### STATE OF RHODE ISLAND DEPARTMENT OF ENVIRONMENTAL MANAGEMENT

OFFICE OF AIR RESOURCES In Re: Proposed Amendments to Air Pollution Control Regulation No. 37, entitled "Rhode Island's LowEmission Vehicle Program" . 

### DECISION Introduction On October 31, 2005 notice was published in the Providence Journal and was mailed to interested parties announcing a public hearing and comment period to accept comments on the proposed amendments to Air Pollution Control Regulation No. 37. On November 7th a second notice was published in the Providence Journal clarifying the date ofthe Public Hearing as "Wednesday, November 30, 2005" . The public hearing was held on November 30, 2005. Written comments were entered into the record at the public hearing. The comment period closed at 4:00 pm of November 30, 2005. This decision will present the Department of Environmental Management's response to comments and the final regulation for adoption. All written and oral submissions respecting the proposed regulation were fully considered. The following is a concise statement of the principal reasons for and against the proposed regulation's adoption, and will further incorporate the reasons for overruling the considerations urged against its adoption. The Administrative Procedures Act requires agencies proposing to amend or promulgate regulations demonstrate the need for amendment or new regulation, demonstrate that no alternative approaches considered would be as effective and less burdensome, identify any overlapping or duplicate state regulations, and determine whether the amendment or new regulation would have significant adverse economic impact on small business or any city or town. Information to comply with those requirements was included in the Fact Sheet, which was available when the Notice ofPublic Hearing and Comment Period was published. The Fact Sheet is appended to this decision. Response to Comments This section will present the Department's response to comments made at the public hearing and written comments received during the comment period. Comments were paraphrased and similar comments were grouped together. The Department's response follows each comment. Comment : Of232 comments received, either written or during oral testimony, 150 were positive in nature. Eleven ofthese positive comments provided individual programmatic support and the remaining 92 provided general support of the program . Positive comments included statements such as : "RI has a narrow window of opportunity tojoin other states and leaders in a fight against global warming, and we're urging today the Department to move ahead and finalize these proposed amendments by the end oftheyear to be a part of that.", and " . . . the proposed rule will be good for Rhode Island. It is pro-environment, pro-consumer, will improve public health, and help our economy." Another commenter stated: "The most effective action available to Rhode Island [to reduce global warming] is to update our state's Clean Car Standard to reflect California's newglobal warming regulations, .. ." Response: Comments noted. No response necessary. Comment: Several comments were submitted indicating that these regulations would have negative impacts on the U.S. auto industry because they will have to change their product lines to comply. Reduction in employment would be nationwide, as many as 55,000 U.S. jobs. Additionally, it was pointed out that certain of the large manufacturers will have a disproportionate burden placed on them due to the greater proportion of larger vehicle models that they offer. On the other hand, one industry representative pointed out in his comments the great improvements that have been achieved by the auto industry over the past 30years in producing many different models ofcars meeting higher standards and using new technologies to improve performance and emissions. Response: Based on a reviewofcomment responses prepared by the California Air Resources Board (CARB) andpublished as the "Final Statement of Reasons'), datedAugust 4, 2005, these concerns were raised during the rulemaking activities in California. In those responses, CARBstates: "Thefeet average emissions reduction approach used in the greenhouse gas regulations provides large manufacturers with thefexibility to sell vehicles with greenhouse gas emission levels that are higher than thefeet average, provided those emissions are offset by vehicles with lower greenhouse gas emissions. This should provide sufficientfexibility to allowlarge manufacturers .. . to both compete with the much smaller manufacturers and still be able to meet itsfeet average greenhouse gas obligations. " DEM agrees with CARB's position. As pointed out by a commenter representing the auto industry, historically the auto industry has successfully improved auto emissions in compliance with stricter air emission limits and been able to improve performance in a large portion oftheir car models. Comment : Conflicting comments were received relating to the availability of technologies necessary to comply with these regulations. One comment indicated that some of these technologies have technical obstacles that still must be overcome and the timeframe available is too short. 

