Diesel Retrofit and Replacement Projects:
Quantifying and Using Their Emission
Benefits in SIPs and Conformity
Guidance for State and Local Air and
Transportation Agencies
United States
Environmental Protection
tl	Agency

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Diesel Retrofit and Replacement Projects:
Quantifying and Using Their Emission
Benefits in SIPs and Conformity
Guidance for State and Local Air and
Transportation Agencies
Transportation and Climate Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
Ŗ%	United States
Environmental Protection
^1	Agency
EPA-420-B-18-017, March 2018
Supersedes EPA-420-B-14-007

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SECTION 1: INTRODUCTION	6
1.1	What is the purpose of this guidance?	6
1.2	What vehicles, engines, and equipment does this guidance address?	7
1.3	What projects are covered by this guidance?	8
1.4	What are the requirements for using vehicle, engine, or equipment replacements in SIPs
and conformity?	9
1.5	How can emission reductions from projects be used to meet SIP and conformity needs? 10
1.5.1	Onroad and nonroad projects in SIPs	10
1.5.2	Onroad projects in transportation conformity	10
1.5.3	Nonroad projects in transportation conformity	11
1.5.4	Projects in general conformity	11
1.6	How does this guidance relate to the Voluntary Mobile Source Emission Reduction
Program SIP guidance?	11
1.7	Can a state or local government require the replacement or retrofit of onroad and
nonroad vehicles, engines, or equipment?	12
1.8	Does this guidance create any new requirements?	12
1.9	Who should I contact for additional information?	13
SECTION 2: QUANTIFYING EMISSION REDUCTIONS	14
2.1	How should emission reductions from projects be quantified?	14
2.2	What is MOVES?	14
2.3	How should the data included in MOVES be used when quantifying emission reductions
from projects?	15
2.4	Can MOVES be used to estimate emission reductions from projects for uses other than SIPs
or conformity determinations?	15
2.5	How should MOVES be used to quantify emission reductions from onroad retrofit projects?
16
2.5.1	Pollutant	17
2.5.2	Process	17
2.5.3	Fuel Type and Source Type	17
2.5.4	Retrofit Year	18
2.5.5	Initial Model and Final Model Year Retrofitted	18
2.5.6	Fraction of Fleet Retrofit	18
2.5.7	Effectiveness of the Retrofit	18
2.6	How should MOVES be used to quantify emission reductions from onroad vehicle or
engine replacement projects?	19
2.7	How should MOVES be used to quantify emission reductions from nonroad retrofit
projects?	20
2.7.1. Retrofit Start Year and Retrofit End Year	22
2.7.2	Start Model Year and End Model Year	22
2.7.3	Source Classification Code (SCC)	22
2.7.4	Engine Tech ID	22
2.7.5	Horsepower Minimum and Horsepower Maximum	23
2.7.6	Pollutant	24
2.7.7	Retrofit ID	25
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2.7.8	Annual Fraction Retrofit	25
2.7.9	Retrofit Effective Fraction	25
2.8 How should MOVES be used to quantify emission reductions from nonroad vehicle or
engine replacement projects?	25
SECTION 3: USING EMISSION REDUCTIONS IN SIPS	27
3.1	What are the basic requirements for using emission reductions in SIPs?	27
3.1.1	Quantifiable-	27
3.1.2	Surplus-	27
3.1.3	Federally Enforceable -	27
3.1.4	Permanent-	28
3.1.5	Adequately Supported -	29
3.2	How can the estimated emission reductions be used for SIP purposes?	30
3.3	What would a state submit to EPA to meet the requirements for incorporating a project in a
SIP? 30
3.4	Are there any other types of SIPs that could include emission reductions from projects?	31
3.5	What monitoring and record keeping should occur to document emission reductions?	31
3.5.1	What should the state air agency monitor and record?	31
3.5.2	How long should the state air agency maintain records?	32
3.6	What validation and reconciliation should occur for emission reductions in SIPs approved
under the VMEP guidance?	32
SECTION 4: USING EMISSION REDUCTIONS IN TRANSPORTATION CONFORMITY
DETERMINATIONS	33
4.1	What is transportation conformity?	33
4.2	Can emission reductions from projects be accounted for in transportation conformity
determinations?	33
4.3	How can the emission reductions from onroad projects be included in transportation
conformity determinations?	34
4.4	How can the emission reductions from nonroad projects be included in transportation
conformity determinations?	35
4.5	How is EPA supporting the use of emission reductions from nonroad projects in
transportation conformity?	36
4.6	What is a safety margin?	36
4.7	When can a safety margin be established in a SIP?	37
4.8	What are the benefits of establishing a safety margin at the time that an RFP SIP,
attainment demonstration, or maintenance plan is initially submitted?	37
4.9	Why should an area start developing a safety margin now?	37
4.10	What are the features of a safety margin?	38
4.11	What is a trading mechanism?	39
4.12	When can a trading mechanism be established in a SIP?	39
4.13	Why develop a trading mechanism as a stand-alone SIP revision?	40
4.14	What would a SIP with a trading mechanism look like?	40
4.15	What are the features of a trading mechanism?	40
4.16	Does the public have the opportunity to comment on trading?	41
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4.17	Are there any examples of transportation conformity-related trading mechanisms that
were approved into the SIP?	42
4.18	Are there any other ways to establish a trading mechanism for a nonroad project?	43
4.19	How can I get additional technical assistance in using the emission reductions from a
nonroad project in transportation conformity?	43
SECTION 5: USING EMISSION REDUCTIONS IN GENERAL CONFORMITY
DETERMINATIONS	44
5.1	How can the estimated emission reductions be used for general conformity determinations?
44
5.2	How can projects be used to meet the general conformity requirements?	44
5.3	Is a SIP revision required if a source with a facility-wide emissions budget wants to
implement a project at the facility?	45
5.4	What requirements would potentially limit the use of projects in the general conformity
program?	46
5.5	Why are SIPs required for use of nonroad projects in transportation conformity but not
required for general conformity?	46
APPENDIX A:	47
Establishing a Safety Margin FOR Transportation Conformity	47
A. 1 What is an example of establishing and using a safety margin?	47
A.2 What is the process for establishing a safety margin that results from a nonroad project?	48
A.3	Have any areas included safety margins in their SIPs?	50
APPENDIX B:	52
ESTABLISHING AND USING A TRADING MECHANISM IN TRANSPORTATION
CONFORMITY	52
B.	1 What is an example of establishing and using a trading mechanism?	52
B.2 Does a trading mechanism have to be included in a SIP?	52
B.3 What is the process for establishing a trading mechanism in a SIP?	53
APPENDIX C:	57
MODEL RULE TEMPLATE FOR TRADING EMISSION REDUCTIONS FROM NONROAD
RETROFIT AND REPLACEMENT PROJECTS (PROJECTS) FOR TRANSPORTATION
CONFORMITY	57
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SECTION 1: INTRODUCTION
1.1 What is the purpose of this guidance?
This guidance is intended to facilitate the development of retrofit and replacement projects in
state implementation plans (SIPs) and transportation conformity and general conformity
determinations. This document provides guidance on quantifying and using emission reductions
from onroad and nonroad diesel vehicles, engines, and equipment that have been replaced or
retrofitted with emission reduction technology.1
As a result of EPA's regulations, diesel engines manufactured today are cleaner than ever
before, and technology is available to reduce diesel emissions in a cost-effective way. But because
diesel engines can operate for 30 years or more, millions of older, dirtier engines are still in
use. Reducing exposure to diesel exhaust from these engines is especially important for human
health and the environment. Through the Clean Diesel Program,2 EPA offers funding for projects
that reduce diesel emissions from existing engines. Federal funding through Diesel Emission
Reduction Act (DERA) provides for national competitive grants and rebates to fund projects that are
EPA or California Air Resource Board (CARB) verified certified diesel emission reduction
technologies.
In addition, through EPA's Ports Initiative,3 EPA has found that accelerating the retirement
of older port vehicles and equipment and replacing them with the cleanest technology will reduce
emissions and increase public health benefits beyond what would be achieved without further
voluntary actions. For example, the potential for replacing older drayage trucks with cleaner diesel
trucks is significant, with nitrogen oxides (NOx) being reduced in 2020 by up to 48% and particulate
matter 2.5 microns and below (PM2.5) being reduced by up to 62% as compare to the Business as
Usual case.4
Retrofit and replacement projects also provide a unique and cost-effective opportunity for
state and local governments to reduce pollution from onroad and nonroad diesel vehicle and
equipment fleets, and as a result, could assist areas in attaining the national ambient air quality
standards (NAAQS or "standards"). The Fixing America's Surface Transportation Act (the FAST
Act), continues to support diesel retrofits and replacements through the Congestion Mitigation and
Air Quality Improvement Program (CMAO program).5 In addition, the FAST Act establishes a new
National Significant Freight and Highway Projects Program to fund highway projects to address
freight movement. Diesel retrofit and replacement projects are eligible for funding under this
program as well. The FAST Act recognizes the importance of diesel retrofit and replacement
1	www.epa.gov/verified-diesel-tech.
2	EPA notes that the Clean Diesel Program funds and supports the diesel retrofit and replacement projects that are
addressed by this guidance document as well as other cost-effective projects that reduce diesel emissions (e.g., truck stop
electrification. See the program website for further information at: www.epa. gov/cleandiesel.
3	www, epa. gov/ports-initiative.
4	"National Port Strategy Assessment: Reducing Air Pollution and Greenhouse Gases at U.S. Ports," EPA-420-R-16-011,
September 2016 www.epa.gov/ports-initiative/national-port-strategv-assessment-reducing-air-pollution-and-greenhouse-
gases-us.
5	www.fhwa.dot.gov/environment/air qualitv/cmaa/.
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projects and other mobile source emission reduction strategies and directs states and metropolitan
planning organizations (MPOs) to give priority for use of CMAQ funds for projects that reduce fine
particulate matter emissions, including diesel retrofits and replacements in PM2.5 nonattainment and
maintenance areas. The law also notes that states and MPOs continue to have final CMAQ project
selection authority.
The ability to quantify and use diesel emission reductions for SIP and conformity purposes
gives states and localities additional incentive to implement diesel retrofit and replacement projects.
This guidance document describes how to quantify and use reductions of NOx, volatile organic
compounds (VOCs), PM2.5, particulate matter 10 microns and below (PM10), and carbon monoxide
(CO) nonattainment and maintenance areas. The emission reductions resulting from implementing a
retrofit or replacement project can be used in a SIP to help achieve reasonable further progress
(RFP), attainment of the NAAQS, or maintenance of the NAAQS; and in transportation conformity
and general conformity determinations. See Section 1.5 for further details.
This guidance document is updated to reflect the quantification procedures to use EPA's
MOtor Vehicle Emissions Simulator (MOVES) model,6 as described in Section 2. State and local
agencies developing SIPs and conformity analyses for California should consult with EPA Region 9
for information on the current version of the EMission FACtor emissions model, EMFAC.
This guidance is focused on quantifying emission reductions from diesel retrofits and
replacements for SIP and conformity purposes and therefore has an intended audience of air quality
and transportation planners. Other audiences can use this guidance for quantifying emissions
reductions for non-SIP or conformity purposes by reading Section 1 for background and referring to
Section 2 of the guidance for quantifying emission reductions. This guidance document is written for
current and future NAAQS as well as current and future versions of MOVES. EPA will re-evaluate
the applicability of this guidance as needed.
1.2 What vehicles, engines, and equipment does this guidance address?
This guidance focuses on emission reductions from heavy-duty onroad and nonroad diesel
vehicles, engines, and equipment, and fuels.7 Note, however, that this guidance excludes locomotive
and marine applications because they are not currently included in MOVES. Emission reductions
that result from vehicle, engine, or equipment replacements that would have occurred through
normal attrition are considered to be the result of normal fleet turnover and are not addressed by this
guidance. The effects of normal fleet turnover are already included in the MOVES model.
Furthermore, the purchase of new vehicles or equipment to expand a fleet is not covered by the
6	The previous version of this document, EPA420-B-14-007, was released in February 2014. Today's version supersedes
the previous document. EPA's initial guidance in 2006 fulfilled the directive from the Energy Policy Act of 2005. See
Energy Policy Act of 2005, Title VII, Subtitle G (sections 791 to 797) at www.epa.gov/laws-regulations/summarv-
energy-policv-act.
7	Onroad sources include vehicles used on roads for transportation of passengers and freight. These sources are also
sometimes referred to as highway sources. Nonroad sources include vehicles, engines, and equipment used for
construction, agriculture, nonroad transportation, recreation, and many other purposes. These sources are also
sometimes referred to as off-road sources. Within these broad categories, onroad and nonroad sources are further
distinguished by size, weight, use, and/or horsepower.
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guidance. To be considered a replacement, the purchase of new vehicles, engines, and equipment
would need to be accompanied by the scrappage of old vehicles, engines, and equipment and occur
before normal attrition.
In general, this guidance applies to the retrofit and replacement of vehicles, engines, and
equipment manufactured before EPA's 2007/2010 onroad and 2008 nonroad regulations took effect:
•	New emission standards, enacted in 2001, affected all onroad heavy-duty highway vehicles
and engines, starting in the 2007 model year, with full implementation of the NOx
requirements beginning in 2010.
•	Tighter emission standards (Nonroad Tier 4) were phased in for 2008 and future model year
nonroad engines.
•	Ultra-low sulfur diesel fuel (15 ppm sulfur content) was required for onroad use beginning in
October 2006.
•	For nonroad vehicles, engines, and equipment, low sulfur diesel fuel (500 ppm sulfur
content) was required beginning in 2007, with ultra-low sulfur diesel fuel required beginning
in 2010.
This guidance document can also apply to retrofits and replacements of post-2007/2010 and post-
2008 vehicles, engines, and equipment if such activities meet the definition of "retrofit" discussed
below.
1.3 What projects are covered by this guidance?
This guidance covers projects that include any technology, device, fuel, or system that, when
applied to an existing diesel engine or vehicle, achieves emission reductions beyond that required by
EPA regulations at the time of the engine's certification. This guidance also covers projects that
include early replacement of existing vehicles or equipment with vehicles or equipment that achieve
emission reductions beyond that required by EPA regulations at the time of the original engine's
certification. Therefore, for those existing vehicles, engines, or equipment that will not have to
comply with EPA's 2007/2010 heavy-duty onroad and 2008 nonroad standards, any additional
emission reduction beyond the regulation of these vehicle, engine, or equipment emission levels is
considered a benefit of a project. These technologies may include, but are not limited to, the
following:
•	EPA "verified" emission control technologies8 (for example, diesel oxidation catalysts and
PM filters and upgrade kits);9
•	California's Air Resources Board (CARB) "verified" emission control technologies (see
paragraph below); and
8	For a complete list of all EPA verified technologies, consult the list at the following web site: www.epa. gov/verified-
dicscl-tcch/vcrificd-tcchiiologies-list-clean-diesel. Any diesel fuel and/or diesel fuel additive included on EPA's list or
verified technologies is required to be registered in accordance with regulations at 40 CFR 79, Registration of Fuels and
Fuel Additives.
9	An engine upgrade kit consists of parts (e.g., turbo charger, fuel injector, pistons, etc) that are used to rebuild an older
engine to an engine configuration which is certified to meet more stringent current federal emissions standards.
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• EPA certified engines10 as engine replacements (see Section 1.4).
Technologies that have not been verified by EPA or CARB, as well as operational strategies, are
beyond the scope of this guidance document.
In 2004, EPA signed a Memorandum of Agreement (MOA)11 with CARB to coordinate the
verification of diesel retrofit technologies. This MOA commits the agencies to establish reciprocity
in verification of hardware or device-based retrofits, and further establishes the joint commitment to
cooperate on the evaluation of retrofit technologies. This agreement commits EPA and CARB to
accept each other's verification of the amount of PM and NOx reduced by a particular retrofit
technology. Currently, EPA accepts CARB verified technologies, and CARB accepts EPA verified
technologies. Additionally, as retrofit manufacturers initiate and conduct in-use testing, both
agencies agreed to coordinate this testing so data generated may satisfy the requirements of both
agencies. This MOA is intended to expedite the verification and introduction into the market of
innovative emission reduction technologies, and reduces the effort needed for manufacturers to
complete verification.
The verification of diesel technologies is specific to particular types of vehicles, engines, or
equipment as defined in the "applicability" section of the EPA and CARB verified technology lists.
Verified retrofit technologies can be applied only to the vehicles, engines, or equipment specified in
those lists. For example, a technology that has been verified for onroad vehicles will not necessarily
be suitable for nonroad vehicles, engines, or equipment unless it is also been verified for such use.
