would require substantial infrastructure investment to ensure
       the availability and use of urea.

       (1)     SCR requires extremely careful control that is difficult to achieve in the real
              world, particularly with mobile engines.  SCR technology that uses an
              oxidation catalyst for NOX reduction requires the same low sulfur levels as
              NOX adsorber technology. Even though other SCR designs are less sulfur
              sensitive, the use of low sulfur fuel  increases their reduction efficiency and
              allows for optimization of the engine/emission control technology system.
              [see also Point (E)]

              Letters:

              American Lung Association  (IV-D-270) p. 21, (IV-F-181)
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256)  p. 47
              NESCAUM  (IV-D-315)p. 10
              Natural Resources Defense Council (IV-D-168) p. 4
              STAPPA/ALAPCO (IV-D-295) p. 11

       (2)     Creating a urea infrastructure throughout the country to make this technology
              viable for distance haulers is far too costly and difficult.

              Letters:

              Mack Trucks (IV-D-324) p. 3

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              STAPPA/ALAPCO (IV-D-295) p. 11

       (3)     Ammonia and other toxics are associated with SCR, which means its use
              may create more problems than  it solves.

              Letters:

              STAPPA/ALAPCO (IV-D-295) p. 11

       (4)     SCRs have demonstrated significant reductions under certain steady state
              conditions where control systems have adequate time to determine the
              correct amount of urea solution injection to achieve maximum NOX control
              while avoiding ammonia slip. However, with heavy duty engines in on-
              highway applications, there are rapid and wide swings in both speed and
              load. It is unclear whether under these varying conditions, the significant
              reductions needed to comply can be achieved with available sensor,
              actuators, and control technologies. Commenter provides significant
              discussion on this technology including issues associated with temperature
              limitations/thermal lag and chemical lag, and notes that before this technology
              is widely used to meet the standards, EPA will need to ensure that urea SCR
              systems can achieve the requisite NOX reductions over these wide swings in
              speed and load.

              Letters:

              Cummins, Inc. (IV-D-231) p. 16-18

       (5)     In achieving 90 percent NOX reduction, the matching of urea and NOX flow
              rate will have to be controlled very precisely.  Excess injection will result in
              ammonia slip and excess urea consumption, while under injection will result
              in not meeting the desired NOX targets. The sensitivity of the system is
              aggravated by the fact that current NOX sensor accuracy is only about +/- 5
              percent, which is about half the proposed NOX standard and the durability of
              these sensors is reduced after 125,000 miles.  In addition to these concerns,
              urea solutions are subject to freezing so  heating systems will be required for
              urea storage and delivery systems.  EPA needs to analyze trap/urea SCR
              systems and determine if they are a viable alternative.

              Letters:

              Cummins, Inc. (IV-D-231) p. 19-20

       (6)     The SCR systems in Europe are not performing as well as originally expected
              and might not provide NOX reductions  necessary to meet the more stringent
              U.S. standards. In addition, transient operation makes it very difficult to
              achieve the optimum urea concentrations, which lead to secondary emissions
              (NH3, N2O, NH4NO3, etc.) and degradation of catalyst durability. SCR would
              also require an average sulfur level of  less than 10 ppm to achieve
              acceptable deterioration rates. Given  these limitations as well as the need for
              a national urea distribution network, a  final rule should not incorporate the
              assumption that SCR systems will work,  particularly with higher sulfur fuels.

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              Letters:

              U.S. Department of Energy  (IV-G-28) p. 2

       Response to Comments 3.5(A). (B). (C) and (D):

       EPA acknowledges that Compact SCR (Urea SCR systems utilizing an up-front
platinum catalyst to promote oxidation of NO to NO2) can enable high NOX reductions. High-
efficiency compact-SCR requires very low fuel sulfur levels similar to those set forth in this
rulemaking in order to enable significant NOX reductions. Further, compact SCR will require
a 15 ppm fuel sulfur cap when applied in conjunction with a CDPF to meet the Phase 2PM
standard.  Please see Chapter III of the RIA for further discussion of the fuel sulfur level
requirements of this technology. See also comment 3.5(E).  EPA acknowledges the
reservations about SCR expressed by some of the commenters.  Although there may be
centrally-fueled fleet applications that may be suitable for the use of SCR, we have
concluded that it would be impossible to ensure widespread  compliance under an SCR
program where an entirely new fluid would need to be added in order to ensure proper
emission control system function. The infrastructure for delivering urea at the diesel fuel
pump would need to be in place for these devices to be feasible in the marketplace; and
before development of the infrastructure could begin, the industry would have to decide upon
a standardized method of delivery for the urea supply. In addition to this, there would need to
be adequate safeguards in place to ensure  the urea is used  throughout the life of the vehicle
since, given the added cost of urea and the fact that urea depletion would not normally affect
driveability, there would be an incentive not to refill the urea tank.  This could lead to
considerable uncertainties regarding the  effectiveness of SCR, even if EPA were to
promulgate the regulations that likely would be needed to require the regular replenishment
of urea. A further discussion of compliance issues and SCR is presented in the response to
comment 3.2.1(C).

(E)     The use of SCR in diesel  engines would require very low sulfur fuel since the
       control system will need to be used along with precious metal oxidation
       catalysts.

       (1)     The application of SCR to diesel vehicles will require a systems approach that
              includes design modifications to the vehicle and engine, very low sulfur fuel,
              reductant (urea, ammonia) delivery, and  catalyst design.  Unlike diesel
              engines in a stationary application which operate  over a relatively narrow
              temperature range, diesel engines in mobile  sources operate transiently over
              a broad range of operating conditions. As a result they require precious metal
              oxidation catalysts to lower the system's  operating temperatures and to
              control ammonia slip. The precious metal catalysts require very low sulfur
              fuel.  Thus, the successful use of SCR would require very low sulfur diesel
              fuel and the development of an infrastructure for the appropriate production,
              shipping, handling, and storage of urea.

              Letters:

              DaimlerChrysler (IV-D-344) p.+21-22
              Detroit Diesel Corporation (IV-D-276) p. 4
              Engine Manufacturers Association (IV-D-251) p.  11
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 47
              Mack Trucks (IV-D-324) p. 3

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              STAPPA/ALAPCO (IV-D-295) p. 11

       (2)     SCR uses an oxidation catalyst to facilitate NOX reduction to achieve high
              control efficiencies and requires the same low sulfur levels as the NOX
              adsorber technology. This type of SCR, sometimes referred to as "Compact
              SCR" typically requires a small volume of SCR catalyst resulting in a more
              compact unit which in turn facilitates its installation on heavy duty vehicles
              with limited space availability. Other SCR technology designs are less
              sensitive to sulfur but very low sulfur fuel allows these technologies to achieve
              the highest NOX reductions and fuel economy improvements. In addition,
              SCR systems often have an oxidation catalyst downstream of the SCR
              catalyst to control any ammonia emissions and these will form sulfate as a
              result of the sulfur in fuel, which would make the PM NTE standard
              unachievable with sulfur levels above 15 ppm.

              Letters:

              Manufacturers of Emission Controls Association (IV-D-267) p. 9, (IV-F-26,
              116) p. 47 (IV-F-117) p. 89 (IV-F-191) p. 120
              UAW  (IV-D-215)p. 4-5

       Response to  Comment 3.5(E):

       As noted by the commenters, reducing  fuel sulfur levels is beneficial to many types of
exhaust emission controls in addition to those that are likely to be used to meet the new
standards. These controls include deNOx catalysts, SCR,  non-thermal plasma, and DOCs.
These benefits were not directly accounted for in the rulemaking,  but are acknowledged by
EPA.

(F)     Recently, catalysts have been developed that may be  more resistant to sulfur
       than present  SCR catalyst technology.

       (1)     Apyron has developed a revolutionary catalyst technology for NOX destruction
              that overcomes issues associated with present commercial SCR technology
              (e.g. cost, disposal, sulfur poisoning, and ammonia slip) and field trials for this
              technology are scheduled for late 2000. However, even though this
              technology may be more resistant to sulfur than present SCR catalyst
              technology, the use of ultra low sulfur fuels will still be beneficial and will
              enhance the effectiveness of NOX destruction.

              Letters:

              Apyron Technologies, Inc. (IV-D-227) p. 1

       (2)     The ARIS 2000 urea SCR technology has demonstrated  emission levels at or
              near the 2007 proposed limits.  The ARIS prototypes have achieved NOX of
              0.6 g/bhp-hr and whatever sulfur level EPA ultimately selects, this technology
              will find broad application to new engines based on its  emission reduction
              capabilities and fuel economy benefits.  The technology is available for use in
              new or retrofit applications with  current sulfur levels.

              Letters:

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              Clean Diesel Technologies, Inc. (IV-D-157) p. 1

       (3)     Bimetallic fuel borne catalyst (FBC) from Clean Diesel Technologies is used
              at low dose rates in the fuel to reduce engine-out emissions, improve fuel
              economy and lower the temperature at which  soot collected in a filter is
              oxidized. Unlike heavily precatalyzed filters, or systems that rely solely on the
              upstream generation of NO2 for the oxidation of soot, the FBC/filter systems
              are more tolerant of higher sulfur fuels in the 50 to 350 ppm range. Nearly
              200 vehicles in Asia and Europe are operating filters using the
              platinum/cerium FBC with fuel sulfur levels at  or above 50 ppm. Engine and
              vehicle testing has confirmed soot oxidation at temperatures as low as 280 to
              300 C when using fuel treated with the FBC. Commenter provides additional
              discussion on this technology and  notes that PM can be reduced by 80 to 90
              percent and NOX can be reduced by 17 to 20 percent with no fuel economy
              penalty.

              Letters:

              Clean Diesel Technologies, Inc. (IV-D-157) p. 1-3

       Response to Comment 3.5(F):

       The commenters did not provide data to substantiate  claims with respect to sulfur
tolerance and the technology does not appear address sulfate PM issues related to SCR as
described in Chapter III  of the RIA.  Furthermore,  EPA has strong reservations about the
general applicability  of SCR as a NOX control (please see the responses to Issues 3.2.1C,
and 3.5 A, B, C and  D).

       The commenter did not provide detailed data on the soot oxidation temperatures.  It is
not clear if the temperatures reported are the minimum temperatures at which any soot
oxidation takes place, or if the temperatures are balance point temperatures (where the soot
deposition rate is roughly equivalent to the soot oxidation rate, ie., sustainably self-cleaning).
It is also not mentioned  if the particulate filter used with the additive was catalyzed or non-
catalyzed. Lower balance point temperatures (~250 °C) and  higher PM removal efficiencies
(>90%) are achievable with the CDPFs, as  described in chapter III of the RIA.  The additive
discussed is similar to the technology used by  PSA with non-catalyzed diesel particulate
filters.  Experience with  these additives and a non-catalyzed diesel particulate filter shows a
balance point temperature of approximately 450 °C, which is  too high for sustainable
regeneration for many heavy-duty applications, particularly medium-heavy and light-heavy-
duty applications.  Fuel-borne catalyst additive use with diesel particulate filters is discussed
in further detail in the response to comment 3.3.1 F.

       EPA is also concerned about the potential health effects of fuel additives and,
therefore, has established a fuel additive registration program that requires extensive testing
to ensure no adverse health implications from such additives.

(G)    EPA should consider advocating an approach that would use fuel additives
       along with particulate or sulfur trap technologies for controlling NOX, PM, and
       other emissions.

       (1)     EPA  should consider advocating the copper additive/trap approach for

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              controlling PM emissions.  Metallic additives in diesel fuel facilitate the
              combustion of diesel particulate.  In combination with a ceramic filter, or trap,
              the emissions of particulate can be controlled  to whatever level desired,
              depending on the porosity of the trap. Commenter cites to Society of
              Automotive Engineers (SAE) papers 901609and 930131 and the references
              therein as supporting documentation that this  methodology could be an
              effective PM reduction strategy. There is no need to modify diesel fuel
              composition in order to achieve EPA's proposed PM emission reduction goals
              since that approach would be extremely costly and since the copper
              additive/trap technology has been demonstrated to be a successful and cost-
              effective strategy. With this approach, PM emissions are easily controlled
              and NOX can be subsequently managed by standard exhaust gas recirculation
              techniques. Commenter provides significant discussion on this issue and
              provides as attachments additional discussion on the benefits and feasibility
              of a DPF/fuel additive system, a letter from EPA to Dr. Mark Levin (Lubrizol
              Corp) that outlines the acceptability of the proposed use of a copper additive
              in diesel fuel, and a comprehensive analysis of the effects of airborne copper
              on the environment.

              Letters:

              TJ Pakamist Ltd.  (IV-D-113) p. all

       (2)     As an alternative technology, EPA should consider the inclusion of a new
              alternative fuel additive technology with the diesel fuel, which would improve
              combustion and reduce NOX, PM, and toxic emissions. This approach could
              be used with existing fuels along with sulfur trap technology and would
              obviate the  necessity of reducing  sulfur levels along with complicated
              aftertreatment systems. The alternative fuel additive technology is the
              combination of a non-toxic oxygenate and a non-toxic proprietary co-additive.
              A oxygen/metallic combination along with conventional diesel leads to an
              enhanced combustion process, which is immune  to the negative combustion
              attributes of sulfur. Commenter provides additional data and analysis to
              support their position on this issue.  Commenter notes that development and
              confirmation testing will be completed later this year (2000).  As further
              documentation supporting the development status of this technology,
              commenter provides a copy of their preproposal to the Southwest Research
              Institute.

              Letters:

              National Alternative Fuels Foundation (IV-D-214) p. 1-4,16-18

       Response to Comment 3.5(G):

       With regards to the copper additive technology,  the commenter references SAE
paper number 930131, which shows that the initiation of soot burn-off occurs at temperatures
of approximately 360 °C or higher, and a PM reduction efficiency of 80 to 90 %.  The
temperature reported was the temperature for initiation of soot oxidation, not balance point
temperature (temperature at which soot accumulation and oxidation rates are equivalent, ie.,
sustainable soot burn off).  Precious metal-based CDPFs have demonstrated balance point
temperatures (-250 °C) that are considerably lower than even the initial soot oxidation

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temperature of the copper additized fuel/non-catalyzed participate filter combination
proposed by the commenter.

       The copper additive discussed is similar to the technology used by PSA with non-
catalyzed diesel particulate filters. Experience with these additives and a  non-catalyzed
diesel particulate filter shows a balance point temperature of approximately 450 °C, which is
too high for sustainable regeneration for many heavy-duty applications, particularly medium-
heavy and light-heavy-duty applications. The CDPF with low sulfur diesel fuel has also
demonstrated higher PM removal efficiencies (>90%) than the strategy proposed by the
commenter (for a further description of CDPF technology, please see chapter III of the RIA).
Fuel-borne catalyst additive use with diesel particulate filters is discussed  in further detail in
the response to Issue 3.3.1 F.  The commenter also states that sufficient NOx control can be
obtained through combustion  modification.  We disagree with that assertion because
experimental and theoretical evidence shows that there is a lower limit of NOx emissions
based on the kinetics of stable diesel combustion of approximately 1.5 g/bhp-hr (Flynn et al.,
SAE Technical Paper 2000-01-1177).

       With regards to the "new alternative fuel additive" the commenter provides virtually no
data to substantiate claims of meeting the Tier 2 standards using combustion-enhanced
fuels. One figure submitted by the commenter shows NOx emissions and fuel economy. No
details of the testing were given,  but from the fuel economy (15-19 mpg), it is assumed that
the application that the data was  provided for was either light-duty or light-heavy-duty.  If
light-duty, the minimal data submitted shows emissions that are more than 30 times the NOx
standard of the highest fully-phased in Tier 2 certification bin, and more than 4 times the
highest current LDT4  Tier 1 diesel NOx standard.  If the application tested were light-heavy
duty, the data would suggest approximately 5 g/bhp-hr for the additized engine, which is
above the 1998 HD on-highway NOx standard. Thus, this presents no information showing
that the technology discussed can meet the standards promulgated in this rule; therefore, it
does not obviate the need for low sulfur diesel fuel to meet the standards.

       Please refer to our responses to Issue 3.3.1(F) and 3.5(F) for more discussion on fuel
additives and additive/trap systems.

       EPA is also concerned about the potential health effects of fuel additives and,
therefore, has established a fuel  additive registration program that requires extensive testing
to ensure no adverse  health implications from such additives.

       As for those comments regarding fuel additives  in conjunction with sulfur trap
technology, please refer to our responses to Issue 3.3.5.

(H)    EPA should consider the new diesel emission purification system - DPNR.

       (1)     DPNR (Diesel Particulate - NOX Reduction System) can simultaneously and
              continuously reduce PM and NOX in diesel exhaust gas based on Toyota's
              NOX storage reduction three-way catalyst technology. DPNR features a newly
              developed fine porous ceramic filter coated with a NOX storage reduction
              three-way catalyst which was designed for use with lean-burn gasoline
              engines.  PM is oxidized by active oxygen released in the NOX storage
              process and by excess oxygen in exhaust gas. When the  engine
              momentarily switches to stoichiometric (rich) operation, PM is also oxidized
              by active oxygen  released in the process of reducing the stored NOX. DPNR
              shows a conversion efficiency of greater-than-80  percent in both PM and NOX
              in the  initial stage of operation, compared to the permitted  level of exhaust

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             emission from a 2-ton diesel truck under 1998 Japanese regulation limits.
             DPNR requires fuel with low sulfur content to maintain a high conversion
             efficiency and is not suited for retrofitting onto in-use vehicles since it requires
             the precise control of injected fuel quantity realized by a common rail fuel
             injection system. [NOTE:  This comment was submitted as a press release
             with information on Toyota's DPNR system (no cover letter was attached) -
             there is no indication that this comment was in fact submitted by Toyota].

             Letters

             Toyota (IV-G-36), p. 1

       Response to Comment 3.5(H):

       The summarized item is actually a press release by Toyota Motor Corporation
describing their new Diesel Particulate NOX Reduction (DPNR) technology, slated for
introduction in 2003. The technology is an integrated catalyzed diesel particulate filter
(CDPF) and a NOX adsorber  in a single compact system. Toyota claims an 80 percent
reduction in both PM and NOX for this system.  We are aware of Toyota's technology claims
and of Toyota's intention to manufacture this product for the 2003 model year (four model
years before the Phase 2 standards begin to go into effect).  We describe the system further
in chapter 3 of the RIA because we believe that it represents one possible approach to
meeting the Phase 2 standards given additional time for refinement. The fact that Toyota
intends to sell a system in 2003, which many commenters suggested was  impossible to even
consider by 2007, shows how rapidly these advanced emission control technologies are
developing.

       Issue 3.6:  Other Issues - Engine and Vehicle Standards

(A)    EPA should adopt rules that would reduce currently unregulated hazardous air
       pollutants that are found in diesel exhaust.

       (1)    Commenters  provided no further supporting information or detailed analysis.

             Letters:

             Natural Resources Defense Council (IV-F-75, 191) p. 68

       Response to Comment 3.6(A):

       We believe that the Phase 2 standards will result in considerable reductions in
unregulated pollutants from diesel exhaust. For example, even though we are not finalizing a
new formaldehyde standard,  we believe that the new hydrocarbon standard will  result in
lower formaldehyde emissions from Phase 2 diesel engines than from current or Phase 2
diesel engines. Additionally,  other toxic hydrocarbons are expected to be reduced in
conjunction with the lower NMHC standard being set for Phase 2 engines.  Please refer to
our response to Issue 2.2(H)(3) for more information regarding gaseous air toxics and, in
general, our responses to Issues 2.2 and 2.3 for more detailed discussion  of air quality and
unregulated pollutants.

(B)    EPA should also address the relationship between cetane and NOX emissions,
       and should impose  additional standards as necessary.

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       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              NY DEC (IV-F-52)

       Response to Comment 3.6(B):

       As described in the NPRM, currently available information on the effect of changes in
cetane number on NOX emissions suggests that the effects will be quite small.  In addition it
does not appear that higher cetane levels are necessary to enable the aftertreatment that we
are focusing on in this rulemaking to  operate efficiently.  For these reasons we have chosen
not to place any new controls on cetane number at this time. See also our responses to
comments under Issue 4.6(A) and 4.6(B). However, we are continuing to evaluate the effects
of diesel fuel properties on emissions, and may propose new standards in the future as we
deem them appropriate.

(C)    Evaluate emissions based on a vehicle-mile, rather than a brake-horsepower
       basis.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Transportation Techniques  (IV-F-191) p. 246

       Response to Comment 3.6(C):

       Engine standards are stated in terms of grams per unit of work rather than grams per
mile.  Therefore, engine emission standards need not increase with weight because heavier
engines do not necessarily emit more per unit of work produced.  Vehicle standards are
stated in terms of grams per mile driven.  In contrast to engines, heavier vehicles, due to their
greater mass, tend to emit more per mile due to the increased load placed on the engine
which requires the engine to do more work to travel each mile.

       For engine certification, it is most appropriate to state emission standards on a gram
per unit work basis because no vehicle exists during the test.  Further, a single engine model
may be installed in many different vehicles designed to do different amounts of work.  Testing
every possible vehicle would increase cost substantially and would result in different g/mile
emission rates for each vehicle.  In the Phase 1 rule (See 65 FR 59896,  October 6, 2000.),
we have required that all complete gasoline vehicles up to 14,000 pounds be chassis
certified (certified as vehicles) which  carries with it a g/mile emission standard. We have
carefully considered the possibility of allowing or even requiring heavy-duty diesels to  certify
in the same way but have not done so in this rule due to concerns that the industry may find it
very difficult to adjust to this substantial testing revision in the time frame necessary for this
rule.  However, we are allowing heavy-duty diesels under 14,000 pounds to chassis certify as
an option.

(D)    EPA must consider engine  deterioration and failure of control devices, which
       may increase projected emissions substantially.

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       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Union of Concerned Scientists (IV-F-165)

       Response to Comment 3.6(D):

       With respect to engine deterioration, the primary effect of deterioration is on PM
emissions.  Preliminary data from EPA-funded work shows that even PM emissions
deterioration that increases engine-out PM emissions by 60% or more has little or no effect
on post-CDPF PM emissions (see memo to Docket A-99-06, item IV-B-17). This is
understandable since the efficiency of the CDPF is over 90%, and the majority of the PM
emissions with  CDPF usage is due to sulfate-make, not break-through.  In fact, the CDPF
data referred to in Chapter III of the RIA (in-house EPA data, data from the DECSE program,
and particle size/number data referred to  in section A(2)(b)) shows that the actual PM capture
efficiency (not including sulfate-make) is upwards of 98%.  As long as low sulfur fuel  is used
and the CDPF remains intact, fairly high engine out PM emissions deterioration (even 2 or 3X
current regulated levels) should not raise  in-use PM emissions above the standard. With
respect to the durability of emissions control devices, EPA agrees that such devices must be
durable. The engine manufacturers are required to meet the emissions standards at the full
useful life of the engine. Please see the responses to Issues 3.2.1 (C), (J), and (M) fora
further discussion of issues related to the durability of exhaust emission control systems.

(E)    EPA should establish a workable voluntary retrofit program.

       (1)     Commenter notes that there are  numerous issues that EPA should take into
              consideration in pursuing  retrofit opportunities. These include the
              implementation of a voluntary retrofit program with incentives, consistency
              across States, qualifying retrofits, uniform testing and certification protocols,
              uniform baseline emission rates, calculation of SIP credits, warranties,
              liability, and other relevant issues.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 73-74
              NYCDEP  (IV-D-209) p. 3

       Response to Comment 3.6(E):

       See our responses to comments 3.1.5(C), 3.1.5(E), and 3.3.4(A).

(F)    EPA should encourage the implementation of non-fuel control strategies such
       as HDDE retrofit programs which could provide greater reductions and would
       be less disruptive than State-imposed diesel sulfur levels.

       (1)     A mandatory retrofit program for certain older vehicles could provide
              enormous emissions benefits in a very cost-effective manner with 30/50 ppm
              sulfur fuel.  Existing in-use engines emit anywhere from 0.1 - 0.6 g/bhp-hr of
              PM.  Reductions in PM from retrofitting these older engines would result in
              much greater mass of PM reduced as compared to an approach that  involves
              imposing a 15 pm sulfur standard for diesel fuel, [see also 3.1.5(E)]

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              Letters:

              American Petroleum Institute (IV-D-343) p. 6, 83

       Response to Comment 3.6(F):

       A mandatory retrofit program is well beyond the scope of this rule which serves to set
new emission standards for new diesel engines beginning in the 2007 model year.  Please
refer to our response to comment 3.1.5(E) regarding our belief that a 30/50 ppm fuel program
would not deliver a viable nationwide program for PM control from diesel engines, even on a
retrofit basis.  We acknowledge that catalyzed PM traps appear to work acceptably on some
applications in mild to warm climates. However, Chapter III of the RIA makes clear that
catalyzed PM traps will network properly on all diesel applications in all climates with a 30/50
ppm fuel program. For that reason, a 30/50 ppm fuel program would only enable PM retrofits
consisting of limited use of catalyzed PM traps and extensive use of DOCs. As we note in
our response to comment 3.3.4(A), DOCs remove gas-phase semi-volatile organic
compounds,  but remove little or no elemental carbon PM.  As mentioned in Chapter III of the
RIA, section A.2, semi-volatile organic compounds comprise only 10 to 30 percent of total PM
mass. Achieving such reductions in addition to the reductions achieved via the Phase 2
standards is attractive but, as stated, outside the scope of this rule.

(G)    EPA should more fully address issues related  to its proposed NOX and NMHC
       standards in the context of alternative fueled engines.

       (1)     EPA has provided little analysis of  the technological feasibility of its proposed
              standards for alternative-fueled engines. Each type of alternative-fueled
              engine presents unique issues of technological feasibility and this is
              particularly true for NOX adsorbers  as natural gas and propane may not be
              effective reductants.  The proposed NMHC level would also be difficult to
              achieve as well as to demonstrate, for natural gas and propane engines.
              EPA must specifically analyze the feasibility of achieving its proposed NOX
              and NMHC standards for alternative-fueled engines, including natural gas
              and propane.

              Letters:

              Cummins, Inc. (IV-D-231) p. 20-21

       (2)     The proposed emission standards  create a dilemma for suppliers of natural
              gas fueled engines. If EPA's proposed standards are finalized, and diesel
              engines can meet those limits, manufacturers of natural gas fueled engines
              will need to make a commercial decision regarding the continued viability of
              natural gas fueled engines since they are  typically a more expensive
              alternative. A possible result would be the withdrawal of natural gas engines
              from the market.

              Letters:

              Detroit Diesel Corporation (IV-D-276) p. 11-12

       Response to Comment 3.6(G):

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       The Phase 2 standards are meant to be fuel-neutral standards. We have argued that
the standards are technologically feasible with the lead time provided for diesel and gasoline
fueled engines. These types of engines overwhelmingly dominate the heavy-duty fleet.  The
standards were not set with the intention of promoting one fuel over the other. Similarly, the
standards were not set with the intention of providing room for alternative fueled engines to
find a role in the market. We believe that those wanting to produce alternative fueled
engines in the 2007 and later time frame will be able to comply with the Phase 2 standards
provided sufficient engineering development is put into achieving that compliance. If a
decision is made to leave the alternative fueled heavy-duty market, we do not believe  it will
be because of technological infeasibility of the Phase 2 standards but because
manufacturers make the business decision not to pursue  a role in that market.  Further, we
disagree that we must specifically analyze the feasibility of achieving our proposed standards
for alternative fueled engines. In  contrast, we must analyze the feasibility of achieving our
proposed standards giving appropriate consideration to cost, energy, and safety. This we
have done.

(H)    Does not support any option that will apply relaxed emission standards for any
       geographic areas because there are environmental concerns in national  parks
       across the nation.

       (1)    A uniform standard is important for national parks' air quality across the
              nation. There are 140 NPS units in 27 States  in various areas of the country
             that are located in ozone (1-hror8-hr) nonattainment areas, based on  1997-
             99 data. In addition, ongoing research shows  the need to reduce nitrogen
             deposition in areas that may be in attainment.  For instance, Denver-area NOX
             emissions, one of the key pollutants that would be reduced by the proposal,
             are a major concern for Rocky Mountain National Park in terms of nitrogen
             and ammonium deposition and episodic acidification. In addition, in this
             same area, the reduced sulfur dioxide emissions from low sulfur fuel would
             assist Class I areas in the region improve  visibility. The same types of
              benefits would occur in other areas that do not face ozone concerns, such as
              Utah, Arizona, and other western States.

              Letters:

              National Park Service (IV-D-180) p. 3

       Response to Comment 3.6(1-1):

       The final Phase 2 engine  standards will apply equally  nationwide, with the exception
of U.S. Territories. There are special fuel provisions for Alaska,  but those do not affect the
implementation of Phase 2 engine standards. Please refer to our responses to Issues 6.6
and 6.7 for more discussion on how our program will be implemented in Alaska and U.S.
Territories, respectively.

       Issue 3.7: Technology Reassessment

              Issue  3.7.1: NOX Control Technology Reassessment

(A)    Expressed opposition to a mid-term technology review.

       (1)    Commenters noted that such a review is unnecessary given the high degree

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              of certainty that the availability of clean fuels will enable rapid development of
              effective NOX control technologies.

              Letters:

              American Lung Association (IV-D-270) p. 26-27
              City of Chicago (IV-D-240) p. 6
              Flowers, Bobbie (IV-G-67)
              GA Public Interest Research Group (IV-F-117) p. 43
              Kotgal, Kalpana  (IV-F-192) p. 17
              STAPPA/ALAPCO (IV-D-295) p. 2, 14
              U.S. PIRG (IV-F-71, 190) p. 185 (IV-F- 192) p. 134

       (2)     One commenter noted that if a technology review is included as part of the
              proposed rule, EPA should limit such a review to the proposed  NOX standard
              only.

              Letters:

              Kotgal, Kalpana  (IV-F-192) p. 17

       (3)     Commenters noted that if EPA determines a technology review is warranted,
              EPA must ensure that it allows equally for the strengthening as for the
              relaxation of emission standards.

              Letters:

              Natural Resources Defense Council  (IV-D-168) p. 8, (IV-F-75)
              U.S. PIRG (IV-F-71), (IV-F-190) p. 185)

       (4)     EPA should not use a future technology review as a substitute for a thorough
              analysis of the technological feasibility of the proposed standards.  Such a
              review would effectively prevent engine manufacturers from fully developing
              and investing resources toward achieving the standards that are finally
              adopted, because those standards may  change in the future.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 53

       (5)     EPA's proposal for a technology review indicates the uncertainty that
              adsorber technology can achieve the proposed NOX reductions. Rather than
              rushing to finalize the rule by the end of the year, EPA should take the time to
              obtain all the information it needs to justify the NOX standard, and get the rule
              right the first time.  If EPA determines to include a technology review, API
              expects a lead time of at least 4 years from the review.

              Letters:

              American Petroleum Institute (IV-D-343) p. 68
              ExxonMobil (IV-D-228) p. 21
              Marathon Ashland Petroleum (IV-D-261) p. 72

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       (6)    A technology review to assess the progress that emission control device
             manufacturers have made towards fulfilling their assurances to EPA is
             worthless, at least from the point of view of the diesel fuel refining and
             marketing industry.  If EPA finds that it has erred in relying on the
             representations of these  manufacturers that their devices will be  commercially
             viable in 2007, the refining industry will have already expended billion of
             dollars towards achieving a 15 ppm diesel fuel.  Commenters conclude that
             such a review would create uncertainty regarding the regulations and would
             be too late to influence the investment decisions of refiners and engine
             manufacturers.

             Letters:

             Chevron (IV-D-247) p. *2
             Society of Independent Gasoline Marketers of America (IV-D-328) p. 3

       (7)    Making the rule contingent on a technology review is a large disincentive for
             manufacturers to develop emission control technologies.

             Letters:

             Chicago DEP/Chicago Metro Mayors Caucus Clean Air (IV-D-335) p. 5-6
             City of Chicago (IV-D-240) p. 5

(B)    Expressed support for a technology review prior to full implementation of the
       rule to evaluate the status of newly developing emission reduction technology
       (i.e. NOX adsorber technology) and to ensure that the development of the
       technology is on schedule and available for meeting the proposed standards.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             International Truck & Engine Corp. (IV-F-34)

       (2)    EPA should conduct a comprehensive technology review prior to finalizing the
             rule because the rule relies on NOX adsorber technology that is still in its
             research phase and has  not been demonstrated to meet all aspects of
             performance required for full-scale application and commercialization. One
             commenter (DOE) specifically suggested the 2003 time frame to conduct the
             reassessment.  By this time, more data will be available on the operation of
             diesel NOX control technology and its sulfur sensitivity. This commenter
             added that the review should be a multi-agency effort, with an opportunity for
             non-federal organizations and the public to participate.

             Letters:

             NY DEC (IV-D-239) p. 3
             National Petrochemical & Refiners Association  (IV-D-218) p. 1,13,14
             U.S. Department of Energy  (IV-G-28) p. 6-7

       (3)    An  engine technology review is reasonable only in the context of a 50 ppm

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              sulfur cap and ABT program.

              Letters:

              Phillips Petroleum Company (IV-D-250) p. 4

       (4)     EPA has not conducted sufficient tests to ensure that the new ultra-low sulfur
              content diesel fuel will work efficiently with the new emission reduction
              technologies and to determine whether the unproven technology will actually
              reduce emissions to desired levels.

              Letters:

              Food Marketing Institute (IV-D-283) p. 3-4

       (5)     EPA should conduct more analysis of the science and technology that would
              support the achievement of the proposed emission standards. An
              independent panel should be convened to evaluate the many unknowns
              associated with achieving the proposed standards, particularly those related
              to NOX emissions. This panel could also develop data to more accurately
              predict the costs and benefits of the proposed rule to the transit  industry.

              Letters:

              American Public Transportation Association (IV-D-275) p. 2

(C)    Expressed support for a periodic  technology progress report and review
       designed to ensure that emission reduction goals are being achieved without
       compromising engine driveability, reliability, durability, and fuel economy
       performance.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              National Automobile Dealers Association  (IV-D-280) p.  2

       Response to Comment 3.7.1 (A). (B) and (C):

       As discussed in section III.H of the preamble, we believe that a review of NOX
adsorber technology is appropriate. In fact, we have committed to conducting a series of
biennial reviews.  For each review, we will collect and analyze information from  engine
manufacturers, NOX adsorber manufacturers, our own testing, and other sources. At the end
of each review cycle, we will release (and post on the Web) a report discussing the status of
the technology and any implications on the heavy-duty engine emission control  program.  We
will release the first report by December 31, 2002, and subsequent reports at the end of each
second year through December 31, 2008.

       We recognize that not all commenters will agree with our decision to conduct these
reviews. In fact, some comments suggested that no such review should occur due to the
high degree of certainty that the availability of clean fuels will enable rapid development of
effective NOX control technologies. We fully agree that knowledge of clean fuel availability

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will result in rapid development of NOX control technology. However, we also acknowledge
the engineering challenges that remain before NOX adsorber technology can be implemented
to achieve the Phase 2 standards.

       Some comments noted that any NOX technology review should allow for the
strengthening of the standards as well as possibly relaxing them. We agree with this
comment and have not placed any limitation on the review that might constrain such
strengthening if warranted and cost effective.

       As for comments regarding  EPA using such a review in place of conducting a
thorough analysis of the technological feasibility of the standards, we do not believe that is
what we are doing.  On the contrary, we have extensively analyzed the technological
feasibility of the standards and have presented that analysis in Section III of the preamble,
Chapter III of the RIA, and throughout our responses to Issues 3.2 and 3.3. Further, we do
not believe that conducting these reviews will prevent engine manufacturers from fully
developing and investing resources toward  achieving the final standards because of the
possibility that those standards may change.  Instead, we believe these reviews encourage
investment so that manufacturers may play a role in shaping the progress demonstrated in
each review and their outcome.

       We do not agree that our decision to conduct these reviews illustrates our uncertainty
that adsorber technology can achieve the proposed NOX reductions.  On the contrary, our
testing demonstrates that NOX adsorbers can achieve the necessary NOX reductions over
both the FTP and the SET. Please  refer to  Chapter III of the RIA for more detail on our test
data.  However, as noted above, we acknowledge that engineering challenges remain in the
area of durability and desulfation. Therefore, we would not characterize the decision to
conduct these reviews as uncertainty, but rather as a chance to work cooperatively with all
stakeholders to address the engineering challenges that remain.  As for leadtime available
following the review, more than four years will still remain following the first review in 2002.

       Some commenters expressed concern that a review of the NOX technology would
create uncertainty regarding the regulations and would be too late to influence the investment
decisions of refiners and engine manufacturers. The concern here appears to be that the
review might indicate that NOX adsorbers will not work, meaning the fuel will not be needed,
meaning that investments toward compliance would be stranded.  Such an outcome is not a
serious possibility. We do not consider the  NOX technology review to be one of determining
whether or not we will have NOX control technology on diesel engines by 2007.  Instead, the
review will address the engineering challenges that remain and serve to determine if minor
revisions to the program are indeed necessary - are the standards still the right standards;
are the regeneration testing provisions still appropriate; etc. Therefore, investments made by
refiners and engine manufacturers will in no way be stranded investments because 15 ppm
fuel will be needed and NOX control technology will be implemented regardless of the
outcome of the reviews.

       One commenter suggested  convening an independent panel to evaluate the many
unknowns associated with achieving the proposed standards. We consider our review
process to serve that function.  While we are not an independent panel, we fully expect all
stakeholders to be involved in the process and that it will be, to the extent feasible, a joint
effort among the many stakeholders.

              Issue 3.7.2: Diesel Fuel Sulfur Reassessment

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(A)    Supports a thorough technology review prior to finalizing the proposed rule.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              National Petrochemical & Refiners Association (IV-D-218) p. 1

       (2)     EPA has not provided any data that demonstrates how the low sulfur fuel can
              be delivered to markets without significant sulfur increases.  EPA has
              identified potential interfaces where substantial contamination with higher
              sulfur-content fuels could occur, but does not identify measures that will
              ensure that contamination will not occur.  Since very small quantities of higher
              sulfur content residuals could have a significant adverse effect on the
              reliability of shipments of the ultra-low sulfur fuel. Clearly more work will be
              necessary over the next few years to resolve these issues.

              Letters:

              U.S. Department of Energy  (IV-G-28) p. 7

       (3)     Supports a review of the fuel standard since it could result in a devastating
              impact to diesel fuel supplies. Commenter specifically notes that there should
              be a review of the potential impacts to the jet fuel market.

              Letters

              National Petrochemical & Refiners Association (IV-G-31), p. 1

(B)    Opposes a review of the fuel standards.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              ExxonMobil (IV-D-228) p. 21

       (2)     Reference to a technology review of the fuel standards either in the final rule
              or the  preamble, will lead to additional uncertainty upon the  part of refiners
              and would create  a major disincentive to make the investments needed to
              comply.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 68
              Marathon Ashland Petroleum (IV-D-261) p. 72

       Response to  Comment 3.7.2(A) and (B):

       Some commenters requested that EPA conduct a formal review of the feasibility of
the 15 ppm sulfur cap at some specified date in the future soon enough to modify the
standard if necessary and before refiners were committed to their significant capital

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-146

investments. Other commenters argued against such a review.

       Commenters supporting a formal technology review cited uncertainties in 1) the
ability of refiners to produce fuel meeting the 15 ppm standard, and 2) the ability of the
distribution system to maintain compliance with this standard during transport. They also cite
the high cost of compliance and are concerned about the possibility of refiners leaving the
highway diesel fuel market, resulting in market shortages. Commenters arguing against such
a review are primarily concerned that such a review adds to the uncertainty facing refiners.
They are concerned that a review would discourage refiners from investing early to meet the
standard and possibly that the results of such a review would come after many refiners had
already invested in technology to meet the final standard.

       EPA does  not believe that a review in this area is necessary. We agree with
ExxonMobil and API that it would add to the uncertainty facing refiners and would discourage
early investment.  We also do not believe that the concerns raised  by commenters supporting
a review are serious enough to merit a formal review. For example, our assessments of
desulfurization technology in Chapters IV and V of the Final RIA indicate clearly that meeting
the 15 ppm standard is feasible.  Uncertainty exists regarding the severity of hydrotreating
which will be necessary in each refinery,  but the leadtime available is more than  sufficient to
resolve these uncertainties and allow each refiner to develop a cost effective strategy  for his
refineries.  Likewise, the steps which will be necessary to transport 15 ppm diesel fuel in
order to maintain its quality are described in these same chapters of the Final  RIA.  No new
technology is necessary in this case, just more careful execution of current best practices.
Thus, there does not appear to be any basis in this area for a formal technology review.
Finally, a detailed  discussion of the diesel fuel supply issue is presented in Chapter V of the
Final RIA.  There,  we indicate that 1) the availability of technology at reasonable cost,  2) the
difficulty of selling  highway diesel fuel in other markets,  and 3) the ability of refiners
producing  nonroad diesel fuel to produce  highway diesel fuel meeting the 15 ppm standard,
and 4) the temporary compliance option all come together to support the conclusion that
supplies of highway diesel fuel will be more than adequate with the implementation of this
rule.

              Issue 3.7.3:  Role of Non-conformance Penalties

(A)    EPA should draft rules that would establish appropriate nonconformance
       penalties for engine and vehicle manufacturers.

       (1)     EPA should establish  nonconformance penalties (NCPs) as part of this
              rulemaking. EPA's proposed new standards and requirements will be
              technology-forcing and almost certainly will result in the inability of some
              engine manufacturers and/or engine families to comply with the standards.
              NCPs are essential to ensure that manufacturers are able to participate in the
              market and meet customer needs. The  size of the penalties should be
              established using the same cost estimates used to establish the cost of the
              proposed regulation.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 54
              International Truck & Engine Corp.  (IV-D-257) p. 31

       Response to Comment 3.7.3(A):

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 3-147

       We are not establishing NCPs for the new standards at this time.  In order for us to
establish NCPs for a specific standard, we would have to find that: 1) substantial work will be
required to meet the standard for which the NCR is offered; and 2) there is likely to be a
"technological laggard" (i.e., a manufacturer that cannot meet the standard because of
technological (not economic) difficulties and, without NCPs, might be forced from the
marketplace). According to the CAA (Section 206(g)), such NCPs "shall remove any
competitive disadvantage to manufacturers whose engines or vehicles achieve the required
degree of emission  reduction." At this time, we cannot conclude that NCPs will be needed.
While we believe that substantial work will be required to meet the 2007 standards, we
currently have no information indicating that a technological laggard is likely to exist.
Recognizing that it may have been difficult for manufacturers to comment on these criteria at
this early stage of development, when implementation of these  standards is still more than
six years away, it may be appropriate to reconsider NCPs in a future action.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-1

ISSUE 4:  DIESEL FUEL STANDARDS

      Issue 4.1:  Level of Diesel Fuel Sulfur Standard

(A)    Expressed support for at least a 15 ppm diesel fuel sulfur standard as
      necessary to achieve the proposed engine and vehicle standards.

      (1)    Many commenters provided no  further supporting information or detailed
             analysis. [See further detail for some of these commenters summarized under
             Issue 4.1, Point (D).] Approximately 13,700 private citizen commenters made
             this statement.

             Letters:

             20/20 Vision (IV-F-58)
             Acoff, Jeffrey, et. al. (IV-G-11)
             Alliance of Automobile Manufacturers (IV-F-59, 190) p. 114  (IV-F-117) p.168
              (IV-G-50)
             American Lung Association of Colorado  (IV-D-54)
             American Lung Association of Los Angeles (IV-D-47)
             American Lung Association (IV-F-72, 161, 164, 181, 191) p. 146
             American Lung Association of CT (IV-D-63) p. 1
             American Lung Association of Metropolitan Chicago  (IV-D-237) p. 1
             American Lung Association of NJ  (IV-D-224) p. 1
             American Lung Association of OR (IV-D-165) p. 1
             American Lung Association of Orange County (CA) (IV-D-176) p. 1
             American Lung Association of SD (IV-D-31) p. 1
             American Lung Association of TN (IV-D-19) p. 1
             American Lung Association of VA (IV-D-205) p. 1
             Appalachian Office of Justice & Peace (IV-D-99) p. 1
             Arab Community Center for Economic and Social Services (IV-D-112)
             Asamoah,  Nikiya  (IV-D-09)
             Bagnarol-Reyes, Carolina, et. al. (IV-G-24)
             Bay Area Air Quality Management District (IV-D-139) p. 1
             Beeman, Nora, et. al.  (IV-G-09)
             Boulder County Clean Air Consortium (IV-D-35) p. 1
             Braun, Carl and Norma (IV-D-69)
             CA Air Pollution Control Officers' Association (IV-D-109) p. 1
             CA Air Resources  Board  (IV-D-203) p. 4, (IV-F-190) p. 13
             CA PIRG (IV-F- 190) p. 175 (IV-F-190) p. 280
             CA Trucking Association  (IV-F-109) p. 65 (IV-F- 116) p. 150 (IV-F-192) p. 34
             CO Public Interest Research Group  (IV-F-191) p. 219
             CT Coalition for Environmental Justice (IV-D-131) p. 2
             CTDEP (IV-F-49)
             Caesar, M.  (IV-D-339)
             Carson Forest Watch  (IV-D-106)
             Cassara, Bob (IV-F-65)
             Center for Environmental  Health (IV-D-89) p. 1
             Center for Neighborhood Technology (IV-F-11)
             Chicagoland Transportation and Air Quality Commission  (IV-F-10)
             Chuang, Henry (IV-F-117) p. 265
             Chung, Payton, et. al.  (IV-D-133)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-2

              Citizen, physician (IV-F-190) p. 76
              Citizens for a Better Environment (IV-F-3)
              CityofArcata  (IV-D-200) p. 2
              City of Chicago (IV-D-240) p. 4
              City of Los Angeles Environmental Quality and Waste Man  (IV-F-190) p. 95
              City of NY, Borough of Manhattan  (IV-F-51)
              City of Seattle (IV-D-297) p. 1
              Clean Air Agency (IV-D-207) p. 1
              Clean Air Network (IV-D-292) p. 2, (IV-F-191) p. 84
              Clean Air Now Campaign (State PIRGs & citizens) (IV-D-357, 358)
              Coalition on the Environment and Jewish Life  (IV-F-184)
              Community Coalition for Change  (IV-F-190) p. 74
              Connor, Thomas, et.  al.  (IV-D-132)
              Corcoran, Janet (IV-D-128)
              Corning, Inc. (IV-F-77)
              DE Dept. of Natural Resources & Environmental Control (IV-D-146) p. 1
              DE Nature Society (IV-D-285) p. 1
              DaimlerChrysler (IV-F-15, 167, 116) p. 292 (IV-F-117) p. 96
              Davidson, Karin, et. al.  (IV-D-79)
              Detroit Diesel Corporation  (IV-F-116) p. 198
              Dickson, Victoria, et.  al.  (IV-D-77)
              Dolman, Suzanne, et. al. (IV-D-341)
              Downtown Community Association  (IV-D-118) p. 1
              Economic & Social Justice (IV-F-117) p. 236
              Engine Manufacturers Association (IV-F-117) p. 39 (IV-F-191) p. 39
              Environmental Advocates  (IV-F-35)
              Environmental Defense  (IV-F-56, 117) p. 81
              Environmental Health Coalition (IV-D-286) p.  1
              Environmental Health Watch (IV-D-212) p. 1
              Firestone, Ross  (IV-F-4)
              Fletcher, Robert E. (IV-F-117) p. 175
              Fleming, Scott, et. al. (IV-D-13)
              Flowers, Bobbie (IV-G-67)
              Fox, John  (IV-F-191) p. 75
              Franczyk, Catherine A., et. al. (IV-D-233)
              Freechild, Aquene, et. al. (IV-G-60)
              GA Department of Natural Resources (IV-D-268) p. 1
              GA Forest Watch (IV-D-67) p. 1
              GA Public Interest Research Group (IV-F-117) p. 268
              Hackel, Barbara, et al.  (IV-D-14) p. 1
              Hart/IRI Fuels Information Services (IV-D-154) p. 2, (IV-F- 190) p. 254
              Higginson, Norman, et. al.  (IV-D-196)
              Hinds, William (IV-F-190) p. 202
              Hirschi, Alexander (IV-D-07)
              Hopkins, Steve, et. al. (IV-G-07)
              IL House of Representatives (IV-F-24)
              IL Public Interest Research Group  (IV-F-18)
              INFORM, Inc.  (IV-F-47)
              International Truck & Engine Corp.  (IV-F-34,180, 117) p. 109
              Interstate Claims  (IV-F-190) p. 66
              Kachik, Thomas (IV-D-11)
              Kinyon, John, et. al.  (IV-G-13)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-3

              Kotgal, Kalpana  (IV-F-192) p. 17
              L.A. County Bicycle Coalition (IV-F- 190) p. 131
              La Grange Park  (IV-D-39) p. 1
              Landfall Productions, Inc. (IV-D-27)
              League of Women Voters of Louisiana  (IV-D-199) p. 1
              League of Women Voters of New Orleans  (IV-D-210) p. 1
              Legal Environmental Assistance Foundation (IV-D-126) p. 1
              Levy, David (IV-F-37)
              Lichtman, Elijah  (IV-D-08)
              Lind, Karen, et. al. (IV-D-121)
              Little Village Environmental Justice Organization (IV-F-192) p. 147
              MO Coalition for the Environment (IV-D-235) p. 1
              Manufacturers of Emissions Controls Association (IV-F-187)
              Mathews, Erik, et al  (IV-D-24) p. 1
              Mayor and citizens of Fort Collins, CO (IV-F-191)p. 211
              Mayor of Denver (IV-F-191) p. 152
              Mayor of Glendale, CO (IV-F-191)  p. 177
              Metropolitan Atlanta Rapid Transit Authority (IV-F-117) p. 122
              Metropolitan Washington Air Quality Committee  (IV-D-34) p. 2
              Mexican-American Community Foundation (IV-F-179)
              Montgomery, Jack, et. al. (IV-D-78)
              NJ  PIRG  (IV-F-116) p. 314
              NY Assembly - Health Committee (IV-F-38)
              NY PIRG  (IV-F-116) p. 244
              NY State Assembly  (IV-D-266) p. 1, (IV-F-53)
              NY State Senator (IV-F-50)
              NYC Council (IV-F-80)
              NYCDEP  (IV-D-159)  p. 1
              NYC Environmental Justice Alliance (IV-F-116) p. 317
              National Park Service  (IV-F-191) p. 108
              Natural  Resources Defense Council (IV-D-168) p. 3, (IV-F-75, 191) p. 68
              Nerode, Gregory, et. al.  (IV-D-04)
              OR Toxics Alliance (IV-D-175) p. 1
              Ozone Transport Commission (IV-D-249) p. 2, (IV-F-55)
              PADEP (IV-D-100) p. 2
              Packard, Josh (IV-G-54)
              Pandey, Stacey  (IV-F-117) p. 274
              Pecoraro, Elizabeth  (IV-F-117) p. 117
              Private citizen  (IV-D-12)
              Rhubert, Pamela J.  (IV-D-15) p. 1
              Richards, Donna and Bill, et. al. (IV-G-19)
              Riggles, Ruth, et. al. (IV-D-102)
              Robin, Susan (IV-D-302)
              Rock, Steve, et. al. (IV-G-22)
              Rodriguez, Dolores, et. al. (IV-D-91)
              Rutherford, Jolene, et. al. (IV-D-347)
              SC Dept. of Health and Environmental Control (IV-D-143) p. 1
              STAPPA/ALAPCO (IV-D-140) p. 1, (IV-F-32, 78)
              Schmitz, Randy,  et. al. (IV-D-46)
              Sierra Club, GA Chapter (IV-D-348) p. 1
              Sierra Club, PA Chapter (IV-D-53)
              Smith, Bryan R.,  et. al. (IV-D-105)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-4

              Smith, Curt, et. al.  (IV-D-49)
              Smith, Maria (IV-D-72)
              Southern Queens Park Association, Inc. (IV-D-36) p. 1
              Stead, Craig (IV-F-116) p. 115
              TN Environmental Council (IV-F- 117) p. 154)
              The Mountaineers  (IV-D-184) p. 1
              Tosco (IV-D-84), (IV-F-157)
              Tri-State Transportation Campaign  (IV-F-116) p. 359
              Tseng, Joyce, et. al.  (IV-D-03)
              U.S. PIRG (IV-F-71, 190) p. 185(IV-F- 192) p. 134 (F-IV-191) p.142
              Union of Concerned Scientists (IV-F-165)
              Unity Center (IV-D-75) p. 1
              Varsbergs, Krista, et. al.  (IV-D-38)
              Village of Burr Ridge (IV-D-316) p.  1
              Wl DNR (IV-D-291) p. 1, (IV-F-25)
              Washington Regional Network (IV-D-18) p. 1
              West Harlem Environmental Action/Envr Justice Network (IV-F-76)
              Western Independent Refineries Association (IV-F-190) p. 144)
              Wilderness Society (IV-F-117) p. 217
              Williams, Mary, et.  al. (IV-D-122)
              Zweig, Robert (IV-D-30)

       (2)     Commenters noted that the availability of 15 ppm diesel also will facilitate the
              retrofit of existing highway and nonroad diesel vehicles with particulate traps.

              Letters:

              American Lung Association (IV-D-270) p. 22-26
              Engine Manufacturers Association (IV-F-174)
              NESCAUM  (IV-D-315) p. 9-10, (IV-F-63)
              OH Environmental  Council  (IV-D-130) p. 1
              STAPPA/ALAPCO (IV-D-295) p. 2,13-14

       (3)     Commenters noted that there  is existing data from the DECSE report that
              indicates that a 15  ppm level is required in order to meet the proposed 0.01
              PM standard.  As sulfur levels increase above 15 ppm, it becomes
              increasingly difficult, and quickly impossible, to meet the NTE limits for the
              entire engine speed and load map.  This is because of sulfate formation (as
              documented in the DECSE report) and the increasing temperature at which
              regeneration occurs. One of the commenters stated that an increase from 3
              to 30 ppm fuel can  increase the temperature by 20 to 30 degrees Centigrade.

       Response to Comments 4.KAH1H3):

       Generally, these comments provide added justification and support for the low sulfur
diesel fuel program.  As described in the preamble to the final rule, we are establishing a
comprehensive national control program that will regulate the heavy-duty vehicle and its fuel
as a single system. As part of this program, new emission standards will begin to take effect
in model year 2007, and will apply to heavy-duty highway engines and vehicles, including
those fueled by alternative fuels, unless otherwise specified in the regulations.  These
standards are based on the use  of high-efficiency catalytic exhaust emission control  devices
or comparably  effective advanced  technologies.  Similar high-efficiency NOx exhaust

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-5

emission control technology has been quite successful in gasoline direct injection engines
that operate with an exhaust composition similar to diesel exhaust.

       However, as discussed in Section III of the preamble and Chapter III of the RIA,
application of this technology to diesels has some additional engineering challenges.  In that
section we discuss the current status of this technology.  Because this technology is
damaged by sulfur, we are also requiring low sulfur diesel fuel containing no more than 15
ppm sulfur by mid-2006.  The program provides substantial flexibility for refiners, especially
small refiners, and for manufacturers of engines and vehicles. These options will ensure that
there is widespread availability and supply of the low sulfur diesel fuel from the very
beginning of the program, and will provide engine manufacturers with the lead time needed
to efficiently phase-in the exhaust emission control technology that will be used to achieve
the emissions benefits of the new standards. As noted by one of the commenters, while not
a part of today's rulemaking, the widespread availability of low sulfur diesel fuel may have the
side  benefit of stimulating the retrofit of existing vehicles and nonroad equipment with
exhaust emission control technology.

              Letters:

              DaimlerChrysler (IV-F-186)
              Environmental  Law & Policy Center of the Midwest (IV-F-6)
              Johnson Matthey (IV-F-117) p. 94
              Manufacturers  of Emission Controls Association (IV-F-26, 116) p. 47 (IV-F-
              117) p. 89 (IV-F-191)  p. 120
              South Coast Air Quality Management District (IV-F-185)

       (4)     The maintenance cost associated with a sulfur standard higher than 15 ppm
              would place the cost burden on truck owners when the fuel spoils the
              emissions control equipment.

              Letters:

              CA Trucking Association (IV-D-309) p. 6

       Response to Comment 4.KAH4):

       We have not analyzed the cost of the additional maintenance that would be required
in order to apply advanced aftertreatment systems on vehicles using fuel with a sulfur  content
higher than 15  ppm, primarily because we do not believe that the systems would function
properly on higher fuel sulfur levels. We do agree with the commenter's suggestion that
higher fuel sulfur levels can have undesirable effects on emission control equipment and that
this might lead  to additional maintenance costs.

       (5)     Although an even lower cap may prove to be necessary, it is crucial that the
              final rule include a fully effective,  nationwide cap of no higher than 15 ppm by
              mid-2006. Exposure to higher sulfur content fuel will compromise the
              performance of, if not render ineffective or destroy, emission control
              equipment that will be introduced to meet the 2007 emission standards.

              Letters:

              American Lung Association (IV-D-270) p. 19

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-6

             CA Air Resources Board (IV-D-203) p. 5
             CT DEP  (IV-D-142) p. 1
             Chicago DEP/Chicago Metropolitan Mayors Caucus Clean Ai  (IV-D-335) p. 4
             Environmental Defense (IV-D-346) p. 9
             Environmental Law and Policy Center (IV-D-331) p. 4
             IL Environmental Protection Agency (IV-D-193) p. 1
             International Center for Technology Assessment (IV-D-313) p. 2-3
             Ml Environmental Council (IV-D-290) p. 1
             NCDENR (IV-D-151)p. 1
             NH DES  (IV-D-150)p. 1
             NY DEC  (IV-D-138)p. 1
             STAPPA/ALAPCO (IV-D-295) p. 2, 10-11
             Southwest Air Pollution Control Authority (IV-D-149) p. 1
             Stuckey, Stephanie (IV-D-182) p. 1
             TX Natural Resource Conservation  Commission (IV-G-3) p. 1
             Transportation Alternatives (IV-D-332) p. 1
             Udall, Mark  (IV-D-173) p. 1
             Vigo County Air Pollution Control (IV-D-137) p. 1
             WA Department of Ecology (IV-D-141) p. 1
             Wl DNR  (IV-D-144)p. 1

       (6)    EPA's low sulfur standard will help facilitate the development and use of
             alternative fuel technologies as well as various NOX and  PM control devices.

             Letters:

             CA Transit Association  (IV-G-14) p. 1
             NJ Transit (IV-G-4) p. 1

       (7)    CARB has also proposed a sulfur content standard of no greater than 15 ppm
             and EPA should maintain this aspect of its proposal.  If a higher standard is
             set, the cost of diesel to California agencies would greatly increase, as
             suppliers would be faced with having to refine a much smaller quantity of this
             fuel for a relatively small California market.

             Letters:

             CA Transit Association  (IV-G-14) p. 1

       (8)    In mandating a 15 ppm cap, the durability of the catalyst in meeting
             performance requirements for NOX destruction will  be significantly enhanced.

             Letters:

             Apyron Technologies, Inc. (IV-D-227) p. 1

       Response to Comments 4.1(A)(5)-(8):

       See Response to Comments 4.1(A)(1)-(3), above.

(B)    It is reasonable and appropriate for EPA to impose the 15 ppm sulfur standard
       based on the assumption that sulfur-sensitive technologies (i.e. NOX adsorbers)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-7

       will be readily available within the time frame proposed.

       (1)    Commenter specifically cites to the API letter from R. Cavaney to Carol
             Browner, dated April 26, 2000, and asserts that the refining industry's
             argument is misleading (i.e. that there is no evidence to suggest that NOX
             adsorber technology for HDDEs would be available and viable for 2007 and
             that as a result, the proposed sulfur standard should not be imposed).  The
             data currently show that the availability of NOX adsorber technology is
             dependent on the availability of ultra-low sulfur fuel and is a viable control
             technology within the time frame  proposed.

             Letters:

             International Truck & Engine Corp.  (IV-D-257) p. 8

       Response to Comment 4.1(B):

       Generally, this comment provides added justification and support for the low sulfur
diesel fuel program.  Refer to the Response to Comments 4.1 (A)(1)-(3) above.

(C)    The proposed sulfur level must be required nationwide to  reduce the chance
       that higher sulfur fuels will damage sulfur-sensitive control technologies.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Air Pollution Control District (IV-D-55) p. 1
             Alliance of Automobile Manufacturers (IV-F-59, 190) p. 114 (IV-F-117) p.  168
             Coalition on the Environment and Jewish Life (IV-F-184)
             Engine Manufacturers Association  (IV-F-117) p. 39 (IV-F-191) p. 39)
             Environmental Health Coalition  (IV-D-286) p. 1
             Environmental Health Watch (IV-D-212) p. 1
             Fogel, Judy (IV-F-190) p. 68
             Grand Canyon Trust (IV-D-317)  p. 1
             Hoosier Environmental Council  (IV-D-281) p. 1
             Institute for Global Solutions  (IV-F-175)
             International Truck & Engine Corp.  (IV-F-117) p. 109
             Interstate Claims (IV-F-190) p. 66
             La Grange  Park  (IV-D-39)  p. 1
             Levy, David (IV-F-37)
             Lu, Rong (IV-F-162)
             NC Waste Awareness and Reduction Network (IV-D-51) p. 1
             Natural Resources Defense Council (IV-D-168) p. 5, (IV-F-75, 190) p. 98
             Ozone Transport Commission (IV-D-249) p. 2
             Regional Air Pollution Control Agency  (IV-D-103) p. 1
             STAPPA/ALAPCO (IV-D-295) p. 10
             Sierra Club, Lone Star Chapter (IV-D-287) p. 2
             Sierra Club, PA Chapter (IV-D-204) p. 1
             Tosco (IV-D-304) p. 2

       (2)    California, Sacramento and the South Coast will not meet their attainment

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-8

              dates unless a national diesel fuel sulfur standard is imposed.  Without a
              universal diesel fuel sulfur standard, the trucking industry will be facing
              regulations that interfere with operation and will put California truckers at a
              competitive disadvantage. This commenter added that a national standard
              will ensure adequate supply and reasonable prices at the pump and that
              truckers will pay the cost in the form of reduced fuel economy if a fuel sulfur
              standard above 15 ppm is imposed. Similarly, commenters in the Midwest,
              particularly Chicago, noted that due to the volume of interstate truck traffic,  a
              national standard is necessary for that region to meet its NAAQS.

              Letters:

              CA Air Pollution Control Officers' Association (IV-D-109) p. 1
              CA Natural Gas Vehicle Coalition (IV-F-190) p. 135
              CA Trucking Association  (IV-D-309) p. 6-7, (IV-F-190) p. 38 (IV-F-116) p.
              150
              Caucus Clean Ai  (IV-D-335) p. 3
              L.A. City Council  (IV-F-176)

       (3)     Commenters in California expressed support for nationwide application of the
              rule in order to level the playing field for California's trucking fuel costs.

              Letters:

              CA Natural Gas Vehicle Coalition (IV-F-190) p. 135
              CA Trucking Association  (IV-F-190) p. 65
              City of Los Angeles Environmental Quality and Waste Man (IV-F-190) p. 95
              Jack Jones Trucking, Inc. (IV-F-190) p. 58
              Natural Resources Defense Council (IV-F-190) p. 98
              Onyx Environmental Services (Gavendi)  (IV-F-190) p. 62
              Quikway Trucking Company  (IV-F-190) p. 60

       (4)     Commenters noted that without a national standard, states may advocate the
              use of boutique fuels to meet their NAAQS, and boutique fuels will make it
              very difficult for the trans-state and national carriers.

              Letters:

              Interstate Claims  (IV-F-190) p. 66
              Swift Transportation  (IV-F-190) p. 59

       (5)     Regional standards would result in clogged aftertreatment technologies,
              forcing high  maintenance costs and decreased fuel economy and
              performance.

              Letters:

              American Lung Association (IV-D-270) p. 19
              Engine Manufacturers Association  (IV-F-174)
              Onyx Environmental Services (Gavendi)  (IV-F-190) p. 62
              Phillips Petroleum Company  (IV-D-250) p. 6

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       (6)     Implementation of a single national low sulfur diesel fuel would eliminate most
              misfueling concerns, the need for a vehicle labeling mandate and awkward
              and expensive nozzle and inlet restricter requirements, and the need for a
              separate distribution, storage, and retail system. A single national standard
              will also result in significant emissions benefits for engines designed to meet
              those standards as well as for nonroad diesel engines. A single national
              sulfur standard would also facilitate the retrofitting  of existing engines and
              would enable the introduction of clean and efficient advanced light duty
              diesels.

              Letters:

              National Automobile Dealers Association  (IV-D-280) p. 3

       (7)     Without a national standard, the potential exists for having different fuel
              standards  in different parts of the  country.  It would not be practical to allow
              two types of diesel fuel in the market.  This would significantly delay the
              benefits of the proposed rule by making the lower sulfur fuel more expensive
              to produce and distribute.

              Letters:

              Children's  Environmental Health Network (IV-D-244) p. 3
              Swift Transportation Company (IV-D-263) p. 1

       (8)     Implementation of low-sulfur fuel nationwide would allow for the effective
              application of emission control technologies to diesel vehicles, would help
              prevent misfueling and the impaired functioning and  failure of pollution control
              devices due to use of higher sulfur fuel, and would help ensure a reliable,
              stable supply of clean diesel fuels throughout the U.S.  A nationwide standard
              would also provide  an incentive for improvements in the performance of
              HDVs currently in use.

              Letters:

              NYCDEP  (IV-D-209) p. 2
              DAW (IV-D-215)p. 4-6

       (9)     Application of the diesel standards only in nonattainment areas would  result
              in urban sprawl as industries flee nonattainment areas.

              Letters:

              City of Chicago (IV-D-240) p. 4

       (10)    A uniform fuel standard is important for national parks'  air quality across the
              nation. There are 140 NPS units in 27 States in various areas of the country
              that are located in ozone (1-hror8-hr) nonattainment areas, based on 1997-
              99 data.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-10

              National Park Service (IV-D-180) p. 3

       (11)    Low sulfur fuel across the nation is important to encourage the use of new
              technologies, such as direct fuel injection or fuel cells, in production vehicles
              because these technologies will require low sulfur fuel.

              Letters:

              National Park Service (IV-D-180) p. 4-5

       Response to Comment 4.1(C)(1)-(11):

       We believe it is necessary that highway diesel fuel must be available nationwide and
year-round which meets the 15 ppm sulfur limit. To relax this requirement would jeopardize
many of the environmental benefits of the program. Although the NOX reduction impact on
ozone tends  to be  concentrated in the warmest summer months, PM and air toxics benefits
are realized year-round.  Moreover, the exhaust emission control devices require low-sulfur
diesel fuel year-round. The use of highway diesel fuel with a sulfur content greater than 15
ppm could damage the emission control technology of 2007 and later model year vehicles
and engines.  Once vehicles are equipped with the new exhaust emission control devices,
they can only be fueled with the low-sulfur fuel.  This precludes any consideration of a
seasonal program. In addition, because diesel vehicles travel across the country transporting
goods from region to region and state to state, low-sulfur diesel fuel will have to be available
nationwide. The health effects associated with diesel PM emissions are not area-specific,
nor are the adverse effects of high sulfur diesel on engines with  exhaust emission control.
For these reasons, we do not believe that any regional or seasonal exemptions from the
requirements of the low sulfur diesel fuel program are practical.  We have incorporated some
transitional provisions at the start of the program which will allow for the continued production
of limited amounts of SOOppm highway diesel fuel. These provisions, however, have been
designed in a way so as not to undermine the availability of 15ppm diesel fuel nationwide for
the new vehicles that are required to use it.

(D)    Specifically expressed opposition to the refining industry's proposal to cap
       diesel sulfur at 50 ppm because that degree of desulfurization will not allow
       car/engine manufacturers to achieve the proposed emission  reductions.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Congress of the United States  (IV-D-294) p. 4
              Environmental Law & Policy Center of the Midwest  (IV-F-6)
              Sherman, Scott (IV-F-190) p. 87

       Response to Comments  4.KDH1):

       See our Response to Comments 4.2(B), (C), and (D), below.

       (2)     Commenters asserted that sulfur is a poison that blocks the use of after-
              treatment technology by  rendering the hardware inoperable at higher sulfur
              levels and that a very low level of sulfur in diesel fuel is critical for the future
              development of effective after-treatment technologies. Some added  that only

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-11

             very low sulfur fuel will permit catalyst-based control strategies to be
             optimized for maximum emission reduction efficiencies.

             Letters:

             Alliance of Automobile Manufacturers (IV-F-9)
             American Truck Dealers Line Representative Committee (IV-F-191) p. 126
             CA Trucking Association (IV-D-309) p. 6-7
             DaimlerChrysler  (IV-F-15, 116) p. 292 (IV-F-117) p. 96 (IV-F- 191) p. 173
             Engine Manufacturers Association  (IV-F-33, 116) p. 43 (IV-F-, 117) p. 39 (IV-
             F-191) p. 39
             GA Public Interest Research Group  (IV-F-117) p. 43
             Manufacturers of Emission Controls Association  (IV-F-26, 117) p. 89 (IV-F-
             191) p. 120
             Natural Resources Defense Council (IV-D-168) p. 3, (IV-F-75, 190) p. 98 (IV-
             F- 191) p. 68
             STAPPA/ALAPCO (IV-F-32,  117) p. 29 (IV-F-191)  p. 32
             U.S. PIRG  (IV-F-71)
             Union of Concerned Scientists (IV-F-165)
             Wl DNR (IV-F-25)

       Response to Comments 4.1(D)(2):

       See our Response to Comments 4.2(B), (C), and (D).

       (3)    At 50 ppm,  the reliability and durability of the filter technology will be
             compromised.

             Letters:

             Environmental Defense (IV-D-346) p. 10
             Environmental Law and Policy Center (IV-D-331) p. 4
             Manufacturers of Emission Controls Association  (IV-F-26, 116) p. 47 (IV-F-
             117) p. 89 (IV-F-191)  p. 120

       Response to Comments 4.KDH3):

       See our Response to Comments 4.2(B), (C), and (D).

       (4)    One commenter added that any work currently underway for the NOX
             adsorber technology will cease if a 50 ppm sulfur standard is imposed since
             the feasibility and  effectiveness of this technology is dependent upon  a very
             low-sulfur fuel. Others noted generally that levels higher than the proposed
             15 ppm sulfur cap could derail the deployment of NOX reduction technologies
             that are necessary to  meet the proposed standards.

             Letters:

             DaimlerChrysler  (IV-D-284) p. 5
             Kotgal, Kalpana (IV-F-192) p. 17
             Manufacturers of Emission Controls Association  (IV-F-26, 116) p. 47 (IV-F-
             117) p. 89 (IV-F-191)  p. 120

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DECEMBER 21, 2000	PAGE 4-12

       Response to Comments 4.KDH4):

       See our Response to Comments 4.2(B), (C), and (D).

       (5)     The use of a NOX adsorber with 50 ppm fuel is only about 20 percent efficient
              but with 15 ppm fuel, the adsorber becomes 90 percent efficient.

              Letters:

              International Truck & Engine Corp. (IV-F-27, 34, 117) p. 109 (IV-F-191) p. 99

       Response to Comments 4.KDH5):

       We have not estimated the NOX reduction efficiency of a NOX adsorber when
operated on  50 ppm sulfur diesel fuel, because we do not believe that the technology would
function properly over its full useful life if operated on 50 ppm sulfur fuel.  We do agree with
the commenter, that diesel fuel sulfur levels higher than 15 ppm will lead  to a significant
decrease in NOX adsorber efficiency.  In addition, higher sulfur diesel fuel would adversely
impact engine fuel economy if the adsorber had to be desulfated frequently enough to
maintain the  NOX performance (refer to Section 3.F of the preamble or Chapter III.A.7 of the
RIA for more information).

       (6)     Diesel fuel at 50 ppm will reduce the  durability and longevity of diesel
              engines.

              Letters:

              International Truck & Engine Corp. (IV-F-27, 34, 117) p. 109 (IV-F-191) p. 99

       Response to Comments 4.KDH6):

       See our Response to Comments 4.2(B), (C), and (D).

       (7)     European countries are using different formulations ranging from 10 ppm
              (Sweden) to 50 ppm (Finland) sulfur. Data have demonstrated that no
              failures in emission control technology was found in the lowest sulfur levels
              but, in areas with higher diesel fuel sulfur content near 50 ppm, the failure
              rate was 10% for areas with cold temperatures similar to the U.S. One
              commenter also cites to examples in California to support their assertion that
              the emission control technologies are effective only with sulfur levels below
              15 ppm. Higher levels of sulfur in the fuel (25-50 ppm) result in additional ash
              buildup, primarily as a result of the metallic oil additives used to neutralize
              sulfuric acid produced as a byproduct of burning fuel that  contains sulfur.

              Letters:

              CA Trucking Association (IV-D-309)  p. 6-7
              Manufacturers of Emission Controls Association (IV-F-26, 116) p. 47 (IV-F-
              117) p. 89 (IV-F-191) p. 120

       (8)     Like Sweden, Germany has put in place measures to achieve a 10 ppm low
              sulfur diesel fuel level by January 1, 2003.  Germany is pressing the

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-13

              European Parliament to follow its lead by 2005. In both Germany and Japan,
              progress toward producing low sulfur diesel has been based on joint
              agreements between the vehicle manufacturers and the oil makers. Another
              commenter also cited German government statement in a recent petition to
              the EC in support of low sulfur fuel.

              Letters:

              American Lung Association (IV-D-270) p. 21-22
              Environmental Defense (IV-D-346) p. 11

       Response to Comments 4.1(D)(7) and (8):

       As discussed in chapter III of the RIA, we have incorporated data and information
from around the world in our analysis of the need for a 15ppm sulfur cap. Generally, these
comments provide added justification and support for the low sulfur diesel fuel program.
While actions taken abroad may serve to support the validity of our final rule, our standards
must be based on their own merits.

(E)    The 15 ppm fuel sulfur standard  as proposed is far too stringent and costly.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Ergon & Lion Oil Co.  (IV-F-117) p. 183
              Placid Refining Company, LLC (IV-D-230) p. 1

       Response to Comment 4.KEH1):

       See our Response to Comments 4.2(B), (C), and (D), below.

       (2)     Many of these commenters expressed support for the refining industry's
              proposal to reduce sulfur levels in diesel fuel to 50 ppm instead of the 15 ppm
              level as proposed by EPA.  Some noted that a 50 ppm standard would cost
              half as much as EPA's proposed 15 ppm fuel sulfur standard, but still would
              result in significant environmental benefits. These commenters argued that
              the additional capital cost to reach a 15 ppm sulfur level in diesel fuel is not
              worth the incremental environmental benefit that would  be achieved. Some
              also noted that the prohibitively high costs of the retrofit will force many
              refiners to forego the highway diesel market, resulting in supply reductions
              and price volatility. One commenter suggested that EPA should set the
              standard at a level that is within the capability of every refinery,  rather than
              that which might be achievable in an average refinery. Another commenter
              specifically noted that EPA should withdraw the rule unless a 50 ppm cap is
              finalized as the diesel fuel standard. A commenter claims that the sulfur
              levels required by the proposal have not been produced in large quantities
              and will be particularly difficult because of the relatively  high-sulfur petroleum
              feedstocks typically available in the U.S.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-14

             Agricultural Retailers Association, et. al.  (IV-D-148) p. 1
             Agricultural organizations as a group (IV-D-265) p. 2
             American Bus Association  (IV-D-330) p. 3
             American Farm Bureau Federation  (IV-F-5)
             American Petroleum Institute (IV-D-343) p. 41-42, (IV-F-16)
             CA Trucking Association (IV-F-190) p. 38
             CO Petroleum Association  (IV-D-323) p. 3
             Cenex Harvest States Cooperatives (IV-D-232) p. 1,12, (IV-F- 191) p. 102
             Citgo Corporation (IV-D-314) p. 7
             Coal Operators & Associates, Inc.  (IV-D-64) p. 1
             Cooperative Refining, LLC  (IV-D-300) p. 2-3
             Countrymark Cooperative (IV-D-333) p. 2-6, (IV-F-30, 117) p. 74 (IV-F-191)
             p. 184
             Equiva Services (IV-D-226) p. 3
             Ergon & Lion Oil Co. (IV-F-117) p. 183
             ExxonMobil  (IV-D-228) p. 2, 5, (IV-F-800)
             Farmland Industries (IV-F-29)
             Food Marketing Institute (IV-D-283) p. 2
             ID Barley Commission  (IV-D-312) p. 1-2
             Independent  Fuel Terminal Operators Association  (IV-D-217) p. 3-4
             Johnson Petroleum, Inc. (IV-D-17) p. 1
             Kentuckians for Better Transportation  (IV-D-16) p. 1
             Koch Industries  (IV-D-307) p. 7-9
             MN Chamber of Commerce (IV-D-28) p. 1
             Marathon Ashland Petroleum (IV-D-261) p. 7,19, 55, (IV-F-74)
             NATSO  (IV-D-246)  p. 8, (IV-F-17)
             NE Farm Bureau Federation (IV-D-153) p. 1
             NY Assoc. of Service Stations & Repair Shops (IV-F-45)
             National Association of Convenience Stores (IV-F-191) p. 168
             National Council of Farmer Cooperatives  (IV-D-351) p. 3
             National Grain and Feed Association (IV-D-301) p. 1
             National Petrochemical & Refiners Assoc./CITGO (IV-F-117) p. 101
             National Petrochemical & Refiners Association (IV-D-218) p. 2,17,15,19,
             (IV-F-31,44)
             National Ready Mixed Concrete Association (IV-D-271) p. 2
             PA Association  of Milk Dealers  (IV-D-23) p. 1
             Perfection Oil Company (IV-D-41)  p. 1
             Phillips Petroleum Company (IV-D-250) p. 3
             Remster, John  (IV-F-28)
             Society of Independent Gasoline Marketers of America (IV-D-328) p. 1,3-5
             U.S. Chamber of Commerce (IV-D-329)  p. 1, 4
             Ultramar Diamond Shamrock Corporation  (IV-F-191) p. 136
             WY Refining  Company  (IV-F-191) p. 58
             Welsh, Inc. (IV-D-22) p. 1
             Western Independent Refineries Association (IV-F-190) p. 144)

       Response to Comment 4.1(E)(2):

       As discussed in  Chapter III of the RIA, we do not believe that the diesel
aftertreatment technology would function properly over its full useful life if operated on diesel
fuel with a sulfur concentration  higher than 15 ppm. As discussed in detail in Section V of the

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DECEMBER 21, 2000	PAGE 4-15

preamble and Chapters VI and VII of the RIA, we believe that the low sulfur diesel fuel
program we have designed is cost-effective. Furthermore, we project that the monetized
benefits of the program will exceed the costs by a wide margin.

       In Chapter V of the  RIA, we discussed our cost analysis for every domestic refinery to
produce 15 ppm sulfur diesel fuel.  In this analysis, we accounted for the variety of crude oil
feedstocks typically available in the U.S., some of which are very sour (i.e., they contain a
relatively high sulfur content). Specifically, we used this information to project the requisite
size reactor and hydrogen consumption for each refinery.  We concluded that the 15 ppm
sulfur standard is reasonable and appropriate. Specifically, we project the average refining
cost will be 4.3 cents per gallon after 2010. The maximum cost for any refinery is only
projected to be five to seven cents per gallon depending on a given refinery's PADD location
and allowing for the market to realign itself for production of highway vs.  off-highway diesel
fuel.  In addition, we concluded that refiners that exit the highway diesel market would face a
much lower value for their diesel fuel if the supply of nonroad diesel fuel  exceeds its
projected demand.  Thus, we believe most refiners will choose to invest in new equipment or
revamp old hydrotreating equipment to produce 15 ppm sulfur fuel.  Based on all information
available to us, we project that 20 percent of diesel fuel production will come from grassroots
units and 80 percent from revamped units.  In Issue 8.1.1, we address the refining industry's
ability to recover the costs associated with the low sulfur diesel fuel program. In essence,
cost recovery will depend upon overall supply and demand for highway diesel fuel which
cannot be predicted without uncertainty.  At the same time, no evidence was presented which
indicates that the industry will not be able to recoup the projected costs.  We have
established the need and emission benefits anticipated by the vehicle and engine emission
reductions enabled by highway diesel fuel capped at 15 ppm.  Both the preamble and the
RIA make this case. Additional discussion of issues considering the need and benefits of
this rule are included under Issue 2 of this document.

       We did not analyze the benefits of a 50 ppm sulfur cap program.  As described  in the
RIA, we have concluded that our standards are not feasible with a sulfur level of 50 ppm.
See our responses to Issue 3.3.1 and Issue 5.10(C)(11).

       We reviewed the report by UOP noted by the commenter as well as other reports by
UOP and studies (including confidential business information) provided by UOP to the
National Petroleum Council (NPC) and MathPro Inc. Our evaluation of these UOP materials
is reflected in our refinery cost analysis.

       (3)     One commenter noted that according to a  recent study (not specified), the
              most advanced vehicle emissions reduction technology known to be effective
              reduces emissions about the same with diesel fuel at either 50 ppm or 15
              ppm.

              Letters:

              American Petroleum Institute (IV-F-42,182, 117) p. 161 (IV-F-191) p. 114

       (4)     Commenters argued that a 50 ppm cap would enable diesel engines to  meet
              the proposed PM standards and also achieve significant  NOX reductions.

              Letters:

              American Petroleum Institute (IV-F-16, 42, 182, 117) p. 161 (IV-F-191)  p.

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              114
              Marathon Ashland Petroleum  (IV-D-261) p. 19, (IV-F-74)
              National Petrochemical & Refiners Assoc./CITGO  (IV-F-117) p. 101
              National Petrochemical & Refiners Association (IV-F-31, 44)

       Response to Comments 4.1(E)(3) and (4):

       See our Response to Comments 4.2(B), (C), and (D), below.

       (5)     In considering the viability and potential benefits of 50 ppm sulfur fuel, EPA
              has ignored viable aftertreatment technology such as SCR, and has
              overstated the sulfur sensitivity of other technology. A 30/50 specification
              would result in virtually identical emissions  reductions as those  projected by
              EPA for a 15 ppm cap. The cost effectiveness of a 30/50 specification is
              clearly better than that of EPA's proposal.  Commenter provides additional
              data and discussion on this issue including comparative projections to 2030.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 11, 51-52
              Marathon Ashland Petroleum  (IV-D-261) p. 54-55

       Response to Comment 4.1(E)(5):

       As described in more detail  in our responses to comments 2.4(G), 3.2.1(J), and
3.5(A) through  (D) and the RIA, we  do not believe that Urea SCR will be capable of achieving
the standards finalized today with a 50ppm sulfur cap on diesel fuel as the commenter
suggests.  Furthermore, we do not believe that Urea SCR will be a generally available
technology in the 2007 timeframe due to the significant compliance issues associated with
the technology.

       (6)     Commenters noted that the small differences in ambient concentrations  of
              diesel exhaust resulting from a 50 ppm versus a 15 ppm sulfur  cap will have
              no significant health benefits.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 12
              Marathon Ashland Petroleum  (IV-D-261) p. 7, 55

       Response to Comment 4.1(E)(6):

       We did not analyze the health benefits associated  with a diesel fuel sulfur cap higher
than  15 ppm. However, as documented in our proposal, the level of emission reductions
expected by  this rule can only be achieved by diesel fuel capped at 15 ppm. Feasible
emission reductions with a 50 ppm fuel would be much less and by extension,  the health
benefits would  be correspondingly less. For the reasons discussed in Section  III of the
preamble and Chapter III of the RIA, we do not believe that the diesel aftertreatment
technology would function properly  over its full useful life if operated on 50 ppm sulfur fuel.
The technology, which requires low sulfur diesel fuel (with  no more than 15 ppm sulfur), will
be needed by new engines and vehicles for them to meet the emission standards which take
effect in 2007.  Without these  standards, the important air  quality benefits of the program

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DECEMBER 21, 2000	PAGE 4-17

would not be achieved. As described in the preamble, our 15 ppm diesel sulfur program and
the associated engine standards do not go too far as evidenced by the fact that there will still
be some concerns with ozone and PM ambient concentrations even after our program is
implemented.

       (7)     One commenter referenced all supporting information and documentation that
              it has already submitted to EPA during the development stages of this
              proposed rule and notes that EPA should take all of this information into
              serious consideration.

              Letters:

              American Petroleum Institute  (IV-F-182, 117) p. 161

       Response to Comment 4.1(E)(7):

       See our Response to Comments 4.2(B), (C), and (D), below.

       (8)     The costs of imposing a 15 ppm standard will be excessive in relation to the
              environmental benefits, and this standard as proposed will result in higher
              fuel prices and fuel shortages.

              Letters:

              American Petroleum Institute  (IV-F-16)
              Cenex Harvest States Cooperatives (IV-F- 191) p. 102 (IV-F-191) p. 232
              Conoco  (IV-F- 191) p. 154
              Cooperative Refining, LLC (IV-D-300) p. 2
              Countrymark Cooperative (IV-F-30)
              Gary-Williams Energy Corporation (IV-F-43)
              NY Assoc. of Service Stations & Repair Shops (IV-F-45)
              National Petrochemical & Refiners Association (IV-F-44)
              Paramount Petroleum Corp.  (IV-F-190) p. 168)
              Petroleum Marketers Association of America (IV-F-67)
              Ports Petroleum Co, Inc.  (IV-F-117) p. 190
              Society of Independent Gasoline Marketers  of America  (IV-F-191) p. 196
              U.S. Oil & Refining Co. (IV-F-190) p. 159
              Western Independent Refiners Association  (IV-D-273) p. 2-3

       (9)     Commenters state that EPA has underestimated the refinery processing
              changes needed to produce 15 ppm sulfur diesel fuel, since EPA's estimates
              are based on refining technology and catalyst vendors who underestimate
              reactor severity and the catalyst activity necessary to make low-sulfur fuel.
              Specifically, the hydrogen consumption required to hydrotreat typical diesel
              stocks containing 20-40% light catalytic cycle oil, and achieve 5-10 ppm
              sulfur, is on the order of several hundred standard cubic feet per barrel more
              than estimated by the  vendor.  Math Pro's predictions for production of very
              low sulfur diesel are based on confidential, overly optimistic catalyst
              performance estimates by the catalyst vendors, and in reality will cost twice
              EPA's estimate of 4.0  cents per gallon. Moreover, the costs of desulfurizing
              nonroad diesel could add to those cost estimates.

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              Letters:

              American Petroleum Institute (IV-D-343) p. 41-42
              Marathon Ashland Petroleum (IV-D-261) p. 37-38, 94

       Response to Comments 4.1(E)(8) and (9):

       Our responses to comments on price spikes and shortages are covered in Issue
8.1.1, below. Regarding the technology, hydrogen, and nonroad issues, the commenters did
not present any technical information along with their comments.  We considered all
available information on these issues in our refining cost analysis which is described in detail
in ChapterV of the RIA. As discussed in  Issue 5.10 and in chapter VII of the RIA, our
analysis of the  benefits of this rulemaking conclude that the economic benefits overwhelm
the costs.
       (10)    Commenters asserted generally that EPA has based the proposed fuel sulfur
              standard on engine and vehicle standards that are arbitrary and potentially
              unattainable.

              Letters:

              Citgo Corporation (IV-D-314) p. 5
              Countrymark Cooperative (IV-D-333) p. 6
              National Petrochemical & Refiners Assoc./CITGO (IV-F-117) p. 101
              National Petrochemical & Refiners Association  (IV-F-31, 44)
              Swain, Edward (IV-D-162) p. 1-2

       Response to Comment 4.1(E)(10):

       See our Response to Comments 4.2(B), (C), and (D), below.

       (11)    Commenter notes that manufacturers are unable to meet the proposed NOX
              standard with fuel containing zero sulfur; therefore, EPA cannot justify a 15
              ppm standard as a basis for enabling NOX adsorbers.

              Letters:

              ExxonMobil (IV-D-228) p. 6

       Response to Comment 4.1 (E)(11):

       As described in more detail in Chapter III of the RIA and in our response to comment
3.2.1 (C), we project that the diesel aftertreatment technology will be generally available and
effective, contingent upon the availability of 15 ppm sulfur diesel fuel.

       (12)    Commenters proposed a 30 ppm sulfur content (some of which indicated this
              should be an average) as a balance struck between refinery issues and
              control technology issues.  Below a 25 ppm standard, production and
              retrofitting costs increase dramatically, while production decreases. A 30
              ppm standard has no measurable impact on fuel economy or the ability of
              technology to meet the proposed emission standards.

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             Letters:

             Equiva Services  (IV-D-226) p. 3
             Kern Oil & Refining Co.  (IV-D-310) p. 2, 4-5, (IV-F-173)
             Paramount Petroleum Corp.  (IV-F-190) p. 168
             U.S. Oil & Refining Co.  (IV-F-190) p. 159
             Western Independent Refineries Association (IV-F-190) p. 144

       Response to Comment 4.1(E)(12):

       See our Response to Comments 4.2(B), (C), and (D), below.

       (13)   One commenter suggested that if engine manufacturers can meet the
             proposed emissions limits with today's control technologies, EPA should
             challenge them to develop controls which function on fuels with 30 ppm sulfur
             content.

             Letters:

             U.S. Oil & Refining Co.  (IV-F-190) p. 159

       Response to Comment 4.1(E)(13):

       We have set the emission standards based upon the substantial air quality need for
emission reductions, primarily NOx and PM. These reductions can be achieved through the
enablement of advanced emission control technologies which are necessary to meet the
phase 2 standards for heavy-duty highway engines and vehicles. More discussion on this
issue can be found above in our  response to issue 3.2.1 (D), 4.2(B)-(D), and section III.F. of
the preamble. See also responses to comments under Issue 8.1 regarding impacts on small
refiners in particular.

       (14)   One commenter supported a 25 ppm standard, which would result in no
             differences in NOX emissions when compared to a 15 ppm standard.  The
             commenter noted that the slightly reduced PM benefits with the higher sulfur
             option can easily be compensated by reducing nonroad diesel fuel sulfur
             levels.

             Letters:

             Chevron (IV-D-247) p. *2,1, 3

       Response to Comment 4.1(E)(14):

       See our response to comment 4.1 (E)(6).

       (15)   The 15 ppm standard is subject to legal challenge because the SBREFA
             process did not focus upon a 15 ppm goal and therefore did not meet the
             requirements of Section 609.

             Letters:

             Western Independent Refineries Association (IV-D-273) p. 4-8, (IV-F-190) p.

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              144

       Response to Comment 4.1(E)(15):

       The SBREFA process was conducted prior to the selection of any specific sulfur
standard. However, the stated expectation throughout the SBREFA process was that the
sulfur standard would fall between 5ppm and 50ppm. Since the final 15ppm standard is less
stringent than the most stringent level considered in the SBREFA process, we do not believe
that the commenters legal arguments are valid. See response to  Issue 12.1 (A).

       (16)    The cost of applying the appropriate technologies  to meet the proposed 15
              ppm sulfur cap for diesel fuel remains controversial, particularly since it is
              likely to be very high. The refining industry has indicated that they will need to
              make major new investments to meet the standard and that several of these
              companies will not be able to recover their costs and as a result will decide
              not to make  the necessary investment. EPA has assumed that refiners will
              be able to meet the standard through retrofitting existing facilities, which may
              not be the case.  EPA should consider the refining industry's proposal to cap
              sulfur at 50 ppm since it may be more cost-effective.

              Letters:

              Mercatus Center at GMU  (IV-D-219) p. 15-16, 32-33

       (17)    Commenter provides supplemental documentation establishing that the  15
              ppm standard is prohibitively expensive and that the quality of crude oil is on
              the decline.  Commenter suggests EPA contact UOP and obtain a copy of
              "Diesel  Fuel Specifications and Demand  for the 21st Century."

              Letters:

              Swain, Edward (IV-D-162) p. 5-49

       Response to Comments 4.1(E)(16) and (17):

       See our response to comment 4.1 (E)(2).

       (18)    EPA's proposal does not make a convincing case  that it is feasible for refiners
              to produce 15 ppm diesel in  the quantities needed nationwide and added that
              these concerns are heightened in the west since there  is a greater reliance on
              small refiners and since large quantities of highway diesel are used. New
              diesel standards will require  most of the distillate pool in the west to meet the
              15 ppm standard and to supply this demand, western refiners will be forced to
              treat cracked diesel stocks, which are the most difficult and expensive
              streams to treat.  Western refiners also have fewer outlets such as home
              heating oil for off-specification product.

              Letters

              Western Governors'Association (IV-G-41), p. 2

       Response to Comments 4.KEH18):

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RESPONSE TO COMMENTS DOCUMENT
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       We believe that the low sulfur diesel fuel program, which includes a temporary
compliance option, hardship provisions, and flexibility for Rocky Mountain refiners, will
ensure that low sulfur diesel fuel will be in sufficient supply and widely available in 2006. We
agree with the commenters that refineries supplying fuel to the Geographic Phase-in Area
(GPA) tend to be disproportionately challenged compared to other refiners with respect to
capital formation, the availability of engineering and construction resources, and the isolated
nature of many of the markets. Moreover, the introduction  of low sulfur highway diesel fuel in
June 2006 overlaps with the conclusion of the interim low sulfur gasoline standards for GPA
refiners.

       As described in the preamble, we have concluded that it is appropriate to grant
additional flexibility to refiners that supply gasoline to the GPA while also meeting the low
sulfur diesel standards. Additional flexibility for GPA refiners will allow them to spread out
their capital investments for producing low sulfur gasoline and highway diesel fuel. In light of
the above, we are  modifying the GPA gasoline program while still achieving significant
environmental benefits. We expect this provision will have little or no long-term impact on the
environmental benefits of the Tier2/Gasoline Sulfur program, while providing for
considerable near-term implementation flexibility and improved feasibility of the highway
diesel fuel program.

       GPA refiners that produce both gasoline and highway diesel fuel and are subject to
the Tier 2/Gasoline Sulfur program may choose to stagger their desulfurization investments
for the two fuels.  Refiners that comply with the low sulfur diesel fuel standard by June 1,
2006 for all of their highway diesel fuel production may receive a two-year extension  of their
interim GPA gasoline standards for 2006, that is until December 31, 2008.  In addition to
allowing refiners the  opportunity to spread out their desulfurization investments, we believe
this provision will encourage the production of 15  ppm diesel fuel by some refiners in and
near the GPA, which will further help to ensure the new fuel is widely available for new
vehicles throughout the area. See also responses to comments under Issue 8.1 regarding
the ability of refiners  to provide adequate supply of 15 ppm sulfur diesel fuel.

(F)    EPA should set the sulfur standard at a level that would not adversely affect the
       supply of diesel fuel.  (See related comments under Issue 8.1.1.)

       (1)     EPA  should set a sulfur standard only after ensuring that this standard would
              not reduce diesel fuel supplies. Commenters do not specifically recommend
              any particular sulfur level but note that considerations associated with the
              need to supply consumers with diesel fuel at a reasonable cost supports the
              adoption of a higher sulfur standard.

              Letters:

              New  England Fuel Institute (IV-D-296) p. 1-3
              Reusable Industrial Packaging Association  (IV-D-129) p. 1

       Response to4.1(F):

       See response to 4.1(E)(8) and (9).

(G)    It is unreasonable for EPA to propose a 15 ppm diesel fuel sulfur standard that
       will require substantial capital investment, based on control technologies that
       have not been field tested or proven.

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DECEMBER 21, 2000                                                     PAGE 4-22
       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Cenex Harvest States Cooperatives  (IV-F-191) p. 232
              Independent Fuel Terminal Operators Association (IV-D-32) p. 2-3
              Marathon Ashland Petroleum  (IV-F-74)

       (2)     Preliminary tests sponsored by both the industry and the government
              demonstrate that after-treatment technologies have not cut emissions to
              desired levels regardless of the sulfur content of fuels.

              Letters:

              American Petroleum Institute  (IV-F-16, 42, 182, 117) p. 161  (IV-F-191) p.
              114
              Marathon Ashland Petroleum  (IV-D-261) p. 2

       (3)     EPA is requiring the addition of aftermarket treatment devices that are not
              necessarily being developed by the engine manufacturers. The engine
              manufacturers will pay the price if the aftermarket devices are not able to
              meet the standard and subsequently, consumers, farmers, and retailers will
              pay higher prices for vehicles as a result.  The commenter specifically
              suggests that EPA withdraw the rule  and reconsider the technological
              advancements they are requiring as well as the resulting costs to the
              consumer.

              Letters:

              Agricultural Retailers Association (IV-D-178) p. 3-4
              North American Equipment Dealers Association  (IV-D-194) p. 3-4

       (4)     Commenter believes that small refiners should have an ongoing exemption
              until the aftertreatment technologies (and the ability of the fuel distribution
              system to deliver 15 ppm fuel) have been proven. See Issue 8.5.2, Point (G).

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 10-11

       (5)     EPA has not provided any legitimate  basis for a 15 ppm standard as opposed
              to a 30 or 50 ppm standard.

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 12

       (6)     EPA has justified the need for the deep reductions in diesel sulfur content
              based on  control technologies that have yet to be proven to be technologically
              feasible in the field or even commercially viable.  In  this regard, EPA's
              proposal is too ambitious. The proposed sulfur level may have an adverse

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-23

              impact on fuel prices and supplies, which would affect businesses that rely on
              diesel vehicles.

              Letters:

              AL Farmers Federation (IV-D-206) p. 1
              Coal Operators & Associates, Inc.  (IV-D-64) p. 1
              ExxonMobil (IV-D-228) p. 1
              IN Builders Association (IV-D-208) p. 1
              IN Retail Council (IV-D-211) p. 1-2
              KS Cooperative Council (IV-D-187) p. 1
              MD Farm Bureau (IV-D-192) p. 1
              MFA Oil Company  (IV-G-16) p. 1
              Ml  Petroleum Assoc./MI Assoc. of Convenience Stores  (IV-D-202) p. 1
              Mid-Atlantic Petroleum Distributors' Association (IV-D-124) p. 1
              OH Trucking Association (IV-D-190) p. 1
              Service Station Dealers of America  (IV-D-253) p. 1
              VA Aggregates Association  (IV-D-177) p. 1
              VA Agribusiness Council (IV-G-1) p. 1
              VA Trucking Association (IV-D-191) p. 1
              Wl Motor Carriers Association (IV-D-189) p. 1

       (7)     EPA has failed to show that engine and emission control technologies will be
              in place by 2007 that can deliver the greater than 90 percent emission
              reductions driving the need for ultra-low sulfur diesel fuel. For example, EPA
              notes that SCR could be adapted for use in vehicles yet admits that
              significant challenges remain for compact SCR systems. EPA cannot make
              the case that SCR will be available,  proven, and reliable by 2007.  Similar
              problems confront other vehicle emission control technologies such as NOX
              adsorbers, sulfur traps, and  catalyzed particulate filters. These technologies,
              while promising, remain uncertain.

              Letters:

              U.S. Chamber of Commerce (IV-D-329) p. 4

       Response to Comment 4.1(G)(1)-(7):

       We believe the emission control technologies enabled by 15 ppm sulfur diesel fuel
will be able to function properly through the useful life  of the vehicles and engines and will
allow the vehicles and engines to meet the standards being adopted today.  For a discussion
of and response to these issues the reader  is referred to section III of the preamble, Chapter
III of the RIA, and issue 3.2.1 (C). Specific aspects of comments (G)(2) and (G)(7) were
previously discussed in the Response to Comments 4.1(E)(11) and 4.1(E)(5), respectively.
For specific aspects of comment (G)(5), see our Response to Comments 4.2(B), (C), and (D)

(H)    EPA should adopt a higher fuel sulfur standard to encourage engine
       manufacturers to develop sulfur-resistant technology and thereby avoid the
       high costs and adverse environmental consequences of severe
       hydrodesulfurization.

       (1)     Small  refiners especially will face high costs because they typically run single

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-24

              refining trains and thus are more sensitive to producing off-spec fuel. Severe
              hydrodesulfurization requires high energy consumption and contributes
              significantly to greenhouse gas emissions. The stringent specification also
              discourages investment in alternative technologies that might be more
              environmentally friendly.

              Letters:

              Petro Star Inc. (IV-D-216) p. 4-5

       Response to Comment 4.KH):

       For a discussion of and response to these issues the reader is referred to the
response to comment4.1(E)(13) and4.1(G) above. In addition, given the requirements of
the new vehicles to be operated on 15ppm fuel or less, higher sulfur levels cannot be used in
these new vehicles.  However, given the disproportionate impact on small refiners, we are
allowing them,  among other things, to continue the production of SOOppm sulfur highway
diesel fuel for several years as long as the fuel is not sold for use in 2007 and later model
year vehicles.

(I)     Expressed support for a  national fuel sulfur level that is lower than 15 ppm.

       (1)     Commenters expressed support for a 5 to 10 ppm sulfur diesel fuel and some
              specifically expressed support for the "sulfur-free" fuel as defined by the
              Worldwide Fuel Charter (WWFC).  Commenters provided significant data and
              discussion regarding the benefits to NOX conversion efficiency if sulfur levels
              are reduced below 15 ppm, and some noted specifically that EPA should
              finalize a diesel fuel specification that is identical to the WWFC Category 4
              requirements (a summary of these requirements is provided by
              DaimlerChrysler as an attachment to their letter). These commenters note
              that the WWFC standards would also set limits for fuel cetane and aromatics
              (see also  Issue 4.9), which would preserve a diesel  powertrain option for the
              light-duty  passenger vehicle market. One commenter provided a detailed
              report [AECA Data of the  Sulfur Effect on Advanced Emission Control
              Technologies, July 2000]  that summarizes the effects  of higher sulfur fuel on
              aftertreatment technologies and supports the assertion that near-zero sulfur
              diesel fuel would be the most desirable option.  Another commenter provided
              the DOE report "Impact of Diesel Fuel Sulfur on CIDI Engine Emission
              Control Technology," August 2000, as supporting documentation. This
              document includes data and discussion on engine test results, which
              compare the effectiveness of emission reduction given varying levels of diesel
              fuel sulfur. Other commenters also provide  significant discussion and data
              regarding the need for ultra low sulfur fuel given the adverse impact to various
              control technologies and specifically advocate a sulfur cap no higher than 5
              ppm.  (See also Issues 3.3.1  and 3.3.2.)

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 1-4,  (IV-F-9, 59, 191)  p.
              89
              Children's Environmental  Health Network (IV-D-244) p. 2
              Cummins, Inc. (IV-D-231) p. 42-44

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-25

              DaimlerChrysler (IV-D-136) p. 1, (IV-D-284) p. 2-4, (IV-D-344) p. 1-5, +all,
              (IV-F-15, 167, 116) p. 292 (IV-F-191) p. 173
              Detroit Diesel Corporation (IV-D-276) p. 4-6
              Engine Manufacturers Association (IV-D-166) p. 1, (IV-D-251) p. 8-9,13-14
              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 35-37
              International Truck & Engine Corp.  (IV-D-257) p. 5-7
              Manufacturers of Emission Controls Association  (IV-D-267) p. 3,7-9
              Sullivan, Linda and Thullen, Angela (IV-F-23)
              U.S. Department of Energy  (IV-G-28) p. 2-3, Att. 2
              UAW  (IV-D-215)p. 2-5
              Unity & Diversity World Council (IV-F-190) p. 213
              Volkswagen (IV-D-272) p. 1-2

       (2)     The sulfur level in diesel fuel needs to be lower than 15 ppm in order to allow
              manufacturers to meet the Tier 2 standards for light duty vehicles (see also
              Issue 9). One commenter (VW) provides significant discussion on this issue
              and asserts that EPA has failed to demonstrate that the high efficiencies
              necessary to comply with the Tier 2 standards can be maintained for the
              useful life of the technologies with a 15 ppm sulfur diesel fuel.  Another
              commenter noted that there is emerging data from DOE research that
              supports the view that this "sulfur-free" standard is needed for diesel vehicles
              to meet the  Tier 2 standards.

              Letters:

              Alliance of Automobile Manufacturers (IV-F-59)
              Volkswagen (IV-D-272) p. +3-4

       (3)     EPA needs  to go further. The removal of as much sulfur in diesel fuel as
              possible is essential to maximizing emission reductions because without the
              removal of essentially all sulfur, advanced NOX after-treatment  devices will not
              be feasible, advanced PM after-treatment will be poisoned, and engines will
              be exposed to excessive wear and increased maintenance costs.

              Letters:

              Alliance of Automobile Manufacturers (IV-F-9)
              Association of International Automobile Manufacturers (IV-D-259) p. 1
              Detroit Diesel Corporation (IV-D-276) p. 4-6
              Engine Manufacturers Association (IV-D-251) p. 8-9, (IV-F-33, 174, 116) p.
              43(IV-F-117)p. 39
              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 35-37
              International Truck & Engine Corp.  (IV-D-257) p. 5-7
              Mack Trucks (IV-D-324) p. 3

       (4)     Continues to support a 5 ppm sulfur requirement, but believes the emission
              standards can be achieved with a 15 ppm  cap.

              Letters:

              Manufacturers of Emission Controls Association  (IV-F-26, 187, 116) p. 47
              (IV-F-117)p. 89

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       (5)    In setting the sulfur cap, EPA should consider what is happening in California
             and other parts of the world.  Europeans are already producing 10 ppm fuel
             using very modest fiscal incentives; and BP, Amoco, and ARCO announced
             that they could do so as well. The U.S. should not allow itself to become a
             "dumping ground" for fuel that cannot meet the specifications in European
             countries and should set a sulfur cap for diesel that is lower than 15 ppm.
             One commenter added that EPA has failed to acknowledge that while the
             Swedish fuel has a specified cap of 10 ppm sulfur, the average sulfur content
             of Swedish fuel is 2-3 ppm and rarely exceeds 5 ppm. This commenter
             concludes that there is no assurance that a cap of 10 ppm or 15 ppm is
             adequate to ensure reliable regeneration and that EPA should impose a 5
             ppm cap.

             Letters:

             Coalition for Clean Air (IV-F-190) p. 177
             Consumer Policy Institute  (IV-D-186) p. 6
             DaimlerChrysler  (IV-D-284) p.  4-5
             Detroit Diesel Corporation  (IV-D-276) p. 5

       Response to Comments 4.1(l)(1)-(5):

       See Response to Comments 4.1(D)(7) and (8).

       (6)    Commenters urged EPA to adopt the toughest possible standards.

             Letters:

             10th District PTA (IV-F-190) p. 262
             Domac,  Jacquiline (IV-F-190)  p. 249
             Environmental Defense  (IV-F-169)
             Friends  of the Children  (IV-F-158)
             Glendale-La Crescenta Advocates  (IV-D-80) p. 1
             Lu, Rong (IV-F-162)
             Mexican-American Legal Defense & Educational Fund  (IV-F-160)
             Sierra Club (IV-F-159)

       (7)    Commenters refers to the California Air Resources Board (CARB) report
             entitled "Proposed Risk  Reduction Plan for Diesel-Fueled Engines and
             Vehicles" dated July 13, 2000 as supporting documentation.  This report is a
             comprehensive plan to reduce diesel PM and refers to the use of a very low
             sulfur diesel fuel with a cap lower than 15 ppm. Commenter also notes that
             the South Coast Air Quality Management District (SCAQMD) is in support of
             reducing sulfur levels for all fuels and that their Proposed  Amended Rule
             431.2 would cap diesel fuel at 15 ppm by 2006 in the SCAQMD.

             Letters:

             DaimlerChrysler  (IV-D-284) p.  5-6

       (8)    EPA should consider a cap of 5 ppm since lower sulfur fuel will improve the
             efficiency and durability  of advanced technology catalysts and traps.  One

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 4-27

              commenter added that the additional cost of reducing sulfur to near zero
              levels to ensure the reliable  operation of the advance diesel aftertreatment
              devices is only a few cents per gallon. (See also Issue 5.8.)

              Letters:

              General Motors Corp.  and Isuzu Motors America, Inc.  (IV-D-256) p. 35-37
              NESCAUM (IV-D-315)p. 9

       (9)     Supports a 5 ppm sulfur standard and suggested that a phase-in approach of
              15 ppm in 2006, 10 ppm in 2007, and 5 ppm in 2008 would both ease the
              transition and help alleviate  problems associated with residual sulfur in the
              pipelines.

              Letters:

              Coalition for Clean Air (IV-F-190) p. 177

       (10)    Nationwide controls that eliminate sulfur from diesel fuel would allow for the
              successful development of control technologies for diesel-powered vehicles
              and would  allow for improvements in the environmental performance of HDVs
              currently in use.  Requirements for very low sulfur diesel fuel in European
              countries have allowed for the development of exhaust emission control
              technologies.  Once clean diesel fuels are available in the U.S., EPA's
              proposed HDE and vehicle standards would ensure that public health and
              environmental benefits from the use of vehicle emission control devices
              would quickly follow.  Requirements for near zero sulfur diesel fuel would
              allow for the implementation of program to retrofit in-use HDVs with some of
              the types of aftertreatment devices that will be used on new diesel engines
              and would  also lead to other benefits such as lower emissions of sulfur oxide
              and sulfate, reduced engine wear, the need for less frequent oil changes, and
              greater durability of exhaust gas recirculation components.

              Letters:

              DAW  (IV-D-215)p. 4-6

       Response to Comment 4.1(l)(6)-(10):

       In developing the regulations finalized today, the Agency considered a wide range of
sulfur levels, including sulfur levels as low as 5ppm  as requested by a number of the
commenters. However, based on the wide  range of information available to us, our analysis
of the current state of the exhaust aftertreatment technology, and the expected advancement
of that technology between now and when the standards would go into effect, we are
confident that a sulfur cap at 15ppm will be  sufficient to enable the technology and enable the
emission standards to be achieved. The  reader is referred to section III.F. of the  preamble
and chapter  III  of the RIA,  and the response to issue 3.2.1  fora complete discussion of this
assessment.

       While reducing the sulfur level below 15ppm may provide marginal benefits, the
benefits are marginal once the technology has been enabled at the 15 ppm level.  However,
as the sulfur level is decreased below 15ppm, the feasibility and cost associated with

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producing and distributing diesel fuel at that sulfur level continues to increase.
Consequently, the benefits of reducing the sulfur level below the  15ppm cap where the
vehicle emission control technology is enabled would not appear to justify the economic
impact.

       See also our Response to Comments 4.2(B), (C), and (D).

(J)     Opposes possibility of moving to a 5 ppm standard.

       (1)    This would require near zero sulfur levels at the refinery to avoid downstream
             contamination, and such levels are neither technically feasible or cost
             effective, and would require significant distribution/transportation
             infrastructure changes.

             Letters:

             Cenex Harvest States Cooperatives (IV-D-232) p. 5

       Response to Comment 4.1(J):

       See Response to Comments 4.1(l)(6)-(10), above.

       Issue 4.2:  Form of Standard (cap and/or average)

(A)     Supports a cap on diesel sulfur levels instead of an averaging system.

       (1)    Commenter provided no further supporting information  or detailed analysis.

             Letters:

             Engine Manufacturers Association (IV-F-174)
             L.A. County Bicycle Coalition  (IV-F- 190) p. 131
             Natural Resources Defense Council (IV-D-168) p. 3

       (2)    An averaging system would be difficult and impractical  to enforce.  A fuel
             sulfur average would represent only a refiner's average and, therefore, cannot
             be monitored or enforced at the pump.  Engine manufacturers and their
             customers must  be assured that fuel meeting the  required limitations will
             always be available nationwide. It is critical that after-treatment technologies
             not be exposed to higher sulfur fuels, which an averaging system would allow.
             The potential for irreversible damage to systems such as  NOX adsorbers and
             catalyzed regenerating particulate filters from higher sulfur fuel underscores
             the need for a capped, not average, diesel fuel sulfur requirement.

             Letters:

             Alliance of Automobile Manufacturers  (IV-D-262) p. 12-13
             British Petroleum (IV-D-242) p. 4
             Children's Environmental Health Network (IV-D-244) p. 2
             Engine Manufacturers Association (IV-D-251) p.  12-13, (IV-F-33, 116) p. 43
             (IV-F-191) p. 39
             International Truck & Engine Corp. (IV-D-257) p.  11

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              Volkswagen (IV-D-272) p. +6

       (3)     The 15 ppm sulfur cap provides assurance that sensitive emission control
              technology will not see high levels of sulfur, which would occur if an average
              of 15 ppm is imposed (or if a higher cap of 80 ppm is imposed).  Refiners
              might choose  any number of options to comply with a 15 ppm average, and
              some of these options could expose current and developing options for
              aftertreatment technologies to higher levels of sulfur. Even localized pockets
              of higher sulfur fuel could have a widespread impact on vehicle emissions.

              Letters:

              DaimlerChrysler  (IV-D-284) p. 2-3

       (4)     A sulfur average standard will only place additional burdens and costs on
              refiners, while providing little benefit.

              Letters:

              British Petroleum (IV-D-242) p. 4

       Response to Comment 4.2(A)(1)-(4):

       The low sulfur diesel fuel program imposes a 15 ppm cap on the sulfur content of
highway diesel fuel.  We are finalizing a cap standard  on the sulfur content of diesel fuel to
protect the vehicle aftertreatment technologies that we expect will be used to meet the 2007
heavy-duty engine and vehicle emission standards. An average standard by itself would not
be sufficient to ensure that sulfur levels higher than those that could be tolerated by the
exhaust emission control technology would not be used  in vehicles for extended periods of
time.  Given that the cap standard is the limiting factor, we agree that imposing an average
standard would only place additional burdens and costs  on refiners while providing little
benefit.

       Although the current 500 ppm sulfur limit requirement for diesel fuel provides no
specific program flexibilities for averaging, in the years since that limit was set, motor vehicle
fuel regulations have frequently incorporated provisions  allowing regulated industries to
average regulated parameters around a standard, often  with a capped upper limit. In fact this
approach was taken in the recently promulgated control  of gasoline sulfur levels, in which we
adopted a 30 ppm average level with an 80 ppm cap.

       Despite the ability of averaging provisions in some programs to increase compliance
flexibility and in some cases reduce overall costs while still achieving the environmental
objectives, we are not finalizing such provisions in the low sulfur diesel fuel program. Basing
the fuel program around an average sulfur level would risk failure in meeting the whole
objective of sulfur control (the enablement of sulfur-sensitive emission control technologies)
and thereby the environmental objectives of the program, or could require the adoption of a
cap so low that the average level would be irrelevant.  The exhaust emission control
technologies enabled by diesel sulfur control appear to be far more sensitive to and far less
forgiving of variations in fuel sulfur level than advanced gasoline technologies for Tier 2 light-
duty vehicles.  Enough is known about the exhaust emission control technologies to convince
us that 15  ppm sulfur represents an enablement threshold level, above which increases in
emissions and system failures are likely if not probable.

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       Imposing an average standard in addition to the cap would require additional product
sampling, recordkeeping, and reporting requirements to demonstrate compliance with the
standard. Thus, the flexibility of an average standard would not be worth the additional cost
and complexity of it, particularly when coupled with a 15 ppm sulfur cap.

(B)    Supports a 5 ppm average with a 15 ppm cap.

       (1)     Commenter provided no further supporting information or detailed  analysis.

              Letters:

              Johnson Matthey (IV-F-117) p. 94

       Response  to Comment 4.2(B):

       There are five key factors which, when taken together, have lead us to conclude that
a sulfur cap of 15 ppm is both necessary to enable the  NOX and PM exhaust emission control
technology (and thereby allow the heavy-duty vehicle and engine emission  standards to be
met), and appropriate, taking into consideration the challenges involved in producing and
distributing low sulfur diesel fuel. These factors include the implications that sulfur levels in
excess of 15 ppm have on  the efficiency, reliability, and fuel economy impacts of the exhaust
emission control systems, and the feasibility and costs  of producing low sulfur diesel fuel.

       The efficiency of emission control technologies at reducing harmful air pollutants is
directly impacted by sulfur  in diesel fuel.  Initial and long term conversion efficiencies for NOX,
NMHC, CO and diesel PM  emissions are significantly reduced by catalyst poisoning and
catalyst inhibition due to sulfur.  NOX conversion efficiencies with the NOX adsorber
technology in particular are dramatically reduced in a very short time due to sulfur poisoning
of the NOX storage  bed. In addition, total PM control efficiency is adversely impacted by the
formation of sulfate PM.  The formation of sulfate PM is likely to be in excess of the total PM
standard, unless diesel fuel sulfur levels  are below 15 ppm. Finally, particulate trap
regeneration is inhibited at higher diesel fuel sulfur levels.  Please refer to issue 3.2.1, 3.3.1,
and 3.3.2.

       The reliability of the emission control technologies to continue to function as required
under all  operating  conditions for the life of the vehicle  is also directly impacted by sulfur in
diesel fuel.  As discussed in Section III of the preamble and Chapter III of the RIA, sulfur in
diesel fuel can prevent proper operation and regeneration of both NOX and  PM control
technologies, leading to permanent loss in emission  control effectiveness and even
catastrophic failure of the systems. We have concluded that diesel fuel with sulfur levels no
higher than 15 ppm is necessary to provide  a level of reliability for these technologies to allow
their introduction into the marketplace.

       The sulfur content of diesel fuel will also affect the fuel economy of vehicles equipped
with NOX  and PM exhaust emission control technologies.  As discussed in detail in Section III
of the preamble and Chapter III of the RIA, NOX adsorbers are expected to  consume diesel
fuel in order to purge themselves of stored sulfates and maintain efficiency. The amount of
sulfur in diesel fuel  is directly proportional to the impact on fuel  economy. As sulfur levels
increase  above 15  ppm , the fuel economy impact transitions from negligible to unacceptable
levels. Likewise, PM trap regeneration is inhibited by sulfur in diesel fuel. This inhibition
leads  to increased  PM loading in the diesel particulate filter, increased exhaust
backpressure, and  poorer fuel economy. Thus, for both NOX and PM technologies, the  lower

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the fuel sulfur level, the better the vehicle fuel economy.

       As a result of these factors, we have concluded that 15 ppm represents an upper
diesel fuel sulfur boundary that would make these technologies viable. Therefore, the low
sulfur diesel fuel program caps diesel fuel sulfur at 15 ppm.  In comments received on the
proposal, as well as in subsequent meetings and discussions, however, we have frequently
heard different points of view on this issue expressed by the vehicle and engine
manufacturers, and by oil refiners.

       Some vehicle and engine manufacturers have argued for a maximum cap on the
sulfur content of diesel fuel of five ppm, believing that this level is necessary. As we discuss
in Section III of the preamble and Chapter III of the RIA, however, we believe that a cap of 15
ppm will be sufficient to ensure the reliability of PM exhaust emission control technology and
enable it to reach the very high efficiencies needed (over the wide range of vehicle operation
and conditions) for engine compliance.

       We believe  that requiring a cap lower than 15 ppm would not be necessary to enable
the exhaust emission control technology to meet the very low NOX and PM emission
standards we are finalizing.  A cap lower than 15 ppm would  provide little additional
emission reduction  but would increase the cost. Consequently, requiring a sulfur cap lower
than that necessary to enable the exhaust emission control technology to meet the emission
standards would be inappropriate.

       Conversely, many oil refiners have argued for a higher maximum cap (if any) on the
content of sulfur in diesel fuel,  typically on the order of 50 ppm.  They argue that the cost of
reducing the sulfur level below a  cap of 50 ppm (and average of 30 ppm) becomes
prohibitively high. They further argue that emission control technology for diesel engine
exhaust is still in its infancy and will likely develop rapidly over the next several years, to the
point where it is much less sulfur sensitive than current technology.  As discussed in Section
III of the preamble and Chapter III of the RIA, we also believe that the emission control
technology will develop rapidly over the coming years, and in particular are projecting that the
sensitivity of NOX adsorber technology to fuel sulfur will improve considerably through the
development of techniques to effectively regenerate themselves of stored sulfur compounds.
Based on available  information and our projections from that information, we believe that a
cap higher than 15 ppm sulfur, and in particular a cap as high as 50 ppm  would not enable
the exhaust emission control technology needed to achieve the emission standards and,
furthermore, may severely compromise the reliability of the systems and result in
unacceptable fuel economy impacts. In addition, as discussed in the preamble, although we
acknowledge that the cost to desulfurize diesel fuel does increase with more stringent sulfur
levels, we have concluded that these costs would not be prohibitively high, and maintain that
the environmental benefits of the program are sufficient to justify the costs of the program at
a sulfur cap level of 15 ppm.

       Based on our assessment of the efficiency, reliability, and fuel economy impacts of
sulfur on emission control technologies for diesel engine exhaust, and the cost and feasibility
factors associated with reducing the sulfur content of diesel fuel, we believe 15 ppm is the
appropriate sulfur cap. However, we did analyze in the draft RIA the impacts on technology
enablement, costs,  and benefits from controlling fuel sulfur to a 15 ppm average level with a
25 ppm cap, as well as from capping fuel sulfur at five ppm and 50 ppm. These levels have
been supported by various stakeholders as either necessary (in the case of a five ppm cap)
or adequate (in the  case of a 50 ppm cap) for enabling high-efficiency diesel exhaust
emission controls, and so we believed that assessments of these levels was appropriate.
We have concluded in the final rule, however, that sulfur levels above 15 ppm would not

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enable the high efficiency diesel exhaust emission controls. Furthermore, the emission
benefits from the standards being adopted today are substantial and of significant benefitin
improving air quality and protecting public health and the environment.  For more information
on benefits issues, please refer to the responses comments under Issue 2, above.

(C)    Supports a 30 ppm average sulfur content.

       (1)    A 30 ppm average represents a balance between production capabilities and
             sulfur's impact on control technologies. Averaging enables fuel to meet the
             emissions standards, but allows for small deviations from  refinery process
             variations, distribution and storage.

             Letters:

             Equiva Services  (IV-D-226) p. 3
             Phillips Petroleum Company (IV-D-250) p. 3
             Western Independent Refineries Association (IV-F-190) p. 144

       Response to  Comment 4.2(C):

       See Response to Comment 4.2(B),  above.

(D)    Supports an average sulfur content of 15 ppm in order to enhance overall
       reliability of diesel fuel supplies.

       (1)    An average  sulfur content of 15 ppm has several advantages:  higher
             probability that some cracked stocks could be included in  the highway diesel
             pool, thereby minimizing the overall loss of volume; longer hydrotreater cycle
             lengths between catalyst replacement at the refinery; more robust and reliable
             plant operation; increased flexibility for refiners/blenders; and mitigation of
             fuel integrity problems expected to occur throughout the distribution system.

             Letters:

             Chevron (IV-D-247) p. 2

       Response to  Comment 4.2(D):

       See Response to Comment 4.2(B),  above.

(E)    Opposes a sulfur cap.

       (1)    A sulfur standard based  on a cap instead of an average imposes undue
             stringency on refiners relative to the true sulfur target. With a 15 ppm cap, an
             additional enforceable average standard would be useless in providing
             refinery flexibility or reducing emissions.

             Letters:

             American Petroleum  Institute (IV-D-343) p. 50
             Marathon Ashland Petroleum  (IV-D-261) p. 53-54

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       Response to Comments 4.2(E):

       See our response to comment 4.2(A).

(F)     The sulfur standard should be established on an annual average basis.

       (1)    While use of a per gallon standard makes a program easier to administer, it
             removes valuable flexibility from the distribution system and adds
             unnecessary costs.  If the EPA is concerned about poisoning of the control
             devices, the annual average could be coupled with a per gallon cap or
             maximum.

             Letters:

             Independent Fuel Terminal Operators Association (IV-D-217), p. 10-11

       Response to Comments 4.2(F):

       See our response to comment 4.2(A).


       Issue 4.3:  Schedule

             Issue 4.3.1:  Start Date

(A)     Support the 2006 deadline as proposed by EPA because this deadline is crucial
       for ensuring that vehicles with new sulfur-sensitive control technologies will
       have access to the low-sulfur fuel.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             American Lung Association  (IV-F-72, 181, 191) p. 146
             Alliance of Automobile Manufacturers (IV_G-50)
             Bay Area Air Quality Management District (IV-D-139) p. 1
             CA Air Resources Board  (IV-F-190) p. 13
             CAPIRG  (IV-F-190) p. 175
             CT Coalition for Environmental Justice (IV-D-131) p. 2
             Citizen, physician (IV-F-190) p. 76
             DE Dept. of Natural Resources &  Environmental Control  (IV-D-146) p. 1
             Estler, Danielle  (IV-F-21)
             GA Department of Natural Resources (IV-D-268)  p. 1
             Institute for Global Solutions  (IV-F-175)
             International Truck & Engine Corp. (IV-D-257) p. 11
             L.A. County Bicycle Coalition  (IV-F- 190) p. 131
             League of Women Voters of Louisiana (IV-D-199) p. 1
             Lu, Rong (IV-F-162)
             Manufacturers of Emission Controls Association  (IV-F-190) p. 108
             NY DEC  (IV-D-138) p. 1
             NYCDEP (IV-D-159) p. 1
             Natural Resources Defense Council  (IV-D-168) p. 6, (IV-F-75, 191) p. 68

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              Northwest District Association (IV-D-117) p. 1
              OH Environmental Council (IV-D-130) p. 1
              STAPPA/ALAPCO (IV-D-140) p. 1, (IV-F-32, 78, 117) p. 29 (IV-F-191) p. 32
              Tosco (IV-D-84), (IV-F-157)
              U.S. PIRG (IV-F-71,  192) p. 134
              Vigo County Air Pollution Control (IV-D-137) p. 1
              WA Department of Ecology (IV-D-141) p. 1

       (2)     EPA should maintain the proposed implementation date of 2006 since a start
              date sooner than this would not leave sufficient time for refiners and retailers
              to adequately plan for the future.

              Letters:

              Quikway Trucking Company  (IV-F-190) p. 60

       (3)     The lead time provided by the 2006 implementation date for low sulfur diesel
              offers the refining industry adequate time to comply with the standards.

              Letters:

              City of Chicago  (IV-D-240) p. 5
              Environmental Defense (IV-D-346) p. 10, (IV-F-169)
              Metropolitan Washington Air Quality Committee  (IV-D-34) p. 2
              Natural Resources Defense Council (IV-F-190) p. 98
              Tosco (IV-D-304) p.  1

       (4)     Since fuel sulfur can  permanently destroy or disable the aftertreatment
              technologies projected to be used to meet the proposed emission standards,
              the diesel fuel  sulfur cap should  be fully implemented nationwide no later than
              June 1, 2006.  Because it's a matter of equipment failure and not just an issue
              of a temporary reduction in emission control performance, it is important to
              ensure that engines designed to meet the proposed standards will never be
              exposed to fuels with high levels of sulfur.  Allowing the deadline to extend
              beyond June 2006 will threaten the viability of the new emission control
              equipment and the credibility of the entire emission control program.

              Letters:

              Detroit Diesel Corporation  (IV-D-276) p. 6-7

       Response to Comment 4.3.1 (AK1H4):

       In general, these comments provided added support and justification for the leadtime
and start date of the low sulfur diesel fuel program. Specifically, beginning June 1, 2006,
refiners must begin producing highway diesel fuel that meets a maximum sulfur standard of
15 ppm. All 2007 and  later model year diesel-fueled vehicles must be refueled with this new
low sulfur diesel fuel.

       The low sulfur diesel fuel program includes a combination of flexibilities available to
refiners to ensure a smooth transition to low sulfur highway diesel fuel. First, refiners can
take advantage of a temporary compliance option, including an averaging, banking and

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DECEMBER 21, 2000	PAGE 4-35

trading component, beginning in June 2006 and lasting through 2009, with credit given for
early compliance before June 2006.  Under this temporary compliance option, up to 20
percent of highway diesel fuel may continue to be produced at the existing 500 ppm sulfur
maximum standard.  Highway diesel fuel marketed as complying with the 500 ppm sulfur
standard  must be segregated from 15 ppm fuel in the distribution system, and may only be
used in pre-2007 model year heavy-duty vehicles.  Second, we are providing additional
hardship  provisions for small refiners to  minimize their economic burden in complying with
the 15 ppm sulfur standard.  Third, we are providing additional flexibility to refiners subject to
the Geographic Phase-in Area (GPA) provisions of the Tier 2 gasoline sulfur program, which
will allow them the option of staggering their gasoline and diesel investments.  Finally, we are
adopting  a general hardship provision for which any refiner may apply on a case-by-case
basis under certain conditions.  These hardship provisions, coupled with the temporary
compliance option, will provide a "safety valve" allowing up to 25 percent of highway diesel
fuel produced to remain at 500 ppm for these transitional years to minimize any potential for
highway diesel fuel supply problems.

(B)    Oppose the 2006 deadline because  it is essential that refiners have additional
       lead time if they must invest in the necessary technology to reduce sulfur levels
       in diesel fuel.

       (1)    Some of these commenters noted that refiners will be trying to meet the Tier 2
             gasoline sulfur standard  at roughly the same time as the diesel sulfur
             standard if the rule is finalized  as proposed and that to address this issue,
             EPA should delay implementation to no earlier than January 1, 2008. The
             overlap of the implementation schedules for these standards would demand
             excessive capital expenditures and would jeopardize the ability of refiners to
             obtain the proper engineering or technical support as well as the
             desulfurization equipment necessary to meet the proposed standards. In
             addition, the uncertainty  of the nonroad standards and the MTBE rulemaking
             may further complicate implementation within the proposed time-frame and a
             determination of exactly when  compliance can be achieved. Commenters
             urged EPA to delay implementation from 2  to 4 years (2008-2010). One of
             the commenters also  pointed to the NPC report as further support for the
             need to delay the start date and as documentation of the impact of other
             requirements such as Tier 2 and MTBE.

             Letters:

             American Farm Bureau Federation (IV-F-5)
             American Petroleum Institute (IV-D-343) p. 41, 55-58
             CO Petroleum Association  (IV-D-323) p. 3
             Citgo Corporation (IV-D-314) p. 7
             ExxonMobil (IV-F-105)
             Marathon Ashland Petroleum  (IV-D-261) p. 58-61, (IV-F-74)
             National Petrochemical & Refiners Association  (IV-D-218) p. 15, (IV-F-44)
             Sinclair Oil Corporation  (IV-D-255) p. 2-3

       (2)    Commenters recommended that EPA delay implementation of the rule until at
             least 2009 or 2010 to allow for additional compliance flexibility for refiners and
             to allow for additional time to develop sulfur-tolerant emissions control
             devices for HDVs. Some of these commenters  proposed a delay to 2010
             together with a 50 ppm cap and no phase-in. One of the commenters added

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DECEMBER 21, 2000	PAGE 4-36

              that the current proposed time frame would force some refiners to make their
              investments in the 2001 to 2003 time frame due to the large number of
              refiners that will need to comply with the standards (which will fill existing
              fabrication shops and qualified  construction companies from 2004 to 2006).
              One commenter noted that a 2-3 year delay would greatly improve EPA's
              ability to accurately estimate the investment requirements for very low sulfur
              diesel and provide a meaningful cost/benefit analysis.

              Letters:

              Cooperative Refining, LLC  (IV-D-300) p. 3
              Ergon & Lion Oil Co.  (IV-F-117) p. 183
              National Petrochemical & Refiners Association (IV-D-218) p.  14
              Phillips Petroleum Company (IV-D-250) p. 3
              Ports Petroleum  Co, Inc.  (IV-F-117) p. 190
              Society of Independent Gasoline Marketers of America (IV-D-328) p. 1, (IV-
              F-191)p. 196

       (3)     The timing will be especially difficult in the West where the proposed 2006
              date occurs eight months before final implementation of the 30/80 ppm
              gasoline standards. In fact, EPA's proposal contradicts the findings EPA
              made in the gasoline rule that refineries in the West would have difficulty
              competing for engineering and  construction resources. To be consistent with
              the delay in the gasoline standards for the West, EPA must allow an
              extended compliance date for diesel fuel as well.

              Letters:

              Sinclair Oil Corporation (IV-D-255) p. 3-5

       Response to Comment 4.3.1 (B)(1)-(3):

       We believe that today's program will provide a sufficient supply of low sulfur diesel
fuel for the engines and vehicles that need it beginning in 2007 while allowing the refining
industry to spread out its capital  investments for producing the clean fuel. Under the
program's temporary compliance option,  a refinery may produce up to 20 percent of its total
highway diesel fuel at the existing highway diesel fuel sulfur standard of 500 ppm,
determined on an annual basis.  The remaining 80 percent of the highway diesel fuel
produced at that refinery during the year must meet a sulfur standard of 15 ppm.  As part of
this temporary compliance option, a PADD-based averaging, banking, and trading (ABT)
program will be available. For example, a refinery could produce more than 80 percent of its
highway diesel fuel as low sulfur diesel fuel and generate credits based on the volume of
highway diesel fuel produced at 15 ppm that exceeded the 80 percent requirement.  Within
that same PADD (within the limits explained in the preamble for California, Alaska, Hawaii,
and any state with an EPA-approved waiver from the federal program), these credits may be
averaged with another refinery owned by that refiner,  banked for use in future years, or sold
to another refinery.

       The low sulfur diesel fuel program offers additional flexibility to refiners who produce
gasoline for sale in  the GPA.  Under this provision, refiners that produce  both gasoline and
highway diesel fuel and are subject to the Tier  2/Gasoline Sulfur program may choose to
stagger their desulfurization investments  for the two fuels. Refiners that comply with the low

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sulfur diesel fuel standard by June 1, 2006 for all of their highway diesel fuel production may
receive a three-year extension of their interim GPA gasoline standards for 2006, that is
through December 31, 2010.  In addition to allowing refiners the opportunity to spread out
their desulfurization investments, we believe this provision will encourage the production of
15 ppm diesel fuel by some refiners in and near the GPA, which will further help to ensure
the new fuel is widely available for new vehicles throughout the area.

       The low sulfur diesel program also contains a menu of small refiner hardship
provisions as discussed in section IV of the preamble and  Issue 8.5, including a four year
delay in compliance with the 15 ppm sulfur standard for diesel fuel, allowance to generate
credits for the production of 15 ppm sulfur diesel fuel, and  a delay in compliance with the final
Tier 2 gasoline sulfur standard in exchange for complying on time with the 15 ppm sulfur
diesel fuel requirement.

       The low sulfur gasoline program, which phases-in from 2004 through  2006 for most
refiners, also offers an ABT program as well as flexibilities for small refiners and refiners who
produce gasoline for sale in the GPA. Hence, we believe both low sulfur fuel  programs are
structured to allow for sufficient lead time and maximum refiner flexibility.

       In section IV of the preamble and chapter IV of the RIA,  EPA analyzed in detail the
combined impacts of both programs together, including the transitional provisions for both
programs as described above. The conclusion of the analysis indicated that a start date of
June 1, 2006 at the refinery for the diesel program, along with the transitional provisions,
allowed for the  distribution of capital, engineering, and construction over a sufficient period of
time  so as to make the burden on the industry reasonable.

       In regard to MTBE, we are exploring control options through our authority under the
Toxic Substances Control Act (TSCA). On March 20, 2000, Administrator Browner
announced the Agency's Advance Notice of Proposed Rulemaking (65 FR 16093, March 24,
2000) under Section 6 of TSCA to control the use of MTBE as a fuel additive. If and when
we propose an MTBE control program, we would consider it's impact on the refining industry
in the context of all other CAA regulatory impacts, including the low sulfur diesel rule.

(C)    Suggested EPA provide tax or other incentives to encourage businesses to
       implement the proposed rule in advance of the deadline.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Chicago  DEP/Chicago Metropolitan Mayors Caucus Clean Ai  (IV-D-335) p. 6
              City of Chicago (IV-D-240) p. 6
              National  Biodiesel Board (IV-F-191) p. 249
              Nolan, Catherine  (IV-D-169) p. 1
              Toltz,  Ken  (IV-F-191)  p. 215

       (2)     EPA should implement financial incentives such as grants  or revolving loan
              programs specifically for the  adoption  of clean vehicle technologies in
              advance of the proposed schedule.  One commenter added that substantial
              quantities of ultra low sulfur fuel will be needed at various locations
              throughout the country beginning in the 2004 timeframe to  support these field
              evaluation programs.