### Additionally, a commenter noted that these regulations will stimulate additional technological innovation.Response: CARBdeveloped theirprogramin such a way as to provide timefor the auto manufacturers to phase in modifications to their vehicle designs to comply with standards that will become rnore stringent each year, beginning with ntodel year (MY) 2009 . As commenters pointed out, the standards that were developed by CARB recognized recent improvements in engine and drive train technology that are cost effective and in use today. Mid-tenn requirements (MY 2013) may require additional advancements in technology, but even these changes have been identified and efforts are underway to complete their development and incorporation into vehicle designs. Based on the CARB research, the Departmentfeels that sufficient time and technology is available to meet the modest requirements imposed on the short term, while work will continue to incorporate additional controls to meet the achievable longer terrn requirements. Comment : Comments were submitted relating to the issue ofreductions in greenhouse gas (GHG) emissions fromthis programand whether the reductions would be measurable or-have any effect on the climate in Rhode Island. As pointed out by several commenters, Rhode Island on its own can't solve global warming, it's a global problem . Rhode Island must implement its own regulatory programto begin to address the emissions it can control . One commenter stated in oral comments that "to say that it's meaningless or insignificant or not effective for Rhode Island to be moving forward with its own standards .. . to say that that's not meaningful is to say the same thing as saying it's not meaningful when an individual votes." As pointed out by a commenter, the transportation sector is responsible for almost 40% of the GHGproduced in Rhode Island. The adoption ofthese standards will result in reductions of these emissions greater than any other action identified in the Climate Change Action Plan adopted by the Conference of New England Governors and Eastern Canadian Premiers, signed by Rhode Island. Response: The State ofRhode Island has chosen, as a public policy, to address the global issue ofglobal warming and therefore GHGemissions. Thatpolicy resulted, among other things, in Rhode Island's commitment to a state emission reduction goal . The reduction goal was developed by Rhode Island's Greenhouse Gas Stakeholderprocess, recipient ofan EPA Climate Protection awardfor development ofthe statewide Greenhouse Gas Action Plan. The diverse and inclusive Stakeholder Group recommended the adoption California's GHG standards. Rhode Island agreed to the regional GHGreduction goals ofthe ClimateAction Plan adopted by the Conference ofNew England Governors and Eastern Canadian Premiers, recently recognized as one ofThe Climate Group's/Business Week magazine's Low Carbon Leaders ofthe Decade. Regulating GHGemissionfromnew motor vehicles by adopting California's emissions standards is certainly consistent with Rhode Island'sprevious actions andwillprovide more emission reduction than any other strategy available.While Rhode Island's contributions to the total global emissions may be small ; Rhode Island will beaffected by global warnaing and has chosen not to ignore its responsibility to do its part, as well as to set an examplefor others tofollow . As one commenterpointed out, the impactfrorn the adoption ofthese regulations in all ofthe statesjoining with California will be measurable and therefore a significant contribution to reducing GHGemissions and combating global warming . Comment : Conflicting comments were submitted relative to the issue of regulatory programconsistency. Acommenter said that Rhode Island must adopt the GHG emissions portion of the California programto remain consistent under the requirements of section 177 ofthe Clean Air Act (CAA) . Although, another commenter pointed out, EPA has never required that every portion of the California programmust be adopted by other states wanting to incorporate the California standards in their programs. Response: Under the CAA, states other than California can adopt California's new vehicle standards if, among other things, the state adopts standards that are identical to Califoriiia's. In any event, Rhode Island is not taking a position on whether adoption is required or not. Rhode Island has chosen to remain consistent with the California programto address the GHGemissionsfromnew vehicles sold here in Rhode Island and to provide Rhode Island residents the added benefit ofmore efficientvehicles. This consistent approach allows Rhode Island and the other states in the Northeast (e.g . New York, Vermont, Connecticut, and Massachusetts) and Northwest regions ofthe country (Washington and Oregon) taking similar actions, to adopt the same standards that California developed through an extensive developmental process. This efficient approach will also allowthe auto industry to develop a single compliance strategy across all ofthe participating states. Comment : Comments were received relating to the impact of the proposed regulations on consumer choice. One commenter indicated that consumers who are not required to purchase a California vehicle will opt not to spend the additional money. This would result in a loss to Rhode Island auto dealers who will lose these "cross-border sales" . Response: It is not necessarily true that consumers would not pay a premium for cleaner morefuel efficient vehicles. In any event, Rhode Island is surrounded by states that are also adopting these standards so there would be little chance, if any, for these types of "cross-border" sales. Because the current and GHG standards arefeetwidestandards, and because our border states are also adopting the samestandards, consumers are notfacedwith a choice ofbuying a vehicle that doesn't comefromafleet complying with the California GHG emission standards. One commenter noted that the statute governing alifa,rnia's regulations requires that the programnot ban the sale ofspecific types ofvehicles, nor require vehicles to have weight reductions. DEMfeels that safeguards put in place in theCalifornia program, specificallv aimed at protecting consumer choice through the continued availability ofthefull range ofvehicle sizes and types, will ensure that consumer choice need not be adversely impacted by the adoption ofthese amendments. Comment : A major area of comments on these proposed regulations relate to the cost of compliance, or, the cost impact on selling prices ofvehicles once the regulations are in effect . Analysis by CARB indicates that the highest increase, on average, to the price of cars in MY 2016will be $1,064. Comments fromthe auto industry say the increase will be more, and during the oral comments, a representative ofthe auto manufacturers used a figure of $3,000. Additionally, commenters indicated that the operating cost savings were exaggerated by CARB and therefore, the increased purchase prices would never be recovered by consumers. Conversely, commenters pointed out that the cost estimates provided by the auto manufacturers in past rulemaking efforts have been much higher than the actual increases experienced fromimplementing earlier regulatory changes, while estimates predicted by CARB have been very close to the actual increases. Several commenters noted that they were more than willing to simply pay more for their vehicles in order to achieve the GHGemission reductions . Commenters also noted that there are other costs to be considered. The cost of health care associated with exposure to automobile emissions should be factored into the analysis. Response: DEM

