Will Washington tighten up on vehicle conversions?

After years of hobbling along on temporary fixes, representatives from the propane industry and the U.S. Environmental Protection Agency are on the verge of hammering out a permanent resolution to the EPA’s demand for cleaner vehicle emissions from aftermarket conversions, which account for a big chunk of the 350,000 propane-powered vehicles on the nation’s roads today.

Full compliance with the 1970 Clean Air Act’s rigorous anti-pollution regulations has been forestalled by a provision known as Option 3 of Memorandum 1A. It is a “reasonable basis” test procedure that the EPA has allowed as a compliance standard for propane (and compressed natural gas) engine emissions. The provision permits aftermarket conversion equipment manufacturers to test kits on a single vehicle within an engine family. Upon compliance, that conversion system can then be legally sold to installers.

“Memorandum 1A has been a way of avoiding the burdensome process of obtaining certification,” says Jeff Clarke, director of policy and regulatory analysis for the Natural Gas Vehicle Coalition. Natural gas and propane have traditionally worked together on alternative fuels emissions standards.

More importantly, it has saved conversion equipment manufacturers a hefty investment to prove their products can perform to federal specifications long after the devices are put on the market.

“Option 3 testing is significantly faster and less expensive than full EPA certification testing, a key point in keeping the cost of alternative fuel conversions under control,” says Nick Pfeiffer at Technocarb, an Abbotsford, British Columbia, Canada-based conversion kit manufacturer.

President George W. Bush is rolling with propane at his Crawford, Texas ranch. Members of the Propane Education & Research Council were among the industry advocates who last summer donated the Ford F-250 pick-up truck as a demonstration project. The Bush truck was converted to a Bi-Phase Technologies liquid propane fuel injection system by Northwest Propane of Dallas. Bright white and featuring a prominent blue “Propane. Exceptional Energy.” logo on the propane fuel tank, the 4-door vehicle got its first national exposure on the ABC news magazine show 20/20 in a ranch interview with the Bush. He was also seen driving the vehicle at a farm bill signing ceremony on the ranch.

Containing costs

The average cost to do a Memo 1A test is $3,100 to $3,200 for each engine category. Full certification, which requires extensive laboratory testing of engine emissions at various stages of engine life, carries a price tag of $23,000 to $27,000 per engine family. The cost difference would put conversion work beyond the financial means of most equipment manufacturers, they claim.

Since its inception in 1997, Option 3 was meant only to be a temporary relaxation of the rules pending the industry’s adoption of full EPA certification standards. Twice the EPA has extended Memo 1A’s Option 3; the most recent extension expired Dec. 31, 2001. Propane industry officials are expecting the EPA to grant a 90-day extension to facilitate the discussions now underway and allow current conversion contracts to be met. (See related column on Page 4.)

A permanent emissions standards testing protocol now on the table would create a new category known as Micro Volume Manufacturers for conversion kit manufacturers. The EPA already recognizes Small Volume Manufacturers and Large Volume Manufacturers.

“The category of MVMs should be limited to a pre-determined number of units produced per year – one that is far less than the current SVM limit of 15,000 but permits industry growth,” according to Michael A. Caldarera, manager of regulatory and technical services for the National Propane Gas Association. The exact numbers are to be determined during the rule-making process.

Caldarera, who designed the proposal, suggests an annual limit approaching 1,000 to 2,000 units. Clarke says the yearly MVM figure could be as low as 500.

“In establishing this new category, it would create a three-tiered structure for which the burden of certification would increase proportionately for those manufacturers who qualify under each respective category,” Caldarera proposes.

If the regulators agree, the MVM standards would mimic those contained in Option 3. This model would thus include some of the testing exclusions granted previously by the EPA.

“Certification requirements should contain elements that do not impose a significant certification burden on MVMs, but yet still demonstrate to (the) EPA that the conversion has not degraded emissions,” according to Caldarera.

Motor vehicle engines that run on propane create 56-67 percent less smog than the hydrocarbons in gasoline engines, while emissions of toxins and carcinogens are cut by up to 96 percent.

He believes the certification fees should either be waived outright or be based upon the cost of the conversion – for both dedicated and dual-fueled vehicles – rather than be based on the cost of the vehicle itself.

“Otherwise, MVMs would incur the same cost for a certificate covering far fewer vehicles,” he points out.

Help Needed

Whatever the numbers, requirements and limitations ultimately decided upon, regulatory relief for those who market vehicle conversions is necessary, stresses Lon Holloway of Northwest Propane of Dallas. Northwest converted the Ford F-250 propane-powered pick-up truck that was given to President George W. Bush last August by the Propane Education & Research Council and other industry advocates.

“If you have to do more testing and paperwork, it’s going to affect the price of the conversion units,” says Holloway. If the price gets much higher, it could have a permanent impact on the entire industry and defeat the stated purpose of encouraging the use of lower-polluting alternative fuels, he maintains.

“That business would be in sad shape,” Holloway says. ‘The cost of the conversion ultimately affects the feasibility of converting a fleet, and that 10-unit fleet would not be feasible to convert any more.”

Done Deal?

Negotiations with EPA are far from a done deal, however.

“A full-blown solution remains a complicated issue,” cautions Joseph L. Colaneri, executive director of the Propane Vehicle Council. The propane industry itself is not united in its position, and there is enough of a constituency to quash negotiations.

“We have marketers who don’t want to see this extended, and we have marketers who use LPG (conversion kits), and they do want to see this continued.”

Some industry observers believe that the prospect of increased public demand for propane vehicles would be better served by the elimination of aftermarket conversions, which have a troubled history of shoddy equipment and lack of qualified service personnel. They would rather see the auto manufacturers step up and expand the availability of factory-made propane vehicles, but contend that aftermarket conversions are putting the brakes on expanded production by siphoning off demand.

The OEMs themselves are basically indifferent to the issue because the desire for propane vehicles has typically been so light when compared to other fuels, according to Colaneri. Others maintain that aftermarket conversions are essential to the industry, especially for the continued use of propane to power fleets facing limited availability of OEM vehicles, parts and service.

“The EPA does not want to see the aftermarket go away. I’m fairly optimistic that we’ll be able to work through these issues and come up with a solution that keeps the aftermarket viable,” says Clarke. “The aftermarket manufacturers have been talking to the EPA since August and we’ve been discussing the issue with the EPA over the past few months.”

“Obviously it’s high on our agenda,” says Richard D. Ackerman, team leader of the EPA’s Mobile Source Enforcement Branch. “We haven’t come to any closure on that yet, but it’s obviously an issue of everyone’s concern.”