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              Letters:

              City of Los Angeles Environmental Quality and Waste Man  (IV-F-190) p. 95
              Detroit Diesel Corporation  (IV-D-276) p. 7
              NY DEC (IV-D-239) p. 3

       Response to Comments 4.3.1(C)(1) and (2):

       EPA does not have statutory authority to create tax incentives. The approach
recommended by the commenters would require an Act of Congress to implement.

       (3)     The early introduction of ultra low sulfur diesel is necessary if engine
              manufacturers are to have any possibility of generating credits under the ABT
              program as proposed.  Such incentives could be refinery emission credits,
              federal or state tax incentives, or other similar, innovative programs.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 31

       (4)     Voluntary emission credits programs or other market-based incentives to
              encourage the early introduction of low-sulfur fuels would allow advanced
              emissions testing, lower the costs of emissions control equipment, and
              possibly allow the distribution system a chance to develop experience in
              handling the new fuel. Any incentive-based opportunities offered by EPA for
              early introduction of a low sulfur diesel fuel should include biodiesel at a level
              at least twice the rate of other credits or incentives offered because of the
              low-sulfur characteristics and other healthy environmental attributes offered
              by biodiesel.

              Letters:

              Ag Environmental Products (IV-D-179) p. 1-2
              National Biodiesel Board (IV-D-288) p. 4-5
              Griffin Industries  (IV-D-221) p. 2
              MN Soybean Growers Association (IV-D-337) p. 2
              ND Soybean Growers Association (IV-D-311) p. 2
              NE Soybean Board (IV-D-195) p. 1-4
              OH Soybean Association (IV-D-277) p. 2
              OH Soybean Council  (IV-D-278) p. 2
              West Central  (IV-G-40) p. 1
              World Energy Alternatives (IV-D-336) p. 2

       Response to Comments 4.3.1(0(3) and (4):

       As discussed in  Section IV.A.2.a of the preamble, today's regulation allows refiners
and importers to generate  early credits (prior to June 1, 2006) under limited circumstances,
based on production of low sulfur diesel fuel prior to June 1, 2006.

       The early credits program has two sets of provisions: 1) credits generated after May
31, 2005 but before June 1, 2006, and 2) credits generated after May 31, 2001 but before
June 1, 2005.  For a refiner or importer to generate early credits after May 31, 2005, it must

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demonstrate that the 15 ppm fuel produced early was segregated in the distribution system
and not commingled with current 500 ppm sulfur fuel. Only that volume that the refiner
could verify was actually sold as 15 ppm fuel at retail or to centrally-fueled fleets would be
eligible for early credits. The program also specifies that early credits can be generated
prior to June 1, 2005. In this case, however, the refiner or importer must demonstrate that
the fuel meeting the 15 ppm sulfur standard is used in vehicles certified to meet the basic
2007 emission standard for PM (0.01 g/bhp-hr) or in vehicles using retrofit technologies
needing equivalent standards approved as part of EPA or state retrofit programs. These
provisions for early credits under the fuel regulations are designed to work in harmony with
the provisions for early credits  under the engine and vehicle regulations.

(D)    EPA should consider requiring that  low sulfur fuel be available in the
       marketplace sooner than July 2006.

       (1)     The July 1, 2006 date for compliance with the sulfur standard is barely
              adequate to meet new vehicle  needs.  Manufacturers can introduce a 2007
              MY vehicle as early as January 2, 2006 and past experience shows that
              some vehicles and engines are certified and available as early as this date.
              A seven year lead time for refiners to comply with the standard is more than
              adequate and EPA should consider setting the compliance date at January
              1, 2006. Commenters provided significant discussion on this issue and
              noted that an earlier introduction is important not only for meeting the
              standards in  the proposed rule, but also to meet the Tier 2 and 2004 HD
              rule requirements.

              Letters:

              DaimlerChrysler (IV-D-284) p. 4
              Engine Manufacturers Association (IV-D-251) p. 16-17

       Response to Comment 4.3.1(D)(1):

       As described below in Response to Comments 4.3.2, we believe that the
September start date for retailers is appropriate. A January 2006 start date would conflict
with the distribution of distillate products such  as home heating oil whereas a July start
date (with a corresponding start date  of April/May for refiners) would overlap with the
distribution of low  RVP gasoline to meet summertime RFG and or conventional gasoline
volatility requirements. Retail availability by September 2006 will assure fuel is available
for the first introduction of heavy-duty diesel trucks with 2007 model year engines installed,
the earliest model  year we can mandate the Phase 2 emission standards for these
engines;  requiring low sulfur fuel substantially  earlier, e.g., September 2005, would  provide
some additional emission benefits and flexibilities for early introduction of Phase 2 engines
but we do not believe the burdens placed on the fuel industry to meet such an early date
for low sulfur fuel availability is warranted without also being able to mandate engine and
vehicle emission standards which require such fuel.

       June 1, 2006 start date of the fuel program is appropriate and will not interfere
significantly with the introduction of 2007 model year vehicles which historically have not
been introduced until January 1 of the same calendar year (i.e., January 1, 2007 for the 2007
model year) and only recently have been introduced as early as July or August of the
previous  calender year for some models.

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       We are confident that the program's June 1, 2006 start date and the program's
design will provide refiners with the appropriate amount of lead time that they need for
producing 15 ppm sulfur highway diesel fuel and avoid excessive interaction with the
gasoline sulfur control program.  Furthermore, it will allow for sufficient and widespread
supply of the low sulfur diesel fuel for the vehicles that will need it beginning with the 2007
model year.

       In the period leading up to the introduction  of lower sulfur diesel fuels, Tier 2 Interim
Standards will be in place (beginning in 2004) for Tier 2 light-duty vehicles that are
achievable through the use of currently available and near term engine and exhaust
aftertreatment technologies that do not require the use of low sulfur diesel fuel. These
technologies include the use of advanced fuel systems (e.g., as electronically controlled,
high-pressure common  rail fuel systems) and cooled EGR to achieve low engine-out NOX
and PM levels, along with the use of conventional diesel exhaust aftertreatment such as
diesel oxidation catalysts and/or near-term NOX reduction technology such as precious-
metal-based lean-NOx catalysts.

       (2)     There is a possibility of slippage in  the proposed diesel compliance date of
              July 2006 and exemptions could be granted.  This presents a concern since
              the 2007 HD technology will not meet the emission standards for the required
              useful life without low sulfur fuel. Any exposure to higher sulfur fuel due to
              regional exemption or delays will cause emissions control hardware
              ineffectiveness.

              Letters:

              DaimlerChrysler (IV-D-284) p. 4-5

       Response to Comment 4.3.1(D)(2):

       No delay in the start of the fuel program is or should be anticipated.  Furthermore, the
flexibility provisions of the final rule will  not interfere with the availability of low sulfur diesel
fuel for the  vehicles that need it.

       (3)     Encourages adoption of the earliest possible date for implementation of low
              sulfur diesel. One commenter stated that 7 to 10 years is too long for those
              suffering from the adverse health effects of diesel exhaust.

              Letters:

              Association of International Automobile Manufacturers (IV-D-259) p. 1
              Environmental Defense (IV-F-169)
              IL Environmental Protection Agency (IV-D-193) p. 1
              NY State Attorney General's Office (IV-D-238) p. 1
              San Joaquin Valley Air Pollution Control District (IV-D-56) p. 2
              Sierra Club (IV-F-159)
              South Coast Air Quality Management District (IV-D-147) p. 1

              Response to Comment 4.3.1(D)(3):

       The 2007 model year is the earliest date for the introduction of the new engine
standards given the lead time and stability provision in the CAA. Since the justification for the

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DECEMBER 21, 2000	PAGE

fuel standards is to enable the introduction of new 2007 model year engines which meet the
standards, there is insufficient justification to introduce the fuel any earlier.

       (4)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              American Lung Association  (IV-F-192) p. 8
              American Lung Association of Metropolitan Chicago  (IV-F-13)
              Bishop, Mark  (IV-F-12)
              CA Trucking Association  (IV-F-190) p. 38 (IV-F-192) p. 34
              CO Environmental Coalition  (IV-F-191) p. 237
              CO People's Environmental and Economic Network (IV-F-191) p. 222
              Coalition for Clean Air (IV-F-190) p. 177
              Communities for a Better Environment  (IV-F-190) p. 129
              Congresswoman Diana DeGette  (IV-F-191) p. 208
              DaimlerChrysler (IV-D-136) p. 2
              Firestone, Ross  (IV-F-4)
              Hinds, William (IV-F-190) p. 202
              International Truck & Engine Corp. (IV-F-180)
              Kouba-Cavallo Associates (IV-F-1)
              L.A. Dept of Water & Power  (IV-F-190) p. 79
              Mayor and citizens of Fort Collins, CO  (IV-F-191) p. 211
              Nadine Garcia (IV-F-183)
              National Biodiesel  Board  (IV-F-191) p. 249
              Sherman, Scott (IV-F-190) p. 87
              South Coast Air Quality Management District (IV-F-185)
              Stewart, Jim (IV-F-170)
              Wilmington North Neighborhood Association (IV-F-190) p. 265

       Response to Comment 4.3.KDH4):

       Refer to Response to  Comment 4.3.1 (D)(1).

       (5)     A national fuel standard should be implemented  by 2004. One commenter
              noted that this deadline would help States attain  the NAAQS. Other
              commenters provided significant discussion on the necessity of providing low
              sulfur diesel by 2004 to allow manufacturers to comply with the Tier 2
              standards for light duty diesel vehicles. These commenters note that
              qualifying light duty diesel vehicles under Tier 2 will depend in part, on a
              company's ability to produce sufficient vehicles in the lower bins allowing for
              acceptable fleet averages. One commenter added that the potential  growth
              of light duty diesels could lead to a market share of 9 to 24 percent of the light
              duty fleet by 2015, which  underscores the importance of ensuring the
              availability of low sulfur diesel for these vehicles  in order to ensure
              compliance with Tier 2 standards. (See also Issue 9.)

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 9-10
              CA Trucking Association  (IV-D-309) p. 3
              Volkswagen (IV-D-272) p. 1,+5-6

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       Response to Comment 4.3.KDK5):

       Refer to Response to Comment4.3.1(D)(1).

(E)     If the compliance deadline for clean diesel fuel is delayed beyond 2006, then
       EPA should delay the implementation of the proposed light duty and HD
       standards until the time at which low sulfur fuel is uniformly available
       throughout the country.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              DaimlerChrysler  (IV-D-284) p. 5

       Response to Comment 4.3.KE):

       Response to Comment 4.3.1(D)(2).

(F)     Recommends a two-year delay in implementation that would require nationwide
       availability of ultra-low sulfur by mid-2008 to enable advanced-technology
       emissions control systems beginning with model year 2009.

       (1)     This delay in timing would free up the necessary engineering and construction
              resources to accomplish the gasoline-desulfurization projects in the Rockies,
              prior to the diesel desulfurization projects nationwide.  Commenter provides
              further discussion and figures appended to its letter.

              Letters:

              Chevron (IV-D-247) p. 4

       (2)     A two year delay would provide adequate time for development of sulfur
              adsorber technology for diesel fuel. Moreover, innovative diesel fuel
              desulfurization technology and catalysts are currently being developed; and it
              is critical that the timeline of the rule allows for the implementation of the best
              processing technology and investment of capital in the most reasonable
              advanced technology.  Phillips, for example,  is actively investigating the
              potential forS Zorb adsorption technology to distillates to reduce the
              dependence of desulfurization technology on hydrogen.  The rule requires
              refiners to have new desulfurization units operating by the fourth quarter of
              2005, effectively forcing them to invest in  conventional hydrotreating
              technology.  New technology units could be built and be operational between
              2006 and 2008,  but not by 2005. The delay would allow advancement in
              aftertreatment technologies, and would avoid the  need for a technology
              phase-in by allowing all vehicles to meet the  NOX  standard in 2009.

              Letters:

              Phillips  Petroleum Company  (IV-D-250) p. 4-6

       (3)     Commenter states that with the supply concerns raised in the NPC report, at

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              least a two year extension is warranted, which would also allow time to work
              out the technical issues in desulfurizing diesel fuel to low levels.

              Letters:

              National Council of Farmer Cooperatives (IV-D-351) p. 5-6

(G)    Recommends a delay until 2010 for the fuel standards because this timing
       would only slightly delay the clean air goals and would provide additional time
       to develop the NOX and PM after-treatment technologies.

       (1)     Commenter provides no further supporting information or detailed  analysis.

              Letters:

              Placid Refining Company, LLC (IV-D-230) p. 5

       Response to 4.3.1 (F)(1)-(3) and (G):

       The start date of the diesel fuel program is driven by the engines and vehicles that
need it to meet the emission standards which take effect beginning in 2007.  The
standards, in turn, are dictated by  the air quality need for NOx and PM control especially.
Any delay in the start of the program would result in the loss of tremendous air quality
benefits of the program  over time and the economic benefit to society that results  from
those air quality benefits.  Based on  our analysis of the vehicle/engine technology as
discussed in section III of the preamble and chapter III of the RIA we are confident that the
standards finalized today will be achievable beginning with the 2007 model year.
Furthermore, we have analyzed the impact of this program on refiners across the  country
in the context of the gasoline sulfur control program and concluded that a June 1,  2006
start date at the refinery provides sufficient lead time, given the various compliance
flexibilities that have been  incorporated in to the final rule (see section IV of the preamble).
Finally, we have analyzed  the potential impact on supply of the program as discussed  in
the response to issue 8.1.1 and chapter IV of the RIA and concluded that the provisions of
the final rule would adequately address any supply concerns. Therefore, we do not believe
it would be appropriate to delay the start date of the program given the air quality need as
well as the many compliance flexibilities that are already available to the regulated entities
under today's program.  While more time always allows the potential of better, cheaper
technology to evolve, the rule already provides more than 5 years of lead time during which
this can occur.  Furthermore, more time has to be weighed against the environmental
losses that would result. Given that the final rule is cost effective in its present form and
provides far greater economic benefits through improved air quality than the cost of the
program, a delay is not justified. We disagree the comment suggesting the loss in in-use
emission benefits and delay in reaching air quality goals that would result from delaying
fuel (and emission standards) to 2010 are acceptable and have substantial comment which
also argues against the  effects of such a  delay; see discussion under Issue 2 of this
response to comment.

(H)    Agrees with EPA  statement that the 2006 start date should not be applicable to
       every refinery and expects that farmer co-ops would be exempt from  this start
       date.

       (1)     Commenter notes, however, that EPA appears to contradict itself in Section

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              VI. of the preamble, which indicates that the entire pool of on-road diesel will
              have to convert in 2006 - this is inappropriate as farmer co-ops should be
              given more time and flexibility to comply.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 5-6,10

       Response to 4.3.KH):

       Farmer cooperative refiners are not exempt from the low sulfur diesel fuel
requirements.  As discussed in Section IV of the preamble, we concluded that it is not
necessary or appropriate to provide separate treatment for farmer cooperative refiners as a
class. However, any farmer cooperative refiner that meets the two criteria of the small refiner
definition will be considered eligible for the small refiner compliance options, one  of which
allows for the continued sale of 500 ppm sulfur diesel fuel through May 31, 2010.  Any farmer
coop covered under GPA provisions of the Tier 2 gasoline program is also eligible for the
flexibility provided to GPA refiners under this rulemaking.  In addition, farmer coops may
choose the temporary compliance flexibility which is available to all refiners. This flexibility
will allow refiners to delay full compliance until December 31, 2009. Finally, farmer coops are
eligible to apply for hardship waivers.  For a discussion regarding impacts on farmer
cooperative refiners, please also refer to the responses to comments under Issue 8.1.1(B), in
particular.

(I)     EPA should postpone implementation of the rule until 2007 to coincide with
       Alaska's Tier 2 gasoline requirements.

       (1)     It's more cost efficient to build the desulfurization capacity simultaneously.

              Letters:

              Williams Energy Services (IV-D-167) p. 4, (IV-F-191) p. 240

       Response to 4.3.1 (I):

       See response to comments under Issue 6.6.2.

       Unlike the rest of the nation, Alaska is currently exempt from the 500 ppm sulfur
standard for highway diesel fuel and dye requirements. Since the beginning of the 500
ppm highway diesel  fuel program, we have granted Alaska exemptions from meeting the
sulfur standard and dye requirements, because of its unique geographical, meteorological,
air quality, and economic factors.  Because of these unique factors, we are establishing in
today's action an alternative option for implementing the low sulfur fuel program in Alaska.

       We are providing the State of Alaska an opportunity to develop an alternative low
sulfur transition plan. We intend to facilitate the development of this plan by working in
close cooperation with the state and key stakeholders.  This plan must ensure that
sufficient supplies of low sulfur diesel fuel are available in Alaska to meet the demand of
any new 2007 and later model year diesel vehicles. Given that Alaska's demand  for
highway diesel fuel is very low and only a few new diesel vehicles are introduced  in Alaska
each year, it may be possible to develop an alternative implementation plan for Alaska in
the early years of the program that provides low sulfur diesel only in sufficient quantities to

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meet the demand of the new diesel vehicles.  This provision gives all Alaska refiners,
including those that are small, more flexibility  during the transition period because they will
not have to desulfurize the entire highway diesel volume. Our goal in offering this
additional flexibility is to transition Alaska into  the low sulfur fuel program in a manner that
minimizes costs, while still ensuring that the new vehicles receive the low sulfur fuel they
need. We expect that the transition plan will begin to be implemented at the same time as
the national program,  but the state will have an opportunity to determine what volumes of
low sulfur fuel must be supplied, and in what timeframes, in different areas of the state.
Consequently, there is sufficient flexibility in our final rule to address the commenter's
concern in Alaska without impacting the startup of the entire program.  See also discussion
under Issue 6.6.

(J)     Opposes the  2006 deadline since it is unnecessary and inconsistent with the
       implementation deadline for HD engine and vehicle standards.

       (1)    An extremely small  percentage of vehicles will require the new low sulfur
             diesel  starting in 2006, given the NOX phase-in for HD engines and expected
             fleet turnover rates. EPA should consider full and simultaneous
             implementation of the  standards for both engines/vehicles and diesel fuel.
             Commenter notes that EPA may not have the authority to require refiners to
             provide low-sulfur diesel for manufacturers that may choose, but are not
             required, to  produce vehicles that meet Tier 2 standards early.

             Letters:

             ExxonMobil (IV-D-228) p. 20-21
             Western Governors'Association (IV-G-41) p. 1

       Response to  4.3.1(J):

       The start date of the fuel program is designed to be in harmony with the start of the
vehicle and engine standards as discussed in 4.3.1(D)(1)(4) and (5) above. All new 2007
and later model year vehicles will require the use of low sulfur diesel fuel, since the PM
standard is not being phased-in.
              Issue 4.3.2:  Transition Schedule

(A)    The implementation date should be changed to October 1 at the refinery gate
       and January 1 at retail to coincide with the model year changeover of HDDE.

       (1)     Implementation timing should be consistent with vehicle introductions that
              occur in September; advancing the effective date for the heavy-duty low sulfur
              diesel is an inappropriate mechanism for encouraging the introduction of
              more light-duty diesel vehicles for fuel economy and policy reasons.  In
              addition, the October 1 refinery deadline that precedes a retail deadline in
              January, will allow three  months of lead time for tank turnover.

              Letters:

              American Petroleum Institute (IV-D-343) p. 55
              Marathon Ashland Petroleum (IV-D-261) p. 58

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(B)    Recommends that refinery shipments begin no earlier than June 1, 2006; and
       that full retail compliance begin by September 1, 2006.

       (1)     Because each April the refining industry is taxed with the RVP/VOC
              phasedown, simultaneous phasing in of low sulfur diesel will overextend the
              industry's capabilities.

              Letters:

              British Petroleum  (IV-D-242) p. 4

(C)    To minimize supply disruptions, EPA should use a start date of May 1 with a
       transition schedule through August 1 (and the ability to obtain quick waivers in
       the early phase of the program).

       (1)     EPA often uses October or January as start dates, but should avoid those
              periods because of higher demand on distillate products at that time (heating
              oil).  Then,  EPA needs to provide a transition period to allow for adjustments
              in the distribution chain (May 1 at refinery gate, June 1 at terminals, and
              August 1 at retail). Then, EPA needs to provide streamlined waiver
              procedures (within a day), with a waiver fee schedule established.  Rural
              versus urban distinctions should apply for obtaining waivers. This approach
              will ensure  the ability to use non-compliant barrels in the early phase and
              maintain supply.

              Letters:

              Hart/IRI Fuels Information Services (IV-D-154) p. 3-4

(D)    EPA should avoid requiring the distribution  system to undergo any changeover
       to low sulfur diesel during April through June of any given year.

       (1)     Beginning in April of every year, the gasoline refining and distribution system
              is severely  taxed with the phase-down of gasoline RVP to meet summertime
              RFG and/or conventional gasoline volatility requirements.  The industry is
              faced with turnover of thousands of storage tanks  at a  multitude of terminals
              to assure adequate supply of compliant gasoline by May 1 at the terminals
              and the implementation of low sulfur fuel at this time would overextend
              industry's capabilities.

              Letters:

              American Petroleum Institute (IV-D-343) p. 55
              Marathon Ashland Petroleum (IV-D-261) p. 58

       Response to Comments 4.3.2(A)-(D):

       As discussed in the preamble, we proposed a set of compliance dates slightly earlier
than the dates contained in this final rule. Under the  proposal, refiners, terminals and
retailers would  have had to begin  producing low sulfur diesel fuel  by April 1, 2006,  May 1,
2006 and June 1, 2006, respectively.  Several commenters pointed out that the April
introduction date for refiners occurred at the same time refiners would be changing over from

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winter to summer gasoline to comply with Reid Vapor Pressure (RVP) requirements. They
recommended that the introduction of low sulfur diesel fuel be delayed for a couple of months
to provide refiners and the distribution system the opportunity to focus on the two conversions
separately and ensure that each occurs as designed. Commenters also suggested that we
extend the time period between the refinery and downstream deadlines to better allow for the
time it may take the distribution system to make a complete transition to the 15 ppm sulfur
level.

       In response to these concerns, today's action provides a few additional months for
introduction of the low sulfur diesel fuel compared to the proposal and provides an additional
month between the refinery and retail compliance dates, to provide a smoother transition
through the distribution system. We believe the additional time provides appropriate relief for
the  refiners, while still assuring that low sulfur diesel fuel will be available at the retail level no
later than September 1, 2006. This schedule will allow manufacturers to introduce 2007 and
later model year diesel engines and vehicles as early as September 1, 2006. While a slight
delay from the dates of the proposal, the Agency does not believe this delay will place any
undue burden on the engine manufacturers. Historically, new heavy-duty vehicle models
were introduced on or around January 1 (of the same calendar year as the model year). Only
recently, manufacturers have begun introducing some model lines as early as July or August,
particularly light heavy-duty vehicles.  Delaying the start date further to October 1 at the
refinery and January 1, 2007 at the retail level, however, could cause a substantial delay in
the  introduction of new 2007 model year vehicles relative to today's practices. Therefore, to
assure availability and to not discourage the early introduction of engines meeting the 2007
standards, we cannot adopt October 1, 2006 refinery gate and January 1, 2007 retail
deadlines for availability of 15 ppm sulfur diesel fuel as recommended by the commenter.

       Issue 4.4:  Exemptions

(A)     Four commenters expressed general opposition to having any areas that are
       exempt from the low sulfur fuel requirements.

             Letters:

             DaimlerChrysler  (IV-D-284) p. 6
             Engine Manufacturers Association  (IV-D-251) p. 22-23
             Detroit Diesel Corporation (IV-D-276) p. 7-8
             National Park Service (IV-D-180) p. 3

       Response to Comment 4.4(A)(1) and (2):

       Our Response to Comments related to areas that are exempt or excluded from the
low sulfur fuel requirements are discussed in Issues 6.6 Alaska and 6.7. U.S. Territories.
While we have not adopted any geographic exemption, we have provided for some additional
flexibilities for compliance  in the GPA and Alaska.  We do not believe these flexibilities will
result in compromising the air quality of national parks.

       Issue 4.5:  Fuel Lubricity

(A)     The fuel property changes resulting from desulfurization may have an adverse
       impact on fuel lubricity.

       (1)    Problems with fuel lubricity and elastomer compatibility occurred in Sweden

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              and California with the introduction of very low sulfur fuel. In these cases,
              there were significant reductions of fuel aromatic levels to 10% or less and it
              is suspected that difficulties with those new fuels were largely a result of the
              severe aromatic reductions. Commenter refers to their own guidance on
              producing superior quality diesel and recommended parameters for lubricity
              and elastomer compatibility (See "EMA Consensus Position:  Joint EMA/TMC
              Pump Grade Specification for Premium Diesel Fuel," FQP1-B, Attachment C).

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 28-29

       (2)     The exact nature of lubricity impacts associated with refining changes used to
              meet the 15 ppm limit are uncertain, but the experience of the agricultural
              community with the initial diesel fuel sulfur rule suggests the impacts may be
              severe.

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 13

       (3)     The hydrotreating process needed to reduce sulfur to 15 ppm will produce
              dramatic reductions in fuel lubricity. One commenter specifically noted that
              EPA's proposed standard will  stress the lubricity of diesel fuel many times
              more than that required for 500 ppm sulfur diesel fuel implemented in 1993.
              Lack of lubricity will cause premature equipment breakdown and in some
              cases, catastrophic failure.

              Letters:

              Department of Defense  (IV-D-298) p. 2
              Stanadyne Automotive Corporation (IV-D-342) p. 1-2

       (4)     The proposed rule would move the industry to virtually sulfur free fuel, which
              would remove some of the benefits from the presence of sulfur in diesel, such
              as  lubricity and seal chemistry. Carriers cannot afford to risk operating on low
              sulfur fuel that may cause operational and maintenance problems for their
              trucks.

              Letters:

              American Trucking Association  (IV-D-269) p. 15

       Response to Comment 4.5(A)(1)-(4):

       Experience has shown that it is very rare for a naturally high-sulfur fuel to have poor
lubricity, although  most studies show relatively poor overall correlation between sulfur content
and lubricity. Considerable research remains to be performed for a better understanding of
the fuel components most responsible for lubricity.  Consequently, we are uncertain about the
potential impacts of the 15 ppm sulfur standard on fuel lubricity. There is evidence that the
typical process used to remove sulfur from diesel fuel - hydrotreating - can impact lubricity
depending on the severity of the treatment process and characteristics of the crude.

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Because refiners will likely rely on hydrotreating to achieve the proposed sulfur limit, there
may be reductions in the concentration of those components of diesel fuel which contribute to
adequate lubricity. As a result, we believe that the lubricity of some batches of fuel may be
reduced compared to today's levels. We have assumed in our cost analysis that industry will
add lubricity additives to diesel fuel to address any lubricity concern, much as they are doing
today both in the U.S. and abroad.

       As discussed  in the comments presented in section 4.5(B) below, there are a number
of options for addressing potential lubricity concerns. Performance enhancing additives such
as might be needed here are often developed in  cooperative efforts between engine
manufacturers, fuel refiners, and additive manufacturers.  The need to consider the use of
additives to enhance lubricity is recognized now, more than five years before fuel meeting the
requirements of today's rule will be required.  Thus, there appears to be adequate  lead time
to assess potential impacts on the current vehicle fleet as well as new technology vehicles
that are  under development and to develop an industry-consensus lubricity standard if one is
necessary.

(B)    There are various strategies that can be used to mitigate the problem of poor
       lubricity.

       (1)     Lubricity concerns are easily mitigated through additization or by blending
              with higher lubricity components.  One commenter (DoD) noted that use of
              JP-8 has helped address concerns associated with lubricity since it contains a
              corrosion inhibitor/lubricity enhancer additive that provides some lubricity
              protection.

              Letters:

              Alliance of Automobile Manufacturers (IV-D-262) p. 5
              Cummins, Inc. (IV-D-231) p. 44
              Department of Defense  (IV-D-298) p. 2
              Engine Manufacturers Association (IV-D-251) p. 29

       (2)     EPA should consider the use of a low blend of biodiesel into the entire U.S.
              diesel pool to address concerns associated with lubricity.  This approach
              would eliminate the inherent variability associated with the use of other
              additives and whether sufficient additive was used to make the fuel fully
              lubricious. Commenters noted that biodiesel significantly enhances engine
              lubricity,  even at very low blends  such as one-half to two percent. [See also
              comments on this issue below under Point (D)].

              Letters:

              Ag Environmental Products (IV-D-179) p. 1
              Griffin Industries  (IV-D-221) p. 1-2
              MN Soybean Growers Association (IV-D-337) p. 1
              ND Soybean Growers Association (IV-D-311) p. 1
              NE Soybean Board (IV-D-195) p. 4
              National Biodiesel Board (IV-D-288) p. 2, (IV-F-191) p. 249
              OH Soybean Association (IV-D-277) p. 1
              OH Soybean Council (IV-D-278) p. 1
              Stanadyne Automotive Corporation (IV-D-342) p. 3

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              West Central (IV-G-40) p. 1
              World Energy Alternatives (IV-D-336) p. 1

       Response to Comments 4.5(B)(1) and (2):

       We agree that blending small amounts of lubricity-enhancing additives increases the
lubricity of poor-lubricity fuels to acceptable levels.  These additives are available in today's
market, are effective, and are in widespread use around the world. For example, in the U.S.,
we understand that refiners are treating diesel fuel with lubricity additives on a batch to batch
basis, when poor lubricity fuel is expected.  Other examples include Sweden, Canada, and
the U.S. military. Since 1991, the use of lubricity additives in Sweden's 10 ppm sulfur Class I
fuel and 50 ppm sulfur Class II fuel has resulted in acceptable equipment durability. Since
1997, Canada has required that its 500 ppm sulfur diesel fuel not meeting a minimum
lubricity be treated with lubricity additives. The U.S. military has found that the traditional
corrosion inhibitor additives that it uses in its fuels have been effective in reducing fuel
system component wear.  Similarly, it appears that  blending small amounts of biodiesel may
also be effective in increasing the lubricity of poor- lubricity fuels to acceptable levels.  While
the commenter suggested EPA require the  use of biodiesel in diesel fuel to address lubricity
concerns, as discussed in the response to next comment, we have not elected to set a
lubricity standard for this rule, and will leave it up to the industry to determine the best way of
addressing diesel fuel lubricity.  The use of  lubricity additives is not expected harm the
emissions control technology that we anticipate will be used to meet the vehicle emission
requirements under  today's rule.

       (3)     Lubricity is not an issue for low-sulfur diesel fuel when  it is incorporated into
              the PuriNOx fuel emulsion. This additive compensates for lubricity
              deficiencies in the diesel fuel.

              Letters:

              Lubrizol Corporation  (IV-G-49) p. 6

       Response to Comments 4.5(B)(3):

       We have decided to not establish a  lubricity standard in today's action, but have
included a 0.2 cents per gallon cost in our calculations for the economic impact to account for
the potential increased use of lubricity additives. We believe the best approach is to allow
the industry and the  market to address the lubricity  issue in the most economical manner,
while avoiding an additional regulatory scheme.  A voluntary approach should provide
adequate customer protection from engine failures due to low lubricity, while providing the
maximum flexibility for the industry.  This approach  will be a continuation of current industry
practices for diesel fuel produced to meet the current Federal and California 500 ppm sulfur
diesel fuel specifications, and benefits from the considerable experience gained since 1993.
It will also include any new specifications  and test procedures that we expect will be adopted
by the American Society for Testing and Materials (ASTM) regarding lubricity of highway
diesel fuel quality.

       We do not believe that an EPA regulation for lubricity is appropriate at this time for
several reasons.  First, the expertise and mechanism for a lubricity standard already exist in
the industry. According to the comments, the industry has been working on a lubricity
specification for ASTM D-975, and low cost remedies for poor lubricity have already been
proven and are already being used around the world.  Although some commenters

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expressed concerns that the ASTM process might move too slowly to establish a lubricity
specification by 2006, we fully expect the refining industry, engine manufacturers and end
users to work together to resolve any issues as part of their normal process in dealing with
customer and supplier fuel quality issues. Today's action will increase the urgency of those
working to establish an ASTM D-975 lubricity specification, and we believe they will do so in
time for the production and distribution of the low sulfur highway diesel fuel. PA will closely
monitor this process and become involved to the degree necessary to help ensure a
successful outcome.

       In addition, we have no firm basis to justify a lubricity specification in today's action.
One such basis might be adequate demonstration that a lubricity level below or above a
certain specification would either cause emissions to increase, or hinder the operation of
emission control equipment.  However, we have no evidence that lubricity impacts emissions,
or emission control equipment, except to the degree that a lubricity failure could lead to the
emissions associated with engine failure. This issue is primarily a concern about vehicle
driveability. Equipment performance is more appropriately addressed by the industry rather
than government regulation by this Agency when emission issues are not present. This is
consistent with past EPA practices.

       One commenter suggested that using biodiesel as a fuel blending component would
enhance lubricity and provide fuel value. Another commenter stated  that lubricity is not an
issue  for low-sulfur diesel fuel when it is incorporated into the PuriNOx fuel emulsion because
the  additive compensates for lubricity deficiencies in the diesel fuel. While EPA staff do not
necessarily agree  or disagree with the technical merits of these assertions, we are not in a
position as this point to specify or mandate a  specific approach.

       The Department of Defense (DOD) expressed lubricity concerns as well.  While is
true that DOD purchases their diesel fuel from commercial sources, and tends to  prefer "off-
the-shelf purchases when consistent with their mission needs, the military frequently applies
a "military-specification" top their purchases.  In the case of diesel fuel, the military has
adequate buying power to get the product needed and adequate technological resources to
determine the lubricity needs  of their vehicles.

(C)     EPA should further examine issues related to the lubricity of low sulfur diesel
       fuels.

       (1)     EPA should fully explore issues of lubricity or fuel system seal failure because
              any in-use problems would adversely impact all parties involved.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 53
              Marathon Ashland Petroleum (IV-D-261) p. 56
              Milwaukee County Transit System (IV-D-97) p. 1

       (2)     Production of desulfurized diesel will require severe hydrotreatment of the
              distillate pool. In addition to removing the sulfur compounds, this  process is
              known  to remove diaromatic compounds that have been  shown to impart
              lubricity. There are currently outstanding issues related to the  selection of a
              proper methodology to characterize and define lubricity.  Two methods
              (HFRR and SLBOCLE) are commonly used but are criticized for poor
              repeatability and their differing response to additives.  ASTM is presently

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              developing an additional method (the Ball on Three Discs - BOTD) as well as
              modifications to the existing methods in an effort to propose a specification in
              D-975.  However, progress on this method has been complicated by the
              attitude of some fuel suppliers that lubricity concerns should be addressed by
              improved engine design instead of fuel changes. Commenter notes that
              lubricity is a critical issue for engine manufacturers and fuel system suppliers,
              and recommends that EPA thoroughly review the issue of fuel lubricity and
              establish an enforceable lubricity requirement.

              Letters:

              Cummins, Inc. (IV-D-231) p. 44

       (3)     Additives will  be required to replace the lubricity needed for proper engine
              functioning. Merely assuming that an additive will be found is unwarranted,
              as documented by the MTBE problem, and this issue should  be studied and
              resolved now, before the rule is finalized.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 5, 8

       Response to Comments 4.5(C)(1)-(3):

       Refer to Response to Comment 4.5(B)(3), above.

(D)    EPA should  establish an enforceable lubricity requirement since the proposed
       approach to treat diesel fuel lubricity on an as-needed and voluntary basis will
       not be  effective at ensuring good diesel fuel lubricity.

       (1)     Experience has shown that treating fuel for lubricity on an as-needed basis
              has fallen far short of ensuring good diesel fuel lubricity and there have been
              numerous examples from the field where lack of lubricity in the fuel has
              caused premature equipment breakdown and in some cases, catastrophic
              failure.  EPA's voluntary approach will lead to wide scale lubricity problems of
              an unacceptable level.  Since the flawed introduction of low sulfur diesel fuel
              in 1993, which caused excessive lubricity and compatibility issues, the fuel
              injection industry has been working with diesel fuel suppliers  and others to
              implement the proper lubricity testing protocols and precautions that will
              protect fuel injection equipment. ASTM subcommittee E on diesel fuel has
              agreed to put a cautionary appendix into ASTM D 975  related to lubricity.
              However, ASTM has  not agreed on the addition of a lubricity  limit to ASTM D
              975.  Therefore, until  newer methods prove superior, the industry standard
              HFRR and SLBOCLE should be specified. EPA should force the adoption of
              the lubricity standard  ISO 12156-2 (based on HFRR test  method) for diesel
              fuel as part of this rule and  should add a provision that incorporates any
              applicable lubricity standards in the future as they are agreed upon and
              incorporated into ASTM D 975.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 5

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              Cummins, Inc.  (IV-D-231) p. 44
              Engine Manufacturers Association  (IV-D-251) p. 29
              Stanadyne Automotive Corporation (IV-D-342) p. 1-3

       (2)     In addition to incorporating an enforceable diesel fuel lubricity standard, EPA
              should encourage the use of a low blend of biodiesel into the entire U.S.
              diesel pool. Biodiesel is a clean burning, zero sulfur diesel fuel made from
              domestically produced renewable fats and oils, and appears to fit in well with
              the goals and objectives of this proposed rule. Commenter notes that they
              (Stanadyne) in  cooperation with the National Biodiesel Board, have tested
              biodiesel and results indicate that the inclusion of 2 percent biodiesel into any
              conventional diesel fuel will be sufficient to address the lubricity concerns
              associated with existing diesel fuels.  Blending biodiesel would  eliminate the
              inherent variability associated with the use of other additives and whether
              sufficient additive was used to make the fuel fully lubricious. Commenter
              notes that biodiesel is not an additive but rather a fuel component since it is
              possible to burn pure biodiesel in conventional diesel engines.

              Letters:

              Stanadyne Automotive Corporation (IV-D-342) p. 3

       (3)     The issue of lubricity is particularly sensitive with regard to military fuels.
              Absent a required standard for fuel lubricity, suppliers will not abide by
              voluntary standards, and  military users will face the added burden of ensuring
              that the highway diesel fuel used in military vehicles provides sufficient
              lubricity.  DoD relies on the commercial market to supply highway diesel to
              military customers and the proposed further reduction in diesel  sulfur would
              increase the risk and scope of lubricity problems.  Due to harsher operating
              conditions, engines used in DoD vehicles are more vulnerable to lubricity
              problems than the same engines operated in commercial vehicles. EPA
              should ensure the development of lubricity standards and should impose a
              deadline for industry-wide implementation in the final rule.

              Letters:

              Department of Defense (IV-D-298) p. 1-2

       Response to Comments 4.5(D)(1)-(3):

       Refer to Response to Comment 4.5(B)(3), above.

(E)    EPA does not need to establish an enforceable lubricity requirement since the
       proposed approach to treat diesel fuel lubricity on an as-needed and voluntary
       basis will be effective at ensuring good diesel fuel lubricity.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 53
              Marathon Ashland Petroleum  (IV-D-261) p. 56

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       (2)    If biodiesel is used as a mitigating strategy to address lubricity concerns,
             there would be no need to determine whether to adopt a voluntary or
             minimum lubricity standard.

             Letters:

             Ag Environmental Products (IV-D-179) p. 1
             Griffin Industries (IV-D-221) p. 1
             MN Soybean Growers Association (IV-D-337) p. 1
             ND Soybean Growers Association (IV-D-311) p. 1
             NE Soybean Board (IV-D-195) p. 4
             National Biodiesel Board (IV-D-288) p. 2
             OH Soybean Association  (IV-D-277) p. 1
             OH Soybean Council  (IV-D-278) p. 1
             West Central (IV-G-40) p. 1
             World Energy Alternatives (IV-D-336) p.  1
       (3)    Commenter notes that when the 500 ppm standards was imposed in 1993,
             some problems with lubricity arose that were quickly addressed by the
             industry. Currently the industry, without any regulatory requirements, ensures
             that its products meet lubricity standards and no problems have arisen since
             the early days of the initial sulfur program.  EPA should adopt a market
             approach since industry would ensure that diesel fuel has adequate lubricity,
             particularly diesel fuel supplied to the military.

             Letters:

             Independent Fuel Terminal Operators Association (IV-D-217), p. 11-12

       Response to Comments 4.5(E)(1)-(3):

       Refer to Response to Comment 4.5(B)(3), above.

       Issue 4.6: Other Diesel Fuel Issues

(A)     EPA should also impose standards for other fuel parameters, as described in
       the World-Wide Fuel Charter, such as cetane, aromatics and distillation.

       (1)    Commenters provided no further supporting information  or detailed analysis.

             Letters:

             Alliance of Automobile Manufacturers (IV-F-9, 59,190) p. 114 (IV-F-117) p.
             168(IV-F-191)p. 89
             Association of International Automobile Manufacturers (IV-D-259) p. 1
             CTDEP (IV-D-142) p. 1
             DaimlerChrysler (IV-F-15, 116) p. 292 (IV-F-117) p. 96,191) p. 173
             Engine Manufacturers Association (IV-D-166) p. 1
             Oregon DEQ  (IV-D-145) p. 1

       Response to Comments 4.6(A)(1):

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       Based on data available at this time, we have concluded that sulfur is the only diesel
fuel property that needs to be controlled to enable heavy-duty diesel engines to meet the
standards we are finalizing in today's action.  The efficiency of the aftertreatment devices that
we expect to be used by manufacturers to meet the new standards is directly impacted by the
sulfur content of the fuel, but has essentially no correlation with other fuel properties.
However, we will continue to evaluate whether other fuel properties or fuel additives need to
be controlled to protect emission control systems in general or provide adequate protection of
public health.

       (2)     Higher cetane diesel fuel has better ignition qualities and is more desirable for
              engine calibration. Additional emission benefits could be realized if future
              diesel engines could be calibrated for a higher cetane fuel. Even though
              some earlier studies indicated that higher cetane fuel could increase NOX
              emissions in existing engines, this has not been the result in studies
              conducted by VW or in the European EPEFE study. Higher cetane levels
              significantly reduces NOX,  HC, and CO emissions.  EPEFE studies have
              shown a 9 percent reduction in NOX and up to a 40 percent reduction in HC
              emissions when cetane is increased from 50 to 58.  Higher cetane reduces
              starting crank time, cold start white smoke and engine combustion noise; and
              improves cold starting and fuel consumption. Some commenters specifically
              recommended that EPA establish a  minimum cetane of 55 for diesel fuel.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 5-6
              DaimlerChrysler  (IV-F-167)
              Engine Manufacturers Association  (IV-D-251) p. 28
              Volkswagen (IV-D-272) p. 2

       Response to Comment 4.6(A)(2):

       It is true that diesel fuels with higher cetane  numbers have better ignition qualities
than fuels with  lower cetane numbers, and that higher cetane may thus lead to more efficient
combustion in some compression ignition engines.  As a result cetane controls could lead to
small changes  in NOx emissions. The magnitude of any potential NOx reductions from
cetane control has not been clearly established, so that we cannot ascertain whether cetane
controls might be cost-effective.  The Agency is in the process of conducting a thorough
analysis of the  effects of diesel fuel parameter changes on emissions which will  be
completed in 2001. In the meantime, cetane number does not appear to affect the efficiency
of the aftertreatment that we expect manufacturers to use to meet our new standards nor
does compliance with our standard anticipate the need for cetane improvement.  As a result,
we do not believe it is necessary to establish  a higher cetane number standard in concert
with  our new engine standards.

       Some studies do suggest that higher cetane numbers will produce reductions in
emissions from existing U.S. engines under the Federal Test Procedure.  However, at least
one study conducted jointly by EPA and the engine  and oil industries concluded  that
increasing the cetane number actually increases NOx emissions for engines equipped with
exhaust gas recirculation (EGR).79  Since  most diesel engines in the future will be equipped
       79 "Gaseous Emissions From A Caterpillar 3176 (with EGR) Using A Matrix of Diesel Fuels (Phase 2)," September 1999,
report from Southwest Research Institute under EPA Contract Number 68-C-98-169.

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with EGR, this study casts grave doubt on the potential benefit of cetane changes. In a past
action, EPA evaluated other potential diesel fuel changes and concluded that they are either
ineffective or too costly for the improvement in emissions performance delivered.

       (3)     In addition to setting limits for fuel cetane and aromatics, EPA should also
              ensure that distillation characteristics, H/C ratio and density are improved. All
              of these parameters should be comparable to the fuels currently distributed in
              Europe.  One commenter noted  that holding fuel  density within a narrow
              tolerance can allow engine calibrators to  optimize the combustion  process,
              which leads to lower emissions and improved fuel consumption. The
              commenter added that a reduction in the  heavy end of the distillation curve
              will help reduce particulate emissions.  Another commenter specifically noted
              that EPA should adopt the category 4 diesel fuel  category of the World Wide
              Fuel Charter for this rulemaking  but with a 5 ppm sulfur  cap.

              Letters:

              Alliance  of Automobile Manufacturers (IV-D-262) p. 4-8
              DaimlerChrysler (IV-D-344) p. 4-5
              Volkswagen  (IV-D-272) p. 2

       Response to Comment 4.6(A)(3):

       There is some data suggesting that control of diesel fuel  properties such as
aromatics, distillation characteristics,  H/C ratio,  and/or density could lead to some emission
reductions. However, these types of controls are neither necessary to enable diesel engines
to meet the new engine certification standards we are finalizing today, nor are the associated
emission reductions likely to be substantial. In our Notice of Proposed  Rulemaking we
proposed that diesel fuel properties other than sulfur not  be controlled in this rulemaking for
these reasons, and we have not seen any comments or new data to suggest that  our focus
on sulfur inappropriately excluded other means  of generating substantial cost-effective
emission reductions.

       We also do not believe that harmonizing U.S. diesel fuel  standards with those  in
Europe makes sense at this time.  European refineries differ from those in the U.S. because
diesel comprises a  significantly higher fraction of transportation fuels in  Europe. In addition,
manufacturers  currently meet different engine certification standards  in  different countries,
based on different test cycles. Any consideration of harmonizing diesel fuel standards with
Europe or any other country should be dealt with in a more encompassing discussion of
mobile source pollution which would fall outside the scope of this rulemaking.

       (4)     The process of removing sulfur in diesel will result in small but significant
              quality improvements  in other fuel properties,  such as increased cetane
              number and index, reduced aromatics and polyaromatics, and a lower gravity
              fuel. These improvements are well documented  in the EMA MathPro study.
              EPA should maintain those average improvements by incorporating them into
              the certification fuel and in-use fuel specifications proposed in 86.113-07 and
              86.1313-07.  Specifically, EPA should establish the following fuel
              specifications:  certification and  verification test fuel should have a cetane
              number and index at 42-52 and  minimum aromatic content of 23%;
              commercial fuel should have a cetane number and index at 42 and a
              maximum aromatic content of 31%; both  testing and commercial fuels  should

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              have API gravity range at 33.5-38.5. (cites to MathPro study, Exhibit 7).

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 28

       Response to Comment 4.6(A)(4):

       Small improvements in diesel properties occurring incidentally as a result of
desulfurization will easily fall within the range of variability exhibited by current in-use
highway diesel fuel.  In fact these improvements, if they occur, may be too small to be
measured accurately. According to the National Petroleum Council's report on petroleum
refining80, desulfurization of highway diesel to very low levels would result in an increase in
cetane index of at most one number, and two vendors actually predicted no change in cetane
number.

       The diesel fuel property ranges given in 40 CFR Part 86 for certification testing are
intended only to reasonably bound the range of possible values that the engine may
experience in-use.  Even after the sulfur level of highway diesel fuel is lowered to below 15
ppm, we believe that the existing certification fuel  property ranges will remain representative
of the range  of possible in-use values. Therefore we have determined that it is not necessary
to change the values for fuel properties other than sulfur in certification fuel at this time.  See
also response to comment 7.1(B).

       (5)     EPA should reduce both total aromatics and polyaromatics.  Lower aromatic
              diesel fuel reduces NOX, particulate emissions and  PAH emissions.
              European test programs demonstrate 6%  reductions in NOX and particulate
              emissions when these properties are reduced. Commenters recommended
              that EPA establish a maximum 15% aromatic limit and a maximum
              polyaromatics content of 2%.

              Letters:

              Alliance of Automobile  Manufacturers (IV-D-262) p. 6
              Engine Manufacturers Association  (IV-D-251) p. 28
              Volkswagen  (IV-D-272) p. 2

       Response to Comment 4.6(A)(5):

       We have determined that changes in the aromatic content  of highway diesel fuel are
not necessary to enable the efficient operation of the aftertreatment we expect will be used to
meet the new engine standards we are finalizing today. Therefore we are not finalizing new
controls on the aromatic content of highway diesel fuel in today's action. It is possible,
however, that additional controls on aromatics could lead  to  reductions in the emissions of
various pollutants, some of which are toxic substances such as benzene. During a
rulemaking completed in 1990, EPA concluded that aromatics control was not cost effective.
Nonetheless, we will continue to evaluate the potential for significant emission reductions in
addition to the cost of controlling aromatics in our  ongoing efforts to reduce pollution from
mobile sources.
         "U.S. Petroleum Refining," June 2000, National Petroleum Council report for the U.S. Secretary of Energy

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(B)    Sulfur content of fuel is the only fuel property that should be regulated.

       (1)     Agrees with EPA that it is appropriate to only address sulfur level in on-road
              diesel at this time because other fuel properties such as cetane, aromatics,
              polyaromatics, distillation and end point have relatively minor effects on
              emissions compared to sulfur level. Cites EPA's Heavy Duty Engine Work
              Group Program which demonstrated cetane and aromatics differences result
              in only minor differences in NOX emissions. One commenter also notes in
              regard to the light duty market that sulfur is the only fuel property that should
              be regulated:  changes to diesel fuel other than sulfur requested by light duty
              diesel manufacturers for a market that does not exist based on emission
              controls not yet developed for light duty engines is entirely inappropriate.
              Koch Petroleum adds that its Performance Gold and Soy Diesel achieve
              environmental benefits comparable to low-aromatics diesel, while lowering
              out of pocket operating costs. Since market based solutions achieve the
              same benefits, regulation of parameters such as aromatics is unnecessary.
              Koch further cites to the preamble and  an SAE paper that emission control
              devices are responsible for reducing emissions, and "all other fuel properties"
              have only minor effects on emissions.  The cost of producing a low aromatic,
              high cetane diesel would be over twice that of producing 30 ppm diesel.
              Adding detergents is a more cost effective way to achieve reductions from the
              existing fleet.

              Letters:

              American Petroleum Institute (IV-D-343) p. 52-53
              British Petroleum (IV-D-242) p. 4
              ExxonMobil (IV-D-228) p. 19
              Koch Industries (IV-D-307) p. 2, 3
              Marathon Ashland Petroleum  (IV-D-261) p. 55
              National Petrochemical & Refiners Association (IV-D-218) p. 17
              Phillips Petroleum Company (IV-D-250) p. 2

       Response to Comment 4.6(B)(1):

       We agree  that it is appropriate to set only new  sulfur standards for highway diesel
fuel in this rulemaking. Sulfur is the only diesel fuel property which appears to have a
significant effect on the efficiency of heavy-duty diesel  aftertreatment devices.  However, we
will continue to evaluate the potential environmental benefits and associated costs of
changes to other diesel fuel properties.

       (2)     Commenter notes that mandates for increased cetane number or index would
              be difficult for the refiner to meet. Provides detailed discussion of the reasons
              for naturally low cetane number from San Joaquin Valley crudes, and the
              limits of improving cetane numbers  by using cetane enhancers. Also argues
              that increases in cetane number/index would unfairly penalize San Joaquin
              Valley crudes because it would require significantly more processing than
              other crudes; San Joaquin crudes comprise approximately 13 percent of
              domestic supply.

              Letters:

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              Golden Bear Oil Specialists (IV-D-111) p. 2-4

       Response to Comment 4.6(B)(2):

       We are not setting new cetane number or index standards in today's action. Any
future actions which seek to change the existing standards for cetane or any other diesel fuel
property will be subject to a thorough evaluation of the impacts on refiners in a public
process.

(C)    EPA should advocate the use of synthetic diesel since blending this type of
       diesel into current and future stocks will help refiners achieve the 15 ppm
       standard and will also have significant environmental and energy security
       benefits.

       (1)     Synthetic diesels have  been developed and tested by Syntroleum and others,
              and meet or exceed properties specified by ASTM D975.  This fuel is similar
              to diesel but has superior combustion emission characteristics (i.e.  lower NOX,
              PM and toxics emissions than even the cleanest fuels currently on the
              market), has no detectable sulfur, aromatics, olefins or metals, has a 74-plus
              cetane number, and exceeds specifications for the highest quality diesel fuel
              described in the April 2000 World Fuel  Charter. The environmental benefits
              can be realized immediately since synthetic diesel can be used in existing
              conventional diesel engines. Laboratory engine tests conducted by
              Southwest Research Institute have demonstrated the Syntroleum diesel fuel
              significantly reduces vehicle exhaust emissions as compared to conventional
              diesel as well as CARB diesel and Swedish City diesel.  The absence of
              sulfur in this type of fuel enables vehicles operating on synthetic diesel to use
              advanced sulfur-sensitive emission control technologies.

              Letters:

              Hart/IRI Fuels Information  Services (IV-F-190) p. 254
              Syntroleum (IV-D-260) p.  1-3, (IV-F-73, 163)

       (2)     Synthetic diesel also has a very low solubility in water, has significantly lower
              toxicity than conventional diesel, and is more biodegradable.

              Letters:

              Syntroleum (IV-F-73, 163)

       (3)     Synthetic diesel will provide substantial energy security benefits since the
              gas-to-liquids conversion technology can be used by the entire energy
              industry for the production of synthetic  fuels. Feedstock to the Syntroleum
              Process can vary widely from pipeline quality natural gas to methane rich gas,
              which are abundant worldwide.

              Letters:

              Hart/IRI Fuels Information  Services (IV-F-190) p. 254
              Syntroleum (IV-F-73)

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       (4)     A study by Oak Ridge National Laboratory (ORNL/TM-1999/258) identified
              substantial energy security benefits that would be realized with the increased
              use of synthetic diesel since it would reduce our reliance on imported oil as a
              transportation energy source and since it can be produced domestically. The
              use of this type of fuel would also increase competition, thus reducing fuel
              prices overall.

              Letters:

              Syntroleum (IV-F-73)

       (5)     Since our reliance on diesel engines is growing, the use of synthetic fuel will
              provide the refining industry with greater flexibility to meet increased demand.

              Letters:

              Syntroleum (IV-F-73)

       (6)     The reduction of sulfur levels can be achieved with a combination of
              desulfurization technology and the  blending of synthetic diesel fuels.  This
              could be a less costly and less energy intensive solution for reaching the 15
              ppm standard.

              Letters:

              Syntroleum (IV-F-73, 163)

       (7)     The use of synthetic diesel fuel is a technology-neutral fuel that has the
              potential to change the fuel industry since it enables emissions reductions in
              existing diesel engines and could accelerate the commercialization of the fuel
              cell.

              Letters:

              Syntroleum (IV-F-73)

       (8)     Another commenter generally expressed support for the use of this type of
              fuel and noted that EPA should support DOE if they choose to approve  a
              petition that would add synthetic diesel to the list of alternative fuels as
              defined by the Energy Policy Act.

              Letters:

              Hart/IRI Fuels Information Services (IV-F-117) p. 206

       (9)     Commenter cites to the July 17, 2000 issue of Hart's Diesel Fuels News (vol.
              4, no. 13).  This issue includes data that supports the contention that the
              environmental benefits associated with ultra low sulfur diesel (including
              synthetic diesel) can be superior to the benefits achieved through the use of
              alternative fuels.  This conclusion is supported by a recent study conducted
              by the Swedish consultant Ecotraffic, which compared exhaust gases from
              transit buses using ultra low sulfur diesel to transit buses using alternative
              fuels, including compressed natural gas (CNG). This study showed that ultra

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              low sulfur fuels, when combined with exhaust after-treatment can achieve
              ultra low particulate and toxic emissions levels.  In addition, the conclusion is
              supported by test data showing that PM trap-equipped diesel engines
              produce similar or even  low PM mass emissions than CNG engines, and a
              new Swedish study finds clean diesel less of a cancer threat than CNG.
              Commenter concludes that ultra clean diesel, including synthetic diesel,
              should be a major part of the solution to reduce mobile source emissions.

              Letters:

              Syntroleum (IV-D-260) p. 3

       (10)    The GTL process technology has the potential to convert vast unutilized
              natural gas reserves into high value products  such as ultra-clean diesel or
              synthetic diesel. Given a natural gas to synthetic oil conversion ratio of 10 to
              1, the  vast amounts of stranded gas (i.e. no local market) could be converted
              to 250 billion barrels of synfuels which is almost equivalent to all the
              estimated oil reserves of Saudi Arabia.  Both  Exxon and Shell have
              considered plants in the 50 to 100 thousand barrels per day range, which
              according to an independent report (commissioned by Syntroleum) would be
              extremely profitable since unlocking enough gas to make 100,000 barrels of
              Fischer Tropsch Products (Synthetic Diesel Fuels) could increase price and
              earnings per share by 26 percent. The fundamental economics driving GTL
              are feedstock driven and synthetic diesel fuel  can be less expensive to make
              than conventional diesel on a "greenfield basis." Commenter provides
              additional discussion and analysis (including cited documentation that
              includes reference testing of Fischer-Tropsch Synthetic Diesel Fuels) to
              support their position on this issue.

              Letters:

              Syntroleum (IV-D-260) p. 3-6

       Response to Comment 4.6(C):

       EPA staff acknowledges the comments on synthetic diesel fuels.  EPA does not
normally promote one fuel blend or compliance approach over another, but instead relies
upon the market place for such decisions. Synthetic diesel fuel can be used  as part of the
total diesel pool provided that it meets EPA regulatory requirements.

(D)    Supports  the use of biodiesel.

       (1)     But, cautioned  EPA against the simple blending of nonsulfur biodiesel with
              conventional diesel fuel.

              Letters:

              National Biodiesel Board (IV-F-191) p. 249

       (2)     With biodiesel's healthy emissions attributes,  ultra low sulfate levels, and
              lubricity characteristics, it can play a role in helping meet the standards set
              out by the proposed rule. EPA should allow fuel manufacturers,  refiners, or

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              retailers to simply blend no-sulfur biodiesel with conventional diesel fuel to
              reduce sulfur content or to gain other emissions or economic benefits.
              Biodiesel is available today and there is no need to wait until 2006 to use an
              ultra low sulfur fuel for diesel engines.  Biodiesel has been proven effective in
              over 30 million miles of on-road use, has been given a clean bill of health by
              Health Effects testing of the EPA, and needs no capital investment or
              separate distribution systems.  One commenter cited to the NBB's Tier I
              Section 211(b) submission to EPA, which shows the significant emission
              reduction  benefits that result from the use of biodiesel.

              Letters:

              Ag Environmental Products (IV-D-179) p. 1-2
              Griffin Industries (IV-D-221) p. 1-2
              MN Soybean Growers Association (IV-D-337) p. 1
              ND Soybean Growers Association (IV-D-311)  p. 1-2
              NE Soybean Board  (IV-D-195) p. 1-4
              National Biodiesel Board (IV-D-288) p. 1-2
              OH Soybean Association (IV-D-277) p. 1
              OH Soybean Council (IV-D-278) p. 1-2
              West Central (IV-G-40) p. 1
              World Energy Alternatives (IV-D-336) p. 1

       (3)     Use of biodiesel would advance the federal government's goals to displace
              petroleum and increase the use of biomass fuels as described in Executive
              Orders 13101, 13134, and 13149.

              Letters:

              Ag Environmental Products (IV-D-179) p. 1
              Griffin Industries (IV-D-221) p. 1
              MN Soybean Growers Association (IV-D-337) p. 1
              ND Soybean Growers Association (IV-D-311)  p. 1
              NE Soybean Board  (IV-D-195) p. 1-4
              National Biodiesel Board (IV-D-288) p. 1-3
              OH Soybean Association (IV-D-277) p. 1
              OH Soybean Council (IV-D-278) p. 1
              West Central (IV-G-40) p. 1

       Response to Comment 4.6(D):

       Biodiesel appears to have the potential to be used as a diesel fuel blending
component which also reduces emissions. Nonetheless, EPA does not normally promote
one fuel blend or compliance approach over another, but instead relies upon the market
place for such decisions.  Biodiesel can be used as part of the total diesel pool provided that
it meets EPA regulatory requirements.

(E)     EPA should  harmonize fuel standards with Canada and Mexico.

       (1)     There is a large volume of heavy-duty truck traffic across the borders between
              the U.S. and Mexico and the U.S. and Canada. The lack of harmonized, ultra
              low sulfur fuel will cause severe operational problems and damage to

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              emission control systems from operation with higher sulfur fuels in Canada
              and Mexico.  One commenter noted that if fuel standards are not harmonized,
              EPA should reconsider the implementation date of the 2007 rule.

              Letters:

              Cummins, Inc. (IV-D-231) p. 46
              Detroit Diesel Corporation (IV-D-276) p. 7
              Engine Manufacturers Association  (IV-D-251) p. 30

       (2)     U.S. fleets will be at a significant competitive disadvantage versus their
              Canadian and Mexican competitors if fuel standards are not harmonized. In
              addition, multinational fleets will be motivated due to cost considerations to
              purchase and register these new vehicles in Canada.  EPA has failed to
              address these issues.

              Letters:

              Cummins, Inc. (IV-D-231) p. 46

       Response to Comment 4.6(E)(1) and (2):

       EPA staff is concerned about the potential for poisoning aftertreatment systems on
vehicles crossing international borders and being refueled with high sulfur diesel fuel Such
disparities in diesel fuel quality exist now, but with generally lesser impact. Truck operators
will need to take extra precautions regarding refueling points, and it is clearly in the long term
best interest of the environment to work for North American in-use fuel quality harmonization.
(F)    EPA should preempt state, regional, or local standards or regulations on diesel
       fuel.

       Some commenters expressed concern that state or local diesel fuel controls may
cause disruptions in supply and/or prices. One commenter specifically mentioned a
proposed low sulfur diesel fuel requirement by a local air quality management district in
California as an example of such potential disruption in supply and prices. One commenter
specifically mentioned the Texas Low Emission Diesel rule as an example of a state diesel
fuel regulation in a SIP provision that should be disapproved. One commenter urged EPA to
advise states of the express preemption of state diesel fuel controls under CAA section
211 (c)(4)(A) as including state controls of sulfur, cetane index and number, aromatics,
distillation, and gravity for highway diesel fuel, and to advise them that states are  preempted
from regulating any properties for both highway and nonroad diesel fuel because  such
controls would conflict with the federal programs, needlessly increase costs for the oil
industry, and potentially create serious supply situations. This commenter also urged EPA to
actively discourage states from adopting diesel fuel programs in order to protect the
nationwide benefits EPA seeks from this federal program from the interference and
disruptions that state diesel fuel initiatives are sure to create. Another commenter
recommended that EPA add a new section with specific regulatory language to address this
issue as follows: 86.1854-01 Preemption of Non-Federal Standards for Diesel Fuel: No
State, or territory, commonwealth  or possession, or political subdivision thereof, shall issue or
enforce a standard or regulation for purposes of motor vehicle emissions  control regarding
the content of diesel fuel or its use in  motor vehicles or motor vehicle engines after (insert

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date of final rule).

              Letters:

              American Petroleum Institute  (IV-D-343) p. 82-85
              American Trucking Association  (IV-D-269) p. 3
              CA Trucking Association (IV-D-309) p. 4-6, 8-9
              Koch Industries (IV-D-307) p. 10
              Phillips Petroleum Company (IV-D-250) p. 2
              Swift Transportation Company (IV-D-263) p. 1

       Response to Comment 4.6(F):

       As stated in the preamble, CAA section 211(c)(4)(A) prohibits states (and political
subdivisions of states, which shall be included in the term "states" for this response) from
establishing  controls or prohibitions respecting motor vehicle fuel characteristics or
components for the purposes of motor vehicle emission control if EPA has established a
control of the fuel characteristic or component. This preemption applies to all states except
California, in accordance with CAA section 211(c)(4)(B).

       EPA also states in the preamble that the highway diesel fuel sulfur levels established
in today's rulemaking modify EPA's existing standards and, as a result, do not initiate  any
new preemption of state authority. Since today's rulemaking does not extend to any
characteristic or component of highway diesel fuel except sulfur content, it is not relevant to
this rulemaking to address preemption under section 211(c)(4)(A) of other characteristics or
components of highway diesel fuel such as cetane index and number, as one commenter
suggests.  EPA has stated, however, that because of EPA's controls of highway diesel fuel in
80 CFR 80.29, states are preempted under section 211(c)(4)(A) from establishing highway
diesel fuel controls respecting sulfur content, cetane index, aromatics content, and the use of
certain visible dyes.

       As a result of this explicit preemption of sulfur content of highway diesel fuel, states
other than California with highway diesel fuel sulfur control programs not already approved
into their SIPs will need to obtain a waiver from EPA under section 211(c)(4)(C), unless the
state standard is identical to EPA's sulfur standard. EPA implements this provision within the
guidance it set forth on August 25, 1997, as cited by this commenter, and requires that the
state justify its state fuel control program as necessary to achieve a NAAQS even if the state
implemented all other reasonable and practicable non-fuel control  measures.

       EPA recognizes the concerns associated with the potential disruption caused  by
numerous state (or "boutique") fuels. In most situations, EPA believes that a uniform  national
program is the best way to protect public health and minimize disruption to the country's
efficient fuel distribution network.  As the number of state fuels increases, the fuel distribution
network becomes less efficient. Therefore, EPA's general expectation is that states will limit
state fuel programs that differ from federal standards to situations where local or unique
circumstances warrant control.

       This is consistent with EPA's  role in implementing the CAA preemption provisions
described  above.  This approach is reflected in EPA's August 25, 1997, guidance, which EPA
follows in reviewing any request from a state for a waiver of preemption, such as the current
request from Texas for its low emission diesel fuel rule. As noted above, however, California
is not subject to the same CAA preemption provisions, so California is not required to  obtain

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a waiver of preemption for the low sulfur diesel fuel requirement proposed by the air quality
management district in California mentioned by one commenter.

       One commenter recommended that EPA advise states that they are implicitly
preempted from controlling all diesel fuel properties, for both highway and non-road diesel
fuel, under the Supremacy Clause of the U.S. Constitution.  EPA explained in the preamble
the possibility that a court could consider whether a state sulfur control is implicitly preempted
under this clause.  EPA has thus given states notice of the possibility, but EPA believes it is
premature to predict that a court would in fact make such a determination with respect to any
particular case.

       Another commenter recommended specific regulatory language that would preempt
all state regulation of highway diesel fuel after the date of this final rule.  EPA rejects this
recommendation because it would establish a broader preemption of state fuel controls than
the CAA authorizes.  As described above, state controls on highway fuel are preempted
under section 211 (c)(4)(A) to the extent EPA has already controlled the component or
characteristic, but states are allowed the opportunity to justify an exception to (or "waiver" of)
preemption under section 211 (c)(4)(C).

(G)    Commenter proposes EPA adopt seasonal specifications, requiring low sulfur
       fuel through the cold months, and higher sulfur fuel in warmer months.

       (1)     Such a change would permit refiners to operate another 3-6 months without a
              catalyst change,  and would reduce production costs by .1 to .3 cpg with no
              significant environmental penalty.

              Letters:

              Koch Industries  (IV-D-307) p. 9-10

       Response to Comment 4.6(G):

       While the commenter did not define "lower" and "higher", the  idea is not workable.
The level of diesel fuel sulfur needs to be consistent year round to ensure the proper
functioning of the emissions control  equipment we anticipate will be used to meet the
emission  standards in today's rule.
(H)    Before proceeding with the proposal, EPA should study the effect of low sulfur
       diesel (15 or 50 ppm) on agricultural and other nonroad equipment.

       (1)     Agricultural nonroad equipment currently operate and likely will continue to
              operate using onroad diesel fuel. There are significant operating differences
              in this equipment that should be studied before the proposal is finalized. This
              would be similar to the study conducted jointly by EPA and USDA in the mid-
              80s during conversion to unleaded fuel. (See also  Issue 11.)

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p.  5

       Response to Comment 4.6(1-1):

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       While there is some highway diesel fuel used in nonroad applications, the majority of
nonroad equipment uses nonroad fuel. Another portion of nonroad equipment likely is fueled
on occasion with highway fuel. We are unaware of any problems which might occur due to
the occasional use of low sulfur highway fuel. For tha small portion of the nonroad fleet
which might routinely be fueled with highway fuel, we are also unaware of any significant
problems which will necessarily result byt the operator will need to assure that its choice to
use highway fuel rather than nonroad fuel will not cause operating problems. We note that
nothing in this rule encourages the use of 15 ppm sulfur highway diesel fuel in nonroad
applications.

(I)     EPA should encourage the implementation of non-monetary incentives such as
       NSR offsets and other emissions credits in order to facilitate the introduction of
       15 ppm fuel.

       (1)    Commenter provides no further supporting documentation.

             Letters:

             National Automobile Dealers Association  (IV-D-280) p. 3

       Response to Comment 4.6(1):

       As in the Tier 2 gasoline sulfur rule, EPA is now working on guidance for the states to
implement policy on emissions effects. Once implemented, this policy will also be applied to
today's diesel fuel  rule.

(J)     Before proceeding with the proposal, EPA should study the effect of low sulfur
       diesel on transit buses.

       (1)    The operating cycle of a transit bus differs significantly from that of a diesel
             truck and therefore, it cannot be assumed that the impact of low-sulfur diesel
             on  transit buses are the same as the impact to trucks. EPA should more fully
             consider the following issues: whether low-sulfur diesel will have an adverse
             impact on the fuel economy for transit buses, whether diesel engines (old or
             new) using low-sulfur fuel would require a special engine oil and different oil
             change intervals, and whether the use of low-sulfur fuel would increase the
             life cycle cost of operating a transit bus. EPA should also clarify the impact
             that low-sulfur diesel will have on the engine (e.g. engine-related subsystems,
             exhaust, turbo charger, and auxiliary heaters).

             Letters:

             American Public Transportation Association (IV-D-275) p. 3-4
             Milwaukee County Transit System  (IV-D-97) p. 1

       Response to Comment 4.6(J):

       As part of the process used for establishing a transient data cycle for heavy-duty
engines, EPA studied differences between truck and bus operation.  The conclusion reached
was that their urban operating characteristics were similar. There is no data to suggest that
this has changed.  There is no reason to expect that the use of low sulfru diesel  will reduce
feul economy and  the removal of the contaminant sulfur should at least directionally extend

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maintenance intervals and component life.  However, as was discussed in 4.6(A), the fuel
needs to have proper lubricity additives.

(K)    EPA should consider the use of new cleaner burning diesel fuels that have
       recently been developed.

       (1)     Clean Diesel Technologies, Inc. has developed a formulation that
              incorporates its Platinum Plus bimetallic fuel borne catalyst (FBC) and is
              capable of reducing PM by 33 percent and NOX emissions by 10 percent as
              compared to a commercial No. 2 diesel fuel.  This cleaner burning fuel is
              based on a high quality pipeline grade of jet/kero diesel fuel plus an additive
              package containing a lubricity agent, detergent and the bimetallic
              platinum/cerium FBC.  Engine tests indicate that there is no fuel economy
              penalty or loss of power associated with the new fuel blend.

              Letters:

              Clean Diesel Technologies, Inc.  (IV-D-157) p. 1-5

       Response to Comment 4.6(K):

       The commenter has done considerable work in this area and has demonstrated the
technical adequacy and effectiveness of the approach used. However, EPA does not set
standards requiring the use of specific fuel additive packages, but  leaves to the market place
the ability of manufacturers to meet standards based on the technology they select for the
fuel available. The  package described by the commenter has the  potential to reduce in-use
emissions, but falls far short of the goals in  the NPRM.

(L)    EPA should investigate the potential adverse effects of desulfurization to fuel
       properties.

       (1)     For  cold  flow performance, usually #1 diesel or jet fuel is added to the diesel
              blend. Adding jet fuel will be precluded because of its high sulfur content,
              and any change to jet fuel sulfur levels would likely require in depth study by
              FAA. Also, dramatically reducing sulfur in the fuel will result in  increased
              hydrogen, which will raise pour points and cloud points of the fuel. Further
              work is needed to investigate these concerns.

              Letters:

              Big West Oil, LLC (IV-D-229) p. 6

       Response to Comment 4.6(L):

       Cold flow performance and pour points are important characteristics of diesel fuel. In
situations where this is critical, refiners will have to add desulfurized blending components or
additives to maintain performance.

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ISSUES:  ECONOMIC IMPACT

       Issue 5.1: Costs for New Diesel Vehicles

(A)    The costs of complying with the engine and vehicle standards are reasonable.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             NY Assembly - Health Committee (IV-F-38)

       (2)    Reports results of survey in which 85% of 1,000 respondents agree that up to
             four cents per gallon is a reasonable increase for cleaner diesel fuel that
             significantly reduces pollution.

             Letters:

             Lake Snell Perry & Associates (IV-D-321) p. 2

       Response to Comment 5.1 (A):

       We concur with the comment that the cost for complying with the engine and vehicle
standards are reasonable given the substantial emission reductions they provide.  The fact
that a majority of the public feels that a four cent per gallon increase in fuel costs would be a
reasonable price to pay for the benefits that clean diesel fuel provides bolsters our belief that
the costs for this program are reasonable.  While the estimate of fuel costs for the final rule is
slightly higher, five cents per gallon, the equivalent of nearly one cent per gallon in vehicle
maintenance savings should also result. Furthermore, we  believe that the majority of the
public based on their support for today's rule would also support the updated five cent per
gallon cost in order to realize the benefits of this  rule.

(B)    The proposed emission standards  can be achieved in a cost-effective manner if
       very low sulfur diesel fuel is available.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Manufacturers of Emission Controls Association  (IV-F-26, 187), (IV-F-190) p.
             108 (IV-F-116) p. 47 (IV-F-117) p. 89 (IV-F-191) p.  120

       Response to Comment 5.KB):

       We agree with the commenter that these substantial emission reductions can only be
had in a cost effective manner if low sulfur diesel fuel is widely available, as is required by
this rulemaking.

(C)    EPA's proposal could lead to significant increases in the cost per truck due to
       the additional emission control hardware that will be required.

       (1)    Commenters provided no further supporting information or detailed analysis.

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              Letters:

              American Petroleum Institute (IV-F-182, 117) p. 161
              CO Petroleum Association (IV-D-323) p. 2
              Capellan, Claudia, et. al.  (IV-D-338) p. 1-2
              IN Retail Council  (IV-D-211) p. 1
              Ml Petroleum Assoc./MI Assoc. of Convenience Stores (IV-D-202) p. 1
              National Federation of Independent Business (IV-D-243) p. 2
              VA Aggregates Association  (IV-D-177) p. 1
              VA Trucking Association  (IV-D-191) p. 1
              Wl Motor Carriers Association (IV-D-189) p. 1

       (2)     Another commenter asserted that the costs of purchasing and maintaining
              after-treatment technologies cannot be evaluated at this time because they
              are not in widespread use.

              Letters:

              American Trucking Association (IV-F-191) p. 42

       (3)     EPA estimates a total cost increase per truck of over $6,000, and these
              estimates may not include all costs given that the technologies evaluated are
              not yet in general use. One  commenter concluded that as a result, it is not
              possible at this time to accurately predict the significant maintenance and cost
              issues associated with the standards.  This commenter (ATA) provided
              significant additional discussion regarding EPA's cost assumptions and why
              the estimated costs to truck owners and operators has been underestimated.

              Letters:

              American Trucking Association (IV-D-269) p. 27-30,37-41, (IV-F- 191) p. 42

       (4)     EPA's estimate that the incremental hardware cost of the proposal for  HD
              trucks of about $1,600 per vehicle in the long term is too  low. The long term
              cost increase is likely to be in the range of $3,500 to $4,000 to equip these
              engines with aftertreatment suitable both to reduce NOX,  NMHC and PM  and
              to have the requisite 435,000 mile useful life.

              Letters:

              Mack Trucks (IV-D-324) p. 4

       (5)     The cost of new intercity motorcoaches with the required emission reduction
              equipment could easily add $4,000 to $8,000 to the overall cost.

              Letters:

              American Bus Association (IV-D-330) p. 6

       Response to Comment 5.KC):

       We agree with the commenters that the additional costs for the advanced emission

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DECEMBER 21, 2000	PAGE 5-3

control technologies and for the needed low sulfur diesel fuel are non-trivial and must be
estimated as accurately as possible. However, we disagree with any implication that
because these costs are non-trivial that the benefits of the program are some how
outweighed by the costs.  To the contrary we believe based upon our cost effectiveness and
benefits estimates, that the costs of the program are reasonable when consideration is given
to the significant emission reductions realized through the application of the technology.

       One commenter suggests EPA's cost estimates are optimistically low because
uncertainty about the emission control technologies means that the cost of the truck will
invariably be higher. While we do agree that cost estimates made several years in advance
of the implementation of the technology is inherently uncertain, we disagree with the
suggestion that the costs are therefore invariably higher. The uncertainty in the estimates
means that the cost of the program may be higher or lower than we have estimated.  Indeed,
past history of Agency rulemakings would suggest that currently unanticipated technology
improvements could lead to costs well below those estimated here. The commenter further
raises concerns that we have not addressed additional costs to the vehicle manufacturers in
the implementation of the technology specifically citing concerns about increased heat
rejection necessitating the use of larger more  expense radiators and new truck designs. We
disagree with the assertion raised here. We do not project that heat rejection will increase
due to the  engine changes needed to meet the Phase 2 standards, costs for emission
controls. It is not clear from the comment why the  commenter believes heat rejection would
go up in order to meet the Phase 2 standards, however it may be for some of the same
reasons addressed in issue 3.2.1(M).

       Another commenter suggests an alternative cost estimate of $3,500 to $4,000 for a
heavy heavy-duty diesel engine meeting the Phase 2 standards but does not provide any
additional information to explain how this estimate  was derived.  Absent this information or
direct criticism of the method EPA  used to estimate costs, we can not agree with the
commenter's estimate. Similarly the estimate for increased cost of the  intercity buses given
in the comment was based upon "some automotive engineers" without  giving a specific basis
for the estimate. Absent additional information on  this estimate we can not agree with the
comment.

(D)    EPA has underestimated the  costs of PM control technology.

       (1)     EPA estimated the cost of the  CDPF at $900, while MECA placed it at
              $1,500, and EPA's  contractor EF&EE reported it at $1,200. Total cost of the
              SCR/CDPF system is several  hundred dollars less than EPA's cost estimates.

              Letters:

              American  Petroleum Institute  (IV-D-343) p. 69
              Marathon  Ashland Petroleum  (IV-D-261) p. 73-74, 95

       (2)     EPA's estimates of the  hardware costs for PM traps are engineering cost
              estimates that are based on the assumption that the technologies will develop
              as quickly and as favorably as EPA predicts.  EPA does not provide estimates
              of how a less favorable development of the technologies would affect ultimate
              hardware  costs.  In addition, EPA's cost estimates assume that supply of the
              emissions control devices will  be infinitely elastic beginning in 2007 when the
              emissions standards start phasing  in. However, unless several firms rapidly
              acquire the ability to produce the necessary emissions control equipment,

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              supply will not be perfectly elastic.  Prices above average cost may persist for
              several years should some of the firms now developing the technologies
              patent key discoveries and thus gain market power.  In addition to these
              concerns, EPA's cost estimates assume that the long-run supply of key
              resources, such as precious metals used in catalysts, is infinitely elastic and
              that the increase demand for those resources created by the proposed rule
              will not drive up resource prices.

              Letters:

              Mercatus Center at GMU  (IV-D-219) p. 15

       Response to Comment 5.1(D):

       Our cost estimates made for the CDPF system are based upon the best available
information on current and future practices in the manufacture of these technologies. We
appreciate that other estimates can be made for these costs, but absent criticism of the
method or particular assumptions we have used in our cost estimates, we must disagree with
the assertion in the comment that our estimate is too high. Further we would like to clarify
that our near term cost estimates for CDPFs fall within,  or are higher than, a range of
estimates made by the Manufacturers of Emission Controls Association (MECA) based upon
a survey of its members (see docket A-98-32 item ll-D-09).

       The estimates for the CDPF technology are cost estimates and not price estimates.
They do not necessarily account for all factors which while not changing cost could change
price.  We believe that our cost estimates reflect the most likely costs for the technology
based upon reasonable  development. To make estimates based on other unspecified
development outcomes would be speculative. The suppliers of these technologies are the
same companies that supply similar products today for the light duty passenger car market
which has annual sales of approximately 15 million units per year in North America alone.
We consider the suggestion that they will be unable to supply the much smaller heavy-duty
truck market in 2007 as  unlikely. We have not based our cost estimates for the CDPF
technology upon proprietary technologies. Should a proprietary technology be developed
which is more desirable  than the system we have estimated here, but is more expensive, it
will be up to the consumer to choose between the technologies. In reality the likely reason
for choosing a new proprietary technology is because it represents a cost savings over the
existing technology.  Therefore we disagree with the assertion that our cost estimates are too
low for CDPFs.

       One comment implied that precious metal costs cannot be assumed to remain at the
levels they are today because increased demand will drive up prices.  While we do not
necessarily disagree with this comment, estimating how the Phase 2 standards will  impact
these prices is inherently problematic. When the CAA was being amended in 1990, there
was much speculation that a new emphasis on rhodium for automotive catalysts would  drive
up demand and, therefore, prices.  While the price did increase due to market speculation,
the prices soon fell back to the levels seen prior to 1990.  We acknowledge that the Phase 2
standards will result in increased demand for platinum in the highway sector.  However, how
that may impact the demand for platinum in other sectors (the bulk of platinum production is
used in jewelry), and the total market demand, is exceedingly difficult to predict.  Further,
recycling of automotive catalysts will mean that platinum for automotive applications will in
the future be a renewable resource whose cost in the long term would fall to the cost of
production (cost of recycling). For this reason, we believe we are best served by assuming a

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precious metal price consistent with our recent Tier 2 rule as it provides a meaningful
comparison to the costs generated by that rule.  Other estimates that we could attempt to
generate would be speculative at best.
(E)    EPA has underestimated the costs of NOX control technology.

       (1)     Some of the cost estimates for NOX adsorbers, which have yet to be
              produced, are in the $3000 range, and EF&EE reported an average around
              $1,450, several hundred dollars above EPA's estimates. Total cost of the
              SCR/CDPF system is several hundred dollars less than EPA's cost estimates.

              Letters:

              American Petroleum Institute (IV-D-343) p. 69
              Marathon Ashland Petroleum (IV-D-261) p. 73-74, 95

       (2)     EPA's estimate of the hardware costs for NOX adsorbers are engineering cost
              estimates that are based on the assumption that the technologies will develop
              as quickly and as favorably as EPA predicts.  EPA does not provide estimates
              of how a less favorable development of the technologies would affect ultimate
              hardware costs. In addition, EPA's cost estimates assume that supply of the
              emissions control  devices will be infinitely elastic beginning in 2007 when the
              emissions standards start phasing in. However, unless several firms rapidly
              acquire the ability to produce the necessary emissions control equipment,
              supply will not be perfectly elastic. Prices above average cost may persist for
              several years should some of the firms now developing the technologies
              patent key discoveries and thus gain  market power. In addition to these
              concerns, EPA's cost estimates assume that  the long-run supply of key
              resources, such as precious metals used in catalysts, is infinitely elastic and
              that the increase demand for those resources created by the proposed  rule
              will not drive up resource prices.

              Letters:

              Mercatus Center at GMU  (IV-D-219) p. 15

       Response to Comment 5.1(E):

       Our cost estimates made for the NOX adsorber based catalyst system are based upon
the best available information on current NOX adsorber applications and expected future
practices in the manufacture of these technologies.  We appreciate that other estimates can
be made for these costs, but absent criticism of the method or particular assumptions we
have used in our cost estimates, we must disagree with the assertion in the comment that
EPA's estimate is too high.  The reasons for the small differences between our estimate and
the estimate of our contractor can be seen in chapter V of the RIA.  These differences reflect
small changes in assumptions and methods for estimating the costs for the technologies.
We believe that the estimates we have reached reflect a best estimate of the future cost for
the reasons articulated in chapter V of the RIA.

       The comments raised with regards to supply elasticity, proprietary interests, precious
metal prices, etc. are all raised in  the same  context with the same reasoning as the issues

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raised in 5.1(D). Please refer to 5.1(D) for our response to these issues.

(F)     EPA's analysis underestimates the cost of compliance for manufacturers.

       (1)     Commenter notes that since EPA did not provide access to their cost
              methodology, they (Cummins) used the EPA assumptions that are outlined in
              the proposed rule along with their own  cost methodology and current
              estimates for the cost of implementing  the proposed rule.  Commenter notes
              that their compliance cost estimates are several times that of EPA, which
              leads to a higher estimate of the total lifetime cost estimated for new trucks.
              Commenter adds that in estimating compliance costs, EPA has not
              adequately accounted for the requirement that the emission control systems
              operate for 435,000  miles, which increases the estimate of lifetime
              compliance costs.

              Letters:

              Cummins, Inc. (IV-D-231) p. 37

       (2)     In developing their compliance cost estimates, EPA has over-simplified the
              potential  combination of technologies and has only assumed implementation
              of a PM trap combined with a NOX adsorber. EPA has stated that it expects
              manufacturers to adapt various  technologies "fine tuned to each application"
              to meet the demands of each market segment they serve but has ignored the
              costs to develop other competing or potential technologies. EPA should use
              the EGR development costs as  the model to estimate costs since the EGR
              systems being developed for MY2002/2004 and the likely systems that will  be
              used to meet the 2007 standards, represent derivative development of
              hardware purchased from suppliers and applied to a base engine product,
              including control system development.

              Letters:

              Cummins, Inc. (IV-D-231) p. 38

       (3)     EPA's development  cost analysis does not adequately account for all costs
              associated with testing requirements.  EPA has failed to account for the cost
              of certification and does not incorporate the costs and complexity associated
              with deterioration factor (DF) testing. In addition, the proposed rule does not
              address the costs involved in developing the necessary additional test
              resources and measurement capabilities that will be required to assure
              compliance with the  standards.  EPA has also  failed to account for the costs
              of increased numbers of tests that result from increased test-to-test variability,
              which would include the cost of additional tests, the costs of procuring new
              test cells, and the costs of employing additional personnel to conduct multiple
              tests. The costs of evaluation of the various alternative control systems and
              the required product durability testing (beyond DF determination testing) are
              also not included in  EPA's analysis.

              Letters:

              Cummins, Inc. (IV-D-231) p. 38-39

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              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 76-77

       (4)     EPA has made several inaccurate assumptions regarding the hardware costs
              associated with ensuring compliance with the proposed standards. EPA has
              allowed for the exhaust aftertreatment hardware suppliers to recoup their
              development costs by allowing for a 29 percent markup from their direct costs
              to their selling price to the engine manufacturer.  In this case, EPA has not
              accounted for realistic recovery by the engine manufacturers  of their system
              development and integration costs or the markup of the OEM vehicle
              manufacturer to the end customer and as a result has underestimated the
              initial cost impact to the end user. EPA has also ignored the impact of the low
              volumes for each technology on the variable hardware costs.  Low volumes
              typically result in higher costs per unit as the development costs are
              amortized over a smaller volume of products. EPA has made several other
              inaccurate assumptions such as setting an arbitrary warranty rate of 1
              percent; not allowing for fluctuations in the cost of precious metals required
              for the emission control technologies; not accounting for the impact of varied
              ambient conditions to PM/HC control technologies; and not accounting for the
              engine manufacturer's financial liability associated with potential system
              failures, recalls, or  enforcement actions.

              Letters:

              Cummins, Inc. (IV-D-231) p. 39-40

       (5)     EPA has based its  cost estimates on the use of speculative technologies.
              EPA's design assumptions for the cost analysis do not reflect the minimum
              system necessary to achieve all the proposed requirements and do not
              acknowledge that a by-pass system is required.  EPA's analysis does not
              include the costs associated with the second PM trap, the second NOX
              catalysts, the second sulfur trap, the associated control valves, required
              sensors for the NOX aftertreatment system, other sensors required for the PM
              trap and sulfur trap regeneration systems and the added complexity and
              capability for  the onboard engine control module. In its assumption that no
              by-pass system is required,  EPA is ignoring the probability that the duration
              between regeneration for the PM, sulfur and NOX control systems are
              different, which will have an  impact on the system design, development costs,
              certification process and operating costs.  EPA also states that the same
              electronic control system hardware developed for the 2004 engines will be
              applied to the 2007 products but the complex exhaust after-treatment
              systems required for this proposal will require much more electronic control
              capability than the 2002/2004 engine products, which will lead to additional
              increases in compliance costs.

              Letters:

              Cummins, Inc. (IV-D-231) p. 40

       (6)     EPA assumes that an oxidation catalyst would be required to meet the
              2002/2004 standards and that this catalyst could be removed as a cost
              savings for the MY 2007 urban  bus engines. This assumption is incorrect
              since an oxidation catalyst downstream of the NOX aftertreatment system will

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              be required to deal with HC or CO 'slip' that occurs during the regeneration
              process for all 2007 engines. The addition of this catalyst will add several
              hundred dollars of direct cost per engine.  EPA's direct cost hardware
              estimates appear to be less than half of what is expected to achieve the
              proposed  standards.

              Letters:

              Cummins, Inc. (IV-D-231) p. 40

       Response to Comment 5.KF):

       With regards to the assertion that we failed to provide access to our cost estimate,
that misunderstanding has been corrected with the commenter.  The details of the cost
estimate and methodology were provided in a memo to the docket at the time of the NPRM
and referenced by the cost tables in the draft RIA.  The commenter had simply missed the
reference contained in an endnote. We provided the commenter with the docket item
number after becoming aware of the  misunderstanding and answered questions that they
had regarding the cost estimate methodology (the teleconference with the commenter is
documented in A-99-06 item IV-E-24).

       We disagree with the conclusion of the commenter that our cost estimates
significantly underestimate the cost of compliance with the Phase 2 standards.  The
commenter provided additional information which was identified as Confidential Business
Information (CBI) to substantiate their opnion that our costs are too low.  Although we can not
respond in detail to their submission  due to its identification as CBI, we can say that with
regards to the cost estimates of individual components our estimates and the commenters
were remarkably similar.  What was markedly different between the CBI submission of the
commenter and our own estimates of the cost were assumptions made about the expected
technology configurations. The commenter identified each function that the total system
would need to accomplish (storage of NOX, reduction of NOX, oxidation of HC/CO, oxidation
of H2S, capture of PM, regeneration  of PM,  etc.) and then estimated a separate component
cost designed to accomplish each  individual task. We have no doubt that if such a
complicated system as the one identified by the commenter were required to meet the Phase
2 standards, the costs would be higher than we have estimated. However, we strongly
disagree with this view of the future technology.  As we explain in detail in chapter III  of the
RIA we believe there are  significant synergies among the system components needed to
meet the Phase 2 standards, as evidenced by testing at NVFEL and by Toyota's recent news
releases describing their  DNPR technology. Please also refer to our responses to issues
3.2.1(C)and3.2.1(J).

       We disagree with the assertion that our cost estimates  do not reflect the total lifetime
operating cost for heavy-duty vehicles. The lifetime operating costs estimated in the  RIA are
for the full  life of heavy-duty vehicles, including the regulatory useful life and beyond based
upon the expected vehicle life from our inventory models. The commenter suggests that
EPA use the EGR development costs as a good guideline for the development costs  of the
technologies needed to meet the Phase 2 standards. In fact, the research and development
costs that we have estimated will be  needed to meet the Phase 2 standards, more than $600
million, are well in excess of the estimates made in setting the Phase 1 EGR based
standards.  Perhaps the commenter  is referring to an internal estimate of EGR development
costs; however those costs are not identified in the comment.  The fixed costs estimated in
the RIA do directly account for certification costs, although this is not inclusive of costs for DF

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testing as identified by the commenter.  The substantial research and development costs
include the cost to do DF testing which will be a fundamental part of developing the
technology for production.

       We disagree with the suggestion that additional testing will be necessary due to
greater test-to-test variability. As we explain in our response to issues in 7.4.5 we believe
that the new measurement procedures will decrease test to test variability. We believe that
the additional cost to implement these new test procedures can be reasonably considered as
part of the overall research and development costs. The test procedure changes do not
require substantial new investment in test hardware to implement.  The new procedures  can
be adopted overtime allowing the costs to be accrued during the normal course of equipment
replacement and manufacturers are making some of these changes already in order to
improve repeatability for existing standards since this reduces their cost of compliance (a
savings we have not accounted for in our analysis). The cost for evaluation of various
alternative technologies is clearly a normal cost of research and development.  If a single
solution was known with no need to test variations or alternative technologies there would be
little need for research investment. Instead we believe that there will be substantial need for
further research and development as indicated by the large cost we have estimated for
research and development.

       We do not agree with commenter that we should include markup for vehicle
manufacturers in our cost analysis or that we have  failed to provide for realistic recovery of
investment.  It is important to note that our analysis estimates the marginal cost of our
standards and not the effect of our standards on the actual vehicle price.  There are many
factors that effect vehicle price that are not considered in this analysis such as demand
elasticity or the availability of competitive engine models.  We do not believe that vehicle
manufacturers will incur significant costs in addition to the increased purchase price of the
engine.  Since vehicle manufacturers are expected to minimize the time between delivery of
the engine from the engine manufacturer and sale of the vehicle to the ultimate purchaser,
there should be little cost to them in terms of handling a higher cost engine. We do not
dispute that vehicle manufacturers may include a markup in their final price, but we believe
that it would  be done in an attempt to maximize profits rather than to recover increased
operating costs. We believe that the methods we have used to account for the total value-
added steps in the supply chain reflect likely incremental cost impacts.  Finally, it should be
noted that even if we were to include a significant vehicle manufacturer markup in our
analysis for heavy heavy-duty engines, it would not change our conclusion that these
standards are very cost-effective.

       We agree with the commenter that low volumes can result in higher cost per unit
given a fixed development cost. However, with regards to the technology development
needed to meet the Phase 2 standards, we believe that development costs can be spread
across the entire range of engines sold  by a manufacturer. This is because aftertreatment
based control technologies can generally be developed for a single application and then
applied over a range of similar applications. The development history of three-way-catalyst
based systems for light duty passenger cars shows this to be true.  Therefore, we believe that
our convention of spreading  the development costs over all engine sales is appropriate.

       We believe that the estimate made of warranty claim rates  (one percent of vehicles)
is a reasonable estimation of likely warranty claim rates. Vehicle and engine manufacturers
strive to have warranty and repair rates  on any individual component on a car or vehicle  well
below one percent. The commenter seems to  suggest that the reason that the warranty
claim rate would be higher than one percent is because of the complexity of the system.  We
disagree with the suggestion that the emission control system would be more complicated

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than many existing automotive systems such as diesel fuel systems, air conditioning
systems, and anti-lock braking systems.

       We have not accounted for the cost of an active PM control system as noted by the
commenter because we do not believe that such a system will be necessary in order to meet
the Phase 2 standards.  Please see our response to comment 3.2.1 (G).  We do not estimate
a cost for the financial liability related to recalls and enforcement actions because we do not
project additional liability due to the  Phase 2 controls standards.

       We have changed our analysis of the need for a diesel oxidation catalyst based upon
the comments we received and our  understanding of how the emission control technologies
are likely to work as explained in detail in chapter III of the RIA. We now project that a diesel
oxidation catalyst will be applied to provide additional HC control as needed from  HC slip
during NOX regeneration and to provide control of H2S emissions during desulfation.  We
therefore no longer account for a net cost savings from urban buses due to the removal of an
existing oxidation catalyst. Further,  we have added the cost of an additional diesel oxidation
catalyst for all heavy-duty diesel  vehicles in our estimates.

(G)    EPA's analysis  underestimates the operating and maintenance costs that will
       be imposed on  consumers.

       (1)     EPA has underestimated the adverse impacts to fuel economy due to the
              proposed standards. Achieving EPA's engine-out emission targets will result
              in a 5% increase in fuel consumption with respect to today's (MY2000)
              HHDEs.  There will also be fuel consumption increases caused by the
              regeneration requirements of the NOX and PM after-treatment systems.  EPA
              has chosen to ignore the analysis of the consulting organization EF&EE and it
              remains unclear how EPA determined the fuel economy and efficiency values
              used to estimate  the costs of this proposal.

              Letters:

              Cummins, Inc. (IV-D-231) p. 41
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256)  p. 76-77

       (2)     Changes to engine design that are necessary to meet the proposed
              standards will lead to increased operation costs to the user. An increase in
              the weight of the  engine will reduce payload as well as operator revenue.
              The engine will have more reliability and durability issues that add to
              operating costs.  The impact on total operating costs to the user will be at
              least three to four times higher than EPA's estimate of 2 percent.

              Letters:

              Cummins, Inc. (IV-D-231) p. 41

       Response to Comment 5.1(G):

       We disagree with the assumption made by the commenter that fuel consumption will
increase due to the Phase 2 standards as we explain in response to comments 3.4(G) and
3.4(C). We expect if there is an  increase in engine weight it will be small in relation to the
gross vehicle weight of heavy-duty vehicles. We therefore do not expect a significant

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economic impact due to a possible increase in vehicle weight.  We disagree with the vague
suggestion by the commenterthat operating costs will increase three to four times over our
estimates. The commenter seems to have reached this conclusion based upon a belief that
our fuel costs are too low and that operating costs will be higher due to the application of the
Phase 2 standard enabling technologies. We disagree with both premises as explained in
responses to issues 5.1(F) and 5.8.1.

(H)    EPA should recognize that increased capital and operating costs to publicly-
       subsidized transit services as a result of this rule will have to be offset by
       increases in federal support for public transit.

       (1)     EPA should coordinate with the Federal Transit Administration on this rule,
              since it would have a significant impact on the financial bottom line of
              publicly-subsidized transit services. Failure to coordinate may result in
              undermining clean air efforts through necessary public transit fare increases
              that divert riders back to their automobiles.

              Letters:

              NJ Transit (IV-G-4) p. 1-2

       Response to Comment 5.1(1-1):

       We appreciate that the incremental cost of the advanced  emission control
technologies will incrementally increase costs for transit authorities.  However, we disagree
with the assertion that these incremental costs will be substantial in relation to the total
operating cost of an urban bus. As we show in chapter 5 of the RIA, the incremental cost for
the new technologies represents less than one percent of the total cost for an urban bus. We
believe that it is unlikely that an increase in transit fares of similar magnitude would deter
significant amounts of riders.  In contrast, we think it  is possible that the significant
improvement in local air quality due to reductions in diesel PM  and odor may increase
ridership, as many people may be avoiding the use transit services due to concerns about
diesel emissions.

       Issue 5.2:  "Learning Curve" Issues

(A)    By incorporating benefits due to a "learning curve," EPA assumes that this will
       be the last round of emission reductions and neglects the development costs
       associated with these improvements.

       (1)     Commenter provided significant discussion regarding EPA's costs analysis
              (see Issue 5.9) but provided no further detailed information or analysis
              regarding the "learning curve" in particular.

              Letters:

              Cummins, Inc. (IV-D-231) p. 38

       Response to Comment 5.2(A):

       The application of the learning curve is unrelated to potential future emission
standards. The learning curve phenomena describes the fact that as manufacturers gain

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experience manufacturing an item they find new ways to lower costs through better
manufacturing processes. Future emission standards would only change this phenomena if
the new standards caused production of the existing technology to cease.  If the existing
technology is no longer manufactured it has no costs, as opposed to reduced  costs due to
the learning curve. Our method to account for the learning curve phenomena does not
include an assumption of future  emission regulations, because such a possibility is not
relevant to the calculation.

       Therefore, we disagree with the comment that, by applying the learning curve cost
reductions, we have assumed that this will be the last round of emission reductions. If we
propose future emission standards more stringent than the Phase 2 standards, we will again
conduct a complete cost analysis that would represent the incremental costs relative to those
estimated for the Phase 2 standards.  We would consider the learning curve cost reduction
again at that time and apply its effects in a manner appropriate to the unique aspects of that
potential future rule.  We cannot assume nor predict emission standards beyond those being
promulgated in this rule, so it would be inappropriate for us to ignore the learning curve
effects in the context of the Phase 2 standards.

       We also disagree that we have neglected the development costs associated with
improvements that result in a learning curve. The commenter did not provide  any data or
information as to the magnitude of these development costs overtime.  We believe that
these costs, if any, would be small and not anything over and above their base
developmental costs for their engines since the "learning curve"  benefits occur primarily from
doing things the first time and learning from it rather than from specific actions taken to
research and develop improved methods.

(B)    The impact of the learning curve on cost reduction in the context of EPA's
       proposed rule may be insignificant.

       (1)    The emission  control technologies and development processes required to
             achieve the proposed emission levels are more reminiscent of a chemical
             plant than a manufacturing process and therefore, the benefits attributable to
             the learning curve/cost reduction process may not be realized. Commenter
             does not provide detailed analysis on this issue or additional explanation
             regarding why this is the case.

             Letters:

             Cummins, Inc. (IV-D-231) p. 39

       Response to Comment 5.2(B):

       The commenter contends that the learning curve and cost reduction process may not
be realized in the context of the  Phase 2 engine standards.  We  disagree with this comment.
As discussed in Chapter V of the RIA and in the Tier 2 RIA, the learning curve is a well
documented and accepted phenomenon. For variable costs, research in the area of costs of
manufacturing has consistently shown that as manufacturers gain experience in production,
they  are able to apply innovations to simplify machining and assembly operations, use lower
cost  materials, and reduce the number or complexity of component parts.  We believe that, to
ignore its potential impacts on costs altogether, as the commenter seems to suggest, would
be overly pessimistic and inconsistent with what industry experience has shown to be true.
The data contained in the studies on the learning curve as referenced in the RIA support the

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commonly used factor of 20 percent, which is approximately the average factor for the
industries included in the studies.

       The operation of exhaust emission control systems may be analogous to the
operation of a chemical factory since pollutants are controlled by reacting them to form
benign products over catalyst systems.  However, this observation by the commenter is
irrelevant with respect to the application of the learning curve in cost estimates. The learning
curve phenomena describes the observation that manufacturing costs decrease overtime
due to improvements in manufacturing processes.  The manufacturing processes used to
make the emission control technologies are typical of much of industrial manufacturing
including processes such as extrusion and  metal rolling and are not similar to the operation
of a process chemical plant.

       Issue 5.3: Diesel Vehicle Maintenance Cost Savings

(A)     For vehicles produced in the years immediately preceding the introduction of
       low-sulfur fuel, the savings associated with reduced engine corrosion and wear
       due to the use of the  low sulfur fuel would be substantial.

       (1)     For a vehicle near the end of its life in 2007, the benefits of using low sulfur
              fuel would be insignificant.  However, those vehicles purchased in the years
              immediately preceding implementation  of the fuel standard would  experience
              significant benefits in the form of reduced corrosion and wear to the piston
              rings, cylinder liners, exhaust system, and EGR as well as reduced deposits
              and less of a need for alkaline additives in the oil. The estimated savings
              would be $153 for light heavy-duty vehicles, $249 for medium heavy-duty
              vehicles, and $610 for heavy heavy-duty vehicles and urban buses.

              Letters:

              STAPPA/ALAPCO (IV-D-295) p. 13

       Response to Comment 5.3(A):

       We concur with the comment and have incorporated these savings in our analysis.

(B)     In addition to its role  as a technology enabler, low-sulfur diesel fuel gives
       benefits in the form of reduced sulfur-induced corrosion and slower
       acidification of engine lubricating oil, leading to longer maintenance intervals
       and lower maintenance costs.

       (1)     These benefits would apply to new vehicles and to  the existing heavy-duty
              vehicle fleet beginning in 2006 when the fuel is proposed to be introduced.

              Letters:

              American Lung Association (IV-D-270) p. 20
              STAPPA/ALAPCO (IV-D-295) p. 12

       Response to Comment 5.3(B):

       We concur with the comment and have incorporated these savings in our analysis..

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(C)    EPA assumes that lower fuel sulfur content will extend the oil life by reducing
       the depletion of the total base number (TBN), which would reduce the
       frequency of oil changes.  However, TBN depletion is only one cause of oil
       degradation, which can also be caused by soot, and EPA's speculation that
       lower sulfur will reduce maintenance costs in this context, is tenuous.

       Letters:

       Cummins, Inc.  (IV-D-231) p. 40

       Response to Comment 5.3(C):

       We appreciate that there may be other factors which also effect oil quality and oil
change intervals.  However absent analysis or a suggestion by the commenter of a more
accurate estimate, we continue to believe that our estimate of a 10 percent increase in oil
change interval is appropriate. Our estimate  is  based upon a survey of industry respondents
and analysis done under contract to EPA.

(D)    EPA has overestimated the maintenance benefits of a 15 ppm diesel fuel.

       (1)    Commenter provides no further supporting documentation or detailed
             analysis.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 74

       Response to Comment 5.3(D):

       Our estimate of the maintenance savings made possible through the application of
low sulfur diesel fuel are based upon a survey of industry respondents and analysis of oil
impacts on maintenance.  Absent substantive comment that suggest specific flaws in our
analysis we continue to believe that our estimates of the potential cost savings due to the use
of low sulfur diesel fuel are appropriate. We disagree with the commenters  assertion that
these savings are overestimated.

       Issue 5.4:  Possible Influence of Proposal on HDV Sales

(A)    The proposed engine/vehicle and fuel standards would raise the cost of new
       HDVs to the point where fewer new vehicles are sold and would create
       incentives to rebuild current engines rather than purchasing new engines.

       (1)    One  commenter also noted that the rise in  costs of the low-sulfur fuel could
             also  be a deterrent for new vehicle sales.

             Letters:

             Petroleum Marketers Association of America  (IV-F-67)

       Response to Comment 5.4(A):

       We disagree with the assertion that increased purchase and operating costs related

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to the Phase 2 standards will lead to substantial deferred purchases of new vehicles. As we
explain in response to issue 8.1.1 we expect that the actual price of the new low sulfur diesel
fuel will be approximately equal to than any remaining high sulfur fuel in most markets under
our temporary compliance option.  Given roughly equivalent fuel costs, the actual operating
cost differences between the existing fleet and the new fleet are expected to be small.
Consequently, under the provisions of the final rule, we do not believe the cost of the fuel will
have any meaningful impact on vehicle purchases.

       The choice to rebuild or to buy a new engine is a complex one and is not made on
cost differences alone. New engines often offer additional benefits which can more than
offset the savings from rebuilding existing engines.  Further, the incremental vehicle costs
estimated in this rule and described in chapter V of the RIA reflect only a small fraction of the
cost of a new vehicle.  For the most expensive new engines, heavy heavy-duty engines, the
incremental vehicle cost increase is estimated to be three percent. Although this issue has
been raised for every heavy-duty rulemaking EPA has undertaken we have never observed a
significant change in rebuild practices or fractions due to new vehicle emission standards.
We do not believe based upon historical evidence that the Phase 2 standards will lead  to a
substantial increase in engine rebuilds at the expense of new lower emitting engine sales.

(B)    A phase-in  option would provide strong incentive to purchase 2005/2006 model
       year engines  to extend the ability to use the lower priced, high sulfur fuel.

       (1)    This result would undercut EPA's emission reduction objectives and is
             another reason not to include a phase-in option.

             Letters:

             NATSO  (IV-F-17)

       Response to Comment 5.4(B):

       We disagree with the assertion of the commenter that any fuel program which is not
introduced as 100 percent of the fuel supply will lead to deferred purchases.  While this
concern may arise more with the various phase-in scenarios on which we requested and
received comment, we are convinced that the design of the fuel program will avoid such
concerns. The lower sulfur diesel fuel will be widely available, and as discussed in issue
5.4(A) is likely to be priced very similarly to high  sulfur diesel fuel, eliminating any motivation
to pre-buy engine or defer purchases.
(C)    Differences in fuel economy, increased acquisition costs, and the fact that
       diesel engines are designed to run for a long time will provide an incentive for
       truck owners to continue to operate existing, higher emitting, better fuel
       economy trucks rather than buy new.

       (1)     Commenter provides no  further detail or supporting information.

              Letters:

              Cummins, Inc. (IV-D-231) p. 37

       Response to Comment 5.4(C):

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       See our response to comment 5.4(A).

       Issue 5.5: Costs for Gasoline Vehicles

(A)    EPA should not assume that light duty technologies and costs apply to heavy-
       duty truck compliance.

       (1)     It is not accurate to assume that light duty technologies and costs apply to HD
              truck compliance.  The larger size of these vehicles, including larger and
              additional tires, suggests that the increase in emissions from background
              sources may be significantly greater than that for light duty vehicles.
              Background emissions contribute a  larger fraction of whole vehicle emissions
              than from light duty vehicles, which increases the challenge for reducing fuel
              vapor emissions beyond what is required for light duty vehicles. In addition,
              the materials used in the larger vehicles are not the same as those used in
              current light duty vehicles (i.e. nylon and monolayer HOPE are more
              prevalent in larger trucks).  Therefore, the replacement with low permeation
              materials will result in a higher incremental cost than indicated by EPA (Table
              III-C.3). Commenter provides an estimate of what the costs are likely to be
              based on new canister array, returnless fuel system, upgrade of fuel system
              materials, and air inlet control measures and recommends that EPA
              thoroughly  evaluate the costs of compliance associated with these  factors.

              Letters:

              Ford Motor Company (IV-D-293) p. 9-10

       Response to 5.5(A):

       Our proposed rule  used a cost estimate of $4 per vehicle for compliance with the
evaporative emission standards. This was the  cost estimate used in our Tier 2 light-duty cost
analysis.  Given that the Tier 2 estimate was for light-duty applications, and because the
heavy-duty vehicles are typically equipped with larger fuel tanks than are  light-duty vehicles,
the $4 cost estimate may underestimate the cost that will  be incurred by "typical" heavy-duty
vehicles.  However, we believe that the $32 to $45 cost estimate suggested by the
commenter represents a worst-case estimate rather than  an average cost that can be applied
across the HD gasoline fleet. Such an estimate may apply for vehicles that have the largest
of fuel tanks and/or are equipped with out-dated materials.  Because many of the heavy-duty
vehicles will indeed have fuel tanks and evaporative emission control systems essentially
equivalent to some light-duty trucks (heavy light-duty trucks and medium-duty passenger
vehicles)  and will, therefore, incur compliance costs similar to the light-duty cost of $4, while
others will incur costs similar to those suggested by the commenter, we believe a mid-term
level of $21 per vehicle is most appropriate. This cost is applied uniformly across the heavy-
duty fleet and is reflected in our cost estimate.  See Chapter V of the RIA for the details of our
cost basis.

       Issue 5.6: [Reserved]

       Issue 5.7: Encouraging Innovative Technologies

(A)    Expressed support for the creation of financial incentives for manufacturers to
       produce and  market alternative technology/fuel vehicles such as natural gas,

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       electric vehicles, and fuel cell vehicles.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              American Lung Association (IV-F-161, 192) p. 8
              CAPIRG (IV-F-190)p. 280
              Center for Neighborhood Technology  (IV-F-11)
              Chicagoland Transportation and Air Quality Commission (IV-F-10)
              City of Arcata  (IV-D-200) p. 2
              Coalition on the Environment and Jewish Life  (IV-F-184)
              Estler, Danielle (IV-F-21)
              IL Public Interest Research Group (IV-F-18)
              Kotgal, Kalpana  (IV-F-192) p. 17
              Mexican-American Community Foundation (IV-F-179)
              Nolan, Catherine  (IV-D-169) p. 1
              Sierra Club  (IV-F-159)
              Stuckey, Stephanie (IV-D-182)
              U.S. PIRG  (IV-F- 190) p. 185 (IV-F-192) p. 134
              Village of Oak Park Dept. of Public Health  (IV-F-8)
              West Harlem Environmental Action/Envr Justice Network (IV-F-76)

       (2)     Assistance such as grants, tax credits, or a revolving loan program would
              encourage municipalities to purchase clean vehicle technologies in advance
              of the regulations  because currently the high costs and uncertainty regarding
              vehicle reliability, performance and durability are significant obstacles.

              Letters:

              L.A. City Council  (IV-F-176)
              Mathews, Erik, et al (IV-D-24) p. 1

       (3)     EPA should provide tax breaks and other incentives to companies that
              manufacture and purchase alternative-fuel HD vehicles and should devise a
              program that emulates the California ZEV mandate for transit buses on a
              national level.

              Letters:

              International Center for Technology Assessment  (IV-D-313) p. 4

(B)    EPA should adopt strong "Blue-Sky" standards for truly clean advanced
       technology vehicles and alternative fuel vehicles.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              CA Air Resources Board  (IV-D-203) p. 6
              Coalition for Clean Air (IV-F-190) p. 177
              NY State Assembly (IV-D-266) p. 2

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DECEMBER 21, 2000                                                    PAGE 5-18
       (2)    Such standards would create incentives for State and Fleet Programs and
             would help establish a substantial market for low emission engines.  Some
             added that even though EPA cannot provide the tax incentives or direct
             funding to make State and local ATV/AFV programs work since this will
             require the involvement of the Departments of Transportation and Energy,
             EPA should provide guidance to States that wish to allocate SIP credits for
             ATV/AFV programs. One commenter noted that by setting "blue-sky"
             standards, EPA can determine exactly what should be the goal for the next
             level of regulation. One commenter (MECA) provided specific
             recommendations for Blue Sky standards and added that an interim  Blue Sky
             category could be established for those engines meeting EPA's proposed
             2007 standards prior to the time those standards go into effect.

             Letters:

             American Lung Association (IV-F-72,  191) p. 146
             CA Air Pollution Control Officers' Association (IV-D-109) p. 2
             Manufacturers of Emission Controls Association (IV-D-267) p. 3,10
             Natural Resources Defense Council (IV-F-75, 191) p. 68
             STAPPA/ALAPCO  (IV-D-295) p. 24-25
             TX Natural Resource Conservation Commission (IV-G-3) p. 3
             U.S. PIRG (IV-F-71, 190) p. 185

(C)    EPA should encourage or mandate the use of alternative fuels or technology.
       Many of these commenters noted that there are a number of existing, new,
       and/or emerging technologies and fuels that could be used as an alternative to
       conventional diesel fuel.

       (1)    Commenters provided no further supporting information or detailed analysis.
             This comment was made by approximately 14,000 private citizens.

             Letters:

             20/20 Vision (IV-F-58)
             Acoff, Jeffrey, et. al. (IV-G-11)
             Alliance of Automobile Manufacturers  (IV-F-190) p. 114 (IV-F-117) p. 168
             American Lung Association (IV-F-72,  192) p. 8
             American Lung Association of Colorado (IV-D-54)
             American Lung Association of Los Angeles (IV-D-47)
             American Lung Association of Metropolitan Chicago (IV-D-237) p. 1
             American Lung Association of NJ (IV-D-224) p. 2
             American Lung Association of OR  (IV-D-165) p. 1
             American Lung Association of Orange County (CA) (IV-D-176) p. 1
             American Lung Association of SD (IV-D-31) p.  1
             American Lung Association of TN (IV-D-19) p.  1
             American Lung Association of VA (IV-D-205) p. 1
             Appalachian Office of Justice & Peace (IV-D-99) p. 1
             Arab Community Center for Economic and Social Services (IV-D-112) p. 1
             Asamoah, Nikiya (IV-D-09)
             Bagnarol-Reyes,  Carolina, et. al. (IV-G-24)
             Bastin, Clinton (IV-F-117) p. 119

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-19

              Beeman, Nora, et. al.  (IV-G-09)
              Braun, Carl and Norma (IV-D-69)
              CA Air Resources Board (IV-F-190) p. 13
              CO Environmental Coalition (IV-F-191) p. 237
              CO Public Interest Research Group (IV-F-191) p. 219
              Cassara, Bob (IV-F-65)
              Center for Environmental Health (IV-D-89) p. 1
              Center for Neighborhood Technology  (IV-F-11)
              Chicagoland Transportation and Air Quality Commission (IV-F-10)
              Citizen, physician (IV-F-190) p. 76)
              City of Los Angeles Environmental Quality and Waste Man  (IV-F-190) p. 95
              Clean Air Council (IV-F-116) p. 333
              Clean Air Network  (IV-D-292) p. 2, (IV-F-191) p. 84
              Clean Air Now Campaign (State PIRGs & citizens) (IV-D-357, 358)
              Clean Fuels Development Coalition (IV-F-191) p. 225
              Coalition for Clean Air (IV-F-190) p. 177
              Chung, Payton, et. al.  (IV-D-133)
              Connor, Thomas, et. al. (IV-D-132)
              Corcoran, Janet  (IV-D-128)
              DE Nature Society  (IV-D-285) p. 1
              Davidson, Karin, et. al. (IV-D-79)
              Dickson, Victoria, et. al. (IV-D-77)
              Dolman, Suzanne, et.  al. (IV-D-341)
              Downtown Community Association (IV-D-118) p. 2
              Economic & Social Justice (IV-F-117) p. 236
              Environmental Advocates (IV-F-35)
              Environmental Health  Watch (IV-D-212) p. 1
              Environmental Law & Policy Center of the Midwest (IV-F-6)
              Estler, Danielle  (IV-F-21)
              Fleming, Scott, et. al.  (IV-D-13)
              Fletcher, Robert E. (IV-F-117) p. 175
              Flowers, Bobbie  (IV-G-67)
              Foley, Deborah  (IV-G-56)
              Fox, John (IV-F-191) p. 75
              Franczyk, Catherine A., et. al.  (IV-D-233)
              Freechild, Aquene, et. al.  (IV-G-60)
              Friends of the Children (IV-F-158)
              GA Forest Watch (IV-D-67) p. 1
              GA State Senator (IV-F- 117)  p. 179
              Grand Canyon Trust  (IV-D-317) p. 2
              Golland, Laurie, et. al. (IV-G-33)
              Hacienda Heights Improvement Association (IV-F-172)
              Hackel, Barbara, et al. (IV-D-14) p. 1
              Hart/IRI Fuels Information Services  (IV-F-117) p. 206
              Higginson, Norman, et. al.  (IV-D-196)
              Hirschi, Alexander  (IV-D-07)
              Hoosier Environmental Council (IV-D-281) p. 1
              Hopkins, Steve, et. al. (IV-G-07)
              Hyatt, Robert E.  (IV-D-94)
              IL Public Interest Research Group  (IV-F-18)
              Institute for Global Solutions (IV-F-175)
              Kachik, Thomas  (IV-D-11)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-20

              Khalsa, Mha Atma S. (IV-D-71)
              Kinyon, John, et. al.  (IV-G-13)
              Kotgal,  Kalpana  (IV-F-192) p. 17
              Kwan, Jeffrey (IV-G-32)
              Landfall Productions, Inc.  (IV-D-27)
              League of Women Voters of Louisiana (IV-D-199) p. 1
              League of Women Voters of New Orleans (IV-D-210) p. 1
              Legal Environmental Assistance Foundation (IV-D-126) p. 1
              Lichtman, Elijah  (IV-D-08)
              Lind, Karen, et. al. (IV-D-121)
              Lu, Rong  (IV-F-162)
              MO Coalition for the Environment (IV-D-235) p. 1
              Margolis, Benjamin  (IV-D-33)
              Mayer Computer Services (IV-D-81)
              Mayor and citizens of Fort Collins, CO (IV-F-191) p. 211
              Montgomery, Jack, et. al.  (IV-D-78)
              Mothers for Clean Air (IV-D-95)
              NC Waste Awareness and Reduction Network (IV-D-51) p. 2
              NJ PIRG (IV-F-116)p. 314
              NY Assembly - Health Committee (IV-F-38)
              NY State Senator (IV-F-83)
              NYC Council (IV-F-80)
              NYC Environmental  Justice Alliance (IV-F-116) p. 317
              Natural  Resources Defense  Council (IV-F-75, 190) p. 102
              Nerode, Gregory, et. al. (IV-D-04)
              Northwest District Association (IV-D-117) p. 2
              OH Environmental Council (IV-D-130) p. 2
              OR Toxics Alliance  (IV-D-175) p. 2
              Orr, David (IV-F-191) p. 258
              Packard, Josh (IV-G-54)
              Private  citizen  (IV-D-12)
              Public Advocate  for the City of New York (IV-D-222) p.  2
              Rhubert, Pamela J.  (IV-D-15) p. 1
              Richards, Donna and Bill,  et. al. (IV-G-19)
              Riggles, Ruth, et. al.  (IV-D-102)
              Rock, Steve, et. al. (IV-G-22)
              Rodriguez, Dolores,  et. al. (IV-D-91)
              Rutherford, Jolene, et. al.  (IV-D-347)
              STAPPA/ALAPCO (IV-F-190) p. 21
              Schmitz, Randy,  et. al. (IV-D-46)
              Sierra Club (IV-F-159)
              Sierra Club, GA Chapter (IV-D-348) p. 1
              Sierra Club, Lone Star Chapter (IV-D-287) p. 2
              Sierra Club, PA Chapter (IV-D-197) p. 2, (IV-D-204) p.  1
              Smith, Bryan R.,  et. al. (IV-D-105)
              Smith, Curt, et. al. (IV-D-49)
              Southern California Ecumenical Council  (IV-F-178)
              Southern Queens Park Association, Inc.  (IV-D-36) p. 1
              TN Environmental Council (IV-F- 117) p. 154
              Tacha, Athena and Richard Spear  (IV-G-06)
              Toxics Action Center (IV-G-02)
              Transportation Techniques (IV-F-191) p. 246

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-21

              Tseng, Joyce, et. al.  (IV-D-03)
              U.S. PIRG (IV-F-71, 190) p. 185 (IV-F-192) p. 134
              Unity Center (IV-D-75) p. 2
              Varsbergs, Krista, et. al. (IV-D-38)
              Village of Oak Park Dept. of Public Health  (IV-F-8)
              W. Houston St. (Manhattan) Block Association  (IV-F- 116) p. 268
              Washington Regional Network (IV-D-18) p. 1
              West Harlem Environmental Action/Envr Justice Network (IV-F-76)
              Williams, Mary, et. al. (IV-D-122)
              Zellers, Tim (IV-F- 116) p. 209
              Zweig, Robert (IV-D-30)

       (2)     One commenter specifically noted that investing in compressed natural gas
              (CNG) infrastructure would move us toward a transportation future based on
              hydrogen. CNG can fuel conventional vehicles and  can also be optimized for
              use in future technologies such as hybrid electric vehicles and is the fuel
              feedstock that can be most easily converted into hydrogen, which will be
              helpful in the eventual commercialization of hydrogen fuel cell vehicles.
              Another commenter supported converting most diesel buses to CNG.
              Another commenter argued that EPA should encourage the use of natural
              gas engines for large buses and trucks.  One commenter focused on
              hydrogen and noted that it would be the best alternative fuel, since it can be
              made from water and is totally non-polluting.

              Letters:

              Glendale-La Crescenta Advocates (IV-D-80) p. 1
              Gostafson, Keith  (IV-F-117) p. 200
              INFORM, Inc. (IV-F-47)
              Metropolitan Atlanta Rapid Transit Authority (IV-F-117) p. 122

       (3)     Commenters noted that alternative fuels are both cleaner and will reduce our
              dependence on foreign oil.

              Letters:

              L.A. Dept of Water & Power (IV-F-190) p. 79
              Stewart, Jim (IV-F-170)

       (4)     Although natural gas vehicle manufacturers cannot afford to invest in
              research and development of aftertreatment devices, the aftertreatment
              technologies developed for diesel are transferable to natural gas vehicles.

              Letters:

              CA Natural Gas Vehicle Coalition (IV-F-190) p. 135

       (5)     One commenter specifically recommended that EPA require 25% of buses in
              high-smog areas to use fuel cell technology by 2005.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-22

              Tseng, Joyce, et al (IV-D-3)

       (6)     EcoEngine is a pollution free engine that is 75% more efficient than the
              average automobile and 35% to 50% more efficient than diesel engines in
              trucks and buses. This engine is capable of using any type of fuel including
              ethanol and hydrogen, is cheaper to build than current engines, can be
              retrofitted into existing vehicles and can be designed to fit any type of on-road
              or nonroad vehicle.

              Letters:

              EcoEngine,  Inc.  (IV-G-18) p. 1

       (7)     Alternative Fuel Technology, using breakthrough technology, on June 16,
              2000, completed and passed all the emission requirements for EPA
              Certificate of Conformity of a Heavy Duty DT466 Dedicated Natural Gas
              Engine (based on the Navistar 7.3 engine).  This new engine offers an
              incentive for diesel fleet owners to switch out (repower) their trucks to a new
              powerful Natural Gas engine at a cost of about $20,000 to the fleet owners.
              EPA should encourage the implementation and use of natural gas and
              hydrogen technologies through financial and other incentives.

              Letters:

              Alternative Fuel Technology, Inc.  (IV-D-62), (IV-D-65) p. 1-3

       (8)     One commenter discussed the propane fired buses that are used in Acadia
              National  Park as a possible model for other areas. The commenter
              suggested that the rule should include provisions that encourage alternatively
              fueled vehicles and funding for such vehicles.

              Letters:

              The Coalition for Sensible  Energy  (IV-D-264) p. 1,2

       (9)     One commenter discussed the low sulfur gasoline invented by Irving Oil in
              Canada, which is available in Canada and Maine, at no extra charge.

              Letters:

              The Coalition for Sensible  Energy  (IV-D-264) p. 2

       (10)    EPA should develop performance or design designations that would assist
              programs seeking to reward the adoption of new technologies or designs.
              These designations could serve as automatic program qualifiers that
              eliminate the need for different jurisdictions to test or verify the performance
              of the technology and could serve as marketing tools that help increase public
              awareness and pressure for the adoption of new technologies. PuriNOx fuel
              could be a valuable component of the program since it offers an immediate
              reduction in emissions and should be included as a contributing factor in any
              broader total-system approach to  encourage innovative technologies.

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DECEMBER 21, 2000	PAGE 5-23

              Letters:

              Lubrizol Corporation (IV-G-49) p. 5

       Response to 5.7(A). (B). and (C):

       We agree with the commenters that increased use of alternate fuels and other
advanced technologies could have significant benefits. However, we lack the authority to
pursue many of the programs suggested by commenters.  The CAA does not give EPA the
authority to change tax policy or otherwise provide the type of financial incentives suggested.
Nor can we mandate things like alternative fuel/engine use without a clear, cost effective,
environmental justification to do so.  Even then, EPA generally sets performance based
emission standards not design standards, leaving to industry the decision of the best way to
achieve the standards.

       We agree that alternative fuels can have significant emission advantages over
conventional diesel engines using conventional diesel fuel. We expect that the new
standards will provide manufacturers with a strong incentive to increase their development of
alternate-fueled engines. We believe that alternate-fueled engines, unlike diesel engines,
will be able to meet the new standards without a change to the quality of their fuel. Thus,
given the interest expressed by manufacturers in generating early certification emission
credits as part of our ABT program, it seems likely that some will try to introduce as many
alternate fueled-engines as they can  by 2007. Also, with the Blue Sky provisions contained
in the final rule,  alternate-fueled engines may be able to play a role in the Phase 2 program
as these vehicles may be able to meet the Phase 2 standards more easily than diesel
engines given that,  as stated, alternate-fueled engines need not wait for changes to the
quality of their fuel.

       The new standards could also encourage the use of alternate fuels apart from the
ABT program.  Historically, the introduction of alternate fuels has been hampered by
concerns about fuel costs, vehicle costs, and/or a customer reluctance to accept
fundamentally new technologies. Alternate-fueled engines will certainly need to change
because they cannot meet  the standards using the emission controls used on today's
vehicles. Therefore, to the  extent that alternate fueled-engines can meet these new
standards with lower costs  (relative to diesels), this rulemaking could have the effect of
making them more  competitive with diesels. It is important to  note, however, that diesel
engines complying with the Phase 2 standards will be as clean or cleaner than today's
alternate-fueled engines, and will perhaps be every bit as clean as Phase 2 alternate-fueled
engines. That is, while alternate-fueled engines can and will be improved to meet the Phase
2 emission standards, they probably will not provide any large emission benefit relative to
diesel engines given the low level of the Phase 2 standards.

       Finally, we believe that our existing regulations already contain provisions to address
to fuels that include fuel additives, such as PuriNOx.  See §86.1313(b)(4).

       Issue 5.8:  Costs of Fuel Change

              Issue 5.8.1: Refinery Costs

(A)    The proposed 15 ppm diesel fuel sulfur standard will not be financially difficult
       for the refiners to achieve.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-24

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              DaimlerChrysler (IV-F-167, 116) p. 292 (IV-F-117) p. 96
              Engine Manufacturers Association (IV-F-191) p. 39
              NY Assembly - Health Committee  (IV-F-38)
              Natural Resources Defense Council  (IV-D-168) p. 5
              Udall, Mark (IV-D-173) p. 2

       (2)     Some commenters point to the large profits that almost all refiners have
              incurred in recent months to support their position that the industry currently
              has sufficient funds to invest in the necessary desulfurization process.
              Commenters noted specifically that the largest oil companies in the U.S.
              reported nearly $12 billion in profits in just the first quarter of 2000 alone, and
              that this level of profits illustrates that the investment required to comply with
              this rule is not prohibitive. Other commenter noted that the profits for the
              second quarter of 2000 were $15 billion, quadruple the cost of compliance. A
              commenter also noted that BP Amoco has reported that its 15 ppm sulfur fuel
              will be sold in California in 2001 at an additional cost of five cents per gallon.
              Another commenter stated that BP would be selling low-sulfur fuel in
              California without any increase in cost to consumers.

              Letters:

              Coalition for Clean Air (IV-F-190) p. 177
              Consumer Policy Institute (IV-D-186) p. 6
              Environmental Law and Policy Center (IV-D-331) p. 4
              Natural Resources Defense Council  (IV-F-75, 190) p. 98 (IV-F-191) p. 68
              Permanent Citizens Advisory Committee (IV-D-318) p. 1,2
              Public Advocate for the City of New York (IV-D-222) p. 2
              The Coalition for Sensible Energy  (IV-D-264) p. 2
              Transportation Alternatives  (IV-D-332) p. 3
              West Harlem Environmental Action (IV-F-116) p. 237

       (3)     Opposes refiner's arguments that reducing the public's cancer risk is not
              worth the costs of retooling their infrastructure to provide clean  fuel.

              Letters:

              CA Natural Gas Vehicle Coalition (IV-F-190) p. 135

       Response to Comment 5.8.KAH3):

       We agree with this comment and we refer readers to the health benefits and the cost-
effectiveness sections of the RIA.

       (4)     EPA's cost estimates are reasonable, accurate, and also consistent with
              estimates by a refining industry consultant. One commenter added that by
              setting the compliance date so far into the future, EPA has allowed extra time
              for refiners to comply which should help lower costs.  This commenter also
              cites to the MathPro study as performed for EMA that estimates the refining

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RESPONSE TO COMMENTS DOCUMENT
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              cost at between 4 and 6 cents per gallon for a 2 to 20 ppm average sulfur
              level for on-highway fuel.  This study used a higher rate of return on capital
              than assumed by EPA and included reduced sulfur levels for nonroad diesel.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 16-17
              Environmental Defense (IV-F-56)

       Response to Comment 5.8.1(A)(4):

       We compare our cost estimate for meeting the 15 ppm sulfur cap standard with other
cost estimates in our response to 5.8.1 (B)(7).
       (5)     The oil industry contends that costs will be excessive since one-third of U.S.
              diesel fuel is light cycle oil that is more difficult to desulfurize than other
              components because it contains a high concentration of sterically hindered
              compounds.  However, the MathPro study takes this fact into account in
              concluding that diesel desulfurization costs would not be unreasonable. It is
              clear that the refining industry has overstated the relevance of this issue as a
              potential argument against an ultra low sulfur requirement. Commenter refers
              to the experience in the early 1970s of removing lead from gasoline, during
              which many of the same  arguments regarding excessive costs and
              infeasibility were presented by the oil industry, and notes that none of these
              concerns came to pass.

              Letters:

              International Truck & Engine Corp. (IV-D-257) p.  10-11

       Response to Comment 5.8.1(A)(5):

       We compare our cost estimate for meeting the 15 ppm sulfur cap standard with other
cost estimates in our response to comment 5.8.1 (B)(7).

       (6)     One commenter provided the report "Refining Economics of Diesel Fuel
              Sulfur Standards, Supplemental Analysis  of the 15 ppm Sulfur Cap" as further
              documentation supporting their conclusions that meeting the  15 ppm sulfur
              standard will be affordable for refiners and that the overall costs are
              reasonable. This study provides an analysis of three scenarios consisting of
              an on-road diesel fuel cap of 15 ppm combined with nonroad diesel fuel sulfur
              standards of 3500 ppm (average), 350 ppm (average), and 15 ppm (cap).

              Letters:

              Engine Manufacturers Association  (IV-G-15) p. all

       Response to Comment 5.8.1(A)(6):

       We compare our cost estimate for meeting the 15 ppm sulfur cap standard with other
cost estimates in our response to comment 5.8.1 (B)(7).

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       (7)     The refining industry has overstated the costs of meeting the 15 ppm
              standard.

              Letters:

              Environmental Defense  (IV-F-169)

       Response to Comment 5.8.KAH7):

       We compare our cost estimate for meeting the 15 ppm sulfur cap standard with other
cost estimates in our response to comment 5.8.1(B)(7).

       (8)     First, the timing of the changes together with planning gasoline
              desulfurization and MTBE phase-out, will allow for integrated planning.  This
              could include realigning process units to optimize use of existing
              hydrotreating capacity, or determining sizing of a hydrogen  plant to
              accommodate both gasoline and diesel desulfurization, while also factoring in
              the hydrogen increase obtained by increasing reformer severity to make up
              for MTBE octane loss. Second, the incremental cost differential between 15
              and 50 ppm is not substantial, approximately one cent/gallon, and the
              combined cost of gasoline/diesel desulfurization is less than 25% of RFG
              capital costs.  The refiners that cannot afford 15 ppm likely  cannot afford 50
              ppm either, and EPA cannot help these refiners escape the reality of the
              marketplace.

              Letters:

              Hart/IRI Fuels Information Services (IV-D-154) p. 2-3

       Response to Comment 5.8.1(A)(8):

       See response to comment 5.8.1 (B)(1).

       Response to Comment 5.8.1 (A):

       EPA conducted an analysis of the impact of this rule on the capital  investments which
must be made by refiners in Chapter 5 of the  Final RIA. There, we found that the oil industry
has the financial capability to fund the investments needed to comply with the 15 ppm sulfur
standard.  Furthermore, our benefit cost analyses in Chapter 7 of the Final  RIA clearly shows
that the benefits of this rule far outweigh the costs.

       EPA's primary basis for justifying its rulemakings is whether the rulemaking meets
the requirements of the Clean Air Act. This rule is justified by the need for  emissions
reductions that this rule will provide and that the technology requirements are feasible, taking
cost into account.  As we conclude in our discussion on cost-effectiveness  in the Preamble
and in Chapter VI of the RIA, we find that this rulemaking  is  cost-effective.  However, we are
also concerned whether the refining industry,  or a part of the industry,  is able to afford this
rulemaking.  We believe that refiners can afford this requirement and news of increased
profits in the industry provides us more confidence that these requirements will be affordable.
We are concerned, though, about the overlap of the other regulatory requirements, such as
the Tier 2 rulemaking, with this diesel fuel sulfur standard, especially on the smaller refiners
in the U.S. such as those in the Rocky Mountain states. In Chapter IV of the RIA and in the

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DECEMBER 21, 2000	PAGE 5-27

response to comment (B) (2) in this section, we provide our projections of the amount of
investments expected to be made in each year for both this rule and the Tier 2 rule and note
that the combined  investments are still less than the investments made by the refining and
marketing portions of the industry did in the early 1990s.  In the response to comment
5.8.1 (B) (7), we compare our cost estimate to those made by others. Our concern for the
smallest refiners in the U.S. is an important reason why we provided those refineries special
hardship privileges.