For the remainder of this guidance document, unless specifically noted, "project" refers to
both retrofit and replacement.
1.4 What are the requirements for using vehicle, engine, or equipment
replacements in SIPs and conformity?
In addition to the EPA and CARB verified technologies, this guidance also applies to the use
of EPA certified engines as engine replacements,12 or the early replacement of older vehicles or
equipment with cleaner vehicles or equipment.
To be able to use emission reductions from any replacements in a SIP or in a conformity
determination:
• The vehicle, engine, or equipment being replaced would be scrapped (i.e., permanently
disabled or destroyed), or the replaced engine would be returned to the original engine
manufacturer for remanufacturing to a cleaner standard;
10	For a complete list of all EPA certified large on-road and nonroad engines, consult the list at the following web site:
www.epa.gov/compliance-and-fuel-economv-data/annual-certification-data-vehicles-engines-and-eauipment
11	The MOA is at the following web site: www.epa.gov/sites/production/files/2016-03/documents/epa-arb moa.pdf.
The CARB verified technology list can be found here: www.arb.ca. gov/diesel/verdev/vt/cvt.htm.
12	Engine replacement is sometimes referred to as an engine "repower;" EPA uses only the term "replacement" in this
guidance.
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•	The replacement vehicle, engine, or equipment would perform the same function as the
vehicle, engine, or equipment that is being replaced (e.g., an excavator used to dig pipelines
would be replaced by an excavator that continues to dig pipelines); and
•	The replacement vehicle, engine, or equipment would be of the same type and similar gross
vehicle weight rating or horsepower as the vehicle, engine, or equipment being replaced (e.g.,
a 300 horsepower bulldozer is replaced by a bulldozer of similar horsepower).
In addition, when emission reductions are calculated for replacements, note that:
•	The emission reductions would be available only for the remaining useful life of the vehicle,
engine, or equipment being replaced (e.g., if the vehicle being replaced had a remaining
useful life of 5 years, the additional emission reductions from the new vehicle would be
available for SIP or conformity purposes only for 5 years).
•	The emission reductions are available only for activity (e.g., travel or hours of use) of the
vehicle, engine, or equipment being replaced within the nonattainment or maintenance area.
Thus, if replacing an older, less used vehicle or piece of equipment with a piece of new
equipment, emission reductions from the new equipment would need to be calculated based
on the activity level of the old equipment.
1.5 How can emission reductions from projects be used to meet SIP and
conformity needs?
State and local air and transportation agencies should work together to determine whether
reductions from these types of projects could be used in a SIP and/or only in a conformity
determination, given local air quality planning needs. Retrofit projects will provide their greatest
benefits in the near term, while significant numbers of vehicles, engines, and equipment built before
EPA's 2007/2010 onroad and 2008 nonroad standards remain in the fleet.
1.5.1	Onroad and nonroad projects in SIPs
One option is to use emission reductions from projects to help demonstrate RFP, attainment,
or maintenance in upcoming SIP submissions. Onroad and nonroad projects are subject to the same
SIP requirements as any other control measures. This guidance document provides the necessary
information to include projects in a SIP, including a calculation method that ensures that emission
reductions calculated are consistent with the rest of the SIP. General SIP requirements are
described in Section 3 of this document.
1.5.2	Onroad projects in transportation conformity
Alternatively, state and local agencies could also use onroad projects to meet transportation
conformity requirements now or in the future with little additional effort beyond what is required to
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properly implement the projects and quantify the emission reductions. These reductions could be
incorporated into a transportation conformity determination without making any change in the SIP.
Section 4.3 of this document explains this process.
1.5.3	Nonroad projects in transportation conformity
This document also provides guidance on options for using reductions from nonroad projects
in regional emissions analyses for transportation conformity determinations (see Section 4). These
options require a SIP revision before they can be implemented. One option, adding a safety margin
to the SIP, could be implemented in the context of the process of developing a new SIP to meet an
applicable NAAQS. SIP safety margins have been implemented and used to meet transportation
conformity requirements many times in the past. We have provided detailed information on how
this option works in Section 4 and Appendix A.
Another option for using the nonroad emission reductions in transportation conformity
determinations is to include a trading mechanism in the SIP. We have provided detailed information
on how to implement a trading mechanism as a SIP in Section 4 and Appendix B. To help reduce
the time needed to develop, submit and approve a trading mechanism SIP, we have provided a model
trading rule in Appendix C.
EPA also notes that reductions can be applied as mitigation measures in quantitative PM2.5 or
PM10 hot-spot analyses for project-level conformity determinations. The methodology in Section 2
of this guidance can be used for such analyses. For further background on PM hot-spot analyses, see
EPA's "Transportation Conformity Guidance for Quantitative Hot-spot Analyses in PM2.5 and PM10
Nonattainment and Maintenance Areas" at www.epa.gov/state-and-local-transportation/proiect-
level-conformitv-and-hot-spot-analvses#pmguidance.
1.5.4	Projects in general conformity
This guidance also provides information on the use of emission reductions to meet general
conformity requirements (see Section 5). The use of nonroad emission reductions in general
conformity does not require a SIP revision.
1.6 How does this guidance relate to the Voluntary Mobile Source Emission
Reduction Program SIP guidance?
In October 1997, EPA issued its "Guidance on Incorporating Voluntary Mobile Source
Emission Reduction Programs in State Implementation Plans (SIPs)" (the VMEP guidance).13 The
purpose of the 1997 VMEP guidance is to support innovative methods in achieving emission
' 'This guidance is found at: www.epa.gov/sites/production/files/2016-05/documents/vmep-gud.pdf. EPA notes that the
VMEP guidance is related to SIP measures, rather than transportation or general conformity determinations. Control
measures for conformity determinations must meet the relevant criteria in the transportation and general conformity
regulations.
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reductions for SIPs. The VMEP guidance applies to SIP emission reduction measures that rely on
voluntary actions of individuals and other parties.
Many state or federally-funded projects may not be subject to the VMEP guidance if they
have well-defined requirements to ensure the full implementation of a SIP program. For example,
projects would not be subject to the VMEP guidance if a state or local regulation or ordinance that
required projects were included in the SIP. Another example of a project that would not be subject
to the VMEP guidance would be a state program that is described in the SIP that requires state
transportation construction contracts to be implemented with retrofitted construction equipment.
Please consult your EPA Region early in the development of a project to determine the appropriate
use of the VMEP guidance. Projects that are pre-empted under applicable provisions of Clean Air
Act (CAA) section 209, as discussed in Section 1.7, may not be included in the SIP.
Under the VMEP guidance, the amount of emission reductions allowed for voluntary mobile
measures in a SIP is presumed to be no greater than three percent of the total projected future year
emission reductions required to attain the NAAQS. EPA acknowledges that it may be possible to
demonstrate that voluntary measures may achieve credible reductions higher than the three percent
cap. In that case, EPA will re-evaluate that cap on a case-by-case basis and allow the cap to be
exceeded if the cap hinders the implementation of effective voluntary control measures, subject to
notice and comment during SIP approval. Today's guidance relies on EPA's 1997 VMEP guidance
for voluntary projects. Interested parties should refer to that guidance at the time a specific project is
under development.
1.7 Can a state or local government require the replacement or retrofit of
onroad and nonroad vehicles, engines, or equipment?
The answer to this question depends on the legal instrument or method chosen to require
replacements or retrofits, and the circumstances for an individual state or local government. CAA
section 209 sets forth certain preemptive restrictions on the abilities of states and localities to adopt
and implement emission standards for new onroad and new and non-new nonroad vehicles, engines,
and equipment. The effect of CAA section 209 on a particular sovereign's replacement or retrofit
requirements can vary depending on the specific provisions of such requirements and the nature of
the parties that must comply. State and local agencies should check with EPA before commencing
any state or local legal mechanisms (e.g., regulations, programs, contracts, etc) that require
replacement or retrofit projects for SIP, conformity, or other purposes. See 40 CFR Part 1074 and 40
CFR Part 89, Subpart A, App. A. Additional preemptive concerns may also need to be
considered. See Section 1.9 of this guidance for EPA contact information.
1.8 Does this guidance create any new requirements?
This guidance does not create any new requirements, but explains to state and local air
agencies, transportation agencies, MPOs, and the general public how the air quality benefits of
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projects could be included in a SIP or in a conformity determination. The CAA and implementing
regulations contain legally binding requirements. SIP requirements can be found in CAA sections
110(a)(2) and 172(c). Transportation and general conformity requirements can be found in CAA
section 176(c) and applicable regulations (40 CFR Parts 51 and 93). This guidance document does
not substitute for those provisions or regulations, nor is it a regulation itself. Thus, it does not
impose binding, enforceable requirements on any party, and may not be applicable in all situations.
EPA and State decision makers retain the discretion to adopt approaches for approval of SIP
measures that differ from this guidance where appropriate and consistent with applicable law and
regulations. Any final decisions by EPA regarding a particular SIP measure will only be made based
on the statute and regulations in the context of EPA notice-and-comment rulemaking on a submitted
SIP revision. This guidance may be revised periodically without public notice.
1.9 Who should I contact for additional information ?
If this guidance document does not answer a specific question, please contact the appropriate
EPA Regional Office with responsibility for air quality planning and/or conformity in the area where
the project is located. A contact list of EPA Regions is available at the following web address:
www.epa.gov/epahome/locate2.htm. In addition, contact information for EPA Regional
transportation conformity staff can be found at the following website: www.epa.gov/state-and-local-
transportation/epa-regional-contacts-regarding-state-and-local-transportation.
For general questions regarding projects or the application of verified technologies for the
existing fleet of onroad and nonroad vehicles, engines, and equipment, please contact EPA's Clean
Diesel Program at Clean Diesel Helpline or www.epa.gov/cleandiesel/forms/contact-us-about-
clean-diesel.
For technical questions regarding the use of MOVES for calculating emission reductions
from projects, please contact EPA's Office of Transportation and Air Quality at mobile@epa.gov.
For general questions concerning the use of emission reductions from projects in SIPs or in
transportation conformity, please contact Astrid Terry of EPA's Office of Transportation and Air
Quality at (734) 214-4812, terry.astrid@epa.gov.
For general questions concerning the use of emission reductions in general conformity,
please contact Virginia Raps of EPA's Office of Air Quality Planning and Standards at (919) 541-
4383. raps.virginia@epa.gov.
For questions concerning whether a state or local government may require replacements or
retrofits of onroad and nonroad vehicles, engines, or equipment, please contact David Dickinson of
EPA's Office of Transportation and Air Quality at (202) 343-9256, dickinson.david@epa.gov.
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SECTION 2: QUANTIFYING EMISSION REDUCTIONS
2.1	How should emission reductions from projects be quantified?
The MOVES model should be used to estimate emission reductions from projects for SIPs
and for conformity analyses in states other than California, the MOtor Vehicle Emissions Simulator
(MOVES).14 The most recent version of MOVES should be used. Users should check EPA's
MOVES website for the most current approved version of the model (MOVES2014a as of the
release date of this guidance document). Also see EPA's "Policy Guidance on the Use of
MOVES2014 for State Implementation Plan Development, Transportation Conformity, and Other
Purposes" for more details.15
EPA is not providing a methodology at this time for the quantification of emission reductions
from projects in California. State and local agencies developing SIPs and conformity analyses for
California should consult with EPA Region 9 for information on the current version of EMFAC for
use in California and for information on how to quantify emission reductions from projects.
2.2	What is MOVES?
MOVES is EPA's motor vehicle emissions model for state and local agencies to estimate
VOCs, NOx, PM, CO, and other precursors from onroad and most nonroad sources for SIP purposes
and conformity determinations outside of California. The latest version of MOVES is available at
www.epa. uov/moves/1 atest-version.16 Since its original release in December of 2009, MOVES has
undergone several revisions, some of which affect the way emission reductions from retrofit projects
are calculated. The instructions for quantifying emission reductions from retrofit projects in this
guidance document apply to MOVES2014 and subsequent minor revisions, including
MOVES2014a. MOVES includes features that are specifically intended for modeling projects
which are described in detail in the sections that follow below. Sections 2.5 and 2.6 address using
MOVES for onroad projects and Sections 2.7 and 2.8 address using MOVES for nonroad projects.
MOVES incorporates EPA's latest emissions data for onroad and nonroad sources, as well as
the capabilities to apply retrofit benefits to emission factors or inventories that are generated by
MOVES under local conditions. These local conditions include environmental factors (e.g.,
temperature, humidity), fleet characteristics (e.g., age distribution of fleet, distribution of vehicle
miles travelled (VMT) by vehicle class, number and types of nonroad engines or equipment),
14	This guidance is applicable to current and future versions of the MOVES model, unless EPA notes otherwise when
approving the model for conformity purposes. Modelers should follow "MOVES2014 and MOVES2014a Technical
Guidance: Using MOVES to Prepare Emission Inventories for State Implementation Plans and Transportation
Conformity," EPA-420-B-15-093 (November 2015); available online at
nepis.epa.gov/Exe/ZvPDF.cgi?Dockev=P100NN9L.txt. EPA's MOVES modeling pages, which include the MOVES
model, user guide, and supporting documentation are can be found at www.epa.gov/otaa/models/moves/index.htm.
15	See nepis.epa.gov/Exe/ZvPDF.cgi?Dockev=P 100K4EB.txt.
16	Note that this guidance refers to "MOVES" generally rather than a particular MOVES version because EPA will
release updated versions of MOVES in the future.
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activity measures (e.g., speed distributions, distribution of VMT by roadway type, distribution of
hours of operation for nonroad equipment), and fuel characteristics (e.g., sulfur content, Reid vapor
pressure (RVP)). The impacts of these local conditions on the emissions of vehicles, engines, and
equipment meeting past, current, and future emission standards are incorporated in EPA's MOVES
emissions model. Using MOVES to generate emission reductions from projects ensures that those
reductions are based on the same conditions used to generate the rest of the inventory used in the SIP
or conformity analysis.
2.3	How should the data included in MOVES be used when quantifying emission
reductions from projects?
As with any model, the quality of the inputs in MOVES affects the quality of the model
results. As required by CAA Section 172(c)(3) and EPA's regulations at 40 CFR 51.112(a), States
must use the latest planning assumptions available at the time the SIP is developed, including, but
not limited to VMT, speeds, fleet mix and SIP control measures.
MOVES includes a national default database of fleet and activity information that is applied
at the county level. However, in most cases for onroad emissions, local data should be used instead
of default fleet and activity data. Detailed guidance on the development of MOVES inputs for SIP
and conformity analyses is included in "MOVES2014 and MOVES2014a Technical Guidance:
Using MOVES to Prepare Emission Inventories in State Implementation Plans and Transportation
Conformity" (hereafter referred to as the MOVES Technical Guidance) available on the MOVES
web page at nepis.epa.uov/E\e/ZvPDF.cui?Dockev=P 100NN9L.txt. This retrofit and replacement
guidance document addresses the specific inputs needed for onroad projects which are not covered in
the MOVES Technical Guidance. All other inputs used in estimating project benefits for SIP or
conformity purposes should be consistent with the MOVES Technical Guidance.
2.4	Can MOVES be used to estimate emission reductions from projects for uses
other than SIPs or conformity determinations?
Yes. MOVES could be used to evaluate projects for other purposes, such as the development
of proposals for projects. For these purposes, MOVES users could rely more on default data in
MOVES or other more simplified methods for using MOVES than would otherwise be necessary for
SIP or conformity purposes. These simplified methods may result in emission reduction estimates
that are not completely consistent with emission reductions calculated for SIP or conformity
purposes using more rigorous methods. Consultation between organizations developing project
proposals and state and local air quality and transportation agencies about appropriate methods and
interpretation of results is important to ensure that retrofit projects are properly evaluated.
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2.5 How should MOVES be used to quantify emission reductions from onroad
retrofit projects?
Onroad projects involving retrofit technologies, devices, fuels, or systems are modeled using
the Retrofit Data tab in the County Data Manager (CDM) to create an onroad retrofit input file in
MOVES. The default MOVES database does not include any existing or planned retrofit programs.
To create an onroad retrofit input file, use the Create Template button in the Retrofit Data tab of the
CDM to create a blank Excel file formatted with the column headers described below. The rest of
this section summarizes the key inputs for MOVES and discusses some of the questions users will
need to answer when developing input data. Onroad vehicle or engine replacement projects are
modeled using a separate process described in Section 2.6.
