Amendments to Vehicle Inspection Maintenance Program Requirements To Address the 8-Hour National Ambient Air Quality Standard for Ozone, 1314-1324 [05-177]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 70, Number 4 (Thursday, January 6, 2005)]
[Proposed Rules]
[Pages 1314-1324]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-177]



[[Page 1313]]

-----------------------------------------------------------------------

Part III





Environmental Protection Agency





-----------------------------------------------------------------------



40 CFR Part 51



Amendments to Vehicle Inspection Maintenance Program Requirements To 
Address the 8-Hour National Ambient Air Quality Standard for Ozone; 
Notice of Proposed Rulemaking

Federal Register / Vol. 70, No. 4 / Thursday, January 6, 2005 / 
Proposed Rules

[[Page 1314]]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[FRL-7857-4]
RIN 2060-AM21


Amendments to Vehicle Inspection Maintenance Program Requirements 
To Address the 8-Hour National Ambient Air Quality Standard for Ozone

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

-----------------------------------------------------------------------

SUMMARY: This document proposes minor revisions to the Motor Vehicle 
Inspection/Maintenance (I/M) regulation to update submission and 
implementation deadlines and other timing-related requirements to more 
appropriately reflect the implementation schedule for meeting the 8-
hour National Ambient Air Quality Standards (NAAQS) for ozone. This 
proposal is directed specifically at those areas that will be newly 
required to implement I/M as a result of being designated and 
classified under the 8-hour ozone standard; the conditions under which 
an existing I/M program under the 1-hour ozone standard must continue 
operation under the 8-hour standard are addressed under the anti-
backsliding provisions of the April 30, 2004 final rulemaking which 
established several key requirements for implementing the 8-hour ozone 
standard (69 FR 23931).\1\
---------------------------------------------------------------------------

    \1\ Additional guidance on anti-backsliding under the 8-hour 
standard and how it applies to I/M programs can be found in the May 
12, 2004 policy memo signed by Tom Helms, Ozone Policy and 
Strategies Group, and Leila Cook, State Measures and Conformity 
Group, entitled ``1-Hour Ozone Maintenance Plans Containing Basic I/
M Programs,'' a copy of which is contained in the docket for this 
proposed rulemaking.

DATES: Written comments on this proposal must be received no later than 
---------------------------------------------------------------------------
February 7, 2005.

ADDRESSES: You may submit comments, identified by Docket OAR-
2004-0095, by any of the following methods:
     Federal eRulemaking portal: https://www.regulations.gov. 
Follow the instructions for submitting comments.
     E-mail: A-and-R-Docket@epa.gov. Include Docket 
OAR-2004-0095 in the subject line of the message.
     Fax: (202) 566-1741.
     Mail: U.S. Environmental Protection Agency, EPA West (Air 
Docket), 1200 Pennsylvania Avenue, NW., Room: B108; Mail Code: 6102T, 
Washington, DC 20460.
     Hand Delivery/Courier: EPA Docket Center (Air Docket), 
U.S. Environmental Protection Agency, 1301 Constitution Avenue, NW., 
Room: B108; Mail Code: 6102T, Washington, DC 20004.
    Instructions: All submissions received must include the agency name 
and docket number or Regulatory Information Number (RIN) for this 
rulemaking. All comments received will be posted without change to 
https://cascade.epa.gov/RightSite/dk_public_home.htm, including any 
personal information provided. For detailed instructions on submitting 
comments and additional information on the rulemaking process, see the 
``Public Participation'' heading of the SUPPLEMENTARY INFORMATION 
section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to https://cascade.epa.gov/RightSite/dk_public_
home.htm or EPA Docket Center (Air Docket), U.S. Environmental 
Protection Agency, 1301 Constitution Avenue, NW., Room: B108; Mail 
Code: 6102T, Washington, DC 20004.

FOR FURTHER INFORMATION CONTACT: David Sosnowski, Office of 
Transportation and Air Quality, Transportation and Regional Programs 
Division, 2000 Traverwood, Ann Arbor, Michigan 48105. Telephone (734) 
214-4823.

SUPPLEMENTARY INFORMATION:

I. Table of Contents

I. Table of Contents
II. Summary of Proposal
III. Authority
IV. Background of the Proposed Amendments
    A. Amendments to the I/M Performance Standards
    B. Amendments to Program Evaluation Requirements
    C. Amendments to the Basic I/M Waiver Requirements
    D. Amendments to Update SIP Submission Deadlines
    E. Amendments to Update Implementation Deadlines
V. Discussion of Major Issues
    A. Impact on Existing I/M Programs
    B. Impact on Future I/M Programs
VI. Economic Costs and Benefits
VII. Public Participation
VIII. Administrative Requirements
    A. Administrative Designation
    B. Reporting and Recordkeeping Requirement
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution or Use
    I. National Technology Transfer and Advancement Act

II. Summary of Proposal

    On April 30, 2004, EPA published a notice of final rulemaking (69 
FR 23931) addressing several key requirements related to the 
implementation of the 8-hour ozone standard originally promulgated on 
July 18, 1997 (62 FR 38856). Among other things, the 8-hour ozone 
standard implementation rule established deadlines for meeting the 8-
hour ozone standard based upon an area's designation and 
classification. The rule also addresses when State Implementation Plans 
(SIPs) and attainment demonstrations must be submitted. As a general 
matter, the deadlines associated with implementation of the 8-hour 
ozone standard relate back to the effective date of an area's 
designation and classification under the 8-hour ozone standard, and new 
8-hour ozone non-attainment areas are given the same amount of time to 
meet their various obligations as was given to comparably classified 
non-attainment areas under the 1-hour ozone standard. For example, 
under the Clean Air Act Amendments of 1990 (CAA), most areas designated 
and classified as moderate under the 1-hour standard were given 6 years 
after designation as non-attainment to attain the 1-hour ozone 
standard. Similarly, under the rule for implementing the 8-hour ozone 
standard, an area designated and classified as moderate under the 8-
hour standard will also have up to 6 years after the effective date of 
its non-attainment designation to attain the 8-hour ozone standard.
    In addition to establishing the above-mentioned deadlines, the 
April 30, 2004 rulemaking also clarified how the CAA's anti-backsliding 
provisions would be applied under the 8-hour standard to certain 
applicable requirements such as I/M once the 1-hour ozone standard is 
revoked. In general, if an existing I/M area is not able to redesignate 
to attainment for the 1-hour ozone standard prior to revocation of that 
standard (and is also designated as non-attainment for the 8-hour 
standard, regardless of classification or subpart) then that area will 
be required to continue implementing an I/M program until it has 
attained the 8-hour ozone standard. Readers interested in learning more 
about how the Act's anti-backsliding provisions apply to I/M under the 
8-hour standard should consult the anti-backsliding provisions of the 
April 30, 2004 final rulemaking

