Sarah Rees Director, Office of Regulatory Policy and Management, Office of Policy 1200 Pennsylvania Avenue NW Mail Code 1803A Washington, DC 20460

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1 May 15, 2017 Sarah Rees Director, Office of Regulatory Policy and Management, Office of Policy 1200 Pennsylvania Avenue NW Mail Code 1803A Washington, DC ATTN: Docket ID No. EPA-HQ-OA To: Ms. Rees The Association of Global Automakers, Inc. 1 (Global Automakers) appreciates the opportunity to submit comments in response to the U.S. Environmental Protection Agency s (EPA) Federal Register Notice, Evaluation of Existing Regulations [82 FR 17793, April 13, 2017]. Global Automakers is approaching this effort as an opportunity to identify ways to assess smarter, more efficient ways to implement existing regulations through streamlining and reduced regulatory costs. More importantly, Global Automakers is offering a list of items that will reduce resources associated with existing regulations without compromising environmental benefits. Global Automakers and our members have consistently supported the long-term goals of environmental improvements and development of advanced, innovative technology. Regulatory certainty and fair competition are needed to support these goals. Global Automakers has evaluated the breadth of EPA regulations that impact the automobile sector, looking for opportunities that significantly reduce costs to industry estimated to have the potential to save $ million annually across the industry while at the same time preserving environmental benefits. 1 The Association of Global Automakers represents the U.S. operations of international motor vehicle manufacturers, original equipment suppliers, and other automotive-related trade associations. Global Automakers companies have invested $47 billion in U.S.-based production facilities, have a combined domestic production capacity of 4.5 million vehicles, and directly employ more than 92,000 Americans. Global Automakers works with industry leaders, legislators, regulators, and other stakeholders in the United States to create public policies that improve motor vehicle safety, encourage technological innovation and addresses environmental needs. Our goal is to foster an open and competitive automotive marketplace that encourages investment, job growth, and development of vehicles that can enhance Americans quality of life. For more information, visit

2 Thank you for the consideration of our comments. Global Automakers would be pleased to discuss these comments further at any time. Sincerely, Julia M. Rege Director of Environment & Energy (202) CC: Chris Grundler, EPA-OTAQ Bill Charmley, EPA-OTAQ Byron Bunker, EPA-OTAQ Maria Doa, EPA-OCSPP Jim Tamm, NHTSA Mary Nichols, California Air Resources Board Alberto Ayala, California Air Resources Board 2

3 COMMENTS SUBMITTED BY THE ASSOCIATION OF GLOBAL AUTOMAKERS, INC. ON THE UNITED STATES ENVIRONMENTAL PROTECTION AGENCY S EVALUATION OF EXISTING REGULATIONS DOCKET NO. EPA-HQ-OA The Association of Global Automakers, Inc. (Global Automakers) hereby submits these comments in response to the U.S. Environmental Protection Agency s (EPA) Federal Register Notice, Evaluation of Existing Regulations. [82 FR 17793, April 13, 2017]. EPA issued this request in acknowledgment of Presidential Executive Order 13771, Reducing Regulation and Controlling Regulatory Costs, released on January 30, 2017 and Presidential Executive Order 13777, Enforcing the Regulatory Reform Agenda, released February 24, In the spirit of the Federal Register notice, Global Automakers is presenting opportunities that will streamline regulatory requirements impacting the automotive sector while at the same time maintaining the environmental benefits the Agency seeks to preserve. More generally, we support efforts that will reduce duplicative requirements, provide certainty for industry, and maximize flexibility and harmonization. Having a stable regulatory environment with prudent and sensible rules is crucial to good business practice and will help ensure consumer choice and affordability. In a rapidly changing technology landscape, increased innovation can render old regulations obsolete, counterproductive, or inefficient. At the same time, it is imperative that the idea of smarter regulations not be conflated with the idea of an agency operating with fewer resources. The agency s ability to provide oversight, and to ensure that all companies are adhering to the same set of rules, is paramount to fair competition. It is important that we maintain a fair and competitive market in which all participants can maximize investments in the research and development of innovative technologies, create jobs, and continue their efforts to protect the environment. The items we identify below will reduce costs and burden on industry and in some cases on EPA as well without impacting environmental protection, vehicle safety, or a competitive marketplace. Global Automakers notes, however, that many of these cost savings cannot be fully realized without incorporation by the California Air Resources Board (ARB) as well. There may be even more opportunity for streamlining and cost reduction if EPA and ARB were to work together to adopt best practices and reduce duplication and inconsistencies in regulatory requirements and test procedures. Finally, while we have carefully considered our recommendations, Global Automakers believes these comments are only a starting point to a larger process and discussion. Further discussion between 1

4 industry and the agency will help ensure a consistent and correlated approach is necessary many of these programs are interrelated and rely on information from each other. Based on estimates provided by our member companies, Global Automakers approximates that the measures identified below could save on the order of $ million annually for the industry as a whole; these estimated savings may vary, and Global Automakers provides costs per measure below where information was available. Our comments do not include the midterm review of greenhouse emissions standards for light-duty vehicles or the petition for greater harmonization between the greenhouse gas (GHG) and Corporate Average Fuel Economy (CAFE) programs. For both issues, we are engaged with the agency on a parallel pathway. Global Automakers comments on streamlining existing regulations, reducing regulatory costs, and promoting innovation and investment in a competitive and strong automotive sector are provided in three categories: light-duty vehicle certification and test procedures, fuel economy labeling, and other EPA regulations. These comments, as follow, are applicable to the Office of Air and Radiation, Office of Chemical Safety and Pollution Prevention, Office of Atmospheric Programs, and Small Business Administration. 1. Light-Duty Vehicle Certification and Test Procedures The resources spent on vehicle certification and compliance testing are a major source of cost to both the automotive industry and EPA. The cost of the facilities to test vehicles and the time spent administering tests adds complexity to an already cumbersome regulatory process. Global Automakers and its members recommend several measures as candidates for streamlining and simplification but whose overall modification would not reduce environmental benefit. These measures include: Air Conditioner Efficiency Credits via AC17 Tests Cold Temperature Testing Elimination of Manufacturer s Confirmatory Test Reduce the Need for Routine Particulate Matter Testing Reduce or Eliminate N 2 O Testing Procedures Simplification of Evaporative Emissions Testing In-Use Verification Program Streamlining Eliminate Fuel Change Requirement in the IUVP Test Vehicle Before and After the Preconditioning Drive Relaxation of Test Facility Requirement The Verify System Reporting No Longer Require Full Applications for Certification for Carryover or Minor Changes to Vehicles Optional Relaxation of the Grouping Requirement 2