O MOVES County Data Manager
m&m
Š I'M Programs Š Retrofit Data
Š Generic
Tools

Ž Source Type population


@ Starts


Š Vehicle Type VMT
Š Hotelling
Š Meteorology Data


Š Ramp Fraction

@ Road Type Distribution
RunSpec Summary
Database
iŠ Age Distribution
Š Average Speed Distribution
Š Fuel
Description of Imported Data:
onRoadRetrofit Data Source:
File: (please select a file)
Browse-
Clear Imported Data Create Template..
Import
Messages:
Export Imported Data
Retrofit Data
Done
The MOVES retrofit input file describes the details of the retrofit project. This includes
inputs that specify the pollutants and pollutant processes affected by the retrofit project, the fuel
types affected, the vehicle types affected, the retrofit year (in MOVES, the calendar year of the
analysis), the model years of the vehicles that will be retrofitted, the fraction of vehicl es in that
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model year range that are retrofitted, and the percentage effectiveness (as a decimal fraction) of the
retrofit technology applied to the vehicles. Specific guidance on these inputs, where applicable, is
given below.
For most types of retrofit projects, the emission reductions for the project are best determined
by using two MOVES runs - one with no retrofit input file used (to represent the inventory without
the project) and one with a retrofit input file set to the appropriate level for the technology used (to
represent the inventory with the project). All other parameters in this section would be set
identically to describe the affected fleet of vehicles or equipment. The difference in emissions
between these two runs is the emission reduction associated with the retrofit project.
2.5.1	Pollutant
EPA and CARB have verified emission reductions from retrofit technologies only for NOx,
HC, CO, and PM emissions. For purposes of this guidance, reductions for HC can be assumed to
apply to VOC and reductions for PM can be assumed to apply to both PMio, and PM2.5 when
creating the retrofit input file. When estimating emission reductions from retrofit projects for SIP or
conformity purposes, only these pollutants (NOx, VOC, CO, PM10, or PM2.5) should be entered in
the retrofit input file.17 As discussed in Section 2.5.7 below, a retrofit evaluation for SIP or
conformity purposes should include all pollutants for which the project area is nonattainment or
maintenance, including any that increase as a result of the retrofit technology.
2.5.2	Process
The retrofit parameter file will include a separate line for each combination of pollutant and
process affected by the retrofit technology. All retrofit parameter files must include start and
running exhaust processes for each pollutant for which you are estimating reductions. Some retrofit
technologies may also reduce crankcase running and crankcase start emissions and retrofit programs
using these technologies will need to also include lines for each of these processes. Section 2.5.7 of
this document provides additional guidance on selecting process inputs for technologies that reduce
crankcase emissions. There are no reductions associated with the extended idle process for retrofit
technologies included in the EPA and CARB verified technology lists.
2.5.3	Fuel Type and Source Type
As discussed in Section 1.3, this guidance document addresses onroad retrofit projects only
for heavy-duty diesel vehicles. The retrofit input in MOVES allows you to enter the full range of
17 In order to calculate some pollutants, MOVES has to first calculate certain prerequisite or base pollutants (e.g. for
VOC, MOVES has to calculate Total Gaseous Hydrocarbons and Non-Methane Hydrocarbons). If you are only
interested in the dependent pollutant (e.g. VOC), you only need to enter a line for that pollutant in the retrofit input file
(i.e., it is not necessary to enter lines for Total Gaseous Hydrocarbons and Non-Methane Hydrocarbons). However,
when using this approach, the dependent pollutant output will correctly reflect the effects of the retrofit program, but the
base pollutants output will not.
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onroad source types (vehicle types) and fuel types, but only inputs for heavy-duty diesel vehicles
should be used for retrofit emission reductions in SIPs or conformity determinations.
2.5.4 Retrofit Year
The Retrofit Year should be equal to the calendar year you are modeling. For example, if the
calendar year of your analysis is 2017, the retrofit year should also be 2017. Using other years may
cause an incorrect result.
2.5.5 Initial Model and Final Model Year Retrofitted
This input allows you to define the initial and final vehicle model years covered by the
retrofit project. For projects that cover multiple model years and have different fractions of vehicles
retrofit for each model year, simply create a new line in the retrofit input file for each year. Using
this approach will ensure that differences in fractions of the fleet retrofit by model year are
accounted for in the retrofit calculation. For example, if a retrofit program applies to 10% of model
year 2000 trucks, 15% of model year 2001 trucks, and 20% of model year 2002 trucks, the retrofit
input file should have three lines, one for each model year, each with the appropriate fraction of fleet
retrofit fraction, rather than a single line representing a model year range of 2000 to 2002.
2.5.6 Fraction of Fleet Retrofit
This input represents the fraction of activity (VMT for running emissions and vehicle
population for start emissions) associated with retrofitted vehicles for a particular range of model
years and source type. This number can be a value from 0.00 through 1.00. For example, if
retrofitted 2005 model year school buses account for 40% of all 2005 model year school bus VMT in
the calendar year of analysis, you would enter 0.40 for the fraction of the school bus fleet retrofitted
for the 2005 model year.
2.5.7 Effectiveness of the Retrofit
This input is used to describe the effectiveness of the particular vehicle, engine, or equipment
technologies being used in the retrofit project. As mentioned in Section 1.4, EPA has verified the
emission reductions for certain retrofit technologies. A list of these EPA-verified retrofit
technologies, the vehicle types and model years they apply to, and the emission reductions
associated with them can be found at www.epa.gov/verified-diesel-tech/verified-technologies-list-
clean-diesel. Retrofit technologies that have been verified by the California Air Resources Board
(CARB) can be found at: www.arb.ca.gov/diesel/verdev/vt/cvt.htm. You should use emission
18

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reductions from retrofit projects from these verified retrofit technology lists as inputs for MOVES.18
These reductions are entered in MOVES as a fraction less than or equal to 1.00 (e.g., a 50%
reduction is entered as 0.50). The same value should be added for both running and start emissions
processes.
Retrofit technologies that include closed crankcase systems will require some adjustments to
the values included given in the verified technology list to account for the way MOVES separates
crankcase start and running emissions as separate processes from tailpipe start and running
emissions. For closed crankcase technologies, add additional lines to the input file for crankcase
start emissions and crankcase running emissions with an effectiveness fraction of 1.00 (i.e., 100%
reduction in crankcase emissions) for PM emissions (do not add lines for crankcase emissions for
any other pollutants). In addition, the values for tailpipe start and running emissions benefits for PM
should be adjusted downward by 5%. For example, if the retrofit technology includes a closed
crankcase system and the verified technology list gives a PM reduction of 30%, you should have
four lines in the input file for PM:
1.	Crankcase start with an effectiveness value of 1.00
2.	Crankcase running with an effectiveness value of 1.00
3.	Start exhaust with an effectiveness value of 0.25
4.	Running exhaust with an effectiveness value of 0.25
Note that the emission reductions for each verified technology in the EPA and CARB
verified technology lists are specific to certain categories of vehicles or engines and to certain model
years. The emission reductions in those lists should be applied only to the categories of vehicle or
engines and model years for which they have been specifically verified.
Some verified retrofit technologies may result in emission reductions for one pollutant and
emissions increases for another. Any analysis of retrofit projects for SIPs or conformity purposes
should include all pollutants for which the project area is nonattainment or maintenance that are
affected by the retrofit project, including any that increase as a result of the retrofit technology used.
An emissions increase from a retrofit is entered in MOVES as a negative number (e.g., a retrofit that
results in a 10% increase in emissions would be entered as -0.10).
2.6 How should MOVES be used to quantify emission reductions from onroad
vehicle or engine replacement projects?
Emission reductions from vehicle or engine replacement projects are not modeled using the
retrofit input file in MOVES. Instead, vehicle or engine replacement projects are modeled with two
runs, using the Age Distribution and Fuel tabs in the County Data Manager to define a base case
fleet and a control case fleet consisting of different model years. Use the Age Distribution tab to
define the age distributions of the base case and control case fleet. Use the Fuel tab to modify the
AVFT (Alternate Vehicle and Fuel Technology) input to reflect the composition of the fleet before
and after the replacement program is put in place.
18 Note that the EPA-verified technology reductions listed in the column labeled HC can be applied as VOC reductions
in MOVES and that reductions listed in the column labeled PM can be applied to both PM2 5 and PM10.
19

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In this case, we strongly recommend that you set up the base case and control case MOVES
runs to include only the fleet of vehicles affected in the project. For example, if you are evaluating a
retrofit project in calendar year 2017 that involved replacing 2005 model year school buses with
2015 model year buses, emission reductions should be calculated in the following way:
Base Case:
1.	Set up a base case RunSpec for your county in 2017, selecting only diesel school buses in the
Vehicles/Equipment panel.
2.	Create the base case input files for the CDM that describe the expected activity of 2005
model year school bus in the analysis year, 2017.
3.	Create an age distribution input file for the CDM which only includes 2005 model year
school buses.
4.	Create an AVFT input file in which all the school buses for the 2005 model year are diesel
buses.
5.	Run MOVES to get the emissions of 2005 model year school buses in 2017.
Control Case:
6.	Set up a control case RunSpec identical to the base case RunSpec.
7.	Use the same activity input files as in step 2; i.e., assume that the control case buses have the
same activity as the base case buses.
8.	Create an age distribution input file for the CDM which only includes 2015 model year
school buses.
9.	Create an AVFT input file in which all the school buses for the 2015 model year are diesel
buses.
10.	Run MOVES to get the emissions of 2015 model year school buses in 2017.
11.	Take the difference between the base case and control case runs to get the benefits of the
replacement project.
Note that these reductions should not be used beyond the remaining useful life of the
vehicles, engines, or equipment being replaced. In this example, if the remaining useful life of these
2005 model year school buses when they are replaced in 2015 is 5 years, emission reductions could
be applied under this guidance for calendar years 2015 through 2020. However, after 2020, these
reductions would be considered part of the normal fleet turnover for these vehicles and would not be
available for use in a SIP or in a conformity determination. See Section 1.5 for further information.
2.7 How should MOVES be used to quantify emission reductions from nonroad
retrofit projects?
Nonroad retrofit projects involving retrofit technologies, devices, fuels, or systems are
defined in MOVES in a table called "nrretrofitfactors", which is created using the Generic tab in the
Nonroad Data Importer. The default MOVES database does not include any existing or planned
retrofit programs. Selecting "nrretrofitfactors" from the pull-down list of MOVES tables in the
Generic tab allows several options for creating and importing a nonroad retrofit input file. Selecting
the Create Template button will create a blank Excel file formatted with the column headers
described below. As an alternative to filling in a blank template, EPA has created the Nonroad
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Retrofit Tool to simplify the creation of a nonroad retrofit input table. The Nonroad Retrofit Tool
automatically creates a template and fills that template based on values that the user enters in the
tool. This tool can be found on the MOVES Tools web page at www.epa.gov/moves/tools-develop-
or-convert-moves-inputs. Instructions on entering retrofit information in the tool and importing the
resulting retrofit input table into MOVES are included with the tool.
J MOVES Data Importer
Tools
ĻS3"
Run Spec Summary Database O Fio) Meteorology Data . Generic
Description of Imported Data:
Table |nrretrofitfactors
File: (please select a file)

Browse,,.
Clear Imported Data Create Template...
Messages:
Import
Export Default Data
Export Imported Data
Generic
Done
The rest of this section summarizes the key inputs for MOVES and discusses issues that
users may face when developing input data. The nonroad retrofit table requires detailed and
complex information about the types of equipment retrofitted, the engine technologies used in that
equipment, and the horsepower ranges of those engines. The Nonroad Retrofit Tool simplifies the
creation of the nonroad retrofit input table by limiting selection to the appropriate equipment types
and automating the selection of engine technology types. EPA strongly recommends use of the
Nonroad Retrofit Tool given the complexity of identifying nonroad engine technology types.
Nonroad vehicle or engine replacement projects are modeled using a separate process described in
Section 2.8.
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For most types of retrofit projects, the emission reductions for the project are best determined
by using two MOVES runs - one with no retrofit input file used (to represent the inventory without
the project) and one with a retrofit input file set to the appropriate level for the technology used (to
represent the inventory with the project). All other parameters in this section would be set
identically to describe the affected fleet of vehicles or equipment. The difference in emissions
between these two runs is the emission reduction associated with the retrofit project.
2.7.1. Retrofit Start Year and Retrofit End Year
The retrofit start year and retrofit end year should be set as the calendar year of analysis that
has been set in the MOVES RunSpec. For example, if the calendar year being modeled is 2017, the
retrofit start year and end year should be set to 2017. Using other years for these inputs may result
in incorrect results. The Nonroad Retrofit Tool automatically uses the year entered for calendar year
of analysis as the retrofit start and end years.
2.7.2	Start Model Year and End Model Year
The start model year and end model year should be the first and last engine model years
receiving the retrofit. Model years must be consecutive and the other entries for the same row
(engine tech ID, horsepower range, annual fraction retrofit, and retrofit effectiveness fraction) apply
to all model years covered. For example, if the annual fraction retrofit is different for different
model years, then each model year range with a unique annual fraction retrofit must be entered in a
separate row. The Nonroad Retrofit Tool creates an input file for a separate row for each model year
in the range entered. The Tool does not allow entry of model years after 2010 when nonroad Tier 4
standards are fully implemented.
2.7.3	Source Classification Code (SCC)
Nonroad equipment in MOVES is broken down by equipment type, engine type, and fuel
type into 214 Source Classification Codes (SCCs) in MOVES. Of these, 65 SCCs use diesel fuel.
The SCC code entry box in the Nonroad Retrofit Tool includes a pull-down list of the applicable
SCC codes. Users must take care to ensure that the SCC chosen matches the equipment type, engine
type, and fuel type of the equipment being retrofitted.
2.7.4	Engine Tech ID
Engine tech ID describes a combination of several engine variables that are specific to SCC
types and model years. These variables are:
1.	The EPA certification standard level, such as Tier 1, Tier 2, Tier 3, etc.
2.	The fuel type - gas, diesel, CNG, or LPG
3.	Engine configuration - 2-stroke or 4-stroke, horsepower range, etc.
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As discussed in Section 1.3, this guidance document addresses nonroad retrofit projects only for
diesel equipment. The retrofit input in MOVES allows you to enter the full range of nonroad engine
tech types, but only inputs for diesel engine tech types meeting Tier 3 or earlier standards should be
used for retrofit emission reductions in SIPs or conformity determinations. The Nonroad Retrofit
Tool automatically determines the appropriate Engine Tech IDs based on the model year range
entered in the tool and enters them in the nonroad retrofit input table. EPA strongly recommends the
use of this tool instead of manually creating the input file. However, for reference, the allowable
diesel engine tech types in MOVES are listed in the following table.
Diesel Engine Tech IDs
Engine Tech ID
Engine Tech Name
Description
167
Base
Pre-1988 diesel engines
168
TO
Late model (1988+)
uncontrolled diesel engines
169
T1
Diesel engine meeting Tier 1
standards
170
T2
Diesel engine meeting Tier 2
standards
171
T3
Diesel land-based engine
meeting Tier 3 standards
172
T3B
Diesel land-based engine
meeting Tier 3 standards for 75-
100 hp engines
177
BaseM
Pre-1988 recreational marine
diesel engines
178
TOM
Late model (1988+)
uncontrolled recreational marine
diesel engines
179
TIM
Diesel recreational marine
engine meeting Tier 1 standards
for engines greater than 50 hp
180
T2M
Diesel recreational marine
engine meeting Tier 2 standards
for engines greater than 50 hp
181
T3M
Diesel recreational marine
engine meeting Tier 3 standards
for engines greater than 50 hp
2.7.5 Horsepower Minimum and Horsepower Maximum
The variables hpMin and hpMax define the power interval of a given SCC in units of
horsepower. The horsepower range is defined as min < HP <= max. MOVES only allows certain
pre-defined power intervals, which are listed in the following table. Not all of these power intervals
exist for every SCC. Users must enter the correct horsepower range intervals in the Nonroad
Retrofit Tool.
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Power Interval Definitions
Range
hpMin
hpMax
0 < hp <= 1
0
1
1 < hp <= 3
1
3
3 < hp <= 6
3
6
6 < hp <= 11
6
11
11< hp <= 16
11
16
16 < hp <=25
16
25
25 < hp <= 40
25
40
40 < hp <= 50
40
50
50 < hp <= 75
50
75
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2.7.7 Retrofit ID
The retrofit ID is an arbitrary number assigned to the retrofit program. The number can be
any integer. It is a key field in the database table and each line in the table should be assigned a
unique retrofit ID. MOVES may ignore records with identical retrofit ID numbers. The Nonroad
Retrofit Tool automatically creates a unique Retrofit ID for each line in the retrofit table.
