### TITLE 13. CALIFORNIA AIR RESOURCES BOARD

NOTICE OF PUBLIC HEARING TO CONSIDER PROPOSED AMEND MENTS TO THE

REGULATIONS FOR IN-USE OFF-ROAD DIESEL-FUELED FLEET S AND OFFROAD LARGE SPARK IGNITION ENGINE FLEET REQUIREMENTS

The Air Resources Board (ARB or Board) will conduct a public hearing at the time and place noted below to consider adoption of amendment s to its regulations for In-Use Off-Road Diesel-Fueled Fleets (off-road regulation) , California Code of Regulations (CCR), title 13, sections 2449 through 2449.3, and for Large Spark Ignition Engine Fleet Requirements (LSI fleet regulation), CCR, title 13, sections 2775 through 2775.2. This notice summarizes the specific amendments being pro posed. The Staff Report: Initial Statement of Reasons (ISOR) presents the proposed a mendments for both regulations and information supporting the adoption of the amen dments in greater detail.

DATE: December 16, 2010

TIME: 9:00 a.m.

PLACE: California Environmental Protection Agency

Air Resources Board Byron Sher Auditorium

1001 I Street Sacramento, California 95814

This item may be considered at a two-day meeting of the Board, which will commence at 9:00 a.m., December 16, 2010, and may continue a t 8:30 a.m., on December 17, 2010. This item may not be considered until December 17, 2010. Please consult the agenda for the hearing, which wi ll be available at least 10 days before December 16, 2010, to determine the day on w hich this item will be considered.

INFORMATIVE DIGEST OF PROPOSED ACTION AND POLICY ST ATEMENT

OVERVIEW

Off-Road Regulation

Sections Affected:

Proposed amendments to California Code of Regulat ions, title 13, sections 2449, 2449.1, 2449.2, and 2449.3, the regu lation for In-Use Off-Road Diesel

Vehicles.

Regulation Background

The off-road regulation was originally approved by the Board on July 26, 2007, and became effective on June 15, 2008. Additional amen dments were approved by the Board on December 11, 2008, and January 26, 2009, a nd became effective on January 8, 2010, and January 1, 2010, respectively. On February 20, 2009, the Governor signed Assembly Bill 8 2X (AB 8 2X) in whi ch the Legislature added section2

43018.2 to the Health and Safety Code, directing AR B to amend the off-road regulation. The Board approved the AB 8 2X amendments and addit ional minor amendments to the off-road regulation on July 23, 2009. The AB 8 2X became effective on December 3, 2009 (the AB 8 2X amendments were exemp t from the Administrative Procedure Act and OAL review); the additional amend ments approved by the Board in July 2009, became effective on August 15, 2010.

The off-road regulation is intended to significantl y reduce emissions of diesel particulate matter (PM) and oxides of nitrogen (NOx) from over 150,000 in-use off-road diesel vehicles that operate in California and consequentl y significantly reduce the public’s exposure to these pollutants and their byproducts. The off-road regulation is structured to achieve these environmental benefits by requirin g fleet owners of in-use off-road diesel vehicles to modernize their fleets by accele rating the use of cleaner engines and

exhaust retrofits in their vehicles. The off-road regulation was designed to support the

Diesel Risk Reduction Plan to Reduce Particulate Ma tter Emissions from Diesel-Fueled Engines and Vehicles, which was adopted by the Boar d on September 30, 2000, as well as the 2007 State Implementation Plans (SIP) for th e South Coast and San Joaquin Valley air basins.

The scope of the off-road regulation is far reachin g, affecting dozens of vehicle types used in thousands of fleets, in industries as diver se as construction, air travel, manufacturing, landscaping, and ski resorts, as wel l as public agencies. The off-road regulation affects, among others, the warehouse wit h one diesel forklift, the landscaper with a fleet of a dozen diesel mowers, the county t hat maintains rural roads, the landfill with a fleet of dozers, as well as the large constr uction firm or government fleet with hundreds of diesel loaders, graders, scrapers, and rollers. To punctuate the scope of the off-road regulation, as of September 20, 2010, 8,815 fleets have reported over 150,000 vehicles to the Diesel One-stop Online Repo rting System (DOORS), the reporting system for the off-road regulation.

The off-road regulation’s requirements vary dependi ng on the size of the fleet and on the age of its vehicles. Fleets are defined in the off-road regulation as small, medium, or large based on their total statewide horsepower (hp). The off-road regulation requires that the largest fleets, which have the mo st significant emissions, meet the most stringent requirements. The smallest fleets a nd local municipal fleets located in low-population counties are required to meet less s tringent provisions.

In general, the off-road regulation requires owners to modernize their fleets by replacing engines with newer, cleaner ones (repowering), repl acing vehicles with newer vehicles equipped with cleaner engines, retiring older vehic les, operating higher emitting vehicles less often (designating them as low-use vehicles), or by applying exhaust retrofits that capture and destroy pollutants before they are emit ted into the atmosphere.