[[Page 1315]]

as well as the May 12, 2004 policy memo concerning exceptions to the 
general anti-backsliding policy for certain maintenance areas signed by 
Tom Helms and Leila Cook entitled ``1-Hour Ozone Maintenance Plans 
Containing Basic I/M Programs,'' a copy of which is contained in the 
docket for this proposed rulemaking.
    When the rulemaking establishing the requirements for vehicle 
inspection and maintenance (I/M) programs was first published in 
November 1992, some of the deadlines were expressed relatively (i.e., 
``within X years of Y * * *'') while others were set as explicit dates 
(i.e., ``no later than November 15, 1993 * * *''). The purpose of 
today's proposed rulemaking is to revise outdated timing-related 
references in the I/M rule such as submission dates, start dates, 
evaluation dates, and other milestones and/or deadlines to make them 
relevant for those areas that will be newly required to begin I/M 
programs as a result of being designated and classified under the 8-
hour ozone standard. It is not the intention of this proposal to revise 
or establish new requirements for existing I/M programs established in 
response to the 1-hour ozone standard. As discussed above, the 
requirements that apply to existing 1-hour I/M programs that must 
continue implementation under the 8-hour standard have already been 
addressed under the anti-backsliding provisions of the April 30, 2004 
final rulemaking as well as the May 12, 2004 policy memo entitled ``1-
Hour Ozone Maintenance Plans Containing Basic I/M Programs,'' a copy of 
which is contained in the docket for this proposed rulemaking.
    Today's notice proposes to: (1) Revise sections 51.351 and 51.352 
(the basic and enhanced I/M performance standards) to update the start 
date and model year coverage associated with specific elements of the 
basic and enhanced I/M performance standards as well as to set the 
benchmark comparison date(s) for performance standard modeling purposes 
that better reflects milestones associated with the 8-hour ozone 
standard; (2) revise section 51.353 (network type and program 
evaluation) to make the deadline for beginning the first round of 
program evaluation testing (which is currently listed as ``no later 
than November 30, 1998'') a relative deadline keyed to the date of 
program start up; (3) amend section 51.360 (waivers and compliance via 
diagnostic inspection) so that the deadline for establishing full 
waiver limits for those basic I/M programs choosing to allow waivers 
(currently, ``no later than January 1, 1998'') becomes ``January 1, 
1998, or coincident with program start up, whichever is later''; (4) 
update section 51.372 (state implementation plan submissions) to set 
the I/M SIP submission deadline for areas newly required to adopt I/M 
programs under the 8-hour ozone standard as 1 year after the effective 
date of EPA's final action on today's proposal or 1 year after the 
effective date of designation and classification under the 8-hour 
standard (whichever is later); (5) update section 51.373 
(implementation deadlines) to establish the implementation deadline for 
new I/M programs required under the 8-hour standard as 4 years after 
the effective date of designation and classification under the 8-hour 
ozone standard; and (6) revise section 51.373 (implementation 
deadlines) to clarify that the deadline for beginning OBD testing for 
areas newly required to implement I/M as a result of being designated 
and classified under the 8-hour ozone standard is ``coincident with 
program start up.''

III. Authority

    Authority for the rule changes proposed in this notice is granted 
to EPA by sections 182, 184, 187, and 118 of the Clean Air Act as 
amended (42 U.S.C. 7401, et seq.).

IV. Background of the Proposed Amendments

    On July 18, 1997, EPA revised the National Ambient Air Quality 
Standard (NAAQS) for ozone (62 FR 38856) by promulgating a standard of 
0.08 parts per million (ppm) as measured over an 8-hour period. At the 
time, EPA indicated its belief that the 8-hour ozone NAAQS should be 
implemented under the less prescriptive requirements of subpart 1 of 
part D of title I of the CAA rather than the more prescriptive mandates 
of subpart 2 of that part. For mandatory I/M--which falls under subpart 
2, as opposed to the more flexible subpart 1--this approach to 
implementing the 8-hour ozone NAAQS solely under subpart 1 would have 
meant that I/M would not be mandatory for any area that was newly 
designated under the 8-hour ozone standard (unless the area in question 
had previously been required to implement I/M under the 1-hour 
standard, in which case the Act's anti-backsliding provisions would 
apply).
    Various industry groups and states challenged EPA's final rule 
promulgating the 8-hour ozone NAAQS, which eventually led to a Supreme 
Court ruling, issued in February 2001. Among other things, the Supreme 
Court found that EPA's original implementation approach, which did not 
provide a role for subpart 2 in implementing the 8-hour NAAQS, was 
unreasonable. Specifically, the Court noted EPA could not ignore the 
provisions of subpart 2 that ``eliminate[] regulatory discretion'' 
allowed by subpart 1. The Court also identified several portions of the 
CAA's classification scheme under subpart 2 that are ``ill-fitted'' to 
the revised standard and remanded the implementation rule to EPA for 
the development of a reasonable approach for implementation. Whitman v. 
American Trucking Assoc., 121 S.Ct. 916-919 (2001) (Whitman).
    The Agency's 8-hour ozone implementation proposal was published in 
the Federal Register on June 2, 2003 (68 FR 32802). Key portions of the 
June 2, 2003 proposal relevant to I/M (and other subpart 2 
requirements) were subsequently promulgated as final in a rulemaking 
published in the Federal Register on April 30, 2004 (69 FR 23951). It 
is, therefore, appropriate and timely for EPA to update the I/M rule to 
clarify the requirements for areas newly required to implement I/M as a 
result of being designated and classified under the 8-hour ozone 
standard. It is not, however, the intention of this proposal to address 
requirements for existing, 1-hour I/M programs which must continue 
under the 8-hour standard; those requirements are already addressed 
under the anti-backsliding provisions of the April 30, 2004 final 
rulemaking as well as the May 12, 2004 policy memo entitled ``1-Hour 
Ozone Maintenance Plans Containing Basic I/M Programs.''
    Today's proposed revisions to the I/M rule and EPA's rationale for 
each are discussed under separate headings below.