2.7.8	Annual Fraction Retrofit
For a given SCC, engine tech ID, horsepower range, and model year range, the annual
fraction retrofit is the fraction of the total population of equipment in the geographic domain that has
been retrofit. A value of 1 for the annual fraction retrofit would indicate that 100% of the equipment
in the specified county with that SCC and engine tech ID, and in the specified horsepower and model
year range, has been retrofit.
2.7.9	Retrofit Effective Fraction
This input is used to describe the effectiveness of the particular vehicle, engine, or equipment
technologies being used in the retrofit project. As mentioned in Section 1.4, EPA has verified the
emission reductions for certain retrofit technologies. A list of these EPA-verified retrofit
technologies, the vehicle types and model years they apply to, and the emission reductions
associated with them can be found at www.epa.gov/verified-diesel-tech/verified-technologies-list-
clean-diesel. Retrofit technologies that have been verified by the California Air Resources Board
(CARB) can be found at: www.arb.ca.gov/diesel/verdev/vt/cvt.htm. You should use emission
reductions from retrofit projects from these verified retrofit technology lists as inputs for MOVES20.
These reductions are entered in MOVES as a fraction less than or equal to 1.00 (e.g., a 50%
reduction is entered as 0.50).
Some verified retrofit technologies may result in emission reductions for one pollutant and
emissions increases for another. Any analysis of retrofit projects for SIPs or conformity purposes
should include all pollutants for which the project area is designated as nonattainment or
maintenance that are affected by the retrofit project, including those that might increase in emissions
as a result of the retrofit technology used. An emissions increase from a retrofit is entered in
MOVES as a negative number (e.g., a retrofit that results in a 10% increase in emissions would be
entered as -0.10).
2.8 How should MOVES be used to quantify emission reductions from nonroad
vehicle or engine replacement projects?
Emission reductions from nonroad equipment or engine replacement projects cannot be
modeled using the retrofit input file in MOVES. In addition, MOVES currently does not have the
capability to allow for easy adjustment of nonroad equipment populations by age. As a result, the
20 Note that the EPA-verified technology reductions listed in the column labeled HC can be applied as VOC reductions
in MOVES.
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method for modeling nonroad equipment or engine replacements is different from the method used
for onroad vehicles.
For a nonroad replacement project, the method to quantify emissions is to run MOVES for
the calendar year of your analysis, calculate emission factors for the model years of the equipment
you are replacing (base case) and for the equipment that you are replacing it with (control case),
multiply these base and control cases emission factors by the expected hours of activity for the
equipment and by average load factors for the equipment, and take the difference between the base
and control cases to get the benefit of replacing the base case equipment. For example, if you are
evaluating a replacement project in calendar year 2017 that involved replacing 2005 model year
excavators with 2015 model year excavators, emission reductions should be calculated in the
following way:
1.	Set up a RunSpec for your county in 2017, selecting only diesel construction equipment in
the Vehicles/Equipment panel. Select Model Year, SCC, and HP Class in the Output
Emissions Detail panel.
2.	Run MOVES to get the emissions of all construction equipment in 2017.
3.	Open the MOVES Post Processing menu, select Run MySQL Script on Nonroad Output
Database, and run the script called
"EmissionFactors_per_hphour_by_SCC_and_ModelYear.sql." This script can take a long
time to run if many SCCs are included in the output. We recommend deleting database
output rows for all SCCs other than the equipment type being replaced before running the
script in order to reduce run time for the script.
4.	Select the emission factors for excavators in the relevant horsepower ranges for the base case
(2005 model year) and the control case (2015 model year).
5.	Multiply the emission factors by the expected daily hours of activity and average load factors
for excavators being replaced to get the base case and control case total emissions.
6.	Take the difference between the base case and control case emissions to get the benefits of
the replacement project.
Note that these reductions should not be used beyond the remaining life of the vehicles,
engines, or equipment being replaced. In this example, if the remaining useful life of the original
2005 model year excavators is 5 years when they were replaced in 2015, emission reductions could
be applied under this guidance for calendar years 2015 through 2020. However, after 2020, these
reductions would be considered part of the normal fleet turnover for these vehicles and would not be
available for use in a SIP or in a conformity determination. See Section 1.5 for further information.
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SECTION 3: USING EMISSION REDUCTIONS IN SIPS
3.1 What are the basic requirements for using emission reductions in SIPs?
In order to be approved as a control measure which provides additional emission reductions
in a SIP, a project would need to be consistent with SIP RFP, attainment, or maintenance
requirements and other CAA requirements, as appropriate. The project must provide emission
reductions that meet the basic SIP requirements described below. Information is separated into "SIP
Requirement" and "Specific Recommendations." The "SIP Requirement" heading refers to
mandatory requirements under CAA section 110. The "Specific Recommendations" headings
include EPA recommendations for implementing a project. While these recommendations are not
binding, they may provide appropriate safeguards and considerations for a successful project.
3.1.1	Quantifiable -
SIP Requirement: The emission reductions from a project are quantifiable if they are
measured in a reliable manner and can be replicated (e.g., the assumptions, methods, and results used
to quantify emission reductions can be understood). Emission reductions must be calculated for the
time period during which the reductions will occur and will be used for SIP purposes.
In general, if retrofitting certified vehicles, engines, or equipment with EPA or CARB
verified emission control technologies or certified engine configurations, quantifying the emission
reductions is fairly straightforward. In these circumstances, you will need to document the emission
reductions and provide all relevant data to EPA for review. Section 2 of this document provides a
recommended method for quantifying emission reductions.
3.1.2	Surplus -
SIP Requirement: Emission reductions are considered "surplus" if they are not otherwise
relied on to meet other applicable air quality attainment or maintenance requirements for that
particular NAAQS pollutant (i.e., there can be no double-counting of emission reductions). In the
event that the project is used to meet such air quality related program requirements, they are no
longer surplus and may not be used as additional emission reductions. Emissions from the vehicles,
engines, or equipment to be retrofitted must be in the applicable mobile source emissions inventory
before the emission reductions from a project can be used for RFP, attainment or maintenance in a
SIP.
3.1.3	Federally Enforceable -
SIP Requirement: A SIP project must be enforceable. Depending on how the emission
reductions are to be used, control measures must be enforceable through a SIP. Where the emission
reductions are part of a rule or regulation for SIP purposes, they are considered federally enforceable
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only if they meet all of the following criteria:
•	Emission reductions are independently verifiable.
•	Violations are defined, as appropriate, e.g., an example of a violation is failing to implement
as required by the regulation or tampering with a retrofit.
•	The state and EPA have the ability to enforce the measure if violations occur.
•	Those liable for violations can be identified.
•	Citizens have access to all the emissions-related information obtained from the responsible
party.
•	Citizens can file lawsuits against the responsible party for violations.
•	Violations are practicably enforceable in accordance with EPA guidance on practicable
enforceability.
•	A complete schedule to implement and enforce the measure has been adopted by the
implementing agency or agencies.
The specific requirements for enforceability vary when submitting a SIP project as a
mandatory21 or voluntary measure. If the project is mandatory, then there is no cap on the amount of
emission reductions that can be claimed as long as such reductions are supported and meet standard
SIP enforceability requirements for mandatory measures and the baseline emissions are in the
inventory.
If a retrofit control measure is approved under EPA's VMEP guidance, the state is
responsible for assuring that the reductions quantified in the SIP occur. The state would need to
make an enforceable SIP commitment to monitor, assess, and report on the emission reductions
resulting from the voluntary measure and to remedy any shortfalls from forecasted emission
reductions in a timely manner. Under the VMEP guidance, the amount of emission reductions
allowed for voluntary mobile source measures, including retrofit programs, in a SIP is not expected
to exceed three percent of the total reductions needed to meet any requirements for reasonable
further progress, attainment or maintenance, as applicable. EPA acknowledges that some areas may
be able to demonstrate that voluntary measures may achieve credible reductions higher than the three
percent cap provided by the VMEP guidance. In that case, EPA will re-evaluate that cap on a case-
by-case basis and allow the cap to be exceeded if the cap hinders the implementation of effective
voluntary control measures, subject to notice and comment during SIP approval. If you wish to have
a project approved as a voluntary measure, consult the 1997 VMEP guidance for further information.
3.1.4 Permanent -
SIP Requirement: The emission reduction produced by the project must be permanent
throughout the time period that the reduction is used in the applicable SIP. The time period that the
emission reductions from projects are used in the SIP can be no longer than the remaining useful life
of the retrofitted or replaced engine, vehicle, or equipment.
21 As stated in Section 1.7 of this guidance, state and local agencies should check with EPA before promulgating any
state or local regulations or programs mandating retrofit projects, due to potential issues related to CAA section 209
requirements.
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Specific Recommendations:
•	Emission reductions can be used from retrofitted vehicles, engines, and equipment that
operate exclusively within the nonattainment or maintenance area. Vehicles, engines, and
equipment that typically operate within a captive area may include, but are not limited to, the
following:
o School buses
o Transit buses
o Waste haulers
o State/local government owned vehicles and engines (e.g., department of
transportation)
o Nonroad construction and agricultural vehicles, engines, or equipment
Some fleets may travel or some equipment may be used only partially in the nonattainment
or maintenance area. Such fleets may be considered as part of a project for these purposes,
but the emission reductions claimed are limited to the activity (and the associated emission
reductions) that are expected to occur from such fleets within the nonattainment or
maintenance area.
For regulatory or voluntary projects, you should demonstrate that the retrofitted vehicles,
engines, or equipment remain in use within the nonattainment or maintenance area or their
remaining useful life, to the extent emission reductions are claimed.
EPA and CARB provide information on the durability of the verified retrofit technology
which allows you to determine the length of time the technology may perform at its verified
emission reduction capability. Consequently, you should select retrofit technologies that are
verified or certified by EPA, or CARB respectively. For a list of verified technologies, see
www.epa.gov/verified-diesel-tech/verified-technologies-list-clean-diesel
3.1.5 Adequately Supported -
SIP Requirement: The state must demonstrate that it has adequate funding, personnel,
implementation authority, and other resources to implement the project on schedule.
Specific Recommendations:
•	The state should ensure it has allocated appropriate funds from a reliable funding source.
•	The state should ensure that the retrofit fleet operators correctly install, operate, and maintain
the retrofit technology according to the manufacturer's recommendations.
o Example: The city transit fleet has 50 buses retrofitted with PM filters. The state
should ensure that the fleet operators are properly trained to operate, maintain, and
detect problems with the PM filters.
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•	The state should assess and verify the status of the retrofitted vehicles, engines, and/or
equipment and the associated emission reductions, as applicable.
3.2	How can the estimated emission reductions be used for SIP purposes?
For your RFP, attainment, or maintenance SIP strategy, you can use emission reductions
which are expected to be generated from the project by applying the following criteria:
•	Emission reductions would be calculated as required in the SIP process for a given pollutant
and NAAQS, either in tons per year, tons per pollutant season, or tons per day. For example,
NOx reductions from projects would be calculated in an ozone SIP for tons reduced per day
for a typical summer day. In contrast, PM2.5 reductions would be calculated on a ton per year
basis for SIP inventories for the annual PM2.5 NAAQS; state and local agencies should
consult their EPA Region and/or applicable guidance22 on what is appropriate for SIP
inventories for the 24-hour PM2.5 NAAQS. Any calculations would consider factors that may
affect emission reductions and their surplus status over time, including changing patterns of
operations or use, vehicle deterioration factors, equipment useful life, and government
emission standards.
•	Emission reductions would be commensurate with the level of activity from retrofitted
vehicles, engines, or equipment within a given nonattainment or maintenance area as
described in Section 3.1.4. For example, if retrofitted vehicles are operated exclusively within
the nonattainment or maintenance area, the associated reductions from retrofit technology
would also be assumed to occur within such an area. However, some fleets may leave the
nonattainment or maintenance area for some portion of their operation. Such fleets may be
considered as part of a project, but the emission reductions claimed are limited to the activity
that is expected to occur from such vehicles within the nonattainment or maintenance area, as
well as those accounted for in the inventory.
3.3	What would a state submit to EPA to meet the requirements for incorporating
a project in a SIP?
A state would submit to EPA a written document which does the following:
•	Identifies and describes the project and its implementation schedule to reduce emissions
within a specific time period;
•	Contains estimates of emission reductions attributable to the project, including the
22 See 81 FR 58029-30, August 24, 2016.
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methodology and other technical support documentation used. MOVES would be used23 to
assess the emission reductions from projects for SIP purposes;
•	Either contains federally enforceable requirements to implement, track, and monitor the
measure; or if the measure is developed under the VMEP guidance, the state includes an
enforceable commitment to monitor, assess and report the resulting emission reductions;
•	If the measure is developed under the VMEP guidance, includes an enforceable commitment
to remedy any SIP emission shortfall in a timely manner in the event that the measure does
not achieve the estimated emission reductions; and
•	Meets all other requirements for SIPs under CAA sections 110 and 172.
3.4	Are there any other types of SIPs that could include emission reductions from
projects?
Yes. As indicated in Section 3.2, state air quality agencies can include projects in RFP SIPs,
attainment demonstrations, and maintenance plans. However, if a state wants to encourage adoption
of projects prior to developing one of these kinds of SIPs, the state could create a SIP submission
that contains only projects, which would be relied upon in a future SIP. The advantage of creating
such a SIP submission now is that a state could secure projects with adequate federal, state, and/or
local funding for a future RFP SIP, attainment demonstration, or maintenance plan.
A state air agency that is interested in creating such a SIP submission specifically for a
project or projects must consult with MPOs, the state DOT, and any other state or local
transportation agencies in its development. The conformity regulation at 40 CFR 93.105 requires
consultation on the development of SIPs.
Note that a SIP submission that contains only projects would still have to meet the
requirements discussed in this section. State or local agencies that are interested in this option
should consult their EPA Region as well as the MPOs and others involved in the interagency
consultation process.
3.5	What monitoring and record keeping should occur to document emission
reductions?
3.5.1 What should the state air agency monitor and record?
CAA section 110(a)(2)(C) requires that submitted SIPs "include a program to provide for the
enforcement of the measures" that the state adopts to reduce emissions. A state's decision about how
23 See EPA's MOVES modeling pages, which include the MOVES model, user guide, and supporting documentation
which can be found at www.epa.gov/otaq/models/moves/index.htm.
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a measure needs to be enforced will depend on the state's knowledge of the emission reductions
achieved by the measure. Therefore, this CAA requirement for a program that provides for
enforcement makes it necessary for states to monitor measures that they include in their SIPs, such
as diesel retrofits and replacements.
EPA recommends that for each retrofitted vehicle, engine, or piece of equipment the state air
agency or another responsible party should monitor and record the following information, where
applicable, for each time period for which an emission reduction is generated:
•	Actual use and operation and maintenance of the retrofitted or repowered
vehicles/engines/equipment and retrofit technology;
•	Proper installation of retrofit technology or repowered engine at project initiation;
•	Proper training of vehicle operators and technicians at project initiation; and
•	For replacements, document the permanent destruction, disabling, or rebuilding of the engine
to meet current emissions standards.
Monitoring and recording these data are ways to ensure that the statute is met. A state can propose
other methods of monitoring and recording data in its SIP submission, and EPA would consider
whether or not it would be sufficient to meet CAA requirements.
3.5.2 How long should the state air agency maintain records?
Under 28 U.S.C. 2462, the government has five years to bring an enforcement action or suit
for the failure to implement a measure in a SIP. Based on this statute of limitations, all information
to be monitored and recorded in accordance with this guidance for existing SIP requirements should
be maintained by the state air agency or another responsible party for a period of no less than five
years, or longer where appropriate.
3.6 What validation and reconciliation should occur for emission reductions in
SIPs approved under the VMEP guidance?
The SIP submission for a voluntary measure should contain a description of the evaluation
procedures and time frame(s) in which the evaluation of SIP reductions will take place. Once the
voluntary control measure is in place, emission reductions should be evaluated by the state or local
agency as required to validate the actual emission reductions. The state or local agency should
submit the results of the evaluation to EPA in accordance with the schedule contained in the SIP. If
the review indicates that the actual emission reductions are not consistent with the estimated
emission reductions in the SIP, then the amount of emission reductions in the SIP should be adjusted
appropriately or applicable remedial measures should be taken under the VMEP guidance. See
EPA's VMEP guidance for further information regarding validation and reconciliation requirements
for such measures.
