STAFF REPORT: INITIAL STATEMENT OF REASONS FOR PROPOSED RULEMAKING

ADOPTION OF THE PROPOSED AMENDMENTS TO CALIFORNIA’S SMALL OFF

- ROAD ENGINE AND TIER 4 OFF

- ROAD COMPRESSION

- IGNITION ENGINE REGULATIONS AND TEST PROCEDURES; AND, AMENDMENTS TO THE EX HAUST EMISSION CERTIFICATION TEST FUEL FOR OFF

- ROAD SPARK

- IGNITION ENGINES, EQUIPMENT, AND VEHICLES

Mobile Source Control Division Emission Research and Regulatory Development Branch

October 2011State of California AIR RESOURCES BOARD

STAFF REPORT: INITIAL STATEMENT OF REASONS FOR PROPOSED RULEMAKING

Public Hearing to Consider

ADOPTION OF THE PROPOSED AMENDMENTS TO CALIFORNIA’S SMALL OFF

- ROAD ENGINE AND TIER 4 OFF

- ROAD COMPRESSION

- IGNITION ENGINE REGULATIONS AND TEST PROCEDURES; AND, AMEN DMENTS TO THE EXHAUST EMISSION CERTIFICATION TEST FUEL FOR OFF

- ROAD SPARK

- IGNITION ENGINES, EQUIPMENT, AND VEHICLES

To be considered by the Air Resources Board at a two

- day meeting of the Board that will commence December 15, 2011, and may continue to D ecember 16, 2011, at

California Environmental Protection Agency Air Resources Board Byron Sher Auditorium 1001 I Street Sacramento, California 95814

Date of Release: October 26, 2011 Date of Board Hearing: December 15, 2011

This report has bee n reviewed by the staff of the California Air Resources Board and approved for publication. Approval does not signify that the contents necessarily reflect the views and policies of the Air Resources Board, nor does mention of trade names or commercial pr oducts constitute endorsement or recommendation for use.- i

- TABLE OF CONTENTS

EXECUTIVE SUMMARY

................................ ................................ ................................ ...... 1

I. INTRODUCTION

................................ ................................ ................................ ............ 3

A. B ACKGROUND

................................ ................................ ................................ ......... 3
1. California’s Off

- Road Categories

................................ ................................ ...... 3
2. Small Off

- Road Engines

................................ ................................ ................... 4 3. Tier 4 Off

- Road Compression

- Ignition Engines

................................ ................. 5
4. Current U.S. Environmental Protection Agency Nonroad Regulations and Test
Pr ocedures

................................ ................................ ................................ ............... 6
5. California’s Off

- Road Exhaust Emission Certification Test Fuel

........................ 7 B. R EGULATORY A UTHORITY

................................ ................................ ........................ 8 C. R ATIONALE FOR THE P ROPOSED A MENDMENTS

................................ ......................... 8 D. S TAKEHOLDER P ARTICIPATION

................................ ................................ ................. 9
1. Small Off

- Road Engines

................................ ................................ ................... 9
2. Tier 4 Off

- Road Compression

- Ignition Engines

................................ ................. 9 3. Exhaust Emission Certification Test Fuel

................................ ........................ 10

II. PROPOSED AMENDMENTS TO THE SMALL OFF

- ROAD ENGINE TEST PROCEDURES

................................ ................................ ................................ ................... 10

A. A LIGNMENT WITH P ART 1054

................................ ................................ ................. 10 B. A LIGNMENT WITH P ART 1065

................................ ................................ ................. 11
1. Allowance for Supplemental Engine Cooling

................................ .................. 11
2. Measurement of PM Emiss ions from Two

- Stroke Engines

............................. 12
3. Exhaust Emission Certification Test Fuel Requirements

................................ 12 C. A LIGNMENT WITH P ART 1068

................................ ................................ ................. 13

III. PROPOSED AMENDMENTS TO THE TIER 4 OFF

- ROAD COMPRESSION

IGNITION ENGINE TEST PROCEDURES

................................ ................................ ......... 13

A. E MISSION S TANDARDS

................................ ................................ .......................... 13
1. Tier 4 ALT NOx+NMHC standards and FEL Caps

................................ .......... 14
2. Alternative NOx FEL Cap Applicability

................................ ............................ 14 B. E NHANCED L ABELING R EQUIREMENTS

................................ ................................ .... 15 C. U PDATED T EST P ROCEDURES

................................ ................................ ................ 16
1. Part 1039

................................ ................................ ................................ ........ 16
2. Part 1065

................................ ................................ ................................ ........ 17 3. Part 1068

................................ ................................ ................................ ........ 17 D. S TOCKPILING P ROHIBITIONS

................................ ................................ .................. 18- ii

- E. O THER P ROPOSED A MENDMENTS

................................ ................................ .......... 18 F. D IFFERENCES B ETWEEN C ALIFORNIA AND F EDERAL R EGULATIONS

........................... 19

I V. PROPOSED AMENDMENTS TO THE OFF

- ROAD EXHAUST EMISSIO N CERTIFICATION TEST F UEL

................................ ................................ ............................ 19

V. ENVIRONMENTAL IMPACT S ANALYSIS

................................ ................................ .. 21

A. B ACKG ROUND ON E NVIRONMENTAL R EVIEW P ROCESS

................................ ............ 21 B. I MPACTS A NALYSIS

................................ ................................ ............................... 22 C. E NVIRONMENTAL J USTICE

................................ ................................ ...................... 24

VI. ECONOMIC IMPACT

................................ ................................ ................................ ... 25

A. L EGAL R EQUIREMENT

................................ ................................ ............................ 25 B. E FFECT OF A MENDMENTS TO THE R EGULATIONS AND T EST P ROCEDURES

................. 25
1. Cost and Cost

- Effectiveness

................................ ................................ ........... 25
2. Economic Impact on the Economy of the State

................................ .............. 25

VII. ALTERNATIVES CONSIDE RED

................................ ................................ ................. 27

A. A LTERNATIVES C ONSIDERED TO THE P ROPOSED A MENDMENTS

................................ 27 B. I SS UES OF C ONTROVERSY

................................ ................................ ..................... 29 C. S UMMARY OF A LTERNATIVES E VALUATED

................................ ............................... 30 D. C ONCLUSIONS AND R ECOMMENDATIONS

................................ ................................ . 30

VIII. REFERENCES

................................ ................................ ................................ ............. 31- iii

- APPENDICES

A. Proposed Regulation Order

– Small Off

- Road Engines

B. Proposed Regulation Order

– Tier 4 Off

- Road Compression

- Ignition Engines

C. Proposed Regulation Order

– Large Spark

- Ignition Engines

D. Proposed Regulation Order

– In

- Use Compliance Requirements for Retrofits of Large Spark

- Ignition Engines

E. Proposed Regulation Order

– New Off

- Highway Recreational Vehicles and Engines

F. Proposed Regulation Order

– Recreational M arine Spark

- Ignition Engines

G. Proposed Test Procedures

– Small Off

- Road Engines

, 200 5

- 2012 Model Years

H. Proposed Test Procedures

– Small Off

- Road Engines, 2013 and Later Model Years, Part 1054

I. Proposed Test Procedures

– Small Off

- Road Engines

, 2013 and Later Model Y ears , Part 1065

J. Proposed Test Procedures , Part I

- C

– Tier 4 Off

- Road Compression

- Ignition Engines,
2008

- 2010 Model Years, Part s 1039/1065/1068

K. Proposed Test Procedures , Part I

- D

– Tier 4 Off

- Road Compression

- Ignition Engines, 2011 and Later Model Y ears, Part 1039

L. Proposed Test Procedures , Part I

- E

– Tier 4 Off

- Road Compression

- Ignition Engines, 2011 and Later Model Years, Part 1065

M. Proposed Test Procedures , Part I

- F

– Tier 4 Off

- Road Compression

- Ignition Engines, 2011 and Later Model Years, Part 106 8

N. Proposed Test Procedures

– Large Spark

- Ignition Engines, 2007 and Later Model Years, Part 1065/1068

O. Proposed Test Procedures

– Large Spark

- Ignition Engines, 2010 and Later Model Years, Part 1048

P. Proposed Test Procedures

– New Off

- Highway Recreational Veh icles and Engines

Q. Proposed Test Procedures

– Recreational Marine Spark

- Ignition Engines

R. Technical Support Document

– For Proposed Amendments Related to Tier 4 Off

- Road Compression

- Ignition Engine Regulations- iv

- S. Summary & Rationale

– Small Off

- Road Engine Regu lations

T. Summary & Rationale

– Tier 4 Off

- Road Compression

- Ignition Engine Regulations

U. Summary & Rationale

– New Large Spark

- Ignition Engines; and In

- Use Large Spark

Ignition Engine Retrofits

V. Summary & Rationale

– Off

- Highway Recreational Vehicles

W. Summary & Rationale

– Recreational Marine Spark

- Ignition Engines- v

- LIST OF ACRONYMS

ABT Averaging, Banking, and Trading
ALT Alternate
ARB Air Resources Board BOARD Air Resources Board CAA Clean Air Act CaRFG2 Phase 2 California Reformulated Gasoline CaRFG3 Pha se 3 California Reformulated Gasoline CCR California Code of Regulations CEQA California Environmental Quality Act CFR Code of Federal Regulations CI Compression

- ignition CO Carbon monoxide
Districts Air Pollution Control and Air Quality Management D istricts E6 Six

- percent ethanol blend E10 Ten

- percent ethanol blend
EMA Truck and Engine Manufacturers Association
FEL Family emission limit
FR Federal Register HC Hydrocarbons HSC Health and Safety Code ISOR Initial Statement of Reasons
kW Kilowa tt LEV III Low Emission Vehicle III LSI Large Spark

- Ignition MAC Manufacturers’ Advisory Correspondence
MTBE Methyl

- tertiary

- butyl

- ether NMHC Non

- methane hydrocarbons NMHC+NOx Non

- methane hydrocarbons plus oxides of nitrogen NOx Oxides of nitrogen NOx+NMHC Oxides of nitrogen plus non

- methane hydrocarbons OHRV Off

- Highway Recreational Vehicles OPEI Outdoor Power Equipment Institute
PM Particulate matter REC MARINE Recreational Marine SORE Small Off

- Road Engines STAFF REPORT Staff Report: Initi al Statement of Reasons SwRI Southwest Research Institute
TRU Transport Refrigeration Unit U.S. EPA United States Environmental Protection Agency1 EXECUTIVE SUMMARY

The amendments proposed herein to the California emissions regulations and test proced ures for new spark

- ignition small off

- road engines (SORE) and equipment , and new compression

- ignition (CI) engines and equipment, are intended to address issues that have developed since the Air Resources Board (Board or ARB) last considered regulations fo r these source categories, and to enhance alignment with other ARB and United States Environmental Protection Agency (U.S. EPA) regulations.

