[Federal Register Volume 61, Number 123 (Tuesday, June 25, 1996)]
[Proposed Rules]
[Pages 32729-32746]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-16009]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 59
[AD-FRL-5526-3]
National Volatile Organic Compounds Emission Standards for
Architectural Coatings
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule and notice of public hearing.
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SUMMARY: The proposed standards would reduce emissions of volatile
organic compounds (VOC) from architectural coatings. The proposed
standards implement Section 183(e) of the Clean Air Act (CAA), as
amended in 1990, which requires the Administrator to control VOC
emissions from certain categories of consumer and commercial products.
Exposure to ozone is associated with a wide variety of human health
effects, agricultural crop loss, and damage to forests and ecosystems.
As required by Section 183(e), the Administrator conducted a study to
determine the potential of VOC emissions from consumer and commercial
products to contribute to ozone levels that violate the National
Ambient Air Quality Standards (NAAQS) for ozone and established a list
of product categories to be regulated. Based on the criteria described
in the study and accompanying report, the EPA determined that VOC
emissions from architectural coatings should be reduced. Therefore, the
EPA is proposing standards to reduce ozone-causing VOC emissions from
these coatings. The proposed standards would reduce annual emissions of
VOC by 106,000 tons representing a 20 percent reduction from 1990
levels.
The proposed rule is centered around requiring VOC content levels
for 55 individual architectural coating categories. When promulgated
these requirements on manufacturers and importers of architectural
coatings are anticipated to take effect on April 1, 1997. This
rulemaking is on an expedited schedule, with a relatively short public
comment period.
Following proposal of this rule, the EPA plans to participate in a
joint study with the architectural coatings industry. This study will
focus on the feasibility of adopting more stringent VOC requirements in
the future.
DATES: Comments. Comments pertaining to the proposed rule must be
received on or before August 30, 1996.
Public Hearing. A public hearing will be held, if requested, to
provide interested persons an opportunity for oral presentation of
data, views, or arguments concerning the proposed standards for
architectural coatings. If anyone contacts the EPA requesting to speak
at a public hearing concerning this proposed rule by July 18, 1996, a
public hearing will be held on July 30, 1996, beginning at 10:00 a.m.
Persons interested in attending the hearing should notify Ms. Kim Teal,
(919) 541-5580 by July 18, 1996, to verify that a hearing will occur
and for notification of the location of the hearing. The record for the
public hearing will remain open for 30 days after completion of the
hearing to provide an opportunity for the submission of rebuttal and
supplementary information.
Persons wishing to present oral testimony concerning this proposed
rule must contact Ms. Kim Teal at the EPA by July 18, 1996. Ms. Teal
may be contacted at the following address: Coatings and Consumer
Products Group (MD-13), U.S. Environmental Protection Agency, Research
Triangle Park, North Carolina 27711, telephone number (919) 541-5580,
FAX number (919) 541-5689.
ADDRESSES: Comments. Comments should be submitted (in duplicate) to:
Air and Radiation Docket and Information Center (6102), Attention:
Docket No. A-92-18, U.S. Environmental Protection Agency, 401 M Street
SW, Washington, DC 20460. Comments and data may also be submitted
electronically by sending electronic mail (e-mail) to: docket@epamail.epa.gov. Electronic comments must be submitted as an
ASCII file avoiding the use of special characters and any form of
encryption. Comments and data will also be accepted on disks in
WordPerfect in 5.1 file format or ASCII file format. All comments and
data in electronic form must be identified by the docket number A-92-
18. No Confidential Business
[[Page 32730]]
Information (CBI) should be submitted through e-mail. Electronic
comments on this proposed rule may be filed online at many Federal
Depository Libraries.
Docket. The proposed regulatory text and other materials related to
this rulemaking, excepting any information claimed as CBI, are
available for review in a public record. This record has been
established for this rulemaking under docket number A-92-18. The
docket, including paper versions of electronic comments, is available
for inspection from 8:00a.m. to 5:30p.m. Monday-Friday, excluding legal
holidays. The docket is located at the EPA's Air and Radiation Docket
and Information Center, Room M1500, 1st Floor, 401 M St. S.W.,
Washington, D.C. 20460, telephone (202) 260-7548, FAX (202) 260-4400. A
reasonable fee may be charged for copying.
Background Information Document. The background information
document (BID) and other documents supporting the proposed standards
may be obtained from the docket or from the U.S. EPA Library (MD-35),
Research Triangle Park, North Carolina 27711, telephone number (919)
541-2777. Please refer to ``Architectural Coatings--Background for
Proposed Standards,'' EPA-453/R-95-009a.
FOR FURTHER INFORMATION CONTACT: For information concerning the
proposed standards, contact Ms. Ellen Ducey at (919) 541-5408, Coatings
and Consumer Products Group, Emission Standards Division (MD-13), U.S.
Environmental Protection Agency, Research Triangle Park, North Carolina
27711.
SUPPLEMENTARY INFORMATION:
Regulated entities
Entities potentially regulated by this action are those who have
the potential to supply products which emit VOC and are listed in
Sec. 183(e) of the CAA in the following regulated categories and
entities:
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Category Examples of regulated entities
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Manufacturer........................ Source that produces, packages, or
repackages architectural coatings
for sale or distribution in the
U.S.
Importers........................... Source that brings architectural
coatings from a location outside
the U.S. into the U.S. for sale
or distribution within the U.S.
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This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely to be regulated by this
action. This table lists the types of entities that the EPA is now
aware could potentially be regulated by this action. Other types of
entities not listed in the table could also be regulated. To determine
whether your facility is regulated by this action, you should carefully
examine the applicability criteria in Sec. 59.400 of the rule. If you
have questions regarding the applicability of this action to a
particular entity, consult the person listed in the preceding
FOR FURTHER INFORMATION CONTACT section of this preamble.
The regulatory text of the proposed rule is not included in this
Federal Register notice, but is available in Docket No. A-92-18 (see
ADDRESSES for information about the docket). The proposed regulatory
language is also available on one of the EPA's Technology Transfer
Network (TTN) electronic bulletin boards.
The TTN provides information and technology exchange in various
areas of air pollution control. The TTN contains 18 electronic bulletin
boards, and the following five items can be obtained through the Clean
Air Act Amendments bulletin board in the section called Recently Signed
Rules:
(1) ``FACT SHEET: Proposed Air Regulations for Architectural
Coatings (1995).''
(2) Federal Register notice for this preamble: ``National Volatile
Organic Compound Emission Standards for Architectural Coatings'' (this
document).
(3) Regulatory text for the proposed rule.
(4) ``Architectural Coatings--Background for Proposed Standards,''
(EPA-453/R-95-009a).
(5) Information Collection Request document for the proposed
standards: ``Reporting and Recordkeeping Requirements for National VOC
Emission Standards for Architectural Coatings,'' November 29, 1995.
The TTN is accessible 24 hours per day, 7 days per week except
Monday morning from 8:00 a.m. to 12:00 p.m. when the system is down for
maintenance and back up. The service is free, except for the cost of a
phone call. Dial (919) 541-5742 for up to a 14,400 bits per second
(bps) modem. If more information on the TTN is needed, call the help
desk at (919) 541-5384.
The information presented in this preamble is organized as follows:
I. Background
A. Clean Air Act Requirements
B. Regulatory Background
C. Supporting Documentation for the Proposed Standards
II. Summary of Proposed Standards
A. Applicability of the Standards
B. Regulated Entities
C. VOC Levels
D. Compliance Requirements
E. Labeling Requirements
F. Recordkeeping
G. Reporting
H. Test Methods
I. Variance
III. Summary of Impacts
A. Environmental Impacts
B. Energy Impacts
C. Cost and Economic Impacts
D. Cost-Effectiveness
IV. Rulemaking Decision Process
A. Legislative Authority
B. Regulatory Negotiation Procedure
V. Rationale
A. Applicability
B. Regulated Entities
C. Selection of Best Available Controls (BAC)
D. Exceedance Fee Approach
E. Low Volume Categories/Exemption
F. Special Provisions
G. Labeling and Public Information Requirements
H. Selection of the Recordkeeping and Reporting Requirements
I. Test Methods
J. Alternative Regulatory Approaches
K. Solicitation of Comments
VI. Future Phase Under Consideration
VII. Administrative Requirements
A. Public Hearing
B. Executive Order 12866
C. Paperwork Reduction Act
D. Regulatory Flexibility Act
E. Unfunded Mandates
F. Enhancing the Intergovernmental Partnership under Executive
Order 12875.
I. Background
A. Clean Air Act Requirements
Exposure to ground-level ozone is associated with a wide variety of
human health effects, agricultural crop loss, and damage to forests and
ecosystems. The most thoroughly studied health effects of exposure to
ozone at elevated levels during periods of moderate to strenuous
exercise are the impairment of normal functioning of the lungs,
symptomatic effects, and reduction in the ability to engage in
activities that require various levels of physical exertion. Typical
symptoms associated with acute (one to three hour) exposure to ozone at
levels of 0.12 parts per million (ppm) or higher under heavy exercise
or 0.16 ppm or higher under moderate exercise include cough, chest
pain, nausea, shortness of breath, and throat irritation.
Ground-level ozone, which is a major component of ``smog,'' is
formed in the atmosphere by reactions of VOC and oxides of nitrogen
(NOX) in the presence of sunlight. In order to reduce ground-level
ozone concentrations, emissions of VOC and NOX must be reduced.
Section 183(e) of the CAA addresses VOC emissions from the use of
consumer and commercial products. It requires the EPA to study VOC
[[Page 32731]]
emissions from the use of consumer and commercial products, to report
to Congress the results of the study, and to list for regulation
products accounting for at least 80 percent of VOC emissions resulting
from the use of such products in ozone nonattainment areas.
Accordingly, in the March 23, 1995 Federal Register (60 FR 15264), the
EPA announced the availability of the ``Consumer and Commercial
Products Report to Congress'' (EPA-453/R-94-066-A), and published the
consumer and commercial products list and schedule for regulation.
Architectural coatings are in the first group of products to be
regulated by March 1997. This listing and prioritization are not final
Agency actions, and the EPA requests comment on the placement of
architectural coatings on the list and the priority assigned to these
coatings.
B. Regulatory Background
Architectural coatings are included under the definition of
consumer and commercial products because the definition under Section
183(e) of the CAA specifically includes paints, coatings, and solvents.
Section 183(e) of the CAA requires that the first group of consumer and
commercial products (i.e., those with highest priority for regulation)
be regulated within two years after publication of the regulatory
schedule. As mentioned previously, architectural coatings are in the
first group of consumer and commercial products to be regulated and,
therefore, must be regulated by March 1997.
Because preliminary information indicated that the architectural
coatings category is a sizable contributor to ozone levels in
nonattainment areas, it seemed probable that this category would be a
high priority for regulation. In 1992, the EPA initiated a regulatory
negotiation to address architectural coatings (see section IV.B for a
discussion of the negotiation). Throughout this process, the EPA
maintained that if the final results of the study of consumer and
commercial products varied from preliminary estimates, the EPA's
decision to include architectural coatings in the first group of
categories to be regulated could change. The study indicated that the
VOC emissions from consumer and commercial products represent
approximately 28 percent of all manmade VOC emissions. The
architectural coatings category is one of the largest consumer and
commercial product categories, accounting for about nine percent of the
emissions of VOC from all consumer and commercial products. Based on
evaluation of criteria developed under Section 183(e) of the CAA,
architectural coatings were placed in the first group of products to be
regulated. The criteria that contribute to the prioritization of
architectural coatings in the first group of consumer and commercial
products to be regulated include the availability of alternatives, the
cost-effectiveness of controls, and the quantity of VOC emissions in
ozone nonattainment areas. Further details about the criteria used to
prioritize consumer and commercial product categories for regulation
are available in the report to Congress.