To meet the PM and NOx emission reduction requireme nts, fleets have the option of meeting fleet average emissions targets, or meeting the Best Available Control Technology (BACT) requirements. The PM BACT requir ements consist of installing3

retrofits that have been approved by ARB as verifie d diesel emission control strategies (VDECS) on 20 percent of their maximum horsepower i n each year of compliance. To meet the NOx BACT requirements, large and medium fl eets must turnover eight percent of their maximum horsepower in each year of complia nce until 2015, after which there is a 10 percent turnover requirement. Small fleets ar e not required to meet the NOx emission reduction requirements.

In April 2010, the Board directed staff to consider the impact of the recession and emission inventory changes from both on-road and of f-road diesel vehicles operating in the state. The Board also directed staff to provid e regulatory relief to fleets affected by the Regulation to Reduce Emissions of Diesel Partic ulate Matter, Oxides of Nitrogen

and Other Criteria Pollutants from In-Use On-Road D iesel-Fueled Vehicles (on-road regulation) at title 13, CCR, section 2025 and/or t he off-road regulation such that any appropriate economic relief could be targeted most cost effectively between the two regulations, and staff could ensure the combined em issions benefits achieved by the two regulations would continue to meet state implem entation plan (SIP) requirements for the combined SIP categories.

On April 22, 2010, staff presented a preliminary up date to the Board on the emissions inventory used to develop the off-road regulation, as well as a summary of the impact of

the recession on emissions from off-road vehicles. Based on this new information, the Board asked staff to draft changes to the regulatio n that will mitigate the potential effects of an unfavorable economy on affected busin esses, while recognizing the need to protect public health, meet federal clean air de adlines, and continue moving forward even through uncertain times.

In summer and fall of 2010, staff also worked with representatives from the Associated General Contractors of America (AGC), and came to a n agreement with AGC in October 2010 to include a number of provisions in s taff’s proposal, including delaying initial compliance dates to no earlier than 2014 an d raising the low-use threshold.

Finally, in December 2008, by Resolution 08-43, the Board approved amendments to bring two-engine cranes under the off-road regulati on. In January 2010, by Resolution 10-2, the Board approved amendments to i nclude two-engine water well drilling rigs within the scope of the off-road regu lation.

Description of Proposed Regulatory Action

The first section below describes the more major mo difications to the off-road regulation. The next section describes additional minor modifications and clarifications proposed by staff to clarify or simplify regulatory provisions.

Major Amendments

Staff’s proposed major amendments to the off-road r egulation are described in more

detail in the sections below.4

1. Delay Initial Compliance Dates

Staff is proposing to modify section 2449.1(a) to d elay the initial compliance date of the off-road regulation for all fleets as described bel ow:

• Large fleets: from March 1, 2010, to January 1, 20 14,

• Medium fleets: from March 1, 2013, to January 1, 2 017, and

• Small fleets: from March 1, 2015, to January 1, 20 19.

Throughout the regulation, staff is proposing to mo dify dates to reflect the fact that compliance dates would be on January 1 rather than March 1 of each year.

2. New Combined PM and NOx Fleet Average Requiremen ts

Staff is proposing to combine the PM and NOx fleet average targets in sections 2449.1 and 2449.2. The fleet average targets would be bas ed on the fleet’s NOx fleet average. However, the combined fleet average targets would b e adjusted and shifted so as to require the appropriate amount of actions to reduce emissions (i.e., such that fleets that meet the NOx targets in the current regulation, but exceed the PM targets, would still be required to take some actions to reduce emissions). Considering the proposed new singular fleet average, section 2449.2 would be del eted completely. By combining the PM and NOx requirements, the regulation would becom e significantly less complicated as fleets will only have to meet a single annual fl eet average. The targets in section 2449.3 for the Surplus Off-road Opt-in for NOx (SOO N) program would also be revised to be more consistent with the amended fleet target s. In addition, staff is proposing to change the final compliance date for large and medium fleets to January 1, 2024 (from March 1, 2020), and for small fleets to January 1, 2029 (from March 1, 2025). Since staff is proposing to remove the PM requirements of the regulation, there will be no final PM compliance re quirements.

Staff is also proposing to modify section 2449.1(a) (1)(A)1. to increase the stringency of the final fleet average targets. This will result in fleets having to turn over additional older, dirtier vehicles such that a greater proport ion of their vehicles are equipped with Tier 4i and Tier 4 engines. By lowering the final fleet average targets, additional

emission reductions will be realized.

3. Modify the Best Available Control Technology (B ACT) Requirements

Staff is proposing to combine the PM and NOx BACT r equirements in sections 2449.1 and 2449.2. The combined BACT requirements would r equire annual actions on no more than 4.8 to 10 percent of a fleet’s horsepower (depending on year) in each year the fleet did not meet the fleet average target.

