94-6949. Air Pollution Control: Amendments To Regulations Governing the Importation of Nonconforming Vehicles  

  • [Federal Register Volume 59, Number 57 (Thursday, March 24, 1994)]
    [Unknown Section]
    [Page 0]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 94-6949]
    
    
    [[Page Unknown]]
    
    [Federal Register: March 24, 1994]
    
    
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    ENVIRONMENTAL PROTECTION AGENCY
    40 CFR Parts 85 and 600
    
    [FRL-4854-7]
    
     
    
    Air Pollution Control: Amendments To Regulations Governing the 
    Importation of Nonconforming Vehicles
    
    AGENCY: Environmental Protection Agency (EPA).
    
    ACTION: Notice of proposed rulemaking.
    
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    SUMMARY: EPA is proposing to amend 40 CFR part 85, subpart P to permit 
    the importation of certain motor vehicles and motor vehicle engines 
    from Canada without obtaining a certificate of conformity from EPA. 
    Such vehicles will be allowed entry into the United States provided a 
    commercial importer proves they are identical, in all material 
    respects, to a vehicle certified for sale in the United States. EPA is 
    proposing this change because it believes that many vehicles produced 
    by manufacturers for sale in Canada are identical to their United 
    States certified counterparts.
        In addition to the changes in subpart P which affect commercial 
    importers of vehicles produced for the Canadian market, this proposal 
    also addresses other issues relating to the importation of 
    nonconforming vehicles. EPA is proposing to: Formalize a longstanding 
    EPA policy regarding the importation of individually owned vehicles 
    that are proven to be identical, in all material respects, to a vehicle 
    certified for sale in the United States, establish new emission 
    standards applicable to imported nonconforming vehicles, clarify the 
    regulatory language at 40 CFR part 85, subparts P and R, which concern 
    the exclusion or exemption of motor vehicles and motor vehicle engines 
    from meeting Federal emission requirements, and provide several minor 
    clarifications to the existing regulations.
        EPA is proposing that implementation of these regulations take 
    place 30 days after publication of the final rule.
        This preamble is abbreviated from a larger supplementary document 
    which expands upon the issues discussed here and which may be found in 
    the Docket No. A-89-20 described below.
    
    DATES: If requested, EPA will conduct a public hearing on this Notice 
    of Proposed Rulemaking on April 25, 1994. The hearing will convene at 
    10:00 a.m. and will adjourn at such time as necessary to complete the 
    testimony. Written comments on this notice will be accepted for 30 days 
    following the hearing, until May 23, 1994. Any party desiring to 
    present oral testimony for the record at the public hearing, instead 
    of, or in addition to, written comments, must notify EPA by 5:00 p.m. 
    EST on April 8, 1994. If no party informs EPA that it wishes to 
    testify, no hearing will be held and EPA will address only written 
    submissions.
    
    ADDRESSES: The hearing, if requested, will take place at the EPA 
    Education Center, Waterside Mall, 401 M Street, SW., Washington, DC 
    20460. Any person wishing to attend should call the EPA contact person 
    listed below to determine if the hearing will be held.
        Materials relevant to this rulemaking are contained in the EPA Air 
    Docket LE-131, Attention: Docket No. A-89-20, located at the Air Docket 
    Section, U.S. Environmental Protection Agency, Room M-1500, 401 M 
    Street, SW., Washington, DC 20460 telephone (202) 260-7548. The docket 
    may be reviewed on weekdays between the hours of 8:30 a.m. to 12 noon 
    and from 1:30 to 3:30 p.m. As provided in 40 CFR part 2, a reasonable 
    fee may be charged for copying services.
    