5 Other Areas for Consideration in Certification and Test Procedures Additionally, Global Automakers believes that a strong agency laboratory equipped with sufficient certification-testing resources is fundamental to maintaining a level playing field upon which automakers can equitably compete. It is important for EPA to provide oversight, and to ensure that all companies are adhering to the same set of rules. Air Conditioner Efficiency Credits via AC17 Tests EPA currently requires manufacturers to perform a time and resource-intensive test, called the AC17, to substantiate emissions improvements associated with more efficient motor vehicle air conditioner (A/C) systems. The AC17, overall, continues to be problematic, because it is lengthy to perform and requires a special test chamber to conduct. Further, this test is unduly burdensome for many manufacturers that lack the facilities and resources to conduct testing, in particular for small-volume manufacturers, which are therefore at a disadvantage compared to larger companies to earn A/C-related efficiency credits. Since its inception, automakers have raised concerns about the AC17 test and have worked with EPA, and with the SAE, for many years to develop and implement the test. Yet, the agency has persisted in supporting use of AC17 to earn air conditioner efficiency credits. Global Automakers believes this entire test sequence would benefit from a thorough evaluation to see if there are alternative methods available that would achieve the same goal to substantiate credit values in a far less burdensome and costly manner. Global Automakers and its members would like an opportunity to work with the agency to consider ways to reduce burden associated with this test. While we have some ideas such as going back to a table-type menu, minimizing the number of test vehicles, or reducing the number of tests there may be better alternatives to make this test easier to perform that should be collaboratively explored. Nonetheless, if this larger undertaking is not possible, Global Automakers believes that several smaller but still significant improvements can be made to the AC17 test, including streamlining the test procedure and providing clear guidance in the off-cycle credit program for requesting A/C technology-related credits. For example, one helpful modification to the AC17 test procedure would be an allowance for a longer time between the A/C on and A/C off portions of the test. AC17 testing currently requires the test to be repeated (A/C off conditions) within 10 to 15 minutes after emissions sampling has concluded for A/C on conditions. This creates significant burden, as a single test takes over four hours to complete (in comparison, it takes only about one hour to perform general emissions and fuel economy testing on the FTP and highway test cycles) and must be run in a specialized environmental testing chamber. Since both sections of the test require a pre-conditioning UDDS test cycle and a soak period, results are expected to be the same regardless of the time between the two portions of the test. In other words, the pre-test requirements simulate the same types of conditions the agency would otherwise hope to 3

6 achieve by having a short time period in-between tests. This provision provides no additional benefit and no notable impact on the test results, yet creates a significant burden on test facilities and staffing resources. Global Automakers recommends that EPA amend the test procedure and allow up to one day (or even longer) to pass between the A/C on and A/C off portions of the AC17 test. An even more significant reduction in testing costs and resources could be achieved by changing the criteria for test-to-test variability. The regulations allow up to 5.0 and 7.2 g/mile for passenger cars and light trucks, respectively, but capturing a 0.1 g/mile difference between tests is not realistic given test-to-test variation. More consideration should be given on how to discern small differences between tests (test variability). It is very unlikely that a true comparison of a more efficient to less efficient A/C system can take place that adequately quantifies A/C system differences due to test-to-test variation. Further, identifying a vehicle which does not incorporate the credit-generating technologies for comparison to a more efficient A/C system is not realistic, due to the additive effects of other powertrain technologies also adopted on the comparison vehicles. Finally, Global Automakers requests that EPA create a clear process for A/C efficiency technologies, including consideration in the off-cycle credit program. This clarification will help automakers consider additional technological improvements and provide a clear pathway to ensure those improvements are accounted for. Having a clear process that encourages automakers to install innovative fuel-efficient technologies will result in greater real world emissions improvements. Further, as noted below with respect to the off-cycle credit process in general, once technologies are approved for off-cycle credits, these accepted technologies and/or methodologies should be added to a menu for future use by any manufacturer. Cold Temperature Testing Cold temperature testing is required to demonstrate compliance with cold temperature carbon monoxide (CO) standards as well as the standards for cold temperature non-methane hydrocarbons (NMHC). It requires a special facility and equipment that can produce, maintain, and be durable in cold temperatures. There is no longer much of an ambient cold temperature CO attainment issue, and the cold CO standards have not been updated commensurate with the pace of technology. Hence, the standards are relatively easy to meet, and it seems the cost of cold testing may not be warranted for every single test group. In contrast, the cold NMHC requirement was added more recently as an air toxics provision, and likely raises more of a compliance issue than cold CO. This may require that cold FTP testing be performed regardless. Thus, while total elimination of cold testing may not be justified, some degree of streamlining should be possible. As discussed under the 5-cycle labeling issue, cold test data is needed for the 5-cycle computation. If it is not run for actual cold CO or NMHC compliance purposes, then it would 4