All fleets would have the following compliance opti ons for meeting the proposed combined BACT requirements:

• Replace older vehicles with new or cleaner, used v ehicles;

• Replace diesel vehicles with electric or alternati ve fuel vehicles;

• Repower older engines with Tier 2 or higher engine s;5

• Retire vehicles from fleet;

• Designate vehicles as permanent low-use; or

• Install verified diesel emission control strategie s (VDECS).

Staff’s proposal would reduce the overall annual re quirements as well as allow fleets the option to choose installing exhaust retrofits, turn ing over their oldest vehicles to newer, cleaner vehicles, or some combination thereof.

4. Credit Provisions

Staff’s proposal is intended to allow fleets to mai ntain credits for actual efforts already

made to reduce emissions and to further incentivize early actions by fleets, as described

below.

In addition, the Board may consider additional amen dments to provide fleets flexibility to

take credit for actions to reduce emissions between the off-road regulation and the onroad regulation.

Extend Double Retrofit Credit Period

Staff is proposing to amend section 2449.2(a)(2)(A) 2. (now moved to 2449.1(a)(2)(A)2.a.ii.) to extend the period during which a fleet may receive double

credit for the installation of a VDECS until 12 mon ths prior to the initial compliance deadline for that fleet. The impact of this propos al would be to incentivize continued progress toward cleaner air and support clean techn ology. It would encourage critical near term reductions of diesel PM and also helps en sure the investment that

businesses and the State have made in retrofit tech nology is not lost due to the delay in the start of the fleet requirements.

In addition, the Board may consider additional amen dments to further incentivize retrofitting prior to fleets’ initial compliance de adlines.

Changes to Other Credit Provisions

Staff’s proposal is intended to allow fleets to mai ntain credits for actual efforts already made to reduce emissions; however, credits would be adjusted to reflect the delay of compliance start dates. Staff is proposing to amen d section 2449.1(a)(2)(A)2.a.v. to reduce each fleet’s early retirement credits by 50 percent and provide that fleets may not use early retirement credits granted per sectio n 2449.1(a)(2)(A)2.a.v. to satisfy all or part of their BACT requirements for the March 1, 20 14, compliance date. Also, because reduced activity credits were scheduled to expire o n March 1, 2011, if not used, per AB 8 2X, and because the proposed amendments would del ay the initial requirements for fleets until January 1, 2014, staff is proposing to remove the regulatory language implementing reduced activity credits.6

5. Increase Low-Use Threshold

Staff is proposing to explicitly identify and defin e the two types of low-use vehicles within the regulation as either year-by-year low us e or permanent low use, and to increase the low-use threshold in section 2449.1(a) (2)(A)6 for both permanent low-use vehicles and year-to-year vehicles from 100 hours a nnually to 200 hours annually. Increasing the low-use threshold would provide addi tional relief, by exempting additional vehicles and increasing the cost effectiveness of t he regulation by focusing turnover and retrofit requirements on vehicles that operate grea ter hours.

6. New Provisions for Fleets Under 500 Horsepower

Staff is proposing a new provision (section 2449(e) (17)) to allow fleets with under 500 horsepower to choose to comply with the BACT requir ements of the regulation solely by phasing out their Tier 0 and Tier 1 vehicles over a prescribed schedule between 2019 and 2029. Compliance for these fleets using this p hase-out schedule would be optional, as these fleets could instead opt to meet the fleet average requirements or the BACT requirements. This provision would provide a very streamlined and relaxed compliance path for the owners of the smallest fleets.

7. Additional Minor Amendments

Staff is proposing a number of minor amendments to clarify the off-road regulation, simplify compliance, and provide consistency with t he major amendments discussed above. These proposed changes include, but are not limited to:

Captive Attainment Area Fleet Definition - modify the definition to designate these fleets as small fleets, regardless of their total horsepow er.

Modify post-2007 flexibility engine definition - simplify the reporting requirements for Post-2007 flexibility engines.

Alternative Fuel and Hybrid Provisions - remove electric vehicle horsepower from the fleet’s total horsepower calculation, which will al so remove this horsepower from all BACT calculations, and incentivize the use of hybri d off-road vehicles by allowing fleets to use a lower emission factor(s) for hybrid equipm ent used in a fleet.

Remove Hours in Fleet Average Provision –delete this provision since no fleets have taken advantage of it or plan to.

New Fleet Requirements - clarify that upon purchasing vehicles or bringing v ehicles into the state for the first time, a fleet must meet the following requirements:

• Large or Medium fleets: Require a large or medium fleet to meet the fleet average target for the closest future large fleet compliance date upon initial formation or upon entrance into the state after the effective date of the proposed

amendments.7

• Small fleet:

Require a small fleet to meet the fleet average t arget for the closest future small fleet compliance date upon initial for mation or upon entrance into the state after the effective date of the proposed amen dments.

