### TITLES 13 AND 17. CALIFORNIA AIR RESOURCES BOARD

NOTICE OF PUBLIC HEARING TO CONSIDER THE ADOPTION O F PROPOSED

REGULATIONS TO REDUCE EMISSIONS FROM DIESEL AUXILIA RY ENGINES ON

OCEAN-GOING VESSELS WHILE AT BERTH AT A CALIFORNIA PORT

The Air Resources Board (the Board or ARB) will con duct a public hearing at the time and place noted below to consider adoption of regul ations to reduce emissions of diesel particulate matter (PM) and oxides of nitrogen (NOx ) from the use of diesel-fueled auxiliary engines aboard ocean-going ships while do cked, or hotelled, at a California port. Auxiliary engines are run to power lighting, ventilation, pumps, communication, and other onboard equipment while a ship is docked at a berth. The proposed regulations would require some vessels to turn off their auxiliary engines; it is expected, but not required, that many of those vessels would then receive their electrical power from shore while at berth. The regulations will al so reduce emissions of carbon dioxide (CO 2 ), a greenhouse gas that is responsible for much of the global climate change.

Any person who owns, operates, charters, rents, or leases any container ship, passenger ship, or refrigerated cargo ship that vis its a California port, or any person who owns or operates a port or terminal located at a port where container, passenger, or refrigerated cargo ships visit, would be subject to and have responsibilities under this regulation. This notice summarizes the proposed re gulations. The Staff Report and Technical Support Document present the regulation a nd information supporting the adoption of the regulation in greater detail.

DATE: December 6, 2007

TIME: 9:00 a.m.

PLACE: Air Resources Board

Auditorium

9530 Telstar Avenue El Monte, California 91731

This meeting location may change. This item will be considered at a two-day meeting of

the Board, which will commence at 9:00 a.m., Decemb er 6, 2007, and may continue at 8:30 a.m., December 7, 2007. This item may not be considered until December 7, 2007. Please consult the agenda for the meeting, w hich will be available at least 10 days before December 6, 2007, to determine the loca tion and day on which this item will

be considered.

For individuals with sensory disabilities, this doc ument is available in Braille, large print, audiocassette or computer disk. Please contact ARB 's Disability Coordinator at (916) 323-4916 by voice or through the California R elay Services at 711, to place your2

request for disability services. If you are a pers on with limited English and would like to request interpreter services, please contact ARB's Bilingual Manager at (916) 323-7053.

INFORMATIVE DIGEST OF PROPOSED ACTION AND POLICY ST ATEMENT

OVERVIEW

Sections Affected : Proposed adoption of new section 2299.3, title 1 3, California Code of Regulations (CCR) and new section 93118.3, title 17, CCR. The following documents would be incorporated in the regulations by reference: (1) “Verification Procedure, Warranty and In-Use Compliance Requireme nts for In-Use Strategies to Control Emissions from Diesel Engines," 13 CCR 2700 et seq.; (2) 40 Code of Federal Regulations (CFR) Part 94, “Control of Emissions fr om Marine Compression-Ignition Engines”; (3) Annex VI of the 1973 International Co nvention for the Prevention of Pollution from Ships, as modified by the Protocol o f 1978 relating thereto (MARPOL 73/78); (4) ARB Method 100 – Procedures for Continu ous Gaseous Emission Stack Sampling,” 17 CCR 94114; (5) International Standard ISO 8178-1(E):1996, “Reciprocating Internal Combustion Engines – Exhaus t Emission Measurement –

Part 1: Test-Bed Measurement of Gaseous and Particulate Exh aust Emissions”; (6) International Standard ISO 8178-2(E):1996, “Rec iprocating Internal Combustion Engines – Exhaust Emission Measurement – Part 2: Me asurement of Gaseous and Particulate Exhaust Emissions at Site”; (7) Interna tional Standard ISO 8178-4(E):1996, “Reciprocating Internal Combustion Engines – Exhaus t Emission Measurement – Part 4: Test Cycles for Different Engine Applicatio ns”; (8) Bay Area Air Quality Management District Source Test Procedure ST-1B, “A mmonia Integrated Sampling,” dated January 1982; (9) International Standard ISO 8754:2003(E), “Petroleum Products – Determination of Sulfur Content – Energy-Dispersi ve X-Ray Fluorescence Spectrometry,” Second Edition, 2003-07-15; and (10) United States Department of Homeland Security, Bureau of Customs and Border Pro tection, “Vessel Entrance or Clearance Statement,” CBP Form 1300 (v. 02/02), 19 CFR Part 4.

