BEFORE THE

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

In the Matter of California’s Request for

Authorization Action Pursuant to Clean Air Act Section 209(e) for California’s Regulation to Reduce Emissions from Diesel Engines on Commercial Harbor Craft Operated Within California Waters

and 24 Nautical Miles of the California

Baseline

__________________ ________________ ) ) ) ) ) ) ) ) )

CLEAN AIR ACT § 209(e)(2) AUTHORIZATION SUPPORT DOCUMENT

SUBMITTED BY THE

CALIFORNIA AIR RESOURCES BOARD

APRIL 12, 2010

I. INTRODUCTION

The California Air Resources Board (CARB or Board) requests that the Administrator of the U.S. Environmental Protection Agency ( EPA) grant California a new authorization under Clean Air Act (CAA) section 209(e )(2) for the emission standards, other requirements relating to the control of emissions, and accompanying enforcement provisions applicable to diesel engines on commercial harbor craft (CHC) operated within Regulated California Waters (herei nafter, “CHC regulation” or “regulation”). 1 The CHC regulation establishes requirements app licable to both new and in-use diesel engines on commercial harbor craft, and is pr ojected to reduce bas eline 2004 emissions levels of diesel particulate matter (PM) by 75 percent and oxides of nitrogen (NOx) by 60 percent when it is fu lly implemented in 2025.

At its November 15, 2007 public hearing, the Board approved the CHC regulation by

Resolution 07-47. 2 At the direction of the Board, after maki ng modifications to the regulation available for s upplemental public comment, CARB’s Executive Officer formally adopted the rulemaking in Execut ive Order R-08-007 on September 2, 2008 (Enclosure 11). The CHC regulation wa s submitted to California’s Office of Administrative Law (OAL) fo r review on September 5, 2 008, and was approved by OAL

and filed with California’s Secr etary of State on October 20, 2008. The CHC regulation became operative under state law on November 19, 2008.

1 The specific regulatory text enact ed by the CHC regulation is set fort h in title 13, California Code of Regulations (CCR), section 2229.5 and titl e 17, CCR section 93118.5 (Reference 15).

2 Enclosure 10.2 Section II describes the CHC regulation. Secti on III describes the criteria for granting

authorizations and demonstrates that the Commercial Harbor Craft regulation meets the criteria for the request ed authorization action.

II. SUMMARY OF THE COMMERCIAL HARBOR CRAFT REGULATORY
REQUIREMENTS

A. Background

A summary of the emissions-related and acco mpanying enforcement provisions of the regulation that require author ization follows. A more detailed description of these provisions is provided in the Staff Report: Initial Statement of Reasons (Staff Report, Enclosure 2) and the Techni cal Support Document (TSD, Enclosure 3). Commercial harbor craft include a variety of vessel ty pes, including ferries , excursion vessels, tugboats, towboats, and commercial and char ter fishing boats. Approximately 80 percent of all harbor craft engi nes are presently unregulated (Tier 0) diesel engines. Commercial harbor craft operating in Califor nia emit approximatel y 3.3 tons per day (tpd) of diesel particulate matter (PM) and 73 tpd of oxides of nitrogen (NOx), which significantly contribute to California’s ambi ent PM2.5 levels and need to be reduced so

that California can meet the 2014 National Ambient Air Quality Standards (NAAQS) deadline for PM2.5 in the South Coast Air Basin (SCAB).

B. Requirements for New Harbor Craft Acquired for Use in California

Waters

The CHC regulation establishes requirem ents for diesel propulsion and auxiliary engines installed in new harbor craft acqui red on or after January 1, 2009 for use in

California waters.

1. New Harbor Cra ft, Including New Ferries

New harbor craft vessels, including ferries, may not be sold, offered for sale, leased, rented, or acquired unless each propulsion and auxiliary diesel engine on the vessel is

certified to the most stri ngent federal new marine engine emission standards for the engines’ power rating and displacement in effect at the time any one of the

aforementioned actions occur.

2. Additional Requirements for Larger New Ferries

If a new ferry with a capacity to transport 75 or more passengers complies with the requirements of section II.B.1. above by bei ng equipped with diesel propulsion engines

that either meet the federal Tier 2 or Tier 3 new ma rine engine emission standards, the propulsion engines must have the best available control technology (BACT) installed on those engines. Alternatively, if a new ferry complies by having a federal Tier 4 certified propulsion engine, BACT is not required.3 BACT is the diesel emission control strat egy (DECS) determined by CARB’s Executive Officer to provide, or is expected to pr ovide, the greatest feasible reductions

of NOx or diesel PM when used with the ferry’s propulsion engines and does not result in an increase of 10 percent or more of any air pollutant, including NOx or diesel PM, relative to the engine’s emissions of that air pollutant without the use of BACT, and the