7 be needed for input to the fuel economy label process. But under our recommendation for streamlining of the fuel economy label program (below), cold testing could be greatly reduced. Our recommendation includes dropping the litmus test which would require cold testing of all emissions data vehicles (EDVs), but we do recommend that EPA continue to acquire some level of full 5-cycle results to allow for periodic updating of the derived 5-cycle equation. Thus, we recommend that cold testing be minimized via a similar requirement that was adopted in the Tier 3 standards for particulate matter (PM) testing. For PM testing, only 25% of all durability groups are required to be tested each year. A similar reduction approach could be applied for cold temperature testing along with liberal carryover criteria that could be applied to certain technologies that have been demonstrated to be reliably compliant with cold temperature standards. Elimination of Manufacturer s Confirmatory Test The benefits associated with manufacturer-performed confirmatory testing have greatly diminished over the years. Automakers confirmatory testing is essentially a double check of certification tests already performed by the automakers. The value of this testing is negligible. Global Automakers recommends that EPA eliminate manufacturer confirmatory testing. Elimination of manufacturer s confirmatory test represents almost $1.5 million per year in testing in savings. Reduce the Need for Routine Particulate Matter Testing Historically gasoline engines were exempted from particulate matter (PM) testing, because their PM emissions were inherently lower than the standards, which were based on diesel engines. While gasoline engines were still held accountable for meeting PM standards, EPA provided an option to provide a statement of compliance, based on good engineering judgement, that gasoline vehicles would meet the PM standards for the full useful life of the vehicle. With the development of EPA s Tier 3 regulations (and California s corresponding LEVIII regulations), EPA tightened the PM standard and added additional requirements to test gasoline engines for PM. The test procedure for PM, however, is cumbersome and lengthy and is subject to a high level of testing variability. As a result, this testing is costly to perform and often has to be repeated. EPA has recognized PM testing burdens to some degree, and it had adopted a provision to reduce it somewhat. The Tier 3 regulations only require PM testing in certification for only about 25% of durability groups. See (d)(1). However, even with this reduction, additional reductions are warranted given the expense and difficulty associated with PM testing. Therefore, Global Automakers recommends that EPA develop criteria to eliminate PM testing on certain technologies, like low-emitting non-gdi gasoline engines, that have been determined to be continually below the PM standards. The exempted test groups meeting such criteria 5

8 would be certified upon receiving a compliance certification based on a good engineering judgement and manufacturer development testing. This amendment would greatly streamline the certification process, reduce testing burden, and therefore reduce associated testing costs as well. To be clear, Global Automakers is not proposing that the agency delete the PM compliance requirement from the regulation. PM emissions have recognized associated health impacts, and Global Automakers agrees that compliance with the PM standards should continue to be checked through surveillance testing, In-Use Verification Program, and/or other audit processes. This would ensure that environmental objectives are maintained, while reducing automakers testing burden. By reducing the certification requirements to test PM emissions for certain technologies, Global Automakers estimates that more than $2 million per year per manufacturer could be saved; these savings also include estimates for reduced laboratory equipment requirements, as addressed below. It is also important to note that PM emissions is another area where California has related test requirements. As a result, it is critical that EPA and California align to reduce this test burden; otherwise, any action EPA takes will not result in a real cost or test burden reduction. Reduce or Eliminate N 2 O Testing Procedures Although EPA has included nitrous oxide (N 2 O) standards as part of the overall GHG light-duty vehicle program, the reality is that the main reductions in GHG-related emissions from mobile sources will be from reductions in carbon dioxide (CO 2 ). These reductions will come from the mandated improvements in vehicle fuel economy associated with the NHTSA CAFE program and the EPA GHG emissions reduction program. Mobile source emissions of N 2 O and CH 4, are inherently low, with N 2 O emissions largely being a byproduct of nitrogen oxides (NO x ) emission controls. Over the years, manufacturers have worked with EPA to address concerns with available technology to test for N 2 O. Manufacturers have also raised concerns with test-to-test variability and the cost of such technologies. At one point in time, EPA did agree to delay the test requirements as a result. These concerns, however, have not been addressed, and testing remains a significant burden with little to no benefit to the environment or impact on meeting the GHG standards. Therefore, Global Automakers strongly recommends reducing the need for N 2 O testing, or eliminating these test requirements in their entirety. It should be sufficient to allow manufacturers to attest to compliance with the N 2 O capped standards based upon good engineering judgement, development testing, and correlation to NOx emissions. EPA could, however, maintain the option to request testing to be performed for new technologies, only, which could have unknown impacts on N 2 O emissions. 6

9 The elimination or significant reduction of these testing requirements for N 2 O may exceed $600,000 per year in savings per manufacturer. Simplification of Evaporative Emissions Testing Testing for evaporative emissions is conducted through several different time-consuming and costly test procedures, including two different types of diurnal testing, onboard refueling, bleed emissions, etc. In 2005, EPA recognized the significant hardships associated with evaporative emission test and finalized a rule to allow several important streamlining aspects. See 70 FR 72917, December 8, In this rule, EPA noted: The enhanced evaporative test procedure is important for measuring evaporative emissions from vehicles under numerous drive and park conditions, and the ORVR test is important for measuring refueling emissions from vehicles. In some cases, similar parameters are tested by these test procedures. The two-diurnal and three-diurnal test sequences both test canister capacity, permeation control, and canister purge capacity. The three-diurnal test sequence also tests hot drive vapor generation (running loss) and high temperature vapor generation. The ORVR test procedure tests canister capacity and canister purge capacity, in addition to refueling vapor generation and fill pipe losses performing all four test procedures requires a minimum of 12 days EPA believes it is appropriate to streamline the evaporative test procedure to reduce testing burden and to reduce overlapping procedures without affecting the level of stringency. These provisions did what was intended, and helped to reduce duplication and testing burden, but since this 2005 streamlining effort, the regulations have been revised by the Tier 3 rulemaking (and California s LEVIII rule), and additional tests have been added. Taken as a whole, it is not clear that all of these tests continue to provide individual value. They would likely benefit from a more complete review of opportunities to streamline the testing. The result of a new, revised, and more streamlined set of evaporative emissions tests would benefit both the agency and manufacturers. Thus, Global Automakers recommends that EPA, along with ARB and industry, work together to develop a robust and holistic evaporative emission test procedure. For instance, both the 3-day test and 2-day diurnal breathing loss test are required for evaporative emission testing. It has been allowed, however, that either one of them is generally sufficient to show compliance, with the default test case being the 3-day test with running loss. The 3-day test is the longer, more resource-intensive test to perform, and does not necessarily have an added benefit over that of the 2-day test, particularly at the super low standards adopted in EPA s Tier 3 regulations (as well as California s LEVIII regulations). Therefore, Global Automakers requests that EPA work with industry, and ARB, to develop a single test that is less 7