    FOR FURTHER INFORMATION CONTACT: This notice of proposed rulemaking 
    provides a brief description of the changes that EPA is proposing. For 
    a more complete explanation, including proposed regulatory language, 
    refer to the EPA Air Docket at A-89-20. Any questions or comments 
    should be directed to: Leonard D. Lazarus, Investigation/Imports 
    Section, Manufacturers Operations Division (6405J), U.S. Environmental 
    Protection Agency, 401 M Street, SW., Washington, DC 20460. Telephone 
    (202) 233-9250.
    
    SUPPLEMENTARY INFORMATION:
    
    I. Statutory Authority
    
        Today's proposal discusses several regulatory programs administered 
    by EPA which provide for the importation of vehicles into the United 
    States. Section 203 of the Clean Air Act (Act), 42 U.S.C. 7522, 
    provides the statutory authority for regulations relating to the 
    importation of new motor vehicles\1\ and motor vehicle engines which 
    are not covered by a certificate of conformity. Sections 203(a)(1) and 
    203(b)(2) provide the statutory authority for the regulations in 
    today's proposal. Generally, section 203(a)(1) prohibits the 
    importation of vehicles not covered by a certificate of conformity by 
    any person except as provided by regulation of the Administrator. The 
    exception for regulations of the Administrator in section 203(a)(1) 
    refers to the grant of authority in section 203(b)(2), which states 
    that a vehicle not covered by a certificate of conformity and offered 
    for importation shall be refused admission into the United States 
    unless the Administrator, by regulation, provides for deferring final 
    determination regarding admission of the vehicle offered for 
    importation upon such terms and conditions as may appear appropriate to 
    insure that any imported vehicle will be brought into conformity with 
    applicable standards, requirements and limitations.
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        \1\The word ``vehicle'' hereinafter refers to a motor vehicle 
    and motor vehicle engine.
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        To implement section 203(b)(2), EPA has established procedures 
    regarding the importation of vehicles not covered by a certificate of 
    conformity. EPA first promulgated regulations on November 15, 1972 (37 
    FR 24314) which allowed individuals to import vehicles and perform 
    modifications subsequent to importation. This regulatory structure was 
    replaced on July 1, 1988 with a new regulatory program promulgated on 
    September 25, 1987. This program established the independent commercial 
    importer (ICI) as the entity responsible for the importation of 
    nonconforming vehicles. The primary purpose of this NPRM is to propose 
    additional provisions regarding the importation of vehicles intended 
    for sale in Canada but identical to U.S. certified configurations. See 
    section II for a discussion of the importation of Canadian vehicles. 
    This proposal also includes amendments to the procedures governing the 
    importation of nonconforming vehicles generally.
        In addition to the regulations administering the importation of 
    vehicles pursuant to section 203(b)(2), EPA is proposing amendments to 
    regulations which implement section 203(b)(1) of the Act. Section 
    203(b)(1) states, ``[t]he Administrator may exempt any new motor 
    vehicle or new motor vehicle engine * * * upon such terms and 
    conditions as he may find necessary for the purpose of research, 
    investigations, studies, demonstrations, or training or for reasons of 
    national security.'' To implement this section of the Act, regulations 
    were initially promulgated on September 10, 1974 (39 FR 32609), 
    codified at 40 CFR part 85, subpart R, to provide for a program 
    allowing manufacturers to apply for and receive exemptions for vehicles 
    that were used for the purposes specified in section 203(b)(1) of the 
    Act. These regulations were amended on March 3, 1980 (45 FR 13733) to 
    extend the availability of exemptions under section 203(b)(1) to 
    individuals and other non-manufacturers. On July 14, 1982 (47 FR 30482) 
    these regulations were amended to reduce the information required in a 
    manufacturer's exemption application. The regulations were also amended 
    on August 27, 1985 (50 FR 34797) to require that a claim of 
    confidentiality accompany information submitted to EPA that is covered 
    by such a claim.
        The proposed amendments to the regulations, codified at 40 CFR 
    85.1703, implement section 203(b)(1) of the Act to address the 
    definition of a motor vehicle; to clarify the definition of a 
    precertification vehicle in contrast to a vehicle subject to a testing 
    exemption; and, to revise the regulations regarding obtaining a display 
    exemption pursuant to 40 CFR 85.1511(b)(4) and 85.1707. These proposed 
    changes are discussed in section V, Proposed Amendments to subpart R.
    