DECS manufacturer or an authorized dealer of the DECS has determined or otherwise agrees with the Executive Officer that use of the DECS on or with the new ferry’s propulsion engine(s) would not in validate or otherwise adverse ly affect the propulsion engine’s original warranty. 3

C. Requirements for In-Use Harbor Craft

1. Newly Acquired New or In-Use Engines for In-Use Harbor Craft

Effective January 1, 2009, with one noted exception, 4 new or in-use diesel engines for in-use harbor craft may not be sold, offered for sale, leased, rented, or acquired unless the diesel propulsion or auxiliary engines are certified to at l east federal Tier 2 or Tier 3

marine emission standards for a new engine of the same power rating and displacement that were in effect at the time any one of the aforementioned actions

occur. 5 This provision ensures that as older engi nes on in-use vessels are retired, they are replaced with cleaner Tier 2 or Tier 3 certified marine engines. 6

2. In-Use Requirements for Tier 0 and Tier 1 Marine Engines in Ferries, Excursion Vessels, Tugboa ts, Towboats, Push Boats, and Multipurpose Harbor Craft

a. In-Use Emission Requirements

The CHC regulation requires that in-use Ti er 0 and Tier 1 propulsion and auxiliary marine engines on ferries, excursion vesse ls, tugboats, and towboats meet emission limits equal to or cleaner t han the federal new marine engine certification standards 7 in effect for the year that in -use engine compliance is requir ed. A compliance schedule,designed to clean up the oldest and dirtiest high use engines first, is based on the inuse engine model year and hours of operation. The regulation includes an accelerated

3 17 CCR section 93118.5(e)(5)(C).

4 A newly acquired engine does not need to meet the ma rine engine standards in effect at the time the engine was acquired if it was manufactured before the effective date of new marine engine emission standards and is acquired by the vessel owner or ope rator no later than six months after the effective

date of the new marine standard. This allows engine re tailers six months to sell in-stock engines after

new standards become effective.

5 A newly acquired engine is not required to meet Tier 4 standards unless it is replacing a Tier 4 certified engine.

6 Owners or operators may install Tier 3 engines on in-use vessels as replacement engines after the Tier 4 marine standards take effect, but only if the engine to be replaced was not a Tier 4 certified engine (see footnote 5).

7 See Table 4 of the Staff Report, and Tables II-3 th rough II-5 of the Technical Support Document and the discussion of EPA’s promulgation of emission standards a nd effective dates at pages 7-9 of the Staff Report4 compliance schedule for harbor craft with home ports in the South Coast Air Basin (SCAB), which is in non-atta inment for both ozone and PM2.5 8 Vessel owners or operators may comply by replacing an in-use engine with a new engine, or by demonstrating that an existi ng engine meets the Tier 2 or Tier 3 standards (e.g., through utilization of engine rebu ild kits or aftertreatment technologies), or that the vessel has not and will not operate more than 300 hours in a year.

In determining a vessel’s compliance date, the regulation considers the engine’s model year, which in most cases is the year of manufacture. Howeve r, the compliance date may be extended beyond the date based on the year the engine was manufactured if the owner or operator takes certain actions before compliance is otherwise required. For vessels ported outside the SCAB, the co mpliance date may be delayed up to five years if the owner or operat or of the vessel implements an emission control strategy that achieves at least a 25 percent reduction in either PM or NOx engine emissions. Regardless of a vessel’s home port, its compliance date may be extended beyond the compliance year based on engine manufacture if the vessel’s engine is rebuilt to at least Tier 1 standards prior to Januar y 1, 2008. In such cases, the engine’s rebuild date can be used as its model year for determining comp liance with the in-use requirements.

b. Compliance Flexibility

The CHC regulation includes several provisions that provide vessel owners or operators with flexibility in complying with the in-use emissions requirements applicable to ferries, excursion vessels, tugboats, towboats, pus h boats, and multipurpo se harbor craft.

(i) General Compliance Date Extensions

Compliance extensions from the in-use em issions requirements are available if: an engine’s annual hours of operation significant ly increased during the year before its anticipated compliance date such that the effective compliance date would be accelerated to an earlier compliance date; there is no suitable engine replacement available anywhere that can be used in t he specific vessel; engine repower delays result from engine manufacturer delays and/or installation difficulties; or an owner has a fleet of two or more vessels, and two or more engines on those vessels have compliance dates of 2009 or 2010.