A. Amendments to the I/M Performance Standards

1. What Is an I/M Performance Standard?
    An I/M performance standard is a collection of program design 
elements (such as start date, test type, network type, vehicle 
coverage, etc.) which defines a benchmark program to which a state's 
proposed program is compared in terms of its potential to reduce 
emissions of carbon monoxide (CO) and/or the ozone precursors, 
hydrocarbons (HC) and oxides of nitrogen (NOX) by certain 
benchmark comparison dates (also known as ``evaluation dates''). Unless 
an alternative method or model has been approved by EPA, the mechanism 
used to compare the performance standard program to a state's proposed 
program is

[[Page 1316]]

the currently applicable version of EPA's mobile source emission factor 
model--currently, MOBILE6.2. The MOBILE model uses input files that 
include descriptions of the program design elements but which also 
include locally variable parameters, such as the age distribution of 
the local fleet, average temperature of the local area, local fuel 
characteristics, etc.
    To determine whether or not a given program meets the performance 
standard, it is necessary to produce three MOBILE input files: (1) The 
applicable performance standard benchmark program; (2) the state's 
proposed program; and (3) a no-I/M scenario which characterizes the 
emissions from the local fleet with no I/M program in place. Once these 
input files have been created, the MOBILE model is then run to produce 
assessments of the emission levels expected with the performance 
standard in place, with the proposed program in place, and with no I/M 
program in place. The emission reduction ``credits'' associated with 
the performance standard and proposed program are calculated by 
subtracting the emission levels projected with either program in place 
from the emission levels projected with no I/M program in place. If the 
emission reduction credits associated with the state's proposed program 
are equal to or greater than those associated with the performance 
standard, then the state's proposed program is considered to have met 
its performance standard.
2. What Are ``I/M Program Design Elements'' and How Do They Interact 
With ``Locally Variable Parameters''?
    I/M program design elements are program features most likely to 
have a direct impact on the ability of the program to reduce levels of 
the three criteria pollutants (CO, HC, and NOX). Factors 
that directly influence the level of emission reductions associated 
with a given I/M program design include but are not limited to the 
following: test frequency, compliance rate, vehicle type coverage, 
model year coverage, start date, evaluation date, and test type [e.g., 
idle, IM240, Acceleration Simulation Mode (ASM), onboard diagnostics 
(OBD)].
    To illustrate how an I/M program design element can interact with a 
``locally variable parameter,'' consider model year (MY) coverage and a 
local variable such as in-use fleet age distribution. Generally 
speaking, the more model years covered, the greater the potential for 
reducing emissions, though not all model years are considered equal in 
this regard. For example, testing the newest vehicles only provides 
marginal, additional emission reductions because new cars are unlikely 
to have accumulated the wear and tear that typically lead to high 
emissions. On the opposite end of the spectrum, testing the very oldest 
cars may not provide much in the way of emission reductions either, 
given the small number of such vehicles still capable of being driven 
and their limited contribution to a given non-attainment area's overall 
vehicle miles traveled (VMT). What constitutes optimal model year 
coverage will vary from area to area, depending upon the 
characteristics of the local, in-use fleet. This local variability (and 
its impact on the emission reductions that can potentially be achieved 
by a given I/M program) is one of the reasons why the input files used 
to demonstrate compliance with an I/M performance standard must include 
both the I/M program design elements that define the programs being 
compared and the local variables likely to affect the mobile source 
emission inventory, like local in-use fleet age distribution, VMT 
distribution, average temperature, and local fuel composition.
3. How Much Discretion Does EPA Have in Deciding What I/M Program 
Design Elements To Include in a Performance Standard?
    In mandating that EPA establish performance standards for I/M 
programs, the Clean Air Act Amendments of 1990 were fairly prescriptive 
with regard to several of the I/M program design elements that must be 
included. For example, EPA's I/M performance standard for areas 
designated and classified as having ``serious'' or worse air quality 
(i.e., the ``enhanced'' I/M performance standard) is required by the 
statute to include annual vehicle testing with at least two tests per 
vehicle (an emissions test and a component check to detect tampering 
and/or misfueling) covering both passenger cars and light-duty trucks, 
with no allowance for any model year exemptions. EPA was given more 
discretion, however, when it came to determining what specific emission 
test and failure threshold combination would apply for any given model 
year covered by the performance standard, so that older vehicles 
certified to more lenient emission standards would not be subject to 
the same stringent I/M testing criteria established for newer, more 
technologically advanced vehicles.
4. How Much Discretion Does a State Have in Deciding the Design of Its 
Actual I/M Program?
    The 1990 CAA specifies certain minimum program design requirements 
that must be part of a state's I/M program. For example, all mandatory 
I/M programs must include some level of OBD testing, while all enhanced 
I/M programs are required to include some form of on-road testing. 
Nevertheless, states have far more latitude in designing their own 
programs than EPA has in setting the performance standard. For example, 
states can adopt biennial programs provided equivalent emission 
reductions are achieved and can exempt the newest and/or oldest model 
years, while EPA's performance standard was required to be annual and 
was not allowed to exempt vehicles based upon model year. As long as a 
state's program meets the 1990 CAA's minimum requirements and can be 
shown through modeling to achieve the same or better emission 
reductions as the applicable performance standard, the actual design of 
the I/M program (whether annual or biennial, with or without model year 
exemptions, centralized or decentralized, allowing waivers or not, 
using dynamometer-based testing or not, covering heavy-duty trucks or 
not, etc.) is for the state to decide. The criteria that a subject area 
should consider in designing (or redesigning) its I/M program are 
discussed below, under item 10 of this subsection.
5. Why Do EPA's Current Performance Standards Need To Be Revised for 
Areas Newly Required To Do I/M Under the 8-Hour Ozone NAAQS?
    The current I/M performance standards were written to reflect the 
deadlines set by the 1990 CAA for 1-hour ozone non-attainment areas. 
For example, the start dates for various elements of the current 
performance standards reflect either the actual mandated start dates 
for those elements, or what were considered reasonable start dates for 
areas newly required to do I/M under the 1-hour standard. These date 
assumptions do not make sense under the schedule promulgated for 
meeting the 8-hour standard. For example, one current enhanced I/M 
performance standard assumes a start date of no later than 1995, while 
current 8-hour ozone non-attainment areas were not even designated and 
classified until 2004 and are not expected to submit attainment plans 
until 2007. It is therefore essential to revise the timing assumptions 
associated with the I/M performance standards so that they