    II. Background for Canadian Importations
    
        The framework of EPA's current Imports regulations establishes, 
    with some limited exceptions, that only independent commercial 
    importers (ICIs) holding a valid certificate of conformity may import 
    nonconforming vehicles into the United States. An ICI bears the 
    responsibility not only for performing all necessary modifications and 
    testing, but also for ensuring that the vehicle it imports complies 
    with United States emission requirements for the vehicle's useful life. 
    In effect, this imposes on the ICI the same emission requirements the 
    Act imposed on original equipment manufacturers (OEMs).
        On November 24, 1987, potential importers of Canadian vehicles for 
    resale in the U.S. petitioned EPA\2\ to reconsider the regulations as 
    they apply to the commercial importation of vehicle models originally 
    designed and built for sale in Canada which are identical to vehicles 
    certified by EPA for sale in the United States. The petitioners 
    maintained that, although these vehicles may not be labeled by the OEM 
    as meeting United States emission requirements, the vehicles do not 
    have to be mechanically modified to comply with such requirements and 
    do not present air quality concerns similar to those presented by other 
    imported nonconforming vehicles.
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        \2\A copy of the petition may be found in the docket at A-89-20.
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        The evidence available to EPA suggests that an overwhelming 
    majority of the vehicle models manufactured for sale in Canada are not 
    configurations unique to the Canadian market, but are mechanically 
    identical to their corresponding United States version regarding 
    emissions compliance, except for EPA's labeling and warranty 
    requirements. Given this situation, EPA believes that it is not 
    necessary to require individuals and commercial importers to obtain 
    separate certificates of conformity from EPA for those vehicles that 
    are mechanically identical to their corresponding United States version 
    regarding emissions compliance.
        On June 29, 1988, EPA granted the petition for reconsideration (the 
    document granting the petition may be found in the docket at A-89-20), 
    and agreed to commence this rulemaking to address the unique issues 
    surrounding Canadian vehicles.
        Today's action proposes formal revisions to EPA's regulations for 
    importing vehicles from Canada. It also clarifies or changes certain 
    other provisions contained in the existing regulations.
    
    A. EPA's Proposal
    
        EPA's proposal would allow only commercial importers with 
    designated Canadian importer status approved by EPA to import vehicles 
    from Canada both for which the title has previously been transferred to 
    an ultimate purchaser and for which the title has not yet been 
    transferred to an ultimate purchaser, for the purpose of resale. The 
    designated Canadian importers would be permitted to import only those 
    vehicles which were previously proven to be identical, in all material 
    respects, to their United States certified counterparts. In addition to 
    making the showing of identical in all material respects, a designated 
    Canadian importer must agree to: (1) Label each vehicle for fuel 
    economy and emissions compliance purposes; (2) fulfill emission 
    warranty and recall obligations, and notify owners of recalls and 
    available warranty coverage; (3) maintain adequate records; (4) pay any 
    applicable Gas Guzzler Taxes, and Corporate Average Fuel Economy 
    penalties (49 CFR 531, 533); (5) submit applications for final 
    admission to EPA; (6) hold vehicles for a period of five working days 
    (or less if approved by EPA on a case-by-case basis) for EPA inspection 
    before transfer to an ultimate purchaser or dealer; and (7) submit to 
    inspections conducted by EPA enforcement officers.
    