8 See Tables 7 and 8 in 17 CCR section 93118.5(e)(6 )(D). Vessels both within and without the South Coast Air Basin (SCAB) must demonstrate compliance beginning December 31, 2009. Tier 0 marine engines in the SCAB must fully comply with the in-use requirements by December 31, 2013; Tier 0 marine engines outside the SCAB must comply by December 31, 2016. Tier 1 engines in the SCAB must fully comply by December 31, 2020, and Tier 1 engine s outside the SCAB must fully comply by December
31, 2022.5 (ii) CHC regulation exemptions

Engines on the following vessel types are entir ely exempted from the regulation: military tactical support vessels, U.S. Coast Guard ve ssels, vessels traversing California coastal waters without stopping and without entering any California inland waterway or port (except in emergency situations or if needed to comply with U.S. Coast Guard regulations), temporary em ergency rescue/recovery vessels, engines on recreational vessels, engines on ocean-going vessels (e xcept ocean-going tugboats and towboats), vessel engines, including t hose on barges, that are regi stered with CARB’s Portable Engine Registration Program (PERP) befor e January 1, 2009, r egistered with PERP on or after January 1, 2009, and not permanently affixed to the vessel, and registered or permitted under local air district r egulations before January 1, 2009.

The following engines are exempted from the in-use emissions requirements applicable to engines in ferries, excursion vesse ls, tugboats, towboats, push boats, and multipurpose harbor craft, but remain subject to all other regulatory requirements: engines on registered historic vessels, engines rated less than 50 horsepower (hp), engines operated less than 300 hours per calendar year, engines on a vessel scheduled to be retired within one year of t he engines’ compliance date, and engines on a temporary replacement vessel (require app roval from CARB’s Executive Officer to operate in California).

D. Requirements for Both New and In-Use Harbor Craft

1. Monitoring, Reporting, a nd Recordkeeping Requirements

Owners or operators of both new and in-use harbor craft must install (if not already installed), a non-resettable hour meter on ea ch engine, and submit an initial report providing CARB with contact informati on, vessel, emission control system (if applicable), and engine information, incl uding annual hours operated and location. 9
Ferry, excursion, tugboat, towboat, push boat, and multipurpose harbor craft owners or operators must also specify how they plan to comply with the regulation’s in-use engine requirements. Vessel owners or operators must keep a copy of the completed initial reporting form and yearly updates on the vessel or in a central dockside location to be made available upon request of t he CARB staff. Additional r eporting is required if there is a change of ownership, a change of hour s of operation, upon the purchase of new vessels or engines, and upon compliance with the in-use engine requirements.

2. Alternative Cont rol of Emissions (ACE)

The regulation provides harbor craft owner s or operators an alte rnative means of complying with the CHC regulation’s hour-me ter and new vessel and in-use emissions requirements if they implement alternative emission control strategies demonstrated to

achieve diesel PM and NOx emission reducti ons equivalent to or greater than the

9 To the extent that the above info rmation is used for emission inventory purposes, authorization is not required.6 reductions required by the primary compliance requirements. Alter native strategies can include engine modifications, exhaust after-tr eatment control, engine repower, use of alternative fuels or fuel additives, or fl eet averaging. ACE applications must be approved by CARB’s Executive Officer. If CARB’s Executive Officer approves an application to utilize an ACE st rategy, the successful applicant must maintain specified

records and test records for the lifetime of each engine.

III. AUTHORIZATION CRI TERIA AND ANALYSIS

A. Criteria for Granting Author izations Under CAA Section 209(e)

Section 209(e)(2) of the CAA sets forth t he protocol for the Administrator to grant California authorization to adopt and enfor ce standards and other requirements relating to controlling emissions from new and in-use nonroad engines that are not conclusively preempted by section 209(e)(1) – new engines less than 175 hp used in farm and construction equipment and vehicles and new engines used in new locomotives and locomotive engines. Section 209(e)(2) direct s the Administrator to grant California an authorization for standards and requirements fo r all other nonroad engines if California

determines that the state’s st andards will be, in the aggregate, at least as protective of public health and welfare as applicable federal standards, unless she finds that: (1) the protectiveness finding of the state is arbitrary and capric ious; (2) California does not need separate state standards to meet compel ling and extraordinary conditions; or (3)

the state standards and accom panying enforcement procedures are not consistent with

CAA section 209.

In its 209(e) Final Rule, EPA interpreted “not consistent with section 209” to mean that those challenging a Californi a authorization request must show that the State’s standards and accompanying enforc ement provisions are not consistent with sections 209(a), 209(b)(1)(C) – that t he standards are not consistent with CAA section 202(a) – and 209(e)(1). 10

B. The Administrator Must Gran t California Authorization for the

Commercial Harbor Craft New Vessel Requirements

CARB submits that for the r easons set forth below and in t he Staff Report and Technical Support Document for the r egulation’s rulemaking, the Administrator must grant California a new authorization for the requi rements applicable to diesel engines on new

and in-use harbor craft because no basis exis ts under the criteria of CAA section 209(e)(2) for the Administrator to deny California’s request.