Architectural coating regulations are already in place in a number
of States, and many other States are in the process of developing
regulations. For the companies that market architectural coatings in
different States, trying to fulfill the differing requirements of State
rules has created administrative, technical, and marketing problems. A
Federal rule is expected to provide some degree of consistency,
predictability, and administrative ease for the industry. In addition,
State representatives have recommended that the EPA develop and
implement Federal control measures. This is because a national rule
helps reduce compliance problems associated with noncompliant coatings
being transported into nonattainment areas from neighboring areas and
neighboring States. Also, a national rule will enable States to obtain
needed emission reductions from this sector in the near term, without
having to expend their limited resources to develop similar rules in
each State.
C. Supporting Documentation for the Proposed Standards
The architectural coating BID (EPA 453/R-95-009a) contains some
supporting documentation for this proposal. It contains a product
category description, an industry profile, a discussion of control
measures, and a description of the expected emission reductions. Other
supporting information for this proposed regulation includes existing
State regulations, regulatory negotiation presentation material,
meeting summaries, survey data, technical memoranda including the
economic impact analysis, and the report to Congress on consumer and
commercial products. This information is contained in the docket and is
available to the public as described above.
II. Summary of Proposed Standards
The proposed standards are summarized below. The rationale for the
regulatory decisions made in developing these standards is provided in
section V.
A. Applicability of the Standards
The provisions of the proposed rule apply to all architectural
coatings that are manufactured or imported for sale or distribution in
the United States on or after April 1, 1997. An architectural coating
is defined in the proposed rule as ``a coating recommended for field
application to stationary structures and their appurtenances, to
portable buildings, to pavements, or to curbs.''
Category definitions in the proposed rule, such as ``exterior
flats'' or ``industrial maintenance coatings,'' are a subset of
architectural coatings. A coating must first meet the general
definition of an architectural coating to be subject to the provisions
of the proposed rule.
The proposed standards do not apply to the following architectural
coatings:
(1) Coatings manufactured exclusively for sale outside the United
States;
(2) Coatings manufactured or imported prior to April 1, 1997;
(3) Coatings supplied in nonrefillable aerosol containers;
(4) Coatings that are collected and redistributed at community-
based paint exchanges; and
(5) Coatings sold in containers with capacities of 1 liter or less.
B. Regulated Entities
Regulated entities in this proposal are limited to architectural
coating manufacturers and importers as defined below.
Architectural coating importer (or importer) means a company,
group, or individual that brings architectural coatings from a location
outside the United States into the United States for sale or
distribution within the United States.
Architectural coating manufacturer (or manufacturer) means a
company, group, or individual that produces, packages, or repackages
architectural coatings for sale or distribution in the United States. A
company, group, or individual that repackages architectural coatings as
part of a community-based paint exchange and does not produce, package,
or repackage any other architectural coatings for sale or distribution
in the United States is excluded from this definition.
C. VOC Levels
The proposed rule is centered around VOC content levels for 55
individual architectural coating categories. Manufacturers and
importers must limit the VOC content of subject coatings to the VOC
levels in Table 1, which are effective April 1, 1997 and thereafter.
As shown in Table 1, the categories of low solids stains and low
solids wood
[[Page 32732]]
preservatives have different units for the VOC content level. The VOC
content for these categories is expressed in grams of VOC per liter of
coating thinned to the manufacturer's maximum recommendation, including
water and exempt compounds. This is because, unlike conventional
coatings, which achieve a film-build, these stains and wood
preservatives are not applied to achieve a certain thickness of solid
film, but rather to affect penetration of the stain or wood
preservative. For these low solids coatings, the assumption that
coverage of the coating is dependent on the volume of solids in the
coating is not valid. The volume of the coating (which must include at
least 50 percent water in the volatile fraction) determines coverage.
For this reason, the VOC content level is determined ``including water
and exempt compounds.''
A coating is subject to the VOC content level for the category in
Table 1 that describes the coating's recommended use, appearance
characteristics, and/or resin type. If a coating meets the definition
of an architectural coating and is subject to the proposed rule, it
must be identified by the manufacturer or importer to be defined under
at least one of the categories listed in Table 1. If a coating does not
meet any of the other category definitions besides ``flat'' or
``nonflat,'' it would be categorized in either the flat or nonflat
category depending on its gloss level. These default categories
generally require lower VOC content levels than other categories in
Table 1. If a coating is marketed in more than one of the listed
coating categories, compliance is required with the lowest applicable
VOC content level except for the following:
(1) High temperature coatings that may also be suitable for use as
metallic pigmented coatings are subject only to the VOC level for high
temperature coatings;
(2) Lacquer sanding sealers that may also be suitable for use as
sanding sealers in conjunction with clear lacquer topcoats are subject
only to the VOC level for lacquer sanding sealers;
(3) Metallic pigmented coatings that may also be suitable for use
as roof coatings, industrial maintenance coatings, or primers are
subject only to the VOC level for metallic pigmented coatings;
(4) Shellacs that may be marketed as primers, sealers, or
undercoaters are subject only to the VOC level for shellacs;
(5) Fire-retardant/resistive coatings that may be suitable for use
as any other architectural coatings are subject only to the VOC level
for fire-retardant/resistive coatings;
(6) Pretreatment wash primers that may be suitable for use as
primers are subject only to the VOC level for pretreatment wash
primers; and
(7) Industrial maintenance coatings that may also be primers are
subject only to the VOC level for industrial maintenance coatings.
These exceptions were developed to clarify the applicable VOC level
in situations where inherent overlap exists between category
definitions, and the least stringent VOC level is meant to apply.
Manufacturers or importers of ``recycled'' architectural coatings
collect, reprocess, and market coatings that contain a percentage of
post-consumer coating product. Such use is environmentally beneficial
because it reduces the magnitude of waste from architectural coatings.
Manufacturers and importers of recycled coatings are given the option
of calculating an ``adjusted VOC content.'' The ``adjusted VOC
content'' provides some credit for the amount of post-consumer material
contained in the coating. The EPA is providing this credit to encourage
recycling of unused paint. The ``adjusted VOC content'' is determined
by multiplying the percentage of post-consumer content of the coating
by the VOC content of the recycled coating, which can then be
subtracted from the VOC content of the recycled coating. An explicit
equation for the calculation is in the proposed rule.
D. Compliance Requirements
1. Compliance Dates
The compliance date for all manufacturers and importers is April 1,
1997. In draft versions of the proposed rule, the compliance date for
small manufacturers and small importers was January 1, 1998. Small
manufacturers and small importers were defined as manufacturers and
importers with annual gross revenues in 1995 of less than $10 million,
and total gross revenues in 1995 from sales of all products of less
than $50 million. This extra compliance time has been eliminated from
the proposed rule due to the inclusion of less stringent VOC levels for
some of the largest categories of architectural coatings, and the
inclusion of a variance provision described in sections II.I and V.F.
These provisions are expected to provide sufficient compliance
flexibility needed by small manufacturers. However, the EPA requests
comment on whether the final rule should include the small manufacturer
compliance extension. If such a provision were included, the VOC
reduction achieved by the proposed rule in 1997 would be reduced from
20 percent to approximately 15 percent. The EPA also requests comment
on the adequacy of the compliance lead time for all affected sources.
Comments supporting extra compliance time for all manufacturers and
other affected sources should include supporting data providing
economic and/or technological justification.
2. Compliance Methods
Compliance with the VOC content levels in the proposed rule is to
be determined on a coating-by-coating basis. To determine compliance
with the VOC levels in Table 1, manufacturers or importers would first
be required to determine the coating category, the applicable VOC
level, and the VOC content for each coating product manufactured or
imported. An initial report is required for all manufacturers and
importers subject to the rule. Other labeling, recordkeeping, and
reporting requirements are summarized in sections II.E, II.F, and II.G,
respectively. Test methods to be used to determine VOC content of the
coatings are described in section II.H.
E. Labeling Requirements
With the exception of low solids stains and low solids wood
preservatives, containers of all subject coatings must bear labels or
lids that include the following information:
(1) The date of manufacture or a code indicating the date of
manufacture;
(2) The maximum VOC content of the coating in the container,
displayed in units of grams of VOC per liter of coating thinned to the
manufacturer's maximum recommendation, excluding the volume of any
water, exempt compounds, or colorant added to tint bases; and
(3) A statement of the manufacturer's recommendation regarding
thinning with organic solvents. Containers of low solids stains and low
solids wood preservatives must bear labels or lids that include the
following information:
(1) The date of manufacture or a code indicating the date of
manufacture;
(2) The maximum VOC content of the coating in the container,
displayed in units of grams of VOC per liter of coating thinned to the
manufacturer's maximum recommendation, including the volume of any
water and exempt compounds; and
(3) A statement of the manufacturer's recommendation regarding
thinning with organic solvents.
[[Page 32733]]
Containers of industrial maintenance coatings, in addition to the
labeling requirements for all subject coatings, must include on the
container label or lid the phrase ``NOT INTENDED FOR RESIDENTIAL USE.''
Containers of recycled architectural coatings, in addition to the
labeling requirements for all subject coatings, must include on the
label or lid a statement of the percentage, by volume, of post-consumer
coating content. This prerequisite must be met to be able to determine
compliance using an ``adjusted VOC content.''
The EPA considered requiring the following statement on every label
or lid of architectural coatings: ``This architectural coating contains
volatile organic compounds that will be emitted to the ambient air
during use and, under certain environmental conditions, these compounds
may contribute to the formation of ground-level ozone, an air pollutant
and major component of urban smog.'' As an alternative to this
requirement, the EPA is considering undertaking an educational effort
directed at informing the public about the role of VOC emissions from
architectural coatings in the formation of ground-level ozone. The EPA
requests comment on whether an outreach effort would be as effective an
approach as an educational statement on each container of architectural
coating.
The EPA is aware that many architectural coating labels currently
display information on the amount of coverage that the coating is
expected to provide. The EPA is considering requiring this information
to be displayed on the labels or lids of all architectural coating
containers. Both coating coverage and VOC content information are
necessary to allow a consumer to estimate and compare the expected
resulting VOC emissions from application of different coatings to
complete a particular job. This information on coating coverage would
allow consumers to make an informed choice between coatings. The EPA
requests comment on the feasibility of requiring coverage information
to be displayed on the label or lid of all architectural coating
containers subject to this rule.
F. Recordkeeping
Except for recycled coatings, there are no proposed recordkeeping
requirements. For recycled coatings, manufacturers and importers must
keep the following records for three years:
(1) The minimum percentage of post-consumer coating content for
each recycled coating product;
(2) Calculation of an adjusted VOC content that accounts for the
post-consumer coating content credit;
(3) The volume of coating received for recycling;
(4) The volume of coating received that was unusable;
(5) The volume of virgin materials; and
(6) The volume of the final recycled coating manufactured.
G. Reporting
Manufacturers and importers of coatings subject to the proposed
standard must file an initial report. The initial report must be
submitted by April 1, 1997 or within 180 days after becoming subject to
the requirements of the proposed standard, whichever is later. The
initial report must include the following information:
(1) Name and mailing address of the manufacturer or importer; and
(2) A list of categories from Table 1 in which coatings are
manufactured or imported.
For recycled coatings, manufacturers and importers must submit an
annual report by February 1 of the calendar year following the year in
which the coatings are introduced into commerce that includes the
following:
(1) The volume of coating received for recycling;
(2) The volume received that was unusable;
(3) The volume of virgin material used;
(4) The volume of the final recycled product; and
(5) The minimum post-consumer content of the coating.
Reporting requirements for the variance application are discussed
in II.I.
In cases where a code is used to indicate the date of manufacture,
all manufacturers and importers of architectural coatings must file an
explanation of each date code displayed on coating containers by April
1, 1997. Explanations of new codes must be filed within 30 days after
their first use.
