New guidance from the Environmental Protection Agency to manufacturers of diesel engines acknowledges the significant impact that Covid-19-related facility closures and testing limitations have had on their ability to meet certification and compliance requirements under the Clean Air Act.
Relying on the EPA’s broad discretion to interpret its certification regulations, the EPA’s Office of Transportation and Air Quality highlighted certain existing authorities it can use on a case-by-case basis to provide much-needed flexibilities and encouraged manufacturers to proactively engage with the agency.
As important as the flexibilities are, they are limited because they are based on existing regulatory authority and do not change any underlying federal certification requirements. The EPA can take this relief one step further by changing the actual regulations.
Carryover Certification and Running Changes
Manufacturers may submit certification data on a rolling basis, request case-specific flexibilities based on “sound engineering judgment,” as appropriate, and provide for agency consideration a proposed plan to meet certification and compliance regulatory requirements. Manufacturers are encouraged to update certification testing data for any “emissions critical” change to a MY21 carryover platform.
Heavy-Duty, On-Highway In-Use Testing (HDIUT) Orders
The EPA will not prioritize HDIUT orders and instead will issue orders in a manner that avoids overwhelming manufacturers based on a manufacturer’s readiness for testing.
Manufacturers may request the EPA to modify voluntary recall agreements under 40 C.F.R. § 1068.535.
Infrequent Regeneration Adjustment Factors (IRAF) Updates for MY21
Manufacturers may use alternate procedures for development of IRAF updates per 40 C.F.R. § 1065.10 or use prior model year data for carryover engines that have not been recalibrated.
Deterioration Factors (DF)
Manufacturers may use “good engineering practices” to comply with existing requirements, which can include modifying a previously accepted DF plan, reassessing carry-over plans, or using assigned DF values.
Manufacturers may submit “placeholder documents” for required compliance reports and describe the reason for the delay.
MY21 Heavy-Duty Greenhouse Gas Phase 2 Certification
Manufacturers may propose alternate timing and content of certification submissions, including use of alternative aerodynamic adjustment factors and submission of an alternative certification plan in lieu of engine maps.
California Air Resources Board Should Follow Suit
While these flexibilities have the potential to significantly ease a manufacturer’s Covid-related testing and reporting burdens, they may be of diminished value if the California Air Resources Board (CARB) does not follow suit.
Pursuant to preemption waivers under the Clean Air Act, CARB has its own requirements for diesel engines. As a practical matter, manufacturers must follow CARB’s regulations for certain segments of the diesel engine market due to the absence of a federal program, particularly on-board diagnostic requirements for on-road diesel engines.
Presumably, the EPA coordinated with CARB before issuing the subject letter to ensure that CARB too will allow manufacturers to avail themselves to these flexibilities where appropriate. Regulated entities, however, need to be mindful of CARB’s views and engage accordingly.
EPA Might Need to Change the Regulations
The EPA should change the actual regulations, as it did in April for stationary sources, including fossil fuel-fired electric power generators and petroleum refineries, regulated under 40 C.F.R. Part 75.
There, the EPA temporarily suspended periodic testing and emissions reporting requirements for these sources because the third-party contractors typically used were unable to gain access to the sources as a result of Covid-related travel restrictions.
Further, use of alternate emissions reporting calculations provided under the regulations was not sustainable for the duration of the pandemic. The EPA relaxed these requirements through an interim final rule effective for 180 days. To expedite the relief, the EPA issued the rule without prior notice and public comment under the Administrative Procedure Act’s section 553(b)(B) “good cause” exception.
Though atypical, the EPA found that prior notice and public comment was impractical and contrary to the public interest due to the cascading impact of sources not meeting certain regulatory requirements during a national emergency.
Should engine manufacturers find that Covid has disrupted their ability to conduct routine testing more than the EPA anticipated, and the existing compliance flexibilities are insufficient, the EPA may need to consider temporarily amending its certification requirements, as was done to Part 75.
In thinking through that option, it is important that no legal challenges were filed to the EPA’s Covid-19 amendments to Part 75. And, while environmental groups and states have challenged the EPA’s general Covid-19 guidance, those challenges have to date failed. See e.g., Nat. Res. Def. Council v. Bodine (S.D.N.Y. July 8, 2020).
Nonetheless, it will be important for manufacturers to continue to communicate with the EPA regarding the need for case-specific compliance flexibilities.
In turn, this will provide the EPA a better record to determine whether the existing regulations can accommodate the Covid-related disruptions these manufacturers are seeing or, if not, how the rules may need to be changed, albeit temporarily, so that the regulated industry can weather the storm while still protecting public health and safety.
This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.
Justin Savage is a partner at Sidley Austin LLP and co-leader of the firm’s Environmental practice.
The views expressed in this article are exclusively those of the authors and do not necessarily reflect those of Sidley Austin LLP and its partners.