1. Protectiveness Determination

In adopting the Commercial Harbor Craft re gulation, the Board approved Resolution 07-47 (Reference 10), in whic h it expressly declared:

10 59 Fed.Reg. 36969, 36983 (July 20, 1994).7 BE IT FURTHER RESOLVED that the Board hereby determines, in accordance with section 209(e)(2) of the CAA, that to the ex tent the regulation approved herein affects nonroad engines as defined in CAA section 216(10) and (11), the

emission standards and other requirements related to the control of emissions in the regulation approved herein are, in t he aggregate, at least as protective of public health and welfare as applicable federal standards; California needs its nonroad emission standards to meet comp elling and extraordinary conditions; and the standards and accompanying enfor cement procedures approved herein

are consistent with CAA section 209.

No basis exists for the Administrator to find that the Board’s determi nation is arbitrary or capricious. The CHC regulation requires new diesel engines in newly acquired harbor craft to comply with applicable federal Tier 2 through Tier 4 emissions standards in effect on the date that a pr ohibited action occurs, and expr essly incorporates those

federal emission standards into the regulation. 11 Given that Calif ornia’s requirements for new diesel engines in newly acquired har bor craft are identical to the federal requirements applicable to those engines, th e Board’s determination of protectiveness for these new engine requirement s is clearly well founded.

The Board’s protectiveness determination al so extends to the requirements for new propulsion diesel engines in larger new ferri es. This requirement is clearly more stringent than applicable federal Tier 2 or Tier 3 standards fo r new marine engines, as it requires the owners or operator s of vessels to also incorporate BACT on the vessels’ engines. 12 CARB’s Executive Officer will deter mine BACT for each engine on a caseby-case basis, which will help ensure that t he NOx or diesel PM emissions from such engines are reduced to the greatest extent f easible beyond the federal Tier 2 and Tier 3 marine engine emission standards. 13 With respect to ferry propulsion engines subject to federal Tier 4 standards, the Ca lifornia and federal r equirements are ident ical (i.e., ferry propulsion engines only need to comply with Tier 4 standards), so California’s requirements for these engines are clearly at least as protective as corresponding federal requirements for these engines.

11 Title 17, California Code of Regulations (C CR) sections 93118.5(d)(7 6)-(78); 93118.5(e)(4).

12 The CHC regulation defines BACT as a diesel emissi on control strategy that is determined by CARB’s Executive Officer to: (1) provide or that is expected to continuous ly provide the greatest reduction feasible of NOx or diesel PM when used with the ferry’ s propulsion diesel engine, (2) does not result in an increase of 10 percent or more of any air pollutan t, including NOx and diesel PM, relative to the engine’s emissions of that air pollutant without the use of BACT; and (3) either the DECS manufacturer or an

authorized dealer of the DECS determines or otherwis e agrees with the E.O. that use of the DECS on or with the new ferry’s propulsion engine(s) would not inva lidate or otherwise adversely affect the propulsion engine’s original warranty. 17 CCR section 93118.5(e)(5)(C).

13 CARB has also established an option allowing owners to install Tier 4 certified ferry propulsion engines, if they are available, in lieu of installing or usin g BACT on Tier 2 or Tier 3 engines, and only before the

Tier 4 standards become effective.8 There is no question that the in-use requi rements of the CHC regulation are more stringent than applicable feder al regulations because EPA is without authority to regulate in-use nonroad engines. 14

2. Compelling and Extraordinary Circumstances

In adopting Resolution 07-47, the Board also confirmed CARB’s longstanding position

that California continues to need its own non road engine program to meet serious air pollution problems. The Administrator has pr eviously and consistently recognized that California meets the compelling and extraor dinary criterion when granting waivers for motor vehicles under section 209(b) and authorizations for California’s nonroad regulations under section 209(e) of the CAA. The relevant inquiry under section 209(e)(2)(A)(ii) is whether California needs it s own emission control program to meet compelling and extraordinary conditions, not whether any given standard is necessary

to meet such conditions. 15

3. Consistency with CAA Section 209

As previously stated, section 209(e)(2) r equires those opposing the granting of an

authorization to show that the emissi on standards and accompanying enforcement provisions are not cons istent with sections 209( a), (b)(1)(C), and (e).

a. Consistent with CAA Section 209(a)

The new vessel requirements are consistent with CAA section 209(a), which preempts states and political subdivisi ons from adopting or attempting to enforce any standard relating to the control of emissions from new motor vehicles or new motor vehicle engines. The new diesel engines regul ated by the new vessel requirements

are neither new motor vehicles 16 nor new motor vehicle en gines, and clearly fall within the definition of nonroad engine established by Congress. 17

b. Consistent with CAA Section 209(e)(1)

The new vessel requirements are also consist ent with section 209(e)(1), which prohibits

states and local subdivisi ons from adopting or enfor cing any standard or other requirement relating to the control of emissions of new nonroad less than 175 hp engines used in farm and construction equipment or engines used in new locomotives.