For any size fleet, the fleet would be required to meet either the fleet average target or comply with the BACT requirements by the next appli cable compliance date.

Adding Vehicle Requirements - amend the adding vehicle requirements:

• Beginning January 1, 2012, large and medium fleets would be allowed to add only vehicles with only Tier 2 or higher engines; b eginning January 1, 2016, the restrictions would apply to small fleets; and

• Beginning January 1, 2018, large and medium fleets would be allowed to add only vehicles with Tier 3 or higher engines; beginn ing January 1, 2021, the restrictions would apply to small fleets.

These revised requirements would apply to all fleet s (regardless of compliance path) and to all horsepower categories, providing additio nal clarity and simplification to the regulation.

Compliance after the Final Target Date - clarify that the turnover and retrofit exemptions do not expire after the final compliance date.

Reporting Dates - change the reporting dates to make them more consis tent with the changes and delays to the compliance dates.

Labeling - require equipment identification numbers (EIN) on b oth sides of a vehicle, instead of just on the right (starboard) side. Add itionally, staff is proposing to require captive attainment area fleets to label their vehic les with EINs that are green with white letters (instead of red with white letters) if they choose to take advantage of the captive attainment area fleet provision.

Order of Turnover

- simplify the order of turnover provisions by only r equiring fleets to

turn over all Tier 0 and Tier 1 vehicles before the y can count other higher tiered vehicles in meeting the fleet’s BACT requirements.

15 Percent Turnover Exemption - clarify that if a fleet has more than 15 percent of its vehicles retrofitted before March 1, 2011, the flee t may choose any of those vehicles to be counted under this exemption and be exempt from turnover, as long as the 15 percent cap is not exceeded and the exempted vehicl e(s) continue to be equipped with

the installed VDECS.

In addition to the above, the Board may consider am ending the off-road regulation to cover other two engine vehicles, as appropriate, fo r reasons similar to its past decisions to include two-engine cranes and well drilling rigs within the regulation’s scope.8

LSI Fleet Regulation

Sections Affected:

Proposed amendments to CCR, title 13, sections 27 75(c), 2775.1(d)(1)(D), 2775.2(b), and 2775.2(e)(1)(A), th e Large Spark-Ignition (LSI) Engine Fleet Requirements regulation.

Regulation Background

At its October 22, 1998, public meeting, ARB approv ed the Off-Road LSI Engine Regulation (LSI Regulation) with the adoption of Ca lifornia Code of Regulations, title 13, sections 2775 through 2775.2. The LSI Regulation e stablished new engine emission standards and test procedures for manufacturers of off-road spark-ignited engines of 25 horsepower or greater (greater than 19 kilowatts ).

On May 12, 2006, the ARB approved a second LSI rule making. The rulemaking included modifications to the existing emission sta ndards and test procedures to make them more stringent. The rulemaking also included fleet requirements for operators of in-use LSI fleets (the LSI fleet regulation) and ve rification procedures for manufacturers of LSI retrofit emission control systems (retrofit kits).

The intent of the LSI new engine emission standards and fleet requirements was to reduce hydrocarbon and oxides of nitrogen (HC+NOx) emissions from the nearly 90,000 pieces of LSI equipment sold into and operating in the state by accelerating the

introduction of new zero- and near zero-emissions e quipment and the retrofit or retirement of uncontrolled in-use equipment, respec tively.

Applicability

The new engine emission standards and test procedur es apply to LSI engines used in airport ground support equipment (GSE), forklifts, generator sets, mining equipment not otherwise primarily used in the construction indust ry, off-highway recreational vehicles, refrigeration units less than 50 horsepower, indust rial (non-road) sweeper/scrubbers, industrial tow tractors (tugs), turf care equipment , and other industrial equipment.

The LSI fleet regulation affects any operator of fo ur or more forklifts, sweepers/scrubbers, tugs, and GSE, the four largest categories of LSI engine equipment. These vehicles are found in thousands o f fleets in California, in industries as diverse as manufacturing, wholesale, transportat ion and utilities, retail, services, and construction, as well as public agencies.

Regulatory Requirements

The 1998 rulemaking required LSI engine manufacture rs to certify 25 percent of their new engines to a 3.0 gram per brake horsepower-hour (g/bhp-hr) combined HC+NOx standard beginning with the 2001 engine model year. The percentage increased by 25 percent each subsequent model year so that 100 p ercent of the engines were9

emission-controlled by the 2004 model year. To ach ieve this standard, manufacturers relied upon the same emission control technologies used in automotive engines – three way catalytic converters, electronic fuel/air contr ollers, and oxygen sensors. The 3.0g /bhp-hr standard represented a 75 percent redu ction in emissions versus LSI engines with no emission controls.

The 2006 rulemaking required manufacturers to certi fy their new LSI engines to a 2.0 g/bhp-hr HC+NOx standard effective January 1, 2 007 and a 0.6 g/bhp-hr standard effective January 1, 2010. The latter standard rep resents a 95 percent emission reduction versus uncontrolled LSI engines.