Background

Over 90 percent of Californians breathe unhealthful air at times. To improve air quality and human health, ARB establishes requirements to r educe emissions from new and in-use on-road and off-road vehicles, engines, and other sources. To reduce emissions from marine vessels, which are considered to be off -road sources, 1 ARB adopted a series of regulations since 2004 that (1) require d iesel fuel sold for use in harbor craft comply with ARB diesel specifications 2 and, (2) require ocean-going vessels with diesel auxiliary engines to comply with specified diesel f uel and other requirements while operating in Regulated California Waters. 3 Although the latter regulation will reduce air pollution from marine auxiliary engines while in po rt, significant opportunities exist to

1 The California term “off-road” and the federal ter m “nonroad” refer to the same sources and are used interchangeably

2 ARB’s fuel standards for harbor craft are codified at title 13, CCR, section 2299.

3 ARB’s fuel standards and other requirements for die sel auxiliary engines on ocean-going vessels are

codified at title 13, CCR, section 2299.1 and title 17, CCR, section 93118.3

further reduce emissions from ocean-going vessels d ocked at California ports. Ships can be docked at a California port from several hou rs to several days.

Control of Criteria Air Pollutants

Health and Safety Code (HSC) sections 43013 and 430 18 direct ARB to adopt standards and regulations that the Board has found to be necessary, cost-effective, and technologically feasible for various mobile source categories, including off-road diesel engines and equipment such as marine vessels, throu gh the setting of emission control requirements. Specifically, HSC section 43013(b) d irects ARB to adopt such standards and regulations for marine vessels to the extent pe rmitted by federal law.

Control of Toxic Air Contaminants

The California Toxic Air Contaminant Identification and Control Program (Air Toxics Program), established under California law by Assem bly Bill 1807 (Stats. 1983, ch. 1047) and set forth in HSC sections 39650 through 3 9675, requires ARB to identify and

control air toxics in California. The identificati on phase of the Air Toxics Program requires ARB, with participation of other state age ncies such as the Office of

Environmental Health Hazard Assessment, to evaluate the health impacts of, and exposure to substances, and to identify those subst ances that pose the greatest health threat as toxic air contaminants (TACs). ARB’s eva luation is made available to the public and is formally reviewed by the Scientific R eview Panel (SRP) established under HSC section 39670. Following ARB’s evaluation and the SRP’s review, the Board may formally identify a TAC at a public hearing. Follo wing identification, HSC sections 39658, 39665, and 39666 require ARB, with participation of the air pollution control and air quality management districts (distr icts), and in consultation with affected sources and interested parties, to prepare a report on the need and appropriate degree of regulation for that substance (a “needs assessme nt”) and to adopt airborne toxic control measures (ATCMs).

In 1998, the Board identified diesel PM as a TAC wi th no Board-specified threshold exposure level. A needs assessment for diesel PM w as conducted between 1998 and 2000, which resulted in ARB staff developing and th e Board approving a Risk Reduction

Plan to Reduce Particulate Matter Emissions from Di esel-Fueled Engines and Vehicles (Diesel RRP) in 2000. The Diesel RRP presented inf ormation that identified the available options for reducing diesel PM and recomm ended control measures to achieve further reductions. The scope of the Diese l RRP was broad, addressing all categories of engines, both mobile and stationary, and included control measures for off-road diesel engines, such as those covered by t he proposed regulation. The ultimate goal of the Diesel RRP is to reduce Califo rnia’s diesel PM emissions and

associated cancer risks from 2000 baseline levels b y 85 percent by 2020. The proposed regulation would reduce diesel PM emission s and the local health impacts from ships docked in California’s ports and would a ssist the Board with meeting the 2020 Diesel RRP goal.4

Attainment of Ambient Air Quality Standards

The federal Clean Air Act (CAA) requires the U.S. E nvironmental Protection Agency (U.S. EPA) to establish National Ambient Air Qualit y Standards (National Standards) for pollutants considered harmful to public health, inc luding fine particulate matter (PM 2.5 ) and ozone. Set to protect public health, the natio nal standards are adopted based on a review of health studies by experts and a public pr ocess. Ambient PM 2.5 is associated with premature mortality, aggravation of respirator y and cardiovascular disease, asthma exacerbation, chronic and acute bronchitis and redu ctions in lung function. Ozone is a powerful oxidant. Exposure to ozone can result in reduced lung function, increased respiratory symptoms, increased airway hyper-reacti vity, and increased airway inflammation. Exposure to ozone is also associated with premature death, hospitalization for cardiopulmonary causes, and eme rgency room visits for asthma.