    B. Importations by Individuals
    
        Today's proposal also addresses the importation of vehicles by 
    individual owners. Often an individual moving to the United States from 
    Canada wishes to import his/her vehicle for personal use. In many of 
    these cases, the vehicle is identical, except for labeling, to its 
    United States certified counterpart. The few vehicles which are not 
    identical to their United States certified counterparts, typically 
    require only minor modifications to make them identical. For these 
    reasons, EPA believes that the special circumstances associated with an 
    individual moving to the United States from Canada also warrant 
    consideration in this rulemaking. EPA believes that similar 
    circumstances may also apply to some individuals importing vehicles 
    from other countries. Consequently, this proposal addresses vehicle 
    importations by individuals moving to the United States from other 
    countries, as well.
        EPA's current policy permits entry to certain vehicles on a case-
    by-case basis. EPA proposes to formalize this policy to grant 
    exemptions to individual owners (individuals and businesses) to import 
    their personal vehicles (i.e., vehicles not imported for the purpose of 
    resale), provided they have proven that their vehicles were: (1) 
    Originally manufactured to be identical, in all material respects, to a 
    vehicle described in an OEM's application for certification, or (2) 
    modified to be identical in all material respects to a vehicle 
    described in an OEMs application for certification. EPA is not 
    proposing to change individual vehicle owners' responsibility for 
    payment of any Gas Guzzler taxes applicable to vehicles they import.
        EPA's proposal also offers individual importers the option of 
    having an ICI import their vehicle or engine for the purpose of 
    modifying it to be identical in all material respects to a vehicle or 
    motor vehicle engine certified by the OEM for sale in the United 
    States. Vehicles imported under this option must be modified by the ICI 
    according to OEM instructions, but do not have to be tested. EPA is 
    confident that detailed instructions provided by an OEM specifying 
    parts to be installed and adjustments to be performed will be 
    sufficient to make a vehicle or engine identical in all material 
    respects to a certified vehicle or engine, because these modifications 
    will result in the vehicle or engine having the same parts and 
    parameters as are described in the OEM's application for certification, 
    which describes the vehicles or engines produced by the OEM within a 
    given certified engine family. Individual vehicle owners who might 
    otherwise have to incur the greater expense of ICI testing for a 
    vehicle they wish to import may benefit from this option, if 
    modification instructions can be obtained from the OEM.
    
    C. Emission Standards
    
        Today, EPA is proposing to delete the requirement that 
    nonconforming light-duty vehicles and light-duty trucks imported 
    pursuant to 40 CFR 85.1505 or 85.1509 meet current year emission 
    standards.\3\ Instead of meeting current year emission standards, these 
    vehicles will be allowed to meet emission standards (with applicable 
    deterioration factors applied) that were in effect at the time of 
    original vehicle production, with a few exceptions. These vehicles 
    must, however, meet such emission standards using the currently 
    applicable testing procedures, and must meet all applicable current 
    model year fuel economy requirements. EPA is not proposing to change 
    ICIs' status as small volume manufacturers and they must comply with 
    corporate average fuel economy (CAFE) requirements as imposed by the 
    Department of Transportation (DOT). This revision would give owners of 
    older motor vehicles a way to import their vehicles. Many of these 
    vehicles are now effectively excluded from importation due to the high 
    cost of modification to meet current model year standards, which may be 
    greater than the value of the vehicle involved.
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        \3\This proposal does not change the emission standards for new 
    motor vehicles imported by the original equipment manufacturers. 
    This proposal changes only the emission standards for motor vehicles 
    that were originally produced in earlier years than the model year 
    of importation.
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        EPA would continue, as under current regulations, to define the 
    useful life of imported nonconforming vehicles as a period of time or 
    mileage of use in the United States, beginning with the date and 
    mileage at the time of a vehicle's release to the owner or purchaser. 
    Consequently, this proposal would not affect the warranty and recall 
    requirements pursuant to 40 CFR 85.1508 and 85.1510 or any other 
    requirement under that subpart.
    