       Statements by refining companies, such as BP Amoco and Tosco, that they will
desulfurize their highway diesel fuel earlier than necessary is further evidence that this rule is
affordable. If it was too expensive, these companies would likely find that consumers'
willingness to pay would be exceeded by the cost of desulfurizing diesel fuel.

       We agree with comment (3) and we refer readers to the health benefits and the cost-
effectiveness in sections 5.9 and 5.10 of this document, and Chapter VI and VII of the RIA.

(B)    EPA's compliance cost estimates for refiners are underestimated.

       (1)     Some of these commenters noted only generally that the proposed 15 ppm
              diesel fuel sulfur standard will be far too costly. Some commenters added
              that it is unreasonable to expect refiners to absorb the costs of implementing
              this standard, particularly when refiners are also dealing with the
              implementation of low-sulfur gasoline under the Tier 2 rule.  One commenter
              noted that reducing diesel fuel sulfur below 30 ppm increases  compliance
              costs exponentially. Phillips cites to the NPC report to support their position
              on  this issue and stated that its projected capital investment for diesel
              desulfurization using conventional technologies are two to three times their
              planned Tier 2 expenditures,  despite the fact that their diesel production is
              half that of their gasoline production.

              Letters:

              Andrews,  Robert  (IV-D-134)  p. 1
              Countrymark Cooperative (IV-F-30)
              ExxonMobil (IV-D-228) p. 2-3,
              Independent Fuel Terminal Operators Association (IV-D-217) p. 3-5
              Marathon Ashland Petroleum (IV-D-261) p. 2, (IV-F-74)
              NY Assoc. of Service Stations & Repair Shops (IV-F-45)
              Petroleum Marketers Association of America (IV-F-67)
              Phillips Petroleum Company  (IV-D-250) p. 5
              Ports Petroleum Co, Inc.  (IV-F-117) p. 190
              Remster, John  (IV-F-28)
              U.S. Chamber of Commerce  (IV-D-329) p. 5
              Western Independent Refiners Association (IV-D-273) p. 3

       Response to Comment 5.8.KBK1):

       The justification for this rule is discussed in the response to comment  5.8.1 (A). We
believe our cost analysis is a true and accurate reflection  of the costs the industry is likely to
incur, and we corroborate our cost estimate in responses to comments 5.8.1(B) (2), (B)  (3)
and (B) (7). For information on how our diesel fuel desulfurization cost estimate was made
and how it compares to other cost estimates on the 15 ppm sulfur cap standard, the reader is

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DECEMBER 21, 2000	PAGE 5-28

directed to section (C) of Chapter V in the RIA.  With respect to the higher cost of reducing
the highway diesel fuel to meet a 15 ppm cap standard relative to meeting a 30 ppm
averaging standard, we conclude that since meeting a 30 ppm sulfur standard would not
allow the emission control devices to operate as designed to meet the emission standards,
the cost of desulfurizing highway diesel fuel to 30 ppm is not important. What is important is
that desulfurizing highway diesel fuel to meet a 15 ppm cap standard is cost effective when
we consider the emission reductions which we estimate will be realized. Our estimated
aggregated capital cost of meeting this 15 ppm highway diesel sulfur cap standard is $5.3
billion, which is about 15 percent higher than the $4.6 billion estimated to be incurred for
meeting the Tier 2 sulfur standard.  For refiners that produce a similar ratio of highway diesel
to gasoline, we would expect that they would be faced with a similar relationship in capital
costs. It is interesting to note that one of the commenters on this issue about the relative
capital cost of meeting Tier 2 and meeting this rule announced a new technology for
desulfurizing diesel fuel since submitting their comments.81  The company asserts that this
new diesel desulfurization technology would significantly reduce the cost of desulfurizing
diesel fuel.  However, the potential  cost reduction due to this new technology is not reflected
in our cost analysis for this Final Rule because we have not been able to fully evaluate the
viability of the new technology, nor its cost impact on the industry. We believe that refiners
can afford the investments which much  be made to meet both Tier 2 and this highway diesel
sulfur standard, and we address this issue in our response to comment (B) (2) below.

       We believe that the premises used in the NPC study referred to by the commenter
were conservative and lead to the overestimation of cost.  For example, the NPC study
assumed that half of diesel fuel would be produced by refineries that would have to  put in
grassroots units to meet a 30 ppm highway diesel sulfur standard. We think that fraction is
too conservative as discussed in Chapter IV of the RIA. Also,  another industry study funded
by API concluded that a lower percentage of highway diesel fuel (40 percent) would be
produced by refineries which would put in grassroots units to meet the much more stringent
15 ppm  cap standard.

       (2)     Commenters noted that EPA based its cost estimate on unreasonable
              expectations that existing diesel hydrotreating could be modified to produce
              adequate volumes of 15 ppm cap diesel fuel and asserted that such catalyst
              improvements have not been demonstrated. One commenter noted that the
              NPC report documents that existing hydrotreaters could be used with
              modifications but only by sacrificing significant output volumes.  Commenters
              note that this rule's  impact on the supply and cost of diesel fuel should be
              based on commercially proven desulfurization technology. One of the
              commenters added that higher pressure treating with  larger volumes of
              catalyst would be much more expensive than EPA estimates. Commenters
              noted that it would take roughly $4 billion (EPA's estimate for 15 ppm cap
              fuel) to achieve a 30 ppm average and a 50 ppm cap.  This information is
              derived from the NPC study, "Assuring the Adequacy and Affordability of
              Cleaner Fuels", requested by DOE with participation by EPA. Most refiners
              will be forced to build grassroots hydrotreaters in order to produce the same
              quantity of diesel as currently produced. DOE estimates of the cost  of
              producing 15 ppm diesel is more than twice the EPA estimate. One
              commenter refers to the study released by Turner, Mason & Co.,
              "Costs/Impacts of Distributing Potential Ultra Low Sulfur Diesel," February
       81 Announcement made by Phillips Petroleum of their S-Zorb desulfurization process being
adapted to desulfurize diesel fuel.

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              2000, as further supporting documentation.

              Letters:

              American Bus Association (IV-D-330) p. 4
              American Petroleum Institute  (IV-D-343) p. 41, 72-74
              British Petroleum (IV-D-242) p. 5
              CO Petroleum Association (IV-D-323) p. 1
              Citgo Corporation  (IV-D-314) p. 2
              Countrymark Cooperative (IV-D-333) p. 2-3
              ExxonMobil (IV-D-228) p. 13-14, (IV-F-105) p.12
              Marathon Ashland Petroleum (IV-D-261) p. 38-44, 74-80
              Murphy Oil Corporation (IV-D-274) p. 12-13
              Sinclair Oil Corporation (IV-D-255) p. 6-7
              Swain, Edward (IV-D-162) p. 2

       Response to Comment 5.8.1(B)(2):

       The information which we received from a number of vendors supports our
assumption that current diesel desulfurization units will mostly be  revamped to meet the new
diesel sulfur standard. We met with Criterion, Akzo Nobel, UOP,  and HaldorTopsoe, which
are all diesel desulfurization catalyst vendors.  These vendors say that current hydrotreaters
can be revamped to  meet the 15 ppm cap standard which we proposed. The  revamp would
not be a simple modification on the existing reactor, but would require the addition of a
second reactor with two to three times more catalyst, probably operating at a moderate
pressure (i.e., 800 -1000 psi). The catalyst used will be selected  from a portfolio of newer,
more active catalysts, probably a cobalt molybdenum (CoMo) catalyst in the first stage, and a
nickel molybdenum (NiMo) in the second stage. It will also be necessary to scrub hydrogen
sulfide from the recycle hydrogen gas and use the best liquid distributors for distributing the
diesel fuel equally over the entire catalyst bed.  In  addition, those  refiners treating cracked
stocks, or aromatic straight run stocks, would probably need to strip out the  hydrogen sulfide
in the diesel fuel generated in the first reactor before the diesel fuel reaches the second
reactor. Hydrogen sulfide must be stripped out because it inhibits the desulfurization of
sterically-hindered sulfur compounds which come primarily from cracked stocks and these
compounds comprise a significant fraction of the remaining sulfur which must still be
removed.  Our capital costs are based on this technology .

       The commenter states that the only desulfurization technology which refiners will use
is that which is commercially proven. However, the only desulfurization technologies which
are commercially proven to desulfurize diesel to under 10 ppm is  ring opening and
hydrocracking. Both of these technologies are strategies for "upgrading" a low quality
distillate stream by cracking the larger, aromatic hydrocarbon compounds into a lighter, more
parafinic blend over a noble metal catalyst. Because these reactions occurs using a noble
metal catalyst, the sulfur must first be reduced to low levels (i.e. less than 50 ppm) in a first
stage.  The product from this technology is upgraded in the noble  metal catalyzed second
stage to a higher cetane number and boiling over a lower range of distillation temperatures.
This process consumes a significant amount of hydrogen.  However, the expense of using
more  hydrogen and purchasing more expensive catalysts is offset by the significant price
improvement which highway diesel fuel commands over residual fuel (on the order of 25
cents per gallon), the typical feedstock for this process. Since current highway diesel fuel
already meets highway diesel fuel cetane and distillation requirements, ring opening is not
necessary, and is cost-inefficient unless the refiner intends to switch to poor feedstocks in

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DECEMBER 21, 2000	PAGE 5-30

conjunction with this change. It is cost inefficient because some of the diesel compounds will
be cracked to lighter compounds such as fuel gas, and the hydrogen consumption would be
excessive.

       Instead, vendors of diesel desulfurization technology have assured us that to meet
single digit parts per million sulfur levels under the 15 ppm diesel fuel cap sulfur standard, a
technology called hydrogenation will be used. Hydrogenation, which is generally best
accomplished by using NiMo catalysts,  saturates one of the aromatic rings of sterically-
hindered, sulfur-containing polyaromatic compounds enabling the catalyst to reach and
remove the sulfur from these compounds.  It is important to mention that an equilibrium is
established by the temperature at which the reactions occur, which controls the extent  of
aromatic saturation and the amount of hydrogen consumed. We are assured by the vendors
who we met with, which have demonstrated this technology in their pilot plants, and to  a
limited degree  commercially, that this desulfurization sequence will allow refiners to meet
their sulfur targets.

       With respect to revamping an existing hydrotreater or putting in a new grassroots unit,
refiners with whom we have spoken have said that they will generally revamp their
hydrotreaters.  At this year's NPRA Q & A meeting held in San Francisco, refiners were
asked if they would not revamp their desulfurization units, and put in  grassroots units.
Several industry technical experts, speaking on behalf of the refining industry, said that
refiners would  revamp their existing hydrotreaters and not mothball their existing highway
diesel fuel capital investment.  The experts said that some refiners may change the service of
their existing hydrotreater from treating  highway diesel to either a gasoline hydrotreater, to
meet the Tier 2 requirements, or to a nonroad hydrotreater, if more stringent standards are
established for nonroad, allowing them to put in a grassroots unit to meet this rule's stringent
sulfur requirement. One refining person said that if a unit is very, very old, implying that it is
more the exception rather than the rule, that a refiner may choose to scrap it and start from
scratch with a new unit.

       In the process of establishing this rulemaking, we spoke to a number of refiners about
what their plans would be to meet a 15 ppm highway diesel fuel sulfur cap standard. The
refiners said that they would revamp most of their existing hydrotreaters, however, some had
made preliminary plans to put in grassroots units in some of their refineries.  One of the
refiners we spoke to said that in those refineries where they are putting in a grassroots unit,
they have  other uses for their equipment. In our cost analysis, we assume that 80 percent of
refineries producing highway diesel fuel will revamp their existing diesel hydrotreater units to
meet the 15 ppm cap standard, and the other 20 percent will put in grassroots units.  We
believe that this estimate is reasonable.

       The NPC study's assumption about the need for installing grassroots units in
refineries is more conservative than the assumptions made in the subsequent study by API.
For this and other reasons, we don't think that the assumptions made by NPC are
reasonable, therefore we don't believe NPC's estimates on  the cost of desulfurizing diesel
fuel are reasonable.

       Considering the above and incorporating it in our cost analysis, EPA projects that the
refining industry will have to invest about 5 billion dollars in capital to enable their refineries to
produce highway diesel fuel which meets the 15 ppm cap standard.  While we  believe  that
these costs are not excessive, they must be considered in the context of the investments
which are estimated to be needed to meet the Tier 2 gasoline sulfur requirements. From
Chapter IV of the Final RIA, the following matrix summarizes our estimates of the investment
costs which must be made by the refining industry to meet the Tier 2 and this rules diesel

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PAGE 5-31
sulfur requirements:

  Projected Capital Costs to be made by the U.S. Refining Industry to meet Diesel and
                       Gasoline Sulfur Standards ($Billion)
Program
Tier 2
Diesel
Total
2002
1.7

1.7
2003
1.11

1.11
2004
0.85
1.2
2.05
2005
0.63
1.7
2.33
2006
0.17
0.6
0.77
2007
0.02

0.02
2008
0.04
0.6
0.64
2009
0.02
1.0
1.02
2010

0.3
0.3
RIA Chapter IV
       The capital investments which we project will be made by refiners to meet the
Highway diesel and Tier 2 sulfur requirements are less than what refiners spent in their
downstream operations in the early 90's to meet the environmental requirements at that time.
During the 9 year period from 2002 through 2010, we project an industry capital investment
of about $9.9 billion compared to the 6 year period from 1990 through 1995 when investment
in refining and marketing totaled about $16.5 billion, or about 65 percent higher, not
considering the effects of inflation. The annual average for 2002 through 2010 is $1.1 billion,
which is less than half the annual average of $2.75 billion in 1990 through 1995.  Thus, we
conclude that these investments are not excessive.  The investments made by the refining
and marketing industry are summarized here.

      Environmental Investments made by the Refining and Marketing Industries
                                 in the Early 1990s
Year
Investment
1990
1.5
1991
2.0
1992
3.6
1993
3.6
1994
3.5
1995
2.3
U.S. Petroleum Refining, Assuring the Adequacy and Affordability of Cleaner Fuels

       To address the comments made concerning how our cost estimates compare to other
estimates which were made by DOE and NPC, we refer the reader to the response to
comment 5.8.1(B) (7).

       (3)    Some commenters noted that EPA has failed to adequately account for the
             difficulty and expense of removing sulfur from all the refinery streams, and
             therefore, has underestimated the compliance costs and that the investments
             required to reduce diesel sulfur levels to 15 ppm would be close to $8 billion
             as opposed to the $4 billion as estimated by EPA. One commenter added
             that this estimate does not even account for increased operating costs and
             loss of production to rerun off-spec product while the industry learns how to
             run the new technologies to meet the strict 15 ppm standard. Another
             commenter noted that EPA's estimate is based on optimistic predictions of
             hydrotreating catalyst improvements and concludes that theoretical
             predictions of these improvements should not be the basis for estimating the
             cost of production.

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PAGE 5-32
              Letters:

              American Bus Association (IV-D-330) p. 4
              American Petroleum Institute  (IV-F-16, 42, 182, 117) p. 161 (IV-F-191) p.
              114
              Big West Oil, LLC (IV-D-229) p. 3-4
              CO Petroleum Association (IV-D-323) p. 1
              Citgo Corporation (IV-D-314) p. 2
              Countrymark Cooperative (IV-F-30)
              ExxonMobil  (IV-D-228) p. 10
              Food Marketing Institute  (IV-D-283) p. 2
              LA Mid-Continent Oil and Gas Association (IV-D-319) p. 1
              National  Petrochemical & Refiners Assoc./CITGO  (IV-F-117) p. 101
              National  Petrochemical & Refiners Association (IV-F-31, 44)
              Remster, John (IV-F-28)
              Ultramar Diamond Shamrock Corporation  (IV-F-191) p. 136

       Response to Comment 5.8.1(B)(3):

       We believe that our estimates  of the cost of desulfurizing diesel are appropriate. To
address these comments primarily made by the oil industry that we underestimated the cost
to desulfurize diesel fuel, we will make a comparison of the amount of hydrogen needed to
desulfurize diesel fuel with API's study (which is also consistent with the study which Mathpro
did for EMA) since hydrogen demand is the most important cost of desulfurizing diesel fuel.
For our Final Rule, we analyzed the cost of desulfurizing highway diesel fuel in a similar
manner which Charles River did for API, which is to estimate the cost for each refinery. This
most recent analysis considered the amount of light cycle oil (LCO) and other cracked stock,
such as coker distillate, which each refiner blends into their distillate, and estimated the
desulfurization  cost based on the fractions of each blendstock.  We estimated the hydrogen
consumption for desulfurizing each of these blendstocks based on information shared with us
by the vendors. For hydrogen consumption we used the following for treating untreated
diesel blendstocks to 7 ppm, the level  needed to meet a 15 ppm cap standard.  Fora
comparison, we included the hydrogen consumption used by Charles River in their analysis
for API.

Comparison of the hydrogen consumption of grassroots Hydrotreaters and Revamped
  Hydrotreaters used in the EPA analysis compared to the analysis performed for API
                            (Solution Losses Included)


EPA
API*
Straight Run
Grassroots
240
200
Revamp
96
90
Coker Distillate
Grassroots
850
1160
Revamp
230
260
Light Cycle Oil
Grassroots
1100
1350
Revamp
375
450
* The API hydrogen consumption values are approximate as they were read off of a chart.

       Next we compared our hydrogen consumption values to those from API and vendors,
who provided estimates to the National Petroleum Council (NPC) for treating a diesel fuel
with 25% LCO, 10% coker distillate, and 65% straight run and a T-90 point of 610° F.  To

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DECEMBER 21, 2000
PAGE 5-33
derive our and API's estimated hydrogen consumption for each of these fuels, we simply
weighted the hydrogen consumption values for each blendstock by the blendstock fractions
assumed for this typical diesel fuel. These values are presented in the following table.

                     Comparison of the Hydrogen Consumption
                  for Desulfurizing a Typical Highway Diesel Fuel

EPA
API
Akzo
Nobel
Criterion
Haldor
Topsoe
UOP
IFP
Revamp
180
200
15
160
50
121
-
Grassroots
520
580
290
375
350
411
1020
Target Sulfur Level
7 ppm
7 ppm
10 ppm
10 ppm
10 ppm
10 ppm
30 ppm
Includes Solution
Losses?
Yes
Yes
Yes
?
No
Yes
Yes
       To compare the hydrogen consumption values in the table, it is important to
understand how the different assumptions used in creating the hydrogen consumption values
impact the values. The vendors were analyzing the hydrogen  consumption for meeting 10
ppm, however our estimate of hydrogen consumption and API's estimate are for achieving
7ppm, the expected target sulfur level to meet the 15 ppm cap standard. We don't know how
each vendor would adjust their hydrogen consumption values  to meet a 7 ppm under a 15
ppm cap standard, however, we assigned a 20 scf/bbl increase for the more stringent sulfur
target based on information which we received from one of the vendors.  Furthermore, we
assigned 25 scf/bbl for solution losses. Each vendor assigned a different values for solution
losses  between the various.  Evaluating the hydrogen consumption values in the table, and
considering the adjustments needed to put the various estimates on the same basis, our
hydrogen consumption values are lower than API's, but they are higher than all the vendor's
hydrogen values, except for IFP's.  We believe that our hydrogen consumption values are
similar to the vendors' and API's estimates because we assume similar technologies for
desulfurizing highway diesel fuel. This hydrogen  consumption estimate provides further
support that our cost estimates are appropriate, and that they  are fairly consistent with the oil
industry's analysis.

       We believe our cost estimates are the best supportable estimates at this time.
However, if someone believes our cost estimates could be low, such an optimistic view might
be appropriate.  There are at least two reasons why diesel desulfurization costs will decline
further before 2006 or 2010 when refiners will have to comply  with  this rulemaking.  First,  the
activity of diesel desulfurization catalysts is expected to improve before then.  In fact, two
catalyst vendors, Criterion and Akzo Nobel, announced the availability of newer more active
catalysts during the last half of this year. Further  improvements are expected over time.
Even improved catalysts which become available after diesel desulfurization revamps and
new units which are started up can be incorporated into the diesel hydrotreater.  Diesel
desulfurization  catalysts lose activity overtime and need to be replaced to maintain the

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DECEMBER 21, 2000	PAGE 5-34

productivity of the desulfurization unit. When refiners change out their catalyst, they can load
a more improved catalyst to replace the older, less efficient catalyst. Another reason why
desulfurization costs should be optimistic is that several diesel desulfurization technologies
have been announced which are expected to be lower cost technologies.  These
technologies, which includes biodesulfurization, chemical oxidation and adsorption, were not
far enough along in their development to provide cost estimates for this rule, however, they
could be far enough along in their development so that refiners investing for 2010 could take
advantage of the lower costs which these processes could offer.

       (4)     Although desulfurization ring opening and de-aromatization technologies work
              in Europe, it is only where light cat cracked cycle oil volume is minimal and
              outlets for higher sulfur diesel/heating oil exist. In the US, sulfur compounds
              in light catalytic cycle oil require expensive, high severity hydrotreating for
              removal. Some European countries such as  Sweden also constrain the final
              boiling point of City Diesel to be low enough to exclude many refractory sulfur
              compounds. EPA provides no resolution to this problem.

              Letters:

              British  Petroleum  (IV-D-242) p. 6

       Response to Comment 5.8.1(B)(4):

       As summarized from an involved discussion on this issue in Chapter IV of the RIA,
we are convinced that refiners will further desulfurize their highway diesel fuel to meet the 15
ppm sulfur cap standard using the hydrogenation method for desulfurizing diesel fuel.  Our
conviction that refiners will use the hydrogenation method is  based on  our discussions with
four different vendors of desulfurization hardware, and is also the basis for the API, NPC, and
EIA cost estimates. Hydrogenation saturates one ring of polyaromatic compounds to
facilitate the removal of sulfur from those compounds. The hydrogen demand using the
hydrogenation  route for desulfurization is moderate  (see the  response  to 5.8.1 (B)  (3) for
estimates).  If refiners  choose to use ring opening and dearomatization, they do so for a
different set of reasons.  Such  technology works for any feed which needs to be upgraded by
increasing the cetane number and lowering the boiling or distillation temperature range of the
feed.  A commercial example of ring opening is the  Lyondel-Citgo's highway diesel
desulfurization unit at their Houston  refinery which processes a very heavy, predominantly
cracked feedstock distilled from Venezuela crude oil. One-third of the feed to their ring
opening unit is light cycle oil, one-third is coker, and one-third is straight run feed. Lyondel-
Citgo is currently processing that blend of feed to their highway diesel fuel to upgrade the
material from residual  oil to highway diesel fuel so that they can sell  it for a much higher
value product.  However, we have been reassured by vendors that refiners would  not be
expected to choose to use this technology to further desulfurize their existing highway diesel
fuel to meet a 15 ppm  cap standard  because of the  costs involved and because the
technology would increase cetane and lower the boiling range temperature of their highway
diesel fuel for no apparent reason.  However, a refiner could use this technology to convert
residual oil to highway diesel fuel if  it wanted to expand their pool of highway diesel fuel to
increase their profits.

       (5)     One commenter noted that the operating costs for a refiner to comply with the
              proposed standard will be significant since as the desulfurization catalyst
              ages, the reactor temperatures must be raised to achieve target sulfur levels
              and there are limits to raising the temperature. At 15 ppm with 70  percent
              heavy-cracked stocks, the cycle life of the catalyst will be reduced from 24

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-35

              months to 8 months. This reduction significantly raises the operating costs by
              requiring more frequent catalyst replacement and additional shutdowns, and
              will result in a loss of diesel production. The more frequent replacement of
              the catalyst may raise the cost of diesel production by as much as 7 cents a
              gallon in addition to the loss in production.

              Letters:

              Citgo Corporation (IV-D-314) p. 6
              National Petrochemical & Refiners Assoc./CITGO (IV-F-117) p. 101

       Response to Comment 5.8.KBH5):

       We are aware of Lyondell Citgo's (commenter's) situation at their Houston refinery.
The refiner put in a processing facility to produce highway diesel fuel meeting the federal 500
ppm diesel sulfur cap standard from a feedstock which is a heavy mixture comprised
approximately of 1/3 straight run,  1/3 coker distillate and 1/3 LCO.  The feedstock is low in
cetane and heavier than diesel fuel and must be processed severely to upgrade both the
feedstock's cetane and the distillation endpoint. The  upgrading process involves ring
opening which opens the aromatic rings of the heavy aromatic feedstock improving both the
endpoint and the cetane of the fuel.  Since that unit was started up, the unit is processing
heavier feedstock than what the unit was originally designed to handle, and the operating
temperature is lower than designed to prolong the cycle length (the time between when the
catalyst must be changed out) of the unit. While the ring opening requires that the
feedstock's sulfur concentration be decreased first prior to being reacted over the ring
opening catalyst, the sulfur level which  must be achieved is perhaps only on the order of 50
to 100 ppm sulfur. When an EPA staff person visited the Lyondel Citgo refinery, the second
reactor was not even  being used. Instead, the ring opening catalyst was loaded into the
bottom of the first reactor.

       We believe that Lyondell-Citgo  has several options for meeting the more stringent
sulfur standard. First, the most active diesel desulfurization catalysts would likely be used,
and the most recently announced catalysts are perhaps 1/3 more active than the catalyst
loaded in the facility now, and future catalysts will likely improve on this even more. After
opting for the most effective catalysts, other options available to the refiner to meet the new
diesel sulfur standard include backing out some of the feedstock (most likely, some of their
LCO) to reduce the space velocity of their current unit, increasing the temperature of the
reactor to improve the desulfurization reaction rate which would also reduce the cycle length
of the catalyst, or putting in more catalyst by either dense packing the current reactors, or
putting in additional reactor volume. The refiner needs to decide what option or combination
of options makes the  most sense for their situation. However, the refiner is not limited to
shorter cycle lengths as the only option since the other two options  which we discuss here
are also available. We are confident that most refiners will not choose the option which
would reduce the cycle length of their diesel hydrotreater. It is likely that this refinery can
take  advantage of the temporary compliance margin option at this refinery to stage their
investments since the refinery has two diesel desulfurization trains. One train could be
modified for 2006, and the second one  for 2010.

       (6)     Commenters referred to the recent assessment by the National Petroleum
              Council (an advisory committee to the Secretary of Energy) entitled "Assuring
              the Adequacy and Affordability of Cleaner Fuels," June 2000, as supporting
              documentation. This document provides an overview of the U.S. petroleum

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DECEMBER 21, 2000	PAGE 5-36

              refining industry as well as a detailed discussion in Chapter 3 on reducing the
              sulfur content of on-highway diesel fuel. This includes an overview of the
              distillate market, distillate hydrotreating technology, technology for reducing
              diesel sulfur, the costs for achieving 30 ppm sulfur on-highway diesel, and the
              limitations of linear programming modeling to predict investments and
              operating costs.

              Letters:

              American Trucking Association  (IV-D-269) p. 18-20
              Countrymark Cooperative (IV-D-333) p. 5
              ExxonMobil (IV-F-800)
              LA Mid-Continent Oil and Gas Association  (IV-D-319) p. 1
              Murphy Oil Corporation  (IV-D-274) p. 13
              National Petrochemical & Refiners Assoc./CITGO (IV-F-117) p. 101
              National Petrochemical & Refiners Association  (IV-F-31, 44)
              U.S. Department of Energy (IV-G-28) p. 4, Att. 3 + 4

       (7)     The NPC and DOE studies demonstrate that the EPA's estimates of the costs
              required to meet its proposal are underestimated by 195-264%. Given the
              close convergence of DOE, CRA, and MathPro costs, EPA has
              underestimated the costs. The PRISM model predicted 40% of refiners would
              have to build new facilities to comply with the rule, and API  urges  EPA to re-
              estimate the cost impacts of meeting the 15 ppm cap based upon findings
              consistent with the PRISM model. Commenters provide significant data and
              discussion to support their position on this issue.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 70-75
              British Petroleum  (IV-D-242) p. 5
              Marathon Ashland Petroleum (IV-D-261) p. 38-39, 75

       Response to Comment 5.8.1(B)(6) and (7):

       In their comments to us, EMA, DOE and API all submitted costs for meeting a 15
ppm highway diesel fuel cap standard. We adjusted the cents per gallon cost estimates for
the EMA and DOE cost studies to represent the amortization of the capital  costs at a 7
percent rate of return before taxes, which is how we calculate our per-gallon cost. DOE
provided two separate cost estimates, a conservative cost estimate and an optimistic cost
estimate. The  conservative cost estimate is based on ring opening technology, however,
since vendors of diesel desulfurization technology have convinced us that such technology
will not be used, and even API based their desulfurization cost estimate on the less
expensive hydrogenation technology, we did not include DOE's ring opening technology
here. Instead we present DOE's costs which we believe is based on hydrogenation
technology.82 We were not able to adjust the API cost estimate since we did not receive a
capital cost estimate from API. Since NPC did not provide a cost  estimate  for meeting a 15
       82 DOE did not specify what technology they assumed would be used for their more optimistic cost
estimate, however, their contractor created the more optimistic cost estimate after we shared vendor
submissions with them, so presumably they based the optimistic cost estimate on the hydrogenation method
of desulfurizing diesel fuel.

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ppm cap standard, we did not summarize their cost estimate in this table, instead we discuss
these costs further below in this response.  These costs are presented in the following table:

              Comparison of National Average Refining Cost Estimates
       (7 percent rate of return on investment before taxes, except where noted)

EPA
Mathprofor EMA*
EnSys for DOE * T
CRA for API (10% after tax rate of
return)
Average Cost
(cents per gallon)
4.3
4.2-6.1 (4.6)
4.2 - 4.4 (4.2)
6.2
Capital Cost
($ billion)
5.3
3.4-6.1 (3.9)
2.7-4.5(3.1)
—
  Lower end of range assumes 100 percent revamped equipment while the upper end assumes all new
equipment; values in parentheses represent 20 percent revamped costs and 80 percent grassroots costs.
f  DOE costs are only for the Gulf Coast refining region, which have slightly lower per-gallon costs than the
entire U.S., and almost half the capital costs. These are DOE's optimistic cost estimates; we are reporting
these because they are based on technology which is expected to be used by refiners to meet the 15 ppm
sulfur cap standard.

       We believe that we can explain the difference between our costs and the costs
estimated by EMA, DOE and API. We will first compare our per-gallon cost with those by
EMA and DOE contained in the parentheses, which is interpolated based on 80 percent of
the revamp cost and 20 percent of the grassroots cost. Before discussing the per-gallon
costs, it is important to put the  DOE costs on a more comparable ground. DOE's costs are
only for PADD 3 which is the largest of all the PADDs and it produces  about half of the
volume of highway diesel produced in the country.  If we extrapolate the  PADD 3 costs to the
rest of the U.S. based on our relative  PADD 3/U.S. costs, we estimate that DOE's nationwide
cost would be about 4.5 c/gal.  Thus the EMA and DOE costs are about the same and slightly
higher than our costs.  In  Chapter V of the RIA, we discuss the various cost studies and
make several observations on  the studies. One important observation we made about both
the EIA and DOE studies is that they  base their hydrogen costs on new hydrogen plants.
However, many refineries, including almost all  of PADD 3, can purchase cheap hydrogen
from third parties at a  lower cost than  hydrogen produced from a small refinery-based
hydrogen plant.  We believe that if these studies had considered the lower cost of hydrogen
available from third parties for a portion of the total hydrogen  demand, their costs would be
about the same as ours.

       The API costs could not be specifically adjusted from 10 percent after tax ROI to 7
percent before tax ROI because API did not provide details of their capital costs. However,
we will make an approximate adjustment based on some assumptions.  If we assume that
capital costs comprise the same portion of API's total costs as our costs, we would estimate
that API's costs would adjust to 5.6 cents per gallon.  In reality, API's costs would be
expected to adjust to an even lower cost than that because the capital costs likely contribute
a higher portion of the overall costs than our analysis. API assumed that 40 percent of the
costs are based on grassroots costs,  and API used higher factors for estimating stream day
capacity from the calendar day throughput. Another likely reason why the API costs are
higher than ours is that API probably based its hydrogen cost completely on production from
new hydrogen plants which, like the EMA and DOE analyses, would overstate the costs.

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       Our capital costs compare well to those from these other studies. EMA's estimated
costs were based on PADDs 1, 2, and 3 which represents about 80 percent of the U.S.
production of diesel fuel. If we adjust those costs (using the interpolated costs in the
parentheses) higher to account for the remaining production volume of the rest of the U.S.
refiners, we estimate the capital costs for entire U.S. refining industry meeting the 15 ppm
sulfur cap standard based on the EMA cost study to be just under $5 billion.  Thus, EMA's
capital costs are slightly lower than our capital costs. DOE's cost estimate represents the
refining cost for PADD 3 which represents only about half of the U.S. refining industry's
highway diesel fuel production. Adjusting the capital costs upward to account for the entire
U.S., we estimate the aggregate capital cost for the U.S. refining industry meeting the 15
ppm sulfur cap standard based on the DOE cost study to be about 6.5 billion. DOE's
extrapolated capital costs are somewhat higher than our costs.  However, as we discussed in
Chapter V (C) of the RIA, DOE's costs include a redundancy factor which increases the
desulfurization unit's volume upward by 15 percent under the presumption that refiners will
size their unit significantly larger to account for a possible shortfall in the performance of their
new unit, and this is already after sizing their unit 20 percent larger than the calendar day
volume. We believe that DOE's redundancy's factor is extreme.  If we were to remove that
factor, DOE's capital costs would be under $6 billion which is slightly higher than ours. API
did not provide capital costs for us to compare with our costs.

       We  reviewed the National Petroleum Council's (NPC) report of the impact of
environmental programs on the refining industry.  The report only evaluated the cost of a 30
ppm average highway diesel sulfur standard, so we could not compare that report's
estimated costs with ours since we are promulgating a more stringent 15 ppm sulfur cap
standard. We do have some comments on the study though. The study used the cost study
which Mathpro did for EMA, however, it applied a conservative set of assumptions to the
study's cost estimate.  NPC assumed that half of highway diesel fuel would be produced by
grassroots units and the other half by revamps. This is very conservative considering that
API assumed that a smaller fraction of highway diesel fuel would be  produced by grassroots
units despite evaluating a much more stringent 15 ppm sulfur cap standard.  NPC also
increased Mathpro's capital and operating costs based on the presumption that the vendors
under report their capital and operating cost estimates, and NPC made that adjustment
despite not  even seeing the vendors' cost information which Mathpro used in their cost study.
       (8)     Commenters also noted that price increases at the pump will be significant as
              a result of these excessive implementation costs. One commenter estimates
              12 cents/gallon.

              Letters:

              American Trucking Association (IV-D-269) p.  18-19
              Farmland Industries (IV-F-29)
              NY Assoc.  of Service Stations & Repair Shops (IV-F-45)
              National Petrochemical & Refiners Association (IV-F-31)
              Remster, John  (IV-F-28)

       (9)     Some commenters asserted that a number of  refiners may cease operations
              or at least the production of diesel fuel as a result of the excessive costs of
              complying with  the proposed sulfur standard.

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              Letters:

              American Trucking Association  (IV-D-269) p. 18-19
              CO Petroleum Association  (IV-D-323) p. 1-2
              Countrymark Cooperative (IV-D-333) p. 5, (IV-F-30)
              Ergon & Lion Oil Co. (IV-F-117) p. 183
              Farmland Industries  (IV-F-29)
              LA Mid-Continent Oil and Gas Association  (IV-D-319) p. 3
              National Petrochemical & Refiners Assoc./CITGO (IV-F-117) p. 101
              National Petrochemical & Refiners Association  (IV-F-31, 44)
              Remster, John  (IV-F-28)

       Response to Comment 5.8.1(B)(8) and (9):

       The commenters provide no basis for stating that the price increase at the pump will
be significant, and the one commenterdid not substantiate their estimate fora 12 cents per
gallon price increase. It is very difficult to estimate price increases since they are market
phenomena. For example members of the API have repeatedly explained to us that the price
differential between an environmentally required fuel such as Reformulated Gasoline (RFC)
and the 500 ppm highway diesel fuel sulfur cap standard only reflects the operating cost of
producing that fuel, not the capital cost, due to sufficient investment by refiners to meet the
environmental requirement.  If that is the case here, we would expect the price at the pump
for the  15 ppm sulfur fuel to be less than 4 cents per gallon more expensive than 500 ppm
sulfur fuel while it is still being sold, and less than 7.0 c/gal more expensive than nonhighway
diesel fuel.83

       However, price increases can be much higher than the cost to produce due to a
significant shortage in a submarket for the fuel as evidenced by the higher prices for gasoline
in the Midwest in the early Summer of 2000.  We believe that the market will not experience
high prices for meeting the 15 ppm cap standard because of certain provisions included in
the Final Rule. We believe that the temporary compliance margin and the small refiner
hardship provisions will prevent the possibility for price spikes for several reasons. During
the period 2006 and 2010, the production of 15 ppm sulfur highway diesel fuel will be much
larger than demand avoiding any supply issues during that period of time.  We believe that a
supply  shortfall and associated price increases will not occur in 2010 because refiners not
investing  in 2006 will be able to assess what markets they can best sell into when full
implementation with the 15 ppm cap standard is required  in 2010.  Not investing until having
to meet the program requirements in 2010 gives those refiners more time to procure the
capital  for meeting the program requirements. Also, conventional desulfurization catalysts
are expected to improve by 2010 and emerging diesel desulfurization technology may well be
commercially available which would reduce their perceived costs for participating in
producing 15 ppm sulfur fuel and would likely even the playing field compared to the lower
cost producers which are likely to begin producing highway diesel fuel in 2006.

       (10)    One commenter noted that the proposed rule consists of a significant capital
              investment in an industry with very low return on capital.
       83 The average price difference between the 500 ppm highway diesel fuel and nonhighway diesel
fuel is 2.7 cents per gallon, however, the range in different PADDs is 0 - 4 cents per gallon.

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              Letters:

              American Petroleum Institute  (IV-F-191) p. 114

       Response to Comment 5.8.1(B)(10):

       EPA acknowledges that the return on capital has been lower for the refining industry
than many other industries over the last decade. However, the refining industry's return on
investment has been better over the last year as described in comments which we received
on this rule, probably due to the fact that refineries are operating near or at full capacity. This
situation creates some anticipation that return on investment for the refining industry could be
better in future years. Whether if the refining industry is earning a high  or low return on
capital, we believe that they can afford to make these investments.  As  an example, despite
earning low returns on capital in the  early '90s, refiners invested a significant amount of
capital to meet the Clean Air Act requirements being implemented during that time. As
discussed in response to comment (B) (2) above, the dollar investments of this program and
Tier 2 are less than those investments, and this comparison does not consider the effects of
inflation.  Thus, we conclude that the refining industry can afford the investments which they
would have to make to meet the program's requirements.

       (11)    One commenter cites to API's estimate that more than 30% of the petroleum
              stocks currently processed for end-use as highway diesel fuel with 500 ppm
              sulfur would be processed for other uses due to the high cost to the refiner to
              produce low sulfur diesel.  It is not technologically feasible for refiners to
              process low sulfur diesel at a price that the market would bear. The loss of
              one third of the highway diesel supply, which is currently at capacity, would
              result in adverse impacts to other businesses and consumers through
              increased fuel costs.

              Letters:

              American Trucking Association  (IV-D-269) p. 19-21

       Response to Comment 5.8.1 (B)(11):

       EPA's goal is to develop a final program that will ensure a smooth implementation of
the program, and avoid  any potential for shortages in the supply of highway diesel fuel. A
key ingredient to meeting this goal is that we are providing sufficient lead time for refiners to
begin planning their desulfurization investment strategies. We believe that providing almost
6 years lead time for many refiners is sufficient for the refining  industry to be able to plan for
the necessary volume of low sulfur highway diesel fuel that will be needed in 2006. The
temporary compliance option provides many refiners up to 9 years to comply.

       Charles River Associates conducted the study for API which concluded that the
proposed diesel sulfur rule would result in a significant shortfall of highway diesel fuel supply.
The results of the study, however, were a direct result of the assumptions made.  Since a
number of the key assumptions were not substantiated, the results of the study are in
question, and EPA cannot support its conclusions.

       First, CRA ignored the fact that there is an oversupply  of highway diesel  fuel today;

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15 percent of highway diesel fuel is currently used in nonroad applications. This means that
the refining industry actually overbuilt desulfurization capacity for the current 500 ppm sulfur
standard that became effective in 1993. Any potential shortage of highway diesel fuel would
lead these non-essential users to switch to nonroad diesel fuel or heating oil. In addition,
CRA assumes that refiners that do invest to meet the sulfur requirement will build their
highway diesel hydrotreaters 40 percent larger than calendar day demand. If refiners do
invest at this level, it seems likely that the industry would over invest again. Even our
estimates that refiners would build their highway diesel hydrotreaters 20 percent larger than
demand provides some margin for guaranteeing supply,  especially considering that catalyst
technology will continue to improve making diesel hydrotreaters sized over the next several
years even more overdesigned.

       Second, CRA assumed that 20 refineries could profitably exit the highway diesel fuel
market entirely, and a large number of additional refiners partially would exit the market by
shifting their highway  diesel production to other distillate  markets. CRA further assumed that
other refiners currently not producing highway diesel fuel would not profitably enter into the
market in the future. Although some refineries may choose to exit the highway diesel fuel
market or lower current production volume, we fully expect that other refineries will choose to
enter the highway diesel market or expand current production. CRA did not conclude that this
is the case because it did not even analyze the  impact of this additional supply on the prices
which could be obtained in these markets, or even  if these alternative markets could
physically absorb all of this material. Much of this material reported to be moved out of the
diesel fuel market is not diesel fuel quality,  but poor quality blendstock.  It is not clear that
such material could be blended into nonroad diesel fuel and CRA did not analyze this likely
problem. We do not see much opportunity for the refining industry to shift production to other
distillate products.  These markets would quickly become saturated, making them less
profitable  We expect that refineries will fully analyze this situation prior to making decisions
about desulfurization investments. As a result, we  believe that the refining industry as a
whole will prepare to meet the expected demand for highway diesel fuel in 2006.  We note
that similar shifts in the market occurred when the 500 ppm sulfur standard became effective
in 1993. Refer to Issue 8.1.1 fora more complete discussion of supply  concerns.

       (12)    Commenter refers to a recent NPRA paper presented in March 2000, which
              shows revamping costs of $20 million fora 30,000 B/D unit (even assuming
              the changes in operation philosophy are successful) to meet a 15 ppm
              standard, but only $6.8 million to meet a 50 ppm cap as recommended by
              many  refiners.

              Letters:

              Big  West Oil, LLC (IV-D-229) p. 3-4

       Response to  Comment 5.8.KBH12):

       We are aware of that paper by UOP and partially based our capital cost estimate to
meet a 15 ppm cap standard on the capital cost estimates made in that paper.

       (13)    Some  commenters referred to the CITGO Petroleum facility at Lyondell and
              noted  that the actual cost of the  desulfurization technology used at this facility
              are  roughly twice what EPA has estimated. One  of these commenters

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              specifically noted that the feedstocks to this revamped facility are 30 percent
              straight-run stocks from the crude distillation unit and 70 percent heavy-
              cracked stocks from conversion units and that these heavy-cracked stocks
              are significantly more difficult to treat to the  15 ppm level. The commenter
              added that operating data for this facility shows that to consistently
              desulfurize to 15 ppm or below, a significant portion of the cracked material
              must be removed from the feed, which will reduce diesel production.

              Letters:

              Citgo Corporation  (IV-D-314) p. 5-6
              National Petrochemical & Refiners Assoc./CITGO  (IV-F-117) p. 101
              National Petrochemical & Refiners Association (IV-F-31, 44)

       (14)    One commenter also provided discussion on the capital improvements to the
              Lyondell-CITGO refinery, which were completed in 1996 and included the
              installation of the world's largest freestanding reactor. Catalyst volume in this
              50,000 barrel per day unit was increased from 40,000 pounds to 1.7 million
              pounds at a capital cost of $86 million (which includes $69 million for the
              process unit and $17 million for the supporting facilities).  This is much higher
              than the $30 million cost for a typical refinery processing light cycle oil as
              estimated by EPA.  Citgo itself estimates that the Lyondell unit can treat less
              than half of the diesel pool to a 15 ppm average. Catalyst cycle life will be
              reduced to unacceptably short intervals. Citgo would have to invest over
              $270 MM at that unit alone to ensure that production meets a 15 ppm
              average. A 15 ppm cap would cost over $340 MM.  In addition, a simple
              retrofit is not possible on many units since most older, smaller units do not
              have sufficient reactor design pressures, the requisite high-purity hydrogen
              supply, a suitable fractionation system,  or other hardware.

              Letters:

              Citgo Corporation  (IV-D-314) p. 6
              National Petrochemical & Refiners Assoc./CITGO  (IV-F-117) p. 101

       Response to Comment 5.8.1(B)(13) and (14):

       Our responses to  (B) (4) and (B) (5) above addresses some of the commenter's
concerns about costs using the Lyondel-Citgo refinery as an example.  However, we want to
address some the specific points made by the commenters in an additional response here.
First, the first stage reactor is very large earning the right to be called the largest free
standing reactor.  It is important to note, though, that refiners do not need to proceed in the
way that Lyondel-Citgo did in desulfurizing and upgrading their diesel fuel.  Lyondel-Citgo
chose to operate their diesel desulfurization and upgrading  unit at 650  psi, not 800 - 900 psi.
If they would have designed their unit operate at the higher pressure, they would have been
able to use much smaller reactors, but with thicker walls,  however, the overall capital costs
would not be much different.

       Second, the Lyondel-Citgo diesel desulfurization and upgrading unit is primarily
designed for ring opening, not desulfurization. Lyondel-Citgo is increasing the cetane

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number of their feed from 30 to 40, decreasing the aromatics from 70 to under 40 volume
percent, and increasing the API gravity by about 7 numbers, which translates into a
significant reduction in the distillation boiling range of the feedstock. The sulfur of the feed is
reduced from 1.3 percent to under 0.01 percent (100 ppm) which allows the product to well
exceed the current 500 ppm sulfur cap standard.  However, if the unit is operated as
designed (with a lower endpoint and operated at a higher reaction temperature), the vendor
which designed the unit informs us that the  unit is capable of desulfurizing the highway diesel
fuel down to  under 20 ppm.

       Because the desulfurization and upgrading unit is designed primarily for upgrading, a
large part of the investment was made to upgrade the diesel fuel and that part of the
investment could  be avoided if the refinery only needed to reduce the sulfur of the feedstock
without needing to improve the other diesel fuel qualities. The vendor which designed that
particular unit was one of the vendors we met with so we know that a unit designed only for
desulfurizing and not upgrading diesel fuel would be a lower cost unit. We also understand
that the diesel desulfurization and upgrading unit at Lyondel-Citgo was  not installed as a
simple revamp, despite the fact that there some facilities in place for some mild
hydrotreating. Instead, the unit could  be considered as a hybrid between a revamp and a
grassroots unit which  is another reason why the capital costs are significant for this unit.

       (15)   Another commenter added that the cost of compliance for the Lion Refinery in
             Arkansas (55,000 barrels per day) will be approximately $25 million with the
             50 ppm standard and that these costs will double if the 15 ppm standard is
             required.

             Letters:

             Ergon  & Lion Oil Co.  (IV-F-117) p. 183

       Response to  Comment 5.8.KBK15):

       The capital cost investment we estimate the Lion refinery would have to make to
meet the 15 ppm  cap  standard is  consistent with Lion's estimate.

       (16)   Commenter notes that its costs at one refinery to meet the 1993 500 ppm
             standard were over $83 million, so the EPA estimates are far too low.
             Commenter notes that farmer co-ops have higher costs than other refiners
             because they produce a higher percentage of diesel to serve their agricultural
             needs.

             Letters:

             Cenex Harvest States Cooperatives (IV-D-232) p. 8

       Response to  Comment 5.8.1 (B)(16):

       We presume that Cenex is referring to the NCRA refinery in its comments. We can
use our current cost model for estimating what Cenex may have invested at that refinery to
meet the 500 ppm sulfur cap standard. The capital investment for meeting the 500 ppm cap
standard would be expected to cost about the same as the capital cost  of revamping  that unit

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to meet the 15 ppm cap standard. This is because our grassroots unit costs are about twice
the cost of a revamp. Based on this relationship of costs, our capital cost estimate of the
Cenex refinery meeting the 500 ppm sulfur cap standard is consistent with Cenex's cost.
This comparison corroborates our cost model, and suggests that Cenex does not face higher
costs than other refineries since their historical costs are consistent with our cost model
which is designed to represent typical refiner diesel desulfurization costs.

       (17)    The capital costs discussed in the literature do not account for inside refinery
              operation changes that will be necessary in addition to the process units.
              Feed tanks, day tanks, piping, and blending  operations all will  likely need
              changes to ensure the refiner can deliver on-spec product. There are
              tremendous costs associated with these changes.

              Letters:

              Big West Oil, LLC (IV-D-229) p. 5

       Response to Comment 5.8.KBK17):

       In our discussion of the capital hardware needed in refineries to meet a 15 ppm  cap
standard in the draft Regulatory Impact Analysis, and in that document for this final rule, we
only discuss the major equipment needed in refineries to produce highway diesel fuel which
meets the  15 ppm cap standard. However, our cost analysis is based on engineering and
construction  firm estimates of the inside and outside battery limits costs to revamp refineries
to meet the 15 ppm cap standard. The outside battery limit costs includes such items as the
piping needed to connect the revamped unit to the rest of the refinery, and it is also meant to
include some costs for other facilities such as control buildings and  administrative offices,
primary substation and switchgear, utility generation systems, waste and water treatment
facilities, and flare costs. In addition, we included the addition of a short term  storage tank as
a separate line item for holding potentially off spec material after hydrotreating. Furthermore,
we estimated that refiners will size their desulfurization units 20 percent larger than
necessary, 5 percent of which for reruns of offspec product. Then we added an  18 percent
contingency  factor for the capital costs, and a 12 percent contingency factor for operating
costs to handle  any additional costs that may not be included in the cost estimate. Therefore,
we believe that we accounted for all the cost items identified by the  commenter.

       (18)    Commenter notes that EPA's cost estimates do not address the costs of
              environmental controls required by the permitting rules. PSD and NSR
              permits require BACT/LAER emission controls that can total several million
              dollars per refinery.

              Letters:

              LA Mid-Continent Oil and Gas Association (IV-D-319) p. 1

       Response to Comment 5.8.KBH18):

       Capital costs for meeting BACT and LAER emission controls would be attributed to
this rulemaking if a diesel desulfurization capital investment is being made in a refinery and
the unit requires, for example, the installation of a heater that would increase the NOx

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emissions from that refinery, and existing NOx control regulations are triggered which require
the use of BACT or LAER emission controls.  However, we anticipate that most refiners will
revamp their existing hydrotreater, thus the heat needed for reaction for both the existing and
the add on unit would be provided by the existing heater.  Since no new heaters would be
installed in the refinery, no increases in NOx emissions are expected and no capital costs
would be incurred  for NOx emissions control. Even refineries which are putting in a
grassroots unit to replace their existing hydrotreater are expected to simply replace an
existing heater with a newer heater, thus no net increase in emissions would be expected.
However, some of those  refineries may have to install NOx controls for the replacement
heaters, depending on the emission requirements which pertain to that individual refinery.
We also believe that some refineries will be converted from producing nonhighway diesel fuel
to producing highway diesel fuel. These refineries would be installing a brand new heater to
desulfurize their nonhighway diesel fuel and it is possible that these refineries will have to
install BACT or LAER controls.  Since  capital costs for meeting BACT or LAER are expected
to be incurred primarily by a portion of the few refineries which will put in new grassroots
units, we believe that our contingency  factor, which increases our capital costs by 18 percent,
would cover any costs associated with these controls.

       (19)    In evaluating the compliance cost to refiners,  EPA has expressed confidence
              in the vendors' estimates of lower pressure requirements and lower costs,
              even though it is acknowledged that vendors typically underestimate their
              capital  costs and utility demands for the refining process for marketing
              reasons.  EPA has stated that even if vendors' costs are underestimated, it
              can be justified since these same vendors will be making improvements in
              their desulfurization technologies.  Commenter notes that  if self-interest
              motivates vendors to underestimate costs and refiners to overestimate costs,
              then neither set of estimates can be considered truly reliable. Adjusting an
              unreliable set of estimates with unspecified "improvements" in desulfurization
              technology does not provide credible evidence of the likely increase in
              average refinery costs.  In addition  to these concerns, EPA's cost estimate
              may be misleading since it does not account for the rapid  increase in demand
              that is likely to result from the proposed fuel standard. Increased prices
              charged to refiners by vendors of desulfurization equipment may persist for
              an  extended period of time, thus increasing overall compliance costs.

              Letters:

              Mercatus Center at GMU (IV-D-219) p. 16-17

       Response to Comment 5.8.1 (B)(19):

       The commenter points out a number of uncertainties  inherent in the inputs and
procedures which are used to estimate costs. We  agree that such uncertainties exist and we
attempted to balance the uncertainties to derive the best possible cost estimates.

       (20)    Investments of at least $8 billion, and as high as $13 billion, will be required to
              prepare U.S. refineries to produce 100 percent of their on-road diesel fuel at
              below 10 ppm sulfur. National investment costs were estimated by scaling
              PADD III  results from the report entitled "Modeling Impacts of Reformulated
              Diesel Fuel, August 14, 2000, assuming that the same diesel desulfurization

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              technologies will be required across regions and that investment cost is
              directly proportional to mass sulfur reduction and to regional cost adjustment
              factors.  In addition to these costs, reductions in MTBE and controls on
              gasoline benzene may add to these investment requirements.  One of the
              factors contributing to the high cost is the need for high pressure HDS units to
              ensure reliable production.  EPA's RIA fails to address the reliability of
              production in its choice of a low pressure HDS strategy and thus, in its cost
              estimation.  Commenter cites to Chapter 3 of the NPC report (p. 68 to 76) and
              notes that until additional data is obtained on this issue, it should be assumed
              that a combination of lower and higher pressure HDS technology will  be
              necessary.

              Letters:

              U.S. Department of Energy (IV-G-28) p. 4, Att. 3 + 4

       Response to Comment 5.8.1(B)(20):

       DOE's cost analysis estimated a range of costs  based on two different diesel
desulfurization technologies, DOE labeled one technology as conservative and the other as
optimistic. The conservative technology assumes that ring opening technology will be used
while the optimistic technology assumes that a more modest desulfurization technology will
be used which we believe represents hydrogenation.  We discuss these two methodologies
for meeting the 15 ppm sulfur cap standard in Chapter IV of the RIA and in responding to
comments B2 and B4 in Section 5.8.1 of this document. We are convinced from our
conversations with vendors that hydrogenation will be the technology of choice by refiners to
meet the 15 ppm sulfur cap standard. Furthermore, EMA, and API both presumed the use of
hydrogenation in their cost analyses. Thus, we think that only DOE's optimistic technology
should be considered when estimating capital investments from their analysis, as how we
responded to comments 5.8.1  B 6 and 7.

       For the final rule we discussed and addressed concerns about the reliability of diesel
fuel desulfurization technology when it is applied to meet the 15 ppm sulfur cap standard.
First, we included the cost of a storage tank to account for the storage of batches of offspec
product when the desulfurization unit has failed to meet the sulfur standard. Then we sized
the diesel desulfurization unit 5 percent larger and increased the operating costs by 2 percent
to process batches of offspec material (the operating costs are lower than the capital size
increase since the batch was treated once already and due to its lower sulfur level, its
treatment costs would be significantly lower the second  time through). Based on our
conversations with vendors, we don't believe that cycle  lengths would be shorter. In our
discussion in Chapter V of the RIA and in our response  to comments 8.1.2 B 2 below, we
describe our understanding that cycle lengths would not be expected to decrease compared
to cycle lengths today. This is because  after the  first stage, which is or equivalent to today's
diesel hydrotreater, the new second stage of a revamped hydrotreaterwill be treating a much
cleaner feedstock and its optimal operating conditions are less severe than today's
hydrotreater. Thus, it is the cycle length of the first stage, or today's diesel hydrotreater,
which will establish the cycle length of the revamped diesel hydrotreater.

       Refiners may use a range  of different pressures to treat their highway diesel fuel to
meet the 15 ppm sulfur cap standard, however, we disagree with DOE that the costs will be

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dramatically different based on using different pressures.  Vendors assured us that
desulfurizing diesel fuel using hydrogenation as the desulfurization technology can occur
over a range of pressures. Lower pressures require larger reactors, while higher pressure
units can use much smaller reactors, but their walls must be much thicker to withstand the
higher pressure. There are tradeoffs using either approach thus the costs are not
significantly different at either end of the pressure range. We understand that to avoid having
to use very large vessels with a very large volume of catalysts, refiners will generally use
moderate pressures, on the order of 900 psi. Vendor submissions to EPA which we used to
estimate desulfurizing diesel fuel were based on 650 and 900 psi.

       When we were writing up this final rule,  requirements were not yet established for
toxics and MTBE, thus we did not consider any  costs on the refining industry for these
potential programs. We did consider Tier 2 since that was finalized at the end of 1999.
(C)    EPA should delay the rule until the U.S. can put in place financial incentive
       plans similar to those used in Europe to help refiners get to 50 ppm.

       (1)     The UK and Germany did not require desulfurization until tax incentives had
              been put in place.  The U.S. should follow a similar approach, especially
              given the extra costs of moving to 15 ppm fuel.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 3

       Response to Comment 5.8.1(C):

       EPA does not have the authority under the Clean Air Act to provide tax incentives.
The provisions of the Clean Air Act, on the other hand, allow and in certain cases, direct,
EPA to impose quality standards on transportation fuels. The U.S. Congress can, at its
discretion, provide such incentives after this  rule is promulgated.

(D)    EPA needs to analyze the costs of the fuel changes  on the agricultural sector
       specifically because of the unique nature of how diesel fuel is used in this
       sector.

       (1)     First, farmers tend to use on-road fuel for nonroad equipment because it is
              the only fuel available.  Second, their use is seasonal, and EPA needs to
              carefully consider the need to be able to obtain fuel at competitive prices at
              these crucial times. Third, the farmer co-op refineries are often the only fuel
              suppliers in these areas.  The marginal cost for these refineries may be much
              higher than the 4 cents/gallon estimate EPA provides, which would mean
              unusual price increases for agricultural interests.

              Letters:

              Agricultural organizations as  a group  (IV-D-265) p. 1-3
              USDA (IV-D-299)p. 1-2

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DECEMBER 21, 2000	PAGE 5^48

       Response to Comment 5.8.1(0):

       In Chapter 4 of the Final RIA, EPA presents estimates of the maximum cost of
meeting the new sulfur standard for any refinery under both the temporary compliance option
and after full implementation of the program. These maximum costs range from 4.1-5.5
cents per gallon under the temporary compliance option and 5.1-8.2 cents per gallon
thereafter. As highway diesel fuel costs have been averaging over $1.50 per gallon over the
past year (over $1.00 per gallon excluding taxes), the potential price increases due to this
rule are roughly 4-8%. Fuel costs represent a small fraction of total farm expenditures, so a
4-8% increase should not be a significant impact on overall farm expenditures.  In addition,
farmers have the option of fueling their farm equipment with nonroad diesel fuel. Historically
there has not been a large incentive  to do this, because the prices of highway and nonroad
diesel fuel have only differed by 2-3 cents per gallon.  However, with the new highway diesel
fuel sulfur standard,  the price differential will likely increase.  This will provide operators of
nonroad diesel equipment with an increased incentive to demand this fuel and distributors to
provide it.  While we have  not assumed that use of highway diesel fuel in nonroad diesel
equipment will decrease in assessing the cost impacts of this rule, such use is likely to
decline. This will reduce overall demand for highway diesel fuel, reducing its cost and
reducing the impact of this rule on nonroad diesel equipment operators.

(E)    Refineries in the western U.S. would bear proportionately higher economic
       burdens to meet a 15 ppm standard.

       (1)     Most of the distillate pool in  the West is used to produce on-road fuel, so the
              western  refineries must treat cracked and uncracked feedstocks to on-road
              specifications.  In the East, refiners  are likely to treat the uncracked stocks for
              on-road  use and divert the harder to treat distillates to home heating and
              other nonroad uses.  When  this disparity is coupled with the smaller refinery
              size in the West, it constitutes an overwhelming compliance problem for
              western  refiners.  This is unfair because the western U.S. receives the least
              benefit from the rule.  Commenter provides data and excerpts from the NPC
              report to support this position.

              Letters:

              Sinclair Oil Corporation  (IV-D-255)  p. 5-7

       Response to Comment 5.8.1(E):

       EPA estimates the fraction of highway diesel fuel represented by cracked stocks for
refineries in each PADD in Chapters of the Final RIA. Based on this assessment, we do not
agree with the commenter that western refiners, particularly those in the Rocky Mountain
states, will have to process more cracked stocks than those in the East. One reason for this
is that nonroad diesel fuel  must still meet an ASTM specification for cetane and this cetane
specification cannot  be met with large amounts of cracked stocks.  Heating oil, which is
consumed primarily in the  East, has  no cetane specification.  However, both heating oil and
nonroad diesel fuel are usually transported  and stored as one product, so most refiners
cannot produce heating oil without also meeting the cetane specification for nonroad diesel
fuel.

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       EPA's analyses presented in Chapter 5 of the Final RIA confirm the commenter's
assertion that western refiners (excluding those in California and Washington state ) are
small in size than those in the East.  Because of this, Rocky Mountain refiners generally face
higher capital investments and compliance costs per barrel of capacity.  Two factors mitigate
this disparity.

       One, Rocky Mountain refiners do not generally compete directly with eastern refiners.
Pipeline capacity from PADD 3 into PADD 4 is limited and transport by truck or rail is not
economically competitive.

       Two, EPA has provided Rocky Mountain refiners with two options to ease the burden
of this rule. One option is available to small refiners. The other is available to refiners who
ship fuel primarily into the Geographic Phase-In Area.  We believe that these two options
compensate for the disparate per barrel economic impacts of this regulation on western
refiners, as discussed elsewhere in this  rule.

(F)     EPA should support the implementation of tax credits to facilitate the
       introduction of a 15 ppm fuel.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              National Automobile Dealers Association (IV-D-280) p. 3

       Response to Comment 5.8.1(F):

       EPA does not have the authority under the Clean Air Act to provide tax incentives.
The provisions of the Clean Air Act, on the other hand, allow and in certain cases, direct,
EPA to impose quality standards on transportation fuels. The U.S. Congress can, at its
discretion, provide such incentives after this rule is promulgated.


              Issue 5.8.2:  Cost of Lubricity Additives

(A)     The cost of lubricity additives will be higher than EPA's estimates.

       (1)     DoD  experience with lubricity additives indicates that the cost of these
              additives will be much higher than 0.2 cents per gallon and is likely to be
              between 1 and 5 cents per gallon.

              Letters:

              Department of Defense  (IV-D-298) p. 2

       Response to Comment 5.8.2(A):

       See response following comment 5.8.2(B).

(B)     The cost of lubricity additives will be minimal.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-50


       (1)     The cost of additization is minimal at approximately 0.2 cents per gallon.

              Letters:

              Cummins, Inc. (IV-D-231) p. 44

       Response to Comment 5.8.2(A) and (B):

       In considering these comments, we have found no basis in today's action to use a
different average cost estimate to treat low sulfur diesel fuel for lubricity than that which was
used in the proposal. Of the two comments we received on this issue, one supported our
cost estimate of 0.2 cents per gallon. The other was submitted by the Department of
Defense (DoD), which indicated it has experienced lubricity additive costs from one to five
cents per gallon. We believe that DoD's experience with lubricity properties and lubricity
additives is not typical of commercial users for several reasons. First, DoD commented that,
due to harsher operating conditions, engines used in DoD vehicles, especially tactical
vehicles, are more vulnerable to lubricity problems than the same engines operated in
commercial vehicles. Second, the fuel DoD uses at its facilities is purchased under contract
usually for a year or longer. Thus, the DoD fuel generally is from a single supplier and does
not have the beneficial effect of blending or mixing different batches of fuel or fuel from
different suppliers, such as that which occurs in the commercial market.  As discussed in
Section IV of the RIA, blending or mixing different batches of diesel fuel minimizes the effect
of isolated poor lubricity fuels. Consequently, DoD might be taking more aggressive action in
responding to lubricity concerns than might be needed for commercial applications. Third,
DoD is using an additive that is primarily a corrosion inhibitor.  It is our understanding that
DoD found that the additive it uses to address a corrosion property in  the fuel is also effective
at improving lubricity, and subsequently has been using that additive to also address its
lubricity concerns. If DoD were able to ignore its corrosion property concerns, it is possible
that a formulation specifically for lubricity might cost less, or that its treat rate could be less,
than that of the corrosion inhibitor formulation and  treat rate it currently uses.  Finally and
most importantly, we believe that DOD's experience is more reflective of the prices that might
be experienced with specialty additives supplied in relatively small quantities.  With the 15
ppm standard, most, if not all, of the nation's highway diesel fuel may need to be treated for
lubricity.  Economies of scale associated with bulk production as opposed to more specialty
products will drive down the unit cost of lubricity additives considerably.


              Issue 5.8.3: Distribution Costs

(A)    EPA underestimates the impact on costs due to the implementation of a 15
       ppm standard, that will  result from fuel distribution difficulties, such as
       downgrading and other logistics between the refiner and retailer.

       (1)     Cost increases from downgraded product will include truck transportation to
              remove contaminated product from terminals,  investment in tankage to
              segregate on-highway fuel, costs of cleaning or dedicating tanks, ships,
              barges, and transport trucks, and increased testing expenses.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-51
              American Petroleum Institute (IV-D-343) p. 42-43

(B)    EPA does not offer sufficient evidence to justify its estimated increase in
       transportation costs that will result from the proposed rule.

       (1)     EPA has estimated an increase in the distribution costs for pipeline operators
              and terminal operators by a total of 0.2 cents/gallon and has dismissed the
              claim by API that pipeline companies will not be able to ship the lower sulfur
              fuel without picking up additional levels of sulfur from other fuels within  the
              distribution system. EPA has asserted that the only significant source of sulfur
              contamination in pipelines occurs at  the interface between fuel shipments but
              does not address the issue that highway diesel may pick up sulfur clinging to
              the inner surface of pipelines that has been left behind by the transport of
              other fuels.  EPA has not provided sufficient evidence to justify its claim that
              the proposed rule will increase transportation costs by an average of only 0.2
              cents/gallon.

              Letters:

              Mercatus Center at GMU (IV-D-219) p. 17-18

       Response to Comments 5.8.3(A) & (B):

       The Regulatory Impact Analysis (RIA) evaluates the various potential sources of
sulfur contamination. Each of the points raised by the above commenters is addressed in the
RIA. Please refer to the RIA for a detailed discussion regarding  our assessment that the
existing distribution system can accommodate the distribution  of highway diesel fuel meeting
a 15 ppm sulfur cap with  modest changes and additional costs.  Our sulfur program will not
cause the need fora segregated distribution system to carry highway diesel fuel meeting a
15 ppm cap on sulfur content.  The changes that will be required in the distribution system to
limit sulfur contamination in highway diesel fuel meeting a 15 ppm cap  are discussed in detail
in section IV.D.  in the RIA on the feasibility of distributing  highway diesel fuel that meets a 15
ppm cap on sulfur content.  Comments related to the feasibility of limiting sulfur
contamination during the distribution of highway diesel fuel meeting a 15 ppm cap on sulfur
content and the potential economic impacts  of sulfur contamination are also addressed under
8.1.1. (A), (B), & (C) in this document. The  costs associated with these changes are
discussed in section V.C.3. in the RIA.

       We estimate that once our sulfur program is fully implemented, the cost of distributing
highway diesel will be 0.5 cents per gallon higher than it is currently.  This increase  in cost is
comprised of the following component costs:

1)     The cost to  distribute the additional volume of highway diesel fuel that will be needed
       to compensate for the reduction in the energy density of highway diesel fuel that will
       accompany the removal of sulfur to meet the 15 ppm cap.

2)     The cost to  downgrade the additional volume of highway diesel fuel to lower value
       product. This additional downgrade  is necessary  to adequately limit sulfur
       contamination during distribution by  pipeline.

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3)     The increased economic impact for the current volume of highway diesel fuel that
       must be downgraded to a lower value product.

4)     The increased cost of terminal testing.

5)     The cost to optimize the distribution system to limit sulfur contamination, including
       testing the system to evaluate the potential sources of contamination and making
       minor changes that we did not specifically assign a cost to.

       During the initial years of our program when a limited fraction of the highway diesel
fuel distributed can continue to meet a 500 ppm cap on sulfur content, we estimate that
distribution costs will be 1.1 cents per gallon of highway diesel fuel supplied. The main
reason for the difference in cost during the initial years of our program is due to the need for
additional storage tanks to handle a second grade of diesel fuel during this period. Two other
costs exist only during only during the first four years of our program:

1)     The cost of additional storage tanks needed to handle the interface volumes between
       batches of highway diesel fuel and batches of kerosene or jet fuel. This cost is
       completely amortized  during the initial years of our program.

2)     The cost to downgrade the additional interface volumes associated with  the shipment
       of a second grade of highway diesel fuel by pipeline.

       The component  costs identified for our fully implemented program also exist during
the initial years of our program. However, the presence of a limited volume of 500 ppm
highway diesel fuel during this period causes the magnitude of these component costs to be
somewhat different.

       We  believe that  the discussion  in the RIA provides sufficient justification for our cost
estimates for the components outlined above. There were some instances where we
recognized that the rule  would cause some  change to current industry practice, but we
concluded that the associated costs would not be significant.  In other instances, we
evaluated issues that commenters suggested might result in costs under our program, but
concluded that they were not a significant concern.  We  believe that the RIA provides
sufficient support for our assessment of such issues as well.

(C)    Pipeline operators currently have insufficient information to determine the
       potential differences in economic impact between a 15 and 50 ppm standard.

       (1)     Commenter provides the results of a pipeline survey to  support this point.
              The issue is made more complicated because there is no current testing
              equipment the pipelines can use to measure changes in sulfur content at
              these low levels. Thus, the approach that is likely to be used will be to make
              a protective cut using the middle portion  of a ULSD batch, and then
              downgrade and re-refine the surrounding batches.  The survey results
              estimated the  amount of downgraded product from 0.42% to 57%, which
              indicates the overall uncertainty on this issue at this time.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-53

              Association of Oil Pipelines (IV-D-325) p. 2, att.

       Response to Comment 5.8.3(C):

       In its comments on the NPRM, the Association of Oil Pipelines (AOPL) stated that
depending on the size of the pipeline, the nature of the surrounding batches, the size of the
ultra low sulfur diesel batches, and the capability of the testing information the downgrade
(downgrade of highway diesel fuel meeting a 15 ppm sulfur cap shipped by pipeline) was
estimated to be from 0.42  percent to 57 percent - a huge range and not to be relied upon for
making valid economic impact estimates.  We agree that these estimates would not form a
reliable basis for our evaluation of amount of highway diesel fuel that would need to be
downgraded to a lower value product as a result of our program. The high upper bound in
these estimates apparently incorporates the assumption that batches  of highway diesel fuel
meeting a 15 ppm cap would be unusually small and that sulfur testing would be required to
determine the location of the interface between a batch of highway diesel fuel and adjacent
batches of high sulfur products in the pipeline.  We do not believe these assumptions are
valid.

       During the initial years of our program, approximately 25 percent of highway diesel
may continue to meet a 500 ppm sulfur cap.  At least 75 percent of highway diesel fuel will be
required to meet a 15 ppm cap on sulfur content during this period.  Therefore, the
preponderance of the highway diesel fuel supplied in any given area will meet a  15  ppm
sulfur cap. Given this, we  believe that it is reasonable to assume that the pipeline batches of
highway diesel fuel meeting a 15 ppm cap on sulfur content will not be substantially smaller
than batches of highway diesel fuel that are shipped by pipeline today.

       We believe that the current methods of determining the location  of the interface
between batches in the pipeline  can continue to be used to identify the location of interfaces
associated with pipeline shipments of highway diesel fuel batches meeting a 15  ppm sulfur
cap. See section IV.D.2.b. in the RIA for our evaluation of the suitability of the current
methods used to identify the location of pipeline interfaces for use in determining the location
of the interface between a  batch of highway diesel fuel meeting a 15 ppm cap on sulfur
content and adjacent batches of other products.

       We believe that a reasonable estimate of the increased volume of highway  diesel fuel
that would need to be downgraded to a lower value product can be derived using the range of
estimates provided by AOPL members of the current downgrade volume, and the evaluation
that downgrade losses will double as a result of our program.  In their comments on the
NPRM, AOPL stated that the diversity in the characteristics of their members operations led
to a wide range in the estimates of the current downgrade volume which ranged from 0.2
percent to 10.2 percent of  the total volume of low sulfur diesel fuel shipped by pipeline.
These estimates included  all of the sources of downgraded highway diesel fuel in the pipeline
system.

       We believe that the estimates provided by AOPL members provides an adequate
characterization of the range of current downgrade volumes across the diverse pipeline
distribution system. To derive an estimate of the average downgrade for the pipeline system
as a whole today, we used the range of downgrade estimates from AOPL and a
characterization of the pipeline distribution system in terms of pipeline diameter and length
derived from the PennWell pipeline database.  Due to the characteristics of fluids as they

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travel through a pipeline, the larger the pipeline diameter and the longer a batch of product is
pumped through a pipeline, the greater degree of mixing with adjacent batches that will take
place.  Furthermore, larger diameter pipelines tend to be relatively more complex than
smaller diameter lines (i.e. have more tank farms and connections to other lines) leading to a
larger number of interface volumes being generated for any given batch of fuel as it travels to
its ultimate destination.

       We assigned a specific estimate of percent downgrade from those provided by AOPL
members to each pipeline diameter included in the PennWell database, ranging from 10.2
percent for the largest diameter pipeline to 0.2 percent for the smallest diameter line. In
doing so, we assumed that downgrade increases linearly with the cross sectional area of the
pipeline.  To account for the impact of pipeline length  on downgrade volume, we weighted
the downgrade estimate for each pipeline diameter by the fraction of total pipeline system
length represented by that diameter. By this method,  we estimated that the average
downgrade for the pipeline system as a whole currently is approximately 2.2 percent of the
highway diesel fuel shipped by pipeline.

       We are assuming that when the 15 ppm cap on highway diesel fuel sulfur content is
implemented, it will no  longer be possible to cut any of the interface volume into highway
diesel fuel.  This is referred to as a protective interface cut, which we believe corresponds to
a doubling of the volume of highway diesel interface volume  downgraded to a lower value
product for many pipeline operators.  Certain pipeline operators already make a protective
interface cut.  For these operators, our assumption of a doubling of downgrade volume as  a
result of our program will result in a conservatively large estimate of our program's impact.
Some individual AOPL members stated that a protective interface cut would be necessary to
limit sulfur contamination during the shipment of 15 ppm highway diesel fuel.  Some AOPL
members also stated that the amount of highway diesel fuel that would need to be
downgraded to a lower value product would likely double as a result of our sulfur program.
Given the uncertainties regarding the various sources of highway diesel fuel that must be
downgraded to a lower value product, we believe that assuming that highway diesel fuel
downgrade volume will double as a result of the implementation of a 15 ppm sulfur provides
an appropriate level of confidence that we are not underestimating the impact of our sulfur
program.

       By applying the assumption that highway diesel fuel volumes will double as a result of
our sulfur program to the estimate of the current downgrade volume (2.2 percent of highway
diesel fuel supplied) we estimated that an additional 2.2 percent of the highway diesel
supplied will  need to be downgraded to a lower value  product to adequately limit sulfur
contamination as a result of the implementation of the 15 ppm sulfur standard under our
program. Please refer to section IV.D.2. in the RIA fora detailed discussion of how we
derived this estimate.

       Since a 50 ppm cap on the sulfur content of highway diesel fuel would not enable the
vehicle emissions standards under our program, it is not a relevant exercise to compare the
distribution costs under a 50 ppm scenario to those under the 15 ppm which we adopted as
part of our program.  Nevertheless, we believe that there would likely be little or no difference
in the cost of distributing highway diesel fuel meeting a 15 ppm versus a 50 ppm cap on
sulfur content.  Under either scenario, we believe that pipeline operators would need to
ensure that none of the interface between a batch  of highway diesel fuel and an adjacent
batch of high sulfur product in the pipeline is cut into the batch of highway diesel fuel. All of

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the other assumptions used in estimating the distribution costs undercut program would also
likely remain unchanged. Consequently, its unlikely that it would be significantly less costly
to distribute highway diesel fuel meeting a 50 ppm versus a 15 ppm cap on sulfur content.

              Issue 5.8.4: Other Fuel Change Costs

(A)    EPA's estimate of the rise in diesel fuel costs is too low since  it does not
       account for the fact that reduced supplies will cause price spikes. (See related
       comments on fuel supply impacts under Issue 8.1.1.)

       (1)     The sulfur standard will result in supply decreases. These  decreases will
              result because of:  high capital expenses that some refiners will choose not to
              incur by halting production; the inability to remove sufficient sulfur from some
              blendstocks; downgrades from pipeline contamination; and the inability to use
              higher sulfur fuel imports to make up for domestic shortages. The reduced
              supplies will limit sources of fuel for independent marketers and weaken their
              competitive position.  Also, it will lead to large price spikes  because  of supply
              shortages.  Some commenters noted that EPA's 4.5 cents/gallon estimate is
              far too low, and argue that recent  experiences with heating oil in the
              Northeast and RFG in the Midwest are better examples of the types of price
              increases that are likely to occur.  These price spikes could have significant
              effects on the economy as a whole because of the importance of diesel fuel
              prices on transportation costs. One commenter (ATA) noted that API has
              estimated supply decreases of 30% as  a result of the proposed rule and using
              a statistical regression model to estimate the impact of this reduction on the
              cost of fuel, the commenter asserts that this decrease will result in a 25.1%
              increase in diesel prices over 12 months. Another commenter cited to the
              Charles River Associates (CRA) study as attached to API's comments that
              indicates the potential for a 35 to 52 cent per gallon increase in diesel fuel
              costs that could result in the initial stages of a program that includes a 15 ppm
              standard.

              Letters:

              American Bus Association (IV-D-330) p. 5-6
              American Trucking Association  (IV-D-269) p. 27-34
              Exxon Mobil  (IV-D-228) p. 16
              Marathon Ashland Petroleum (IV-D-261) p. 75
              NATSO  (IV-D-246) p. 8
              National Petrochemical & Refiners Association (IV-D-218) p. 3
              New England Fuel Institute  (IV-D-296)  p. 5
              Ports Petroleum Co, Inc.  (IV-F-117) p. 190
              Society of Independent Gasoline Marketers of America (IV-D-328) p. 4-5,
              (IV-F-191)p. 196

       (2)     The recent gasoline price debacle across the nation and specifically in the
              Midwest is an indication that EPA's cost estimate of four cents per gallon is
              far too low. The recent price hikes were a direct result in part to EPA's
              reformulated gasoline program and are an indication that the proposed rule
              may have a much more significant impact on fuel prices than EPA

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              anticipates. Commenter specifically suggests that EPA withdraw the rule until
              it has completed an accurate cost-benefit analysis that reflects the true costs
              that the consumer will be expected to absorb.

              Letters:

              Agricultural Retailers Association (IV-D-178) p. 4
              American Trucking Association  (IV-D-269) p. 32
              North American Equipment Dealers Association (IV-D-194) p. 4

       (3)     The true fuel costs to the consumer of EPA's proposal is 15 cents per gallon,
              including production costs, distribution costs, manufacturing fuel economy
              loss, emission control fuel economy penalty, and maintenance benefit. EPA
              has used a number of inaccurate assumptions or data in their calculations of
              the fuel costs resulting from their proposal.  In addition to not fully accounting
              for the impact of supply shortfalls, these include, EPA's assumed rate of
              return on refiner investment, the true costs of segregation and downgrading,
              and fuel economy impacts.  In addition, the appropriate cost should be the
              average cost of all refiners on a volume-weighted basis. However, if the
              supply is not adequate, the fuel cost to the consumer will be the incremental
              cost of the refinery supplying the most expensive fuel into the market.  EPA
              should address these issues in its cost estimates in the final rule.
              Commenter notes that in contrast to EPA's proposal, the total fuel cost for
              API's proposal is 5.7 cents per gallon.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 74-75

       (4)     EPA's reliance on a study prepared for EMA by MathPro, Inc. entitled
              "Refining Economics of Diesel Fuel Sulfur Standards" (Octobers, 1999) is
              misplaced  since this study explicitly assumed away the most troubling aspect
              of the  proposed rule - that the volume  of diesel fuel produced may change.
              Estimating possible effects of the various sulfur standards on production was
              outside the scope of this study.  In addition, this study addressed only the
              costs of production incurred by refineries and did not address the storage and
              distribution costs incurred downstream of the refinery. This study presents an
              inaccurate picture by focusing only on production costs and ignoring broader
              market factors of supply and demand.

              Letters:

              American Trucking Association  (IV-D-269) p. 33-34

       (5)     Commenter provides detailed analysis of NPC and DOE estimates of fuel
              costs to the consumer resulting from the rule, and revises EPA's cost
              estimates to more accurately reflect the cost-benefits of the proposal.

              Letters:

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              Marathon Ashland Petroleum  (IV-D-261) p. 74-83

(B)    The proposed sulfur standard for diesel fuel is unlikely to cause price spikes
       due to refiner compliance costs.

       (1)     The refining industry's arguments regarding their compliance costs and the
              potential for price spikes as a result of these costs, are inconsistent with
              EPA's assessment that fuel costs will increase 4-5 cents per gallon and are
              also inconsistent with cost estimates developed  by MathPro, Inc. Currently,
              BP (ARCO) is selling its low sulfur fuel for a 5 cent premium in California.
              Commenter notes that the oil industry implemented the 1993 on-road sulfur
              rule that reduced  sulfur from 5,000 to 500 ppm without triggering any long
              term price increases.

              Letters:

              International Truck & Engine Corp.  (IV-D-257) p. 9

       (2)     One commenter provided the report "Refining Economics of Diesel Fuel
              Sulfur Standards, Supplemental Analysis of the  15 ppm Sulfur Cap"  as further
              documentation supporting their conclusions that meeting the 15 ppm sulfur
              standard will be affordable for refiners and will not lead to excessive  fuel
              costs at the pump.

              Letters:

              Engine Manufacturers Association (IV-G-15) p.  all

       Response to Comments 5.8.4(A) and (B):

       Regarding the comments concerning EPA's estimated costs for the new fuel
standard, all technical information provided with these comments was considered as we
developed the final cost estimates. The reader is referred to Chapter 5 of the Final RIA for a
complete description of this information and how it was considered.

       The comments are based on the premise of supply shortages. Comments dealing
directly with the issue of fuel supply are analyzed in Issue 8.1.1  of this document. The reader
is referred there, as well as to Chapter 4 of the Final RIA more detailed assessments of the
issue of supply. The reader is particularly referred to EPA's analysis of the Charles  River
Associates and Baker and O'Brien study performed for API which predicted that this rule
would result in  large supply shortages and enormous price spikes. As summarized  in Issue
8.1.1, Issue 5.8.1 (B)  (11) and Chapter IV of the RIA, EPA believes that this study contains a
number of serious flaws which make its conclusions spurious.

       As a result of these analyses, EPA concludes that a combination of a number of
factors make it unlikely that any shortages will result from the rule. One such factor  is the
difficulty that refiners face in shifting their current highway diesel fuel to other markets. The
price available in these markets drops quickly as supply increases (for the same basic
economic reasons that supply shortages cause price spikes). Another factor is the temporary
compliance option. This option allows almost half of U.S. refineries to delay their investment

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for four years.  This narrows the likely cost differential between refiners, reducing concerns
that refiners will not be able to recoup their investment. This additional time also allows the
market to assess the impact of the new standard on costs and prices and allows refiners
facing higher costs to take advantage of the experience of the refiners meeting the new
standard in 2006.  This should narrow the long run cost variation between refiners.  Overall,
absent supply shortages, there is  no reason to expect this rule to cause price spikes.

       Beyond the flawed studies used to project supply shortages, the commenters' ability
to project supply shortages and resulting price spikes 6 years into the future is speculative, at
best. Furthermore, many of the above commenters referred to price spikes and their impact
on the economy. These commenters use the terms costs and prices interchangeably.  EPA
evaluates these two  aspects of a rule quite differently. When EPA assesses costs, the only
costs which are considered are true social costs.  Social costs entail the consumption of
natural resources and labor. Thus, desulfurizing diesel fuel involves costs, since equipment
must be built and operated and hydrogen, among other things, must be produced and is
consumed. Excess profits to refiners resulting from payments for sulfur credits which exceed
the costs, on the other hand, involve the transfer of funds from one entity to another. The
monetary transfers do not involve  real resources and are not considered costs in our
analyses.

       In addition to costs, EPA also considers other economic impacts. These impacts can
include financial impacts which do not involve social costs.  The price spikes referred to by
the commenters above fall into this category. In general, price increases can either be more
or less than increases in  social costs. The price spikes referred to above would be examples
of the former, where the increase  in price far exceeds the actual costs experienced by
refiners and distributors.  Price spikes tend to arise when there is a physical shortage of fuel
and can be significant because the price sensitivity of fuel is quite low.  This means that large
changes in the price of fuel have little effect on the demand for fuel (i.e., fuel  consumption).

       EPA agrees that significant supply shortages of highway diesel fuel would have
serious economic impacts on the  nation. In fact, EPA considered the issue of potential supply
shortages seriously and designed the final diesel fuel program to minimize the potential for
supply disruptions and associated price spikes. The primary purpose of the temporary
compliance option and the small refiner program is to ensure that adequate supplies of
highway diesel fuel are available in 2006.

       Some commenters indicated that the new diesel sulfur cap could cause temporary
and occasional  price spikes, as was caused by the reformulated gasoline program during the
summer of 2000 in the Midwest.  First, EPA does  not believe that these price spikes were
caused by the reformulated gasoline  program.  Second, we acknowledge that the production
of diesel fuel compliant with the 15 ppm sulfur cap will be contingent on the proper operation
of hydrotreaters or other analogous equipment. Because of this contingency, we believe that
refiners will construct their equipment in a way to allow additional distillate material to be
processed in order to occasionally reprocess material which did not meet the 15 ppm
standard.  At the same time, all types of refining equipment, distillate hydrotreaters included,
must occasionally be shut down due to emergencies.  In these cases, the excess production
capacity at other refineries which was built to allow reprocessing of off-specification material,
could be used to increase production and  make up for the shortfall.  Also, within limits,  the
operating conditions of distillate hydrotreaters can  be varied to allow increased production
(e.g., increased temperature).  While increasing temperature will decrease catalyst life in the

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long run, for short periods, it can be used to increase supply. EPA believes that relatively
small price increases (e.g., 2 cents per gallon) should encourage refiners to increase supply,
even at the expense of shorter catalyst life.  This commenter also suggested that EPA
perform a cost-benefit study. This has been done and the results of this analysis is
summarized in the Final RIA.

      We disagree with API that the true fuel costs to the consumer of this rule is 15 cents
per gallon. The reader is referred to Chapter 5 of the  Final RIA, where all relevant data and
information are considered in estimating the fuel-related costs of this rule to be just over 5
cents per gallon. Also, this cost was determined across all refiners on a volume-weighted
basis. It should be pointed out that the Charles River and Baker and O'Brien study
performed for API did not provide any of the details of its analysis which would allow EPA to
determine its accuracy.  We have also assessed the potential maximum cost for producing
15 ppm diesel fuel of any refiner within each PADD. Assuming market shifting to and from
offhighway diesel production, this cost is 5 cents per gallon in the lowest cost PADD, and 8
cents per gallon in the highest cost PADD.  The reader is referred to Chapter IV and V of the
Final RIA for the details of this analysis.

       EPA did not rely directly on a study prepared for EMA by MathPro, Inc. entitled
"Refining Economics of Diesel Fuel Sulfur Standards" (October 5, 1999). However, this
study does confirm the refining costs which  we estimate using our own model.

(C)    EPA has underestimated the impact of increased fuel costs to truck owners
      and operators.

       (1)    Commenter provides no detailed analysis on this point.

             Letters:

             CO Petroleum Association (IV-D-323) p. 2

       (2)    Some commenters specifically noted that the rule could add about $2,600 to
             the annual expenses of truck owners and operators, should the cost of diesel
             fuel rise as expected.

             Letters:

             American Petroleum Institute (IV-F-16, 42, 182, 117) p. 161 (IV-F-191) p.
             114
             American Trucking Association (IV-D-269) p. 28
             Marathon Ashland Petroleum (IV-F-74)

(D)   The proposed diesel fuel standard would have an adverse economic impact on
      smaller communities that rely exclusively on trucking for the delivery of
      consumer goods.

       (1)    EPA's proposed rule will lead to supply shortages and fuel price  increases,
             which will affect the ability of trucking businesses to  purchase adequate
             supplies of fuel and to  deliver goods to smaller or more rural communities.
             Trucks play a crucial role in  local delivery, and a shortage of very low sulfur

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              highway diesel fuel could have an adverse impact on local economies if
              trucks do not have adequate diesel fuel.

              Letters:

              American Trucking Association  (IV-D-269) p. 26-27

(E)     Since it will lead to increased fuel costs, EPA's proposal will have an adverse
       impact on certain businesses, including those that provide vital public
       services.

       (1)     Intercity motorcoach companies, many of which operate on low margins,
              would see the cost of doing business increase significantly as a result of the
              proposed rule.  Higher fuel costs and/or inadequate fuel supplies would have
              an adverse impact on  motorcoach companies. In this context, there is also
              the concern that current diesel engines may not operate safely or efficiently
              on the new low sulfur fuel. Commenter provides "Motorcoach Census 2000,"
              a study of the motorcoach industry in the U.S. and Canada, which contains
              general information on the industry.

              Letters:

              American Bus Association (IV-D-330) p. 6

       (2)     Higher fuel costs and the potential for reduced diesel fuel supplies would
              impair the ability of private waste service firms to provide adequate services
              and protect public health. Costs to collect garbage, recyclables and yard
              waste will inevitably increase as fuel prices rise. If EPA's estimates are
              correct, the increased  cost of the diesel fuel necessary to collect garbage
              would be at least $300 to $400 per truck per year, which would be even
              higher if API's estimates are correct.  EPA should address this issue and
              clarify whether there are any fallback plans if adequate fuel supplies cannot
              be provided at a reasonable cost to consumers.

              Letters:

              National Solid Wastes Management Association (IV-D-90) p. 1-2

       (3)     The concrete industry  is essentially a transportation industry, which is
              required to deliver a perishable product on a dependable basis to various
              customers.  A disturbance in fuel availability and prices will have a severe
              impact on both the financial stability of the ready mixed concrete industry and
              on the cost of one of the nation's most basic building commodities.

              Letters:

              National Ready Mixed Concrete Association (IV-D-271) p. 1

       (4)     EPA's proposal will have an adverse impact on businesses that rely on diesel
              vehicles, trucks, and buses for the purpose of transporting people and goods

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              to where they need to be. There is great potential that the proposed
              regulations will limit essential fuel supplies to farmers, truckers, and other
              users of diesel fuel and significantly increase the cost of new diesel vehicles
              and other consumer goods.

              Letters:

              AL Farmers Federation (IV-D-206) p. 1
              Agricultural Organizations as a group (IV-G-26) p. 1
              Coal Operators & Associates, Inc.  (IV-D-64) p. 1
              ID Barley Commission  (IV-D-312) p. 1
              IN Builders Association (IV-D-208) p. 1
              IN Retail Council (IV-D-211) p. 1-2
              KS Cooperative Council (IV-D-187) p. 1
              MD Farm Bureau (IV-D-192) p. 1
              MFA Oil Company  (IV-G-16) p. 1
              Ml  Petroleum Assoc./MI Assoc. of Convenience Stores (IV-D-202) p. 1
              Mid-Atlantic Petroleum  Distributors' Association (IV-D-124) p. 1
              National Grain and Feed Association (IV-D-301) p. 1
              VA Aggregates Association (IV-D-177) p. 1
              VA Agribusiness Council (IV-G-1) p. 1
              VA Trucking Association (IV-D-191) p.  1
              Wl Motor Carriers Association (IV-D-189) p. 1

       (5)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              Capellan, Claudia, et. al. (IV-D-338) p.  1-2
              MN Chamber of Commerce (IV-D-28) p. 1

(F)     EPA has failed to consider the economic impact of the proposed regulations on
       food prices, which will rise as a result of increased diesel fuel costs.

       (1)     EPA's initiative will  increase food distribution and fuel transportation costs
              significantly, which  may well result in higher food prices. This impact should
              not be treated lightly since these costs will have an adverse affect on  every
              household, particularly those with limited incomes.

              Letters:

              Food Marketing Institute (IV-D-283) p. 2

(G)    EPA should address the issue of how increases in the price of diesel fuel that
       may result from  this rule, will be monitored and whether there will be a
       mechanism to prevent significant cost increases.

       (1)     Commenters provided no further supporting information or detailed analysis.

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              Letters:

              American Public Transportation Association  (IV-D-275) p. 3
              Milwaukee County Transit System (IV-D-97) p. 1

(H)    Marginal and average costs for desulfurized diesel fuel will be higher than EPA
       has estimated.

       (1)     Under a  100 percent production requirement and assuming all necessary
              investments are made, it is estimated that the cost of the marginal production
              of low sulfur diesel will be over 11 cents per gallon above today's diesel fuel.
              Average cost increases are estimated at 7 to 8 cpg. Marginal costs, which
              reflect the cost increment for the last barrel required to  meet market demand
              for the ultra-low sulfur diesel fuel, will be higher than average cost because of
              both the  smaller and less efficient marginal refinery configurations and
              because of the difficulty of handling the most difficult to desulfurize diesel
              blendstocks.  Marginal cost is  a key factor in determining the price consumers
              will pay for the new ultra low sulfur diesel.

              Letters:

              U.S. Department of Energy  (IV-G-28) p. 5, Att. 3 + 4

       Response to Comments 5.8.4(C) through (H):

       The commenters summarized above state that the price increases associated with
this rule will be substantial and will have serious economic impacts on  various sectors  of the
economy.  Most of these commenters did not provide any independent information or
technical analysis supporting their claim of high price increases or showing the impact  high
prices would have on their businesses. Those that did referred to  a study performed for API
by Charles River Associates and Baker and O'Brien.  EPA analyzes this study in Section
8.1.1 of this document and Chapter 4 of the RIA and found  it to contain serious flaws which
invalidate its conclusions.

       EPA has performed its own  assessment of costs under the new sulfur cap.  These
costs average just over 5 cents per gallon. Including the fact that some refiners face higher
costs than others could increase this by 2-3 cents per gallon in some areas. Whether these
costs will be fully passed on to consumers is impossible to predict. That will depend on the
overall supply of and demand for highway diesel  fuel. With the temporary compliance  option
and the small refiner program, we believe that supply will be more than adequate. Price
hikes in the area of these average and maximum costs should not seriously impact the
economic sectors mentioned by the commenters. These price increases would only
represent 3-5% of total fuel costs and fuel costs are themselves a  small fraction of the  total
costs faced by  these industries.  Fuel price swings much larger than this are a part of typical
day to day business operations today. Also, the cost benefit analyses summarized  in the
Final RIA indicate that the benefits of this rule to society far outweigh the costs.

EPA has no  authority to  control fuel prices.

The commenter provides no basis for the statement that marginal  cost is the key factor in

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determining the price to consumers.  This is not the case today for many fuels, including
gasoline and diesel, since refiners have been shown to be price takers and have faced a
lower return on investment compared to other industries.

       Issue 5.9:  Cost Effectiveness of Program

(A)    The rule is cost-effective.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Wl DNR (IV-D-291) p. 1, (IV-F-25)
              West Harlem Environmental Action/Envr Justice Network (IV-F-76)

       Response to 5.9(A):

       We agree with this comment.

(B)    The proposed standards are too costly.

       (1)     Compared to other mobile source control measures that have been pursued
              by EPA, the cost per ton emission reduction is higher than  comparable mobile
              source rulemakings.  The proposed standards are not necessary to maintain
              compliance with the NAAQS and NOX disbenefits are likely to reduce
              estimated emission reductions. EPA has not adequately considered this
              phenomenon (see also Issue 2.2), and therefore has underestimated the
              cost-effectiveness of the rule. Commenter provides additional discussion on
              this issue and concludes that EPA's overall cost estimates  are unrealistically
              optimistic.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 76-77

       Response to Comment 5.9(B)(1):

       It is true that some previous programs have been more cost effective than the
program we are proposing today.  However, it should be expected that the next generation of
standards will be more expensive than the last, since the least costly means for reducing
emissions is generally pursued first.  Even with this expectation, the $/ton values for NOX+HC
for the standards we are finalizing today fall within the range of the Tier 1 vehicle standards,
and are very close to those for our recently promulgated Tier 2 vehicle/gasoline sulfur
program and our on-board diagnostics program. For PM, our cost-effectiveness falls within
the range of $/ton values for the 1996 urban bus standards, our urban bus retrofit/rebuild
program, and the 1994 highway HD diesel rule.

       In addition, a more appropriate cost-effectiveness comparison is not to previous
control measures,  but rather to potential future controls which might have been implemented
in  lieu of the program we are finalizing today. Although these potential future  controls could

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not provide the dramatic emission reductions that are expected with today's rule, they do
provide a benchmark for what might be expected in terms of the cost-effectiveness in the
future. In the context of the Agency's rulemaking which would have revised the ozone and
PM NAAQS84, the Agency compiled a list of additional known technologies that could be
considered in devising new emission reductions strategies.  Through this broad review, over
50 technologies were identified that could reduce NOX, VOC, or PM. The cost-effectiveness
of these technologies averaged approximately $5,000/ton for VOC, $13,000/ton for NOX, and
$40,000/ton for PM. Although a $10,000/ton limit was actually used in the air quality analysis
presented in the NAAQS revisions rule, these values clearly indicate that, not only are future
emission control strategies likely to be more expensive (less cost-effective) than past
strategies, but the cost-effectiveness of our engine/diesel sulfur program falls within the
range of potential  future strategies.  In fact, our program is considerably more cost-effective
than the average of those potential future programs. It should also be noted that the
monetised health  benefits of our program outweigh the program costs, as discussed in more
detail under Issue 5.10.

       We have taken into account the potential for NOX disbenefits due to our program.
See  response to comment 2.2(D).  We do not believe that potential NOX disbenefits will
substantially reduce the estimated reductions in ambient ozone concentrations associated
with  our rule. Regardless,  NOX disbenefits only affect ozone concentrations, not the amount
of reduction in NOX emissions due to our program.  NOX disbenefits are taken into account in
our assessment of the health benefits associated with our program. In addition, we do
believe that the proposed standards are necessary to protect public health and welfare from
adverse health effects associated with ambient concentrations above the 1-hour ozone
NAAQS.  See responses to Issue 1.1(A)(3), Issue 2.1 (J)(3), and Issue 2.2(A).

       Finally, we do not believe that the costs of our program are unrealistically optimistic.
Our cost estimate for the catalyzed diesel particulate filter technology compares well to
estimates made by the Manufacturers of Emission Control Association (MECA) based on a
survey of their members (see docket A-98-32 item ll-D-09). Therefore the cost estimates are
believed to accurately reflect a consensus of the likely future cost for this technology and is
not considered to  be unduly optimistic.  The cost estimates for the other technologies
considered by EPA were made using the same methodology and are therefore  expected to
reflect a similar degree of accuracy. As for our estimates of the cost of desulfurizing diesel
fuel,  we have found that our costs are reasonable.  See responses to comments under
Issues 5.1, 5.3, 5.5, and 5.8.

       In its detailed comments, the commenteralso raises the issue of fuel economy. Our
responses to concerns about fuel economy and its impact on cost can be found under Issue
3.4.

       Finally, it should be noted that cost-effectiveness is only one measure for comparing
our program to other programs.  Our cost-benefit analysis is another tool for assessing our
program. According to the analysis described in Chapter VII of the RIA, the benefits of our
program outweigh the costs.
       84 This rulemaking was remanded by the D.C. Circuit Court on May 14, 1999.  However, the
analyses completed in support of that rulemaking are still relevant, since they were designed to investigate
the cost-effectiveness of a wide variety of potential future emission control strategies.

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       (2)     First, it is nearly impossible to determine cost-effectiveness when the
              technology to meet the standards is highly uncertain. This problem is
              compounded by refiners having to meet Tier 2 gasoline standards at the
              same time.  The cost estimates also need to account for indirect costs of
              having to compete for scarce engineering and construction resources.  In
              addition, ABT approaches are unworkable because the ultra-low 15 ppm level
              does not provide adequate room to average down off-spec fuel batches.

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 13

       Response to Comment 5.9(B)(2):

       We based our cost-effectiveness analysis on the technologies expected to be used to
meet our standards. We do believe that the refinery technology needed to achieve sulfur
levels of below 15 ppm is currently available.  See response to comment 5.8.1(B)(2).

       In our analysis of the costs associated with desulfurizing diesel fuel to below 15 ppm,
we have in fact considered various other factors such as compliance with the Tier 2 low sulfur
gasoline requirements. See our response to comment 5.8.1(B)(1) on Tier 2 co-compliance.
Although we have not quantified the costs associated with alleged competition over scarce
engineering and construction resources, we have evaluated this issue and concluded that
there will be sufficient resources to meet the refining industry's needs. Refiners will not have
to comply with the 15 ppm standard until 2006 at the earliest, giving substantially more than
the four years leadtime typically included in new fuels standards of this magnitude.  In
addition, we have added a phase-in to our sulfur program that will mitigate much of the
problems associated with scarce  resources. Thus we believe that this timeframe should be
sufficient for establishing contracts for the new equipment that will be necessary to meet the
15 ppm standard.

       The diesel fuel ABT program does not allow averaging around the 15 ppm sulfur
level.  The ABT program allows refiners to earn credits if they produce more  15 ppm fuel than
required under the Temporary Compliance Option we are adopting.  For a discussion of
comments on our diesel fuel ABT program, see our responses to Issue 6.2.

       (3)     Commenter notes generally that EPA has not conducted an adequate cost-
              effectiveness and fiscal impact analysis and that it appears that
              implementation of the proposed standards will be too costly.

              Letters:

              National Ready Mixed Concrete Association (IV-D-271) p. 2

       Response to Comment 5.9(B)(3):

       The commenter did not provide any details to support its position that the cost
effectiveness analysis presented in our proposal was inadequate.  After our detailed review
of the costs and emission reductions associated with our program, we believe that our
analysis is sufficiently comprehensive and that our program is cost effective as described in

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the RIA.

(C)    EPA has not analyzed the cost-effectiveness of the Supplemental Emission
       Requirements and Tests (SERT).

       (1)     EPA has failed to provide any analysis of the cost-effectiveness of the SERTs
              in the context of the proposed rule. Manufacturers anticipate significant costs
              associated with the imposition of the numerous and complex new
              requirements represented by the SERTs.  Meeting these requirements will
              result in design compromises that will increase costs and/or reduce engine
              performance, life or fuel economy.  EPA has failed to meet its responsibility to
              perform a cost-effectiveness analysis before finalizing the supplemental
              emission requirements.

              Letters:

              Detroit Diesel Corporation (IV-D-276) p. 25
              Engine Manufacturers Association (IV-D-251) p. 66

       Response to  Comment 5.9(C):

       The SERT was not a new requirement in this rulemaking, though we did revise the
requirements originally established in a previous rule setting standards for model year 2004
heavy-duty diesel engines [65 FR 59896, or "2004 rule"].  We  do agree that some additional
testing will be necessary to comply with the  supplemental standards in this rulemaking, but
do not agree that the provisions contained in today's final rule  will require manufacturers to
construct new test facilities. The  regulations finalized in the 2004 rule were designed in such
a manner that manufacturers will be able to rely significantly on engineering analysis in
addition to testing. The costs associated with compliance with the revised SERT
requirements in this rulemaking have  been included in our estimates of the total costs for our
program, though they are expected to be minimal. However, our program is an integrated
whole and thus we have not separated costs and emission reductions associated with the
FTP and SERT. As discussed in our response to comment 3.1.1 (L), it is difficult if not
impossible to determine how much emission reduction  can be attributed separately to the
supplemental requirements or the FTP standard. For this reason we have not developed
separate cost-effectiveness estimates for other individual components of our program.  It
would not be reasonable to consider SERTs separately from rest of the program, and thus
our cost-effectiveness estimates represent our program as a whole.

(D)    EPA's cost-effectiveness analysis for the requirement to close crankcase
       breathers  is flawed.

       (1)     Using  EPA's assumption that this provision will eliminate 100 pounds of
              emissions over the life of the vehicle and the cost estimate of $49 plus $268
              for the breather system and  replacement filters, translates into a cost-
              effectiveness of $6340 per ton of emissions reduced. This analysis does not
              include the labor cost for breather maintenance and filter replacement; the
              maintenance costs for charge cooler, intake system, or aftertreatment system
              cleaning; or the impact of offsetting emission increases due to loss of
              performance of these systems.  In addition, EPA's analysis does not consider

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              the fact that most of the NMHC component of the assumed emission
              reduction is in the form of oil vapor, which is not a reactive hydrocarbon and
              does not contribute to ozone formation in the atmosphere.  It is arguable
              whether oil vapor should be considered an air pollutant given the fact that its
              residence time in the atmosphere is limited.  When all of these factors are
              considered, the cost per ton of emissions reduced by this provision will be
              substantially higher than EPA has estimated.

              Letters:

              Detroit Diesel Corporation  (IV-D-276) p. 22-23

       Response to  Comment 5.9(D):

       Oil vapor is a pollutant, as discussed more fully in our response to comment
3.1.1(P)(1).  It is reasonable, therefore, to consider controls on crankcase emissions.
However, we are using an integrated systems approach to setting new standards in this
rulemaking, and as a result we believe it is appropriate to view the  new crankcase and
tailpipe standards as being two elements of a single strategy for reducing emissions from
HDDE. As a result, we combined the crankcase standards with our new tailpipe standards
for both HDDE and HDGV, as well as the new standard for diesel sulfur content, to calculate
the cost-effectiveness of our program. We did not set the new crankcase standards on the
basis of their stand-alone cost, emission reductions, or cost-effectiveness. Rather, we set
the crankcase standards on the  basis of how they contributed to the total engine costs,
emission reductions, and cost-effectiveness.

       We have revised our controls on crankcase emissions for this final rulemaking so that
manufacturers must comply with a performance standard instead of a mandate to use a
closed  crankcase ventilation  (CCV) system. However,  for purposes of the analysis of costs,
we have continued to  assume that manufacturers will use CCV systems.  In our analysis of
the costs associated with our new crankcase emissions standards, we determined that the
labor costs were too small to characterize accurately. The maintenance interval associated
with servicing the crankcase  is designed to match the oil change interval and would therefore
be handled in the same service event.  In addition, we believe that these advanced
crankcase systems will remove the bulk of the oil which could foul the intake system as
described  by the commenter, and there would likely be a maintenance benefit associated
with the resulting reduced oil consumption which we have not taken into account. Therefore
we expect no new net maintenance costs for that system.

(E)     EPA should rely on  incremental cost effectiveness when determining the
       optimal standards.

       Response to  Comment 5.9(E):

       We do not believe that an incremental approach to cost-effectiveness is more
appropriate than an average approach. As described in the NPRM, nearly all other previous
control  programs made use of an average approach to cost-effectiveness. It would be
misleading to the compare the incremental costs of NOX and NMHC control under our diesel
engine/sulfur program to the average costs of other programs.  In addition, data on
incremental costs and emission  reductions for other programs are difficult to procure.

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Incremental cost-effectiveness is not a reasonable approach for other reasons as well: the
results are highly dependent on the size of the increment chosen, the change to new
technology is extremely difficult to predict on the increment, and the choice of technology for
various incremental points is not straightforward. We have therefore retained our traditional
approach to cost effectiveness which uses average rather than incremental costs and
emission reductions.  Note also that a comparison of costs to monetised health benefits is an
alternative to cost-effectiveness which provides an indication of whether our standards are
optimal. See responses to Issue 5.10.

       (1)     EPA's approach of accounting for "global" cost effectiveness is intended to
              make the proposal look more  reasonable, but this approach results in
              excessive costs and places at risk essential fuel supplies. An "incremental
              cost effectiveness" approach would yield substantial emissions benefits at a
              much lower cost to end users.

              Letters:

              National Petrochemical & Refiners Association  (IV-D-218) p. 18

       Response to Comment 5.9(E)(1):

       We disagree that the use of an incremental approach to cost effectiveness would
necessarily have resulted in lower costs. Our technology assessment led us to conclude that
significant reductions  in emissions from heavy-duty diesel engines would require the use  of
aftertreatment such as NOX adsorbers and PM traps, and that these devices could tolerate no
more than 15 ppm sulfur. Diesel fuel sulfur reductions were necessary in order to enable the
aftertreatment to operate efficiently and thus do not offer a  means for balancing
aftertreatment and fuel costs. An incremental approach to  cost effectiveness would not have
changed our conclusion that aftertreatment devices require sulfur levels to be no higher than
15 ppm in order to effectively reduce emissions. See also response to  5.9(E)(2) below.

       It is worth noting that our standards under 202(a)(3) require us to promulgate
standards which reflect the greatest degree of emission reduction achievable, giving
appropriate consideration to cost,  energy, and safety factors. The standards we set are not
premised on  the need to promulgate the most cost-effective standards.

       Our cost-effectiveness analysis is not intended to make our proposal look more
reasonable, but instead represents what we believe is the appropriate way to analyze  the
cost-effectiveness of our rule.  The levels of the standards and the fuel  requirements all
interact with each other, and we believe that it is best to view the cost-effectiveness of the
program as the integrated system that it is.

       (2)     Using an incremental basis could have resulted in the identification of  a lower
              total cost and much more cost-effective proposed emission standards  than
              what is currently proposed.  No assessment of cost vs. NOX burden impact
              was considered other than for the standards EPA has proposed.

              Letters:

              Cummins, Inc.  (IV-D-231) p. 41

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       Response to Comment 5.9(E)(2):

       Following the requirements of Section 202(a)(3) of the Clean Air Act, we have set
new standards for heavy-duty trucks that reflect the greatest degree of emission reduction
achievable through the application of technology which we determine will be available for the
model year to which the standards apply.  The Act does not require us to  evaluate cost
effectiveness as a means for judging the appropriateness of new standards, but instead
directs us to  set new standards on the basis of what is technologically feasible. We are also
required to give appropriate consideration to cost, energy, and safety factors associated with
the application of such technology.  However, we have included an evaluation of cost
effectiveness to further inform our decision, and we have used this evaluation  in concert with
other criteria to conclude that our new standards are appropriate. An incremental approach
to cost effectiveness as a means for setting new standards as suggested by the commenter
would not be consistent with the Act's directives to set standards on the basis  of
technological feasibility.  But consistent with past rules we have considered cost-
effectiveness in our standards-setting process.

(F)     EPA has not provided adequate analysis of the cost-effectiveness of the
       proposed rule.

       (1)     EPA concludes that the proposed rule is cost-effective because the estimated
              average cost-per-ton figures fall within the range of cost-per-ton figures
              estimated for other pollution control programs. This approach assumes that
              other programs pass a benefit-cost test and that the reductions from the
              proposed rule will have comparable health and welfare effects. EPA counts
              all emission reductions as if each ton will produce similar health and welfare
              benefits. However, many tons will produce no benefits and may even cause
              harm (i.e., NOX disbenefits).  EPA has artificially reduced its cost-per-ton
              estimate by including all emission reductions when only a fraction of those will
              provide benefits.  Commenter provides significant discussion regarding EPA's
              assumptions and why the cost-effectiveness estimates may have been
              overestimated.

              Letters:

              Mercatus Center at GMU (IV-D-219) p. 18-20

       Response to Comment 5.9(F)(1):

       The commenter blurs the distinction between cost-effectiveness and cost-benefit
analyses. Cost-benefit analyses have been used in some mobile source  recent rulemakings
to supplement the more traditional cost-effectiveness analyses. Whereas cost-effectiveness
seeks to compare the program costs to the emission reductions that are expected to result
from that program, cost-benefit analyses attempt to ascertain the degree to which the
program reduces adverse health and welfare effects, comparing the estimated monetary
value of those reductions to the costs of the program.  Both cost-effectiveness and cost-
benefit analyses are useful  tools for evaluating our rule, but their respective purposes are
different.  Trying to  choose  which tons should be included in our cost-effectiveness analysis
and which should be excluded, as the  commenter suggests, mixes in benefit considerations
more properly dealt with in the cost-benefit analysis. We have conducted a cost-benefit

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analysis for this rule, and have concluded that the monetised benefits do in fact far outweigh
the costs.  See our responses to Issue 5.10 and Chapter VII of the RIA.

As stated above, cost-effectiveness only has relevance when compared to alternative
strategies. Thus we must use an approach to calculating the cost-effectiveness of our
annual, nationwide program that is consistent with the approaches taken for calculating the
cost-effectiveness of various alternative strategies. That is, we compare total emission
reductions to total  cost to produce a cost per ton of emission reduction. To exclude some
emission reductions from our cost-effectiveness analysis would yield an invalid comparison
with other strategies for attaining and maintaining the NAAQS.

Beyond the fact that we are maintaining consistency with the approach to cost-effectiveness
used for other programs, we believe that all the emission reductions have benefits other than
reducing the levels of criteria  pollutants in nonattainment areas.  These include reductions in
air toxics, reductions in secondary fine PM, reductions in CO, and reductions in damage to
agricultural crops,  forests, and ecosystems from ozone exposure.  In addition, there are
ozone health benefits to be gained in  attainment areas, since there is no apparent threshold
for biological responses to ozone exposure. Emission reductions in attainment areas also
help to maintain clean air as the economy grows and new pollution sources come into
existence.  For these reasons we believe it is appropriate to include all emission reductions
produced by our program in our cost-effectiveness analysis.

The commenter goes on to say that he believes our cost estimates are optimistic and that  our
cost-effectiveness estimates are biased downward as a result.  For a more detailed
discussion of the process we  went through to determine costs and the reasons that we
believe our cost estimates are reasonable, see  our responses under Issue 5.1 for engines
and Issue 5.8.1(B) for fuels.

       (2)     EPA's cost estimates  only address the proposed rule's impact on long-run
              average cost.  Those  estimates  do not consider how short-run marginal cost
              may be affected.  This would include how costly it will be to replace the loss of
              a portion of supply due to occasional disruptions caused by accidents or
              weather that would temporarily disable the industry's facilities. The severity of
              a price increase in the context of a supply disruption would depend on how
              easily and cheaply alternative supplies of lawful fuel can be obtained. Short-
              run demand for diesel fuel is highly price inelastic and therefore, a relatively
              small percentage change in supply causes  a much larger percentage change
              in price.  EPA should  more fully consider this issue in the context of the
              proposed rule.

              Letters:

              Mercatus Center at GMU (IV-D-219) p. 20-21

       Response to Comment 5.9(F)(2):

       It may be true that unforeseen events such as accidents or severe weather could
impact production  levels at individual  refineries. However,  we do not anticipate widespread
supply shortages,  as described in our responses under Issues 5.8.1(B)(11) and  5.8.4(A).
Our schedule for bringing all highway diesel fuel down to the 15  ppm standard is gradual

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enough to allow refinery capacity to exceed anticipated demand and thus absorb occasional
and partial disruptions of supply. Once the program is fully implemented and all highway
diesel fuel must meet the 15 ppm sulfur standard, other refineries should be able to meet any
resulting supply shortfalls just as today.  Still, in response to concerns about potential supply
shortages, we have implemented a temporary compliance option and various hardship
provisions for the 15 ppm sulfur standard.  See our responses to Issue 4.1(F) and 8.1.

       (3)     The RIA's methodology for allocating costs among pollutants bias downward
              its cost-per-ton estimates for PM.  EPA's cost-per-ton estimates for PM are
              highly sensitive to the methodology chosen to allocate implementation costs
              among pollutants and it appears that EPA has allocated as much cost as
              possible to the ozone precursors instead of to PM.  Commenters raises a
              number of points in the context of this issue. First, EPA's "SO2 credit"
              illustrates the importance of cost allocation.  Since virtually the entire nation
              now meets the SO2 NAAQS standard, the reduction in SO2 emissions under
              the proposed rule would appear to  provide relatively few benefits. Therefore,
              it is unclear why any "credit" should be made forSO2, which reduces the
              cost-per-ton estimate for PM significantly. Second, EPA's allocation of costs
              for PM and NOX + NMHC may bias its results.  EPA has attributed some of
              the cost of tightening a  25 ppm cap alternative to its proposed 15 ppm cap to
              ozone precursors, even though such tightening only affects PM reductions.  If
              EPA had allocated  costs among the pollutants differently, it could have found
              that the proposed rule would be an unusually expensive way to reduce PM
              emissions. Commenter provides data  on alternative net present value cost-
              per-ton estimates to illustrate their point on this issue.  Third, EPA's lengthy
              time horizon may bias downward net percent value cost-per-ton estimates for
              both PM and NOX and NMHC. EPA's use of 30-year net present value cost
              estimates assumes that annual costs and emission reductions can be
              estimated reliably long into the future. Commenter provides significant
              discussion on these issues and concludes that the proposed rule may be a
              relatively expensive way to reduce  PM emissions since the incremental costs
              would be high and since the cost-per-ton of PM removed would greatly
              exceed the upper limit promised by President Clinton (cites to memo from
              Clinton to Browner dated July 16, 1997 on implementation  of the ozone and
              PM NAAQS). Commenter notes that costs per ton of PM emissions removed
              will be dramatically higher than EPA's estimate and between 2 and 8 times
              higher than what EPA considers acceptable.

              Letters:

              Mercatus Center at GMU  (IV-D-219) p. 21-26, 31-32

       Response to Comment 5.9(F)(3):

       Although our program was not intentionally designed to produce reductions in SO2
emissions, such reductions are produced incidentally by virtue of setting a lower diesel sulfur
standard. These reductions do have value, as described below. We therefore believe it
appropriate to calculate the cost-effectiveness of our program both with and without a credit
for these incidental reductions. Comparisons to alternative control strategies can be made
with either the credited or uncredited values. The results show that our program is cost-

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effective regardless of whether the credit for SO2 emissions is included. Note that our rule
produces other reductions in pollutants which we are not directly giving a monetary value,
such as toxics, secondary PM, and CO. Also, there are other benefits for reductions in
pollutants which are not monetised, such as visibility, eutrophication of waterways, acid rain,
etc.

       The cost credit for SO2 emission reductions was based on the average cost-
effectiveness for potential future SO2 control strategies as described in the RIA.  We  do not
believe that the current market price for SO2 credit trading is an appropriate source for
valuing the SO2 emission reductions from our program.  The value ascribed to our SO2
emission reductions should represent alternative sources for SO2 reductions.  Since SO2
credit trading is already occurring, it does not represent a means for replacing the SO2
emission reductions that our program is generating. The only source for alternative SO2
emission reductions that could be instituted if our program did not exist is potential future
programs that have not yet been  implemented.

       Though we recognize that most areas now meet the NAAQS for SO2, we continue to
believe that reductions in SO2 emissions will be beneficial.  For instance, many areas are still
out of attainment for PM, and atmospheric SO2 does contribute substantially to the formation
of secondary PM. As new PM control measures are implemented in the future, the cost of
those programs is likely to increase, and it is possible that strategies such as more stringent
SO2 emissions controls could become viable means for reducing  PM.  Thus we still believe it
is appropriate to take into account the reductions in SO2 emissions that will result from our
program, and to apply the value of those SO2 reductions entirely to the calculation of cost-
effectiveness for PM.

       The commenter points out that the alternative program scenario we evaluated in the
NPRM  in which the sulfur cap is 25  ppm shows the same NOX and HC emission reductions
as for our proposed program with a  15 ppm cap. For the 25 ppm cap  scenario, we assumed
that,  if the technology were enabled with this sulfur level, virtually the same emission
standards would be achieved. However, as stated in the NPRM , Section III of both the
preamble and RIA, and in our responses under Issue 4.1, we do not believe that the
aftertreatment technologies being considered in this rule will be enabled and are capable of
reaching our engine standards at 25 ppm.

       The commenter goes on to conclude that none of the costs associated with a
reduction in sulfur of 25  ppm to 15 ppm should be attributed to the calculation of cost-
effectiveness for NOX+HC. As noted above, this comment is based on the erroneous
conclusion that NOX + HC emission  performance would be unchanged.  In fact, a sulfur cap
of 15 ppm is necessary to meet the  standards we are finalizing in this  final rule.

       The commenter further presumes that cost-effectiveness analyses should be done on
an incremental basis, such that only the costs and  emission reductions associated with a
change in the sulfur cap of 25 ppm to  15 ppm would be used to calculate $/ton values.
However, as discussed in our response to  comment 5.9(E), we did not conduct an
incremental cost-effectiveness analysis for our program, and we do not believe that
incremental cost-effectiveness analyses described by the commenter are appropriate in this
rulemaking.  Our "average" approach  to cost-effectiveness took into account all the costs and
all the emission reductions associated with either the 25 ppm alternative sulfur cap or our
proposed 15 ppm sulfur cap, both of which were compared  to the same baseline, namely the

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DECEMBER 21, 2000	PAGE 5-73

current in-use sulfur level of 340 ppm. Using this average approach and the cost allocation
procedure described in Chapter VI of the RIA, we continue to deem it appropriate to allocate
75 percent of the costs for the 15 ppm sulfur cap to the calculation of cost-effectiveness for
NOX+HC.

       In its detailed comments, the commenter suggests that allocating 50 percent of fuel
costs to the calculation of PM cost-effectiveness is more appropriate than allocating only 25
percent. We disagree. The allocation of fuel costs should be consistent with the fuel's
enabling function in our program, namely that the 15 ppm standard is being promulgated
because it is necessary in order to enable both the PM trap and NOX adsorber to operate
efficiently. But since cost-effectiveness is emission-based rather than technology-based, it
was necessary for us to allocate fuel costs associated with each aftertreatment technology to
the pollutants affected by those technologies. A more detailed description of our cost
allocation methodology is given in Chapter VI of the RIA. The result is that 25 percent of the
fuel costs are allocated to  PM.

       The commenter suggests that a 30-year timeframe for calculating net present value
of costs and emission reductions is too long and that our estimates cannot be reliably
predicted for that timeframe.  The 30-year timeframe is consistent with the approach taken in
many previous rulemakings, and is used in order to fully capture all of the costs and emission
reductions associated with new engines which only fully replace existing engines over a long
period of time.  A significantly shorter timeframe would account for all of the costs of the
diesel fuel sulfur standard, but would ignore the emission reductions associated with new
engines which have not yet been sold and thus have not yet replaced existing engines in the
fleet. As for the reliability of the estimates in the long term, our approach to estimating long-
term costs and emission reductions is also consistent with the approach taken in other
rulemakings, and represents the best available methodology.

       Finally, the commenter suggests that the cost-effectiveness of our program exceeds
the upper limit discussed by President Clinton in a 1997 memo, particularly for PM.  We
agree that the uncredited cost-effectiveness for PM may exceed the $10,000/ton value given
in that 1997 memo. However, we continue to believe that our program is cost-effectiveness
for PM control.  The referenced memo was a discretionary action that was specific to EPA's
process of revising the NAAQS for PM and ozone, and thus  did not establish requirements
for all Agency programs.  In addition, we are not setting new standards in today's action in
order to meet the revised NAAQS.  It should also be noted that the $10,000/ton metric was
intended to be used as a maximum value in the air quality modeling conducted for the
rulemaking to revise the ozone and PM  NAAQS; only those  programs costing less than
$10,000/ton were actually modeled in that rulemaking. Using this limitation, most, but not all,
nonattainment areas came into attainment. It might be surmised,  then, that programs costing
more than $10,000/ton would need to be implemented for all areas to reach attainment.
However, cost-effectiveness is only a relative measure, having relevance only when the $/ton
value for one program is compared to the $/ton value for an  alternative program. The limit of
$10,000/ton used in the NAAQS revisions rule is not an Agency benchmark applicable to all
new control strategies, but instead was used only to determine which control strategies
among the myriad of possibilities would most likely be implemented. Finally, several past
programs were less cost-effective than the program we are finalizing today, so we continue to
believe that our program is appropriate. See also the response to comment 5.9(B)(1).

       (4)     EPA has not demonstrated that its proposed rule is superior to the

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              alternatives.  EPA has concluded that the 50 ppm cap is less cost-effective
              than its proposed 15 ppm cap.  However, EPA's analysis underlying this
              conclusion appears seriously flawed since it violates the economic law of
              increasing costs in several places.  Under the law of increasing costs,  a
              stricter standard must cost more than a less stringent standard.  It is
              implausible that EPA can conclude that choosing a lower sulfur cap would
              provide additional clean air benefits and save money.  EPA has  not provide
              cost estimates for the 50 ppm cap based on the same engine emissions
              standards as for the other three fuel standards it considers. In addition, EPA
              may be unduly pessimistic regarding the European experience with 50  ppm
              sulfur diesel. The different failure rates in Finland and Sweden are
              insufficient grounds to base a fuel sulfur standard for the U.S. given its
              diverse geography and climate.  EPA should inquire more deeply into the
              reasons for the positive results experienced by the U.K.

              Letters:

              Mercatus Center at GMU (IV-D-219) p. 26-28

       Response to Comment 5.9(F)(4):

       The so-called law of increasing costs does not impose the same kinds of constraints
on cost-effectiveness as it does  on costs.  Since cost-effectiveness compares the costs to the
emission reductions (typically $/ton), cost-effectiveness can go up even if costs  remain the
same or go down.  This effect results from the fact that benefits associated with different
emission standards (in this case the engine certification standards associated with either the
50 ppm cap or the 15 ppm cap) can be very different. In the NPRM, the total 30-year net
present value costs of the 50 ppm alternative program were in fact lower than the costs of the
proposed 15 ppm program ($35.4  billion verses $37.7 billion).  Despite this, the $/ton values
associated with the 50 ppm alternative program were higher than those for the proposed 15
ppm program.

       The engine certification standards we are finalizing today simply would not be
possible without very low sulfur. See Chapter III fo the RIA. The engine certification
standards we believe would be possible with a 50 ppm sulfur cap are not the same as  those
that would be possible under a 15  ppm sulfur cap, because the required aftertreatment
technology would have to be different and could not meet the standards we are promulgating
today.  The lower sulfur cap of 15 ppm enables the NOX adsorber and PM trap to operate
efficiently, producing the highest amount of emission reductions among the alternative
strategies discussed in the NPRM. As a result, the cost-effectiveness of the proposed 15
ppm cap program was significantly better than that for the alternative 50 ppm cap program.

       Finally, the failure rates in  Finland and Sweden provided one benchmark in our
determination of the maximum sulfur level that PM traps could tolerate and still operate
efficiently. See our responses to Issues 3.3, 4.1, and 5.9(E)(2).

       (5)     EPA has manipulated their figures to make the cost-effectiveness calculations
              appear "appropriate."  EPA has put all the fuel costs into the NOX adsorber
              part of the calculation. EPA has also chosen to combine the NOX and NMHC
              benefits and to separate these from PM.  NMHC (VOC)  reductions are  due to

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DECEMBER 21, 2000	PAGE 5-75

              the CDPF, not the NOX adsorber or the SCR and therefore, makes EPA's
              combination problematic.  Commenter notes that NMHC should not be
              considered in a cost-effectiveness analysis and provides revised cost-
              effectiveness figures that EPA should consider.

              Letters:

              American Petroleum Institute (IV-D-343) p. 77-79
              Marathon Ashland Petroleum  (IV-D-261) p. 81-82

       Response to 5.9(F)(5):

       In determining how to allocate costs to the various pollutants in our cost-effectiveness
analysis, we did not allocate all fuel costs to the NOX adsorber. As described in Chapter VI of
the RIA, we allocated the fuel costs first to the individual components of the aftertreatment
technology, since the fuel standard  of 15 ppm is being promulgated only because it is
necessary in order to enable the aftertreatment to function efficiently.  We then further
divided the fuel costs evenly between the pollutants that the aftertreatment affects.

       We have chosen to  calculate cost-effectiveness in terms of NOX + HC because these
two pollutants act together to produce tropospheric ozone. This approach is consistent with
the approach taken in several past rulemakings. We calculated separate cost-effectiveness
values for PM because there are separate NAAQS for ozone and PM.

       Issue 5.10:  Cost-Benefit Analysis

(A)    The health benefits of the  rule, including reduced costs related to
       hospitalization for lung ailments, far outweigh the costs that will be imposed as
       a  result of these new requirements.

       (1)     Commenters provided no further supporting information or detailed analysis.
              This comment was made by approximately 92 private citizens.

              Letters:

              Barrett, Bruce (IV-D-93)
              Beeman,  Nora,  et. al. (IV-G-09)
              Chung, Payton, et. al.  (IV-D-133)
              Citizens for a Better Environment (IV-F-3)
              City of NY, Borough of Manhattan (IV-F-51)
              Corcoran, Janet (IV-D-128)
              Damitz, Kyle and Colleen  (IV-F-20)
              Davidson, Karin, et.  al.  (IV-D-79)
              Evans,  David (IV-F-116)
              Fleming, Scott,  et. al. (IV-D-13)
              Franczyk, Catherine A., et. al.  (IV-D-233)
              Holy Spirit Church  (IV-D-83)
              Khalsa, Mha Atma S. (IV-D-71)
              Lind, Karen, et.  al.  (IV-D-121)
              Lipka, Richard P.  (IV-D-92)

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              Montgomery, Jack, et. al.  (IV-D-78)
              NY State Attorney General's Office (IV-F-61)
              Natural Resources Defense Council (IV-F-75)
              Nerode, Gregory, et. al. (IV-D-04)
              Pastor of Culver-Palms United Methodist Church  (IV-F-177)
              Richards,  Donna and Bill, et. al.  (IV-G-19)
              Riggles, Ruth (IV-D-102)
              Rodriguez, Dolores, et. al.  (IV-D-91)
              Ruth, Richard T. (IV-D-73)
              Smith, Maria (IV-D-72)
              StarQuest Leasing Company (IV-G-17)
              Vid, Da (IV-D-70)
              West Harlem Environmental Action/Envr Justice Network (IV-F-76)
              Williams,  Mary, et.  al.  (IV-D-122)

       Response to Comment 5.10(A)(1):

       We agree with the comments that the benefits to society outweigh the costs.

       (2)     One commenter noted that the government is subsidizing the polluters by
              forcing the health industry to bear the costs of their economic impacts.

              Letters:

              Hacienda  Heights Improvement Association (IV-F-172)

       Response to Comment 5.10(A)(2):

       We would like to clarify that EPA does not directly subsidize any industries. Our goal
is to adequately carry out the mandates of the Clean Air Act while minimizing the costs
resulting from controlling  emissions.

       However, the emissions from diesel engines and fuels targeted by this rule produce
pollution that burdens many parts of society, especially sensitive populations such as
children, the  elderly, and  individuals with pre-existing respiratory conditions.  PM, Ozone, CO
and HAP pollutants have  been associated with health endpoints that can cause exposed
sensitive groups to use more medical services (e.g., medication, doctors visits,
hospitalization, and emergency room visits). We agree that these emissions should be
reduced.

(B)    The added fuel costs of approximately 4 cents per gallon would be a
       reasonable cost  considering the significant benefits that will be achieved
       regarding pollution reductions and is  unlikely to have a significant impact on
       the national economy.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              American  Lung Association (IV-F-72)

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             MN Chamber of Commerce  (IV-D-28) p. 1
             NESCAUM (IV-D-315)p. 9
             Natural Resources Defense Council  (IV-D-168) p. 5, (IV-F-190) p. 98
             STAPPA/ALAPCO (IV-D-295) p. 11

       Response to Comment 5.10(B)(1):

       We agree with the comments.

       (2)    The public expressed its view in a nationwide opinion survey conducted
             recently in which 85 percent of those polled believe that an increase of up to 4
             cents a gallon is justified fora significant reduction in pollution.

             Letters:

             American Lung Association (IV-D-270) p. 20
             Udall, Mark (IV-D-173) p. 2

       Response to Comment 5.10(B)(2):

       We agree with the comments that the benefits outweigh the costs of this program.
       (3)    These estimates are consistent with the findings of MathPro in "Refining
             Economics of Diesel Sulfur Fuel Standards" (October 1999).

             Letters:

             Environmental Defense  (IV-D-346) p. 10-11

       Response to Comment 5.10(B)(3):

       We generally agree with the commenter on the consistency of the costs between  our
cost estimates and those by Mathpro. See our response to 5.8.1 (B) (6) and (7) for further
discussion.

(C)    EPA has failed to provide an adequate and accurate analysis of the costs and
       benefits of its proposal.

       (1)    Under section 211 (c)(2)(B), EPA must prepare a benefit-cost analysis and
             compare the emission control systems that are or will be in general use that
             require a low-sulfur fuel with those systems that are or will be in general use
             but do not require a low-sulfur fuel. While the proposal describes the benefit-
             cost analysis process, EPA has not provided a benefit-cost analysis for public
             comment.  EPA should issue this analysis as soon as possible with
             notification to the public and additional time to comment on the analysis.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 3, 93
             Marathon Ashland Petroleum (IV-D-261) p. 2, 86

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       Response to Comment 5.10(C)(1):

       In the proposed rule, EPA presented its assessment that although the full
quantification of the economic benefits would not be available until the final rule, we believed
that the health and welfare benefits would substantially outweigh the costs. This assessment
was based on the similarity between the HD Engine/Diesel Fuel rule and Tier2/Gasoline
Sulfur rule in terms of cost per ton of emissions reduced, emissions reductions, and types of
health and welfare benefits expected.

       We have completed a benefit-cost analysis for those benefits we were able to
quantify for the final rule. That analysis fully verified the expectations outlined in the NPRM.

       EPA's discussion of compliance with the requirements of section 211(c)(2)(B) of the
Act can be found in Appendix A of the RIA and in response to comments section 12(E).

       (2)     EPA's intention to finalize the BCA when finalizing the rule will deprive the
              public of the opportunity to review and comment on the merits of the Agency's
              economic analysis and EPA's belief that the health benefits will exceed the
              costs.

              Letters:

              ExxonMobil (IV-D-228) p. 11

       Response to Comment 5.10(C)(2):

       We believe that we presented enough detail of our proposed economic analysis
methodology for the public to comment on the merits of our approach. In addition, more
details are available in the Tier2/Gasoline Sulfur RIA regarding the application of these
methods in a similar mobile source rulemaking context. The Tier 2/Gasoline Sulfur RIA was
referenced in the NPRM to  this rule. Given that in a recent rulemaking with similar magnitude
and distribution of emissions reductions and cost per ton,  the net benefits were $20 billion in
2030, we feel that it was reasonable to conclude that the net benefits to society for this
rulemaking will also be positive. The commenters did not provide additional information to
support any belief to the contrary.  See also the response to comment 5.10(C)(1).

       Our costs estimates were available at the time of the proposal. EPA provided a
detailed cost-effectiveness analysis in the proposal. A cost-benefit analysis of the rule is not
required under section 202. Regarding the commenter's complaint that EPA only provided a
draft RIA at the proposal stage and won't finalize the BCA until the final rule, EPA could not
provide a final BCA prior to the final rule being completed.  Obviously, the costs and benefits
of a rule can  only be determined at the time the final rule is being completed, because we
don't know what the costs and benefits of a rule will be until we know what the final standards
are.  EPA's final analyses arise from the analyses and information provided in the proposal
and we are not required to delay this rule to allow further comment on the final analyses.
Moreover, as discussed elsewhere, delaying this rule would reduce the amount of leadtime
provided for refiners and engine manufacturers. Refiners and engine manufacturers urged
us during the Tier 2 rule to complete this rule quickly.