[[Page 1317]]

make sense for 8-hour ozone non-attainment areas new to I/M.
6. What Regulatory Change Does EPA Propose?
    EPA proposes to make the following regulatory changes to the basic 
I/M performance standard for areas newly required to implement a basic 
I/M program as a result of being designated and classified moderate 
non-attainment under the 8-hour ozone NAAQS (and meeting the existing 
I/M population criteria): (1) Start date: four years after the 
effective date of designation and classification under the 8-hour ozone 
standard; (2) emission test types: Model Year (MY) 1968-2000--idle, MY 
2001 and newer--onboard diagnostic (OBD) check; (3) evaluation date: 
six years after the effective date of designation and classification 
under the 8-hour ozone standard rounded to the nearest July. All other 
basic I/M performance design elements shall be the same as previously 
promulgated for 1-hour ozone non-attainment areas (see 40 CFR 51.352).
    For areas newly required to implement an enhanced I/M program as a 
result of being designated and classified as serious or higher non-
attainment under the 8-hour ozone NAAQS (and meeting the existing I/M 
population criteria for enhanced I/M areas), EPA proposes that an 8-
hour ozone enhanced I/M performance standard be established assuming 
the same program design elements as the current low enhanced I/M 
performance standard defined at 40 CFR 51.351 (g) but with the 
following exceptions: (1) Start date: four years after the effective 
date of designation and classification under the 8-hour ozone standard; 
(2) emission test types: MY 1968-2000--idle, MY 2001 and newer--onboard 
diagnostic (OBD) check; (3) evaluation dates: six years after the 
effective date of designation and classification under the 8-hour ozone 
standard rounded to the nearest July and the applicable attainment 
date, also rounded to the nearest July.
    A state's program will be deemed in compliance with the 8-hour 
ozone enhanced I/M performance standard if it can demonstrate through 
modeling that the proposed program will achieve the same percent 
reduction in HC and NOX: (1) As achieved by the performance 
standard program based upon an evaluation date set to the six year 
anniversary of the effective date of the area's designation and 
classification under the 8-hour ozone standard, rounded to the nearest 
July and (2) can demonstrate through modeling that the same percent 
reduction as achieved under number 1 is still being achieved as of the 
first July following the area's attainment date under the 8-hour ozone 
standard.
7. Why Does EPA Propose That Only MY 2001 and Newer Vehicles Be 
Subjected To the OBD-I/M Check as Part of the Proposed I/M Performance 
Standards for Areas New to I/M Under the 8-Hour Ozone Standard When 
Vehicles Have Included OBD Systems Since MY 1996? Does This Reflect 
EPA's Recommended MY Coverage for Such Testing? Is There Something 
Which Prevents Successful Testing of Older (i.e., pre-2001) OBD-
Equipped Vehicles?
    EPA's proposed MY coverage for OBD-I/M testing in the 8-hour I/M 
performance standards does not reflect the Agency's recommended MY 
coverage for such testing nor does it suggest a problem with testing 
pre-2001 OBD-equipped vehicles. Since 2000, I/M programs across the 
country have been successfully testing MY 1996 and newer vehicles using 
the OBD-I/M test, in accordance with EPA requirements and guidance. 
Although older OBD-equipped vehicles tend to have higher failure rates 
than newer OBD-equipped vehicles, this relationship holds true for all 
older versus newer vehicles.
    The reason EPA proposes to limit coverage of the OBD test as part 
of the proposed 8-hour I/M performance standards goes to the heart of 
why the CAA required EPA to establish performance standards as opposed 
to mandating program designs: Flexibility. Test type coverage is one of 
the mechanisms used in setting an I/M performance standard that can 
either increase or all but eliminate the level of flexibility states 
will have in designing their own I/M programs. If, for example, EPA 
established a performance standard using maximum MY coverage of the 
most rigorous test available, the performance standard would 
effectively cease to be a ``performance standard'' and would become, 
instead, a mandatory program design.
    In 1992 when the original I/M performance standards were 
established, OBD testing was included in the performance standards only 
as an uncredited placeholder because, at the time, no OBD-equipped 
vehicles were available for test credit assessment. Since that time, 
however, EPA has done extensive testing of OBD-equipped vehicles and 
the effectiveness of OBD testing. As a result, EPA's mobile source 
emission factor model (currently MOBILE6.2) affords OBD testing the 
maximum credit available to any I/M test. This, in turn, means that 
what was previously an uncredited placeholder has now become the 
driving factor in determining how much or how little flexibility is 
reflected in the I/M performance standards.
    EPA is proposing MY 2001 and newer as the model year coverage for 
the OBD test in the 8-hour I/M performance standards because that is 
the level of coverage that has been found (through modeling) to afford 
8-hour areas newly subject to I/M the same level of flexibility 
included in the existing I/M regulations and currently available to I/M 
programs required under the 1-hour standard. MY 2001 was chosen to 
ensure that new and existing programs are held to comparable standards. 
EPA invites commenters interested in proposing alternative ranges of 
model year coverage to provide their recommendations, including an 
explanation addressing why the alternative is preferable to today's 
proposal.
8. How Much Flexibility Will States Have in Designing Their Newly 
Required, 8-Hour I/M Programs To Meet EPA's Proposed I/M Performance 
Standards Under the 8-Hour Ozone Standard?
    Under EPA's proposal, areas newly subject to I/M under the 8-hour 
ozone standard will have approximately the same level of flexibility 
that currently exists for areas subject to I/M as a result of the 1-
hour standard. That said, designing a new I/M program will nevertheless 
involve facing different opportunities and/or challenges than were 
faced in the mid-1990's when many of today's current programs were 
designed. This is because the vehicle fleet is not static; as time 
passes--and standards and requirements change--the relative proportion 
of old to new technology vehicles is constantly changing, with the 
percent and number of older technology vehicles shrinking as newer 
technology vehicles begin to dominate the in-use fleet.
    In the mid-1990's, fleet turnover was not much of an issue when it 
came to designing I/M programs because even though testing technology 
had evolved considerably since the simple idle test, the new tests 
were, for the most part, downwardly compatible. An IM240 could be used 
to test a 1968 model year vehicle just as readily as it could test a 
1993 model year vehicle. Such is no longer the case with the OBD test, 
which, while inexpensive, accurate, easy, and effective, can only be 
performed on OBD-equipped vehicles (i.e., light-duty vehicles and 
trucks, MY 1996 and newer). Given the substantial difference in capital 
investment involved in traditional tailpipe testing

[[Page 1318]]