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SECTION 4: USING EMISSION REDUCTIONS IN
TRANSPORTATION CONFORMITY DETERMINATIONS
4.1	What is transportation conformity ?
Transportation conformity is required under CAA section 176(c) (42 U.S.C. 7506(c)) to
ensure that federally supported highway and transit project activities are consistent with ("conform
to") the purpose of the SIP. Conformity to the purpose of the SIP means that transportation activities
will not cause new air quality violations, worsen existing violations, or delay timely attainment of
the relevant NAAQS and interim milestones. EPA's transportation conformity rule (40 CFR Parts
51 and 93) establishes the criteria and procedures for determining whether transportation plans,
transportation improvement programs (TIPs) or projects conform to the SIP. Transportation
conformity applies to areas that are designated nonattainment, and those redesignated to attainment
after 1990 ("maintenance areas") for transportation-related criteria pollutants. Some areas that are
currently doing transportation conformity could benefit from project reductions, including ozone,
PM2.5, and PM10 nonattainment and maintenance areas.
In urban areas, transportation planning and conformity determinations for transportation
plans and TIPs are the responsibility of the MPO. MPOs are responsible for updating and revising
the transportation plan and TIP on a periodic basis, as well as making transportation plan and TIP
conformity determinations. Such a determination includes a regional emissions analysis that shows
that the emissions expected from the area's planned transportation system do not exceed the motor
vehicle emissions budget ("budget") set by the SIP for meeting RFP, attainment, or maintenance
requirements.24 After an MPO's conformity determination, the U.S. DOT must also determine
conformity of the transportation plan and/or TIP. The interagency consultation process is required to
be used when developing transportation plans, TIPs, conformity determinations, and SIPs, and the
process includes MPOs, state departments of transportation, public transit agencies, other
transportation agencies, state and local air quality agencies, EPA, and DOT (40 CFR 93.105).
4.2	Can emission reductions from projects be accounted for in transportation
conformity determinations?
MPOs may use emission reductions in transportation plan and TIP conformity determinations
that result from either:
•	Onroad vehicle and engine projects, or
•	Nonroad vehicle, engine, and equipment projects.
24 In cases where an area does not yet have a SIP in place, a different type of emissions test is used for conformity. See
40 CFR 93.119 for more on these requirements.
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Onroad vehicle projects can be used in regional emissions analyses for transportation conformity
determinations, since transportation conformity includes emissions and reductions from onroad
sources. Requirements are discussed in Section 4.3.
Although the emissions from nonroad sources are separate from onroad vehicles in a SIP
inventory, the emission reductions that result from nonroad retrofits can still be applied in
transportation conformity. When appropriate and desired, the transportation conformity rule allows
options for including reductions from nonroad projects, such as the retrofitting of highway
construction equipment, in a transportation conformity determination. See Sections 4.4 through the
end of this section for further information on options for including the emission reductions from
nonroad projects in transportation conformity determinations.
EPA also notes that reductions from projects can be applied as a mitigation or control
measure in quantitative PM2.5 or PM10 hot-spot analyses for project-level conformity determinations.
See EPA's Transportation Conformity Guidance for Quantitative Hot-spot Analyses in PM2.5 and
PM10 Nonattainment and Maintenance Areas at www.epa.gov/state-and-local-transportation/proiect-
level-conformitv-and-hot-spot-analvses#pmguidance
For further background on PM hot-spot analyses, the MOVES methodology in Section 2 of this
guidance can be used for such analyses. The remainder of Section 4 and the Appendices focus on
applying emission reductions from projects in transportation plan and TIP conformity determinations
(and regional emissions analyses).
4.3 How can the emission reductions from onroad projects be included in
transportation conformity determinations?
The transportation conformity rule describes the specific requirements for including emission
reductions from onroad projects in a transportation conformity determination. If the emission
reductions from the project have been accounted for in the SIP's motor vehicle emissions budget, the
MPO would also include the emission reductions from the project, to the extent it is being
implemented, when estimating regional emissions for a transportation conformity determination.
Including the emission reductions in both the SIP's budget and in a conformity determination in this
way is not "double-counting," but correctly accounting for all the control measures that are in
place.25
To include the emission reductions from projects in a conformity analysis, the appropriate
jurisdictions must be committed to the measure.26 The appropriate level of commitment varies
according to the requirements outlined in 40 CFR 93.122(a) which are described as follows:
• If the project does not require a regulatory action to be implemented and it is included in the
transportation plan and TIP with sufficient funding and other resources for its full
25	See 40 CFR 93.122(a) for the requirements regarding what must be included when estimating regional emissions in a
conformity determination.
26	As stated in Section 1.7 of this guidance, state and local agencies should check with EPA before promulgating any
state or local regulations or programs mandating retrofit projects, due to potential issues related to CAA section 209
requirements.
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implementation, it can be included in a transportation conformity determination.
• If the project requires a regulatory action to be implemented, it can be included in a
conformity determination if one of the following has occurred:
o The regulatory action for the project is already adopted by the enforcing jurisdiction
(e.g., a state has adopted a rule to require such a project);
o The project has been included in an approved SIP; or
o There is a written commitment to implement the project in a submitted SIP with a
motor vehicle emissions budget that EPA has found adequate.27
If the project is not included in the transportation plan and TIP or the SIP, and it does not
require a regulatory action to be implemented, then it can be included in the transportation
conformity determination's regional emissions analysis if the determination contains a written
commitment from the appropriate entities to implement the project.
Whatever the case, any emission reductions can only be applied in a transportation
conformity determination for the time period or years in which the project will be implemented.
Written commitments must come from the agency with the authority to implement the project. The
latest emissions model and planning assumptions must also be used when calculating emission
reductions, according to 40 CFR 93.110 and 93.111.
The interagency consultation process must be utilized (as required by 40 CFR 93.105) to
discuss the methods and assumptions used to quantify the reductions from the project. Section 2 of
this document describes how to quantify emission reductions.
4.4 How can the emission reductions from nonroad projects be included in
transportation conformity determinations?
There are two options that may be used to reflect reductions from nonroad projects in
transportation conformity determinations. The two options are:
1.	Apply nonroad retrofit emission reductions as a "safety margin" to the SIP's motor vehicle
emissions budgets; or
2.	Establish a trading mechanism in the SIP to allow emissions to be traded from one emissions
sector to another.
Both of these options are allowed by the current transportation conformity rule and are completed
through the SIP process with consultation among federal, state, and local air quality and
27 40 CFR 93.118 describes the process and criteria that EPA considers when determining whether submitted SIP
budgets are appropriate for transportation conformity purposes prior to EPA's SIP approval action.
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transportation agencies. An area may decide to pursue one of these options if it is anticipated that
emission reductions from nonroad projects may be needed to assure future transportation conformity
determinations. Note that nonroad projects that are reflected in a transportation conformity
determination under either option must meet the conformity rule requirements articulated in Section
4.3, in addition to other requirements described below.
4.5	How is EPA supporting the use of emission reductions from nonroad projects
in transportation conformity?
EPA recognizes the importance of nonroad projects in reducing emissions and wants to
support the process for state and local air and transportation agencies to implement them when
desired. The remainder of Section 4 and Appendices A through C include additional information for
including the emission reductions from nonroad projects in transportation conformity:
Safety margins. EPA has provided the following:
•	Questions and answers about safety margins, beginning with Section 4.6;
•	Step-by-step process instructions, including a flowchart, for adopting a safety margin - see
Appendix A;
•	An example of how a safety margin is applied - see Appendix A;
•	A list of areas that have adopted safety margins in the past - see Appendix A;
Trading mechanisms. EPA has provided the following:
•	Questions and answers about trading mechanisms, beginning with Section 4.11;
•	Step-by-step process instructions, including a flowchart, for adopting a trading mechanism -
see Appendix B;
•	An example of how a trading mechanism would work - see Appendix B;
•	A model trading rule that interested states could adopt through the SIP - see Appendix C.
4.6	What is a safety margin ?
Section 93.101 of the transportation conformity rule defines a "safety margin" as
"the amount by which the total projected emissions from all sources of a given pollutant are
less than the total emissions that would satisfy the applicable requirement for reasonable
further progress, attainment, or maintenance."
That is, if an area has a safety margin, it has more emission reductions than necessary to meet the
CAA goal of RFP, attainment, or maintenance. It can meet the goal with room to spare - a margin
of safety. Safety margins are calculated for a specific year in the SIP for which a budget is
established (e.g., the last year of a maintenance plan).
The conformity rule allows a safety margin to be allocated to the transportation sector, if the
SIP explicitly states so (see 40 CFR 93.124(a)). The SIP must state that a specified portion or the
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entire safety margin is available to the MPO and DOT for conformity purposes. Therefore, the
nonroad project that creates the safety margin allows the motor vehicle emissions budget to increase.
4.7	When can a safety margin be established in a SIP?
An area may include a safety margin from the point at which they develop their SIP
submission for RFP, attainment, or maintenance, or it may be developed later as a stand-alone SIP
submission. For example, if an area has more emission reductions from the control measures
contained in its attainment demonstration than needed to achieve the applicable NAAQS, it could
establish a safety margin in that attainment demonstration.
An area could also develop a safety margin after the SIP has been established. For example, if
an area's attainment demonstration contains control measures that are sufficient to attain, then any
other measures that reduce emissions adopted later, such as nonroad projects, would potentially
create a safety margin. Alternatively, an area that already has a safety margin in its SIP could add to
it by adopting a new nonroad project.
Whatever the case, any SIP that incorporates a safety margin must meet all applicable SIP
requirements, including being based on the most recent emissions estimates available at the time the
SIP safety margin is developed. For example, an existing safety margin in an ozone maintenance
plan could be increased to account for new projects in a given year, assuming the existing safety
margin is still applicable. Under this example, EPA's approval would be required before the
increased SIP safety margin could apply for transportation conformity purposes, since revisions to
existing approved SIPs cannot apply until EPA approves them (40 CFR 93.118(e)(1)).
4.8	What are the benefits of establishing a safety margin at the time that an RFP
SIP, attainment demonstration, or maintenance plan is initially submitted?
While a safety margin can be developed after a SIP is established, it makes sense for areas
that are currently developing a SIP to include a safety margin in that SIP, if possible, instead of
adding it later. A safety margin that is included in an initial control strategy SIP (e.g., an RFP SIP or
attainment demonstration) or maintenance plan could be used for conformity on the effective date of
EPA's adequacy finding. But if a safety margin is developed later, the state would need to revise the
SIP. If EPA has already approved the initial SIP, the revised SIP that includes the safety margin
could not be used in conformity until it is approved, as noted above. Including a safety margin in a
SIP submission as it is developed saves time and effort throughout the process.
4.9	Why should an area start developing a safety margin now?
Areas that are currently developing attainment demonstrations or maintenance plans should
consider whether they want to adopt programs to retrofit nonroad vehicles, engines, and equipment
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and include them in these SIP submissions, because doing so now can save time and may allow their
use in conformity sooner. The conformity rule requires that consultation occur during the
development of a SIP (40 CFR 93.105(a)(1)). State air agencies should consult with the relevant
MPOs, DOT, and other agencies as appropriate in order to determine whether a safety margin might
be needed for conformity.
Several nonattainment areas have already established safety margins through the SIP process
to assist in making future transportation conformity determinations. See Appendix A for further
information.
4.10 What are the features of a safety margin ?
In order for EPA to approve the allocation of a safety margin to a motor vehicle emissions
budget(s), the following SIP and transportation conformity requirements would have to be met:
•	The entire SIP must continue to demonstrate its CAA purpose, pursuant to the statute and 40
CFR 93.124(a). Before the emissions level of a motor vehicle emissions budget is increased,
the state air agency would need to determine that there is a safety margin, including any
surplus emission reductions from any nonroad projects. The agency would also need to
ensure that emissions inventories of onroad, nonroad and other sources are consistent with the
SIP's demonstration.
•	The calculation for the nonroad projects and any safety margin would be based on the latest
information and models available at the time the SIP is developed. The method for
calculating a safety margin may vary depending upon whether new air quality modeling is
performed or if a less rigorous demonstration is adequate (e.g., maintenance areas that are
establishing a safety margin based on staying below the emissions level(s) for a previous year
of clean monitoring data for the maintenance demonstration).
•	The SIP must clearly allocate the safety margin to the motor vehicle emissions budget(s) for
use in transportation conformity determinations, pursuant to 40 CFR 93.124(a);
•	Projects reflected in a safety margin must be assured, permanent, and enforceable, have
adequate funding and resource commitments, and be on schedule; and
•	The safety margin must meet CAA section 110(1) and any other applicable SIP statutory and
regulatory requirements.
See Section 3 for more information about including a project in a SIP. See Appendix A for more
detailed information on establishing and implementing a safety margin.
EPA notes that the allocation of a safety margin to the onroad transportation sector may limit
that area's ability to allow future growth in emissions from other source sectors (e.g., stationary
sources). State and local transportation and air quality agencies and other affected parties should
always consult on whether a safety margin is appropriate for transportation conformity in a given
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area.
4.11	What is a trading mechanism ?
A trading mechanism is a process established through the SIP that allows emission reductions
achieved in a source sector other than onroad transportation - such as the nonroad sector - to be used
for demonstrating transportation conformity. It's also possible to establish a trading mechanism
between different pollutants. Before emission reductions can be traded from one sector to another,
the SIP must include a trading mechanism to allow the trading to occur.
This option is supported by 40 CFR 93.124(b) as well as preamble language. Section
93.124(b) states:
"A conformity demonstration shall not trade emissions among budgets which the applicable
implementation plan (or implementation plan submission) allocates for different pollutants or
precursors, or among budgets allocated to motor vehicles and other sources, unless the
implementation plan establishes appropriate mechanisms for such trades."
In the preamble of the November 24, 1993 transportation conformity rule, EPA stated that
"[t]he state may choose to revise its SIP emissions budgets in order to reallocate emissions among
sources or among pollutants and precursors. For example, if the SIP is revised to provide for greater
control of stationary source emissions, the State may choose to increase the motor vehicle emissions
budget to allow corresponding growth in motor vehicle emissions (provided the resulting total
emissions are still adequate to provide for attainment/maintenance of the NAAQS..." (58 FR 62196).
EPA believes that this preamble and 40 CFR 93.124(b) clearly allow trading mechanisms to be
established to ensure future transportation conformity determinations, when desired.
EPA's Economic Incentive Program (EIP) guidance also discusses trading among different
sources.28 The primary concerns articulated in that guidance are: 1) to ensure that emission
reductions are only used in transportation conformity if they are truly reductions to overall air
quality (i.e., are not offset by emissions increases in other emission sources); and 2) to ensure that
double-counting does not occur among source categories in the SIP or in transportation conformity.
EPA must approve a SIP that creates a trading mechanism before emission reductions can be traded
for transportation conformity determinations.
4.12	When can a trading mechanism be established in a SIP?
A trading mechanism can be established by a state and approved by EPA into the SIP for a
nonattainment or maintenance area at any time.
28EPA's January 2001 guidance entitled, "Improving Air Quality with Economic Incentive Programs," provides
additional information on developing and implementing economic incentive based control strategies. This guidance is
available at: www, epa. gov/sites/production/files/2015-07/documents/eipfm.pdf . See Appendix 16.10 of the 2001
guidance for further information regarding the transportation conformity requirements that need to be met by an EIP
trading program.
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A trading mechanism that would allow trading of emission reductions from nonroad projects
for transportation conformity purposes could be submitted by a state and approved by EPA prior to
the submission of an area's RFP SIP, attainment demonstration, or maintenance plan.
Alternatively, a state could decide to submit a trading mechanism as part of an RFP SIP,
attainment demonstration, or maintenance plan for a given area.
4.13	Why develop a trading mechanism as a stand-alone SIP revision?
The advantage of developing a trading mechanism as a stand-alone SIP instead of including it
in a required ozone or a PM2.5 SIP is that doing so allows trading to occur sooner than if the trading
mechanism was combined with a larger SIP such as an RFP plan, an attainment demonstration, or a
maintenance plan. Where developed as a stand-alone SIP, a trading mechanism allows emission
reductions from a nonroad project to be applied in conformity during the time period before one of
these larger SIPs is submitted and found adequate. For example, assuming it has a SIP trading
mechanism in place, if an ozone area could not pass a NOx budget contained in its ozone attainment
demonstration, the area could program funds for a nonroad project and apply the emission reductions
in a conformity determination. A stand-alone SIP based on the model trading rule provided in this
guidance document can be developed and approved by EPA through parallel processing29 the SIP.
4.14	What would a SIP with a trading mechanism look like?
EPA developed a model trading rule to allow states to use nonroad emission reductions in
transportation conformity. States that are interested in establishing a trading mechanism merely
need to copy the model rule and fill in the blanks as appropriate (e.g., the state would insert the
appropriate names of state air quality agencies and MPOs), and can adopt it into their SIPs. The
model rule is found in Appendix C of this guidance document. EPA developed this model rule in
consultation with DOT and state and local air quality and transportation organizations. The model
rule is just one way to write a regulation for a trading mechanism for conformity. A state could
deviate from this model rule, but the more the state deviates from the model rule language, the more
time it may take for EPA's final SIP action.