       (3)     Without a BCA, commenter cannot  determine whether EPA's general

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              assessment that the costs are less than the Tier 2 costs accurately addresses
              the significant costs to farmer co-ops, including refineries, pipelines,
              terminals, local co-ops and farms.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 6

       Response to Comment 5.10(0(3):

       We analyzed the feasibility and costs of the proposed program in the Draft RIA, and our
final analyses are in the Final RIA, Chapter 4 and 5.  In these analyses, we address the impact of
the program on all refiners for their entire volume of highway-compliant fuel, as well as all points
in the distribution system nationwide, including those refineries, terminals, pipelines, retailers
owned by farmer cooperatives.  We considered a wide range of factors including individual
refinery locations and characteristics; locations and storage capacities of terminals; the
capacities, directions, and endpoints of pipelines; and the numbers and capacities of retail outlets
nationwide. By looking at each major segment of the distribution system in this manner, we
believe we have incorporated the key aspects of farmer cooperative's participation in the national
petroleum system into our economic analyses.

       (4)     Commenter provides an analysis based on DOE's "Modeling Impacts of
              Reformulated Diesel Fuel"  and highlights the deficiencies in  EPA's cost
              analysis.  Commenter concludes that EPA's estimated cost of 4 cents per
              gallon is underestimated by almost 11 cents if investment costs, fuel economy
              impacts and distribution costs are reflected and that the industry proposal (i.e.
              50 ppm) will cost 5.7 cents/gallon and is also more cost effective per vehicle.
              Because  under either proposal the  emissions benefits are roughly equivalent,
              the cost benefit analysis weighs in favor of the less-expensive industry
              proposal.

              Letters:

              ExxonMobil  (IV-D-228) p. 11-12

       Response to Comment 5.10(0(4):

       DOE initially modeled the cost of desulfurizing diesel fuel based on diesel fuel ring
opening or upgrading technology.  DOE then received a number of comments by vendors
and refiners on the DOE analysis pointing out that  ring opening technology is not needed, but
severe hydrotreating would be used instead. We believe these comments caused DOE to
include a second set of costs, which they term optimistic costs, which are based on severe
hydrotreating and these costs are much lower. We believe that these other  costs are more
representative of the actual costs of desulfurizing diesel fuel and we compare these  costs to
our costs in Chapter IV of the RIA. We also discuss how the DOE costs compare to  our costs
in response to comment 5.8.1 (B) (11).

       (5)     The analysis fails to account for the nationwide inflationary, ripple effect of the
              proposal that will occur as a result of higher refiner costs, reduced fuel
              supplies,  and increased fuel and vehicle costs.

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DECEMBER 21, 2000	PAGE 5-80

              Letters:

              CO Petroleum Association (IV-D-323) p. 2

       Response to Comment 5.10(C)(5):

       The program is not expected to have a significant inflationary effect because the
increased vehicle costs and operating costs represent only a small change in existing costs,
as described in Chapter V of the RIA. For example, for HMD diesel vehicles, which carry
much of the nation's freight, the total lifetime vehicle and operating cost is expected to
increase by only about 3 percent.  Furthermore, the increased fuel and vehicle costs will be
offset by monetary benefits in the form of lower health care costs, improved worker
productivity and reduced agricultural crop damage, which is estimated in our benefit-cost
analysis to amount to approximately $4.5 billion per year once the fleet is fully turned over
and the program phased in. We also have analyzed the risk of supply shortfalls of highway
diesel fuel and concluded that our final program is designed to avoid such shortfalls. The
commenter is directed to review our response to comment 5.8.1 (B) (11) for a more complete
discussion on this aspect of the program.

       (6)     EPA overstates the emission reductions that will result from the  proposed
              2007 emission  standards of HD diesel engines and this.  EPA's  estimate of
              the emissions benefits from the proposed HD diesel engine standards are
              overstated. The HD engine emission inventory has been significantly inflated
              (see also Issue 2.2), which increases the emission reductions that can be
              attributed to the proposed emission standards. EPA's proposal  compares the
              cost per ton of emission reduction in this rule with other recent EPA mobile
              source rulemakings (i.e. a comparison of the cost per ton of NOX and NMHC
              reduction achieved in the Tier 2 rule, "2004" rule, Tier 1 rule, and others).  If
              the cost per ton in this rule were calculated using an inventory consistent with
              the prior rulemakings cited by EPA in Table V.F.3 (65 FR 35498), the benefits
              of the  proposed rule would be halved, which would increase the cost per ton
              of emission reduction by a factor of two. The proposed rule's cost per ton is
              at least 50 percent higher than all but two of the  rules cited by EPA and  is
              twice the average of the upper bound estimates  for the eight rules cited  by
              EPA.

              Letters:

              General Motors Corp. and  Isuzu Motors America, Inc. (IV-D-256) p. 75

       Response to Comment 5.10(C)(6):

       We  believe that the models we used to develop emission inventories for this
rulemaking, as well as the associated data inputs and assumptions, were appropriate and
produced the best possible estimates of the baseline emissions and emission benefits of our
program. See responses to Issues 2.2(F)(3) and 2.2(G)(3) fora more detailed discussion of
our models  and inventory estimates.

       The primary utility of a cost-effectiveness analysis is in determining if the control
strategy under consideration represents an appropriate next step in efforts to reduce pollution

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compared to alternatives.  In this context, one approach is to compare the present program
with past programs.  The commenter argues that it is inappropriate to compare the present
program using up-to-date information with past programs that used then-current but now out-
of-date information.  Instead the commenter believes it is appropriate to use old, out-of-date
and knowingly incorrect inventory information for the purposes of conducting a cost-
effectiveness analysis of the current program. We reject such  a suggestion and believe that
only accurate and available information should be used to determine both costs and emission
benefits for our rules. Furthermore, a better comparison of cost-effectiveness is to compare
this rule with alternative regulations which would have similar emission benefits in terms of
tons reduced, the national distribution of those tons,  and the particular pollutants impacted.
In fact, if comparisons are made to potential future programs as described in the RIA, it
becomes clear that our program represents a cost-effective strategy, among available
alternative control strategies, for obtaining substantial reductions in emissions of ozone
precursors and PM.  See response to comment 5.9(B)(1).

       (7)    The cost impacts of imposing supplemental emission requirements and tests,
             at both FTP and expanded ambient conditions, will be enormous and should
             be fully considered.  EPA has  not met its statutory burden to review and
             evaluate the costs of its proposed standards and requirements.

             Letters:

             Engine Manufacturers Association (IV-D-251) p. 81

       Response to Comment 5.10(0(7):

       We disagree with these comments. First, we disagree with the comment that the cost
of complying with the supplemental emission  requirements (i.e., the SET and the NTE
requirements) will be enormous. As discussed in Chapters of the RIA, the emission control
technology  hardware which will be used to comply with the FTP is also capable of complying
with the supplemental requirements, and the variable hardware costs is the vast majority of
the engine costs for this rule. In addition, the  supplemental requirements will require
research  and development costs with respect to engine calibration and integration of control
strategies, and these costs are included in the research and development costs we have
included in our cost analysis; please see Chapters of the  RIA which discusses our estimates
of HDDE R&D costs  associated with this rule. Therefore, we also disagree with the comment
that EPA did not fully consider these costs; we did both in  the proposal and in this final rule.

       We also disagree with the comment that we  have not met our statutory burden
regarding the standards promulgated in this final rule.  CAA Section 202(a) requires the
Agency to give appropriate consideration to cost, among other factors, when setting new
emission standards for HDDEs, which as discussed  above, we have done.

       (8)    EPA  has not given appropriate consideration to cost under the requirements
             of the CAA (Section 202(a)(3)) nor has it complied with the requirements of
             Executive Order 12866 to select a regulatory approach that will maximize net
             benefits  to Americans.  Commenter provides significant discussion on this
             issue, noting that EPA has not demonstrated that the proposed rule can
             provide substantial benefits since in the preamble and draft RIA for the
             proposed rule, EPA does not quantify any of the expected benefits in terms of

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-82

              dollars even though many of the expected costs are in fact, quantified.  EPA
              has only offered a limited numerical accounting of the rule's benefits in the
              form of estimated reductions, which are not adequately supported by factual
              evidence.  (See also Issue 2.1 and 2.4.)

              Letters:

              Mercatus Center at GMU (IV-D-219) p. 7-8

       Response to Comment 5.10(C)(8):

       EPA disagrees with the comment.  Section 202(a)(3) requires that standards for
heavy duty engines "reflect the greatest degree of emission reduction achievable through the
application of technology which the Administrator believes will be available for the model year
to which such standards apply, giving appropriate consideration to cost, energy, and safety
factors associated with the application of such technology." EPA has given considerable
consideration to cost, within the mandate of section 202(a)(3). EPA has performed cost
effectiveness analyses for both the proposed and final rules.  The analyses indicate that the
cost-effectiveness of this rule is within the range of cost-effectiveness total for other mobile
source regulations and will provide considerable reductions in pollutants. We have also
examined viable alternatives in our analysis for this rule and we believe we has chosen the
option that is most the cost-effective option  to achieve the requirements of the Act. These
analyses are based on considerable factual evidence. The commenter does not explain its
view that the factual evidence does not support these analyses.

       In addition, though the Clean Air Act does not require benefit-cost analysis to be
performed, a benefit-cost  analysis  was completed to determine efficiency of the  program.
For the final rule, EPA conducted a benefits-cost analysis, putting into monetary terms the
emissions reductions benefits enumerated in the proposal. This analysis is discussed in
detail in the preamble and section  V of the RIA for this final rule.  The analysis indicates that
this rule will lead to substantial benefits that well outweigh the costs of the rule.  Even so,
there are significant unquantified benefits in our full analysis due to deficiencies in the
literature  (see Table V-G.2 in the preamble  to the final rule for unquantified benefits
categories).  Even with these limitations, we estimate that the benefits will exceed costs and
that public welfare will increase.  At proposal, we provided our rationale for stating that we
believed that the benefits  would be comparable to the Tier 2/Gasoline Sulfur rule, and our
final RIA confirms this belief.

       EPA's analysis under Executive Order 12866 must take account of the underlying
statutory  requirements of the Clean Air Act, and we believe that we has fulfilled our
requirements under the statute and EO  12866.

       (9)    EPA's benefit-cost  analysis  will not accurately portray the effects of the
              proposal.  By using a benefit-cost "snapshot" for a single, distant year, 2030,
              EPA ignores all of the development and start-up costs. An accurate benefit-
              cost analysis considers all years for which reliable dollar estimates of benefits
              and costs  can be made. This approach also prevents any useful analysis of
              how the magnitude of development and start-up costs will affect the pace at
              which clean air benefits are  delivered to American citizens. The  higher the
              up-front costs are, the slower vehicle turnover will be, and therefore, the more

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              distant the delivery of clean air benefits. EPA's proposed rule may force
              Americans to pay more in costs than they would receive in clean air benefits
              and an alternative rule that provides a smaller annual "maximum" dollar
              benefit, but provides that maximum more quickly, could better serve our
              citizens.

              Letters:

              Mercatus Center at GMU  (IV-D-219) p. 29-30

       Response to Comment 5.10(0(9):

       EPA has considered the development and start-up costs explicitly in its analyses.  In
addition, we have also considered the pace at which clean air benefits are delivered. The HD
Engine/Diesel Fuel program has various cost and emission related components, as
described in the proposal and final rule. These components would begin at various times
and in some cases would phase in over time. This means that during the early years of the
program there would not be a consistent match between cost and benefits.  This is especially
true for the vehicle control portions of the program, where the full vehicle cost would be
incurred at the time of vehicle purchase, while the fuel cost along with the emission
reductions and benefits resulting from all these costs would occur throughout the lifetime of
the vehicle. Because of this inconsistency and our desire to more appropriately match the
costs and emission reductions of our program, our analysis uses a future year when the fleet
is nearly fully turned over (2030).

       In the years before 2030, the benefits from the HD Engine/Diesel Fuel program will
be less than those estimated in the final RIA, because the compliant heavy-duty fleet will not
be fully phased in. Annualized costs, on the other hand, reach nearly their full value within a
few years of program initiation (once all phase-ins are  completed). This can be seen by
comparing the anticipated emission reductions described in section II.D of the preamble to
the final rule with the aggregate costs of section V.E. Thus, a benefit-cost ratio computed for
the earlier years of the program would be expected to  be lower than a ratio based on our
2030 analysis.  On the other hand, since the estimated benefits are more than ten times the
costs in 2030, the emission reduction and cost trends suggest that it is  likely that annual
benefits would exceed costs from a time early in the life of the program.85

       Furthermore, to the extent that a lower ratio of benefits to costs early in the program
is the result of the mismatch of costs and benefits in time, a simple analysis of an individual
year would be misleading.  A more appropriate means of capturing the impacts of timing
differences in benefits and  costs would be to produce a net present value comparison of the
costs and benefits over some period of years (an approach analogous to the aggregate cost
effectiveness presented in  section V.F of the final rule). Unfortunately, while this  is relatively
straight-forward for the costs, it is currently not feasible to do  a multi-year analysis of the
benefits as this would require a significant amount of air quality modeling to capture each
year. EPA did not have the resources to conduct such an intensive analysis.  See also the
       85 While emission reduction trends give a general indication of the likely trends in the benefits,
there are sufficient non-linearities and interactions among pollutants in the atmospheric chemistry used in
our modeling that it is not possible to attempt a quantitative estimate of the benefits simply from changes in
the inventories in years that were not fully modeled.

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response to comment 5.10(B)(8) for further discussion of the appropriate use of cost analysis
for the purposes of this rule.

       (10)    EPA's analysis does not recognize the impact of regulatory costs on public
              health.  It is widely recognized that health improves as family incomes rise
              and empirical evidence indicates that regulatory programs can harm health
              indirectly by reducing incomes.  EPA's proposed rule would be costly,
              therefore lowering  incomes and as a result, may lead  to an overall adverse
              effect on public health.

              Letters:

              Mercatus Center at GMU (IV-D-219) p. 30

       Response to Comment 5.10(0(10):

       The costs of this rulemaking will have a negligible, if any, impact of U.S. household
income. First, the costs are spread out over the 30 year period of this analysis with the costs
in 2030 being $4.3 billion. Second, the magnitude of these costs relative to the U.S.
economy is very small.  For example, the U.S. gross domestic product (GDP) is estimated by
the Department of Energy at $14 trillion in 2024, while the cost of this rulemaking is roughly
$4 billion in that year, or only 0.03  percent of GDP.  Therefore, the likelihood is very remote
that price increases resulting from this action would cause household income to change by
any noticeable amount.  Thus, we  find no basis for the commenter's assertion that the cost
impact of this rule will result in an adverse impact on an average person's health.

       In addition, EPA does consider the well-established public health implications of its
rule, noting that the program will result in significant  improvements in  the health of children,
the elderly, people with underlying respiratory disease, and other sensitive populations. Each
year, the program is likely to result in thousands of fewer premature deaths, thousands of
fewer hospital admissions from cardiac and respiratory ailments, hundreds of thousands of
fewer asthma attacks among asthmatics, millions of fewer days missed from school and work
for respiratory problems.

       The commenters offer a specific test that they feel the rule must meet: that EPA's rule
must avoid at least 2,500 lives over a 30 year period. As an illustrative example, the
premature deaths avoided in the period 2020 to 2030 could be as many as 40,000 over the
10-year period, which is substantially more than the  2,500 fatalities that the commenters  cite
over 30 years.  Although we may not agree with their risk-risk trade-off framework, the rule
satisfies the test on the commenters own terms.

       We believe that the health  and welfare benefits are substantial and spread over the
entire exposed population. Costs, while significant for those bearing the costs, are not major
for the total economy when viewed on a per capita basis.

       (11)    Given the high costs of meeting the proposed diesel fuel sulfur standard,  EPA
              should more fully evaluate the costs vs. benefits of a 50 ppm diesel fuel sulfur
              standard as compared to the 15 ppm standard.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-85
              Perfection Oil Company (IV-D-41) p. 1

       Response to Comment 5.10(C)(11):

       While we costed out the difference in refining costs for desulfurizing highway diesel
fuel to an average of 50 ppm and to meet a 15 ppm cap standard for the NPRM, we did not
consider a 50 ppm average standard for the final rule because since the NPRM we
concluded that the emission control hardware would not function adequately on the higher
sulfur level.

       (12)    EPA should not use the claimed public health benefits in non-transport
              attainment areas as benefits in the benefit-cost analysis.

              Letters:

              American Petroleum Institute (IV-D-343) p. 5
              Marathon Ashland Petroleum (IV-D-261) p. 4

(D)    EPA has failed to take into account the costs of imposing the NTE as required
       under the CAA and has also failed to identify the environmental  benefits
       associated with the NTE.

       (1)     Section 202(a)(3)(A) requires that EPA give "appropriate consideration to
              cost, energy and safety factors" associated with the application of the
              technology used to achieve new emission standards.  EPA has failed to
              consider the costs associated with NTE and has provided no data showing
              that the NTE contributes to emission reductions or that this provision is
              necessary to provide adequate compliance assurance.  EPA has failed to
              provide any sort of cost-benefit analysis showing that the NTE is cost-
              effective.

              Letters:

              International Truck & Engine Corp.  (IV-D-257) p. 23

       Response to Comment 5.10(D):

       We disagree with these comments.  First, we disagree with the statement that the
Agency has not considered the costs associated with the NTE requirements.  CAA Section
202(a)  requires the Agency to consider costs, among other factors, when establishing new
standards for HDDEs, which is what we have done in this final rule. As  discussed in
response to the comment under issue 5.10(C)(7), the Agency has estimated the costs of
complying with all of the HDDE emission requirements promulgated in this rule, including the
NTE requirements.

       We disagree with the comment that the Agency has failed  to demonstrate that the
NTE contributes to emission reductions or is necessary to provide adequate  compliance
assurance.  As discussed in response to comments 3.1.1(L) (1) &  (2), the Agency has clearly
articulated the need for the supplemental emission requirements, including the NTE. (see

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 5-86

responses to comments 3.1.1(L) (1) & (2)).

       Finally, we disagree with the comment that the Agency is required to perform either a
cost-benefit analysis or a cost-effectiveness analysis with respect to the NTE requirements.
As the commenter correctly cited, CAA Section 202(a) requires the Agency to consider costs,
among other factors, when setting new HDDE standards. The statute does not require the
Agency to perform either a cost-effectiveness analysis or a cost-benefit analysis, and
certainly does not require such analysis for individual  pieces of a program. Nevertheless, the
Agency has performed a cost-effectiveness analysis of the HDDE standards established in
this rule as a whole, as well as a cost-benefit analysis. As discussed in the preamble and in
the final RIA, this rule is cost-effective, and is  similar to the cost-effectiveness of other recent
mobile source pollution control rulemakings, and the cost-benefit analysis performed for this
rule shows the monetary benefits of the rules  outweighs the costs of the rule significantly.

(E)    EPA's cost-benefit analysis is a  political tool, and not useful for comparing
       alternatives.

       (1)     It is too difficult to determine accurately, the monetary value of health and
              environmental benefits and this uncertainty contributes to the ease at which
              the data can be manipulated to serve a pre-determined purpose.  EPA
              described the cost-benefit  analysis process in the NPRM, but did  not issue
              the analysis as part of the proposed rule.  This implies that EPA has already
              predetermined the outcome of the cost benefit analysis, yet is withholding it
              until the final rule, which does  not allow time for peer review. This is an
              abrogation of the rulemaking process and EPA should release the Benefit-
              Cost analysis as soon as possible for public comment.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 81
              Marathon Ashland Petroleum  (IV-D-261) p. 86
              National Petrochemical & Refiners Association (IV-D-218) p. 13

       Response to Comment 5.10(E):

       At proposal, EPA solicited public comment on its regulation and analytical approach.
No outcome  was pre-determined; however, EPA did compare the program to other past
regulations to inform the  public of the likely magnitude of benefits once analyses were
performed. EPA's methodologies and data have long been in the public domain. Most of our
methodologies and underlying benefits data are in public dockets for previous rulemakings or
parts of public reports (e.g., Tier 2/Gasoline Sulfur docket and section 812 reports to
Congress). These  methodologies have been scrutinized by the public and appropriately peer-
reviewed  (see references below).  The models and many key assumptions have been
examined by the independent Science Advisory Board. See also the responses to issue
5.10(C)(1)and5.10(C)(2).
References:

EPA-SAB-COUNCIL-ADV-99-012, 1999. The Clean Air Act Amendments Section 812

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Prospective Study of Costs and Benefits (1999): Advisory by the Health and Ecological
Effects Subcommittee on Initial Assessments of Health and Ecological Effects: Part 1. July
28, 1999.

EPA-SAB-COUNCIL-ADV-00-001, 1999.  The Clean Air Act Amendments Section 812
Prospective Study of Costs and Benefits (1999): Advisory by the Health and Ecological
Effects Subcommittee on Initial Assessments of Health and Ecological Effects: Part 2.
October 29, 1999.

US EPA 1999.  The Benefits and Costs of the Clean Air Act. EPA Report No. EPA-410-R-
99-001, November 1999.

US EPA 1999. Regulatory Impact Analysis for the Tier 2/Gasoline Sulfur  Rule. US EPA
Office of Air and Radiation.  Washington,  DC.  December 1999.

EPA-SAB-EEAC-00-013. An SAB Report on EPA's White Paper Valuing the Benefits of Fatal
Cancer Risk Reduction.  July 27, 2000.

(F)    EPA's cost/benefit analysis should take into account that the cost and
       availability may differ significantly in various parts of the nation.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             American Public Transportation Association (IV-D-275) p. 3

       Response to Comment 5.10(F):

       EPA's benefits analysis does take into account that the benefits may be different in
different parts of the country. We provide detailed air quality modeling and take into account
regional differences as appropriate in our benefits methodology (e.g., visibility valuation).
Also, the refining costs are estimated on a refinery-by-refinery basis using regional cost
inputs. The benefits are compared to the costs, however, on a nationwide basis.

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ISSUE 6:  ALTERNATIVE PROGRAM OPTIONS

       Issue 6.1: Phase-in Approach

             Issue 6.1.1: Supports Phase-in Approach (Fuel Standard)

(A)     Because only a small percentage of the fleet would require the low-sulfur fuel
       at first, this approach would reduce costs without interfering with emission
       benefits.

       (1)    This approach would allow large refiners to provide a percentage of their
             production to the low sulfur market and then take advantage of advances in
             desulfurization overtime to meet the increasing requirements for the amount
             of low sulfur diesel. Marketers/retailers should be allowed to select which
             diesel they wish to market so that they are not required to add tankage and
             other systems to handle two diesel grades.

             Letters:

             Placid Refining Company, LLC (IV-D-230) p. 4

       (2)    A phase-in could reduce the fuel related costs by 2-3 cpg during the phase in
             period; and would substantially reduce the risks of supply disruptions and
             price spikes. Allowing a significant part of the market to remain at higher
             sulfur diesel will benefit those who produce off-spec products (from
             maintenance turn-arounds, upsets, etc.) and those whose pipelines carry jet
             fuel which contaminate low sulfur diesel.  Delaying investment through a
             phase in is worth $5-1  billion using EPA estimates for refiner capital and
             operating costs.  To reduce costs, commenter supports credit trading which
             allows higher cost producers to defer their products.  Doing so would
             eliminate the PADD IV and small refiner issues, and let the  market drive the
             program.

             Letters:

             Koch Industries (IV-D-307) p. 4, 6

       (3)    The phase-in would ensure that fuel  supply disruptions and price spikes do
             not occur during the transition to the  new fuel. It would also reduce costs to
             consumers, and to small refiners/farmer co-ops that face high capital costs to
             desulfurize diesel fuel. EPA should structure the  program so that large
             refiners have incentives to supply the ultra-low sulfur fuel in the early years.

             Letters:

             USDA  (IV-D-299) p. 3-4

(B)     Supports a phase-in that would be voluntary for refiners.

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       (1)     Supports a voluntary phase-in for those few refiners who can take advantage
              of it, but believes that this option will not provide flexibility to most refiners,
              especially small refiners and farmer co-ops.

              Letters:

              Countrymark Cooperative  (IV-D-333) p. 11

(C)    A volume phase-in would allow refiners to spread out their investments over a
       longer period of time.

       (1)     A volume phase-in would allow refiners to spread their investments over a
              five to seven year period and would create the potential for HDS technology
              improvements, which may lower the total investment costs.  This approach
              would also allow refiners to delay addressing the heavier and cracked
              blendstocks, which is difficult to desulfurize.  In addition, smaller cost
              increases would be possible at the smaller volumes associated with a phase-
              in.  These cost increases, at less than 10 ppm average sulfur, are likely to
              range from about 5 cpg at 25 percent of on-road demand to 6 cpg at 75
              percent of all on-road diesel, making a phase-in of the low sulfur diesel an
              attractive environmental protection program. Commenter provides two
              documents that discuss this issue and provide additional supporting data and
              information: "Analysis of the Cost of a Phase-in of 15  ppm Sulfur Cap Diesel
              Fuel," Center for Transportation  Research, Argonne National Lab, August
              2000; and "Consumers' Views on the Availability of Cleaner Diesel Fuel," Oak
              Ridge National Lab, June 14, 2000.

              Letters:

              U.S. Department of Energy (IV-G-28) p. 4, Att. 5 + 6

       Response to 6.1.1 (A). (B). and (CUD:

       We agree that a fuel  program that allows refiners to continue producing a limited
amount of current highway fuel (meeting a 500 ppm sulfur cap) while also producing 15  ppm
sulfur fuel reduces any supply concerns without interfering with the benefits of the new
engine standards, and potentially reduces costs. With today's final rule, we are adopting a
temporary compliance option that allows refiners to continue producing a limited amount of
highway diesel fuel meeting a 500 ppm sulfur level while majority of the fuel produced by
refiners must meet a sulfur level of 15 ppm. The temporary compliance option is optional for
refiners.  It will  last for four years and includes averaging, banking and trading provisions
which allows refiners that produce more than the required amount of 15 ppm sulfur fuel (or
produce it earlier than required) to earn credits which can be banked or sold to other refiners
that produce less than the  required amount of 15 ppm sulfur fuel.

       As described in section IV of the preamble for today's rule, we believe the temporary
compliance option will ensure there are adequate supplies of highway diesel fuel once the
fuel program begins.  Section V of the preamble and Chapter IV of the RIA for today's rule,
contain our complete analysis of the fuel supply issue. As described in section IV of the
preamble, we are also adopting special provisions for small refiners that allow them to

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continue producing 500 ppm sulfur throughout the duration of the temporary compliance
option which should reduce costs for small refiners.  Together, these provisions provide a
supply "safety valve" by allowing the highest cost producers of diesel fuel, those most likely to
curtail their production, additional time to determine the most economical way to comply.

       While we have serious concerns with the appropriateness of and the basis for much
of the DOE cost analysis, our main concern with any of the phase-in recommendations is the
need to ensure widespread availability of 15 ppm diesel fuel. Without such availability, the
economic and environmental  benefits of the rulemaking would not be achieved. Given the
amount of 15 ppm sulfur fuel that must be produced under the temporary compliance option,
we believe based on our analysis in  Chapter IV of the RIA that there will be widespread
availability of 15 ppm without  any retailer requirements. Therefore, marketers and retailers
will be allowed to select which fuels they market. We will not require any marketer or retailer
to sell both 15 ppm and 500 ppm fuels.  We believe most will carry only one highway diesel
fuel because of the high cost  of carrying more than one fuel. A phase-in allowing  a higher
percentage of 500 ppm sulfur fuel increases the risk that 15 ppm sulfur fuel would not be
available on a widespread basis, and would increase the need fora retailer availability
requirement. For these reasons, EPA does not believe a higher percentage of 500 ppm
sulfur fuel is appropriate.

       We believe the temporary compliance option will result in a cost saving to  refiners as
it will allow some refiners to delay compliance with the 15 ppm sulfur requirement. As
described in  Chapter V of the RIA for today's rule, we estimate that refiners will  be able to
save as much as $1.7 billion over the duration  of the temporary compliance option compared
to a requirement that all highway diesel  fuel comply 15 ppm sulfur. While much of this
savings will be offset by increased costs in the distribution system, we project that in total, a
small overall savings should result from refiners taking advantage of the temporary
compliance option. (Refiners who are able to delay investment in desulfurization  equipment
should be able to realize lower costs as improvements in technology occur, however, we
have not included such cost savings in our cost analysis and do not believe technology
improvements are necessary  to allow production of 15 ppm sulfur diesel fuel.)
       (2)     Commenter suggests a phase-in involving 30 ppm sulfur in 2006, 20 ppm in
              2007, 15 ppm in 2008, and 10 ppm in 2012.  EPA should mandate no price
              differentiation between different grades of diesel at retail stores.

              Letters:

              Consumer Policy Institute (IV-D-186) p. 6

       Response to Comment 6.1.1(0(2):

       As described in Chapter III of the RIA for today's rule, we believe that the
technologies engine manufacturers will employ to comply with the standards being adopted
today will require the use of diesel fuel with a sulfur level of 15 ppm or less. Allowing refiners
to produce a higher sulfur fuel for use in 2007 model year and later heavy-duty diesel trucks
would inappropriately jeopardize the efficiency of the emission controls  resulting in
significantly higher emission levels. Therefore, we are adopting a fuel program that requires
refiners to start producing 15 ppm sulfur diesel fuel in mid-2006.  Also, owners of 2007 and

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-4

later model year heavy-duty diesel vehicles will be required to use diesel fuel with a sulfur
level of 15 ppm or less.

       With regard to mandating that there be no price differential between the 15 ppm and
500 ppm sulfur diesel fuels, we do not have the authority and do not think it would be
appropriate to mandate prices of fuels. Given the provisions of the fuel program being
adopted, we expect the price of 15 ppm and 500 ppm sulfur fuels to be similar to each other
at retail outlets in most of the country.

             Issue 6.1.2: Opposes Phase-in Approach (Fuel Standard)

(A)     Expressed opposition to the concept of providing a phase-in for the fuel sulfur
       standards because phasing in the sulfur standard would be logistically difficult
       and financially burdensome to refiners, distributors, and retailers.

       (1)    Commenters noted that a phase-in is impractical and would be too costly
             since this approach would require investment in additional tanks, piping and
             pumps to accommodate two different grades of fuel and noted that this type
             of investment would only be necessary for a few years, and would result in
             spot outages, price increases and fuel cross-contamination. Some (NATSO
             & PMAA) provided significant discussion on this issue including analysis of
             the phase-in alternatives presented by EPA and recommend that to avoid
             significant adverse economic impacts, EPA should not incorporate any sort of
             phase-in of the fuel standard. API noted that the cost of the proposal, as
             estimated by TM&C, would exceed $1 billion - a cost that cannot be justified
             for a temporary program of 3-4 year duration. EPA's projected cost increase
             of 4 cents per gallon would provide a  strong incentive for deliberate
             misfueling and API's projected cost increase of 10 cents per gallon would
             force truckers to misfuel just to stay in business. (See also Issue 6.1.3.)
             Another commenter raised some of these same arguments and also added
             opposition to combining a phase-in with an ABT program.

             Letters:

             Ackerman Oil Co., Inc. (IV-D-21)  p. 1
             American Bus Association  (IV-D-330) p. 4-5
             American Petroleum Institute (IV-D-343) p. 66-67
             American Trucking Association (IV-D-269) p. 15
             Big West Oil, LLC (IV-D-229) p. 2
             Bossom's Quasky Mart (IV-D-44) p. 1
             British Petroleum  (IV-D-242) p. 3
             CA Trucking Association (IV-D-309) p. 1-2
             Cenex Harvest States Cooperatives (IV-D-232) p. 7, (IV-F- 191) p. 232
             Chevron (IV-D-247) p. 6
             Collier, Shannon, & Scott (IV-F-117) p. 24
             Engine Manufacturers Association (IV-D-251) p. 17-18
             Equiva Services  (IV-D-226) p. 2
             ExxonMobil  (IV-D-228) p. 19, (IV-F-800)
             Farmland Industries (IV-F-29)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-5

              Harold Dickey Oil Corp.  (IV-D-43) p. 1
              Independent Fuel Terminal Operators Association  (IV-D-217) p. 13-15
              James Enterprises, Inc.  (IV-D-40) p. 1
              Johnson Petroleum, Inc. (IV-D-17) p. 1
              Kendle Oil Company (IV-D-42) p. 1
              MT DEQ  (IV-D-254) p. 8
              Marathon Ashland Petroleum  (IV-D-261) p. 3, 70, 95, (IV-F-74)
              Meyer Oil Company (IV-D-45) p. 1
              NATSO  (IV-D-246)p. 1-10, (IV-F-17)
              NY Assoc. of Service Stations & Repair Shops  (IV-F-45)
              National Association of Convenience Stores  (IV-D-279) p. 2, (IV-F-191) p.
              168
              National Federation of Independent Business (IV-D-243) p. 2
              National Petrochemical and Refiners Association (IV-D-218) p. 4
              Nauss Oil Company, Inc. (IV-G-21) p. 1
              New England Fuel Institute  (IV-D-296) p. 5-7
              PA Association of Milk Dealers (IV-D-23) p. 1
              Perfection Oil Company (IV-D-41) p. 1
              Petroleum Marketers Association of America (IV-D-245) p. 1-14
              Phillips Petroleum Company (IV-D-250) p. 6
              Ports Petroleum  Co, Inc. (IV-F-117) p. 190
              Sinclair Oil Corporation  (IV-D-255) p. 10
              Society of Independent Gasoline Marketers of America  (IV-D-328) p. 6, (IV-
              F-191)p. 196
              Tosco (IV-D-84), (IV-D-304) p. 3, (IV-F-157)
              Welsh, Inc.  (IV-D-22) p. 1

       Response to Comment 6.1.2(A)(1):

       EPA agrees with the commenters that a gradual phase in of the 15 ppm fuel would
likely create significant problems for the program at little overall cost savings to the nation.  In
particular, such a phase in would likely result  in 15 ppm  fuel not being readily available in a
number of areas around the country, absent a retailer availability requirement.

       While EPA's temporary compliance option and small refiner program have a number
of things in  common with a gradual  phase in,  EPA believes that there are important
differences  which will make the program workable and serve to ensure adequate supply of
highway diesel fuel in 2006. The main differences result from the volume of highway diesel
fuel required to be 15 ppm sulfur at the start of the program.  Based on our analysis in
Chapter IV of the RIA, we believe this will ensure that 15 ppm fuel is widely available across
the country  at a cost comparable to 500 ppm fuel, without the need for a retailer availability
requirement or other such requirement.  We expect 15 ppm fuel will be the fuel of choice  for
distributors  and marketers, including pipelines, terminals and retail outlets, based on the
volume. The decision to carry 500 ppm fuel alone, or in combination with 15 ppm fuel, will be
entirely voluntary.  While we do project, as discussed in  Chapter V of the Final RIA, that a
number of terminals and other entities will choose to invest in tankage to handle both grades
diesel fuel over the transition period, we also project that the fuel production savings resulting
from the continued production of 500 ppm fuel will offset these costs.  Consequently, as
discussed in Chapter IV of the RIA and in later responses to comments, we believe that

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-6

misfueling will be of limited concern under the provisions finalized today.

       We have designed the temporary compliance option and small refiner program to
keep distribution costs to a minimum, while easing the task of the refinery system to produce
adequate supplies of highway ppm fuel.  For example, the 15 ppm fuel production
requirement is relatively high: 80%. Given the distribution system's reluctance to carry an
additional fuel, the fact that most of the production of highway diesel fuel will meet the 15
ppm standard means that most of the distribution system need only carry one fuel: 15 ppm.
Because most vehicles during between 2006 and 2010 will be able to use 500 ppm fuel, the
500 ppm fuel can be utilized near the refinery where it is produced. In addition to this local
distribution, we expect the major pipeline systems (Colonial, Plantation, TEPPCO) to carry
both highway diesel fuels. The 500 ppm fuel may not be carried at every terminal, but will be
carried at those  terminals where  it can be handled more easily and where large quantities
can be distributed to retail (i.e., those terminals serving large numbers of high volume truck
stops). Likewise, not every retail outlet need carry the 500 ppm fuel. While the average cost
of modifying a truck stop to handle a second fuel averaged over $100,000, according to
NATSO, many truck stops estimated much lower costs. These lower cost truck stops would
likely be the ones to carry both 15 and 500 ppm fuel, if it were economically to their
advantage to do so.

       We also believe that the credit program will keep the cost of both highway diesel
fuels very close. Those refiners choosing to produce 15 ppm fuel will  be able to sell their
credits to other refiners choosing to wait  until 2009 or 2010 to comply with the new standard.
This sale of credits  should approximately compensate them for at least 20% of their
production costs. Refiners producing 500 ppm fuel will have to buy credits for 80% of their
production. The overall expenditures of the two sets of refiners should be roughly equal on a
per gallon basis at the  refinery gate, if the market power of the refiners buying and selling
credits is balanced.  In this case, refiners selling  credits will be able to demand a price for
their credits which covers their costs on a per gallon basis. However,  if credits are in short
supply, the price may exceed costs and the cost of producing 500  ppm fuel, including
purchasing credits,  could exceed that to  produce  15 ppm.  Or, if more credits are being
generated than are needed, then the price of a credit could be less than the full cost of
producing 15 ppm fuel. In any event, the cost of credits should make the prices of 15 ppm
and 500 ppm fuels  much more similar in  the marketplace than if unlimited amounts of 500
ppm fuel could be produced and  marketed.

       EPA has taken a relatively conservative approach to estimating the capital investment
costs associated with the temporary compliance  option and small refiner program. We
considered the fact that the fleet will be slowly turning over to post-2006 vehicles even during
the 2006-2010 period.  We also assumed that centrally fueled fleets, card locks and service
stations would not carry the 500 ppm fuel.  We assumed that only truck stops would carry the
500 ppm fuel and that every truck stop in an area receiving 500 ppm fuel would invest in
being able to handle both fuels. This expanded the geographical area necessary to absorb
all of the 500 ppm fuel  being produced and the cost of doing so. We still only estimated
about $1 billion  in capital investment. A the same time, the refining side would be able to
save roughly $1.7 billion. This also provided nearly half of all refineries 3-4  more years of
leadtime prior to investment.  Thus, while the overall savings associated with the temporary
compliance option and small refiner program is relatively small, it is a savings and the
benefits in terms of supply certainty are significant. Thus, we have determined that the
additional costs  to the distribution system are worth the benefits elsewhere, particularly the

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-7

assurance it provides of adequate supplies of highway diesel fuel at the start of the program.

       (2)     EPA should consider the experience in 1993, when retail dealers were
              required to distribute two types of distillate - on-road diesel fuel with 500 ppm
              sulfur and nonroad distillate for heating and other purposes. This
              requirement compelled the distribution sector to segregate its operations -
              storage tanks, trucks, hoses and related  equipment. This undertaking was
              very costly and burdensome to dealers' operations and it took a number of
              years for these dealers to fully recoup their costs. A phase-in program for
              ultra-low sulfur diesel fuel would force dealers who have only recently
              recovered from the 1993 rule, to undergo the process again. Even a
              voluntary program would cause distribution problems and would lead to
              uncertainty for dealers regarding the sources of supply and level of demand.

              Letters:

              New England Fuel Institute (IV-D-296) p. 6

       Response to Comment 6.1.2(A)(2):

       As pointed out under Issue 6.1.2(A)(1), we believe that the distribution  of 500 ppm
fuel will be limited to those pipeline systems which can handle an additional diesel fuel at
reasonable cost. A large volume of 500 ppm fuel can  be distributed by truck directly from
refineries producing this fuel to areas already receiving truck shipments from the refinery.  A
few major pipelines will be capable of distributing the remainder where it is likely to also be
distributed by truck from a limited number of large terminals. The distributor need invest to
carry both fuels only if it is in his economic interest to do so. As  the volume of  both 15 and
500 ppm fuels will equal the volume of highway diesel fuel absent this  rule, we believe that
those parts of the  distribution system handling both fuels will be  able to do so without any
loss of overall capacity.

       (3)     Commenters argued that the dual fuel  option would decrease the fungibility of
              the fuel products and lead to breakdowns in the efficient pipeline system used
              to transport fuel.

              Letters:

              Ports Petroleum Co, Inc. (IV-F-117) p. 190
              Society of Independent Gasoline Marketers of America (IV-F-191) p.  196

       Response to Comment 6.1.2(A)(3):

       Both 15 ppm sulfur diesel fuel and 500 ppm sulfur diesel fuel will be fungible products
in the distribution system during the transition period.  As discussed in  Chapters IV and  V of
the RIA, there are likely to be costs and impacts  on the distribution system in order to carry
both fuels, but these will be manageable. In general, we expect both fuels to be carried
where it is economically advantageous to do so,  compared to carrying  just one fuel.

       (4)     Commenter noted that adopting a phase-in may  create problems with foreign
              refiners and imported diesel fuel.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-8

              Letters:

              Tosco (IV-D-304) p. 6-7

       Response to Comment 6.1.2(A)(4):

       We do not expect that the fuel program being adopted today will create problems with
foreign refiners and imported diesel fuel. The fuel program has been designed so that
foreign refiners and importers of highway diesel fuel must comply with the same provisions
as domestic refiners for the highway diesel fuel imported into the United States. In addition,
foreign refiners and importers of highway diesel fuel are allowed to take advantage of the
flexibilities being adopted today, including participation in the averaging, banking and trading
program and the small refiner flexibilities being adopted today (if the foreign refiner meets the
definition of "small refiner").

       (5)     Commenters noted that a phase-in would endanger the nation's energy
              supply as refiners choose not to invest in developing their facilities in favor of
              producing the high sulfur diesel that will be in demand for many more years.
              EPA should analyze the supply shortfall and costs of diesel, jet fuel and
              heating oil resulting from the proposal.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 67
              Marathon Ashland Petroleum (IV-D-261) p. 70

       Response to Comment 6.1.2(A)(5)

       The 80% highway diesel fuel production mandate  prevents refiners from avoiding
complying with the 15 ppm standard, unless they have purchased credits from other refiners
over-producing the new fuel.  Also, the limited  duration of the program limits this issue to 3-4
years.  Finally, EPA did  analyze the capability of refiners shifting their current highway diesel
fuel to other markets and found that this could  be done only at significant economic cost in
terms of lost revenue. (The reader is referred to Chapter 5 of the RIA where this analysis is
presented and under issue 8.1.1. of this document.) At the same time, compliance with the
new sulfur standard does not affect a refiner's  ability to produce other products, such as jet
fuel or heating oil.

       (6)     Commenter noted that a phase-in would not change a refinery's investment
              decision because most refiners would build the same new facilities regardless
              if the market demanded 50% of the fuel be 15 ppm or 100%.  Furthermore,
              the cost  savings of delaying the investment for 2-4 years would be
              overwhelmed by the distribution costs for 2 grades of diesel.

              Letters:

              Tosco (IV-D-304) p. 3-4

       Response to Comment 6.1.2(A)(6):

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-9

       We believe the temporary compliance option being adopted today will impact a
refinery's investment decisions. Under the averaging,  banking and trading program included
with today's program, we expect most refiners will make only one fuel for the highway
market. Some refiners will produce all of their highway diesel fuel at the 15 ppm sulfur level
and generate credits. Other refiners will purchase credits from refiners that produce all 15
ppm sulfur fuel and then continue to produce all 500 ppm sulfur diesel fuel. Therefore, we
believe the temporary compliance option and the small refiner hardship provisions will
provide flexibility to a number of refiners and allow them to delay investment in
desulfurization technology.

       With regard to the cost savings of delaying investment the reader is referred to
Chapter V of the RIA for a detailed discussion of the cost of the fuel program.  In addition, the
reader is referred to the response to comments on issue 6.1.2(A)(1) fora short summary of
the estimated cost savings under the temporary compliance option and small refiner hardship
provisions (compared to a requirement that all fuel meet 15 ppm sulfur).

       (7)     One commenter added that if EPA chooses to pursue this option, the costs to
              refiners, distributors and retailers should be thoroughly examined.

              Letters:

              Collier, Shannon, & Scott  (IV-F-117) p. 24

       Response to Comment 6.1.2(A)(7):

       We have analyzed the cost of the fuel program being adopted today for all levels of
the highway diesel fuel distribution system, including refiners, distributors, and retailers.  The
reader is referred to Chapter V of the RIA for the complete analysis.

       (8)     At least, any phase-in should be voluntary for refiner co-ops.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 7

       Response to Comment 6.1.2(A)(8):

       The transition compliance option being adopted today is a voluntary program for all
refiners, including farmer co-ops. A refiner may choose to participate in the program or they
may choose to produce all of their highway diesel fuel  at the 15 ppm sulfur level beginning in
mid-2006.  If they qualify for the GPA refiner provisions or hardship provisions discussed in
section IV of the preamble, they may opt for the relief granted there instead.

       (9)     Commenter provides results of pipeline survey to document that the phase-in
              approach would be difficult for pipelines because they do not have adequate
              tanks to accommodate the range of fuels, and the pipelines would not want to
              incur the cost, or permitting burdens, of adding tanks that would be need only
              fora short period.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-10
              Association of Oil Pipelines (IV-D-325) p. 4, att.

       Response to Comment 6.1.2(A)(9):

       EPA considered the information provided by the Association of Oil Pipelines in
developing its temporary compliance option and small refiner program. As pointed out under
lssue6.1.2(A)(1), we believe that the distribution of 500 ppm fuel will be limited to those
pipeline systems which can handle an additional diesel fuel at reasonable cost. A large
volume of 500 ppm fuel can be distributed by truck directly from refineries producing this fuel.
A few major pipelines will be capable of distributing the remainder where it is likely to also be
distributed through a limited number of terminals.   If it is in their economic interest to do so,
they will. Otherwise, since it is voluntary, they can avoid the cost and burden. Refiners
interested in continuing to produce 500 ppm fuel until 2010 will consider the distribution
system's capability to distribute their 500 ppm fuel prior to relying on this option.

(B)    Opposes any phase-in that would  require distributors or retailers to market
       both fuels because of the high costs involved.

       (1)     This is important for farmer co-ops who cannot afford to create a dual fuel
              distribution system. The high-volume highway outlets should have adequate
              supplies available to meet limited demand in early years.

              Letters:

              Agricultural organizations as  a group  (IV-D-265) p. 2
              National Council of Farmer Cooperatives (IV-D-351) p. 7

       Response to Comment 6.1.2(6):

       Our fuel program does not require any distributor or retailer to market any specific
fuel. We believe retailers and distributors will make the choice of which fuel or fuels to
distribute based on what fuels are available to the retailer or distributor and the cost of
providing more than  one fuel at their outlets.

(C)    Expressed  opposition to the concept of providing a phase-in for the fuel sulfur
       standards because this approach would jeopardize the effectiveness of the
       control technologies and would decrease the likelihood that the diesel engine
       standards are achieved.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Alliance of Automobile Manufacturers (IV-F-9, 59, 117) p. 168 (IV-F-191) p.
              89
              American Lung Association (IV-F-72)
              CO Environmental Coalition  (IV-F-191) p. 237
              Chevron  (IV-D-247) p. 7

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-11

              City of Chicago (IV-D-240) p. 5
              GA Department of Natural Resources (IV-D-268) p. 1
              GA Public Interest Research Group (IV-F-117) p. 43
              NYDEP  (IV-F- 116) p. 73
              NY State Assembly (IV-D-266) p. 1
              STAPPA/ALAPCO  (IV-F-78)
              Toltz, Ken (IV-F-191) p. 215
              U.S. PIRG (IV-F-71, 190) p. 185

       (2)     There is no benefit to a fuel  phase-in since it would require the management
              of two grades of diesel fuel and the issues of possible misfueling, compliance
              complexity, and consumer awareness may jeopardize the emission reduction
              goals.

              Letters:

              Alliance of Automobile Manufacturers (IV-D-262) p. 12-13
              Chicago DEP/Chicago Metropolitan Mayors Caucus Clean Ai (IV-D-335) p. 5
              DaimlerChrysler (IV-D-284) p. 5
              Engine Manufacturers Association (IV-D-251) p. 17
              Equiva Services (IV-D-226) p. 2
              International Truck & Engine Corp. (IV-D-257) p. 11-12
              Phillips Petroleum Company (IV-D-250) p. 6
              Tosco  (IV-D-304) p. 3
              Volkswagen (IV-D-272) p. +6

       Response to Comment 6.1.2(C):

       We do not believe the fuel program  we are adopting, which allows refiners to produce
and distribute both 15 ppm and 500 ppm sulfur diesel fuels fora period of time, will
jeopardize the effectiveness of the emission control technologies or the emission reductions
expected from the new standards.  Under the provisions of the final rule, 15 ppm sulfur diesel
fuel will be the dominant fuel in the  distribution system from the start of the program, limiting
the likelihood that 500 ppm sulfur fuel will contaminate 15 ppm sulfur fuel. (Additional
discussion of contamination is addressed under Issue 8.1.2. of this document.)  The
preponderance of 15 ppm sulfur diesel fuel  will also limit the likelihood that someone will
misfuel a 2007 and  later model year truck with the wrong fuel. In addition, we are requiring
that all fuel pumps dispensing highway diesel fuel have labels that identify what fuel is being
dispensed. We are also requiring that all 2007 and later model year heavy-duty diesel
vehicles have labels that  specify the use of  15 ppm sulfur diesel fuel only.  Furthermore, as
discussed in response to issue 6.1.2(D)(1) and the RIA,  we expect there to be little or no
price differential to exist between the fuels in most markets, minimizing any incentive to
misfuel. Finally, we expect truckers will want to use the  correct fuel in their 2007 and later
model year trucks to ensure their warranty is not voided.  Chapter IV of the RIA for today's
rule contains a more detailed discussion of  the misfueling issue and the reasons we believe it
will not be a serious problem under the fuel  program being adopted today.

(D)    Expressed  opposition to the phase-in of a fuel sulfur standard since it would
       lead to higher costs for the low sulfur fuel, which would slow down truck

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-12

       purchase and turnover as consumers hold onto their older vehicles to avoid
       higher fuel costs. This would delay progress towards the emission reduction
       goals of the proposal.

       (1)    The market reaction to a dual-fuel approach will cause economic harm to
             engine and truck manufacturers as companies delay purchases indefinitely
             due to the inevitable higher costs of low sulfur fuel.

             Letters:

             CA Trucking Association  (IV-D-309) p. 1

       Response to 6.1.2(0):

       As described in Chapter V of the RIA, the cost of producing 15 ppm sulfur diesel fuel
will be more expensive than producing 500 ppm sulfur diesel fuel. However, under the
temporary compliance option, refiners wishing to produce more than 20 percent of their
highway diesel fuel volume as 500 ppm sulfur fuel will have to purchase credits from refiners
that have produced 15 ppm sulfur diesel fuel. Therefore, the cost of 500 ppm sulfur fuel will
go up as well, even though there are no refinery changes necessary to continue producing
the 500 ppm sulfur fuel. In addition, we expect that 15 ppm sulfur diesel fuel will be the main
highway diesel fuel distributed by pipeline and therefore have lower distribution cost
compared to 500 ppm sulfur fuel. For these  reasons, we expect that the retail cost of 15 ppm
and 500 ppm sulfur fuels should be very similar in most market where both fuels are
available.  Therefore, because the price of both the 15 ppm and 500 ppm sulfur diesel fuels
will be similar, we do not believe that the fuel program will encourage consumers to hold on
to their older trucks and cause delayed sales of lower-emitting vehicles.

(E)    Expressed opposition to a regional phase-in of the fuel standard since it would
       limit the available supply and increase fuel costs in the regions affected.

       (1)    If a regional phase-in approach is taken, fuel purchases  in  the regions
             required to use the proposed fuel standard would cost far more than
             purchases in other areas. In  addition, the interstate nature of trucking would
             amplify this effect.  Commenter provides data and analysis that illustrate how
             a regional phase-in would have an adverse effect on the trucking industry and
             would lead to a competitive disadvantage for some trucking companies.
             Commenter provides additional discussion on the experience in California
             with respect to low sulfur diesel and fuel cost, and recommends that EPA
             adopt the proposed fuel standard without a phase-in  to avoid the California
             single-state fuel experience where trucks from bordering states market freight
             rates below the costs of trucks fueling with CARB diesel.

             Letters:

             CA Trucking Association  (IV-D-309) p. 2-3

       Response to Comment 6.1.2(E):

       We are not adopting a fuel program which requires certain areas of the country to

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-13

have 15 ppm sulfur fuel while other areas have 500 ppm sulfur fuel.  Instead, with today's
rule, we are adopting a fuel program that ensures 15 ppm sulfur diesel fuel will be widely
available in all areas of the country.  Therefore, we do not expect that truckers in one region
of the country will have an economic advantage over truckers from another region of the
country because of the fuel program being adopted today.

(F)     One  commenter noted that if a phase-in of the diesel sulfur standard is
       necessary, then it should start in 2004, which would link the standard to Tier 2
       and would ensure the availability of clean diesel for the light duty market.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              DaimlerChrysler (IV-F-15,  167, 116) p. 292 (IV-F-117) p. 96 (IV-F-191) p.
              173

       Response to Comment 6.1.2(F):

       The low sulfur diesel fuel program  being adopted today is necessary to ensure that
heavy-duty diesel engine manufacturers can meet the emission standards being adopted for
2007 and later model year engines.  Currently, heavy-duty diesel vehicles consume  nearly all
of the diesel  fuel used in highway vehicles in the United States, while light-duty diesel
vehicles consume a very small portion  of the diesel fuel sold in this country.  Therefore, we
do not believe we could justify starting the  low sulfur diesel fuel program earlier than needed
to ensure availability for the 2007 model year. Furthermore, we do not believe light duty
vehicle and truck manufacturers need low sulfur fuel to comply with the interim standards
contained in  the Tier 2 rule. As noted in the Response to Comment document for our recent
Tier 2 rulemaking for light-duty vehicles and trucks, we expect that manufacturers will be able
to comply with the interim standards for light-duty diesel vehicles and trucks using current
highway diesel fuel.

              Issue 6.1.3:  Misfueling Concerns

(A)     EPA should not pursue any sort of phase-in of the fuel sulfur standard  since it
       could lead to deliberate or accidental misfueling, particularly if the higher sulfur
       fuel is offered at a lower price.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 17

       (2)     Nozzle restrictions, such as a new type of interface, to prevent misfueling are
              unlikely to be fully effective. One commenter noted that as experienced
              during the lead phase-down, special nozzles will not prevent misfueling.
              Another noted that most diesel trucks use saddle tanks that can be easily
              removed and replaced by the owner. Also, at many retail stations, diesel is
              dispensed through a smaller nozzle that in any configuration could fit into the

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-14

              larger openings in the fuel tanks.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 14-15
              NATSO (IV-D-246) p. 7
              Petroleum Marketers Association of America (IV-F-67)

       (3)     Commenter noted that a sulfur sensor for the fuel tank could be installed to
              address misfueling concerns but could have some limitations - particularly
              given the fact that a sensor could be deliberately or accidentally disabled.  In
              addition, it is fairly common that the engine is replaced but not the fuel tank,
              which could present additional problems if a sulfur sensor is used.

              Letters:

              NY State Attorney General's Office (IV-D-238) p. 2
              Petroleum Marketers Association of America (IV-F-67)

       (4)     The potential for misfueling, both accidental and deliberate, is a very real
              concern under a phase-in  scenario.  The presence of two grades  of diesel
              could result in price differentials that would serve as an incentive for
              individuals to use the  higher sulfur or less expensive fuel. In addition, the
              existence of a higher sulfur fuel would  provide an incentive for individuals to
              disable the emission control devices that would be damaged from the higher
              sulfur levels.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 14-15
              American Petroleum Institute  (IV-D-343) p. 66
              NATSO (IV-D-246) p. 7
              Petroleum Marketers Association of America (IV-D-245) p. 4-5,8

(B)    Commenter does not believe that misfueling will be a serious problem.

       (1)     Truckers will not use higher sulfur diesel due to higher operating costs, and
              because the profitability of their business is tied to the care and maintenance
              of their vehicles.

              Letters:

              Koch Industries (IV-D-307) p. 5

       (2)     Misfueling in the past  (unleaded fuel) stemmed  mostly from purposeful
              cheating. Because of the  negative ramifications on the equipment, that type
              of misfueling should not occur in this situation.  Labeling pumps to avoid
              misfueling seems to be acceptable.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-15
              Cenex Harvest States Cooperatives (IV-D-232) p. 10,12

(C)    Misfueling remains a critical issue that should be addressed by EPA, but
       should not be used as a reason to reject a phase-in approach.

       (1)     The risk of misfueling will exist regardless of whether a phase-in program is
              implemented for the fuel standard since there are other regulatory flexibilities
              that will lead to the continued availability of higher sulfur fuels and should not
              be used as a reason to reject a phase-in approach. Purchasers of new
              catalyst-equipped diesel vehicles will have a very strong economic incentive
              to find and use the correct fuel and a 5 cent per gallon differential between
              the low sulfur and conventional diesel will not cause these owners to use the
              higher sulfur fuel, which would void their warranties. On-board  diagnostics
              and engine control integration with the emission control devices could be
              designed to make misfueled vehicles undriveable. However, since there are
              still many uncertainties associated with the impact of occasional misfuelings,
              ensuring reasonable fuel availability and modest price increases for the new
              low sulfur diesel are the best answer to potential misfueling concerns.

              Letters:

              U.S. Department of Energy  (IV-G-28) p. 8-9

              Response to Comments 6.1.3(A), (B). and (C):

       Given the fuel program we are adopting today with its 80  percent requirement of 15
ppm sulfur fuel under the temporary compliance option for just a  limited period of time, along
with the fuel pump/vehicle labeling requirements, we do not expect that misfueling, either
deliberate or accidental, will be a serious problem. Likewise, we  do not expect that the fuel
program being adopted today will encourage individuals to disable or tamper with the
emission controls on the new  engines. The main basis for our expectations is that we expect
the price of 15 ppm and 500 ppm sulfur fuels to be very  similar to each other under the fuel
program we are adopting. Chapter IV of the RIA contains a full discussion of the misfueling
issue and why we do not expect misfueling to be a significant problem.  We do not believe
that additional requirements, such as fuel nozzle requirements, sulfur sensors in the fuel
tank, or other vehicle sensor requirements are needed to address misfueling concerns.  We
believe the fuel pump/vehicle  labeling requirements should  be adequate to prevent and
discourage operators of 2007  and later model year trucks from using the wrong fuel.

              Issue 6.1.4: Distribution System Impacts and Costs

(A)    A phase-in approach would  increase the complexity of the distribution system
       since a dual fuel stream would be required.  This may lead to contamination
       and shortages.

       (1)     One commenter (EMA) cites to their comments submitted in response to the
              advanced notice, which advocated the adoption of a single fuel stream.
              Commenters also cited to the EMA-sponsored distribution study conducted by
              Baker and O'Brien, which indicated elevated cost and distribution complexity

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-16

              ("Very Low Sulfur Diesel Distribution Cost," Baker & O'Brien, Inc., August
              1999), and to the report recently issued by the National Petroleum Council in
              conjunction with DOE ("U.S. Petroleum Refining: Assuring the Adequacy and
              Affordability of Clean Fuels," National Petroleum Council, June 2000) as
              supporting documentation.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 13-14
              Engine Manufacturers Association (IV-D-251) p. 17

       Response to Comment 6.1.4(A)(1):

       The changes that we expect will be needed in the distribution system to
accommodate the presence of two grades of highway diesel fuel during the first years of our
program when the temporary compliance option and small refiner hardship provisions are
available are discussed in Chapter IV (Section C.S.a.) of the RIA. Please refer to this
discussion for the details of our analysis. With these changes, we believe that the existing
distribution system can handle the distribution of two grades of highway diesel fuel in the
limited fashion envisioned under our program without market disruption. We estimated that a
significant number of new storage tanks would be needed to accommodate the presence of
two grades of highway diesel fuel. We also estimated that only those pipelines that can
accommodate carrying two grades without a reduction in the volume or slate of fuels that
they carry would do so.  Please refer to the response to comment 6.1.4(A)(4), Chapter IV
(section D) of the RIA, Chapter V (section C) of the RIA, and the response to comments on
Issue  8 of this document for additional discussion regarding potential contamination concerns
associated with the presence of two grades of highway diesel fuel in the distribution system
during the initial years of our program.

       (2)     The introduction of a second separate grade through a phase-in would force
              the truck stop industry to make a tremendous capital investment to carry both
              products. The costs associated with upgrading a truck stop to provide both
              grades of highway diesel would prove to be an unrecoverable expense since
              the use of these two diesel fuels would be temporary.  Some commenters
              (NATSO & PMAA) provide significant discussion and analysis on this issue
              and NATSO notes that their conclusions are also based on a survey of their
              member travel plazas and truck stops. Their survey of member truck stops
              reported that 45% of respondents stated it would cost over $100,000 per
              location to carry an additional grade of diesel fuel.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 13-14
              NATSO  (IV-D-246) p. 3-5, (IV-F-17)
              Petroleum Marketers Association of America (IV-D-245) p. 1-2,10-11
              Tosco (IV-D-304) p. 4

       Response to Comment 6.1.4(A)(2):

       As discussed under Issue 6.1.2.(A), we project that the consumption of 500 ppm fuel

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-17

will be concentrated around producers of that fuel, as well as few major metropolitan areas.
In areas where 500 ppm fuel is available, we project that truck stops will be the main
distributor of 500 ppm fuel. We acknowledge that some truck stops face substantial costs to
modify their facilities to handle both fuels. EPA regulations do not require any individual truck
stop or other final dispenser of fuel to handle either 15 or 500 ppm highway fuel during the
initial years. Thus, we expect that those truck stops which can offer two fuels at the lowest
cost will do so and that those which face higher costs may choose not to.  When assessing
the cost of the temporary compliance option, we included a cost for half of all truck stops
nationwide to modify their stations to carry two fuels and fuel production savings associated
with the option still exceeded the costs.  However, even though we believe this seriously
overestimates expected actual costs, we included the cost for such a large number of truck
stops  to ensure that all potential costs were considered. This number of truck stops do not
need to  handle both fuels.

       (3)    The only way to guarantee that the ultra low sulfur fuel is widely available in
              all parts of the country is to adopt the single fuel approach. A phase-in
              approach would fail to adequately provide a reliable supply of highway diesel.
              Due to the massive costs associated with carrying two separate grades  of
              diesel, many distributors may decide against providing the low sulfur fuel.
              This could result in  significant supply shortages and volatile price spikes of
              the low sulfur diesel. One commenter (PMAA) provided detailed  analysis on
              EPA's phase-in alternatives  and concludes that all three alternatives would
              actually result in a significant overall net cost to society due to the
              investments required to manage two types of fuel, potential damage to trucks
              due to misfueling, and other factors.

              Letters:

              NATSO  (IV-D-246) p. 4-5
              Petroleum Marketers Association  of America (IV-D-245) p. 1-7
              Tosco (IV-D-304) p. 4

       Response to Comment 6.1.4(A)(3)

       Under the provisions of the final rule, as discussed in Chapter IV of the RIA, we are
convinced that 15 ppm sulfur fuel will be widely available across the country.  The fuel of
choice for the distribution system will be 15  ppm fuel. Conversely, 500 ppm sulfur fuel will
not be available everywhere. As discussed under the response to issue 6.1.4(A)(2),
distribution of 500 ppm sulfur fuel will only occur where it is economical to do so.

       (4)    The creation of a second, separate grade of highway diesel fuel would likely
              result in  the cross-contamination of both grades at some point along the
              distribution chain. The entire diesel fuel distribution chain  is configured  to
              handle a single grade of highway diesel and there are numerous places
              throughout this chain where accidental cross-contamination could occur
              through simple human error or other causes.

              Letters:

              NATSO  (IV-D-246) p. 7

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-18

              Tosco (IV-D-304) p. 4


       Response to Comment 6.1.4(A)(4):

       We do not believe that the presence of a second grade of highway diesel fuel in the
distribution system in the limited fashion envisioned under our program will result in
additional concerns with respect to the contamination of products handled by the system.
The presence of 500 ppm highway diesel fuel during this period will allow some opportunity
to abut batches of 15 ppm highway diesel fuel against batches of 500 ppm fuel in the pipeline
rather than nonroad diesel fuel (which has a sulfur content of approximately 3,000 ppm on
average).  This would tend to reduce concerns regarding sulfur contamination of low sulfur
highway diesel fuel during transport by pipeline. Please refer to section IV.D.  in the RIA for a
discussion of the concerns associated with limiting contamination during the distribution of
highway diesel fuel under our program.  We attributed costs to the increased pipeline
interface costs associated with the shipment of 500 ppm highway diesel fuel during the initial
years of our program (see section IV.C.S.g. in the RIA). We estimated that a significant
number of new storage tanks would be needed to accommodate the presence of two grades
of highway diesel fuel. We also estimated that only those pipelines that can accommodate
carrying two  grades without placing an undue  strain on their system would choose to do so.
The presence of additional tanks and the fact that only a limited subset of facilities are
expected to handle two grades of highway diesel fuel addresses the concern  expressed by
the commenter that the presence of two  highway diesel fuel grades would overburden the
distribution system, potentially causing increased incidents of contamination.

(B)     The elevated distribution costs from a dual fuel stream may affect consumer
       choices and behavior - such as the type of fuel used, as well as delayed sales
       of  lower-emitting engines and  vehicles.

       (1)     The increased distribution costs associated with a phase-in strategy would
              lead to higher fuel costs.  Because  profitability in the trucking industry is so
              sensitive to fuel cost, commercial operators would choose whichever fuel is
              less expensive (i.e. higher sulfur fuel). The existence of two separate heavy-
              duty fuel streams  also may delay the purchase of newer, lower-emitting heavy
              duty engine technologies if truck owners are able to save the costs of
              operating on lower fuel sulfur levels by keeping their older trucks longer. (See
              also Issue 6.1.2,  Point (D)).

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 17-18
              NATSO  (IV-D-246) p. 6-7

       Response to Comment 6.1.4(B):

       See response to comment 6.1.2(0).
(C)    Creating two diesel fuels in the market through a phase-in strategy would
       create enforcement issues for EPA that would be difficult to address or resolve.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-19
       (1)     Occasionally, fuels are misdelivered and, for a truck stop receiving multiple
              loads per day, this possibility increases, which in turn increases the possibility
              of contamination. Testing or other quality control procedures are likely to be
              ineffective at preventing this from occurring.  EPA could respond to this issue
              by increasing fines and levels of enforcement. However, the fuels programs
              have been successful because they are largely self implementing.  Relying on
              enforcement to prevent these mistakes will likely impose new burdens on the
              private sector and EPA.

              Letters:

              Petroleum Marketers Association of America  (IV-D-245) p. 12

       Response to Comment 6.1.4(C):

       We agree that the opportunity for misdeliveries to occur at retail and wholesale
purchaser-consumer facilities is somewhat increased due to the presence of 2 grades of
highway diesel fuel in the distribution system. However, industry can minimize these
problems through appropriate business practices such as the use of standardized color
codes for different diesel products on the tanker trucks and on the covers to the underground
storage tanks at retail and wholesale purchase-consumer facilities.

       EPA intends to rely on enforcement of this program, as in other fuel programs, to
deter violations and level the playing field. We expect enforcement of this program will be
similar in nature and extent as with other fuel programs. We do expect to seek substantial
civil penalties against distributors or retailers/wholesale purchaser-consumers who cause
misdelivery violations, in order to deter such violations.  This  is consistent with current
practice under the RFG rule and with previous practice  under the unleaded gasoline rule.
We do not believe an EPA field  enforcement presence substantially increases the burden of
compliance for industry, and it will help ensure a level playing field.

              Issue 6.1.5: Availability of 15 ppm Fuel

(A)    A phase-in approach may create a situation where supply and demand are out
       of balance since a phase-in may lead to refiners initially producing
       substantially more fuel than is likely to be consumed.

       (1)     In this case, it is unlikely that refiners will be able to recover the costs
              associated with production and distribution, and the likelihood of subsequent
              shortages will increase as refiners adjust their operations.

              Letters:

              Petroleum Marketers Association of America  (IV-F-67)

       Response to Comment 6.1.5(A):

       We expect that refiners will be able to recover the cost associated with the production
and distribution of low sulfur fuel under the fuel program adopted today.  While the temporary

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-20

compliance option will allow refiners to continue producing 500 ppm sulfur fuel fora limited
amount of time, the amount of fuel that be produced at the 500 ppm sulfur level is small
(around 20 percent, or 25 percent including potential volume under the small refiner hardship
provisions).  The large majority of the fuel produced will have to meet a 15 ppm sulfur
standard and will be priced at a level to recoup production and distribution costs.  Production
of 500 ppm sulfur fuel will be limited, and increased production will only be possible with a
corresponding increase in the production of 15 ppm sulfur fuel, or the purchase of credits
from another refiner.  Consequently, it will not be possible for production of 500 ppm sulfur
fuel to significantly undercut the ability of refiners to recover their costs for producing 15 ppm
sulfur fuel. We expect refiners will be able to sell all of their 15 ppm fuel to pre-2007 model
year trucks and recover the costs associated with producing and distributing the clean fuel.

(B)    Opposes a production percentage requirement for refiners as part of any
       phase-in.

       (1)     EPA suggests limiting the amount of 500 ppm fuel that a refinery can produce
              for on-road use. This approach is punitive to farmer co-op refiners whose
              members-owners use almost exclusively 500 ppm and higher diesel.
              Because every farm  has on and nonroad needs that vary seasonally, this
              approach does not work.  It also appears to favor refiners with multiple
              refineries, which is inapplicable to farmer co-ops.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 12

       Response to Comment 6.1.5(B):

       The commenter implies that a diesel fuel sulfur control approach that limits the
fraction of a refiner's diesel fuel that can be 500 ppm (like the temporary compliance option
we are implementing  in  this rule) may result in changes in how highway and nonroad fuel is
produced and marketed to rural customers.  We agree that such changes are likely, but are
not required.  In addition, we do not expect that such changes will significantly affect the
ability of refiners serving rural areas, including farmer cooperative refiners, to meet the  needs
of their customers.  For  example, the implementation of this rule may change today's overall
fraction of highway fuel sold as nonroad fuel for farm and other uses (this is true both for
farmer cooperative refiners as well all other refiners serving these markets); but, as we
discussed under issue 8.1.1, we expect the program as designed to maintain sufficient
supplies of fuel for highway as well as nonroad use at reasonable prices in all parts of the
country. In addition, farmer co-ops can continue to sell the same fuel for both highway and
nonroad use.

       Despite the fact that this is only a highway diesel fuel rulemaking, we are giving credit
to refiners, such as some farmer co-ops, under the ABT provisions of the final rule for all 15
ppm sulfur fuel they produce, regardless of whether it is ultimately sold for highway use or for
off-highway purposes. Consequently, if these refiners choose to comply in 2006,  they will
receive a significant economic advantage as a result.

       It is not clear based on their comments how the commenter believes the provisions
favor multiple refinery refiners. The  trading aspects in the ABT provisions of the temporary

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-21

compliance option allow all refiners, whether single refinery or multiple refinery, to take
advantage of the compliance flexibilities.  Furthermore, some of the farmer co-op refiners
already have co-ownership or joint operating or marketing arrangements that could readily be
expanded to take advantage of the flexibility under the temporary compliance option.

(C)    To address potential spot shortages, EPA can take several steps to provide
       knowledge and information to consumers that will allow the free market to
       operate efficiently.

       (1)     In follow-up comments to initial comments in support of a phase-in approach,
              the commenter suggests that EPA could establish a Web site or phone-in
              database of retail stations and truck stops that have  ultra-low diesel during
              the phase-in period. The basic information would be: that ULD is  available;
              retail location; and types of vehicles served at the location. The site could
              include retailer advertising if operated on a for-profit basis.  Price could be
              included but adds complexity and possibly FTC concerns.  This type of
              database would allow truck line schedulers and individual truckers to plan
              routes.  Given technology  advances, by that time each truck probably will
              have GPS capability that could provide continuous updates of closest ULD
              stations. Although not completely eliminating potential localized spot
              shortages, this approach would allow quick resolution of problems.

              Letters:

              Koch Petroleum Group (IV-G-8)  p. 1-2

       Response to Comment 6.1.5(C):

       Under the fuel program adopted today, we expect 15 ppm sulfur diesel fuel to widely
available in all regions of the United States. Therefore, we do not believe it is necessary to
establish a Web site or  database that lists retail outlets selling 15 ppm sulfur diesel fuel.
Even so, if the private sector wished to establish its own web site or database highlighting
what stations are carrying 15 ppm sulfur diesel fuel, it could only further assist vehicle
operators.

(D)    Under a phase-in approach, it would not be difficult to ensure the availability of
       low sulfur fuel  at the retail level.

       (1)     Commenter provides the report "Consumers' Views on the Availability of
              Cleaner Diesel Fuel," Oak Ridge National Labs,  June 14, 2000 as
              documentation that supports their conclusion that availability will not be a
              problem under a  phase-in  approach.  If half of current retail outlets selling
              diesel fuel (approximately  20 percent of all retail outlets, excluding truck
              stops) had the new low sulfur fuel available for sale, diesel vehicle  owners
              requiring the new fuel would find  its availability to be adequate. No matter
              which regulatory  mechanisms or alternatively, incentives are used, increased
              distribution system costs will be incurred with a phase-in and paid for primarily
              by fuel users who require the low sulfur diesel fuel.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-22
              U.S. Department of Energy (IV-G-28) p. 10

       Response to Comment 6.1.5(0):

       The information provided by the commenter was of a very small consumer survey of
diesel passenger vehicle owners, and is thus, of limited use in assessing the retail availability
needs of heavy-duty, primarily commercial vehicle owners and operators.  Furthermore, the
responses tended to indicate not that 50 percent was acceptable, but that "more than 50
percent" was necessary, and for many, 100 percent was necessary. The provisions in our
final rule, however, we believe will ensure sufficient retail availability without imposing a
regulatory burden on retailers.

              Issue 6.1.6: Costs/Cost Savings

(A)    A phase-in approach for the diesel fuel sulfur standard will lead to significant
       cost savings.

       (1)     Commenter provides the report "Analysis of the Cost of a Phase-in of 15 ppm
              Sulfur Cap Diesel Fuel," Center for Transportation Research, Argonne
              National Laboratory, August 2000 (which draws on research from the report
              "Modeling Impacts of Reformulated Diesel Fuel, August 14, 2000 - also
              provided) as supporting documentation for their conclusion that adding a
              second on-road diesel fuel to the distribution and  retail system represent only
              a small part of the total costs of bringing an ultra-low sulfur diesel fuel into
              general use. Overall costs of any scenario, including the phase-in, are
              dominated by fuel costs, which are sensitive to estimated per gallon costs and
              total gallons consumed.  While different assumptions can be made regarding
              various elements of a phase-in scenario, commenter (DOE) believes that the
              up to $20 billion potential savings estimated in their phase-in analysis is a
              compelling argument to pursue a phase-in strategy.  The potential economic
              benefits to consumers of a phase-in will significantly outweigh the potential
              increased costs that some fuel distributors and retailers face and the costs
              associated with the two fuels approach are much  less than all fuel users will
              face with a 100 percent ultra-low sulfur production and use requirement in
              2006.

              Letters:

              U.S. Department of Energy (IV-G-28) p. 9-10

(B)    A phase-in approach for the diesel fuel sulfur standard would be too costly.

       (1)     These commenters expressed opposition to a phase-in strategy for the diesel
              fuel sulfur standard in whole or in part due to cost considerations. See
              narrative under Issue 6.1.2, points (A), (B), (D), and (E) for further discussion
              on this issue and a summary of the  comments.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-23

             Ackerman Oil Co., Inc.  (IV-D-21) p. 1
             Agricultural organizations as a group (IV-D-265) p. 2
             American Bus Association  (IV-D-330) p. 4-5
             American Petroleum Institute (IV-D-343) p. 15
             American Trucking Association (IV-D-269)
             Big West Oil, LLC (IV-D-229) p. 2
             Bossom's Quasky Mart (IV-D-44) p. 1
             British Petroleum  (IV-D-242) p. 3
             CA Trucking Association (IV-D-309) p. 1-2
             Cenex Harvest States Cooperatives (IV-D-232) p. 7, (IV-F- 191) p. 232
             Chevron (IV-D-247) p. 6
             Collier, Shannon, & Scott (IV-F-117) p. 24
             Engine Manufacturers Association  (IV-D-251) p. 17-18
             Equiva Services  (IV-D-226) p. 2
             ExxonMobil  (IV-D-228) p. 19, (IV-F-800)
             Farmland Industries (IV-F-29)
             Harold Dickey Oil Corp.  (IV-D-43) p. 1
             Independent Fuel Terminal Operators Association (IV-D-217) p. 13-15
             James Enterprises, Inc.  (IV-D-40) p. 1
             Johnson Petroleum, Inc. (IV-D-17) p. 1
             Kendle Oil Company (IV-D-42) p. 1
             MT DEQ (IV-D-254) p. 8
             Marathon Ashland Petroleum (IV-D-261) p. 3, 70
             Meyer Oil Company (IV-D-45) p. 1
             NATSO  (IV-D-246)p. 1-10, (IV-F-17)
             NY Assoc. of Service Stations & Repair Shops (IV-F-45)
             National Association of Convenience Stores (IV-D-279) p. 2, (IV-F-191) p.
             168
             National Council of Farmer Cooperatives  (IV-D-351) p. 7
             National Federation of Independent Business (IV-D-243) p. 2
             Nauss Oil Company, Inc. (IV-G-21) p. 1
             New England Fuel Institute  (IV-D-296) p. 5-7
             PA Association of Milk Dealers  (IV-D-23) p. 1
             Perfection Oil Company (IV-D-41) p. 1
             Petroleum Marketers Association of America  (IV-D-245) p. 1-14
             Phillips Petroleum Company (IV-D-250) p. 6
             Ports Petroleum Co, Inc. (IV-F-117) p. 190
             Sinclair Oil Corporation (IV-D-255) p. 10
             Society of Independent Gasoline Marketers of America (IV-D-328) p. 6, (IV-
             F-191)p. 196
             Tosco (IV-D-84, 157), (IV-D-304) p. 3
             Welsh, Inc. (IV-D-22) p. 1

       Response to Comments 6.1.6(A) and (B):

       EPA performed a detailed analysis of both the refining savings and the distribution
costs associated with the temporary compliance option and small refiner hardship provisions.
This analysis showed that the refining savings were about $1.7 billion, while the distribution
costs were roughly $1 billion. Thus, the temporary compliance option  results in a net savings

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-24

of about $0.7 billion. The reader is referred to Chapter V of the RIA for the details of this
analysis. Based on our own analysis, we do not believe a phase-in of the nature analyzed by
DOE would provide any significant cost savings and would have put at risk the tremendous
economic and environmental benefits of the program.

       Issue 6.2: Compliance Flexibility Option

(A)     If compliance flexibilities are offered to refiners, EPA should ensure that there
       are requirements in place that would ensure the use of ultra-low sulfur fuel in
       metropolitan areas such as New York City.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Consumer Policy Institute, NY  (IV-F- 116) p. 305
       Response to Comment 6.2(A):

       Under the fuel program adopted today, we expect that in excess of 75 percent of the
highway diesel fuel produced starting June 1, 2006 will be 15 ppm sulfur diesel fuel.  (The
fuel program applies separately in each PADD, so we expect there to be widespread
geographic production of 15 ppm sulfur diesel fuel.) Given the high level of production, we
expect that 15 ppm sulfur diesel fuel will be the main highway diesel fuel distributed through
the pipeline system.  Based on these expectations, we expect widespread availability of the
low sulfur fuel throughout all areas of the country. Therefore, we do not believe it is
necessary to mandate the use of low sulfur fuel in any given area, since it will be widely
available.

(B)    Allow flexibility to permit occasional sulfur levels higher than 15 ppm.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Tesoro Petroleum (IV-F-191) p. 26

       Response to Comment 6.2(B):

       Refiners will be allowed to produce highway diesel fuel with  a sulfur level above 15
ppm for a limited time under the fuel program. Under the temporary compliance option and
the small refiner flexibilities, certain  refiners will be allowed under certain conditions to
continue producing highway diesel fuel that meets the current sulfur standard of 500 ppm.
Because of concerns over poisoning emission control systems on 2007 and later model year
heavy-duty diesel trucks with the use of diesel fuel greater than 15 ppm sulfur, we will not
allow refiners to sell diesel fuel with a sulfur level above 15 ppm (even if the fuel only
exceeds the sulfur standard by a few ppm) as low sulfur fuel.  Under the temporary
compliance option or the small refiner flexibilities, such fuel would need to be sold as 500

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ppm fuel or downgraded to nonroad diesel fuel.  Once the temporary compliance option and
small refiner flexibilities expire in 2010, a refiner will no longer be able to sell the fuel as 500
ppm sulfur highway diesel fuel because all highway diesel fuel will be subject to the 15 ppm
sulfur standard. However, they will still be able to downgrade the fuel with a sulfur level
above 15 ppm to nonroad diesel fuel.

(C)    Opposes compliance flexibility option because aftertreatment technologies are
       rendered inoperable if exposed to high sulfur fuels, and therefore will not be
       able to meet the proposed emissions standards.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Engine Manufacturers Association (IV-F-191) p. 39

       Response to Comment 6.2(C):

       While we agree that exposure of 2007 and later model year heavy-duty diesel
vehicles to diesel fuels with sulfur levels above 15 ppm for a significant amount of operation
will damage the emission control systems, we believe that the provisions of the final  rule will
prevent any significant amount of misfueling from occurring.  The reader is referred to the
response to Issue 6.1.3.  In addition, Chapter IV of the RIA contains a full discussion of the
misfueling issue and why we do not expect misfueling to be a significant problem.

(D)    The proposed NOX/NMHC phase-in for HDEs would partially waste the early
       investment in ultra-low sulfur diesel and would cause the cost-effectiveness of
       the regulation to be unacceptable during this period.

       (1)     The regulation would be more cost-effective and equitable if engine emission
              standards and diesel fuel requirements were implemented at the same time.
              The NOX and NMHC emission reductions are the primary reason for the
              regulation. With the proposed phase-in, and with slow fleet turnover, refiners
              are being asked to spend billions of dollars by 2006 to enable technology
              used by a small percentage of the fleet prior to 2010. If EPA intends  to
              provide generous flexibility to engine manufacturers, it needs to provide
              compliance flexibility to refiners as well.

              Letters:

              Sinclair Oil Corporation (IV-D-255) p. 9-10

       Response to Comment 6.2(D):

       EPA considered the possibility of phasing in the diesel fuel sulfur cap as the fleet
turned over to 2007 and later vehicles.  Such a  program would reduce the refining costs
associated with the sulfur cap substantially and provide  many refiners considerable more
time to select their desulfurization technology. However, there are also considerable costs
associated with providing two diesel fuels to the entire highway vehicle fleet. In the final
analysis, the refining savings are lower than anticipated because of limitations in  the fuel

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distribution system. Also, even the remaining refining savings are severely mitigated by the
costs associated with providing two fuels. Plus, EPA received numerous comments from
those producing and distributing diesel fuel arguing against such a phase in.  These
comments are discussed earlier in this section (e.g., Issue 6.1).

       Generally, in order for the full refinery savings to be obtained, the entire distribution
system from pipeline to service station would have to carry two fuels. We evaluated the cost
of adding tankage at every terminal, bulk plant, truck stop, card lock, service station and fleet
refueling location and found that the cost of this tankage far exceeded any potential refinery
savings.  In addition, such a phase in would also require a retailer availability requirement to
ensure the 15 ppm fuel was widely available across the country for the vehicles that need it,
which could significantly impact fuel retailers.

       We also evaluated less gradual phase in schedules, where some of the distribution
system (e.g., smaller centrally fueled fleets) converted immediately to 15 ppm fuel, while the
rest of the system dispensed both 15 and 500 ppm fuels.  We found that these approaches
saved little relative to the temporary compliance option and small refiner hardship provisions
contained in  the final rule. They still would  have required  a retailer availability requirement,
which could significantly impact fuel retailers and would put at risk the tremendous
environmental and economic benefits of the final rule if widespread misfueling or deferred
engine purchases would  result. Thus, we rejected the option of a gradual phase in of the
diesel sulfur cap.

       In the end, we concluded that the flexibility provided by the temporary compliance
option,  small refiner hardship provisions, and other hardship provisions was sufficient to
address the economic impact and supply concerns raised by refiners.

       In addition, the PM reductions are also a primary reason for the regulation, and there
is no phase-in of the PM  emission standard.

              Issue 6.2.2: ABT

(A)     Opposes ABT program as inconsistent with the technology-enabling rationale
       used to justify the  low sulfur rules. The potential flexibility of the program is
       outweighed by the administrative burden and inequities that would arise.

       (1)     The technology-forcing aspect of the proposal seems to preclude utilization of
              any meaningful ABT program.  Permitting  sulfur levels to exceed the
              regulatory cap under any circumstances would compromise the
              environmental benefits of the program; and the low sulfur standard leaves no
              room to use any sulfur credits that might have been accrued.  EPA should
              keep the diesel rule as  clean and simple as possible, with no ABT program.

              Letters:

              Chevron  (IV-D-247) p. *2, 7

       Response to Comment 6.2.2(A):

       As long as fuel exceeding the 15 ppm sulfur cap is not used in 2007 and later model

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year vehicles which require its use, allowing fuel to remain in the market higher than this level
does not significantly undermine the emission reductions that result from the program. We
believe the averaging, banking and trading program adopted today for refiners will provide
flexibility to a large number of refiners in the early years of the program allowing them to
delay desulfurization for a limited portion of their highway diesel fuel pool, resulting in a
savings to some refiners.  While we will allow some refiners to produce highway diesel fuel
for a limited number of years subject to the current 500 ppm sulfur cap, all highway diesel
fuel will  need to labeled appropriately at the pump. Along with the labeling requirements for
2007 and later model year heavy-duty diesel vehicles, we believe truck owners will be able to
clearly identify and use the correct fuel in their vehicles, preventing any loss of environmental
benefit from  misfueling with the wrong fuel.

       We agree that the fuel destined for 2007 and later model year diesel trucks must
meet the 15  ppm sulfur standard with no averaging, banking and trading provisions for the 15
ppm standard. The 15 ppm standard is a cap, and not an average (with averaging, banking
and trading), because the advanced aftertreatment engines need fuel with sulfur level of 15
ppm or lower.

(B)    An ABT program is an important flexibility provision.

       (1)     In establishing an ABT program EPA should allow the price of ABT credits to
              be determined by the  market.  EPA should also ensure that penalties for a
              'compliance shortfall' of credits are applied only to the credit seller and not the
              'good faith purchaser' and should not establish citywide surveys similar to the
              RFG program. A refiner should not lose its flexibility to supply some higher
              sulfur diesel if found liable for a violation since this approach may drive up the
              price in the market. If EPA chooses to include this sanction,  imposition
              should be automatic and not subject to  EPA discretion.

              Letters:

              Koch Industries (IV-D-307) p. 6-7

       Response to Comment 6.2.2(B)(1):

       Under the ABT program being adopted, the price of credits will be determined by the
refiners involved in the credit transfer. We will not be, and we see no reason why we need to
be involved in setting the price of credits.

       With regard to the use of credits which are determined to be invalid, we will not allow
the use  of such credits for demonstrating compliance under the  temporary compliance
program.  Both the seller and purchaser of invalid credits would  have to adjust their credit
calculations to reflect the proper credits and either party (or both) could be deemed in
violation if the adjusted credit calculations demonstrate noncompliance. Our strong
preference is to hold the credit seller liable for the violation, rather than the credit purchaser.
As a general matter we would expect to enforce a shortfall in credit compliance calculations
against the credit seller, and we would expect to enforce a compliance shortfall (caused by
the good faith purchase of invalid credits) against a good faith purchaser only in cases where
we are unable  to recover sufficient valid credits from the seller to cover the shortfall. Further,
we believe that credit buyers can minimize their risk by purchasing credits from parties they

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know and trust. The provisions that require records to show who generated the credits (and
any intermediate transferee of the credits) and that limit the number of times credits can be
transferred, should help buyers in assessing the validity of the credits.

       If a refiner is determined to be in noncompliance with the temporary compliance
option, we have included provisions that allow a refiner to exceed the amount of fuel allowed
to be at the  500 ppm sulfur level by five percent, as long as the refiner makes up the credits
in the next compliance period. This will provide some additional relief to refiners unable to
readily find credits to cover the loss of invalid credits.

       (2)     An ABT program similar to the Tier 2 rule would provide more certainty of
              sustainable and adequate highway diesel fuel supplies by removing the
              extreme concerns of delivering a 15 ppm cap diesel fuel without
              contamination. EPA's statements suggest a 15 ppm average with an
              appropriate cap could allow identical low emission standards at no impact on
              the cost of emission control hardware.

              Letters:

              Phillips Petroleum Company (IV-D-250) p. 4, 7

       Response to Comment 6.2.2(B)(2):

       As described in Chapter III of the RIA for today's rule, we believe that repeated
exposure of vehicles to diesel fuels with a  sulfur level above 15 ppm will poison the emission
control systems on 2007 and later model year heavy-duty vehicles. Therefore, under the
averaging, banking and trading program we do not allow averaging around the 15 ppm level.
Instead the  program allows refiners to generate credits if they produce more 15 ppm sulfur
fuel than required under the temporary compliance option (i.e., 80%  of their highway diesel
fuel).  The credits can be used by refiners to produce  up to an equal volume of highway
diesel fuel subject to a 500 ppm sulfur standard.

       (3)     In establishing an ABT program, EPA should use a universal industry
              benchmark for how much complying diesel production is required, as
              opposed to separate baselines for each producer, and should set this
              benchmark as low as possible. EPA should also allow sales of sulfur credits
              to other industries (power plants, etc.).

              Letters:

              Countrymark Cooperative  (IV-D-333) p. 12

       Response to Comment 6.2.2(B)(3):

       Under the averaging, banking and  trading  program for diesel fuel, the baseline
requirement is the same for all refiners (except small refiners, as described below). Each
refiner must produce at least 80 percent of its highway diesel fuel at the 15 ppm level or
purchase an equal volume of low sulfur fuel credits to demonstrated compliance with the 80
percent requirement.  Under the flexibilities adopted for small refiners, a small refiner is
allowed to produce all of its highway diesel fuel to  meet the current 500 ppm sulfur standard

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until mid-2010. However, small refiners can also participate in the averaging, banking and
trading program and generate credits for any fuel meeting a 15 ppm sulfur standard.

       (4)     Resale of credits should be limited to no more than two resales. Repeated
              sales of credits could significantly reduce the Agency's ability to monitor the
              credits and thereby enforce its rule.

              Letters:

              Children's Environmental Health Network (IV-D-244) p. 2

       Response to Comment 6.2.2(B)(4):

       We agree that repeated sales of credits could significantly reduce our ability to
monitor the validity of credits under the averaging, banking and trading program.  Therefore,
we are adopting the requirement, as proposed, that allows credits to be traded no more than
twice. Any credit that is traded more than two times will be an invalid credit and cannot be
used to demonstrate compliance under the temporary compliance option.

(C)     There is inadequate detail on what an ABT program would look like to  comment
       on ABT, but ABT is vital for a final rule.  EPA should publish an interim final rule
       with  ABT.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 5

       Response to Comment 6.2.2(C):

       We believe the discussion in the NPRM for the rule provided sufficient detail on the
provisions of a possible averaging, banking, and trading program fordiesel fuel refiners.
EPA did, in fact, receive a large volume and breadth of comments on this issue.

(D)     Farmer co-ops have special concerns that should be built into any ABT
       program.

       (1)     Commenters provided discussion on one or more of the following issues.
              First, farmer co-ops should be able to pool together and be treated as a single
              refiner so that they can  take advantage of the flexibility that large refineries
              with multiple refineries will receive. Second, credits for farmer co-ops should
              not be based on volumes above a set production percentage because these
              refiners must make a large percentage of 500  ppm diesel for agricultural,
              nonroad  use. Also, limiting credits based on production percentages reduces
              flexibility in rural America or Rocky Mountain states, which  EPA raises as a
              concern. In addition, farmer co-ops are likely to be some of the last refiners
              to convert and thus a production percentage requirement would limit their
              ability to develop credits. Third, farmer co-ops  should be given the longest
              time to buy credits. EPA suggests that credits may expire by 2009.  This

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              works against farmer co-ops. If there is a system that limits or staggers
              timeframes to buy/use credits based on capacity, that could help farmer co-
              ops.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 13-14
              National Council of Farmer Cooperatives  (IV-D-351) p. 7-8

       (2)     Commenter notes generally that an ABT approach should be one option for
              farmer co-ops to help reduce impact of the rule.

              Letters:

              National Council of Farmer Cooperatives  (IV-D-351) p. 6-7

       Response to Comments 6.2.2(0):

       The commenters request various forms of separate treatment for farmer
cooperatives as a class compared to other refiners. As discussed in Section IV of the
preamble, we have concluded that from both organizational and financial perspectives, it is
not necessary or appropriate to provide such separate treatment to farmer cooperatives as
a class. We expect that relative to other refiners serving rural America, our program will
not disproportionately affect farmer cooperative refiners or their customers (whether
members or non-members of the cooperatives). As with other refiners, we expect that the
temporary compliance option may be useful to one or more of these refiners as they carry
out their desulfurization projects. In addition, one farmer cooperative refiner may benefit
from the special provisions for refiners marketing  gasoline in  the Geographic Phase-in
Area (GPA) and a  second is likely to benefit from  the small refiner hardship provisions.
The remaining two farmer cooperatives can also take advantage of the general hardship
provisions in the final rule, just as they have under the Tier 2  gasoline rule. Finally,  under
the ABT provisions of the temporary compliance option, these refiners are able to trade
credits with  each other to assist them in compliance.

(E)    Disagrees with EPA suggestion that refiners perform downstream quality
       assurance sampling as part of being able to produce 500 ppm fuel; this is an
       issue that pipelines and terminals must address.

       (1)     Commenter provides no further analysis on this point.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 14

       Response to Comment 6.2.2(E):

       We  believe that refiners who produce highway diesel fuel subject to the 500 ppm
sulfur standard after June 1, 2006 should bear some of the burden of assuring that such
highway diesel fuel is not causing contamination of motor vehicle diesel fuel subject to the 15
ppm sulfur standard  at downstream facilities. We also believe that the rule minimizes this

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burden by only requiring that the refiner perform quality assurance testing at a small
percentage of its own branded outlets.  We expect that many branded refiners would, in any
case, perform such downstream quality assurance testing anyway as part of its normal
business practices and be able to  meet affirmative defense requirements under § 80.613.
(F)     EPA should define "eligible entities" broadly enough to allow the manufacture
       of biodiesel as an eligible generator of credits that can be averaged, banked, or
       traded under a "compliance flexibility option."

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              National Biodiesel Board (IV-D-288) p. 5

       Response to Comment 6.2.2(F):

       The averaging, banking and trading program adopted today allows refiners to
participate if they produce motor vehicle diesel fuel.  Both of the terms "refiner" and "motor
vehicle diesel fuel" are defined at 40 CFR 80.2.  Therefore, if the manufacturer of biodiesel
fuel, or any other fuel, can demonstrate that they meet our definition of "refiner" and that the
fuel they are producing meets our definition of "motor vehicle diesel fuel," they may
participate in the averaging, banking and trading program adopted today. Based on our
current understanding of biodiesel production, we expect that manufacturers of such fuel
would meet our definition of "refiner" and that biodiesel fuel would comply with our definition
of "motor vehicle diesel fuel" and could therefore, participate in the program.  However, it is
the  responsibility of any entity considering participating in the program to determine whether
they meet the eligibility requirements and whether they want to take on the responsibilities
under the regulations associated with refiner status.

(G)     The viability of a credit program for diesel fuel will depend on what is proposed
       by EPA for the nonroad fuel.

       (1)     Because the  primary concern  with nonroad diesel applications will be
              emissions and not engine technology (as is the case with highway diesel
              fuel), it may be possible to devise a system in which diesel credits could be
              generated for use in offsetting against nonroad diesel sulfur standards.  In this
              context, it is critical to  know now what EPA intends to propose regarding the
              regulation of nonroad  diesel fuel.

              Letters:

              Williams Energy Services  (IV-D-167) p. 5

       Response to Comment 6.2.2(G):

       As described in Section VIII of the preamble for today's rule, we believe that any
specific new requirements for nonroad diesel  fuel need to be carefully considered in the
context of a proposal for further nonroad diesel engine emission  standards. The many

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issues connected with any rulemaking for nonroad engines and fuels warrant serious
attention, and we believe it would be premature today for us to attempt to address potential
resolutions to them.  We plan to initiate action in the future to formulate thoughtful proposals
covering both nonroad diesel fuel and engines.  However, we have established the viability of
a credit program for highway diesel fuel, independent of what may happen for nonroad diesel
fuel.

       Issue 6.3:  Availability Requirements

              Issue 6.3.1:  Refiner-Assured Availability

(A)    EPA should not impose a refiner ensured availability requirement.

       (1)     Since many refiners do not have a direct relationship with retailers, the impact
              of an availability requirement will differ between refiners and it would be
              difficult for EPA to micromanage the distribution system in this way and to
              establish a definition for "availability."

              Letters:

              Petroleum Marketers Association of America (IV-F-67)

       Response to Comment 6.3.1 (A):

       We agree with the comment.  With today's action we are not adopting a refiner-
assured availability program as we sought comment on in the NPRM.

(B)    EPA should establish a limited refiner fuel  production requirement.

       (1)     Based on the information on expected use of the new low sulfur diesel fuel,
              one approach would be to establish a  production requirement for refiners set
              at 20 percent of a refiner's on-road diesel fuel production for 2007. This
              would allow for the establishment of a retail  availability-based market driven
              phase-in of the new fuel.

              Letters:

              U.S. Department of Energy (IV-G-28) p. 11

       Response to Comment 6.3.1(B):

       We considered the possibility of slowly phasing in the volume of low sulfur diesel fuel
as the fleet turned over to 2007 and later vehicles.  However, we rejected such a phase-in
because such an approach raises concerns that the new low sulfur fuel would not be
available across the country for owners of new vehicles that need it. We believe such a
phase-in would require a retailer availability mandate  (i.e., requiring that certain retailers sell
the 15 ppm diesel), which would be a complex program to design, and which in the end may
not even result in sufficient availability in all parts of the country. Given that diesel fuel is less
than ten percent of sales at most retail outlets, if faced with  large compliance costs,
particularly now in the wake  of underground storage tank regulations, many retailers could

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easily choose not to carry diesel fuel at all.  Further, there are considerable costs associated
with providing two diesel fuels to the entire highway vehicle fleet under such a slow phase-in.
Plus, EPA received numerous comments from those producing and distributing diesel fuel
arguing against such a phase-in. With today's action, we are adopting a temporary
compliance option which, based on  the minimum percentage of highway diesel fuel that is
required to be produced meeting the 15 ppm standard, we believe will ensure the widespread
availability of low sulfur fuel and provide added flexibility to refiners. The reader is also
referred to our response to Issue 6.1.1(C)(1).

              Issue 6.3.2:  Retailer-Assured Availability

(A)    An availability requirement for service stations that distribute a certain volume
       of diesel fuel is unnecessary.

       (1)     The market will adjust appropriately so that the fuel is readily available to
              those that need  it.  Also, because nearly one-third of all trucks use their  own
              fueling infrastructure, it may not be cost-effective to require all large service
              stations to invest in a separate fueling system for the new fuel.

              Letters:

              Koch Industries  (IV-D-307) p. 6
              Petroleum Marketers Association  of America  (IV-F-67)

       (2)     An availability requirement could be unduly burdensome for certain smaller
              retail stations and may require them to close  entirely. In addition, this type of
              requirement could be prohibitive for those retailers that obtain their fuel from
              refiners that are exempt from the requirements because of their size and that
              do not have another refiner in close proximity from which to purchase the low-
              sulfur fuel.

              Letters:

              Petroleum Marketers Association  of America  (IV-F-67)

       (3)     Some commenters expressed opposition to either a retailer availability or
              large marketer availability mandate as part of a dual fuel option. One
              commenter (NATSO) noted that the fundamental flaws  associated with a
              phase-in strategy will not be resolved by imposing a retailer availability
              requirement. The volume of a facility does not necessarily mean that the
              facility is located in an area where the demand for low sulfur fuel will be
              higher. This commenter provides significant  discussion on this issue and
              notes that this type of mandate will be costly  and burdensome and will not
              result in significant improvements in air quality.

              Letters:

              NATSO (IV-D-246) p. 5-6
              Ports Petroleum Co, Inc. (IV-F-117) p. 190
              Society of Independent Gasoline Marketers of America (IV-F-191) p.  196

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       (4)     A retailer availability requirement is unnecessary, even if small refiners are
              producing higher sulfur diesel fuel. Small refiners do not have a substantial
              share of any diesel market. Since most refiners will be producing the low
              sulfur diesel, there will be adequate supplies of this fuel at retail locations.

              Letters:

              Western Independent Refiners Association (IV-D-273) p. 7

       (5)     A retail availability requirement is unnecessary for several reasons. First,
              providing adequate assurance of low sulfur fuel availability at the wholesale
              level means that refiners should be required to produce some small fraction
              of their on-road diesel fuel as ultra-low sulfur at the start of the program and
              establishing that requirement is necessary to guide refiners' business
              investment  plans.  Second, a number of uncertainties remain that may affect
              how this fuel is distributed and retailed and therefore, any decision regarding
              retailer availability requirements should be made after a technology review in
              2003. Third, additional consideration should be given to a wider range of
              possible regulatory approaches (including a possible phase-in) and incentive
              mechanisms to bring the new fuel to the retail  market.

              Letters:

              U.S. Department of Energy (IV-G-28) p. 10

(B)    Opposes retailer availability requirement, especially for farmer co-op controlled
       retail outlets.

       (1)     For truck stop retail locations operated by farmer co-ops, these outlets
              provide important sources of revenues because sales are often to non-
              members and the co-op can more easily use price to pass on capital
              expenditures. Thus, farmer co-ops already have a strong incentive to provide
              the  15 ppm fuel at these locations.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p.  10,15

(C)    EPA must mandate the availability of low sulfur fuel, and cannot lawfully rely on
       a market-based approach.

       (1)     EPA can only realize the environmental benefits of its proposed regulations
              by mandating the availability of low sulfur fuel, since without this type of
              mandate, there is no guarantee that low sulfur fuel will be available when
              needed. Without low sulfur fuel, the standards clearly cannot be met and
              maintained, which would place manufacturers at risk of enforcement actions
              and warranty claims. Simply allowing the marketplace to dictate the possible
              availability of low sulfur fuel further undercuts the technological feasibility of
              the  proposal.

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              Letters:

              Cummins, Inc.  (IV-D-231) p. 55

       Response to Comments 6.3.2(A). (B) and (C):

       We are not adopting any retailer availability requirements with today's action.
Retailers will be free to sell 15  ppm sulfur diesel fuel, 500 ppm sulfur diesel fuel, or both. We
believe the fuel program being adopted today for refiners will ensure that adequate supplies
of low sulfur diesel fuel are available throughout the nation.  The temporary compliance
option and hardship  provisions have been designed with a required level of production that
we believe will ensure that 15 ppm fuel is distributed widely through pipelines, at terminals,
and retail outlets throughout the country without the need for a retailer availability
requirement. Our analysis supporting the design of these provisions can be found in Chapter
IV of the RIA for today's rule.

       Issue 6.4:  Military  Fuels

(A)     Commenter is concerned about the  potential impact of the proposed rule on
       the availability and quality of the aviation fuels JP-5 and JP-8.

       (1)     The proposed rule might force  some refiners to  stop manufacturing these
              unique fuels, further reducing supply availability and impacting military
              readiness.

              Letters:

              Department of  Defense (IV-D-298) p. 2-3

       Response to Comments 6.4(A):

       The commenter provides no factual basis to support their concern that some refiners
will stop producing specialty fuels for the U.S.  military. We have no information which would
indicate our program will have  an adverse impact on the availability and  quality of specialty
fuels such as military aviation fuels JP-5 and JP-8. The changes to refinery operations that
we envision will need to be made to comply with our sulfur program are primarily related to
the addition of additional hydrotreating capability to reduce the sulfur content of highway
diesel fuel.  These changes will not impact a refiner's ability to produce a range of different
types of fuels. We anticipate that the distillate blendstocks used to manufacture highway
diesel fuel may be adjusted by certain  refiners to ease the difficulty in producing highway
diesel fuel meeting a 15 ppm sulfur cap. However, we do not expect that such adjustments
will impact the ability of refiners to produce adequate quantities of specialty fuels or the
quality of these fuels. On the contrary,  it is entirely possible that additional refiners may
choose to enter into  the specialty fuels market to offset their investment to  comply with
today's new diesel fuel standard.

(B)     Commenter is concerned that the multi-product commercial system will be
       challenged to the point that it will be unable to accommodate the transportation
       of military fuels.

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       (1)     EPA should evaluate all impacts on distribution, which is of particular concern
              for military users of specialty fuels such as F-76, JP-5, and JP-8.  Since these
              fuels are not fungible, distribution problems may limit the military's ability to
              transport the required critical volumes in order to meet operational readiness
              requirements.

              Letters:

              Department of Defense (IV-D-298) p. 3-4

       Response to Comments 6.4(B):

       We concluded that the fuel distribution system can accommodate the distribution of
highway diesel fuel meeting a 15 ppm cap on diesel sulfur with modest changes (see
Chapter IV, section C of the RIA). These changes will have little or no impact on the ability of
pipelines and terminals to handle segregated shipments of the specialty fuels that they carry
today.  To the extent that it is in the economic best interest of these entities to handle these
fuels today, it will continue to be in the future. In addition, we expect that projects that the
distribution  industry will undertake to increase its capacity to match the increase in highway
diesel fuel demand over time due to economic growth will add surplus capacity that could be
utilized for the distribution of the relatively small volumes of specialty products.

       During the initial years of our program when the temporary compliance option and
small refiner hardship provisions are available to refiners, we expect that two grades of
highway diesel fuel will be carried in some parts of the distribution system  (Refer to Chapter
V, section C of the RIA).  Given the short duration of these provisions, we do not believe that
pipelines and terminals would chose to disrupt and put at risk their long term business
practices of handling specialty fuels.  Rather, we believe that those entities that choose to
distribute both grades of highway diesel fuel during this transition period will do so by utilizing
currently underutilized capacity or by constructing additional storage capacity.  Therefore, we
believe that the presence of two grades of highway diesel fuel in the distribution system will
not limit the availability of storage tanks for use in distributing specialty fuels.

       We estimated that 40 percent of pipeline systems would carry two  grades of highway
diesel fuel.  Having two grades  of highway diesel fuel in the system will place additional
demands on the pipeline system associated with separating and routing the two grades.
There will also be some additional volume of highway diesel downgraded to a lower value
product as a result of the presence of batches of 500 ppm highway diesel fuel as well as  15
ppm fuel (see Chapter V, section C.S.g. in the RIA). These factors may tend to reduce the
total  capacity of pipelines that carry two grades of highway diesel fuel to a  small extent. We
took this  into account when making our assessment that only 40 percent of pipelines would
carry two grades of highway diesel fuel.  We anticipate that only those pipelines that have the
additional capacity to carry 500 ppm as well as  15 ppm highway diesel fuel without impacting
their ability to distribute a full slate of fuels (including specialty products), will choose to do so.

(C)    Commenter believes that EPA will need to exercise the existing National
       Security Exemption procedures to exempt tactical heavy-duty diesel vehicles
       from engine standards that do not allow use of JP-8 or other diesel fuel used
       outside of the U.S. because of sulfur-intolerant emissions control technology.

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       (1)     JP-8 is a kerosene-based fuel that is essentially commercial Jet A-1 aviation
              fuel with additives to make it battlefield-equipment ready. Because tactical
              wheeled vehicles must be able to operate on JP-8 when deployed, they
              cannot contain engines with pollution control technology that is intolerant to
              sulfur.

              Letters:

              Department of Defense  (IV-D-298) p. 4-6

(D)    EPA should continue its determination that JP-8 does not meet the definition of
       diesel fuel under EPA's regulation and that operational readiness, logistical
       considerations and cost considerations warrant allowing use of JP-8 in military
       tactical motor vehicles.

       (1)     This would provide an exemption for the rapid deployment land forces at U.S.
              home  bases which are in the process of converting all vehicles to JP-5 and
              JP-8 to allow quick response to operational needs.

              Letters:

              Department of Defense  (IV-D-298) p. 6-7

       Response to  Comments 6.4(C) & (D):

       We agree  that it will be appropriate for the Department of Defense (DOD) to seek a
National Security Exemption for tactical heavy-duty vehicles from the emission standards
under our program based on the necessity that these vehicles be fueled on high sulfur
military fuel. Due to national security  considerations,  EPA's existing regulations allow the
military to request and receive national security exemptions (NSE) for their motor vehicles
from emissions regulations if the operational requirements for such vehicles warrant such an
exemption. These provisions have worked successfully in the past to enable us to meet both
our national air quality and security goals simultaneously.  Today's final rule does not change
these provisions.

       Based on EPA's existing definition of diesel fuel, we previously concluded that JP-8
military fuel is not subject to EPA's existing requirements for diesel fuel. A provision in our
sulfur program revises the definition of diesel fuel so that JP-5 and JP-8 military fuel that is
used or intended for use  in  diesel motor vehicles will be subject to all of the requirements
applicable to diesel fuel under our program. However, we also included a provision in our
program that exempts JP-5 and JP-8  fuels from EPA's diesel fuel requirements if it is used in
tactical military vehicles that have a national security exemption or if it is used in tactical
military vehicles that are not covered by a  national security exemption but for national
security reasons, such as the need to be ready for immediate deployment overseas, need to
be fueled on the same fuel as motor vehicles with a national security exemption. The
provision for this exemption will  be sufficient to address DOD's comment that tactical military
vehicles must be fueled on JP-8 or JP-5 while  in the United States to facilitate their readiness
for deployment overseas. Use  of JP-5 and JP-8 fuel not meeting the highway diesel fuel
standards in a motor vehicle other than the tactical military vehicle described above is

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DECEMBER 21, 2000	PAGE 6-38

prohibited under today's rule. We believe that this prohibition is necessary to ensure that JP-
8 is not used in vehicles equipped with the sulfur sensitive emissions control hardware that
we believe will be needed to meet the emissions standards under our program.

       In discussions with the Department of Defense (DOD), DOD stated that certain
tactical military vehicles must be ready to be shipped overseas quickly in response to an
emergency and must be ready to be fueled on whatever fuel is available under tactical
conditions (typically JP-8). The use of the high sulfur fuel normally supplied under tactical
situations overseas in engines equipped with the aftertreatment technology thought to be
necessary to meet the emissions requirements of today's rule could result in driveability
problems and permanently destroy the emission control system. To avoid problems
experienced in the past when switching between fuel types, tactical vehicles which may need
to be shipped overseas are commonly fueled with JP-8 military fuel while in the U.S. as well.

       Therefore, it appears that requiring tactical military vehicles that may be used outside
of the U.S.  to comply with the vehicle emissions requirements under our program is not
compatible with the operational requirements for such vehicles. We recognize the national
security concerns raised by DOD, and will address this issue using the Agency procedures
established for this purpose. These guidelines are contained in EPA's "Guidelines for
National Security Exemptions of Motor Vehicles and Motor Vehicle Engines - Guidelines for
Tactical Vehicles/Engines"  We also recognize that tactical military vehicles manufactured
before the requirements of today's rule become effective may need to continue to be
operated on JP-8 or JP-5 fuel while in the U.S. to facilitate their readiness to be fueled on
whatever fuel is available overseas. Consistent with an exemption for certain military
vehicles,  EPA is also exempting diesel fuel from the sulfur standard under our program,
where the fuel is used in vehicles exempted from the emissions standards in this rule
(pursuant to 40 CFR 85.1708) or in tactical motor vehicles that are not covered by a national
security exemption but for national security reasons need to be fueled on the same fuel as
motor vehicles with a national security exemption. The exemption for fuel used in tactical
motor vehicles not covered by a national security exemption will require prior EPA approval in
order for it to be in effect.

       Issue 6.5:  [Reserved]

       Issue 6.6: Alaska

             Issue 6.6.1: Inclusion of Alaska in the Nationwide Cap

(A)  EPA should include Alaska in the nationwide cap on diesel fuel sulfur content.

       Commenters indicated the proposed diesel fuel requirement should apply in Alaska.
       Manufacturer organizations stated that Alaska will need low sulfur diesel fuel if
       vehicles and engines employing advanced emission control technologies are to be
       operated in the state of Alaska.  Any vehicles manufactured during or after 2007 will
       be damaged by the higher sulfur fuel. The manufacturers' ability to meet the
       emission standards will depend on the availability of low sulfur diesel fuel, and the
       existence of high sulfur fuel in Alaska would lead to adverse emission consequences.
       The Engine Manufacturers Association (EMA) also commented  that there are a
       number of diesel vehicles from the lower-48 states that will be traveling to Alaska to
       deliver goods. Any exposure to Alaska high sulfur diesel fuel by those vehicles may

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6-39

       permanently reduce the effectiveness of the emission control technologies employed
       on those engines and will substantially reduce their overall durability and
       performance. EMA provided additional discussion and referred to its comments on
       "State of Alaska Petition for Exemption from Diesel Fuel Sulfur Requirement," Docket
       No. A-96-26 (June 12, 1998).

       Environmental and health organizations and approximately 33 public citizens
       commented that we should include Alaska in the new nationwide cap on diesel sulfur
       levels in order to help protect human health and the environment in Alaska.  One
       commenter provided statistics on diesel use in Alaska and noted that a majority of
       Alaska's population would be adversely affected if yet another exemption is provided
       for the State.  The National Park Service commented that exemptions for any area in
       the United States would compromise the air quality of many national parks.

              Letters:

              AK Conservation Alliance  (IV-D-349)  p. 1
              AK Department of Environmental Conservation (IV-D-236) p. 1
              Alliance of Automobile Manufacturers (IV-D-262)  p. 12
              Clean Air Coalition (IV-D-322) p. 1-3
              Clean Air Coalition and AK organizations (IV-D-350) p. 1
              Dolman, Suzanne, et. al.  (IV-D-341)
              Engine Manufacturers Association  (IV-D-251) p. 23-27
              Franczyk, Catherine A., et. al. (IV-D-233)
              Northern Alaska Environmental Center  (IV-D-223) p. 1
              Rock, Steve, et. al. (IV-G-22)
              Rutherford, Jolene, et. al.  (IV-D-347)

(B) EPA should not include Alaska in the nationwide cap on diesel fuel sulfur content.

       One commenter,  a refiner in Alaska, indicated that we should grant an exemption to
       Alaska for highway diesel fuel since the environmental and human health risks posed
       by diesel fuel within the state are insufficient to justify the costs of low sulfur fuel in
       Alaska. The cost for installing desulfurization equipment will be high  (estimated at
       over $100  million for Williams' North Pole, AK refinery) and it is uncertain whether a
       commercially viable technology is available for the harsh arctic environment found in
       many parts of Alaska.  Given Alaska's unique circumstances and the high cost of
       compliance, Alaska's refiners face two undesirable choices - either invest millions to
       comply with the standard (for which there would be no return on investment) or stop
       manufacturing highway diesel.  Applying the sulfur cap to  Alaska may cause supply
       disruptions since  additional tanks and storage would be required (of which there is
       currently a shortage) and it would be impractical to import an arctic grade fuel, since
       the diesel fuel produced in the lower 48 does not meet Alaska's pour and cloud point
       requirements (for temperatures as low as -60° F).

       Williams Energy Services also indicated that disposing of the sulfur produced  as a
       by-product of the  hydrotreating process is very expensive  in Alaska. It would be
       costly to landfill, which may not be allowed on a continuous basis, and would be even
       more costly to ship out of Alaska for disposal or use (the cost of getting it to the
       market would not offset the shipping costs). Williams estimated the total cost for

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DECEMBER 21, 2000	PAGE 6^40

       sulfur disposal at their North Pole, AK refinery would be approximately $281,000.

       In addition, approximately 17 private citizens indicated we should not include Alaska
       in the nationwide cap on diesel fuel content, but they did not provide supporting
       information or detailed analysis.

              Letters:

              Williams Energy Services (IV-D-167) p. 2-4, (IV-F-191) p. 240
              Rutherford, Jolene, et. al. (IV-D-347)
              Kinyon, John, et. al. (IV-G-13)

       Response to Comments 6.6.1 (A) and (B):

       Chapter IV of the RIA discusses the costs and technological feasibility of the diesel
sulfur standard of the final rule and Chapter III of the RIA discusses the critical need to have
sulfur levels reduced to 15 ppm for the engine and emission control technologies to achieve
the emission standards of the final rule.  If vehicles and engines employing  these
technologies to achieve the emission standards will be operated in Alaska,  then low sulfur
diesel fuel must be available for their use. Any 2007 and later model year diesel vehicles in
Alaska, or driven to Alaska, must be fueled with low sulfur highway diesel, or risk potential
damage to the aftertreatment technologies or even the engines themselves. Consequently, it
is also important to implement the low sulfur diesel fuel program in Alaska.  Moreover, there
are important environmental and public health benefits that  will be achieved nationwide,
including in Alaska, with cleaner diesel engines and fuel, particularly from reduced particulate
emissions, nitrogen oxides, and air toxics. Therefore, we are including Alaska in the
nationwide cap for highway diesel fuel sulfur  content.

       In Chapter IV of the RIA, we determined that the nationwide 15 ppm sulfur cap is
technologically feasible.  Although the engine standards established in the  final rule are not
based upon different technology and cost implications for Alaska as compared to the  rest of
the country, the low sulfur fuel program has different implications. Chapter  VIII of the RIA
discusses  these issues, including those raised by Williams  Energy Services in its comments
to the proposal, and  in its earlier comments during previous proposed and final actions
regarding the diesel  sulfur standard in Alaska. As noted in Comment  B, one of Williams
Energy Services' concerns is whether a commercially viable technology  is available for the
harsh arctic environment found in many parts of Alaska.  However, we received  no specific
technical data indicating conventional hydrotreating technology is not feasible in Alaska. Our
goal  is to take action in a way that maintains the environmental benefits  of the program, but
still minimizes costs  and  impact by allowing Alaska to develop a transition plan to the new
low sulfur program uniquely designed for Alaska.  (See the following issues.)

              Issue 6.6.2: Development of an Alternative Transition Plan for Alaska

(A) Supports Alaska having the opportunity to develop  an alternative transition plan.

       The Alaska Department of Environmental Conservation (ADEC)  supports the
       proposed transition plan. It stated the proposal recognizes the unique circumstances
       in Alaska,  the anticipated low demand in the early years of the program,  and also
       recognizes that the State is the appropriate entity to  develop the  transitional plan. It

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE

       commented that the one year schedule for development of the alternative transition
       plan  may be ambitious given the nature of this issue within Alaska, but the ADEC is
       preparing to develop such a plan within the proposed time frame and will begin that
       effort immediately upon EPA's adoption of the final rule.

       Two  refiners provided discussion on a number of unique circumstances  in Alaska that
       pose particularly difficult challenges for refiners operating in the State that warrant a
       separate timetable for implementation, if we choose to apply the proposed diesel
       sulfur standard to Alaska.  In particular, Williams Energy Services cites our rationale
       in providing an exemption  from the 500 ppm standard and specifically to our August
       19, 1996 Notice of Final Decision that addresses this issue, and asserted that the
       unique conditions  that existed in  1996 continue to exist in Alaska today.  The on-
       highway diesel fuel in Alaska accounts for only five percent of the total diesel fuel
       sales in the State and the  per capital  consumption of on-highway diesel  is
       significantly smaller than the lower-48 states.  There is limited transportation and
       storage infrastructure that would  force refiners to produce all diesel to the lowest
       common denominator (i.e., 15 ppm), which will increase the already high cost of living
       in the rural areas because of higher electricity costs from rural co-ops and diesel
       generators. Diesel fuel emissions are not as significant of an air pollution factor as
       they  are in the lower-48 states since Alaska's diesel emission sources are not as
       numerous and are spread over a very large geographic area. Alaska is  very sparsely
       populated and many people live in  remote areas where the fuel supply delivered in
       the summer months must  last the entire year.  Another factor that contributes to the
       need for a transitional period is that the construction season is very short and in order
       to install desulfurization equipment, refiners must select the appropriate  technology
       and obtain the necessary permits as well as complete construction in a relatively
       short time frame.

              Letters:

              AK Department of Environmental Conservation (IV-D-236) p. 2
              Petro Star Inc.  (IV-D-216) p.  2-3
              Williams Energy Services (IV-D-167) p. 2-4, (IV-F-191) p. 240

(B)    Conditionally supports Alaska having the opportunity to develop an alternative
       transition  plan.

       The Engine Manufacturers Association supports a transition plan, but only if
       adequate supplies of low sulfur diesel fuel and the prevention of misfueling can  be
       ensured. Provided that the transition plan truly meets the minimum requirements set
       forth  by EPA (cites to 65 FR 35521), it could be workable.  However, manufacturers
       should have the opportunity to review any plan proposed by Alaska and  be assured
       that it precludes the possibility of any misfueling.

       The Alliance of Automobile Manufacturers also commented that our proposed
       transition period may lead to misfueling, and this concern could affect manufacturers'
       plans for selling new technology vehicles in Alaska.  It indicated that our proposal to
       not base any vehicle or engine recall  on emissions exceedances caused by the use
       of high-sulfur (>500 ppm) fuel in Alaska during the transition period would be helpful,
       but would not eliminate the added costs and consumer inconvenience of addressing

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DECEMBER 21, 2000	PAGE 6^42

       warranty and performance problems should misfueling occur. The Alliance indicated
       a willingness to help Alaska adopt and implement a plan to deliver low sulfur diesel
       fuel throughout the state as quickly as possible.

       Phillips Petroleum commented that, absent actions by the Canadian government to
       mirror the U.S. standards, the goals of our transition period for Alaska may be
       compromised.  It suggested that we consider the Canadian standards and their
       impacts as we appropriately consider transition plans for Alaska with its extremely
       unique geographical and supply/demand situation.

              Letters:

              Alliance of Automobile Manufacturers (IV-D-262) p. 12
              Phillips Petroleum Company (IV-D-250) p. 6
              Engine Manufacturers Association (IV-D-251) p. 27

(C) Does not support Alaska having an alternative transition plan.

       Environmental and health advocates commented that we should ensure that diesel
       fuel sold in Alaska is as clean as in the other states by the national deadline of 2006
       in order to ensure protection of human health and the environment.

              Letters:

              AK Conservation Alliance  (IV-D-349) p. 1
              Clean Air Coalition  (IV-D-322) p. 1-3
              Clean Air Coalition and AK organizations (IV-D-350) p. 1
              Northern Alaska Environmental Center (IV-D-223) p. 1

       Response to Comments 6.6.2(A). (B). and (C):

       We agree that Alaska should  have the same health and environmental benefits
attributed to the new heavy-duty emission standards and low sulfur fuel.  The final rule
requires that new (2007 and later) heavy-duty highway engines sold in Alaska and the
highway diesel fuel for those engines meet the national requirements. However, because of
the unique circumstances in Alaska (discussed in Chapter VIM of the RIA), the national
schedule for implementing low sulfur  diesel fuel has more severe implications on the fuel
production and distribution system in Alaska than in the lower-48 states.  Fortunately, those
same unique circumstances may allow for a unique fuel implementation program in Alaska.
Therefore, we are allowing the opportunity for Alaska to develop an alternative transition
period to phase in the low sulfur diesel fuel in a manner that minimizes costs, while still
ensuring that the new vehicles receive the low sulfur fuel they need. By implementing the
program in this manner, the 2007 model year and later vehicles would still achieve the new
emission standards, thus achieving the environmental benefits envisioned by the final rule.

       We are providing the State an opportunity to develop an alternative low sulfur
transition plan, and intend to facilitate the development of this plan by working in close
cooperation with the State and key stakeholders (including vehicle and engine
manufacturers, refiners, retailers, distributors, truckers, environmental groups, and other
interested parties). Among the criteria that are specified for an alternative transition plan for

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DECEMBER 21, 2000	PAGE 6^43

Alaska is the requirement that the plan ensure that sufficient supplies of low sulfur diesel fuel
are available in Alaska to meet the demand of any new 2007 and later model year diesel
vehicles. Also, the plan should include measures to prevent contamination and misfueling,
including segregation and pump labeling requirements, and those measures should be at
least as stringent as those required by the national plan in the final rule. We expect that the
transition plan would begin to be implemented at the same time as the national program.
However, the State will have an opportunity to determine what volumes of low sulfur fuel will
need to be supplied, and in what timeframes, in  different areas of the State, and how those
volumes may need to increase over time as the  demand for the low sulfur fuel grows by
increasing numbers of new vehicles. The  State  may consider an extended transition
schedule for implementing the low sulfur program in rural Alaska based on the anticipated
penetration of 2007 and later model year vehicles in the remote areas.

       The manufacturers and other stakeholders will have an opportunity to assist the State
in developing the plan, and to subsequently comment on the plan  after the State submits it to
EPA for approval.  If Alaska submits such  a plan to us within one year, and if it provides a
reasonable alternative as described in the final rule, we will conduct a rulemaking with notice
for public comment.  If appropriate after considering the public comments, we will publish a
final rule promulgating the new regulatory  scheme for Alaska.

       We believe that these provisions, along with the public process they allow, will be
sufficient to address the concerns raised by the commenters. Regarding the concern about
the Canadian diesel fuel sulfur standard (currently 500 ppm sulfur), Canada has publically
announced their intention to adopt a highway diesel sulfur standard consistent with our final
rule ("Process Begins to Develop Long Term Agenda to Reduce Air Pollution from Vehicles
and Fuels", Environment Canada press release,  May 26, 2000). But, this concern is not
relevant to the narrow issue of an alternative diesel fuel transition plan for Alaska.  It is
relevant to the larger issue in the  final rule implementing the  nationwide 2007 and later
heavy-duty engine emission standards (see comment 4.6(E)).  With or without an alternative
fuel-sulfur transition plan for Alaska, 2007  and later heavy-duty vehicles will be driven
between the lower-48 states  and Alaska through Canada. Nevertheless, we do intend to
closely track Canada's efforts in implementing its low sulfur diesel fuel program.

              Issue 6.6.3:  Extending Current 500 ppm Exemption

(A) Supports extending the current 500 ppm exemption.

       EPA should ensure that the exemption from the 500 ppm sulfur requirement remains
       in effect during the transition to the 15 ppm sulfur requirement. Since Alaska is not
       currently implementing the 500 ppm  diesel fuel sulfur standard, EPA should allow for
       a single transition to the new 15 ppm standard to  minimize refinery impacts and
       costs. Williams Energy Service commented on the special challenges faced by
       Alaska in implementing a low sulfur requirement (see Chapter VIII of the RIA), and
       referenced an earlier letter by the Alaska Trucking Association (Williams erroneously
       cited the American Trucking Association) stating that the new engine technology, i.e.,
       the technology designed to  meet the 2004 emission standards, may not reach Alaska
       in significant numbers for 10 years.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 6^44

             AK Department of Environmental Conservation  (IV-D-236) p. 2
             Petro Star Inc. (IV-D-216) p. 3
             Williams Energy Services (IV-D-167) p.1-4

(B) Does not support extending the current 500 ppm exemption.

       The Engine Manufacturers Association commented that we should not extend
       Alaska's temporary exemption beyond 2002. Emission  control systems used on
       engines and vehicles introduced into the marketplace beginning as early as 2002 to
       meet the 2004 standards not only will likely fail to meet those standards if operated
       on exempted diesel fuel with sulfur content greater than 500 ppm, but also will
       experience serious operational problems, and in some cases could fail completely.

             Letters:

             Engine Manufacturers Association (IV-D-251) p. 23

       Response to Comments 6.6.3(A) and (B):

       The impacts to Alaska's fuel distribution system of implementing a low sulfur
requirement for highway diesel fuel would likely occur whether we require the current 500
ppm standard or the new 15 ppm standard. The impacts to Alaska's refineries and fuel
importers are greater at 15 ppm than at 500 ppm. It is likely that the refiners and fuel
importers would have a significant incremental impact if we required Alaska to implement the
500 ppm sulfur standard in 2004 when the current exemption expires, and the 15 ppm sulfur
standard in  2006 when the new national requirement becomes effective, rather than only
once for the 15 ppm sulfur standard in 2006. (See Chapter VIII of the RIA)

       The Engine Manufacturers Association correctly points out that emission control
systems used on engines and vehicles introduced into the marketplace beginning as early as
2002 to meet the 2004 standards not only will  likely fail to meet those standards if operated
on exempted diesel fuel with sulfur content greater than 500 ppm, but some may also
experience  serious operational problems. We  must balance this concern against the cost of
the low sulfur (500 ppm) fuel in Alaska, and the relatively low expected exposure of 2004
technology engines and vehicles to high sulfur fuel during this interim period.  As Williams
Energy Services pointed out, the Alaska Trucking Association (ATA) previously wrote a letter
(public Docket A-96-26, IV-D-43) indicating its concern over the cost of the fuel.  The ATA
stated that the impact of high sulfur fuel on new technology engines (designed to meet the
2004 emission standards) does not rise to  the level  of offsetting the cost involved in
mandating the use of 500 ppm sulfur fuel at any time in the near future. According to the
ATA, common use of that technology will probably not occur until sometime after the year
2010 in Alaska. Further, the ATA indicated the investment required for a new diesel engine
is not going to be made without the availability of the proper fuel to run that engine. ATA
members believe that the market will provide fuel for those new engines as needed, and
there is no reason to have a mandate from the EPA or State. We agree that the use of high
sulfur fuel with the 2004 technology engines and vehicles would likely require more
maintenance with associated added cost.  However, we also concur that, based on the
assessment of the State of Alaska, the refiners in Alaska, and the Alaska Trucking
Association, that the added cost of more maintenance on the 2004 technology engines and
vehicles does not warrant a mandate for 500 ppm sulfur fuel in the State beginning in 2004,

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DECEMBER 21, 2000	PAGE 6^45

when the current exemption expires.

       Consequently, we are extending the existing temporary exemption from the current
sulfur standard of 500 ppm for the areas of Alaska served by the Federal Aid Highway
System to the effective date for the new 15 ppm sulfur standard.  While Alaska submitted a
petition for a permanent exemption from the 500 ppm standard for these areas, we are not
approving that petition. Our goal is to take action on that petition in a way that minimizes
costs through Alaska's transition to the new low sulfur program. The cost of compliance
could be reduced if Alaska refiners were given the flexibility to  meet the low sulfur standard in
one step, rather than two steps (i.e., once for the current 500 ppm sulfur standard in 2004
when the temporary exemption expires, and again for the new 15 ppm standard in 2006).

       As already discussed, we are allowing Alaska to develop an alternative transition plan
for implementing the 15 ppm sulfur program.  During such a transition period, it is possible
that both  15 ppm sulfur (for 2007 and later model year vehicles) and higher sulfur (for older
vehicles)  highway fuels might be available in Alaska.  To avoid the two-step sulfur program
described above during an alternative transition period,  we would consider  additional
extensions to the temporary exemption of the 500 ppm standard  beyond 2006 (e.g., for that
portion of the highway diesel pool that is available for the pre-2007 vehicles) during Alaska's
transition period. We would make a decision  on any additional temporary extensions, if
appropriate, in the context of the separate rulemaking taking action on the alternative
transition plan submitted  by Alaska.

              Issue 6.6.4: Exemption from Emissions Liability

(A)  Supports exemption from emissions liability

       The Engine Manufacturers Association commented that the level of protection
       provided to engine manufacturers under the current exemption for Alaska and the
       proposal falls short of what is reasonable and necessary. It asserted that the use of
       high sulfur diesel fuel by an engine should raise a "rebuttable presumption" that the
       fuel has caused the engine failure, and that EPA should have the burden of rebutting
       that presumption.  It also asserted that the emissions warranty is a regulatory
       requirement under Section 207, that only EPA has the  authority to exclude claims
       based on the use of high sulfur diesel fuel.

              Letters:

              Engine Manufacturers Association (IV-D-251) p.  25-26

       Response to Comment 6.6.4(A):

       We understand and concur with the manufacturers' concerns about in-use testing of
engines operated in an area exempt from fuel sulfur requirements.  Consequently, we affirm
that, for recall purposes,  we will not seek to conduct or cause the in-use testing of engines
we know have been exposed to high sulfur fuels. We will likely screen any engines  used in
our testing program to see if they have been operated in the exempt area.  We believe we
can readily obtain sufficient samples of engines without testing engines from exempt areas.
In reviewing the warranty concerns of the Engine Manufacturers Association, we have
determined that our position regarding warranties, as previously stated and described in the

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DECEMBER 21, 2000	PAGE 6^46

proposal, is consistent with section 207(a) and (b) of the CAA and does not require any new
or amended regulatory language to implement.

              Issue 6.6.5: Permanent Exemption from Dye Requirement

(A)  Supports permanent exemption from dye requirement

       The Alaska Department of Environmental Conservation believes it is critical that an
       exemption from the dye  requirement be maintained in order to minimize costs and
       problems associated with Alaska's unique fuel distribution system, and for rural
       Alaska to avoid separate fuel storage infrastructure.

       Letters:

       AK Department of Environmental Conservation (IV-D-236) p. 1,


(B)  Conditionally supports permanent exemption from dye requirement

       The Engine Manufacturers Association commented that the proposed dye exemption
       should not be problematic, if we also substantially reduce sulfur levels in nonroad
       diesel fuel. However, if we do not require nonroad fuels to be at sufficiently low sulfur
       levels, then we should not exempt that fuel from the dye requirement.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 28

       Response to Comments 6.6.5(A) and (B):

       Under the existing exemptions, Alaska is exempt from the dye requirements for
nonroad fuel and does not have separate fuel storage infrastructure as in the lower-48 states.
The costs of complying with the  low sulfur diesel fuel requirements could be reduced
significantly if Alaska were not required to dye the nonroad fuel.  Dye contamination of other
fuels, particularly jet fuel, is a serious potential problem in Alaska, since the same transport
and storage tanks used for jet fuel (which comprises more than half of Alaska's distillate
market) are generally also used for other diesel products, including nonroad diesel products.
(This issue is discussed in Chapter VIII of the  RIA.) Therefore, we are granting Alaska's
request for a permanent exemption from the dye requirement of 40 CFR 80.29 and 40 CFR
80.446 for the entire State.

       Regarding the concern about nonroad fuel  specifications, we assume that the
manufacturers are concerned about sulfur contamination of highway fuels by very high sulfur
nonroad fuels, and with misfueling of highway vehicles with very high sulfur nonroad fuels.
The final  rule does not address nonroad fuel specifications, but we are considering
addressing the  sulfur levels in nonroad fuel  in  a future separate rulemaking.

       Even though Alaska will  be exempt from the dye requirements for nonroad fuel, the
final rule contains specific safeguards to prevent contamination and misfueling. Alaska will
be required to comply with all other nationwide requirements  designed to  prevent misfueling

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and contamination.  It will also be required to comply with some special requirements.  For
example, the high sulfur nonroad fuel must be segregated from the highway fuel to prevent
contamination and misfueling. On each occasion that any person transfers custody or title to
the fuel, except when it is dispensed at a retail outlet or wholesale purchaser-facility, the
transferor must provide to the transferee a product transfer document complying with the
requirements of § 80.462(a) and (d) and stating that the fuel is for use only in Alaska and is
not for use in highway vehicles.  Any pump dispensing the fuel must comply with the labeling
requirements in 80.453(c). The pump label must designate the fuel as nonroad fuel, and
must warn that the fuel may damage or destroy highway engines and their emission controls,
and that Federal Law prohibits use of the fuel in any highway vehicle.

       Issue 6.7:  US Territories

(A)    American Samoa, Guam, and Northern Mariana Islands should be excluded
       from the cap on diesel fuel sulfur content

       The governments of American Samoa and Guam requested that we continue the
       diesel fuel sulfur content exemption in their territories, based on the economic
       implications detailed in their 1992 requests for exemption.