14 See CAA section 213.

15 Final 209(e) Rule , 59 Fed.Reg. at 36982. The Administrator has recognized that even if such a standard by standard test were applied to California, it "would not be applicable to its fullest stringency due to the degree of discretion given to California in dealing with its mobile source pollution problems." (41 Fed.Reg. 44209, 44213, (October 7, 1976 ); 49 Fed.Reg. 18887, 18892 (May 3, 1984).)

16 The regulated engines are not “self-propelled vehicles designed for transporting persons or property on a street or highway” CAA section 216(2)

17 “[A]n internal combustion engine (including the fuel system) that is not used in a motor vehicle or a vehicle used solely for competition, or that is not subject to standards promulgated under section 111 or section 202.” CAA section 216(10).9 Although some of the new dies el engines on new harbor craf t may be rated at less than 175 hp, those engines are not pr imarily used in farm and construction equipment and

vehicles.

c. Consistent with CAA Section 209(b)(1)(C)

CAA section 209(b)(1)(C) provi des that no waiver shall be granted if the Administrator

finds that the state standards and acco mpanying enforcement procedures are not consistent with section 202(a) of the CAA. EPA has historically interpreted consistency with section 202(a) using a two-pronged test: (1 ) that there is sufficient lead time to permit the development of technology nece ssary to meet the standards and other requirements, giving appropriate consideration to the cost of compliance in the time frame provided, and (2) that the California an d federal test procedures are sufficiently compatible to permit manufacture rs to meet both the state a nd federal test requirements with one test vehicle or engine. 18 The reference to “cost of compliance” in CAA section 202(a) refers to the economic costs of emission standards and accompanying enforcement procedures and the timing of a particular emissi on control regulation rather than to its social implications. 19

(i) New Vessel Engine Requirements

The new vessel engine requirem ent that requires all dies el propulsion and auxiliary engines on newly acquired new vessels to m eet applicable federal new marine engine Tier 2, 3, or 4 emission cert ification standards at the time the vessels are acquired, is clearly technologically feasible because it mirrors EPA’s already adopted new marine Tier 2, 3, and 4 emission standards, and because the technological feasibility and

economic costs associated with each of t hose emissions standards has already been fully considered by EPA in its rulemakings pr omulgating these certification standards. No issue regarding test procedure inconsiste ncy between federal and California test procedures exists because CARB has adopted EPA’s Tier 2, 3, and 4 federal marine engine test procedures for the covered engine classifications. Therefore, the

Administrator cannot find that the Californ ia requirements are inconsistent with CAA

section 209.

(ii) Requirements for Larger New Ferry Propulsion Engines

(A) Technical Feasibility and Lead Time

As previously explained in section II.B.2, the CHC regulation require s that prior to the date that new engines must be certified to Tier 4 emission standards, the diesel propulsion engines in newly acquired large new ferries must meet applicable Tier 2 or

18 See 61 Fed.Reg. 53371, 53372 (October 11, 1996); Decision Document at p.2 ( OBD II Waiver

Decision ).

19 Id. , referencing See S. Rep. No. 192, 89th Cong., 1st Sess. 5-8 (1965); H.R. Rep. No. 728, 90th Cong., 1st Sess. 23 (1967), U.S. Code Cong. & Admin.News 1967, p. 1938; see also 74 Fed.Reg. 3030 (January
16, 2009), Decision Document at p. 49

.10 Tier 3 federal new marine engine emission st andards in effect on the date the ferry is acquired and be equipped with BACT. Alternatively, if Tier 4 engines have been introduced early, the newly acquired vessels may be equipped with new diesel propulsion engines certified to Tier 4 standards , with no BACT required. Once the Tier 4 standards are required, ferry owners or operators must install Tier 4 certified propulsion engines, and BACT is not required.