H. Test Methods
For purposes of determining compliance with this rule, the VOC
content of each coating product manufactured or imported must be
determined using the EPA's Reference Method 24, ``Determination of
Volatile Matter Content, Water Content, Density, Volume Solids, and
Weight Solids of Surface Coatings,'' found in 40 CFR part 60, appendix
A. Analysis of waterborne coating VOC content determined by Reference
Method 24 must be adjusted as described in section 4.4 of Method 24.
Manufacturers and importers may use alternate methods for
determining coating VOC content if it can be demonstrated to the
Administrator's satisfaction that the method provides results
equivalent to or more accurate than those obtained using Reference
Method 24.
I. Variance
The proposed rule also allows manufacturers and importers of
architectural coatings to submit a written application to the
Administrator requesting a variance if, for reasons beyond their
reasonable control, they cannot comply with the requirements of the
proposed rule. The application must include the following information:
(1) The specific grounds for which the variance is sought;
(2) The proposed date(s) by which compliance with the provisions of
the rule will be achieved; and
(3) A compliance report reasonably detailing the method(s) by which
compliance will be achieved.
Upon receipt of the variance application, the Administrator will
hold a public hearing to determine whether, under what conditions, and
to what extent, a variance from the requirements of the proposed rule
is necessary and will be permitted.
The Administrator may grant a variance if the following criteria
are met:
(1) By complying with the proposed rule, the applicant would bear
unreasonable economic hardship;
(2) The public benefit of avoiding hardship to the applicant
outweighs the public interest in any increased emissions or air
contaminants that would result from issuing the variance; and
(3) The proposed compliance schedule can be reasonably implemented,
and compliance will be achieved as expeditiously as possible.
The approved variance order will designate a final compliance date
and a condition that specifies increments of progress necessary to
assure timely compliance. A variance shall end immediately upon the
failure (of the party to whom the variance was granted) to comply with
any term or condition of the variance.
III. Summary of Impacts
A. Environmental Impacts
This section contains a discussion of the incremental increase or
decrease in air pollution, water pollution, and solid waste generation
that would result from implementing the proposed standards.
[[Page 32734]]
1. Air Pollution Impacts
The proposed standards would reduce annual nationwide emissions of
VOC from the use of architectural coatings by an estimated 96,000
megagrams (Mg) (106,000 tons) beginning in 1997. These reductions are
compared to the 1990 baseline emission estimate of 480,000 Mg (530,000
tons) and represent emissions that would occur in the absence of the
proposed standards.
Because the VOC emissions from architectural coatings include a
large class of compounds that are expected to be associated with a wide
spectrum of health effects, reductions in VOC from architectural
coatings would result in a decrease in the associated health effects.
Because many regulated VOC species are also hazardous air
pollutants (HAP), the proposed standards are expected to reduce some
HAP emissions from the use of architectural coatings. An increase in
the use of HAP in product formulation is not expected to occur as a
result of the proposed standards. Data on speciated VOC content from
the VOC Emissions Inventory Survey show no pattern of higher HAP
concentrations in lower VOC formulations.
2. Water and Solid Waste
The major compliance method for this rule will be the use of
compliant coatings. No adverse solid waste impacts are anticipated from
compliance with this rule. It is not expected that the disposal of
coatings as solid waste will increase as a result of this rule. In
fact, because the compliant (higher solids) coatings are more
concentrated, fewer containers will require disposal when the same
volume of solids is applied.
Some provisions in this proposed rule have the potential to reduce
the amount of coating discarded as solid waste. Recycling of coatings
may be encouraged through two provisions. The rule includes a provision
that allows an ``adjusted VOC content'' to be calculated for recycled
coatings for compliance purposes. This adjustment essentially allows a
higher VOC content standard for coatings that contain post-consumer
coating. The rule also exempts any coatings distributed through
community-based paint exchanges.
In cases where conversion from solventborne to waterborne coatings
is the method used to achieve compliance, an increase in wastewater
discharge may occur if waste waterborne coatings are discharged to
publicly owned treatment works.
B. Energy Impacts
No adverse energy impacts are anticipated from compliance with this
rule. No add-on controls are required.
C. Cost and Economic Impacts
By establishing a set of product-specific levels for VOC content,
the proposed regulations have cost implications for manufacturers and
consumers of the affected products. In 1997, manufacturers of
architectural coatings that do not meet the VOC levels in Table 1 will
be required to reformulate products or remove products from the market
(or participate in an alternative compliance mechanism such as an
exceedance fee). It is presumed that manufacturers will choose the
option that is most advantageous to them, but each option imposes
costs, some of which will be passed on to other members of society
(consumers) in the form of higher prices and some of which will be
borne directly by the manufacturers.
The cost for reformulating noncompliant products depends on the
level of effort required to develop a new product (e.g., research and
development and market testing expenditures) and how these expenditures
are incurred over time. Data on level of effort were provided to the
regulatory negotiation committee (see section IV.B for discussion of
the negotiation) for prototype reformulations, from which an annualized
cost estimate of approximately $17,772 (in 1991 dollars) per
reformulation was computed. This cost is assumed to be independent of
the annual sales volume of the product. Other costs and cost savings
associated with reformulation are likely, but could not be quantified.
Unquantified costs include material cost changes and changes in
disposal costs.
An economic impact analysis of the proposed regulatory requirements
was performed. Potential cost, price, and output effects for the
architectural coatings industry were examined for the proposed table of
VOC levels. The economic analysis also evaluated the option of
utilizing an exceedance fee, which is an alternative compliance
mechanism that is discussed in detail in section V.D. However, the
analysis did not consider the impact of any variances or low volume
exemptions that may be granted to reduce impacts.
The cost analyses performed were based on data from the 1990 VOC
Emissions Inventory Survey. These survey data represented approximately
75 percent of the total volume of architectural coating products
produced in 1990. For the products in the survey population, the
estimated average annualized cost, if all products exceeding the VOC
levels were reformulated to meet the standard, is $260 per ton of VOC
emissions reduction (in 1991 dollars). This value is extrapolated to
the national population for the cost and economic analysis.
With exceedance fees as an option, it was estimated that
manufacturers would choose to pay fees for approximately 12 percent of
products instead of incurring reformulating costs or exiting the market
in 1997. These products only account for about 2 percent of industry
output, so the foregone emissions reduction by allowing the fee is less
than 0.8 percent (2,308 tons) of estimated baseline emissions. However,
the fee reduces national reformulation costs by roughly 50 percent.
Thus, it is anticipated that the exceedance fee provision could allow
significant cost savings while sacrificing little in the way of
emissions reduction.
The estimated market effects from the proposed standards are
relatively slight. In 1997, approximately one million liters of
architectural coating products, accounting for less than one-tenth of
one percent of industry product volume, are projected to withdraw from
the market. Price effects in each market ranged from no effect to an
increase of less than two cents per liter, which is still less than a
one percent increase of the baseline price. Average price and quantity
effects across all market segments were each less than one-tenth of one
percent of baseline values.
Although relatively little product volume is projected to be
withdrawn or subject to an exceedance fee, the remaining volume is
subject to reformulation and bears the associated cost. The estimated
cost to society of the regulation is approximately $25.0 million per
year (evaluated in 1991 dollars, excluding reporting and recordkeeping
costs, and costs to the EPA). These cost estimates amount to roughly
0.4 percent of baseline revenues for the industry. With the exceedance
fee alternative compliance mechanism, the estimated annual cost
decreases to $13 million, which equates to a savings of $12 million.
Resource constraints preclude an evaluation of foreign trade
impacts. However, according to a 1992 study by SRI International,
importers accounted for less than one percent of total coating sales
volume in 1990. Due to importers' small market presence and the lack of
detailed product data on imported coatings, importers have not been
included in the cost and economic impacts analysis. However, all of the
[[Page 32735]]
flexible compliance options that are available for manufacturers are
also available for importers. The EPA solicits comment on the potential
cost and economic impacts of this rule on importers.
As discussed earlier in this section, the estimated national cost
for the regulation is based on information developed by industry
representatives during the regulatory negotiation. The assumption in
estimating these costs was that coating technologies would need to be
researched and developed in the laboratories of resin manufacturers/
suppliers and paint manufacturers in order to meet VOC requirements.
Although the proposal is significantly less stringent than the
potential requirements discussed during negotiations (which would have
been implemented in three phases), the EPA has relied on these same
reformulation cost estimates for calculating the national cost of the
proposed rule. Given that the rule has similar VOC content requirements
to State rules which have been enforced since 1990, the EPA believes
the reformulation estimates used may be overstated. Since the proposed
rule is implementing available resin technologies, the cost to comply
for those manufacturers needing to reformulate their higher VOC
coatings is expected to be partially reduced through the assistance of
resin manufacturers/suppliers. Upon request, most resin suppliers are
willing to share information and sample low VOC coating formulations
with interested paint manufacturers, both large and small. In addition,
another limitation in the cost data is that no distinction for
reformulation cost is made between categories (i.e., the reformulation
cost in one category is the same as the reformulation cost in any other
category), or in relation to the required VOC content reduction (i.e.,
it does not distinguish between coatings at different VOC levels above
the limit). The EPA requests comment and technical information on
previous (since 1990) or potential reformulation costs. Commenters on
this topic should provide detailed information specific to a given
category and VOC content level change (e.g., total number of
noncompliant products within each category, VOC content and sales
information for each noncompliant product, the applicable category, and
the estimated cost of reformulation). The EPA also requests historic
information about product reformulations and reformulation costs in
response to State and local architectural coating regulation. In
addition, information is requested on any changes in variable (e.g.,
raw material) costs or disposal costs associated with manufacturing
coatings to meet the proposed VOC levels.
D. Cost-Effectiveness
The EPA often compares the relative cost of different measures for
controlling a pollutant by calculating the ``cost-effectiveness'' of
the measures. Using the EPA's traditional calculation methodology, the
cost-effectiveness of a regulation that applies nationwide is based on
a comparison of national costs and nationwide emission reductions. This
comparison is expressed as the cost per Mg (or ton) of emissions
reduced. Using social cost and emission reduction figures presented
earlier in this section of the preamble, the nationwide cost-
effectiveness of the proposed regulation is $260 per Mg ($237 per ton).
Alternative ways to calculate a measure of the ``cost-
effectiveness'' of the regulation have been suggested by others. One
alternative would be to calculate cost-effectiveness on the basis of
the nationwide cost of the regulation ($25 million for the proposed
regulation) and the VOC reduction achieved in ozone nonattainment
areas. The stated rationale for this approach is that cost-
effectiveness measures should be designed in a way that best represents
the objective of the regulatory action. In this case, for example, a
major objective, though not the only objective, of these regulations is
the control of ozone formation in nonattainment areas. By establishing
nationwide standards, the cost of achieving emission reductions in
ozone nonattainment areas during the ozone seasons requires nationwide
expenditures during all seasons of the year, including expenditures
year-round in areas currently in attainment with the current standard.
These nationwide emission reductions--including emission reductions
outside of nonattainment areas and out of the ozone season--may or may
not contribute to efforts to limit ozone in nonattainment areas,
depending on whether they participate in ozone transport from one area
to another.
The proposed standard will achieve 42,341 Mg of VOC emission
reductions in ozone nonattainment areas. Thus, the cost-effectiveness
of the rule in limiting VOC emissions in nonattainment areas would be
$590/Mg ($538/ton). It has been suggested that cost-effectiveness could
also be calculated considering the seasonality of ozone formation, and
the EPA requests comment on this approach.
While such an approach offers a measure of the cost of emission
reductions in nonattainment areas, the EPA sees significant drawbacks
to this approach. First, cost-effectiveness figures would no longer
provide a consistent basis for comparison of the relative cost of
different control measures or regulations considered at different
points in time. Because the number and location of nonattainment areas
changes frequently, the initial calculation of the cost-effectiveness
of a rule would depend upon when it was issued. The EPA believes it is
important that cost-effectiveness be calculated in a consistent manner
that allows for valid comparisons. Also, introducing new methodology
would tend to make new control measures appear superficially to be less
cost-effective than measures utilized in the past, simply because of a
change in well-established terminology.