Staff is proposing that the Board modify the SORE test procedures t o adopt portions of U.S. EPA’s t itle 40, Code of Federal Regulations , Parts 1054 and 1065 to increase alignment of the certification and exhaust emission testing requirements without any changes in the stringency of the emission standards and associated test procedures

, and without any cost impacts

. S taff proposes to generally align with the emission test ing and certification requirements , while n ot al ign ing with the federal production

- line testing requirements, and some special compliance and emission credit provisions. The proposed changes would re sult in a more efficient certification process for engine and equipment manufacturers because they would not need to perform duplicative test procedures for California and federal certifications . In addition, manufacturers of the test equipment and analyz ers will eventually phase out support for maintaining older test equipment. Consequently, if ARB does not adopt the proposed emission test requirements, it may become increasingly impractical for manufacturers, private testing facilities, and ARB as well, to perform exhaust emission tests using the current test procedures.

Staff is also proposing that the Board update the off

- road CI engine regulation and associated tier 4 test procedures to provide better harmonization with federal requirements for non road CI engines, but also to expand upon federal engine labeling requirements in order to facilitate implementation and enforcement of the various ARB in

- use programs. Staff’s recommendations for alignment do not adversely affect the stringency or the emi ssion benefits of the existing regulation, but do correct clerical errors, standardize measurement specifications, calibrations, and instrumentation, and would remove unnecessarily burdensome reporting requirements currently placed on the engine manufactur ers. For the most part, the proposed changes are relatively minor, but are necessary to avoid duplicate State vs. Federal certification testing and the production of 49

- state engine families. Additionally, staff is proposing to align with U.S. EPA ’s anti

- stockpiling provisions , which help ensure the realization of pro jected emission benefits, and a new interim tier 4 combined hydrocarbon plus oxides of nitrogen standard w ith the potential to provide emission benefits in addition to those of the December 2 004 rulemaking.

Finally, s taff is proposing modifications to the exhaust emission certification test fuel requirement used by California’s off

- road spark

- ignition, gasoline

- fueled categories including large spark

- ignition engines, SORE, recreational marin e engines, and off

highway recreational vehicles. Off

- road engine, equipment, and vehicle exhaust2 emission certification test fuel requirements have typically followed those of on

- road motor vehicles. Since the requirements of the certification fuel for on

- road motor vehicles are also scheduled to be modified to use a ten

- percent ethanol

- blend of gasoline, staff believes that it is fitting to update the off

- road categories’ exhaust emission certification test fuel requirements at th is time.

Staff recomme nds that the Board adopt this proposal.3 I. INTRODUCTION

This Staff Report: Initial Statement of Reasons (Staff Report) supports the proposed amendments to the following regulations , as well as the associated test procedures , as they are incorporated by ref erence :

• Regulations and Test Procedures for Small Off

- Road Engines (SORE) and Equipme nt , t itle 13, California Code of Regulations (CCR), sections 2400

- 2409 ;

• Regulation s and Test Procedures for Tier 4 Off

- Road Compression

- Ignition (CI) Engines and Equipme nt, t itle 13, CCR, sections 2420

- 2427 ;

• Regulations and Test Procedures for Off

- Highway Recreational Vehicles (OHRV), title 13, CCR, sections 2410

- 2415;

• Regulations and Test Procedures for Recreational Marine (Rec Marine) Engines, title 13, CCR, sections 2440

- 2448;

• Regulations and Test Procedures for Large Spark

- Ignition (LSI) Engines, title 13, CCR, sections 2430

- 2439; and

• Verification Procedure, Warranty, and In

- Use Compliance Requirements for Retrofits to Control Emissions from Off

- Road LSI Engines, t itle 13, CCR, sections 2780

- 2789.

The Staff Report describes the proposed amendments and the rationale for each amendment. It also presents staff’s analysis of impacts associated with the implementation of the proposed amendments, including costs, and ec onomic and environmental impacts. The proposed text of the regulations , which generally set forth numerical emission limits and related standards, is attached as Appendices A

- F . T he proposed test procedures , which generally set forth the manner in which engines are certified to meet the regulatory standards, are attached as Appendices G

- Q.

A. Background

1. California’s Off

- Road Categories

California’s off

- road categories include SORE

, LSI engines, Rec Marine engines, CI engines, and OHRV

. Except for the CI c ategory, which c onsists of engines that operate on diesel fuel, the other categories use spark

- ignition engines that mostly operate on gasoline

. S ome SORE and LSI engines do operate on alternative fuels, such as liquefied petroleum gas or compressed natur al gas

.4 The SORE category includes lawn, garden, and general utility engines that are less than or equal to 19 kilowatts (kW). The LSI engine category includes engines greater than 19 kW that are used in forklifts, portable generators, large turf care eq uipment, airport ground support equipment, and a wide array of other agricultural, construction, and general industrial equipment. The Rec Marine engine category includes personal watercraft engines, as well as outboard, inboard, and sterndrive recreation al boat engines. The OHRV category includes off

- road motorcycles and all

- terrain vehicles. Off

- road CI engines are used in a variety of off

- road applications, including tractors, excavators, portable generators, transport refrigeration units (TRUs), irri gation pumps, welders, compressors, scrubber/sweepers, and a wide array of other agricultural, construction, and general industrial equipment.

2. Small Off

- Road Engines

In 1990, ARB approved the initial exhaust emission control regulations for new SORE. T hese regulations include d exhaust emission standards, emission test procedures, and provisions for warranty and production compliance pr ograms, which are contained in t itle 13, C CR , sections 2400

- 2409, along with the applicable test procedures which are i ncorporated by reference. Later, the United States Environmental Protection Agency ( U.S. EPA ) adopted similar but less stringent regulations and test procedures for small “nonroad” spark

- ignition eng ines, which were introduced in t itle 40, C ode of Federal Regulations (C FR ) , Part 90 (40 CFR Part 90).

In 2003, ARB adopted more stringent SORE exhaust emission standards, and also aligned, with some modifications (ARB 2003) , with U.S. EPA’s small nonroad engine test procedures in 40 CFR Part 90.

In Novemb er 2008 , ARB adopted modifications to the SORE emission credit program, including adding a zero

- emission equipment credit program and an option to certify using a 10

- percent ethanol

- blend 1 (E10) of gasoline, as well as other minor modifications to the regu lations (ARB 2008) . Immediately before the Board hearing, manufacturers asked ARB to align with U.S. EPA’s recently updated test procedures (i.e., P arts 1054 and 1065; see Section I.A.4 below). However, because the request was both beyond the scope of th e noticed proposal for the hearing and staff was uncertain of the possible effects of such an alignment, the request could not be granted. Nevertheless, staff agreed to research the need to align with U.S. EPA’s updated test procedures as the next course of action. Staff then reviewed the possibility of increasing the SO RE category’s alignment with U.S. EPA’s current test procedures, and determined that it could be done without affecting the stringency of California’s current emission standards. Accordin gly, these proposed modifications for aligning are discussed in detail in Section II of this report.

1 All percentages related to ethanol are by volume.5 3. Tier 4 Off

- Road Compression

- Ignition Engines

a) Tiers 1, 2 and 3 Emission Standards

There are currently four tiers of increasingly stringent emission stand ards required for off

- road CI engines in California. Particulate matter (PM), oxides of nitrogen (NOx),

non

- methane hydrocarbons (NMHC), and carbon monoxide (CO) are the pollutants regulated by these requirements, though not always collectively. In 1990, the Board adopted the very first emission standards for new off

- road CI engines for engines less than 19 kW as part of the California requirements for 1995 a nd later small off

- road engines. In 1992, the Board approved standards for off

- road CI engines 13 0 kW and greater , which became known as the tier 1 standards . These standards were implemented beginning in 1996 and resulted in approximately a 50 percent drop in NOx emissions compared to previously uncontrolled engines.

At the same time in 1992 tha t the Board adopted tier 1 standards, the Board also adopted a second tier of more stringent emission standards, known as tier 2. These original tier 2 standards were to apply to engines with rated power 130 ≤ kW ≤ 560 beginning in 2000. However, in response to U.S. EPA’s 1998 adoption of even more stringent tier 2 emission standards to start in 200 1

, ARB fully aligned California’s standards and implementation schedules with U.S . EPA’s requirements in 200 0 (ARB 1999). Tier 2 requirements were phased

- in from 2001 through 2010, and encompassed the entire power spectrum of engine applications including those above 560 kW and those under 19 kW.

At the 2000 Board hearing, ARB also adopted U.S. EPA’s tier 3 s tandards , which were phased

- in from 2006 through 2011 and were applicable to engines with rated power 37 ≤ kW ≤ 560. The new standards have reduce d non

- methane hydrocarbons plus oxides of nitrogen ( NMHC+NOx ) emissions by an additional 40 percent compared to the previous tier 2 standards. However, tier 3 PM standards are the same as tier 2 PM standards.

b) T ier 4 Emission Standards

Tier 4 emission standards are based on the use of advanced aftertreatment technologies (i.e., particulate filters and selective catalyst reduction) and can be up to 95 percent more stringent than the previous tier 3 standards. Th ese standards are phased

- in over two stages with the first stage known as tier 4 interim and the second as tier 4 final. Tier 4 interim standards began in 2008 for eng ines in the 19 ≤ kW ≤ 56 power category and are scheduled to be phased

- in through 2014 for engines greater than 560 kW. In general, the tier 4 interim standards require maximum control of PM and NMHC emissions, but only moderate control of NOx emissions, primarily to allow for the maturation of advanced aftertreatment NOx control technologies. Tier 4 final standards also began in 2008 for engines less than 19 kW and reduced the PM standard for the se engines by 50 percent. Engines in the 56 ≤ kW ≤ 560 pow er category will be subject to advanced aftertreatment

- based standards for NOx and PM in6 the 2014/2015 timeframe, with some generators greater than 560 kW also being required to meet aftertreatment

- based standards. Advanced aftertreatment generally requir es the use of ultra

- low sulfur diesel fuel to function properly, which California mandated for both on

- road and off

- road use beginning in 2006.