             Letters:

             Governor of Samoa Government (ll-G-13)
             Environmental Protection Agency of Guam  (IV-G-43)

(B)    American Samoa, Guam, and Northern Mariana Islands should be included in
       the cap on diesel fuel sulfur content

       The Engine Manufacturers Association and Detroit Diesel Corporation commented
       that we should not provide any exemption from the low sulfur (15 ppm) diesel fuel.
       The Engine Manufacturers Association indicated that the three territories import all
       the diesel fuel they use, and low sulfur fuel can  be imported as easily as can 500 ppm
       sulfur diesel fuel.  The use of low sulfur fuel will ensure the durability and emissions
       performance of engines used in three the territories. However, if low sulfur fuel
       cannot be made reasonably available, we should put requirements in place to assure
       that sulfur in diesel fuel is capped at 500 ppm.

       Both  commenters expressed concern that product availability in the three territories is
       likely to become very limited in the long term under an exemption. As time goes by,
       manufacturers will phase out older on-highway engines that can tolerate higher levels
       of fuel sulfur and will only be producing engines which require low sulfur fuel. Detroit
       Diesel commented that, to avoid disruptions and ensure the continued viability of
       reliable transportation systems in the three territories, we should treat them the same
       as the fifty states and not provide any exemptions.  But, if we determine that
       exemptions are necessary for the three territories, the proposed exemptions should
       be temporary measures of no more than five years duration. Further, to maximize the
       availability of engines, both commenters suggested that uncertified engines be
       allowed during the exemption period.

       The Alliance of Automobile Manufacturers (Alliance) commented that the proposal to

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       exempt these territories from the heavy-duty vehicle emission standards and the low
       sulfur fuel standard fails to help the Alliance members who may want to sell light-duty
       diesel vehicles there.  Like everywhere else, the people of these areas deserve to
       have access to the latest technologies, but the Alliance members will be unable to
       sell these technologies without the cleaner fuel.  The Alliance suggests that, if we
       were to exempt light duty diesel vehicles from Tier 2 emission standards until  cleaner
       fuel became available, then the three territories could at least benefit from some of
       the new technologies.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 12
              Detroit Diesel Corporation  (IV-D-276) p. 7-8
              Engine Manufacturers Association (IV-D-251) p. 27-28

       Response to Comments 6.7(A) and (B):

       As when the 500 ppm sulfur standard was implemented in 1993, we believe that
compliance with the new 15 ppm sulfur standard would result in relatively small
environmental benefit, but major economic burden for these territories (57 FR 32010, July 20,
1992 for American Samoa; 57 FR 32010, July 30, 1992 for Guam; and 59 FR26129,  May 19,
1994 for CNMI). We recognize there would be impact to vehicle owners and operators if new
engine and emission control technologies were run using high-sulfur fuel.  We believe that for
the sulfur exemption to be viable for vehicle owners and operators, they would need access
to either low  sulfur (15 ppm) fuel or vehicles meeting the pre-2007 HDV emission standards
that could  be run on high-sulfur fuel without significant engine damage or performance
degradation.

       Contrary to  the implications of the Engine Manufacturers Association's comments,
importing 15 ppm sulfur diesel fuel (or 500 ppm sulfur diesel fuel, as suggested by the
Engine Manufacturers Association as an alternate strategy) would be more expensive than
the exempt fuel currently being imported. These  U.S. territories are islands with limited
transportation networks. Combined, these three territories have only approximately 1300
registered diesel vehicles. Diesel fuel consumption in these vehicles represents just a tiny
fraction of the total diesel fuel volume consumed  on these islands; the bulk of diesel fuel is
burned in marine, nonroad, and stationary applications. Most fuel is currently imported from
East Rim nations, although some is imported from Hawaii. This exempt fuel currently has no
sulfur cap, and is less expensive than current 500 ppm sulfur diesel fuel.  In addition,
compliance with 15 ppm (or alternatively 500 ppm) sulfur requirements for highway diesel
fuel would require construction of separate storage and handling facilities for small quantities
of a unique grade of diesel fuel for highway purposes, or use of the low sulfur diesel fuel for
all  purposes  to avoid segregation. Either of these alternatives would significantly add to the
already high  cost of diesel fuel in these territories, which rely heavily on United States
support for their economies. (See Chapter VIII of the RIA)

       The final rule excludes American Samoa, Guam and the Commonwealth of Northern
Mariana Islands from the new diesel fuel sulfur requirement of 15 ppm and the 2007 heavy-
duty diesel vehicle and engine emissions standards, and other requirements associated with
those emission standards. The three territories will continue to have access to 2006 heavy-
duty diesel vehicle and engine technologies, at least as long as manufacturers choose to

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market those technologies. We will not, however, allow the emissions control technology in
the three territories to backslide from those available in 2006.  If, in the future, manufacturers
choose to market only heavy-duty diesel vehicles and engines with 2007 and later emission
control technologies, we believe the market will determine when and if the three territories will
make the investment needed to obtain and distribute the low sulfur diesel fuel necessary to
support these technologies.

       This exclusion from emission standards does not apply to light-duty diesel vehicles
and trucks because gasoline vehicles and trucks meeting the emission standards and
capable of fulfilling the same functions will be available.  We believe that the market will
determine when and if having access to new light-duty diesel technologies in the three
territories, in place of or in addition to gasoline technologies, is important enough  to obtain
and distribute the low sulfur diesel fuel needed to support those technologies.

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ISSUE 7:  ENGINE/VEHICLE MANUFACTURER REQUIREMENTS

       Issue 7.1: Certification Fuel

(A)    In order to improve measurement accuracy, EPA should limit the range of
       allowable  sulfur to ultra-low levels.

       (1)     EPA should allow the use of zero sulfur fuel for engine certification and SEA
              testing.  The proposed upper sulfur limit of 15 ppm (under the full-range
              approach) actually represents an atypical fuel and should not be used to
              specify the certification fuel. In addition, the 7-10 ppm range is above the
              average. EPA should allow the minimum sulfur to drop to zero since it is
              currently unknown what the actual in-use levels will be within the allowable
              range.

              Letters:

              Alliance of Automobile Manufacturers  (IV-D-262) p. 17
              DaimlerChrysler (IV-D-344) p. 17

       (2)     EPA should limit the range of allowable sulfur to the 7-10 ppm level, which
              will result in certification test results that better reflect  in-use emissions.

              Letters:

              International Truck & Engine Corp. (IV-D-257) p. 32

       Response to 7.1 (A):

       We agree with manufacturers that measured emissions are affected by the properties
of the fuels specified for emission testing. Our specifications are intended to represent most
typical fuels that are commercially available in use.  Because we are  lowering the upper limit
for sulfur content in the field, we are specifying a new range of allowable sulfur content for
testing. We are setting the maximum sulfur content at 15 ppm. We are setting the minimum
sulfur level for the test fuel at 7 ppm because we believe that it will be relatively rare for fuel
to sulfur lower than this when dispensed into a vehicle. We expect refiners to target 7 ppm
as an average value, to allow sufficient margin to account for the effects of mixing and
potential contamination during distribution. It would not be  appropriate to allow
manufacturers to use lower sulfur test fuel. We believe that this range will represent the most
typical in-use fuels.

(B)    EPA should adjust the allowable cetane levels, aromatics, and poly-aromatic
       limits of certification fuel to ensure that it will be representative of the fuel that
       is available in actual use.

       (1)     Test fuel specifications are intended to represent fuels that are commercially
              available and with respect to low sulfur fuel, it can be  expected that there will
              be  improvements in other fuel properties when the sulfur level is lowered.

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              Letters:

              International Truck & Engine Corp. (IV-D-257) p. 31

       Response to 7.1(B):

       We believe that it is possible that lowering the sulfur content of in-use fuels could also
change other fuel properties, as the manufacturers have suggested. However, we also
believe that any changes that occur will likely be relatively small. Thus we believe that our
current specifications for non-sulfur properties, which were set broadly to allow a range of
representative fuels, are adequate. It is important to emphasize that we are committed to the
principle that test fuels need to be fully consistent with in-use fuels. We will continue to
monitor this issue.  Should it become clear that the specifications being finalized are not
consistent with in-use fuels, we will take appropriate action.

(C)    EPA should assure that the same fuel used for certification of an engine family
       is available and used for in-use confirmatory testing of that engine family.

       (1)     Manufacturers do not control the fuel used for in-use confirmatory testing and
              should not be held liable for potential exceedances of the standards in-use
              based on improper or off-specification fuel. If EPA adopts a 5 ppm diesel
              sulfur cap standard, manufacturers could be reasonably assured that the
              proper fuel would be available for testing an engine family's performance in-
              use. If EPA insists on finalizing a 15 ppm diesel fuel sulfur cap,  EPA should
              allow in-use testing to be conducted using the average fuel available
              nationwide, not on any fuel  up to the 15 ppm cap.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 22

       Response to7.1(C):

       Beginning in the 2007 model year, the same specifications would apply  to all
emission testing conducted for Certification and Selective Enforcement Audits, as well as any
other engine testing for compliance purposes. To extent practical, we expect to use fuel
meeting these specifications that is most typical of in-use fuel.  However, we retain the
authority to modify by rulemaking the fuel allowable for in-use field testing. It  is  likely that we
would consider such modifications in any future rulemaking that establishes specific in-use
field test procedures.

(D)    Manufacturers should be able to use biodiesel for certification purposes.

       (1)     Since biodiesel is not specifically mentioned in EPA's proposed  rule, the
              ability of an engine company to certify emission levels with biodiesel to take
              advantage of emissions credits for ABT is unclear.  It is also unclear whether
              the exemptions provided for diesel engine certification for CO, formaldehyde,
              and evaporative emissions would also apply to engines certified on biodiesel.
              EPA should explicitly address this issue.

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              Letters:

              National Biodiesel Board  (IV-D-288) p. 3-4

       (2)     EPA should consider additional options that would encourage adoption of
              biodiesel through reduction of certification costs for biodiesel. EPA should
              waive the certification fee costs for biodiesel as well as the NTE and SS State
              testing requirements  proposed for petrodiesel, and should base certifications
              for biodiesel solely upon the required FTP test data.

              Letters:

              National Biodiesel Board  (IV-D-288) p. 4

       Response to 7.1(D):

       Our regulations allow manufacturers to request the use of fuels other than those
specified, but only with advance approval from EPA. The test fuel regulations being finalized
are not changing this allowance. Thus a manufacturer could certify an engine using a
biodiesel fuel, but only if the manufacturer could demonstrate that the biodiesel fuel is the
fuel that the engine would actually be operated on in use. We do not believe that biodiesel
should receive special exemptions.   However, the regulations are being revised to clarify
that the CO data waiver applies for all diesel-cycle engines. There are no evaporative or
formaldehyde standards for biodiesel, so no exemption is necessary.

       Issue  7.2: ABT

              Issue 7.2.1: Family  Emission Limit (FEL) Caps

(A)    Supports the use of NOX and PM credits rounded  to 0.01 megagram.

       (1)     This change allows a greater degree of precision and is consistent with the
              order of magnitude reduction in the emission  standards.

              Letters:

              Cummins, Inc. (IV-D-231) p. 49
              Engine Manufacturers Association (IV-D-251) p. 70

       Response to Comment 7.2.1 (A):

       We agree with the  comments.

(B)    The ABT FEL caps must be set at the levels of the previous standards.

       (1)     Setting the ABT emission caps at the level of the previous standards would
              be  consistent with EPA's previous ABT program and would allow
              manufacturers to carry over a very limited number of engines that otherwise
              could not be certified  at the new standards or could only be done so at

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              excessive costs.  The 2004 standards are very stringent and represent the
              limits of emission reductions that engine manufacturers will be capable of
              achieving. There are limitations on the number of emission credits that could
              be generated which will limit the usage of credits under the new program
              irrespective of PEL caps.

              Letters:

              Cummins, Inc. (IV-D-231) p. 49
              Engine Manufacturers Association  (IV-D-251) p. 71

       (2)     EPA's concern that without the stringent PEL caps, manufacturers could use
              the ABT program to unnecessarily delay the introduction of exhaust emission
              control technologies, is unfounded and their proposed solution is
              counterproductive.  Setting the PEL caps for 2007 compliant engines at the
              level of the previous standards (2.5 g/bhp-hr NOX + NMHC and 0.10 g/bhp-hr
              PM) will provide the greatest incentive for low emission technology and
              would provide the greatest flexibility in complying with the extremely stringent
              standards.

              Letters:

              Detroit Diesel Corporation  (IV-D-276) p.  19

       Response to Comment 7.2.KB):

       We agree with the commenters that we have generally set the PEL caps at the
emission levels allowed by the previous standard.  However, there have been cases when we
did not do this. For example, the PEL cap for NOX+NMHC emissions from 2004 and later
HDDEs (§86.004-11) is 4.5 g/bhp-hr. This is lower than the sum of the previous HDDE
standards for NOX (4.0 g/bhp-hr) and HC (1.3 g/bhp-hr).  In  this particular case, where the
standards are being reduced by an order of magnitude, we believe that special consideration
is appropriate.  In the NPRM for this rulemaking, we proposed PEL caps that were lower than
the previous  standard, because we wanted to ensure that manufacturers did not continue to
produce old-technology high-emitting engines under the  new program. While we continue to
support this goal, we now believe that the proposed low PEL caps are not needed for NOX
during the transition period.  We believe that the other provisions of the  NOX ABT program
will sufficiently address this goal. Thus, in this FRM, we are finalizing interim PEL caps for
NOX (for HDDEs and HDGEs,) that are consistent with the levels allowed by the previous
standards.  We are,  however, adopting the proposed PEL NOX caps for future years. We
believe that it would not be appropriate to have  long-term PEL caps that allowed some
engines to indefinitely have emissions as high as ten times the level of the standard.  When
compared to the 0.20 g/bhp-hr NOX standards, the long-term PEL caps of 0.50 g/bhp-hr for
HDDEs and HDGEs are more consistent with PEL caps set in prior rulemakings.

       We are also adopting the proposed PEL cap for PM emissions from HDDEs for all
years.  Specifically, model year 2007 and later diesel engines will not be allowed  to have PM
emissions higher than 0.02 g/bhp-hr. The PM cap is being set lower than the previous
standard of 0.10 g/bhp-hr, in connection with the absence of the  kind of restrictions on the
use of PM credits that are being set for NOX credits. Without those  restrictions, we believe

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that it is necessary to set a lower PEL to prevent the possibility of PM credits being used to
delay the implementation of the program and its benefits.  We believe that the manufacturers'
argument that few credits would be available  prior to the introduction of the new fuel is not
correct for PM. It is possible that diesel oxidation catalysts (DOCs) with relatively low
precious metal content could be used with HDDEs before the introduction of the new fuel,
and could generate a meaningful amount of PM credits.  In fact, we believe that the ABT
program will  encourage some manufacturers  to make greater use of DOCs to generate
credits  that they could use later to provide for slightly larger compliance margins for their trap
equipped engines.

(C)    The ABT program should be based on family emission limits as  a percentage of
       the standard.

       (1)    EPA should allow cross-program trading with  credits and debits calculated as
             a fraction of the standard rather than in absolute mass emission terms (which
             would address the potential negative air quality effects of trading credits
             between  the "2004" and "2007" program vehicles).  By referencing credits
             relative to the standards under which they were generated, EPA can preserve
             the ABT program's flexibility while also ensuring that the program does not
             result in emission increases.

             Letters:

             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 82

       Response to Comment 7.2.KC):

       See response to comment 7.2.4(0).

(D) ABT PEL caps should be separated based on GVWR.

       (1)    Commenter provided no further analysis or supporting documentation.

             Letters:

             CA Air Resources Board (IV-D-203) p. 7

       Response to Comment 7.2.KD):

       We agree and have changed the PEL caps for complete vehicles.

             Issue 7.2.2: Averaging Sets

(A)    Opposes EPA's proposed averaging set restriction on ABT credit usage since
       this restricts flexibility and does not provide any environmental  benefit.

       (1)    Even with EPA's phase-in approach, there is no legitimate rationale for the
             averaging set restriction. Because the engines from both the 2004-2006 set
             and the 2007 set would be operating in the fleet concurrently and because
             averaging credit exchanges are inherently environmental neutral, there can

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              be absolutely no adverse air quality impacts from allowing credits to be
              exchanged between the two groups of engines.  EPA should not place
              restrictions on the ABT program simply as a means to mandate use of a
              specific emission control technology.

              Letters:

              Detroit Diesel Corporation (IV-D-276) p. 19-20

(B)    EPA should use separate averaging sets during the phase in period for those
       vehicles which have and those which haven't yet been phased in.

       (1)     Commenter provided no further analysis or supporting documentation.

              Letters:

              CA Air Resources Board (IV-D-203) p. 7

       Response to Comments 7.2.2(A) and (B):

       Our ABT program allows us to lower emission standards and achieve greater
emission reductions than would be possible otherwise, because ABT reduces the costs and
improves the ability of manufacturers to meet the standards. Therefore, we proposed to
continue the basic structure of the existing ABT program for heavy-duty engines. We also
proposed some significant restrictions to prevent manufacturers from producing very
high-emitting engines, jeopardizing the environmental benefits of the program, and
unnecessarily delaying the transition to the new exhaust emission control technology. We do
agree with those commenters that observed that we proposed more restrictions than we have
set in past ABT programs.  However, we do not agree that we are required by precedent to
extend the existing ABT provisions to 2007 and later engines. While we understand the
manufacturers' desire for EPA to continue precedents set with the 2004 diesel engine
standards, we believe that each new ABT program must be considered in the context of the
standards with which it would associated. Nevertheless, in developing the final ABT
program, we did consider both the existing provisions and the many comments that we
received. In response to those comments, we have modified the ABT program that was
proposed to make  it more useful to manufacturers. We have  reduced the restrictions as
much as possible without compromising the goals of this rulemaking. We believe that the
final ABT program will provide the flexibility that the manufacturers have stated they will need
to comply with the  new standards.

       We proposed separate averaging sets during the phase-in period: one for engines
certified to the 2.5 g/bhp-hr NOx+NMHC standard, another for engines certified to the 0.20
g/bhp-hr NOx standard. We  did that primarily to achieve the goals of the phase-in, but
secondarily because of concerns related to the inherent difference between NOx+NMHC
credits and NOx credits. After reconsidering the entire ABT program, we now believe that we
should allow manufacturers to transfer credits across these averaging sets, with some
restrictions.  Under the  final regulations, manufacturers could use credits generated during
the phase-out of engines subject to the 2.5 g/bhp-hr NOx+NMHC standard to comply with the
0.20  g/bhp-hr NOx standard,  but these credits will be subject to a 20 percent discount. (Each
gram of NOx+NMHC credits from the phase-out engines would be worth 0.8 grams of NOx

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credits in the new ABT program.) This discount reflects the fact that the change from our
proposed ABT program provides manufacturers with substantial flexibility in meeting the
standards. The flexibility will allow manufacturers to reduce fleetwide emissions more than
would have been possible with the proposed program.  Manufacturers will be able to reduce
emissions for a substantial percentage of their production, reflecting the use of low-NOx
technologies, without being required to produce a full 50 percent of their production with NOx
emissions at or below 0.20 g/bhp-hr. This will give manufacturers a greater opportunity to
gain experience with the low-NOx technologies before they are required to meet the final
standards across their full production.

       We recognize that NOx+NMHC credits are not the same as NOx-only credits.
However, we are less concerned about the differences now because of the low NMHC levels
that are expected from 2004-2006 diesel engines (probably about one-tenth of the expected
NOx levels) and because of the 20 percent discount that would be applied to the credits if
they are transferred into the new NOx ABT program.

       More specifically, there are three areas affecting the environmental integrity of the
program which support the inclusion of the 20 percent discount in the provisions for
converting NOx+NMHC credits to NOx credits. First, the discounting addresses the fact that
NMHC reductions can provide substantial NOx+NMHC credits, which are then treated as
though they were NOx credits. For example, a 2006 model year engine emitting at 2.2
g/bhp-hr NOx and 0.3 g/bhp-hr NMHC meets the 2.5 g/bhp-hr NOx+NMHC standard in that
year, but gains no credits.  In 2007, that engine, equipped with a PM trap to meet the new PM
standard, will have very low NMHC emissions because of the trap, an emission reduction
already accounted for in our assessment of the air quality benefit of this program. As a
result, without substantially redesigning the  engine to reduce NOx or NMHC, the
manufacturer can garner a windfall of nearly 0.3 g/bhp-hr of NOx+NMHC credit for each of
these engines produced. (Engines designed at lower NOx levels than this in 2006 can gain
even more credits.) Allowing these NMHC-derived credits to be used undiscounted to offset
NOx emissions on the phase-in engines in 2007 (for which each 0.1 g/bhp-hr of margin can
make a huge difference in facilitating the design of engines to meet the 0.20 g/bhp-hr NOx
standard) would be inappropriate.  Similar arguments apply to the discounting of banked
diesel NOx+NMHC credits and of gasoline engine NOx+NMHC credits.

       Second, the more flexible ABT program being adopted in the final rule, by allowing
emission reductions from one engine to offset increased emissions on another, possibly very
different, engine, introduces uncertainty on a number of fronts with regard to whether that
offset is truly balanced.  For example, to facilitate the phase-in to the new standards, we
allow the use of credits generated from large engine to show compliance on smaller engines
during the phase-in years, or vice-versa.  Uncertainty is also introduced in the transferring of
credits from one technology regime such as EGR-based control, to another regime such as
control based on exhaust emission control devices, especially considering the
order-of-magnitude change in emission levels involved.  In addition, the allowance for
gasoline vehicle credits to be used on gasoline engines introduces uncertainty with respect to
differences in such key items as test procedures, vehicle loadings, typical vehicle sizes, and
in-use emissions control programs.  These uncertainties cannot be removed simply through
the development of accurate credit adjustment factors, because there are too many
variables and unknowns. One alternative in dealing with these uncertainties would be to
restrict credit usage only to closely matched engine configurations.  Instead, we believe that
the flat 20 percent discount factor is the appropriate means of providing the enhanced ABT

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program flexibility in the final rule without adding undue calculational and tracking complexity,
or making the environmental benefit of the overall program uncertain.

       Third, the discounting works toward providing a net environmental benefit from the
ABT program, such that the more that manufacturers use banked and averaged credits, the
greater the potential emission reductions overall.  This is a critical element of the legal
justification of the program. Under Section 202(A)(3) of the Clean Air Act, our standards
must "reflect the greatest degree of emission reduction achievable through the application of
technology which the Administrator determines will be available for the model year to which
such standards apply, giving appropriate consideration to cost, energy, and safety factors
associated with the application of such technology." The revisions to the ABT program in the
FRM provide considerable flexibility for manufacturers. To the extent it is used, this flexibility
allows  manufacturers to obtain lower fleet average emissions than would have been possible
under the proposed ABT program.  The 20 percent discount ensures that EPA is meeting its
requirement  to promulgate standards that "reflect the greatest degree  of emission reduction
achievable".

       See also response to comment 7.2.3(A).

              Issue  7.2.3:  Banking

(A)    Opposes the proposed restrictions on the use of credits generated in model
       years prior to 2007.

       (1)     The banking program is intended to be used to ease the  transition to new,
              more-stringent standards.  EPA's proposal to prohibit the use of credits
              generated by engines meeting the 2006 or earlier standards for use on
              engines certifying to the 2007 standards contradicts this intention. The
              proposed restrictions also  remove any ABT incentive for  manufacturers to
              introduce any new technology to reduce emissions below the standard(s)
              during the 2004-2006 time period and actually would encourage the
              production and sale of higher-emitting engines in that time frame or order to
              use up any credits they have generated. EPA's proposed restrictions reneges
              on EPA's guarantee provided in the existing regulatory language that states
              "NOX plus NMHC and PM credits from diesel cycle HDE families do not
              expire" (Section 86.004-15(f)(2)).  EPA cannot retroactively change the rules
              under which manufacturers have operated and to do so would deprive the
              manufacturer of property without due process.

              Letters:

              Cummins, Inc.  (IV-D-231) p. 46-48, 55
              Detroit Diesel Corporation (IV-D-276) p. 17-19
              Engine Manufacturers Association  (IV-D-251) p. 68-69
              International Truck & Engine Corp. (IV-D-257) p. 17-19

       (2)     EPA has engaged in an illegal and unconstitutional taking of engine
              manufacturers' property and other rights by eliminating the life of averaging,
              banking and trading credits which were guaranteed by EPA not to expire in its
              prior rulemaking on the 2004 standards.

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              Letters:

              Engine Manufacturers Association (IV-D-251) p. 86

       (3)     EPA's proposal to allow the use of banked NOX and NMHC credits that are
              "generated from engines that meet all of the stricter standards early" is
              meaningless because manufacturers could not design engines to meet the
              proposed NOX standard without the availability of low sulfur diesel which will
              not occur until 2006.  In addition, EPA's apparent concern that the ABT
              credits could result in delayed application of the NOX adsorber is unfounded.
              ABT credits will help assure the success of the NOX adsorber during its in-use
              maturation period.

              Letters:

              Detroit Diesel Corporation  (IV-D-276) p. 17-19
              International Truck & Engine Corp. (IV-D-257) p. 18

       (4)     EPA's proposal also creates fairness problems because NOX and NMHC
              credits generated and banked before 2007 will be completely useless after
              2010.  There will be no market for those credits since all new HDEs would be
              certified to the NOX standard at that time.  These credits should not be
              effectively eliminated simply because the standards become more stringent.

              Letters:

              International Truck & Engine Corp. (IV-D-257) p. 18

       (5)     To allow manufacturers to generate early credits, EPA should permit credits
              generated against the "2004" standards to be carried over and used in the
              "2007" standards program and should permit early certification of low emitting
              engines to the 2007 standards using the low sulfur fuel being proposed in this
              rule.  Early credits generation  programs serve as important voluntary
              programs under which a manufacturer can introduce low-emitting engines
              earlier than  required and would be particularly beneficial to manufacturers in
              the context of the stringent "2007" standards.  Credits developed during the
              "2004" program should not be restricted from use in later years (i.e. as "early
              reductions"  under the proposed rule).  This restriction would essentially
              remove the  incentive for early engine introductions. Trades between the
              "2004" program engine families and the "2007" program engines would
              provide a net benefit to the environment if the credits are referenced to the
              standard under which they are generated.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 81-82

       (6)     Any delays in the introduction  of advanced NOX aftertreatment controls as a
              result  of allowing credits to be traded between the "2004" and "2007"
              programs will be limited since  the "2007" standards are so low as compared

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              to the "2004" standards. The sales of just a few engines certified at "2004"
              standards when the "2007" standards are in effect would require an extremely
              large number of credits to be used.  Because the proposed standards are 90
              percent lower than the "2004" standards, the manufacturer would have to use
              credits representing overachievement of the standard by 90 percent for each
              vehicle sold without advanced NOX control equipment. In addition,  receiving
              an early emission reduction that is ten times the later offsetting overage is a
              definite benefit to the environment. Such trades will result in large overall
              reductions in emission and an improvement in air quality compared to a
              scenario where there is no cross-program trading allowed.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 83

       Response to Comment 7.2.3(A):

       We have revised the ABT program in the  final rule in response to comments. We
have decided to allow the unlimited use of banked PM credits.  After considering the
comments, we  believe that the PEL cap for PM, being adopted in the final rule as proposed,
is sufficient to address our concerns over the use of banked PM credits. We have also
decided to allow the use of banked NOx+NMHC  credits generated from engines certified to
the 2.5 g/bhp-hr NOx+NMHC standard for engines subject to later standards.  However, we
do not agree with the comments suggesting that such use should be unlimited for
NOx+NMHC credits. We believe that it is necessary to discount the credits by 20 percent
when they are converted to NOx credits for the new program, for reasons discussed above in
the response to 7.2.2(A).

       We also believe that it is necessary to set an upper bound on the number of
higher-emitting engines on which a manufacturer could use such banked NOx+NMHC credits
to demonstrate compliance with the 0.20  g/bhp-hr NOx standard during any one model year.
The upper limit is ten percent of the manufacturer's U.S.-directed annual production of
engines certifying with NOx FELs above 0.50 g/bhp-hr. This limit is necessary to prevent
manufacturers from loading up credits from engines designed to the relatively much less
stringent 2004 model year standards, and thus delaying their compliance with the new
standards by using a large number of banked credits into the first year of the phase-in (or
longer). This kind of delay would be contrary to the goals of the phase-in, which is designed
to facilitate the transition to high-efficiency NOx technologies when low-sulfur fuel becomes
widely available.

       During the critical phase-in years, the 10 percent restriction actually corresponds to
20 percent of the  phase-in engine production, because the phase-in requirement is 50
percent of total production. Because the  NOx PEL cap in these years is 2.0 g/bhp-hr, these
engines can actually emit at levels nowhere near the new standard, and thus are not likely to
contribute to the goal of the phase-in (facilitating the introduction of the new technology).
Furthermore, the  10 percent restriction must be viewed in the context of the averaging
provisions of the ABT  program.  The 90 percent of total production that must be certified
without the use of banked credits consists of 40 percent certified to the new 0.20 g/bhp-hr
NOx standard and 50  percent certified to  the 2.5 g/bhp-hr "phase-out" standard. However,
emissions from these engines can be averaged.  A looser restriction on the use of banked

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DECEMBER 21, 2000	PAGE 7-11

credits, say 20 percent, would heavily skew the balance toward the high-emitting end,
allowing the mix of new and old technology engines to shift from a fairly balanced 40-50 ratio
to a 30-70 ratio (the 70 percent consists of 20 percent at 2.0 g/bhp-hr NOx via banked credits
plus 50 percent at 2.5 g/bhp-hr NMHC+NOx via the phase-out schedule). Considering the
ABT program averaging opportunity, the confidence of broad new technology introduction
becomes even more diminished and uncertain because of the relatively small percentage of
"credit-using" engines needing to demonstrate compliance with the new NOx standard.
Given enough banked credits, this technology delay could drag out through at least 2009.
We believe that this restricted allowance does ensure that banked NOx+NMHC credits will
continue to have value when the new standards go into effect, thus addressing the
manufacturers concerns, while at the same time not jeopardizing the environmental benefits
of the program.

       We disagree with comments that restrictions on  the banking of credits deprives
manufacturers of property rights.  The ABT program does not create any property rights. It is
a regulatory program that can be changed through normal notice-and-comments procedures.
The only guarantee in a regulation is the guarantee that the regulation will not be changed
other than through notice-and-comment rulemaking.   EPA has engaged in such rulemaking
to revise the program.  Nor is this change at all "retroactive." The provisions to which
manufacturers object do not even take affect until the 2007 model year, at least five years
from today.

       Finally, EPA understands that the majority of engines built prior to model year 2007
will not be designed to meet the more stringent standard especially given the relative
unavailability of low-sulfur fuel. However, EPA believes that some engines  may be designed
to the more stringent standards early in order to meet particular customer needs, for
example, if a centrally-fueled fleet were using low-sulfur fuel for its heavy-duty engines and
wished to use early-complying engines. We believe that the population of engines meeting
the 2007 model year standards early will increase as we approach the date when the
requirements for low sulfur diesel fuel become effective.
(B)    Supports the elimination of discounts and the limitations on credit life.

       (1)     EPA should retain the practice of not discounting credits and placing no limits
              on credits life. This increases flexibility and encourages the development and
              use of low-emission technology earlier than would otherwise be required.
              However, in this context, commenters reiterated their concern regarding the
              limitations associated with credits generated prior to 2007 and recommended
              that this limitation be eliminated.

              Letters:

              Cummins, Inc.  (IV-D-231) p. 49
              Engine Manufacturers Association (IV-D-251) p. 70

       Response to Comment 7.2.3(6):

       See responses to comments 7.2.2(A) and 7.2.3(A).

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 7-12

              Issue 7.2.4: Other ABT Issues

(A)    Opposes the proposed prohibition on credit exchanges between phase-in and
       phase-out engines during the optional NOX phase-in period.

       (1)     EPA's proposed restriction removes flexibility without providing any
              environmental benefits. The concerns that such flexibilities could be used to
              delay the introduction of the NOX aftertreatment technology are completely
              unfounded and unsupported by any data or analysis.  EPA has always set
              upper limit caps on the use of credits at the previous emission limit, which
              would serve to assure that existing  engine performance is not degraded
              because of ABT credits. Commenters support this approach and note that
              having this type of ABT flexibility available to manufacturers will provide the
              necessary additional time to refine the technology needed to achieve
              optimum emission control but would prevent delayed introduction of NOX
              aftertreatment technology. EPA should  design an ABT program that allows
              full credit exchange among engine families meeting pre-lnterim, Interim and
              Final standards.

              Letters:

              Cummins, Inc. (IV-D-231) p. 48
              Engine Manufacturers Association  (IV-D-251)  p. 69-70

       Response to Comment 7.2.4(A):

       We have revised our ABT program in response to these commenters' concerns. See
response to comments 7.2.2 (A) and 7.2.1 (B).

(B)    EPA's ABT program will not lead to significant emission reductions in the long
       term.

       (1)     Having scores of different, somewhat arbitrarily established engine FELs
              does not lend itself to a program to  encourage  states and others to promote
              or to require the use of ultra-clean engines if they are available.  An ABT
              program is a regulatory compliance strategy for meeting the standards that
              may result in lower emissions in the early years of the program, only to be
              offset by higher emissions in the later years and could delay the introduction
              of new technologies.  EPA should not extend the ABT program beyond 2006.

              Letters:

              Manufacturers of Emission Controls Association  (IV-D-267) p. 10

       Response to Comment 7.2.4(B):

       We believe that the ABT program is an  important part of the entire program being
established in this action.  Its primary purpose is not to provide additional emission
reductions, but to provide flexibility to manufacturers, and thus to enhance the
cost-effectiveness and feasibility of the new standards across a manufacturers entire product

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DECEMBER 21, 2000	PAGE 7-13

line.  Nevertheless, we believe the discounts  being established will likely provide some small
but significant emission reductions.

(C)    Opposes an ABT program for mobile sources.

       (1)     However, if the program were modified in a way that rewarded significant
              improvements rather than modest incremental adjustments that can
              encourage gaming, the program would be more attractive and more likely to
              result in stimulating the introduction of significant advances. California has
              adopted an approach that rewards emissions levels that are 50 percent lower
              than the existing standard; this approach appears to be one that EPA should
              emulate.

              Letters:

              STAPPA/ALAPCO (IV-D-295) p. 24-25

       Response to Comment 7.2.4(C):

       We disagree. We believe that the ABT program is an important consideration in  our
determination that the new standards will be feasible. Our ABT program allows us to lower
emission standards and achieve greater emission reductions than would be possible
otherwise because ABT reduces the costs and improves the ability of manufacturers to .
Therefore, we proposed to continue the basic structure  of the existing ABT program for
heavy-duty engines.  Nevertheless, we have modified the program so that it will provide a net
environmental benefit and encourage the early introduction of the newer technologies.

(D)    Trading between engines and vehicles should be allowed.

       (1)     The restriction to prohibit trading credits between vehicles and engines is
              unnecessary since credits are already traded between  engines, even though
              some of these engines are used in complete vehicles.  Trading credits
              between engine-certified and  chassis-certified engine families should
              continue to be allowed. This would provide increased flexibility by allowing
              manufacturers to minimize the costs of achieving the desired  emission
              reductions and focus their redesign efforts in a model by model basis over a
              period of several years instead of attempting to redesign all their HD engines
              in a single year. In addition, the number of engines that will be certified on an
              engine dynamometer will be extremely limited and most of the Otto-cycle
              engines will  be complete vehicles. Any  environmental  benefit from this
              restriction is far outweighed by the additional cost and inconvenience
              imposed on  manufacturers. EPA should propose an exchange rate to allow
              trading between engines and  vehicles even if it is only a default worst-case
              value that can be modified upon an adequate demonstration by the
              manufacturer.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p.  80-81

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       (2)     EPA has stated in the context of the 2004 standards, that trading between
              engine-certified and vehicle-certified families is not necessary since the
              "2004" standards are technically feasible. However, the technology forcing
              "2007" standards being proposed in this rulemaking represent a very different
              situation since it is unclear whether EPA's 90 percent reduction in NOX
              emissions is even achievable. EPA should maximize the flexibility for
              manufacturers by allowing trading between engine-certified and vehicle-
              certified families, particularly since it would not have an adverse impact on the
              environment.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 81

       Response to Comment 7.2.4(D):

       We are making changes to the ABT programs for heavy-duty gasoline engines and
vehicles.  One of the important changes is that we will allow exchange of credits from the
chassis-certified vehicles to engines (and vice versa), subject  to a 20 percent discount. We
believe that this discount addresses our concerns about the uncertainty in converting
between g/mi standards and g/bhp-hr standards.  We do not believe that the fraction of the
standard approach recommended by General Motors/lsuzu would have addressed this
fundamental  uncertainty.  We will also allow NOX+NMHC credits from gasoline  engines
certified to the combined standards (including banked credits) to be used in either of the
NOx-only ABT programs (for engines and for vehicles), also subject to the 20 percent
discount. We have decided to not apply this discount for banked or averaged gasoline
vehicle credits used within the vehicle ABT program. The existing vehicle ABT program is
already a NOx-only program that uses consistent g/mile standards.  In addition, the new
emission standards for gasoline vehicles are not expected to require fundamentally new
technologies. Thus the reasons that we are applying the discounts in the other cases do not
apply for NOX credits exchanged between complete gasoline vehicles.

(E)    Opposes EPA's alternative proposal to allow credits to be generated from pre-
       interim standard engines below some threshold emission level and used for
       engines complying  with the interim standards.

       (1)     Credits earned by reducing emissions from pre-lnterim standard engines by
              any amount should be fully applicable to Interim and later compliant engines.
              Setting thresholds and applying the deep discounts that a threshold approach
              involves, discourages the early application of emission control technology -
              especially technology that cannot achieve the threshold level. ABT programs
              are intended to provide compliance flexibility and encourage the early use of
              emission control technology - not to provide a direct emission benefit through
              discounting or credit expiration schemes.

              Letters:

              Cummins, Inc.  (IV-D-231) p. 48-49

       Response to Comment 7.2.4(E):

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 7-15

       See above response to comment 7.2.3(A).

(F)     Expresses general support for EPA's proposed ABT program.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              National Automobile Dealers Association  (IV-D-280) p. 3

       Response to Comment 7.2.4(F):

       See above response to comment 7.2.4(C).

(G)    Supports the approach to allow manufacturers to certify vehicles before the
       implementation date to preserve the ability to produce 2006 vehicles during
       2007.

       (1)     EPA's "pull ahead" approach used under the recent Tier 2 rule where a
              manufacturer certifying a 2007 level vehicle in 2006 could then produce one
              vehicle in 2007 that meets only the 2006 standards, should be adopted.  In
              this context, EPA should encourage early adoption of biodiesel for gaining
              additional pull ahead credits, if applicable.

              Letters:

              National Biodiesel Board (IV-D-288) p. 3

       Response to Comment 7.2.4(G):

       We agree with this comment in that we are finalizing a pull ahead provision very
similar to that finalized in our Tier 2 rule.  This provision is discussed in detail in section III.D
of the preamble to this rule.  Under this provision, manufacturers can take credit for diesel
engines certified to the Phase 2 standards prior to the 2007 model year (prior to the 2008
model year for gasoline engines or vehicles) in exchange for making fewer diesel engines
certified to these standards in or after the 2007 model year (2008 for gasoline engines or
vehicles).  In other words, a clean engine sold earlier than required displaces the requirement
to sell a similar engine later. For diesel-fueled engines to earn this early introduction credit,
they would likely need to ensure that low sulfur diesel fuel would be used. This may not be
easy given that the low sulfur fuel requirement does not begin until mid-2006.  To the extent
that biodiesel can play a role in facilitating use of the early introduction provision, EPA is
supportive because we believe the early introduction credit provisions are good for air quality.

(H)    Recommends ABT Program be consistent with HD gasoline vehicle standards,
       in order to encourage the use of the  most advanced  emission control
       technology.

       (1)     EPA should verify calculated credits with actual production quantities.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 7-16
              CA Air Resources Board (IV-D-203) p. 7

       Response to Comment 7.2.4(H):

       We believe that our program is consistent. We do verify credits at the end of the year
based on actual production quantities.

(I)     Supports a provision in the ABT program to allow for additional credits to be
       generated from the introduction  of extra clean models.

       (1)     Manufacturers may wish to use PuriNOx fuel as part of a total system to
              generate ABT program credits. Including such fuel-use credits within the
              proposed ABT program could provide a very powerful incentive leading to
              large cost-effective emission reductions well in advance of the proposed
              effective dates.

              Letters:

              Lubrizol Corporation (IV-G-49), p. 5-7

       Response to Comment 7.2.4(1):

       We are finalizing a provision granting extra credits for vehicles certifying to levels
below the standards prior to 2007.  Beginning in 2007, manufacturers certifying to levels
lower than the standards may take advantage of our ABT program to obtain credits for such
engines.


       Issue 7.3:  Chassis Certification

(A)    EPA should require chassis-based certification for all heavy-duty complete
       vehicles, including diesel.

       (1)     Chassis certification will support the expansion  of state efforts to conduct
              heavy-duty diesel inspection and maintenance programs. Without chassis-
              based standards, the development of emissions standards for in-use testing
              will be more difficult to establish.

              Letters:

              CA Air Resources Board (IV-D-203) p. 6
              Consumer Policy Institute (IV-D-186) p. 7
              NESCAUM (IV-D-315)p. 11

       Response to Comment 7.3(A):

       We did not propose to subject complete heavy-duty diesel vehicles to chassis-based
standards, although the  proposal requested comment on the possibility of allowing or
requiring chassis certification.  We agree with the commenters that there could be significant

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 7-17

advantages associated with certifying diesel vehicles based on a chassis test, and we are
allowing diesel-fueled engines below 14,000 pounds to certify to the chassis standards.
However, we do not have sufficient information at this time to conclude that requiring such
chassis-based testing for all complete diesel vehicles would be appropriate at this time, given
the considerable burdens such a change would impose on manufacturers.

       Issue 7.4:  Test Procedures

              Issue 7.4.1:  Regeneration

(A)    EPA should eliminate special provisions for intermittently regenerating
       aftertreatment devices.

       (1)     EPA has proposed in section 86.1337-07(d) special provisions for
              aftertreatment devices that are intermittently regenerated. However, EPA's
              proposal is unclear, unworkable, and not representative of emissions  from
              such devices. EPA should adopt an appropriate definition of "intermittently
              regenerating aftertreatment device" which  should make clear that the
              desulfation of a NOX adsorber would not cause a NOX adsorber to be
              classified as an intermittently regenerating device. The proposed language is
              unclear as to whether the engine must  be shut off and restarted during repeat
              hot cycles and there is no indication of  how long the soak period should be.
              EPA should adopt a single procedure for engines with aftertreatment devices.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 74-75

       Response to Comment 7.4.1(A)(1):

       Discrete regeneration events can be important because it is possible for exhaust
emissions to increase during the regeneration process. The regeneration of a NOX adsorber
for instance, could result in increased particulates, NMHC and NOX due to the rich exhaust
gas required to purge and reduce the NOX.  We expect that in most cases, the NOX
regeneration events would be sufficiently frequent to be included in the measured emissions.
Our feasibility analysis projects very frequent regeneration of the NOX adsorbers, and
continuously regenerating PM traps. Nevertheless, this issue becomes a regulatory  concern
because it is also conceivable that these emission storage devices could be designed in such
a way that a regeneration event would not necessarily  occur over the course of a single
heavy-duty  FTP cycle, and thus be  unmeasured by the current test procedure.  Since these
regeneration events could produce  increased emissions during the regeneration process, it
will be important to make sure that regeneration is captured as part of the certification testing.
However, we agree with the manufacturers that it could be impractical to require that  the
transient FTP be repeated until a regeneration occurs.  Thus, we are not finalizing that
provision. We now believe that it would be more appropriate to require manufacturers to use
a mathematical adjustment of measured emissions to account for increased emissions
during infrequent regeneration or desulfurization events.  We would expect that these
regeneration events would be controlled by the engine computer, and would thus be
generally predictable. This will allow for a relatively simple regeneration factor.  This
regeneration factor will be applied in a manner similar to manner in which deterioration

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 7-18

factors are already used. This will not be a significant burden to the manufacturers.

       (2)     In their provisions for aftertreatment devices, EPA should make clear that the
              proposed supplemental emission test and limit requirements - including NTEs
              and  MAELs - do not apply during regeneration.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 75

       Response to Comment 7.4.KAH2):

       See response to comment 7.4.3(D).

(B)    EPA's proposal for addressing regeneration emissions is unacceptable.

       (1)     EPA's proposal for addressing regeneration emissions oversimplifies the
              variety of regeneration processes that might occur. Even if all regeneration
              processes fit into this simple paradigm, there would still be many procedural
              details to develop such as whether the engine is to be shut off and then
              restarted during repeat hot cycle, how to establish the length of the soak
              period after the engine is shut off and restarted, and what to do if the
              regeneration is not complete at the end of the cycle. EPA's approach
              overstates the real impact of any regeneration events that would occur. Using
              the highest emission levels among the numerous repeat hot cycles would not
              provide representative results. In addition, EPA's proposal would add
              significant costs to every emissions test and would increase variability  in the
              test  results since testing costs would not be contained due to the possibility of
              numerous cycles before a regeneration event occurs.

              Letters:

              Cummins, Inc. (IV-D-231) p. 30-31

       Response to Comment 7.4.KB):

       See response to comment 7.4.1 (A)(1).

              Issue 7.4.2: OBD

(A)    Supports including OBD requirements as part of engine/vehicle certification
       requirements.

       (1)     Commenters provided no further supporting information or detailed analysis.
              This comment was made by approximately 6,700 private citizens.

              Letters:

              Acoff, Jeffrey, et. al. (IV-G-11)
              American Lung Association of Colorado (IV-D-54)

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 7-19

             American Lung Association of Los Angeles (IV-D-47)
             American Lung Association of Metropolitan Chicago (IV-D-237) p. 1
             American Lung Association of NJ  (IV-D-224) p. 2
             American Lung Association of OR (IV-D-165) p. 1
             American Lung Association of Orange County (CA) (IV-D-176) p. 1
             Arab Community Center for Economic and Social Services (IV-D-112) p. 1
             Asamoah, Nikiya (IV-D-09)
             Bagnarol-Reyes, Carolina, et. al. (IV-G-24)
             Braun, Carl and Norma (IV-D-69)
             Center for Environmental Health (IV-D-89) p. 1
             Children's Environmental Health Network  (IV-D-244) p. 4
             Clean Air Agency (IV-D-207) p. 2
             Clean Air Network  (IV-D-292) p. 2
             Coalition for Sensible Energy, The (IV-D-264) p. 1
             Connor, Thomas, et. al. (IV-D-132)
             DE Nature Society  (IV-D-285) p. 1
             Davidson, Karin, et. al.  (IV-D-79)
             Dickson, Victoria, et. al. (IV-D-77)
             Dolman, Suzanne,  et. al. (IV-D-341)
             Downtown Community Association  (IV-D-118) p. 2
             Environmental Health Watch  (IV-D-212) p. 1
             Fleming, Scott, et. al. (IV-D-13)
             Franczyk, Catherine A., et. al. (IV-D-233)
             GA Forest Watch (IV-D-67) p. 1
             Grand Canyon Trust (IV-D-317) p. 2
             Higginson, Norman, et. al. (IV-D-196)
             Hirschi, Alexander  (IV-D-07)
             Hoosier Environmental Council  (IV-D-281) p. 1
             Hyatt, Robert E.  (IV-D-94)
             Kachik, Thomas (IV-D-11)
             Legal Environmental Assistance Foundation  (IV-D-126) p. 1
             Landfall Productions, Inc. (IV-D-27)
             Lichtman, Elijah  (IV-D-08)
             Lind, Karen, et.  al.  (IV-D-121)
             MO Coalition for the Environment  (IV-D-235) p. 1
             Montgomery, Jack, et.  al. (IV-D-78)
             Mothers for Clean Air (IV-D-95)
             NC Waste Awareness  and Reduction Network (IV-D-51) p. 2
             NJ PIRG (IV-F-116)p. 314
             NY DEC (IV-F-52)
             NYC Council (IV-F-80)
             Natural Resources  Defense Council  (IV-F-75)
             Nerode, Gregory, et. al. (IV-D-04)
             Northwest District Association (IV-D-117)  p. 2
             OH Environmental  Council  (IV-D-130) p. 2
             OR Toxics Alliance (IV-D-175) p. 2
             Private citizen (IV-D-12)
             Riggles, Ruth, et. al. (IV-D-102)
             Rock, Steve, et. al.  (IV-G-22)

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DECEMBER 21, 2000	PAGE 7-20

              Rodriguez, Dolores, et. al.  (IV-D-91)
              Rutherford, Jolene, et. al. (IV-D-347)
              Schmitz, Randy, et. al. (IV-D-46)
              Sierra Club, GA Chapter (IV-D-348) p. 1
              Sierra Club, Lone Star Chapter (IV-D-287) p. 2
              Sierra Club, PA Chapter (IV-D-197) p. 2, (IV-D-204) p. 1
              Smith, Curt, et. al. (IV-D-49)
              Southern Queens Park Association, Inc.  (IV-D-36) p. 1
              Toxics Action Center (IV-G-02)
              Tseng, Joyce, et. al. (IV-D-03)
              Unity Center (IV-D-75) p. 2
              Varsbergs, Krista, et. al.  (IV-D-38)
              Wilderness Society  (IV-F-117) p. 217
              Zweig, Robert (IV-D-30)

       (2)     OBD systems help ensure  continued compliance with emission standards
              during in-use operation and help mechanics to diagnose properly and to
              repair malfunctioning vehicles while minimizing the associated time and effort.

              Letters:

              American Lung Association (IV-D-270) p. 29-30
              International Center for Technology Assessment (IV-D-313) p. 3

       (3)     As the new standards are expected to require the introduction of advanced
              technologies that have not yet been used on heavy-duty vehicles and
              engines, the OBD requirements for these systems must be designed to
              address all critical components, the failure of which could result in significant
              increases in emissions. To the extent that it is possible to include sensors
              that can identify potential performance problems, such as filter plugging,
              these should be included.

              Letters:

              STAPPA/ALAPCO (IV-D-295) p.  25-26

       (4)     OBD systems play an important role in helping to identify excessive in-use
              emissions and improve operating efficiency. EPA should implement an
              appropriate OBD mandate for vehicles above 14,000 Ibs GVWR. A
              regulatory proposal with such a mandate should be issued  soon and should
              include an implementation  schedule identical to what is ultimately required  in
              the HDE proposed rule.

              Letters:

              National Automobile Dealers Association (IV-D-280) p. 4

       Response to Comment 7.4.2(A):

       The agency agrees with commenters regarding the need to include OBD

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requirements as part of the engine/vehicle certification requirements.  We also agree with the
comments regarding OBD's in-use capabilities. Test programs conducted by EPA related to
implementing OBD checks in Inspection and Maintenance (I/M) Programs along with
feedback from external stakeholders have verified these capabilities.

       As for applying OBD technology to the new diesel emission control technologies
expected from this rule, the agency anticipates that much of the added technology used to
comply with the emission standards will require additional sensors and computing power
solely to ensure their proper operation.  We expect the OBD system, which is primarily the
computer software that diagnoses component condition based on the output signals of
various sensors and actuators, will make use of these new sensors and actuators along with
appropriate diagnostic software to carry out the diagnostic functions. Therefore, we fully
expect that the existing OBD requirements  will adequately address advanced technologies
for <14,000 pound vehicles and engines.

       As for OBD requirements on >14,000 pound vehicles, as discussed in the proposal
for the Phase 1 rule (See 64 FR 58515), we intend to pursue under separate rulemaking
actions a means of appropriately addressing OBD for >14,000 pounds, and we do not rule
out the possibility that these provisions could  be implemented by model year 2007 or earlier.

(B)    The multipliers that were finalized in the 2004 HD rule should be reviewed for
       OBD compliance in the context of the proposed emission standards.

       (1)    The delay in finalizing the 2004 HD rule has not allowed enough time to
             thoroughly review the issues associated with OBD. The combination of these
             multipliers with the proposed low standards will not allow a feasible threshold
             and will result in an increase in "false mils."  Since the 2004 HD rule has a
             combined standard for NOX and NMHC and the 2007 proposal is for separate
             standards, there will be an added workload for manufacturers. OBD systems
             will need to be redesigned and reprogrammed for the 2007 MY, and with the
             OBD phase-in schedule in 2005/06/07, there is no stability period for the OBD
             system.  EPA should harmonize all OBD issues with the CARB OBD II
             program.

             Letters:

             DaimlerChrysler  (IV-D-284) p. 11

       Response to Comment 7.4.2(6):

       We believe that the malfunction thresholds established in the Phase 1 rule are
feasible and appropriate for Phase 2 vehicles and engines below 14,000 pounds  for several
reasons.  For gasoline vehicles, the OBD requirements are essentially equivalent to the
already existing California OBD II requirements.  Further, light-duty Tier 2 vehicles will need
to design OBD systems to detect malfunctions at emission levels well below those required
of Phase 2 gasoline vehicles and engines.  We foresee no unique aspects of heavy-duty
gasoline OBD systems relative to the Tier 2 OBD systems or the California OBD systems.
Manufacturers will use the same engine control hardware that already exists on their heavy-
duty gasoline vehicles and apply diagnostic algorithms similar to those already being used on
California OBD systems and those that will be used for federal OBD systems  as a result of

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the Phase 1  rule (Note: the Phase 1  rule required OBD on federal heavy-duty gasoline and
diesel vehicles up to 14,000 pounds; See 65 FR 59896, October 6, 2000). As emission
standards get more stringent in the context of the Phase 2 rule, so do the OBD malfunction
thresholds given their direct relationship to standards. Therefore, OBD diagnostic algorithms
for those OBD monitors having an emission malfunction threshold will  have to be adjusted as
will most engine and emission control system calibrations.  However, most OBD monitors are
not tied to emissions and are instead based solely on rationality and functionality checks.
Such monitors will not need to be changed  for Phase 2 gasoline vehicles.

       As for diesel OBD, the requirements are, again,  essentially equivalent to the existing
California OBD II requirements for diesels, with the exception of exhaust emission control
monitoring. As for these latter monitors, the federal OBD requirements are more stringent,
but we believe that California will soon have similar OBD requirements for diesel exhaust
emission control monitoring. We did not expect Phase 1 engines to be equipped with
exhaust emission controls,  but we do expect Phase 2 engines will be.  Further, those exhaust
emission control devices are expected to account for over 90 percent of the emission control
on Phase 2 engines.  Similar to the rationale for gasoline engines and  vehicles, we do not
believe it would be appropriate to have an emission control system responsible for over 90
percent of control without having appropriate diagnostics to ensure its  continued performance
during in-use operation.

       Commenters have questioned the feasibility of the OBD thresholds for Phase 2 diesel
engines.  However, most of the required monitors need not be monitored against any
emission threshold and are, instead, simply rationality and functionality checks. Such
diagnostics are independent of the emission level to which an engine is certified. Therefore,
such diagnostics will work equally  well for Phase 1  and for Phase 2 engines.  As for EGR
monitoring, which must be done to the 1.5x the standard threshold, this should not pose
serious problems given that gasoline engines are able to monitor EGR function to equivalent
1.5x the standard thresholds and the gasoline EGR monitoring approaches should readily
transfer to diesel applications.  Despite the  tight emission delta that must be detected,  0.1
g/bhp-hr  NOX on a 0.2 g/bhp-hr NOX engine, that level represents fully 50 percent of the
standard and loss of proper EGR flow capable of resulting in such a large emission increase
can be readily detected using temperature sensors, pressure sensors, or even NOX sensors.

       As for monitoring of the exhaust emission control devices, there is no requirement to
monitor diesel oxidation catalysts.  The PM trap need only be monitored  for catastrophic
failure, effectively a cracked PM trap with no backpressure or a severely  plugged PM trap
which, needless to say, would cause severe driveability problems for the vehicle owner. The
NOX adsorber remains as the only real feasibility issue in the context of the Phase 2
standards. We believe that NOX adsorbers can be  monitored using NOX  sensors that are
currently capable of detecting NOX emissions in the 100 ppm  range. A recent SAE paper
(Kato et.  al.,  1999) provides an in depth discussion of the accuracy,  repeatability, and
durability of an on-board NOX sensor, as well strategies for using the sensor for closed loop
control and OBD monitoring of an  active lean  NOX absorber.  In fact, the  EPA NOX adsorber
test program described in Chapter III of the final RIA uses these  NOX sensors for NOX
adsorber regeneration control. By making use of these sensors, an algorithm could be
readily developed to determine the functionality of the NOX adsorber itself with no additional
hardware.

       Lastly,  it is important to note that the OBD requirements require manufacturers to

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monitor emission related powertrain components and do not require monitoring of actual
regulated pollutant emissions. The possibility exists that future OBD could include the on-
board measurement of actual emission performance. We are following the development of a
number of emerging on-board emission measurement technologies which may lend
themselves to regulatory requirements in the future. These technologies include in-cylinder
measurement devices, on-board PM measurement devices, and predictive emission
measurement systems such as neural networks. Crank-angle resolved pressure  and/or
temperature measurements would allow for NOX emission prediction, based on the current
understanding of NOX formation. (Dodge, 1996) Piezo-electric and infrared pressure sensing
technologies are currently used to measure crank-angle resolved in-cylinder pressure.
Based on recent advances in sensor durability, EPA expects that future advances could allow
their use on-board.  Lastly, neural networks have recently demonstrated a technique for
accurately predicting emissions based solely on currently measured engine parameters. One
study (Atkinson, 1998) has shown excellent correlation between predicted NOX and PM
measurement with respect to actual emissions measurements.

       To conclude, we believe that through use of existing sensors and actuators and the
addition of new sensors such as NOX sensors for basic control of the emission control
system, in combination with the sophisticated control strategies and algorithms needed to
achieve the new emission standards, effective and feasible OBD systems will be enabled at
the emission levels required.

       Regarding the commenter's claim on stability, EPA did not propose to revise any of
the OBD requirements in this rule, so the proposal could not have created  any legal stability
issue. However, EPA recognizes that added OBD-related workload may result from the new
standards.  For several reasons, EPA has revised the OBD phase-in schedule. The new
schedule will remove any stability related issues by providing additional years of stability and
more closely aligning the phase-ins of the new standards and the OBD requirements.

       Commenters suggest that we commit to making changes to the OBD requirements
based on the outcome of future rulemaking efforts by the California Air Resources Board
(ARB). While we cannot make any such commitment, nor do we believe the commenter truly
would want us to commit to making changes solely because ARB made  changes, we do
intend to continue our normal practice of working closely with ARB and harmonizing our OBD
requirements where appropriate. Of course, any changes to our OBD requirements could
only  be done via rulemaking

References:
Kato, N., H. Kurachi, Y. Hamada: "Thick Film ZrO2 NOX Sensor for the Measurement of Low
NOX Concentration", SAE paper 980170, pp. 76-77, 1998.

Kato, N., N. Kokune, B. Lemire, T. Walde: "Long term stable NOX sensor with integrated in-
connector control electronics", SAE paper 1999-01-0202, March 1999; also, see
Memorandum to Air Docket A-98-32, from Todd Sherwood, Item IV-B-07, summarizing this
paper.

Dodge, L.G., D.M. Leone, D.W. Naegeli, D.W. Dickey, K.R. Swenson: "A PC-Based Model
for Predicting NOX Reductions in Diesel Engines," SAE paper 962060, p.149, 1996.

Atkinson, C., "Emissions Prediction forOn-Board Diagnostics and Engine Control", SAE

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TOPTEC presentation, "Diesel Technology for the New Millennium", April 21-22, 1998, Air
Docket A-98-32, item no. ll-D-02.

Chapter 3 of the final RIA for the Phase 1 rule contained in Air Docket A-98-32.

(C)    EPA should revise the proposed OBD requirements.

       (1)     EPA's proposed extensive OBD requirements may require revisions since
              EPA has not provided any analysis of the technological feasibility of meeting
              the OBD requirements in connection with the proposed 2007 standards. The
              current OBD requirements were developed based on the regulations used for
              light duty vehicles. These regulations can be transferred for application to HD
              diesel engines only if the emission control systems are similar and operate at
              similar efficiencies, which is not the case. The threshold values that an OBD
              system will be required to monitor are extremely small and manufacturers
              believe that it is unlikely such small emission perturbations can be measured
              in actual vehicle/engine operation. Even if the OBD system could monitor the
              emission control system accurately for HD engines and vehicles, it would not
              be desirable to set the OBD threshold so close to the standards.
              Measurement accuracy issues need to be resolved before the OBD  limits are
              finalized.  One commenter specifically noted that CARB plans to review the
              feasibility of monitoring at such low emission thresholds and will consider
              changes to their OBD II regulation pertaining to LEV II vehicles. This
              commenter recommended that EPA commit to making the necessary
              changes to the regulation based on the outcome of CARB's OBD II
              rulemaking effort.

              Letters:

              Cummins, Inc. (IV-D-231) p. 29-30
              Engine Manufacturers Association (IV-D-251) p. 72-73
              Ford Motor Company (IV-D-293) p. 8
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 80
              International Truck & Engine Corp. (IV-D-257) p. 31

       (2)     Vehicles over 14,000 GVWR should continue to be exempt from OBD
              requirements. While industry has not been informed as to the specific OBD
              requirements being considered, it is likely that they will be similar to those
              considered, but ultimately rejected as part of the "2004" rule.  Commenter
              cites to their letter as submitted in response to the "2004"  rule and reiterates
              their concerns associated with applying OBD to these HD vehicles.  The
              unique configurations of these heavier vehicles require the development of
              separate OBD algorithms and calibration parameters.  It may not be possible
              to develop reliable diagnostics that execute frequently under the broad range
              of conditions encountered by this vehicle category. HD vehicles are subject
              to huge variations in operating conditions (e.g. an empty vs. full dump truck)
              and it may be possible to calibrate a diagnostic to run when the truck is empty
              or full, but not both.  It is not cost-effective to develop unique OBD algorithms
              and calibrations for this type of HD vehicle since these vehicles have a
              tremendous number of configurations and most of these configurations have

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DECEMBER 21, 2000	PAGE 7-25

             very small sales volumes. Commenter provides significant discussion on this
             issue.

             Letters:

             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 77-79

       Response to Comment 7.4.2(C):

       Regarding OBD feasibility and EPA commitments based on the outcome of California
rulemaking efforts, please refer to our response to comment 7.4.2(B).

       Regarding OBD on >14,000 pound vehicles, please refer first to the response to
comment 7.4.2(A). Given that OBD requirements for >14,000 pound vehicles are not a part
of this rule, the issue is not appropriately addressed within its context.

(D)    EPA should promulgate OBD service and repair information at the same time as
       it promulgates OBD hardware requirements.

       (1)    EPA extends the provisions of 40 CFR 86.004-40 regarding the emissions
             performance of rebuilt engines and the liability, under section 203(a)(3) of the
             CAA to rebuilders if emissions performance after a rebuild does not meet the
             standards pursuant to which the vehicle was certified. In order to ensure that
             parts manufacturers and, subsequently, rebuilders can meet the standards
             set forth in the rule, commenter (Motor and Equipment Manufacturers
             Association and Heavy Duty Manufacturers Association) proposes that the
             anticipated rule to require OBD on HD vehicles also require that information
             necessary for the service and repair of vehicles equipped with OBD systems
             be made available to the  independent aftermarket at the same time  as these
             new OBD-equipped vehicles are sold to consumers.  HD vehicles and
             engines generally travel great distances with heavy loads and are frequently
             serviced, and often in the independent aftermarket. Aftermarket businesses
             will be immediately and adversely affected if they lack the information
             necessary to diagnose, service and repair emissions-related vehicle
             malfunctions. Commenter notes that it is not only good public policy for EPA
             to require that the information necessary to service and repair OBD equipped
             HD vehicles be made available to the public, but that EPA is mandated to
             issue the information availability requirements at the same time as the OBD
             hardware requirements. Commenter provides significant discussion on this
             issue, citing to appropriate sections of the  CAA as well as case law to support
             their position.

             Letters:

             Motor and Equipment Manufacturers Association (IV-D-258), p. 2-7

       Response to Comment 7.4.2(D):

       The heavy-duty OBD regulations promulgated in the Phase 1 rule require
manufacturers to  provide available diagnostic data. This includes diagnostic trouble codes,

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freeze frame engine conditions and engine coolant temperature, fuel control system status,
fuel trim, ignition timing advance, intake air pressure, air flow rate, manifold air pressure,
engine RPM, throttle position sensor output value, secondary air status, calculated load
value, vehicle speed, and fuel pressure.

       EPA has also required that this information be accessible through uniform
connectors, that access to the connectors be unrestricted, and that the information be
provided in a set format without any need for unique decoding, thus fulfilling our requirements
under section 202(m)(4). Additional information required under section 202(m)(5) would fall
under the service information availability regulations. (40 CFR § 86.094-38).  We did not
propose to revise the service information regulations in the NPRM for this rule, so it would be
inappropriate to finalize  any such changes without further notice and comment. EPA does
not agree that the current Service Information regulations apply to heavy duty engines.  The
Service Information rule explicitly referred only to "requirements for the availability of
emission-related service information for all light-duty vehicles (LDVs) and light-duty trucks
(LDTs)." 60  FR 40474 (August 9, 1995). Though the regulations are ambiguous on this
issue, the preamble is clear. EPA agrees that, as manufacturers of heavy duty vehicles and
engines below 14,000 pounds will now be required to equip their engines and vehicles with
OBD systems, they apparently should also be subject to service information rules.  However,
EPA does not believe that the rules governing service information requirements for such
manufacturers need to be promulgated at the same time as the rules for OBD.  Nothing in
section 202(m)(5) of the Act indicates that the two sets of regulations, which are clearly
written as distinct regulations in the Act, need to be promulgated at the same time. Contrast
section 202(m)(5)'s requirements with those of section 202(m)(4), which clearly contemplate
that the regulations under section 202(m)(4) will be promulgated at the same time as those
under section 202(m)(1).  The regulations governing service information have generally
raised significant issues distinct from the issue raised in OBD regulations. It is therefore
appropriate that EPA undertake such actions in a separate proceeding. Indeed, EPA's initial
service information regulations were issued over two years after its initial OBD regulations
(60 FR 40474, August 9, 1995).

       Currently, EPA is drafting a Notice of Proposed Rulemaking (NPRM) to amend the
1995 regulations.  In this NPRM, we expect to propose that all of the proposed changes
to1995 requirements apply to manufacturers  of all heavy-duty vehicles and engines weighing
14,000 pounds gross vehicle weight (GVW) and lower beginning in model year 2005 which is
the first year that such engines and vehicles are subject to  OBD requirements.  EPA expects
to  propose the same requirements for these engines and vehicles as it expects to propose for
light-duty vehicles and trucks.  We would request comment on the appropriateness of the
proposed requirements for this sector and expect to address the need for heavy-duty service
and repair information as appropriate in subsequent regulatory activities.

(E)    Parts manufacturers should be provided OBD monitoring information.

       (1)     In light of the extension of OBD in the heavy-duty context, it is now necessary
              for EPA to also extend its OBD information  availability regulations to include
              the information necessary to manufacture and remanufacture parts.
              Heavy-duty repair shops are even more likely than light-duty repair shops to
              conduct  engine and parts rebuilding on their premises,  in which case
              information about OBD system tolerances and expectations will be required to
              build compatible parts.  EPA should reconsider its decision that parts

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              manufacturers and remanufacturers are not part of the automotive service
              and repair market.

              Letters

              Motor and Equipment Manufacturers Association (IV-D-258), p. 7-8

       Response to Comment 7.4.2(E):

       As noted by the commenter, the issue being raised in this comment pertains to EPA's
service information availability regulations. As discussed in section (D)(1), EPA expects to
issue a Notice of Proposed Rulemaking in early 2001 that will propose requirements for the
availability of service and repair information for the heavy-duty sector. As part of that
rulemaking process,  EPA would accept comment from interested parties on issues
pertaining to the proposed requirements and would address any comments we receive at that
time.

(J)     Opposes allowance to average across  primary intended service class.

       (1)     EPA cannot finalize an allowance  to use credits across subclasses. The
              existing regulations prohibit this, and EPA did not propose to change this
              prohibition. Finalizing such an allowance without opportunity for public
              comment violates the CAA and the APA. Allowing averaging "across
              subclasses creates a competitive advantage for certain manufacturers." Also,
              EPA has not demonstrated that cross-class averaging would be
              environmentally neutral.

       Letters:

              Mack Trucks, Inc.

       Response to Comment 7.4.2(J):

       EPA proposed to phase in  the standards by a percentage of production without
regard to subclass (§86.007-11(f),  65 FR 35553). We specifically requested comment on
how the phase-in  and the ABT program would fit together:

       In some ways the ABT program is intended to serve the same purpose as the
       phase_in for diesel engines. As is described below, we have proposed some
       restrictions to make this program compatible with  the phase_in. Thus your comments
       on this ABT program should address how it fits with the phase_in, and vice versa.

       The cross-subclass averaging allowance that is being finalized is being adopted in a
manner to make it fully consistent with our phase-in, by ensuring that credits are generated
and used on a consistent basis.  This allowance does not fundamentally alter the nature of
the phase-in, but merely provides a small degree  of additional flexibility.  We do not believe
that this allowance will have any adverse environmental impacts, given the 20 percent
discount being  applied to all credits exchanges from the Phase 1 engines to Phase 2
engines.

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             Issue 7.4.3: Supplemental Test Procedures

(A)    Supports proposed provisions for steady-state test.

       (1)    Supports provision that test must be conducted with all emission-related
             engine control variables in the maximum NOx-producing condition that could
             be encountered for a 30-second or longer averaging period at the given test
             point.

             Letters:

             STAPPA/ALAPCO  (IV-D-295) p. 20

       (2)    Support the proposed provision that in addition to the 13 modes of the test
             cycle, EPA would have the opportunity to select an additional three test points
             as a check to ensure the effectiveness of the engine's emission controls
             within the control area (e.g., ensuring that emissions do not "peak" outside of
             the 13-mode test points.

             Letters:

             STAPPA/ALAPCO  (IV-D-295) p. 20

       Response to Comment 7.4.3(A):

       We agree with the comment supporting the requirement that the SET test should be
conducted with the engine control variables set to result in the maximum NOX emission rates
which the test engine can produce under the conditions specified by the SET test (i.e., under
standard laboratory conditions.  Regarding the comment supporting the EPA selection of
"mystery points", we have eliminated the MAEL requirements and the "mystery point"
requirements for Phase 2 technology engines because the stringency of the  Phase 2
standards  makes these requirements unnecessary. The regulations for the SET in model
year 2007  as they apply to the 2004 FTP emission standards contain additional steady-state
test point emission limits beyond the requirement of the SET. The Phase 1  supplemental
requirements define a "Maximum Allowable Emission Limit" (MAEL) which the engines must
comply with. The Phase 1 regulations allowed EPA to randomly select up to three steady-
state test points prior to certification which the manufacturer would test to show compliance
with the MAEL. These test points are referred to as "mystery points".  In this final rule we
have eliminated the MAEL for engines certified to the Phase 2 standards. The MAEL
assures that an engine is calibrated to maintain emission control similar to the SET test
under steady state conditions across the engine map, not just at the pre-defined 13 test
points which comprise the SET  test. For Phase 1 engines the MAEL was necessary to
ensure this potential for gaming did not occur because the difference between the FTP
standard and the NTE standard could be large, for example, 0.625 g/bhp-hrfor NMHC+NOX.
However, for Phase 2 engines the NTE requirements for NOX are a mere 0.10 g/bhp-hr
greater than  the FTP standard.  Considering this small increment, we  have eliminated the
MAEL for Phase 2 technology engines (engines meeting the new NOX standard, and for
engines certified with NOX FELs below 1.5 g/bhp-hr. because it is redundant with the NTE.
For the same reasons, we have eliminated the certification "mystery points"  for engines
complying with today's diesel engine standards.

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(B)    Opposes proposed provisions for steady state test.

       (1)    The supplemental steady state test (also referred to as the Euro-Ill test) is
             infeasible and unnecessary. The test is not correlated with the FTP and EPA
             has not developed a method of comparing the relative stringency of the two
             tests. One commenter noted that EPA has added a requirement that the
             emission results at each of the three EPA-defined test points must be within
             ten percent of the interpolated value predicted for that test point based on the
             13 standard test points and that this requirement cannot feasiblely be met.
             Emissions tests, including the FTP, do not usually provide results that are
             within five percent. CARB's policy of not requiring a recall if the in-use test
             results are  within ten percent of the standards is indicative of how difficult it is
             to obtain repeatable measurements and this ten percent policy is applied to
             the average of a sample of ten or more vehicles,  not a sample of one engine
             as proposed by EPA.

             Letters:

             Cummins, Inc. (IV-D-231) p. 26
             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256)  p. 61

       Response to Comment 7.4.3(B)(1):

       We disagree with the comment that the SET standard is  infeasible; see response to
comment 3.2.1(N). We disagree with  the comment that the  SET standard is unnecessary;
see response to comment 3.2.1(P). We have also eliminated the MAEL and mystery point
requirements for Phase 2 engines because they are unnecessary for the reasons articulated
in response to comment 7.4.3(A).

       (2)    EPA's proposal that every point within the supplemental steady-state control
             area not exceed MAELs increases the stringency of any emission standard by
             requiring compliance with a standard at every engine  operating point within
             the emission control area, rather than requiring that the average emissions
             remain  below the MAEL. This requirement is not feasible since any particular
             engine operating point may slightly exceed the MAEL simply because the
             MAEL is merely a prediction based on 12 standard test points. This  approach
             focuses unreasonably  on control of emissions on a point-by-point  basis,
             rather than on a reasonable aggregate basis.

             Letters:

             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256)  p. 63

       Response to Comment 7.4.3(B)(2):

       We have eliminated the MAEL and mystery point requirements for Phase 2 engines
because they are unnecessary for the reasons articulated in response to comment 7.4.3(A).


       (3)    In an engine with multiple control parameters, it is unreasonable and

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              meaningless to require an engine to be in a maximum brake-specific NOX
              (BSNOX) producing state during the SSS test. This logic was originally
              proposed for engines with inj4ection timing control as the emissions
              controlling input. With multiple technologies present in the emission control
              system, it is reasonable to assume that at different times, under different
              conditions, control variable will be varied to achieve the required compliant
              emission levels. This requirement should be dropped since it is overly
              restrictive and will ultimately reduce the performance envelope of the
              emission control systems envisioned.

              Letters:

              Cummins, Inc.  (IV-D-231) p. 27

       Response to Comment 7.4.3(B)(3):

       We disagree with the comment that the provisions of 40 CFR 86-1360-2007(e)(4) are
either unreasonable or meaningless. These test provisions require the manufacturer to
ensure that during the SET test, the engines control system is run so that the calibration
represents the highest NOX emitting conditions at the given test point and for the conditions
under this the engine is being tested (i.e., standard FTP laboratory conditions).  Engine
calibrations used by a number of HDDE manufacturers indicate various engine control
strategies are possible for a given test  conditions,  and this provision ensures that the
calibration which produces the highest NOX is tested. As documented  in the Chapter 3 of the
RIA, we have determined that the requirements will be feasible without overly restricting
engine performance.  See also the response to comment 7.4.3(A).

(C)    EPA's proposed supplemental test procedures are arbitrary and subjective and
       fail to provide manufacturers with the ability to determine at the time of
       manufacture and distribution whether they will later be found to be in non-
       compliance.

       (1)     Individuals must be able to discern with certainty whether their conduct is
              lawful at the time that they undertake that conduct and  that principle is
              particularly relevant in the case of EPA's supplemental test procedures.
              These procedures are not objective and manufacturers are not able to ensure
              their own compliance with reasonable accuracy. The use of testing
              procedures that could take place under "normal" conditions, combined with a
              short 30-second interval in conjunction with a not-to-exceed approach would
              create wide  variability in testing results, would not simulate real-world
              conditions, and would be  both impractical and unpredictable.  Assuring
              compliance  at virtually all conditions would require many combinations of test
              conditions and a large investment in engine emission test equipment and
              personnel. Commenter cites to their comments submitted in response to the
              2004 standards and also cites to relevant sections of the  CAA and case law
              to support their conclusion on this issue. Commenter provides significant
              discussion on this issue and notes that under applicable legal standards,
              such testing is unlawful.

              Letters:

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              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 53-55

       Response to Comment 7.4.3(C):

       We disagree with these comments. GM/lsuzu imply the NTE requirements are not
defined in the regulations. The regulations specifically define both the engine operation and
the ambient conditions during which the engine must comply with the NTE. The regulations
define specific and constrained NTE ambient conditions, and the regulations define specific
and constrained NTE engine operating conditions. The regulations also define specific
numerical limits which are the NTE emission standard. Therefore, the NTE standard and
requirements are not subjective at all, but are specifically defined by numerical boundaries.
Manufacturers will know precisely what conditions they are  required to comply with to meet
the supplemental standards. GM/lsuzu comment that the proposed test procedures are
subjective. However, the NTE requirements do not allow EPA to test compliance at any
condition operated by an engine.  The NTE regulations specify specific engine operating
zones under which testing can be compared to the standard, for time durations as short as
30 seconds;  however, longer sampling times can be included.

       GM/lsuzu point to the phrase "any conditions that could reasonably be expected to be
seen by that  engine in normal vehicle operation and use", to support their comment that the
NTE requirements are subjective.  The regulatory requirement contained in this final rule
specifies that an engine must comply with the NTE "under conditions which can reasonably
be expected  to be encountered in normal vehicle operation  and use.", see §
86.1370-2007(a), which is a limitation on EPA's authority to test outside of those conditions.
The statement regarding normal vehicle operation and use  is virtually identical to the existing
regulatory definition of defeat device under which both the on-highway light duty vehicle and
heavy-duty engine industry  have been regulated for many years.  The existing applicable
definition of defeat device for on-highway HD engines specified in § 86.094-2 states
(underline added for emphasis);

       Defeat device means an auxiliary emission control device (AECD) that reduces the
       effectiveness of the emission control system under conditions which may reasonably
       be expected to be encountered in normal vehicle operation  and use, unless:
       (1) Such conditions are substantially included in the applicable Federal emission test
       procedure;
       (2) The need for the AECD is justified in terms of protecting the vehicle against
       damage or accident; or
       (3) The AECD does not go beyond the requirements of engine starting.

       The NTE provisions contained in today's final rule require engine manufacturers to
design and control emissions below a specified maximum for the type of engine operation
their product will encounter during normal vehicle operation and use. This is wholly
consistent with past Agency requirements.  Engine manufacturers such as General Motors
will be able to rely on their more than 20 years of experience in designing engines which
utilized AECDs which operate under conditions which may reasonably be expected to be
encountered in normal vehicle operation and use as they develop engines to comply with the
NTE standard by model year 2007.

       EPA  believes that manufacturers have for years and will continue to routinely

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evaluate their engines to ensure that their products provide a high level of performance and
reliability for non-emissions related qualities during normal vehicle operation and use.  The
highly competitive nature of this market and its sophisticated consumer base call for such
analysis by manufacturers. EPA expects that this same knowledge of how their engines are
normally used and operated can be employed by manufacturers in designing for emissions
performance as well as non-emissions related performance.

       EPA's use of the term normal vehicle operation and use is designed to build on such
current industry practices.  It is not designed to address rare, unique, or abnormal operation
and use, but instead focuses on what is commonly and generally viewed  as normal driving
and operation during urban, suburban, and interstate driving. This would not include abusive,
reckless, unlawful, or  unsafe driving or operation.  It is aimed at the kind of operation and use
that is encompassed in the limitation of recall authority to proper operation and use in section
207(c)ofthe Act.

       The kinds of operation and use envisioned by the current definition of a defeat device
and the statutory provision for recall have been employed by the agency and industry to
regulate in-use emissions for  over two decades.  Manufacturers have also designed for in-
use performance of non-emissions qualities for many years. The term "normal operation and
use" in the NTE test procedure is directed at the same kind of limits on operation and use
employed in these other contexts. Any subjectivity in the term "normal operation and use" is
no greater in the context of the NTE than in these other contexts.  The experience in the  last
decades in implementing these other provisions indicates that use of the  same provision in
the NTE requirements provides a reasonable basis for all parties to design complying
engines under this provision.

       Moreover, because manufacturer requirements under the NTE procedures are
specifically linked to particular numerical emission values, these requirements are
significantly less subjective than the previous regulatory regime.  Manufacturers will know
that if emissions from their engines are below a specific number under specified engine and
ambient conditions, they will meet the supplemental requirements.  It is only if a manufacturer
cannot meet this specific number under those conditions that the term "normal operation and
use" is even implicated.

       We also disagree with the comments from GM/lsuzu regarding the appropriateness
of the NTE's minimum sample time requirements. We believe that 30 seconds is a
reasonable length of time to determine compliance with the NTE standard, which is intended
to be an emissions cap,  not an average standard over a long period of time (e.g., such as the
20 minute pre-existing FTP).  Thirty seconds is long enough to avoid short spike's in
emissions which may occur from limited operating excursions, and 30 seconds is long
enough for manufacturers  to control for emissions during operation which may reasonably be
expected to occur during normal vehicle operation in- use.  See also the response to
comment 3.2.1(N) which discusses certain  NTE testing provisions where the minimum
sample time can be longer than 30 seconds. As discussed above, we expect that
manufacturers can rely on  their long experience in designing engines both for performance
reasons as well as their existing requirements under the prohibition of defeat devices to
control emissions during normal operation in use. We also disagree that HD diesel engine
operation while heavily loaded, or during an acceleration up a hill, or operating a truck into a
strong head wind are  conditions which  manufacturers cannot anticipate or design for.  These
are situations which on-highway HD diesel  vehicles in the U.S. experience every day of the

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year across the entire country. We believe that it is reasonable and appropriate that
manufacturers can anticipate these types of operation and design for emission controls as
well as for engine performance (which they obviously already do today, since the vehicles
continue to operate under such conditions).  Further, with respect to the minimum NTE 30
second sample time, manufacturers already design engines to meet smoke standards which
include engine operation over a time frame nearly as  short (lugging mode smoke test) or
shorter than 30 seconds (acceleration mode smoke test). GM/lsuzu comment that the NTE
allows EPA discretion to test under extreme temperature conditions, though they don't
specify what extreme is. As discussed above, the regulations constrain the Agency from
testing outside specific temperature (and altitude) conditions when determining compliance
with the NTE.

       We disagree with the comment that manufacturers will need to test an "infinite" or
inappropriate number of steady state and transient combinations in order to design engines
to comply with the NTE. This comment inaccurately assumes that the  engine emission
performance would be near the 1.5 NTE standard under all or the majority of engine
operation within the NTE control zone which could reasonable be  anticipated to occur during
normal operation and use.  General Motors/lsuzu themselves commented that the NTE
requirements would force them to concentrate on the highest emitting modes. The Agency
agrees with this comment.  Engine manufacturers will be required to perform extensive
mapping of their engine's emission performance across the  NTE control zone in order to
develop engines to comply with the pre-existing FTP and the SET, regardless of the NTE
standard. However, with respect to the NTE standard, manufacturers will be able to quickly
narrow their test programs to focus in on those areas of the  NTE control zone where the
emissions are higher and are nearest the NTE standard.  Engineering  experience and logic
dictates that manufacturers will not expend resources testing areas of the NTE control zone
where emissions are well below the NTE standard. The  same is true with respect to the
expanded conditions which apply to the NTE.  The manufacturers' comments would indicate
that under today's FTP, they must perform development tests at every  1 deg F increment
between 68 and 86 deg. F, yet this is not what is done. The effects of temperature on
emissions are fairly well known, and manufacturers will only focus testing resources at the
conditions which result in the highest emissions. If the emissions  under these conditions can
be controlled to meet the standard, then emissions will clearly meet the standards at the less
difficult to meet conditions.  For example, NOX emissions tend to increase with ambient
temperature, and they decrease with decreasing ambient temperature. The manufacturers
do not need to waste testing resources and development time on lower ambient temperature
compliance with the NTE NOX standard, when they clearly know that higher temperatures are
more difficult, and if the engine complies at higher temperatures it will then comply at  lower
temperatures.  As another example, see the comments from Detroit Diesel Corporation on
the Phase 1 NPRM regarding the NTE(EPA Air-Docket A-98-32, docket item IV-D-28)
regarding the development of efficient testing schemes to determine compliance with  the
NTE, which indicates manufacturers have the capability to create  NTE  development tests
which are "efficient", i.e., that do not waste testing resources.

(D)    The 30-second minimum engine compliance measurement period is not  an
       objective measure of engine emissions.

       (1)    A 30-second test results in undefined  compliance conditions and
              nonrepeatable testing and is not practical. This measurement duration will
              impose compliance obligations that are almost limitless in their scope. The

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              risk of noncompliance using this approach is too high.  EPA has replaced the
              defined and reproducible characteristics of traditional compliance testing with
              testing based on any 30-second on-road driving event deemed appropriate by
              EPA. Given the process of incremental development of the emissions control
              system, it is unclear how a manufacturer could decide whether the most
              recent revision to the development cycle improved or degraded emission
              control performance. When the scope of compliance evaluation narrows to
              any arbitrarily chosen 30-second operating mode, it is virtually certain that
              most changes will produce a mixed result. If an engine is to be properly
              characterized over its entire  operating range, significantly more testing would
              be  required. Commenter provides significant discussion  on this issue and
              concludes that the test protocol and associated on-road emission
              measurement instrumentation do not have the  required accuracy to measure
              emissions.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 62-67

       (2)     There is no direct relation between compliance with a 30-second test and air
              quality. With compliance being judged over an arbitrary 30-second period of
              vehicle operation, there would seem to be no guarantee that the costs of
              improving performance in such narrow contexts will produce improved air
              quality.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 65

       Response to Comment 7.4.3(D):

       We disagree with these comments.  A large part of GM/lsuzu's discussion focuses on
the iterative process of developing engines to comply with emission standards, and they
comment that the minimum 30 second NTE sample time requirement restricts this process,
and results in undefined compliance conditions and interferes  with repeatable testing. As
discussed in response to comment 7.4.3(C) above, the commenter implies engines will
always be near the NTE emission limit, but this is not the case. There are many areas of the
NTE control zone during which the engine will not be near the  NTE limit,  and  thus the NTE
will not interfere with this interactive process. For example, data presented in Chapter 3 of
the RIA on the NVFEL test program shows that for a number of the NOX  adsorbers we
evaluated, NOX reductions well in excess of 90 percent occurred over broad regions of the
NTE control zone.  Because the NTE standard is  intended to be a cap, is 50 percent greater
than the FTP standard, and is based on available data, we disagree with these comments
which imply the 30 second sample time will  be overly restrictive. Regarding the comments
on undefined compliance conditions, see response to comment 7.4.3(C).

       Regarding the comment that the NTE approach, including the 30 second minimum
sampling time, does not improve air quality, we disagree with this comment.  The NTE
standard, in combination with the FTP, the SET, and the prohibition of defeat devices, will
ensure the large emission reductions we estimate will occur from the standards in this rule

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occur in actual use. GM/lsuzu's comments also imply they do not believe the emission
benefits of the NTE are justified by the costs of complying with the NTE; please see the
response to comment 5.10(D) fora response to this comment.

       Regarding the comment on test protocol and emission measurement. GM/lsuzu
imply emission measurement equipment is not capable of accurately measuring HDDE
emissions at the levels  required by the standard in this rule, this is incorrect.  Please see the
response to comments  under issue 7.4.5.(A)

       Regarding GM/lsuzu's comments on the ROVER on-board emission  measurement
system, we did not propose and this final rule does not require the use of a ROVER system,
therefore  this comment is not relevant to this rule.

       Regarding the comments on time alignment of emission measurements. The Agency
agrees the time alignment of the emissions sample with the engine speed/torque
measurement will be important when performing NTE testing. Considering the availability of
very accurate emission  measurement, engine speed and torque measurement, and time
measurement instrumentation, we do not expect this to be a difficult issue for NTE emissions
sampling.

(E)     As a result of the late release of the 2004 HD rule, there has  been inadequate
       opportunity to  fully analyze the impacts of the supplemental test procedures on
       EPA's proposed 2007 standards.

       (1)    EPA has only recently released the 2004 final rule containing details
             regarding the supplemental test procedures.  The 2004 final rule contains
             detailed provisions regarding the final NTE limit program and the
             supplemental steady-state test modified from the ESC test cycle.  EPA
             confirms for the  first time the final conditions  under which an NTE limit is
             applicable and also confirms final "carve-out" areas applicable to various
             emissions. Even though  EPA and members  of industry participated in
             negotiations and meetings in which these issues were discussed, there
             remained considerable uncertainty regarding the final provisions.  EPA
             introduced the concept of an "NTE deficiency provision" applicable to HDDEs
             and also provides for the first time detail regarding the modified ESC test.
             Two weeks is insufficient time to be able to digest these complex concepts,
             analyze engineering and  production issues and review the data relevant to
             emissions performance.  One commenter notes that they will be providing
             additional comments that will specifically address the supplement test
             components of the 2004 rule.  (See also Issue 12.2.)

             Letters:

             Cummins, Inc.  (IV-D-231) p. 22-26
             DaimlerChrysler (IV-D-344) p. 17-19
             Detroit Diesel Corporation (IV-D-276) p. 24-25
             Engine Manufacturers Association (IV-D-251) p. 56-57

       Response to Comment 7.4.3(E)(1):

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       See responses to comments 12.2(H)(2-3) and 3.1.1(K)(1).

       (2)    The proposed supplemental emission requirements and tests (SERTs) are
             based on the technological feasibility of meeting a 2.5 g/bhp-hr NMHC + NOX
             standard. EPA has changed the roadmap by choosing  to apply multiple,
             complex requirements represented in the NTE zone and limits, supplemental
             steady state tests, maximum allowable emission limits,  load response test,
             and expanded ambient conditions. Despite such a significant technology
             change, EPA has failed to demonstrate the technological feasibility of the
             proposed supplemental emission tests and requirements on the proposed
             (now-final) 2004 standards.

             Letters:

             Cummins, Inc.  (IV-D-231) p. 22-26
             Engine Manufacturers Association (IV-D-251) p. 57
       Response to Comment 7.4.3(E)(2):

       Issues related to the Agency's Phase 1 standards (2004 FTP and 2007 supplemental
tests as they apply to the 2004 FTP standards) were fully addressed in the Phase 1 rule. The
comment period for the Phase 1  rule closed on December 16, 1999. This Phase 2 rule did
not contain proposals regarding the 2004 standards.

(F)    The application of the supplemental testing rules prevents promising emission
       control technologies from being introduced, particularly if they do not exhibit
       constant emission control capabilities at all engine operating conditions.

       (1)    The supplemental test requirements adopted as part of the 2004 rulemaking
             severely limit the variability in the emissions rates over the HD engines
             operating range.  Thus, the feasibility of EPA's proposed standards must be
             compared at the worst-case conditions rather than over the composite
             emissions measured over the FTP. All of the potential emission control
             strategies exhibit significant declines in their ability to reduce emissions at off-
             nominal conditions. These conditions can include low or high temperature
             operation, catalyst regeneration, rich  operation, and other engine operating
             zones. The application of the supplemental testing requirements ensures that
             the aggressive standards being proposed cannot be met using any of the
             known candidate emission control systems. (See also Issue 3.2.1.)

             Letters:

             General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 49-50

       Response to Comment 7.4.3(F):

       We disagree with these comments. As discussed in Chapter 3 of the RIA for this
rule,  and in response to comment 3.2.1 (N), we have  demonstrated that HDDE emission
control technology is capable of achieving the supplemental test requirements (SET and NTE

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standards) by model year 2007.  This determination is based, in part, on our assessment of
the capabilities of CDPFs and NOX adsorbers, which are clearly advanced emission control
technologies. It is unclear what control technologies the commenter is referring to, and they
do not describe any specific technology in their comments, beyond the generic term
"catalysts".  We agree that some of the control technologies, e.g. NOX adsorbers, do exhibit
peak areas of performance, and as discussed in the RIA and in response to comment
3.2.1 (N), the defined NTE engine and ambient operating conditions fall within this peak
emission reduction efficiency region, and hence the NTE standard can be met with the use of
this technology.  It should also be noted that,  as discussed in response to comment 3.2.1(N)
and in the RIA, CDPFs do not exhibit the same "fall off  of emission reductions described by
the commenter, and hence their comments do not apply to the NTE PM standard. Finally, we
do not believe that we should allow alternative technologies that are  not capable of
controlling emissions to levels meeting our NTE requirements, since they could result in
excessive and unnecessary emissions from heavy-duty engines.

(G)    Supports proposed supplemental Load Response Test for heavy-duty diesel
       engines.

       (1)    Commenter provided no further supporting information or detailed analysis.

              Letters:

             STAPPA/ALAPCO  (IV-D-295) p. 21-22

       Response to Comment 7.4.3(G):

       The NPRM for this rule specifically proposed to  apply the SET and the NTE
requirements to Phase 2 engines, but did not propose any aspect of a Load Response Test
(LRT), and this final rule contains no requirements  regarding the LRT.  Any issues regarding
the load response test were dealt with  in the Phase 1 rule, which established a LRT as a data
submission requirement for HDDEs for model years 2004 through 2007.

(H)    The load  response test (LRT) is a useless, unnecessary, and burdensome
       requirement.

       (1)    The LRT has no correlation to any real world heavy duty truck operation. The
              FTP, federal smoke cycle and J1667 roadside test procedures already
             measure highly transient behavior.  Commenter refers to their comments
             submitted previously on this issue in response to the 1999 Feasibility Review
             (2004 rule), p. 39-40 and concludes that this unnecessary test complicates
             manufacturers' ability to comply with the rule.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 62

       (2)    The results from this test provide no information of value that could not
             otherwise be obtained from other sources.  In addition, the test is conducted
             at constant speed with  no acceleration.  Increasing load acceptance at
             constant speed is not a normal HD vehicle operating condition and therefore,

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             the data are not technically meaningful.

             Letters:

             Cummins, Inc. (IV-D-231) p. 27
             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 67

       Response to Comment 7.4.3(1-1):

       See response to comment 7.4.3(G).

(I)     The FTP together with EPA's supplemental steady state test provides adequate
       compliance assurance, and thus the NTE provisions are unnecessary.

       (1)    The supplemental steady state test involves an averaging of specified
             emissions points along an engine's normal power curve. Commenter provides
             detailed discussion regarding this test and notes that the FTP transient tests
             and the supplemental steady-state test combine to provide adequate
             compliance assurance while  ensuring that an engine's certification continues
             to be based on real world operating conditions. Commenter adds in this
             context that there is no need for the NTE requirements, which are
             unnecessary and infeasible.  [See also discussion under Issues 3.1.1 and
             3.2.1.]

             Letters:

             International Truck & Engine Corp.  (IV-D-257) p. 19-20

       Response to Comment 7.4.3(1):

       We disagree with the comment that the pre-existing FTP together with the SET are
adequate to assure compliance, and thus the NTE provisions are unnecessary.  As
discussed in response to comment 3.2.1(P), the SET and the NTE are clearly different
requirements, and the NTE provides compliance assurance over engine operation not
covered by the SET.  For example, the SET  and the FTP apply during standard laboratory
conditions, while the NTE applies at expanded conditions, in some cases up to 100 deg. F (at
sea-level), while the FTP and SET only apply up to 86 deg. F, regardless of altitude. In
addition, the SET is only a steady state test,  while the NTE can include steady state or
transient engine operation.  Clearly the three test procedures, the pre-existing FTP, the SET,
and the NTE, each cover engine operation not covered by the other tests, and thus the tests
do complement each other. When combined with the Agency's prohibition on defeat devices,
we believe these requirements provide a comprehensive set of compliance requirements
which will help ensure that engines comply with the applicable emission standard in-use, and
thus help ensure the emission benefits of the standards will occur.

(J)     There is no basis for extending special exemptions to alternatively fueled HDEs
       for the supplemental test requirements.

       (1)    EPA has presented no justification for providing an exemption to the
             supplemental test requirements for alternatively-fueled  HDEs.  These engines

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              are not always inherently lower-emitting than diesel HDEs.  This provision
              would provide manufacturers of alternatively fueled HDEs with a commercial
              advantage over their diesel HDE counterparts and EPA should apply the
              testing requirements equally.

              Letters:

              International Truck & Engine Corp. (IV-D-257) p. 31

       Response to Comment 7.4.3(J):

       It is unclear from the comment what exemption the commenter is referring to.
Alternatively  fueled HDDEs will be required to comply with the NTE standard and with the
SET standard.  Though not specifically referenced in the comment, we assume the
commenter is referring to the regulatory provisions established in the Phase 1 rule which
would allow a manufacturer of an alternatively fueled HDDEs to petition EPA to exclude
regions of the NTE control zone from NTE compliance if the manufacturer can demonstrate
the engine is not expected to operate in such regions. We believe the reasoning for this
minor allowance for alternatively-fueled vehicles remains valid (i.e., the shape of the NTE
control zone  was determined primarily to control emissions from diesel-fueled HDDEs).
However, we do agree that there are reasons why we should  include similar allowances for
petroleum-fueled diesel engines.  We will allow manufacturers to exclude from the NTE zone
operation that is not possible when the engine is installed in the vehicle.  We will also allow
manufacturers to exclude other infrequent operation from targeted NTE testing.  These
allowances are described in the Preamble to this FRM.

(K)    SFTP considerations for HDG complete vehicles should be deferred to a
       separate rulemaking.

       (1)     The SFTP requirements for light duty vehicles, enforced federally and in
              California, were based on extensive vehicle testing conducted in the early to
              mid 1990s, which included only a small number of larger vehicles and no
              vehicles over 8500 GVWR. In addition,  there  has  been no testing  conducted
              justifying SFTP like cycles for these vehicles.  Manufacturers have no
              practical experience with in-use compliance over the SFTP drive cycles for
              light duty, much less heavy-duty vehicles.  Any future SFTP rulemaking
              should proceed only after further testing and analysis has been performed.

              Letters:

              Ford  Motor Company (IV-D-293) p. 11

       Response to Comment 7.4.3(K):

       We did  not propose and this final rule does not contain SFTP requirements for HD
gasoline vehicles.
              Issue 7.4.4: Ambient Conditions (Temperature/Humidity)

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(A)    EPA should require manufacturers to meet the NTE standard under the range
       of conditions typical of days when ozone exceedances occur.

       (1)    EPA should increase the upper end of the temperature range to 105 degrees
             Fahrenheit.

             Letters:

             CA Air Resources Board (IV-D-203) p. 5
             NESCAUM (IV-D-315)p. 8
             STAPPA/ALAPCO (IV-D-295) p. 23

       Response to Comment 7.4.4(A):

       We appreciate the concerns  raised by the commenters regarding the need for
adequate emission controls under high temperature days due to the increased possibility for
ozone formation.

       We have based the upper temperature range of the NTE requirements on the
technical feasibility of complying with the NTE standard.  At sea-level, under one NTE
compliance  option, manufacturers must comply with the NTE at an ambient temperature of
100 deg. F.  Under the other NTE compliance option, manufacturers would have to comply
with the NTE even at a temperature of 105 deg. F, but they are allowed to use correction
factors to correct emissions back to an  equivalent ambient temperature of 95 deg.  F.
Regardless  of which compliance option the manufacturer chooses, we believe emissions will
be adequately controlled even at the very high temperature suggested by the commenter,
because these very high temperatures occur infrequently, and because even when
manufacturers are outside the conditions applicable to the NTE, they must still comply with
the Agency's regulatory prohibition of defeat devices. This prohibition would prevent
manufacturers from reducing the effectiveness of their emission control system, regardless of
temperature, unless the engine/vehicle met one of the conditions which are allowed under
the regulations.

(B)    Supports applying the expanded range of ambient conditions to the new
       supplemental test procedures beginning  no later than  the 2004 model year.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             STAPPA/ALAPCO (IV-D-295) p. 22-23

       Response to Comment 7.4.4(6):

       Clean Air Act section 202(a)  requires the Agency to provide 4  years of lead time for
the establishment of any new HDDE emission standards. The commenter suggests the
Agency apply the expanded conditions requirement  to the 2004  HDDE standards.
Considering that manufacturers are now into model  year 2001, we are prevented from
considering  the change recommended  by the commenter because of this 4 year lead time
restriction.

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(C)    EPA's proposal to expand the ambient conditions under which emission
       testing would be conducted creates additional stringency and compliance
       uncertainty.

       (1)     The aftertreatment technologies that manufacturers will use to comply with
              the proposed standards are extremely sensitive to expanded ambient
              conditions (i.e. temperature, altitude). However, feasibility tests conducted on
              these technologies have been only under lab or FTP conditions.  Therefore it
              is difficult to determine whether EPA's proposal is feasible under all actual,
              onroad operating conditions and EPA has not provided adequate data on this
              issue.

              Letters:

              International Truck & Engine Corp. (IV-D-257) p. 23-24

       Response to Comment 7.4.4(C):

       We disagree with the comment that the ambient conditions which apply to the NTE
standard makes compliance with the standard uncertain or technologically infeasible. As
discussed in response to comment 3.2.1 (N), and in more detail in Chapters of the RIAfor
this final rule, we have considered both the effects of ambient altitude and temperature  on the
feasibility of the NTE, and, as finalized in this rule, the NTE requirements are technologically
feasible by model year 2007.

       Regarding the comment on stringency, we would agree that compliance with the NTE
at more restricted ambient conditions, for example, only between 60 and 70 deg. F, would
decrease the stringency of the NTE standard.  However,  as discussed above, we have
determined the NTE standards are feasible over the range of engine operating conditions
and ambient conditions specified in the regulations

(D)    EPA should consider a broader ambient temperature range when conducting
       certification testing of HDDEs using FTP.

       (1)     In Alaska, and other northern communities, poor air quality from fine
              particulate matter generally occurs during the winter at temperatures colder
              than the FTP temperature range of 68 to 86 degrees F. EPA should allow
              certification of HDDEs at colder temperatures at least comparable to cool
              certification temperatures (20 degrees) for light duty gasoline powered
              vehicles.

              Letters:

              AK Department of Environmental Conservation (IV-D-236) p. 2

       Response to Comment 7.4.4(D):

       We believe that it is not necessary to require lower temperature FTP laboratory
testing for two reasons.  First, the NTE testing  requirements include low temperatures, and
will ensure that emission controls are effective at low temperatures. It is very unlikely that an

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DECEMBER 21, 2000	PAGE 7^42

engine could comply with the NTE limits at some low temperature, but significantly exceed
the FTP standard at that same temperature.  Second, with respect to PM, we believe that the
very nature of the PM traps that manufacturers will use to meet the new PM standards is
such that there will not be any significant decrease in control efficiency at lower
temperatures, provided low sulfur fuel is used.

              Issue 7.4.5: Other Test Procedure Issues

(A)    The current test procedures are not adequate for the measurement of the new
       emission levels proposed by EPA.

       (1)     Current test procedures for HDDEs have been in place for over 20 years and
              were  developed for much higher emission levels than those currently
              proposed by EPA.  These test procedures need to be improved considerably
              before very low emission levels can be reliably measured. One commenter
              noted that EPA should resolve this problem in close cooperation with the
              regulators in Europe and Japan as well as with the engine industry.
              Commenters provided significant discussion on this issue as well as data to
              illustrate the problems associated with test variability for the test methods
              used  to measure PM and NOX. Commenters noted that the observed test
              variability is incompatible with the proposed standards and concluded that by
              proposing to apply a measurement procedure on which emissions cannot be
              accurately and reliably measured, EPA has failed to meet its mandated
              obligation to propose standards that are technologically feasible.  One
              commenter (Cummins) provided a statistical analysis of the impact of short
              term and long term precision errors at current and at proposed emission
              levels and provided a detailed description of the specific measurement
              challenges in the context of NOX, NMHC, PM, and formaldehyde.

              Letters:

              Cummins, Inc. (IV-D-231) p. 31-37
              DaimlerChrysler  (IV-D-344) p. 7,14
              Detroit Diesel Corporation  (IV-D-276) p. 8-10, (IV-F-7, 168, 116) p. 198
              Engine Manufacturers Association  (IV-D-251) p. 32-35
              International Truck & Engine Corp.  (IV-D-257) p. 30

       Response to Comment 7.4.5 (A)(1):

       In response to manufacturer comments, we are finalizing changes to the test
procedures to reduce variability.  As described below, these changes are sufficient to ensure
that the test procedures do not adversely impact the feasibility of the standards.

       For NOX measurement, the changes to the test procedures include new specifications
for the chemiluminescent detectors (CLDs) that take into account the current state-of-the-art
of available analyzers, particularly analyzers that have been developed for measuring the low
NOX concentrations representative of current light-duty LEV vehicles and future LEV-II and
Tier 2 vehicles. We have added provisions to the test procedures for both dilute
continuously-integrated measurements and dilute bag-integrated NOX measurements similar
to those used for HD gasoline engine measurements.  Based on testing conducted by EPA

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with a Tier 2 prototype GM Silverado using an older 200 Series Horiba CLD analyzer (SAE
Paper 2000-01-1957, June 2000), we expect that bag-integrated NOX measurement down to
approximately one-half of the proposed 2007 HDDE NOX standard should have a coefficient
of variance (COV) better than 8 percent.

       With respect to PM measurement, we have made several changes to reduce the
COV of PM measurements. This was done primarily by adopting a number of changes
originally recommended by Kittelson and Johnson as long ago as 1991 (SAE 910738). We
also adapted sample filter media and handling procedures from ambient measurement
procedures forfine-PM, and the new regulations will require the use state-of-the-art
microbalances for PM filter-mass determination. We have instituted many, although not all,
of these changes for our current laboratory measurements of PM from a HDDE equipped
with catalyzed diesel particulate filters at NVFEL. We have demonstrated the ability to
measure PM emissions between 0.002 and 0.004 g/bhp-hr with a 95 percent confidence
interval of ± 0.001 g/bhp-hr (see Chapter 3 of the RIA).  For an engine emitting at the
standard (0.01 g/bhp-hr), this would give a COV of less than 5 percent.

       (2)    The Federal Test Procedure (FTP) was developed on the basis of driving
             patterns in the early 1970s and the operating characteristics of modern truck
             and bus engines have changed considerably. FTP is obsolete and a test
             cycle more representative of current and future engine operation is necessary
             to better reflect in-use driving conditions.  One commenter noted that the FTP
             requires the engines to be operated at high engine speeds never experienced
             in actual use and that EPA should participate in the Worldwide Heavy-Duty
             Certification (WHDC) work program of the UN Economic Commission for
             Europe (UN-ECE).  This commenter added that the US has recently signed
             the global agreement within the WP29 framework and EPA's involvement as
             well as the harmonization of highly complicated test procedures would be
             highly beneficial to manufacturers. This commenter  also specifically
             proposes that EPA replace the FTP with the proposed WHDC cycle in 2008.

             Letters:

             DaimlerChrysler (IV-D-344) p. 14-15
             Engine  Manufacturers Association (IV-D-251) p. 34-35
             International Truck & Engine Corp.  (IV-D-257) p. 30

       Response to Comment 7.4.5 (A)(2):

       We recognize the commenters' concerns about the applicability of the FTP transient
test.  However, we do not agree that it is obsolete. The FTP transient test exercises engines
over their full range of potential speeds and loads. This would have value, even if it were no
longer representative of the most typical in-use operation. As we noted in establishing the
NTE provisions, no single test cycle can perfectly represent all in-use operation. The FTP
transient test remains a useful measure of emission performance. We are participating in the
development of the WHDC, but it is too early for us to determine whether that process will
result in an acceptable replacement for the FTP transient test. Moreover, we do not agree
with the comment that the higher speeds included in the FTP test are never experienced in
actual use. While they may no  longer be as common as they were in the past, they do still
occur.  Finally, it is important to note that if we were to adopt a different test cycle, we would

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need to reconsider the appropriate level of the standards, and may need to set them lower.

       (3)     PM values of 0.02 g/bhp-hr and below are very close to the limits of detection
              for current technology. The total measurement error, which is around 6% for
              current PM levels, can account for a much higher percentage of the
              measured value of PM than actual PM levels. EPA should work with industry
              to improve PM measurement technology prior to establishing new emissions
              standards based on inaccurate, outdated PM measurement technology.
              Since part of the measurement variability is due to sulfur in the fuel, EPA
              should at a minimum, disregard the sulfate portion of emissions  as part of PM
              until the test procedures can be corrected. Commenter provides additional
              discussion and supporting data  regarding PM measurement accuracy.

              Letters:

              DaimlerChrysler (IV-D-344) p. 16-17

       Response to Comment 7.4.5 (A)(3):

       See our response to comment 7.4.5(A)(1).

       (4)     An ISO standard has been developed for the measurement of gaseous and
              particulate emissions from heavy duty engines and is currently in the Draft
              International Standard (DIS) stage (commenter provides as an attachment).
              EPA should adopt  ISO 16183 as soon as it is published as an alternative to
              the current, measurement procedure.

              Letters:

              DaimlerChrysler (IV-D-344) p. 17

       Response to Comment 7.4.5 (A)(4):

       The  ISO standard mentioned is only a draft.  It would not be appropriate to make any
commitments regarding whether the final version would be acceptable.
       (5)    To address the issue of inadequate test procedures, EPA should immediately
             begin a cooperative effort with industry experts to reduce test variability and to
             develop substantial revisions to Subpart N of Title 86 governing certification
             and auditing test procedures. The goal of this effort should be to reduce the
             variability to less than 10% of the standards.

             Letters:

             Engine Manufacturers Association  (IV-D-251) p. 35

       Response to Comment 7.4.5 (A)(5):

       We have been working with industry to address these concerns. As noted in

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DECEMBER 21, 2000	PAGE 7^45

response 7.4.5 (A)(1), we believe that the progress that we have made is sufficient to
address the manufacturers' concerns. Nevertheless, we will continue to work with
manufacturers as new methods become available.

       (6)    The flaws in EPA's test measurement procedures are exacerbated under the
             supplemental emission requirements.  Engine manufacturers have seen even
             higher standard deviations for engine testing conducted on the supplemental
             steady state test than on the transient FTP. Higher variability is expected
             over the NTE zone compared to the transient FTP test.  EPA must first fully
             develop test procedures and analyze and maximize measurement accuracy
             and once that is completed, EPA can  establish technologically feasible
             standards and limits.

             Letters:

             Engine Manufacturers Association  (IV-D-251) p. 59

       Response to Comment 7.4.5 (A)(6):

       We addressed these concerns in "Control of Emissions of Air Pollution from 2004
and Later Model Year Heavy-Duty Highway Engines and Vehicles: Response to Comments".
As we noted there:

       The NTE procedure specifies the conditions under which the engine must comply
       with the NTE standard. We have not specified the emission measurement equipment
       which could be used to determine compliance with the NTE, and we do not believe it
       is necessary to do so. However, this does not give the Agency unlimited discretion to
       determine compliance with the NTE as suggested by the commenters.  Compliance
       with the NTE could clearly be determined using the laboratory equipment  and
       procedures specified in the regulations for the existing FTP. The test equipment
       regulations for the existing FTP include detailed accuracy and precision requirements
       for the equipment, which allows manufacturers to design their engines with sufficient
       compliance margins to ensure that the true value (i.e., the actual value) of the
       engines emission performance is below the emission standard, including appropriate
       consideration for the accuracy and precision of the test equipment. The use of
       existing standard  laboratory equipment will allow manufacturers to design engines to
       comply with the NTE standard, because the use of existing laboratory equipment will
       allow manufacturers to design engines with sufficient compliance margins to ensure
       the true value of the engines emission performance is below the emission standard.
       Laboratory facilities with engine dynamometers are capable of simulating  any duty
       cycle which the engine would experience during normal vehicle operation  and use
       during actual on-road vehicle operation.  In addition, as discussed by a number of
       engine manufacturers, the effect of temperature, humidity and altitude on  HDDE
       engines are well known, and manufacturers can include appropriate compliance
       margins to design engines to comply with the broader range of expanded  conditions
       which apply to the NTE based on their existing expertise and knowledge.  A
       manufacturer can therefore design engines based on laboratory equipment which
       ensures that the true value of the engines emission performance is at or below the
       emission standard, and that engine would therefore continue to comply with the
       standard in actual vehicle operation  during normal vehicle operation and use.

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       (7)    Commenter states that EPA did not clearly define test procedures and should
             develop NTE test procedures and PM measurement techniques adequate for
             the proposed standard without delay. The proposed PM standard on FTP is
             .01 g/bhp-hr based on averaged weighted composite cycle; and consequently
             a PM measurement accuracy required to comply with NTE limits may not be
             achievable undercurrent prevailing regulations.

             Letters:

             DaimlerChrysler (IV-F-186)

       Response to Comment 7.4.5 (A)(7):

       See the response to comment 7.4.5 (A)(1).

       (8)    Changes to Subpart N are necessary. The current FTP emission
             measurement test requirements contained in Subpart N of 40 CFR Part 86
             have not been significantly  revised since they were adopted over a decade
             ago.  To accurately measure emissions  from HD engines at levels similar to
             those proposed for the 2007 standards,  major improvements to the testing
             requirements are necessary and should include use  of ultra-clean intake air,
             humidity and temperature controls, more accurate gas analyzers and PM
             measurements methods, and low sulfur test fuel. In  addition, the required
             analyzer specifications and test procedures must be  modified to ensure
             technically accurate emission test results.  Until improvements  to Subpart N
             are made, EPA will have no defined test procedures  for HD engines that are
             sufficiently accurate to make compliance determinations with respect to the
             2007 standards.  One commenter added in this context, that without
             improvements in the test methods, the feasibility of the standard may be
             limited as much or more by the capabilities of the test methods instead of by
             the engine and aftertreatment technologies. Another commenter specifically
             recommended that Subpart N procedures and associated test practices be
             improved such that the standard deviation within and among lab test
             variabilities be reduce to no more than 10 percent of the standards and noted
             that this task should be accomplished no later than January 1, 2003 to allow
             manufacturers adequate time to upgrade their testing facilities.

             Letters:

             Cummins, Inc.  (IV-D-231) p. 31
             Detroit Diesel Corporation  (IV-D-276) p. 8-10
             General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 67

       Response to Comment 7.4.5 (A)(8):

       See the response to comment 7.4.5 (A)(1).

       (9)    University of Minnesota research has demonstrated that laboratory test stand
             PM emission certification procedures, similar to EPA's recently finalized
             certification procedures, produce results that appear to have no relationship

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DECEMBER 21, 2000	PAGE 7^47

             to the actual PM emissions generated by vehicles operating on the highway.

             Letters:

             American Petroleum Institute (IV-D-343) p. 14

       Response to Comment 7.4.5 (A)(9):

       We are aware of research from the University of Minnesota that have shown some
discrepancies with respect to  particle numbers, but we are not aware of any similar research
that shown similar discrepancies with respect to particulate mass.  Since our standards are
based on measurement of PM mass, we continue to believe that our test procedures are
appropriate. See response to comment 7.4.5(A)(1).

(B)    There may be unforeseen implementation issues related to test requirements
       and measurement capability since knowledge of the requirements and
       technology is currently limited.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Cummins,  Inc. (IV-F-64)

       Response to Comment 7.4.5 (B):

       It is always possible for there to be unforseen implementation issues.  Such issues
have arisen in the past, and have been adequately dealt with either through our regulatory
discretion, or through regulatory amendment.

(C)    EPA should consider the use of portable "rover-like" or "HDD IM" devices as an
       option for testing emissions. This commenter asserted that the testing is
       accurate and these type of devices are small and easy to use and install.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Clean Air Technologies International, Inc. (IV-D-2) p. 1

       Response to Comment 7.4.5 (C):

       EPA is aware of such  devices and will be reviewing their accuracy in the context of in-
use field testing. EPA is expecting to further review this issue in a future rulemaking dealing
with in-use testing.

(D)    Use of on-road emission measurement systems such as the Real-Time On-
       Road Emission Reporter (ROVER), are inadequate to determine compliance
       status accurately.

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       (1)    There are serious problems with ROVER-type systems which make this type
             of equipment inadequate for emission measurement and compliance
             purposes. These problems must be resolved before any such system is
             established as a regulatory compliance requirement. The major problems
             with the ROVER system involve equipment and process limitations that
             constrain the accuracy of emissions measurement, evidence of poor
             correlation between on-highway measurements using ROVER and standard
             laboratory emission testing methods, test-to-test variability resulting from
             these limitations, and the unlimited or undefined set of on-road conditions
             over which a vehicle could be tested.  These measurement problems are
             magnified under the stringent "2007" standards. It is apparent that the
             ROVER-type systems are not capable of measuring compliance to the "2004"
             standards and because the "2007" standards are 90  percent lower than the
             "2004" standards, the accuracy of any such system must be improved by at
             least a factor of ten.  Commenter provides significant discussion on  this issue
             detailing the numerous equipment and procedural  issues that must be
             addressed before using ROVER-type equipment for testing and compliance
             purposes.

             Letters:

             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 68-71

       Response to Comment 7.4.5 (D):

       This comment is nor relevant to this  rulemaking because we are not establishing any
requirements with respect to ROVER systems in this action.

(E)     EPA may not require manufacturers to conduct in-use testing.

       (1)    Light duty in-use compliance models (i.e. CAP 2000) are not applicable to HD
             engines. It is impractical to require manufacturers to remove in-use HD
             vehicles from their customers in order to conduct in-use emissions tests.
             Even though EPA claims authority to impose this requirement under section
             208 of the CAA, there is no statutory basis for requiring HD engine
             manufacturers to conduct in-use testing. EPA should observe the clear
             legislative history of section 208.  Congress simply did not grant EPA
             authority to require manufacturers to sponsor in-use testing programs when
             such testing was "reasonably available." Any attempt to force such in-use
             testing on manufacturers would nullify the clear limitation on EPA's power to
             require such testing in section 208. EPA's current proposal does not meet the
             basic statutory criterion for invoking its section 208 testing authority. In
             addition to this lack of legal authority, EPA has  assumed that HD engine
             manufacturers could in fact comply with its testing  rule, but the vehicle owners
             have no specific contractual obligation to make their  engines available to
             manufacturers for testing.  Commenter provides significant discussion on this
             issue, citing  case law and relevant sections of the CAA and notes that
             requiring manufacturers to conduct in-use testing would be inconsistent with
             the decision making requirements of CAA 307(d)(9) and 5  USC 706.

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              Letters:

              General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 72-75

       Response to Comment 7.4.5 (E):

       This comment is not relevant to this rulemaking because we neither proposed nor are
we finalizing  any requirement for manufacturers to conduct in use testing similar to CAP
2000. However, regarding the commenter's legal argument regarding our authority to require
such a program in the future, please refer to Issue 27 of our Response to Comments for the
Phase 1 Heavy Duty Engine Rule.

(F)     EPA  should remove the requirement to complete the idle CO test for HDGs
       since it is unnecessary.

       (1)     EPA should review the usefulness of the idle CO test for HDGs.  This
              requirement was dropped under the Tier 2 rule for 2004 or later model year
              vehicles and continuing this requirement for HDGs would be a waste of
              resources since the HDG results for this testing requirement are similar to the
              light duty vehicle side.  Current certification data indicates that idle CO
              emission levels are near zero due to the low CO concentration and the
              calculation method (percent of exhaust flow).

              Letters:

              DaimlerChrysler (IV-D-284) p. 10
              Engine Manufacturers Association (IV-D-251) p. 52

       Response to Comment 7.4.5 (F):

       We have reviewed the need for the idle CO standard, and have concluded that it is
not necessary for vehicles equipped with OBD systems. See response to comment 3.1.1(R).

       Issue  7.5: Used Motor Oil as Fuel

(A)     EPA  should prohibit the practice of adding used motor oil to diesel fuel to be
       used in any vehicles with after-treatment control devices.

       (1)     Ash forming components in the oil (i.e. sulfur and phosphorus) will deactivate
              catalysts if they make their way into the exhaust system. The effect is more
              severe in diesel systems than gasoline because diesel catalysts do not
              achieve the high temperatures that are required  to purge them of ash
              deposits.  In addition, the fine metallic content found  in used engine oil may
              accelerate component wear in the fuel injection system and prematurely
              degrade emissions.  Restricting the chemical composition of oils should occur
              only in conjunction with  manufacturers since the resulting composition may
              affect the oil's performance.  Used motor oils should  be recycled at plants that
              are designed to properly treat the used oil.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 7-50
              Alliance of Automobile Manufacturers  (IV-D-262) p. 18

       Response to Comment 7.5(A):

       We agree that ash formation can be potentially problematic for aftertreatment
technologies. Thus, we are prohibiting the practice of adding used motor oil to diesel fuel,
with one important exception. We will allow manufacturers to certify engines that are
specifically designed to use such mixed fuel. For these engines, used oil can be added to
the fuel, but only as specified by the certifying manufacturer. Adding more oil than allowed
by the manufacturer, or adding oil that does not meet the manufacturer's specification, would
be considered to be a violation of the new section 40 CFR 80.522.

(B)    EPA does not have the authority under section 211(c) to control used motor oil
       because it's not a fuel nor fuel additive.

       (1)     EPA provided no rationale for its authority to control motor oil under the CAA;
              nor did EPA define used motor oil. EPA must remedy both of these failings in
              order to allow for public comment and discussion on the  proposal.

              Letters:

              American  Petroleum Institute (IV-D-343) p. 65, 93

       Response to Comment 7.5(B):

       We are only regulating used motor oil to the extent that it is used as a fuel or fuel
additive. Today's action does not affect any used oil that is not used as  a fuel or as a fuel
additive. EPA is not creating a definition of the term "used motor oil" because the plain
language meaning is sufficiently clear.

(C)    Opposes the prohibition on motor oil being  dispensed into truck fueling
       systems.

       (1)     The disposal of used oil is very complicated and has impacts on different
              environmental media.  For marketers, the disposal of motor oil has been a
              source of continuing problems as disposal facilities go bankrupt and become
              superfund sites on a regular basis. As a result, burning and reusing motor oil
              as a fuel have become very attractive methods of disposing of this oil. The
              ban proposed by EPA would eliminate a cost effective disposal option and
              eliminates any incentive to develop a low sulfur lubricant that could be used in
              the vehicle engine.  The use of high sulfur motor oils is unlikely to be
              problematic and the issue should be deferred to a separate  rulemaking.

              Letters:

              Petroleum Marketers Association of America (IV-D-245) p.  13-14

       Response to Comment 7.5(C):

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RESPONSE TO COMMENTS DOCUMENT
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       We are aware that practice of blending used motor oil with diesel fuel is sometimes a
convenient way to dispose of used oil. However, since current formulations of motor oil
contain very  high levels of sulfur, the addition of used oil to highway diesel fuel could
substantially impair the sulfur-sensitive emissions control equipment expected to be used by
engine manufacturers to meet the emissions standards in today's rule. Depending  on how
the oil is blended, it could increase the sulfur content of the fuel burned in the vehicle by as
much as 200 ppm.  Ash formation can also occur because of other contaminants in the  used
oil. As a result, we believe blending used oil into highway diesel fuel could render inoperative
the emission control technology on the vehicle.  Thus, we are prohibiting this practice for all
engines not specifically designed and certified to handle these blended fuels.

(D)    EPA should not require motor oil blended with fuel to be the highest sulfur
       content of any commercially available motor oil.

       (1)     EPA has proposed certain requirements with respect to motor oil  blended with
              diesel fuel at any point downstream of the refinery.  However, the proposed
              regulatory language is unclear and should be revised. Proposed  Section
              80.441 (a) appears to mandate that any motor oil blended into diesel fuel be
              compliant with the requirements of 80.446. Such a  requirement would be the
              equivalent of an  outright ban on such blending as motor oil cannot meet those
              specifications and still perform their primary function.  If there is a 15 ppm cap
              on motor oils that are to be blended with diesel, the  proposed Section 80.448
              that reads "that is explicitly based on the addition of motor oil having the
              greatest sulfur content of any motor oil that is commercially available" is not
              required and does not make sense. Even if this section does not impose
              specifications on motor oils, the clause is  inappropriate since it will be
              impractical to determine which commercially available motor oil has the
              greatest sulfur content, and manufacturers should be allowed to specify  which
              oils can be used in their engines and be able to certify using those specified
              oils.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 30-31

       Response to Comment 7.5(D):

       We are not finalizing that requirement.

(E)    ASTM D-5185 should be used as the test method for sulfur in motor oil.

       (1)     If EPA chooses to require a test method for sulfur in motor oil, it should be
              ASTM D-5185 since it has the best precision.  EPA  should not use ASTM D-
              4927 as the test  method for this requirement.

              Letters:

              Alliance of Automobile Manufacturers (IV-D-262) p. 18

       Response to Comment 7.5(E):

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       We are not specifying any test requirements for used motor oil.

       Issue 7.6: Other Compliance Issues

(A)     EPA should adopt a strong in-use compliance and enforcement program for all
       trucks and buses to ensure that they continue to comply with the standards on
       the road throughout their useful lives.

       (1)    Commenters provided no further supporting information or detailed analysis.
             This comment was made by approximately 7,100 private citizens.

             Letters:

             American  Lung Association (IV-F-161, 192) p. 8
             American  Lung Association of Los Angeles  (IV-D-47)
             American  Lung Association of TN  (IV-D-19) p. 1
             CAPIRG  (IV-F- 190) p. 280
             CO Environmental Coalition  (IV-F-191) p. 237
             CO Public Interest Research Group  (IV-F-191) p. 219
             Cassara, Bob (IV-F-65)
             Center for Neighborhood Technology (IV-F-11)
             Chicagoland Transportation and Air Quality Commission  (IV-F-10)
             Chuang, Henry (IV-F-117) p. 265
             Chung,  Payton, et. al.  (IV-D-133)
             City of Arcata (IV-D-200) p. 2
             Clean Air Network (IV-F-191) p. 84
             Clean Air Now Campaign (State PIRGs & citizens) (IV-D-357, 358)
             Coalition for Clean Air (IV-F-190) p.  177
             Coalition on the Environment and Jewish Life (IV-F-184)
             Communities for a Better Environment (IV-F-190) p. 129
             Community Coalition for Change  (IV-F-190)  p. 74
             Davidson, Karin, et. al. (IV-D-79)
             Dickson, Victoria, et. al. (IV-D-77)
             Firestone, Ross (IV-F-4)
             Fox, John (IV-F-191) p. 75
             Franczyk,  Catherine A., et. al. (IV-D-233)
             Freechild, Aquene, et. al. (IV-G-60)
             GA State Senator (IV-F- 117) p. 179
             Glendale-La Crescenta Advocates (IV-D-80) p. 1
             Hackel,  Barbara,  et. al. (IV-D-14) p.  1
             Hopkins, Steve, et. al.  (IV-G-07)
             IL Environmental Protection Agency  (IV-D-193) p. 2, (IV-D-308) p. 2
             IL Public Interest Research Group (IV-F-18)
             Institute for Global Solutions (IV-F-175)
             Kinyon,  John, et.  al.  (IV-G-13)
             L.A. County Bicycle Coalition  (IV-F-190) p. 131
             Lu, Rong  (IV-F-162)
             MD DOE  (IV-D-59) p. 2
             Mayor and citizens of Fort Collins, CO (IV-F-191)p. 211

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             Mexican-American Community Foundation (IV-F-179)
             Montgomery, Jack, et. al. (IV-D-78)
             NESCAUM (IV-D-315)p. 9
             NY DEC (IV-D-239) p. 2
             NY State Assembly  (IV-D-266) p. 2
             NYC Environmental Justice Alliance  (IV-F-116) p. 317
             Natural Resources Defense Council  (IV-D-168) p. 11, (IV-F-190) p. 102
             O'Leary, Cathy and John Carey (IV-G-05)
             Ozone Transport Commission  (IV-D-249) p. 2, (IV-F-55)
             Packard, Josh (IV-G-54)
             Rhubert, Pamela J.  (IV-D-15) p. 1
             Riggles, Ruth, et. al.  (IV-D-102)
             Rodriguez, Dolores,  et. al.  (IV-D-91)
             Schmitz, Randy, et. al.  (IV-D-46)
             Schwartz, Steve  (IV-D-85)
             Sierra Club Rocky Mtn. Chapter (IV-F-191) p. 191
             South Bronx Clean Air Coalition (IV-F-116) p. 125
             Stuckey, Stephanie  (IV-D-182) p. 2
             Tacha, Athena and Richard Spear (IV-G-06)
             Union of Concerned  Scientists (IV-F-165)
             Village of Oak Park Dept. of Public Health (IV-F-8)
             Washington Regional Network (IV-D-18) p. 1
             Williams, Mary, et. al. (IV-D-122)

       Response to Comment 7.6(A)(1):

We agree that a strong in-use enforcement program is necessary to ensure that heavy-duty
vehicles will comply with the new standards in use.  EPA has promulgated OBD and NTE
requirements in the Phase 1 rule in part to improve our ability to enforce the heavy-duty
standards in use. We did not propose  any manufacturer in-use testing program in this rule.
We expect to address these issues in a future rulemaking.

       (2)    One commenter noted that the NTE limits in the recent Consent Decree
             between the U.S. and a number of diesel manufacturers, should be codified
             and that EPA should adopt OBD requirements and implement an in-use
             testing program and  other enforcement mechanisms.

             Letters:

             City of Seattle  (IV-D-297) p. 2
             MDDOE  (IV-D-163)p. 1
             Natural Resources Defense Council  (IV-F-75)

       (3)    Some specifically noted that both in-use compliance efforts and OBD
             requirements should be in place for all HDVs by 2007.

             Letters:

             Consumer Policy Institute (IV-D-186) p. 7
             International Center for Technology Assessment  (IV-D-313) p. 3

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DECEMBER 21, 2000	PAGE 7-54

             NJ PIRG (IV-F-116)p. 314
             NY DEC (IV-D-239) p. 4
             NY State Attorney General's Office  (IV-D-238) p. 2
             NYC Council  (IV-F-80)
             Wl DNR (IV-D-291)p. 2
             Wl Department of Transportation (IV-D-241) p. 2
             Wilderness Society (IV-F-117) p. 217

       Response to Comments 7.6(A)(2) and (3):

       We have already codified the NTE limits from the consent decrees into 40 CFR Part
86, with some modifications.  We have also adopted OBD provisions for heavy-duty vehicles
under 14,000 pounds GVWR. We will be considering adoption of similar OBD provisions for
other heavy-duty vehicles and a manufacturer in-use testing program in a future rulemaking.

       (4)    Commenter suggests a required national I&M program for all affected
             vehicles to ensure that new controls are effective in-use, on a continuous
             basis.

             Letters:

             Fletcher, Robert E. (IV-F-117) p. 175

       (5)    In-use compliance is necessary because otherwise more stringent controls
             must be imposed on stationary sources, and businesses will be forced to pay
             to compensate for illegal dirty emissions.

             Letters:

             CA Air Pollution Control Officers' Association  (IV-D-109) p. 2

       (6)    EPA should develop a true emissions short test for States to use to
             encourage proper maintenance of vehicles.

             Letters:

             PADEP (IV-D-100)p. 3

       Response to Comment 7.6(A)(4).  (5) and (6):

       See our response to comment 7.6(A)(1).

(B)     EPA should examine and address,  if possible, the issue of trucks idling
       unnecessarily  for extended period  of time, which causes emissions that could
       easily be avoided.

       (1)    In order to address this problem, EPA could encourage or require the
             production of trucks that have a sleeper cab that can  be heated or cooled
             without  the engine being on continuously.

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              Letters:

              Instatherm (IV-F-117) p. 223

       (2)     Commenters provided no further supporting information or documentation.

              Letters:

              Mathews, Erik, et al (IV-D-24) p. 1

       (3)     The extent to which engines powering interstate trucks are idled without a
              driver behind the wheel (40 percent of HDDEs total operating time), severely
              compromises the g/bhp-hr standards as presently proposed. EPA should
              recognize this extremely deleterious situation by a further lowering of the
              allowable engine pollution level to accommodate this extended idling at zero
              bhp.  The best available means to achieve this is simply to turn off the engine
              when it is not propelling the truck. Technology is currently available to
              sleeper truck manufacturers and to the industry to eliminate the need for
              trucks to idle and pollute in this manner. Commenter provides additional
              statistics and urges EPA to address the issue in its proposed rule.

              Letters:

              Instatherm (IV-D-119) p. 1-3

       Response to Comment 7.6(B):

       We did not propose any changes to the test procedures or emission calculations to
address technologies that reduce idling time.  Nevertheless, we believe that such
technologies may have significant environmental value, and may consider the issue in  a
future rulemaking.

(C)    EPA should adopt appropriate labeling requirements for vehicle manufacturers.

       (1)     Agrees with the labeling requirement in section 86.007-35(c). This is a
              necessary step to help prevent misfueling. EPA should clarify that it does not
              intend to require HDE manufacturers to comply with the labeling requirements
              since these manufacturers typically supply the engines to the vehicle
              manufacturers who should be held responsible for ensuring the labeling
              requirements are met.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 74

       Response to Comment 7.6(C):

       We are adopting a requirement that manufacturers notify each purchaser of a model
year 2007 or later diesel-fueled vehicle that the vehicle must be fueled only with the
low-sulfur diesel fuel meeting the regulations being adopted in this FRM. We are also

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requiring that model year 2007 and later heavy-duty diesel vehicles must be equipped by the
manufacturer with labels on the dashboard and near the refueling inlet that say: "Use Low
Sulfur Diesel Fuel Only" or "Low Sulfur Diesel Fuel Only".  The regulations do not specify
precisely which manufacturer must install the labels.  For non-integrated manufacturers, we
believe that it would be appropriate for the engine manufacturer to provide such a label to the
vehicle manufacturer, since in many cases the engine manufacturer will be more familiar with
the regulatory requirements.  However, we will allow an engine manufacturer work out other
arrangements with the vehicle manufacturer to have the vehicle manufacturer install its own
label.  In many ways, this requirement is similar to the requirements for manufacturers to
specify exhaust systems or cooling systems for their engines, which the vehicle
manufacturers install.

(D)    EPA should draft rules that would establish appropriate noncompliance
       penalties for engine and vehicle manufacturers.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             West Harlem Environmental Action/Envr Justice Network (IV-F-76)

       Response to Comment 7.6(D):

       See response to comment 3.7.3(A)(1).

(E)    EPA should consider alternative compliance options to address issues
       associated with competitiveness.

       (1)    Competitive issues created by the 2004 rules and unresolved issues from the
             Consent Decree, will compromise certain manufacturers' ability to compete in
             the HD diesel engine market-place. Since the 2004 rule was not successfully
             implemented, Consent Decree companies must now make a choice between
             attempting to survive almost five years of severe competitive disadvantage or
             developing  two separate produce lines.  In its proposed rule, EPA has not
             acknowledged or addressed the competitive impact that proposed
             industry-wide regulations (or the lack thereof) have on companies bound by
             Consent Decrees. Commenter recommends that EPA consider an alternative
             approach that would address their concerns.  Under the commenters'
             proposal, the 2007 rule would add a voluntary program beginning in 2005,
             under which volunteers would pull ahead Supplemental Emission Testing
             requirements (including NTEs) in exchange for reduced emission
             requirements in  2007, and would move Consent Decree implementation of
             the testing requirements from October 2002 to October 2003 to maintain the
             15-month competitive disadvantage to which the Consent Decree companies
             agreed. Commenter provides additional discussion on this issue and their
             proposal to address competitiveness issues.

             Letters:

             Cummins Inc. and Caterpillar Inc. (IV-G-61), p. 1-3

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DECEMBER 21, 2000	PAGE 7-57
      Response to Comment 7.6(E):

      See response to comment 3.1.4(F)(8).