Second, this alternative approach attributes all costs of the rule
to emission reductions achieved in nonattainment areas and no cost to
emission reductions achieved in attainment areas. By not including
emission reductions in attainment areas, the methodology assumes that
emission reductions in areas which attain the NAAQS for ozone have no
value. In fact, attainment areas often contribute to pollution problems
in nonattainment areas through the transport of emissions downwind.
Also, emission reductions in attainment areas help to maintain clean
air as the economy grows and new pollution sources come into existence.
Furthermore, measures to reduce emissions of VOC often reduce emissions
of toxic air pollutants.
Another alternative that has been suggested would be to calculate
not only the emission reductions but also the cost if the requirements
applied only in ozone nonattainment areas, perhaps through issuance of
control techniques guidelines (CTG). A request for comment and further
information on the use of a CTG is discussed in section V(J)(2) of this
notice.
The EPA requests comments on the traditional and alternative
methods discussed above to characterize the cost-effectiveness of this
regulation.
IV. Rulemaking Decision Process
A. Legislative Authority
Section 183(e) of the CAA gives the EPA the authority to establish
national standards to reduce VOC emissions from architectural coatings.
According to the CAA, regulations developed under this section shall
require best available controls (BAC). Best available
[[Page 32736]]
controls are defined in Section 183(e)(1)(A) as follows:
The term ``best available controls'' means the degree of
emissions reduction that the Administrator determines, on the basis
of technological and economic feasibility, health, environmental,
and energy impacts, is achievable through the application of the
most effective equipment, measures, processes, methods, systems, or
techniques, including chemical reformulation, product or feedstock
substitution, repackaging, and directions for use, consumption,
storage, or disposal.
Section V.C describes the EPA's determination of BAC for the proposed
regulation.
B. Regulatory Negotiation Procedure
1. Overview of the Regulatory Negotiation Process
The regulatory negotiation process is an alternative to the
traditional approach to rulemaking. Negotiations are conducted through
an advisory committee (hereafter ``the committee'') that consists of
representatives of the interests significantly affected by the outcome
of the regulation (e.g., industry, States, environmental groups, and
consumers). In this process, the EPA works closely with the members of
the committee to develop the regulation.
The goal of the committee is to attempt to reach consensus on
language or issues that can be used as the basis of a proposed rule. If
the committee fails to reach consensus, the EPA proceeds with its own
regulatory development approach.
2. History of the Architectural Coatings Regulatory Negotiations
The EPA recognizes that there are many issues and challenges in
developing, proposing, and promulgating a rule for this source
category. In early 1992, the EPA held three meetings with
representatives of the industry (including small and large
manufacturers), trade associations, resin suppliers, States, and
environmental groups to discuss the potential scope of the regulation
and issues, share information, determine data collection needs, and
assess whether a regulatory negotiation would be appropriate for this
industry.
On July 16, 1992, the EPA solicited comments on its intent to form
an advisory committee under the authority of provisions of the Federal
Advisory Committee Act (FACA), 5 U.S.C. app. II 9(c), and the
Negotiated Rulemaking Act (NRA), 5 U.S.C. Sections 581-590, to
negotiate a proposed regulation for architectural coatings, referred to
in the notice as AIM (architectural and industrial maintenance)
coatings. The EPA held a meeting in July 1992 to discuss the
feasibility of conducting regulatory negotiations to develop a
regulation for architectural coatings. Based on the interest of the
potentially affected parties and the EPA, the EPA decided to proceed
with the regulatory negotiation process. After publishing a notice of
establishment of the regulatory negotiation committee in the Federal
Register on October 2, 1992 (57 FR 45597), the first official
regulatory negotiation meeting was held in October 1992 (57 FR 45597).
The members of the regulatory negotiation committee represented the
affected industries, consumers, Federal agencies, State and local air
pollution control agencies, environmental groups, and labor
organizations. Regulatory negotiation meetings were held from October
1992 to February 1994. During the negotiation process, it became
evident that certain groups of committee members shared similar views
and interests. These groups were called ``caucuses.''
During the negotiations, most of the caucuses submitted proposed
regulations for review by the rest of the committee. Based on elements
from the caucus proposals and discussions, a number of ``frameworks''
for a potential regulation were prepared by the EPA and the facilitator
during the more than two years of negotiation. Despite these efforts,
the committee could not reach consensus on a regulatory framework.
Therefore, on September 23, 1994, the negotiations facilitator notified
each of the committee members that the regulatory negotiations were
concluded without consensus. Following this decision, the EPA continued
development of the rule. The EPA used the information obtained in the
negotiations to develop the proposed rule. The proposed rule
development was, therefore, assisted in part through the regulatory
negotiation. Specifically, information on the volume, VOC content, and
HAP content of coatings produced in 1990 was collected in the VOC
Emissions Inventory Survey conducted by industry. Categories and
definitions for architectural coatings were presented and discussed
both in caucus meetings and meetings of the entire committee.
V. Rationale
The following sections explain the rationale for selecting the
proposed standards.
A. Applicability
These proposed standards apply to all architectural coatings that
are manufactured or imported for sale or distribution in the United
States on or after April 1, 1997. Architectural coatings were
determined to be a significant source of VOC emissions in nonattainment
areas and were designated for regulation under the authority of Section
183(e) of the CAA.
In general, architectural coatings protect the substrates to which
they are applied from corrosion, abrasion, decay, ultraviolet light
damage, or the penetration of water. These coatings are recommended for
field application to stationary structures and their interior or
exterior appurtenances, portable buildings, pavement, and curbs. The
definition in the proposed regulation includes the term ``field
application'' and specifies ``stationary structures'' in order to
distinguish architectural coatings from those coatings applied at a
coating or recoating facility or other shop or maintenance facility.
Some architectural coatings have specialized functions. Concrete
form release compounds and concrete curing compounds are examples of
architectural coatings that are used during construction, rather than
being used for protecting or enhancing the finished structure. Fire-
retardant/resistive coatings and traffic marking coatings have
important public safety functions. Coatings may also increase the
aesthetic value of a structure by changing the color or texture of its
surface. Application of architectural coatings also decreases
maintenance costs associated with stationary structure replacement or
repair. Input received during negotiations from committee members was
used to take these economic, protective, safety, and aesthetic benefits
of architectural coatings into consideration in the development of
these proposed standards.
The proposed standards do not apply to some types of coatings.
There are exemptions for exported coatings, coatings manufactured or
imported prior to April 1, 1997, coatings that are sold in
nonrefillable aerosol containers, coatings that are collected and
redistributed at community-based paint exchanges, and coatings that are
sold in containers with a volume of one liter or less.
The purpose of Section 183(e) of the CAA is to control VOC
emissions that contribute to ozone nonattainment in the United States.
Because exported coatings do not contribute to VOC emissions in the
United States, and because the EPA has no legal or factual basis to
impose VOC control measures outside the United States, coatings
manufactured for the explicit purpose of export and which are in fact
exported
[[Page 32737]]
are exempt from the requirements of the proposed rule. Coatings
manufactured and imported prior to April 1, 1997 are exempted because
the compliance date for the proposed rule is April 1, 1997. An
exemption for coatings sold in nonrefillable aerosol containers is
included in the proposed rule because the EPA is addressing these
coatings separately under Section 183(e) authority. The reason is
because aerosol paint is considered a specialty paint product and
typically involves a specialized division within a paint company. In
addition, it is a complex category due to the many subcategories of
aerosol paint, and the range of options to reformulate include the
potential to change propellant formulations.
Community-based paint exchanges are programs in which the general
public may drop off and pick up post-consumer architectural coatings
(leftover paint), typically free of charge, and thereby reduce
household hazardous waste. The exchanges occur between users and not
manufacturers. Even though these coatings may be repackaged and the
proposed regulatory definition of ``manufacturer'' includes
repackagers, repackaging that occurs at community-based paint exchanges
is specifically excluded from the definition. These programs are
consistent with the EPA's pollution prevention policies and are
generally considered effective in minimizing waste. Because the EPA
wants to encourage this form of recycling, the EPA has excluded paints
exchanged in these programs from the proposed rule.
An exemption for products sold in containers with capacities of one
liter or less is included in the proposed rule as means for
manufacturers and importers to keep selected products on the market.
Similar exemptions are included in State regulations. Due to the
increased cost of packaging products in smaller size containers, and
the increased bulk of multiple containers, the EPA would not expect a
marked increase in the number of products sold in small volume
containers as a result of the exemption. No reporting or recordkeeping
would be required for this provision.
B. Regulated Entities
In contrast to traditionally regulated stationary sources that emit
VOC at a specific fixed location (e.g., a manufacturing plant), VOC
from architectural coatings are emitted wherever the products are used.
For this reason, regulating at the manufacturer and importer level is
the most efficient and least burdensome method of regulating the VOC
content of coatings, and would ultimately impact the VOC content of
architectural coatings at the distributor and end user level.
Regulated entities are defined under Section 183(e) to include
processors, wholesale distributors, and those entities that supply
manufacturers, processors, wholesale distributors, and importers.
However, regulated entities in this proposal are limited to
architectural coating manufacturers and importers.
The EPA is also considering including ``processors'' as a regulated
entity. Processors would be defined to include individuals who add
organic thinner to the coating in a commercial setting at the point of
application. Commercial settings would include industrial applications
of architectural coatings. This would allow the regulation to prohibit
an applicator from using organic solvents to thin a coating beyond the
manufacturer's recommendation. This is a concern because if an
applicator exceeds the maximum recommended thinning, expected VOC
reductions may not be achieved. The EPA requests comments on this
approach.
C. Selection of Best Available Controls (BAC)
The primary factors considered in determining BAC were
technological and economic feasibility, and environmental impacts.
Other factors, such as non-air-environmental impacts (solid waste and
water) and energy impacts, are expected to be minimal and therefore do
not vary significantly among various VOC control levels. Health impacts
are expected to parallel environmental impacts in terms of directional
benefit (i.e., as the environment improves, health improves).
The process of determining BAC for architectural coatings presented
a new challenge for the EPA. In the past, control levels for VOC
emissions from coatings were often established based on the ability to
use add-on controls. For architectural coatings, the method for
achieving VOC reduction is through reformulation, which is a pollution
prevention technique. Reformulation could involve minor adjustments in
coating formulation or larger adjustments involving a change in resin
technology.
The EPA considered many factors in evaluating economic and
technological feasibility of VOC levels (i.e., degree of
reformulation). These include State and local VOC requirements, VOC
content and sales information, technical information, performance
considerations, cost considerations, market impacts, and stakeholder
positions.
The discussion in section V.C.1 focuses on the general process used
to determine categories and VOC levels that constitute BAC. The
discussion in V.C.2 describes the selection of BAC. The determination
of what constitutes BAC by April 1, 1997 involved consideration of what
is economically and technologically feasible in light of the lead time
available for compliance.
1. Process for Selection of BAC
The process of determining BAC began with the collection of
information from existing State and local architectural coating
requirements. The EPA focused generally on existing categories and
associated VOC limits in State architectural coating rules to determine
what categories and VOC levels might constitute the degree of emissions
reduction that represents BAC. Since California has been regulating
architectural coatings for almost two decades and generally has the
most stringent VOC limits in the country, some California air quality
management district regulations were gathered and the record underlying
these regulations was analyzed. The EPA recognizes that what is
achievable now in California cannot necessarily be used to extrapolate
what is achievable nationwide in 1997. Adequate consideration must be
given to lead time, and any other factors that may influence the
ability to apply requirements nationwide (e.g., climate
considerations).
After analyzing existing standards, the EPA reviewed the data from
the Emissions Inventory Survey that was developed during the regulatory
negotiation process. The regulatory negotiation committee developed the
survey that was administered through an industry trade association.