4. Current U.S. Environmental Protection Agency Nonroad Regulations and Test Procedures

In 2001, U.S. EPA ad opted t itle 40, CFR , Part 1065, as a “united” test procedure for both “nonroad” engines and equipment and on

- highway heavy

- duty CI engines. The test procedures in Part 1065 essentially replaced those previously used in Part 90 for nonroad spark

- ignition engine s and those in Part 89 for nonroad CI engines. Part 1065 is currently the technical part of U.S. EPA’s regulations that promulgates emissions measurement methodologies, criteria for selecting analytical instrumentation, calibration procedures, and specifi cations for virtually all engine categories. Since its initial adoption, Part 1065 has been amended repeatedly to both improve and expand its applicability for the nonroad engine categories. In addition, U.S. EPA adopted specific “standard

- setting” parts for each engine/equipment and vehicle category. Besides the actual emission standards, these standard

- setting parts contain other provisions, such as certification protocols, production

- line testing requirements, credit

- generation allowances, etc. Also adopted was Part 1068, which is the general compliance, special provisions, and defect reporting part of U.S. EPA’s regulations

. Since 2005, U.S. EPA has adopted several amendments to its nonroad CI engine regulations contained in Parts 1039, 1065, and 10 68 2 . Federal nonroad CI engines certified to the more stringent “ tier 4” emission standards must be tested using Part 1065. Use of Part 1065 is optional for less stringent “ tier 3” and earlier model engines. Part 1039 is the standard

- setting part of U.S . EPA’s regulations for nonroad CI engines, and also contains provisions regarding certification procedures, labeling, credit generation, emissions averaging, equipment flexibility options, and hardship relief.

In 2008, U.S. EPA adopted exhaust and evapor ative emission standards for small nonroad engines, which coincided with some of ARB’s SORE emission standards that were adopted in 2003. At the same time, U.S. EPA divided up the small nonroad engine requirements that were contained in the then

- current P art 90, and distributed these requirements into other p arts. The applicable small nonroad engine test procedures are now contained in Part 1065; the standard

- setting provisions for small nonroad engines are now contained in Part 1054; and, the small nonro ad engine general compliance requirements are now contained in Part 1068. Also at that time, U.S. EPA set the requirement that nonroad small engines had to be tested using the Part 1065 test procedures starting with the 2013 model year, although carry

- ove r of engines already certified using the older Part 90 test procedures would still be allowed.

2 Ref.: 72 FR 72955 (Dec. 26, 2007); 73 FR 59521 (Oct . 8, 2008); 74 FR 84270 (Feb. 24, 2009); 74 FR 56260, (October 31, 2009); and 76 FR 37977 (June 28, 2011).7 5. California’s Off

- Road Exhaust Emission Certification Test Fuel

In January, 2012, ARB is scheduled to propose adopting a n E10 gasoline certification test fuel s pecification for on

- road motor vehicles. Specifically, t his proposal will be made in conjunction with the third phase of California’s Low

- Emission Vehicle (LEV III) rulemaking as part of the Advanced Clean Cars rulemaking package, and will essentially re

- establish the consistency between the certification test fuel and the California commercially available gasoline

. Staff believes that now is also an appropriate time to propose using the same E10 fuel for exhaust emission certification testing of off

- road , gasoline

- fueled, spark

- ignition engines because this will re

- establish the consistency that had existed originally between the off

- road categories’ certification and commercially available fuels.

Except for OHRV s , gasoline

- fueled, spark

- ignition engines certified for California’s other off

- road categories are currently allowed to conduct exhaust emission certification tests using Phase 2 California Reformulated Gasoline (CaRFG2), which is oxygenated with methyl tertiary

- butyl ether (MTBE) , as an option t o the two specified federal test fuels 3

. For instance, both L S I engines and SORE can conduct testing using CaRFG2, federal Indolene, and federal tier II gasoline. In addition, ARB’s 2008 SORE amendment rulemaking allowed these engines, and by an existi ng reference, LSI engines with displacements less than one liter as well, the option of using a n E10 gasoline for certification testing if the associated engines were previously certified federally using an E10 gasoline ( ARB 2008 )

. Rec Marine engines can use CaRFG2, federal Indolene, and another type of federal fuel. Lastly, OHRV s are currently required to certify using either federal Indolene or federal tier II gasoline.

In 2007, ARB amended the Phase 3 reformulated gasoline (CaRFG3) regulations by

es sentially increasing the amount of fuel oxygenates (i.e., ethanol) in California’s commercially available gasoline from 5.7 percent 4 ( i.e., E6) to 10 percent ( i.e., E10) by December 31, 2009. Staff recognized that there was limited ethanol

- based emission test data available from off

- road, spark

- ignition engines during this rulemaking. Nevertheless, published test data that w ere available indicated that HC and CO emissions decreased when switching from E6 to E10, while NOx emissions tended to increase prop ortionally with increas ing amounts of ethanol (ARB 2007

, Appendix C). This change meant that for open

- loop fuel

- system

- configured engines in particular, manufacturers needed to design fuel metering systems that would be emissions compliant when both certi fying with either CaRFG2 or a federal test fuel and when operating in

- use with CaRFG3 commercial fuel. Staff’s proposal addresses this issue and is explained in further detail in Section IV.

3 One of these federal test fuels, known as “Indolene,” is specified in t itle 40, CFR, Part 86, subpart B, section 86.113

- 94(a)(1); the other fuel , known as “tier II,: is specified in title 40

, CFR, Part 86, subpart B, Section 86.113

- 04(a)(1)

. 4 The 5.7 percent by volume ethanol

- blend gasoline is commonly known as E6.8 B. Regulatory Authority

ARB has been granted both general and specific authority under the Health and Safety Code (HSC) to adopt the proposed regulation. HSC sections 39600 (General Powers), 39601 (Standards, Definitions, Rules and Measures), and 39602.5 (Adoption of Rules and Regulations) confer on ARB, the gen eral authority and obligation to adopt rules and measures necessary to execute the Board’s powers and duties imposed by State law and to attain federal national ambient air quality standards in all areas by applicable attainment dates. HSC sections 43013 and 43018(a) provide broad authority to achieve the maximum feasible and cost

- effective emission reductions from all mobile source categories, including both new and in

- use on

- road and off

- road engines used in motor vehicles.

Additionally, California's Ai r Toxics Program, established under California law by AB 1807 (stats. 1983, ch. 1047, the Tanner Act) and set forth in the HSC sections 39650 through 39675, mandates that ARB identify and control air toxic emissions in California. Following the ide ntifica tion of a substance as a toxic air contaminant , HSC section 39665 requires ARB, with the participation of the local air pollution control and air quality manageme nt districts (D istricts), and in consultation with affected sources and interested parties, to prepare a report on the need and appropriate degree of regulation for that substance. Based upon the findings of the report, ARB is vested with authority under sections 39666 and 39667 to adopt and enforce airborne toxic control measures that will respec tively achieve emission reductions using best available control technology for nonvehicular and vehicular sources

.

C. Rationale for the Proposed Amendments

The proposed amendmen ts to both the SORE and tier 4 off

- r oad CI engine regulations are mostly relativ ely minor and are intended to enhance alignment with the federal versions to make certification compliance less burdensome for the off

- road engine and equipment manufacturers. Specifically, they are necessary to avoid imposing either duplicate California vs. federal certification testing or forcing manufacturers to produce separate California and 49

- state engine families. Nevertheless

, complete harmonization with the federal provisions is not possible because it would compromise the expected future emissi on reductions required for California. Descriptions and rationale for these more critical “non

- alignment” amendments are presented in Section II for the SORE category and in Section III for the tier 4 off

- r oad CI engine category. A description and ration ale for the proposed amendment to completely align the off

- road exhaust emission certification test fuel with the new E10 certification test fuel for

on

- road motor vehicles is provided in Section IV.

Requirements and rationale for each provision of the proposed amendments to the regulations and applicable test procedures are provided in Appendix S for the SORE category, in Appendix T for the tier 4 off

- r oad CI engine category, and in Appendi ces S,9 U, V, and W for the proposed off

- road exhaust emission ce rtification test f uel amendments.

D. Stakeholder Participation

1. Small Off

- Road Engines

On July 11, 2011, staff posted Mail

- out #MSC 11

- 24, which included draft s of the proposed test procedure changes . This posting was announced via email on ARB’s msprog and orspark listserve to all stakeholders, including environmental organizations, engine manufacturers, equipment manufacturers, and trade associations, as well as other intereste d parties. In addition to the M ail

- out, staff held a meeting with several manuf acturers and representatives of the Truck and Engine Manufacturers Association (EMA) and the Outdoor Power Equipment Institute (OPEI) on July 12, 2011 to discuss how the test procedure changes would affect their companies ’ engine and equipment certificatio ns . Subsequently, staff shared draft proposed regulatory language with all stakeholders. Finally, telephone conference call s were held on Septem ber 1, 2011, with EMA and OPEI, and on October 12, 2011 with OPEI. to discuss the significant changes that sta ff made to the proposal as a result of the oral and written comments receiv ed, which are reflected in this Staff R eport. Public information concerning the development of this proposal was also made available on ARB's website at www.arb.ca.gov/msprog/sore/sore.htm

.