For the reasons set forth in se ction III.B.3.c.(i) above, the new marine engine Tier 2, 3,

and 4 emission standards are cons istent with CAA section 209(b )(1)(C). To the extent that owners or operators elect to comply by meeting applicable Tier 2 or Tier 3 standards with BACT, the BACT requirement is also technically feasible. 20 By definition, BACT is technically feasible in that it requires the best level of control that:

has been achieved in practice or (2) in the absence of any previously determined BACT determinations, on engineering evalua tions and consideration of the best

available information. 21 BACT must be determined on a vessel-by-vessel basis, because the environmental operating conditi ons that control technologies will be exposed to can vary significantly from one application to another, 22 and vessel-specific factors such as engine duty cycle, exhaust syst em configuration, engine placement in the hull, and weight of the emission control strategy components all affect the type of technologies that can be utilized in a specific vessel. 23 To the extent that the Executive Officer determines that BACT for a specific ferry vessel is not available, use of Tier 2 or 3 propulsion engines is all that would be required.

As stated, if Tier 4 engines are available befor e they are required under the federal rule, owners or operators of new ferries may elect to comply by installing new Tier 4 engines instead of using Tier 2 or Tier 3 engines with BACT. 24 This is a voluntary option, which will only be used if Tier 4 technology is available. 25 This option is only available until the Tier 4 engine standards take effect. At that time, for the reasons specified in section III.B.3(c)(i), the technical feasibility of the Tier 4 standards should not be in question, having fully been evaluated by EPA in adopti ng the federal emission standards.

A key element in considering the costs of compliance in the context of in-use regulations is whether the incurred costs can be passed on by engine and BACT

20 The BACT requirements effectively apply only to the owners and operators of ferries, as they are the entities responsible for submitting BACT applications that contain specific vessel information and recordkeeping, reporting, and monitoring requirements, and for operating BACT in conjunction with a Tier 2 or Tier 3 certified propulsion engine. TSD Sect ion V.B.5.b.(iv), 17 CCR sections 93118.5(e)(5)(A)2, (e)(5)(D). As discussed in this section, BACT is determined on a case-by-case basis because it requires vessel-specific information –information that is uniquel y available and within the control of ferry owners and operators.

21 See, FSOR, Section III.F.(Comment s 1-5 and Agency Res ponses thereto), pp. 31-32.; see also Appendix E to the TSD.

22 FSOR, Section III.F, Agency Response to Comment 5.

23 Appendix E to TSD, p. E-1. These factors were also discussed in the context of selecting an

Alternative Emission Control Strat egy, but the vessel-specific considerations are equally applicable to BACT determinations for new ferry propulsion engines. TSD, Section VI.D.

24 17 CCR section 93118.5(e)(5)(B).

25 74 Fed.Reg. 3030 January 16, 2009), Decision Document at 64.11 manufacturers to owners or operators, and w hether those costs can in turn be passed on from ferry owners or operat ors to their passengers. In that regard, CARB has determined that ferry owner s or operators will largely be able to pass on their compliance costs to their cu stomers without incurring signi ficant economic disruption. 26

In such situations, the Admi nistrator has long deferred to California’s policy judgments, including judgments on costs that may have social implications and that pertain to costeffectiveness as opposed to direct compliance costs. 27 Accordingly, for the reasons outlined above, the new ferry requirements are feasible within the time provided for compliance, giving appropriate consideration of costs.

(B) Consistency of Larger New Ferry Requi rements with Federal T est

Procedures

For the reasons outlined above, no issue regarding test procedure inconsistency between federal and California test proc edures exists because CARB has adopted EPA’s Tier 2, 3, and 4 feder al marine engine test proced ures for the covered engine classifications. The BACT requirements do not present any issue of incompatibility between California and federal test proc edures because EPA does not require ferry owners or operators to incorporate BACT on their vessels and BACT requirements are not a part of the federal testing program.

(iii) In-Use Emission Requirements for Ti er 0 and Tier 1 Marine Engines in Ferries, Excursion Vessels, Tugboats , Towboats, Push Boats, and Multipurpose Harbor Craft

As described in section II.C.2 of this author ization request, the CHC regulation requires that owners of in-use ferries, excursion vessels, tugboats, towboats, push boats, and multipurpose harbor craft utilizing Tier 0 or Tier 1 marine engines demonstrate compliance with emission limits equivalent or cleaner than EPA ’s Tier 2 or Tier 3 new marine engine certification standards by spec ified compliance dates. The schedule of compliance is based on the location of the vessel’s homeport, the vessel type, model year of the engine, and the engine ’s annual hours of operation.