(and especially dynamometer-based testing like the IM240 and ASM) 
versus that associated with the OBD test, areas newly required to 
implement I/M under the 8-hour standard will face a challenge not faced 
by I/M programs which began testing in the 1990's or earlier--namely, 
how to take full advantage of the evolving nature of the in-use fleet. 
As suggested earlier, one important characteristic of that evolving in-
use fleet is the rate at which OBD-equipped vehicles are becoming an 
increasing proportion of any fleet while non-OBD-equipped vehicles play 
an ever shrinking role, in terms of absolute numbers as well as overall 
contribution to an area's VMT and the local mobile source emission 
inventory. This trend toward an OBD majority in-use fleet will only 
become more pronounced as time goes on, making the prospect of an I/M 
program that relies exclusively (or nearly exclusively) on OBD testing 
an attractive alternative to traditional, tailpipe-based testing.
    Based upon the time period associated with implementing the 8-hour 
ozone standard and the national default rate of fleet turnover from 
non-OBD-equipped to OBD-equipped vehicles, EPA believes that both of 
today's proposed basic and enhanced I/M performance standards can be 
met by a state program that exempts model year 1995 and older vehicles 
from testing and only performs the OBD and gas cap test on MY 1996 and 
newer, OBD-equipped vehicles. The degree to which the proposed 
standards also allow for other forms of flexibility (such as allowing 
newer model year exemptions, and/or permitting the testing of vehicles 
biennially as opposed to annually) will depend largely upon an area's 
locally variable parameters, such as local fleet age and VMT 
distributions. Whether adopting such a program will meet the area's 
other Clean Air Act goals, however, will vary on a case-by-case basis. 
Item 10 of this subsection will discuss some of the criteria states 
should consider as they begin the process of developing their newly 
required I/M programs (as well as revamping existing programs to 
capitalize on evolving vehicle and vehicle testing technology).
9. Is EPA Barring 8-Hour Ozone Non-Attainment Areas Newly Required To 
Adopt I/M From Performing Tailpipe Testing?
    No. EPA does not have the authority to prohibit I/M programs from 
tailpipe testing, nor would it be appropriate to do so. Instead, EPA is 
merely providing the flexibility needed to allow areas to exempt 
vehicles from tailpipe testing in favor of OBD testing on vehicles MY 
1996 and newer, if a state so desires. However, EPA does recommend that 
8-hour non-attainment areas newly required to implement I/M programs 
look closely at their local fleet characteristics such as age 
distributions, the fraction of local VMT attributable to MY 1995 and 
older vehicles, and the rate of fleet turn-over from non-OBD-equipped 
vehicles to OBD-equipped vehicles to assess the financial viability of 
various program designs before deciding on an appropriate program 
design. For example, based upon the number of such vehicles in the 
local fleet, can the cost of starting up and running a dynamometer-
based testing network dedicated to MY 1995 and older vehicles be 
recouped without charging an exorbitant per-vehicle test fee or 
subsidizing the program through some alternative funding mechanism, 
such as an across-the-board increase in vehicle registration fees?
10. What Are Some of the Factors That Should Be Considered as Areas New 
to I/M Begin Designing Their Vehicle Inspection Programs in Response to 
the 8-Hour Ozone Standard?
    As newly required (as well as existing) I/M programs look at ways 
to optimize those programs, it is appropriate to consider what 
programmatic and financial efficiencies and other improvements might be 
feasible. To facilitate this process, in 2002, EPA (in consultation 
with the states and other stakeholders) developed a list of questions 
and/or issues states should consider as they make choices about their 
existing and/or future I/M programs, entitled ``Considerations for 
State I/M Program Optimization,'' \2\ an abbreviated version of which 
is provided in the list of criteria below.
---------------------------------------------------------------------------

    \2\ A copy of the full document from which these criteria are 
drawn is located in the docket for this action (Docket  
OAR-2004-0095).
---------------------------------------------------------------------------

    In providing this list, it is not EPA's intention to advocate for 
one I/M program type or element versus another, or to make formal 
recommendations. The history of I/M has clearly shown that what is 
appropriate for one area is not always appropriate for another. The 
following list is therefore intended merely to outline the various 
factors that should be taken into consideration when designing (or 
redesigning) the optimal I/M program for a given area. It should be 
used to supplement whatever I/M optimization efforts may already be 
underway, to raise issues that may have been overlooked, and to 
otherwise ensure that the optimization process is as comprehensive as 
possible and does not lead to unintended consequences.
    Although today's proposal focuses on those 8-hour ozone non-
attainment areas brand-new to I/M, the list of criteria provided below 
includes considerations that may be relevant to both new and/or 
existing I/M programs.\3\ States should consult with their EPA Regional 
offices early in the I/M optimization process, and such efforts should 
be conducted taking the following factors into consideration:
---------------------------------------------------------------------------

    \3\ It should be noted that any revision to an existing I/M 
program which is part of a previously approved SIP will require the 
submission and approval of a SIP revision prior to those revisions 
going into effect.
---------------------------------------------------------------------------

     What portion of the state's emissions inventories for 
ozone, CO, and/or air toxics do on-road mobile sources constitute?
     What portion of the state's attainment, maintenance, and/
or Rate-of-Progress (ROP) plans does and/or will I/M constitute?
     How important will I/M reductions be in demonstrating 
attainment and transportation conformity?
     Are there additional emission reduction benefits an area 
may need from an I/M program in addition to what is needed to meet the 
performance standard?
     Alternatively, how much credit can an area afford to lose 
without negatively affecting these plans?
     If an area with an existing I/M program is redesignated to 
attainment, what changes (if any) can be made without backsliding or 
interfering with any other CAA requirement?
     Even if an existing I/M program plays a relatively modest 
role in a state's 1-hour ozone standard attainment strategy, what role 
will it play in attaining the 8-hour ozone standard?
     Is the I/M program useful in meeting an area's goal for 
reducing air toxics? Will an OBD-only program meet this goal?
     What are the legal and/or contractual constraints 
associated with optimizing the I/M program?
     What number of MYs should be exempted to strike the right 
balance among competing factors such as the likelihood of failure, 
equity to vehicle owners of exposure to program requirements, and the 
cost of testing clean vehicles?
     What is the proportion of pre- to post-MY 1996 vehicles in 
the local fleet? When will post-MY 1996 vehicles predominate?
     How do the pre- and post-MY 1996 fleets compare in terms 
of the VMT attributed to each? When will MY 1996

[[Page 1319]]

and newer vehicles make up the majority of the area's VMT?
     What proportion of the local mobile source emission 
inventory is attributable to pre- vs. post-MY 1996 vehicles?
     What are the projected failure rates for the pre- vs. 
post-MY 1996 fleets?
     If an area already has an I/M program, how recent was the 
last change to the program? Will changing the program again undermine 
public confidence in the program? Will voluntarily changing the program 
make it vulnerable to pressure to incorporate additional, unwelcome 
changes?
     Will changing an existing program require changes to the 
program's legal authority?