2. Tier 4 Off

- Road Compression

- Ignition Engines

In May 2009, tier 4 off

- r oad CI engine manufacturers formally asked ARB to maintain full alignment and harmonization with the federal regu lations. On July 8, 2009, staff met (via a telephone conference cal l) with representatives of EMA and several manufacturers to initiate discussions for such an alignment. Since that time, staff has worked cooperatively with these manufacturers in develop ing harmonizing amend ments to the California tier 4 off

- r oad CI engine regulations and test procedures, without affecting the stringency of California’s current emission standards. Specifically, staff held subsequent meetings in El Monte, C alifornia , wit h EMA and manufacturers on June 7, 2011, and July 26, 2011, and via telephone conference calls on June 30, 2011, and July 7, 2011. On August 26, 2011, staff posted Mail

- out #MSC 11

- 28, which included drafts of the proposed regulatory and test procedure cha nges. This posting was announced via email on ARB’s ms

- mailings, ag

, arber ; diesel

- retrofit

, ordiesel

, cert

, tru

, portable , and misc listserve to all stakeholders, including environmental organizations, engine manufacturers, equipment manufacturers, and t rade associations, as well as other interested parties.10 3. Exhaust Emission Cert ification Test Fuel

On August 12, 2011, staff posted Mail

- out #MSC 11

- 26 which stated ARB’s intent to propose , at the December 2011 Board hearing, adoption of a new E10 cert ification test fuel for the LSI engine, SORE, OHRV, and Rec Marine spark

- ignition engine categories for demonstrating compliance with the applicable exhaust and evaporative emission standards. The posting announced t his intent via email to ARB’s fuels

, ms

- mailings

, orrec , orspark

, and recmarine listserve listings, to all stakeholders, including environmental organizations, engine manufacturers, equipment manufacturers, and trade associations, as well as other interested parties . Later, staff decided to ch ange the applicability of the proposal to only exhaust emission testing. Then on August 30, 2011, staff met, via a telephone conference call, with represent atives of EMA and OPEI to discuss the latest proposal. Representatives of the OHRV and Rec Marine engine categories were also apprised during development of the proposal by telephone or email correspondence.

II. PROPOSED AMENDMENTS TO THE S MALL OFF

- ROAD ENGINE TEST PROCEDURES

In general, staff proposes that 40 CFR, Parts 1054 and 1065 be adopted by refer ence and incorporation, wi th applicable modifications, in to the SORE test procedures, effective for the 2013 and later model years. To this end, s taff proposes to retire the existing test procedures and renam e them the “ ...2005

- 2012 Test Procedures,” and create replacement test procedures to be known collectively as the “

... 201 3 and Later Test Procedures.” In addition, staff proposes amending the corresponding citations of these test procedures that are contained in sections 2403 and 2407 of 13 CCR, to indi cate these changes. The proposed alignment of the SORE test procedures does not affect the stringency of the current emission standards or test procedures.

A. Alignment with Part 1054

Part 1054, which is commonly referred to as the “stand ard

- setting” par t of the federal small nonroad engine category, also contains certification protocols, production

- li ne testing requirements, credit

- generation allowances, and other related provisions. However, California has its own unique versions of these emission stan dards and other provisions, which are already contained in 13 CCR, sections 2400 through 2409. Thus

, in aligning with the federal P art 1054, staff is proposing adopting the entire Part 10 54

, but with modifications that then reference and include these Cal ifornia

- specific sections from 13 CCR in place of the similar federal provisions. Accordingly, staff propose s that the current federal Part 1054, as of November 8, 2010, be ado pted and incorporated with the appropriate modifications that include the Calif ornia

- specific emission standards, production

- line testing requirements and credit

- generation allowances.11 The new test procedure will be titled the “California Exhaust Emission Standards and Test Procedures for New 201 3 and Later Small Off

- Road Engines, Engine

- Testing Procedures (Part 1054)

.

B. Alignment with Part 1065

The material contained in Part 1065 is complex and technical in nature. It involves specific information about “state

- of

- the

- art” testing equipment, systems, and processes that are neces sary for properly conducting the emission testing of the applicable engines in order to achiev e the required accuracy while minimizing variability of the test data generated using the current test procedures specified in 40 CFR, Part 90

.

California’s al ignment with Part 1065 is appropriate because it will prevent a duplication of effort that would arise if manufacturers were required to conduct two separate emission test procedures (i.e., one federal procedure and another California procedure). Such a s cenario is undesirable because of the extra costs that would be required in performing two separate test procedures. Further

, the majority of manufacturers have already upgraded their own test equipment in order to be compliant with P art 1065 under curren t federal requirements. Alignment is also warranted due to the fact that the test equipment manufacturers intend to eventually cease to maintain existing older test equipment. Thus, failure to align with the current federal Part 1065 w ould mean that the use of the existing test procedures will become increasing impractical, or even impossible over time

, for manufacturers and independent testing facilities, including ARB.

Accordingly, staff proposes that the current federal Part 1065, as of June 28, 2 0 11, be adopted into the SORE test procedures, which are incorporated by reference into 13 CCR

, except for modifications as described below. The new test procedure will be titled the “California Exhaust Emission Standards and Test Procedures for New 201 3 and Later Small Off

- Road Engines, Engine

- Testing Procedures (Part 1065).

1. Allowance for Supplemental Engine Cooling

The federal version of Part 1065 includes section 1065.122, which allows supplemental cooling of an engine for simulating in

- use conditio ns when conducting exhaust emission testing. However, staff believes that the current Cal ifornia allowance for supplemental cooling , as stated in sections 90.118(f) and 90.307

, of the current SORE test procedures , is more representative of in

- use conditio ns and its continued use will maintain the stringency of the current test procedures. Specifically, the current allowance requires manufacturers to justify the need and use of any auxiliary fans that would be used for providing supplemental cooling, as we ll as requiring that manufacturers also demonstrate that the supplemental cooling resulting from the use of these fans is representative of in

- use engine operation. Accordingly, staff proposes adopting Part 1065, with modifications that add the current Ca lifornia requirements.12 2. Measurement of PM Emissions from Two

- Stroke Engines

Unlike U. S. EPA ’s small nonroad engine regulations

, California’s SORE emission standards include a PM emission standard for two

- stroke engines. Thus, for this particular engine category, the PM emission measurement provisions contained in Part 1065 would be applicable to only California. Further , California has always allowed manufacturers the option of demonstrating compliance with this standard using the measured HC emissions as a surrogate in dete rmining PM emission levels (see section 90.404 (e) , of the current test procedures ). Therefore, staff believes that continuing this option is reasonable because it provides manufacturers with flexibility in conducting the testing re quired for demonstrating emissions compliance, without affecting the strin gency of the current PM emission standards. Accordingly, staff proposes that the language in section 1065.650(i) of Part 1065 be adopted and modified to retain this existing option.

3. Exhaust Emission Certification Test Fuel Requirements

The federal Part 1065 provides engine test fuel and lubricant information in subpart H. While staff is proposing adopting this subpart, certain changes are necessary in order to address specific Ca lifornia requirements. In particular, section 1065.701 needs to be modified to include the test fuels currently allowed to be used by California for SORE exhaust emission certification testing . Further, because staff is also proposing to align the off

- ro ad categories’ certification exhaust emission test fuel requirement with the E10 gasoline certification test fuel that will be proposed in January 2012 for on

- road motor vehicles, section 1065.701 needs to be modified to indicate this intent (see Section I V for more discussion on this E10 test fuel ). This proposal will allow the use of an E10 test fuel as an option for conducting exhaust emission certification for the 2013 through 2018 model years. Use of the E10 test fuel will become mandatory beginning with the 2019 model year.

Staff is proposing that an existing option, in section 90.308(b)(1)(i)(B) of the SORE test p rocedures, which allows using an E10 test fuel provided the same fuel was approved for federal certification testing, be retire d as par t of the proposed retirement of the current SORE test procedures at the end of the 2012 model year. Retaining this option beyond the 2012 model year will become unnecessary for two reasons. First, the use of the on

- road E10 certification test fuel as an off

- road testing option for 2013 through 2018 model year certifications will make the current option unnecessary. Second, another E10 test fuel option is in the current federal provisions (i.e., Part s 1054.501(b)(2)(i) and 1054.501(b)(2)(iii) ) . Thus, the proposed alignment with Part 1054 effectively maintains this currently allowed test fuel option.13 C. Alignment with Part 1068

Part 1068 establishes general compliance requirements. Much of the California SORE compliance requirements are currently addres sed in 13 CCR. In addition, some portions of Part 1068 concern selective enforcement authority, imports

, and bonds,

none of which California has the authority to implement. Because most of the requirements that are found in Part 1068 are either addressed in the 13 CCR or California does not have the authority to implement the requirements, staff does not find it necessary to include Part 1068 in the alignment process.

III. PROPOSED AMENDMENTS TO THE TIER 4 OFF

- ROAD C OMPRESSION

I GNITION ENGINE TEST PROCEDURE S

The staff recommends that the Board amend sections 2421, 2423, 2424, 2425, 2425.1, 2426, and 2427, t itle 13, CCR, as set forth in Appendix B : “Proposed Amendments to the California Regulations for 2011 and Later Off

- Road Compression

- Ignition Engines and Equipment” and Appendices K

- M : “Proposed Amendments to the California Exhaust Emission Standards and Test Procedures for New 2011 and Later Tier 4 Off

- Road Compression

- Ignition Engines and Equipment, Part I

- D, Part I

- E, and Part I

- F” of this Staff R eport. The proposed regulatory language is intended to further harmonize portions of ARB’s exhaust emission requirements for new off

- road CI engines , as appropriate, with those of 40 CFR Parts 1039, 1065, and 1068, as most recently amended by U.S. EPA in the Fe deral Register (FR) on June 28, 2011 (76 FR 37977). Although the California and federal programs for CI engines will be similar upon adoption of this proposal, ARB will retain its authority to further regulate off

- road mobile sources in the future and its ability to enforce the regulations in California.