The in-use emission requirements provide ve ssel owners with four compliance options: (1) replacing in-use engines with new engines certified to applicabl e Tier 2 or Tier 3

26 See Resolution 07-47, Technical Support Document , section VIII.D and VIII.E; FSOR Section III.L.7

27 MEMA I, 627 F.2d at 1118. See also 36 Fed.Reg. 17158 (August 31, 1971) [“The issue of whether a proposed California requirement is likely to result in only marginal improvement in air quality not commensurate with its cost or is otherwise an arguabl y unwise exercise of regulatory power is not legally pertinent to my decision under section 209. . . .” ]; 40 Fed.Reg. 23102, 23104; 58 Fed.Reg. 4166 (January 7, 1993), Decision Document, at p. 20 [“Since a balanci ng of these . . . costs against the potential benefits from reduced emissions is a central policy decision [o f CARB in adopting the regulation] I believe I am required to give very substantial deference to Ca lifornia’s judgments on this score.”]; 74 Fed.Reg. 3030 January 16, 2009), Tr ansportable Refrigeration Unit Decision Document at 63 [“EPA believes that the CARB regulations are feasible with respect to cost ob jectively; i.e., all fleet operators face the same cost per unit to comply. While this cost may have differ ent impacts on fleets of va rying sizes, EPA recognizes that it is up to CARB to choose who it will regulate under its standards.”]12 standards, (2) demonstrating that the in-use engine already meets the most stringent

Tier 2 or Tier 3 standards in effect for new engines of similar power rating and displacement, or (3) demonstrating that the in-use engine has not and will not operate more than 300 hours per calendar year. 28

(A) Technical Feasibility and Lead Ti me of In-Use Emission Requirements for Ferries, Excursion Vessels, Tugboats, Towboats, Push Boats, and Multipurpose Harbor Craft

1. Engine Replacement is Technically Feasible

CARB anticipates that the vast majori ty of vessel owners will comply with this requirement by replacing their in-use engines with new engines certified to either the applicable EPA Tier 2 or Tier 3 standards. As explained in section III.B.3.c.(i) of this document, EPA has considered both the tec hnological feasibility and the economic

costs associated with its Tier 2 and 3 new marine engine standards in its rulemaking actions that promulgated those emissi on standards, and has determined that those engine standards provide sufficient lead time to permit the development and application of requisite technology, giving appropriate cons ideration to the cost of compliance. The federal Tier 2 marine standards apply to 2004 through 2007 model year marine engines and are currently available for all engine pow ers and displacement. The federal Tier 3 marine standards apply to 2009 through 2014 model year marine engines and are currently available for the smallest engines . As previously st ated, EPA determined in adopting the federal marine rule that suffici ent lead time has been provided for other Tier 3 engines categories for which cert ification is required between 2012 and 2014. 29

2. Demonstrating Compliance with Tier 2 and Tier 3 Standards

An owner or operator may demons trate that its vessel’s in-u se engines currently meet Tier 2 or Tier 3 standards applicable to new engines of the same power rating and displacement. 30 Possible means for demonstrating co mpliance include rebuilding in-use engines to cleaner emissions standards or implementing diesel emission control strategies, both of which are presently being utilized in marine applications. 31

3. Demonstrating that a Vessel Will Not Operate More than 300 Hours in a Compliance Year

A vessel owner can comply with the in-use emission requirements by demonstrating that an in-use engine has not and will not operate more than 300 hours per calendar

28 17 CCR section 931 18.5(e)(6)(C)1-4.

29 ISOR section 12, TSD Section VI.B; “[W]e believe these technologies [to comply wi th Tier 3 marine diesel engine standards] can be implemented for some engines as early as 2009, and for all engines by 2014 ...” 73 Fed. Reg. 25098, 25136 (May 6, 2008).

30 Compliance by meeting Tier 2 levels is only av ailable before the date Tier 3 standards become effective for new engines of the same size and configuration as the in-use engine.

31 TSD, Section VI.D and E.,and Appendix E and FSOR at pages 45-46.13 year. There should be no dispute that th is is feasible, and CARB staff received no comments during the rulemaking process questi oning the technical feasibility of this option.

4. Additional Flexibility Provided Through Exemptions and Compliance

Extensions

The compliance extensions and exemptions t hat were described in section II.C.2.b will provide vessel owners and operators enhanced fl exibility to comply with the in-use emissions requirements.

(B) Consistency with Federal Test Procedures

The in-use emission requirements present no issue regarding inco mpatibility between California and federal test procedures. T he compliance methods do not alter the test procedures specified for certifying federal Ti er 2, 3, or 4 new marine engines. To the extent that the compliance methods apply to in -use modifications to existing engines, they are not inconsistent with federal te st procedures simply because EPA does not have any comparable in-use standards and te st procedures and lacks the authority to adopt such requirements. 32

(iv) The Alternative Control of Emissions (ACE) Provision of the CHC Regulation

Title 17, CCR section 93118.5(f) provides vessel owners an alternative means of compliance with the in-use emission requirem ents of section 93118. 5(e). Owners that use this compliance option must implement al ternative emission control strategies that are demonstrated to provide diesel PM and NOx emission reduction s equivalent to, or greater than, the emission reductions that would have been otherwise achieved under section 93118.5(e). Ex amples of possible alternativ e emission control strategies include engine modifications, exhaust aftert reatment controls, engine repowers, and use

of alternate fuels or fuel additives. T he technical feasibility of engine repowering was discussed in section III.B.3(c)(i) of this r equest. The technical feasibility of exhaust aftertreatment controls and engi ne rebuilding was discussed in section III.B.3(c)(ii)(A) of this request and the references to t he Staff Report and TSD cited therein.