10 burdensome, reduces unnecessary testing (like running loss), and ensures control of evaporative emissions. 1 Further, the bleed emissions test, originally developed by ARB and later adopted by EPA, may no longer provide any incremental benefit. This test replaced another evaporative emission test, the rig test, and EPA agreed to harmonize with ARB s procedure. The purpose of the rig test is to assure control of vapor bleeds from the canister. While it may be appropriate to consider eliminating this test, it should be part of the broader evaluation of the suite of evaporative emissions-related tests and thus considered as part of a simplified, holistic and streamlined evaporative emission test procedure. In the interim, allowing the bleed emission test to be replaced by a manufacturer statement of compliance based on good engineering judgment should be sufficient and would provide significant relief. Further harmonization with California will be necessary if a statement of compliance is allowed. Streamlining this process represents a potential savings of $160,000 per model year per manufacturer. This estimate includes potential savings associated with the elimination of the evaporation bleed emissions requirements noted below. Finally, the onboard refueling vapor recovery (ORVR) standard requires the vehicle to be designed to prevent excessive displacement of vapor from a vehicle tank to escape to the atmosphere as the tank is being filled during refueling. The ORVR test procedure simulates the refueling operation in a sealed chamber (or SHED) designed to capture and measure any vapor that might escape during the fill operation. That escaped vapor may not exceed the number of grams allowed over a controlled fill of a specified amount of new fuel pumped into a tank having a specified starting fuel level. Given that manufacturers have been running the full test for 15 or more years, existing testing has resulted in substantial demonstration of the system designs. Hence, it should be possible for manufacturers to base future demonstrations on use of prior data on combinations of previously-proven filler interfaces and canister/tank size relationships. In addition, the ORVR test requires a special test facility that is not common among manufacturer test facilities. As a result, in addition to paying for the test, additional costs are incurred through transportation fees to and from the facility. Furthermore, while the ORVR test sequence is similar to the evaporative emissions test sequence, EPA requires that both sequences be performed separately. Having a single testing procedure would help streamline a cumbersome, duplicative process, while reducing test burden. If necessary, automakers could provide a statement of compliance in place of the EPA certification test. The requirement to run the full test procedure could be retained for cases where totally new, and hence unproven, changes have been made that fall 1 It is also important to note that California has long been the proponent of a 3-day evaporative emission test with running loss. As a result, it is necessary that EPA and California align to reduce this test burden, otherwise, any action EPA takes will not result in a real cost or test burden reduction. 8

11 outside the range of what has been previously proven. In any case, manufacturers would still be subject to complying with the standard under the full test procedure should EPA perform confirmatory testing either during certification or on in-use vehicles. Benefits of the elimination of this test would be contingent on ARB s elimination of its testing requirements. Elimination of this test could represent a savings of $1.2 million per model year. Coordination with the California Air Resources Board on this topic is highly recommended to ensure the full benefits of an elimination could be achieved. In-Use Verification Program Streamlining In a rulemaking finalized in the timeframe (referred to as CAP2000), EPA streamlined how emission deterioration should be projected for vehicles when operated over their useful lives. Previously the procedures involved driving a prototype whole vehicle on a track or on a mileage-accumulation dynamometer over the full number of useful-life miles (i.e. 100,000 miles and up to 150,000 miles under the latest Tier 3 standards). Given this had to be accomplished before the start of production, compromises had to be built into the procedure to allow accumulation of 100,000 or more miles on an accelerated basis. The procedure was costly and yet failed to exercise the vehicle under realistic on-road conditions. EPA replaced this whole vehicle driving procedure with a procedure that allowed a manufacturer a fair degree of flexibility to develop its own durability testing procedure based on component bench aging techniques. In exchange for this flexibility, manufacturers were required to perform testing on consumer-owned vehicles to verify the credibility of their bench testing procedures. This program was called the in-use verification program (IUVP). Consumer-owned vehicles had to be tested for every certified test group at two points in their useful lives. The first set of tests was required at low mileage (nominally at one year after the end of production) and then again at high mileage (nominally after the four-year point). While at the beginning, every test group had to be tested every year even for "carryover" years where the product had not been changed the regulations authorized EPA to consider reducing test burdens over time as manufacturer durability procedures were demonstrated to be effective and when good in-use performance had been demonstrated. IUVP testing has been ongoing for about 15 years, and nearly all manufacturers have demonstrated good durability performance. This presents an opportunity for significant streamlining or elimination from the program in order to reduce testing requirements and volumes. This effort has actually been the subject of discussion with EPA for many years, but previous efforts with EPA to identify and implement streamlining measures have not resulted in any notable reductions to the testing requirements and volumes, despite strong support and justification for doing so. There are a variety of aspects of IUVP that EPA should address, all of which have good reasons to be streamlined and will have little overall impact on the data collected by EPA. These 9

12 suggested amendments will have little to no impact on real world emissions. They will, however, have a significant impact on reducing unnecessary cost and burden. The aspects of IUVP that should be streamlined include: 1. Eliminating high altitude testing. High altitude testing is extremely costly, because it requires special test facilities, which are limited in availability and must be shared by all automakers for both certification testing and IUVP. The limited facilities available to conduct this testing often leads to delays and increased testing prices. Further, for smaller automakers that build much of their fleet abroad, they are limited to two testing sites in Europe, which creates additional competitive disadvantages for these smaller automakers. Even with certain work arounds that allow testing in facilities that can simulate high altitude conditions, the facilities are limited, overbooked, and costly to use. High altitude testing for IUVP also provides little to no environmental benefit at this time. Finally, high altitude IUVP testing has an extremely high pass rate for testing, which helps to justify the elimination of this test requirement. 2. Reducing testing requirements and volumes. An overall reduction in test requirements and volumes would result in a significant reduction in costs. The current IUVP requirements specify percentages of vehicles that must be procured for testing (which could be greatly reduced), as well as requirements for testing on several test cycles, including FTP, Highway, and US06 testing requirements. 3. Eliminating or significantly reducing low-mileage testing and reducing high-mileage testing by not testing carryover groups. 4. Redefine the high-mileage testing requirements for years and mileage. The current requirements for high-mileage testing require vehicles to meet the criteria of four years and 50,000 miles. These two criteria taken together make it very difficult for manufacturers to identify and procure vehicles for this category of testing. While EPA does provide additional flexibility to expand procurement areas and occasionally procure vehicles slightly outside the mileage requirements, manufacturers must seek advance EPA approval. EPA should evaluate the number of requests they receive regarding procuring high-mileage vehicles and consider changing the criteria if it appears manufacturers have to frequently request additional flexibility. 5. Consider shortening the record retention period. EPA currently requires that manufacturers retain records for eight-years. Record retention requires secure facilities and adequate storage space for the eight years. Therefore, Global Automakers suggests that the agency should consider a shorter retention time should be used. The cost savings resulting from implementing these four items could produce per-manufacturer cost reductions of $120,000 per model per year to up to more than $1.2 million per year for larger manufacturers. It is important to note that the California Air Resources Board also has requirements for IUVP that are similar to EPA s. So even if EPA implements 10