In sum, the proposed amendments correct clerical errors, clarify existing requirements, standardize measurement specifications, calibrations, and instrumentation, and provide additional compliance flexibi lity options without sacrificing air quality benefits. The following subsections discuss the major provisions of the staff proposal in further detail. The critical amendments proposed are as follows:

A. Emission Standards

Staff proposes to align with the f ederal alternate combined oxides of nitrogen and non

methane hydrocarbon s ( ALT NOx+NMHC ) standards and the corresponding family emission limit ( FEL ) caps for tier 4 engines ranging from 56 kW through 560 kW. Staff is also proposing to correct clerical err ors that unintentionally limited the years of applicability for several al ternative FEL caps erroneously identified in the regulations and test procedures.14 1. Tier 4 A LT NOx +NMHC standards and FEL Caps

Both ARB ( ARB 2004) and U.S. EPA ( U.S. EPA 2004 ) intend ed that the tier 4 regulation would allow engine manufacturers to continue producing a small number of tier 3 off

road CI engines using emission credits after the tier 4 standards began. The purpose of this allowance was to increase the cost

- effectiveness of the regulation. However, the original U.S. EPA regulations and current California regulation inadvertently hinder manufacturers from using this certification allowance because the tier 4 averaging programs do not allow manufacturers to show compliance with the existing 0.19 g/kW

- hr NMHC standard using credits. To fix this oversight, staff is proposing to amend the California regulations and test procedures by aligning with the revised U.S. EPA regulation, which allows manufacturers the option to use c redits to show compliance with new ALT NOx+NMHC standards for engines ranging from 56 kW through 560 kW. The new ALT NOx+NMHC standards for each power category in this range would be equal to the numerical value of the applicable alternate oxides of nitro gen ( ALT NOx ) standard plus 0.10 g/kW

- hr. Because the new combined ALT NOx+NMHC standards would be more stringent than the sum of the otherwise separately applicable ALT NOx and NMHC standards, a small environmental benefit is likely to occur when manufa cturers choose to certify to the new ALT NOx+NMHC standards. However, engines certified to these ALT NOx+NMHC standards would themselves not be allowed to generate emission credits. Table R

- II.A, in Appendix R, shows how the ALT NOx+NMHC standards woul d compare to other existing certification options.

The proposed FEL caps corresponding to the new ALT NOx+NMHC standards described above are shown in Table R

- II.B, in Appendix R. FEL caps are the maximum emissions level to which an engine family may be certified using averaging, and are typically set at the previous tier emission standards, which in this case are the tier 3 NMHC+NOx standards for the power categories affected.

Table R

- II.B, in Appendix R, also identifies proposed revisions to the d ates of applicability for several of the existing FEL caps. These proposed changes are provided only to clarify the existing regulations and do not affect the stringency of existing requirements.

2. Alternative NOx FEL Cap Applicability

The proposed revi sion to the start dates for the ALT 20% NOx FEL caps are intended to correct an inconsistency between the provisions in section 1039.104 of the 2008 and Later Test Procedures and a table in the existing regulation (i .e., Table 2b). Specifically, section 1 039.104(g)(1) states that the period of applicability for certifying engines to the ALT NOx FEL caps should extend over a four

- year period, but the existing regulations inadvertently specify the period of applicability as either only one or two years for e ngines ranging in power from 56 kW through 560 kW, beginning at least two years after the commencement of the tier 4 interim standards. This exclusion of applicability during the initial years of tier 4 interim standards would have effectively15 negated the allowance of any tier 3 engines to be aver aged in compliance with the ALT NOx standards for the power categories affected. This is because the errors in Table 2b, of Part 1039.104, would have established a more stringent A LT NOx FEL Cap for engines certi fied to the ALT NOx standard at the onset of tier 4 interim implementation in 2011, then permit a less stringent ALT 20% NOx FEL Cap for engines that later certified to the ALT NOx standard, and then once agai n require a more stringent ALT NOx FEL Cap when tier 4 final standards became effective. This is clearly i nconsistent with the intent of section 1039.104 to ease the transition to the final tier 4 standards.

This matter was addressed by ARB in the form of a Manufacturers’ Advisory Correspondence (MAC ) 2010

- 002, dated December 21, 2010 (MAC 2010

- 002)

. S taff’s proposal would codify the provisions of that MAC and would address the duration of ALT 20% NOx FEL Caps for other affected power categories not covered by the MAC.

B. Enhanced Labeling Requirements

Staff is proposing that additional information, beyond that required by U.S. EPA, be included on off

- road CI engine emission control labels to aid in the implementation, compliance, and enforcement of ARB’s o ff

- road diesel in

- use regulations (e.g., TRU, Off

- Road Fleets, Ports, etc.). These California

- specific programs require fleets to comply with an averaged target emissions level based on the model year, the certification tier, and/or the power of the engines/equipment in the fleet. End users (i.e., f leet owners) are responsible for calculating their fleet averages and target emission levels per the provisions of the applicable in

- use regulation.

However, current emission control labels for replacement engines are not required to include the certifica tion power category or an explicit designation of the emissions tier to which the engine conforms. The lack of this information makes equipment registration

, which is the responsibility of end

- users, error prone, which in turn makes tracking off

- road CI e ngine in

- use fleet emissions by ARB staff more complicated

. Enforcement efforts in the field can also be compromised as a result of insufficient information on the emission control label with which to confirm compliance. For example, a field inspector

ma y have difficulty confirming that the power information submitted by an end

- user, when registeri ng an engine in one of ARB’s in

- use programs, is accurate unless the power information is readily available to the inspector (i.e., on the label) at the time of inspection. Without engine power being explicitly stated on the label, end

- users would have to resort to some other possibly less

- than

- accurate means for determin ing engine power , p erhaps even guessing a t a value, when submitting this information during the registration process. Consequently, incorrect power submissions have the ability to significantly alter the calculation of emission targets and adversely affect the perceived emission benefits of the in

- use requirement. Similarly, confirming that the correct emissions factors have been registered for an engine would be impossible without accurate model year or emissions tier information being readily available to the inspector.16 To address these concerns, staff is proposing that, in addition to existi ng labeling requirements, all emission control labels for new and replacement off

- road CI engines include the following information beginning January 1, 201 3 :

ENGINE POWER: {insert the certified power of the specific engine configuration , if available, o therwise insert advertised power in kilowatts}

REFERENCE FAMILY NAME: {insert the engine family name of the replacement engine as recorded in the Executive Order for the engine family to which the replacement engine was originally certified}

DATE OF MANU FACTURE: {insert the engine build date}

Staff believes that these proposed amendments provide the correct balance between the optimal implementation and enforcement of ARB’s in

- use programs vs. the level of commitment that would be required of industry t o comply with the amendments in the short

- term.

C. Updated Test Procedures

Staff is proposing to amend the existing tier 4 off

- road CI test procedures to incorporate additional California

- appropriate revisions made by U.S. EPA since 2005. The existing 2008 and Later Test Procedures incorporate the majority of the section s contained in 40 CFR, P arts 1039, 1065, and 1068 related to off

- road CI engines and equipment. Staff proposes to retire the existing test procedures and renam e them the “

... 2008

- 20 10 Test Procedures,” and create replacement test procedures to be known collectively as the “

... 2011 and Later Test Procedures.” The 2011 and Later Test Procedures will still contain the in corporated sections of 40 CFR, P arts 1039, 1065, and 1068, as revised by sta ff and included as appendices to this Staff R eport, but instead of a single document containing all three parts, the 2011 and Later Test Procedures will be a collection of three separate documents. Having three separate documents makes it easier to make

a ny future amendments to each individual test procedure, as necessary.

1. Part 1039

Part 1039 was originally adopted by the Board in 2004 as part of the “California Exhaust Emission Standards and Test Procedures for New 2008 and Later Tier 4 Off

- Road Compres sion

- Ignition Engines, Part I

- C.” Staff is proposing to update this portion of the existing California test procedures with California

- appropriate modifications of the latest revision of 40 CFR P art 1039

, rather than to incorporate the latest revision of the federal regulation in its entirety into a new document. The new test procedure will be titled the17 “California Exhaust Emission Standards and Test Procedures for New 2011 and Later Tier 4 Off

- Road Compression Ignition Engines, Part I

- D.” The key align ments of off

- road CI being proposed to Part 1039, many of which parallel similar ch anges for SORE as described in S ection II above, are:

• The adoption of a new tier 4 interim NOx+NMHC standard for engines ranging in power from 56 kW through 560 kW

– sectio n 1039.102(e)(3)

• Correction of clerical errors that unintentionally limited the dates of applicability for several ALT NOx FEL Caps

– section 1039.104

• Modification of the criterion for selecting engine families regarding engine cylinder arrangement

– secti on 1039.230(b)(7)

• Removal of unnecessary and/or redundant labeling and notification instructions regarding the equipment man ufacturer flexibility program

– section 1039.625

• Correction of clerical errors that inadvertently elevated the minimum standard for equipment flexibility engines beyond that originally intended

– section 1039.625(e)(3)

• Clarification regarding the rounding of Averaging, Banking, and Trading ( ABT ) credits

– section 1039.705(b)

2. Part 1065

The Board originally adopted the sections of Par t 1065 relevant to off

- road CI engines in 2004 as part of the “California Exhaust Emission Standards and Test Procedures for New 2008 and Later Tier 4 Off Road Compression

- Ignition Engines, Part I

- C.” So much has changed regarding emission measurement tec hnologies and techniques since ARB adopted Part 1065 in 2004, as evidenced by the sheer number of amendments to the federal requirements. Accordingly, staff is proposing to incorporate the latest revision of 40 CFR, P art 1065, with staff’s California

- spec ific revisions, as a new test procedure document to be titled “California Exhaust Emission Standards and Test Procedures for New 2011 and Later Tier 4 Off Road Compression Ignition Engines, Part I

- E,” rather than updating this portion of the existing Calif ornia test procedures. Noteworthy among the changes to the test procedures are provisions for using and calculating an optional declared speed value in section 1065.510(f)(3)(i), and for the standardization of calculating exhaust restriction setpoints in section 1065.130(h).