The 2006 rulemaking also required operators of in-u se fleets to achieve specific HC+NOx fleet average emission level standards that are more stringent with fleet size and time. The standards are also more stringent fo r forklifts than they are for non-forklift LSI equipment. The stringency of the standards ref lects the availability of retrofit devices for LSI equipment as well as the greater ab ility of large fleets to incorporate zero- and near zero-emission new and used equipment into their operations.

Description of Proposed Regulatory Action

Staff is proposing several minor changes and clarif ications to the LSI fleet regulation. The minor changes include: (1) extending the limite d hours of use provisions, (2) broadening compliance extension flexibility, (3) ad ding definitions, and (4) clarifying definitions and modifying record keeping requiremen ts.

Proposed Amendments

1. Limited Hours of Use Provision

Staff proposes to amend section 2775.1(d)(1)(D) to extend the limited hours of use (LHU) exclusion for LSI equipment operated fewer th an 251 hours per year. Currently, LHU equipment may be excluded from fleet average em ission level standard calculations, but only until January 1, 2011. Afte r that date, LHU equipment that has been retrofitted to a 3.0 g/bhp-hr standard may con tinue to be excluded from fleet average emission level standard calculations. If n ot retrofitted, the LHU piece of equipment may have to be retired or replaced, resul ting in a significant economic impact on some operators. Staff proposes to extend the LH U provisions for equipment operated no more than 200 hours per year and intend s to clarify that operators desiring to exclude equipment under the LHU provisions must use non-resettable hour meters.

2. Compliance Extension Provision

Staff proposes to amend section 2775.2(e)(1)(A) to extend the length of compliance extensions. Currently, an LSI equipment operator ma y request a one-year compliance

extension in cases where retrofit emission control devices (retrofit kits) are not available for a given engine/equipment combination. After th at time, if no retrofit kit has become10

available, the operator is expected to retire or re place their piece of equipment to come into compliance with their fleet average emission l evel standards. However, replacement is not an economically feasible option for specialized LSI equipment with either very large engine displacements or an Underw riters Laboratories (UL) issued LPS/GS (propane/gas) safety designation. Staff pro poses to allow a two-year compliance extension with a provision for an additi onal two years in the event of non-availability of retrofit kits. After the exten sion(s) expire(s), the operator may no longer exclude the LSI equipment from the fleet ave rage emission level standard and may have to retire or replace it to achieve the sta ndard. Staff also proposes to clarify an incomplete reference in section 2775.2(e)(1)(A) to “subsections 2775.1(a), (c), and (d).

3. Modified Definitions

Agricultural Operations - The “Agricultural Operations” definition would also clarify that forestry and nursery operations are considered agri cultural operations. The “Fleet Average Emission Level” definition would also clari fy two items for fleet average emission level standards calculations: (1) the defa ult emission rate for uncontrolled LSI equipment is 12.0 grams HC+NOx per brake horsepower -hour, and (2) electric equipment of less than 19 kilowatts power may be in cluded in calculations as long as it performs, with similar efficiency, the same functio n as an LSI engine-powered piece of equipment subject to the standards.

Airport Ground Support Equipment or GSE - “GSE” currently means any LSI engine or electric-powered equipment contained in the 24 cate gories of equipment included in section B.3 of Appendix 2 of the South Coast Ground Support Equipment Memorandum of Understanding, dated November 27, 2002. Two of these categories are “carts” and “other,” which, for the purposes of electric-powere d equipment, can be interpreted very broadly. Under the proposal, staff would eliminate the “other” category and limit the “cart” category so that it only allows electric car ts into fleet average emission level standards calculations if they perform the work equ ivalent of an LSI engine-powered cart. These proposed modifications bring the defin ition in line with the original intent of the LSI fleet regulation.

Baseline Inventory - The “Baseline Inventory” definition currently st ates that this inventory should reflect all equipment owned at the time of the inventory. The intent of the regulation was that the baseline inventory shou ld reflect all operated equipment subject to the fleet average emission level require ments. Staff proposes to clarify that the baseline inventory requirement applies to all o perated LSI equipment by replacing the word “owned” with the word “operated.”

Operator - The “Operator” definition currently states that “operator” includes a person whose usual and customary business is the rental or leasing of LSI engine equipment for any equipment not solely possessed or used for rental or leasing. The intent of the regulation was to allow rental equipment companies and equipment dealers some de minimis level of use of their rental and used equip ment fleet vehicles without triggering11

the fleet average emission level standards requirem ents. Staff proposes to modify the “operator” definition to stipulate a de minimis usa ge level that reflects this intent.