    D. Other Issues
    
    (1) Precertification Exemption
        Today's proposal revises the precertification exemption available 
    to ICIs pursuant to 40 CFR 85.1511(b)(3) for the importation of 
    nonconforming prototype vehicles for use in certification. Presently, 
    the ICI must obtain written approval from the Administrator prior to 
    importing such nonconforming motor vehicles, must use the vehicle to 
    obtain a certificate of conformity, and must obtain a certificate of 
    conformity within 180 days of importation. In this rulemaking, EPA 
    retains these provisions, and proposes additional requirements 
    regarding the number of precertification exemptions given to an ICI at 
    any given time and EPA's criteria for granting precertification 
    exemptions pursuant to 40 CFR 85.1511(b)(3) while other 
    precertification exemptions are pending. In addition, a provision is 
    made for extension of the 180 day time limit under certain 
    circumstances. A precertification exemption allows an ICI to bring a 
    vehicle or engine into the U.S. for the purpose of obtaining a 
    certificate of conformity.
        EPA is concerned with granting, or with the need for granting, 
    precertification exemptions when the ICI has failed to complete the 
    certification process and obtain certificates of conformity for other 
    prototype vehicles previously entered under this exemption. EPA is also 
    concerned about the technical capability of some ICIs, that the ICIs 
    successfully modify the pending precertification vehicles, and that the 
    ICIs continue to comply with all requirements of the Imports 
    regulations. Therefore, EPA is proposing limits to precertification 
    exemptions.
        EPA is proposing an automatic limit of no more than three 
    precertification exemptions to an ICI at any one time except upon a 
    case-by-case determination that the ICI has demonstrated an ability to 
    meet the EPA technical and time requirements for the additional 
    prototype vehicle as well as for all other vehicles it has already 
    imported. Absent such approval, the ICI will not be granted another 
    precertification exemption until a certificate for the existing 
    prototype vehicle(s) is obtained or the vehicle(s) unable to be brought 
    into conformity with Federal emission requirements has been exported. 
    Secondly, regardless of the number of outstanding precertification 
    exemptions, EPA also would not grant another precertification exemption 
    if the ICI is in noncompliance with the Imports regulations for any 
    other vehicle already imported until the noncompliance situation is 
    resolved. When determining whether to grant approval of additional 
    exemptions, EPA will consider such factors as an ICI's previously 
    demonstrated success in obtaining certificates of conformity in a 
    timely manner, accurate and efficient compliance with all certification 
    procedures, extent of progress on other outstanding precertification 
    exemptions, and whether the ICI is and will likely be in compliance 
    with all requirements of the Imports regulations for other vehicles it 
    has already imported. EPA is also proposing the following 
    clarifications to the precertification process to eliminate confusion 
    associated with the final admission of prototype vehicles. The 
    prototype vehicle is the first vehicle imported and tested under the 
    certificate of conformity for the purposes of testing every third (or 
    fifth) vehicle under 40 CFR 85.1505.
        Under current regulations, an ICI must obtain a certificate of 
    conformity within 180 days of the date of entry of the prototype 
    vehicle. If not, then either the total amount of the bond is forfeited 
    or the vehicle is exported. EPA recognizes there are limited instances 
    when it is not possible to obtain a certificate of conformity within 
    180 days. Therefore, EPA is proposing that an extension of the 180 day 
    requirement may be granted by the Administrator. The length of the 
    extension will be determined by EPA on a case-by-case basis considering 
    the needs of each ICI. The ICI must request such an extension prior to 
    the expiration of the 180 days. EPA expects to grant such requests only 
    under unique circumstances. For example, EPA would expect to grant an 
    extension to an ICI who has completed all modifications for the vehicle 
    and certification testing is pending, but circumstances beyond the 
    ICI's control have led to failure to obtain the certificate of 
    conformity within the required 180 days. EPA specifically will not 
    grant an extension for situations such as (but not limited to) when an 
    ICI allows a significant amount of time to elapse in which significant 
    progress was not made on the vehicle, or when an ICI fails to submit in 
    a timely manner the application for certification (or applicable parts, 
    thereof) to EPA.
        The ICI must comply with all requirements of Subpart P once the 