3. Part 1068

The portion of Part 1039 pertaining to off

- road CI engines was originally adopted by the Board in 2004 as part of the “California Exhaust Emission Standards and Test Procedures for New 2008 and Later Tier 4 Off

- Road Compres sion

- Ignition Engines, Part I

- C.” Staff is proposing to update this portion of the existing California test procedures with California

- appropriate modifications from the latest revision of 40 C FR, P art 1068 rather than to incorporate the latest revision o f the federal regulation in its entirety into a new document. The new test procedure will be titled the “California18 Exhaust Emission Standards and Test Procedures for New 2011 and Later Tier 4 Off

- Road Compression Ignition Engines, Part I

- E.” The key pro visions being proposed

are:

• Allowance for distributors to replace incorrect labels prior to sale of the engine to an ultimate purchaser

– section 1068.101(b)(7)(i)(D)

• Incorporation of provisions related to the duration and applicability of Executive Order s

– section 1068.103(c)

• Incorporation and clarification of anti

- stockpiling provisions

– section 1068.103/105

• Revisions to the label content for replacement engines

– section 1068.240

• Clarification of the provisions for shipping engines independently of re quired aftertreatment and for delegated final assembly

– section 1068.260/261

• Clarification that defect reporting applies only to regulated pollutants and revision of thresholds for filing reports

– section 1068.501

• Incorporation of the federal definition for “Date of Manufacture”

– section 1068.801

D. S tockpiling Prohibitions

Staff proposes to align with recently added federal provisions in 40 CFR, section 1068.103, and amendments to section 1068.105, concerning the intentional

over

- production (i.e., stock piling) of engines prior to a year in which a change in the standards occurs. The proposed language makes clear that manufacturers cannot deviate from normal production and inventory practices to circumvent the regulations. A new section 2423(m) , in 13 C CR, is proposed for inclusion in the California regulations.

E. O ther Proposed Amendments

In addition to the above proposed amendments, staff is proposing several key terms for either i ncorporation or modification in to the regulations and test procedures, i ncluding: a new standardized abbreviation method, as an aid to readers, for readily identifying references to the test procedures; aligning with the federal definition of “constant speed engine/operation” to more accurately describe the normal operation o f a constant speed engine; aligning with the federal definition of “date of manufacture” to standardize the assignment of engine build dates; and, aligning with the federal definition of “carryover’ to ensure uniform criteria for the application of data fr om previous model

- year engine families. More detailed descriptions of these proposed key term definitions are in Appendix R.

Lastly, staff proposes other miscellaneous am endments, including: amending section 2426(a) , in 13 CCR, to extend the requiremen t for manufacturers to include a copy of the California Emission Control Warranty Statement to all off

- road CI engines;19 harmonizing with the federal provisions for extending some limited

- scope inspection authorization applicability of certain test procedur e provisions to equipment manufacturers in California; and, for fixing grammatical and formatting errors recently discovered throughout the regulation and test procedures.

F. Differences Between California and Federal Regulations

Staff has endeavored to ha rmonize California’s off

- road CI proposal with the provisions of 40 CFR, Parts 1039 , 1065, 1068, and incorporated p arts. However, staff’s proposal differs from the federal program in some relatively minor, but important ways that are necessary to support California’s unique air quality programs. These differences are primarily documentary in nature and do not present any technical obstacles for the off

- road industry to overcome. These major new differences between ARB off

- road and U.S. EPA nonroad CI pro grams are: replacement engine labeling requirements, preliminary certification approvals, untracked replacement engine provisions, partially completed engine requirements, and definition of an engine. Existing differences from the tier 4 2004 rulemaking which have been retained are: flexibility engine labeling provisions, flexibility engine Executive Orders, rebuild labeling prohibition and supplemental label requirements, extension of replacement engine reporting requirements, and in

- use compliance/reca ll program provisions. More detailed descriptions of the se differences are in Appendix R

. The differing state regulations are authorized by the Authorities cited in Appendix B of this Staff Report. The proposed amendments are intended to minimize costs of separate state and federal regulations. Although there are no net aggregate costs associated with staff’s proposal, any remaining individual cost differential is essential for effective enforcement to ensure emissions reductions in California benefiti ng human health, public welfare, and the environment.

IV. PROPOSED AMENDMENTS TO THE OFF

- ROAD EXHAUST EMISSION CERTIFICATION TEST FUEL

Staff is proposing to align the exhaust emission certification test fuel for off

- road spark

ignition, gasoline

- fueled engin es with the E10 gasoline specifications that are planned for proposal in December 2011 for approval in January 2012 for on

- road motor vehicle certification emission testing under the third rulemaking phase of California’s LEV standards . Specifically, the new E10 test fuel would be required for exhaust emission certification testing of new gasoline

- fueled, LSI, SORE, OHRV, and Rec Marine off

- road categories. Staff is proposing that the use of E10 gasoline be made an option for exhaust emission testing for the 2013 through 2018 model years. Under a similar mandatory implementation schedule expected to be proposed for on

- road motor vehicles, u se of the E10 test fuel would become mandatory for exhaust emission testing of these off

- road categories beginning wi th the 2019 model year

. At this time, staff is proposing that this amendment apply to only the off

- road exhaust emission certification20 test fuel. Amendments for changing the evaporative emission certification test fuel to an E10 fuel would be best handle d separately under future rulemakings that can specifically focus on those particular emission characteristics with respe ct to each off

road category.

This proposed test fuel change is appropriate because doing so maintains the current test fuel consist ency between on

- road motor vehicles and most of the off

- road categories (OHRVs are the exception because they currently certify using only federal gasolines test fuels ). The proposed change is also appropriate because it establishes a complete consistency between the off

- road categories’ certification and commercially available fuels

. Specifically, e xcept for OHRVs, the off

- road categories’ certification and commercially available fuels have been consistent with respect to using CaRFG2 beginning with the SORE category in 1995. However, that consistency was upset on December 31, 2003, when the MTBE oxygenate in California’s commercially available gasoline was replaced with another oxygenate having a 5.7

- percent ethanol blend. Although both fuels have simi lar oxygenating characteristics, this replacement introduced an inconsistency between the particular oxygenate specifications of the required certification test fuel (i.e., CaRFG2 with MTBE) and the commercially available fuel (i.e., CaRFG3 with ethanol). Further, this proposed test fuel amendment is appropriate because the 2007 CaRFG3 amendments essentially required that the only commercially available gasoline allowed to be produced and dispensed in California on and after December 31, 2009 must have 10

- percent ethanol as the oxygenate. Accordingly, all new off

- road, spark

- ignition engines sold and operated in California since that time have been designed to be emissions compliant when they are certified with either a lower oxygenated MTBE C a RFG2 or a no n

- oxygenated federal test fuel

, yet they operate in

- use with a higher oxygenated CaRFG3. In addition, since December 31, 2009, all new engines used by OHRVs have been designed to be emissions compliant when they are certified with a non

- oxygenated federal gasoline, yet also operate in

- use with an oxygenated CaRFG3.

Staff believes that the emission s increase/decrease differences exhibited by engines when switching from an E6 to an E10 test fuel (or a non

- oxygenated fuel to an E10 test fuel, in the specific case of OHRVs) , particularly engines with open

- loop system s, could be reduced to zero by making the proper adjustments to the engines’ fuel metering systems. Consequently, with such proper adjustments, an E10 gasoline could now be used as a certification test fuel, without affecting the stringency of the existing exhaust emission standards . This is because these adjustments would allow the engines’ fuel metering systems to be fully optimized for emissions compliance both when certifying and when operatin g in

- use on only an E10 type of gasoline. In addition, c ertain adjustments to off

- set the increase in the E10 gasoline’s emissions due to increased oxygenation could also be advantageous, and therefore

, likely to be employed. Such adjustments might impro ve engine durability by providing additional engine cooling as a byproduct of any extra fuel metering.

Therefore, because the proposed amendment both maintains the general current test fuel consistency between on

- road motor vehicles and most of the off

- road categories21 and establishes a complete consistency between the off

- road categories’ certification and commercially available fuels, staff proposes that the appropriate sections of the LSI engine, SORE, OHRV, and Rec Marine engine test procedures be ame nded to require using the E10 certification test fuel that is specified in the “California Exhaust Emission Standards and Test Procedures for 2015 and Subsequent Model Passenger Cars, Light Duty Trucks, and Medium Duty Vehicles,” which are planned for prop osal in December 2011 for approval in January 2012 , for off

- road spark

- ignition engine certification exhaust emission testing . This new test fuel would be allowed as an option

, for the 2013 through 2018 model years

, to the test fuels that are currently al lowed. Staff is proposing this option, and over this range of model years, because it affords manufacturers ample flexibility in deciding when to switch over to certifying engines using an E10 test fuel, based on their own requirements. In 2019 and later model years, using the E10 fuel would become mandatory as the sole exhaust emission certification test fuel. S taff also proposes that the applicable sections in 13 CCR for these off

- road engine categories be amended to reference and incorporate the revis ed

on

- road motor vehicle test procedures. In addition, the test fuel requirements under the in

- use compliance requirements for retrofits for controlling emissions from off

- road LSI engines, contained in 13 CCR sections 2783(d) and 2784(c), should be modif ied to optionally allow this E10 certification test fuel for engines tested during the 2013 through 2018 calendar years, and requiring this E10 test fuel for such engines tested during 2019 and later calendar years.

In the event that sometime in the fut ure, U.S. EPA adopts a greater

- than

- ten

- percent ethanol

- blend certification test fuel, ARB and U.S. EPA would likely join in a technical evaluation, analysis, and review process to seek to establish an equivalency factor between their respective ethanol te st fuels prior to the required mandatory use of the fuels (i.e., an off

- road categ ory “reciprocity” agreement).