4.15	What are the features of a trading mechanism ?
In order for EPA to approve a trading mechanism, the following SIP and transportation
conformity requirements would have to be met:
29 The term "parallel processing" means that EPA, at the request of the state, begins to process a SIP submission (either
to approve it or find its budgets adequate) before the state has finalized it. EPA's process and the state's process are
occurring "in parallel." Specifically, EPA would begin to review the SIP trading mechanism while the state's public
comment period is running, but must wait until the state submits its final SIP trading mechanism before taking a final
SIP action. See Appendices A and B for more detail on how parallel processing works.
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•	The entire SIP must continue to demonstrate its CAA purpose when trades are allowed,
pursuant to the statute and 40 CFR 93.124(b). When the trading mechanism is developed, the
state air agency would need to ensure that trades can occur, while ensuring that emissions
inventories from all sources continue to be consistent with the SIP's demonstration.
•	A state regulation must be developed that describes in adequate detail the scope and process
for making trades so that the trading mechanism can be implemented as intended. Such a
regulation would also provide that all trades become enforceable through the trading
mechanism approved into the SIP in the event that reductions are not otherwise enforceable.
•	Trades must be based on nonroad projects that result in a net emission reduction, which must
consider the emissions produced by the vehicles, engines, and equipment and the impact of
any retrofit technology. Individual trades cannot exceed the net emission reductions of a
project.
•	The trading mechanism would ensure that individual trades must be made only when surplus
emission reductions exist. Trading cannot result in "double-counting" of reductions already
accounted for in the SIP and conformity determinations.
•	Reductions can be taken only for years of the regional emissions analysis where reductions
are achieved.
•	The trading mechanism must meet any other applicable SIP and conformity requirements (for
example, control programs that produce emission reductions relied on in a conformity
determination must be assured and enforceable, have adequate funding and resource
commitments, and be on schedule - see 40 CFR 93.122(a)).30
See Appendix B for more information on implementing a trading mechanism and Appendix C for a
model trading rule that could be incorporated into the SIP.
4.16 Does the public have the opportunity to comment on trading?
Yes, the public does have the opportunity to comment at two distinct points in the process:
First, the public can comment on the trading mechanism itself at the point when it is
incorporated into the SIP. Any time a state prepares a SIP, it must give the public an opportunity to
comment on it before the final submission is sent to EPA. In a situation where a state adopts a
regulation separately from an RFP or attainment SIP or a maintenance plan, the public will also have
the opportunity to comment on the state's regulation. In addition, when EPA proposes to approve
30 EPA notes that SIPs that establish a trading mechanism are required to meet CAA section 110(1) requirements, similar
to all other SIPs for other purposes. However, by definition, the trading mechanisms described in this guidance
document should meet section 110(1) requirements since emissions increases would not occur as a result of trades for
transportation conformity purposes.
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the SIP in the Federal Register, the public again has the opportunity to comment to EPA. The
approval process, including these public comment periods, is covered in further detail in Appendix
B.
Second, the public has the opportunity to comment on individual trades that employ the SIP
trading mechanism during the public comment period on a transportation plan or TIP conformity
determination. The conformity regulation at 40 CFR 93.105(e) requires that the public be given
access to technical and policy information considered in a conformity determination at the beginning
of the public comment period and prior to taking formal action on a transportation plan/TIP
conformity determination. If an MPO relies on nonroad retrofit emission reductions that are the
result of a trade, information about that trade would belong in such technical and policy information
that is made available for public review. Under the model trading rule in Appendix C of this
document, the MPO would be required to document the description of the project; its enforceability,
funding sources, and implementation schedule; and details regarding emission reduction
calculations. In addition, the model rule would require that the state air agency document its
concurrence (e.g., through a letter), which the MPO could then reference in its transportation
plan/TIP conformity determination. If a state adopts any trading mechanism, all of the information
described above would be made available to the public as part of any transportation plan/TIP
conformity determination.31
4.17 Are there any examples of transportation conformity-related trading
mechanisms that were approved into the SIP?
Yes, a couple of areas adopted another type of trading mechanism for conformity purposes.
The provision of the transportation conformity rule that allows trading among source sectors also
allows trading among motor vehicle emissions budgets of pollutants and precursors. Both the San
Joaquin Valley and Salt Lake City adopted trading mechanisms that established trading between
budgets for directly-emitted PMio and NOx.32
Though these trading mechanisms applied to the trading of onroad mobile precursors and
pollutants rather than among source sectors, they have provided EPA with valuable experience in
developing a trading mechanism through the SIP process. EPA has applied this experience to the
development of the model trading rule found in Appendix C. In addition, Salt Lake City's trading
mechanism was needed as soon as it could be approved, so EPA and the State of Utah worked
together to expedite its approval into the SIP.
31	Note that if a state decides to substantially alter the model rule or create a different one, the trading mechanism would
still need to provide the public with access to information via the conformity determination to meet 40 CFR 93.105(e).
EPA would examine any trading mechanism with regard to this point during the SIP process.
32	These trading mechanisms differed according to the atmospheric conditions in each area. An inter pollutant trading
mechanism must include a scientific rationale, as well as comply with CAA section 110(1) by showing that the trading
mechanism will not interfere with any applicable CAA requirement. See 67 FR 44065 for EPA's approval of Salt Lake
City's trading mechanism; 69 FR 30006 for EPA's approval of San Joaquin Valley's PMio SIP that includes the trading
mechanism.
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4.18	Are there any other ways to establish a trading mechanism for a nonroad
project?
Yes. Sections 4.11 through 4.17 and Appendices B and C address establishing a trading
mechanism that, once adopted into a SIP, would allow emission reductions from any nonroad project
to be traded to the transportation sector. However, another possibility is for a state to adopt a SIP
that allows trading of emission reductions from only a specific project (or projects). This type of SIP
would look similar to the type of SIP submission described in Section 3.4 in that it would contain the
description of, and emission reductions from, a specific project (or projects). It would also explicitly
state the portion of the retrofit emission reductions that are available to be used in transportation
conformity determinations. The advantage of creating such a SIP submission now is that a state
could secure specific projects with adequate federal, state, local, or private funding for a future
conformity determination. Where a SIP specifically states that a certain number of tons of emission
reductions from projects are to be preserved for use in future conformity determinations, such
reductions would not be available for use in any other SIP demonstrations such as RFP or attainment
demonstrations.
State or local agencies that are interested in this option should consult with their EPA Region
as well as the MPOs and others involved in the interagency consultation process.
4.19	How can I get additional technical assistance in using the emission
reductions from a nonroad project in transportation conformity?
State and local agencies are strongly encouraged to consult early with their respective EPA
Region if they are considering applying a safety margin or developing a trading mechanism in the
SIP for transportation conformity purposes. EPA is available to provide such technical assistance so
that SIP submissions can be processed efficiently. See Section 1.9 for more information regarding
EPA contact information.
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SECTION 5: USING EMISSION REDUCTIONS IN GENERAL
CONFORMITY DETERMINATIONS
5.1	How can the estimated emission reductions be used for general conformity
determinations ?
General conformity applies in nonattainment and maintenance areas to emissions from all
federal actions or activities not covered by the transportation conformity program, such as military
base expansions or approval of airport expansion projects. The general conformity regulation (40
CFR 51.851 and 93.150-165) prohibits federal agencies from taking, or supporting in any way,
actions in areas that are designated nonattainment or maintenance for any criteria pollutant without
demonstrating that the action will not 1) cause or contribute to any new violation of any NAAQS in
any area; 2) increase the frequency or severity of any existing violation of any NAAQS in any area;
or 3) delay timely attainment of any NAAQS or any required interim emission reductions or other
milestones in any area. The general conformity regulation applies to the total foreseeable direct and
indirect emissions increases from the action or activity including both construction and operational
emissions. Indirect emissions can include those from vehicles servicing a federal facility or
activities supported by federal funds.
To reduce the regulatory burden on insignificant actions, the regulation establishes a number
of exemptions for categories of actions or activities known to have insignificant emissions increases
or whose emissions fall below certain de minimis levels. The general conformity rule establishes de
minimis emission levels based on the severity of the nonattainment problem. If the net increase in
total direct and indirect emissions from a federal action is below the de minimis levels, the federal
agency does not have to make a conformity determination for the action.
If the net increase in emissions is above the de minimis levels and the project is not otherwise
exempt, the federal agency may choose to revise the proposed action to include emission reduction
methods into the plan; otherwise, the agency must determine that the action or activity will conform
to the SIP. Because the general conformity regulation applies to a wide variety of actions or
activities, the rule provides a number of methods to demonstrate conformity. Two methods,
mitigation and offsetting of emissions increases, require emission reductions from sources which
may, or may not be directly connected to the federal action or activity.
5.2	How can projects be used to meet the general conformity requirements?
There are some fleets of vehicles that are not considered in transportation conformity
determinations, and instead considered in general conformity determinations. Some examples
include a fleet of trucks at a military base, or vehicles that operate only within the boundary of a
commercial airport. Since a project for such a fleet would not be increasing emissions, the
implementation of a project would not be subject to general conformity requirements. Additionally,
in many cases, a federal action would not be needed to implement such a project. However,
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emission reductions generated by projects could be used in a number of ways in general conformity
determinations, such as:
•	Diesel engine retrofits could be used to mitigate or offset emissions increases caused by a
federal action. For example, the retrofitting of diesel airplane tugs at a military air station
could be used to mitigate a portion of the emissions increases associated with an expansion
project at the military base or the retrofitting of package delivery vehicles could be used to
offset the emissions increases caused by a base expansion.
•	The Vision 100-Century of Aviation Reauthorization Act of 2003 (P.L. 108-176), directed the
FAA to establish a national program to reduce airport ground emissions at commercial service
airports located in air quality nonattainment and maintenance areas. The Voluntary Airport
Low Emissions (VALE) program allows airport sponsors to use certain funds to finance low
emission vehicles, refueling and recharging stations, gate electrification, and other airport air
quality improvements (including retrofit projects). The emission reductions generated by
these measures are kept by the airport sponsor and may only be used for current or future
general conformity determinations. To be used in a general conformity determination,
emission reductions must be voluntary and cannot otherwise be used to meet other applicable
air quality attainment and maintenance requirements. Emission reductions must also be
"permanent" in that they continue to occur at the estimated level throughout the lifetime of the
vehicles and infrastructure.
A federal or federally permitted facility which is subject to the general conformity regulation,
such as a military base or a commercial airport, could institute an agreement with a state to operate
the facility within a facility-wide emissions budget. Emission reductions from a fleet retrofitting
project could ensure emissions increases generated by future actions would not exceed the facility-
wide budget and thus would conform to the SIP. A demonstration that emissions from a new action
do not exceed the facility-wide emissions budget could be used in a general conformity
determination.
5.3 Is a SIP revision required if a source with a facility-wide emissions budget
wants to implement a project at the facility?
No, a SIP revision would not be required, if a source with a facility-wide emissions budget
established for general conformity purposes decided to retrofit vehicles or equipment used at the
facility. The facility's emissions budget would have included emissions of all relevant pollutants
and/or precursors from all sources on the facility including the pre-retrofit emissions from the
vehicles and/or equipment that are included in the project. Therefore, the emission reductions from
a project can be used to show that the facility remains within its budget without a SIP revision.
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5.4	What requirements would potentially limit the use of projects in the general
conformity program?
Emission reductions used as part of the (1) project design, (2) mitigation measures, (3) offset,
or (4) in future conformity determinations, must be surplus, permanent, quantifiable and enforceable
as described in the General Conformity rule and Section 3 of this document. In addition, the
emission reductions must be reviewed by EPA, state, tribes and local air quality agencies and the
public as part of the review of the general conformity determination and meet the following criteria:
•	The proj ect must be identified and the process for implementation and enforcement must be
explicitly described.
•	Prior to determining conformity, the federal agency making the determination must obtain
written commitments from the appropriate entities (e.g., fleet operator, state or city official,
private company official or MPO) to implement the project as a mitigation measure.
•	The reductions from the project must be contemporaneous with the project emissions
increases, specifically, the reductions must occur in the same calendar year as the increases.
•	The implementing entity/official responsible for implementing the project and any persons or
agencies voluntarily committing to mitigation measures must comply with the obligations of
such commitments.
•	If the federal action involves licensing, permitting or approving an action of another
governmental or private entity, the federal agency must condition its approval action on the
other entity meeting all mitigation commitments.
•	If the project is modified resulting in an increase in emissions, the new mitigation measures
must continue to support the initial general conformity determination and must undergo
public review.
5.5	Why are SIPs required for use of nonroad projects in transportation
conformity but not required for general conformity?
With regard to nonroad projects, a SIP establishing either a trading rule or safety margin is
required in order for emission reductions from such projects to be used in transportation conformity
determinations because nonroad emissions are not included in an area's onroad motor vehicle
emissions budget (40 CFR 93.124(a) and (b)). The SIP provides the authority to use nonroad
emission reductions as part of a demonstration that an area is meeting its onroad emissions budgets.
In contrast, a facility-wide emissions budget established for general conformity purposes would
include emissions from all sources at the facility including the pre-retrofit emissions from the
vehicles and/or equipment that are included the project and the facility budget is within the SIP's
allowable emission budget. Therefore, the emission reductions from the project can be used to show
that the facility remains within its budget without a SIP revision.
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APPENDIX A:
ESTABLISHING A SAFETY MARGIN FOR
TRANSPORTATION CONFORMITY
This appendix provides detail about how a state could apply the emission reductions from a
nonroad project or projects in a conformity determination via a safety margin.
1.1 What is an example of establishing and using a safety margin ?
Suppose a 2012 PM2.5 NAAQS nonattainment area develops a draft attainment plan that
shows the area could emit 400 tons per day of NOx from all sources, and still attain the NAAQS by
the Moderate area attainment date, December 31, 2020. The area's total NOx SIP inventory for
2020 is:
Nonroad:	100 tons per day
Onroad:	100 tons per day
Stationary sources:	100 tons per day
Area sources:	100 tons per day
Initial total attainment SIP inventory:	400 tons per day
If the area submitted this draft SIP without a safety margin, this SIP would have a 2020 NOx motor
vehicle emissions budget of 100 tons per day, which is the onroad portion of the 2020 NOx
inventory.
However, the MPO, in consultation with others, decides to spend some of its CMAQ and
other funding to retrofit nonroad transportation construction equipment. The MPO consults with the
state air agency, who agrees that the projects could be used to create a safety margin, since the area
can demonstrate attainment without these additional reductions. The MPO decides to retrofit a
number of bulldozers, front loaders, and backhoes and estimates that the total emission reductions
from these projects will be 5 tons per day in 2020. The state air agency reviews these calculations
and concurs that these reductions are surplus. Therefore, after consultation, it adjusts the NOx
inventory in its draft maintenance plan for 2020 as follows:
Nonroad:	95 tons per day (i.e., 100 minus 5 tons for new
retrofit)
Onroad:	105 tons per day (i.e., 100 plus 5 tons for new
retrofit)
Stationary sources:	100 tons per day
Area sources:	100 tons per day
Final total attainment SIP inventory:	400 tons per day
The state submits a final SIP that includes a 5 ton per day safety margin and specifically states
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in the SIP that it is allocated to the motor vehicle emissions budget. Therefore, the final budget is
105 tons per day:
Onroad:	100 tons per day
Safety margin:	5 tons per day
Total available for transportation: 105 tons per day (the final budget)
Once the SIP has been submitted and found adequate by EPA, the MPO uses the new 2020
NOx budget of 105 tons per day. This new budget would apply to all conformity determinations for
all analysis years 2020, for as long as this motor vehicle emission budget is in place without other
future budgets. If the MPO later wanted to fund additional nonroad projects and use the additional
reductions for conformity determinations, they would either have to work with the state to revise the
safety margin in the SIP or implement a SIP trading mechanism (as discussed in Section 4 and
Appendix B).
A. 2 What is the process for establishing a safety margin that results from a
nonroad project?
An area that wants to include a safety margin in its SIP from a project or projects can follow
the steps described below. (See Figure 1 at the end of this appendix for a flowchart that depicts
these steps.) These steps assume that EPA has not yet approved a SIP submission that establishes
budgets that the safety margin amends, that is, the safety margin is included in the initial RFP SIP,
attainment demonstration, or maintenance plan that the state submits. Therefore, the budgets that
include the safety margin can be used as soon as EPA finds them adequate. However, if the area has
an approved SIP with a motor vehicle emissions budget and the state submits a SIP with a safety
margin that would change the budget, the revised budget could not be used until EPA approves the
SIP.