The ACE provision presents no issue regardi ng incompatibility between California and federal test procedures because EPA does not have any comparable in-use standards, and lacks the authority to adopt such requirements. 33

(v) Accompanying Enforcement Requirements

An integral component of t he regulation requires fleet ow ners or operators to submit compliance reports and maintain records. Among other things, a new ferry owner must

32 See CAA section 213; EMA v. U.S. EPA, supra, 88 F.3d 1075.

33 See CAA section 213; EMA v. U.S. EPA, supra, 88 F.3d 1075.14 specify and agree, at a minimu m, to report and maintain reco rds of (i) hours of operation for the engine and BACT and fuel usage, (ii) us age of any alternative fuels, additives, agents, flow rates, and emission test resu lts, (iii) maintenance procedures for the engine(s) and its BACT, and (iv) any other measurements or re cordings specified by the

Executive Officer. 34 Similarly, owners and operators of in-use vessels must report and maintain records that demonstrate complianc e with the in-use emission requirements 35
and eligibility for the compliance extensions available under title 17, CCR, section 93118.5(e)(6)(E). The regulation also requi res that all owners or operators have nonresettable hour meters installed on their ve ssels to record hours of operation and to provide accurate emission inventory information. 36

During the rulemaking process, no party alleged that the CHC regulation’s reporting and recordkeeping requirem ents were not capable of being implemented in the lead time provided or were inconsistent with federal test procedures.

These accompanying enforcement provisions sa tisfy the criteria of a new authorization because they do not undermine the Board’s prot ectiveness determination. CARB fully

considered these and other enforcement provisions wh en making its protectiveness finding, and consequently these provisions do not undermine its fi nding that the adopted emission standards are at least as protective as applicable federal requirements. The enforcement provisions further do not affe ct the technological feasibility of the requirements or mandate the use of incompatible test procedures.

IV. CONCLUSION

Based on the foregoing, CARB respectfully requests that the Administrator grant California’s requests for the authorization ac tion as described in this document pursuant to CAA section 209(e). To assist you in re viewing the requests, CARB is enclosing two CD-ROMs, each containing the following referenced document s to be included in the record of this waiver proceeding.

Reference Materials from the Co mmercial Harbor Craft Regulation

1. Public Hearing Notice, dated August 28, 2007.

2. Staff Report: Initial Statement of Reasons for Proposed Rulemaking, with Appendix A.

3. Technical Support Document With Appendices A through F

34 17 CCR section 93118. 5(e)(5)(D)(2)(b).

35 17 CCR sections 93118(h)(2) and (h)(3).

36 As previously stated, to extent that the me ters are used for emissions inventory reporting no authorization is required.15 4. Errata: Correction of Inte rnet Website Address, dated September 7, 2007.

5. Errata: Corrected Tables , dated September 11, 2007.

6. Copy of Slides for Staff Presentation.

7. Notice of Continuation of Public Hearing dated November 1, 2007.

8. Notice of Availability of Modified Text, with Attachments 1 through 5, issued June 18, 2008.

9. Copy of Slides for Staff Presentation.

10. Resolution 07-47, dated November 15, 2007, with Attachments B and C.

11. Executive Order R-08- 007, dated September 2, 2008.

12. Final Statement of Reasons for Rule making, Including Su mmary of Comments and Agency Response.

13. Transcript of October 26, 2007 Public Hearing in the Commercial Harbor Craft Regulation rulemaking.

14. Transcript of November 15, 2007 Public Hearing in the Commercial Harbor Craft Regulation rulemaking.

15. Fully endorsed STD 400 face sheet and Final Regulation Order as approved by

OAL and filed with the Secret ary of State January 18, 2007, for adoption of title 13, California Code of Regulati ons, section section 2299.5, and adoption of title 17, California Code of Regulati ons, section 93118.5 and incorporated test procedures.

16. Office of Administrative Law A pproval Notice, dated October 20, 2008.

CARB Contacts

Technical questions or requests for additional technical information on this item should be directed to Cherie Rainforth, Manager of the Control Strategies Section, at (916) 327-7213. Legal questions should be directed to Alex Wang, Senior Staff Counsel, at (916) 323-9610.