13 these more streamlined testing procedures, if California does not fully align with the federal modifications, the reductions in testing and costs will not be fully achieved. Under EPA Tier 3 and California LEVIII regulations, it is expected that most test groups will be certified as 50- state tests groups (i.e. meeting both EPA and California requirements), and therefore would be subject to the test requirements of both EPA and California testing, in this case IUVP. Therefore, Global Automakers recommends that EPA and ARB work together to streamline IUVP requirements. Eliminate Fuel Change Requirement in the IUVP Test Vehicle After the Preconditioning Drive Cycle The emission test sequence begins with a prep test being run on the same cycle that will then undergo official testing. This allows the vehicle to adapt to the laboratory conditions of the official test to be run. The fuel is then drained and replaced with fresh fuel filled to the specified fill level of the test. Then the vehicle is parked for six to 36 hours in a controlled temperature environment to allow the vehicle and fuel to all reach a stable condition. This is all done to ensure that the official test is done under an exact highly controlled and repeatable test condition. Global Automakers requests that this step to change the fuel after the preparation drive cycle - be eliminated for the IUVP tailpipe emissions test sequence. The fuel change requirement adds an additional set of steps to the test procedure that requires additional labor burdens in the testing procedure. The resulting test results do not merit the use of this additional fuel change and should be eliminated. To be clear, Global Automakers is only requesting this change for IUVP and suggests it be maintained for official certification and recall tests (whether run by EPA of the manufacturers). Relaxation of Test Facility Requirement EPA s Tier 3 regulations added new test procedure requirements, including dramatically increasing testing accuracy. Part forces automakers to update most of the testing facilities. As a result, older dynamometers do not comply with the new test procedures, and these old dynamometers must be replaced. The replacement cost of new equipment can be extremely high, and in some cases may be entirely unnecessary. It also takes a significant amount of time to procure new equipment and install it. There are some test facility requirements newly introduced at the timing of Tier 3 regulations in 40 CFR Part and Part 1066 that avoid carry-over of current test facility specification (e.g : Response time verification (for chassis dynamometer). These should be eliminated, or at a minimum, EPA should extend the required deadline for incorporation of these elements. A one-time upgrade of one automakers facilities requires more than $7 Million. 11

14 The Verify System Reporting Certification burdens were decreased with the CAP2000 program, but much of the savings came from giving manufacturers more control over routine decision making, reducing the number of emissions data vehicles required, and allowing revised durability procedures based upon bench testing. While manufacturers were given more autonomy as it relates to certification testing, the revised approach did not radically decrease what is required to be reported to the Verify System. A significant amount of data is required to be submitted to EPA to certify vehicles. Thus, there is an opportunity to reduce another area of certification burden by streamlining and lessening reporting requirements. For instance, the Excel report of CAFE/GHG is no longer necessary, except for credit information, because the Verify System can calculate CAFE and carbon related exhaust emissions (CREE) values. Therefore, except for the credit information, EPA is duplicating reporting requirements by requiring this Excel report, with no added benefit. Further, Global Automakers supports integration of the calculation and values of credits, such as those earned under the CAFE and GHG programs for off-cycle technologies, into the Verify System. By adding this data submission into Verify, the system can then automatically compute the end data. This incorporation would reduce the potential for human-related errors from transcribing Excel reports into the Verify System and simplify the EPA s work in computing compliance with the CAFE and GHG standards. Further, the contents of ARB E-Cert system are almost identical to those of the Verify System, so manufacturers burdens could be further decreased by combining the two systems California s E-Cert and EPA s Verify System into a single, shared, and harmonized database that both ARB and EPA use. These suggested streamlining efforts would reduce unnecessary duplication of efforts. No Longer Require Full Applications for Certification for Carryover or Minor Changes to Vehicles Global Automakers recommends that EPA no longer require a new full application for certification each model year when the vehicle is carryover and/or only has minor changes. Even if there are minor changes that require new test data for the carryover model, such changes could be reported through an update notification as opposed to a full application. In other words, the emission certification system can be streamlined to adopt a selfcertification -like system for carryover models. The current requirements for vehicles include a minimum of three tests for model-year exhaust emission compliance: a regular model-year exhaust emission certification application, an in-use emission test submitted by a manufacturer, and a surveillance test conducted by EPA. For purposes of carryover models, Global Automakers recommends a self-certification-like system (such as the one NHTSA allows for vehicle safety certification) that would not require a regular 12