•	Agencies consult and decide on the project. The process would begin with the MPO and
state air agency discussing the ability to create a safety margin by retrofitting nonroad
vehicles, engines, and equipment and the scope of the project(s) that could contribute to the
safety margin. There may be some areas where a safety margin cannot be created; in these
cases, nonroad projects may be even more important for the area's SIP. Assuming that the
nonroad project is funded at least in part with CMAQ dollars, the MPO (or state DOT) would
need to determine the timing of the project, number of vehicles, engines, or equipment to be
retrofitted, and the retrofit technology that would be applied because the MPO (or state DOT)
determines how CMAQ money is spent. The state air agency also must be involved because
that agency prepares the SIP.
•	Agencies quantify the project's emissions reductions. The state air agency, in consultation
with the MPO,33 would quantify emission reductions from the project in the year(s) for which
the budgets are established. (See Section 2 of this guidance for further direction in how a
33Note that either the state air agency or the MPO could take the lead role in this step.
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project can be quantified.)
•	State air agency assures SIP criteria are met. The state air agency would determine and
document that the emission reductions meet all of the criteria necessary for a SIP to include
emission reductions from a project, specifically, that emission reductions are surplus,
quantifiable, enforceable, permanent, and adequately supported. (See Section 3 of this
guidance for further discussion of these criteria.)
State air agency prepares the safety margin section of the SIP. The state air agency would
prepare an initial draft of the safety margin section of the SIP; share it with the other parties in
the interagency consultation process, including the MPO, DOT, and EPA; and revise it as
necessary once it receives comments from the other agencies. If the nonroad project is well
thought-out and accurately quantified in the initial draft, it is likely that fewer issues would
have to be resolved in the consultation process.
•	State requests that EPA parallel process the SIP. The state air agency would send the EPA
Region the proposed SIP and in its transmittal letter, request that EPA use parallel processing
to approve the revision and find the budgets adequate. Please note that using parallel
processing is an optional approach; a state air agency could also choose to submit the SIP
after its public process is completed and any revisions are made.
•	State publishes proposal. The state must publish its proposal in accordance with its own
state's procedures, which would begin a public comment period. In most cases, a state would
give the public one month to comment, but depending on the circumstances, the public
comment period could be shortened to 15 days.34
•	EPA begins the adequacy process. Once EPA receives an initial SIP submission for parallel
processing, EPA must review it for adequacy, regardless of whether the safety margin is part
of a larger SIP demonstration or whether it is a stand-alone submission. EPA uses the criteria
in 40 CFR 93.118(e) to judge whether a SIP submission is adequate, and follows the process
described in 40 CFR 93.118(f). EPA begins the adequacy process by notifying the public that
we have received a SIP submission and beginning a 30-day public comment period.
•	State revises its proposal. The state would revise its proposal as necessary, based on the
comments it receives during the public comment period. At this point, the state air agency
finalizes the SIP and submits it to EPA for approval and completion of the adequacy process.
•	EPA completes the adequacy process. After the comment period, EPA must inform the
state of its decision on adequacy and respond to any comments it has received. EPA also
must publish a notice in the Federal Register.
•	EPA adequacy finding effective. The adequacy finding is effective 15 days from the date
34Requirements for public hearings on SIPs can be found at 40 CFR 51.102. Section 51.102(g) allows a state to shorten
its public comment period if it submits a written application to EPA in advance.
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the Federal Register notice is published. At this point, the MPO can use the motor vehicle
emissions budgets in the SIP submission for conformity.
A. 3 Have any areas included safety margins in their SIPs?
Yes. Many areas have included safety margins in their SIPs that have been used in
conformity. Below we have listed areas with a safety margin as of the date of this guidance
document, as well as the pollutant and the type of SIP that included the safety margin. These safety
margins have resulted from a variety of control measures, rather than nonroad projects. However,
the list demonstrates that safety margins have been done with some frequency in the past, and that
many states have experience with including safety margins in their SIPs.
Area
Pollutant-
Type of SIP
Syracuse, NY	CO
TN portion of the Clarksville-Hopkinsville ozone
Greene and Jackson Counties, IN	ozone
Evansville, IN	ozone
Terre Haute, IN	ozone
Muncie, IN	ozone
Colorado Springs, CO	CO
Denver, CO	CO, PMio
Fort Collins, CO	CO
Greeley, CO	CO
Longmont, CO	CO
Ogden, UT	CO
Provo, UT	CO
Salt Lake City, UT	CO
San Diego, CA	ozone, CO
Bakersfield, CA	CO
Chico, CA	CO
Fresno, CA	CO
Lake Tahoe North Shore, CA	CO
Lake Tahoe South Shore, CA	CO
Modesto, CA	CO
Sacramento, CA	CO
San Francisco-Oakland-San Jose, CA	CO
Stockton, CA	CO
New Jersey portion of the NY-NJ-CT area PM2.5
New Jersey portion of the PA-NJ-DE area PM2.5
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
maintenance
plan
plan
plan
plan
plan
plan
plan
plans
plan
plan
plan
plan
plan
plan
plans
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
plan
1 EPA notes that safety margins were also included in maintenance plans for the 1-hour ozone NAAQS by 14 areas.
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Figure 1: Flowchart for the
Development of a SIP
Safety Margin for
Transportation Conformity
State Air Agency: 1) determines that the
emissions reductions are surplus,
quantifiable, enforceable and
permanent; 2) quantifies the emissions
reductions from the retrofit project(s)
for the years for which budgets are
established; and 3) what portion of the
reductions are available as a safety
margin for transportation conformity
purposes
MPO determines the scope of the
nonroad retrofit project(s) (e.g.,
timing, number of
vehicles/engines, type of
equipment retrofit technology
Key:
I
State Actions
MPO
Action
State Air Agency prepares proposed SIP
I
Action
EPA begins adequacy
rev ew
State Air Agency requests that EPA parallel
process the proposed SIP revision
EPA agrees to
parallel process
I
EPA does not agree to
parallel process
I
EPA processes as a
normal SIP revision'1'
EPA puts the
submission on the
adequacy webpage -
starts public
comment period
f	\
State Air Agency proposes the SIP revision
containing the safety margin - starts
public comment period
I
State Air Agency addresses comments and
revises if necessary <2>
EPA responds to
comments, prepares
FR Notice and letter
making the
adequacy finding
I
State Air Agency finalizes SIP revision and
submits It to EPA for approval
I
0
1
EPA publishes FR
Notice announcing
adequacy of budgets
Adequacy finding
effective
(15 days)
(1)	EPA would not propose approval until after the state submits final SIP revision for approval.
(2)	Assumes budgets are not affected by any revisions.
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APPENDIX B:
ESTABLISHING AND USING A TRADING MECHANISM IN
TRANSPORTATION CONFORMITY
This appendix provides detail about how a state could apply the emission reductions from a
nonroad project or projects in a conformity determination via a trading mechanism.
B. 1 What is an example of establishing and using a trading mechanism?
Suppose a 2008 ozone NAAQS nonattainment area develops a draft attainment demonstration
that shows the area could emit from all sources 400 tons of NOx per day, and still meet the NAAQS
in 2017. The area's total NOx SIP inventory for 2015 is as follows:
Nonroad:	100 tons per day
Onroad:	100 tons per day
Stationary sources:	100 tons per day
Area sources:	100 tons per day
Total final attainment SIP NOx inventory:	400 tons per day
This SIP would have a 2017 NOx motor vehicle emissions budget of 100 tons per day, which
is the onroad portion of the NOx inventory. The area also includes a trading mechanism in its SIP,
and EPA has approved it.
During the development of the SIP, the MPO implements a nonroad project that will reduce
NOx by 5 tons per day in 2017 and 2 tons per day in 2020. The state air agency and MPO concur
that these reductions will not be applied to the nonroad inventory used in the SIP, in order to use it in
a future transportation plan/TIP conformity determination. The state air agency concurs through a
letter to the MPO that the reductions in 2017 and 2020 are surplus.
In this case, the onroad motor vehicle emission budget does not change. In subsequent
conformity determinations for 2017, the MPO could offset as much as 5 additional tons of onroad
emissions using the reductions from the nonroad project in 2017 and as much as 2 tons per day in
2020, based on the latest information available for the project's reductions when transportation
plan/TIP conformity is determined. Emission reductions from projects from a trade would be
estimated based on the latest assumptions and emissions model available at the time of a
transportation plan/TIP determination (40 CFR 93.110 and 93.111).
B.2 Does a trading mechanism have to be included in a SIP?
Yes, a state must adopt a trading mechanism into its SIP. A state may choose to develop this
type of trading mechanism either as a stand-alone SIP or as part of a larger SIP submission.
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EPA believes that the most expeditious process for developing and approving a trading
mechanism is for a state to use the model trading rule provided in this guidance document in
Appendix C to develop the mechanism as a stand-alone SIP and for EPA to parallel process its
approval. The model rule should be used as the basis for a state's trading rule whether the state
submits its rule as a stand-alone SIP or includes it in an RFP SIP, attainment demonstration, or
maintenance plan to expedite the development, review and approval of the trading mechanism.
B.3 What is the process for establishing a trading mechanism in a SIP?
To minimize the time needed for the state air agency to develop and EPA to review a SIP
addressing a trading rule, EPA developed a model rule that is discussed in detail in Appendix C of
this document. States that want to minimize the time necessary to adopt a trading mechanism into
their SIP should use EPA's model rule.
The following paragraphs and the flowchart at the end of this appendix (Figure 2) describe a
process that can be used to expedite the approval of a trading rule into a SIP.
•	State prepares proposed SIP. The first step in developing a SIP for a trading rule to allow
emission reductions from nonroad projects to be used in transportation conformity
determinations is for the state air agency to prepare the proposed SIP. To expedite this step,
the air agency should start with the model trading rule and modify it only to the extent
necessary. The air agency would need to fill in the information pertinent to the nonattainment
and maintenance areas in its state where the rule would apply. It is also likely that the state
air agency would have to format the rule so that it conforms to the state's requirements for
regulatory text. The state would also develop language to be included in the preamble of its
notice of proposed rulemaking (NPRM). In drafting its preamble language, the state may find
it useful to incorporate as much relevant language as possible from the explanatory text in
Appendix C that accompanies the model rule.
Once the air agency has drafted its regulation it would share the draft with the interagency
consultation partners as required by 40 CFR 93.105(b)(1). The interagency consultation
partners include representatives of the MPO(s), state and local air quality and transportation
agencies, and the local or regional offices of EPA, FHWA, and FTA. After the interagency
consultation partners have reviewed and commented on the draft, the state air agency would
make any needed revisions.
•	State submits proposed SIP to EPA and requests parallel processing. At this point the air
agency would transmit the SIP to the EPA Region and request in the transmittal letter that the
submission be parallel processed in order to expedite its incorporation into the SIP. Please
note that using parallel processing is an optional approach; a state air agency could also
choose to submit the SIP after its public process is completed and any revisions are made.
•	State proposes trading rule and solicits public comment. The air agency would also move
forward with publishing its proposed rulemaking, consistent with the state's requirements.
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Once published, a public comment period would begin. A typical public comment period is
30 days; however, it may be possible to reduce the comment period to as little as 15 days
under some circumstances.36 We believe that a state air agency could complete these steps in
about one month.
•	EPA reviews proposed trading rule. The EPA Region would begin its formal review of the
trading rule as soon as it receives the state's SIP submission. EPA's review (and the
subsequent publication of an NPRM in the Federal Register) would occur while the state was
accepting public comments on its notice of proposed rulemaking and addressing any
comments received.
•	EPA proposes approval of the trading rule. The EPA Region would then publish its
NPRM in the Federal Register. The publication of the notice would start a public comment
period. A typical public comment period is 30 days; however, it may be possible to reduce
the comment period to as little as 15 days under some circumstances.
•	EPA addresses comments and prepares final approval. At the close of the comment
period on EPA's NPRM, the EPA Region would address any comments received and could
draft the Federal Register notice finalizing the approval of the trading rule; however, EPA
cannot publish this final rulemaking (FRM) notice until the state completes its rulemaking
process and submits the adopted rule to EPA.
•	State prepares final rulemaking package. By this time the state's public comment period
would have closed. The state air agency would address any comments received and prepare
its final rulemaking package, making any changes in the rule that are necessary to address any
comments that are received. It must be noted that if the state needs to make a significant
revision to its trading rule, the EPA Region would not be able to complete its rulemaking
through parallel processing because the state's final rule would not be consistent with the rule
that EPA had proposed for approval.
•	State review, if required. At this point some states may be required to submit the final rule
for review within the state before submission to EPA for final approval. These reviews may
be carried out by the state legislature, the Governor's office or other body established by the
state. The length of these reviews varies greatly.
•	State submits adopted rule for EPA approval. After any required state-level review is
completed, the air agency would address any comments that resulted from this review
process. The air agency would also complete the state rulemaking process which may involve
steps such as publishing a final rulemaking notice. The state would then submit the final SIP
package to the EPA Region for final approval.
•	EPA finalizes approval. The EPA Region would then complete its FRM notice and have the
notice published in the Federal Register. EPA's final action would be effective 30 days after
36Requirements for public hearings on SIPs can be found at 40 CFR 51.102. Section 51.102(g) allows a state to shorten
its public comment period if it submits a written application to EPA in advance.
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publication. If EPA approves the SIP and once EPA's rulemaking action is effective, the
MPO(s) may use the trading rule in conformity determinations. No further rulemaking by the
state or EPA would be necessary to allow trades to occur.
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Figure 2: Flowchart for the
Development of a SIP
Trading Rule for
Transportation Conformity
State Air Agency prepares proposed
SIP revision
State Air Agency requests that EPA parallel
process the revision
EPA begins SIP
EPA complete review
and prepares NPRM
EPA agrees to
parallel process
EPA does not agree to
parallel process
1
State Air Agency proposes the trading rule
- starts public comment period
EPA publishes NPRM
- starts comment
period
State Air Agency addresses comments and
revises if necessary
State review process, if necessary
legislature, Governor's office
EPA addresses
comments and
prepares FRM
State Air Agency finalizes SIP revision and
submits it to EPA for approval'2'
I
I
EPA finalizes and
publishes FRM
(1)	EPA would not propose approval until after the state submits final SIP revision for approval.
(2)	Assumes any changes are minor and would not cause EPA to re-propose approval.
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APPENDIX C:
MODEL RULE TEMPLATE FOR TRADING EMISSION
REDUCTIONS FROM NONROAD RETROFIT AND
REPLACEMENT PROJECTS (PROJECTS) FOR
TRANSPORTATION CONFORMITY
Introduction
In recognition of the importance of nonroad projects and other mobile source emission
reduction strategies, the FAST Act continues to direct states and MPOs to give priority to funding
diesel retrofits and other cost-effective transportation strategies under the CMAQ program. The law
also notes that states and MPOs continue to have final CMAQ project selection authority.
Furthermore, any state that has a PM2.5 nonattainment or maintenance area, with the exception of
those that are specifically exempt under the FAST Act, is required to invest a portion of its CMAQ
funding on projects that reduce PM2.5 emissions and for its precursor emissions.
A state's trading rule establishes a trading mechanism that would allow emission reductions
from nonroad projects that are eligible to be funded with CMAQ (23 U.S.C. 149(b)) to be used in
transportation conformity. The model rule language, included below, is intended to facilitate states'
adoption of this type of trading mechanism into their SIPs. States would need to modify this model
rule to account for any new issues raised by including projects that may not be eligible for CMAQ
dollars, as described further below.
Once a trading mechanism is adopted by a state into its SIP, the state air agency, MPO, and
other agencies as appropriate would follow its provisions each time the MPO wants to include the
emission reductions from a new nonroad project (or set of projects) in a transportation conformity
determination.
Appendix C is divided into two parts that follow a parallel structure. Part 1 provides
background information for state and local agencies to consider for each section of the model trading
rule. Part 2 provides the model rule itself that states can include in their SIPs. EPA developed the
model rule based on existing laws and regulations.
Part 1: Explanatory Notes for Using Model Trading Rule Language
Section 1. Purpose
The purpose of the model rule is to establish a trading mechanism that allows certain nonroad
emission reductions to be used in transportation plan and TIP conformity determinations.