has reviewed the comments received on the issue ofthe cost impact on consumers. Based on the work done by CARB and the information provided concerning historical cost estimating by both proponents and opponents to earlier rulemakings, DEM agrees with the cost estimates prepared by CARB . Therefore, the modest projected increase in new vehicle cost, coupled with a decrease in operating costs results in an overall savings to consumers. Comment : Comments were submitted questioning the authority of DEM to adopt these regulations relative to provisions in the CAA, as well as under State law . Questions were raised relating to preemption issues and EPA's need to grant a waiver to California before other states can adopt their program . Additionally, concerns were raised over the constitutionality ofthe regulations relating to the Foreign Affairs Supremacy Clause. However, as pointed out by a commenter, Rhode Island cannot afford to wait . It is imperative that the Rhode Island program, as well as the programs ofother states incorporating the GHGemission standards, stays in sync with the California programso that all programs regulate the same model year vehicles. 

### One commenternoted that the Department's authority to regulate motor vehicle emissions, provides that the regulations "shall not be more stringent than the mandatory standards established by federal law or regulation . . .". 'Response: The preentption issue will likely be resolved in a venue other than that provided by Rhode Island's proposed adoption ofCalifornia GHG emission standards. Ultimately, the Rhode Island regulations may have to be modified to adjust to any changes mandated in the California regulations. The issue ofwhether a waiver has been granted to California may similarly impact the Rhode Island regulations. Ifthe regulations must be removedfromthe California programdue to the lack-ofan EPA grantedwaiver, the Rhode Island programmay have to be modified. DEM accepts the premise that it is important to remain consistent in time with California and the other neighboring states implementing these GHGprovisions and will take appropriate actions in the future ifthe program is not implemented in California or ifthe EPA chooses not to issue a waiver to California. Regarding the Foreign Affairs Supremacy Clause, the United States Congress has given the authority to the State through the CleanAirAct, to adopt the California program