4. Record-keeping Requirements

Staff proposes to modify the record-keeping require ments in section 2775.2(b) of the existing regulation . This section requires operators to record identi fying and emissions information for each piece of LSI equipment in thei r fleet. It also requires them to obtain product delivery tickets or a like surrogate, if ob tainable, stipulating that the fuel they are using meets motor vehicle grade propane specificati ons. The ARB added this second requirement in an attempt to force operators to put pressure on their fuel suppliers to provide uncontaminated and low-olefin (propene) con tent motor vehicle grade fuel. However, operators have been unable to obtain this documentation from their fuel suppliers. Staff proposes to remove the fuel quali ty record-keeping requirement. Staff also proposes to clarify the ARB’s intent that the record-keeping requirement apply to each piece of LSI equipment and that serial numbers be recorded for both engines and equipment.

COMPARABLE FEDERAL REGULATIONS

Off-Road Regulation

The United States Environmental Protection Agency ( U.S. EPA) has promulgated federal emission standards for new non-road engines . However, no federal standards have been promulgated addressing emission reduction s from in-use diesel vehicle engines.

Under section 209(e)(2), California may adopt and e nforce emission standards and other requirements for off-road engines and equipme nt not expressly subject to federal preemption, so long as California applies for and r eceives authorization from the

Administrator of U.S. EPA. California submitted it s initial request for authorization on August 12, 2008, and filed a supplemental request o n February 11, 2010. EPA conducted hearings on the requests on October 27, 2 008, and April 14, 2010. The requests for authorization are presently pending.

LSI Fleet Regulation

In 2002, the U.S. EPA followed California’s lead a nd adopted emission standards for new LSI engines (Volume 67, Federal Register, page 68242, November 8, 2002; title 40, Code of Federal Regulations, part 1048). As the preamble to the federal regulations notes, the federal regulations extend California’s 1998 standards for new LSI engines to the rest of the United States in 2004 through 2006 and adopt more stringent standards for new LSI engines beginning in 2007.

In 2006, the ARB harmonized with the federal standa rds for new 2007 through 2009 model year LSI engines, but went a step further ado pting more stringent California new12

engine standards that became effective January 1, 2 010. The ARB also adopted fleet average emission level standards for operators of L SI engine-powered equipment. The federal regulations do not impose the more stringen t 2010 new engine standards. They additionally do not impose requirements on fleet op erators or on in-use engines.

Under section 209(e)(2), California may adopt and e nforce emission standards and other requirements for off-road engines and equipme nt not expressly subject to federal preemption, so long as California applies for and r eceives authorization from the Administrator of U.S. EPA. California’s request fo r authorization was submitted on December 10, 2008; the request for authorization is presently pending.

AVAILABILITY OF DOCUMENTS AND AGENCY CONTACT PERSON S

ARB staff has prepared a Staff Report: Initial Sta tement of Reasons (ISOR) for the proposed regulatory actions, which includes a summa ry of the economic and environmental impacts of the proposal. The report is entitled: “Proposed Amendments to the Regulations for In-Use Off-Road Diesel Fuele d Fleets and Off-Road Large Spark-Ignition Fleet Requirements.”

Copies of the ISOR and the full text of the propose d regulatory language for both the off-road regulation and the LSI fleet regulation, i n underline and strikeout format to allow for comparison with the existing regulations, may b e accessed on ARB’s website listed below, or may be obtained from the Public Informati on Office, Air Resources Board, 1001 I Street, Visitors and Environmental Services Center, First Floor, Sacramento, California, 95814, (916) 322-2990, at least 45 days prior to the scheduled hearing on December 16, 2010.

Upon its completion, the Final Statement of Reasons (FSOR) will be available and copies may be requested from the agency contact per sons in this notice, or may be

accessed on ARB’s website listed below.

Inquiries concerning the substance of the proposed off-road regulation amendments may be directed to the designated agency contact pe rsons, Ms. Kim Heroy-Rogalski, Manager of the Off-Road Implementation Section, at (916) 327-2200, or Ms. Elizabeth Yura, Off-Road Implementation Staff, at (916) 323-2397.

Inquiries concerning the substance of the proposed LSI fleet regulation amendments may be directed to the designated agency contact pe rsons, Ms. Elise Keddie, Manager of the ZEV Implementation Section, at (916) 323-897 4, or Mr. Mark Williams, ZEV Implementation Staff, at (916) 327-5610.

Further, the agency representative and designated b ack-up contact persons, to whom nonsubstantive inquiries concerning the proposed ad ministrative action may be directed, are Ms. Lori Andreoni, Manager, Board Adm inistration and Regulatory Coordination Unit, (916) 322-4011, or Ms. Trini Bal cazar, Regulations Coordinator,13

(916) 445-9564. The Board has compiled a record fo r this rulemaking action, which includes all the information upon which the proposa l is based. This material is available for inspection upon request to the contact persons.