Areas in the State that exceed the national standar ds are required by federal law to develop State Implementation Plans (SIPs) describin g how they will attain the standards by certain deadlines. The NOx emission reductions are needed because NOx leads to formation in the atmosphere of both ozone and PM 2.5 ; diesel PM emission reductions

are needed because diesel PM contributes to ambient concentrations of PM 2.5 . At this time, the South Coast Air Basin is required to atta in the PM 2.5 standard by 2015. U.S. EPA further requires that all necessary emissi on reductions be achieved one calendar year sooner – by 2014 – in recognition of the annual average form of the

standard.

The ARB has adopted revisions to the ozone and PM 2.5 SIPs and, as part of that action, will request from U.S. EPA a reclassification of th e Basin to “extreme” nonattainment for ozone, which will give the Basin until 2023 to atta in the federal ozone standard. ARB will submit the SIPs to the U.S. EPA by the applica ble due dates within the next year.

Air quality modeling indicates that significant red uctions of NOx are crucial to help meet both these standards. At this time, the strategy t o achieve attainment of the PM 2.5 standards in the South Coast Air Basin includes a 5 5 percent reduction in NOx emissions and a 15 percent reduction in direct PM 2.5 emissions from 2006 baseline levels. The NOx emission reductions from the propo sed regulation would play an essential role in assisting the South Coast Air Bas in with meeting its 2014 PM 2.5 deadline as well as its future ozone deadlines.

The federal CAA permits states to adopt more protec tive air quality standards if needed, and California has set standards for particulate ma tter and ozone that are more protective of public health than respective federal standards. The Bay Area, South Coast, and San Diego areas are nonattainment for th e State standards for ozone and

PM 2.5 . Health and Safety Code section 40911 requires th e local air districts to submit plans to the Board for attaining the State ambient air quality standards, and HSC section 40924 requires triennial updates of those p lans. The NOx and PM 2.5 emission reductions from the proposed regulation will assist the local air districts in achieving attainment of the State ambient air quality standar ds.5

Control of Emissions from Goods Movement-related Ac tivities

In April 2006, the Board approved the Emission Reduction Plan for the Ports and Goods

Movement in California (GMERP). The GMERP identifies strategies for reduc ing emissions created from the movement of goods throug h California ports and into other regions of the State. The GMERP is part of the bro ader Goods Movement Action Plan (GMAP) being jointly carried out by the California Environmental Protection Agency and the Business, Transportation, and Housing Agency. Phase I of the GMAP was released in September 2005 and highlighted the air pollution impacts of goods movement and the urgent need to mitigate localized health risk in af fected communities. The final GMAP was released in January 2007 and includes a framewo rk that identifies the key contributors to goods movement-related emissions.

The GMERP identifies numerous strategies for reduci ng emissions from all significant emission sources involved in goods movement, includ ing ocean-going vessels, harbor craft, cargo handling equipment, locomotives, and t rucks. The GMERP identifies several strategies for reducing emissions from ocea n-going vessels. Specific to hotelling emissions, the GMERP establishes a goal o f utilizing shore power for 20 percent of the ship visits to California ports b y 2010, 60 percent of visits by 2015, and 80 percent of visits by 2020. The proposed regulation would represent a significa nt first step toward satisfying the GMERP goals by req uiring specific vessel types to use shore power for 50 percent of a fleet’s visits to a port by 2014 and 80 percent of visits by 2020. Furthermore, emission reductions would begin in 2010 for vessel owners or operators choosing an alternative emission control technology to reduce their hotelling

emissions.