This survey accounted for roughly 75 percent of the volume of
architectural coatings sold in 1990. The survey data included
information on the volume and VOC content of coatings. Manufacturers
were surveyed primarily using a system of coating categories that form
the basis for existing rules in several California districts. The
survey data were used to identify the minimum VOC contents needed for
certain applications and/or resin types as well as to determine the
feasibility of establishing lower VOC levels for various categories
based on the distribution of coating sales with respect to different
VOC content levels.
The EPA also relied on technical input and information received
during the regulatory negotiation process to
[[Page 32738]]
determine BAC. The EPA considered information that was submitted to the
docket by coating manufacturers and other members of the general public
during the course of the regulatory negotiations, and definitions for
categories found in other EPA regulations. The expertise of the EPA's
engineering staff also was used to develop the appropriate definitions
that would minimize overlap and specify characteristics so that
manufacturers and enforcement personnel can identify the applicable
category for each coating on the market.
The Emissions Inventory Survey did not provide data to answer the
question as to whether coatings at a given VOC level can meet all the
performance needs within a particular category. Ideally, coating
performance data in addition to VOC content and sales data would have
been gathered to better aid this type of determination. Collection of
performance data, however, is complicated due to the subjective nature
of performance requirements. ``Acceptable'' performance is difficult to
evaluate. In evaluating potential emissions of VOC into the
environment, acceptable performance means durable coatings with
qualities acceptable to the consumer that would maximize the interval
between required repaintings. These acceptable qualities can vary
significantly depending on the consumer and the coating category. For
example, durability might be of limited value in evaluating house paint
since a house paint may be painted over due to extraneous factors such
as resale of the house or redecorating long before the coating begins
to fail. For coatings used in an industrial setting, such as high
temperature and industrial maintenance coatings, repainting is more
dependent on durability considerations. A variety of performance levels
within most coating categories presently exist in the marketplace and
will continue to exist after regulation.
Because there is no consensus within the architectural coating
industry on standards by which to evaluate acceptable coating
performance, it was not obvious what performance data could be gathered
to permit comparison. The EPA relied to some extent on input from the
negotiation committee to determine the BAC VOC level within each
coating category that would allow customer performance needs to be met.
Beyond that, the EPA also relied on the survey results as support for
its conclusions about the achievability of various VOC levels in light
of performance needs. Although the EPA recognizes that the authority
under Section 183(e) does not limit BAC determination to coatings
available in the marketplace today, availability and the fact that
customers are purchasing coatings at a particular VOC content level to
meet their performance needs were significant factors in the EPA's BAC
determination process.
While low VOC coatings are available today which meet the proposed
coating VOC limits, there continues to be debate over the performance
characteristics and perceived limitations of low VOC architectural
coatings. This issue was raised by some industry representatives during
development of the proposed rule. Specifically, it has been argued that
low VOC content levels may be counterproductive if the use of coatings
with reduced VOC results in more coating applied, more thinners needed,
and more frequent recoating, and consequently, more emissions. This
argument has been made broadly, without detail as to the VOC content
levels to which it pertains or the categories involved. The EPA is
aware of numerous examples of low VOC systems which perform better than
the traditional higher VOC systems and which result in less emissions.
The EPA requests documentation, test results, or factual evidence which
either supports or refutes claims about performance changes in coatings
with VOC contents that comply with the proposed standards.
In addition, the EPA relied on the background and expertise present
within the Agency to make decisions regarding category selection and
corresponding VOC content levels. The EPA has developed VOC standards
and guidance documents for different sectors of the paint industry
since 1977. The EPA has expertise in analysis of control techniques for
coatings and in developing test methods for coatings, including the
test method used to determine the VOC content of coatings (Method 24).
The BAC selection process involved both selection of categories and
determination of VOC content levels. These components are linked in a
determination of what degree of emissions reduction represents BAC.
Decisions to subdivide a given category into more specific
subcategories can be a direct consequence of the VOC content levels
under consideration. For example, the industrial maintenance coating
category is fairly broad and encompasses many industrial coating
applications. As the technological and economic feasibility of lower
VOC content levels are considered for the industrial maintenance
category, coatings within a particular application may not be able to
meet the VOC level under consideration. Rather than establish the VOC
level high enough to allow this particular application, the category
can be subdivided to create another category that would then allow the
achievable VOC content for industrial maintenance to be lower. For
example, the ``high temperature coating'' category was created to allow
a more stringent VOC level for the broader category of ``industrial
maintenance coatings,'' which otherwise would have included high
temperature coatings. Rather than raise the VOC content level for all
the industrial maintenance coatings to ensure that high temperature
coatings could achieve this level, the EPA created a separate, less
stringent VOC level for high temperature coatings while maintaining the
more stringent level achievable for other types of industrial
maintenance coatings. Thus, it is possible to achieve lower VOC levels
and greater emission reductions while still meeting the performance
needs of some coating categories by further subdividing particular
categories. Stains and wood preservatives have both been subdivided
into clear and semitransparent, and opaque coatings. This subdivision
of categories helps preserve markets while still achieving emission
reductions.
During development of the proposed rule, some industry
representatives provided requests for particular categories to be
created and given a higher VOC level than the VOC level for the more
general category in which it would otherwise be grouped. Categories for
which adequate justification was presented appear in the proposed rule.
However, in cases where significant overlap between the requested
category and other existing categories was apparent and the overlap
could be expected to undermine the degree of emission reductions
achieved, the category was not included in the proposal. The categories
and definitions in the proposed rule are roughly consistent with the
categories and definitions presented during negotiations.
For the BAC determination, the EPA generally focused on the coating
categories that contribute the largest amount of VOC to the
environment.
2. Determination of BAC
A primary consideration affecting the selection of VOC content
levels that EPA believes represent BAC was the need expressed by many
industry and regulatory stakeholder representatives to proceed with
development of these standards as quickly and expeditiously
[[Page 32739]]
as possible. State and local agencies and representatives of industry
who market products in different States have expressed concern about
the lack of Federal VOC standards for architectural coatings. For this
reason, the EPA has focused on establishing VOC levels that would take
effect in 1997. An expedited rulemaking process for this proposed rule
is necessary to fulfill the expectations and reliance of the States and
to give coating manufacturers timely notice of requirements. Therefore,
EPA based the BAC determination on VOC content levels that could be
achieved in a short time frame (by April 1, 1997). As discussed in
section II.D.1 of this preamble, EPA requests comment on the adequacy
of this compliance lead time.
The EPA attempted to gather specific information with which to
determine the technological and economic feasibility of different VOC
limits that would take effect in 1997. The following paragraphs discuss
this information and how EPA used it to determine BAC.
Fourteen categories which appear in the proposed rule and which are
found in existing State standards were included in a list of categories
developed during the regulatory negotiation referred to as ``low
volume.'' These are anti-graffiti coatings, bituminous coatings and
mastics, bond breakers, concrete curing compounds, fire-retardant/
resistive coatings (clear/pigmented), form release compounds, graphic
arts coatings (sign paints), high temperature coatings, magnesite
cement coatings, mastic texture coatings, multi-color coatings, pre-
treatment wash primers, sanding sealers, and swimming pool coatings.
The VOC content levels in Table 1 for these categories are in the upper
range of the VOC content limits found in existing State rules. The
industry argued that these coatings represent unique compositions and
specialized uses, and the imposition of lower VOC levels on these
categories would probably result in an adverse economic impact on the
manufacturers and may even have a disproportionate effect on small
manufacturers. Because these coatings are used in relatively low
volumes and in a limited range of circumstances, the EPA has determined
that it should set VOC levels for these coatings based on the
justification presented by the industry and that additional effort to
collect more data is not warranted in the development of this proposal.
After proposal, the EPA plans to reevaluate the feasibility of more
stringent VOC levels for these categories as part of the joint study
with industry that is described in section VI.
In addition to the 14 ``low volume'' categories discussed, the VOC
Emissions Inventory Survey contains 12 categories that represent about
75 percent of the VOC emissions (industrial maintenance, interior
nonflat, exterior nonflat, clear and semitransparent stains, clear
waterproofing sealers and treatments, interior flat, roof coatings,
primers and undercoaters, traffic markings, exterior flat, varnishes,
and lacquers). For these 26 categories and an additional 15 categories
contained in the survey, sales and VOC content data indicate that
coatings are available that can achieve the VOC content levels listed
in Table 1. The fact that the survey reveals that coatings are
available that meet today's proposed standard is one factor that
supports the conclusion that these coatings are economically and
technologically feasible.
During regulatory negotiation discussions of potential VOC content
limits, 17 additional specialty coating categories were added to the
list of categories under consideration. These categories were generally
offered as a result of discussion of specific VOC content levels for
more general and broad categories such as industrial maintenance
coatings. These specialty coating categories did not appear in any
existing State architectural coating regulation and, excepting high
performance architectural coatings, were not categories for which data
were collected in the VOC Emissions Inventory Survey. These 17
categories include alkali-resistant primers, antenna coatings,
antifouling coatings, chalkboard resurfacers, concrete protective
coatings, extreme high durability coatings, floor coatings, flow
coatings, heat reactive coatings, high performance architectural
coatings, impacted immersion coatings, lacquer stains, nonferrous
ornamental metal lacquers and surface protectants, nuclear coatings,
repair and maintenance thermoplastic coatings, rust preventative
coatings, and thermoplastic rubber coatings and mastics.
Fourteen of these 17 additional specialty coating categories appear
in today's proposal because discussion during negotiations and/or
petitions from individual companies provided support for inclusion of
these categories and an associated VOC content level separate from the
broader category and level to which they otherwise would have been
assigned. No data were available to the EPA to conclude that lower VOC
content levels for these categories would represent BAC.
Three of these 14 categories which appear in the rule, antenna
coatings, antifouling coatings, and nuclear coatings, were assigned VOC
content levels consistent with those found in the EPA's National
Emission Standards for Hazardous Air Pollutants for Shipbuilding and
Ship Repair (59 FR 62681). These VOC levels were based primarily on
information contained in the EPA's Alternative Control Techniques (ACT)
Document: ``Surface Coating Operations at Shipbuilding and Ship Repair
Facilities,'' EPA-453/R-94-032.
Two of the three specialty categories that do not appear in the
proposed rule are alkali-resistant primers and lacquer stains. Although
the EPA considered inclusion of alkali-resistant primers based on
requests from some manufacturers, it was excluded for two reasons.
Significant overlap between alkali-resistant primers and the more
general primer category is apparent, and comments were received about
the ability of latex coatings (lower VOC coatings) to perform the
function of alkali-resistant primers. For lacquer stains, although
arguments were presented about the need for the category, the overlap
between lacquer stains and the more general stain categories would
allow the higher VOC lacquer stain for uses in which lower VOC stains
would be acceptable substitutes. In order to attain the degree of
emission reductions achievable, these categories are excluded in the
proposed rule. The coatings that would have been classified into these
categories would be subject to the VOC level of the more general
category of either primers or stains, as applicable.
The third coating category that was surveyed in the VOC Emissions
Inventory Survey, but does not appear in the proposed rule, is ``high
performance architectural (HPA) coatings.'' Several industry proposals
presented to the regulatory negotiation committee contained a
definition and VOC standard for HPA coatings with subcategories for
concrete protective coatings, floor coatings, and rust preventative
coatings. However, the information available to the EPA does not
support a need for a broad HPA category. Rather than including a
separate, broad category of HPA coatings, the proposal contains
separate definitions and VOC levels for concrete protective, floor, and
rust preventative coatings. These subcategories were specifically
identified during negotiations, and arguments were presented for VOC
levels and definitions. These categories have specific performance
requirements such
[[Page 32740]]
as prevention of water and chloride ion intrusion (concrete protective
coatings), abrasion resistance (floor coatings), and prevention of the
corrosion of metals (rust preventative coatings).