This notice, the ISOR and all subsequent regulatory documents, including the FSOR, when completed, are available on ARB’s website for this rulemaking at http://www.arb.ca.gov/regact/2010/offroadlsi10/offr oadlsi10.htm

COSTS TO PUBLIC AGENCIES AND TO BUSINESSES AND PERS ONS AFFECTED

The determinations of the Board's Executive Officer concerning the costs or savings necessarily incurred by public agencies and private persons and businesses in reasonable compliance with the proposed regulations are presented below.

Pursuant to Government Code sections 11346.5(a)(5), the Executive Officer has determined that the proposed regulatory actions wou ld not create any costs to or mandates on any local agency or school district tha t is reimbursable by the State pursuant to Government Code, title 2, division 4, p art 7 (commencing with section 17500).

Pursuant to Government Code sections 11346.5(a)(6), the Executive Officer has determined, based on estimates prepared in accordan ce with instruction adopted by the Department of Finance, that the amendments to the o ff-road regulation or the LSI fleet regulation would not create additional costs to any State agency or to any local agency or school district, whether or not reimbursable by the State pursuant to Government Code, title 2, division 4, part 7 (commencing with section 17500), create other nondiscretionary costs on local agencies, and affec t costs or savings in federal funding

to the State.

The proposed amendments to both regulations will pr ovide significant relief from compliance requirements, and are expected to decrea se the compliance costs for both public and private fleets alike; it is not expected that any of the proposed amendments will increase compliance costs for fleets.

In developing this regulatory proposal, ARB staff e valuated the potential economic impacts on representative private persons or busine sses. ARB is not aware of any cost impacts, other than the aforementioned savings, tha t a representative private person or business would necessarily incur in reasonable comp liance with the proposed action. Additionally, as stated above, the proposed amendme nts to both regulations are expected to decrease compliance costs for fleets, w hich will result in a cost savings for

fleets.

Pursuant to Government Code section 11346.5(a)(8), the Executive Officer has made an initial determination that the proposed regulato ry actions would not have a significant statewide adverse economic impact directly affectin g businesses, including the ability of California businesses to compete with businesses in other states, or on representative14

private persons. In accordance with Government Cod e sections 11346.5(a)(10) and 11346.3(b), the Executive Officer has further deter mined that the proposed regulatory actions will overall decrease the elimination of jo bs within the State of California, and decrease the elimination of existing businesses wit hin the State of California. The amendments to both regulations are expected to prov ide significant relief to affected fleets and, therefore, will not have an adverse aff ect on California businesses.

Although these proposed amendments are not expected to adversely impact the economy overall, these modifications could have a n egative economic impact on retrofit manufacturers and installers, and firms that provid e repowers or new or used vehicles because they would receive fewer orders in the next few years. However, the off-road regulation will still provide incentives that are i ntended to encourage early retrofitting, repowering, and replacement, and the LSI fleet regu lation does not preclude a fleet from voluntarily cleaning up there fleet, which could he lp mitigate potential impacts on retrofit and repower jobs and businesses.

A detailed assessment of the economic impacts of th e proposed regulatory actions and

their effect on California businesses can be found in the ISOR.

In accordance with Government Code section 11346.3, except as stated above with respect to retrofit manufacturers and installers, a nd firms that provide repowers or new or used vehicles, by providing significant relief t o affected fleets, the Executive Officer has determined that the proposed regulatory actions would overall positively affect the number of jobs created or, at least, decrease the n umber of jobs eliminated within the State of California; positively affect the number o f new businesses created or, at least, decrease the number of existing businesses eliminat ed within the State of California, and positively affect the expansion of businesses c urrently doing business within the

State of California. A detailed assessment of the economic impacts of the proposed regulatory actions can be found in the ISOR.

The Executive Officer has also determined, pursuant to California Code of Regulations, title 1, section 4, that the proposed off-road regu latory action would affect small businesses. It is expected that the proposed amend ments to the off-road regulation will result in an overall cost savings to small business es. However, as stated above, the amendments could have a negative economic impact on small businesses associated with retrofit manufacturing and installation becaus e they would receive fewer orders in the next few years. The proposed LSI fleet regulato ry action would not affect small businesses as they are already exempt from the requ irements of the LSI fleet regulation.

In accordance with Government Code sections 11346.3 (c) and 11346.5(a)(11), the Executive Officer has found that the reporting requ irements of the regulations which apply to businesses are necessary for the health, s afety, and welfare of the people of

the State of California.15

Before taking final action on the proposed regulato ry actions, the Board must determine that no reasonable alternatives considered by the B oard, or that has otherwise been identified and brought to the attention of the Boar d, would be more effective in carrying out the purpose for which the actions are proposed, or would be as effective and less burdensome to affected private persons than the pro posed actions.