The California Global Warming Solutions Act of 2006

In June 2005, Governor Arnold Schwarzenegger signed Executive Order S-3-05, which established targets for reducing GHG emissions in C alifornia: roll back GHG emissions to 2000 levels by 2010, to 1990 levels by 2020, and finally to 80 percent below 1990 levels by 2050. In 2006, the Governor signed Assem bly Bill (AB) 32 (Stats. 2006, ch. 488), which established the 2020 GHG emission reduc tion goal in State law (set forth in HSC §38500 et seq.) and made the ARB responsible fo r monitoring and reducing GHG emissions. AB 32 requires the Board, by January 1, 2009, to design and adopt an overall plan to reduce GHG emissions to 1990 levels by 2020. The Board has until January 1, 2011, to adopt the necessary regulations to implement that plan. Implementation begins no later than January 1, 2012 , and the emission reduction target must be fully achieved by January 1, 2020. AB 32 a lso required the Board to identify a list of discrete early action GHG reduction measure s by June 30, 2007. AB 32 defines discrete early action measures as regulations that are to be adopted by the Board and be enforceable by January 1, 2010.

In April 2007, ARB staff released a report identify ing 37 proposed early action items the Board could undertake to mitigate GHG emissions in California. Port electrification was

identified as a GHG emission reduction measure in t his report. In September 2007,6

ARB staff recommended reclassifying port electrific ation (now called Green Ports) from an early action measure to a discrete early action measure. Staff’s recommended reclassifications will be considered by the Board a t its October 25, 2007 hearing. The proposed regulation, while reducing diesel PM and N Ox emissions, would also result in significant reductions of CO 2 emissions as a co-benefit of requiring cleaner gri dsupplied electrical generation for ocean-going vess els while docked. These CO 2 emission reductions will help California meet its 2 020 greenhouse gas emission reduction goal.

Authority

The ARB has authority under California law to adopt the proposed regulations. Health and Safety Code sections 43013(b) and 43018 provide broad authority for ARB to adopt emission standards and other regulations to reduce emissions from new and in-use

vehicular, nonvehicular and other mobile sources. Under HSC sections 43013(b) and 43018, ARB is directly authorized to adopt emission standards and other regulations for marine vessels, as expeditiously as possible and to the extent permitted by federal law,

to meet State standards. The ARB is further mandat ed by California law under HSC section 39666 to adopt ATCMs for new and in-use nonvehicular sources, including marine vessels such as ocean-going vessels, for ide ntified TACs such as diesel PM. As noted, ARB is also mandated under HSC section 38500 et seq. to reduce greenhouse gas emissions, which are emitted at significant lev els by ships hotelling at California

ports.

Emission Reductions and Public Health Benefits Proj ected

The proposed regulations are expected to significan tly reduce emissions of diesel PM from at-berth ocean-going vessels. Diesel PM emiss ion reductions are needed to reduce premature mortality, cancer risk, and other adverse impacts from exposure to this TAC. The proposal would help achieve the 2020 goal set forth in the 2000 Diesel RRP of reducing diesel PM by 85 percent from 2000 b aseline levels and the 2015 and 2020 goals of the GMAP. In December 2005, the Boar d adopted an auxiliary engine fuel regulation that will provide significant emiss ion reductions from auxiliary engines on ocean-going vessels. The proposed regulations are expected to provide additional significant emission reduction benefits. Staff pro jects that, by 2020, the proposed regulation would reduce hotelling diesel PM and NOx emissions from container ships, passenger ships, and refrigerated cargo ships by ne arly 75 percent relative to levels expected to be emitted. These emission reductions will occur in areas at and near ports where environmental justice concerns are especially prevalent. In addition, hotelling

CO 2 emissions are expected to be reduced by 136,000 to 269,000 metric tons in 2020, which will assist the State with meeting the AB 32 mandates for greenhouse gas

reductions.

The proposed regulations would also reduce diesel P M and NOx emissions that contribute to exceedances throughout the State of a mbient air quality standards for both7

PM 2.5 and ozone. These reductions will assist Californi a in its goal of achieving State and federal air quality standards. Furthermore, in addition to reducing cancer impacts caused by diesel PM, the proposed regulation will provide a significant reduction in non-cancer health impacts, including premature death, due to reductions in directly-emit ted PM and the secondary formation

of PM from NOx

Staff Report and Further Information

As described in more detail below, ARB staff has pr epared two documents as part of this rulemaking, a Staff Report: Initial Statement of Reasons (Staff Report) and a Technical Support Document. Together with the need s assessment (i.e., the Diesel RRP), these two documents serve as the report on th e need and appropriate degree of regulation for at-berth ocean-going vessels auxilia ry engines.