V. ENVIRONMENTAL IMPACTS ANALYSIS

A. Background on Environmental Review Process

ARB is the lead agency for the proposed regulation and has prepared this environmental analysis pursuant to its certified regulatory program. The California Environmental Quality Act (CEQA) at Public Resources Code section 21080.5 allows public agencies with regulatory programs to prepare a plan or other written document in lieu of an environmental impact report or negative declaration once the Secretary of the Resources Agency has certified the regulatory program. ARB’s regulatory program has been certified by the Secretary of the Resources Agency. 5 As required by ARB’s certified regulatory program, and the policy and substantive requirements of the California Environmental Quality Act (CEQA), ARB has prepared this environmental analysis to assess the potential for significant long or short term adverse environmental

5 State CEQA Guidelines section 15251 (d); CCR, title 17, sections 60005

- 60008.)22 imp acts associated with the proposed action and a succinct analysis of those impacts. 6 In accordance with ARB’s regulations, the assessment also describes any beneficial impacts. 7 The resource areas from the state CEQA Guidelines environmental checklist

wer e used as a framework for assessing potentially significant impacts. 8 In accordance with ARB’s certified regulatory program, for proposed regulations the environmental analysis is included in th is Staff Report: Initial Statement of Reasons (ISOR) for the proposed regulatory action. 9

If comments ARB receive s during the public review period raise significant environmental issues, staff will summarize and respond to the comments in writing. The written responses will be included in the Final Statement of Re asons (FSOR) for the regulation. In accordance with ARB certified regulatory program, prior to taking final action on the proposed regulation, the decision maker will approve the written responses. 10 If the regulation is adopted, a Notice of Decision will be posted on ARB’s website and filed with the Secretary of the Natural Resources Agency for public inspection. 11

B. Impacts Analysis

Based on ARB’s review of the proposed regulatory action, staff has concluded th at the amendments to the SORE, tier 4 off

- roa d CI engine, and off

- road spark

- ignition e ngine regulations and test procedures (including the certification test fuel changes), would not have a significant adverse effect on the environment. No discussion of alternatives or mitigation measures is necess ary because there are no significant adverse environmental impacts identified. The basis for this conclusion is provided below.

1. Potential Air Quality Benefits

The proposed amendments to the SORE, tier 4 off

- road CI engine, and off

- road spark

igniti on e ngine regulations and test procedures do not affect the stringency of the current emission standards or the effectiveness of the test procedures. Accordingly, there are no quantifiable air quality benefits due to the proposed amendments. While all te st procedures are designed to ensure that engines produced for sale in California meet California’s emissions standards, the test procedures themselves, typically and here, do not generate additional emission reductions but rather seek to ensure reductions occur as planned.

6 CCR section 60005, subd (b).
7 CCR 60005, subd. (d).
8 State CEQA Guidelines, Appendix G.
9 CCR section 60005.
10 CCR 60007, subd (a).
11 CCR 60007, subd. (b).23 2. Other Potential Impacts

These proposed actions [e.g. aligning test procedures] do not change the stringency of the current emission standards or any impacts from conducting engine testing under the current test procedures and will no t cause any change in compliance responses by the affected manufacturers. Because nothing in the amended test procedures can conceivably cause a change to the types, attributes, or number of engines they produce, no potential adverse impacts are at issue as explained below.

The proposed amendments will modify both the California SORE and tier 4 off

- r oad CI

e ngine regulations and test procedures, contained in t itle 13, C CR , to enhance the alignment with the current federal versions of these regulations an d test procedures contained in t itle 40, C FR . The proposed amendments for alignment do not affect the stringency of the current emission standards or effectiveness of the test procedures. For the most part, the proposed amendments are relatively minor and improve the efficiency of the emission certification process, but a few are necessary to avoid imposing unreasonable compliance cost burdens on manufacturers, such as requiring duplicate California vs. federal emission certification testing and separate p roduction of California vs. 49

- state engines. In addition, some of proposed amendme nts to the tier 4 off

- road CI e ngine labeling regulations expand upon the corresponding federal provisions in order to facilitate implementation and enforcement of the vari ous ARB in

- use fleet programs, and thereby ensure their expected emission benefits.

The proposed amendments to the regulations and test procedures, in 13 CCR, for California’s off

- road spark

- ignition engine categories (i.e., SORE, LSI e ngines, Rec M arin e e ngines, and O HRV ) are for performing exhaust emission testing using the same 10

- percent ethanol certification test fuel that ARB plans to adopt for on

- road motor vehicle certification emission testing. The intent of this proposal is to maintain the

cur rent consistency between California’s on

- and off

- road categories’ certification test fuels and the commercial gasoline sold in California. It does not affect the stringency of the current off

- road categories’ exhaust emission standards or the likelihood t hat a given engine family is meeting those standards

. Furthermore, the pr oposed amendments to the SORE, tier 4 off

- road CI engine, and off

- road spark

- ignition e ngine regulations and test procedures do not require or result in any new development or requi re modifications to buildings or other structures, affect operations at existing facilities, or cause any new land use designation. Therefore, the proposed amendments are not expected to result in any adverse impacts that would result from development inc luding aesthetics, air quality, agricultural and forestry resources, biological resources, cultural resources, geology and soils, greenhouse gases, land use planning, mineral resources, population and housing, public services, recreation, or traffic and tr ansportation. Further, the pr oposed amendments to the SORE, tier 4 off

- road CI engine, and off

- road spark

- ignition e ngine regulations and test procedures do not involve any activity that would involve or affect hazardous material, hydrology and water qual ity, noise, or population and housing

. This is because t hese24 regulations and test procedures are already in existence and are an on

- going part of the applicable certification process for the related engines and the proposed amendments do not mandate any a ction that could affect these resources.

C. Environmental Justice

The objectives of ARB’s statewide regulatory programs are better air quality and reduced health risk for all residents throughout California. The Board has a policy that community health a nd environmental justice concerns be addressed in all of ARB’s regulatory programs. This is consistent with the ARB’s environmental justice policy of reducing exposure to air pollutants and reducing the adverse impacts from toxic air contaminants in all c ommunities, including low

- income and minority communities.

State law defines environmental justice as the fair treatment of people of all races, cultures, and incomes with respect to the development, adoption, implementation, and enforcement of environmen tal laws, regulations, and policies (Senate Bill 115, Solis; Stats 1999, Ch. 690; Government Code section 65040.12(c)). The Board has established a framework for incorporating environmental justice into the ARB's programs consistent with the directives of State law. The policies developed apply to all communities in California, but recognize that environmental justice issues have been raised more in the context of low income and minority communities, which sometimes experience higher exposures to some pol lutants as a result of the cumulative impacts of air pollution from multiple mobile, commercial, industrial, area wide, and other sources. For over twenty

- five years , ARB, local air districts, and federal air pollution control programs have made substanti al progress towards improvin g the air quality in California. However, some communities continue to experience higher exposures than others as a result of the cumulative impacts of air pollution from multiple mobile and stationary sources and thus may suff er a disproportionate level of adverse health effects.

This proposal does not make changes to the stringency of the current exhaust emission standards so there is no emissions impact associated with the amendments. Thus, it is consistent with the ARB’s environmental justice policy of reducing exposure to air pollutants and reducing the adverse impacts from toxic air contaminants in all communities, including low

- income and minority communities. However, California will continue to evaluate improving te chnologies and will review the off

- road emission standards as additional relevant scientific evidence becomes available to make certain that the health of the public is protected with an adequate margin of safety.

To ensure that everyone has an opportunit y to stay informed and participate fully in the development of the proposal, staff has distributed information through the internet, as described in section I.D. of this report.25 VI. ECONOMIC IMPACT

A. Legal Requirement

Section 11346.3 of the Government Code req uires State agencies to assess the potential for adverse economic impacts on California business enterprises and individuals when proposing to adopt or amend any administrative regulations. The assessment shall include a consideration of the impact of the proposed regulations on California jobs, business expansion, elimination or creation, and the ability of California business to compete.

Also, section 11346.5 of the Government Code requires State agencies to estimate the cost or savings to any state, lo cal agency and school district in accordance with instructions adopted by the Department of Finance. The estimate shall include any non

discretionary cost or savings to local agencies and the cost or savings in federal funding to the state.

B. Effect of Ame ndments to the Regulations and Test Procedures

1. Cost and Cost

- Effectiveness

The proposed amendments to both the SORE and tier 4 off

- road CI e ngine regulations and test procedures, incorporated by reference, w ould not increase the cost of complying with the current regulations. In fact, the modifications in this proposal are expected to avoid extra cost burdens, mainly by avoiding duplicative emission testing requirements and by standardizing test equipment measurement specifications, calibrations, and inst rumentation. The proposed changes to the off

- r oad exhaust emission certification test fuel would not increase the cost of compliance with the current regulations because manufacturers already need to procure certification test fuels in order to conduct ce rtification

.

2. Economic Impact on the Economy of the State

The proposed amendmen ts to both the SORE and tier 4 off

- road CI e ngine regulations are not expected to impose a cost burden to engine or equipment manufacturers. As noted in Sections II

- IV of thi s Staff Report , the amendments w ould not increase the compliance cost burden on the applicable manufacturers. Based on the above assumptions, staff expects the proposed regulations to impose no adverse impact on California competitiveness and employment

. In addition, staff expects that the proposed E10 test fuel amendment will not impose any adverse impact on California competitiveness and employment. The following subsections are intended to fulfill ARB’s legal requirements related to economic analysis and economic impact for stakeholders affected by these proposed regulations.26 a) Businesses Affected

The proposed amendments are not expected to impose any additional cost burden to off

- road engine or equipment manufacturers because these amendments, in the aggregate, would reduce manufacturers’ certification

- related testing and compliance burdens by avoiding duplicate State vs. Federal certification testing and the production of 49

- state engine families . In addition, any businesses that buy and sell test eq uipment, such as analyzers used in emission testing, as well as businesses that perform certification emission tests for applicable engine and equipment manufacturers would not be impacted by the proposed amendments because any required test equipment upgr ades have already occurred as a result of complying with current federal requirements. Finally, the proposed amendments to the exhaust emission certification test fuel would not affect any independent emission test ing facilities because there is

no t any e xpected cost differential between the proposed and existing test fuels. Accordingly, there is no t any expectation that the proposed amendments will cause any creation or loss of business and cause any creation or elimination of jobs

.

b) Engine Manufacture rs
(1) Small Off

- Road Engines

There are currently 59 SORE manufacturers that market certified engines in California. None of the manufacturers is located in California although some have small repair and distribution operations in California. Some manufactur ers of the evaporative emission components are located in California, but these would not be affected by the proposed amendments because the amendments do not apply to either the evaporative emission regulations or test procedures.