SUBMITTAL OF COMMENTS

Interested members of the public may also present c omments orally or in writing at the meeting, and comments may be submitted by postal ma il or by electronic submittal before the meeting. The public comment period for this regulatory action will begin on November 1, 2010. To be considered by the Board, w ritten comments, not physically submitted at the meeting, must be submitted on or a fter November 1, 2010 and

received no later than 12:00 noon on December 15, 2010, and must be addressed to the following:

Postal mail: Clerk of the Board, Air Resources Boa rd

1001 I Street, Sacramento, California 95814

Electronic submittal: http://www.arb.ca.gov/lispub/comm/bclist.php

Please note that the webpage provided above for ele ctronic submittal is for comments on the following on-road and off-road regulations:

• Truck and Bus

• Drayage Truck

• Tractor-Trailer GHG

• Off-Road

• Large Spark Ignition

To ensure that all comments are properly considered and responded to, please identify in the subject heading of each comment letter the r egulation(s) for which comments are being submitted.

Please note that under the California Public Record s Act (Gov. Code, § 6250 et seq.), your written and oral comments, attachments, and as sociated contact information (e.g., your address, phone, email, etc.) become part of th e public record and can be released to the public upon request. Additionally, this inf ormation may become available via Google, Yahoo, and any other search engines.

The Board requests, but does not require, that 20 c opies of any written statement be

submitted and that all written statements be filed at least 10 days prior to the hearing so that ARB staff and Board members have time to fully consider each comment. The Board encourages members of the public to bring to the attention of staff in advance of the hearing any suggestions for modification of the proposed regulatory action.16

STATUTORY AUTHORITY AND REFERENCES

Off-Road Regulation

This regulatory action is proposed under that autho rity granted in Health and Safety Code sections 39002, 39003, 39500, 39600, 39601, 39 602, 39602.5, 39650, 39656,
39658, 39659, 39665, 39667, 41511, 43000, 43000.5, 43013, 43018, and 43018.2. This action is proposed to implement, interpret and make specific 39002, 39003,
39500, 39600, 39601, 39602, 39602.5, 39650, 39656, 39658, 39659, 39665, 39667, 41511, 43000, 43000.5, 43013, 43018, and 43018.2.

LSI Fleet Regulation

This regulatory action is proposed under that autho rity granted in Health and Safety Code, sections 39002, 39003, 39500, 39600, 39601, 4 3000, 43011, 43013, 43017, 43018, 43600, and 43700. This action is proposed t o implement, interpret, and make specific sections 43000, 43013, 43017, 43018, 43101 , 43102, 43104, 43105, 43106,
43150, 43151, 43152, 43153, 43154, 43204, 43205, 43 205.5, 43210, 43210.5, 43211,

and 43212.

HEARING PROCEDURES

The public hearing will be conducted in accordance with the California Administrative Procedure Act, Government Code, title 2, division 3 , part 1, chapter 3.5 (commencing with section 11340).

Following the public hearing, the Board may adopt t he regulatory language as originally proposed, or with non-substantial or grammatical mo difications. The Board may also adopt the proposed regulatory language with other m odifications if the text as modified is sufficiently related to the originally proposed text that the public was adequately placed on notice and that the regulatory language a s modified could result from the proposed regulatory action; in such event, the full regulatory text, with the modifications clearly indicated, will be made available to the pu blic, for written comment, at least 15-days before it is adopted.

The public may request a copy of the modified regul atory text from ARB’s Public Information Office, Air Resources Board, 1001 I Str eet, Visitors and Environmental Services Center, First Floor, Sacramento, Californi a, 95814, (916) 322-2990.

SPECIAL ACCOMMODATION REQUEST

Special accommodation or language needs can be prov ided for any of the following:

• An interpreter to be available at the hearing;

• Documents made available in an alternate format (i. e., Braille, large print, etc.) or another language;

• A disability-related reasonable accommodation.17

To request these special accommodations or language needs, please contact the Clerk of the Board at (916) 322-5594 or by facsimile at 9 16) 322-3928 as soon as possible, but no later than 10 business days before the sched uled Board hearing. TTY/TDD/Speech to Speech users may dial 711 for the California Relay Service.

Comodidad especial o necesidad de otro idioma puede ser proveído para alguna de las siguientes:

• Un intérprete que esté disponible en la audiencia

• Documentos disponibles en un formato alterno (por d ecir, sistema Braille, o en impresión grande) u otro idioma.

• Una acomodación razonable relacionados con una inca pacidad.

Para solicitar estas comodidades especiales o neces idades de otro idioma, por favor llame a la oficina del Consejo al (916) 322-5594 o envíe un fax a (916) 322-3928 lo más pronto posible, pero no menos de 10 días de trabajo antes del día programado para la audiencia del Consejo. TTY/TDD/Personas que necesit en este servicio pueden marcar el 711 para el Servicio de Retransmisión de Mensaje s de California.

CALIFORNIA AIR RESOURCES BOARD

/s/

_________________________________ James N. Goldstene

Executive Officer

Date: October 19, 2010

The energy challenge facing California is real. Ev ery Californian needs to take immediate action to reduce energy consumption. For a list of simple wa ys you can reduce demand and cut your energy costs, see our website at www.arb.ca.gov

.