Description of the Proposed Regulatory Action

Under the approach proposed by staff, the Board wou ld adopt a regulation, pursuant to its authority under HSC sections 38500 et seq., 430 13 and 43018, which would apply to the emissions from diesel engines on ocean-going sh ips while docked at a California port (as defined in the proposal). The Board would also approve adoption of essentially identical provisions as an ATCM, pursuant to its au thority under HSC section 39666, which would complement the regulation and provide m aximum notice to the regulated community of the regulatory requirements on ocean-g oing vessels. These measures

will hereinafter sometimes be referred to collectiv ely as “the proposed regulations.”

Applicability

The regulations would apply to any person who owns, operates, charters, rents, or leases any container ship, passenger ship, or refri gerated cargo ship that visits a California port, or any person who owns or operates a port or terminal located at a port where container, passenger, or refrigerated cargo(r eefer) ships visit. These ports include Los Angeles, Long Beach, Oakland, San Diego , San Francisco, and Hueneme.

The regulations apply to both U.S.-flagged vessels and foreign-flagged vessels. Foreign-flagged vessels are vessels registered unde r the flag of a country other than

the United States.

Exemptions

The proposed regulations contain general and specif ic exemptions. Under the general exemptions, vessels in “innocent passage”; vessels owned or operated by local, state, federal or foreign governments in government non-co mmercial service; steamships; and auxiliary engines using natural gas are exempt from the regulations in their entirety. A steamship is an ocean-going vessel whose primary pr opulsion and electrical power are provided by steam boilers. Further, there are part icular exemptions from specified8

portions of the regulations for emergency events an d delays caused by federal agency inspections, as set forth in the proposal. Limited Hours of Operation for Auxiliary Diesel Eng ines at Berth

The proposed regulations allows for two options to reduce hotelling emissions; ship operators can either shut down their auxiliary engi nes while in port (not including 3 or 5 permissible hours of total operation, as specifie d in the proposal), or they can reduce the emissions from those auxiliary engines by speci fied degrees while docked

.

T he “limited auxiliary engine operation” option in t he proposed regulations requires that the operators of container ships, passenger ships, and reefers that visit California ports shut down their auxiliary engines for most of their stay while hotelling. Specifically, these auxiliary engines must be shut down for 50 pe rcent of a fleet’s total visits to a California port in 2014 and 80 percent of the fleet ’s total visits to a port in 2020. While auxiliary engines are shut down, the ship’s onboard electrical requirements would need to be satisfied by some other source of power. The source of electrical power used instead of the auxiliary engines must be provided e ither by the grid or by another power source with specific emissions standards.

Fleets that do not make a minimum number of annual visits to a California port are exempt from the auxiliary engine limitations for th at port. The engine shutdown requirement is applied when there are 25 or more to tal annual visits by a container vessel fleet or reefer vessel fleet to a port. For passenger vessel fleets, this threshold is five annual visits. However, regardless of the num ber of annual visits, the regulations require a vessel to use shore power if it is equipp ed to do so, and it visits a berth equipped to provide compatible shore power.

As noted, to provide for sufficient time to connect and disconnect electrical lines for shore power, the proposed regulations allow the aux iliary engines to operate for up to three hours during a visit, or five hours during a visit for vessels that lose power during the process of switching power from the vessel’s au xiliary engines to shore power. This time period may be extended due to circumstances be yond the control of the vessel operators, such as emergency events or delays resul ting from obligations imposed by federal agencies (for example, the Department of Ho meland Security or the U.S. Coast Guard).

Emission Reduction Option

An alternative to the “limited auxiliary engine ope ration” approach is the “emissions reduction option”; operators choosing this option a re required to reduce their auxiliary engine emissions at a port by specific amounts and by specific dates. The compliance dates vary based on the types of emission reduction techniques applied to the fleets. The emission reduction techniques that could be app lied to a fleet include: 1) using selected vessels for grid-supplied power based on p otential auxiliary engine emission reductions rather than fleet visit percentages; 2) using distributed generation equipment9

to provide power to a vessel; 3) using alternative emission controls onboard a vessel or at the berth; and 4) using a combination of these t echniques.