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Section 2. Definitions
Examples of definitions that may be needed are listed, but all of them do not need to be
included if they are defined elsewhere in the state's regulations or if they do not apply (e.g., PMio
does not need to be defined if a state has no PMio nonattainment or maintenance areas). At a
minimum, the definitions of "CARB," "CMAQ," "EPA," "nonroad project," and "surplus" must be
included. If you include a definition for a word or phrase that is defined in the conformity rule (40
CFR 93.101), your definition must be consistent with the definition found in that rule.
Section 3. Applicability
(a)	This model rule could be tailored to establish individual trading mechanisms for more than
one nonattainment or maintenance area within a state. Section 3(a) is intended to ensure that
the exchange of emission reductions occurs within the geographic area that the regional
emissions analysis covers, rather than between areas covered by separate regional emissions
analyses. We believe that this language will cover all possible jurisdictional cases, e.g., where
there is one MPO in a nonattainment area, an MPO that has a donut area, multiple MPOs in an
area, or a multi-state area.37
States can apply this model rule to one or more MPOs, simply by including the names of the
MPOs within the model rule. However, states could also list the MPOs to which the model
rule applies and refer to this list in subsequent sections of the model rule. A state may want to
choose this approach to be consistent with other parts of its SIP, or simply because doing so
avoids repetition of the list in multiple places throughout the trading rule.
(b)	As noted above, the model trading rule is intended to target projects that are eligible for
CMAQ dollars. States would need to modify this model rule to account for any new issues
raised by including projects that may not be eligible for CMAQ dollars. For example, a
trading mechanism could also account for other projects that are funded or operated by a state
or local transportation agency that may not be eligible for CMAQ dollars (e.g., retrofitting
diesel mowing tractors that cut vegetation within the rights-of-way of roadway facilities).
(c)	This section allows agencies to specify which pollutants and/or precursors are covered by
their trading rule (e.g. the rule for an ozone area could specify that it applies to NOx, VOC, or
both).
This section also states that the rule applies only to trades of the same pollutant or precursor.
That is, the model trading rule does not provide for trading between pollutants or
37Please refer to EPA's guidance, "Guidance for Transportation Conformity Implementation in Multi-Jurisdictional
Nonattainment and Maintenance Areas" (EPA-420-B-12-046), for more information regarding how the conformity rule's
requirements for conformity determinations apply in areas that contain more than one MPO, a donut area, parts of more
than one state, or any combination. See ncpis.cpa.gov/E.\c/ZvPDF.cgi?Dockcv=P 100EOXE.pdf.
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TO TQ
precursors. '
Section 4. Applying Emission Reductions from Nonroad Projects in Transportation
Conformity Determinations
(a)(i) The interagency consultation process in the transportation conformity (40 CFR 93.105) would
be followed for each nonroad retrofit trade. This part of the model trading rule would require
the MPO, state department of transportation, other state and local transportation agencies
(when appropriate), and the state air agency to consult on trades. Individual states can further
clarify which agencies should be involved in their consultation process, and make any further
modifications as appropriate.
(a)(ii) This section specifies that the MPO and the state air quality agency must agree on the quantity
of emission reductions from a nonroad project, or set of projects, that can be used in
conformity. The MPO and state air quality agency must work together for a trade to occur
because each agency is responsible for part of the process. MAP-21 directs states and MPOs
to give priority to projects that reduce PM2.5 emissions, including diesel retrofits, in areas
designated nonattainment or maintenance for PM2.5 (23 US.C. 149(g)(3)). These projects may
include both nonroad and onroad diesel equipment that are operated on highway construction
projects within PM2.5 nonattainment and maintenance areas (23 U.S.C. 149(k)(2)).
Ultimately, the state DOTs and MPOs decide how to spend the CMAQ money they receive, in
accordance with the CMAQ provisions of 23 U.S.C. 149. On the other hand, the state air
agency is responsible for determining which emission control programs an area needs to meet
its CAA obligations. The MPO and the state air quality agency must decide together how
much of the emission reductions from a nonroad project or set of projects are appropriate to
use in conformity. These two agencies would make a decision for each project or set of
projects being considered for transportation plan and TIP conformity determinations.
State air quality agencies and MPOs need to consider the area's air quality needs when
deciding how much of the emission reductions from a nonroad project is appropriate to use in
conformity. For example, in the time period before a nonattainment area has an attainment
demonstration, it may be appropriate to reserve some of the emission reductions generated by
a nonroad project to help demonstrate attainment. Or, a state may decide to reserve some of
the emission reductions for improving air quality, regardless of whether or not the attainment
demonstration is in place. The state air agency and MPO could also decide that all of the
emission reductions from a nonroad project can be used in the conformity determination.
Whatever the case, the state air agency would document its concurrence in a letter to the
MPO, which would describe the surplus reductions that are available for transportation
38	If your SIP allows trading between pollutants and/or precursors that will be included in the retrofit trading rule, you
will need to delete the sentence in Section 3(c) that says, "This rule applies only to trades of the same pollutant or
precursor" and add a sentence similar to the following: "This rule does not interfere with [name of state regulation]
which provides for trading between [insertpollutants/precursors]."
39	If you are interested in allowing inter-pollutant or precursor trading for conformity purposes, you will need to do so
within the SIP. Note that you would need to develop an appropriate trading ratio based on a technical justification and
consider other factors as appropriate. Please consult your EPA Region if you intend to add inter-pollutant/precursor
trading to your SIP.
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conformity.
(b)(i) In order for emission reductions from a nonroad project to be estimated, MOVES would need
the number of vehicles/engines/equipment being retrofitted, the vehicle/engine/equipment
type and class being retrofitted, vehicle/engine/equipment model years, the retrofit technology
being applied, the activity level of the vehicles/engines/equipment that are used (e.g., hours of
usage), and when the retrofits will be implemented. This section requires an MPO to describe
the details of the project. While an MPO may not know all of this information with complete
certainty, it should know enough about the project to make reasonable assumptions.
(b)(ii) The model rule relies upon the transportation conformity rule's requirements for ensuring that
emission reductions from projects have sufficient commitments before they are accounted for
in a regional emissions analysis. For example, projects that result from a state or local
regulation or ordinance could be included in a conformity analysis once such a regulation or
ordinance is adopted (40 CFR 93.122(a)(3)(i)). Conversely, a project that does not require a
regulatory action to be implemented would meet this requirement if it is included in the
transportation plan and TIP with sufficient funding and other resources for its full
implementation. See Section 4.3 of this guidance for further information on what level of
commitment is necessary to include emission reductions from projects in a transportation
conformity determination.
Whatever the case, once an entity (e.g., an owner or operator of nonroad equipment or
vehicles) provides a commitment for implementing a nonroad project and the MPO relies on
it in a conformity determination, it is an enforceable obligation. That is, under the existing
provisions of the transportation conformity rule, an entity that makes a written commitment
is subject to civil action if the entity does not fulfill its commitment.
(b)(iii)	- (b)(v) These paragraphs are similar to the conformity rule's requirements for any control
measures that are relied upon in a conformity determination.
(c)	Emission reductions must be quantified using the latest assumptions available at the start of
the regional emissions analysis (40 CFR 93.110). The consultation process would be used to
evaluate and choose the model(s) and associated methods and assumptions to be used (40
CFR 93.105(c)(l)(i)). If the emission reductions are calculated using a method that relies on
inputs such as temperature that were also used for developing the budgets in a SIP, these
factors must be consistent with those used to establish the SIP as required in 40 CFR
93.122(a)(6). Quantification methods and information on the efficacy of retrofit technologies
are addressed in more detail in Section 2 of this guidance document.
(d)	This requirement for documentation is similar to the conformity rule's requirements for
documenting the transportation plan, the TIP, and any control measures that are included in
the regional emissions analysis of a conformity determination. The MPO would document in
its conformity determination that the state air agency has concurred on the traded nonroad
retrofit emission reductions. This documentation could be completed by referencing the state
air agency's concurrence letter in the transportation plan/TIP conformity determination.
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(e) In subsequent determinations, the MPO and state air agency would follow the consultation
procedures in 40 CFR 93.105, but would not have to renegotiate the amount of available
emission reductions from a nonroad project that has already been traded for a given year of
the regional transportation conformity analysis. However, the MPO must recalculate the
emission reductions that result from the project in subsequent conformity determinations. The
MPO would also cite and/or include the previous air agency concurrence letter in its new
conformity determination.
For example, suppose an area that is nonattainment for the 2008 ozoneNAAQS has a trading
mechanism in place, and the MPO is determining transportation plan/TIP conformity in the
year 2017. The MPO determines that a new nonroad project reduces NOx by 5 tons per day
in 2020 and 2 tons per day in 2025. After discussion in the interagency consultation process,
the MPO and state air agency agree that these reductions are surplus, and the MPO can use
some of the reductions in the years 2020 and 2025 of the regional emissions analysis for the
transportation plan/TIP conformity determination. Specifically, in this example, the MPO and
state air agency agree that the following reductions can be used for conformity purposes: 3 of
the 5 tons per day of NOx reductions for the 2020 conformity analysis year and all 2 tons per
day of NOx reductions for the 2025 conformity analysis year.
The next time the MPO does transportation plan/TIP conformity, the MPO re-calculates the
project's reductions based on the latest models and assumptions, and it is found that the
project reduces emissions by 6 tons per day in 2020, and 3 tons per day in 2025. In this
example, the MPO can continue to use up to 3 tons per day of reductions in 2020 and up to 2
tons of reductions in 2025, based on the previous trade for this nonroad project. If additional
reductions are needed from this project for any years, then the trading mechanism would need
to be used to conduct a new trade.
As with any control measure that an MPO includes in its conformity determination, the MPO
can only use the emission reductions from the project, or part of the project that is actually
occurring. If the nonroad project's implementation is delayed, the MPO cannot include
emission reductions from the project until its implementation is assured.
Section 5. Prohibition on Double-Counting
This section is intended to ensure that there is no double-counting of emission reductions that have
already been used in a transportation conformity determination or in meeting any other CAA
purpose. The best way to ensure this is to require that the impact of any trades be accounted for in
any subsequent inventory analyses that are done. For example, if the application of this rule results
in a decrease in the nonroad emissions inventory and an increase in the allowable onroad emissions,
future SIP inventories or regional transportation conformity analyses should reflect those changes as
appropriate.
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Part 2: Model Trading Rule
Section 1. Purpose
This rule establishes the procedures that may be used to trade emission reductions from
nonroad projects, as defined below, to the transportation sector for the purpose of determining
conformity of a transportation plan or transportation improvement program.
Section 2. Definitions
The following definitions apply to this rule:
•	CARB means the California Air Resources Board.
•	CMAQ means the Congestion Mitigation and Air Quality Improvement Program, as defined in
title 23, U.S.C.
•	EPA means the U.S. Environmental Protection Agency.
•	Nonroad retrofit project (project), for the purpose of this rule, means an undertaking to reduce
emissions from nonroad vehicles or engines as described by 23 U.S.C. 149(b), below the
emissions level which is currently required by EPA regulations at the time of vehicle or
engine certification. For the purposes of this rule, such an undertaking must apply a
technology verified by EPA, CARB, or other entity recognized by EPA for verifying retrofit
technology, use an EPA-certified engine replacement or early replacement of older vehicles
or equipment with cleaner vehicles or equipment; and it must be eligible for funding under
CMAQ.
•	NOx means oxides of nitrogen.
•	PMw means particulate matter that is less than or equal to 10 microns in aerodynamic
diameter.
•	PM2.5 means particulate matter that is less than or equal to 2.5 microns in aerodynamic
diameter.
•	Surplus means that emission reductions are not otherwise relied on to meet any CAA air
quality related purpose including but not limited to reasonable further progress, attainment,
maintenance, or requirements adopted to satisfy CAA section 110(a)(2)(D). In the event that
a nonroad project is relied on to meet such an air quality requirement, emission reductions
are no longer surplus and may not be used in transportation conformity determinations.
•	VOC means volatile organic compounds.
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Section 3. Applicability
(a)	Geographic applicability: This trading rule applies to the geographic area covered by the
regional emissions analysis done for a transportation conformity determination for a transportation
plan or transportation improvement program in [insert name of nonattainment or maintenance area].
(b)	Project applicability: This trading rule applies to nonroad projects as defined in Section 2 of
this rule.
(c)	Pollutant applicability: This trading rule applies to the following pollutants/precursors:
[insert pollutants/precursors; for precursors indicate for which pollutant and standard(s)]. This
rule applies only to trades of the same pollutant or precursor.
Section 4. Applying Emission Reductions from Nonroad Projects in Transportation
Conformity Determinations
Before [insert name ofMPO] can include emission reductions from a nonroad project(s) in a
transportation conformity determination, the steps in paragraphs (a) - (d) must be completed.
(a)	Interagency Consultation.
(i)	[Insert name ofMPO], [insert name of state department of transportation], [insert names of
other state and local transportation agencies, when appropriate] and [insert name of state air
agency] shall follow consultation procedures in [insert "40 CFR 93.105" or state transportation
conformity SIP if one has been approved by EPA] throughout the implementation of this rule.
(ii)	[Insert name ofMPO(s)] and [insert name of state air agency] must concur on the amount of
emission reductions from a nonroad project(s) that can be used in the transportation conformity
determination. [Insert name of state air agency] will document this concurrence in a letter to
[insert name ofMPO]. Concurrence of [insert name of state air agency] also affirms that the
emission reductions are surplus and therefore available for the transportation conformity
determination.
(b)	Description of the Nonroad Project(s).
(i)	[Insert name ofMPO] must fully describe each nonroad project being relied upon in a
conformity determination, including the number of vehicles/engines/equipment being retrofitted,
the vehicle/engine/equipment type and class, vehicle/engine/equipment model years, the retrofit
technology being applied, the activity level of the vehicles/engines/equipment, and the
implementation schedule of the nonroad project.
(ii)	[Insert name ofMPO] must provide assurance that the nonroad project is enforceable by
ensuring that any nonroad project under this rule meets the requirements of 40 CFR 93.122(a);
(iii)	[Insert name ofMPO] must provide assurance that the nonroad project has adequate funding
and resource commitments to ensure that emission reductions from the nonroad project will
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occur in the years of the regional emissions analysis when emission reductions will be used;
(iv)	[Insert name ofMPO] must provide assurance that the nonroad project is on schedule and
that the retrofitted vehicles, engines, or equipment will remain in use within the nonattainment or
maintenance area in the years of the regional emissions analysis when the emission reductions
will be used; and
(v)	[Insert name ofMPO] must provide assurance that emission reductions will be based only on
activity that occurs within the geographic area covered by the regional emissions analyses.
(c)	Calculation of Emission Reductions. For each year of the regional emissions analysis in which
emission reductions from the nonroad project(s) will be applied, [insert name ofMPO] and [insert
name of state air agency] must calculate emission reductions from the nonroad project(s) using:
(i)	the latest EPA-approved emissions model or other method as determined through the
interagency consultation process required by 40 CFR 93.105;
(ii)	data and assumptions consistent with requirements for use of latest planning assumptions
under 40 CFR 93.110, including, but not limited to current data or future projections of numbers
and types of nonroad vehicles/engines/equipment being retrofitted, and current data or future
projections of hours of use for those vehicles/engines/equipment within the nonattainment or
maintenance area;
(iii)	the latest verified information available regarding the efficacy of the nonroad project as
provided by EPA and/or CARB; and
(iv)	ambient temperatures and other relevant factors consistent with those used to establish the
motor vehicle emissions budgets (if they exist) in the applicable implementation plan, as required
by 40 CFR 93.122(a)(6), if a method is used that requires such factors as inputs.
Once total emission reductions from the nonroad project(s) are calculated, [insert name ofMPO] can
use no more than the amount of emission reductions determined in Section 4(a)(ii) to be available for
the conformity determination.
(d)	Documentation. [Insert name ofMPO] must document in the transportation conformity
determination how steps (a) through (c) of this section have been satisfied, consistent with the
transportation conformity regulations at 40 CFR Parts 51 and 93.
(e)	Subsequent conformity determinations. Once emission reductions from a nonroad project(s)
have been used in a conformity determination, [insert name ofMPO] can include emission
reductions from those projects for the same analysis years in a subsequent conformity determination
without repeating paragraph (a)(ii), provided [insert name ofMPO] meets all other requirements of
Section 4 of this rule.
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Section 5. Prohibition on Double-Counting
Once the emission reductions of the nonroad project(s) are included in a transportation conformity
determination, those specific reductions are no longer surplus and therefore no longer available as
new reductions for meeting any CAA air quality related purpose, including but not limited to,
reasonable further progress, attainment, maintenance, or requirements in CAA section 110(a)(2)(D)
Any emissions inventory created after a trade must properly account for the emission impact of the
trade.
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