15 model-year exhaust emission certification application. For example, NHTSA accepts manufacturers self-certification and verifies its performance through a compliance test after sales. Since emission performance will still be inspected through IUVP and EPA surveillance testing, there is adequate assurances to check the performance of carryover models and hold manufacturers accountable for the vehicle s performance. Optional Relaxation of the Grouping Requirement Global Automakers recommends that EPA consider additional flexibility for the current emission data vehicle (EDV) grouping requirement. This flexibility would allow manufacturers to reduce the number of EDV groups (tailpipe and evaporation), should they choose. An example would be to eliminate the specified limits for canisters. Under the current system, identical evaporation systems with only a difference in canisters result in different EDV groups. This is unnecessarily restrictive and does not provide any environmental benefit. Test groups should be separated based on performance, not on specification difference. Savings could exceed $2 million per year. Other Areas for Consideration in Certification and Test Procedures These items are based on Global Automakers initial review of opportunities to streamline existing certification and test procedure burdens, but they may not represent the full possibilities available to EPA and the automotive industry. Additional discussion between EPA and the industry could help identify other areas that would benefit from further clarification, guidance, or streamlining that could result in greater reductions in cost and burden. For example, while EPA allows for automakers to use a simulation for road load values, in some instances, EPA has not approved use of the simulation. It is possible that manufacturers could use additional guidance to help clarify EPA s criteria and decision-making process to help ensure manufacturers will be able to use this intended cost-saving flexibility. Global Automakers recommends that EPA and industry work together to further identify streamlining opportunities. 2. Fuel Economy Labeling There are two topics covered in this section: Simplification of the Fuel Economy Labeling Program Expanded Use of Analytically Derived Fuel Economy (ADFE) Simplification of the Fuel Economy Labeling Program It has long been recognized that the original city test (i.e., FTP) and highway test significantly overstate fuel economy compared to real world driving. While the original FTP and highway 13

16 test results are locked into the Corporate Average Fuel Economy (CAFE) program by statute, EPA has the authority to provide adjusted fuel economy results for fuel economy labeling purposes to try to better estimate real world fuel economy that the average driver might expect to experience. EPA has been using adjusted fuel economy results for labeling since the mid-1980 s. EPA adopted new label adjustment procedures that became fully effective with MY It involves a two-step process. A complex equation was developed that utilizes fuel economy data inputs from five different driving cycles. These five cycles have been in place for several years for emission certification purposes, but were not previously used for estimating fuel economy. These are resource-intensive laboratory vehicle testing cycles. They include the Federal Test Procedure (FTP), highway, US06, SC03 and cold FTP test cycles. The fuel economy computed using the data collected by these five test is referred to as 5-cycle fuel economy. The first step in the process involves computing this 5-cycle fuel economy based upon testing that is generally done on an emission data vehicle (EDV) for emissions compliance purposes. Additional fuel economy data vehicles (FEDVs) must be tested to obtain the minimum required data needed to generate a fuel economy label. It would be extremely burdensome if every one of these FEDVs needed to also be tested on all five cycles. EPA provided a second step in the process to minimize such extra testing. A second simpler regression equation was developed that only needed input from just the FTP and highway test. These tests would be run regardless of the labeling program for CAFE compliance purposes. This equation, referred to as the derived 5-cycle equation, attempts to predict the same results as the more cumbersome true 5-cycle computations. Due to its simplicity, it represents a cruder approximation of the data but works well on average. The derived 5-cycle results are then compared to the full 5-cycle results. This comparison process is referred to as the litmus test. If the derived results compare within an established acceptable limit boundary to the full 5-cycle results for the EDV (within 4% for FTP and within 5% for highway) the litmus test is considered passed. If passed, all remaining FEDVs from the same test group as the EDV may then use the simpler derived 5-cycle equation. This means all fuel economy values used for labeling purposes from that test group could be computed only from the FTP and highway test inputs, significantly saving time and resources associated with 5- cycle testing. If the litmus test is failed, all FEDVs from that test group must undergo testing on all five cycles to fulfill the minimum data requirement to support a label computation, and the full 5- cycle fuel economy is then used to generate labels. The availability of the option to use the simpler derived 5-cycle fuel economy greatly reduces the amount of testing that that is needed for labeling. In EPA s rulemaking, it predicted that on the order of 75% of all test groups would be expected to pass the litmus test. Actual experience has shown that even a higher pass rate has occurred. It appears that somewhere in 14

17 the range of as low as 5% to perhaps a high of 15% of test groups (this can vary with model year, vehicle technology, and manufacturer) fail the litmus test and hence are subject to increased testing. Despite of the burden reductions built into this ability to use only the derived 5-cycle equation, additional benefits can be achieved via further simplification of this program. EPA has a goal of presenting label values [that] are the best real world estimates for consumers, and EPA should continue to strive for values as close as possible to real world fuel economy. 2 This goal can be achieved, however, through other means that reduce reliance on large amounts of laboratory tests of light-duty vehicles. Global Automakers requests that EPA simplify the fuel economy label test procedures to rely even more on the derived 5-cycle equation. A potential method to make this changeover would be reducing FEDVs and increasing the cap on analytically derived fuel economy (ADFEs) above the current 20% threshold. Based on EPA s and industry s extensive vehicle testing, the derived 5-cycle equation should be periodically updated to maintain the correlation between the historical 5-cycle data and current vehicles. While no additional 5-cycle testing would be performed on FEDVs, full 5-cycle data would continue to be generated from emissions certification testing of the EDV on all 5-cycles. This amendment would allow for elimination of the litmus test and reduce testing burdens associated with all 5-cycles tested FEDVs. There are several reasons to consider this item as a candidate for streamlining, including: A high percentage of test groups routinely qualify for use of the derived 5-cycle equation anyway. If the empirical equation is subject to periodic updates, it should provide a reasonable fit for all vehicles. Cost savings would be incurred from both reductions in record reporting requirements and extra testing needed to complete the litmus test. Note that while in theory the only 5-cycle data needed for the litmus test would come from emission certification testing of the EDV, there are circumstances where additional testing becomes necessary. Even greater cost savings could be incurred by eliminating the full 5-cycle test on those FEDVs needed to satisfy minimum data needs for labels from test groups that fail the litmus test. Competitive inequities would be removed. Under current policy, a vehicle that just passes the allowable litmus tolerance (4% for city and 5% for highway) can continue to use average results from the derived 5-cycle equation. On the other hand, a similar 2 EPA, Office of Transportation and Air Quality. Questions and Answers: Fuel Economy Labeling. EPA-420-F at p. 1. (April 2014). 15