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DECEMBER 21, 2000	PAGE 8-1

ISSUE 8:  REFINERY/DISTRIBUTION ISSUES

       Issue 8.1:  Supply and Distribution

              Issue 8.1.1: Fuel Supply Reliability Impacts

(A)    The implementation of a 15 ppm diesel fuel sulfur standard is unlikely to cause
       refiners to close or to stop producing diesel fuel.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Environmental Law & Policy Center of the Midwest (IV-F-6)

       (2)     Disagree with refiners' argument that some refiners will choose not to make
              diesel, thereby reducing supply.  Fuel supply will be driven by profitability, not
              cost.  Despite the implementation of a low-sulfur standard in California,
              demand for diesel remains high and many of the most profitable refiners are
              located in California.

              Letters:

              Alliance of Automobile Manufacturers (IV-F-9, 59, 190) p. 114 (IV-F-117) p.
              168(IV-F-191)p. 89

       (3)     The refining industry has proposed a fuel sulfur level of 50 ppm and the
              incremental costs associated with reducing the sulfur in fuel from 50 ppm to
              15 ppm is minimal. According to the  MathPro study, this incremental cost
              would be approximately 3-5 cents per gallon. In addition, API's own data
              show that refinery closures have occurred steadily since  1985 but crude oil
              capacity in the U.S. has increased significantly during that same period, which
              further supports the assertion that fuel shortages are unlikely to pose a
              problem,  [cites to API Basic Data Book, Section VIII, Table 4].

              Letters:

              International Truck & Engine Corp. (IV-D-257) p. 9

       (4)     Fuel supply issues are unlikely to be  a significant problem in the context of
              EPA's  proposed rule. Refiners have  the capability to use zero-sulfur blending
              to help return any contaminated volume to compliance levels. In addition,
              EPA should consider the potential fuel savings that would accrue if
              automakers are successful in introducing the higher efficiency advanced
              technology diesel vehicles, which have very high fuel efficiencies.  The
              increase market share of light duty diesels with higher fuel efficiencies would
              reduce overall use of diesel and could help mitigate any future issues
              associated with reduced diesel supply.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-2
             Alliance of Automobile Manufacturers  (IV-D-262) p. 17

(B)    The 15 ppm diesel fuel sulfur standard will  have an adverse impact on the
       supply of diesel fuels, which may result in price spikes.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             American  Farm Bureau Federation (IV-F-5)
             Countrymark Cooperative (IV-D-125) p. 2
             Farmland  Industries (IV-F-29)
             LA Mid-Continent Oil and Gas Association  (IV-D-319) p. 3
             NY Assoc. of Service Stations & Repair Shops (IV-F-45)
             Placid Refining Company, LLC  (IV-D-230) p. 1

       (2)    The cost of the capital investments alone will cause some refiners to stop
             producing diesel, which will further reduce supplies. Some of these
             commenters noted that meeting the 15 ppm standard will require large capital
             investments since new, high-pressure  hydrotreating units will be required and
             only a handful of suppliers design and build these units and as a result,
             refiners will most likely produce a  reduced volume of diesel from available
             straight run stocks and supplies will shrink. One commenter provided as an
             attachment to their letter, the Turner, Mason & Company study entitled
             "Costs/Impacts of Distributing Potential Ultra Low Sulfur Diesel" of February
             2000, as further supporting documentation.

             Letters:

             American  Bus Association  (IV-D-330) p. 5
             American  Petroleum Institute (IV-D-343) p. *3,*4, 45
             CO Petroleum Association  (IV-D-323) p. 1-2
             Cenex Harvest States Cooperatives (IV-F-191) p. 102
             Citgo Corporation (IV-D-314) p. 3, 4
             Conoco (IV-F-191) p. 154
             Countrymark Cooperative (IV-D-333) p. 5, (IV-F-30)
             Equiva Services  (IV-D-226) p. 3
             ExxonMobil (IV-D-228) p. 2-3,14-16, (IV-F-800)
             Food Marketing Institute (IV-D-283) p. 3
             Gary-Williams Energy Corporation (IV-F-43)
             Independent Fuel Terminal Operators Association  (IV-D-217) p. 3
             Marathon  Ashland Petroleum (IV-D-261) p. 2, (IV-F-74)
             Murphy Oil Corporation (IV-D-274) p.  13-14
             NATSO (IV-D-246) p. 8, (IV-F-17)
             National Petrochemical & Refiners Assoc./CITGO  (IV-F-117) p. 101
             National Petrochemical & Refiners Association  (IV-D-218) p. 5,19, 21,(IV-F-
             44,67), (IV-G-31), p. 1
             Ports Petroleum  Co, Inc. (IV-F-117) p. 190

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DECEMBER 21, 2000	PAGE 8-3

              Remster, John (IV-F-28)
              Society of Independent Gasoline Marketers of America (IV-D-328) p. 4, (IV-
              F-191)p. 196
              U.S. Chamber of Commerce (IV-D-329) p. 5-7

       (3)     Some commenters referred to the National Petroleum Council report "U.S.
              Petroleum Refining: Assuring the Adequacy and Affordability of Cleaner
              Fuels" June 20, 2000 and noted that the NPC  has called the risk of
              inadequate supplies as a result of the proposed diesel fuel sulfur standard
              "significant."  Commenters referred to several  conclusions in this report
              regarding the potential for adverse impacts to diesel fuel supply and price due
              to the proposed fuel standard. One  commenter also referred to statements
              made by the Congressional Research Service (CRS) and noted that the
              limitations associated with the pipeline infrastructure would magnify any
              supply disruptions resulting in significant prices increases.  This commenter
              provided significant discussion on the issue of the potential for supply
              shortages and cited to API's estimate that the implementation of the proposed
              fuel standard would lead to a decrease  in the production of diesel fuel by
              about 30% from current levels.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 43, (IV-F-16, 42, 182, 117) p. 161
              (IV-F-191)p. 114
              American Trucking Association (IV-D-269) p.  13-18, 29
              Countrymark Cooperative  (IV-D-333) p. 5
              Murphy Oil Corporation (IV-D-274) p. 9-10,13-14
              Sinclair Oil Corporation (IV-D-255) p. 5
              U.S. Department of Energy (IV-G-28) p. 5-6

       (4)     Commenters cited a Charles River Associates study, "An Assessment of the
              Potential Impacts of Proposed Environmental  Regulations on U.S. Refinery
              Supply of Diesel Fuels," August 2000, that estimates 20 refiners will produce
              less on-road diesel, thus significantly affecting diesel supplies.  The report
              estimates a 320 thousand barrel per day shortfall; this on top of lower imports
              from Europe as a result of more stringent standards will result in price
              increases. Commenters provide significant discussion on this issue including
              a graph of supply-demand  market equilibrium with full cost recovery and note
              that the economic impact of expected supply disruptions will be more acute in
              certain regions such as PADD 4. Commenters suggest EPA consider the
              potential economic and national security ramifications of its proposed rule.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 46-50
              ExxonMobil  (IV-D-228) p. 2-3,14-16
              Marathon Ashland Petroleum (IV-D-261) p. 45-48

       (5)     Some commenters cited to specific estimates  of how much the supply of
              diesel fuel may be reduced as a result of EPA's proposed rule. One

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-4

              commenter noted that NPRA expects diesel fuel supply capability to be
              reduced by 320-620 thousand barrels per day, or as much as 10-20% of
              projected diesel demand in 2006, as a response to EPA's proposed rule.
              Another noted that API and the NPRA have estimated that the proposed rule
              will result in a 20 to 30 percent reduction in the U.S. diesel fuel supply over a
              period of up to four years.

              Letters:

              National Petrochemical & Refiners Association (IV-D-218) p. 3
              U.S. Chamber of Commerce (IV-D-329) p. 6

       (6)     Any supply shortages will be exacerbated by the fact that foreign refiners will
              be unable to provide additional supplies of the low-sulfur diesel. Increased
              imports are unlikely to be able to fill the gaps in lost production since few
              foreign refiners will be producing diesel that would meet the low-sulfur
              standards. The installation of new equipment for foreign refiners to meet
              increased demand could take several years. Some commenters suggested
              that EPA move to a 50 ppm standard to be consistent with Europe.  One
              commenter notes that without European supplies, distributors will turn to
              Midwest diesel to supply Northeast home heating oil in  the winter at the same
              time Midwest farmers are attempting to stockpile supplies for spring planting
              and to use for home heating. Another commenter notes that much of the
              diesel fuel used on the East Coast is imported from abroad and the lower the
              sulfur content standard required, the more difficult it becomes to obtain
              additional supplies from outside the U.S. This commenter added that if EPA
              mandates an extreme standard, it will very likely result in tight markets, high
              prices and physical dislocations and shortages.

              Letters:

              American Petroleum Institute  (IV-F-16, 42, 182, 117) p. 161  (IV-F-191) p.
              114
              Cenex Harvest States Cooperatives (IV-D-232) p. 6
              Independent Fuel Terminal Operators Association (IV-D-217) p. 3-4
       Murphy Oil Corporation (IV-D-274)  p. 10,14
              National Petrochemical & Refiners Association (IV-D-218) p. 11
              New England Fuel Institute  (IV-D-296) p. 2-3
              Ports Petroleum Co, Inc.  (IV-F-117) p. 190
              Society of Independent Gasoline Marketers of America (IV-F-191) p. 196
              U.S. Chamber of Commerce (IV-D-329) p. 6

       (7)     Increasing fuel specification stringency, coupled with the refining industry's
              low rate of return on capital, make it more difficult to produce and distribute
              products. This leads to supply disruptions and  price spikes, such as home
              heating oil last winter and Midwest RFG recently. The commenter cites "The
              California Conundrum," by P.K. Verleger (March, 2000) which draws
              analogies between the increase in California gas prices and price spikes in
              home heating oil in the East, as evidence that strict standards result in price
              spikes because of the associated difficulty of producing and distributing such

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DECEMBER 21, 2000	PAGE 8-5

              products. Other commenters pointed to recent price spike incidents (such as
              home heating oil and RFG) as examples of what is likely to occur as a result
              of a 15 ppm standard. One of these commenters noted that while those
              spikes tended to be localized in nature, diesel price spikes will affect a
              broader area geographically and a broader set of industries that rely on the
              fuel.

              Letters:

              Agricultural organizations as a group (IV-D-265) p. 1-2
              Big West Oil, LLC  (IV-D-229) p. 1-2
              Cenex Harvest States Cooperatives (IV-D-232) p. 11
              National Petrochemical & Refiners Association (IV-F-31)
              USDA (IV-D-299) p. 3

       (8)     Some commenters also asserted that contamination at pipeline interfaces or
              elsewhere in the distribution network will lead to inevitable downgrades, which
              will subsequently reduce the supply of diesel (or lead to spot outages).  Some
              commenters pointed to the NPC report's conclusions about this concern.
              One of the commenters stated that there could be initial contamination of low-
              sulfur fuels unless pipelines, tanks, and other distribution  components are
              thoroughly separated from exposure to higher sulfur products. Complete
              segregation of low-sulfur diesel is not currently possible since there are not
              enough dedicated pipelines, and storage, cargo and retail tanks to ensure
              that higher sulfur fuels will remain completely separate. One commenter
              noted that some pipelines are estimating that over 20% of the on-highway
              diesel will have to be downgraded  in order to ensure the integrity of the 15
              ppm sulfur product on the receiving end.

              Letters:

              American Petroleum Institute (IV-D-343) p. 42-44, (IV-F-16, 42, 182, 117) p.
              161  (IV-F-191)p. 114
              American Trucking Association (IV-D-269) p. 13-18
              British Petroleum (IV-D-242) p. 6
              Cenex Harvest States Cooperatives (IV-D-232) p. 9
              Citgo Corporation (IV-D-314) p. 2
              Collier, Shannon, & Scott (IV-F-117) p. 24
              Countrymark Cooperative (IV-D-333) p. 4, (IV-F-191) p.  184
              ExxonMobil (IV-D-228) p. 3,18
              Marathon Ashland Petroleum  (IV-D-261) p. 3, 50, 94-95, (IV-F-74)
              Murphy Oil Corporation (IV-D-274) p. 10,14
              NATSO  (IV-F-17)
              National Petrochemical & Refiners Assoc./CITGO (IV-F-117) p. 101
              National Petrochemical & Refiners Association (IV-D-218) p. 5, (IV-F-31, 44)
              New England Fuel  Institute (IV-D-296) p. 4
              Ports Petroleum Co, Inc.  (IV-F-117) p. 190
              Society of Independent Gasoline Marketers of America (IV-D-328) p. 4-5,
              (IV-F-191)p. 196

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DECEMBER 21, 2000	PAGE 8-6

              U.S. Chamber of Commerce (IV-D-329) p. 6
              U.S. Department of Energy  (IV-G-28) p. 5-6
              Western Independent Refiners Association  (IV-D-273) p. 3

       (9)     The domestic industry has no experience handling low-sulfur fuels, as
              assessed by Turner, Mason & Co. and presented to EPA in a letter dated
              Feb. 23, 2000, and will have difficulty maintaining a continuous supply of 15
              ppm sulfur fuel.  Consequently, a large percentage of fuel will be downgraded
              from on-highway diesel, resulting in inadequate supplies and supply
              disruptions and concomitant price spikes. Other delays will be caused when
              the hydrotreater shuts down and the refinery produces high sulfur diesel; such
              downtime will be exacerbated by the need to flush the pipelines and product
              distribution system to avoid contamination of on-highway fuel.  Moreover, it is
              doubtful that field testing equipment for low sulfur fuel will be available to test
              the product in pipelines, and so delays in  product delivery may result as the
              product is tested in laboratories.

              Letters:

              American Petroleum Institute (IV-D-343)  p. 43-45
              Citgo Corporation (IV-D-314) p. 2
              ExxonMobil  (IV-D-228) p. 2,18

       (10)    Even if a refiner can  afford to make the investments necessary to install the
              machinery necessary to make 15 ppm or less diesel fuel, there is no
              assurance that this refiner can sustain production of diesel fuel with this sulfur
              level day after day. This would require near perfect operations of all
              machinery every day and such perfection will not occur in the real world of
              diesel fuel production.  As a result, some  portion of the existing production of
              on-road diesel will fail to  meet the 15  ppm standard, thus further reducing
              supplies.

              Letters:

              Society of Independent Gasoline Marketers of America (IV-D-328) p. 5

       (11)    Commenter notes several factors that adversely affect supplies. First, LCO
              and coker distillates  have molecules that are hard to desulfurize and therefore
              likely will not remain  as viable distillates for the on-road markets. Second,
              refiners will have to run all distillates through the sulfur reduction units and not
              blend some distillate straight into the on-road pool. Third, molecular
              saturation and hydrocracking of distillates will result in yield losses of about 2
              percent, or up to 40,000  B/D, which means that refiners will have to process
              an additional 120,000 B/D of crude (assuming 30 percent of a crude barrel
              goes to distillates). Finally, some refiners will find it more economical to crack
              distillate range molecules to gasoline rather than produce low sulfur diesel.

              Letters:

              Big West Oil, LLC (IV-D-229) p. 5-6

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       (12)    Because diesel production is blended from fewer refinery units than gasoline,
              refinery diesel production capabilities are more limited than gasoline
              production capabilities. This results in less flexibility to control and blend
              sulfur to a level as low as 15 ppm. This will contribute to supply problems.

              Letters:

              Western Independent Refiners Association (IV-D-273) p. 3

       (13)    Already, as a result of industry consolidations and refiners exiting the motor
              fuels business, the number of sources of diesel fuel on which an independent
              marketer can look for supply has been reduced.  If the sources of supply or
              the numbers of suppliers are restricted further, independent marketers will be
              forced to look towards integrated refiners (which in many cases are
              independent marketers' strongest competitors), for diesel fuel supply. As
              integrated refiners become aware that independent marketers have limited
              supply sources, there will be less of an incentive to be competitive. EPA's
              diesel fuel sulfur proposal will result in a substantial decrease in the overall
              supplies of on-road diesel fuel in this country.

              Letters:

              Society of Independent Gasoline Marketers of America (IV-D-328) p. 4

       (14)    For farmers, the seasonality of diesel supply is critical, and thus farmers can
              be significantly harmed by short term supply problems or price spikes. That is
              why farmer co-op refiners were established and why their continued existence
              is critical for farmers.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 11

       (15)    Fuel supply concerns are a national security issue. Instead  of developing this
              type of regulation and Tier 2 that restrict supplies, the U.S. should be
              establishing programs to foster crude exploration and increased refining
              capacity.

              Letters:

              Countrymark Cooperative  (IV-D-333) p. 14
              Marathon Ashland Petroleum (IV-D-261) p. 48

       (16)    To help address these problems, EPA should establish fair and workable
              variance procedures.  Commenter does not recommend specific elements of
              a variance  procedure, but strongly urges EPA to develop a plan that will allow
              flexibility without compromising environmental benefits or disadvantage
              refiners who are in full compliance.

              Letters:

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DECEMBER 21, 2000	PAGE 8-8
              Chevron  (IV-D-247) p. *2, 7

       (17)    Interruptions in fuel supply will cause substantial disruption to the food
              distribution industry, which depends largely on trucks to transport perishable
              food products on a regular basis from distribution centers to grocery stores
              and, therefore, depends on reliable fuel supplies to ensure the quality of the
              food.  One commenter noted that in light of these supply disruptions, EPA's
              proposed rule is likely to result in an additional 9 percent increase in fuel
              prices, thereby resulting in an overall increase in excess of 20 percent for
              diesel fuel for food distributors and supermarkets.  EPA should fully evaluate
              these  impacts before finalizing the rule.

              Letters:

              Food Marketing Institute  (IV-D-283) p. 3
              U.S. Chamber of Commerce (IV-D-329) p. 6

       (18)    A consistent supply of fuel is essential to the concrete industry, and EPA's
              proposal appears to have the ability to jeopardize the supply of diesel fuel.
              Businesses in this industry are required to  deliver a perishable product on a
              dependable basis, and supply disruptions may impede their ability to do so.

              Letters:

              National Ready Mixed Concrete Association  (IV-D-271) p. 2

       (19)    Refiners' ability to consistently produce 15 ppm sulfur diesel fuel by the
              proposed deadline will be compromised by the fact that these refiners are
              also required to be installing technologies that will reduce  the sulfur level of
              gasoline as well as MTBE.  Refiners may not be able to reconfigure their
              facilities for diesel desulfurization at the same time as they are required to
              meet these other requirements.

              Letters:

              U.S. Chamber of Commerce (IV-D-329) p. 6

       (20)    In follow-up comments, an industry association provided quantified estimates
              of the  potential reduction in supply capability that may be caused by the 15
              ppm standard. The potential reductions were grouped into reason categories
              (technical feasibility, hydroprocessing yield loss, energy content loss, refinery
              sustainability, distribution impacts, and net import loss), and the commenter
              noted  that some of the categories are cumulative while others are
              interdependent. The total loss in capability is likely to be well over 10 percent
              and may exceed 30 percent. In addition, the flexibility to add  supplies from
              domestic or foreign sources will be reduced or even eliminated.

              Letters:

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              National Petrochemical & Refiners Association (IV-G-29) p. 2

       (21)    The fuels industry has no applicable experience in the shipment of an ultra
              clean product in the multi-product petroleum distribution system, and the
              EPA's RIA addresses this issue by assigning a very small cost to the
              downgrading of pipeline interface, asserting that "good operational practices"
              will avoid all problems.  Assuring retail supply reliability of an ultra-low sulfur
              diesel fuel will require the industry to take extraordinary actions, not just "good
              operational practices."  The work performed by Turner, Mason & Company
              (TMC), as previously submitted to EPA, provides a well-informed basis for
              understanding what will have to be done and the likely range of costs.
              However, this is an area where more work needs to be completed and the
              issue of feasibility and cost of maintaining low sulfur diesel quality after it
              leaves the refinery needs to be reconsidered in the "technology review."

              Letters:

              U.S. Department of Energy (IV-G-28) p. 6

(C)    Although some market upset is likely, there are few options to completely
       address this issue.

       (1)     Some disruption is likely regardless of whether EPA selects 15 or 50 ppm.
              The market will correct itself and attain equilibrium.  To minimize initial
              disruptions, EPA can use a transition period similar to the proposed approach
              (see commenter's points under Issue 4.3.2).

              Letters:

              Hart/IRI Fuels Information Services (IV-D-154) p. 3-4

       Response to Comments 8.1.1 (A). (B). & (C):

       Comments addressing the ability of the refining industry to produce sufficient volumes
of diesel fuel meeting the 15 ppm sulfur cap will be addressed first. This discussion will be
followed by a discussion addressing comments on the ability of the pipeline system and the
rest of the fuel distribution system to transport sufficient volumes of diesel fuel meeting the 15
ppm sulfur cap. More specific issues raised in these comments (e.g., comment (13)) will be
addressed in each of the two broad responses.

       Response to Comments Under 8.1.1 (A), (B), & (C) on the Supply of  15 ppm Fuel
       by Refineries

       The comments summarized above which express concern that a 15 ppm sulfur cap
could  create  a shortage of highway diesel fuel and associated price spikes basically present
the following reasons for their position:

       o      The requisite desulfurization technology has not been demonstrated
              commercially and promising new technology will not be ready until after 2006,
              encouraging refiners to delay compliance, leaving the market short in the

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              early years of the program
       o      Diesel fuel is lost during the desulfurization process, adding to the shortage of
              diesel fuel due to other reasons
       o      Assuming that the projected desulfurization technology will work, refineries
              face a wide range of costs to meet 15 ppm cap, raising significant concerns
              that the market will not allow refiners with higher costs to recoup their
              investment and encouraging those facing higher costs to avoid the investment
              and leave the highway diesel fuel market
       o      The required investment to meet the sulfur cap is relatively large and refiners
              face other environmental program investments in the same timeframe,
              making it difficult for refiners to be able to find  adequate financing and to find
              the required engineering and construction resources
       o      The domestic refining system is approaching or already at maximum
              utilization of capacity; so any inadvertent shutdowns or upsets of the new
              desulfurization  units will impact supply
       o      Overseas refiners will have difficulty meeting the 15 ppm sulfur cap, cutting
              off this portion of current diesel fuel supply
       o      The increased difficulty in avoiding contamination of 15 ppm fuel in pipelines
              will increase the amount of highway diesel fuel that is downgraded to nonroad
              diesel or heating oil, again decreasing supply

       The comments summarized above which project that the supply of highway diesel
fuel will be adequate under a 15 ppm sulfur cap basically make the following points:

       o      Refiner's  investment decisions are driven by profitability, not cost,
       o      Refiners will face large drop in price to sell diesel fuel in alternative markets
       o      Desulfurization technology will likely be commercially demonstrated soon
              after the final rule, the vendors are confident in their technology, and new
              catalysts  are rapidly being developed
       o      Need for some refiners to build new units makes it convenient and profitable
              for refiners to move some of their nonroad diesel fuel into  the highway market
       o      Concern for supply shortages argues against low profit margins; high
              expected profit margins argue for refinery investment and adequate supply
       o      Refiner margins may be improving, providing more capital for investment
       o      Higher price spread between highway and nonroad diesel fuel likely to reduce
              use of highway diesel fuel in nonroad engines and boilers

       In addressing these comments, we will start with the factors presented which argue
that the new standard will reduce the supply of highway diesel fuel. In addressing, the points
made supporting an adequate diesel fuel supply will be mentioned, as appropriate.

       The first factor which could affect highway diesel fuel supply is uncertainty in what
technology will be required to meet the 15 ppm standard.  As discussed in Section 8.1.2
below and in the RIA, uncertainty does exist concerning the requisite desulfurization
technology.  Most vendors project that two-stage conventional hydrotreating at low to
moderate hydrogen pressure will be sufficient to achieve the new standard, even with
significant quantities of LCO.  Most refiners commenting on the rule,  plus 1-2 vendors believe
that moderate to high pressures will be needed, accompanied by more aromatic saturation
and hydrogen consumption. In addition, Phillips Petroleum just announced that they have
developed a new, low pressure process which promises to consume no hydrogen.  This

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process cannot yet be licensed, but Phillips hopes to begin licensing next year. However, a
commercial unit utilizing this technology is not projected to start up until 2004.

       The uncertainty in current technology which will be necessary to achieve the new
standard could encourage some refiners to delay investment until the latest possible time
while still allowing time to build their equipment in time for the 2006 implementation date.
The promise of lower costs based on refiner's experience meeting the new standard in 2006
or with the new Phillips technology could encourage refiners to delay the construction  of new
equipment until beyond the 2006  implementation date. The temporary compliance option
and small refiner provisions will allow up to 25% of highway diesel capacity (nearly half of the
refineries currently producing highway diesel fuel) to delay meeting the 15 ppm cap until
2010, allowing time for Phillips' and other new technologies to be  demonstrated. In some
cases, particularly refiners located in isolated areas where hydrogen costs are high, the
promise of lower long term compliance costs in one to two years could be preferable to the
lower revenues obtained from selling highway diesel fuel into the nonroad diesel fuel market
in the short term.

       Countering the benefit of more lead time with respect to conventional hydrotreating
technology is the fact that vendors will have 2-3 years to generate both pilot plant and
commercial data to convince refiners of the efficacy of their processes. While no refiners are
currently required to meet a 15 ppm cap prior to 2006, numerous two-stage (and low space
velocity one-stage) hydrotreating units exist world-wide.  Vendors and refiners are likely to
utilize these units to demonstrate their catalysts commercially.  This is already being done
with some units in Europe. Thus, the largest detriment to investing to meet the new standard
in 2006 is the potential cost savings associated with novel technologies such as Phillips'
SZORB.  These technologies are sufficiently different from conventional hydrotreating that
refiners are likely to require full-size commercial operation for a year or two prior to investing
tens  of millions  of dollars on their effectiveness.  As mentioned above, with the temporary
compliance option and small refiner provisions, nearly half of all refiners currently producing
highway diesel fuel will be able to delay investment for 3.5-4 years and should be able to
utilize the newer technologies, such as SZorb, if this is desirable.

       The second factor raises a concern that conventional desulfurization processes both
reduce the physical and energy density of diesel fuel.   Desulfurization actually increases the
volume of diesel fuel produced, but each gallon of diesel fuel contains less energy. Overall,
the total amount of energy leaving the hydrotreater in the form of diesel fuel decreases by
roughly 1.5%. Vehicular fuel economy is directly proportional to fuel energy density.  Thus,  in
order in to provide the same number of vehicle miles,  refineries will need to increase the
volume of blendstocks which they process by 1.5%. Our cost projections consider this factor.
In terms of supply, the effect is much less. Most of the energy lost to diesel fuel is in the form
of naphtha or LPG. This increases the refinery's production of these products.  This allows
the refinery to make other adjustments, such as  its FCC fractionator outpoints, which
increase diesel  fuel production at the expense of gasoline, bringing the net production of both
products back into balance.

       The third factor potentially affecting supply is the  range of costs faced by refiners in
complying with the diesel sulfur standard.  Our refinery by refinery analysis indicates that
refineries face a wide range of compliance costs.  If each refinery currently producing
highway diesel fuel invests to just maintain their current production, costs range from under 3
cents per gallon to over 15 cents per gallon. It is probably unreasonable for a refiner to

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expect the market to allow a long term increase in the price of diesel fuel of 15 cents per
gallon. However, our refinery model also indicates that some refineries can produce 15 ppm
diesel fuel from their current nonroad diesel fuel blendstocks more cheaply than many
refineries which currently produce highway diesel fuel.  In order to minimize refining costs, we
currently predict that roughly 6 refineries will increase production of highway diesel fuel using
current nonroad diesel fuel  blendstocks. These alternative supplies reduce the maximum
cost for any specific refinery to 5-7 cents per gallon, depending on the PADD.  The phase in
has a similar effect, allowing those refiners with the lowest compliance costs to produce 15
ppm fuel in 2006 and allowing other refiners to delay investment until 2010. The cost range
within each PADD is only 2-3 cents per gallon.  For the purposes of assessing the ability of
some refiners to increase production of highway diesel fuel, we assumed some limitation on
refiners ability to shift production between PADDs.  No shifting was allowed into or out of
either PADDs 4 or 5.  PADD 3 was allowed to send additional highway diesel fuel to PADD  1
and to the southern portion of PADD 2. It is reasonable that refiners would expect that the
market may provide a price increase as high as 5-7 cents per gallon, if average cost is the
4-5 cent per gallon range.

       This  range of price increase to fully recover costs is still high relative to those
associated with previous environmentally driven standards.  According to EIA studies,
refiners have generally not been able to fully recover the cost of previous environmental
programs. Thus, higher compliance costs mean that more money is at risk.

       RFG was projected to cost 4 cents per gallon for Phase 1 of the program, with an
additional  1 cent per gallon for Phase 2.  Gasoline RVP standards, oxy-fuel programs, and
the current diesel fuel 500 ppm  sulfur cap were all projected to cost much less than 4-5 cents
per gallon. One key difference between this rule and the RFG program was that the RFG
program did  not require all gasoline producing refiners to meet the new standards. The RFG
areas were generally small enough geographically that, even near RFG areas, refiners could
choose to  produce RFG or conventional gasoline or a mix of RFG and conventional gasoline.
RFG also only represented roughly one quarter of the national gasoline pool. Here, refiners
can choose to  produce highway or nonroad diesel fuel, but the highway diesel fuel market
represents two-thirds of diesel fuel pool.

       The first aspect of this issue with respect to supply is refiners' ability to leave the
highway diesel fuel market, directly reducing the supply of highway diesel fuel.  Current
highway diesel fuel easily meets the specifications for nonroad diesel fuel or heating oil.
However, the market for these other distillate fuels is not large enough, nor growing fast
enough to absorb much highway diesel fuel. Plus, the highway diesel fuel market is currently
in balance, so any decrease in domestic supply would have to made up by imports.

       In order to assess the potential for refiners to sell their current highway diesel fuel or
some of the blendstocks used to produce highway diesel fuel into alternative markets, EPA
contracted with SwRI and Muse, Stancil to assess these other markets.  Muse, Stancil found
that refiners would have very limited possibilities of disposing of highway diesel fuel or its
blendstocks  domestically.  Only PADD 1 imports significant quantities of nonroad diesel fuel
or heating oil.  Refiners in PADD 1 could produce more of this fuel and back out imports.
However, refineries in other PADDs would  have to export their excess production should they
decrease production of highway diesel fuel, but maintain total distillate production. Based on
historical prices (i.e., highway diesel fuel priced under the 500 ppm sulfur standard), Muse,
Stancil estimates that refiners outside of PADD 1 would lose 3-6 cents per gallon in revenue

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if they shift even 5% of their highway diesel fuel to the nonroad diesel fuel market. These
losses increase to 4-20 cents per gallon if they shift over 5% of their current highway diesel
fuel to these alternative markets.  Refiners in PADDs 2 and 4 would be particularly hard
pressed, as they would have to ship their product to the US Gulf Coast prior to export.  This
adds significant transportation costs, as there are no pipelines flowing from PADDs 2 or 4 to
the Gulf. Refiners attempting to shift fuel to the nonroad diesel fuel market would save their
current operating cost to meet the 500 ppm sulfur specification (mostly hydrogen costs at 1-2
cents per gallon), but this would not nearly compensate for the lower price to be gotten in the
alternative markets.

       Should refiners shift highway diesel fuel production to these other markets, it will not
only affect the price of the shifted product. The price of all nonroad diesel fuel and heating oil
will drop. Refiners trying to sell their highway fuel into these other markets will try to sell  it
locally prior to exportation,  although this will remain an option. These refiners will compete
with those currently producing nonroad diesel fuel and heating oil, depressing prices in the
entire market.  Despite lower prices, fuel demand will not increase substantially, since the
use of nonroad equipment  is a very weak function of fuel price. (For example, fuel costs are
a small portion of the total cost of farming, mining and construction, so one would not expect
that the  demand for diesel fuel in  these sectors of the economy would be very responsive to
fuel price.)  Thus, refiners planning on shifting their highway fuel to alternative markets will
not only have to consider the decrease in market value of the shifted product, but also the
drop in value of their existing nonroad fuel and heating oil production. This added cost of a
drop in highway diesel fuel production would vary widely from  refinery to refinery, since some
refineries produce much more nonroad diesel fuel than highway fuel  and vice versa.

       This loss in market price serves as a discouragement to shift highway diesel fuel to
these other markets.  It basically provides refiners with a second reward for investing in
desulfurization equipment in order to stay in the highway diesel fuel market.  First, investment
allows the price rise of highway diesel fuel which should accompany  the new sulfur standard
to be achieved.  Second, investment allows the price drop associated with export to be
avoided, as well as reduces the potential fora drop in value in existing nonroad diesel fuel
production. (This last factor is a function of other refiners' decisions,  as well, in this area.)
Thus, a  refiner should desire to invest in meeting the new standard if he believes that the
price increase in highway diesel fuel will be at least the cost of meeting the standard minus
the loss associated with export.   For example, if it costs up to 7 cents per gallon to meet the
15 ppm  standard, then the  required price increase in highway  diesel  fuel price may only need
to be 3 cents per gallon for refineries to prefer meeting the 15  ppm standard  versus taking a
loss in the nonroad market (less operating cost savings) of 5 cents per gallon (ignoring any
price drop for existing nonroad diesel fuel production). The lack of a  ready domestic
alternative market for their  product appears to be a strong discouragement to refiners shifting
their production away from highway diesel fuel.

       The sizeable loss in revenue associated with shifting highway diesel  fuel to other
markets is a strong argument by itself that refiners will likely project that it is more profitable
to invest and stay in the highway diesel fuel market than shift their production to other
markets. A further argument is that domestic demand for distillates (including highway,
nonroad diesel fuel and heating oil) has outstripped domestic production in recent years.
While historically the  U.S. imported little of these products, imports now occur and are
growing. Imports of gasoline have also been growing significantly. This has led to improved
refining  margins and record refining profits.

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       For example, over the past year, refining margins have improved dramatically.
Domestic refineries are operating at full practical capacity and are expected to do so for the
foreseeable future. Thus, the market may have begun a long term period where refining
margins will be strong and reward refiners who invest in additional capacity. Refiners also
know that even slight shortages in highway diesel fuel supply would lead to significant price
increases and substantial profits for those in the market. Thus, as always there will be  a
tension between wanting to invest and reap the rewards of a potentially short market and the
concern over over-investment and the inability to fully and consistently recover investment.
The large investment per unit volume of product (discussed further below) will make this a
more difficult situation to balance than in past regulatory requirements.  However, the
temporary compliance option and small refiner provisions will help counter this difficulty, as
they will allow nearly half of all refineries currently producing highway diesel fuel to delay their
investment by 3.5-4 years.  Thus, refiners who are in a better financial position to take the
financial risk involved in such a significant investment can do so, while those which are not in
as good a position can wait, buying credits in the meantime.  In the past, over capacity  in
terms of both fuel production and fuel quality has led to relatively poor refining margins which
have not allowed refiners to  recoup the full cost of environmental standards. Two examples
are the 500 ppm sulfur diesel fuel standard and the RFG standards. In both cases,
over-investment by the refining industry led to over-supply of these fuels and low prices. This
appears unlikely to be the case in the future.  Even  if refiners over invest in diesel fuel
desulfurization capacity, this will  be at the expense  of nonroad diesel fuel production. While
the price differential between the two diesel fuels may be lower in some areas than it would
have been if the industry had just the right capacity, the prices of both fuels are likely to be
relatively high, still providing reasonable returns.

       The fourth factor is related to the previous factor and is the  relatively large size  of the
investment per refinery required to meet this diesel  sulfur standard (e.g., it is more than that
required to meet the recent Tier 2 gasoline sulfur standard).  This is accurate.  We projected
that it would cost $44 million per refinery to meet the Tier 2 gasoline sulfur standards, while
we project that it will cost $50 million per refinery to meet the diesel fuel sulfur cap.  In
addition,  this $50 million figure represents the average of revamped units (which will cost
less) and new units (which will cost more).  Revamped units (representing roughly 80% of all
units) will cost roughly $40 million apiece, while new units will cost $80 million apiece.  Thus,
we project that roughly 20 refineries will face twice the investment cost to meet this diesel
standard as they did to meet the Tier 2 gasoline sulfur standards.

       This difference in investment is to be expected.  Nearly all of the sulfur in gasoline is
contained in the naphtha (material boiling in the gasoline boiling range) produced in the
fluidized catalytic cracker (FCC).  Generally, FCC naphtha is the only material which needs to
be hydrotreated in order to meet the 30 ppm average  sulfur standard for gasoline and this
material only comprises 35-40% of total gasoline volume.  In contrast,  essentially all highway
diesel fuel will need to be hydrotreated in order to meet the 15 ppm cap. Refiners produce
roughly the same  volumes of FCC naphtha and highway diesel fuel. However, diesel fuel
desulfurization requires much higher temperatures  and  pressures, and the material must be
in contact with the catalyst for longer periods of time.  This means that the size of the reactor
must be much larger, its walls must be thicker and pumps and compressors must be
designed for the higher pressure, as well.  Thus, the capital investment per unit volume of
treated material is much higher.  Finally, because the  cost of the  FCC naphtha hydrotreater
can be spread overall gasoline volume (2.5-3 times more volume than that being treated),
the investment per gallon of finished fuel is far more for highway  diesel fuel than for gasoline.

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       Commenters also mention the fact that they will have to finance investments for
gasoline desulfurization and possibly MTBE and benzene removal technology in the same
timeframe.  This issue is addressed in detail in Chapters 4 and 5 of the Final RIA.  There, we
estimated the engineering and construction resources required by the gasoline and diesel
fuel desulfurization projects and found that existing resources were sufficient. EPA has not
yet finalized any MTBE or benzene limits, so it is not appropriate to  consider those programs
here.  However, the analyses associated with those rules, should they be proposed or
promulgated, will consider the investments associated with the diesel sulfur cap.

       We also compared the combined capital investment associated with the gasoline and
diesel fuel desulfurization projects to those over the past 15-20 years. The upcoming
desulfurization investments are slightly less than those experienced by the refining industry in
the early  1990's.  Thus, the industry should be capable of handling this investment. One
commenter did point out that a number of refineries closed during the period of high capital
investment in the early 1990's and indicated that a repeat of these investment levels would
lead to the same industry rationalization. Refineries close for many reasons, not just
environmental requirements (e.g., an historic source of crude oil no longer being available).
A large number of the refinery closures were in California, where a number of smaller
refineries closed just prior to California's Phase 2 Clean Burning Gasoline program.  As
discussed above, we believe that refiners facing higher costs have the  capability of shifting
their highway diesel fuel to other markets, with other refiners having the capability to move
into the market. After such shifts, the range of potential costs of compliance appear to rather
narrow, arguing for little incentive for refineries to close in response to this rule.

       This higher investment per unit volume of product means that refiners will be putting
more investment at risk relative to potential profit in the case of diesel fuel than gasoline. As
will be discussed further below, the market sometimes allows refiners to recoup their full cost
of meeting environmental standards (operating plus capital costs) and sometimes only allows
the recoup of operating costs.  The greater level of investment per unit volume of product
means that refiners would have to cover 3-4 times the investment cost  per gallon of fuel if the
market does not reward them with a price increase which allows the recovery of capital plus a
reasonable return on this investment. Directionally, this means that refiners will look much
more closely at the market situation for diesel fuel before making the investment to meet the
15 ppm standard. In particular, refiners are likely to carefully assess their competitors'
actions to ensure that significant overcapacity  does not exist, which decreases refining
margins.

       However, the demand for fuel continues to grow and domestic refinery capacity is
growing at only about half the rate of growth in demand.  Imports of finished fuel, including
highway diesel fuel are increasing. Also, refining margins during the past year have been
excellent for most refiners.  Integrated oil company profits have also been at record levels.
The net income of individual major oil companies over just the 2nd and 3rd quarters of 2000
(e.g., ExxonMobil) was sufficient to fund all of the capital investment associated with this rule.
If these refining margins continue for any appreciable amount of time, the availability of
capital should not be an issue, even considering other environmental programs facing
refiners, such as the Tier 2 gasoline sulfur requirements and NESHAP  standards for FCC
units, reformers and sulfur plants. We analyzed the combined capital investments
associated with all of these programs in Chapter IV of the RIA.  There, we found that the level

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of capital investment per year will be lower than that occurring in the early 1990's, when most
of the programs associated with the Clean Air Act of 1990 were being implemented and
when refining margins were low. Thus, from an industry wide perspective, the availability of
capital should not be a problem.  The temporary compliance option helps this situation
substantially. Nevertheless, a few individual refiners could have difficulty raising sufficient
capital to meet the new diesel  sulfur standard. We have included hardship provisions in this
rule to accommodate at least some of these situations. In addition, as discussed above,  not
every refiner currently producing highway diesel fuel will need to continue to  do so in order to
meet future demand.

       This raises the fifth factor, the fact that domestic refiners are currently operating at
capacity and any disruption in  supply will cause a supply shortage and price  spikes.  This
issue was addressed in detail under Issue 5.8.2 above.  In summary, we believe that refiners
will invest in a modest amount of over capacity for other reasons which will be available to
respond to unexpected shutdowns. Also, the throughput of any given distillate hydrotreater
can be increased by increasing temperature, albeit at a cost of shorter catalyst life, so the
desulfurization capacity is not exactly fixed, but can be expanded if necessary.

       The sixth factor concerns imported highway diesel fuel. Several commenters stated
that overseas refiners may not be in as able to produce diesel fuel under the new 15 ppm
cap,  as they have been under the current 500 ppm cap.  The three largest sources of diesel
fuel imported into the mainland U.S. are Canada,  the Virgin Islands and Venezuela.  The
Canadian refineries which export to the U.S. are located in the far eastern portion of Canada
and perennially send the vast majority of their production to the U.S. The same  is true of the
largest Virgin Island refinery, which has U.S. ownership. In  both cases, these refineries look
to the mainland U.S. as their main market, though the fact that their production must enter
the U.S. by tanker makes a change in destination logistically easier than that for a truly
domestic refinery. Thus, they are as likely to invest to meet the new standard as any
domestic refinery. Venezuelan refineries are in a  somewhat better position to send their
diesel fuel elsewhere and could be less likely than domestic refiners to invest in new
desulfurization equipment. At the same time, Europe and Japan are implementing 50 ppm
diesel sulfur caps and Europe  is already considering a 10 ppm cap. Thus, export oriented
refineries world-wide will have to invest to at least meet a 50 ppm cap and will likely prepare
for even lower standards, since Europe is already considering imposing a  10 ppm sulfur cap.
Even a refinery designed to produce 50 ppm sulfur diesel fuel is capable of producing some
15 ppm fuel using its existing equipment.  This may require  reducing volumetric  throughput or
cutting the endpoint of its most difficult to hydrotreat blendstocks. However,  such refineries
should be able to send diesel fuel to the U.S. even if they do not design to do so on a regular
basis. Several overseas refiners are likely to closely observe the investment patterns of U.S.
refineries to assess the economics of exporting their diesel fuel under the new standard.
Thus, overall, exporting fuel to the U.S. will be more difficult under the new standard, but
supplies should be available if necessary.  Again,  the temporary compliance  option helps this
situation by allowing importers to import two gallons of 500 ppm fuel for every eight gallons of
15 ppm brought into the country.

       The final factor potentially affecting supply is the possibility that 15 ppm diesel fuel
produced at a refinery will be contaminated during shipment and becoming unsuitable for use
in 2007 and later highway vehicles. As discussed in the RIA, we expect refiners to produce
diesel fuel with an average of 7 ppm under the new standard. However, some batches are
likely to be higher than this.  Pipelines are likely to set their own limits below  15 ppm (e.g., 10

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ppm) for highway diesel fuel entering the pipeline.  This means that diesel fuel will only be
able to pick up perhaps 5 to 8 ppm sulfur during distribution, given the testing allowance
provided in the final rule. As also discussed in the RIA and further below in this section, we
estimate that current loss of highway diesel fuel to nonroad diesel market of 2.2% will double
to 4.4%. This increases the production requirements for 15 ppm diesel fuel, but not for total
diesel fuel, since the volume lost during distribution can be used as nonroad diesel fuel or
heating oil.

       In addition to the broad statements about future supply which were not supported by
any technical information, two technical studies were submitted by outside commenters along
with the comments. One was a study by the National Petroleum Council (NPC) study and
the other was a study performed by Charles River Associates and Baker and O'Brien.

       The NPC study evaluated the cost of producing diesel fuel with an average of 30 ppm
sulfur.  It projected a cost of 6-7 cents per gallon to produce this fuel. NPC also evaluated
the ability of the engineering and construction industry to construct the desulfurization units
needed to meet both the Tier 2 gasoline and diesel fuel sulfur limits.

       As discussed  in detail in Chapters IV and V of the RIA, we believe that NPC
overestimated the  cost of meeting tighter sulfur standards. Also, its projection of  engineering
and construction requirements for both the gasoline and diesel fuel  programs did  not reflect
the phase in and transition provisions associated with either program. These provisions
spread out construction significantly and reduce the maximum demand for these  resources
substantially at any point in time. Our analysis of the demand for these resources is
contained in Chapter  IV of the RIA.

       The study  by Charles River Associates (CRA) and Baker and O'Brien, which was
commissioned by API, assessed refiners ability to maintain an adequate supply of highway
diesel fuel under the 15 ppm cap. As part of this study, CRA polled refiners concerning their
plans under a 15 ppm sulfur cap.  Using the results of this survey, as well as other
information, CRA projected refiners' costs of meeting the  15 ppm standard, as well as their
likely production volumes. CRA concluded that U.S. refiners would likely reduce  their
highway diesel fuel production by an average of 12 percent, creating significant shortages
and price spikes.

       CRA's conclusions appear to have been strongly affected by their assumptions, as
well as the refiner  survey they conducted.  For example, CRA assumed that the new sulfur
standard would cause 10% more highway diesel fuel to be "lost" in the distribution system
compared to today (i.e., downgraded to nonroad diesel fuel).  A much more reasonable
estimate would be 2%, as outline in the RIA, resulting in 9% (98% versus 90% is  a relative
gain of 9%) of more 15 ppm fuel being available than CRA estimated. This difference alone
accounts for 75 percent of their projected  national supply  shortfall.

       CRA also concluded, with little explanation, that 20 refineries producing highway
diesel fuel today would not produce highway diesel fuel under the 15 ppm standard and that
many more would  reduce production. Given the lack of information provided in the study, it
was not possible to evaluate CRA's criteria in selecting these 20 refineries, nor was it
possible to determine how much of the shortfall was attributable to this conclusion. While
CRA evaluated whether refiners currently  producing highway diesel fuel would be likely to
leave the market, they did not assess whether any refineries currently not producing highway

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diesel fuel might enter the market.  EPA did conduct such an assessment. We found that
one refinery currently not producing highway diesel fuel could build a grassroots hydrotreater
and be competitive with other refiners likely to revamp their current hydrotreating units.  In
addition, we found that at least 17 other refineries could economically increase their
production of highway diesel fuel using nonroad diesel fuel blendstocks (e.g., for a cost of
less than 5 cents per gallon).  The diesel fuel production from these refineries would
represent 17% of highway diesel fuel production.  Together with a more reasonable estimate
of downgrades in the distribution system, this would more than compensate for the lost
production, even as estimated by CRA.

       CRA also implicitly assumed that the material being removed from the highway diesel
market could be sold at a reasonable price. However, CRA did not analyze the impact of this
additional supply on the prices which could be obtained in these markets, or even if these
alternative markets could physically absorb all of this material. Much of the material which
CRA assumed would not be used to produce highway diesel fuel is not even diesel fuel, but
poor quality blendstocks, such as light cycle oil or the heavy end of straight run or cracked
material.  It is not clear that such material could be blended into non-highway diesel fuel and
CRA did not analyze this likely problem. Our analyses, supported by a study by Muse,
Stancil and Co., indicate that any substantial quantities of highway diesel fuel diverted to
other markets will depress prices in those markets substantially.  Thus, CRA's analysis,
which only considered the cost to desulfurize highway diesel fuel, and ignored the cost of
dumping  this fuel into other markets must be considered to be flawed  in this  regard.  As
pointed out by the Alliance for Automobile Manufacturers, profitability drives  investment, not
simply cost. If refiners are faced with considerable losses if they have to sell their highway
diesel fuel in other markets, this increases their incentive to invest in meeting the 15 ppm
standard.

       Finally, CRA ignored the fact that roughly 15% of today's highway diesel fuel is
consumed in engines and furnaces not requiring this fuel. Any shortage of highway diesel
fuel, or increased difference in price, would lead many of these non-essential users to switch
to nonroad diesel fuel or heating oil. Only limitations in the fuel distribution system would
cause these users to continue to burn highway diesel fuel.

       These problems with CRA's analysis, plus the lack of detail available concerning the
specifics  of the study, lead us to reject the study's conclusions that there will be significant
supply shortfalls under a 15 ppm sulfur standard.

       Moving on to specific comments which were not addressed above, in responding to
comment (6), very little distillate is imported from Europe today, so having  different sulfur
standards than Europe will not have a significant impact on the ability of the U.S. to receive
distillate imports. European refineries produce more gasoline than is consumed there, but do
not produce sufficient supplies of diesel fuel and heating oil to meet demand. Therefore,
European refineries export gasoline, sometimes to the U.S., but do not export substantial
quantities of diesel  fuel.

       In comment (7), the commenter states that the proposed rule will increase the
likelihood and frequency of price spikes. This issue was addressed earlier in detail under
Issue 5.8.2. There, we acknowledged that the production of  15 ppm diesel fuel will be
contingent on the proper operation of the revamped or new desulfurization equipment.
Unexpected shutdowns of this equipment would immediately reduce supply and, if not

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compensated for, could result in price spikes. However, we also pointed out that the
hydrotreater throughput can be increased by raising temperature, while still maintaining
product quality. We also pointed out that each refiner would likely invest in more capacity
than necessary on a daily basis, in order to be able to reprocess material which did not quite
meet the 15 ppm specification.  (Our cost projections  include this excess capacity.) While
some of this excess capacity will be used in reprocessing at any point in time, much of it will
not be in  use and will provide a buffer to compensate  for unexpected outages at other
refineries. Likewise, refiners will generally design their new equipment with more capacity
than is currently needed in order to handle future growth in production. At any point in time,
some refiners will not be operating at their peak production capacity and can also response
to outages at other refiners. Thus, we do not expect that price spikes will become either
more frequent or severe because of this rule.

       Comment (10) states that the desulfurization equipment needed to meet the 15 ppm
standard will not operate sufficiently well to be able to meet the standard each and every day
of every month, year, etc.  Comment (12) states that the same result will occur because of the
limited number of diesel fuel blending streams available. As pointed out in the previous
paragraph, we expect refiners to plan for occasional off-specification material by building
more capacity than necessary for that day's production. We also believe that controls within
a refinery allow it to anticipate problems which could affect a distillate hydrotreater.  These
controls can be both feed  forward and feed back in nature.

       An example of feed forward control would be the adjustment of hydrotreater operation
based on the types, qualities and amounts of the various blendstocks being fed to the unit.
Hydrotreater operation will be affected by a number of variables, such as distillate volume,
quality, temperature and pressure. However, in a typical refinery, the critical sources of
variability will likely be the volume and quality of its light cycle oil or light coker gas oil, since
these materials contain the sulfur which is most difficult to remove.  The relative volumes of
these streams is easily controlled via pump rates. Variability is likely to arise in their quality,
which will be primarily a function of their distillation  endpoints, which are in turn a function of
how the FCC and coker fractionators operate. Refiners will have available real-time data on
the operation of these fractionators.  When a fractionator is allowing a higher endpoint, either
the amount of that blendstock can be reduced, the total through put of the  hydrotreater can
be reduced, or the temperature of the reactor can be increased.  We expect that refiners will
initially operate their hydrotreaters conservatively (i.e., at very low sulfur levels) based on the
results of pilot plant studies and vendor recommendations to ensure compliance with the 15
ppm cap. However, they will quickly  fine-tune their correlation of input variables and product
sulfur content to operate continuously at their sulfur target.

       We also expect that refiners will install in-line sulfur measurement equipment (i.e.,
feedback control). As soon as sulfur creeps above the target level, the refiner will adjust the
operating parameters mentioned above to compensate.  Likewise, when sulfur is too low, the
refiner will back off on severity,  etc. This is already done with every other piece of equipment
in a refinery. We know of no reason  why distillate hydrotreater operation will be any different.

       Comment (13) believes that this rule would  reduce the number of sources that
independent suppliers have for diesel fuel, reducing competition  and raising prices. EPA has
based its primary cost analysis  assuming that each refiner currently producing highway diesel
fuel continues to do so. In other words, these refiners build or revamp their current
hydrotreaters to produce 15 ppm fuel. As pointed out in Chapter 5 of the Final RIA, however,

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some of these refiners produce very small quantities of highway diesel fuel.  This makes the
per gallon costs of meeting the  15 ppm cap relatively high (e.g., over 10 cents per gallon).
The refiners facing these relatively high costs include both independent refiners and vertically
integrated, global oil companies.

       Our analysis in Chapter 5 also points out that a number of refiners who currently
produce only nonroad diesel fuel could meet the 15 ppm cap at much lower cost.  These
refiners again include both independent refiners and vertically integrated, global oil
companies.  If the refiners facing high compliance costs also face generally high costs of
production, they may choose not to invest to meet the new sulfur cap and instead  market
their distillate to the nonroad diesel fuel and heating oil markets.  However, if their base costs
of production are relatively low, then they may choose to remain in the highway diesel fuel
market. Thus, there may or may not  be a reduction in the number of suppliers of highway
diesel fuel. If there is such a reduction, we expect the reduction to be small and that highway
diesel fuel will continue to be produced by both independent refiners and major oil
companies.

       Comment (14) raises a concern that farmers may not be able to obtain diesel fuel at
critical points in  their farming operation because spot shortages and price spikes caused by
this rule.  The issue of price spikes and general fuel supply were  already addressed above.
There, we concluded that this rule should not increase the frequency nor severity of supply
shortfalls of highway diesel fuel nor price  hikes.

       It should also be pointed out  that farming equipment can use nonroad diesel  fuel
which is not subject to this rule. It is true that farming equipment  is sometimes fueled with
highway diesel fuel either because the farmer desires this, the prices of the two fuels  are the
same, or the farmer's particular distributor only carries highway diesel fuel.  In the  first
situation, if the price of highway diesel fuel did rise dramatically, the farmer could simply
choose to use nonroad diesel fuel. We expect that the last two situations will become less
frequent with the onset of this rule, as the price differential between highway and nonroad
diesel fuel is likely to increase significantly.  Consumers of nonroad equipment will increase
their demand for nonroad diesel fuel,  due to its lower price. This  will encourage more
distributors to carry it.

       Regarding comment (15), as  presented in the main discussion of supply issues
above, we do not believe that this rule will cause any shortages in diesel fuel supplies. Thus,
it should not cause any related national energy nor security issues.  Concerns over crude oil
exploration and  refinery capacity are  more appropriately addressed to other agencies in the
government.

       With respect to comment (B)(16), the final rule contains a number of provisions that
will  assist refiners in complying with the 15 ppm diesel fuel standard, as well as mechanisms
for them to offset any shortfall. As discussed in Section IV and VII of the preamble, today's
final rule contains small refiner hardship provisions, GPA refiner provisions, and general
hardship  provisions. The general hardship provisions apply to all refiners and consist of two
types of hardship relief. First, in cases of extreme unforeseen circumstances such as natural
disasters, refiners may apply for and  EPA may approve provisions for compliance that would
be unique to each individual refiner's  circumstances. Second, in  cases of extreme, typically
economic, hardship, the final rule contains provisions for refiner's to apply to the Agency for
relief and gain approval fora unique compliance plan that, among other things could  allow

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them additional time in complying with the final standards. These general hardship
provisions are very similar to and would be implemented in a similar manner to the provisions
recently finalized in the Tier 2 gasoline sulfur rulemaking.

       In addition to these hardship provisions, today's final rule contains additional flexibility
for refiners during the startup of the program.  The final rule contains a temporary compliance
option for all refiners that allows them to delay compliance of up to 20% of their production
with the 15 ppm standard on an annual basis for the first few years of the program.  Should a
refiner want to  exceed this amount, the program includes ABT provisions that would allow
them to purchase credits from other refiners.  If they in good faith fall short of their production
plans, the  rule  contains provisions that will allow them to make up shortfalls of up to 5% the
following year without penalty, and if greater than 5 % to purchase credits on the open
market in the two months following the end of the calendar year. Finally, unlike in the
gasoline program, where if a refiner is unable to comply with the standard, there is no other
outlet for the production, the diesel market contains other outlets. If a refiner is unable to
comply for a short period of time with the 15 ppm highway diesel fuel requirement, the off
highway diesel market represents a  very viable outlet for their diesel fuel production.

       Comments (17) and (18) raise concerns about the impact of price spikes and
shortages  on the trucking industry an the industries it serves. As discussed above, we do not
believe that this rule will result in supply shortages, nor increase the frequency nor severity of
price hikes.  Thus, these industries should not be affected.

       Comment (19) raises the issue of refiners having to  comply with other EPA
regulations at the same time that they have to meet the diesel fuel sulfur cap. This issue is
addressed in Chapters 4 and 5 of the Final RIA.  There, we  analyze the design and
construction requirements of the diesel sulfur cap and other applicable EPA regulations and
demonstrate that sufficient industry resources exist to provide all the services needed by the
refining industry.

       Response to Comments Under Issue 8.1.1. (A), (B), & (C) on the Ability of the
       Fuel Distribution System to Transport Sufficient Volumes of 15 ppm Highway
       Diesel  Fuel:

       The comments summarized  under issues 8.1.1  A, B,&C which project that our sulfur
program will create a shortage of highway diesel fuel due to difficulties in maintaining a 15
ppm cap on sulfur content throughout the distribution system basically make the following
points:

       o      Limiting sulfur contamination during the distribution of highway diesel fuel
              meeting a 15 ppm sulfur cap will be the  greatest  challenge ever faced by the
              distribution system in limiting contamination. There is no relevant experience
              to compare this challenge.
       o      Absent the use of dedicated equipment for the distribution of highway diesel
              fuel, contamination from high sulfur products (such as off highway diesel fuel)
              left in pipes, truck hoses, in storage tanks will cause highway diesel fuel that
              uses the same equipment to exceed 15 ppm sulfur.
       o      EPA is incorrect in its assertion that careful and consistent observation of
              current industry practices to limit contamination will be sufficient for operators
              of tank trucks and tank wagons.

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       o      Additional evaluation of the distribution system's ability to limit contamination
              during the distribution of highway diesel fuel meeting a 15 ppm sulfur cap is
              needed. This should including sending test batches of 15 ppm highway
              diesel fuel through the distribution system to evaluate the level of
              contamination which results at each link in the system. EPA should conduct a
              formal technology review of the ability of the distribution system to limit
              contamination prior to the implementation of its diesel sulfur program.
       o      The implementation of a 15 ppm cap on highway diesel fuel would result in
              the generation of unacceptably high volumes of highway diesel fuel that must
              be downgraded to a lower value product, or must be returned to the refinery
              for reprocessing (transmix). This could result in fuel shortages,  outages, and
              price spikes. Some pipeline operators have estimated that they would need
              to downgrade as  much as 20 percent of the 15 ppm highway diesel fuel they
              ship to a lower value product (compared to  10 percent today).
       o      Downstream parties will not be able to blend out of specification batches of
              highway diesel fuel  back into compliance using fuel that is substantially below
              the 15 ppm sulfur cap.
       o      Field testing equipment needed to evaluate the sulfur content of highway
              diesel fuel at terminals and  pipelines as a result of our program will not be
              available when our  program is implemented.
       o      An allowance for  test tolerance should be included  when evaluating
              compliance with the 15 ppm cap on the sulfur content of  highway diesel fuel.
       o      EPA should adopt variance provisions to allow batches of highway diesel fuel
              that exceed 15 ppm in sulfur content due to contamination to be used as
              highway diesel fuel. These provisions should be designed to  prevent an
              adverse environmental impact.
       o      Contamination in  the distribution system will force refiners to produce highway
              diesel fuel substantially below the 15 ppm cap.  If contamination can not  be
              adequately limited,  refiners  will be forced to produce near zero sulfur diesel
              fuel.

       As discussed in section IV.D. of the RIA, we concluded that with  relatively minor
modification and at modest costs, the current distribution system will be able to adequately
limit sulfur contamination during the distribution of highway diesel fuel meeting a 15 ppm cap
without the adverse impacts described in the above comments. The distribution industry has
experience in maintaining product integrity  of a range of different products that can be drawn
upon. Although our sulfur program represents a significant new challenge to the industry with
respect to limiting contamination, the  changes that will need to be made  to meet this
challenge are extensions and expansions upon existing methods.  We believe that issue
regarding the distribution of highway diesel fuel is not one of feasibility but rather is one of
cost. Such cost issues are detailed in section V.C.3. of the RIA. Although a modest
additional volume of highway diesel fuel will need to be downgraded to a lower value product
in the distribution system as a result of our  program, we believe that this can be
accommodated without market disruptions. The distribution system will continue to be
capable of distributing a sufficient volume of highway diesel fuel. As discussed in the
preceding response to comments under 8.1.1 (A), (B), & (C) related to the supply of adequate
volumes of highway diesel fuel under our program, we believe that refiners will be capable of
supplying sufficient quantities of  highway diesel fuel to compensate for the modest additional
volume that must be downgraded to a lower value product.

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       The following discussion outlines our evaluation of the various issues which support
our conclusions regarding the distribution of highway diesel fuel meeting a 15 ppm cap on
sulfur content.  For a detailed discussion of the measures we expect the distribution industry
will need to take to adequately limit sulfur contamination during the distribution of 15 ppm
highway diesel fuel meeting a 15 ppm sulfur cap, please refer to section IV.D. of the RIA.

       Although our program may encourage the existing trend towards dedicating storage
tanks, tank trucks, and barges to highway diesel fuel use, it will not force significant additional
segregation of highway diesel fuel. We continue to believe that tank truck and tank wagon
operators can adequately limit sulfur contamination through careful and consistent
observation of existing practices to prevent contamination from high sulfur product left in
storage tanks and delivery systems. Such practices are sufficient to ensure that residual high
sulfur products in vehicle storage tanks and delivery systems on such vehicles is adequately
purged prior to their use for highway diesel fuel. These practices are detailed in the RIA to
this rule and include leveling the vehicle to ensure that it can drain completely, allowing
sufficient time for the tank compartment to drain completely, and filling the delivery system
with highway diesel fuel prior to making the delivery. Most importantly, we believe that most
tank truck, tank wagon compartments, and tank wagon delivery systems used to distribute
highway diesel fuel are already dedicated to this purpose.  Thus, instances where such
equipment will need to be cleaned  when switching to use for highway diesel fuel purposes
will be the exception rather than the rule.

       We also concluded that most stationary storage tanks used to store highway diesel
fuel are dedicated to this purpose.  Thus, instances where stationary storage tanks will need
to be cleaned when switching to use for highway diesel fuel purposes will be the exception
rather than the rule. For those storage tanks that are periodically switched from storing high
sulfur products to highway diesel fuel, we expect that existing procedures will be sufficient in
most cases to purge the tank of high sulfur products. Some additional highway diesel fuel
may be needed to flush such tanks prior to being filled with highway diesel fuel.  Under
limited circumstances, certain older stationary storage tanks with irregular flat bottoms may
present more of a challenge with respect to switching from storing a high sulfur product to 15
ppm highway diesel fuel.  While this practice will continue to be possible, we anticipate that
our program may encourage such tanks to either be dedicated to highway diesel fuel use or
relegated to storing other products. We concluded that this change could be made without
significant impact to the regulated parties.  In addition, we attributed significant costs to the
construction of additional storage tanks to handle two grades of highway diesel fuel during
the initial four years of our program when the temporary compliance option is available. This
will more than compensate for whatever costs might be associated with the need to dedicate
additional storage tanks to highway diesel fuel use.

       It may be reasonable to presume that barges are equipped with sumps from which
the residual product can be completely removed. If this were the case, one might conclude  a
barge cold be made ready to carry 15 ppm  highway diesel fuel by allowing sufficient time for
fuel to drain into these sumps and to be removed by pumps. If this were not sufficient,
flushing the barge with 15 ppm  diesel fuel might provide the necessary cleaning action. If
this were so, the situation  would be similar to that discussed above for stationary storage
tanks, for which we concluded that sulfur contamination from residual product should not be
a significant concern.

       Due to existing contamination concerns, most tank compartments in marine vessels

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DECEMBER 21, 2000	PAGE 8-24

used to transport highway diesel fuel are already dedicated to this purpose and there is an
increasing trend toward such dedication.  Some barges plying the eastern seaboard may on
occasion switch seasonally between highway diesel and heating oil.  However, this is the
exception rather than the rule.  Consequently, we expect that there would be few instances
when this concern would arise, and that such concerns were they do exist, would decrease
overtime. To the extent that such instances might occur, we believe that the associated tank
cleaning costs would not substantially add to the cost of our program. In addition, the volume
of heating oil shipped under such circumstances is a small fraction of the total volume
shipped by barge.  Hence, any impact would be insignificant in the context of our entire
program.

       During the three month transition period between the time when refiners are required
to produce 15 ppm highway diesel fuel and when it is required downstream, we anticipate
that distributor's stationary storage tanks will gradually be blended down so that any residual
product is removed.  Thus, we expect that contamination from residual high sulfur fuel will not
be a significant concern for dedicated stationary storage tanks. Similarly for barges, we
believe there will be  sufficient cycles to ensure that sulfur contamination from residual high
sulfur product is not  a significant concern.

       The pipeline  system will continue to be capable of distributing the current range of
products. To limit  contamination during the distribution by pipeline, an additional volume of
highway diesel will need to be downgraded to a lower value  product.  We adjusted our
estimate of the downgrade volume based on the comments  received on the NPRM. The
upper bound in range of estimates provided by pipeline operators of the volume of highway
diesel fuel that they must currently downgrade is 10 percent of the highway diesel fuel they
ship. A number of pipeline operators stated that they expect the amount of highway diesel
fuel they downgrade would double as a result of our sulfur program.  Based on this
information, some  pipeline operators will need to downgrade up to 20 percent of the 15 ppm
highway diesel fuel they ship to a lower value product due to mixing with high sulfur products
in the distribution system. However, this represents the worst case situation and is not
representative of the industry as a whole. Taking into account the diversity in the
characteristics of pipeline owner's operations that the Association of Oil Pipelines (AOPL)
related was linked to the wide range in the estimates of the current downgrade volumes that
they received from their members, we estimated that on average pipeline operators currently
downgrade 2.2 percent of the highway diesel fuel supplied (see the RIA to this rule for
additional discussion on how we made this estimate).  Based on input from several
commenters, we estimated that this amount would  double as a result of our program.  Our
rationale for this making this estimate is described in section IV.D.2. of the RIA.  Thus, an
additional 2.2 percent of highway diesel fuel supplied will need to be downgraded to a lower
value product as a result of our sulfur program.  This additional volume is relatively modest
and can be accommodated by the market without significant disruption.  We attributed
additional costs to make this downgrade.

       The fuel distribution  industry will move quickly to optimize the system to limit
contamination. Thus, we believe that there will not be a significant increase in the number of
highway diesel fuel batches that are found to not comply with the sulfur standard. We
anticipate that the  batches of highway diesel fuel that are discovered to exceed the 15 ppm
sulfur cap will be coped with as follows:

       When possible, by blending highway diesel fuel that is below the 15 ppm cap with the

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out of specification batch to bring the resulting mixture into compliance.  This practice will be
more difficult than it is currently because the amount of fuel needed to blend the out of
specification batch into compliance may increase.  However, we expect it to continue to be
the method of choice for handling out of specification highway diesel whenever possible.

       By downgrading the batch either to off highway diesel fuel or to 500 ppm highway
diesel during the initial four years of our program when the temporary compliance  option is
available.

       By reprocessing the batch to meet the 15 ppm cap, but only in those infrequent
instances where the previous options do not exist.

       We do not believe that the cost of handling out-of specification highway diesel
batches will increase significantly as a result of our sulfur program.

       We believe that there will not be significant additional volumes of transmix generated
as a  result of our program. We expect that no changes will be needed in the choice of
products that abut highway diesel fuel in the pipeline.  We recognized that the  interface
between a batch of highway diesel fuel and jet fuel or kerosene can no longer be cut into the
highway diesel fuel batch when the highway diesel fuel is required to  meet a 15 ppm cap on
sulfur content.  However, we believe that it will be possible to downgrade this interface to off
highway diesel fuel rather than to treat it as transmix (see section V.C.S.e. of the RIA).
Therefore, we believe that no significant additional volume of transmix associated with
pipeline interface will be generated as a result of our program (such as might arise from
shipping additional batches of highway diesel fuel adjacent to gasoline).

       It is possible that sources of sulfur contamination which did not hitherto represent a
significant concern may need to  be reevaluated to assess their potential impact on
maintaining the 15 ppm cap on the sulfur content of highway diesel fuel.  Although all of
these potential minute sources of sulfur contamination in the distribution system may not
have currently been identified and quantified, we believe that the total contamination from
such sources, while made more  significant by the implementation of the 15 ppm sulfur cap, is
not of a sufficient magnitude to impact to any significant degree the feasibility of distributing
15 ppm sulfur highway diesel fuel.  The changes needed  to the distribution  system to limit
sulfur contamination in highway diesel fuel under our program are logical outgrowths and
extensions of existing hardware and  procedures.

       In gearing up to comply with our program, we expect that industry will conduct an
evaluation of whether changes are needed in addition to those that we have specifically
identified.  The changes needed in the distribution system as a result  of our sulfur program
will be readily apparent once industry focuses on meeting the challenge of limiting sulfur
contamination during the distribution of 15 ppm highway diesel fuel. Therefore, we believe
that a technical review of the ability of the distribution system to limit sulfur contamination in
15 ppm highway diesel fuel is not needed.

       We anticipate that the distribution system will conduct an evaluation of the potential
sources of contamination to ensure that each segment in  the system has a  satisfactory
margin of compliance below the  15 ppm cap. As a result of this evaluation, we anticipate
that industry may take measures to help adequately limit sulfur contamination in addition to
those specifically identified at this time. However, we anticipate that these measures will be

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the exception rather than the rule. We do not anticipate that such additional measures will
result in an unacceptable burden to the fuel distribution industry.

       We also anticipate that distributors will gain some experience in reducing  sulfur
contamination in the distribution system through complying with the recently finalized Tier 2
low sulfur gasoline requirements (65 FR 6698, February 10, 2000). Furthermore,  we fully
anticipate that some refiners will take advantage of the early credit provisions in the final rule
and begin producing 15 ppm diesel fuel early, and in so doing provide valuable experience in
distributing 15 ppm fuel nationwide prior to the June 1, 2006 start date for the program.

       In response to the comment under 8.1.1 .(B).9. regarding  the lack of availability of
field testing equipment to measure the sulfur content of highway  diesel fuel, we believe that
such equipment will not be required at terminals and pipeline facilities as a result of our
program. Terminals can continue to use laboratory test methods when they need to evaluate
the sulfur content of highway diesel fuel in their possession.  The time required for such
testing will not represent a substantial impediment to their operations.

       Pipeline operators currently rely on physical parameters (e.g.  changes in fuel density,
presence of red dye in off highway diesel fuel) to discern the interface between fuel batches
in the pipeline. In cases where pipeline operators  have difficulty  in locating the interface
between batches today, they will sometimes inject dye at the beginning of a batch of fuel to
help identify the interface downstream.  Pipeline operators currently do not test the sulfur
content of fuel batches in the pipeline to locate the interface between fuel batches. We
believe that our sulfur program will result in changes to highway diesel fuel that will make it
more difficult to identify the interface between fuel  batches. Therefore, we believe that the
current physical methods used to identify the interface between batches can continue to be
used once our sulfur program is implemented, and pipeline operators will not need to conduct
in-line measurements of highway diesel fuel sulfur content. See  the RIA to this rule for
additional discussion of the methods used  by pipeline operators to discern the location of the
interface between different batches of fuel  in the pipeline and their continued applicability
once our sulfur program is implemented.

       We agree with commenters' request that an allowance for test tolerance should be
included when evaluating compliance with  the 15 ppm cap on highway diesel fuel sulfur
content.  As suggested in the comments, we believe this downstream allowance will
substantially ameliorate concerns regarding the ability to comply  with the 15 ppm sulfur
standard downstream of the refinery. We believe this allowance  will not impact the expected
average level of fuel sulfur in-use. Therefore, providing this measurement tolerance will not
reduce the emissions benefits  of our program.

       With respect to the comment under 8.1.1.B.16, we do not believe that variances to
allow out of specification batches of 15  ppm highway diesel fuel to be sold into the highway
diesel fuel market is either necessary or appropriate. As discussed above, there will not be a
significant increase in the number of batches of highway diesel fuel found to exceed the 15
ppm sulfur cap.  Those that are found to exceed the cap can be dealt with as they are today.
Providing such variances would increase the average in use sulfur level.  This could
adversely impact the functionality of the sulfur sensitive emissions control technology that we
anticipate will be needed to meet the  emissions standards under our program.

       Under our sulfur program, we expect that highway diesel  fuel designated as meeting

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the 15 ppm cap on sulfur content will leave the refinery with an average sulfur concentration
of approximately 7-10 ppm.  Consequently, for highway diesel fuel to comply with the 15
ppm sulfur standard, sulfur contamination could contribute no more than 5 - 8 ppm to the final
sulfur of the fuel.  Pipeline operators will set a specification on the maximum sulfur content of
highway diesel fuel they accept for shipment based on these criteria.  Our inclusion of a
tolerance on the measurement of fuel sulfur will provide additional flexibility in the maximum
sulfur level that can be accepted  by a refiner to ensure that the 15 ppm sulfur cap is
maintained downstream. The means to limit sulfur contamination during the distribution of
highway diesel fuel outlined above (and detailed in section IV.D of the RIA to the final rule for
our sulfur program) will be sufficient to ensure that highway diesel fuel leaving the refinery at
the projected levels can meet the 15 ppm sulfur throughout the distribution system to the end
user.

              Issue 8.1.2:  Technological/Logistical Considerations

(A)    The proposed 15  ppm diesel sulfur standard will not be difficult for the refiners
       to achieve and is technologically feasible.

       (1)     Commenter provided no further supporting information or detailed analysis.

              Letters:

              Hart/IRI Fuels Information Services (IV-D-154) p. 2, (IV-F-190) p. 254
              Syntroleum (IV-D-260) p. 2

       (2)     Commenters noted that several other countries have  already successfully
              implemented low-sulfur requirements and that diesel  sold in the European
              Community will be capped at 50 ppm in 2005 and will move toward 10 ppm
              by 2008.

              Letters:

              Natural Resources Defense Council (IV-F-75)

       (3)     One commenter noted that Sweden also has a 50 ppm cap and is moving
              towards a 10 ppm cap but 90% of diesel fuel sold in Sweden is already at the
              10 ppm level  due  to an effective incentives program.  Another commenter
              added that refiners in Sweden and elsewhere are currently producing the 5
              ppm fuel - this is evidence that it can be done at U.S. refineries as well.

              Letters:

              Alliance of Automobile Manufacturers  (IV-F-9, 59,190) p. 114 (IV-F-117) p.
              168(IV-F-191)p.  89
              Natural Resources Defense Council (IV-F-75)

       (4)     Refiners already have the technological ability to reduce sulfur levels.  Oil
              companies (such  as BP Amoco, Equilon and ARCO)  are already making 15
              ppm diesel fuel, including in parts of California. ARCO has developed a  low-
              sulfur diesel fuel called Emission Control Diesel (EC-D) that is produced from

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              typical crude oil using a conventional refining process [cites to EC-Diesel
              Technology Validation Program Interim Report, 2000-01-1854].  TOSCO has
              expressed its support for a nationwide 15 ppm fuel requirement  by 2006.
              One commenter cites to a study by MathPro Inc. (as performed for EMA) that
              demonstrates that a 5 ppm fuel is well within current technological
              capabilities.

              Letters:

              Alliance of Automobile Manufacturers (IV-F-9, 59,  190) p. 114 (IV-F-117) p.
              168(IV-F-191)p. 89
              American Lung Association (IV-D-270) p. 19
              DaimlerChrysler (IV-F-15, 116) p. 292 (IV-F-117) p. 96 (IV-F-191) p. 173
              Environmental  Defense  (IV-D-346) p. 11
              International Truck & Engine Corp.  (IV-D-257) p. 6-8, (IV-F-27, 34, 180, 117)
              p. 109 (IV-F-191) p. 99
              NESCAUM (IV-F-63)
              Natural Resources Defense Council  (IV-F-75, 191) p. 68
              STAPPA/ALAPCO  (IV-D-295) p. 10-11

       Response to Comment 8.1.2(A)

       We agree with the commenters that meeting a 15 ppm sulfur cap standard is
technologically feasible to achieve. Hydrocrackers and ring opening technologies are
examples of processes which are reducing the sulfur levels of diesel fuel to very low levels
today.  We provide a rich discussion of these  technologies in Chapter IV of the RIA.
However, these are somewhat expensive processes to operate. A number diesel
desulfurization technology vendors have published technical papers and explained to us
during our meetings with  them that a severe desulfurization process, using a route of reaction
called hydrogenation which saturates polyaromatic compounds to monoaromatics, can
achieve a 15 ppm cap standard and it is a lower cost technology than hydrocracking or ring
opening. We expect that refiners will readily choose this technology for meeting the 15  ppm
cap standard and we based our cost estimate on this technology.  Refiners could also
choose among several different emerging technologies if they are sufficiently confident in
these technologies. A detailed discussion on  the hydrogenation and emerging technologies
is also contained in Chapter IV of the RIA.

       While we are confident that refiners can desulfurize their highway diesel fuel to under
15 ppm sulfur, we believe that refiners will have to take extra steps to consistently meet the
cap standard on a daily basis.  First, refiners will need to ensure that their heat exchangers
for their diesel hydrotreaters have no leaks, and if there are leaks they may either have to
weld the tubes to the tube sheets, or replace them altogether (any refiners putting in
grassroots units would put in new heat exchangers as part of that installation).  Even if a
small amount of the feedstock, which contains about 10,000 ppm sulfur, leaks through to the
product, the product can quickly exceed the 15 ppm sulfur cap standard. Next,  refiners  will
need to control the amount or fraction of sterically hindered compounds in the diesel
hydrotreater feedstock. A vendor confidentially shared diesel desulfurization information with
us which showed that variances in the endpoint, especially the endpoint of the LCO present
in their feed, which translates in variances in the amount of sterically hindered compounds,
resulted in significant variances in the sulfur level of the product.  Thus, refiners are expected

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to focus on better controlling the endpoint of their light cycle oil (LCO) from their fluidized
catalytic cracker unit which would allow the refinery to meet the cap sulfur standard on a
consistent basis. Finally, we believe that refiners will install an online sulfur analyzer in the
product stream from their diesel hydrotreater which would allow them to continually monitor
the sulfur level of their highway diesel to ensure that they are staying under the cap. This
strategy for meeting the 15 ppm cap standard is discussed in Chapters IV and V of the RIA.

       We agree that the actions or commitments by certain refiners and other countries
supports that it is feasible and cost-effective to desulfurize highway diesel fuel to meet the 15
ppm sulfur cap standard.  This includes the very low sulfur diesel already being  provided by
BP-Amoco and ARCO, and the commitment  by Tosco to desulfurize their diesel fuel to meet
this program's requirements early. Furthermore, Sweden's highway diesel fuel is already
under 10 ppm and other European countries  are expected to follow suit.  If desulfurizing
diesel fuel was not feasible nor cost-effective, these companies and these other countries
would not have taken such proactive steps.

(B)    Achieving the 15 ppm standard is not technologically feasible for refiners.

       (1)     The technology to consistently produce diesel with a sulfur content below 15
              ppm is problematic.  Commenters asserted that there  has been no
              demonstration, technological  or otherwise, that the 15 ppm sulfur level is
              achievable or sustainable across the current diesel pool and/or that there is
              no existing technology to remove sufficient sulfur from certain diesel
              blendstocks. One commenter noted that a refiner has only two options:
              undercut the dibenzothiophenes from the treated pool, or replace the distillate
              desulfurization catalyst every two to four months-and both of these options
              have limitations and could have an adverse impact on diesel  supply and
              production costs.  Others noted that refiners will need  to produce highway
              diesel fuel at 7 to 10 ppm in order to consistently meet the 15 ppm cap, even
              though no U.S. or foreign refiner has been able to produce this kind of ultra-
              low sulfur diesel in large quantities. Achieving the proposed  standard will be
              particularly difficult for U.S. refiners because of the relatively  high-sulfur
              petroleum feedstocks typically available in the U.S. EPA discusses several
              promising desulfurization technologies, including biodesulfurization, but
              acknowledges that these technologies are several years from being
              commercially available.  Refiners should not be asked to make multimillion
              dollar investments and gamble the future of their companies  based on
              technologies that are "promising."

              Letters:

              Countrymark Cooperative (IV-D-333) p. 6
              Marathon Ashland Petroleum  (IV-D-261) p. 41-42
              National Petrochemical & Refiners Assoc./CITGO  (IV-F-117) p. 101
              National Petrochemical & Refiners Association  (IV-F-31, 44)
              Ports  Petroleum Co, Inc. (IV-F-117) p. 190
              Reusable Industrial Packaging Association (IV-D-129) p. 1
              Society of Independent Gasoline Marketers of America (IV-F-191) p. 196
              U.S. Chamber of Commerce  (IV-D-329) p. 3-4

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       Response to Comment 8.1.2(B)(1):

       We disagree that there is no existing technology for desulfurizing highway diesel fuel
to meet the 15 ppm sulfur cap standard. As described above in Chapter IV and V of the RIA
and reiterated in response to comments (A) (1), (2), (3), and (4) above, hydrocracking and
ring opening technologies have already been demonstrated to  meet a 15 ppm cap standard.
However, refiners are expected to use a desulfurization process called hydrogenation.  While
the hydrogenation process has not been demonstrated commercially, vendors have
demonstrated this technology in  their pilot plants. We believe that refiners will use
hydrogenation to meet the 15 ppm cap standard.

       We also disagree  that no technology can remove sulfur from certain diesel
blendstocks such as dibenzothiophenes. Once again hydrocracking and ring opening
technologies have already been  demonstrated to desulfurize dibenzothiophene  compounds.
However, vendors of diesel fuel desufurization technology have also assured us that the
hydrogenation process for desulfurizing diesel fuel will also desulfurize dibenzothiophene
compounds as well.  In fact, they provided us guidelines and information for desulfurizing
diesel fuel which contains dibenzothiophenes which allowed us to estimate the cost of
desulfurizing diesel fuel for both  a combined set of refinery streams and individual refinery
streams incrementally (i.e., light  cycle oil, coker distillate and straight run).  If refiners choose
to undercut the dibenzothiophene compounds out of their highway diesel fuel, it is because
they have another fuel in which to place that blendstock which  is economically beneficial for
the refiner.  For example,  refiners which can cut their dibenzothiophenes out of their highway
diesel fuel will treat them in their hydrocracker or can arrange to treat them in a  neighboring
refinery's hydrocrackers, or they can blend them in off highway diesel fuel or home heating
oil.  If refiners do cut the dibenzothiophenes out of their highway diesel fuel, they would likely
balance their mix of distillate products to satisfy their highway diesel fuel market by shifting
some straight run compounds out of nonhighway and heating fuel into the highway diesel
pool.

       However, if refiners have only their residual pool to put their cut dibenzothiophenes
into, we don't believe that  refiners would readily take that action. This is because our
analysis shows that it costs between 6 and 7 cents per gallon to desulfurize their
dibenzothiophenes, while  residual fuels are generally valued at least 25 cents per gallon less
than highway diesel fuel.

       We believe that cycle lengths will not be  shorter if refiners choose to desulfurize their
dibenzothiophene along with the rest of their highway diesel fuel based on what vendors
explained to us about meeting a  15 ppm sulfur standard.  This  is because diesel
desulfurization is expected to take place in two stages and the  second stage will be less
severe. The first stage for most  all refineries will be today's diesel hydrotreater which treats
untreated distillate down to about 350 ppm. This first stage will remove most all the sulfur,
nitrogen and metals. Then the hydrogen sulfide will be scrubbed out before the second stage
will desulfurize that 350 ppm product down to under 15 ppm. Since the second  stage will not
see much less sulfur nitrogen and metals, and because the reaction equilibrium for
desulfurization favors a lower operating temperature, we  believe that the second stage will
have longer cycle lengths  than the first stage.  Since today's diesel hydrotreater is essentially
the first stage of the hydrotreater which will deliver highway diesel fuel which will meet the 15
ppm sulfur cap standard, we believe that today's cycle lengths  will persist. This assumption
is likely conservative since new,  more active catalyst technologies are expected to be

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introduced overtime which will more easily remove sulfur and other contaminants, thus cycle
lengths could very will improve.

       As described in Chapter IV of the RIA, there is the possibility that some refiners will
be able to meet the 15 ppm cap standard by not installing  new capital, but instead by
improving the desulfurization capability of their existing diesel hydrotreaterwith
improvements such as more active catalysts, better reactor internals, purifying their hydrogen
and by operating their diesel hydrotreater at a higher temperature which improves the
catalyst desulfurization activity.  Because of increasing the reactor temperature, these
refiners would suffer shorter cycle lengths, however, they would choose to do so because it
would be more economical to do so than making a capital investment in a high pressure
stripper and a second stage reactor.

       EPA discussed several different emerging technologies which could be used by
refiners to meet the 15 ppm sulfur cap standard. We expect that refiners will only use such
technologies if their review of those technologies finds them more cost-effective and as
capable as conventional desulfurization technologies.

       (2)     The NPC has concluded that reducing sulfur much below 30 ppm average will
              not be practical and that most units will  not be capable of achieving the 15
              ppm standard.

              Letters:

              ExxonMobil (IV-F-800)

       Response to Comment 8.1.2(B)(2)

       We disagree with the conclusions made by the NPC study that desulfurization of
highway diesel fuel to under 30 ppm  is not practical and that most units would not be able to
meet a 15 ppm cap standard. The NPC study made such conclusions despite the
submissions made byAkzo Nobel, Criterion, HaldorTopsoe and UOP which show that 10
ppm can  be achieved, and that the costs are reasonable.  Furthermore,  studies made later
on by API and DOE presumes that every refinery can meet a 15 ppm sulfur cap standard
except for those refiners which in a survey claimed  that they would no longer participate in
the highway diesel sulfur market. Our own discussions with vendors and a number of
refiners and the actions and commitments by refiners described above in our response to
comments (A) (1), (2), (3) and (4) of this section convinced us also that refiners can meet a
15 ppm sulfur cap standard.

       (3)     A fluctuation in desulfurization performance of less than 0.4% could disrupt
              the 15 ppm standard.

              Letters:

              National  Petrochemical & Refiners Association (IV-D-218) p. 3, 9

       Response to Comment 8.1.2(B)(3)

       We agree  that a small decrease in the desulfurization efficiency of diesel

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desulfurization units could cause the product to exceed the 15 ppm sulfur cap standard.  This
is why we believe that refiners must exercise the steps summarized in response to comments
(A) (1), (2),  (3) and (4) above which would ensure that they can meet the sulfur standard  on a
continual basis.

       (4)     There are constraints on revamping existing units that at best will result in
              reduced production capacity.  Reactor internals need to be reviewed and
              probably changed to minimize catalyst bypassing.  Reactor distribution issues
              while trying to produce 5 ppm diesel (at the refinery to meet a 15 ppm retail
              cap) will cause units to have shortened runs, perhaps 50% shorter. Also,
              feed filters may be needed, as well modified reactor loading schemes and
              other changes. All of these changes adversely affect capacity.

              Letters:

              Big West Oil, LLC (IV-D-229) p. 4-5
              Citgo Corporation (IV-D-314) p. 4
              Marathon Ashland Petroleum (IV-D-261) p. 3

       Response to Comment 8.1.2(B)(4)

       We agree that refiners will want to use the best reactor internals when they revamp
their diesel  hydrotreaters as part of a strategy for meeting the 15 ppm cap standard. Refiners
may choose to filter the feed to the diesel desulfurization unit, if they do the unit feed pumps
can be modified to  feed the same volume of feed to the hydrotreater, if the existing pumps
are currently capable not capable of doing so. In response to the comment that diesel
hydrotreater units will experience shorter run lengths, we disagree and point the reader to our
response to comments (B) (1) in this section. We don't believe that the requirements would
affect capacity as claimed by the commenters.

       (5)     A 15 ppm cap will result in delays for refineries returning to normal operations
              following turnarounds and unplanned upsets. The downtime will be extended
              to fully flush the products distribution system to avoid sulfur contamination.

              Letters:

              Citgo Corporation (IV-D-314) p. 3

       Response to Comment 8.1.2(B)(5)

       We don't believe that refiners will have to extend their turnaround times by flushing
out their product lines since  their product lines will  normally see very low sulfur product.
When starting their diesel  hydrotreaters after a turnaround, we expect refiners to recycle  the
diesel in their hydrotreaters until their diesel hydrotreaters  are up to normal operating
temperature and the diesel under 15 ppm.  Thus, the product lines should not see high sulfur
diesel fuel.  Refiners may have to flush their process lines  the very fist time they start up the
unit,  and we include startup  costs for addressing this issue. Furthermore, we believe that
refiners will produce some offspec product while they operate their revamped and grassroots
diesel desulfurization units and we included cost for the storage capacity, the treating
capacity and the operating the diesel hydrotreater for desulfurizing that offspec material.

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       (6)     EPA's preamble acknowledges that there is no operating experience in the
              U.S. with typical U.S. diesel fuel feedstocks of using high pressure
              hydrotreating units to reduce sulfur to the 7-10 ppm range at the refinery gate.

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 12

       Response to Comment 8.1.2(B)(6)

       We acknowledge that there is not extensive commercial experience using
hydrogenation as the desulfurization technology which we expect will be used to meet the 15
ppm cap standard.  However, vendors have demonstrated this technology many times over in
their pilot plants, and they will continue to do so as they continue to test refinery diesel fuel
hydrotreater feedstocks to provide refiners cost estimate information. We believe that the
diesel desulfurization vendors have extensive experience in applying their technology to
commercial situations which gives us confidence in their projections.

       (7)     Commenter provided a detailed discussion of the chemistry of sulfur
              compounds and the hydrodesulfurization mechanism to explain why
              production of ultra-low sulfur diesel is problematic.

              Letters:

              Marathon Ashland Petroleum  (IV-D-261) p. 42-43

       Response to Comment 8.1.2(B)(7)

       We agree that desulfurizing diesel fuel to very low sulfur levels can be difficult. The
difficulty lies in  desulfurizing the sterically hindered compounds in diesel fuel, which
predominantly come from light cycle oil  (LCO).  In Chapter IV of the RIA, we present our
understanding of that difficulty.  However, we also describe how vendors have configured
their technology to optimize the desulfurization of these compounds.

(C)    EPA's proposed rule will not lead to any significant distribution problems.

       (1)     Implementation of the national fuel standard as proposed by EPA would not
              present distribution problems and would solve some of the regional
              distribution and supply issues created by the specialty fuels sold only in
              California. CARB reformulated gas raised distribution concerns because
              economies of scale were lost and monopolies were created; but a national
              standard would eliminate these problems.

              Letters:

              CA Trucking Association (IV-D-309) p. 6
              Interstate Claims (IV-F-190) p. 66

       (2)     Disagrees with the assumption related to trucking contained in the
              Cost/Impacts of Distributing Potential Ultra Low Sulfur Diesel as submitted by

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              API on February 23, 2000. Clean products are currently moving through the
              pipelines and are efficiently transported to market. The introduction of low
              sulfur diesel fuel nationwide will actually have a long-term, positive economic
              impact since it will prohibit the regional use of boutique fuels, which present a
              larger long-term challenge for supply and spot outages.

              Letters:

              CA Trucking Association  (IV-D-309) p. 6

       (3)     The industry already has various specialty fuels traveling the same pipelines,
              with little or no contamination.

              Letters:

              CA Trucking Association  (IV-F-190) p. 21

       Response to Comment  8.1.2(C):

       Please refer to the response to comments 8.1.1 (A), (B), & (C) and the Regulatory
Impact Analysis (RIA) to the final rule for a discussion of our assessment of the ability of the
distribution system to handle highway diesel fuel meeting a 15 ppm cap on sulfur content.
We agree with the commenter that the implementation of our nationwide highway diesel fuel
sulfur standard will lessen the burden associated with the distribution of a special diesel fuel
in California.

(D)    Contamination and cost increases may be limited by  reducing the sulfur
       differences with other fuels.

       (1)     Significant distribution costs can occur when excessive transmix is generated
              or when large fuel product downgrading is generated. The sulfur level of
              adjacent products will influence the amount of product downgrade at a
              distillate interface. Reducing the nonroad fuel sulfur level would lower the
              potential impact of cross-contamination.

              Letters:

              Engine Manufacturers Association  (IV-D-251) p.  22

       Response to Comment  8.1.2(D)(1):

       We estimated that the amount of additional highway diesel fuel that must be
downgrade is 2.2 percent of the total volume of highway diesel fuel supplied.  We concluded
that this downgrade can be accommodated by the market without significant disruption. We
have also concluded that there will be no significant increase in the volume of transmix
generated as a result of our program. Please refer to the response to comments 8.1.1 (A),
(B), & (C) and the  Regulatory Impact Analysis (RIA) to the final rule for a discussion of how
we arrived at these conclusions.

       We agree  that reducing the sulfur  level of off highway diesel fuel would tend to limit

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the potential for sulfur contamination during the distribution of highway diesel fuel meeting a
15 ppm sulfur cap.  However, our consideration of such an action is not within the scope of
this rule and is not necessary to ensure that sulfur contamination during the distribution of
highway diesel fuel meeting a 15 ppm sulfur cap can be adequately limited.  Please refer to
the response to comments 8.1.1 (A), (B), & (C) and the Regulatory Impact Analysis (RIA) to
the final rule fora discussion of this assessment.

       (2)     The few nations planning to lower sulfur content are moving only to a
              standard of 50 ppm. The greater the difference between foreign diesel sulfur
              standards and U.S. diesel sulfur standards, the more difficult it becomes to
              import and blend down the product.

              Letters:

              Independent Fuel Terminal Operators Association (IV-D-217) p. 3-4

       Response to Comment 8.1.2(D)(2):

       Please refer to the response to comments 8.1.1 (A), (B),  & (C) regarding the
continued ability to import highway diesel fuel once the 15 ppm cap on sulfur content is
implemented.

       Contrary to the commenter's assertion, other countries are in fact looking at diesel
fuel sulfur standards as low as, or even lower than the 15 ppm standard finalized today.
Sweden has been at 10ppm for many years.  Germany and the entire European Union are
considering reducing their sulfur level to 10 ppm as well. Canada, a source of much of the
current imports into the U.S. of highway diesel fuel has already expressed a desire to
harmonize with our diesel fuel sulfur standard. Furthermore, in many respects it is easier for
foreign refiners to comply with this new diesel fuel sulfur standard since they do not have to
meet the  standard on all of the diesel fuel they produce and can selectively choose those
distillate feedstocks that can be desulfurized at the least cost.

(E)    There are logistical constraints to ensuring that the 15 ppm standard is
       maintained throughout the distribution process.

       (1)     Commenters provided no supporting information or detailed analysis.

              Letters:

              American Petroleum Institute  (IV-F-191) p. 114
              Cenex Harvest States Cooperatives  (IV-D-232)  p. 7, (IV-F- 191) p. 232
              Collier, Shannon, & Scott (IV-F-117) p. 24
              Conoco  (IV-F-191)p. 154
              Farmland Industries (IV-F-29)
              Gary-Williams Energy Corporation (IV-F-43)
              Sinclair Oil Corporation (IV-D-255) p. 8

       Response to Comment 8.1.2(E)(1):

       The challenge of limiting sulfur contamination during the distribution of highway diesel

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fuel meeting a 15 ppm cap can be met with modest changes and associated costs. Please
refer to the response to comments 8.1.1 (A), (B), & (C) and the Regulatory Impact Analysis
(RIA) to the final rule for a discussion of our assessment of the ability of the distribution
system to handle highway diesel fuel meeting a 15 ppm cap on sulfur content.

       (2)     Because the pipeline shipments are typically long and the fuel could be
              contaminated at any point in the distribution process, refiners must reduce
              their sulfur levels in diesel far below the standard, to ensure that the sulfur
              level will meet the 15 ppm standard at the retail level.  Commenters stated
              that the actual ppm level for refiners will be less than 10 ppm (a range of
              values was provided). One commenter specifically noted that EPA's estimate
              of a 3 ppm increase in the sulfur level between the refinery  gate and the retail
              location is underestimated and that a 5 ppm sulfur fuel will need to be
              produced to ensure compliance at the retail level. One commenter
              recommended that EPA conduct trial  runs or tests to determine whether the
              distribution of a 15 ppm diesel fuel can be transported long  distances without
              significant contamination.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 45
              CO Petroleum Association  (IV-D-323) p. 2
              Countrymark Cooperative (IV-D-333) p. 4, (IV-F-30, 191) p. 184
              Marathon Ashland Petroleum  (IV-D-261) p. 3, 45-46, 50-53, (IV-F-74)
              National Petrochemical & Refiners Assoc./CITGO (IV-F-117) p. 101
              National Petrochemical & Refiners Association  (IV-F-31, 44)
              Tesoro Petroleum (IV-F-191)  p. 26
              U.S. Department of Energy (IV-G-28) p. 5
              Ultramar Diamond Shamrock Corporation (IV-F-191) p. 136

       Response to Comment 8.1.2(E)(2):

       While no data was provided supporting the 5 ppm compliance  margin claimed in the
comments to be necessary, the Agency also believes that refiners will  have to produce diesel
fuel consistently below the 15 ppm cap in order to ensure compliance day-in and day-out not
only at the refinery but all the way through to retail as well. Consequently, while the standard
is a 15 ppm cap, EPA assumed, consistent with the commenters, in our cost and feasibility
analyses in the RIA that refiners would on average need to produce diesel  fuel at a 7-8 ppm
level in order to ensure consistent downstream compliance.

       While no test runs of the distribution system  using 15 ppm diesel fuel have yet been
completed, as discussed in the response to comments 8.1.1 (A), (B), and (C) and the RIA,
we remain convinced that it is feasible to distribute 15 ppm using the current distribution
system at a minimal additional cost. We anticipate that distributors will quickly optimize their
practices to avoid sulfur contamination.  We also anticipate that distributors will gain some
experience in reducing sulfur contamination in the distribution system through complying
with the recently finalized Tier 2 low sulfur gasoline requirements (65 FR 6698, February 10,
2000).  Furthermore, we fully anticipate that some refiners will take advantage of the early
credit provisions in the final rule and begin producing 15 ppm diesel fuel early, and in so
doing provide valuable experience in distributing 15 ppm fuel nationwide prior to the June 1,

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2006 start date for the program.

       (3)     Commenter provides the results of a pipeline survey that provides several
              insights into this issue. First, owners of pipelines will try to accommodate
              shipper needs, and will continue to carry higher sulfur products if possible.
              However, if ULSD becomes the product of choice,  pipelines may decide not
              to carry the higher sulfur products because those products compound the
              difficulty in ensuring ULSD product quality. Second, pipelines anticipate
              setting receipt specifications from 5-15 ppm, but at this point the commenter
              cannot state with certainty where in that range the  actual specifications are
              likely to fall. Owners of pipelines do believe that the test tolerance (which
              EPA indicates is +/- 4 ppm) should be included in the acceptable sulfur level.
              If not,  then the acceptable level for a pipeline to accept will be no higher than
              11 ppm. Third, the pipeline owners consider the transition to ULSD as more
              complex than previous fuel specification transitions, such as leaded to
              unleaded gasoline. The  complexity stems from the limited tolerance cushion,
              the lack of visual clues of a batch transition, and the inability to blend
              interface. Fourth, owners of pipelines will try to minimize contamination by
              wrapping the ULSD with  low sulfur (500 ppm) diesel or gasoline.  The
              interface (transmix) would be downgraded and have to be re-refined.  At this
              time, there is no experience that enables an accurate guess at the level of
              downgrading that will be  necessary. Fifth, owners  of pipelines will have
              difficulty finding the cuts between product batches.  There are no visual clues
              (color differentiation) or specific gravity changes to use. An alternative is to
              dye the ULSD fuel, which raises its own set of issues for contaminating other
              products with the dye, such as jet fuel.  Sixth, the survey results indicate that
              only in PADD I do pipelines uniformly carry high  sulfur diesel product. A
              number of pipelines in PADD II do not carry the high sulfur product, and this
              may be true of PADDs III, IV and V as well. Finally, pipeline owners have
              insufficient knowledge to respond to issues raised  about the potential impacts
              of bio-diesel.

              Letters:

              Association of Oil Pipelines (IV-D-325) p. 2-4, att.

       (4)     There are a number of procedures that will need to be followed in order to
              prevent contamination of 15 ppm diesel fuel throughout the distribution
              system.  Commenter provides  a description of the  cleaning and other
              maintenance procedures that need to be completed to  prevent contamination
              at numerous points during distribution (i.e. barges, tank trucks, storage tanks,
              and test equipment). Commenter adds that very small amounts of high sulfur
              fuel - 2 to 7 barrels - left along  pipes, hoses or in trucks, could completely
              contaminate a 50,000 barrel batch of ultra-low sulfur fuel. Therefore, with a
              15 ppm sulfur standard, either separate distribution equipment or strict and
              continuous  prevention procedures will be  required  to avoid contamination,
              which aside from being very costly, would have several other adverse effects;
              the distribution facilities would  be more  limited overall, marketers would  be
              prevented from using transportation grade diesel as a heating fuel during the
              winter as necessary, and some marketers would choose to abandon the

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              business of selling on-highway diesel.

              Letters:

              Independent Fuel Terminal Operators Association (IV-D-217), p. 5-9

       Response to Comments 8.1.2(E)(3) and (4):

       After our review of the comments and all the information available to us, we remain
convinced that the challenge of limiting sulfur contamination during the distribution of
highway diesel fuel meeting a 15 ppm cap can be met with modest changes and associated
costs. The provision in the final rule to allow for an adjustment to downstream
measurements to take into consideration test variability will further serve to address the
concerns raised.  Please refer to the response to comments 8.1.1 (A), (B), & (C) and the
Regulatory Impact Analysis (RIA) to the final rule for a discussion of our assessment of the
ability of the distribution system to handle highway diesel fuel meeting a  15 ppm cap on
sulfur content.

       Highway diesel fuel meeting a 15 ppm cap on sulfur content will continue to be
suitable for use as heating fuel as necessary. The changes to the composition of highway
diesel fuel that will result from our program will not affect its suitability for use as heating oil.

(F)     The distribution system cannot transport multiple products without some level
       of contamination and loss of higher quality product volume; and such
       contamination will increase significantly with a 15 ppm sulfur cap.

       (1)     Commenter urges EPA to conduct tests of the distribution system to
              determine whether 15 ppm sulfur fuel can be delivered in a fungible pipeline
              system while still maintaining sulfur integrity; and if it is possible, at what cost
              and how much fuel will have to be downgraded to achieve that delivery. API
              references Attachment 6 to its letter, a study by NPC expressing the high risk
              of pipeline  contamination.  Commenter further cites a TM&C assessment of
              the costs and impacts of distributing ultra low sulfur fuel which concludes that
              the lack of experience in dealing with such a product will  lead to difficulties
              maintaining a continuous supply, and spot outages would result.  The large
              differences in sulfur content between on-road diesel and  home heating oil (15
              vs. 5000 ppm) will create a significant amount of pipeline interface to ensure
              product integrity.  Some pipelines estimate that 20% of on-highway diesel will
              have to be downgraded at the receiving end to maintain product integrity.
              Consequently, refiners will have to produce an additional 20% of on-road
              diesel than demand requires.  Although there may be many different
              pathways from refiner to end-user, the pipeline distribution system is the most
              complex with respect to potential contamination, and by far the most
              prevalent one in terms of delivery of product. EPA overly simplified the
              pipeline distribution system in Section IV-46 of the Draft RIA. The product,
              particularly in larger systems such as the Colonial Pipeline, goes through
              numerous steps and travels long distances. In Houston, the pipeline will have
              to be flushed with 15,000 barrels of 15 ppm diesel before pumping the main
              batch into the mainline. Contamination could also occur from leakage from
              valves or fuel trapped in valve bonnets, in common manifolds, or from slight

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DECEMBER 21, 2000	PAGE 8-39

              miscalculations. To protect against contamination, refiners can issue even
              lower sulfur product into the pipeline or dedicate part of the delivery system to
              only 15 ppm fuel. Neither choice is feasible. The first because it would
              require great capital investment to reduce sulfur to near zero, and would
              result in inadequate diesel supply; and the second because of the number of
              products required in the market today. Contamination could occur at any
              point along the distribution system, and with a 15 ppm standard there is no
              margin for error.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 46
              Citgo Corporation  (IV-D-314) p. 2, 3
              ExxonMobil (IV-D-228) p. 18
              Marathon Ashland Petroleum (IV-D-261)  p. 50-51
              National Petrochemical & Refiners Association  (IV-D-218) p. 10, 20

       (2)     Commenter notes that contamination problems will be difficult to remedy
              because of the volumes need to blend down the sulfur. Thus, the likely
              scenario will be to try to find a refinery to rerun the off-spec product  (as well
              as  increased transmix products), but capacity limits will make this difficult.

              Letters:

              Big West Oil, LLC (IV-D-229) p. 2

       (3)     A 50 ppm or 15 ppm diesel fuel sulfur standard will present a serious problem
              with respect to  both the distribution system and ensuring that the fuel is not
              contaminated during transport.  The existing distribution system  is incapable
              of meeting the standard on a regular basis because of contact with other
              products in the system. Unless each of the pipelines, barges, bulk storage
              terminals and tank trucks are cleaned immediately prior to the introduction of
              low sulfur diesel, the residual product will contaminate the new fuel. If it is not
              EPA's intent to require segregation, the EPA should thoroughly assess how
              its  proposal will work in the real world without significant product
              contamination.

              Letters:

              National Association of Convenience  Stores  (IV-D-279) p. 2

       Response to Comment 8.1.2(F):

       After our review of the comments and all the information available to us, we remain
convinced that the challenge of limiting sulfur contamination during the distribution of
highway diesel fuel meeting a 15 ppm cap can be met with modest changes and associated
costs. The provision in the final rule to allow for an adjustment to downstream
measurements to take into consideration test variability will further serve to address the
concerns raised.  Please refer to the response to comments 8.1.1 (A), (B), & (C)  and the
Regulatory Impact Analysis (RIA) to the final rule for a discussion of our assessment of the

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DECEMBER 21, 2000	PAGE 8^40

ability of the distribution system to handle highway diesel fuel meeting a 15 ppm cap on
sulfur content.

       While no test runs of the distribution system using 15 ppm diesel fuel have yet been
completed, we remain convinced that it is feasible to distribute 15 ppm using the current
distribution system at a minimal additional cost. We anticipate that distributors will quickly
optimize their practices to avoid sulfur contamination. We also anticipate that distributors will
gain some experience in reducing sulfur contamination in the distribution system through
complying with the recently finalized Tier 2 low sulfur gasoline requirements (65 FR 6698,
February 10, 2000).  Furthermore, we fully anticipate that some refiners will take advantage
of the early credit provisions in the final rule and begin producing 15 ppm diesel fuel early,
and in so doing provide valuable experience in distributing 15 ppm fuel nationwide prior to
the June  1, 2006 start date for the program.

(G)    Limitations in the petroleum distribution and storage system of rural America
       will force  rural retailers to make decisions that would limit the availability of
       fuels to their customers, which would force rural customers and agribusiness
       to purchase an unrequired, higher-priced fuel.

       (1)     Rural retailers, due to their limited  storage systems, will be forced to
              designate their storage tanks to only one fuel, probably the ultra-low sulfur
              fuel.  This will force all rural customers to purchase a higher priced fuel or will
              force the  rural retailers to install additional storage tanks.  Some commenters
              stated that the installation  of these additional tanks would be too costly and
              could also increase the potential environmental threat of USTs. Commenters
              suggest that EPA withdraw the rule in order to accurately assess the impact
              to agribusiness.

              Letters:

              Agricultural Retailers Association  (IV-D-178) p. 2
              Agricultural organizations as a group (IV-D-265) p. 1-2
              North American Equipment Dealers Association  (IV-D-194) p. 2-3

       Response to Comment 8.1.2(G):

       The standards finalized today require all highway diesel fuel to meet the 15 ppm
sulfur standard, with the exception of that fuel continued to be produced to the current 500
ppm standard under the temporary compliance option and small refiner hardship provisions
during the first  few years of the program.  We are  aware that for various reasons, including
those mentioned by the commenter, that today up to 15% of highway diesel fuel production is
consumed in nonroad uses. In our cost analysis in Chapter V of the RIA we have assumed
that this "spillover" of highway diesel fuel into  the nonroad market would continue, and have
factored this cost into our analysis of the program. However, there are a number of reasons
to believe that this spillover will be reduced in the future as the various entities in the refining
and distribution system revisit their decisions  in the wake of today's final rule.  To the extent
this spillover is reduced,  it will lessen the overall cost of the program.

(H)    Refining industry concerns that diesel fuel will be contaminated  by higher
       sulfur gasoline in pipelines and storage systems is unfounded.

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       (1)     As a matter of industry practice, the contact between diesel fuel and gasoline
              in distribution pipelines is minimized and there is a current need to protect
              diesel fuel from gasoline contamination in ways that virtually assure that any
              sulfur cross-contamination will not be an issue. For example, diesel fuel
              cannot be sold unless it has a "flash point" of 125 degrees F, a requirement
              that would be violated if even a small amount (1 %) of gasoline is allowed to
              mix with the diesel.  Since it would take a higher percentage of gasoline to
              contaminate the sulfur level in diesel fuel, these concerns are unfounded.

              Letters:

              International Truck & Engine Corp.  (IV-D-257) p. 10

       Response to Comment 8.1.2(1-1):

       We agree with the commenterthat although limiting sulfur contamination in highway
diesel fuel meeting a 15 ppm cap on sulfur content will represent a substantial new challenge
to the fuel distribution industry, that this challenge can be successfully managed with modest
changes to the existing system and at acceptable costs.  We agree that sulfur contamination
of highway diesel fuel by contact with gasoline will continue to be effectively managed by the
distribution  system. Please refer to the response to comments 8.1.1 (A), (B), & (C)  and the
Regulatory Impact Analysis (RIA) to the final rule for a discussion of our assessment of the
ability of the distribution system to handle highway diesel fuel meeting a 15 ppm cap on
sulfur content.

(I)      EPA's reliance on catalyst vendor information and the MathPro study failed to
       account for real world processing options and feed quality, and therefore
       overestimated the  ability of refiners to achieve the 15 ppm standard.

       (1)     Commenter notes that the vendors pointed out to EPA, MathPro and the
              commenter that the assumed feed quality was not consistent with refiners'
              processing options. One of the vendors stated that the MathPro cases are
              not representative of what most refiners face. The same vendors have
              concluded that with current feedstocks, more aggressive aromatic saturation
              or hydrocracking will be necessary,  which is not technically practical or
              economically feasible in some cases. Thus, even one of the vendors has
              recognized that feed downgrading, especially by cutting LCO endpoint, is
              likely.  These technical issues pose further risk of supply shortages (see Issue
              8.1.1).

              Letters:

              National Petrochemical & Refiners Association (IV-G-29) p. 3

       Response to Comment 8.1.2(1):

       For the Final Rule, we estimated each refinery's cost for meeting the 15 ppm sulfur
cap standard. For a more robust analysis, we estimated the mix of refinery streams (i.e.,
LCO, other cracked stocks and straight run) which comprise each refinery's distillate

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presuming that the mix of refinery streams is the same for the refinery's highway diesel fuel.
We then incrementally estimated the cost of desulfurizing each refinery stream assumed to
comprise the feed to the highway diesel hydrotreater based on desulfurization information
which we obtained from vendors.  A complete discussion on our cost estimation methodology
is contained in Chapter V of the RIA. We are confident that our analysis is complete and our
cost estimates are sound.

       We also heard one vendor's claim that the Mathpro feeds, which vendors provided
cost information for, do not represent actual highway diesel fuel quality because the
endpoints are too low. We evaluated the Mathpro feeds and  compared them to NIPER
(National Institute for Petroleum and Energy Research) survey data for several different
years.  NIPER surveys diesel fuel quality at the point of retail  sale all across the country. The
NIPER surveys reveal that the average T-90 point for highway diesel fuel is about 600  F.
The Mathpro feed intended to represent average diesel fuel quality is feed #1 and it is
assumed to contain 23 percent LCO, 8 percent coker distillate, and 69 percent straight run (in
our analysis we  name this feed as "typical"). Mathpro assigned this particular feed a T-90
point of 610  F, which is more severe than the average diesel fuel, not less. Thus, the
vendor's claim that Mathpro's feed does not represent average highway diesel fuel quality
does not hold true. We believe that the vendor's basis for claiming that the Mathpro's feeds
are too light stems from their work with refiners for meeting the 500 ppm sulfur cap standard
implemented in  1993. To meet the 500 ppm cap standard, some refiners retrofitted existing
VGO hydrotreaters to meet the sulfur standard, while others put in grassroots units. A likely
explanation could be that those refineries with the lightest,  easiest to treat feeds ended up
retrofitting existing VGO units on their own while those with the  heaviest, most difficult to treat
feeds were  addressed by the  vendors putting in grassroots units, so the vendors only saw the
more difficult feeds.
Vendors which we spoke to explained to  us that highway diesel fuel, even those fuels with  a
large fraction of sterically hindered compounds from cracked  stocks, can  be desulfurized
using desulfurization. Thus, hydrocracking and ring opening would not be necessary. We
don't think that refiners will  put in these units to meet this program's requirements. If they do
then they likely have economic reasons beyond meeting the requirements of this  rule for
doing so (i.e., upgrading residual fuel to a much higher quality highway diesel fuel). We
understand that refiners are currently using their existing hydrocracker to treat some of their
cracked stocks,  and this practice could expand in the future as refiners optimize the
processing of their refinery streams and the blending of blendstocks for meeting product
quality constraints, including this requirement.

              Issue 8.1.3: Lead-time Required

(A)    There will be a shortage of the  engineering and construction resources
       necessary to meet the 2006 deadline, particularly given the overlap with Tier 2
       gasoline desulfurization requirements.

       (1)    Commenters provided  no supporting information or detailed analysis.

              Letters:

             CO Petroleum Association (IV-D-323) p. 2-3
             Cooperative Refining, LLC (IV-D-300) p. 3
             Countrymark Cooperative (IV-D-333) p. 5

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              ExxonMobil (IV-F-800)
              Marathon Ashland Petroleum  (IV-F-74)

       (2)     The high pressure, high temperature and high alloy units needed to meet the
              standards require highly specialized engineering contractor support as well as
              high quality craftsmen such as welders. Also, many of the fabrication and
              manufacturing shops for the vessels are located overseas which complicates
              the construction process.  The same  is true for the necessary piping.  The
              time pressure and volume to be supplied could lead to poor construction and
              put workers at risk. Thus, there needs to be separation of time between the
              gasoline and diesel desulfurization requirements.

              Letters:

              Big West Oil, LLC (IV-D-229)  p. 2-3

       (3)     This is a significant concern, especially in Rocky Mountain area.  Also, a
              significant level of the resources available to farmer refiner co-ops may be
              engaged in ethanol refining plants, based on the planned construction activity
              cited in the comments.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 6-7

       (4)     There are a limited number of manufacturers for the necessary high pressure
              reactors and compressors - fabrication of this new equipment could be a
              limitation on the industry's ability to meet the proposed fuel standard.

              Letters:

              ExxonMobil (IV-F-800)
              Marathon Ashland Petroleum  (IV-D-261) p. 41
              National  Petrochemical & Refiners Association (IV-D-218) p. 3

       (5)     The need for higher pressure  HDS units to ensure compliance with the
              standard, instead of the lower pressure HDS strategy  assumed by EPA's will
              contribute to the financial, engineering and construction  resource limitations
              related to the fuel change. These limitations will make it unlikely that refiners
              will be able to meet the proposed standard by 2006.

              Letters:

              U.S. Department of Energy (IV-G-28) p. 4

       Response to Comment 8.1.3(A)

       EPA evaluated the engineering and construction resources needed to design and
build the desulfurization  equipment needed for the Tier 2 gasoline sulfur standards and the
15 ppm diesel fuel sulfur cap. The analysis is presented in Chapter 4 of the Final RIA.

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There, we found that the need for these resources is well below those available, indicating
that existing resources should be more than sufficient to fulfill the needs of these two rules.

(B)    The six year lead time is adequate.

       (1)     The 2006 deadline allows for a full two years of planning and then the ability
              to fit upgrades into normal turnaround schedules. Although skilled labor will
              be at a premium, everyone will be trying to get work done simultaneously, and
              permits will be a chore.  None of those concerns are atypical for refinery
              operations. The experience with RFG, which was a much more difficult job,
              shows that a 3-4 year period is feasible; so the six year period for this rule is
              more than  adequate.

              Letters:

              Hart/IRI Fuels Information Services  (IV-D-154)  p. 3

       (2)     Commenter notes that API stated that a 4-year lead time is required for
              refiners, and this rule would provide them with 5.

              Letters:

              PADEP (IV-D-100)p. 2

       Response to Comment 8.1.3(B)

       The oil refining industry has typically requested at least 4 years lead time between
promulgation and the implementation date of a new fuel quality standard. Examples of this
were industry comments to the Federal reformulated gasoline (RFG) program and the Tier 2
gasoline sulfur control program.  Also, the lead time analysis performed by EPA in support of
the Tier 2 sulfur standards and summarized in the Final RIA for that program confirm that 4
years lead time is  more than sufficient.  Thus, the five and a half year lead time provided prior
to the onset of the new diesel fuel sulfur cap is more than sufficient time for the industry to
design and build their desulfurization equipment. Also,  it should be noted that the timing of
this program provides four and a half years before the date when early sulfur credits can be
generated without restrictions on the use of the 15 ppm diesel fuel. Thus, sufficient lead time
for all refiners is being provided even for generating early credits.

              Issue 8.1.4:  Diesel Fuel Additives Issues

(A)    EPA should modify the proposed rule to permit downstream use of static
       dissipater additives.

       (1)     Often, during tank truck loading, and in particular during switch loading from
              gasoline to diesel, there are flammable vapors present that can  ignite if
              charges accumulate and sparks occur.  Static dissipater additives prevent the
              possibility of electrostatic ignition during tank truck loading because  they
              prevent charge accumulation. The commenter  noted that the downstream
              use of static dissipater additives will minimize the amount that is necessary
              and that even though available static dissipater  additives contain >15 ppm,

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              normal use concentration is low (1-3 ppm).  Commenter adds that the
              concentration of the additive can be monitored using ASTM D2624. This
              commenter recommends that EPA  allow the downstream use of these
              additives under conditions that will assure that low-sulfur diesel content is not
              increased by more than 0.2  ppm. Commenter adds that an allowable increase
              of 0.2 ppm sulfur to diesel fuel as a result of using static dissipater additives,
              will not compromise EPA's goals and will essentially be undetectable by
              ASTM D2622.

              Letters:

              Octel America (IV-D-174) p. 1-4, (IV-F-46)

       (2)     All commercially available static dissipater additives have a significant sulfur
              content, and while the proposed regulation will allow use of these additives at
              the refinery, it is the current  practice to add these additives at pipeline
              terminals prior to tank truck  loading, which is where the electrostatic hazard
              exists. Downstream addition, as opposed to refinery addition, would reduce
              the amount of sulfur added to the fuel. Commenter provides significant
              discussion on this issue, noting that these additives are essential for
              preventing electrostatic ignition during tank truck loading and that the
              prohibition of their use downstream will result in  fires during tank truck
              loading. Commenter refers  to an API study that documents the frequency of
              ignitions at terminal loading  facilities (see "Protection Against Ignitions Arising
              Out of Static, Lightning, and Stray Currents," API Recommended Practice
              2003, Fourth Edition, March 1982) and to Canada's regulations requiring the
              use of static dissipater additives (see CAN/CGSB-3.16, Mining Diesel Fuel,
              CAN/CGSB-3.6, Automotive Diesel Fuel, CAN/CGSB-3.517, Automotive Low
              Sulfur Diesel Fuel, CAN/CGSB-3.3, Kerosene, and CAN/CGSB-3.2, Heating
              Fuel Oil).  Commenter adds that recent incidents have resulted in use of
              these additives in  many European countries and that in one incident a refiner
              has speculated that low conductivity, due to a severe level of hydrogen
              treating to achieve 10 ppm sulfur for Class I Swedish Diesel Fuel, was a
              causative factor. Commenter provides as attachments to their letter the
              following supporting documentation: Stadis 450, Static Dissipater Additive
              (Conductivity Improver Additive), Octel Starreon LLC; Henry, Cyrus P., Jr.,
              E.I. DuPont de Nemours & Co., "Electrostatic Hazards and Conductivity
              Additives," Fuel Reformulation,  Jan/Feb 1993; ASTM D4865-97, Standard
              Guide for Generation and Dissipation of Static Electricity in  Petroleum Fuel
              Systems, Octel America; "Electrostatic Ignitions  During Diesel Fuel Loading,"
              Octel America, Additives Brief No. 91-01. These documents contain
              significant discussion and information regarding the use, effectiveness, and
              necessity of these additives.

              Letters:

              Octel America (IV-D-174) p. 1-4, +all

(B)    There is no need to impose a 15 ppm sulfur cap on diesel additives in order to
       ensure that the sulfur content of finished diesel fuel meets the proposed

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       standard.

       (1)     The American Chemistry Council Fuel Additives Task Group (FATG)
              suggests an alternative triple-option approach that would achieve EPA's
              environmental objective without causing unnecessary disruption or imposing
              unjustified costs on producers and users of diesel additives. Under this
              proposal, an additive that is sold or transferred for blending into motor vehicle
              diesel fuel downstream of the refinery would have to meet one of three
              alternatives (to be chosen by the additive producer).  These include producing
              the additive at 15 ppm or less, producing the additive with a sulfur content that
              would not cause the resulting diesel fuel to have a sulfur content greater than
              15 ppm (only for additives sold to persons other than the ultimate consumer),
              and producing the additive with a sulfur content that would not contribute
              more than 0.5 ppm to the sulfur content of the resulting diesel fuel. The
              commenter reviews the Product Transfer Document (PTD), labeling,
              blending, and testing/sampling requirements associated with the proposed
              alternatives.

              Letters:

              American Chemistry Council (IV-D-183) p. 5-8

       (2)     A 15 ppm requirement imposed on diesel additives is unnecessary and would
              increase the cost of additives to refiners and blenders. EPA's RIA assumes
              that except for increase use of lubricity additives, no increased costs will be
              incurred in producing and distributing diesel additives that comply with a 15
              ppm sulfur cap. This assumption is unrealistic and it underscores the
              importance of ensuring that the rule imposes the lowest possible costs and
              paperwork burdens on additive manufacturers consistent with achieving the
              15 ppm cap.

              Letters:

              American Chemistry Council (IV-D-183) p. 2-3

       (3)     EPA should let market mechanisms determine the level of sulfur that can be
              present in diesel additives, so long as the sulfur limit in  finished diesel fuel is
              not exceeded.  This would be consistent with the Gasoline sulfur
              requirements which do not impose any limits on the sulfur content of
              additives. In addition, low sulfur alternatives to certain diesel additives are  not
              currently available and could be difficult and costly to produce.

              Letters:

              American Chemistry Council (IV-D-183) p. 3-4
              New England Fuel Institute (IV-D-296) p. 7

       (4)     Since  they are typically blended in at a treat rate of 0.1 % or less, additives
              make  a negligible contribution to the overall sulfur level in finished diesel fuel.
              Commenter provides an example to illustrate this point  and notes that the use

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              of additives can be accommodated easily within the 7 ppm sulfur tolerance
              margin that EPA estimates will characterize diesel fuel when it leaves the
              refinery.

              Letters:

              American Chemistry Council (IV-D-183) p. 4

(C)    EPA should not control the sulfur content of fuel additives.

       (1)     Requiring additives to meet the 15 ppm standard would further complicate
              suppliers' capabilities to produce and distribute diesel fuels. EPA should fully
              evaluate the unintended consequences of such a course of action.

              Letters:

              American Petroleum Institute (IV-D-343) p. 53
              Independent Fuel Terminal Operators Association (IV-D-217) p. 12-13
              Marathon Ashland Petroleum (IV-D-261) p. 56

       Response to Comments 8.1.4(A). (B). & (C):

       In response to these comments, we are allowing the use of diesel fuel additives with
a sulfur content greater than 15 ppm provided their use does not result in an exceedance of
the 15 ppm cap on the sulfur content of highway diesel fuel.

       Our review of data submitted by additive and fuel manufacturers to comply with
EPA's Fuel and Fuel Additive  Registration (F&FAR) requirements (40 CFR Part 79), which is
summarized below, indicates that additives to meet every purpose (including static
dissipation) are currently in common use which meet a 15 ppm cap on sulfur content. The
ability of industry to provide additives for use in 15 ppm highway diesel fuel is further
supported by the fact that diesel fuel meeting a 10 ppm cap on sulfur content has been
marketed in Sweden for some time, and ARCO Petroleum recently began marketing fuel
meeting a 15 ppm sulfur cap in California. Even if low sulfur additives were not yet available
for certain purposes, we believe that it is reasonable to assume that they would become
available before our sulfur program is implemented in 2006. The summary of the data in the
F&FAR database also indicates that the industry could adapt to use only additives that
contain less than  15 ppm sulfur.  However, we agree that it is  not necessary to force the
additives that contain greater than 15 ppm sulfur to be retired.  By allowing their continued
use under certain conditions, we  avoid  any significant impacts from our sulfur program
related to diesel fuel additives.

Summary of Information Contained in the F&FAR Database on Diesel Fuel Additives

       Most sulfur containing additives registered with the EPA currently meet the 15 ppm
       cap.

       There are approximately 3500 diesel additives registered with the EPA.

              Of the diesel additives registered with EPA,  463 additives contain sulfur.

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              Of the sulfur-containing additives, 176 additives (38 of such additives) have a
              sulfur content greater than 15 ppm
              There are 226 sulfur-containing additives that have a sulfur content less than
              5 ppm.

       In 1999, 5.5 percent of the total volume the additives used in diesel fuel contained
       sulfur.

       In 1999, 47 percent of the diesel fuels registered by fuel manufacturers had sulfur
       containing additives listed (of all purposes in-use). These fuel formulations represent
       65 percent of the total diesel fuel volume.

       Several dozen different additives registered with EPA have anti-static (static
       dissipater) listed as a purpose in-use (PIU). EPA data shows that there are 40
       additives that list anti-static as a PIU.

              64 percent  of these additives have an elemental sulfur level greater than 15
              ppm.
              Nearly a dozen different anti-static additives registered with the EPA have
              zero amount of sulfur in their formulations.

       Since such low-sulfur additives are currently in widespread use side-by-side with
high-sulfur additives, it is reasonable to conclude that there is not a significant difference in
their cost.

       The unusually  high sulfur content of a few additives may discourage their use in
diesel fuel that meets a 15  ppm sulfur cap. However, it will generally continue to be possible
for additive manufacturers  to market additives that contain greater than 15 ppm sulfur for use
in highway diesel fuel. Such additives can also continue to be used in off highway diesel
fuel. Additive manufacturers that market such additives and blenders that use them in
highway diesel fuel will have additional requirements to ensure that the 15 ppm sulfur cap on
highway diesel fuel is not exceeded. Although our sulfur program may  encourage the
gradual retirement of additives that do not meet a  15 ppm sulfur cap for use in highway diesel
fuel, we do not anticipate that this will result in disruption to additive  users and producers or a
significant increase in cost. Additive manufactures commonly reformulate their additives on a
periodic basis as a result of competitive pressures. We anticipate that any reformulation that
might need to occur to meet a 15 ppm sulfur cap will be substantially accommodated within
this normal cycle.

       In some cases, blenders may not find it feasible to conduct testing, or otherwise
obtain information on the sulfur content of the fuel either before or after additive blending,
without incurring substantial cost. Without such information, a blender would not have
documentation with which to evaluate what impact the use of an additive which exceeds 15
ppm would have on the fuel's final sulfur content.  We anticipate that blenders will manage
the risk associated with the use of additives above 15 ppm in sulfur content under such
circumstances with actions such as the following:

       selecting an additive with minimal sulfur content above 15 ppm  that is used at a low
       concentration,  recognizing that any additive with a sulfur content above 15 ppm must
       be blended at less  than one volume percent (of the resulting mixture) and

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RESPONSE TO COMMENTS DOCUMENT
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       working with their upstream suppliers to provide fuel of sufficiently low sulfur content
       to accommodate the small increase in sulfur content which results from the use of the
       additive.

       This is similar to the way distributors will manage contamination from their distribution
hardware (tank trucks, etc.).  Distributors will not necessarily test for fuel sulfur content after
each opportunity for contamination, but rather will rely on mechanisms set up to minimize the
contamination, and to obtain fuel sufficiently below the standard to accommodate the
increase in  sulfur content from the contamination.

       Our program requires that additives that exceed which exceed 15 ppm in sulfur
content may only be added to highway diesel fuel at concentrations less than one volume
percent. This provides some limit on the potential impact on the  sulfur content of highway
diesel fuel from the use  of such  additives.

(D)    EPA should clarify whether the sulfur content limits of the rule are intended to
       apply to "aftermarket"  additives that are sold in small containers to individual
       consumers for occasional use in their vehicles.

       (1)     Sections 80.441 (a) and 80.447(c) of the proposed rule suggest that the sulfur
              content limitations  of the rule apply to small cans  of diesel additives sold at
              retail service stations or auto supply stores to individual consumers who
              occasionally may add a small amount of the additive to their vehicle fuel
              tanks. However, those provisions may be referring to  sales to wholesale-
              purchaser consumers who blend more  substantial volumes of additives into
              large quantities of diesel fuel being stored in tanks from which fleet vehicles
              are fueled. EPA should clarify this issue.

              Letters:

              American Chemistry Council (IV-D-183) p. 9

       Response to  Comment 8.1.4(D):

       We clarified the  requirements applicable to aftermarket diesel fuel additives under
our program.  Additives  that exceed 15 ppm in sulfur content may not be used as aftermarket
additives for use by the  ultimate consumer once our diesel sulfur requirements go into effect.
The use of aftermarket additives that exceed 15 ppm in highway  diesel fuel by consumers
would result in significant harm to the sulfur sensitive the emissions control that we anticipate
will be needed to meet the emissions standards under our program.

(E)    EPA should clarify the regulations that would govern the addition of additives
       to low-sulfur fuel.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              American Public Transportation Association (IV-D-275) p. 4

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       Response to Comment 8.1.4(E):

       We clarified the regulations that will govern the addition of additives to highway diesel
fuel under our program.  Please see the responses to comments 8.1.4.(A), (B), and (C) and
to comment 8.1.4.(D).

(F)     EPA should allow for the use of additive packages or products that could be
       blended with conventional diesel fuel to meet the sulfur standard and reduce
       emissions.

       (1)     The PuriNOx Performance System is a proprietary blending process and
              additive package that produced PuriNOx fuel, a low emission diesel fuel that
              can reduce emissions of NOX by up to  30 percent and PM by up to 50 percent
              when compared to commercial diesel fuel.  This fuel is a stable fuel emulsion
              made by blending the PuriNOx additive package, diesel fuel and water in an
              automatic unit; can be used in existing and new diesel engines, and works
              well with low-sulfur diesel fuel. When looking at emissions reductions from a
              systems viewpoint, PuriNOx fuel  can contribute additional cost-effective
              emission reductions to those achieved through engine design optimization
              and emission control technologies for both  on-road and nonroad diesel
              engines.

              Letters:

              Lubrizol Corporation (IV-G-49), p. 1-4, 6

       Response to Comment 8.1.4(F):

       Our program will not prevent the use of the additive packages described by the
commenter in highway or off highway diesel fuel to achieve emissions benefits under EPA
market incentive emissions reduction programs.  The  use of additives under these programs
is beyond the scope of our highway diesel fuel program.

       The focus of our diesel  fuel program is to control of highway diesel sulfur content to
the level necessary to allow the use of the sulfur sensitive emissions control hardware which
we believe will  be needed to meet the emissions standards under our program.  We
determined that this approach is the most cost effective means to achieve the requisite
emissions reductions from diesel fueled vehicles. We do not believe that it would be
appropriate or cost effective for some portion of the highway diesel fuel pool to be permitted
to continue to have a high sulfur content once our sulfur program becomes fully effective so
that such fuel with the addition of additive packages or products could be used by current
vehicle technology in an attempt to meet the emission standards under our program. The
continued existence of high sulfur diesel fuel once our sulfur program becomes fully effective
designated for  additization with specified additives prior to  its use in a limited subset of
vehicles would add a burdensome level of complexity to our program. Such an approach
would also introduce unacceptable risk that vehicles that require 15 ppm sulfur fuel (model
year 2007 and  later vehicles) could be misfueled with  high  sulfur fuel.  Such misfueling would
render the emissions control hardware  on these vehicles inoperative and jeopardize the
emissions benefits of our program.

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(G)    Supports a requirement that refiners supply only low sulfur kerosene, and that
       all number one kerosene meet the 15 ppm standard.

       (1)    The absence of such a requirement on refiners and importers could lead to
             errors in labeling and tankage and/or fuel additives that mistakenly exceed
             EPA's standards.

             Letters:

             Motor and Equipment Manufacturers Association (IV-D-258), p. 8

(H)    EPA should not control the sulfur content of number one kerosene to the on-
       highway limit.

       (1)    The market will drive supply of low-sulfur kerosene for those areas and times
             when the product is necessary for blending with on-road fuel. A requirement
             that all number one kerosene meet on-road limits could have serious supply
             implications for aviation fuel, as well.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 53
             Independent Fuel Terminal Operators Association (IV-D-217) p. 12-13
             Marathon Ashland Petroleum  (IV-D-261) p. 56

       Response to Comments 8.1.4(G) and (H):

       Kerosene is commonly added to highway diesel fuel to reduce fuel viscosity in cold
weather.  Our diesel sulfur program will not limit this practice. Our program requires that
kerosene that is used, intended for use, or made available for use in 15 ppm sulfur highway
diesel fuel is itself required to be classified as "motor vehicle diesel fuel" and meet the 15
ppm standard, as well as the standards for aromatics and cetane (see Section 80.2(y) of the
regulations).

       To help ensure that only distillates that comply with the 15 ppm highway diesel fuel
standard are blended into highway diesel fuel, our program requires that kerosene meeting
the 15 ppm standard, and distributed for use in motor vehicles, must be accompanied by
product transfer documents (PTDs) accurately stating that the product meets the 15 ppm
sulfur standard and cetane and aromatics requirements or that the blender has test data
demonstrating such compliance. Similarly, any kerosene distributed for blending into 500
ppm highway diesel fuel must be accompanied by PTDs stating that the product meets the
500 ppm highway diesel fuel standard and that it may not be blended into 15 ppm highway
diesel fuel.

       Our program does not require refiners  or importers of kerosene to produce or import
kerosene meeting the  15 ppm sulfur standard. Only kerosene meeting the  definition of motor
vehicle diesel fuel must meet the 15 ppm standard.  We believe that refiners will produce low
sulfur kerosene in the same refinery processes that they use to produce low sulfur highway
diesel fuel, and that the market will drive supply of low sulfur kerosene for those areas where,
and during those seasons when, the product is needed for blending with highway diesel fuel.

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The additional cost of producing sufficient quantities of kerosene meeting a 15 ppm cap on
sulfur content has  been included in our analysis of the costs of our program. We believe that
the PTD requirements described above will be sufficient to prevent the mistaken use of high
sulfur kerosene in  15 ppm highway diesel fuel. Therefore, we believe that the approach
outlined above will ensure that the use of kerosene in highway diesel fuel will not jeopardize
compliance with the 15 ppm cap on the sulfur content of highway diesel fuel under our
program. Consequently, we believe that requiring all kerosene to meet a 15 ppm cap on
sulfur content is unnecessary and that the accompanying  additional costs would be
unjustified.