    certification process is complete, including the submittal of final 
    admission forms as stated in 40 CFR 85.1505, the recordkeeping 
    requirements and labeling requirements of 40 CFR 85.1706 and any other 
    requirements of 40 CFR 85.1501 et seq.
    (2) Racing Exclusion
        According to 40 CFR 85.1511(e), a racing vehicle may be imported by 
    any person provided the vehicle meets one or more of the exclusion 
    criteria set forth in 40 CFR 85.1703. Presently, EPA policy will allow 
    such a vehicle to be imported only with a prior written EPA 
    determination that the vehicle meets these exclusion criteria. The 
    purpose of this policy is to ensure that vehicles which may be legally 
    operated or are capable of being legally operated on the streets and 
    highways will not be imported as racing vehicles. EPA proposes to 
    incorporate this practice into the regulations.
    (3) Warranty/Insurance
        When the current Imports program was initially implemented in 1988, 
    EPA discovered that ICIs were not capable of obtaining the independent 
    insurance coverage as required in 40 CFR 85.1510(b)(2). As a result, 
    EPA proposes to amend the existing regulations to allow an ICI to 
    obtain prepaid independent insurance coverage less than that required 
    by the regulations, with the ICI retaining full responsibility for the 
    remaining warranty coverage. The prepaid insurance policy, underwritten 
    by an independent insurance company, shall at a minimum provide 
    coverage for emission related components installed or modified by the 
    ICI and to the maximum extent possible, the emission related components 
    installed by the OEM.
        This change does not alter the requirement that the ICI provide an 
    emissions warranty as required by section 207 (a) and (b) of the Act.
    (4) Minor Clarifications
        EPA is also proposing the following minor clarifications and 
    changes: (1) Adding a definition of fifteen working day hold period 
    (and five working day hold period) (40 CFR 85.1502), (2) clarifying 
    that the fifteen (or five) working day hold period begins the first 
    working day after the application for final admission is received by 
    the Manufacturers Operations Division (40 CFR 85.1505 and 85.1509), (3) 
    providing for the transfer of control of a nonconforming motor vehicle 
    between ICIs after conditional admission (40 CFR 85.1504), (4) adding a 
    requirement that vehicles be stored within 50 miles of the test 
    facility during the fifteen working day hold period (importers wishing 
    to use storage facilities not meeting this criterion must obtain EPA's 
    prior written approval) (40 CFR 85.1505 and 85.1509), (5) providing for 
    the acceptance of alternative dates in lieu of the date of original 
    manufacture, if it is unobtainable (40 CFR 85.1507), (6) clarifying the 
    repair and alteration exemption (40 CFR 85.1511), (7) clarifying the 
    exclusion for methanol-fueled vehicles produced prior to the 1990 model 
    year (40 CFR 85.1511), (8) clarifying the catalyst control programs and 
    other requirements for United States version vehicles driven overseas 
    (40 CFR 85.1512), (9) clarifying that the ICI must retain control of 
    each vehicle until final admission is granted by EPA (40 CFR 85.1513), 
    (10) adding a requirement that to be eligible to modify and test six-
    year old or older vehicles under 40 CFR 85.1509, an ICI must have a 
    currently valid certificate of conformity for the same vehicle type 
    (i.e., light-duty gasoline-fueled vehicle/truck, heavy-duty diesel 
    engine, or motorcycle) (40 CFR 85.1509), (11) clarify that unless all 
    requirements of 40 CFR 85.1505 or 85.1509 have been met, final 
    admission status will not be granted (40 CFR 85.1505 and 85.1509), (12) 
    delete the requirement that a vehicle greater than 20 original 
    production (OP) years old which is ineligible for exclusion, must be 
    imported by an ICI (40 CFR 85.1511), (13) clarify that vehicles 
    returning to the United States may be imported under bond for 
    restoration of any missing, damaged, or disabled emission-related parts 
    (40 CFR 85.1512), (14) modify existing regulatory language to 
    accurately reflect recent changes in the Act regarding useful life and 
    civil penalties (40 CFR 85.1507, 85.1508, 85.1510, and 85.1513), (15) 
    clarify that a conditionally admitted vehicle or engine must comply 
    with EPA requirements at the time that the application for final 
    admission is submitted to EPA (40 CFR Sec. 85.1513), (16) clarify that 
    the recordkeeping requirements for maintaining a list of vehicle 
    modifications includes all part numbers and calibration changes (40 CFR 
    85.1507), and (17) clarify that a vehicle that is emission tested in 
    order to obtain final admission must satisfy all of the applicable 
    testing requirements of part 86 (40 CFR 85.1502, 85.1505, 85.1507, 
    85.1509, 85.1513, 85.1516).
    