18 vehicle that just barely falls outside the tolerance must base its label on full 5-cycle testing. While the two example vehicles might only differ from each other in 5-cycle fuel economy by a very small percentage, the one that just passes the litmus test gets to use the nearly 4% higher derived 5-cycle result while the one that just fails must use the full 5-cycle result that could be four or more percent lower. Testing on the 5-cycle tests requires special and expensive facilities (especially for the SC03 and cold temperature tests on FEDVs), which could be reduced. Instead, this testing would only occur on vehicles needed for certification. For vehicle manufacturers that are smaller or newer to the market with fewer resources, these 5-cycle tests present a real economic hurdle to bringing new and innovative vehicles to market, and initially such vehicle could fall within the failed litmus realm. Expanded Use of Analytically Derived Fuel Economy (ADFE) The provisions of 40 CFR (e) allow EPA to accept analytical expressions to generate fuel economy data. EPA has historically implemented the use of such ADFE computations via guidance letter. Prior guidance limited use of ADFE results to a maximum of 10% of the number of sub-configurations required for a manufacturer s CAFE value. In 2004, EPA raised the maximum allowance to 20% via guidance letter. 3 EPA historically has been concerned about excessive use of ADFE values as this could unduly increase computed CAFE levels. One reason was because manufacturers could pick and choose what works best for them. If a computed ADFE value produces a favorable value, a manufacturer could use it, but if the ADFE value is undesirably low, the manufacturer could then choose to go through the expense of actually testing the vehicle to achieve a better result. Additionally, EPA was concerned that manufacturers would maximize the use of ADFE computations when they could be based upon what EPA called a sweet test result (i.e., a test that by luck of the draw in test variability came out high). The impact of this value could be magnified if this vehicle then served as the basis for computing ADFE results for other vehicles. Hence, EPA applied the limit on maximum use of ADFE values. But EPA s guidance letters applied other protections to minimize such a high bias from potential sweet fuel economy tests. Such measures should be sufficient to maintain credible fuel economy computations without limiting ADFE use to only 20%. By streamlining the procedure and implementing an increase in maximum allowed ADFEs, there is potential to reduce costs between $500,000 and $2.5M per model. Variation in these estimates depends on the number of FEDVs that would need to be tested. High volume models, for example, might have between two and eight FEDVs, while low volume models might have between one and three FEDVs. Consequently, reducing the number of fuel economy test 3 US Environmental Protection Agency. Updated Analytically Derived Fuel Economy (ADFE) Policy for 2005 MY and Later (CCD LDV/LDT). March 11,

19 vehicles would allow for an immediate reduction in fixed costs to the automotive industry, as well as the agency. 3. Additional Regulations for Streamlining Consideration There are four topics covered in this section: Important Considerations for Small-Volume Manufacturers Stakeholder Engagement in Chemicals Regulations GHG Reporting Requirements for Subpart QQ Improve Off-Cycle Credit Program Process Important Considerations for Small-Volume Manufacturers Global Automakers represents the U.S. operations of international motor vehicle manufacturers, original equipment suppliers, and other automotive-related trade associations. Of our member companies, twelve are automobile manufacturers ranging in size, resources, investment, and sales, including some small, specialized brands. As we noted above, Global Automakers supports a fair and competitive market that encourages innovation and green technology. Some smaller companies, therefore, may need additional consideration in the regulatory process to ensure they can continue to compete against larger companies with more resources, while also working toward the same environmental goals. Global Automakers is recommending that as part of this effort to reduce regulatory burden, EPA should consider flexibilities for small-volume manufacturers (SVMs). These flexibilities will reduce costs, allowing these SVMs to instead invest in research and development to advanced cleaner and more efficient vehicles. The following are some concepts on how EPA can reduce regulatory burdens without compromising environmental improvements for SVMs: Additional Lead Time: In general, when implementing new emissions requirements, EPA should consider providing additional lead-time for SVMs, on a case-by-case basis. In some cases, a separate implementation date may be appropriate and in others, simply implementing effective dates for SVMs that start at the end of any large volume manufacturers phase-in requirements. The reason for this is that SVMs have fewer models sometimes only one or two engine families and limited product offerings compared to large volume manufacturers. As a result, a percent phase-in for requirements inadvertently results in them having to meet the requirements faster and earlier than large-volume manufacturers. Global Automakers recommends that EPA issue additional lead-time for SVMs to help reduce costs and smooth the transition to new requirements. 17

20 Certainty for Alternative Standards: In recent years, EPA has implemented alternative standards for SVMs in certain scenarios. This flexibility should help SVMs comply with the intent of regulations to reduce emissions year-over-year but account for the specific challenges that SVMs face, including, but not limited to, leaner resources and small, specialized product lines. SVMs must submit requests for alternative standards in a timely manner, with adequate lead time before the standards would be implemented. In concept, alternative standards should help SVMs as they plan for cleaner, greener technologies to meet the regulations and provide a clear and consistent path forward for technology investment. There have been, however, issues with the process for approving alternative standards, which have resulted in delays in approval. EPA needs to ensure adequate resources to make sure that all manufacturers requests are dealt with in a timely and efficient manner. SVMs, as well as other companies, should not be unduly penalized by delays in agency decision-making. Any delay in approval reduces (or eliminates) necessary lead time. These unnecessary delays in the approval process create regulatory uncertainty, drive up costs, are overly restrictive, and most importantly divert resources from developing cleaner and more efficient technologies. Deterioration Factors: There are two areas where EPA could help support industry, and in particular SVMs, related to the generation and application of deterioration factors (DFs). First, EPA allows for the use of industry-assigned deterioration factors (ADFs) based on industry data. The last time ADFs were updated was approximately three years ago, and so the ADFs are likely outdated by now. It would be beneficial for EPA to consider a more regular process for updating the ADFs. This process will help keep ADFs updated and relevant, and assist manufacturers in determining if it is appropriate to apply ADFs. Second, as noted above, the evaporative emissions standards and associated test procedures would benefit from an EPA-industry process to review and revise the program to reduce duplication and costs. One area that was not addressed above was the evaporative emission durability program. This program was developed to provide additional flexibility to automakers in developing DFs for evaporative emission control systems, but this process remains overly costly and extremely difficult for SVMs. There is no clear industry DF available, and it would be helpful to provide general DFs, particularly for SVMs, whose systems may remain largely unchanged year after year. Global Automakers recommends that EPA evaluate options to reduce burden for SVMs in this area, but also ensures compliance, and provide clarity on what is required for SVMs. Streamlined Reporting Requirements: Similar to our comments to streamline and revise reporting requirements above, evaluating opportunities to simplify SVM reporting 18