In April 1995, architectural coating industry representatives
submitted recommended VOC content limits for BAC to the EPA. These
industry representatives reported that these limits were developed
based on extensive negotiations within the industry to determine what
is economically and technologically feasible. Today's proposed VOC
requirements are consistent with those in the proposal submitted by
these industry representatives.
The EPA requests comment and any supporting data on the
appropriateness of inclusion or exclusion of the 17 additional
specialty categories and the VOC content levels assigned to all of the
categories included in the proposed rule. For comments supporting
exclusion of a category, the supporting argument should include data to
show why the category under consideration could be expected to meet
(consistent with performance needs) the VOC levels applicable to the
more general category to which it would revert back in the absence of
the specific category. For comments supporting inclusion of a category,
the request should be accompanied by a detailed explanation of the need
for the category, and data on why lower VOC coatings would not be
acceptable substitutes.
In addition, the EPA requests information on any coating category
where recent progress in low VOC resin systems has resulted in new low
VOC coatings being introduced into the market since 1990. The EPA
requests comments on the ability of coatings with VOC content levels
lower than those in Table 1 to meet the performance needs within the
category.
D. Exceedance Fee Approach
An exceedance fee economic incentive approach is being considered
for inclusion in the architectural coating rule. Under this approach,
manufacturers and importers would have the option of paying a fee,
based on the amount that VOC content levels are exceeded, instead of
achieving the VOC content levels listed in Table 1.
The fee would be calculated at an initial rate of $0.0028 per gram
($2,500 per ton) of VOC in excess of the applicable VOC level,
multiplied by the volume of coating produced. For example, if a coating
is 50 grams of VOC per liter over the applicable VOC standard, the fee
rate would be approximately 14 cents per liter ($.0028 per gram
multiplied by 50 grams per liter). The fee rate is in the upper end of
the range of the incremental VOC reduction cost imposed by VOC
regulations for other source categories. The EPA believes this rate is
appropriate because the exceedance fee rate is intended to provide
compliance flexibility, but also be high enough to encourage
reformulation to meet the applicable VOC level. This rate would be
adjusted for inflation periodically.
For all but two categories, the volume of coating produced is
determined excluding the volume of any water, exempt compounds, or
colorant added to tint bases to be consistent with the units of the VOC
content level. For the two ``low solids'' categories (low solids stains
and low solids wood preservatives), the volume is determined
``including water and exempt compounds'' to be consistent with the
units of the VOC content level for these coatings. The exceedance fee
would be paid quarterly to the Administrator and would be due no later
than two months after the end of the quarter in which the coating is
manufactured or imported.
The fee option could be expected to provide transition time for
those manufacturers that desire additional time to obtain lower VOC
technologies. It could also provide a less costly compliance approach
for manufacturers selling very low volume products.
Under the exceedance fee approach, manufacturers and importers
would be required to keep records and submit reports detailing the
following information for all coatings for which fees are paid: VOC
content, excess VOC content above the standard, volume of product
manufactured or imported, product quarterly fee, and the total
quarterly fee for all products.
Section 183(e) specifies that fees collected must be deposited in a
special fund. Specifically, under Section 183(e)(5) of the CAA, funds
collected pursuant to the regulation of consumer and commercial
products:
* * * shall be deposited in a special fund in the United States
Treasury for licensing and other services, which thereafter shall be
available until expended, subject to annual appropriation Acts,
solely to carry out the activities of the Administrator for which
such fees, charges or collections are established and made.
The Congress, through the annual appropriations process, will
determine whether and how to spend any fee revenues collected. The
Administrator, however, may make recommendations to Congress concerning
use of any funds collected. Therefore, the EPA today seeks comment on
how the revenues should be spent should the proposed exceedance fee
option be promulgated as part of the final rule. The EPA believes that
it may be possible to construe the statutory language on potential uses
of the money either broadly, to authorize spending for a wide variety
of activities related to reducing ozone, or more narrowly. In
particular, the EPA requests comment on whether these revenues should
be used for:
(1) Grants or awards to promote the development of lower VOC
architectural coating technologies by private firms, or by other
governmental or nongovernmental entities;
(2) Purchase by the government of VOC emission reduction credits
from private firms or emission credit brokers;
(3) State and EPA administrative and enforcement costs in carrying
out architectural coating rules, or other rules to reduce VOC emissions
from consumer and commercial products; or
(4) Other possible uses.
In addition to comments on the use of exceedance fees, the EPA
seeks comment on the exceedance fee rate, and recordkeeping and
reporting associated with this option.
E. Low Volume Categories/Exemption
The EPA recognizes that there may be some low volume, specialty
niche products for which it may not be cost effective for either the
manufacturer or resin supplier to develop a lower VOC formulation. The
Agency addressed this concern during the regulatory negotiation by
developing many new specialty categories and definitions which have
been subsequently included in the proposed rule. To evaluate what
further steps may still be needed to accommodate niche coatings within
the proposed rule, the EPA requests detailed information on the
following: (1) Identification of any specialty coatings which do not
comply with Table 1. (specify coating category from Table 1 in which
the product would be classified) and that cannot be cost-effectively
reformulated, (2) the sales volume and VOC content of each identified
product, (3) detailed cost estimate for reformulation (e.g., man-years,
and product testing expected to be involved) and (4) whether a lower
VOC alternative product currently exists in the market which can
adequately substitute for the identified specialty product.
EPA will consider developing additional categories for newly
identified niche markets in the final rule. In addition, based on
reformulation cost, sales volume, and VOC emissions information
gathered in
[[Page 32741]]
response to the above request on low volume products, the EPA will
evaluate the option of a categorical exemption for any new or existing
low volume specialty categories. Alternatively, although no coating
manufacturers have requested that EPA consider a low volume exemption,
the EPA will consider establishing a low volume cut-off, under which a
coating may be exempt from regulation. These approaches would allow
these low volume, specialized products to remain on the market. Under
the low volume exemption concept, any manufacturer or importer may
request an exemption from the VOC levels in Table 1 for specialized
coating products that are manufactured or imported in quantities less
than a specified number of gallons per year. This exemption would
require an annual report, recordkeeping, and labeling.
A major issue with this type of an exemption is where to set the
cut-off. The EPA would design any low volume exemption to avoid
significant loss in emission reductions. The EPA has limited data with
which to evaluate an appropriate cut-off level. The EPA requests
comment on a cut-off in the range between 1,000 and 5,000 gallons per
year.
A manufacturer or importer applying for this type of exemption
would need to submit an annual report. This report would contain a
written request for the exemption, a list of the coating products for
which the exemption is being requested, a statement signed by a
responsible official that the sales of each product for which the
exemption is being requested will not exceed the cut-off established,
and documentation and a statement signed by a responsible official that
each product serves a specialized use which cannot be cost-effectively
replaced with another, lower VOC product. In addition, the report would
contain the following information for each product for which the
exemption is being requested: the name of the product, the specialized
use, the sales of the product in the previous year, and the VOC content
of the product. The EPA can waive this reporting requirement on a case-
by-case basis if the information from each year is essentially the
same. Whether or not reporting is waived, the company would be required
to keep records for a three year period sufficient to demonstrate upon
request that the product qualified for the exemption. A company that
sold more than the cut-off amount of a product for which the exemption
was claimed would be in violation of the rule and subject to the same
penalties as any company producing coatings in violation of the VOC
content limits.
In addition, the following statement would need to be placed on the
label or lid of each container of coating for which the exemption is
being applied: ``This is a specialized architectural coating produced
in volumes less than X gallons per year.'' The labeling requirement
would serve to identify these coatings to enforcement personnel.
The EPA's goal would be to set the volume cut-off for this
exemption low enough such that it would not significantly impact the
VOC emission reductions achieved by the rule, yet high enough such
that, if needed, it could be expected to be used by a number of smaller
manufacturers and importers for their low volume products.
The EPA requests comment on whether a low volume exemption would
have any disadvantages. Such an exemption might create an incentive for
some companies to circumvent the rule by taking a higher volume product
and marketing (with or without any variations in formulation) as
several separate products, each meeting the sales volume cut-off. Also,
some may perceive that a low volume exemption would give competitive
advantage to higher polluting, low volume products.
The EPA requests comments on whether this exemption should be
included in the final rule and on the following specific aspects of
this exemption: (1) What would be an appropriate cut-off level? (2) To
what degree would a low volume exemption aid small manufacturers and
importers in complying with the rule? (3) To what extent would the
exemption be used if included in the regulation? (4) Would such an
exemption be equitable? (5) Would such an exemption create incentives
for circumvention of the rule?
F. Special Provisions
This section contains a description of the rationale for the
recycled coating and variance provisions that are included in the
proposed standard.
1. Recycled Coatings
The proposed regulation allows manufacturers and importers VOC
credit for recycling post-consumer coatings. Post-consumer coating is
unused coating that has been previously purchased by a consumer, and is
subsequently combined with virgin materials and offered for sale as a
recycled coating. The proposed credit for recycled coating content is
demonstrated in the following example: If a coating has a VOC content
(calculated as prescribed in Sec. 59.404 of the regulation) of 400
grams per liter of coating and contains 10 percent recycled coating,
then 10 percent of the calculated VOC content (40 grams per liter) is
subtracted or credited to give an adjusted VOC content of 360 grams per
liter. Compliance is determined based on the adjusted VOC content.
The calculation of an adjusted VOC content is included in the
proposed regulation to encourage recycling by providing flexibility to
manufacturers of recycled coatings. Recycling these coatings eliminates
the need for their disposal (some unused coatings may be considered
hazardous waste) and reduces the amount of new coating that must be
manufactured.
The EPA recognizes the inherent difficulties associated with
enforcing the credit associated with the recycled coating provision. It
is not normally possible to determine the fraction of post-consumer
content by analytical means. Therefore, enforcement would be through an
evaluation of reports submitted by manufacturers or importers of
recycled coatings (see section II.G) and a comparison of these reports
to claims of recycled content on the labels of coatings. The EPA
requests comment on this VOC credit for recycled coatings and the
enforcement of such a provision.
2. Compliance Variance.
The proposed rule includes a variance provision whereby
manufacturers and importers of subject architectural coatings may apply
to the Administrator for a temporary variance from compliance with the
standards. A variance will be granted if the applicant demonstrates
that compliance would result in economic hardship, and that granting
the variance would better serve the public interest than would
requiring continuous compliance under the conditions of economic
hardship. The EPA intends for this provision to allow manufacturers and
importers some flexibility in responding to unforeseen circumstances
that may cause additional, unanticipated compliance burden. The EPA
recognizes that certain interruptions in the availability of raw
materials and or manufacturing processes may affect the manufacturer's
or importer's ability to continuously comply with the standards. In
particular, the EPA anticipates that this variance provision will help
to mitigate impacts to small manufacturers. Within the architectural
coatings industry, small manufacturers are likely to have fewer
research and development
[[Page 32742]]
resources, and therefore, will benefit from the allowed variance.
G. Labeling and Public Information Requirements
1. Containers of All Subject Coatings
The proposed regulation requires that containers for all subject
coatings display on the label or lid the date of manufacture (or a code
indicating the date) and the maximum VOC content in the coating. The
date of manufacture on the label or lid allows enforcement personnel to
determine whether the coating was manufactured prior to April 1, 1997.
Section 183(e) of the CAA specifically authorizes the EPA to
require certain labeling and informing of the public as mechanisms for
control of VOC emissions from consumer and commercial products. The
proposed standards include labeling requirements that not only allow
the EPA to verify compliance with the VOC content levels but also to
inform consumers about VOC content. Such labeling, with appropriate
consumer education, might provide an incentive to consumers to purchase
coatings that will emit less VOC, and to manufacturers and importers to
manufacture or import lower VOC content coatings.