. The Clean AirAct is presumptively constitutional and requires action on the part ofthe State ofRhode Island to comply with its terms. The State has chosen tofollow

the California program as an alternativeprovided by theAct. Until such time as a court ofcompetentjurisdiction renders an opinion on the California programto the contrary, the State will continue tofollowthe law . DEM also notes that because the CAA specifically allows states to adopt the California standards, in so doing, DEM cannot be considered to be adopting requirements that are more stringent than thefederal requirements. Comment : Comments were received relative to possible modifications of the California programthat should be considered by DEM . One commenter wanted DEM to adopt more stringent regulations. Auto industry comments were concerned about certain provisions of the regulations such as definitions, impact on commercial vehicles and some of the methods used by CARBto determine COZ equivalent emissions fleet averages. Response: DEMperceives that under the CAA Rhode Island has only two choices: adopt the identical California program, or rely onfederal standards governing the emissionsfrommotor vehicles. Rhode Island has chosen to adopt the California regulations as they were adopted in California for the purpose of consistency and to avoid issues under the CAA concerning the "identical" nature ofour regulations. California's regulations dictate thesize and makeup ofauto manufacturers covered under these regulations andfor consistency, these provisions will not be modified in the Rhode Islandprogram . Additionally, any modifications to the California regulations, resultingfrom future rulemaking or litigation activities in California, will have to bepromulgated here in Rhode Island to incorporate the changes in the Rhode Islandprogramto maintain the identical nature ofthese regulations.Comment : Comments were submitted pointing out that there may be an increase in the emissions of other criteria and ozone precursor pollutants as a result of the adoption of these GHG emissions reduction regulations. Due to the differences in the way these emissions will be regulated, and the way the other pollutant emissions are currently regulated, it could be that because of the anticipated "rebound" effect (car owners may choose to drive their cars more when their car's efficiencies improve as a result of the GHGemissions reduction program) and the possible tendency for car owners to delay in purchasing slightly higher priced cars in the future (fleet turnover) . Also comments were submitted as a critical reviewof the State ofVermont's response to analysis ofimpacts in Vermont relating to adoption of the California regulations on criteria and precursor pollutants fromthe rebound effect and fleet turnover. Response: Conflicting irformation has been presented concerning the impact these regulations will have on consumer driving habits. Estimates ofthe rebound effectfromCARBare much lower than estimates provided by opposing comrnenters. A document prepared by Meszler Engineering Services dated November 22, 2005, responding to issues raised during the rulemaking in Vermont relating to their adoption ofthe California standards, refutes analyses prepared by opponents ofthose and Rhode Island's proposed regulations. Just as in the case ofcost estimates developed relating to these regulations, the estimates by opponents show

much higher increases in emissions ofcriteria andprecursor pollutants than those developed by the proponents ofthese regulations. DEM accepts the estimates prepared by CARB which indicate a much lower impact . As far as thefeet turnover impact, wefeel that the reductions in GHGemissions will be worth a slight increase in other pollutant emissions thatwill resultfrom a future car owner delaying their new car purchases. However, with the price of fuel only destined to increase, the appeal ofthese new cars may minimize both of these impacts.Decision Based on the comments and the response to comments, it is the decision of the Hearing Officer to adopt the amendments to Air Pollution Control Regulation No. 37 as proposed. The final amended regulation is appended to this decision. The final regulation is to be filed with the Secretary of State. 

# `ZZ i --------------------------- Steph'en 1Vlajkut, Chief Date Offi6e ofAir Resources Hearing Officer Approved:



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-'----------- W . Michael Sullivan, Director Date Department ofEnvironmental Management