21 requirements, as appropriate, would help to reduce time and resources necessary for reporting. These recommendations can provide important flexibility to help SVMs to continue investment in greener technologies and remain competitive with larger manufacturers. They can help free up resource for the SVMs, but EPA as well. Just as importantly, these flexibilities will have a de minimis effect on environmental improvements; in some cases, they may result in a slight delay in environmental improvements, but ultimately ensure greater success for SVMs in ultimately meeting any requirements and therefore provide greater certainty that such environmental improvements will be made. Stakeholder Engagement in Chemicals Regulations EPA has begun work on regulating the first ten priority chemicals under the Frank R. Lautenberg Chemical Safety for the 21 st Century Act of 2016, which amended the existing Toxic Substances Control Act (TSCA). The regulation of these chemicals will have significant impacts not only on those companies that manufacture the chemicals, but also (and sometimes more directly) on chemical users, including auto manufacturers, suppliers, and importers of articles that may contain the regulated chemical. While consultation with stakeholders can be a cumbersome process that can add cost and time at the beginning of a rulemaking, it is critical to have all stakeholders engaged in the regulatory process to ensure fully-informed and fact-based regulations. Resources invested at the beginning and throughout the regulatory process will result in a valuable return on investment that will be reflected in smarter, more efficient and effective environmental regulation. For example, chemical users are critical stakeholders that have not always been invited to participate in the process of evaluating candidate chemicals, their uses, and the availability of viable substitutes. Chemical users can have valuable information that should be considered at the outset of any regulatory process. Finding suitable substitutes once a chemical is marked for elimination adds additional cost to manufacturing of products that can then be passed to American consumers. To allow for the lead-time for users to change product plans and make updates to their manufacturing processes, it is important to engage with the entire supply chain as early in the rulemaking process as possible. GHG Reporting Requirements for Subpart QQ On November 9, 2010, EPA issued a rule for the mandatory reporting of greenhouse gases (GHGs) from large sources of fluorinated GHGs such as hydrofluorocarbons (HFCs), nitrogen trifluoride (NF3), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). This rulemaking includes reporting for imports and exports of pre-charged equipment or closed-cell foams containing fluorinated GHGs (Subpart QQ). Global Automakers recommends that EPA eliminate reporting under Subpart QQ, since there is no environmental benefit incurred with this reporting. 19

22 Under this rule, EPA estimates the total cost of reporting for the private sector will be approximately $7.6 million for the 1 st year and $7.2 million in subsequent years. 4 This is a significant cost for reporting. Global Automakers does not know what portion of these reporting costs are attributed to Subpart QQ, but nonetheless, any effort to reduce reporting such as Subpart QQ will help reduce these overall costs. Improve Off-Cycle Credit Program Process Our member companies remain committed to investing in technology that provides real environmental benefits while meeting consumers needs, and we have consistently requested greater alignment in the One National Program for emissions and fuel economy to reduce unnecessary costs and regulatory burdens that provide no incremental environmental benefit. Global Automakers, with the Alliance of Automobile Manufacturers, submitted a petition for rulemaking to EPA and the National Highway Traffic Safety Administration on June 20, This petition is incorporated by reference in these comments. Global Automakers is, however, including additional discussion about a more general improvement to the GHG off-cycle credit program, which was included in our June 2016 petition. It is a critical component of the overall One National Program, and with the right implementation, this program can help launch innovative fuel-saving technologies. Automakers and suppliers are bringing new and innovative technologies to the market yearover-year. These technologies have the potential to provide real-world environmental benefits that were not considered in previous rulemakings. In this rapidly changing technological landscape, it is important to continually evaluate innovations that provide real benefit and to give credit for these. Thus, Global Automakers recommends that EPA evaluate ways to encourage this innovation and avoid arbitrary barriers to real world fuel economy improvements. First and foremost, Global Automakers requests that EPA, along with NHTSA, establish more guidance for the alternative method for GHG off-cycle credit generation. Providing clear and consistent running rules on tested technologies that provide real GHG reduction promotes the use of various methods to reduce pollutants at a reasonable cost. Greater guidance from the EPA about acceptable procedures, reputable data sets, how to capture driver behavior, etc. will incentivize automakers to use this channel, resulting in the application of more CO 2 -reducing technologies coming to market sooner. This would allow for a lower cost of technology penetration and the potential for increased environmental benefits Association of Global Automakers and The Alliance of Automobile Manufacturers. Joint Petition for Direct Final Rule with Regard to Various Aspects of the Corporate Average Fuel Economy Program and the Greenhouse Gas Program. (June 20, 2016). 20

23 Guidance will help to create a more streamlined process to apply for and obtain off-cycle credits. Streamlining the process would reduce the current onerous test programs and, more importantly, address the low confidence among manufacturers of EPA acceptance of off-cycle credit applications. Taken together, these concerns have acted as barriers to manufacturers that wish to apply for off-cycle credits, and as a result, have directly slowed the rollout of innovative fuel-saving technologies. In contrast, improving the process will build confidence in the procedure for obtain credit approval, and thereby provide real environmental benefits and reduce costs associated with the implementation of newer technology. In addition to providing guidance and streamlining the process, Global Automakers requests that EPA allow automakers to reference previously accepted applications especially in areas of: Defining off-cycle testing and procedures Demonstrating real-world ambient conditions, road type, geography, etc. List of accepted assumptions (i.e. city weighting) Capturing driver behavior / usage EPA should seek to make improvements that support such innovative growth and should expedite this activity. This activity could lead to more cost-effective approaches to reducing emissions and at the same provide additional environmental benefits in the real world. In summary, Global Automakers believes that Executive Orders and provide an important opportunity to reassess regulations to date and assess smarter, more efficient ways to implement such regulations. Global Automakers is evaluating the breadth of EPA regulations that impact the automobile sector and looking for opportunities that significantly reduce costs to industry estimated to have the potential to save $ million annually across the industry while at the same time preserving environmental benefits. Thank you for the consideration of our comments. 21