As described in section II.E, the EPA is considering two other
labeling requirements. The EPA is considering a requirement to include
on the label of each coating an educational statement about VOC
emissions, and their potential contribution to ground-level ozone. The
EPA requests comment on whether an outreach effort would be as
effective an approach as an educational statement. Also, the EPA is
considering a requirement to include coating coverage information on
all architectural coating labels. Comment is requested on the
feasibility of this requirement.
2. Containers of Industrial Maintenance Coatings
In addition to the general labeling requirements for all
architectural coatings, containers of industrial maintenance coatings
(as defined in Sec. 59.401 of the proposed regulation) must also
include on the label or lid the phrase ``NOT INTENDED FOR RESIDENTIAL
USE.'' Section 183(e) of the CAA provides authority to include in the
regulation directions for use of the product. The proposed VOC levels
for industrial maintenance coatings were set based on more rigorous
performance specifications than those needed for residential
applications. While this labeling requirement is intended to discourage
consumers from applying industrial maintenance coatings in a
residential setting where a lower VOC coating with less rigorous
performance specifications may be adequate, it does not prohibit the
use of industrial maintenance coatings in a residential setting where
extreme environmental conditions are present and for which an
industrial maintenance coating would provide the most viable protection
from these conditions.
3. Containers of Recycled Architectural Coatings
Containers of recycled architectural coatings, in addition to the
requirements listed previously for all subject coatings, must also
display a label that includes the statement ``CONTAINS NOT LESS THAN X
PERCENT, BY VOLUME, POST-CONSUMER COATING,'' where X is replaced by the
percentage, by volume, of post-consumer coating. Inclusion of the
recycled coating content is necessary for compliance purposes to
identify coatings for which an adjusted VOC content has been
calculated.
H. Selection of Recordkeeping and Reporting Requirements
The EPA evaluated what recorded and reported information would be
sufficient to ensure compliance with the VOC levels. The recordkeeping
and reporting requirements proposed are necessary to allow
determination of compliance, and the EPA believes they do not represent
an undue burden on manufacturers or importers of architectural
coatings. For all but the initial report, recordkeeping and reporting
are only required for manufacturers and importers who choose to take
advantage of optional provisions, including the calculation of an
adjusted VOC content (based on post-consumer coating content), the
variance provision, or the exceedance fee approach that is under
consideration.
For coatings for which the manufacturer or importer chooses to
demonstrate compliance by meeting the VOC content levels in the
proposed table (Table 1), enforcement personnel can compare the VOC
content of the product to the VOC content statement on the label to
establish compliance or noncompliance. Therefore, there are no
reporting or recordkeeping provisions for the manufacturers and
importers of these coatings beyond initial notification. The initial
report serves to notify the EPA of the identity of the universe of all
manufacturers and importers subject to the standards.
The proposed rule includes reporting and recordkeeping requirements
for coatings that contain post-consumer coating and for which an
adjusted VOC content is reported for compliance purposes. Manufacturers
and importers must maintain the required records for these coatings for
a period of three years. The required recordkeeping and initial reports
are essential for the EPA to determine whether coatings are in
compliance.
Manufacturers or importers that choose to apply for a variance are
required to submit a variance application to the Administrator. The
purpose of this application is for the applicant to provide the
Administrator with sufficient information on which the decision to
grant, or not to grant, the variance can be made.
The reporting and recordkeeping requirements for the exceedance fee
approach and low volume exemption that is under consideration for
inclusion in the final rule is discussed in section V.D., and V.E.
respectively
I. Test Methods
Under the proposed provisions, compliance with the VOC content
levels is based on the EPA's Reference Method 24. This is the EPA's
standard test method for determining the VOC content of coatings.
A provision allowing use of alternative methods of determining VOC
content subject to the Administrator's approval is also included in the
proposed rule.
J. Alternative Regulatory Approaches
1. Other Systems of Regulation.
Section 183(e)(4) allows the EPA to consider ``any system or
systems of regulation as the Administrator may deem appropriate,
including requirements for registration and labeling, self-monitoring
and reporting, prohibitions, limitations, or economic incentives
(including marketable permits and auctions of emission rights)
concerning the manufacture, processing, distribution, use, consumption,
or disposal of the product.'' Accordingly, the EPA requests comment on
any alternative to the proposed system of regulation.
2. Regulation with the Use of CTG
Section 183(e)(3)(C) gives the EPA the flexibility to ``issue
control techniques guidelines under this Act in lieu of regulations
required under subparagraph (A) if the Administrator determines that
such guidance will be substantially as effective as regulations in
reducing emissions of volatile organic
[[Page 32743]]
compounds which contribute to ozone levels in areas which violate the
national ambient air quality standard for ozone.''
In many cases, a CTG can be an effective approach to reduce
emissions of VOC in nonattainment areas without imposing control costs
on attainment areas. For example, a CTG may effectively reduce VOC
emissions from commercial products used in industrial settings where
the targeted emissions occur at a point of end use which is readily
identifiable, and at a fixed location. However, a CTG may not be as
effective as a regulation to reduce emissions in nonattainment areas
for architectural products because these products are easily
transportable and widely distributed. This is because an architectural
coating CTG would prohibit the sale of noncompliant architectural
coatings in nonattainment areas. A CTG would have the potential
compliance problems associated with noncompliant products being
transported into nonattainment areas from neighboring areas and
neighboring states. In contrast, a regulation could require
modification of the product itself. Since all products would be subject
to the same requirements, this would help ensure effective enforcement
and implementation in all areas.
It is expected that an architectural coating national rule would
reduce costs of compliance for companies serving national or large
regional markets by promoting consistency in VOC requirements across
the country. In addition, a national rule would help reduce
recordkeeping and reporting for those manufacturers who sell products
in both attainment and nonattainment areas. To evaluate the benefits
(i.e., reduction in cost) to manufacturers from the consistency aspect
of a national rule, the EPA requests detailed information from
manufacturers on the cost to comply with a variety of State standards.
In particular, the EPA requests comment on the administrative cost
burden (inventory tracking, distribution, labeling, and tracking of
State architectural coating regulation development) expected to result
from use of a CTG. In addition, to evaluate the population and product
mix of manufacturers who may be excluded from regulation under a CTG
approach, the EPA requests comment on the number and identity of
manufacturers who sell products solely in attainment areas. To evaluate
differences in the reformulation cost associated with a CTG versus a
national rule, the EPA requests comment on the proportion of products
which would be reformulated if, in general, only nonattainment areas
were regulated. For example, EPA requests information on whether
manufacturers would tend to produce one product for attainment areas
and one for nonattainment areas, only sell products in attainment
areas, or reformulate all products to be compliant with applicable
nonattainment area requirements.
The EPA requests comment on whether and how a CTG approach (by
itself, or in combination with any other regulatory alternatives) would
be as effective as a national rule in reducing VOC emissions in ozone
nonattainment areas. If warranted by comments, a quantitative analysis
of costs and emission reductions expected from a CTG will be completed.
K. Solicitation of Comments
The EPA invites comments concerning the proposed standards,
particularly as noted in the preceding sections concerning: the
inclusion of specialty product categories; the technological and
economic feasibility of VOC levels listed in Table 1; the ability of
coatings with VOC content levels lower than the proposed levels to meet
performance needs; the inclusion of processors in the applicability of
the rule; economic and other impacts on importers; the feasibility of
requiring coverage information to be displayed on coating labels or
lids; the effectiveness of a public outreach program versus statements
on the container label to educate users about the environmental impacts
of VOC in coatings; and the placement of architectural coatings on the
consumer products priority list. The EPA also requests information on
coating categories where recent progress in low VOC resin systems has
resulted in new low VOC coatings that have been introduced since 1990.
The EPA requests comment on the inclusion of an exceedance fee
option for use as a compliance alternative to meeting the VOC levels in
Table 1. Specifically, the EPA requests comments on the following: the
appropriate use for revenues generated from the fee; the
appropriateness of the exceedance fee rate; and the appropriateness of
the recordkeeping and reporting requirements associated with the fee.
The EPA requests detailed information on any specialty coatings
which do not comply with proposed standards, and cannot be cost-
effectively reformulated. The EPA also requests comment on the
inclusion of a low volume exemption for specialty, niche products.
Specifically, the EPA requests comment on the following: (1) What would
be an appropriate cut-off level? (2) To what degree would a low volume
exemption aid small manufacturers and importers in complying with the
rule? (3) To what extent would the exemption be used if included in the
regulation? (4) Would such an exemption be equitable? (5) Would such an
exemption create incentives for circumvention of the rule?
In addition, the EPA requests comment on the inclusion of the
special provision for VOC credit for recycled coatings, the variance
provision, and the small container exemption. For all of these
provisions, the EPA requests comment on the expected extent of their
use by small manufacturers and small importers.
Comments submitted to the Administrator should contain specific
proposals and supporting data to allow the EPA to fully evaluate the
comments. Recommended changes to any of the VOC content levels
presented in this proposal should include sufficient information for
the EPA to evaluate the technological and economic feasibility
associated with such changes. Applicable dates and addresses for the
submission of comments are included at the beginning of this preamble.
VI. Future Phase Under Consideration
The EPA believes further VOC reductions beyond those in Table 1 may
be technologically and economically feasible. A great deal of
controversy surrounds the proposal of more stringent VOC levels in a
future phase of regulation. To address the controversy, the EPA will
participate in a joint study with industry representatives to
investigate the cost and performance characteristics of coatings with
VOC contents lower than the proposed levels in Table 1. The
environmental and economic impacts of requiring lower VOC contents will
also be assessed. In addition, the EPA will continue to meet with other
stakeholders regarding the potential for a future phase for the
architectural coatings rule. After analyzing comments received
regarding this proposal and following completion of the joint EPA/
industry study, the EPA will evaluate whether further reductions beyond
the 1997 requirements are technologically and economically feasible.
The result of this evaluation could be proposal of more stringent VOC
levels, the proposal of economic incentive approaches, some combination
of VOC levels and economic incentive approaches, or no further action
beyond the 1997 requirements.
The EPA is using this proposal as an opportunity to solicit input
for use in
[[Page 32744]]
the joint EPA/industry study. The EPA expects to focus effort in the
study on evaluation of issues which will include the following: the
cost and economic impact of requiring lower VOC contents than those in
Table 1, identification of any performance issues associated with lower
VOC content coatings, and investigation of reactivity considerations
involved in reformulating architectural coatings. The EPA invites
comments concerning the planned EPA/industry study, and any input on
performance, cost or reactivity considerations which should be included
in the study.
Because the EPA's data consists of the Emissions Inventory Survey
of coatings sold in 1990 and on limits in California coatings
regulations that have been in effect since the late 1980's, the EPA is
requesting information on coating categories where recent progress in
low VOC resin systems has resulted in new low VOC coatings being
introduced into the market since 1990. The EPA requests comments on the
ability of coatings with VOC content levels lower than those in Table 1
to meet the performance needs within the category. Cost information on
these coatings is also requested.
VII. Administrative Requirements
A. Public Hearing
A public hearing will be held, if requested, to provide opportunity
for interested persons to make oral presentations regarding the
requirements in the proposed regulation in accordance with Section
307(d)(5) of the CAA. Persons wishing to make oral presentation on the
proposed regulation for architectural coatings should contact the EPA
at the address given in the ADDRESSES section of this preamble. Oral
presentations will be limited to 15 minutes each. Any member of the
public may file a written statement before, during, or within 30 days
after the hearing. Written statements should be addressed to the Air
and Radiation Docket and Information Center at the address given in the
ADDRESSES section of this preamble and should refer to Docket No. A-92-
18.
A verbatim transcript of the hearing and written statements will be
available for inspection and copying during normal business hours at
the EPA's Air and Radiation Docket and Information Center in
Washington, DC (see ADDRESSES section of the preamble).
B. Executive Order 12866
Under Executive Order 12866, the Agency must determine whether the
regulatory action is ``significant'' and therefore subject to Office of
Management Budget (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.