       Issue 8.2:  Testing and Sampling Requirements

(A)    Retailers should not be required to test every batch of fuel delivered but
       instead should be permitted to establish a potential sulfur level violation
       defense through specific documentation of the product delivered to the
       retailer's outlet.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Collier, Shannon, & Scott  (IV-F-117) p. 24

       Response to Comment 8.2(A):

       The Agency agrees with this commenter's request that retailers should not be
required to test every batch of delivered fuel.  The Agency does not believe such a
requirement is appropriate for retailers. Consequently, this requirement is not imposed on
retailers under the final regulation, either as an affirmative duty or as an affirmative defense
element that would be necessary for the retailer to establish when it is attempting to rebut a
presumption of liability.

       The Agency cannot agree, however, with this commenter's second suggestion that
retailers be permitted to rebut a presumption of liability for a discovered violation merely by
providing documentation indicating compliance of the delivered product.  To establish an
affirmative defense, retailers must demonstrate that they did not cause the violation, as well
as that product transfer documents account for the fuel and indicate it was in compliance.
Our experience under similar fuel control programs such as the volatility and RFG programs,
leads us to believe that in most instances, the establishment by a retailer of conforming
product transfer documents does result in the successful rebutting of presumptive liability for
that retailer.

       However, this is not always the case.  For instance, there are those situations in
which it is not clear which party actually caused the fuel nonconformity violation. In such
situations, the Agency does not generally believe that a retailer can successfully establish its
lack of causation of the violation merely through establishing the existence of conforming
transfer documents. This is because it is  possible that a retailer may cause fuel
nonconformity in spite of the existence of such documents, such as through the retailer's
possible addition of non-documented high sulfur fuel to low sulfur fuel, after the retailer's
receipt of the low sulfur fuel with transfer documents indicating that fuel's sulfur compliance.

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In such instances, the Agency does not consider the mere provision of conforming transfer
documents to be adequate to successfully establish a retailer's affirmative defense to liability.
The retailer may, under such circumstances, provide additional evidence that indicates that it
did not cause the violation, e.g., other business records indicating lack of causation.

(B)     Refiners should not have to test every batch of low sulfur fuel.

       (1)     Commenter provides no further analysis on this point.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 16

       Response to Comment 8.2(B):

       The Agency agrees with this commenter's argument that  refiners should not have to
test every batch of low sulfur diesel fuel. We have not included such an every batch, refiner
testing requirement as an affirmative duty under the final rule. However, because the final
rule does permit the continued production of 500 ppm sulfur highway diesel fuel during the
rule's initial implementation period, a significant risk of fuel nonconformity exists because
such high sulfur highway fuel will continue to be available. Since this greater potential for
nonconformity exists, the Agency has included in the final rule a mandatory quality assurance
sampling and testing program for branded refiners who choose to produce 500 ppm fuel.
Such branded refiners are required to do representative sampling and testing of the  low
sulfur fuel at their branded retail outlets, in order to ensure that the low sulfur fuel that is sold
at these branded outlets has not been contaminated by the legally permitted, higher sulfur
product.

       Further, the final rule does impose on refiners a separate, conforming test results
element for the affirmative defense that a refiner would be required  to establish in order to
rebut a presumption of liability arising if a violation  involving the refiner's fuel is discovered.
The need for conforming test results exists under the final  rule because of the greater risk of
fuel nonconformity that results from refiners' ability to produce 500 ppm sulfur fuel, as well as
the production of other high sulfur diesel products. Due to this risk, the Agency believes it is
necessary to impose an affirmative defense testing requirement on  refiners as an added
assurance that refiners will produce conforming fuel. The creation of this affirmative defense
element does not mean, however, that refiners have an affirmative duty to conduct every
batch testing, as previously discussed in this Response. Instead, the requirement to produce
conforming test results would only arise as a necessary affirmative defense element if a
violation were discovered, and refiners do have the option  of choosing not to conduct batch
testing if they don't believe it is important for them to do so. For instance, refiners may
believe that their fuel will not likely be the subject of a violation, so they may choose  not to
prepare for the possible establishment of affirmative defenses through batch testing.

(C)     Since enforcement is targeted at retail locations instead of the refinery  gate,
       refiners would be forced to produce less than 10 ppm sulfur diesel to account
       for test tolerances and reproducibility.

       (1)     Commenters provided no further supporting information or detailed analysis.

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DECEMBER 21, 2000	PAGE 8-54

              Letters:

              National Petrochemical & Refiners Assoc./CITGO  (IV-F-117) p. 101
              National Petrochemical & Refiners Association (IV-F-31)

       (2)     EPA should set downstream tolerance levels that are equal to the proven
              reproducibility of the standard test method plus some consideration for
              nominal degradation during shipping. The NPRM suggests a sulfur level as
              low as 5 or 6 ppm (as would be required to maintain a 15 ppm standard
              downstream) is inappropriate from a cost/benefit point of view.

              Letters:

              Koch Industries  (IV-D-307) p. 11-12

       Response to Comment 8.2.(C)

       EPA's analysis of the feasibility of the 15 ppm sulfur cap considers the need to
produce complying diesel fuel at refineries which contains less than 10  ppm sulfur on
average. Our projected refining costs assume that complying diesel fuel meets an average
sulfur level of 7-8 ppm. This margin of safety is intended to allow for both variability in
refining operation and allowances for pipeline specifications which may be less than 15 ppm.
We accounted for this in our analysis of the feasibility and cost of producing  and distributing
highway diesel fuel that meets a 15 ppm cap on sulfur content. We included a 2 ppm
downstream adjustment to account for the reproducibility of the test method that will be used
to measure the sulfur content of highway diesel fuel.  We do not believe that it is necessary
or appropriate to include an additional downstream adjustment above the 15 ppm standard
as a consideration for sulfur contamination  during shipping.  We selected the 15 ppm cap on
highway diesel fuel sulfur content because  it is necessary to enable the emission control
technology that will be needed to meet the vehicle emissions standards under today's rule.
We also believe that the amount of sulfur contamination during distribution can be
adequately  limited so the margin below the 15  ppm cap provided by the refiner will be
sufficient to allow the 15 ppm sulfur cap to be maintained throughout the distribution system
to the end user.

(D)    ASTM D 2622 has limitations and disadvantages, and ASTM D 5453 is a viable
       and more accurate alternative.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Antek Instruments, Inc. (IV-D-32) p. 1
              Cenex Harvest States Cooperatives (IV-F-191) p. 232

       (2)     Experience  in California in the mid-1990's shows that an alternative to 2622
              should be used to accurately assess sulfur levels below 10 ppm.

              Letters:

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DECEMBER 21, 2000	PAGE 8-55

             ASTM Subcommittee D 203 (IV-F-96)

       (3)    ASTM D 5453, a sulfur by UV technique, is a method that has the analytical
             range to provide equivalent sulfur results in higher concentration and can
             readily analyze diesel samples down to 1 ppm.

             Letters:

             ASTM Subcommittee D 203 (IV-F-96)
             Alliance of Automobile Manufacturers (IV-D-262) p. 18
             Phillips  Petroleum Company (IV-D-250) p. 7

       (4)    Data from the ASTM cross-check program and the findings of an ASTM
             research report (attached to written testimony) confirms and reinforces the
             conclusions of the Western States Petroleum Association and the CA Air
             Resources  Board that ASTM 5453 is equivalent to ASTM 2622 for higher
             sulfur levels, but that 5453 is superior when measuring sulfur levels below 15
             ppm.

             Letters:

             ASTM Subcommittee D 203 (IV-F-96)
             Koch  Industries (IV-D-307) p. 14

       (5)    ASTM 5453 uses a sample combustion technology that is very selective and
             free from the carbon/hydrogen ratio and oxygenate interference that can
             affect the current primary sulfur regulatory method. The instrument
             calibration for this method is not biased by the hydrocarbon matrix of the
             calibration material.

             Letters:

             ASTM Subcommittee D 203 (IV-F-96)

       (6)    Many labs already employ the use of 5453 analyzers but this method is not
             allowed  for regulatory reporting. However, some regulatory agencies have
             already  approved its use in determining sulfur levels. It is a very economical
             alternative to 2622 and has a lower initial and operational cost. The
             necessary equipment for this test is also a good deal smaller in size than the
             2622 equipment.

             Letters:

             ASTM Subcommittee D 203 (IV-F-96)

       (7)    D5453 should be chosen as the designated test method, and D2622-98,
             D4045 and D3120 should  be alternatives within the scope of their
             applicability. CARB recognizes D5453 as the preferred method for low level
             sulfur in gasoline and the same performance characteristic is expected for
             diesel.  EPA should provide data to support its statement that D2622-98 will

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              have acceptable precision at sulfur levels below 15 ppm despite the fact that
              it currently does not have test repeatability for fuels with sulfur levels below 60
              ppm. EPA should submit its modifications to D2622-98 to ASTM
              Subcommittee D02.03 Elemental Analysis for study, ruggedization and round
              robin testing. Commenters provide significant discussion on this issue and
              API provides specific and detailed comments and questions in the context  of
              certain portions of EPA's proposal [i.e. 40 CFR 80.461 (a)(2)(l), (ii), (iv), (vi),
              and (vii)] on this issue. API also cites to ASTM's CS92 crosscheck program
              which shows that D5453 is a superior method and notes that ASTM 2622-98
              currently does not include biodiesel in its scope.

              Letters:

              American Petroleum Institute (IV-D-343) p. 51, 59-64
              ExxonMobil (IV-D-228) p. 20
              Marathon Ashland Petroleum (IV-D-261) p. 64-67

       (8)     The appropriate testing method for levels of sulfur in biodiesel or
              diesel/biodiesel blends is ASTM D 5453, not ASTM D 2622-98. At a recent
              meeting of ASTM Committee D-2 on Petroleum Products and  Lubricants,
              where committee members discussed the application of method D 2622
              versus D 5453 for measure sulfur levels in biodiesel, ASTM concluded that
              the former provided a falsely high bias (30 to 50 ppm too high) due to the
              oxygen content in biodiesel. EPA should adopt testing method D5453 for
              sulfur level in biodiesel and biodiesel blends, as well as petrodiesel.
              Commenter provides additional discussion on this issue, including the
              attachment "Sulfur Testing Standard for Biodiesel."

              Letters:

              National  Biodiesel Board (IV-D-288) p. 3

(E)     EPA should provide flexibility in selecting test methods for certification at the
       refinery and for downstream quality assurance testing.

       (1)     EPA should provide additional flexibility in selecting test methods  by including
              an equivalence statement for D5453, D4045 and D3120 applicable at low
              sulfur levels, just as EPA did for D4294 at higher sulfur levels.

              Letters:

              American Petroleum Institute (IV-D-343) p. 63-64
              Marathon Ashland Petroleum (IV-D-261) p. 67-68

(F)     It is unlikely that field testing equipment will be readily available for pipelines
       and terminals to ensure compliance with the diesel fuel sulfur standard.

       (1)     A recent NPC study stated that testing would have to be performed in
              laboratories that have more sophisticated equipment and trained technicians,
              which will result in product delays and supply disruptions.

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             Letters:

             American Petroleum Institute  (IV-D-343) p. 44
             Citgo Corporation (IV-D-314) p. 3

       (2)    Commenter provides results of a pipeline survey to support this point.  The
             lack of in-line testing will make it difficult to determine batch contamination,
             and may affect the amount of transmix that will be treated as downgraded
             product.  Commenter also notes that pipelines tend to use ASTM D-4294 or
             ASTM D-5453 in a lab setting, and none of the pipelines use  ASTM D2622.
             The ASTM  D-4294 standard only applies for sulfur levels >150 ppm, while
             D5453 has  a published reproducibility of +/- 2.7 ppm at 155 ppm, but is not
             rugged enough for field use and is very costly.

             Letters:

             Association of Oil Pipelines (IV-D-325) p. 3-4, att.

(G)    Aromatic content  should not be determined by the  FIA method (D1319).

       (1)    Repeatability and reproducibility are poor, and subject to great operator error.
             Infra-red and SFC are both superior to the FIA procedure.

             Letters:

             Koch Industries (IV-D-307) p. 14

(H)    EPA should not limit industry to end-window type scanning instruments.

       (1)    There is no reason to abandon the use of side-window x-ray tubes and there
             is no evidence that they introduce any significant degree of variability in
             results at the 0 to 50 ppm level. End-window tubes may produce somewhat
             more sulfur intensity but side window x-ray tubes produce sufficient sulfur
             intensity at  0-50 ppm levels; and the cost of replacing them is around
             $200,000 each. There is a body of RFG round robin data with a fair number
             of low level samples and the results have been excellent.

             Letters:

             American Petroleum Institute  (IV-D-343) p. 63
             Marathon Ashland Petroleum  (IV-D-261) p. 67

(I)     Commenter concerned about the technical ability to reliably use ASTM D 2622-
       98 as the sole compliance method at low sulfur levels when alternative
       methods such as  D 5453 are already available and widely used.

       (1)    Commenter requests that EPA provide data to support a number of claims in
             the preamble about D 2622-98: (1) precision at sulfur levels < 15 ppm; (2)
             correlation of test results with  industry labs on samples in 1-20 ppm sulfur
             range; (3) +/- 4 ppm reproducibility in 1-20 ppm range; (4) rationale  behind

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              blank diluent prepared for mixing 8 hydrocarbons;  and (5) side-window
              versus end-window XRF configurations (given that industry overwhelmingly
              uses side-window instruments and would incur up to $100,000 each to obtain
              the necessary equipment).  The commenter notes that XRF experts have
              serious misgivings about the ability to obtain the required precision at low
              sulfur levels.  Commenter notes that once EPA provides the detailed support
              for its claims,  the ASTM committee will check the real  world performance at
              multiple labs with multiple low sulfur samples.

              Letters:

              ASTM (IV-D-123) p. 1-2

       Response to Comments 8.2(D). (E). (F). (G). (H). & (I):

       Most comments from the industry (Issue 8.2: Testing and Sampling requirements (D),
(E), and (J)) were due to the concern that ASTM D2622-98 (Standard Test Method for Sulfur
in Petroleum Products by Wavelength Dispersive X-Ray Fluorescence Spectrometry) would
be the designated test method for diesel fuel meeting the 15 ppm standard. Whereas  ASTM
D2622-98 will remain as the designated test method for motor vehicle diesel fuel meeting the
500 ppm standard, ASTM D6428-99 (Test Method for Total Sulfur in Liquid Aromatic
Hydrocarbons and Their Derivatives by Oxidative Combustion and Electrochemical
Detection) is the designated test method for diesel fuel meeting the 15 ppm standard.  In
addition, for both the motor vehicle diesel fuel meeting the 15 and 500 ppm standards, there
are several alternative test methods that industry may use with appropriate correlation to the
designated test methods.

       For motor vehicle diesel fuel meeting the 15 ppm standard, ASTM D6428-99 (Test
Method for Total Sulfur in Liquid Aromatic Hydrocarbons and Their Derivatives by Oxidative
Combustion and Electrochemical Detection) is the designated test method. EPA selected
ASTM D6428-99 because its stated analysis range was the most appropriate for the sulfur
concentration range expected in commerce as a result of this rule.  In a brief parallel-testing
program comparing ASTD D6428-99 with other methods, EPA has found that ASTM
D6428-99 has equivalent or better statistical response and concluded that ASTM D6428-99
is the most logical choice as the designated test method.

       Numerous commenters suggested that ASTM D5453-99 should be adopted as the
designated method.  However, the Agency is concerned that this method may not accurately
measure all sulfur-containing compounds such a some found in diesel fuel additives. ASTM
D6428-99does not appear to have this drawback and consequently was deemed preferable.

       ASTM D5453-99 (Standard Test Method for Determination of Total Sulfur in Light
Hydrocarbons, Motor Fuels and Oils by Ultraviolet Fluorescence), ASTM D2622-98
(Standard Test Method for Sulfur in Petroleum Products by X-Ray Spectrometry, and ASTM
D3120-96 (Standard Test Method for Trace Quantities of Sulfur in Light Liquid Petroleum
Hydrocarbons by Oxidative Microcoulometry) are the alternative test methods which may be
used as long as the results obtained by these methods are correlated to those obtained  by
the designated test method.  Technical  suggestions and guidance for parties who would like
to use ASTM D 2622-98 as an alternative test method for motor vehicle diesel fuel meeting
the 15 ppm standard are provided in a memorandum to the docket (IV-B-22).  We are

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providing this information because many laboratories are already utilizing ASTM D 2622 for
determining the sulfur content of both motor vehicle diesel fuel (subject the 500 ppm
standard) and gasoline.  We believe these modifications will aid in correlating test results
with ASTM D 6428-99.  These technical suggestions and guidance address the technical
concerns regarding the use of this method ASTM D2622-98 expressed in the above
comments.  We believe that the provision in today's rule for the alternate use of ASTM
D5453-99, ASTM D2622-98, and ASTM D3120-96 addresses the comment regarding the
need for flexibility in the test methods that may be used to measure diesel fuel sulfur content
while at the same time ensuring measurement reliability. ASTM test procedure D4045 is
capable of measuring the sulfur content of diesel fuel only at levels below 10  ppm. Since the
sulfur cap under today's rule is  15 ppm, the use of a test procedure that is not capable of
measuring fuel sulfur levels of 15 ppm is not appropriate. Consequently, we did not allowed
the use of ASTM D4045 as an alternative test method.

       ASTM D6428-99 (Test Method for Total Sulfur in Liquid Aromatic Hydrocarbons and
Their Derivatives by Oxidative Combustion and Electrochemical Detection) is also
appropriate for measuring the sulfur content of biodiesel and biodiesel blends(D-S).

       For motor vehicle diesel fuel meeting the 500 ppm standard, ASTM D2622-98
(Standard Test Method for Sulfur in Petroleum Products by Wavelength Dispersive X-Ray
Fluorescence Spectrometry) is  the designated test method.  ASTM D5453-99 (Standard Test
Method for Determination of Total Sulfur in Light Hydrocarbons, Motor Fuels and Oils by
Ultraviolet Fluorescence) and ASTM D6428-99 (Test Method for Total Sulfur  in Liquid
Aromatic Hydrocarbons and Their Derivatives by Oxidative Combustion and Electrochemical
Detection) are the alternative test methods which may be used as long as the results
obtained by these methods are correlated to those obtained by the designated test method.

       While EPA did not propose and is not finalizing changes to the aromatics standard
and consequently did not propose any changes to the aromatics content test  method, we
nevertheless did receive comment on this test method.  For aromatic content measurement
in diesel fuel, we will evaluate the currently available test methods, including Infrared and
SFC (Supercritical Fluid Chromatography) in the near future. Until then, D1319 (Test Method
for Hydrocarbon Types in Liquid Petroleum Products by Fluorescent Indicator Adsorption)
remains as the official test method for aromatic content measurement in diesel fuel (G).

       Side-window x-ray tubes as well as end-window x-ray tubes may be used in
measuring the sulfur content of highway diesel fuel meeting a 15 ppm standard using the
modified ASTM procedure D2622-98, provided that the test results using the  modified ASTM
D2622-98 procedure (in the side window configuration) can be correlated with those using
the designated test method, ASTM procedure D6428-99. Side-window x-ray tubes as well  as
end-window x-ray tubes may be used in measuring the sulfur content of highway diesel  fuel
meeting a 500 ppm standard using the ASTM D2622-98 procedure.

       Please  refer to section VII.D.1. in the preamble  to today's rule for additional
discussion regarding the diesel fuel testing requirements and test methods.

       Issue 8.3:  Permitting Issues

(A)    The time frame is too short to complete the permitting process.

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       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Ergon & Lion Oil Co. (IV-F- 117) p. 183

       (2)     EPA may not have the resources and the capability to properly process
              diesel-sulfur related permit applications, particularly since this will occur in
              generally the same time frame as gasoline sulfur related permit applications.

              Letters:

              CO Petroleum Association (IV-D-323) p. 3
              Countrymark Cooperative  (IV-D-333) p. 5-6
              ExxonMobil (IV-F-800)
              National Petrochemical & Refiners Association (IV-F-31, 44)

       Response to Comments 8.3(A)(1) and (2):

       EPA expects many refineries to "net out" of major NSR requirements by utilizing
emissions reductions opportunities at their plants to offset emissions increases. Refineries
that utilize netting  opportunities can obtain minor NSR permits that are simpler and generally
issued more quickly than major NSR permits. In addition, for the reasons stated below, in
conjunction with the fact that the new Diesel rules  provide more than 5 years lead time, as
well as several years to transition into the fuel program, EPA believes that there will be
sufficient time for those refineries who must obtain major NSR permits to do so well in
advance of the compliance deadlines for producing low sulfur diesel fuel.

       In most States, the responsibility for issuing NSR permits belongs primarily with State
and local permitting agencies.  Most state and local air pollution control agencies review
applications and issue NSR permits  via programs  approved by EPA as part of the applicable
State  Implementation Plan or via federally-delegated authority to implement the Federal NSR
program. Relatively few jurisdictions, including  approximately 10 States and Puerto Rico,
have programs in which NSR permits are issued by EPA. The Clean Air Act provides that a
PSD permit should be issued within  one year of the receipt of a complete application.  EPA
has found that most permits, regardless of the issuing agency, are approved well within this
time limit.

       Comments submitted by STAPPA and ALAPCO indicate that the State and local
programs are committed to expedite the processing and issuance of required NSR permits.
To help ensure expeditious review, it is also important that refiners submit their permit
applications for proposed refinery modifications in a timely manner. Also, EPA remains
committed to providing technical assistance to help ensure that  permit issues are resolved
quickly and in ways that can be applied consistently by different permitting programs.  EPA
is also preparing public outreach  material to help concerned communities learn more about
the benefits of the Diesel rules and the permitting process to which refineries may be subject.

       (3)     EPA's proposed rule may contribute to regulatory bottlenecks that could result
              in adequate supplies of low sulfur diesel. Commenter cites to the NPC report,
              which provides significant discussion on this issue and notes that the fuel

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              standard raises "significant concern about the ability of regulatory agencies to
              review and approve the significant number of environmental permits
              necessary to deliver the product quality changes." In addition, there are other
              issues such as environmental justice claims and new NSR requirements that
              could  slow the permitting  process even further.  EPA and other regulatory
              agencies should streamline the permitting process, resolve environmental
              justice claims promptly, and should not retroactively reinterpret NSR
              requirements.

              Letters:

              American Trucking Association  (IV-D-269) p. 22-23

       Response to Comment 8.3(A)(3):

       EPA is committed to working with State air permitting authorities and refineries so
that any necessary permit modifications can be made without delays. EPA agrees that
environmental justice claims should be resolved promptly and is committed to facilitating
communication among permit applicants, permitting authorities and community members in
the hope that community concerns  can be expressed and resolved as early as possible in the
permitting process.

       The commenter's statement about EPA retroactively reinterpreting the NSR
requirements refers to the allegation that an ongoing EPA enforcement initiative affecting
some refineries is based on a reinterpretation of NSR applicability provisions. EPA disagrees
with the commenter's statement and submits that a consistent interpretation of the relevant
applicability provisions has been maintained. Further, enforcement actions  being taken do
not prohibit refineries from making changes needed to comply with the new Diesel
desulfurization rules.  Rather, they address prior activities that should have been subject to
proper NSR permitting.

       (4)     First, Title V backlogs may delay state/local action on any NSR permits that
              are required. Also,  environmental justice issues or complaints could delay
              permit issuance. To overcome permit delay concerns, EPA should state in
              the rule that mobile  source reductions attributable to sulfur reduction projects
              are used in determining overall project impacts, provide a  sulfur compliance
              date extension for permit-related delays, and commit to a  procedure for
              quickly processing/deciding environmental justice complaints.

              Letters:

              Murphy Oil Corporation (IV-D-274) p. 14-15

       Response to Comment 8.3(A)(4):

       While the Diesel rules provide for compliance extensions under certain unique
circumstances, EPA does not believe that the regulations contemplate allowing such
extensions for permit-related delays.  Further, EPA does not believe that the Title V
permitting process will delay any NSR permits that refiners must obtain to comply with the
new Diesel Rules, because there are opportunities to synchronize the NSR and Title V

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processes so as not to significantly affect the overall time line for compliance with the Diesel
Rules. Moreover,  States have indicated that they will make the issuance of NSR permits a
top priority to ensure the timely availability of low sulfur diesel fuel. Also, as mentioned in our
response to an earlier comment, the rules provide significant lead time (over 5 years) as well
as several years to transition into the fuel program so that there should be sufficient time for
permit issuance, especially when permit applications are submitted in a timely manner, and
since EPA expects that many or most refineries will net out of major NSR.

       Furthermore, we do not anticipate that environmental justice concerns will delay
action on any permit. Neither the filing of a Title VI complaint nor the acceptance of one for
investigation by EPA's Office of Civil Rights stays the permit at issue.  In addition, we are
encouraging permitting authorities and industry to engage the public in a permitting process
which identifies environmental justice-related concerns early  and allows for the informal
resolution of these issues well in advance of permit issuance. To the extent resources are
available, EPA has committed to provide support for such informal resolution efforts.

(B)    EPA should address the same permitting issues in the final diesel rule that
       were addressed in the gasoline sulfur rule.

       (1)     EPA should address a number of permitting issues many of which have been
              addressed in the context of the gasoline sulfur rule. EPA should work with
              industry to develop BACT/LAER guidance for states and local permitting
              agencies for sulfur removal facilities; allow states to use sulfur reductions
              from vehicles to offset refinery emission increases from installing diesel sulfur
              removal facilities; work with agencies and refiners to insure permits for diesel
              desulfurization facilities are received in a timely manner;  identify how
              environmental justice issues will be resolved in a timely manner to ensure
              refiners can meet compliance dates; and provide for variance procedures
              should refiners be unable to comply due to factors beyond their control.  EPA
              should continue to work with the refiners to ensure that the proper permits are
              obtained in a timely manner, (cites to NPC study, pg  131-141 and requests
              that EPA review this portion of the study).

              Letters:

              American Petroleum Institute  (IV-D-343) p. 58-59
              ExxonMobil (IV-D-228)  p. 21-22
              Marathon Ashland Petroleum (IV-D-261) p. 62

       Response to Comment 8.3(B):

       EPA does  plan to provide guidance and support similar to that offered for the Tier
2/gasoline sulfur control rules to help expedite processing of  permit applications from
refineries making changes to  comply with the new Diesel Rules. The BACT/LAER guidance
being developed for the Tier 2/sulfur control program has application  for the Diesel
desulfurization program also.  EPA will continue to review the guidance to see that it remains
relevant and useful to refinery modifications under the Diesel rules. Guidance for using Tier
2 motor vehicle emission reductions to offset emissions from refineries has also been drafted
and has been made available for public comment. After evaluating public comments on the
draft guidance, we will make a decision in the future whether such guidance would be

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appropriate and useful for purposes of complying with both the Tier 2/Sulfur Control Rules
and the new Diesel Rules.  We also remain committed to providing assistance to both
refiners and permitting authorities to help ensure the timely issuance of the required permits.
Also, we are actively working to provide important public outreach materials and would be
available to meet with States and local community groups to help develop means to alleviate
the concerns that local citizens may have.  States, too, have indicated that they intend to
make the timely issuance of permits to refineries a top priority.

       Regarding the comment pertaining to variance procedures for factors beyond a
refiner's control, the final program does provide an opportunity for refiners to apply for a
temporary waiver based on extreme unforeseen circumstances (such as a natural disaster or
refinery fire). This provision is intended to provide refiners short-term relief in  unanticipated
circumstances, and is similar to provisions in  the reformulated gasoline and gasoline sulfur
programs. We do not believe it is appropriate to provide broader relief.

(C)    EPA should undertake every option available to minimize the permitting burden
       on refineries and on States.

       (1)     Emission increases around the refineries will require  PSD permit applications
              and review, which will place a substantial burden on State Departments of
              Environmental Quality, and on the industry. EPA should expand the guidance
              to allow emission reductions from vehicles to satisfy both the NSR and PSD
              offset requirement for refiners. EPA should eliminate the need for the PSD
              permit or eliminate provisions relating to Class II  and  Class I increment
              analysis and Class I  area visibility analysis. One commenter noted that EPA
              should deny filings of any environmental justice claims on the permits
              necessary to implement this rule since any federal rule is subject to EO 12898
              and therefore it is assumed that EPA has determined that there would be no
              adverse impacts to any affected party. Another commenter noted specifically
              that refiners should be granted flexibility in meeting the compliance deadlines
              if agencies, environmental justice issues or other regulatory actions prevent
              timely permitting and construction.

              Letters:

              LA Mid-Continent Oil and Gas Association (IV-D-319) p. 2-3
              Marathon Ashland Petroleum (IV-D-261) p. 6

       Response to Comment 8.3(C):

       As indicated in the response to a prior comment, State and local permitting
authorities are committed to expediting the permit review process for affected  refineries.
EPA is also committed to providing technical  assistance as appropriate throughout the
permitting  process. EPA is preparing guidance on BACT/LAER  to assist States in evaluating
permit applications submitted by refiners complying  with the Tier 2/sulfur control
requirements. This guidance, with any needed updates, will also apply and be useful for
issuing permits to comply with the new Diesel rules. EPA permitting  teams also are available
to assist with any issues that may arise during the permitting process. EPA does not,
however, have the authority to suspend specific statutory requirements such as the PSD
increment  analysis or Class I area impact analysis for sources who are otherwise subject to

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DECEMBER 21, 2000	PAGE 8-64

the applicable NSR/PSD requirements, nor does EPA believe that suspension would be
justified even if it were available. These requirements ensure that industrial growth does not
compromise air quality.

       With respect to potential environmental justice issues, EPA remains committed to
supporting community outreach programs to educate the public about the benefits of the
changes needed at refineries to produce the low sulfur diesel fuel. The EPA cannot,
however, deny a citizen's right to petition the Agency to review a permit for alleged
environmental justice violations (see, e.g., Section 505(b) of the Clean Air Act).
Environmental justice complaints may also be addressed through Title VI of the Civil Rights
Act of 1964 (Public Law 88-352, 78 Stat. 241  (codified as amended in scattered sections of
42 U.S.C.)), which prohibits discrimination based on race, color, or national origin under any
program or activity of a Federal financial assistance recipient. As a result,  permits that are
intentionally discriminatory or have a discriminatory effect based on race, color, or national
origin are prohibited.  Persons who believe Federal financial assistance recipients (i.e., state
or local permitting agencies) are administering their programs in a discriminatory manner
have the right to file administrative complaints with the EPA pursuant to Title VI and the
EPA's Title VI implementing regulations at 40 C.F.R. Part 7. These complaints must be filed
subsequent to a particular action taken by a recipient (such as the issuance of a permit) that
the complainants allege has a discriminatory purpose or effect.

(D)    Opposes use of mobile source emission reductions as NSR offsets.

       (1)     Commenter vigorously opposes an approach that is in any way similar to the
              one recently drafted  by EPA in association with the Tier2/low sulfur gasoline
              program for the "Use of Emission Reductions from Motor Vehicles Operated
              on Low-Sulfur Gasoline as New Source Review Offsets for Tier 2/Gasoline
              Sulfur Refinery Projects in Nonattainment Areas."

              Letters:

              STAPPA/ALAPCO  (IV-D-295) p. 26-27

       Response to Comment 8.3(D):

       We would like to clarify that EPA has not released final guidance concerning the use
of Tier 2 motor vehicle emission reductions as offsets for emission increases at refineries.
Draft guidance was made available for comment in July of 2000.  We are currently evaluating
public comments that were received on the draft guidance on the use of Tier 2 reductions as
refinery offsets. When EPA identifies the appropriate resolution for the Tier 2 context, we will
plan to apply a similar approach for diesel desulfurization projects as well.

(E)    The time frame is adequate to complete the permitting process.

       (1)     The issuance of permits is not likely to disrupt implementation of the
              proposed program, since the amount of lead-time provided is more than
              adequate. The use of model permits, increased technical assistance and
              stakeholder processes can be  used to  help facilitate the permitting process.
              Commenter notes that they will make the issuance of permits to ensure the
              timely availability of fuel a top  priority.

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              Letters:

              STAPPA/ALAPCO (IV-D-295) p. 26-27

       Response to Comment 8.3(E):

       EPA agrees with the commenter that the new Diesel rules provide ample time for
refineries to obtain any needed construction permits. As described above, we intend to
provide guidance and assistance to States and refiners, in much the same ways that they are
being provided for the Tier 2/sulfur control program, to help expedite the permitting process.
We believe it is appropriate for State and local permitting authorities to give priority to the
issuance of permits to refineries making changes to produce low sulfur diesel fuel, and
emphasize the importance of timely permit application submittals by the industry.

(F)     On top of these actions, EPA has made NSR review and enforcement a priority
       for the petroleum sector which leaves refiners uncertain about their ability to
       expand plant capacity to meet demand.  All of these regulatory burdens make it
       increasingly difficult for refiners to offset the costs involved.

       Letters:

       CO Petroleum Association (IV-D-323) p. 2

       Response to Comment 8.3(F):

       EPA disagrees with the commenters allegation that the enforcement initiative, as it
affects certain refineries, hinders their ability to  expand plant capacity to meet fuel demands.

       The enforcement initiative does not change EPA's interpretation of its NSR
applicability requirements and should not alter the appropriate permitting actions of individual
facilities or permitting authorities. Moreover, NSR does not prohibit the continued expansion
of petroleum refinery capacity as alleged by commenter; it merely requires that such
expansion take place in an environmentally responsible manner.  EPA, as always, is
available to assist industry and permitting authorities with any questions they may have
regarding the applicability of NSR to an particular refinery, or aspects of a permit.

       With regard to cost-related issues,  please refer to EPA's responses under Issue 5.8.


       Issue 8.4:  General Refiner/Distributor Issues

              Issue 8.4.1: Reporting and Recordkeeping

(A)     EPA should allow blenders to rely on product transfer documents rather than
       having to perform analytical testing,  in order to demonstrate compliance with
       the rule.

       (1)     As the rule currently is structured, requiring blenders to perform analytical
              tests to  demonstrate compliance would not be possible as a practical matter

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              since blenders have to conduct a quality assurance program - including
              periodic sampling and testing of the diesel fuel - in order to establish an
              affirmative defense to presumptive liability.  Product transfer documents
              (PTDs) for the fuel and the additive presumably can constitute "relevant
              evidence or information" as referenced in Section 80.471 (a) of the proposed
              rule, since they show pre-blending sulfur content of the two components of
              the "additized" diesel fuel. The sulfur content of the fuel once the blending
              has been completed can  be calculated from these documents.

              Letters:

              American Chemistry Council (IV-D-183) p. 4-5, 8

       Response to Comment 8.4.1 (A):

       This commenter asserts that EPA should permit blenders of additives into diesel fuel
to rely on product transfer documents, instead of analytical testing, to demonstrate
compliance. In response, we first note that the final diesel rule does not require blenders  - or
any other party except certain refiners subject to mandatory QA testing if they produce 500
ppm sulfur fuel - to perform analytical tests in order to comply with the sulfur control program.
For most parties, there is no affirmative duty to test.  It is only if the existence of a diesel fuel
violation has been determined, that parties subject to presumptive liability for the violation
would have to successfully assert an affirmative defense in order to rebut their presumption
of liability.  If a blender of diesel fuel additives into diesel fuel  wishes to establish a successful
affirmative defense, then one of the elements the regulation demands is that the blender
must establish either a periodic sampling and testing program, or the existence of conforming
test results, depending on whether the additive is above 15 ppm sulfur.

       In either situation,  the use of sampling and testing is required for a successful
establishment of this element of the blender's affirmative defense.  The Agency specifies  the
use of affirmative defense testing because a party's use of sampling and testing provides  the
greatest assurance that party's fuel actually complies with the regulatory requirements, both
on an individual batch basis and generally. Merely providing  product transfer documents
indicating low sulfur levels of the unblended components of the final fuel, does not provide
the same degree of certainty of compliance as would test results of the finished product
which establish the fuel's complying sulfur level.  Testing of the finished product would catch
more instances of noncompliance than would the PTDs because, after the PTDs are
received by the additive blender, the fuel might become noncomplying through a variety of
means, including improper blending of a  high sulfur additive into the fuel or the blending of
other, undocumented high sulfur components into the fuel. The required use of testing for
affirmative defense purposes is thus an important enforcement tool to ensure compliance, as
well as the means of establishing particular batch compliance.

(B)    Supports a requirement that PTDs be labeled to ensure conformity with the 15
       ppm standard.

       (1)     Commenter (Motor and Equipment Manufacturers Association and
              Automotive Chemical  Manufacturers Council) notes that the absence of a
              requirement to ensure PTD labeling, could lead to fuel additive products that
              mistakenly exceed EPA standards.  If it can be assured that all the input

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              materials contain the appropriate sulfur content, then it would be unnecessary
              to regulate finished diesel fuel additives sold in the aftermarket.

              Letters

              Motor and Equipment Manufacturers Association (IV-D-258), p. 8-9

       Response to Comment 8.4.KB):

       The Agency agrees with this commenter that diesel aftermarket additives sold in cans
to ultimate consumers should contain labels indicating their sulfur content, so that the
consumer can purchase the correct additive for his motor vehicle. The Agency has included
in the final diesel rule a  requirement that aftermarket diesel fuel additives sold in containers
must have a warning label on the container, notifying the consumer that the additive complies
with EPA sulfur requirements for motor vehicles, or that it doesn't. The Agency does not
agree, however, with the commenter's second argument that the existence of such labeling
requirements does away with the need for EPA to regulate such additives. The Agency
believes that aftermarket additive labels must accurately reflect the additive's sulfur content,
so that the consumer will know which additive it is safe to use in his diesel motor vehicle.
The addition of a high sulfur additive, such as a nonroad additive, into a consumer's diesel
motor vehicle, could potentially cause significant damage to that vehicle's emission controls.
This would be just the damage that the diesel rule was intended to prevent. Therefore, the
Agency believes that we must regulate aftermarket diesel fuel additives to ensure the
accuracy of their labeling information, and their proper usage.

              Issue 8.4.2:  Compliance/Enforcement Issues

(A)    Testing and enforcement of the 15 ppm sulfur standard  should apply only at
       the retail level.

       (1)     The actual value  up to that point could  vary above and below the standard at
              various points in the distribution system.  The only point where the value must
              meet the cap is at the point of sale. Commenter also disagrees with EPA's
              suggestion that pipelines might set more stringent refiner specifications to
              account for test variability and contamination. Refiners may want to
              deliberately ship off-spec fuel to blend with on-spec fuel at a distant terminal.
              Commenter notes that it does this now with seasonal gasoline vapor pressure
              blending. The commenter also appears to state that enforcement of a lower
              cap at the refinery is  expected, and that a 10 ppm cap may be appropriate.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 8,15

       (2)     EPA should test for sulfur at retail locations and should not consider testing
              sulfur at all points in the distribution system.  EPA suggests that the  proposed
              sulfur standard should apply to the diesel fuel at the point of sale to the
              ultimate  consumer, but goes on to confuse the issue by discussing blending
              of additives and the likely requirement that all parties in the distribution
              system could be prohibited from causing or allowing the introduction of

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              highway diesel fuel whose sulfur content exceeds the proposed sulfur cap.
              For the new sulfur standard to foreclose on the opportunity of a fuel
              manufacturer, refiner or end user to simply blend no-sulfur biodiesel with
              conventional diesel fuel, whether to reduce sulfur or to gain other emissions
              or economic benefits, would effectively take away useful flexibility currently
              exhibited by biodiesel as a renewable alternative fuel.

              Letters:

              Ag Environmental Products (IV-D-179) p. 2
              Griffin Industries (IV-D-221) p. 2
              MN Soybean Growers Association  (IV-D-337) p. 2
              ND Soybean Growers Association  (IV-D-311) p. 2
              National Biodiesel Board  (IV-D-288) p. 3
              OH Soybean Association  (IV-D-277) p. 2
              OH Soybean Council (IV-D-278) p. 1
              West Central  (IV-G-40) p. 1
              World Energy Alternatives (IV-D-336) p. 2

       Response to Comment 8.4.2(A):

        EPA does not agree that the retail outlet is the only point in the diesel distribution
system at which compliance with the sulfur standard is important. In its many other fuels
programs, such as the RFC, volatility, and prior diesel programs, the Agency has consistently
ensured compliance of fuel at the retail level by setting standards for the fuel throughout the
distribution system, with a presumptive liability scheme. The  Agency has found that such an
approach is effective since all parties then have a stake in ensuring compliance.

        The Agency does not agree with  this commenter's additional position that setting a
lower standard at the refinery level than at the retail level is necessary. Under today's rule,
the Agency has chosen to account for testing variability not by creating two standards, but by
providing a 2 ppm test result adjustment factor based on  testing variability, to apply  to EPA
sulfur compliance testing of fuel at locations downstream of the refinery. Applying this
adjustment factor downstream should address legitimate concerns about test variability, while
not forcing refiners to produce unnecessarily low sulfur level fuel at their facilities.

       The Agency also believes that this commenter's additional concern is unfounded, that
the rule's application of the sulfur standard to all levels of the  fuel's distribution system will
preclude the current refiner practice of shipping off-spec diesel fuel to distant terminals for
further blending. The rule will not prohibit this practice because it permits diesel fuel that
does not comply with the stricter highway fuel standards, to appropriately be identified, and
shipped, as nonroad fuel. The nonroad diesel  fuel can then be blended at another terminal
with other diesel fuel or diesel products to produce  highway fuel if the terminal chooses,
provided that the mixture, if re-designated as highway fuel: (1) properly meets the standards
for the specified category of highway fuel; and  (2) complies with any applicable fuel
downgrading requirements of the rule. Thus, the practice of shipping off-spec diesel fuel can
continue under the provisions of the final  rule.

       The agency does not agree with the additional assertion that the imposition  of the
rule's sulfur standard at all points in the distribution system precludes parties in the

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distribution from blending no-sulfur biodiesel into conventional diesel fuel (presumably into
the motor vehicle diesel fuel which is regulated under the rule). The rule does permit parties
to blend diesel fuel blendstocks or other diesel fuel - which could include biodiesel - into
motor vehicle diesel fuel at any point in the distribution system. Parties who choose to do so
are regulated parties under the rule, and are subject to the rule's requirements for that fuel -
such as compliance with the sulfur standard and product transfer document requirements -
that are imposed.  Provided these ordinary requirements of the rule are complied with, the
blending of diesel blendstocks or other diesel fuel into motor vehicle diesel fuel is acceptable.
(B)    EPA should clarify certain violation provisions in the proposed rule.

       (1)     In Section 80.470(f), the phrase "downstream of the refinery" should be
              added in two places after the words "distribution system."

              Letters:

              American Chemistry Council (IV-D-183) p. 9

       Response to Comment 8.4.2(B)(1):

       EPA does not agree with this  commenter's request that the prohibition against
causing violating fuel or additive to be in the distribution system should be modified to
specifically apply only to diesel fuel downstream of the refinery. In reality, this prohibition will
almost always address fuel which is downstream of the refiner, since it concerns
nonconforming fuel that has been released  into the distribution system, which typically
means downstream of the refiner. However, inserting this downstream location qualification
might conceivably impair the Agency's ability to hold parties liable whose conduct should be
covered under the prohibition. For instance, a refiner transfer of finished, but noncomplying,
highway diesel fuel to another refiner. If this commenter's suggested downstream
qualification were included in  this prohibition, it might be argued that such a lateral shipment
between refineries should not be considered "downstream" of the first refiner, so that, under
the downstream qualifier, the  first refiner would not be subject to this prohibition. Such an
exclusion was not intended.
       (2)     In Section 80.473(c), EPA should make clear that a person subject to
              presumptive liability for a violation of Section 80.473(a)(1) can show that the
              violation was caused by someone else by providing or possessing the
              appropriate PTDs, acting consistently with the information contained in the
              PTDs and, where applicable, conducting a quality assurance and testing
              program in accordance with Section 80.473(d).

              Letters:

              American Chemistry Council (IV-D-183) p. 9

       Response to Comment 8.4.2(B)(2):

       This commenter requests that EPA consider a party subject to presumptive liability

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for a fuel violation, to have established conclusively its lack of causation affirmative defense
element by the party's: (1) possession of PTDs indicating the fuel's compliance at the party's
facility; (2) compliance with the information on the PTD; and (3) conduct of a quality
assurance program complying with the rule's affirmative defense QA program requirements.
In response, the Agency agrees that for many downstream parties, such a showing will
typically be successful in  establishing their lack of causation affirmative defense element.
However, we cannot assume that this will always be the case.  For instance, where the actual
cause of a fuel's noncompliance is unknown, yet each of the presumptively liable parties is
successfully able to provide the defense information addressed by the commenter, then the
Agency would not  be able to conclude that each party has successfully established its lack of
causation defense element.  It is clear that someone must have caused the violation, even
though each party can establish these other required defense elements.  Thus, under such a
scenario, parties may be  required to do more than merely  produce complying PTDS and
evidence of a Q/A  program, in order to establish lack of causation.

       (3)     In Section 80.473(d)(1), the reference to "paragraph (a)(2)" should be to
              "paragraph (a)(3)."

              Letters:

              American Chemistry Council (IV-D-183) p. 9

       Response to Comment 8.4.2(B)(3):

       The Agency corrected the citation.

       (4)     In Section 80.473(d)(1)(ii)(A), the reference to "storing" non-complying
              product should be deleted since  a person who is storing diesel fuel or additive
              that is found not to be in compliance with the applicable standards cannot
              "immediately" cease storing it. No environmental harm will result from
              continuing to store the non-complying product until appropriate arrangements
              can be made.

              Letters:

              American Chemistry Council (IV-D-183) p. 10

       Response to Comment 8.4.2(B)(4):

       The Agency agrees with this commenter's assertion that parties who are storing fuel
or additives which  are shown to be noncompliant under their affirmative defense QA
programs, cannot always promptly dispose of the noncomplying product or take the blending
or other physical steps necessary to make the product complying. We disagree, however,
with the commenter's request that parties who find themselves in this situation should not be
required to immediately cease storing such product as part of their QA affirmative defense
requirements.  The Agency believes that a party discovering such noncompliance can and
should immediately re-classify the fuel to a status in which it is complying, such as to 500
ppm fuel or nonroad status, as applicable. Through the re-classification, the party can
comply with the affirmative defense requirement of ceasing to store noncomplying fuel, while
creating for itself the time it needs to decide how best to handle the fuel in the future.

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       (5)     Section 80.474(C) should incorporate the same 25-day presumption
              regarding presence in the distribution system as Section 80.474(b).

              Letters:

              American Chemistry Council (IV-D-183) p. 10

       Response to Comment 8.4.2(B)(5):

       The commenter suggests that the final rule should apply  the same 25-day penalty
presumption for the determination of number of days that noncomplying fuel remains in the
system when the violation is a standard or "causing the presence" violation, to those
violations involving the blending of noncomplying additive into diesel fuel.  We agree that the
same presumption should apply, since the penalty determination for both sets of violations is
based on the continued presence in the distribution system of the same product - the
noncomplying diesel fuel.  The final rule incorporates this change.
       (6)     EPA should place a limit on the "separate-day-of-violation" provision of
              Section 80.474(d), which addresses violations other than those involving non-
              complying product.  Section 80.474(d) presumably could apply when a person
              fails to provide an appropriate PTD or fails to create and maintain a required
              record for a period of five years. With no limit on the separate days of
              violation, the penalty for furnishing a single incorrect  PTD or failing to provide
              a PTD for a single sale could easily run into the tens  of millions of dollars and
              there is no justification for such potentially enormous liability in these
              circumstances. EPA should add the phrase "up to a  maximum of 25 days." at
              the end of Section 80.474(d).

              Letters:

              American Chemistry Council (IV-D-183) p. 10

       Response to Comment 8.4.2(B)(6):

       The Agency does not agree to this commenter's request that a maximum number of
25 days should be imposed on the number of days that a non-standard violation may
continue, for the purposes of calculating penalties for non-standard violations.  We
acknowledge this commenter's concern that failing to impose such a maximum number of
days could theoretically subject a violator to very large  penalties.  However, the Agency does
not believe that imposing an artificial maximum number of days for these violations is
warranted.  First, the 25 day presumption of the continuation of standard violations is based
on data about the amount of time fuel remains in the system. The Agency is not aware of
similar data that could be used to realistically establish the amount of time PTD or other
record violations typically remain uncorrected, so that reasonably assigning a maximum
number is not possible.  Further, in spite of this commenter's fears of the possibility of huge
penalties being imposed  absent a stated maximum, the Agency's experience in our other
fuels programs has shown that record violations are consistently subject to much lower
penalties than standard violations, based on the lower relative environmental impact of the
different type of violations. Our experience further establishes that both the Agency and the

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courts impose reasonable penalties for fuels program violations, and we have no reason to
believe that this will not continue under this program.

(C)    EPA should include a temporary relief provision in the final diesel rules similar
       to 80.270 that was adopted in the gasoline rules.

       (1)     This type of provision is important for any refiner, large or small, as a safety
              net to ensure that unusual circumstances do not result in undue hardship to
              an individual refiner.

              Letters:

              Placid Refining Company, LLC (IV-D-230) p. 4-5

       Response to Comment 8.4.2(C):

       The Agency agrees with this commenter that it would be appropriate in the diesel rule
to create a temporary relief provision for refiners similar to such a relief provision found in the
Tier 2 gasoline sulfur rule. Temporary relief provisions for refiners are found in §§ 80.560 and
80.561 of the final diesel rule.

(D)    Disagrees with EPA's presumptive liability scheme.

       (1)     A fuel can change from on-spec to off-spec (and back again) at various points
              in the distribution chain. The only requirement should be that at the point of
              sale the fuel  meets the required specification. A refiner can have no legal say
              in a retailer's decision to market the fuel.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 16

       (2)     The refiner does not have control of the fuel once it leaves the refinery gate.
              Therefore, refiners should not be held responsible for violations of the
              standard that are found downstream of the refinery (for fuel that was
              determined to be in compliance at the time it was produced and released for
              distribution by the refiner).

              Letters:

              Williams Energy Services (IV-D-167) p. 5

       Response to Comment 8.4.2(0):

       The Agency disagrees with the comment that since refiners lose control over fuel
once it leaves their facilities, they shouldn't be  liable for violations that  are discovered
downstream. That comment ignores the obvious fact that a violation found downstream
could have been caused by  upstream parties,  including refiners. Our presumptive liability
approach imposing potential liability on all parties in the distribution system has been shown
in other EPA fuels program to increase the likelihood of identifying which parties actually

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cause violations and should be held responsible. Our experience has shown that those
persons who handle the fuel are in the best position to identify the cause of a violation, and
that a refutable presumption of liability provides an  incentive for parties to be forthcoming with
information regarding the cause of the violation.  In addition to identifying the party that
caused the violation, providing evidence to rebut a  presumption of liability also serves to
establish a defense for the parties who are not responsible. Presumptive liability is familiar to
both industry and to EPA, and we believe that this approach makes the most efficient use of
EPA's enforcement resources to resolve violations.  For these reasons, the final diesel rule
includes the typical presumptive liability scheme with liability extending to all parties in the
distribution system, unless successfully rebutted by each individual  party.

       The Agency also disagrees with the comment that since fuel composition is
constantly changing in its distribution, it is  only important that compliance be enforced at the
retail level. The Agency holds the contrary position: that the existence of fuel content
fluctuations is actually a compelling reason supporting the imposition of the sulfur standard at
all points in the fuel distribution system. Our experience in other fuels programs establishes
that the potential imposition of liability at all points in the distribution system results in the
situation under which all parties feel the need to control fuel fluctuations. Upstream parties
would not have such an incentive if liability was only imposed downstream, and fuel
compliance would suffer.

(E)    EPA should exclude from the rule Sections 80.470(e) & (f) and 80.472(a)(1 )(iii),
       (a)(2) and (b)(2) because they prohibit a person from "causing" another to
       violate the rule.

       Response to Comment 8.4.2(E):

       The Agency disagrees with the commenter's suggestion that we exclude liability
under the diesel program for causing another party to commit a violation. Many other EPA
fuel programs, such as the RFG, volatility, lead  control,  and the prior diesel fuel programs,
contain presumptive liability enforcement structures which impose liability on parties who,
through their actions, could logically have  caused the fuel nonconformity. The final diesel
rule's presumptive liability scheme is thus  consistent with the liability schemes  of typical prior
fuels programs. While EPA has issued notices of violations to multiple parties for violations
under these fuels regulations, the Agency  believes  it is appropriate to clarify that the act of
causing another party to violate the regulations  is itself a prohibited  act.  Therefore, the
regulatory language in the final diesel rule explicitly addresses this issue. For further support
for the imposition of causation liability in the final diesel rule, and for examples of actions that
could give rise to causation liability, see the discussion on this issue in the preamble to the
final Tier2 gasoline rule, 65 FR 6813 and  6814, February 10, 2000.

       (1)     Alternatively EPA should enumerate the actions it believes would constitute
              "causing"  another to violate the rule. The proposal to prohibit conduct that is
              not defined is arbitrary and capricious, will lead to confusion, and is not
              needed to implement the rule.

              Letters:

              Koch Industries (IV-D-307) p. 15-16

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       Response to Comment 8.4.2(E)(1):

       The Agency does not believe it is either necessary or worthwhile to provide examples
of what behavior could be considered a cause of another's violation of the diesel rule.
Neither the Agency nor anyone else could possibly create an inclusive list of all the myriad
actions that could be construed as causing another's infractions.  Further, since "to cause" is
a common verb, we believe it does not need explanation, as indicated by the fact that it has
been used in previous statutes to proscribe behavior, without explanation. [See 42 U.S.C. §
7522(a)]

(F)     EPA should not include a "credible evidence" provision.

       (1)     As a result of such a provision, neither the industry nor EPA will be able to
              rely on measurements taken using the prescribed methodology.  Such a
              provision casts the validity of the standards into uncertainty because the
              stringency of the standards is determined in  part by the test methods for
              determining compliance. API provides comment on why it believes that the
              legal basis for including  a credible evidence  provision in the regulations is
              doubtful.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 64-65
              Marathon Ashland Petroleum (IV-D-261) p.  67-68

       Response to Comment 8.4.2(F):

       The Agency does not agree with the comment that the rule should exclude the
evidentiary provision permitting the use  of a variety of evidence. We believe that the ability to
use various forms of evidence is essential to the effective enforcement of our regulations.
We have often used a variety of evidence to establish non-compliance with the requirements
imposed  under our fuels regulations. Test results of the content of fuel have been used to
establish violations, both in situations where the sample has been taken from the facility at
which the violation occurred, and where the sample has been obtained from other parties'
facilities when such test results have had probative value of the fuel's characteristics at points
upstream or downstream.  The Agency  has also commonly used documentary evidence to
establish non-compliance or a party's liability for non-compliance. Typical documentary
evidence has included PTDS identifying the fuel as inappropriate for the facility it is being
delivered to, or identifying parties having connection with the non-complying fuel.

       The ability to use a variety of evidence does not mean, however, that the use of the
designated regulatory test method has been downgraded under the regulation. On the
contrary,  the diesel rule provides that compliance  with the standards is to be  determined
using the approved test methodologies, which, for sulfur, include the designated method and
the approved alternative methods.  While other information may be used, including test
results using different test methods, such other information may only be used if it is relevant
to determining  whether the sulfur level would meet applicable standards had compliance
been properly measured using the designated test method.  Contrary to this commenter's
argument, this  provision ensures that the stringency of the rule's sulfur standard  is based on
the regulatory test method, so that compliance with the rule's sulfur standard can be

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accurately determined. Thus, the regulation adopted today does not result in a situation
where any and all evidence carries equal weight in an enforcement action.  Rather than
causing more confusion regarding compliance with the sulfur standard as this commenter
asserts, our evidentiary provision provides assurance that the regulatory test method defines
compliance.

       The Agency also disagrees with the comment that we lack the legal authority under
the Clean Air Act to permit the use of non-regulatory test method evidence  to establish
standard compliance under the final diesel rule. The Agency believes the Clean Air does
provide the authority for inclusion of this provision. Our arguments in support of this position
can be found in the preamble to the final Tier 2 gasoline rule, at 65 FR6815 and 6816,
February 10, 2000, in that preamble's discussion of the statutory authority for the same
evidentiary provision as in found in the final diesel rule.

(G)    EPA should draft rules that would establish appropriate noncompliance
       penalties for refiners.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              West Harlem Environmental Action/Envr Justice Network (IV-F-76)

       Response to Comment 8.4.2(G):

       EPA believes that the penalty provisions of the diesel rule and the  authorizing Clean
Air Act provisions provide sufficient guidance to enable us to establish penalties under the
diesel program in a reasonable manner.  However, the Agency is not against the creation of
a penalty policy to assist us in determining appropriate penalties under the  diesel rule
program. Such a document may be created at some point in the future, after we develop a
greater understanding of criteria useful in establishing penalties, such as the costs of
compliance under this program and the economic gains to be made from noncompliance.

(H)    Terminals should be able to import foreign diesel fuel and blend it to meet the
       U.S.  low sulfur specification.

       (1)     EPA's sulfur standard should apply not when the product enters the U.S. but
              when the terminal operator (importer) enters the product into commerce -
              when it leaves the terminal gate. This would provide flexibility and increase
              the supply of the ultra-low sulfur diesel fuel. This concept is already  applied
              in the reformulated gasoline program.

              Letters:

              Independent Fuel Terminal Operators Association (IV-D-217), p. 10

       Response to Comment 8.4.2(H):

       Under the regulation, a party who imports motor vehicle diesel fuel  is subject to the
provisions of the rule pertaining to importers.  After the fuel has  been imported, if a party

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desires to blend blendstocks to the fuel or otherwise change the sulfur, cetane or aromatics
content of the fuel, it is then additionally subject to the provisions of the rule applicable to
refiners, as well as those provisions pertaining to downstream parties.  Under the provisions
of the rule, a party who acts as both an importer/blender-refiner may blend blendstocks or
finished diesel fuel to the imported fuel if all the requirements of the rule are complied with.
This includes the additional provisions for imported  fuel in § 80.620, and the limitations on
downgrading fuel under § 80.527.  The provisions under the Reformulated Gasoline (RFG)
rule address various gasoline standards and parameters and are intended to address
circumstances specific to that rule. This rule only affects the sulfur standard for diesel fuel.
The approach under this rule is similar to  that for conventional gasoline.

              Issue 8.4.3: Other Refiner/Distributor Issues

(A)     The refining industry is facing more than 12 major regulatory actions over the
       next ten years, which are largely uncoordinated and will prove to be an
       unmanageable  burden on refiners and fuel distributors.

       (1)     Commenter provided chart of the actions to document this concern.

              Letters:

              National Petrochemical &  Refiners Association (IV-F-31, 44)

       Response to Comment 8.4.3(A)(1):

       In their testimony, NPRA states that the oil industry's efforts to comply with the
proposed diesel sulfur cap would fall in the middle of 13 other regulatory programs which are
being implemented in a largely uncoordinated fashion. NPRA presents a timeline chart
showing the  approximate time of each program's implementation.

       NPRA does not present any information about the impacts of these programs, it just
provides the timeline. The time  shown is  that for implementation efforts (e.g., planning,
designing and construction of new equipment, if necessary) and is very approximate. NPRA
assumes that every program will involve 3 years of implementation efforts prior to the initial
implementation date of the program and continuing  through the last implementation dates for
programs with a phase in.  Thus, programs such as EPA's Tier 2 gasoline sulfur program are
shown to have an impact from January 1, 2000 through January 1, 2006 (i.e., 6 full years),
even though the impact of this program in any one year has been dramatically reduced due
to the phase in provisions which EPA included in the final program.  Thus, the overlap of the
implementation of this diesel fuel program with some of the  other programs may involve an
overlap of implementation  efforts, or  may  not. The degree of overlap in terms of actual
economic impact was not addressed by NPRA.

       (2)     On top of these actions, EPA has made NSR review and enforcement a
              priority for the petroleum sector which  leaves refiners uncertain about their
              ability to  expand plant capacity to meet demand. All of these regulatory
              burdens  make it increasingly difficult for refiners to offset the costs involved.

              Letters:

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              CO Petroleum Association  (IV-D-323) p. 2

       Response to Comment 8.4.3(A)(2):

       EPA disagrees with the commenter's allegation that the enforcement initiative, as it
affects certain refineries, hinders refiners' ability to expand plant capacity to meet fuel
demands. The enforcement initiative does not change EPA's interpretation of NSR
applicability requirements and should not alter the appropriate permitting actions of individual
facilities or permitting authorities concerning plant expansions necessary to produce these
new fuels. Moreover, NSR does not prohibit the continued expansion of petroleum refinery
capacity as alleged by commenter; it merely requires that such expansion take place in an
environmentally responsible manner. Also, in the context of the enforcement initiative,  EPA
has engaged in global settlement discussions with several refining companies and recently
lodged consent decrees affecting two of them. Among other things, it is expected that these
decrees and agreements will simplify and expedite permitting for new or modified units that
may be needed to produce the fuels required by this rule.  EPA, as always, is available to
assist industry and permitting authorities  with  any questions they may have regarding the
applicability of NSR to an particular refinery, or aspects of a permit.

       With regard to cost-related issues, please refer to EPA's responses under Issue 5.8.

       Issue 8.5:  Small Refiners

              Issue 8.5.1:  Small Refiner Definition

(A)    Certain small refiners that do not qualify for the exemption  or the phase-in
       program will be particularly hard hit by this rulemaking.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Ergon & Lion Oil Co. (IV-F-117) p. 183

       (2)     The geographic phase-in  under the gasoline rule successfully provided  relief
              to all of the small refineries  serving the Rocky Mountain region. The small
              diesel refinery definition in this proposal fails to provide similar relief.

              Letters:

              Sinclair Oil Corporation (IV-D-255) p. 10-11

       Response to Comments 8.5.KAH1) and (2):

       In designing the structure of the low sulfur diesel program, we considered the impact
that it would have  on all refiners that currently produce highway diesel fuel and would
therefore be subject to the rule which takes effect in 2006. We believe that the temporary
compliance option within the program, coupled with flexibility for GPA refiners, the menu of
options available to small refiners, and the  general hardship provision will make low sulfur
diesel fuel available in the market as soon as possible for the vehicles that need it (beginning

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in 2007) while minimizing the economic impact of the program on all refiners, including small
refiners.

       Any refiner, regardless of size, may participate in the temporary compliance option
within the program. Under this option, a refiner may continue producing up to 20 percent of
its highway diesel fuel at the existing 500 ppm sulfur standard until the end of 2009. The
remaining 80 percent of the highway diesel fuel produced at that refinery during the year
must meet a sulfur standard of 15 ppm. As part of this temporary compliance option, a
PADD-based averaging, banking, and trading (ABT) program will be available. Through the
ABT program, we project that up to half of all refineries could  delay capital investments
during the transition period.

       Today's program also includes special provisions for small refiners. Since small
businesses in particular face hardship circumstances, we are adopting temporary provisions
that will provide refineries owned by small businesses additional time to meet the ultimate 15
ppm sulfur cap or balance investments of this program with those related to the Tier
2/Gasoline Sulfur program. This approach allows us to achieve the earliest implementation
date for advanced technology diesel vehicles  (i.e., the 2007 model year) and the needed
emission reductions they will bring. The emissions benefits of the low sulfur diesel program
are needed as soon as possible-to allow the implementation  of new emission reduction
requirements on heavy-duty engines and vehicles and, thus, to reduce ozone, particulate
matter, and other harmful air pollutants.

       In addition, refiners that produce highway diesel fuel as well as gasoline for use in the
Geographic Phase-in Area have an option that allows them to stagger their investments for
the two low sulfur fuel programs. In the low sulfur gasoline rule, we established the
Geographic Phase-in Area (GPA) provision which provides temporarily less stringent
standards for gasoline sold in certain  parts of the West and Alaska.  However, because of the
extremely sulfur-sensitive nature of the aftertreatment devices with which 2007 and later
model vehicles will be equipped, we could not accommodate  a similar provision in today's
program. That is, we could not accommodate an area of the country with a higher diesel
sulfur cap.

       Instead, under the gasoline/diesel compliance date option for GPA refiners, those
that comply with the low sulfur diesel fuel standard by June 1, 2006 for all of their highway
diesel fuel production may receive a two-year extension of their interim GPA gasoline
standards for 2006, that is until December 31, 2008. In addition to allowing refiners the
opportunity to spread out their desulfurization investments, we believe this provision will
encourage the production of 15 ppm diesel fuel by some refiners in and near the GPA, which
will further help to ensure the new fuel is widely available for new vehicles throughout the
area.
       (3)     EPA's proposed definition of small refiner is problematic, particularly the
              component that defines how the number of employees will be determined.
              Establishing the number of employees of a small refiner based on its own
              employees, the employees of any subsidiary companies, any parent
              companies, any subsidiaries of the parent  company (of which the parent
              company has at least a 50 percent ownership interest), and any joint venture
              partners, is inequitable and poor policy. Commenter notes that their refinery

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              located at Come-by-Chance in Newfoundland has only 700 employees but
              would be prevented from taking advantage of any benefits or flexibility
              provisions provided to small refiners since the number of employees under
              both the parent company (Vitol) and its subsidiaries would exceed the 1500
              employee limit as proposed.  Commenter notes that these subsidiaries
              include a smelter in Siberia with a high number of employees due to cheap
              labor and argues that since they will not be able to operate without small
              refiner benefits, EPA's definition would effectively disqualify the only small
              refiner serving the U.S. market from abroad.

              Letters:

              North Atlantic Refining Ltd  (IV-G-51) p. 1-4

       Response to Comment 8.5.1(A)(3):

       See Response to Comments 8.5.1(B)(1) and (2) and (C), below.


(B)    The rule should define a small refiner on the basis of throughput only.

       (1)     The number of employees is not indicative of the  size of the refiner's refining
              operations or its  ability to absorb the capital costs of compliance.

              Letters:

              Consumer Policy Institute (IV-D-186)  p. 6
              Giant Industries, Inc. (IV-D-248) p. 1-2

       (2)     The proposed definition is inconsistent with section  410(h) of the Act, which
              establishes congressional intent of a small "diesel" refinery. EPA should use
              that definition, which is based on throughput of a refinery, and the total
              throughput of all  refineries owned by a corporate entity.  The use of the
              number of employees, especially since it includes non-refinery employees, is
              inappropriate. In addition, commenter notes that several small refineries in
              PADD IV have closed, which indicates that the size  of the refinery, not
              necessarily the refiner, is the critical consideration in determining which
              entities need relief.

              Letters:

              Sinclair Oil Corporation (IV-D-255) p. 11-12

(C)    Definition of small refiner should match the definition set forth by SBA.

       (1)     However, the use of crude capacity less than 155,000 B/D also seems
              reasonable.

              Letters:

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              Placid Refining Company, LLC (IV-D-230) p. 3

       Response to Comments 8.5.KAH3), (B)(1) and (2). and (C):

       The low sulfur diesel program is designed to provide regulatory relief to those refiners
that may experience disproportionately higher burdens in complying with the regulations, and
by providing temporary relief the majority of the program can begin  in 2006. Some
commenters recommended that small volume refineries (based on  throughput) owned by
large companies be accorded the same treatment as refineries owned by small businesses,
as defined by the Small Business Administration (SBA). However, one unique factor
affecting small  businesses that own refineries is their relative difficulty in raising the capital
needed to make significant refinery modifications.  Large companies that own small volume
refineries are not in the same situation, since they may have other refineries, or other
operations, that can be used to generate capital.  Even if the large companies choose to
make decisions about investments on a refinery-specific basis, their situation is not the same
as small businesses who do not have the option of looking to other  operations for capital.

       The SBA size standard (North American Industry Classification System code
324110), for the purposes of regulation, specifies that for a petroleum refining company to
qualify as a small business, it must have no more than 1500 employees corporate-wide. The
standard also states that, "for purposes of Government procurement, the firm may not have
more than 1,500 employees nor more than 75,000 barrels per day capacity of petroleum-
based inputs, including crude oil or bonafide feedstocks.  Capacity includes owned or leased
facilities as well as facilities under a processing agreement or an  arrangement such as an
exchange agreement or a throughput.  The total product to be delivered under the contract
must be at least 90 percent refined by the successful bidder from either crude oil orbona fide
feedstocks." Since our use of the size standard for Regulatory Flexibility Analysis purposes
did not concern procurement, we only used the 1,500 employee limit to define a small refiner.

       In the lead phase-down program for gasoline, we used  a definition of "small refinery"
that Congress adopted in 1977 specifically for the lead phase-down program. The definition
was based on crude oil or feedstock capacity at a particular refinery (less than or equal to
50,000 barrels  per calendar day (bpcd)), combined with total crude  oil or feed stock capacity
of the refiner that owned the refinery (less than or equal to 137,500  bpcd). In 1990, the lead
phase-down program was complete and Congress removed this provision from the Act.

       Shortly before the Act was amended in 1990, we set standards for sulfur content in
diesel fuel, including a two-year delay for small refineries.  We  used the same definition of
small refinery as we used in the lead phase-down program. This two-year delay, like many of
the small business flexibilities in the low sulfur gasoline and diesel programs, was aimed at
problems that small refineries faced in raising capital and in arranging for refinery
construction.

       In the 1990 amendments to the Clean Air Act, Congress rejected this small refinery
provision, and instead allocated allowances to small diesel refineries under the Title  IV Acid
Rain program.  (See CAA Section 410(h).) This approach was also aimed at helping small
refineries solve the problem of raising the capital needed to make investments to reduce
diesel sulfur. Congress provided allowances to small refineries that met criteria similar to
that used in the lead phase-down provision - based  on the crude oil throughput at a
particular refinery, combined with the total crude oil throughput of the refiner that owned the

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refinery.

       As mentioned above, the CAA definition was based on crude oil or feedstock capacity
at a particular refinery (less than or equal to 50,000 bpcd), combined with total crude oil or
feed stock capacity of the refiner that owned the refinery (less than or equal to 137,500
bpcd).  However, given the mergers, acquisitions, and other changes that have transpired
throughout the refining industry in the past few years, we believe the appropriate boundary
today is a corporate crude oil capacity less  than or equal to 155,000 bpcd.

       All fuel actions prior to the Tier 2/low sulfur gasoline rule were done only in the
context of the CAA. The RFA as amended by SBREFA introduced a new approach for
assessing and mitigating impacts on small  businesses. This is the approach we used under
the low sulfur diesel fuel program. We believe that defining a small refiner as having no
more than 1,500 employees and 155,000 bpcd will provide relief only to those refiners who
are truly challenged by the regulations without compromising the environmental goals of the
program. The  regulations state that, for purposes of determining the number of employees
and corporate crude oil capacity, the refiner must include the employees and crude oil
capacity of any subsidiary companies, any  parent company, subsidiaries of the parent
company, and  any joint venture partners. We interpret this regulation to require refiners to
include employees  and crude oil capacity at any and all subsidiaries, as well as employees
and crude capacity of any joint venture partners.  See § 80.225(a)(2). We interpret a
subsidiary of a company to mean any subsidiary in which the company  has a 50 percent or
greater (i.e., the majority) ownership interest.  Although we assessed other measures to
identify small entities (for example,  unique refining operations, low diesel fuel volume, or low
crude oil capacity),  none could be implemented without undermining the environmental goals
or creating anti-competitive issue in local areas.

       We are adopting other flexibility and hardship provisions that will assist many small
volume refiners who would not be defined as  small businesses. The temporary compliance
option  may provide refiners additional time  to produce low sulfur diesel  fuel.  In addition, the
gasoline/diesel compliance date option will help many small volume refineries that are
located in and  market to the geographic phase-in area to spread out their capital investments
while concurrently providing a highway diesel fuel "safety valve." Finally, all refiners are
eligible for the  general hardship provision of the rule, where, on a case-by-case basis, they
may obtain regulatory relief, if appropriate.  Therefore, while we are not modifying the
definition of small refiner to include small volume refineries owned by large companies, such
refineries will receive other flexibility under the final rule.

(D)    Supports the approach discussed in the preamble of allowing any refiner to
       qualify as a small refiner for the diesel rule if the refiner is approved under the
       Tier 2 rule as a small refiner.

       (1)     Unless EPA adopts this approach, the  benefits of being classified as a small
              refiner for gasoline rules will be frustrated by not meeting the classification
              under the diesel rules.

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 1, 7-8

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-82

       Response to Comment 8.5.1(0):

       As discussed in the preamble, the gasoline sulfur standards and the diesel sulfur
standards will impact small refiners in approximately the same time frame. For this reason,
we will consider any refiner that we approve as meeting the small refiner definition under the
low sulfur gasoline program (40 CFR 80.235) to be a small refiner under today's program as
well provided they are a producer of highway diesel.

(E)     EPA needs to adjust the definition of small refiner to account for farmer co-ops.

       (1)     The definition should: (1) treat all refiner co-ops as separate
              refiners/refineries, and (2) allow each refiner co-op to have a  limit of 155,000
              bpd because farmer co-ops would be disadvantaged using the 75,000 bpd
              SBA limit.  Commenter urges EPA to look at relative rankings in the industry
              as SBA used to. Based on a "bottom percentile' approach, farmer co-ops
              could be addressed.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 17-18
       Response to Comment 8.5.1(E):

       As discussed in Section IV of the preamble, we concluded that it is not necessary or
appropriate to provide separate treatment for farmer cooperative refiners as a class. This
includes the approach suggested by the commenter (i.e., treatment of farmer cooperative
refiners as small refiners). However, any farmer cooperative refiner that meets the two
criteria of the small refiner definition will be considered eligible for the small refiner
compliance options,  and any farmer cooperative refiner that supplies gasoline to the GPA is
eligible for flexibility under the GPA refiner provisions.  Furthermore, all farmer cooperative
refiners are eligible for the general hardship provision of the rule, where, on a case-by-case
basis they may obtain regulatory relief, if appropriate.

              Issue 8.5.2: General  Impacts/Need for Flexibility

(A)    Establishing additional flexibility for small refiners is unnecessary given the
       long time frame in which refiners are allowed to implement the standard.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              GA Public Interest Research Group (IV-F-117) p. 43
              Koch Industries (IV-D-307) p. 5
              Kotgal, Kalpana (IV-F-192) p. 17
              U.S.  PIRG (IV-F-190) p. 185

       (2)     Even so-called "small refiners" can make the $30 million average investment,
              and small refiners would likely need much less to make the conversion.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-83

              Letters:

              Consumer Policy Institute (IV-D-186) p. 6

       Response to Comment 8.5.2(A):

       Although we are not required by the CAA to provide special treatment to small
refiners, the Regulatory Flexibility Act (RFA) as amended by the Small Business Regulatory
Enforcement Fairness Act of 1996 (SBREFA) requires  us to carefully consider the economic
impacts that our rules will have on small entities and balance that with the environmental
benefits. Specifically, the RFA requires us to determine, to the extent feasible, our rule's
economic impact on small entities, explore regulatory options for reducing any significant
economic impact on a substantial number of such entities, and explain our ultimate choice of
regulatory approach.  In our analysis of the cost and feasibility of compliance with the sulfur
standards, we concluded that small refiners will, in general, need more time than large
companies to comply, based on their unique circumstances. Small businesses generally lack
the resources available to large  companies which enable the large companies (including
those large companies that own small volume refineries) to raise capital for investing in
desulfurization  equipment. The small businesses are also likely to have more difficulty in
securing loans, competing for engineering resources, and completing construction of the
needed desulfurization equipment in time to meet the standards adopted today which begin
in 2006. Rather than delaying the overall sulfur program to allow for concurrent compliance
by all refiners, we have adopted a menu of temporary provisions for small refiners. However,
significant reductions  in sulfur levels for all highway diesel fuel will be required in the  long-
term.

       In addition, the implementation  of the low sulfur diesel program will occur in the same
general time frame as the implementation of the low sulfur gasoline program, since many of
those small refiners that are covered by the interim standards under the  Tier 2/Gasoline
Sulfur program (40 CFR Part 80, Subpart H) are also covered by today's diesel fuel sulfur
program.

        The emissions benefits of the low sulfur diesel  program are needed as soon  as
possible-to allow the implementation of new emission reduction requirements on heavy-duty
engines and vehicles and, thus, to reduce ozone, particulate matter, and other harmful air
pollutants. Since our analysis showed  that small businesses in particular face hardship
circumstances, we are adopting temporary provisions that will provide refineries owned by
small businesses additional time to meet the ultimate 15 ppm sulfur cap or balance
investments of this program with those  related to the Tier 2/Gasoline Sulfur program. This
approach allows us to achieve the earliest implementation date for advanced technology
diesel vehicles (i.e., the 2007 model year) and the needed emission reductions they will
bring.

(B)    Opposes providing preferential treatment to any class of refiners because such
       options do not level the playing field or offer equitable flexibility for meeting
       program goals.

       (1)     If EPA intends to provide exemptions or special provisions for small refiners,
              API  recommends that EPA level the playing field by using an economic
              penalty assessed on all highway diesel  fuel that exceeds the new standard.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-84

              Letters:

              American Petroleum Institute  (IV-D-343) p. 67
              Marathon Ashland Petroleum  (IV-D-261) p. 71

       (2)     Opposes any exemption for any refiners.

              Letters:

              ExxonMobil (IV-D-228) p. 20

       (3)     The concerns  expressed in the Report of the Small Business Advocacy
              Review Panel  (3-24-00) can be accommodated by either an industry-wide
              phase-in or a free market approach.  Either approach eliminates the need to
              define a small refiner because there are no special exemptions; eliminates
              the need to debate the appropriate hardship waivers or exemptions;
              eliminates the need to debate  how small refiners can meet both gasoline and
              diesel requirements; eliminates the debate over whether small refiners should
              be given a 50  ppm cap; and it  eliminates the need for policing small refiners.

              Letters:

              Koch Industries  (IV-D-307) p. 12-13

       Response to Comment 8.5.2(B):

       As discussed in our response to comment 8.5.1 (A), above, we considered the impact
that the low sulfur diesel rule would have on all refiners that currently produce highway diesel
fuel and would therefore be subject to the rule which takes effect in 2006.  We  believe that
the temporary compliance option within the  program, coupled with flexibility forGPA refiners,
the menu of options available to small refiners, and the general hardship provision will make
low sulfur diesel fuel available in the market as soon as possible for the vehicles that need it
(beginning in 2007) while minimizing the economic impact of the program on all refiners,
including small refiners.

       Any refiner, regardless of size, may participate  in the temporary compliance option
within the program. Under this option, a refiner may continue producing up to 20 percent of
its highway diesel fuel at the existing 500 ppm sulfur standard until the . Refiners that
produce more than  the required amount may generate  credits that they can then use within
their own company  for compliance purposes or they may sell them to another refiner within
the PADD that is not able to meet the required volume.  Under this approach, refiners must
either invest to produce 15 ppm diesel fuel or  they must purchase credits to continue
producing (i.e., more than 20  percent of their highway diesel product) 500 ppm diesel fuel.
       Even with the program's compliance flexibility, small refiners, as a class, will likely
have much more difficulty in meeting the low sulfur diesel standard than other refiners.  Small
businesses generally lack the resources available to large companies which enable the large
companies (including those large companies that own small volume refineries) to raise
capital for investing in desulfurization equipment.  The small businesses are also likely to

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-85

have more difficulty in securing loans, competing for engineering resources, and completing
construction of the needed desulfurization equipment in time to meet the standards adopted
today which begin in 2006.  For these reasons, we have provided small refiners with an
additional menu of compliance options.  However, we do not believe these options will cause
competitive disadvantages within the highway diesel fuel market.

(C)    Small refiners may be unable to raise the necessary capital and absorb the
       increased operating costs associated with desulfurization, which in many
       cases may result in the closure of the refinery.

       (1)    Commenters supplied no further detailed  information or analysis.

             Letters:

             Harold Dickey Oil Corp.  (IV-D-43) p. 1

       (2)    Support the concept of providing flexibility to small refiners that are subject to
             both the gasoline and diesel sulfur requirements but assert that additional
             measures are necessary to minimize the adverse economic impact to small
             refiners. Commenters also note the importance of providing a number of
             flexibility options because no one option will be the appropriate choice for
             each small refiner.

             Letters:

             Countrymark Cooperative (IV-D-333) p. 7-8,12, (IV-F-191) p. 184
             Frontier Oil Corporation  (IV-F- 116) p. 204 (IV-F-191) p. 93
             Gary-Williams Energy Corporation (IV-D-252) p. 2, (IV-F-43, 191) p. 193
             Golden Bear Oil Specialists (IV-D-111) p. 1-2
             Remster, John (IV-F-28)
             Western Independent Refineries Association (IV-F-190) p. 144

       (3)    Small refiners cannot achieve the economies of scale that large integrated
             refiners can achieve.

             Letters:

             Countrymark Cooperative (IV-D-333) p. 6
             Ergon & Lion Oil Co.  (IV-F-117) p. 183
             Frontier Oil Corporation  (IV-F-191) p. 93
             Western Independent Refiners Association  (IV-D-273) p. 2-8

       (4)    Small refiners require more time to engineer, construct, finance and train
             workers to operate the new refinery units. One commenter added that small
             refiners operate under different, less flexible process scenarios than do large
             refiners.

             Letters:

             Chevron (IV-D-247) p. *2, 4

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-86

              Countrymark Cooperative  (IV-F-30)
              Kern Oil & Refining Co.  (IV-D-310) p. 6
              Remster,  John (IV-F-28)

       (5)     One commenter noted that Gary-Williams refinery (a 50,000 BPD crude oil
              refinery) will close if the rule stands as proposed, since there are no options
              that would allow profitable  business to continue. The additional capital
              investments will require an investment of approximately $46 million with $5 to
              $6  million in increased operating and maintenance costs. This commenter
              added that without some type of tax credits, loan guarantees and other
              incentives, small refiners will be unable to access the technology required to
              install desulfurization equipment, and that since the investment needed to
              comply with the Tier 2 gasoline sulfur requirements coincides with the diesel
              sulfur requirements, it will be more difficult to find the necessary capital to
              ensure compliance. In written comments, the commenter expanded upon this
              hearing testimony and provided further detailed estimated costs.  Another
              commenter noted similar concerns and provided estimates  of the capital and
              operating costs that would  be required. Similarly, a commenter argued that
              moving from a 30 ppm to a 15 ppm standard results in costs that are 7 times
              greater, and that even a 30 ppm standard would mean costs for small refiners
              that are 50% greater than costs for large refiners.  Commenter notes how its
              continued operation is important for regional competitiveness, and thus how
              important it is that EPA design a rule that allows small refiners to remain in
              business. The commenter describes the control options it would face to meet
              a 15 ppm cap to document why the standard would force it  out of business.
              Another commenter raised similar concerns for its small refinery, and noted
              the high costs associated with having to meet the gasoline,  on-road (and
              possibly nonroad) diesel requirements in the same timeframe.  The
              commenter also noted the  importance of its refinery in the local region for
              supply and competitiveness, and the lack of need for emission reductions in
              its  local region, both in terms of low interstate truck traffic and good air quality.
              The commenter provided detailed information on these concerns, including
              cost information.

              Letters:

              Countrymark Cooperative  (IV-F-30)
              Gary-Williams Energy Corporation (IV-D-252) p. 2-4, (IV-F-43)
              Kern Oil & Refining Co.  (IV-D-310) p. 2-5
              Murphy Oil Corporation  (IV-D-274) p. 1-7

       (6)     One commenter asserted that diesel regulations in California have resulted in
              the elimination  of all small  refiners in that state. This contributed to a lack of
              competition  and price spikes. Small refineries should be treated differently
              under the rulemaking to enable them to survive the transition to low sulfur
              diesel.

              Letters:

              Western Independent Refineries Association  (IV-F-190) p.  144

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-87

       (7)     Many of the types of crude oil presently available to and processed by small
              refiners will no longer be able to be processed economically because of their
              higher sulfur content. Small refiners often depend on these crudes to
              produce specialty asphalt products.  The 15 ppm sulfur cap puts asphalt-
              producing small refiners in a difficult position since it will be much more
              difficult to eliminate the sulfur from diesel fuels produced from such crude
              oils.

              Letters:

              Western Independent Refiners Association  (IV-D-273) p. 3

       (8)     Commenter provides detailed explanation of the unique constraints it faces as
              a lubricating base oil refiner as opposed to a typical fuels refiner.  Commenter
              notes that the ability to sell the diesel fuel that naturally distills from the
              refiner's crude charge is critical to maintain profitability. Commenter also
              notes especially that the rule could restrict availability at reasonable cost of
              hydrogen that the refiner must purchase both to hydrotreat their primary base
              oil products but also for desulfurization.

              Letters:

              Golden Bear Oil Specialists (IV-D-111) p. 1-2

       Response to Comments 8.5.2(C)(1)-(8):

       In addition to the temporary compliance option and general hardship provision which
are available to all refiners under today's program, small refiners have a menu of compliance
options from which to choose. These three options have evolved from concepts on which we
requested and received comment in the proposal.  In most cases, we believe that small
refiners will find these options preferable to either the broader diesel fuel temporary
compliance option or the  GPA provision (as applicable) discussed in the preamble.

       500 ppm Option. A small refiner may continue to produce and sell diesel fuel meeting
       the current 500 ppm sulfur standard for four additional years, through May 31, 2010,
       provided that it reasonably assures the existence of sufficient volumes of 15 ppm fuel
       in the marketing area(s) that it serves.

       Small Refiner Credit Option. A small refiner that chooses to produce 15 ppm fuel
       prior to 2010 may generate and sell credits to other refiners under the broader diesel
       temporary compliance option. Since a small refiner has no requirement to produce
       15 ppm fuel under this option, any volume of fuel it produced at or below  15 ppm
       sulfur will qualify for generating credits.

       Diesel/Gasoline Compliance Date Option. For small refiners that are also subject to
       the Tier 2/Gasoline sulfur program (40 CFR Part 80), the refiner may choose to
       extend by three years the duration of its applicable interim gasoline standards,
       provided that it also produces all its highway diesel fuel at 15 ppm sulfur beginning
       June 1, 2006.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-88

       These provisions will provide small refiners with additional and sufficient time to
secure capital, engineering and construction resources, and, where applicable, to stagger
their gasoline and diesel investments.  While a number of other possible means of providing
flexibility to small refiners were raised in comment, we believe that this menu sufficiently
addresses the needs of the broad range of small refiners.  Other options, such as a higher
cap for small refiners, would have raised much more serious air quality impact concerns, or
go beyond our legal authority.
(D)    Indicates general support for flexibility options for small refiners.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              National Automobile Dealers Association  (IV-D-280) p. 3
              Petroleum Marketers Association of America (IV-F-67)
              Wl Department of Transportation  (IV-D-241) p. 2

       (2)     Even though the commenter may not be able to take advantage of each
              particular option, the commenter supports all of the options because different
              small refiners will need different options.

              Letters:

              Petro Star Inc.  (IV-D-216) p. 3

       (3)     State environmental agency notes the nationwide benefits of the proposal, but
              argues that certain areas that will not benefit significantly (such as Montana)
              will face unusually high costs  because small refiners are critical to their fuel
              supply. Closure of these refineries will not only adversely affect fuel  supply,
              but will cause economic dislocation as well. Commenter provides detailed
              analysis of the  potential effects in Montana, of why small refiners are
              especially important in the State, and of the reasons why small refiners are
              disadvantaged by the rule.

              Letters:

              MTDEQ (IV-D-254)p. 1,3-7

       (4)     Without any flexibility this proposal could significantly reduce competition in
              the highway diesel fuel market.  Assuming the long-run direct price elasticity
              of demand for highway diesel fuel is around -0.5, average retail prices could
              increase almost 10 percent if all the small refiners representing 4 percent of
              the market exit as a result of the rule.

              Letters:

              U.S. Small Business Administration (IV-G-20) p. 1-3

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-89

       (5)     Agrees that small refiners do not have the economies of scale to compete
              with large refiners in updating their desulfurization technology but notes that
              EPA's proposed rule does not reconcile the different options proposed by
              small refiners and marketers.  Some of the flexibility options that could be
              provided to small refiners, such as a phase-in option, could have an adverse
              impact on other small businesses such as fuel marketers and retail stations.

              Letters:

              National Federation of Independent Business (IV-D-243) p. 2

       Response to Comments 8.5.2(D)(1)-(5):

       Generally, these comments provide added justification and support for our small
refiner provisions. As we explained in the preamble, we believe that small refiners, if not
offered some respite, would have difficulty in meeting the standards in the 2006 timeframe.
Based on our discussions with and information received from small refiners during and after
the SBREFA process, and comments received on the proposal, we concluded that it would
be an extreme  hardship for small refiners to comply with  the 15  ppm diesel sulfur standard in
the same time frame as the larger refining companies. Furthermore, based on this
information, we concluded that the menu of compliance flexibilities afforded in the rule was
sufficient to alleviate their hardship.

       While providing relief to small refiners, we are not doing so in a way that will place
extreme regulatory burden on other small entities in the fuel distribution system. We are not
adopting any retailer availability requirements under the low sulfur diesel fuel program. In
other words, we are not requiring that diesel retailers sell the 15 ppm fuel.  Rather, retailers
may sell 15 ppm sulfur diesel fuel, 500 ppm sulfur diesel fuel, or both.  We believe the low
sulfur diesel fuel program for refiners and importers will ensure that adequate supplies of low
sulfur diesel fuel are available throughout the nation.  The voluntary compliance and hardship
provisions have been designed with a required level of production that we believe will ensure
that 15 ppm fuel is distributed widely through pipelines and at terminals throughout the
country without the need for a retailer availability requirement.

(E)    EPA should provide investment tax credits, loan guarantees, excise tax relief,
       accelerated depreciation, credits for expensive qualified environmental
       expenditures, acid rain credits, or other forms of economic assistance to help
       cover the associated costs of the new rule.

       (1)     Commenters provided no further supporting  information or detailed analysis.

              Letters:

              Countrymark Cooperative  (IV-F-30, 191) p. 184
              Farmland Industries (IV-F-29)
              Frontier Oil Corporation  (IV-F-116) p. 204 (IV-F-191) p. 93
              Gary-Williams Energy Corporation  (IV-F-191) p. 193
              Kern Oil & Refining Co.  (IV-D-310) p. 2, 6, (IV-F-173)
              ORDEQ (IV-F-191) p.  164
              U.S. Oil & Refining Co.  (IV-F-190) p. 159

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-90

              Western Independent Refineries Association (IV-F-190) p. 144

       (2)     Although EPA does not have the authority to provide these financial
              assistance tools, the Administration can publicly endorse legislative initiatives
              to provide this assistance.

              Letters:

              Countrymark Cooperative  (IV-D-333) p. 8
              Gary-Williams Energy Corporation (IV-D-252) p. 7-8
              MTDEQ  (IV-D-254)p. 1,7-8

       (3)     In addition to tax credits or other tax restructuring, two other options would be
              a state-level revolving loan fund or a diesel surcharge at the pump. Although
              a loan fund could be used to generate funds to allow recovery of small
              refiners' capital costs, the loan fund would require a significant amount of
              funding that is not available at the state level.  Based on estimated small
              refiner costs, a surcharge of less than 2 cents/gallon would allow investments
              to be recouped within  six years and would level the  playing field for small
              refiners that do not enjoy the large refiners' economies of scale.

              Letters:

              MT DEQ  (IV-D-254) p. 7-8

       Response to Comments 8.5.2(E)(1)-(3):

       EPA does not have statutory authority to create any of the financial assistance
mechanisms as requested in the comments. The  approach recommended by the
commenters would require an Act of Congress to implement. In regard to acid rain credits,
we don't have authority to extend that provision beyond 500 ppm sulfur diesel, which is
currently constrained under section 410(h) of the Act.

(F)     Suggests a geographic phase-in area and a special relaxed implementation
       schedule for small refiners.

       (1)     One commenter suggests  EPA aid small refiners in  Rocky Mountain area to
              ensure that the proposed rule does not threaten that region's oil industry.

              Letters:

              CO Petroleum Association (IV-F-191) p. 275

       (2)     Small refiners in the Rocky Mountain GPA would face simultaneous gasoline
              and diesel changes. The continued viability of these refineries demands that
              this timing overlap problem be resolved.  If a geographic phase-in and a
              relaxed implementation schedule for small refiners are not incorporated  into
              EPA's proposed rule, many small refiners will be forced to  close, and regional
              fuel prices will rise.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-91

              Letters:

              Chevron  (IV-D-247) p. *2, 4
              WY Refining Company (IV-F-191) p. 58

       (3)     EPA recognized the appropriateness of a phase-in for certain western states
              in the gasoline rule  and should apply the same, consistent approach in this
              rule in recognition of the unique market in this area.

              Letters:

              Giant Industries, Inc. (IV-D-248) p. 1-2

       Response to Comments 8.5.2(F)(1)-(3):

       In the low sulfur gasoline rule, we established the GPA provision which provides
temporarily less stringent standards for gasoline sold in certain parts of the West and Alaska.
However, because of the extremely sulfur-sensitive nature of the aftertreatment devices with
which 2007 and later model vehicles will be equipped,  we could not accommodate a similar
provision in today's program. That is, we could not accommodate an area of the country with
a higher diesel sulfur cap.

       However, we do recognize that refiners that produce or import both gasoline and
diesel fuel for use in the GPA will have unique challenges given that the introduction of low
sulfur highway diesel fuel in June 2006 overlaps with the conclusion of the interim low sulfur
gasoline standards for GPA refiners.  Furthermore, refineries supplying the GPA tend to be
disproportionately challenged compared to other refiners with respect to capital formation, the
availability of engineering and construction resources,  and the isolated nature of many of the
markets.

       In response to the commenters' concerns, we are allowing refiners that produce both
gasoline and highway diesel fuel and are subject to the Tier 2/Gasoline Sulfur program  to
stagger their desulfurization investments for the two fuels. Refiners that comply with the low
sulfur diesel fuel standard by June  1, 2006 for all of their highway diesel fuel production may
receive a two-year extension of their interim GPA gasoline standards for 2006, that is until
December 31,  2008 (refer to Section IV.B.2. of the preamble for more information).  This
provision should provide these refiners with sufficient relief from the low sulfur gasoline and
diesel fuel programs by balancing their needs with the air quality and enforceability needs of
the program.

(G)    EPA should provide small refiners an ongoing exemption from the diesel rule
       until the aftertreatment technologies and the ability of the distribution system
       to deliver 15 ppm fuel at retail have been  proven commercially viable.

       (1)     Small  refiners should receive five years from proof of commercial viability to
              meet the 15 ppm standard. The commenter believes this would likely provide
              small refiners until 2013 at least to meet the 15 ppm limit. This approach
              would ensure that if, for example, it becomes clear that the aftertreatment
              technology can handle 50 ppm fuel, small refiners would not face stranded
              investments in desulfurization projects.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-92

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 11

       Response to Comment 8.5.2(G):

       Based on all information available to us, we believe that diesel aftertreatment
technologies, albeit extremely sulfur-sensitive technologies, will be available for 2007 and
later model heavy-duty engines and vehicles to comply with the new emission standards that
phase-in beginning in 2007. By 2009, all new engines and vehicles will be required to meet
these standards. The structure of the low sulfur diesel fuel program complements the design
of the heavy-duty engine and vehicle program. Under the low sulfur diesel fuel program, both
500 ppm sulfur diesel fuel for older vehicles and 15 ppm sulfur diesel fuel for new vehicles
(beginning with the 2007 model year) will be available until 2010.  One option under today's
program provides small refiners the ability to continue producing 500 ppm sulfur highway
diesel fuel through May 31, 2010,  provided that it reasonably ensures the existence of
sufficient volumes of 15 ppm fuel in the  marketing area(s) that it serves.  We do not believe
that a longer extension to meet 15 ppm  sulfur diesel fuel, such as an extension or exemption
until 2013 as the commenter suggested, would be appropriate.

       As described in  Section IV.D.3.  of the preamble,  we believe that with relatively minor
changes and associated costs, the existing distribution system will be capable of adequately
managing sulfur contamination during the transportation  of 15 ppm highway diesel fuel from
the refinery to the end-user. Furthermore, we believe that the existing system is capable of
handling two grades of highway diesel fuel (500 ppm and 15  ppm sulfur cap) in a limited
fashion during the transition period of the sulfur program at acceptable cost with the addition
of storage tanks at a fraction of distributor facilities. The voluntary compliance and hardship
provisions have been designed with a required level of production that we believe will ensure
that 15 ppm fuel is distributed widely through pipelines and at terminals throughout the
country without the need for an availability requirement.

              Issue 8.5.3: Sale  of 500 ppm Fuel

(A)    Supports a provision that would allow small refiners to continue selling 500
       ppm fuel.

       (1)     Small business refiners  need the ability to continue to manufacture and sell
              on-road  diesel at the current 500 ppm standard for as long as there is a
              market for the fuel.  Some of these commenters noted, however, that this may
              not be as helpful to the refiner since at some point most retailers are likely to
              purchase only the lower sulfur fuels. One commenter also noted that the
              transportation segregation requirements of the 500 ppm diesel may limit
              distribution to locations near the refinery. This commenter argued that there
              is no need for EPA to limit the duration of this option as the markets will
              effectively dictate when the 15 ppm fuel is the fuel of choice.

              Letters:

              Frontier Oil  Corporation  (IV-F-116) p. 204 (IV-F-191) p. 93
              Gary-Williams Energy Corporation  (IV-F-191) p. 193

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-93

              Murphy Oil Corporation  (IV-D-274) p. 8-9
              Placid Refining Company, LLC (IV-D-230) p. 2-3
              U.S. Oil & Refining Co. (IV-F-190) p. 159
              Western Independent Refineries Association (IV-D-273) p. 7, (IV-F-190) p.
              144

       (2)     Commenter urges that this option be one of multiple options available to a
              small refiner. Commenter also opposes any restrictions on how the fuel is
              transported as EPA's downstream testing requirements are adequate to
              ensure that the 15 ppm fuel is not contaminated.  The commenter agrees that
              proper pump labeling and tank filler modifications may be needed but does
              not believe that production limits are necessary (although the proposed 105%
              limit appears reasonable, and the use of volume of highway diesel fuel
              produced from crude oil on average calendar year basis is also acceptable).
              The commenter does not believe that allowing this small refiner flexibility will
              adversely affect the supply of 15 ppm fuel and notes that in its PADD region,
              its product competes with product from several large refiners.

              Letters:

              Placid Refining Company, LLC (IV-D-230) p. 2-3

       Response to Comments 8.5.3(A)(1) and (2):

       Under the low sulfur diesel fuel, small refiners have three special compliance options
available to them.  One option, the 500 ppm Option, is available for any refiner that qualifies
as a small refiner.  Under this option, small refiners may continue selling highway diesel fuel
with sulfur levels meeting the current 500 ppm standard for four additional years, provided
that they supply information showing that sufficient alternate sources  of 15 ppm diesel fuel in
their market area will exist for fueling new heavy-duty highway vehicles. Specifically, through
May 31, 2010, small refiners may supply 500 ppm highway diesel fuel for use in vehicles with
older (pre-2007) technology. In other words, small refiners that choose this option may delay
production of highway diesel fuel meeting the 15 ppm standard for four years.

       As described above in Response to Comments 8.5.2(D)(1)-(5), we are not placing
extreme regulatory burden on other small entities in the fuel distribution  system.  We are not
adopting any retailer availability requirements under the low sulfur diesel fuel
program-distributors may carry and retailers may sell 15 ppm sulfur diesel fuel, 500 ppm
sulfur diesel fuel, or both.  However, distributors and retailers choose  to carry/sell both fuels
must segregate the two grades of fuel to ensure product integrity.

       (3)     At a minimum, small refiners should be given seven years (until 2013) to
              continue to market current 500 ppm fuel.

              Letters:

              Murphy Oil Corporation  (IV-D-274) p. 9

       Response to Comment  8.5.3(AU3):

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-94

       Refer to Response to Comment 8.5.2(G), above.

       (4)     Labeling should be adequate to prevent misfueling, although using dyes to
              differentiate fuel may be appropriate as well. The biggest deterrent to prevent
              misfueling is that engine/vehicle manufacturers will make clear to purchasers
              of vehicles that need the ultra-low sulfur fuel that the wrong fuel can result in
              engine failure.

              Letters:

              Murphy Oil Corporation (IV-D-274) p. 9

       Response to Comment 8.5.3(A)(4):

       To ensure the integrity of the low sulfur diesel fuel as it is transported from the
refinery gate to the end-user, all  parties in the distribution system are required under today's
program to maintain product transfer documents, which will indicate whether the diesel fuel
meets the 15 ppm or 500  ppm standard as well as the volume of such fuel.

       In addition, today's program establishes pump labeling requirements. For any
multiple-fuel program like  the temporary compliance option adopted today, clearly labeling
diesel fuel pumps is vital for end users to distinguish between the two grades of fuel.  We
received comments  on the NPRM that concurred with our assessment in the proposal that
pump labels, in conjunction with  vehicle labels, would also have the effect of helping to help
prevent misfueling of motor vehicles with high sulfur diesel fuel. Section VI.G. of the
preamble describes  the labels that manufactures will place on vehicle and information that
will be provided to vehicle owners. Today's rule also adopts pump labeling requirements for
retailers and wholesale purchaser-consumers similar to those we proposed, but with
modifications to account for the availability of diesel fuel subject to the 500 ppm sulfur
standard for use in pre-2007 motor vehicles. The text of the labels appears in Section
VII.C.2.c. of the preamble; the specific requirements for label size and appearance are found
in the regulatory language for this rule.

       As discussed in the Section VII of the preamble, we believe that additional measures
may be useful in preventing accidental misfueling, and will work with industry to develop such
measures.

       Today's rule does not modify the current dye requirement for tax-exempt highway
diesel fuel or for nonroad fuel. Furthermore, for the reasons discussed in Section VII.C.2.C of
the preamble, it does not establish any nozzle or filler inlet requirements.

       (5)     Small refiners that serve limited markets that have the ability to continue to
              sell 500 ppm fuel could be required to provide facilities to store and deliver
              ultra  low-sulfur fuel. This would ensure that local market retailers would have
              access to ultra-low sulfur fuel. This requirement for small refiners to support
              distribution of the ultra-low sulfur fuel would last as long as the small refiner
              has the right to produce and distribute on-road diesel at 500 ppm.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-95

              Murphy Oil Corporation  (IV-D-274) p. 9

       Response to Comment 8.5.3(A)(5):

       As described above in Response to Comment 8.5.2(G), small refiners may supply
500 ppm highway diesel fuel for use in vehicles with older (pre-2007) technology through
May 31, 2010.  This option effectively allows small refiners to delay production of highway
diesel fuel meeting the 15 ppm standard for four years, provided they ensure the existence of
sufficient volumes of 15 ppm fuel in the marketing area(s) that they serve. However, this
option does not require small refiners to carry both fuels themselves. If a small refiner cannot
ensure that low sulfur diesel fuel will be sufficiently available in its marketing area, then it
must choose another compliance option such as the Small Refiner Credit Option or the
Gasoline/diesel Compliance Date Option, as described in Section IV.C.1.C.

       (6)     This flexibility should be provided to farmer co-ops as well. Also, commenters
              oppose any limitation on distribution by pipeline or barge of the 500 ppm fuel
              because farmer co-ops rely heavily on pipeline systems for distribution of their
              product. Given that the pipelines already will be carrying nonroad fuel at 500
              ppm, this  restriction would not make sense. Also, one of the commenters
              states that because farmer co-ops sell 500 ppm nonroad, they should have
              no availability requirement regardless of whether EPA includes an availability
              requirement as part of providing this flexibility to small refiners.  Commenter
              agrees that the limited distribution system inherent to most small refiners will
              limit concerns about misfueling and that this same argument applies to farmer
              co-ops.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 17
              National Council of Farmer Cooperatives  (IV-D-351) p. 6-7

       Response to Comment 8.5.3(A)(6):

       Refer to Issue 8.5.7, below

(B)    EPA's proposed option to allow small refiners to continue  selling 500 ppm
       highway diesel may not be helpful to the refiner.

       (1)     There is unlikely to be a price differential  between the high and low sulfur fuel
              and retailers would not have an incentive  to keep purchasing the higher sulfur
              diesel.  In follow-up written comments, commenters added that this approach
              definitely would be inappropriate as the only or major source of small
              business  relief, although it could be included as one option. One of the
              commenters also strongly opposed a 500 ppm phase-in for the industry as a
              whole because it would result in three fuels (including the commenter's high
              sulfur nonroad diesel), which their pipeline system could not carry.

              Letters:

              Countrymark Cooperative (IV-D-333) p. 11

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-96

              Gary-Williams Energy Corporation  (IV-D-252) p. 8, (IV-F-43)

       (2)     Small refiners will need to be in the ultra low sulfur market as soon as
              possible. Selling 500 ppm will be a short term fix at best and is unlikely to
              provide an opportunity to raise capital or to be profitable in the long run.

              Letters:

              Countrymark Cooperative (IV-D-333) p. 9, (IV-F-191) p. 184

       Response to Comments 8.5.3(B)(1) and (2):

       As described above in Response to Comment 8.5.2(C), today's program includes a
menu of compliance options for small refiners that will provide them with additional and
sufficient time to secure capital, engineering and construction resources, and, where
applicable, to stagger their gasoline and diesel investments.

       As described in  Section IV.D.3.  of the preamble, we believe that with relatively minor
changes and associated costs, the existing distribution system will be capable of adequately
managing sulfur contamination during the transportation of 15 ppm highway diesel fuel from
the refinery to the end-user. Furthermore, we believe that the existing system is capable of
handling two grades of highway diesel fuel (500 ppm and 15 ppm sulfur cap) in  a limited
fashion during the transition period of the sulfur program at acceptable  cost with the addition
of storage tanks at a fraction of distributor facilities.

       As discussed above under Issue 6, we believe that the sulfur credit program will bring
the prices of 15 and  500 ppm fuels close together at the refinery gate.  We do not expect the
entire distribution system to handle the 500 ppm fuel, but  only that necessary to dispense the
fuel (which we believe should cover less than half the nation), even in 2009, as much of the
fleet will require use  of the  15 ppm fuel.  One of the criteria which refineries will use in
determining whether they will continue to produce 500 ppm fuel will be  the ability to distribute
this fuel.  Much  of each  refinery's fuel can be transported  directly by truck from the refinery's
rack.  The rest will likely have to utilize pipelines  in order to be economically distributed.
While we do not expect every pipeline to carry both 15 and 500 ppm fuels, we do expect that
the major pipelines, such as Colonial, Plantation and TEPPCO will do  so.  We  also expect
that refiners desiring to produce 500 ppm fuel will be able to purchase credits at an
acceptable price. We expect that the refiners producing 15 ppm fuel will be those with the
lower or lowest compliance costs and those producing 500 ppm to face higher compliance
costs. This difference in cost of meeting the 15 ppm standard should provide a  range of
potential credit prices which allows both  buyer and seller to win (i.e.,  the credit price can be
simultaneously more than the cost for one refiner to produce the excess 15 ppm fuel and less
the other refiner's cost of producing the 15 ppm fuel).

(C)    EPA should not provide any exemption from the fuel sulfur requirements for
       small refiners.

       (1)     Fuel with a  500 ppm sulfur level would have a devastating effect on the
              aftertreatment systems and operation of engines and vehicles designed to
              operate  on  ultra low sulfur fuel. Commenter provides significant discussion
              on the issue of the adverse impact to the effectiveness  of control technologies

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-97

              of higher sulfur levels. Commenter asserts that even small refineries have
              low-cost options available for reducing sulfur, such as the newdesulfurization
              catalyst, incremental purchases of hydrogen, elevation of hydrogen partial
              pressure to the unit's design maximum and increased residence time. Those
              options along with low cost government loans could be a workable solution for
              small refiners.  EPA should investigate the possibility of low-cost loans or
              other means to minimize the financial burden on small refiners.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 29-30
              International Truck & Engine Corp. (IV-D-257)  p. 12

       Response to Comment 8.5.3(C)(1):

       We agree with the commenters that 500 ppm sulfur diesel fuel would have a
devastating effect on diesel aftertreatment systems.  However, given that not all heavy-duty
vehicles on the road in 2007 will need 15 ppm sulfur diesel fuel, we believe it is appropriate
to provide the refining industry with some compliance flexibility in producing the low sulfur
diesel fuel.  Small refiners, in particular, are challenged-they generally have limited additional
sources of income beyond refinery earnings for financing the equipment necessary to
produce low sulfur diesel.  In addition, small refiners are disadvantaged by the economies of
scale that exist for the larger refining companies-capital costs and per-barrel fixed operating
costs are generally higher for small refiners.

       We are confident that the program's structure will ensure that low sulfur diesel fuel is
sufficiently available nationwide in 2007 for the vehicles that need it.  Furthermore, we
believe that the program contains sufficient safeguards, such as product transfer documents
for tracking purposes and  fuel pump labeling requirements, to mitigate the potential for
misfueling as discussed in Section VII of the preamble.

       EPA does not have statutory authority to create any of the financial assistance
mechanisms as requested in the comments. The approach recommended by the
commenters would require an Act of Congress to implement.  However, some funding such
as loans may be available through the SBA.

       (2)     Special treatment for any refiner would create market distortions and increase
              the likelihood of misfueling with subsequent loss of emission benefits. Non-
              exempt refiners competing in the same market may be forced to withdraw
              from the market, placing at risk adequate fuel supplies.  Exempting or
              relieving those that have not met the standard is inconsistent with the goals of
              the program and punishes those that meet the challenge.  One commenter
              noted that  EPA should avoid any flexibility approach that would perpetuate a
              difference  between small and large refiners in terms of sulfur levels or timing
              of implementation. The commenter states that the only meaningful flexibility
              is to delay  the timing of either the diesel rules (nationwide) or the gasoline
              rules in the Rockies GPA to remove the overlapping schedules that small
              refiners are facing.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-98
              British Petroleum (IV-D-242) p. 4
              Chevron (IV-D-247) p. 4
              Phillips Petroleum Company (IV-D-250) p. 2

       Response to Comment 8.5.3(C)(2):

       As described above in Response to Comments 8.1.1 (A), (B), & (C), the temporary
compliance option, which is available to all refiners, allows refiners to continue producing a
limited amount of 500 ppm until  2010. The intent of this provision is to serve as a supply
"safety valve" for highway diesel fuel by providing refiners with compliance flexibility in the
early years of the program.  Because small refiners as a class are challenged due to lack of
access to capital, engineering and construction resources, and poorer economies of scale,
we believe additional compliance options for them are appropriate.

       (3)     If differential treatment is adopted, commenter recommends that an economic
              penalty be assessed on all  on-highway fuel exceeding 15 ppm sulfur in order
              to maintain a level playing field and thus an adequate fuel supply.

              Letters:

              British Petroleum (IV-D-242) p. 4

       Response to Comment 8.5.3(C)(3):

       We disagree with the commenters  recommendation to impose an economic penalty
on diesel fuel exceeding 15 ppm sulfur.  Such a penalty would negate the purpose of
allowing both grades of diesel fuel which is to provide relief for severe hardship.

       (4)     Commenter asserts that a phase-in approach could reduce the impact on
              small refiners, negating the need for allowing small refiners to offer higher-
              sulfur diesel to the market.

              Letters:

              Koch Industries  (IV-D-307) p. 5

       Response to Comment 8.5.3(C)(4):

       Refer to Comment Response to Comments 8.5.1(A)(1)-(2) and 8.5.3(C)(2), above.

       (5)     If EPA decides to grant such special treatment, it should be limited to the
              genuine small business refiners, which account for only about 4%  of U.S.
              diesel production.

              Letters:

              Tosco (IV-D-304) p. 6

       Response to Comment 8.5.3(0(5):

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-99
       The temporary compliance option as described above in Response to Comments
8.1.1 (A), (B), & (C), which is available to all refiners, allows refiners to continue producing a
limited amount of 500 ppm until 2010.  Only genuine small business refiners (those that meet
the corporate employee and crude oil capacity criteria described in Section IV.C.Lb of the
preamble and specified  in the regulations) may avail themselves of the menu of small refiner
options.

       (6)     Pockets  of high sulfur fuel would not only result in higher sulfur emissions, but
              also contaminate the control devices.  EPA should not provide flexibility that
              could delay the introduction of controls that require low sulfur fuel.  It may be
              possible to allow farmer cooperatives to continue the sale of 500 ppm fuel by
              limiting its use to nonroad applications for farming equipment, but that should
              not extend to on-road applications.  There are many national park units
              across the nation that are in nonattainment areas for ozone and that are
              subject to adverse nitrogen deposition or face visibility impairment.  The on-
              road standards proposed by EPA are an important part of the overall solution
              to these  problems.

              Letters:

              National Park Service (IV-D-180) p. 3-4

       Response to Comment 8.5.3(C)(6):

       Refer to Response to Comment 8.5.3(C)(1), above.

(D)    Supports a special provision for Alaska small refiners to continue to produce
       and market diesel fuel that meets current specifications (i.e. subject to current
       500 ppm exemption) for as long as a market exists (or at least for a period of
       five years).

       (1)     Commenter understands that many lower 48 refiners do not believe that this
              flexibility will assist them, but commenter believes that this will be of help to
              Alaska small refiners. This approach also would not interfere with retail
              availability of the low sulfur fuel because most of the highway diesel in Alaska
              is produced  by the two large refineries in Alaska.  Placarding and separate
              island requirements would prevent misfueling.

              Letters:

              Petro Star Inc.  (IV-D-216) p. 3-4

       Response to Comment 8.5.3(D):

       Unlike the rest of the nation, Alaska is currently exempt from the 500 ppm sulfur
standard for highway diesel fuel and dye requirements.  Since the beginning of the  500 ppm
highway diesel fuel program, we have granted Alaska exemptions from  meeting the sulfur
standard and dye requirements, because of its unique geographical, meteorological, air
quality, and economic factors.  Because of these unique factors, we are establishing in

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-100

today's action an alternative option for implementing the low sulfur fuel program in Alaska.

       We are providing the State of Alaska an opportunity to develop an alternative low
sulfur transition  plan.  We intend to facilitate the development of this plan by working in close
cooperation with the state and key stakeholders. This plan must ensure that sufficient
supplies of low sulfur  diesel fuel are available in Alaska to meet the demand of any new 2007
and later model year diesel vehicles. Given that Alaska's demand for highway diesel fuel is
very low and only a few new diesel vehicles are introduced in Alaska each year, it may be
possible to develop an alternative implementation plan for Alaska in the early years of the
program that provides low sulfur diesel only in sufficient quantities to meet the demand of the
new diesel vehicles. This provision gives all Alaska refiners, including those that are small,
more flexibility during  the transition period because they will not have to desulfurize the entire
highway diesel volume. In addition, small refiners in Alaska will also be eligible for the same
menu of options as all other small refiners. Our goal in offering this additional flexibility is to
transition Alaska into  the low sulfur fuel program in a manner that minimizes costs, while still
ensuring that the new vehicles receive the low sulfur fuel they need. We  expect that the
transition plan will begin to be implemented at the same time as the national program, but the
state will have an opportunity to determine what volumes of low sulfur fuel must be supplied,
and in what timeframes, in different areas of the state.

              Issue  8.5.4:  Hardship Waiver

(A)    EPA should clarify and define in detail how hardship criteria will be defined for
       small refiners.

       (1)    EPA's process for determining whether a hardship waiver is necessary is
              arbitrary.

              Letters:

              Gary-Williams Energy Corporation  (IV-F-43, 191) p. 193
              Tosco (IV-F-157)

       (2)    EPA needs to establish criteria for financial standards, engineering, planning
              and permit requirements, and construction hardships that justify a waiver.
              EPA also needs to set the time frame for action. Commenter opposes EPA
              suggestion that EPA decide on a waiver within one year after submission - a
              3 month timeframe is appropriate. These changes are necessary so that
              lenders will have certainty before making capital available. Commenter notes
              that this option is likely to be the most important flexibility option for small
              refiners.

              Letters:

              Countrymark Cooperative (IV-D-333) p. 9-10, (IV-F-191)  p.  184

       (3)    The only relevant and appropriate criterion is that the refiner produces both
              gasoline and diesel. If so, an automatic hardship waiver should apply.  If EPA
              is concerned about geographical air quality impacts associated with this type
              of automatic exemption, then EPA could require that small refiner gasoline

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-101

              exempted from the original Tier 2 deadlines not be sold in nonattainment
              areas.

              Letters:

              Gary-Williams Energy Corporation (IV-D-252) p. 5

       Response to Comment 8.5.4(A):

       The low sulfur diesel fuel program offers two types of hardship provisions: small
refiner hardship and general hardship. The small refiner hardship provision is described in
detail in Section IV.C.1 of the preamble and Chapter VIII of the RIA. We define a  refiner that
meets certain corporate employee and crude oil capacity criteria as a "small refiner" for the
purposes of the low sulfur diesel fuel program. Note that this definition is based closely on
our small refiner definition in the Tier 2/Gasoline Sulfur rule.

       The general hardship provision which is available to all refiners is discussed in
Section IV.C.3 of the preamble.  Within this provision, there are two main types of general
hardship: 1) extreme unforeseen circumstances, such as a natural disaster, and 2) extreme
hardship circumstances, such as extreme financial hardship. The requirements for obtaining
temporary relief from the requirements due to extreme unforeseen circumstances are
described under Section 80.561 of the regulations.  The requirements for obtaining
temporary relief due to extreme  hardship circumstances are described under Section 80.560
of the regulations.  Because every refiner has unique circumstances which may warrant
hardship relief, we do not believe it would be appropriate to specify exact financial standards,
engineering, construction, planning, or permit requirements as one commenter suggested.
We believe refiners will benefit from a more open-ended, less constraining process.

(B)    The hardship waiver should be automatically granted when the final rule is
       published (or at least three full years before the 2004 Tier 2 deadline) since
       clarification of hardship status will be crucial to the investment and operational
       changes currently being determined by small refiners.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              Frontier Oil Corporation  (IV-F-191) p. 93
              Gary-Williams Energy Corporation (IV-F-43)

       (2)     Commenters note that Tier 2 interim standards compliance will improve
              substantial capital costs and annual operating expenses (up to $20 million in
              capital and $2.5  million in incremental annual operating costs), so  commenter
              needs clarification of their hardship status immediately when the rule is
              published.

              Letters:

              Countrymark Cooperative (IV-D-333) p. 9
              Gary-Williams Energy Corporation (IV-D-252) p. 5

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-102

       Response to Comment 8.5.4(6):

       The interim low sulfur gasoline program for small refiners lasts for four years, 2004
through 2007, and the refiner can apply for an extension of up to two years. After the interim
program expires, small refiners must produce the same low sulfur gasoline as other refiners.

       Today's diesel sulfur program takes effect in the same time frame as the small refiner
interim program for low sulfur gasoline. To avoid the need for simultaneous investments in
both gasoline and diesel fuel desulfurization,  several small refiners subject to both programs
raised the concept of allowing those investments to be staggered in time.  Because of the
relative difficulty small refiners will face in financing desulfurization projects, especially for
both diesel and gasoline desulfurization in the same time frame, we agree that this concept
has merit and have adopted it for this rule.  Under this concept, small refiners may extend the
duration of their gasoline sulfur interim standards and, thus, potentially postpone some or all
of their gasoline desulfurization investments while they work to achieve the low sulfur diesel
standard "on time" in 2006.

       Specifically, this option provides that a small refiner  can receive a three year
extension of a refinery's interim gasoline standard, until January 1, 2011, if it meets two
criteria: 1) it produces both gasoline and diesel fuel at a refinery and chooses to comply with
the 15 ppm diesel fuel sulfur standard by June 1, 2006 for all its highway diesel production at
that same refinery, and 2) it produces a minimum volume of 15 ppm fuel at that refinery that
is at least 85 percent  of the average volume of highway diesel fuel that it produced at that
refinery during  calendar years 1998 and  1999.

       We believe that the additional three-year extension of the interim gasoline sulfur
standards, which small refiners otherwise need to request on a case-by-case basis under the
gasoline sulfur program, is warranted without any further action by small refiners, provided
that they assume the  financial burden of full low  sulfur diesel compliance in 2006 (i.e.,
instead of choosing the flexibility of the broader program). The diesel and gasoline
desulfurization  investments for those refiners can thus be staggered in time.

(C)    Supports concept of case-by-case hardship waivers.

       (1)     EPA should apply this flexibility to farmer co-ops as well as small refiners.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 18-19

       (2)     An appropriate time frame for submitting the initial application would be within
              9-12 after rule promulgation.  EPA, however, should act on applications within
              6-9 months so the refiner can react to the decision. Repeated applications
              should be allowed for cause based on subsequent knowledge as refiners
              move  down the 9-year conversion timeframe. Finally, because the gasoline
              rules are linked with these rules,  the timeframe for an application under the
              gasoline rules should be changed to February 2001.

              Letters:

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-103

              Cenex Harvest States Cooperatives  (IV-D-232) p. 19

       Response to Comment 8.5.4(C):

       Any refiner, including farmer cooperative refiners, may apply for temporary relief from
the requirements of the low sulfur diesel fuel rule under the general hardship provision.

       Once all hardship applications have been received, we will consider the appropriate
process to follow in reviewing and acting on applications, including whether to conduct a
notice and comment decision-making process.

       We believe the June 1, 2002 application deadline is appropriate-refiners must have
sufficient time to prepare all the necessary information required in the application. While we
will review and act on applications as expeditiously as possible, we believe a six-to-nine
month timeframe for this process would be too constraining; we may need time after all
applications have been submitted to clarify certain information or request additional
information.  Because we will consider the joint impact of the low sulfur diesel fuel and low
sulfur gasoline rules through this hardship application process, we do not believe it is
necessary or appropriate to delay the gasoline hardship application deadline (of September
1,2000) until February 2001.

(D)    Opposes any hardship waiver for small refiners.

       (1)     At most, small refiners may be given  an extension on the gasoline sulfur
              standards if they demonstrate intent and capability to meet the diesel
              standards on schedule.

              Letters:

              Tosco (IV-D-84), (IV-F-157)

       (2)     Koch favors a true free market approach for fuel distribution. Supply should
              be  accomplished by those able to supply the product at lowest cost.

              Letters:

              Koch Industries (IV-D-307) p. 5

       (3)     EPA should more objectively define "hardship"; otherwise widespread use of
              the option to address local or temporary problems could undermine the
              integrity of the program and lead to a patch-work of dual fuel scenarios. If
              EPA decides to include these  provisions, they should be narrowly construed.

              Letters:

              Tosco (IV-D-304) p. 6

       Response to Comment 8.5.4(D):

       See our response to comment 8.5.2(B), above.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-104


              Issue 8.5.5: Gasoline Sulfur Extension

(A)    Small refiners that manufacture both gasoline and diesel fuel should be
       granted an extension of Tier 2 gasoline sulfur requirements if they meet the
       diesel standards in the 2006 timeframe.

       (1)     Commenters suggested a range of years. Most suggested four years.

              Letters:

              Countrymark Cooperative (IV-F-117) p. 74
              Frontier Oil Corporation  (IV-F-116) p. 204 (IV-F-191) p. 93

              Gary-Williams Energy Corporation  (IV-D-252) p. 4-5, (IV-F-191) p. 193
              National Council of Farmer Cooperatives  (IV-D-351) p. 6
              WY Refining Company (IV-F-191)  p. 58

       (2)     The extension should be for both the interim and final standards, not simply
              extending the interim period.  This approach is needed because of the high
              costs of meeting the initial interim standards.  One commenter added that if
              EPA will not extend the interim standard, there should be targeted relief for
              small refiners with low 1997/98 baselines as a result of operational issues
              during that particular timeframe, such as allowing adjustment of the interim
              standard to 90% of the baseline.

              Letters:

              Countrymark Cooperative (IV-D-333) p. 9
              Gary-Williams Energy Corporation  (IV-D-252) p. 4-5

       (3)     The four-year extension for meeting the final gasoline sulfur requirements
              needs to be  automatic and known as soon as possible so that small refiners
              can use the  extension to gain access to financing. The commenter believes
              this flexibility is the most important for small refiners. Also, EPA needs to
              ensure that there is no market resistance  in the 2008-2012 period to the
              higher sulfur gasoline fuel by stating explicitly that there is no prohibition  on
              commingling the small refiner fuel with the fuel meeting the final gasoline
              standards.

              Letters:

              Placid Refining Company, LLC (IV-D-230) p. 3-4

       Response to Comment 8.5.5(A)(1)-(3):

       As described in Section IV of the preamble and Chapter VIII of the  RIA, today's diesel
sulfur program takes effect in the same time frame as the small refiner interim program for
gasoline sulfur. To avoid the need for simultaneous investments in  both gasoline and diesel
fuel desulfurization, several small refiners subject to both programs raised  the concept of

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allowing those investments to be staggered in time. Because of the relative difficulty small
refiners will face in financing desulfurization projects, especially for both diesel and gasoline
desulfurization in the same time frame, we agree that this concept has merit and have
adopted it for this rule. Under this concept, small refiners may extend the duration of their
gasoline sulfur interim standards by three years and, thus, potentially postpone some or all of
their gasoline desulfurization investments while they work to achieve the diesel sulfur
standards "on time" in 2006. This provision is automatic under the provisions of today's rule,
in response to commenters concerns about needing certainty as soon as possible. To the
extent that small refiners choose this Diesel/Gasoline Compliance Date option, this provision
will benefit the overall diesel program because it will increase the availability of 15 ppm diesel
fuel in the small refiner's market area.

       While the Agency also considered granting an extension for small refiners to meet or
skip entirely their interim gasoline sulfur standards, the much greater environmental impact
associated with  the very high gasoline sulfur baselines caused us to dismiss such an
approach. Furthermore, it was not at all clear that additional  relief beyond an extension for
complying with the final gasoline sulfur standards was warranted. Finally, a three year
gasoline extension was deemed  more than sufficient to allow small refiner to stagger their
diesel and gasoline investments.

       (4)    Alternatively, small refiners could be allowed to supply highway diesel with 50
              ppm sulfur for a reasonable period beyond the 2006 deadline.

              Letters:

             Tosco (IV-D-304) p. 6
       Response to Comment 8.5.5(A)(4):

       See response to comments 8.5.6(A), (B), and (D), below.
       (5)     Commenter states this option should apply to farmer co-ops as well, and that
              if there is any extension to the diesel fuel deadline, the gasoline extension
              should run from that extended date, not 2006.

              Letters:

              National Council of Farmer Cooperatives  (IV-D-351) p. 6
       Response to Comment 8.5.5(A)(5):

       See response to comment 8.5.1 (E), above.

(B)    Does not believe an extension on meeting the gasoline requirements will be
       useful.

       (1)     All California refiners either no longer refine gasoline, or make low-sulfur

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              gasoline already. Thus, commenter opposes this option.

              Letters:

              British Petroleum (IV-D-242) p. 5

       (2)     Even though this provision may be useful to certain small refiners (commenter
              expresses their support on this issue), it is unlikely to be useful for western
              refiners since most either already make ultra low sulfur gasoline or choose
              not to manufacture finished gasoline at all.

              Letters:

              Western Independent Refineries Association  (IV-D-273) p. 7, (IV-F-190) p.
              144

       (3)     EPA's option to allow trade-offs between compliance with the gasoline and
              diesel sulfur programs appears to be inequitable, and would require that EPA
              re-visit the Tier 2 program through a notice and comment rulemaking. EPA
              would be required to thoroughly review the implications that an amendment
              regarding small refiner compliance would have on other aspects of the Tier 2
              rule, such as the emissions benefits received under the Tier 2 program. Such
              trade-offs were not contemplated in the Tier 2 rulemaking and could further
              complicate the  compliance and supply issues for diesel.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 67
              Marathon Ashland Petroleum (IV-D-261) p. 71

       Response to Comment 8.5.5(B):

       In the diesel proposal, we sought comment on a gasoline/diesel compliance trade-off
for small refiners and farmer cooperative refiners. In  addition, we received comment on this
issue with respect to small refiners as well as GPA refiners. However, because the option is
voluntary, it is difficult to project the extent to which refiners will take advantage of it.
Nevertheless, we attempted to project which refiners would benefit most from this flexibility
and evaluated the environmental impact in the same manner as we did for the Tier 2/low
sulfur gasoline rule.  The impact of this flexibility is incorporated into our overall
environmental impact analysis for today's diesel program.  These losses from this flexibility
amount to only a very small fraction  of the diesel program benefits over time. Furthermore,
this flexibility is necessary in order to provide for the earliest possible implementation of the
program. Without this flexibility, the start of the program may have to be delayed, resulting in
a much, much greater loss in environmental benefits.

       While this  option will not benefit all small refiners,  neither will others.  Hence, we
believe it is important to provide refiners with a choice of three different compliance flexibility
options. This option may not benefit California refiners that are not subject to the federal low
sulfur gasoline program. However, they may still take advantage of the other two small
refiner compliance options (500 ppm option and small refiner credit option) as well as the

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temporary compliance option and general hardship provision that are available to all refiners.

(C)    Supports generally the concept of allowing small refiners to stagger the
       implementation of gasoline and diesel desulfurization.

       (1)     Staggering the compliance dates will allow small refiners to spread their costs
              out overtime and ensure that contractors are available to put the
              desulfurization equipment in place. One commenter provided detailed
              analysis of these concerns, and added that potential nonroad diesel
              desulfurization concerns further complicated the possible financing and
              construction cost considerations for small refiners.  This commenter also
              adds that any relief provided by the small refiner provisions under Tier 2 will
              be undone if the small refiner must meet the diesel  requirements by 2006.
              This commenter suggests that the small refiner be allowed to meet the Tier 2
              gasoline requirements in 2008 as allowed  under Tier 2, and then have on-
              road and nonroad diesel desulfurization requirements delayed  until sometime
              after that date.

              Letters:

              Giant Industries,  Inc.  (IV-D-248) p. 2
              Murphy Oil Corporation (IV-D-274) p. 2-5, 8,14

       Response to Comment 8.5.5(C)(1):

       In general, commenters provided added support and justification for the
Gasoline/Diesel Compliance Date Option available to small and GPA refiners under today's
program. This option as it applies to small refiners is described above in Response to
Comments 8.5.5(A)(1)-(3) and Section IV.C.1 of the preamble.  The option for GPA refiners  is
described above in Response to Comment4.1(E)(18) and in Section IV.B.2 of the
preamble.
       (2)     Commenter argues that farmer co-ops need maximum flexibility on both
              rules, and that a longer gasoline timetable should not be linked to the
              refiner co-op meeting the 2007 diesel timeline. Instead, refiners should be
              given the maximum flexibility under the diesel rule (until 2009) and then a
              further extension for gasoline.  EPA even notes that it has more flexibility
              on the gasoline timetable because gasoline does not raise the same
              serious concerns about negative impacts on exhaust controls or
              driveability.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 15,18


       Response to Comment 8.5.5(C)(2):

       Refer to Response to Comments under Issue 8.5.7 on Farmer Cooperatives,

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below.

              Issue 8.5.6: Higher Sulfur Cap

(A)    Supports the use of a 50 ppm cap (or average) for small refiners.

       (1)     Allowing a 50 ppm average for some time period would reduce capital and
              operating costs for small refiners.  Given that not all engines/vehicles
              would require ultra low sulfur fuel at first, this approach may not cause
              concerns for meeting the new emission standards. There may be some
              concern about the ability to blend the 50 ppm average fuel with other fuels
              to meet the 15 ppm cap, which suggests the better alternative may be an
              overall delay in the diesel fuel standards until it is clear what level the
              emission control technologies will require.

              Letters:

              Countrymark Cooperative (IV-F-191) p. 184

       (2)     To work, this option must not require that the small refiner fuel be blended
              down to the 15 ppm  level because the small refiners would have to
              contract with the large refiners and the large refiners would extract much
              of the economic value of the flexibility in the process. Also, because the
              small refiners would produce a small percentage of the overall volume,
              there is no need to impose limitations on the marketing of the 50 ppm fuel.

              Letters:

              Placid Refining Company, LLC  (IV-D-230) p. 4

       (3)     If this is adopted for small refiners,  EPA should adopt it for farmer co-ops
              as well.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 19
              National Council of Farmer Cooperatives (IV-D-351) p. 6-7

(B)    EPA should adopt a permanent sulfur standard that is slightly higher than the
       proposed sulfur standard for small refiners.

       (1)     Because small refiners represent such a relatively small share of the
              diesel fuel market, small refiner diesel fuel is likely to be diluted  in the
              course of distribution. If a slightly higher standard is imposed for smaller
              refiners, the potential for contamination is low since these refiners
              represent such a small portion of market share. Commenter does not
              recommend any specific "slightly higher" level that should be imposed on
              small refiners.  However, this commenter notes that cost increases
              dramatically and production  capacity declines dramatically below 30 ppm
              and  urges EPA to set a standard at or above this level.

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              Letters:

              Western Independent Refiners Association (IV-D-273) p. 6-7

       (2)     Commenter believes that a 25 ppm cap/15 ppm average for small refiners
              would provide significant cost relief to small refiners. Commenter
              recognizes that EPA may be concerned about circumstances where the
              small refiner is the major distributor for an area or for a particular end
              user, but notes that its product supplies only about 2% of the total diesel
              distribution handled by its pipeline carrier over a wide geographic area.

              Letters:

              Gary-Williams Energy Corporation  (IV-D-252) p. 8-9

       Response to Comments 8.5.6(A) and (B):

       Given the sulfur sensitivity of 2007 and later model year vehicles and their need
to operate on 15 ppm sulfur diesel fuel,  it is not possible to allow for a subset of the fuel
to be produced and sold higher than the 15 ppm  sulfur cap indiscriminately with fuel
meeting the 15 ppm cap. Based on our analysis of the distribution of diesel fuel we
believe that, with relatively minor changes and associated costs, the existing  distribution
system will be capable of adequately managing sulfur contamination during the
transportation of 15 ppm highway diesel fuel from the refinery to the end-user. We also
believe that the existing system is capable of handling two grades of highway diesel fuel
(500 ppm and 15 ppm sulfur cap) in a limited fashion during the transition period of the
sulfur program at acceptable cost with the addition of storage tanks at a fraction  of
distributor facilities. Furthermore, we believe that the other safeguards  within the
program, such as product transfer documents for tracking purposes and fuel  pump
labeling requirements, will mitigate the potential for misfueling of 2007 and later model
year vehicles with high sulfur diesel fuel.

(C)    Small refiners should not be required to produce the lower sulfur fuel at any
       time.

       (1)     Commenters provided no further  supporting information or detailed
              analysis.

              Letters:

              Frontier Oil Corporation  (IV-F-116) p. 204

       Response to Comment 8.5.6(C):

       Under today's program, small refiners have a menu of compliance options
available to them.  One option allows them to continue producing and selling  diesel fuel
which meets the current 500 ppm sulfur standard for four additional years, through May
31, 2010.  However, as a necessary condition of  this option, small refiners that choose it
must reasonably assure the existence of sufficient volumes of 15 ppm fuel in the
marketing area(s) that they serve. Additional relief beyond this, such as leaving the end

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DECEMBER 21, 2000	PAGE 8-110

date open, is not necessary to address these hardship circumstances.  Furthermore, it
causes continued concerns regarding the enforceability and environmental impact of
allowing 500 ppm diesel fuel to linger in the marketplace.

(D)    Allowing small refiners to produce 50 ppm diesel for a period of time as
       opposed to 15 ppm diesel may not be helpful since significant capital
       expenditures would also be required to reach 50 ppm.

       (1)    Commenters provided no further supporting information or detailed
             analysis.

             Letters:

             Gary-Williams Energy Corporation (IV-F-43)

       (2)    Although this could be included as one option, commenter strongly
             opposes the use  of this approach as the only or major form of small
             refiner relief.

             Letters:

             Countrymark Cooperative (IV-D-333) p. 11
             Gary-Williams Energy Corporation (IV-D-252) p. 8

       Response to Comment 8.5.6(0):

       Refer to Response to Comments 8.5.6(A) and (B), above.