    III. Proposed Amendments To Subpart R
    
    A. Application of Section 216(2)
    
        Section 216(2) of the Act defines the term ``motor vehicle'' as ``* 
    * * any self-propelled vehicle designed for transporting persons or 
    property on a street or highway.'' Generally, EPA proposes to amend 
    section 40 CFR 85.1703 to provide additional guidance on when a vehicle 
    is not a ``motor vehicle'' under section 216 of the Act.
        To provide further guidance to the regulated industry, EPA proposes 
    to: (1) Amend this exclusion provision to reflect EPA's policy that the 
    use of a governor to limit a vehicle's speed to 25 mph is unacceptable 
    unless the speed control device cannot easily be removed, disabled, or 
    circumvented; (2) amend 40 CFR 85.1703(a)(2) by deleting the reference 
    to safety features required by Federal law; (3) revise 40 CFR 
    85.1703(a)(3) to state that the Federal Interstate Highway limitations 
    will be used to determine if a vehicle is of ``inordinate size''; (4) 
    include a new provision reflecting the Agency's policy that racing and 
    other vehicles which are not capable of safe and practical street or 
    highway use will not be considered motor vehicles under section 216 of 
    the Act; and (5) include a new provision to specify when a motorcycle 
    (as defined at 40 CFR 86.402-78) will be deemed to not be a motor 
    vehicle.
        It is important to note that converting a non-motor vehicle into a 
    motor vehicle, and operating it on a public street or highway may be 
    considered to be manufacturing and introduction into commerce of an 
    uncertified motor vehicle. This is a violation of section 203(a)(1) of 
    the Act and may subject the manufacturer to civil penalties under 
    section 205 of the Act.
    
    B. Precertification Exemption
    
        EPA proposes to amend 40 CFR 85.1702(a) (3) and (4), to clarify the 
    distinction between a ``Precertification motor vehicle or motor vehicle 
    engine'' and a motor vehicle or motor vehicle engine subject to a 
    testing exemption (40 CFR 85.1705).
        EPA further proposes to revise 40 CFR 85.1702(a) (3) and (4) by 
    substituting the terms ``Manufacturer-owned vehicle'' and 
    ``Manufacturer-owned vehicle engine'' for the terms ``Precertification 
    vehicle'' and ``Precertification vehicle engine'' respectively. 
    Finally, EPA proposes to rename 40 CFR 85.1706 ``Manufacturer-owned 
    exemption''. For purposes of this provision, this substitution does not 
    expand the meaning of the subject terms, but only distinguishes them 
    from the exemptions provided to ICIs under Subpart P in order to 
    eliminate possible confusion created by the current use of the terms.
    