B. Amendments to Program Evaluation Requirements

1. What Is the Program Evaluation Requirement?
    Section 182(c)(3)(C) of the 1990 CAA requires that each state 
subject to enhanced I/M shall ``biennially prepare a report to the 
Administrator which assesses the emission reductions achieved by the 
program required under this paragraph based upon data collected during 
the inspection and repair of vehicles. The methods used to assess the 
emission reductions shall be those established by the Administrator.'' 
Section 51.353 of EPA's current I/M rule (network type and program 
evaluation) provides additional detail on how this requirement is to be 
met, including minimum sampling requirements and specific deadlines by 
which program evaluation testing must begin. Currently, section 
51.353(c)(4) of the I/M rule specifies that the first round of program 
evaluation testing is to begin ``no later than November 30, 1998.''
2. What Regulatory Change Does EPA Propose?
    EPA proposes to revise section 51.353(c)(4) of the I/M rule which 
currently indicates that the first round of program evaluation testing 
is to begin ``no later than November 30, 1998'' to ``no later than 1 
year after program start up.'' This 12 month period prior to the 
beginning of program evaluation testing is comparable to that permitted 
under the original I/M program evaluation requirements and is intended 
to allow new programs under the 8-hour ozone standard the opportunity 
to resolve the sorts of start-up problems typical of such programs in 
their first few months of implementation.

C. Amendments to the Basic I/M Waiver Requirements

1. What Are the Basic I/M Waiver Requirements?
    Neither the 1990 CAA nor the existing I/M rule require (or 
prohibit) basic I/M programs to grant waivers from the program's repair 
requirements once a minimum dollar limit has been spent toward repairs 
relevant to the cause of failure. To help ensure that the issuance of 
waivers did not become excessive in the basic I/M programs that chose 
to allow them, EPA established specific repair expenditure levels that 
had to be met prior to a waiver's being granted in a basic I/M program 
as part of its original 1992 I/M rule. Specifically, for pre-1981 model 
year vehicles, a minimum of $75 has to be spent on relevant repairs 
while for 1981 and newer vehicles, the minimum expenditure level is 
$200. Because several basic I/M programs were already operating at the 
time the 1992 rule was promulgated--some complying with the waiver 
allowances provided in the rule, some not--EPA also established a 
deadline by which the new requirements were to be met (i.e., ``no later 
than January 1, 1998'').
2. What Regulatory Change Does EPA Propose?
    EPA proposes to amend section 51.360(a)(6) which sets the deadline 
for establishing waiver limits for those basic I/M programs choosing to 
allow waivers (currently, ``no later than January 1, 1998'') to read 
``January 1, 1998, or coincident with program start up, whichever is 
later.'' Since all existing programs should already be meeting these 
requirements and requiring spending limits prior to waiver will impose 
no additional program implementation delay in areas newly starting 
programs, EPA sees no reason to delay implementation of these 
requirements for either new or existing programs.

D. Amendments to Update SIP Submission Deadlines

1. What Are the Current SIP Submission Deadlines?
    Under the CAA as amended in 1990, areas required to implement basic 
I/M programs were to submit SIP revisions for such programs 
``immediately after the date of enactment'' of the 1990 Act. The basic 
I/M programs submitted under this provision were to be based upon pre-
existing EPA I/M guidance that was in effect immediately before passage 
of the 1990 Act. As a separate (but related) matter, the 1990 CAA 
required EPA to revise this pre-1990 I/M guidance within 12 months of 
enactment. Enhanced I/M SIPs were required to be submitted 1 year after 
EPA was to have published its revised I/M guidance (i.e., two years 
after enactment). Previously submitted basic I/M SIPs were required to 
be revised to incorporate EPA's revised I/M guidance.
    The Act did not define what was meant by the term ``immediately,'' 
nor did it attempt to explain how such a requirement might be met, 
especially for areas new to the I/M requirement and therefore lacking 
the necessary legal authority and implementing regulations. To provide 
basic I/M program areas a reasonable amount of time in which to prepare 
and submit the required basic I/M SIP, EPA proposed to use its 
authority to grant conditional approvals under section 110(k)(4) of the 
1990 CAA to give these areas up to 1 year after conditional approval of 
a so-called ``committal SIP''.\4\ EPA was challenged on its attempt to 
extend I/M SIP deadlines through the SIP approval process and although 
the court found that 110(k)(4) could not be used to effect such 
extensions, in its decision, the court identified the states' need for 
further guidance from EPA in the case of enhanced I/M programs as the 
deciding factor regarding whether or not a given I/M deadline extension 
was justified. See Natural Resources Defense Council, Inc. v. EPA, et 
al., 22 F.3d 1125 (D.C. Cir. 1994). Because existing pre-1990 I/M 
policy was adequate for a state to develop and submit a basic I/M SIP, 
the court ruled that EPA's attempt to extend the basic I/M SIP 
submittal deadline was unjustified in that case. In the case of 
enhanced I/M programs, however, existing pre-1990 I/M policy was not 
adequate and enhanced I/M areas could not proceed with SIP development 
until after EPA published its revised guidance. In this latter case, 
therefore, the court ruled that although 110(k)(4) should not have been 
used, extending the SIP submittal deadline for enhanced I/M SIPs was 
justified, given that EPA's guidance was not published until 10 days 
before those SIPs were due.
---------------------------------------------------------------------------

    \4\ A ``committal SIP'' consisted of a commitment from a state's 
governor or his/her designee to meet a list of milestones leading to 
the submittal of a full SIP within 1 year.
---------------------------------------------------------------------------

    Unlike 1990 when basic and enhanced I/M programs differed with 
regard to the availability of adequate existing EPA guidance from which 
to proceed with SIP development, under the 8-hour ozone standard newly 
required I/M programs of either variety are equally dependent upon 
EPA's

[[Page 1320]]

revising its existing I/M regulations. As previously discussed, many of 
the timing-related requirements of the I/M rule are no longer relevant 
within the context of the 8-hour ozone standard and must therefore be 
revised before states can proceed with I/M SIP development. For 
example, if we were to apply the existing basic I/M performance 
standard (as written) to a newly required, basic I/M program area under 
the new standards, that area would be required to demonstrate that back 
in 1996 (when it had no I/M program in place) it was nevertheless 
achieving the same or better emission reductions from that non-existent 
program as it would have achieved if the performance standard program 
had been in place. Clearly, this would be an absurd requirement, and 
that is why EPA is proposing to adopt a more rational approach, as 
discussed below. Thus EPA believes that consistent with the NRDC case, 
it is appropriate to interpret the I/M SIP submittal requirement of the 
CAA to allow areas subject to that requirement to have a reasonable 
time after promulgation of EPA's revised I/M rulemaking to adopt and 
submit such programs. EPA concludes that any other interpretation of 
the statute would produce absurd results.
2. What Regulatory Change Does EPA Propose?
    Because areas newly required to adopt either basic or enhanced I/M 
programs under the 8-hour ozone standard are unable to produce a 
complete and approvable SIP until EPA has revised its existing I/M 
regulations, EPA proposes to update section 51.372 (state 
implementation plan submissions) to clarify that such areas are 
required to submit their I/M SIPs, whether basic or enhanced, within 1 
year after the effective date of EPA's taking final action on the I/M 
rule revisions proposed here today. For areas newly designated as non-
attainment under the 8-hour ozone standard after finalization of this 
proposal, we propose that those areas submit their I/M SIPs within 1 
year of the effective date of their designation and classification. 
Based upon its experience with the submission of I/M SIPs in response 
to the 1990 Act's requirements for 1-hour I/M programs, EPA deems this 
to be a reasonable amount of time in which to develop and submit an I/M 
SIP, given the states' need to secure legal authority, develop 
implementing regulations, provide notice-and-comment opportunity, etc. 
As noted by EPA both in its general preamble published after the 1990 
amendments to the Act and in the 1992 I/M rules, 57 FR 13498, 13517 and 
57 FR 52950, 52970, respectively, EPA has long believed that one year 
is an appropriate time period for states to obtain necessary 
legislative authority to adopt and submit an I/M program.