(2) Tier 4 Off

- Road Compres sion

- Ignition Engines

On a nationwide basis, there are approximately 600 off

- road CI equipment manufacturers, and 50 off

- road CI engine manufacturers, based on a U.S. EPA estimate. These manufacturers would not be affected by the proposed amendments beca use these amendments do not affect the stringency of the current emission standards

, but rather would, in the aggregate, reduce manufacturers’ certification

related testing and compliance burdens

. Thus, there would not be any increases in the cost of comp liance for these manufacturers

. Businesses that operate or service diesel engines w ould not be affected by the proposal because the proposal is related to test procedures for demonstrating emission compliance of new engines.

c) Impact on Small Businesses

The concerns of small businesses are the same concerns that exist for large businesses. As discussed above, the proposed amendments are not expected to27 impose any additional cost burden. Accordingly, there is not any expectation that the proposed amendme nts will cause any creation or loss of business and cause any creation or elimination of jobs

d) Potential Impact on Distributors and Dealers

The proposed amendments are not expected to impose any cost impacts on distributors or dealers.

e) Potential Impac t on Business Competitiveness

The proposed amendments would have no impact on the ability of California engine and equipment manufacturers to compete with manufacturers of similar products in other states. This is because all manufacturers that produce t hese engines and equipment for sale in California are subject to the proposed amendments regardless of their location. Furthermore, all of the engine manufacturers, and most of the equipment manufacturers, are located outside of California.

f) Potential Imp act on Employment

The proposed amendmen ts to both the SORE and tier 4 off

- road CI e ngine regulations, as well as the proposed E10 test fuel amendments, are not expected to cause a reduction in California employment because, as previously noted, there is n o expected economic impact of the proposal.

VII. ALTERNATIVES CONSIDERED

A. Alternatives Considered to the Proposed Amendments

Staff evaluated the four alternatives listed below as substitutes to the amendments that are propose d for both the SORE and tier 4 off

- road CI e ngine regulations, as well as the “No Action” alternative for the proposed E10 test fuel amendment. These included:

• Take “No Action”

• Harmonize Completely with the Federal Regulations

• Prospective Incorporation of Federal Regulations by Referenc e

• Harmonize Through Executive Officer Discretion

These alternatives are discussed below.28 No Action

The first alternative evaluated was to take no action to modify either of the exis ting California SORE or tier 4 o ff

- r oad CI e ngine regulations and test procedures. The existing regulations and test procedures for both categories now differ significantly in several key areas from the current federal requirements for nonroad engines. Consequently, many of the engine and equipment manufacturers would be re quired to perform two different exhaust emission tests during the certification process or perform extra tests to prove the equivalency of the emission tests. Such separate testing is expensive and would unnecessarily increase the costs of compliance to t he manufacturer, which would be passed down to the consumer, without any resulting emission benefit. Another consideration, with respect to the SORE test procedures, is that test equipment manufacturers have indicated their intent to phase

- out support of test equipment specified by the current test procedures. Thus, continued use of these test procedures would become impractical due to the eventual breakdown and unavailability of the test equipment. Additionally, with respect to the tier 4 CI engine regu lations, the federal provisions contain additional compliance flexibility options lacking in the California regulation (i.e., a new HC+NOx standard and longer FEL durations) that could result in certain product lines no longer being made available in Calif ornia. With regard to the proposed E10 test fuel amendment, a “No Action” alternative is not practical because it would create an inconsistency with the on

- road motor vehicle test fuel that is scheduled to be proposed in January 2012, as well as maintain the current inconsistency between the off

- road categories’ test fuel and commercially available fuel. Therefore, staff rejected this alternative as both impractical and substantially more costly

. Harmonize Completely with U.S. EPA’s Regulations

Another alternative would be to a dopt completely the U.S. EPA’s P arts 1054 and 1065, in the case of the SORE category, and Parts 1039, 1065, and 1 068, in the case of the tier 4 off

- road CI e ngine category.

A complete adoption of the federal regulations and tes t procedures differs from the proposal in that it creates a complete alignment while the proposal creates a less

- than

complete alignment in order to preserve current California

- specific provisions. This less

- than

- complete alignment is necessary because Ca lifornia has unique needs in controlling the off

- road categories’ emissions and has established provisions in response to those needs that are not reflected in the federal provisions. For example, the tier 4 off

- r oad CI e ngine regulations differ from fede ral provisions in the flexibility engine Executive Order and labeling requirements, engine replacement reporting and labeling requirements, and in

- use compliance and engine recall programs, because these California

- specific provisions better support Califo rnia’s emission reduction objectives. In addition, California’s current SORE regulations and test procedures include provisions for two

- stroke PM emissions and more representative supplemental engine cooling. Thus, a complete adoption of the federal regu lations and test29 procedures would eliminate these provisions and likely compromise the level of stringency of the emission standards that is required by California in order to achieve the expected level of future emission reductions. Accordingly, staff re jected this alternative.

Prospective Incorporation of Federal Regulations by Reference

This alternative would allow ARB to dynamically incorporate federal regulations by reference, in part or as a whole, into California law without a date of publicatio n. The benefits of such an alternative would be to ensure full regulatory harmonization with U.S. EPA revisions now and i n the future, and to minimize the staff resources required in developing an alignment rulemaking in response to any future federal reg ulatory amendments. The downside of this alternative is that it would limit ARB’s ability to independently implement or enforce its regulations should U.S. EPA make a change that is not in California’s best interests. Also, t itle 1, CCR, section 20(c)(3) , generally prohibits the incorporation by reference of material into California regulations without a date of publication or issuance. Therefore, staff rejected this alternative.

Harmonization Through Executive Officer Discretion

This alternative would allow ARB’s Executive Officer to approve requests, from off

- road engine/equipment manufacturers and on a case

- by

- case basis, for permission to comply with specific federal provisions instead of provisions required by California regulations. This would gi ve ARB the ability to harmonize with any federal requirements with which it agreed, providing timely relief to the off

- road industry when necessary. Any changes allowed by the Executive Officer would then be formally codified into the applicable regulatio ns at a future, more convenient date. While this option does have merits

, such as the ability to address compliance issues more efficiently, less Board time devoted to harmonization issues, and more staff time and resources to devote to other projects, it is generally necessary that such changes undergo a public process with the opportunity for affected stakeholders to provide comment, and the Board to review and render judgment. Therefore, staff rejected this alternative.

B. Issues of Controversy

I ndus try initiated the request for ARB to harmonize its regulations and test procedures with the applicable federal provisions. During the development of the proposed amendments, staff worked collaboratively with manufacturers in addressing their request, whil e always emphasizing that harmonizing completely in every instance was not possible because of the need to preserve the integrity of existing California

- specific measures. Manufacturers both recognized and understood this condition. Accordingly

, staff is not proposing complete harmonization because staff believes that the proposed

ame ndments to the SORE and tier 4 o ff

- r oad CI e ngine regulations and test procedures preserve the expected emission benefits and, thereby, the best interests of California.30 C. S ummary of Alternatives Evaluated

After carefully considering the remaining issues and the suggested alternatives, staff believes its proposal is the best option.

D. Conclusions and Recommendations

In developing the proposed regulations, staff’s goal has b een to preserve the current stringency of the emission standards and effectiveness of the associated test procedures in order to continue achieving the greatest possible emissions reductions in a technologically feasible and cost

- effective manner. Meeting the requirements of the current emission standards continues to be achievable using existing technologies and manufacturing processes . The proposed amendments are not expected to add to previous ly estimated costs, and may reduce compliance costs associat ed with the existing provisions.

No alternatives considered wo uld be more effective in achieving the purpose for which the regulations are proposed or would be as effective as or less burdensome to affected private persons than the proposed regulations.

S taff recommends that the Board adopt this proposal.31 VIII. REFERENCES

ARB 1999. California Air Resources Board, Public Hearing to Consider Amendments to Off Road Compression Ignition Engine Regulations: 2000 and Later Emission Standards, Compliance Requireme nts and Test Procedures (Staff Report). December 10, 1999. http://www.arb.ca.gov/regact/ciengine/isor.pdf

ARB 2003. California Air Resources Board

. Public Hearing To Consider The Adoption Of E xhaust And Evaporative Emission Control Requirements For Small Off

- Road Equipment And Engines Less Than Or Equal To 19 Kilowatts (Staff Report). August 8, 2003. http://www.arb.ca.gov/regact/sore03 /isor.pdf

ARB 2004. California Air Resources Board, Public Hearing to Consider Amendments to the California Off

- Road Emissions Regulation for Compression

- Ignition Engines and Equipment (Staff Report). October 22, 2004. http://www.arb.ca.gov/regact/offrdcie/isor.pdf

ARB 2007. California Air Resources Board

. Staff Report: Initial Statement of Reasons; Proposed 2007 Amendments to Phase 3 California Reformulated Gasoline Regulations; Appendix C: Emissions from Off

- Road Applications: Discussion of Impacts from Permeation Due to Ethanol Blending. Sacramento: April 27, 2007. http://www.arb.ca.gov/regact/2007/carfg07/appc.pdf

ARB 20 08. California Air Resources Board. Staff Report: Initial Statement of Reasons; Proposed Amendments to the Current Regulations for Small Off

- Road Engines

. Sacramento: April 27, 2007. http://www.arb.ca.gov/regact/2008/sore2008/soreisor.pdf

MAC 2010

- 002. California Air Resources Board, Mobile Source Operations Division, Manufacturers Advisory Correspondence 2010

- 002. December 21, 2010. http://www.arb.ca.gov/msprog/macs/mac1002/mac1002.pdf

SwRI 2010. Southwest Research Institute. Ethanol Evaluation On Nonroad Engines (Final report). Project Nos. 14075.07, 14936.07, and 15777.07. December 2010.

U.S. EPA 2004. Unit ed States Environmental Protection Agency, Control of Emissions of Air Pollution from Nonroad Diesel Engines and Fuel; Final Rule. 69 Federal Register 38958

- 39273. June 29, 2004. http://edo cket.access.gpo.gov/2004/pdf/04

- 11293.pdf

U.S. EPA 2007. United States Environmental Protection Agency

. Control of Emissions from Nonroad Spark

- Ignition Engines and Equipment; Proposed Rule, 72 Federal Register 28097

- 28393, May 18, 2007. http://www.epa.gov/otaq/regs/nonroad/marinesi

- equipld/420f07032.pdf