    C. Display Exemption
    
        EPA is also proposing a revision to the display exemption found at 
    40 CFR 85.1511(b)(4) and 85.1707. Presently, EPA will grant a temporary 
    display exemption for uncertified motor vehicles under certain 
    conditions. Although the exemption will be retained, EPA is proposing 
    several clarifications. These clarifications include incorporating 
    EPA's policy of granting the display exemption for business or public 
    display purposes only; and establishing a time limit for the display 
    exemption. In addition, the language in the display exemption in 40 CFR 
    85.1511(b)(4) and 40 CFR 85.1707 will be reconciled so that both 
    provisions will prohibit use on public streets and highways except for 
    purposes incident and necessary to the display purpose.
    
    IV. Administrative Requirements
    
    A. Administrative Designation and Regulatory Analysis Executive Order 
    12866
    
        Under Executive Order 12866, [58 FR 51,735 (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 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; or
        (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.
    
        It has been determined that this rule is not a ``significant 
    regulatory action'' under the terms of Executive Order 12866 and is 
    therefore not subject to OMB review.
    
    B. Paperwork Reduction Act
    
        The information collection requirements in this proposed rule have 
    been submitted for approval to the Office of Management and Budget 
    (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. An 
    Information Collection Request document has been prepared by EPA (OMB 
    control number 2060-0095, ICR No. 10.06) and a copy may be obtained 
    from Sandy Farmer, Information Policy Branch,; EPA; 401 M St., SW. 
    (Mail Code 2136); Washington, DC 20460 or by calling (202) 260-2740.
        This collection of information has an estimated reporting burden 
    averaging 0.5 hours per response and an estimated annual recordkeeping 
    burden averaging 0.3 hours per respondent. These estimates include time 
    for reviewing instructions, searching existing data sources, gathering 
    and maintaining the data needed, and completing and reviewing the 
    collection of information.
        Send comments regarding the burden estimate or any other aspect of 
    this collection of information, including suggestions for reducing this 
    burden to Chief, Information Policy Branch; EPA; 401 M St., SW. (Mail 
    Code 2136); Washington, DC 20460; and to the Office of Information and 
    Regulatory Affairs, Office of Management and Budget, Washington, DC 
    20503, marked ``Attention: Desk Officer for EPA.'' The final Rule will 
    respond to any OMB or public comments on the information collection 
    requirements contained in this proposal.
    
    C. Impact on Small Entities
    
        The Regulatory Flexibility Act of 1980 requires federal agencies to 
    identify potentially adverse impacts of federal regulations upon small 
    entities. In instances where significant impacts are possible on a 
    substantial number of these entities, agencies are required to perform 
    a Regulatory Flexibility Analysis.
        There will not be a significant impact on a substantial number of 
    small business entities because the proposed rule benefits the small 
    businesses that import nonconforming vehicles into the United States, 
    allowing them additional options for importing these vehicles and 
    minimizing their costs.
        Therefore, as required under section 605 of the Regulatory 
    Flexibility Act, 5 U.S.C. 601 et. seq., the Administrator certifies 
    that this regulation does not have a significant impact on a 
    substantial number of small entities.
    
    D. Statutory Authority
    
        Subpart P--Secs. 203, 206, 207, 208, 301 and 307, Clean Air Act, as 
    amended (42 U.S.C. 7522, 7525, 7541, 7542, 7601 and 7607).
        Subpart R--Secs. 203(b)(1), 216(2), 301 and 307, Clean Air Act, as 
    amended (42 U.S.C. 7522(b)(1), 7550(2), 7601 and 7607).
    
    List of Subjects
    
    40 CFR Part 85
    
        Imports labeling, Motor vehicle pollution, Reporting and 
    recordkeeping requirements, Research, Warranties.
    
    40 CFR Part 600
    
        Electric power, Energy conservation, Gasoline, Labeling, 
    Administrative practice and procedure, Fuel economy.
    
        Dated: March 17, 1994.
    Carol M. Browner,
    Administrator.
    [FR Doc. 94-6949 Filed 3-23-94; 8:45 am]
    BILLING CODE 6560-50-P