E. Amendments To Update Implementation Deadlines

1. What Are the Current Implementation Deadlines?
    Under section 51.373 of the 1992 I/M rule, non-attainment areas 
required to begin (or upgrade) basic I/M programs as a result of their 
classification under the 1990 CAA were given until January 1994 to 
begin implementing if a decentralized program was adopted, or July 
1994, if a centralized program was adopted. Areas newly required to 
adopt basic I/M as a result of being designated and classified after 
promulgation of the 1992 I/M rule were required to begin implementation 
one year after obtaining legal authority (if a decentralized program 
was adopted) or two years after obtaining legal authority (if a 
centralized program was adopted). Enhanced I/M program areas required 
as a result of being designated and classified under the 1990 CAA were 
allowed to phase-in implementation of the enhanced I/M program between 
January 1, 1995 and January 1, 1996, provided at least 30% of the I/M 
vehicle population was subject to the full requirements of the program 
as of January 1, 1995. Areas newly required to adopt enhanced I/M as a 
result of being designated and classified after promulgation of the 
1992 I/M rule were required to begin implementation two years after 
obtaining legal authority. Separately, section 51.373 of the I/M rule 
established a range of deadline options for implementation of the OBD 
checks required of all I/M programs under the 1990 CAA. While the 
deadline for requiring repairs based upon the OBD test varied depending 
upon the phase-in option chosen by the program, all I/M programs 
required as a result of being designated and classified under the 1-
hour ozone standard were required to begin some form of OBD testing no 
later than January 1, 2003.
2. What Regulatory Change Does EPA Propose?
    EPA proposes to revise section 51.373 (implementation deadlines) to 
replace the current fixed implementation deadlines for I/M programs 
required as a result of designation and classification after 1992 with 
a new, relative implementation deadline for areas newly subject to I/M 
as a result of being designated non-attainment under the 8-hour ozone 
standard and classified as moderate non-attainment or higher. 
Specifically, EPA proposes that all I/M programs newly required based 
upon their designation and classification under the 8-hour ozone 
standard--whether basic or enhanced--begin full implementation of the 
required program within 4 years after the effective date of designation 
and classification under the 8-hour ozone standard. EPA believes that 
the proposed implementation deadline is reasonable and necessary to 
allow for sufficient time to construct and start-up a program after 
program adoption following EPA promulgation of final guidance, as well 
as to provide a minimum of one full, biennial test cycle prior to the 
first milestone date for newly required I/M programs under the 8-hour 
ozone standard (i.e., the attainment deadline for moderate 8-hour ozone 
non-attainment areas, which is 6 years after the effective date of 
designation and classification, as described below).
    Additionally, EPA proposes to clarify that the deadline for 
beginning pass-fail OBD checks for areas newly required to perform I/M 
testing as a result of being designated and classified under the 8-hour 
ozone standard is coincident with implementation of all other program 
elements, i.e., within 4 years after the effective date of designation 
and classification. Since current model year vehicles are all OBD 
equipped and viable OBD test methods have been available for a number 
of years EPA sees no reason to delay start up of OBD testing beyond the 
start date of the program as a whole.

V. Discussion of Major Issues

A. Impact on Existing I/M Programs

    The proposed amendments to the I/M rule do not change the 
requirements that currently apply to existing I/M programs required as 
a result of being classified under the 1-hour ozone standard. The 
proposed amendments are directed specifically at those areas that will 
be newly required to implement I/M as a result of being designated and 
classified under the 8-hour ozone standard. The intention of these 
proposed amendments is to ensure that these new program areas are 
afforded generally the same level of flexibility in program design and 
implementation as is currently available to existing, 1-hour I/M 
programs. Readers interested in learning the conditions under which an 
existing 1-hour I/M program must continue operation under the 8-hour 
standard should consult the anti-backsliding provisions of the April 
30, 2004 final rulemaking which

[[Page 1321]]

established several key requirements for implementing the 8-hour ozone 
standard (69 FR 23931).\5\
---------------------------------------------------------------------------

    \5\ Additional guidance on anti-backsliding under the 8-hour 
standard and how it applies to I/M programs can be found in the May 
12, 2004 policy memo signed by Tom Helms, Ozone Policy and 
Strategies Group, and Leila Cook, State Measures and Conformity 
Group, entitled ``1-Hour Ozone Maintenance Plans Containing Basic I/
M Programs,'' a copy of which is contained in the docket for this 
proposed rulemaking.
---------------------------------------------------------------------------

B. Impact on Future I/M Programs

    The proposed amendments are intended specifically for those areas 
which currently do not perform I/M testing, but will be required to do 
so as a result of being designated and classified under the 8-hour 
ozone standard. Should they be made final, these amendments will allow 
future I/M program areas the flexibility necessary to design from the 
ground up reasonable, cost effective, motorist-friendly I/M programs 
that take full advantage of advances in vehicle and vehicle-testing 
technology, as well as fleet turnover. The level of flexibility 
proposed to be provided for these new program areas is comparable to 
the level of flexibility already available to existing 1-hour I/M 
programs.

VI. Economic Costs and Benefits

    Today's proposed revisions provide states with an incentive to 
increase the cost effectiveness and efficiency of future I/M programs. 
The proposal, if finalized, will lessen rather than increase the 
potential economic burden on states of implementing such programs. 
Furthermore, states are under no obligation, legal or otherwise, to 
modify existing plans meeting the previously applicable requirements as 
a result of today's proposal.