             Issue 8.5.7: Farmer Cooperatives

(A)    Farmer cooperatives need additional flexibility to ensure that they may comply
       with the requirements in a feasible and affordable manner.

       (1)    The cumulative impact of the gasoline and diesel standards may drive
             farmer-owned cooperatives out of business. EPA should provide them
             with maximum flexibility  and more time for implementation of the proposed
             rules. One commenter recommended that farmer co-ops should be able
             to choose which desulfurization program to undertake first (gasoline or
             diesel).  This would require an extension of time for both the gasoline and
             diesel rules.

             Letters:

             Agricultural Retailers Association (IV-D-178) p. 4
             Cooperative Refining, LLC (IV-D-300) p. 2
             Farmland Industries  (IV-F-29)
             North American Equipment Dealers Association (IV-D-194) p. 3

       (2)    Small farmer-owned cooperative refiners can operate at a profit only in the
             absence of unreasonable regulatory restrictions.

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              Letters:

              Remster, John (IV-F-28)

       (3)     Farmer co-ops will have difficulty in obtaining engineering and
              construction assets to meet the rule.  First, large refiners have increased
              access to these assets because of their market power. Also, this problem
              is magnified in small, rural areas where farmer co-ops are located
              because the E&C providers prefer to concentrate efforts in large markets
              with multiple jobs with small distances.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 6-7

       (4)     Farmer co-ops should receive maximum compliance flexibility and be able
              to use any of the  flexibilities provided to small  refiners.

              Letters:

              Agricultural organizations as a group  (IV-D-265) p. 2
              Cooperative Refining, LLC (IV-D-300) p. 2
              National Council of Farmer Cooperatives (IV-D-351) p. 3-4

       (5)     Suggested that since the compliance costs for cooperatives  and small
              refiners would be significant - particularly when compared to the amount
              of assets and expected profits - cooperatives and other small refiners
              should be able to delay full implementation of the sulfur standards by up to
              five years.

              Letters:

              Countrymark Cooperative (IV-F-117) p. 74

       Response to Comments 8.5.7(A)(1)-(5), and (B) and (C):

       Section IV.C.2 of the preamble describes our rationale for not providing special
treatment for farmer cooperative refiners as a class.  In summary, we concluded that,
although farmer cooperatives are unique in some respects, especially  in their corporate
organization, they are not fundamentally different from other refiners in their ability to
comply with the diesel fuel sulfur program.

       Several commenters state that cooperative refiners are unique. We agree that
refiners  that  are also cooperative businesses are significantly different from  other refiners
in several respects.  The key aspect is that several avenues for accessing capital used
by many other refiners (in this case, the capital needed to carry out diesel fuel
desulfurization projects in their refineries) are  not available to, or are not practical for,
cooperative refiners.  In particular, farmer cooperatives, unlike publicly-held  corporations,
are generally not permitted to raise equity capital in the securities markets (that is, by
selling stock).  At the same time, the equity financing provided by the membership,

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usually a modest amount assessed from each member as a condition of membership,
provides a return for the members only to the extent that the members purchase the
products or services of the cooperative. Conventional investors that do not regularly
patronize the cooperative have little incentive to provide investment from the outside,
since their investment will not appreciate in value.

       For farmer cooperatives, money for capital projects is generally raised internally
as equity from members and as loans from banks or other financial institutions. In this
sense, farmer cooperative  refiners are similar to privately-held refining companies, which
are also unable to raise capital by selling public stock.  In the case of farmer
cooperatives, equity capital is raised either by assessment of the members or, more
often, by retaining a portion of the cooperative's earnings that would otherwise be
distributed to the members (on the basis of how much business they have done with the
cooperative). The amount of equity available to the cooperative, as well as the earning
prospects of the cooperative, usually determine whether financial institutions will lend
additional capital, how much money will be lent, and what terms the cooperative will have
to agree to.  For example, when a cooperative's equity is low and/or the farm economy is
stressed (and thus the prospects  for strong earnings performance by the cooperative are
diminished) cooperatives can have difficulty competing among other potential borrowers
for loans for large capital projects.

       While the unique structural and financial characteristics of farmer cooperative
refiners can present special challenges to these refiners, their status as cooperatives can
also provide advantages not shared by other refiners. The same federal and state laws
and regulations that place limitations on the financial avenues available to cooperatives
also tend to include special provisions only available to cooperatives. These include
special treatment for cooperatives under securities laws, antitrust laws,  contractual
marketing laws, and restrictive corporate entity laws, some or all  of which may come into
play in efforts to capitalize refinery desulfurization projects.

       Also, the relatively large regionally-based cooperatives that own two of the
cooperative refineries have a variety of other business interests as well.  This broader
business base,  which involves not only the refining, distribution, and marketing of fuels
but also a variety of other agricultural supply, processing, and related operations,  may
provide an advantage to these larger cooperative refiners as compared to competing
refiners that often have little or no business beyond refining and fuel marketing. Finally,
the three larger farmer cooperative refiners have developed several economic
relationships among one another (including joint refinery ownership, a joint refinery
operating agreement, and a joint fuel distribution and marketing organization) that
together create  greater options for financing than are available to many other refiners.

       Commenters express concern about some refiners having difficulty accessing
engineering and construction (E&C) resources.  We have designed the diesel  sulfur
program to  address this concern.  For refiners in the Geographic Phase-in Area in the
western U.S., where E&C concerns would have been expected to be the most serious,
we are providing special relief  provisions.  More generally, our analyses in Chapter 4 of
the RIA show that our program as designed tends to minimize the likelihood of serious
difficulties in contacting for E&C resources.

       In balancing these factors, we have not been able to clearly distinguish a unique

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economic burden that today's program will place on farmer cooperative refiners, as a
class, apart from other refiners, especially other refiners of similar size and/or those that
are privately-held companies.  However, we expect that the options we have
incorporated into the overall diesel sulfur program will be valuable to many refiners,
including farmer cooperative refiners.

       (6)     EPA should support financial assistance measures for farmer co-ops,
              should assist these co-ops with  securing financial assistance, and should
              ensure that agricultural producers can receive tax credits to offset diesel
              fuel price increases.  One commenter expressed support for a delay in the
              rule until the Administration can develop financial incentive plans similar to
              those used in Europe to help refiners move to a 50 ppm standard.  For
              example, the federal tax on on-road fuel could be dropped or reduced for
              gallons produced by co-ops, especially since  those gallons are used on
              local roads primarily  and not the highway system the tax supports.

              Letters:

              Agricultural organizations as a group (IV-D-265) p. 2
              Cenex Harvest States Cooperatives (IV-D-232) p. 3,17
              ID  Barley Commission  (IV-D-312) p. 2
              National Council of Farmer Cooperatives (IV-D-351) p. 5

       Response to Comment 8.5.7(A)(6):

       EPA does  not have the authority to offer financial assistance measures that might
subsidize farmer cooperative refiner investments in desulfurization. However, the U.S.
Department of Agriculture (USDA) has indicated an interest  and willingness to review its
existing authorities for the potential mechanisms to provide financial assistance to refiner
cooperatives that invest in desulfurization programs.

(B)    Farmer co-ops have unique concerns about the ability to raise capital that
       justify providing these co-op refiners special flexibility.

       (1)     Co-ops are prohibited from issuing  stock, and cannot take on outside non-
              co-op investors. Also, the farmers get no return on the investment, and it
              takes away scarce funds from projects designed to enhance farm income.
              Also, the farmers are both the owners and the customers, which means
              they pay  twice in the form of higher fuel price and reduced patronage
              from the co-op as owners that have to make the capital expenditures. As
              a demonstration of the concerns with this type of regulation on farmer co-
              ops, commenter notes that in 1979 there were 8 farmer co-op refiners and
              that by 1983, largely because of environmental regulation of refiners,
              there were only 4.  Commenter  notes that refiner co-ops: have different
              business structures;  are treated differently legislatively with special
              protections; are treated separately in regulatory contexts, such as the tax
              code; have received  separate judicial treatment (such as a case involving
              refunds of crude oil resales); are governed democratically in a closed
              membership setting; and are recognized politically as an integral part of
              rural America.

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             Letters:

             Cenex Harvest States Cooperatives (IV-D-232) p. 7,16-17
             National Council of Farmer Cooperatives (IV-D-351) p. 4-5

       Response to Comment 8.5.7(B)

       See response to comments 8.5.7(A)(1)-(5).

(C)    A benefit cost analysis needs to consider negative impacts on farmer co-ops
       that are dependent on petroleum revenues to stay in business.

       (1)    Small co-ops earn nearly 50% of their total farm supply sales from
             petroleum products and even the largest co-ops earn an average of 27%.

             Letters:

             Cenex Harvest States Cooperatives (IV-D-232) p. 9

       Response to Comment 8.5.7(C):

       See response to comments 8.5.7(A)(1)-(5).

(D)    EPA needs to address concerns that there will be fuel dumping on the nonroad
       market that will reduce margins for farmer co-ops, depress earnings, reduce
       patronage, and potentially make farmer co-ops economically non-viable.

       (1)    Refiners may be tempted  or forced to dump fuel on the nonroad market to
             delay converting to ultra-low-sulfur fuel, to avoid altogether the capital
             costs of producing ULSD, or to handle an off-spec batch of fuel.  In
             addition, small refiners (or large refiners under a phase-in approach) that
             have the ability to continue to produce 500 ppm fuel for on-road use may
             decide to dump that fuel on the nonroad market. Farmer co-ops would
             then face reduced margins and have less ability to pay for converting  to
             ULSD. (See also Issue 8.5.8, Point (A).)

             Letters:

             Cenex Harvest States Cooperatives (IV-D-232) p. 8-9,15

       Response to Comment 8.5.7(0):

       See Response to Comments 8.5.8(A)(1) through (4).

(E)    Some farmer co-ops agricultural organizations expressed concern over the
       effects on agriculture of supply disruptions and price spikes.

       (1)    Commenters provided no  supporting information or detailed analysis.

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              Letters:

              Cenex Harvest States Cooperatives (IV-F-191) p. 102
              Countrymark Cooperative (IV-D-125) p. 2, (IV-F-30)
              Farmland Industries (IV-F-29)
              Remster, John (IV-F-28)

       (2)     Farmers need fuel at a fair market price, and at secure product volumes at
              particular times of the year. The difficulty of achieving 15 ppm fuel all of
              the time puts farmers at risk, and farmers already struggle to maintain
              economic viability.  Farmer co-ops will struggle to meet the proposal and
              continue to serve farmers' seasonal needs for a secure fuel supply
              because of the high desulfurization costs,  the difficulty of consistently
              refining below the 15 ppm cap, the  inevitable reduction in supplies from
              diverting hard to treat feedstocks and off-spec product, and the
              uncertainties about the desulfurization control technologies.

              Letters:

              Countrymark Cooperative (IV-D-333) p. 12-13

       (3)     EPA's requirements for ultra low sulfur diesel could have an adverse
              impact on farmers since the proposal could increase the threat of supply
              disruptions in rural areas and force refiners to produce more costly low
              sulfur fuel for farm and other nonroad uses due to distribution limitations.
              The indirect costs to farmers would also be high due to their reliance on
              trucking to market products.

              Letters:

              Agricultural Retailers Association, et. al. (IV-D-148) p. 1
              ID Barley Commission (IV-D-312) p. 1
              NE Farm Bureau Federation  (IV-D-153) p. 1
              National Grange of the Order of the Patrons of Husbandry (IV-D-181) p. 1

       Response to Comment 8.5.7(E):

       The commenters express concern about supply disruptions and  price spikes,
especially in rural areas.  In our analyses of the feasibility and costs of the diesel fuel
sulfur program (Chapters 4 and 5 of the RIA), we provide  our rationale for concluding
that under the program as designed, refiners will make sufficient supplies of low sulfur
diesel fuel available in all parts of the country at reasonable prices.  We thus do not
expect that other problems related  to supply shortages, like spikes in fuel prices, will
occur.

       Furthermore, the commenter appears to be inconsistent in expressing concern
about a shortage in the fuel supply to farmers. The commenter suggests on the one
hand that there could be a shortage of highway diesel fuel due to "dumping" into the
nonroad fuel market while also suggesting a shortage of the nonroad diesel farmers rely
on for their agricultural operations.

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(F)     The proposed rule will be financially burdensome to small refiner co-ops that
       specialize in fuels for the agricultural industry, and as a result, will force added
       costs onto the agricultural sector.

       (1)     Due to the distribution system being able to only handle one type of
              diesel, the co-op refiners will be forced to invest significant resources to
              produce the ultra-low sulfur fuel or face high costs in duplicating their
              systems for the production of different types of diesel fuel. Even if refiners
              and retailers finance a dual distribution system, pump prices will increase
              dramatically and the small co-op refiners would face huge capital
              expenditures and a potential loss of revenue, customers, and
              farmer/owners.  Some commenters suggested that EPA withdraw the rule
              until the agency has had time to consider the effects of this proposal on
              small refiner co-ops.  Another commenter suggested that allowing refiner
              co-ops to  continue selling 500 ppm fuel may help avoid  having to provide
              dual fuels. The commenter  notes that farmers buy HDV and HD
              equipment that lasts 25-30 years,  far longer than on-highway HDV. Thus,
              there is a  need for farmer co-ops to maintain the current nonroad diesel
              and farm fuel distribution system for a long period  of time. This also
              justifies giving these co-ops  more  time to comply.

              Letters:

              Agricultural Retailers Association  (IV-D-178) p. 3
              Agricultural Retailers Association, et. al. (IV-D-148) p. 1
              Cenex Harvest States Cooperatives (IV-D-232) p. 11-12
              Countrymark Cooperative (IV-D-125) p. 2
              North American Equipment Dealers Association (IV-D-194) p. 3

(G)    EPA's suggestion that refiners which ensure that low  sulfur diesel is available
       at retail could sell a larger percentage of 500 ppm fuel as on-road fuel, provides
       farmer co-ops no additional flexibility because those co-op refiners already are
       set up as a complete system from refiner through consumer.

       (1)     Commenter provides no further analysis on this point.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 14

       Response to Comments 8.5.7(F) and (G):

       Under the highway diesel fuel sulfur program as designed, we agree with the
commenters that some refiners may choose to  produce some 500 ppm fuel while others
will choose to produce only 15 ppm fuel, depending on the economic interests of the
organization at the time.  As discussed  in Chapter 5 of the RIA, we expect the costs to be
reasonable  (4-5 cents per gallon).  Regarding the comment that it could be beneficial for
refiners (specifically farmer cooperative refiners) to avoid producing two grades of diesel
fuel by being allowed continue to produce and sell 500 ppm diesel fuel, we agree.  The
temporary compliance option allows a refiner to seek credits to comply  and delay

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DECEMBER 21, 2000	PAGE 8-117

production of 15 ppm for some time. Regarding the comment that farmer cooperative
refiners need to maintain the current nonroad diesel distribution system, the diesel sulfur
program allows this to be done since nonroad diesel fuel is not covered by the program.

       As discussed in the response to Comments 8.5.7(A)(1)-(5), we recognize that the
program will create economic challenges, but we do not believe these challenges  will be
disproportionately greater for cooperative refiners than for other refiners.

       Similarly, the diesel fuel sulfur program allows parties in the distribution system to
decide whether they can most economically distribute one or the other grade of diesel
fuel, or both, during the early years of the program.

(H)    Disagrees with EPA's analysis of the relationship between price increases, cost
       savings, and pressures to convert to a single low sulfur diesel, particularly as it
       applies to farmer co-ops.

       (1)     First, price markups result in profits, not cost savings.  Profits made at
              each level of production/distribution could be used for capital investment
              at that part of the system, but would not be distributed. Second, local co-
              ops would not enjoy any benefits out of this process. The farmer is the
              owner of both the refinery and the distribution system, and is the buyer of
             the product. To mark up prices to pay for investments is a double  penalty
             to farmers. Finally, commenter disagrees with EPA's assumption that if
             the cost savings were not sufficient "the entire system would convert to
              low sulfur diesel."  More realistically, a number of refiners will opt to
              produce just for the nonroad market, and if too many choose this option,
             the fuel dumping will work to the detriment of the farmer co-op.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 10-11

       Response to Comment 8.5.7(H):

       The issues raised by the commenter are incorporated in our economic analyses
in Chapters of the RIA.  Our analyses  recognize the refiners will be making decisions on
whether to produce some 500 fuel or pursue a single fuel strategy.  Similarly, we
recognize the fact that downstream parties, including local cooperatives that sell diesel
fuel, have the option of providing one or two grades of diesel fuel. Our economic
conclusions about the program consider these and many other factors. Regarding
"dumping" of diesel fuel into the nonroad diesel market, see our response to comments
8.5.8(A)(1) through (4).

              Issue 8.5.8:  Other Small Refiner Issues

(A)    EPA should ensure that small refiners are allowed to continue sales of higher
       sulfur diesel fuel to the nonroad market.

       (1)     Commenters provided no further supporting information or detailed
              analysis.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-118

              Letters:

              American Farm Bureau Federation  (IV-F-5)

       (2)     Commenters asserted that small refiners that have historically made
              predominately nonroad diesel, will be facing closure if larger oil companies
              choose to dump or produce large quantities of diesel fuel for the nonroad
              market.  EPA should prohibit dumping into the nonroad market.  In written
              comments, one commenter suggested that one option would be to limit
              sales of high sulfur diesel into the nonroad market to a refiner's current
              volume or some appropriate baseline. Any additional sales would have to
              be of 15 ppm fuel supplied to the nonroad market. Small refiners would
              be exempt from this requirement. This option would preserve an nonroad
              market for small refiners and ensure that the large refiners provide
              adequate supply to the on-road market. In follow-up written comments,
              the commenter further noted the need for this type of provision given the
              strong possibility of refiners choosing to dump light cycle oil (LCO) into the
              nonroad market. The commenter notes that, based on the amount of
              LCO stocks, over 12% of current on-road diesel could be shifted to the
              nonroad market plus shifts associated with increased pipeline transmix.
              This result will cause severe disruptions in the on-road market while
              driving down prices in the nonroad market so that small refiners who rely
              on the nonroad market are driven out of business. In the follow-up
              comments, the commenter also stated that, based on legal advice it had
              received, EPA should be able to include this type of provision in  the final
              rule as a logical outgrowth of the proposal, and that the CAA is broad
              enough to allow for this type of provision as part of setting a fuel standard.
              A second option would be to regulate nonroad diesel to the  on-road
              specification as soon as possible and  in one step, and then  exempt small
              refiners from that requirement for a period of time. As an example, the
              nonroad spec could be set at 15 ppm in 2008,  with small refiners exempt
              until 2012. If this example was used, some form of an anti-dumping
              option would be needed in the 2006-2008 time period.  Finally, the
              commenter notes that  the nonroad change needs to be a single step
              because the pipelines  cannot handle ultra low sulfur on-road plus two
              different nonroad diesel grades.

              Letters:

              Cenex Harvest States  Cooperatives (IV-F-191) p. 102
              Countrymark Cooperative (IV-D-333) p. 10-11
              Frontier Oil Corporation  (IV-F-116) p. 204 (IV-F-191) p. 93
              Gary-Williams Energy  Corporation  (IV-D-252) p. 6-7, (IV-G-25) p. 1-2
              U.S. Oil & Refining Co. (IV-F-190) p. 159
              Western Independent  Refineries Association (IV-F-190) p.  144

       (3)     Commenters suggested a higher nonroad diesel standard should be
              maintained to minimize fuel costs to farmers and to provide  refiners with
              flexibility.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-119

              Letters:

              Countrymark Cooperative (IV-F-117) p. 74
              Gary-Williams Energy Corporation (IV-F-43)

       (4)     Commenter states that instead of the 500 ppm option, a limit on the
              amount of nonroad diesel large refiners could produce would enable small
              refiners to market all of their diesel to the nonroad market. This approach
              could be enhanced by providing incentives to government entities, such as
              the military, to purchase nonroad diesel from small refiners.

              Letters:

              Placid Refining Company, LLC  (IV-D-230) p. 3

       Response to Comment 8.5.8(A):

       As discussed under Comments 8.1.1(A)-(C), we think a comprehensive view of
the likely actions that refiners will take in response to the diesel sulfur program indicates
that refiner economics will avoid any excessive "dumping" of diesel fuel into the nonroad
diesel market.  We expect there will be some downgrading of highway fuel due to
contamination and that there will be some shifting of production from highway diesel to
nonroad diesel. To the extent these occur, other refiners will shift from nonroad diesel
into highway diesel production. These shifts will be an natural result of the market
optimizing itself to comply with the standards at the least cost. However, as discussed in
our response to Comments 8.1.1(A)-(C), the markets for both highway and nonroad
diesel production will stay in balance.

       Because of this conclusion, we have not considered regulatory provisions to
prevent these dynamics. Regarding the comments relating  to regulating off-road diesel
fuel, this rule only applies to highway diesel fuel and does not affect off-road fuel.

       Issue  8.6: Other Small Business Issues

(A)    Higher diesel fuel costs will have an adverse impact on small businesses.

       (1)     Commenters provided no further supporting information or detailed
              analysis.

              Letters:

              American Petroleum Institute (IV-F-182, 117) p. 161
              National Federation of Independent Business (IV-D-243) p. 2

       (2)     The slim profit margins in the trucking industry, and the large number of
              miles driven, mean that a small change in fuel costs can have a large
              impact on viability of a trucking business.  EPA has estimated a 4
              cents/gallon impact, but recent experiences with RFC document that price
              increases associated with regulatory requirements can be far greater than
              EPA estimates. One commenter (ATA) provided significant discussion of

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-120

             this issue including data on the revenues and profit margins of smaller
             carriers, and the potential impact of higher fuel costs to these small
             businesses. Another commenter also raised concerns about price spike
             impacts on small business truckers, and noted that even short term spikes
             can have disastrous consequences for these truckers.

             Letters:

             American Truck Dealers  Line Representative Committee (IV-F-191) p.
             126
             American Trucking Association  (IV-D-269) p. 24-25, (IV-F-191) p. 42
             Big West Oil, LLC  (IV-D-229) p. 2

       Response to Comment 8.6(A):

       Refer to Response to Comments 4.1 (E)(2), (16), and (17), above, and Chapter V
of the RIA regarding cost information.  We are confident that the menu of options
available to small refiners,  as well as the broader program flexibilities available to all
refiners, under today's program will provide sufficient assistance to small refiners with
program compliance (see Response to Comments 8.5.2, above).  Furthermore, these
options are  necessary in order to provide for the earliest possible implementation of the
program. Without this flexibility, the start of the program may have to be delayed,
resulting in a much, much greater loss in environmental benefits.

(B)    If emissions reduction technologies degrade powertrain performance, truckers
       will be more likely to drive their older vehicles longer, which may have an
       adverse economic impact on new-truck dealers.

       (1)    Commenters provided  no further supporting information or detailed
             analysis.

             Letters:

             American Truck Dealers  Line Representative Committee (IV-F-191) p.
             126

       Response to Comment 8.6(B):

       The aftertreatment is not expected to result in a fuel economy or power
disbenefit. The devices, by themselves,  will not have a significant impact on engine
power output. We anticipate that any fuel economy cost due to the aftertreatment
systems will at least be offset by engine modifications, if not improved over non-
aftertreatment engines. The extremely high NOX reduction efficiency of the NOX adsorber
will allow the fuel injection timing to be advanced to a point where at least a 100 percent
fuel economy benefit will be realized.  Please refer also to our responses to issues 5.4(A)
and 5.4(B).
(C)    EPA should provide grants and funds to small businesses leading the
       development of evolving technologies.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 8-121

       (1)     Commenters provided no further supporting information or detailed
              analysis.

              Letters:

              Transportation Techniques  (IV-F-191) p. 246

       Response to Comment 8.6(C):

       While we offer grants for research and development purposes, corporate grants
such as these are already possible through other programs funded by the federal
government through SBA, DOE, USDA, and other agencies.

(D)    EPA fails to recognize the enormous burden and cost to small dealers that will
       be incurred as a result of operational issues and the potential contamination of
       low sulfur diesel supplies.

       (1)     EPA states that to prevent contamination, dealers would have to drain
              tank trucks completely of higher sulfur fuel and purge delivery hoses prior
              to their use for the ultra-low sulfur fuel.  These practices along with the
              inevitable contamination concerns may prove to be an excessive burden
              to small dealers. To minimize contamination, dealers could be forced to
              purchase new vehicles, hoses and other equipment. EPA should examine
              this  issue more closely and  should recognize that small businesses in the
              distribution sector face many of the same problems as small refiners.

              Letters:

              New England Fuel Institute  (IV-D-296) p. 4

       Response to Comment 8.6(D):

       We believe  that by careful and consistent observation of current industry
practices to limit contamination,  tank truck operators will be capable of adequately
limiting sulfur contamination  during the distribution of 15 ppm highway diesel fuel. These
practices include leveling the truck prior to draining, allowing sufficient time for the tank to
drain completely, and purging the delivery hose of residual product prior to the delivery of
15 ppm highway diesel fuel.  Given that these practices are not new, we do not believe
that there will be significant costs associated with ensuring that they are properly
observed. Tank truck operators may need to instruct their employees regarding that
necessity of observing these practices.  However, this could be readily accomplished at
minimal cost. Although our program may encourage the existing trend towards the use
of dedicated tank compartments and delivery systems on tank trucks for the delivery of
highway diesel fuel, it will not force the  use  of such dedicated equipment. Given this, we
believe that there are no unique concerns related to the impact of our program on small
businesses in the distribution sector. Please refer to section IV.D.3 in the RIA for
additional discussion regarding the additional measures we expect tank truck operators
will need to take to  limit sulfur contamination during the distribution  of 15  ppm highway
diesel fuel.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 9-1

ISSUE 9:  RELATIONSHIP TO TIER 2 RULE

(A)     EPA's July 2006 compliance date for the fuel standard should be advanced to
       coincide with the phase-out of the higher test bins in the Tier 2 program.

       (1)    Commenters provide no further supporting information or detailed analysis.

             Letters:

             DaimlerChrysler (IV-D-284) p. 4

(B)     Clean diesel fuel for the 2004 MY is a prerequisite to meet the Tier 2 standards
       and therefore, clean diesel fuel should be made available in the marketplace
       much sooner than  2006. (See related comments in Issue 4.3.1.)

       (1)    Tier 2 generally requires all light duty diesel products to meet the same
             emission standards as gasoline vehicles beginning in 2003. However, with
             the July 2006 introduction date for cleaner fuel, light-duty diesel vehicles are
             excluded from the U.S. market because of the certainty of poisoning of
             emission control hardware.

             Letters:

             DaimlerChrysler (IV-D-284) p. 4

       (2)    EPA cannot determine the feasibility of achieving its Tier 2 standards with
             advanced control technology by evaluating only the level and timing of diesel
             sulfur fuel changes for heavy duty applications. The HDE standards would be
             effective for the 2007 model year and the low sulfur diesel fuel necessary to
             achieve those standards would be required by mid-2006 and EPA has
             maintained that for Tier 2 vehicles, there is no need to make ultra-low sulfur
             diesel available prior to 2006 given the flexibilities provided by the phase-in
             schedule. However, in its final Tier 2 Rule, the only support that EPA
             references for its position that the Tier 2 interim standards are feasible within
             the bin structure of the rule and without further reduction in diesel fuel sulfur
             levels is that Cummins Engine Company has publicly agreed with EPA's
             assessment.  EPA has failed to satisfy its burden under the CAA to
             demonstrate that the level and timing of its proposed fuel change will render
             its Tier 2 standards feasible by enabling advanced exhaust emissions control
             technology to achieve those standards. EPA should implement the cleaner
             diesel fuel program beginning in 2004. This would allow manufacturers to
             qualify light duty diesel vehicles under Tier 2 standards and to produce
             sufficient vehicles in the lower bins to yield acceptable fleet emission
             averages.

             Letters:

             Volkswagen (IV-D-272) p. +5-6

(C)     The availability of ultra low sulfur diesel fuel capped at 5 ppm is necessary to
       ensure that Tier 2 light duty diesel engines and vehicles can comply with the

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 9-2

       standards.

       (1)     Without significant sulfur reductions, the Tier 2 standards cannot be achieved
              with diesel-fueled engines. The NOX and PM standards in the highest bin
              under the Tier 2 rule are not even approachable for diesel engines without the
              availability of this ultra low sulfur fuel.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 14-15

       (2)     EPA's proposed sulfur limit is only the first step toward "enabling" highly
              efficient advanced technology for light duty diesel vehicles.  EPA has noted
              the level above which sulfur content would be disabling or significantly
              impairing to the emission control technology. However, EPA has not
              demonstrated the feasibility of its  15 ppm sulfur cap for purposes of enabling
              those technologies to meet its Tier 2 standards. The Tier 2  standards pose
              significant challenges for light duty diesel vehicles and the fundamental
              problem will be achieving the NOX and PM standards at the  same time.
              EPA's analysis fails to demonstrate that, with a 15 ppm sulfur level, the high
              efficiencies necessary to comply with the Tier 2 standards can be maintained
              for the useful life of the technologies.

              Letters:

              Volkswagen  (IV-D-272) p. +3-4

       (3)     The use of light duty diesel trucks is expected to rise significantly in the
              coming years. The number of diesel engines installed in light duty trucks was
              up nearly four-fold between the 1998  and 1999 model years and will soon
              surpass a half million annually if current trends continue.  These trends
              underscore the importance of ensuring  that ultra low-sulfur diesel fuel is
              available nationwide, which would allow these vehicles to meet the Tier 2
              standards and would contribute to improved fuel economy.

              Letters:

              DAW (IV-D-215)p. 6-7

       Response to Comments 9(A). (B). and (C):

       As discussed in the preamble, the basis for the diesel fuel sulfur provisions of this
rule is the need for heavy-duty diesel engines with new emission control systems to meet and
maintain the new emission standards. Although the fuel will also be  available for light-duty
diesel vehicles, the availability of low sulfur diesel fuel for these vehicles, or the feasibility of
these vehicles meeting the Tier 2 standards, are not relevant to this rule.

       Our feasibility analyses as presented in the Tier 2 rule (65 FR 6697, February 10,
2000 remain our policy regarding light-duty diesel vehicles.  We have not reexamined or
reopened the issues regarding the Tier 2 standards in this rule. See also our Response to
Issue 12.2(F).  We note that we are  modifying the test fuel regulations in §86.113-07 to allow

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DECEMBER 21, 2000	PAGE 9-3

some low sulfur diesel test fuel to be used prior to 2007.

(D)    Supports the early introduction of low sulfur diesel to accommodate light duty
       diesel vehicles under Tier 2.

       (1)     The early introduction of low sulfur diesel is similar to a phase-in but focuses
              on the period before the regulatory target, stimulates the market, and helps to
              establish demand for the new fuel.  To encourage early introduction, EPA
              should allow States to require clean  fuels before 2006, encourage public and
              private fleet managers to specify ultra-clean fuels for their diesel powered
              vehicles, undertake a high visibility public education campaign prior to 2004,
              and encourage consumers to ask for and use cleaner fuels before 2006 by
              requiring stations to label fuel quality at the pump.

              Letters:

              Alliance of Automobile Manufacturers (IV-D-262)  p. 10

       Response to Comment 9(D):

       Our diesel fuel program offers credits to encourage the early production and use of
low sulfur diesel fuel.  We believe this provision, in addition to the market pressure that the
introduction of new technology diesel engines will create, offer sufficient encouragement for
the production of low sulfur diesel fuel as early as possible.  There are indications today that
refiners will be producing low-sulfur fuel earlier than required.  For example, BP/Amoco is
providing 15 ppm fuel on a limited basis today in California as a part of the ARCO EC-D
demonstration program.

(E)    EPA must set an effective date for implementing the new diesel standards that
       does not coincide or overlap with the  period in which refiners are making major
       modifications to accommodate the Tier 2 requirements.

       (1)     One commenter suggests a regional approach to eliminate the overlap
              between gasoline and diesel rules, and the emissions impacts of such an
              approach can be offset by other means. All refineries in an area must be
              given additional time to avoid the overlap between gasoline and diesel
              standards, regardless of their size, affiliation or small business status.

              Letters:

              Chevron (IV-D-247) p.  *2, 5

       (2)     Overlapping schedules for the  gasoline and diesel projects will increase the
              costs of both programs, as many of these projects will compete for scarce
              resources. A major issue will be the procurement of reciprocating
              compressors required for the new hydrotreaters from the five companies
              worldwide that make them, because these companies will need to
              simultaneously supply them for low sulfur projects in Europe and both the Tier
              2 and diesel rule in the  U.S. The same holds true for the design and
              procurement of thick-walled reactor vessels. One commenter noted that the
              NPC Study predicts "disaster" to stem from scheduling the low sulfur diesel

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 9-4

              fuel to begin during the gasoline sulfur phase down period. If diesel fuel
              sulfur reductions follow gasoline sulfur reductions in a timely manner, the
              resources of the process industries can be employed in an efficient manner
              without excessive costs and risk of either major system disruption or the
              necessity to weaken the integrity of the environmental planning and
              investment system by granting special emergency waivers.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 55-58
              Citgo Corporation  (IV-D-314) p. 6
              ExxonMobil (IV-D-228) p. 3,17
              Koch Industries (IV-D-307) p. 4
              National Petrochemical & Refiners Association (IV-D-218) p. 2,15
              Phillips Petroleum Company (IV-D-250) p. 5
              Western Governors' Association (IV-G-41) p. 2

       Response to Comment 9(E):

       Our diesel fuel  sulfur program is designed to minimize adverse interactions between
this program and the gasoline sulfur program that may occur for a refiner. By adopting these
diesel fuel requirements now, we allow the refining industry significant lead time to
accommodate changes to both gasoline and diesel fuel production in an efficient,
coordinated manner. The implementation date of the diesel program is set more than 2
years after the start date of the gasoline program. We expect that refiners will make full use
of the gasoline program phase-in provisions and the diesel fuel temporary compliance option
to organize the scheduling their desulfurization projects in their best economic interest.

       As discussed elsewhere in this document and in the preamble, we believe that the
dates of the requirements and the options available to refiners to stagger their diesel and
gasoline projects will permit a smooth introduction of low sulfur gasoline and low sulfur diesel
fuel. In Chapter 4 of the RIA, we specifically analyzed the capital, engineering, and
construction demands of the gasoline and diesel program together, incorporating the various
options in both programs, to conclude that the burden on refiners will not be excessive.

       In addition, refiners that are granted small refiner status and refiners marketing
gasoline in the Geographic Phase-in Area have additional options in the scheduling of their
gasoline and diesel programs. As described in the preamble and elsewhere in the
rulemaking documents, these refiners may choose to extend their interim gasoline sulfur
standards if they produce all of their diesel fuel at  15 ppm by 2006.

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ISSUE 10: [RESERVED]

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ISSUE 11:  NONROAD FUEL/VEHICLE STANDARDS

(A)    EPA should apply the proposed fuel and engine/vehicle standards to nonroad
      sources as well, since they contribute significantly to ozone and PM emissions.

      (1)    Commenters provided no supporting information or detailed analysis.
             Approximately 60 private citizens made this comment.

             Letters:

             20/20 Vision (IV-F-58)
             American Truck Dealers Line Representative Committee  (IV-F-191) p. 126
             CA Air Resources Board  (IV-F-190) p. 13
             CA Environmental Protection Agency (IV-F-190) p. 18
             CA Natural Gas Vehicle Coalition  (IV-F-190) p. 135
             CO Public Interest Research Group  (IV-F-191) p. 219
             Chuang, Henry (IV-F-117) p. 265
             Chung, Payton, et. al.  (IV-D-133)
             Citizens for a Better Environment  (IV-F-3)
             Clean Air Agency (IV-D-207) p. 2
             Coalition for Clean Air (IV-F-190) p. 177
             Coalition on the Environment and Jewish Life (IV-F-184)
             Community Coalition for Change (IV-F-190) p. 74
             Consumer Policy Institute, NY (IV-F-116) p. 305)
             DaimlerChrysler (IV-D-284) p. 6
             Economic & Social Justice (IV-F-117) p. 236
             Engine Manufacturers Association (IV-F-33, 174, 116) p. 43 (IV-F- 117) p. 39
             (IV-F-191) p. 39
             Environmental Defense (IV-F-56,  117) p. 81
             Environmental Law & Policy Center of the Midwest (IV-F-6)
             Fletcher, Robert E.  (IV-F- 117) p. 175
             Flowers, Bobbie (IV-G-67)
             Freechild, Aquene, et. al.  (IV-G-60)
             GA Public Interest Research Group  (IV-F-117) p. 268
             IL Public Interest Research Group (IV-F-18)
             Mayor and citizens of Fort Collins, CO  (IV-F-191) p. 211
             NH DES  (IV-D-150)p.  1
             NY DEC  (IV-F-52)
             NYDEP (IV-F-116) p. 73
             NY State Attorney General's Office (IV-F-61)
             Natural Resources Defense Council  (IV-F-75, 190) p. 102 (IV-F-191) p. 68
             Ozone Transport Commission (IV-F-55)
             PADEP (IV-D-100)p. 1
             Packard, Josh (IV-G-54)
             Pandey, Stacey (IV-F-117) p. 274

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             Pecoraro, Elizabeth  (IV-F-117) p. 117
             Riggles, Ruth, et. al. (IV-D-102)
             Smith, Bryan R., et. al. (IV-D-105)
             South Coast Air Quality Management District (IV-F-185)
             TN Environmental Council (IV-F- 117) p. 154
             Tseng, Joyce, et. al. (IV-D-03)
             Wl Department of Transportation (IV-D-241) p. 1
             Wilderness Society (IV-F-117) p. 217
             Williams, Mary, et. al. (IV-D-122)

       (2)    Commenters recommended that EPA accelerate its program development
             strategies for nonroad diesel engines and fuels and adopt engine standards
             and a sulfur cap for nonroad heavy-duty diesels and fuel that are equivalent
             to those for on-road heavy duty diesels.  The commenters noted that EPA
             should use the 2001 technology review to strengthen the nonroad diesel
             program.

             Letters:

             CA Air Pollution Control Officers' Association (IV-D-109) p. 2
             CAPIRG (IV-F-190) p. 280
             CTDEP  (IV-D-142) p. 1
             City of Portland (IV-D-198) p. 2
             City of Seattle  (IV-D-297) p. 2
             IA Department of Natural  Resources (IV-D-201) p. 1
             IL Environmental  Protection Agency (IV-D-193)  p. 2, (IV-D-308) p. 2
             MDDOE (IV-D-163)p. 1
             Metropolitan Washington  Air Quality Committee  (IV-D-34) p. 2
             NY DEC (IV-D-239) p. 3
             NY State Attorney General's Office  (IV-D-238) p. 1
             NYC DEP (IV-D-209) p. 2
             ORDEQ (IV-F- 191) p. 164
             Ozone Transport Commission  (IV-D-249) p. 3
             STAPPA/ALAPCO (IV-D-295) p. 27-28, (IV-F-32, 78, 117) p. 29 (IV-F- 191)
             p. 32
             Stuckey, Stephanie (IV-D-182) p. 1
             TX Natural Resource Conservation  Commission (IV-G-3) p. 3
             Tri-Met  (IV-D-96) p. 1
             Wl DNR  (IV-D-291)p. 2

       (3)    One commenter suggested that the same emission goals can be met if both
             on road and off road diesel are simultaneously brought into compliance in
             2008.

             Letters:

             WY Refining Company (IV-F-191) p. 58

       (4)    One commenter requested that EPA clean up the ships and trains that are

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RESPONSE TO COMMENTS DOCUMENT
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              responsible for a large percentage of diesel emissions in the Los Angeles
              Basin.

              Letters:

              Stewart, Jim  (IV-F-170)

       (5)     One commenter noted that the relatively reasonable cost estimates of the
              proposed rule speak in favor of extending the standards to nonroad diesels.

              Letters:

              Environmental Defense (IV-F-169)

       (6)     The technological advances that will occur in order to meet future, more
              stringent highway heavy-duty diesel standards will carry over to nonroad
              equipment, but only if very low sulfur diesel fuel is available for this sector as
              well.

              Letters:

              NESCAUM (IV-D-315)p. 12

       (7)     Nonroad diesel engines contribute as much as 40% to total diesel particulate
              emissions.

              Letters:

              American  Lung Association  (IV-D-270) p. 26
              Consumer Policy Institute (IV-D-186) p. 3

       (8)     Commenter noted that nonroad heavy duty diesel engines emit the same
              total amount of pollution and should be controlled to a similar degree.

              Letters:

              Northwest District Association (IV-D-117) p. 2
              OR Toxics Alliance  (IV-D-175) p. 2

       Response to Comments 11 (A)(1) through (8):

       We agree that nonroad sources are significant contributors to ozone and PM
emissions. We have promulgated two final rules for nonroad diesel engines (See 59 FR
31306, June 17, 1994 and 63 FR 56968, October 23, 1998) and will be reviewing these
standards in the 2001 technology review. In particular, we will be reviewing the need for
and appropriateness of more stringent PM standards for these engines and the need for
more stringent sulfur limitations on nonroad diesel fuel. We have made  no decisions on
these issues, which are not raised in this rule. We believe that any new  requirements for
nonroad diesel engines and fuel would need to be carefully considered in the context of a
proposal specifically addressing nonroad diesel engine emission standards.

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       We have also promulgated standards for marine engines (see e.g. 64 FR 73300,
December 29, 1999) and locomotive engines (63 FR 18978 April 16, 1998) and will
continue to review emissions from such engines in the future. We have also worked with
California to attempt to address emissions from those engines in Los Angeles.

       We neither proposed nor will we promulgate at this time any regulations on
nonroad engines or fuel.  The many issues connected with any rulemaking for nonroad
engines and fuel warrant serious attention, and we believe it would be premature today
for us to attempt to raise potential resolutions to them.

(B)     EPA should promptly address the need for low sulfur nonroad diesel fuel.

       (1)     EPA appears to be planning to implement a Tier 3 nonroad regulatory
              program that will drive 2004 like on-highway engine technologies to the
              nonroad market. EPA should assure that nonroad engines operate in-use on
              the same or better fuel quality as the corresponding on-highway engines with
              the same or similar technologies.  Nonroad engines that use EGR systems to
              control emissions will require low sulfur diesel fuel to ensure the effectiveness
              of emission reductions. EPA and CARB representatives have indicated an
              interest in moving to aftertreatment forcing emission limits and skipping the
              intermediate step of EGR forcing emission limits. If this approach is taken,
              then the importance of requiring the availability of low sulfur nonroad fuels is
              underscored even further.  Given these concerns, EPA should establish a
              clear roadmap for the future of nonroad engine regulations and the nonroad
              diesel  fuel sulfur level.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 18-19

       (2)     EPA should lower the sulfur level in nonroad diesel fuel to help reduce the
              potential contamination and enforcement concerns associated with managing
              the distribution of two types of diesel fuel.

              Letters:

              Association of International Automobile Manufacturers (IV-D-259) p. 2
              Engine Manufacturers Association (IV-D-251) p. 22
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 37

       (3)     Any clean fuel standard promulgated in this  rulemaking should be extended
              to nonroad diesel fuel as well. It would be more  costly and inefficient to
              reduce sulfur in on-road and nonroad diesel in two separate steps. The
              application of this standard to nonroad fuel will facilitate technological
              development in emission control similar to that occurring for onroad sources
              and would lead to significant environmental benefits.

              Letters:

              Environmental Defense (IV-D-346) p. 13-14

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 11-5

              International Truck & Engine Corp.  (IV-D-257) p. 12
              National Automobile Dealers Association (IV-D-280) p. 3

       (4)     Commenter asserts that without knowing the sulfur level for nonroad fuel,
              commenter cannot quantitatively assess the total refining costs, other than to
              state that EPA's prediction of the costs for on-road diesel are a factor of 2-3
              times too  low.

              Letters:

              British Petroleum (IV-D-242) p. 6

       (5)     Nonroad diesel emissions are significant, and an integrated on and nonroad
              rule will help communities sustain air standards.

              Letters:

              MD DOE  (IV-D-59) p. 1
              Metropolitan Washington Air Quality Committee (IV-D-58) p. 2

       Response to  Comments 11(B)(1)-(5):

       See Response to Issue 11 (A) and Response to Issue 8  regarding contamination
issues. The distillate fuel stream is currently divided into on-highway diesel fuel and
nonroad/other distillate fuel.  This rule does not change this division.

(C)    EPA needs to apply the same requirements to nonroad sources and diesel fuel
       to ensure fair and equitable treatment between different diesel engine sources.

       (1)     Commenter provides no further supporting information  or detailed analysis.

              Letters:

              American Trucking Association  (IV-F-191) p. 42

       (2)     EPA's action violates the APA since it is  arbitrary and capricious and since it
              lacks a rational basis. EPA has not provided a rational basis for the proposed
              disparate treatment of onroad and nonroad sources. EPA's proposal
              regulates onroad  sources while ignoring  similarly powered nonroad sources
              that are significant contributors to criteria pollutants.  The same issues
              regarding costs, leadtime, environmental impacts and impacts on competitive
              relationship in the marketplace apply equally to the regulation of onroad
              vehicles.  Commenter provides significant discussion regarding the legal
              issues and logistics associated with subjecting onroad and nonroad sources
              to different requirements and asserts that the record  simply does not support
              the conclusion that a  dual regime is technically possible since the low sulfur
              diesel  (15 ppm) is likely to become contaminated by the presence of much
              higher sulfur nonroad diesel fuel. EPA should amend the proposed rule to
              incorporate requirements for onroad and nonroad diesel emission sources.

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DECEMBER 21, 2000	PAGE 11-6

              Letters:

              American Trucking Association  (IV-D-269) p. 7-12

       Response to Comments 11(C)(1) and (2):

       We are not required under the APA to regulate all emission sources at the same
time.  In fact, prior to 1990, we were not even permitted to promulgate new engine
standards for nonroad engines. We acknowledge that nonroad engines are a significant
source of pollution and, as discussed  above, have instituted several rulemaking to control
emissions from these engines in the past ten years, including stringent standards for
locomotive engines.  However, nonroad engines are regulated under a different section
of the Clean Air Act (section 213, rather than section 202), and there are unique issues
associated with these engines that generally require us to regulate these engines
separately from on-highway engines.  Indeed, we have  needed to promulgate regulations
for various different categories of nonroad engines separately from one-another because
of the special issues associated with each category of engine and the differences
between particular categories of nonroad engines.  For example, several categories of
nonroad engine use different test cycles, which are different from the federal on-highway
diesel test cycle. Also, nonroad engines are used in different types of equipment which
create different implementation and feasibility issues.

       Our current rule no more discriminates against on-highway engines than our rules
regulating nonroad engines discriminate against those nonroad engines. Indeed, under
the commenter's analysis, any time we regulate any single type of source, we are
required to regulate all sources. This  would lead to an irrational administrative paralysis,
because such a rulemaking would be  inordinately large and unwieldy.

       This rule is clearly justified under the provisions of the Clean Air Act and we have
shown this rule to be a cost-effective method of reducing emissions of ozone precursors
and PM. We will be reviewing the need regulations for further regulation of nonroad
engines in the context of the 2001 feasibility review.

       Regarding the commenter's concern for contamination of highway diesel fuel by
nonroad fuel, as noted above,  highway and nonroad diesel fuels have needed to be
segregated for several years because highway diesel fuel is already lower in sulfur than
nonroad diesel fuel.  Moreover, as discussed further in chapter VIII of the RIA and
section 7(C) of the preamble,  the rule includes enforcement and compliance provisions
to assure that highway diesel  rule subject to thel 5 ppm sulfur limit is not contaminated
with high sulfur products like nonroad diesel fuel.

(D)     EPA should regulate locomotives as part of this effort or as a separate effort to
       reduce overall emissions since they are a significant contributor.

       (1)     Commenters provided no further supporting  information or detailed analysis.

              Letters:

              Tseng, Joyce, et al  (IV-D-3)

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DECEMBER 21, 2000	PAGE 11-7

       Response to Comment 11(D):

       EPA already regulates emissions from locomotives under 40 CFR parts 85, 89,
92.  The Agency issued a final rule on emission standards for locomotives and
locomotive engines two years ago (63 FR 18977, April 16, 1998). However, the Agency
does not currently regulate locomotive fuel.
(E)     EPA should clarify whether nonroad diesel will be subject to the proposed
       sulfur standard as soon as possible.

       (1)     Commenters provide no further supporting information or detailed analysis on
              this point (but see further summary on related issue under Issue 8.5.8(A)).

              Letters:

              Frontier Oil Corporation (IV-F-116) p. 204
              Gary-Williams Energy Corporation (IV-F-43)

       (2)     Since such a small portion of Alaska's fuel is used on-highway, EPA must
              clarify exactly when and how nonroad fuel will be regulated. This information
              is critical for Alaska refiners to be able to make a decision regarding whether
              to exit the market for on-highway diesel.  Alaska refiners will not invest in
              desulfurization equipment if it is unlikely that low sulfur standards will be
              applied to nonroad diesel, which comprises 95 percent of the diesel fuel
              market in the State. EPA should also address what will be included under the
              definition of regulated nonroad diesel (i.e., will it include fuel for fishing boats,
              power generation, construction, etc.?). It is critical that EPA disclose what it
              intends to do regarding  all types of diesel or, at the very least, publish a
              timeline of when it intends to make such  decisions known.

              Letters:

              Williams Energy Services (IV-D-167) p.  4

(F)     EPA should make decisions on nonroad diesel sulfur requirements at the same
       time, especially, many commenters note, to improve refiners' ability to plan
       desulfurization decisions.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              CA Air Resources Board  (IV-D-203)  p. 5
              Environmental Defense (IV-D-346) p. 13
              San Joaquin Valley Air Pollution Control  District (IV-D-56) p. 2
              Tesoro Petroleum  (IV-F-191) p. 26

       (2)     Refiners cannot determine what facility changes will be necessary without
              knowing what sulfur level will be specified for nonroad diesel. Changes to the

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 11-8

              distribution system to accommodate low sulfur diesel will be influenced by the
              nonroad diesel requirements.  One commenter recommends nonroad diesel
              rules in 2001 with a 50 ppm sulfur level.  Another commenter notes that
              combining on- and nonroad regulations might eliminate the need for any
              phase-in or special treatment for small refiners.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 54
              Big West Oil, LLC  (IV-D-229) p. 3
              ExxonMobil (IV-D-228) p. 10
              Koch Industries  (IV-D-307) p. 2
              Marathon Ashland Petroleum  (IV-D-261) p. 3, 56-57, 89-90
              National Petrochemical & Refiners Association (IV-D-218) p. 16
              Phillips Petroleum Company (IV-D-250) p. 6
              Sinclair Oil Corporation (IV-D-255) p. 7-8
              Western Governors'Association (IV-G-41) p. 1

       (3)     This is another reason to withdraw and reconsider the proposal.

              Letters:

              Cenex Harvest States Cooperatives  (IV-D-232) p. 19

       (4)     Commenter notes that this does not mean that the desulfurization schedules
              should necessarily overlap.

              Letters:

              CO Petroleum Association  (IV-D-323) p. 3

       (5)     Disparities in sulfur levels create economic incentives for consumers to use
              less expensive, high sulfur fuels.  Also, air quality and visibility benefits are
              missed if high sulfur fuels are not controlled. Therefore, a coordinated
              strategy should be used.

              Letters:

              Sinclair Oil Corporation (IV-D-255) p. 8
              Western Governors'Association (IV-G-41) p. 1-2

       Response to Comments 11(E) and (F):

       This program covers only highway diesel engines and highway diesel fuel. However,
our potential plans for nonroad diesel engines, and especially the sulfur content of nonroad
diesel fuel, including jet fuel, are related.

       We believe that any new requirements for nonroad diesel fuel would need to be
carefully considered in the context of a proposal for further nonroad diesel engine emission
standards. For the nonroad program, we expect to use the same systems-based approach

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DECEMBER 21, 2000	PAGE 11-9

as we used for the Tier 2/Gasoline Sulfur program and today's highway diesel fuel and
heavy-duty engine standards program. This is because of the close interrelationship
between fuels and engines-the best emission control solutions appropriately balance fuel
modifications and engine improvements.  This is especially significant given that engine
manufacturers and diesel fuel refiners would need to address potential challenges such as
capital cost, leadtime, and engineering and construction resources, of simultaneously
meeting the highway standards under this program with the nonroad standards that may be
implemented. Thus we need to address issues in  both the fuel and engine arenas together.

       The many issues connected with any rulemaking for nonroad engines and fuel
warrant serious attention, and we believe it would be premature today for us to attempt to
raise potential resolutions to them.  We plan to initiate action in the future to determine
whether and to what extent proposals covering further regulation of both nonroad diesel fuel
and engines is appropriate.

       Given the severe damage to the engine that could occur if nonroad diesel fuel is
used in a heavy-duty vehicle subject to today's standards, we believe that there will be
little temptation for users of such engines to use nonroad fuels in these engines.

(G)    A 50 ppm sulfur cap for both on- and nonroad diesel fuel would have a larger
       pollution improvement at  lower cost than the proposed rule.

       (1)     Commenter provides no further supporting information or detailed analysis.

              Letters:

              Cenex Harvest States Cooperatives (IV-F-191) p. 232

       Response to  Comment 11 (G):

       As described below, we are not regulating  the sulfur content of nonroad diesel
fuel under today's action. For the reasons described in Issues 3 and 4, above, a 50 ppm
cap on the sulfur content of highway diesel fuel will not allow highway diesel engines to
meet the emission standards adopted today given  the severely sensitive nature of the
aftertreatment technologies for controlling  diesel engine exhaust. These  technologies
will be necessary for attaining the air quality goals  of today's program.
(H)    EPA should evaluate the potential effects that the ultra-low sulfur diesel will
       have on nonroad equipment. (See also Issue 4.6, Point (H ).)

       (1)     Since it is apparent that this rule will exacerbate current supply and
              distribution problems and as a result, will force the use of on-highway fuel in
              nonroad equipment, EPA should study the effects of using the ultra-low sulfur
              diesel in this equipment. Some commenters specifically recommend that
              EPA work with the U.S. Department of Agriculture and the  Department of
              Energy to ensure that the final rule addresses concerns about farm engine
              performance by conducting an analysis of the technological requirements and
              availability, price, and farm engine performance implications of moving to an
              ultra-low standard. The USDA states that EPA appears to  believe that there

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 11-10

              are no engine/equipment issues other than lubricity, but EPA fails to provide
              scientific test data on lubricity or any other engine performance concern to
              bear out its opinions. USDA also notes the need to consider nonroad
              agricultural engines in considering maintenance benefits reported in the RIA.

              Letters:

              Agricultural Retailers Association (IV-D-178) p. 3
              Agricultural organizations as a group (IV-D-265) p. 3
              National Council of Farmer Cooperatives (IV-D-351) p. 7
              North American Equipment Dealers Association (IV-D-194)  p. 3
              USDA (IV-D-299) p. 2

       (2)     EPA needs to evaluate the cost impacts on agricultural machinery.
              Commenter also notes that EPA's B/C analysis appears to be based on miles
              traveled, which is not an appropriate metric for consumption  of on-road diesel
              in farm machinery. Commenter suggests that EPA also evaluate
              cost/benefits in terms of fuel consumption. Commenter notes that 3 of 4
              farmer co-ops sell almost exclusively on-road diesel to farmers.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 8-9
       Responses to Comment 11(1-1):

       There is really little distinction between nonroad engines and the existing fleet of
highway engines with respect to fuel effects. We have no evidence to support the comment
that fuel quality that is acceptable for highway engines, such as low sulfur diesel fuel, will be
unacceptable for nonroad engines.  In fact, nonroad and harvest equipment are frequently
fueled with federal highway diesel fuel and California low sulfur/low aromatics diesel fuel
today without problems.

       Any potential problems related to lubricity are resolvable through the use of diesel
fuel additives as discussed in section IV of the preamble, chapter IV of the RIA, and
elsewhere in this document. A variety of commonly used (in the U.S. and around the world)
lubricity additives exist today which are highly effective. We have included the cost for these
additives in today's rule.  We intend to work with ASTM and the refiners to ensure that they
complete the process they have already begun to define a lubricity  test and standard for
diesel fuel.

       Problems with leaking seals due to California low aromatics diesel fuel during the
early 1990's  were addressed by new materials for replacement parts.  This issue is not
expected to resurface since highway engines and  nonroad engines have essentially all  been
made compatible with low aromatics diesel fuel by now.

       We believe that any other potentially negative impacts on existing engines would
have surfaced by now given the wide variety of real world experience with low sulfur diesel
fuels. Since 1993, all highway diesel fuel in the U.S has had to be at a maximum of 500

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DECEMBER 21, 2000	PAGE 11-11

ppm sulfur, down from approximately 3000 ppm.  Much of the fuel used in nonroad
applications is also less than SOOppm in many parts of the country (e.g., the Midwest
where some  farmer cooperative refiners supply only 500 ppm sulfur diesel fuel and in
PADD4 where much of the pipeline system only transports 500 ppm diesel fuel).  In
addition, since 1993, California has required all highway diesel fuel and all fuel used in
many nonroad applications to be at 500 ppm sulfur in  addition to meeting a low
aromatics specification. The result in California has been an average sulfur level of
approximately 140 ppm, with some refiners producing diesel fuel with sulfur levels as low
as 30 ppm. Since 1992, the majority of the highway diesel fuel in Sweden has contained
less than 10  ppm sulfur as well as very low aromatics. In the 1990s, the tax subsidy in
Sweden was extended to nonroad fuel.  Thus, fuel used in nonroad applications in Sweden
for the  last several years has also  been low sulfur/low aromatics diesel fuel. This provides
real world, as opposed to test laboratory, experience with low sulfur fuels used in nonroad
engines to provide confidence that problems are highly unlikely to  surface. While not specific
to nonroad engines, other parts of the world, including Great Britain and Germany have
already moved to sulfur levels of 50 ppm or less for use in highway diesel engines, also
indicating that these low sulfur fuels are compatible with the diesel engines produced today.
(Refer to Chapter IV.C.3 of the RIA for more information on this subject.)

        Conversely, low sulfur diesel fuel should provide a maintenance, reduced engine
wear, and durability savings due to a reduction in the generation of sulfuric acid in the engine
and exhaust  system, leading to longer oil change intervals, and/or longer engine and exhaust
system lives.

(I)     Opposes the potential use of a "10 times" on-road/nonroad sulfur ratio as the
       basis for setting an nonroad sulfur standard.

       (1)    Commenter notes that EPA uses the "10 times" ratio to describe the current
             on-road to nonroad ratio (500 to 5000 ppm).  Commenter argues that this is
             merely a mathematical exercise, not a scientifically-based ratio. Any change
             in the nonroad sulfur requirements should be based on appropriate scientific
             considerations.

             Letters:

             Cenex Harvest States Cooperatives (IV-D-232) p. 7-8

       Response to Comment 11(1):

       We only used the "10 times" factor to describe the sulfur level of highway diesel
fuel in comparison to nonroad diesel fuel. Any nonroad diesel fuel sulfur standard that
may be established in the future would not be based on a ratio-we would determine the
standard using the same  procedures and methodolgies (i.e.,  air quality need,
technological feasibility, safety, and cost) we used for establishing the highway diesel
fuel standard under today's action.
(J)     EPA's proposed product transfer document (PTD) system for heating oil and
       other nonroad diesel fuel is unnecessary.

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       (1)    Heating oil and other nonroad distillates are already dyed and are
             accompanied by substantial paperwork, including a legend on the bill of
             lading required by the IRS, which states that the fuel cannot be used on-road.
             Current regulations more than adequately inform all parties that heating oil
             and other nonroad diesel cannot be used in highway vehicles.

             Letters:

             Independent Fuel Terminal Operators Association  (IV-D-217) p. 15-16
             New England Fuel Institute  (IV-D-296) p. 8

       Response to Comment 11 (J):

       Today's rule retains the previously established Product Transfer Document
requirement regarding the identification  of dyed, tax-exempt highway diesel fuel. This
provision is useful for wholesale purchaser-consumers that need to know that the diesel
fuel they purchase is appropriate for tax exempt motor vehicle use  despite the presence
of red dye.
(K)    EPA should develop policies that create economic incentives for programs to
       retrofit existing nonroad diesel engines such as programs that would allow
       stationary sources to earn NOX or participate emission reduction credits as a
       result of investing in retrofits of nonroad engines.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             Environmental Defense  (IV-D-346) p. 14

       Response to Comment 11(K):

       We are reviewing possibilities to encourage retrofits of highway and nonroad
engines, but these activities are being handled separately from this rule.


(L)    EPA inappropriately suggests in an example that a pump which is used by
       nonroad and on-road sources must carry low sulfur diesel. This basically
       directs nonroad equipment to comply; instead, EPA should focus on the fuel,
       not the pump.

       (1)    Commenter provides no further analysis on this point.

             Letters:

             Cenex Harvest States Cooperatives (IV-D-232) p. 15-16

       Response to Comment 11(L):

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RESPONSE TO COMMENTS DOCUMENT
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       Diesel fuel that is available for sale as motor vehicle diesel fuel must be
accurately labeled as 15 ppm sulfur or 500 ppm sulfur diesel fuel as described under
Section VII.C.2.c of the preamble. Nonroad diesel fuel must also be labeled
appropriately.

       Under any multiple-fuel program like today's program with the temporary
compliance option and hardship provisions, clearly labeling fuel pumps is vital for end
users to distinguish between the various grades of fuel available. We received
comments on our proposal that concurred with our assessment that pump labels, in
conjunction with vehicle labels, would help to prevent misfueling of motor vehicles with
high sulfur diesel fuel. However, in the proposal, we also sought comment on more
complex and costly approaches to discouraging misfueling such as unique pump nozzles
and filler inlet sizes.  (The unleaded gasoline program used fuel filler inlet restrictions and
pump nozzle sizes as a mechanism to discourage misfueling.)

       Despite the potential for some inadvertent misfueling under the optional
compliance and hardship provisions of our diesel  fuel sulfur program, we have decided
not to set any nozzle/interface requirements (for the reasons described in Section
VII.C.2.c of the preamble).  If additional information arises that warrants reconsideration
of the need for unique nozzles and inlet restrictors, we would plan to work with the
industry to develop a workable solution that addresses their concerns.

       In addition to the required labels on diesel fuel pumps (as described in  more
detail in Section VII the preamble), we believe that the use of color-coded nozzles to
distinguish the grades of diesel fuel might be useful in preventing accidental misfueling.
While we are not finalizing any requirements today, we plan to work with the industry
over the next several years to develop a system for color-coding the nozzles that is
consistent with current industry practices and other regulatory requirements.
(M)    Agrees that nonroad diesel should continue to meet red dye requirements.

       (1)     Commenter provides no further analysis on this point.

              Letters:

              Cenex Harvest States Cooperatives (IV-D-232) p. 16

       Response to Comment 11(M):

       Today's rule does not affect the dye requirement for nonroad (also known as off-
highway or off-road) diesel fuel.  The existing dye requirements remain in effect.

       In addition, today's action also grants Alaska's request for a permanent
exemption from the dye requirement of 40 CFR 80.29 and 40 CFR 80.446 for the entire
state. The costs of complying with the low sulfur (both the current 500 ppm sulfur and
new 15 ppm sulfur) diesel fuel requirements could be reduced significantly if Alaska were
not required  to dye the non-highway fuel.  Dye contamination of other fuels, particularly
jet fuel, is a serious potential problem. This is a serious issue in Alaska since the same
transport and storage tanks used for jet fuel (which is more than half of Alaska's distillate

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DECEMBER 21, 2000	PAGE 11-14

market) are generally also used for other diesel products, including off-highway diesel
products which are required to be dyed under the current national program.  This issue is
discussed further in the RIA (Chapter IX).
(N)    EPA should maintain a higher nonroad diesel fuel standard in order to minimize
       costs to farmers and small refiners.

       (1)    Commenter provided no additional supporting information or detailed
             analysis.

             Letters:

             Agricultural Retailers Association, et. al. (IV-D-148) p. 1
             American Farm Bureau Federation (IV-F-5)

       Response to Comment 11 (N):

       See response to 11 (E) and (F).
(O)    There are unlikely to be adverse effects on off-road equipment resulting from
       the use of ultra-low sulfur diesel.

       (1)    Commenter notes that they have discussed the issue of low sulfur diesel fuel
             with numerous key organizations in Sweden (including contractors' and
             agricultural equipment suppliers) and that beyond some initial problems with
             fuel pumps (which was quickly resolved by using a lubrication additive), there
             have been no increase in service problems or engine malfunctions as a result
             of the use of low-sulfur fuel.

             Letters:

             MTC AB (IV-G-42), p. 1
       Response to Comments 11(O):

       Refer to Response to Comments 11 (H).

(P)     The production of low-sulfur off-road diesel should be addressed by incentives
       rather than command and control.

       (1)     The state of the agricultural economy is such that it cannot withstand
              additional costs.  An incentive structure would help introduce low sulfur diesel
              universally  without imposing a financial burden on the agricultural community.

              Letters

              Western Governors'Association (IV-G-41) p. 1

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      Response to Comment 11(P):

      See response to comments 11(E) and (F).

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DECEMBER 21, 2000	PAGE 12-1

ISSUE 12:  ADMINISTRATIVE, PROCEDURAL AND LEGAL REQUIREMENTS

      Issue 12.1: SBREFA

(A)    The SBREFA process does not meet the legal requirements of 5 DSC 609(b)(1).

      (1)    SBREFA requires that, prior to the publication of the Initial Regulatory
             Flexibility Analysis (IRFA), EPA must notify the Chief Counsel for Advocacy of
             the SBA and provide information on the potential impacts of the proposed rule
             on small entities.  EPA failed to comply with Section 609(b)(1) since it did not
             provide the Chief Counsel with adequate information on the potential effects
             of the proposed rule on small businesses.  The report issued by the Panel
             convened by the Chief Counsel to receive  information on the rule indicates
             that "....EPA was unable to provide to the Panel its own assessment on the
             appropriateness of the standard in the  5-40 ppm range." This report indicates
             that the Panel was not able to evaluate the potential for less sulfur sensitive
             aftertreatment technology to be developed that might allow for a higher sulfur
             cap. What little information was provided to the Panel was inadequate for
             completing an accurate evaluation of the impact to small businesses.

             Letters:

             Western Independent Refiners Association (IV-D-273) p. 4-5

      (2)    The data supplied by EPA to the SBREFA Panel were inadequate. The Panel
             report indicates that EPA analyzed the  costs of the proposed rule on small
             refineries by relying  on a 30  ppm standard, which is irrelevant and useless for
             accurately determining the impact to small refiners of a 15 ppm standard. As
             a result, the cost impacts to small refiners are vague as illustrated by EPA's
             statement in the RIA, which acknowledge that a typical  small refiner cost
             could be as much as 50 percent higher than the projected estimates.

             Letters:

             Western Independent Refiners Association (IV-D-273) p. 5-6

      (3)    Because the SBREFA Panel never received meaningful comment from the
             small businesses the Act was designed to  protect, the SBREFA process has
             been subverted. Given EPA's failure to provide the essential information to
             the Panel, it was impossible for small business representatives to  offer advice
             and recommendations as to the potential impacts of the proposed rule. EPA
             must conduct the SBREFA process again and reconvene a Panel.

             Letters:

             Western Independent Refiners Association (IV-D-273) p. 6

      Response to Comments 12.KAH1). (2) and (3):

      Commenter believes that EPA failed to provide essential information to the SBREFA

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Panel, and as a result it was impossible for small business representatives to offer advice
and recommendations on the potential impacts of the proposed rule.  Since the panel never
received meaningful comment from the small businesses, EPA must reconvene a panel and
conduct the SBREFA process again.  The commenter objected to the adequacy of
information submitted on the sulfur sensitivity of diesel engine afertreatment technology,  and
on the cost of sulfur control for small refiners.

       Section 609(b) of the Regulatory Flexibility Act calls for EPA to "provide the Chief
Counsel with information on the potential impacts of the proposed rule on small entities and
the type of small entities that might be affected," and for the Panel to "review any material the
agency has prepared in connection with [the Regulatory Flexibility Act]."  EPA provided a
significant amount of information to the Chief Counsel, and to both the panel and small
business  representatives, on the issues raised by the commenter, as well as other relevant
issues. EPA provided, for example, several reports prepared by the manufacturers of
emissions control equipment which gave an overview of various diesel aftertreatment
technologies and the effect of sulfur.  EPA also provided additional information comparing
and contrasting various types of emissions control technology, and provided a substantial
amount of information in meetings and dialogues with panel members and small business
representatives. EPA also provided a study on refinery costs performed for the engine
manufacturers, as well as EPA's own initial analysis of refinery costs.  In  combination this
provided information on a variety of scenarios, including a 30 ppm cap as well as an estimate
of the incremental costs to go further to lower sulfur levels.

       All of this and other information was made available to the Panel  members and to the
small business representatives. Since EPA had not yet determined what level of sulfur
control it intended  to propose, EPA did not provide an analysis directly aimed at a 15 ppm
sulfur level.  However an appropriate  and valid purpose  of a SBREFA panel  is to obtain
advice and recommendations to aid EPA in reaching such a  decision  on a proposal, and that
is what occurred in this circumstance.  EPA provided information that was available at the
time, and that information was significant and fairly informed all parties involved on the issues
affecting small refiners. The result was a panel process and resulting report that reflects
significant and important advice and recommendations to the agency.  As evidenced by the
proposal issued by the agency in June 2000, and the final rule adopted today, the Panel
process and Report was an important step in  developing a menu of options that are available
to small refiners to minimize the burdens from this rule while still achieving the emissions
benefit expected from the engine emissions and sulfur content standards adopted in the final
rule.

       The commenter questioned the ability of small refiners and the panel to provide
advice and recommendations on a 15 ppm sulfur level, since EPA's cost analysis addressed
a 30 ppm level.  However, EPA consistently discussed with the Panel and small business
representatives that a range of 5 to 40 ppm was under consideration.  EPA's analysis
discussed 30 ppm. A survey to small business representatives asked information on various
sulfur level standards, and information was received from various small business
representatives about the costs of different levels of sulfur control, including  15 ppm. See,
e.g., Panel Report at Section 7.4.1. The IRFA and proposal were based  in part on the variety
of information, advice and recommendations  obtained from small business representatives
on these matters.  The panel also  recognized that issues of the level of the sulfur standard
and the sensitivity of engine technology were still being evaluated by EPA, and that EPA
would address these issues in the  proposal and all parties, including small business

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representative, would be able to comment fully at that time. See Panel Report at Section 3.2.

       The fact that EPA still had issues to resolve prior to issuing a proposal, and therefore
considered a range of options in the SBREFA process and had not fully resolved all technical
and other issues does not subvert the SBREFA process. Instead, EPA provided small
business representatives  and the Panel a significant amount of information and a important
opportunity to  provide meaningful advice and recommendations that would help EPA to
evaluate small business concerns in making these decisions on the specific elements of a
proposal. The Panel and small business representatives did in fact provide important advice
and recommendations,  as reflected by the contents of the proposal and the final rule adopted
today.  EPA fully complied with the requirements of 5 U.S.C. § 609(b).

       (4)    The SBREFA Panel's report was untimely. This report was to be provided to
             EPA within sixty days of the convening of the Panel on November 12,1999.
             However, the report was not issued until March 24, 2000.

             Letters:

             Western Independent Refiners Association (IV-D-273) p. 6

       Response to Comment 12.1(A)(4):

       The Panel report was issued to EPA on March 24, 2000. This was more than
adequate time for EPA to fully consider it in developing its proposal.  It was also made part of
the public record for this rulemaking. All interested parties had a full opportunity to comment
on it and the IRFA during  the public comment period.

       EPA is not required to publish the IRFA in the Federal Register under 5 U.S.C.
603(a). The IRFA was made available for public comment through notice in the Federal
Register of it's inclusion in the public docket. A summary was also published in the  Federal
Register. EPA fully complied with the notice and availability requirements of § 603.

(B)    EPA failed to publish the IRFA in the Federal  Register at the same time as the
       proposed rule.

       (1)    The IRFA for this rule was not published in the Federal Register but merely
             referenced in a footnote that explained the IRFA was available in the Docket
             supporting the proposed rule.

             Letters:

             Western Independent Refiners Association (IV-D-273) p. 6

       Response to Comment 12.KB):

       See response to comment 12.1(A)(4).

(C)    EPA should ensure that there is adequate compliance equity between facilities
       covered under SBREFA and other similar facilities.

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       (1)    There are compliance equity concerns between SBREFA refineries and the
             other small refineries in the western region. There must be compliance equity
             between the classes of facilities EPA has created -this has been successfully
             addressed in the gasoline rule using the GPA approach. If this issue is not
             addressed, there would be a strong compliance disincentive for the small
             non-SBREFA refiners.

             Letters

             Western Governors' Association (IV-G-41) p. 3

       Response to Comment 12.KC):

       EPA has evaluated the issues raised by refiners providing diesel and gasoline to the
GPA area. As discussed in the Preamble and RIA, this group of refiners face many of the
same problems faced by small refiners in transitioning to the new low sulfur diesel
requirements. EPA has adopted a provision that will allow GPA refiners additional time to
meet the low sulfur gasoline requirements, where they produce low sulfur diesel fuel starting
June 1, 2006, i.e. with no extension of the low sulfur diesel requirements.  The reasons and
basis for this provision are discussed in the Preamble and RIA.

       Issue 12.2: Other Administrative/Legal Issues

(A)    EPA has failed to meet its requirements under section 202(a)(1) to demonstrate
       that HDDE significantly and adversely affects public health or welfare.

       (1)    EPA has failed to demonstrate that HDDE emissions significantly and
             adversely impact public health or welfare; and has failed to quantify the air
             quality benefits of the proposed rule. The available evidence does not
             support a finding that emissions from HDDEs meet the statutory criterion (in
             CAA Section 202(a)(1)) that such emissions can "reasonably be anticipated
             to endanger public health and welfare." EPA's assertion that it is authorized
             to take air quality into consideration under section 202(a)(3)(B) in deciding
             whether to modify standards under 202(a)(3)(A) is not well founded since
             subsection (A) makes no reference to air quality in defining the criteria to be
             used  in  setting an emission standard, which should be set only after a finding
             has been made under section 202(a)(1) that the pollutants of concern are
             reasonably anticipated to endanger public health or welfare.  Commenters
             provided significant discussion on this issue as well as the accuracy of EPA's
             estimates of HDDE emissions, [see also Issue 2.2]

             Letters:

             American Petroleum Institute (IV-D-343) p. 3
             General Motors Corp. and Isuzu Motors America, Inc. (IV-D-256) p. 4-6

       Response to Comment 12.2(A):

       The final preamble and  RIA for this rule, as well as this  Response to Comments
document, (in particular, Issue 2 of this document), discusses in detail the reasons for EPA's

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belief that emissions from heavy duty diesel engines "cause or contribute to air pollution
which may reasonably be anticipated to endanger public health or welfare." Emissions from
these engines significantly and adversely impact public health and welfare in numerous
ways, including their contribution to ozone, PM, CO, air toxics, regional haze and acid
deposition.  We have provided substantial data and other information explaining the nature
and significance of this impact.  We have also provided the reductions in pollutants expected
from this rule, and where available, information on expected reductions in the health and
welfare impacts of emissions from heavy duty engines.

       Regarding the commenter's discussion of our reliance on section 202(a)(3)(B), the
commenter's analysis is incorrect on its face.   Subparagraph (B) clearly authorizes EPA to
modify standards provided for under subsection (A) in  order to address the circumstances the
commenter claims would occur (i.e., "the continual  promulgation of stricter emission
standards as technology improved without regard to whether there was any air quality need
or justification for the  standards."). In addition, the available evidence clearly shows that this
rule is authorized whether EPA relies on section 202(a)(3) or 202(a)(1) for its determination
regarding air quality.

(B)    EPA failed to propose emissions standards that are technologically feasible or
       cost-effective as required under section 202(a)(3)(A) of the CAA. [see also
       Issue 3.2.1]

       (1)     Section 202(a)(3)(A) requires  EPA to propose standards which are
              technologically feasible and cost-effective; yet EPA has failed to fully consider
              the feasibility of the NOX, PM,  NTE and SSS standards. Commenters
              provided significant discussion on this issue citing to case law and other
              relevant sections of the CAA to support their assertion.
              Letters:

              American Petroleum Institute  (IV-D-343) p. 86-87
              Cummins, Inc.  (IV-D-231) p. 50-51

       Response to Comment 12.2(B)(1):

       EPA disagrees with the comments. The final preamble and RIA for this rule, as well
as this Response to Comments document, (in particular, Issue 3 of the RtC), provides
considerable explanation regarding the  technological feasibility of these standards, including
investigation of emission control devices, emissions testing, and detailed engineering
analyses. Several commenters also provided information supporting EPA's view that the
final standards are feasible.  In fact, even a Cummins employee has provided testimony
indicating that NOX adsorber technology were capable  of achieving the ninety percent
reductions EPA expects them to achieve to meet the standards under this rule.86 Given the
considerable advances that  have already been achieved, the steps in development expected,
and the long lead time provided by this rule, EPA is confident that the standards promulgated
are technologically feasible in the lead time provided.

       In addition, EPA disagrees with  Cummins regarding its analysis of the requirements
        ' See Memo to Docket, A-99-06, ll-E-25.

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of section 202(a)(3)(A).  The Act requires that EPA take costs into consideration in
promulgating standards, and EPA has done that. The standards are primarily designed to
provide the greatest emission reduction achievable in the time provided, and cost-
effectiveness is not addressed in the statute.  Nevertheless, as indicated in numerous
documents in this docket, the requirements of this rule do not impose inordinate costs, and in
fact are quite cost-effective compared to other potential measures. We have reviewed the
expected costs of the rule, taking the comments into account in our final analysis.

       Regarding the comment that users will delay purchases of new engines rather than
buy newer more expensive engines, the commenter provides no  evidence to indicate that
such a delay will occur or that it has occurred in the past. Moreover, even if a few individual
purchase decisions are changed based on these rules, the long-term effect of these rules will
be the continuing and growing use of low-emitting engines in user fleets.

       (2)     None of the required data has been included in the record showing that the
              "de-facto" NTE standard is feasible for MY 2004 or MY 2007. The proposed
              rulemaking does not even identify what the NTE standard would be.  The
              proposed NTE is defective as a matter of law and fact.

              Letters:

              International Truck & Engine Corp. (IV-D-87) p. 1-3

       Response to Comment 12.2(B)(2):

       The comment regarding MY2004 standards is not relevant; this rulemaking  does not
establish NTE standards, or any other standards, for MY2004 engines.

       Further, the NTE standard is not the "de-facto" 2007 standard. As discussed in the
RIA for this final rule, the same emission control technologies will be used to meet the FTP,
SET, and NTE standards, though the calibration requirements necessary to meet the various
test procedures may vary. The FTP test cycle contains engine operation (low load and low
speed operation) which is not covered by the NTE test, and the SET contains low load, high
speed operation which is not covered by the NTE test. An engine calibrated to meet the NTE
standard only will not necessarily comply with the FTP or SET standard, and vice versa.
Therefore, we disagree with the statement that the NTE  standard is the de-facto standard.

       The proposal did identify the NTE standard that EPA was proposing. The NTE
standard contained in the proposal was very clear, see 65 FR 35463 ("As proposed, the
specified value under which emissions must remain is 1.25 times the FTP standard.....
Today's document proposes to apply the heavy-duty diesel NTE  and supplemental steady-
state test provisions intended to be finalized as part of the 2004 standards rulemaking.  The
October 29,  1999, proposal for that rule contained the description of these provisions."). The
NTE standard promulgated in this final rule is also very clearly identified, in the regulations as
well as in the preamble,  as being equal to 1.5 times the FTP emission standards.

       Finally, the rulemaking record contains significant data and analysis regarding the
technological feasibility of the NTE standards contained in this final rule.  Specifically,
Chapter 3 of the RIA discusses the relevant data on  which we have made our determination
that the 2007 NTE standard is feasible. This includes, but is not  limited to, test data collected

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in our EPA NVFEL NOX adsorber and CDPF evaluation program, during which we achieved
emission reductions for both PM and NOX emissions greater than 90 percent across the
majority of the NTE control zone.

       (3)    Section 202(a)(3) of the CAA gives EPA the authority to establish vehicle
             emission standards which "reflect the greatest degree of emission reduction
             achievable through the application of technology which the Administrator
             determines will be available for the model year to which such standards
             apply, giving appropriate consideration to cost, energy, and safety factors
             associated with the application of such technology." EPA has failed to show
             that the technologies necessary to meet the fuel sulfur standard and the
             engine and vehicle emission requirements will be available within the
             proposed timeframe. EPA must wait until these technologies can be more
             certainly  demonstrated before proceeding with this  rulemaking.

             Letters:

             U.S. Chamber of Commerce (IV-D-329) p. 3-5

       Response to Comment 12.2(B)(3):

       As discussed above, the evidence and analysis provided shows that the technologies
capable of meeting the engine and vehicle standards (and, as discussed elsewhere, the fuel
standards) will be available  in the time frame provided.  This determination is based on data
and analysis, including information received from commenters, regarding the specific
technologies expected to be used to meet the  standards, the specific hurdles to overcome to
meet the standards, and how those hurdles can be overcome.

(C)    EPA has failed to provide adequate lead time or the minimum period of stability
       for the introduction of the new standards as required by the CAA.

       (1)    In the SOP and in the preamble to the 2004 rule, EPA committed to providing
             engine manufacturers with more than the minimum three years' period of
             stability as required by the CAA.  EPA should provide more than three years'
             stability in the implementation of standards as stringent as those finalized for
             the 2004 rule and the proposed rule.

             Letters:

             Engine Manufacturers Association  (IV-D-251) p. 42, 85

       Response to Comment 12.2(C)(1):

       EPA has provided the period of stability required under the Act. EPA has shown that
the standards promulgated today are feasible and appropriate within the time frame
permitted, considering costs and other factors.  Though the 1995 SOP established a
framework for a specific  proposed rulemaking, it did not create any binding commitments on
any party; indeed, it did not  even address leadtime for later rules. Delaying the rule would
mean delaying the important public health and welfare benefits achieved by this rule and the
commenter has not provided evidence of technological or cost or other factors that would

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warrant foregoing these health and welfare benefits.

       (2)     Under the lead time provisions of the CAA, new emissions standards
              applicable to HD trucks or engines may take effect "no earlier than the model
              year commencing 4 years after such revised standard is promulgated." The
              emissions standards recently signed on July 31, 2000, but which have not yet
              been officially promulgated and published in the FR, must provide the four-
              year lead time required under CAA 202(a)(2)(C),which would expire during
              the 2004 model year at the earliest and may not be lawfully enforced before
              the 2005 model year. In addition, the three year period of stability provision
              under CAA 202(a)(2)(C) requires that any standards must remain in effect for
              at least three years.  Therefore, the CAA's four year lead time requirement
              and the three year period of stability requirement precludes EPA from
              enforcing the  proposed standards for heavy-duty gasoline engines and
              vehicles before model year 2008.

              Letters:

              Engine  Manufacturers Association (IV-D-251) p. 48-49
              Ford  Motor Company (IV-D-293) p. 7-8
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 34-35

       Response to Comment 12.2(C)(2):

       As commenters note, EPA's mandatory Phase 1  standards for heavy-duty gasoline
engines and vehicles that were finalized on July 31, 2000 will not go into effect until the 2005
model year.  As the commenters state, these standards should remain stable for three model
years.  Therefore, the Phase  2 standards  for heavy duty  gasoline engines and vehicles
proposed to commence in the 2007 model year will instead be phased in beginning in the
2008 model year.

       (3)     Even though EPA's 2004 emission standards contain two optional programs
              that allow manufacturers to certify HDEs  to the emission standards in  model
              years 2003 and 2004, participation in these optional programs does not
              "waive" the lead time or stability requirements with respect to when the
              proposed standards can become effective.

              Letters:

              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 34-35

       Response to Comment 12.2(C)(3):

       Our final Phase 2 heavy duty gasoline standards do not differentiate between
manufacturers based on which  program a manufacturer  participates in under the Phase 1
rule. All manufacturers will have until the  2008 model year to begin phasing into the Phase 2
requirements.

       (4)     Opposes phase-in of NOX  standard because it fails to provide  an adequate
              period of stability as required  under Section 202(a)(3)(C). [see also

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              discussion in Issue 3.1.4] EPA's proposed phase-in violates the 3-year
              stability requirement for engine standards; nor can the SSS and NTE
              standards applicable to engines meeting the NOX standard in 2007 be revised
              in 2008 or 2009 without violating the stability requirement.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 21
              Cummins, Inc. (IV-D-231) p. 54
              Engine Manufacturers Association (IV-D-251) p. 85
              Marathon Ashland Petroleum  (IV-D-261) p. 17

       Response to Comment 12.2(C)(4):

       We believe that a phase-in of heavy duty engine standards by percentage of a
manufacturer's production does not violate the stability requirement of section 202(a)(3)(C).
On the contrary, a phase-in requires that the engine families in each specified percentage of
production be changed only a single time to meet the new standard. That standards for that
percentage of production then remain stable.  A phase-in merely gives a manufacturer the
flexibility to change only a portion of its engine families in any given year, which can lessen
the manufacturer's burden in the initial years of any phase-in.  The stability requirement is
designed to allow manufacturers to avoid multiple technological changes of the entire
production within a short period and to recoup expenditures.  A phase-in does not require any
particular vehicle or engine family to undergo  multiple changes within a three year period, but
merely allows the manufacturer to spread out the single technological change over more than
one year.

       We do, however, agree that the combination of the 100% initiation of the
supplemental standards in the 2007 model year, required by the Phase 1 rule, with the
phase-in of new NOX standards for the supplemental tests over the 2007-2010 time frame
(particularly in the 2008 and 2009 model years) appears inconsistent with the provision for
standard stability.  However, for a variety of reasons, we have revised the NOX phase-in
schedule to require a 50% phase-in in the 2007 model year and the remaining 50% phase-in
no later than the 2010 model year. Under this approach, the supplemental standards being
implemented in the 2007 model year will remain unchanged for all engine families until at
least the 2010 model year.

(D)     EPA's requirement that manufacturers demonstrate compliance with
       supplemental test procedures under expanded ambient conditions violates
       CAA requirements applicable to high altitude standards.

       (1)     The application of supplemental test procedures to the 2007 standards
              presents significant issues of technical feasibility and would require a
              manufacturer to demonstrate compliance up to an elevation of 5500 feet.
              Section 202(f)(2) of the CAA, as applied to HDEs, only allows EPA to set
              standards applicable in high-altitude areas if they require proportional
              reductions (i.e. standards requiring no greater a percentage reduction in
              vehicle emissions at high altitude than the percent reduction required at low
              altitude) and in this context,  requires EPA to evaluate economic impacts,
              technical feasibility, and air quality benefits.  EPA has proposed an "all

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              altitude" standard for purposes of demonstrating compliance with the
              supplemental test procedures and in so doing has failed to follow the clear
              requirements of the CAA and has exceeded its statutory authority.

              Letters:

              Cummins, Inc.  (IV-D-231) p. 54

       Response to Comment 12.2(D):

       The commenter misreads the statute.  Section 202(f)(2) is limited to the "future
regulations" discussed in section 202(f)(1), which are limited to engines manufactured before
model year 1984.

(E)    EPA has failed to meet the requirements under section 211 (c)(1) of the CAA.

       (1)     Under section 211(c)(1), EPA may only regulate sulfur content of diesel fuel if
              the emissions may reasonably be anticipated to endanger the public health
              and welfare.  However, the medical and scientific evidence relied on by EPA
              does not support the need to reduce exposure to PM10. To count as
              benefits, those reductions  in attainment areas is contrary to section 211(c).  In
              addition, it is unclear whether the sulfur content would reduce the health
              effects associated with exposure to fine particulate matter.  Also, the
              uncertainties in existing health  risk assessments make it impossible to
              determine a significant difference in health benefits resulting from a 15 versus
              a 50 ppm sulfur cap.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 87-91

       Response to Comment 12.2(E)(1):

       EPA has concluded that the emissions products of sulfur in diesel fuel contribute to
ambient levels of particulate matter that can reasonably be anticipated to endanger pubic
health or welfare. The sulfur in diesel fuel contributes to  the particulate emissions of heavy-
duty trucks, which are an important contributor to ambient PM levels. The impact of sulfur on
particulate emissions from trucks, the contribution of particulate emissions from trucks to
ambient PM  levels,  and the risks to public health and welfare from current and projected
levels of PM10, fine PM, as well as the cancer related risk to exposure of diesel PM and
other components of diesel exhaust are discussed in detail in Section II of the preamble,
Chapter 2 of the RIA, as well as in other sections of this Response to Comments document
and Appendix A of the RIA.  This information includes consideration of all of the medical and
scientific information available to the agency, including information presented in public
comments.  The contribution of sulfur in diesel fuel to emissions of PM from heavy-duty
trucks, and the risk  to public health and welfare from ambient levels of PM, are considered
significant enough to warrant control of the sulfur content under section 211(c)(1)(A). In
addition, EPA considered and has reasonably rejected more stringent controls of motor
vehicles under § 202 as an alternative to regulating diesel sulfur.  See Section III of the
preamble, Chapter  III and Appendix A of the RIA.

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       Commenters appear to argue that the lack of evidence of expected benefits from
reducing sulfur to either 50 or 15 ppm, or the lack of a demonstrated difference in expected
benefits between a 15 ppm cap and a 50 ppm cap indicate that EPA has failed to making this
required showing under section 211(c)(1).  However concern with the effectiveness of the
fuel level actually adopted by EPA, or with a difference in effect between possible controls,
relates to the reasonableness of the level of control adopted by EPA.  It does not relate to
whether emissions from engines operating with the current levels of sulfur in diesel fuel
(which are significantly above either 15 or 50 ppm) present the kind of contribution  to air
pollution that authorizes EPA to consider and adopt a fuel control under section 211(c)(1). In
addition, EPA has shown that there will in fact be significant reductions in PM emissions from
this rule, with significant benefits to public health and welfare at a reasonable cost.  These
benefit include those from the reductions in  PM related to the sulfur content of the fuel.

       (2)     EPA's proposed rule is for emissions from HD engines and all of EPA's
              analysis and rationale should be based on these engines. In the context of
              requiring a special diesel fuel for light-duty vehicles, commenter notes that it
              would be unlawful to EPA to implement a policy goal of encouraging a new
              light-duty diesel vehicle  market to emerge by disregarding the criteria under
              section 211 of the CAA.  On this issue, it is interesting to note that while EPA
              insists that emissions from diesel engines are harmful to public health, EPA
              appears to support regulations that would encourage the growth of  a light-
              duty diesel market. In doing so, EPA would require the oil industry  to invest in
              a new product that would involve significant refining, distribution, and
              infrastructure changes.

              Letters:

              American Petroleum Institute (IV-D-343) p. 90-91

       Response to Comment 12.2(E)(2):

       The adoption of controls on the sulfur content of diesel fuel is  based on EPA's
analysis involving heavy-duty trucks and engines.  EPA is not relying on the use of diesel
light-duty trucks to justify this rule under § 211 (c). While today's rule will mean that low sulfur
diesel fuel will be available for light-duty diesel cars or trucks in the future, EPA is not relying
on this as a basis for this rule.  It is an expected impact, but the rule is not based on it.

       (3)     EPA cannot lawfully make the finding required under 211(c)(1)(B) that the
              emission control devices or systems that are expected to be used to meet the
              proposed standards are "in general  use" or have "been developed to a point
              where in a reasonable time [they] would be in general  use were such
              regulation to be promulgated." EPA may regulate fuels only if it determines
              that the emission products of the fuel will significantly impair emission control
              systems in general use or which would be in general use were the fuel control
              to be adopted.  The technology EPA relies on is not "in general use" nor has it
              been developed to a point where it would be in  general use were such
              regulation promulgated.  One of the commenters provides significant
              discussion on this issue noting that "testing" and "in general use" stages are
              clearly not the same, and that EPA and the regulated industry have
              acknowledged that there are uncertainties regarding the technology that will

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              be used to meet the standards. Commenter cites to statements made by the
              auto manufacturing industry as well as to case law to support their position on
              this issue.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 5, 87-90
              ExxonMobil (IV-D-228) p. 9

       Response to Comment 12.2(E)(3):

       The preamble and RIA discuss in great detail the feasibility of PM and NOX
aftertreatment technology to be available to meet the model year 2007 emissions standards
adopted today.  EPA has concluded that given the fuel control adopted today and the lead
time provided for model year 2007, that the PM aftertreatment and NOX adsorber
technologies needed to meet the emissions standards will be in general use by that time.
Compliance with the requirements of § 211(c)(1) and (2) is also discussed in Appendix A to
the RIA.

       EPA interprets the phrase "would [or will] be in general use" as used in § 211(c)(1)(B)
and (c)(2)(B) to be forward looking, and focusing on general use at the time vehicle
emissions standards go into effect. This is consistent with the focus of § 202(a)(3)(A), which
provides that EPA is to base its emissions standards on "technology which the Administrator
determines will be available for the model year to which [section 202] standards apply."

       This is consistent with the decision in Amoco Oil Co. v. Environmental Protection
Agency, 501 F.2d 722 (D.C. Cir. 1974). There, the court considered what technology would
be "in or near general use in the 1975 or 1976 model years." Amoco at p.739. It focused on
availability of emissions control technology for the time period when the emissions standards
would go into effect, not for the earlier time when EPA adopted the emissions standards. In
that rulemaking, EPA reasonably concluded that catalytic converters would be in general use
in the model years 1975 and 1976, that auto makers would rely on catalytic converters for
another five years, and that in the spring of  1973 other technologies that might not need
control of lead levels in gasoline were still in a testing stage and would not be generally
available for model years 1975 and 1976.  In  that case, it was reasonable for EPA to
determine that  no technologies other than catalytic converters were in or near general use for
purpose of model year 1975 and 1976. Amoco at p.738-9.

       The claim that NOX adsorbers are currently in a testing stage and are not at this time
in or near general use is not the important issue under § 211(c)(1) and (2).  The question
before EPA is whether NOX and PM aftertreatment technology will be in or near general use
for model year 2007.  EPA has determined that such aftertreatment technology will be
available for general use for that model year.  Based on this, EPA has authority to adopt the
emissions standards under § 202(a)(3)(A) for that model year and to adopt a fuel control
under § 211(c)(1)(B) to limit a fuel  component, sulfur, that  substantially impairs the emissions
control technologies that would be in general use in that time frame, given an  appropriate
control on the fuel component.

       Commenters also object that the current stage of technology development precludes
EPA from making the comparison  of technologies called for under § 211 (c)(2)(B), and

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therefore EPA cannot take action under § 211 (c)(1)(B) until it is able to determine that a
technology or technologies are in or near general use. As discussed above, EPA has
determined that certain technologies will be in general use for model year 2007. EPA
evaluated several technologies, and believes that PM aftertreatment technology, and NOX
adsorber aftertreatment technology, will be in general use in model year 2007, given the level
of sulfur control adopted today.

       Other technologies, such  as compact SCR, would also require control of sulfur in fuel
to allow the NOX and PM standards to be met. The sulfur control adopted today would be
required for compact SCR to meet the PM emissions standards. Significant control of sulfur
would also be required to achieve NOX reductions approaching those needed to meet the
NOX emissions standards adopted today.  In addition, compact SCR is not expected to be in
or near general use by model year 2007, given the significant and widespread infrastructure
changes that would need to be made  for that to occur. There are also significant unresolved
issues about how the use of urea would be ensured in-use, so that compliance with the
emissions standards could be ensured in-use.

       EPA  has evaluated what technologies are reasonably expected to be in general use
for model year 2007, and whether they are also significantly impaired  by the sulfur level in
diesel fuel. EPA has reasonably  determined that all  potential or likely control technologies
would require control of sulfur to meet the NOX and PM emissions standards.  In addition, all
potential or likely control technologies would require  the level adopted today to meet the PM
standards. For compact SCR EPA has  identified significant problems that indicate that it is
not reasonably expected to  be in  general use by model year 2007, even with a control on
sulfur levels,  although with the sulfur control  adopted in this rule it may find use in some
market areas, for example some  centrally fueled fleets.

       The requirements of § 211(c)(2)(B) are focused on making a threshold determination
of whether regulation of sulfur in diesel fuel is appropriate, as compared to no regulation of
fuels.  It is not aimed at determining the  actual level or type of control adopted by the agency,
among various potential levels or types of fuel controls.  Amoco at pp.736-9. Here, as in  the
case of unleaded gasoline, all of the technologies that will be in general use in model year
2007 require control of sulfur to meet the model year 2007 emissions  standards adopted
today.  In addition, they require it  at the level adopted today. The alternative technologies
evaluated by EPA, such as compact SCR, also require control of sulfur, and also require  it at
the level adopted today. In addition, compact SCR is not expected to  be  in general use in
model year 2007, with or without  the sulfur control adopted today.  Certain commenters have
suggested that additional or different fuel controls would be needed to address concerns  over
fuel infrastructure changes and use of urea in-use, before compact SCR could be considered
in general use. Under all of these circumstances, EPA believes that no further comparison of
technologies is required under § 211 (c)(2)(B) and that EPA has appropriately made the
threshold determinations required under § 211(c)(2)(B) to warrant regulation of the sulfur
level of diesel fuel under § 211(c)(1)(B).

(F)     EPA  has failed to demonstrate that the level and timing of its proposed fuel
       change would enable advanced exhaust emission control technologies to
       achieve the Tier 2 standards.

       (1)    Section 202(1) of the CAA requires  EPA to demonstrate the feasibility of its
             Tier 2 emissions standards for light duty diesel vehicles by establishing a

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              diesel sulfur control program that will assure the availability of clean fuel to
              enable the use of advanced exhaust emissions control technology by the time
              that the low-emitting diesel vehicles are introduced.  Commenter provides
              significant discussion on this issue and concludes that EPA has failed to
              satisfy its burden the CAA to demonstrate that the level and timing of its
              proposed diesel fuel change will render its Tier 2 standards feasible by
              enabling advanced exhaust emissions control technology to achieve those
              standards.

              Letters:

              Volkswagen (IV-D-272) p. +3-7

       Response to Comment 12.2(F):

       This issue is not relevant to the current rulemaking.  This issue was raised in the Tier
2 rule and was dealt with in that rule.  We have not reopened this issue in this rule, but are
replying to provide information to the commenter.

       As explained in our Response  to Comments for the Tier 2 rule, EPA is not required to
show the feasibility of the Tier 2 standards for diesel light duty vehicles under section 202(i).
Section 202(i) requires EPA to review the appropriateness of new standards  for LDVs and
LDT1s, and does not distinguish between diesel-fueled and gasoline-fueled vehicles in
requiring EPA to review and promulgate such standards.  Nothing in the text  of section 202(i)
provides any justification for dividing these categories of vehicle into different subcategories
of diesel-fueled and gasoline-fueled vehicles.

       In the Tier 2 rulemaking, EPA also determined that it was not appropriate to
promulgate separate, in particular, less stringent, standards for diesel vehicles in  the
LDV/LDT fleet.  Diesel vehicles currently represent a tiny percentage of the LDV/LDT market.
Further, diesel  vehicles do not represent a critical segment of the market, as  gasoline-fueled
vehicles can and do exist (in greater numbers) in all segments of the market  that  are
occupied by diesel  LDV/LDTs. Thus, gasoline-fueled LDV/LDTs provide for the consumer
the full panoply of vehicles in  the LDV/LDT fleet.   See International Harvester v.
Ruckelshaus, 478 F. 2d 615,  640  (D.C. Cir. 1973) ("as long  as feasible technology permits
the demand for new passenger automobiles to be generally met, the basic requirements of
the Act would be satisfied, even though this might occasion  fewer models and a more limited
choice of engine types.  The driving preferences of hot rodders are not to outweigh the goal
of a clean environment.").

       On the  other hand, allowing separate, and less stringent, standards for diesel
LDV/LDTs could potentially create substantial problems for the Tier 2 program. If EPA
allowed diesel  LDV/LDTs to be sold at less stringent standards than gasoline LDV/LDTs,
manufacturers  would have an obvious incentive to build more  diesel-fueled vehicles,
resulting in a loss of emissions reductions. EPA therefore cannot justify allowing diesel-
fueled vehicles to emit at higher rates than the gasoline-fueled vehicles in this market.

       In any case, however, EPA believes that the Tier 2 standards are feasible for diesel
LDVs with the diesel fuel sulfur restrictions promulgated in this rule, and considering the
flexibilities in the Tier 2 standards with respect to  lead-time,  interim standards, and phase-in

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structure.  Once the Tier 2 standards are fully phased in, NOX and PM removal by the exhaust
emission controls will need to be approximately 80% (assuming 1 g/mi NOX and 0.1 g/mi PM
engine-out from an LDT4 truck or MDPV - which is consistent with current certification data)
for a vehicle certifying to bin 8, which is somewhat less than the removal efficiency that will
be required for heavy-duty engines subjected to a test procedure with a considerably higher
load factor.

       Both Ford and AAM have provided data from light-duty testing to the Tier 2 docket
documenting NOX aftertreatment under lean exhaust conditions that is up to 85% efficient
when used with very low sulfur diesel fuels. Similarly, light-duty data for CDPFs provided by
Ford and MECA to the Tier 2 docket has demonstrated PM reductions from 80% to greater
than 90% when used with such fuels.

       In the period leading up to the introduction of lower sulfur diesel fuels, Tier 2 Interim
Standards will be in place that are achievable through the use of currently available or near
term engine  and exhaust aftertreatment technologies87. These technologies include the use
of advanced fuel systems (e.g., as electronically controlled, high-pressure common rail fuel
systems) and cooled EGR to achieve low engine-out NOX and PM levels, along with the use
of conventional diesel exhaust aftertreatment such as diesel oxidation catalysts and/or near-
term NOX reduction technology such as precious-metal-based lean-deNOx catalysts.

(G)    Setting highway diesel sulfur standards based on expectations of future diesel
       penetration of light duty diesel vehicles is of doubtful legal validity.

       (1)     Currently, diesel vehicles account for only a tiny fraction of light duty vehicle
              and light duty truck sales.  There is no guarantee that consumer will buy
              these engines, thus ensuring their success in the market place.  The A.D.
              Little  (AVL) study estimates that only 3.5 percent of the new car and light
              truck sales would be using diesel technology. Even given the unlikely EPA
              scenario that diesels will account for 50 percent of light duty truck sales in
              2010 and beyond, HDDEs would still account for 82 percent of EPA's total
              highway motor vehicle PM10 emissions inventory in 2020. The petroleum
              industry  should not be forced to invest in the capacity to produce a fuel simply
              in order to accommodate a segment of the vehicle market that may never
              materialize.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 40
              Marathon Ashland Petroleum  (IV-D-343) p. 34-35

       Response to Comment 12.2(G):

       We have not set our highway diesel fuel sulfur requirements based on expectations
of further penetration of diesel engines into the light duty vehicle market. Though the
reductions in sulfur promulgated today will allow such further penetration, this was not the
       87 "Cummins Sees Diesel Feasible for Early Years of Tier 2". Hart Diesel Fuel News, Sept. 20,
1999, p.2.

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basis for the rule and is not a primary justification for the rule.

(H)    EPA has failed to provide interested parties due process of law.

       (1)     The due process requirement prohibits EPA from regulating a private party
              without first providing notice and the bases for its proposed actions, yet EPA
              has failed to provide justification for many of its proposed requirements. EPA
              has failed to provide adequate explanation regarding the need for the PM and
              NOX emission reductions or the proposed reductions in diesel sulfur content,
              and has failed to provide any assessment of the air quality benefits resulting
              from its proposal. The Docket items contain no information on the actual
              estimates of emissions inventories or actual air quality modeling outputs, and
              it is unclear whether stakeholders will have adequate time to comment on
              EPA's modeling efforts. Commenters note several cases where EPA should
              expand its analysis and provide additional information.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 92-93
              Cummins, Inc. (IV-D-231) p. 51-52

       Response to Comment 12.2(H)(1):

       EPA fully met its requirements for notice in its proposal. The proposal documented in
great detail the air quality need for this rule; in particular, we reviewed the nonattainment
status anticipated for the nation without this rule, as well as the numerous other health and
welfare concerns associated with diesel emissions. We also specified the tons of NOX and
PM expected to be reduced under this rule. We have updated and supplemented our
information in the final rule. EPA provided five opportunities for public oral testimony and
approximately 2%  months for written comments in the proposal.  We entered new information
received after the comment period ended into the docket as such material became available
to us. Commenters had sufficient time and ability to comment on the information EPA
provided to show the emissions impact of this rule as evidenced by the more than 13,000
comments received on this rule. EPA does not believe that it should wait before
promulgating this rule because we have enough information at this time and have determined
that these standards are appropriate for model year 2007. Acting now provides lead time
and avoids  the loss in air quality benefits that would occur if we delayed the rule.

       Manufacturers have in the past requested that EPA provide as much leadtime as
possible prior to implementation. In fact, the comments of EMA, of which Cummins  is  a
member, requests even more lead time for this rule.  Manufacturers and refiners in the Tier 2
requested that EPA promulgate its diesel sulfur rule as soon as possible to allow them to
prepare for the Tier 2 rule with full knowledge of their further requirements under this rule.
EPA has found that the emission control technologies required by this rule will be feasible in
the time frame provided and that the standards promulgated are needed to reduce air
pollution that causes or contributes to pollution which may reasonably be anticipated to
endanger public health or welfare.  Given the substantial emission benefits that this  rule will
provide and the substantial time period needed for new engines to dominate the total fleet of
heavy duty  engines, it is critical for these standards to go into effect as soon as possible,
especially given that many metropolitan areas have relatively short deadlines for meeting the

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ozone NAAQS.

       The final preamble, RIA and Response to Comments (in particular, the air quality
sections of these documents) address the need for this rule and the pollution reductions
expected from this rule.

       (2)     EPA has failed to provide adequate notice of its proposal for HD engines and
              vehicles by not finalizing the 2004 HD rule prior to the publication of this
              proposed rule and as a result, has failed to provide interested parties due
              process of law.  Commenters refer to sections of the preamble (65 FR 35463)
              and specifically note that EPA posted the final 2004 HD rule on August 1,
              2000, which gave interested parties only 14 days to review the supplemental
              test requirements and the effects of the emission standards. EPA has
              provided an insufficient opportunity to comment on the proposed standards
              and should extend the comment period and consider comments that are
              delayed with regard to the heavy-duty diesel issues as related to the
              supplemental test procedures. Some commenters note that this due process
              failure is compounded by the fact that the rulemaking record is devoid of any
              review and analysis by EPA of the impact of the SERTs on the proposed new
              emission limits, control technologies and measurement techniques. (See
              also Issue 7.4.3.)

              Letters:

              American Petroleum Institute (IV-D-343) p. 92-93
              Cummins, Inc. (IV-D-231) p. 21, 52-53
              DaimlerChrysler (IV-D-284) p. 10-11
              DaimlerChryslerAG (IV-D-213) p. 1-6
              Detroit Diesel Corporation (IV-D-276) p. 23-26
              Engine Manufacturers Association (IV-D-251) p. 4, 54-55
              General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 85

       Response to Comment 12.2(H)(2):

       Commenters had adequate opportunity to comment on the proposed standards as
they relate to the Phase 1 rulemaking signed on July 31, 2000.  EPA published the proposed
Phase 1 rule in October, 1999 and referred  to that proposal in the NPRM for this rule.
Though the final Phase 1 rule made minor modifications to what was proposed, the final
regulations were very similar to the proposed regulations.  EPA notified commenters as soon
as possible that the final rule had been signed and posted the rule on our Internet site, as
well as publishing a notice in the Federal Register announcing the final rule.

       Regarding comments that the signed rule is  not the final rule because it had not yet
been published, the rule does become final  at the time of signature. The Federal Register
occasionally makes minor edits to conform with Federal Register style, but no substantive
changes are made to final documents.  The final rule published on October 6, 2000 is
substantively identical to the document signed on July 31, 2000.

       EPA also informed commenters that we would review comments on this issue if they
were received promptly after the comment period ended.  See e.g. Letter to E. Murphy,  API,

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Document No. IV-C-03.

       EPA addressed the cost and feasibility implications of the supplemental standards in
the proposal and has updated and supplemented its analysis in this final rule.

       (3)    Despite frequent requests from EMA and its members, EPA never held
             meaningful discussions with engine manufacturers on the substance of the
             new diesel fuel sulfur requirements or the more stringent emission levels that
             were to be proposed. EPA has incorporated numerous complex provisions
             from the 2004 HD rule into the proposed rulemaking.   EPA's actions fail to
             provide the regulated industry and the interested public with adequate due
             process. EMA notes specifically that EPA has failed to provide interested
             parties any meaningful opportunity to review the specifics of EPA's
             supplemental emission requirements, to assess them in the context of the
             proposed  new emission standards and the emission control technologies to
             which they will apply, and to comment on them.  In addition, EPA has not
             completed the necessary reviews on these requirements itself.

             Letters:

             Engine Manufacturers Association (IV-D-251) p. 5, 54-55

       Response to Comment 12.2(H)(3):

       We disagree with these comments.  EPA has met on  numerous occasions with EMA
and its members in the past year regarding heavy duty emission standards, including the
standards finalized in this rule.  (See Memos in  Docket Section IV-E).  EMA also had five
opportunities to provide oral comments to EPA at the public hearings,  as well as to provide
written comments on the proposed rule.  The proposals for this rule and the Phase 1 rule, as
well as meetings with EMA and its members companies since this proposal, included specific
discussions regarding the supplemental  emission requirements.  (See 65 FR 35467-35470.)
In contrast to EMA's comments, we have closely reviewed the issue of compliance with the
proposed supplemental requirements and have provided specific analysis of that issue in our
final RIA See Final RIA, Chapter III.A., particularly Chapter III.A.S.b.vi. We have also been
engaged  in a testing program related to these standards, which has reinforced our
conclusions regarding the feasibility of the standards. We have provided the public with
information regarding this program as it has become available to us. See Document Nos. IV-
C-08,  IV-E-05, IV-E-07. See also response to comment 12.2(H)(2) above.

       (4)    By failing to provide details or justification for many of its proposed
             requirements and programs, EPA has failed to provide due process of law
             under the  CAA. EPA cannot subject a private party to the consequences of a
             rule without providing notice and the bases of the proposed actions,  [cites to
             Ass'n of Nat'l Advertisers, Inc. v. FTC, 627 F.2d 1151, 1165-66 (D.C. Cir.
             1979) as an example] Commenter provides additional discussion on  the
             requirements of the CAA in this context and also  cites to Portland Cement
             Ass'n v. Ruckelshaus, 486 F.2d 375, 393 (DC Cir. 1973) and Global Van
             Lines v. ICC,  714 F.2d 1290 (5th Cir. 1983) to support their assertion that
             EPA cannot promulgate rules on the basis of inadequate data or on data that
             are known only to EPA.

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              Letters:

              Engine Manufacturers Association (IV-D-251) p. 83-84

       Response to Comment 12.2(H)(4):

       EPA has provided considerable discussion and underlying information justifying the
regulations promulgated in this rule, both at the time of proposal and as supplemented prior
to completing this rule. We have met our burden under section 307(d) of the Act.

       (5)     EPA's feasibility determinations are invalid since EPA relied on non-public
              data.  In making its feasibility determination in the proposed rule, EPA relied
              in part on confidential data developed as a result of consent decrees entered
              into between the Government and certain diesel engine manufacturers.  EPA
              has not released detailed technical information concerning the strategies
              used to meet the NTE requirements and other consent decree requirements
              that have been subsequently proposed as industry-wide regulations.  Without
              an opportunity to review the technical data underlying EPA's reliance  on the
              certification status of various engines families, manufacturers have not been
              provided with a meaningful opportunity to respond and comment on the data
              upon which EPA is relying.  Commenters provide significant discussion on
              this issue and cite to case law, Pub. L. No. 105-277 (1998), and sections of
              the CAA to support their position on this issue.

              Letters:

              General Motors Corp.  and Isuzu Motors America, Inc. (IV-D-256) p. 80-81

       Response to Comment 12.2(H)(5):

       EPA has not relied on confidential data to justify this rule. The commenter cites to
statements that are in the public record.  Manufacturers have agreed to meet the Phase  1
standards earlier than required under the Phase  1 rules.  Manufacturers  have certified
engines to meet NTE requirements. All information required to be provided by manufacturers
for such certifications is publicly available. The commenter wishes to be provided with
confidential business information regarding how particular manufacturers have met, or will
meet, these standards. It is of course inappropriate for EPA to provide one competitor with
information from another regarding how the competing manufacturer is meeting a standard,
even if EPA had that information. EPA has, however, provided in the record, both for this
rule and the Phase 1  rule, considerable data and analysis regarding how manufacturers  can
meet the standards. EPA has relied on data that is in the docket, not on  confidential
business information. The cases and statutes cited by the commenter, which concern
agency reliance on non-public data, are therefore inapposite. In fact, the statutes cited
generally contain provisions indicating the need to protect the confidentiality of trade secrets.

       (6)     One commenter noted that some manufacturers were not involved in  the
              Consent Decree process  referenced in the 2004 rulemaking, and that as  a
              result, have not had the opportunity to participate in the discussions with  EPA
              where the new standards and test procedures were first developed.
              Manufacturers who  are not signatories to Consent Decrees for alleged

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              violations of the CAA are put at a considerable competitive disadvantage.
              EPA's failure to provide non-Consent Decree signatories adequate
              opportunity for meaningful comment would be a violation of due process.

              Letters:

              DaimlerChryslerAG (IV-D-213) p. 2-5

       Response to Comment 12.2(H)(6):

       Daimler Chrysler has been aware of the consent decrees for over two years and has
had the opportunity on many occasions to meet with EPA, both as part of industry groups and
separately, regarding the supplemental requirements. See, e.g., Docket No. A-98-32,
Document Nos. ll-E-02-04, 12, 15, 17, IV-E-05, 09, 13, 16. Daimler Chrysler has had full
opportunity to provide its comments on these requirements and has had the same amount of
time to comment on this rule as other manufacturers.  We have provided them with
appropriate  due process.

(I)     The proposed rule is arbitrary and capricious and EPA has exceeded its
       statutory authority with respect to certain components of the proposal.

       (1)     Commenter cites to CAA section 307(d)(9)(A) and asserts that EPA has
              contravened the applicable statutes since certain aspects of the proposed
              rule will not withstand judicial scrutiny. It is incumbent on EPA in its
              rulemaking to "articulate... a 'rational connection' between the facts found and
              the choice made."  EPA did  not meet this requirement, fully examine the
              relevant data or provide an adequate explanation for its actions.  Commenter
              cites to case law to support their conclusions on this issue and notes that
              EPA must adequately address the concerns raised by industry and provide a
              rational basis for any resulting  final rule.

              Letters:

              Engine Manufacturers Association (IV-D-251) p. 85-86

       Response to Comment 12.2(l)(1):

       EPA disagrees with the comment, which is not supported by facts.  EPA has provided
considerable factual and analytical support for these regulations and has explained  its
connection to the conclusions and decisions we are making, as discussed elsewhere in this
document and the docket.  For example, Chapters II, III, IV and V of the  RIA provide detailed
examination of the need for this rule, the feasibility of the requirements, and the economic
impact of the requirements.

       (2)     EPA has exceeded its statutory authority in attempting to adopt "NTE"
              requirements and  other supplemental emissions requirements and tests.
              EPA has failed to demonstrate the technological feasibility, cost-effectiveness
              or overall efficacy  of those supplemental standards.  (See also Issue 3.2.1.)

              Letters:

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              Engine Manufacturers Association  (IV-D-251) p. 86

       Response to Comment 12.2(l)(2):

       EPA has demonstrated the feasibility of the supplemental requirements and has
taken into account the cost of such requirements in promulgating standards in this rule, as
required under section 202(a)(3).  EPA has included the costs of such requirements in its
cost analysis and, though there are no specific requirements for cost-effectiveness in the
statute, we have determined the cost-effectiveness of this rule, which is comparable to other
control measures.  See RIA Chapter V.

       (3)     EPA has exceeded its statutory authority in proposing to apply a prohibitory
              definition  of "defeat device."  (See also Issue 3.2.1.)

              Letters:

              Engine Manufacturers Association  (IV-D-251) p. 86

       Response to Comment 12.2(l)(3):

       The commenter provides no support for this statement. EPA has not revised the
definition of defeat device in this rule.

       (4)     Although the CAA prohibits any rule found to be "arbitrary, capricious,  an
              abuse of discretion, ..." EPA has articulated no rational connection between
              this  proposal and air quality, protection of public health, technological
              feasibility and cost. Citing court rulings which assess this standard,
              commenter notes that EPA relied on flawed methodology in determining
              potential risks of diesel exhaust and benefits of the rule.  Commenter asserts
              that the NTE and SSS standards are arbitrary, with no  rational connection
              between the facts and multipliers selected for the standards and that EPA
              significantly underestimated the  costs of the proposal, and overestimated the
              emission  reductions benefits.

              Letters:

              American Petroleum Institute  (IV-D-343) p. 85-86
              ExxonMobil (IV-D-228) p. 6

       Response to Comment 12.2(l)(4):

       EPA made clear in its proposal, and in this  final rule, the air quality need for the
pollution reductions in this rule, as well as the technological feasibility of the requirements.
EPA has also shown the  need for the low sulfur diesel fuel standards required in this rule.
EPA's air quality analysis, discussed in detailed elsewhere,  is reasonable, well documented
and based on generally accepted methodology.  EPA has reviewed the emissions control
technologies expected to meet the requirements for vehicles and engines under this rule and
found them to be feasible, as long as the low sulfur fuel required by this rule is used in the
vehicles. EPA has also reviewed alternative aftertreatment technologies suggested by
commenters. With  regard to SCR in particular,  EPA found that it would need low sulfur fuel

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and that there are substantial problems associated with SCR that will prevent its use by the
majority of the industry in the time frame available.

(J)     As a test procedure, the proposed NTE violates the statutory limitation that
       emissions test procedures measure conformity with the underlying standard.

       (1)    Commenter cites to 42 USC Sections 7525(a)(1) and 7541 (b) and notes that
             for MY 2004 HDEs the proposed emissions standard is an average based
             FTP standard.  The NTE establishes an absolute emission cap of 1.25 times
             the FTP standard. This standard in no way tests compliance with the
             proposed 2.5 gram FTP standard - only the FTP test does this. The inherent
             inapplicability of the NTE to the FTP standard is illustrated by the fact that the
             FTP test cycle itself includes emissions excursions that exceed 1.25 times the
             standard. The mere fact that excursions above the NTE occur does not allow
             the conclusion that an engine will not meet the FTP standard on average over
             its useful life, any more than an excursion above the NTE cap during the FTP
             test cycle necessarily means that an engine will not meet the FTP standard.
             Therefore, the NTE is fundamentally inconsistent with the FTP and therefore,
             violates the testing provisions of the CAA.

             Letters:

             International Truck & Engine Corp. (IV-D-87) p. 2-3

       Response to Comment 12.2(J):

       The NTE emissions cap is a separate standard from the FTP standard, based  on a
different test procedure. EPA has promulgated the NTE,  as well as the SSS test and
associated standards, in full compliance with section 202(a), as well as sections 206 and
207. It is designed for several purposes, and  is not limited to determining compliance  with
the  FTP standards, as the commenter suggests.  Section 202(a) authorizes EPA to adopt
emission standards such as the NTE.  As indicated elsewhere, we believe that the NTE
standards for NOX, PM, etc. promulgated in this rule are feasible.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 13-1

ISSUE 13:  MISCELLANEOUS

(A)    EPA should ensure that local and State agencies properly use CMAQ funds for
       city and State road projects.

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Cassara, Bob (IV-F-65)

       Response to Comment 13(A):

       This issue is not relevant to the current rulemaking. However, we note that the U.S.
Department of Transportation developed the Congestion Mitigation and Air Quality (CMAQ)
Improvement Program to fund transportation projects and programs in nonattainment and
maintenance areas which reduce transportation-related emissions. According to The
Congestion Mitigation and Air Quality Improvement (CMAQ) Program Guidance Document,
April 1999, the Federal  Transit Administration and Federal Highway Administration field
offices should establish a consultation and coordination process with their respective EPA
regional offices for early review of CMAQ funding proposals. The document states that
review by EPA is critical to assist the determination  of whether the CMAQ-proposed  projects
will have air quality benefits and to help assure that effective projects and programs  are
approved for CMAQ funding. In this way, EPA has the  opportunity to work with the
Department of Transportation to ensure that local and state agencies properly use CMAQ
funds.

(B)    EPA should also regulate emissions from the airline industry (jet fuel).

       (1)    Commenters provided no further supporting information or detailed analysis.

             Letters:

             Tseng, Joyce, et al  (IV-D-3)

       Response to Comment 13(B):

       We are not regulating airplane emissions or the quality of jet fuel under today's
rulemaking. In April of  1997, we promulgated new NOX and CO emission standards  for
commercial aircraft engines. That rule adopted the voluntary NOX and CO emissions
standards of the United Nations International Civil Aviation Organization (ICAO), bringing the
United States aircraft standards into alignment with the international standards. In April of
1999, we  released a study entitled "Evaluation of Air Pollutant Emissions from Subsonic
Commercial Jet Aircraft" which assesses the existing and potential impact of aircraft
emissions on local air quality at ten selected cities.  The many issues connected with any
rulemaking for airplane/jet engines and fuel warrant serious attention, and we believe it would
be premature today for us to attempt to raise potential resolutions to them.

(C)    EPA should clarify the amount of emissions reductions achieved through these
       rules that a State may include in its SIP demonstration for NAAQS.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 13-2

       (1)     EPA should consider delaying the attainment demonstration deadline to 2010
              to allow states to take advantage of these significant emissions reductions.

              Letters:

              Koch Industries (IV-D-307) p. 11

       Response to Comment 13(C):

       EPA expects to clarify the amount of emission reductions achieved through these
rules that a State may include in its SIP demonstration for the ozone NAAQS after the rule
has been promulgated. Some states have already included estimates of the reductions in
their ozone attainment demonstrations for 2007 (Houston, Chicago, Milwaukee). The Agency
expects that others will seek to  include reductions from this rule in their SIP attainment
demonstrations after the rule is finalized (e.g., New York, Los Angeles). And in some cases,
the Agency expects to rely on reductions from this rulemaking when it considered a proposed
or final approval of a State's attainment demonstration (Beaumont-Port Arthur).

EPA disagrees that it should consider delaying the attainment demonstration deadline to
2010 to allow states to take advantage of the greater reductions  in 2010 as the heavy-duty
vehicle fleet is turned over with  cleaner vehicles meeting today's new standards. It is the
combined task of the federal government and the States to bring nonattainment areas into
attainment as expeditiously as practicable. As Congress was no doubt aware, and the
Agency heard repeatedly during the course of its five public hearings, every year of delayed
attainment causes harm to public health and welfare.  If reductions from this rulemaking are
insufficient to bring areas into modeled attainment, then state and local government should
considered additional measures to make up the shortfalls.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 14-1

ISSUE 14:  SUPPORTS OR INCORPORATES OTHER COMMENTS

       Issue 14.1: Supports/Incorporates Prior Comments of Commenter

(A)    Commenter provides their comments as submitted in response to the Tier 2
       rulemaking as an attachment.

       (1)    Commenter provided a copy of their Tier 2 comments (August 2, 1999)as
             well as their supplemental Tier 2 comments (December 1, 1999) as
             attachments to their letter.

             Letters:

             General Motors Corp. and Isuzu Motors America,  Inc.  (IV-D-256) p. +A, C

       Response to Comment 14.1 (A):

       A copy of the RTC of comments for the Tier 2 rule has been placed in the  docket for
this rule.  See Issue 9 for responses to comments specific to the Tier 2 rule.

       The commenter attached verbatim portions of a comment previously submitted to the
agency in connection with another rulemaking. The attachment included comments relating
to the potential beneficial health effects of tropospheric ozone.  The commenter did not
specify the relationship between these previous comments (submitted in 1997 in response to
EPA's proposed revisions to the National Ambient Air Quality Standards for ozone) and the
current rulemaking and thus the comments do not appear to be directly relevant to this rule.
In any event, we do not agree with the commenter's conclusions.

       The previous comments suggest that such beneficial health effects "may significantly
reduce, or even eliminate, the net health benefits of EPA's proposed ozone standards." EPA
has reviewed the technical information related to the possible  health benefits of tropospheric
O3 associated with its shielding of the public from potentially harmful, but naturally occurring,
ultraviolet radiation from  the sun. This information was previously submitted to EPA, and we
have responded to this information, in conjunction with our 1997 review of the National
Ambient Air Quality Standards (NAAQS) for O3.  Our technical evaluation  of the information
remains the same as expressed in our earlier response (Responses to Significant Comments
on the 1996 Proposed Rule on the National Ambient Air Quality Standards for Ozone, U.S.
EPA, July 1997,  Docket Number A-95-58).

       In our earlier response (p. 133), we noted that the commenter's own citations provide
little confidence in the calculations made to date with respect to this issue. The EPA
documents cited by the commenter include an EPA white paper (Cupitt, 1994), developed as
an initial scoping analysis of the issues, in preparation for potential consideration of this issue
in the Regulatory Impact Analysis (RIA) that would accompany the O3 NAAQS regulatory
package, together with internal peer reviews of that paper (Childs, 1994; Altshuller, 1994).
The review of the draft estimates concluded "(1) the numbers resulting from these
calculations are quite small and (2) the limitations of the accuracy and reliability of the input
to the calculations produces numbers that cannot be defended, whether large or small."
(Childs, 1994).

       Further, we noted that the submitted documents that present quantitative estimates of

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 14-2

such potential disbenefits, including Cupitt (1994) and one publication  (Lutteret al., 1996),
all base estimated disbenefits on an average change in O3 across the year of 10 ppb.
Neither these documents nor the commenter provide any support for the earlier claim that the
proposed or final O3 standards would result in a long-term spatial and seasonal average
change of this magnitude; nor is there any support provided now that this rulemaking would
produce a long-term spatial and seasonal average change of this magnitude. To the
contrary, the final RIA for this rulemaking estimates that change in the population-weighted
seasonal average 8-hour O3 concentration likely to result from the implementation of this rule
in the eastern  United States is approximately 1.4 ppb (Table VII-2, Final HD Engine Diesel
Fuel Regulatory Impact Analysis, December 2000), with even smaller changes likely
throughout the rest of the country.  Thus, apart from the substantial  uncertainties inherent in
the available assessments that call into question the credibility of any such estimates.88, the
use of this single assumption alone serves to significantly inflate any estimated disbenefits.

       In summary, our evaluation of the available analyses that have produced estimates of
health risks associated with changes in ground-level O3 has identified major limitations in
available information that resulted in the need for the analyses to incorporate broad and
unsupportable assumptions. These limitations are such that we have concluded that the
available technical information does not provide credible quantitative estimates of any such
potential beneficial effects, and further, that any such potential beneficial effects are likely
very small. This conclusion is consistent with the judgments previously expressed by internal
and external reviewers of such analyses.89 Thus, we conclude that  available analyses of
potential health benefits of the presence of tropospheric O3 do not support any change to our
evaluation of the adverse health effects associated with breathing O3 in the ambient air.


       Issue 14.2:  Supports/Incorporates Other Commenters

(A)    Supports and/or incorporates  by reference testimony given by the Engine
       Manufacturers Association (EMA).

       (1)     Commenters provided no further supporting  information or detailed analysis.

              Letters:

              Cummins,  Inc.  (IV-F-64)
              Detroit Diesel Corporation  (IV-F-116) p. 198
       88As we noted in our earlier response, the results of recent high-dose animal toxicology studies
suggest more research is needed into the direct effects of tropospheric O3 on the skin before reaching any
conclusions suggesting even very small disbenefits of reducing tropospheric O3.  Tests by Thiele et al.
(1997) suggest that chronic O3 can deplete Vitamin E in the skin, and this could make the skin more
susceptible to the effects of ultraviolet-B radiation.  Therefore, reducing ground level O3 exposure might
serve to reduce skin problems.  Even a very small O3 effect in this regard could completely offset or counter
the small shielding effect of O3 on ultraviolet-B radiation.

       89 A similar conclusion was also reached  in an external review of such information by the Health
and Ecological Effects Subcommittee of the Advisory Council on Clean Air Compliance Analysis, a part of
EPA's Science Advisory Board, in conjunction with their review of "The Benefits and Costs of the Clean Air
Act 1990 to 2010" (EPA, 1999b).

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 14-3

       Response to Comment 14.2(A):

       No response required. We have responded to the referenced comments elsewhere
in this document.

(B)    Incorporates by reference testimony given by Frontier Oil and/or Gary-Williams
       Energy Company in the New York public hearing.

       (1)    Commenters provided no further supporting  information or detailed analysis.

             Letters:

             Countrymark Cooperative  (IV-F-117) p. 74 (IV-F-191) p. 184

       Response to Comment 14.2(B):

       No response required. We have responded to the referenced comments elsewhere
in this document.

(C)    Supports and/or incorporates by reference testimony given by MECA.

       (1)    Commenters provided no further supporting  information or detailed analysis.

             Letters:

             Corning, Inc. (IV-F-77)
             Johnson Matthey (IV-F-117) p. 94

       Response to Comment 14.2(C):

       No response required. We have responded to the referenced comments elsewhere
in this document.

(D)    Supports and/or incorporates by reference testimony given by the NPRA.

       (1)    Commenters provided no further supporting  information or detailed analysis.

             Letters:

             Ergon & Lion Oil Co. (IV-F-117) p. 183

       Response to Comment 14.2(D):

       No response required. We have responded to the referenced comments elsewhere
in this document.

(E)    Incorporates by reference position statement of the National Council of Farmer
       Cooperatives.

       (1)    Commenters provided no further supporting  information or detailed analysis.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 14-4

             Letters:

             Countrymark Cooperative (IV-F-191) p. 184

       Response to Comment 14.2(E):

       No response required. We have responded to the referenced comments elsewhere
in this document.

(F)     Supports and incorporates by reference written comments as submitted by
       AAM and/or EMA.

       (1)    Commenter provided no further supporting information or detailed analysis.

             Letters:

             Caterpillar (IV-D-306) p. 1
             Cummins, Inc. (IV-D-231) p. 1
             DaimlerChrysler (IV-D-284) p. 1
             Detroit Diesel Corporation (IV-D-276) p. 1
             Ford Motor Company  (IV-D-293) p. 1
             Mack Trucks (IV-D-324) p. 1
             Volkswagen  (IV-D-272) p. 1

       Response to Comment 14.2(F)(1):

       No response required. We have responded to the referenced comments elsewhere
in this document.

       (2)    Commenter provides as an attachment to their letter the supplemental
             comments of the AAM as submitted in response to the Tier 2 rulemaking,
             including Volumes I, II, and III  (October 25, 1999)

             Letters:

             General Motors Corp. and Isuzu Motors America, Inc.  (IV-D-256) p. 2, +Att.
             D

       Response to Comment 14.2(F)(2):

       A copy of the RTC of comments for the Tier 2 rule has been placed in the docket for
this rule.  See Issue 9 for responses to comments specific to the Tier 2 rule.

(G)    Generally supports the positions taken by API and NPRA.

       (1)    Commenter provides no further supporting information or detailed analysis.

             Letters:

             Big West Oil, LLC (IV-D-229) p. 1
             Chevron  (IV-D-247) p. *1

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 14-5

             Citgo Corporation (IV-D-314) p. 1
             Marathon Ashland Petroleum (IV-D-261) p. 1
             Phillips Petroleum Company (IV-D-250) p. 7

       Response to Comment 14.2(G)(1):

       No response required. We have responded to the referenced comments elsewhere
in this document.

       (2)    Specifically references other comments that suggest flexibilities and
             approaches to provide universal opportunity for all refiners to meet the
             adopted standards on a consistent and equitable timeframe.

             Letters:

             Phillips Petroleum Company (IV-D-250) p. 3

       Response to Comment 14.2(G)(2):

       No response required. We have responded to the referenced comments elsewhere
in this document.

(H)    Supports/incorporates comments submitted by WIRA.

       (1)    Commenter provides no further supporting information or detailed analysis.

             Letters:

             Kern Oil & Refining Co. (IV-D-310) p. 1

       Response to Comment 14.2(1-1):

       No response required. We have responded to the referenced comments elsewhere
in this document.


(I)     Supports and incorporates those comments made by API and all attachments
       thereto.

       (1)    Commenter provides no further supporting information or detailed analysis.

             Letters:

             Equiva Services  (IV-D-226) p. 2
             ExxonMobil (IV-D-228) p. 22

       (2)    Also endorses the recommendations of the NPC study.

             Letters:

             LA Mid-Continent Oil and Gas Association (IV-D-319) p. 1

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 14-6

       Response to Comment 14.2(1):

       No response required. We have responded to the referenced comments elsewhere
in this document.

(J)     Supports and incorporates industry comments in the "Any Credible Evidence"
       (ACE) rulemaking, as applied to use of non-reference test methods to prove a
       violation in Section 80.29(b)(2).

       (1)     If the provision is finalized, it will lead to confusion in the regulated community
              because it is impossible for any party to assure its compliance with the rule.
              Furthermore, inclusion of the provision will increase industry compliance
              costs and may outweigh EPA's determination  of the cost-effectiveness of the
              rule.

              Letters:

              Koch Industries (IV-D-307) p. 16-17

       Response to Comment 14.2(J):

       This commenter argues that the inclusion in the final diesel rule of the provision
permitting the use of evidence in addition to the regulatory test method to establish
compliance, will cause confusion through lack of compliance certainty. The Agency
disagrees with this assertion. The Agency's Response to Comment 8.4.2(F) in this document
also provides the Agency's response to this comment.

       EPA disagrees with this commenter's additional argument that the rule's inclusion of
this alternative evidence provision will increase industry's cost of compliance due to the
alleged need for parties to conduct a multitude of tests, using a variety of methods, to assure
compliance.  The Agency believes, on the contrary, that the inclusion of this provision creates
compliance certainty through it's establishment of the regulatory test method as the
benchmark method with which to determine compliance.  It is EPA's position that the
compliance certainty that is created through the establishment of this benchmark status
should actually hold testing costs down for industry because the  evidentiary supremacy of the
regulatory test method (or the approved testing alternatives) is so firmly established under
this provision.

(K)    Supports and/or incorporates by reference comments submitted by Cummins.

       (1)     Commenters provided no further supporting information or detailed analysis.

              Letters:

              American Public Transportation Association (IV-D-275) p. 2

       Response to Comment 14.2(K):

       No response required. We have responded to the referenced comments elsewhere
in this document.

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RESPONSE TO COMMENTS DOCUMENT
DECEMBER 21, 2000	PAGE 14-7

(L)    Supports and/or incorporates by reference comments submitted by Detroit
      Diesel.

      (1)     Commenters provided no further supporting information or detailed analysis.

             Letters:

             American Public Transportation Association (IV-D-275) p. 2

      Response to Comment 14.2(L):

      No response required. We have responded to the referenced comments elsewhere
in this document.

(M)   Other comments presented as part of STAPPA/ALAPCO; and supports
      comments made by STAPPA/ALAPCO.

      (1)     Commenter provided no further supporting information or detailed analysis.

             Letters:

             CT DEP  (IV-D-320) p. 1
             Clean Air Agency  (IV-D-207) p. 1
             GA Department of Natural Resources (IV-D-268) p. 1
             IA Department of Natural Resources (IV-D-201) p. 1
             PA DEP  (IV-D-100)p. 3
             Regional Air Pollution Control Agency (IV-D-103) p. 2

      Response to Comment 14.2(M):

      No response required. We have responded to the referenced comments elsewhere
in this document.


(N)    Supports comments submitted by the Clean Air Coalition.

      (1)     Commenters provided no further supporting information or detailed analysis.

             Letters:

             AK Conservation Alliance (IV-D-349) p. 1

      Response to Comment 14.2(N)(1):

      No response required. We have responded to the referenced comments elsewhere
in this document.

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