Pursuant to the terms of the Executive Order, the EPA has
determined that this rule is a ``significant regulatory action'' under
criterion (4) above, based on both the long regulatory negotiation
process that preceded this proposal and the novel use of economic
incentives (potential exceedance fees) for this industry. Therefore,
the proposed regulation presented in this notice was submitted to the
OMB for review as required. Any written comments from the OMB to the
EPA and any written EPA response to those comments will be included in
Docket No. A-92-18, listed at the beginning of this notice under the
ADDRESSES section of this preamble.
C. Paperwork Reduction Act
The information collection requirements in this proposed rule have
been submitted for approval to the OMB under the Paperwork Reduction
Act, 44 U.S.C. 3501 et seq. An Information Collection Request (ICR)
document has been prepared by the EPA (ICR No. 1750.01) and a copy may
be obtained from Sandy Farmer, Office of Policy Planning and Evaluation
(OPPE) Regulatory Information Division; U.S. Environmental Protection
Agency (2136); 401 M Street., SW, Washington, DC 20460 or by calling
(202) 260-2740. This ICR document is also available on the EPA's OAQPS
TTN bulletin board under the Clean Air Act Amendments menu. See the
SUPPLEMENTARY INFORMATION section of this preamble for information on
accessing the EPA's TTN electronic bulletin board.
The information required to be collected by this proposed rule is
necessary to identify the regulated entities who are subject to the
rule and to ensure their compliance with the rule. The recordkeeping
and reporting requirements are mandatory and are being established
under authority of Section 114 of the CAA. All information submitted as
part of a report to the Agency for which a claim of confidentiality is
made will be safeguarded according to the Agency policies set forth in
title 40, Chapter 1, part 2, subpart B, ``Confidentiality of Business
Information'' (see 40 CFR 2; 41 FR 36902, September 1, 1976, amended by
43 FR 39999, September 28, 1978; 43 FR 42251, September 28, 1978; 44 FR
17674, March 23, 1979).
The total annual reporting and recordkeeping burden for this
information collection averaged over the first three years is estimated
to be 37,447 hours and $1,279,469. This is the estimated burden for 500
respondents (i.e., architectural coating manufacturers).
The average burden, per respondent, is 75 hours per year. The total
reporting, recordkeeping, and labeling burden for an individual
respondent will vary depending on the compliance option chosen.
Respondents choosing to meet the VOC levels will have the lowest
reporting, recordkeeping, and labeling burden, whereas, manufacturers
and importers that use the option of calculating an ``adjusted VOC
content'' (for recycled coatings) will have the highest reporting,
recordkeeping, and labeling burden. The proposed rule requires an
initial one-time notification from each respondent. Respondents whose
coatings products have a VOC content that is less than or equal to the
VOC content levels have no periodic reporting requirements. Respondents
choosing the recycled coatings provision must submit annual reports.
Respondents choosing the variance provision must submit a one-time
report requesting the variance.
Burden means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This estimate includes
the time needed to: (1) Review instructions; (2) develop, acquire,
install, and utilize technology and systems for the purposes of
collecting, validating, and verifying information; processing and
maintaining information; and disclosing and providing information; (3)
adjust the existing ways to comply with any previously applicable
instructions and requirements; (4) train personnel to be able to
respond to a collection of information; (5) search data sources; (6)
complete and review the collection of
[[Page 32745]]
information; and (7) transmit or otherwise disclose the information.
The exceedance fee alternative compliance mechanism being
considered for inclusion in the final rule would require quarterly
reports of fees by the manufacturers choosing this option. In addition,
these manufacturers would keep records for each coating product on
which fees are paid. The average annual burden increase for each
manufacturer choosing this option is 194 hours.
Comments are requested on the Agency's need for this information,
the accuracy of the provided burden estimates, and any suggested
methods for minimizing respondent burden, including through the use of
automated collection techniques. Send comments on the ICR to the
Director, OPPE Regulatory Information Division; U.S. Environmental
Protection Agency (2136); 401 M Street SW; Washington, DC 20460; and to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, 725 17th Street NW; Washington, DC 20503; marked
``Attention: Desk Officer for the EPA.'' Include the ICR number in any
correspondence. Since OMB is required to make a decision concerning the
ICR between 30 and 60 days after June 25, 1996, a comment to OMB is
best assured of having its full effect if OMB receives it by July 25,
1996. The final rule will respond to any OMB or public comments on the
information collection requirements contained in this proposal.
D. Regulatory Flexibility Act
The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires the
EPA to consider potential adverse impacts of proposed regulations on
small entities and to consider regulatory options that might mitigate
any such impacts. It is currently the EPA's policy to perform a
regulatory flexibility analysis of the potential impacts of proposed
regulations on small entities whenever it is anticipated that any small
entities may be adversely impacted. Because it is anticipated that some
small architectural coating manufacturers could be adversely impacted
from implementation of the proposed standards, a regulatory flexibility
analysis was performed.
The analysis of small entity impacts focused on the potential
impacts on small manufacturers producing architectural coatings. For
the purpose of this analysis, small manufacturers were considered to be
firms with less than $10 million of total gross annual revenues from
the sale of architectural coatings and less than $50 million in total
gross annual revenues from all products. Using this definition,
potentially 85 percent of architectural coating manufacturers are
considered small manufacturers. A copy of the technical memorandum
titled ``Economic Impact and Regulatory Flexibility Analysis of the
Proposed Architectural Coatings Rule'' is included in the public
docket.
Reducing VOC content generally requires a fixed investment for
reformulation of each product to its respective regulatory level.
Because, on average, coatings sold by small manufacturers are sold in
smaller quantities than the industry average (an estimated 67,000
liters per product versus 377,000 liters per product), the cost of
reformulation per unit sold may in some cases be significantly higher
for small manufacturers. To meet the limitations in Table 1, the
estimated ratio of annualized reformulation cost to revenues for small
manufacturers equals approximately 3.5 percent as opposed to a ratio of
only about 0.4 percent for the entire industry. Thus, it may be
difficult for small coating manufacturers to pass control costs to
consumers in product markets where competition with larger
manufacturers is significant. This impact will be reduced to the extent
that small manufacturers are provided reformulation technologies from
larger resin suppliers. Still, the EPA has recognized a need to include
special compliance provisions in the rule to avoid adverse economic
impacts upon small manufacturers.
The economic impacts on small manufacturers were taken into
consideration in establishing both the categories and VOC levels.
Special effort was made to consider the economic feasibility of VOC
levels for product categories in which small manufacturers have a
disproportionate presence. The small container exemption, compliance
variance, and consideration of an exceedance fee option and low volume
exemption are also included in the proposed rule primarily to reduce
small business impacts.
Because the per-unit costs of the economic incentive options are
constant with respect to volume sold, and because the per-unit
reformulation cost is higher for small-volume products than large-
volume products, an economic incentive option, such as a fee, if
included, is more likely to be beneficial to and adopted by small
manufacturers than by large manufacturers. The results of the economic
analysis suggests that the fee option is likely to provide a cost-
saving alternative to reformulation for relatively low-volume products
with VOC content fairly close to the regulatory VOC levels. Estimated
annual reformulation cost savings minus fee payments associated with
the fee option equals approximately $5.0 million. In addition, the fee
option reduces foregone profits by roughly 0.3 million for products
which otherwise would have been removed from the market. It is
anticipated that most of these savings would accrue to small
manufacturers.
E. Unfunded Mandates
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under Section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to State, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, Section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of Section 205
do not apply when they are inconsistent with applicable law. Moreover,
Section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed under
Section 203 of the UMRA a small government agency plan. The plan must
provide for notifying potentially affected small governments, enabling
officials of affected small governments to have meaningful and timely
input in the development of EPA regulatory proposals with significant
Federal intergovernmental mandates, and informing, educating, and
advising small governments on compliance with the regulatory
requirements.
Today's rule contains no Federal mandates (under the regulatory
provisions of Title II of the UMRA) for State, local, or tribal
governments or the private sector. The rule imposes no enforceable
duties on any of these governmental entities. In any event, EPA has
determined that this rule does not contain a Federal mandate that may
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result in expenditures of $100 million or more for State, local, and
tribal governments, in the aggregate, or the private sector in any one
year. Thus, today's rule is not subject to the requirements of Sections
202 and 205 of the UMRA.
F. Enhancing the Intergovernmental Partnership under Executive Order
12875
In compliance with Executive Order 12875, the EPA has involved
State and local governments in the development of this rule. State and
local air pollution control associations participated in the regulatory
negotiation and have also provided regulatory review. State and local
air pollution control representatives participated in the regulatory
negotiation and have also provided input into subsequent regulatory
development.
List of Subjects in 40 CFR Part 59
Environmental protection, Air pollution control, Architectural
coatings, Consumer and commercial products, Incorporation by Reference,
Ozone, Regulatory negotiation, Volatile organic compound.
Table 1.--Architectural Coating Volatile Organic Compound Content Levels
[Unless otherwise specified, units are in grams of VOC per liter of
coating thinned to the manufacturer's maximum recommendation excluding
the volume of any water, exempt compounds, or colorant added to tint
bases.]
------------------------------------------------------------------------
Effective
Coating category Apr. 1,
1997
------------------------------------------------------------------------
Antenna coatings............................................. 530
Antifouling coatings......................................... 400
Anti-graffiti coatings....................................... 600
Bituminous coatings and mastics.............................. 500
Bond breakers................................................ 600
Chalkboard resurfacers....................................... 450
Concrete curing compounds.................................... 350
Concrete protective coatings................................. 400
Dry fog coatings............................................. 400
Extreme high durability coatings............................. 800
Fire-retardant/resistive coatings:
Clear.................................................... 850
Opaque................................................... 450
Flat coatings:
Exterior................................................. 250
Interior................................................. 250
Floor coatings............................................... 400
Flow coatings................................................ 650
Form release compounds....................................... 450
Graphic arts coatings (sign paints).......................... 500
Heat reactive coatings....................................... 420
High temperature coatings.................................... 650
Impacted immersion coatings.................................. 780
Industrial maintenance coatings.............................. 450
Lacquers (including lacquer sanding sealers)................. 680
Magnesite cement coatings.................................... 600
Mastic texture coatings...................................... 300
Metallic pigmented coatings.................................. 500
Multi-colored coatings....................................... 580
Nonferrous ornamental metal lacquers and surface protectants. 870
Nonflat coatings:
Exterior................................................. 380
Interior................................................. 380
Nuclear coatings............................................. 420
Pretreatment wash primers.................................... 780
Primers and undercoaters..................................... 350
Quick-dry coatings:
Enamels.................................................. 450
Primers, sealers, and undercoaters....................... 450
Repair and maintenance thermoplastic coatings................ 650
Roof coatings................................................ 250
Rust preventative coatings................................... 400
Sanding sealers (other than lacquer sanding sealers)......... 550
Sealers (including interior clear wood sealers).............. 400
Shellacs:
Clear.................................................... 650
Opaque................................................... 550
Stains:
Clear and semitransparent................................ 550
Opaque................................................... 350
Low solids............................................... \1\ 120
Swimming pool coatings....................................... 600
Thermoplastic rubber coatings and mastics.................... 550
Traffic marking coatings..................................... 150
Varnishes.................................................... 450
Waterproofing sealers and treatments:
Clear.................................................... 600
Opaque................................................... 400
Wood preservatives:
Below ground wood preservatives.......................... 550
Clear and semitransparent................................ 550
Opaque................................................... 350
Low solids............................................... \1\ 120
------------------------------------------------------------------------
\1\ Units are grams of VOC per liter of coating, including water and
exempt compounds, thinned to the maximum thinning recommended by the
manufacturer.
Dated: June 18, 1996.
Carol M. Browner,
Administrator.
[FR Doc. 96-16009 Filed 6-24-96; 8:45am]
BILLING CODE 6560-50-P