VII. Public Participation

    EPA desires full public participation in arriving at final 
decisions in this rulemaking action. EPA solicits comments on all 
aspects of this proposal from all parties. Wherever applicable, full 
supporting data and detailed analysis should also be submitted to allow 
EPA to make maximum use of the comments. All comments should be 
directed to the Air Docket, Docket No. OAR-2004-0095.

VIII. Administrative Requirement

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866, (58 FR 51735; October 4, 1993) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines significant ``regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more, 
or otherwise adversely affect in a material way the economy, a sector 
of the economy, productivity, competition, jobs, the environment, 
public health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof;
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, OMB has notified 
EPA that it considers this a ``significant regulatory action'' within 
the meaning of the Executive Order. EPA has submitted this action to 
OMB for review. Changes made in response to OMB suggestions or 
recommendations will be documented in the public record.

B. Paperwork Reduction Act

    There are no additional information requirements in this proposed 
rule beyond those already imposed by the existing I/M rule which 
require the approval of the Office of Management and Budget under the 
Paperwork Reduction Act 44 U.S.C. 3501 et seq.

C. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act, 5 
U.S.C. 605(b), the Administrator certifies that this proposal will not 
have a significant economic impact on a substantial number of small 
entities and, therefore, is not subject to the requirement of a 
Regulatory Impact Analysis. A small entity may include a small 
government entity or jurisdiction. This certification is based on the 
fact that the I/M areas impacted by the proposed rulemaking do not meet 
the definition of a small government jurisdiction, that is, 
``governments of cities, counties, towns, townships, villages, school 
districts, or special districts, with a population of less than 
50,000.'' The basic and enhanced I/M requirements only apply to 
urbanized areas with population in excess of 200,000 depending on 
location. Furthermore, the impact created by the proposed action does 
not increase the preexisting burden of the existing rules which this 
proposal seeks to amend.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule. The provisions of section 205 
do not apply when they are inconsistent with applicable law. Moreover, 
section 205 allows EPA to adopt an alternative other than the least 
costly, most cost-effective or least burdensome alternative if the 
Administrator publishes with the final rule an explanation why that 
alternative was not adopted. Before EPA establishes any regulatory 
requirements that may significantly or uniquely affect small 
governments, including tribal governments, it must have developed under 
section 203 of the UMRA a small government agency plan. The plan must 
provide for notifying potentially affected small governments, enabling 
officials of affected small governments to have meaningful and timely 
input in the development of EPA regulatory proposals with significant 
Federal intergovernmental mandates, and informing, educating, and 
advising small governments on compliance with the regulatory 
requirements.
    EPA has determined that this proposed rule itself does not contain 
a Federal mandate that may result in expenditures of $100 million or 
more for State, local, and tribal governments, in the aggregate, or the 
private sector in any one year. The primary purpose of this proposed 
rule is to amend the existing federal I/M regulations to provide 
flexibility in how the regulations cover areas newly designated non-
attainment under the 8-hour ozone ambient air quality standards. Clean 
Air Act sections 182(b)(4) and 182(c)(3) require the applicability of 
I/M to such areas. Thus, although this rule explains how I/M

[[Page 1322]]

should be conducted, it merely implements already established law that 
imposes I/M requirements and does not itself impose requirements that 
may result in expenditures of $100 million or more in any year. The 
intention of this proposal is to improve the I/M regulation by 
implementing the rule in a more practicable manner and/or to clarify I/
M requirements that already exist. None of these proposed amendments 
impose any additional burdens beyond that already imposed by applicable 
federal law; thus, today's proposed rule is not subject to the 
requirements of sections 202 and 205 of the UMRA and EPA has not 
prepared a statement with respect to budgetary impacts.

E. Executive Order 13132: Federalism

    Executive Order 13132, Federalism (64 FR 43255, August 10, 1999), 
revokes and replaces Executive Orders 12612 (Federalism) and 12875 
(Enhancing the Intergovernmental Partnership). Executive Order 13132 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by State and local officials in the development of 
regulatory policies that have federalism implications.'' ``Policies 
that have federalism implications'' is defined in the Executive Order 
to include regulations that have ``substantial direct effects on the 
States, on the relationship between the national government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government.'' Under Executive Order 13132, EPA may 
not issue a regulation that has federalism implications, that imposes 
substantial direct compliance costs, and that is not required by 
statute, unless the Federal government provides the funds necessary to 
pay the direct compliance costs incurred by State and local 
governments, or EPA consults with State and local officials early in 
the process of developing the regulation. EPA also may not issue a 
regulation that has federalism implications and that preempts State law 
unless the Agency consults with State and local officials early in the 
process of developing the proposed regulation.
    If EPA complies by consulting, Executive Order 13132 requires EPA 
to provide to the Office of Management and Budget (OMB), in a 
separately identified section of the preamble to the rule, a federalism 
summary impact statement (FSIS). The FSIS must include a description of 
the extent of EPA's prior consultation with State and local officials, 
a summary of the nature of their concerns and the Agency's position 
supporting the need to issue the regulation, and a statement of the 
extent to which the concerns of State and local officials have been 
met. Also, when EPA transmits a draft rule with federalism implications 
to OMB for review pursuant to Executive Order 12866, EPA must include a 
certification from the Agency's Federalism Official stating that EPA 
has met the requirements of Executive Order 13132 in a meaningful and 
timely manner.
    This proposed rule, that amends a regulation that is required by 
statute, will not have substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government, as specified in Executive Order 13132. The Clean Air Act 
requires I/M to apply in certain non-attainment areas as a matter of 
law, and this proposed rule merely provides areas newly designated as 
non-attainment under the 8-hour ozone standard additional flexibility 
with regard to meeting their existing statutory obligations.
    In summary, this proposed rule is required primarily by the 
statutory requirements imposed by the Clean Air Act, and the proposed 
rule by itself will not have a substantial impact on States. Thus, the 
requirements of section 6 of the Executive Order do not apply to this 
proposed rule.

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

    Executive Order 13175: ``Consultation and Coordination with Indian 
Tribal Governments'' (65 FR 67249, November 6, 2000) requires EPA to 
develop an accountable process to ensure ``meaningful and timely input 
by tribal officials in the development of regulatory policies that have 
tribal implications.'' ``Policies that have tribal implications'' is 
defined in the Executive Order to include regulations that have 
``substantial direct effects on one or more Indian tribes, on the 
relationship between the Federal government and the Indian tribes, or 
on the distribution of power and responsibilities between the Federal 
government and Indian tribes.''
    Today's amendments to the I/M rule do not significantly or uniquely 
affect the communities of Indian tribal governments. Specifically, this 
proposed rule would incorporate into the I/M rule flexible provisions 
addressing newly designated 8-hour ozone non-attainment areas subject 
to I/M requirement