For option 1, the emission reduction targets are al igned with the limited engine operation approach: the NOx and PM emissions from t he fleet’s auxiliary engines at a port must be reduced by 50 percent from the baselin e fleet emissions by 2014 and by 80 percent by 2020. For options 2 and 3, in which alternative control technologies are implemented, the NOx and PM emissions from the flee t’s auxiliary engines at a port must be reduced by 20 percent from the baseline fle et emissions by 2010, 40 percent by 2012, 60 percent by 2014, and 80 percent by 2016 . For option 4, in which a combination of approaches is implemented, NOx and P M emissions must be reduced by 20 percent from the baseline fleet emissions by 2012, 50 percent by 2014, and 80 percent by 2020.

The proposed regulations provide default values for making the emission reduction calculation, including default values for emission factors and power requirements, in lieu of more specific values. In addition, the proposal provides procedures for determining control factors and applicable emission testing pro cedures.

Sources of electrical power, other than the grid, t hat are used to comply with the emission reduction option would be subject to addit ional requirements. Before January 1, 2014, distributed generation equipment must sati sfy the emission standards applicable to a newly manufactured spark-ignited of f-road engine. By January 1, 2014, all distributed generation must satisfy a more stri ngent emission standard that is equivalent to a spark-ignited engine using Best Ava ilable Control Technology (BACT). Finally, the source of electrical power must emit n o more CO 2 (a greenhouse gas) emissions than a combined-cycle gas turbine – the e missions level that the California Public Utilities Commission recommended for unspeci fied sources of power.

Recordkeeping and Reporting Requirements

The proposed regulations have reporting and recordk eeping requirements affecting the vessel owners and operators, terminals, and ports.

The reporting and recordkeeping requirements for ve ssel owners or operators depend upon the compliance option selected by the vessel o wner or operator and terminal. The proposed regulations require a vessel fleet plan to be submitted to the Executive Officer of the ARB in the years prior to the fleet’s regula tory compliance dates.

In addition to the vessel fleet plans, the proposal requires an annual statement of compliance to be submitted to the Executive Officer of the ARB certifying compliance with the regulatory requirements for the previous c alendar year. As with the vessel fleet plans, the dates for the initial submittals depend upon the compliance option selected by the vessel owner or operator.10

The recordkeeping and reporting requirements are si mpler for the limited auxiliary engine use option because the vessel owner or opera tor choosing that option must track only those vessels that will comply with the 2014 and 2020 shore power requirements. The recordkeeping and reporting requ irements for the emission reduction option are more significant because the v essel owner or operator choosing that option must track the emissions of each vessel in the fleet.

A terminal that receives more than 50 vessel visits in 2008 is required to submit a plan to ARB’s Executive Officer by July 1, 2009, that id entifies how the terminal will be upgraded to allow vessels to satisfy either the lim ited auxiliary engine operation option or the emissions reduction option. The terminal is also required to submit plan updates at a frequency dependant upon the control strategy selected by the vessel fleet owner or operator and the terminal.

The port is required to submit wharfinger data annu ally to ARB’s Executive Officer, documenting when each vessel visits the port, the b erth that the vessel visited, and the dates and times that the vessel was initially tied to the berth and subsequently released from the berth. In addition, the terminal operator is required to keep records of electricity usage for shore power and equipment bre akdowns that affect a vessel’s ability to comply with the limited auxiliary engine operation option or the emission reduction option.

Test Methods and Other Incorporated Documents

The proposal would incorporate by reference Parts 1 , 2, and 4 of International Standard ISO 8178, as revised in 1996 by the International O rganization for Standardization (ISO). This standard includes test methods for rec iprocating internal combustion engines. Further, the proposal would incorporate b y reference ISO 8754 (as adopted in 2003) for measuring the sulfur content of fuels use d in auxiliary engines. The proposal would also incorporate by reference ARB’s verificat ion procedure requirements for diesel engine control measures as set forth in 13 C CR 2700 et seq. (June 2003), ARB’s

test method for NOx and CO 2 emissions as set forth in 17 CCR 94114 (July 1997) , and the Bay Area Air Quality Management District’s sour ce test procedure for ammonia slip, ST-1B, dated January 1982. The proposal would also incorporate U.S. EPA’s regulations for compression-ignition engines (40 CF R 94) and Annex VI of the 1973

International Convention for the Prevention of Poll ution from Ships (as amended in 1978, also known as the MARPOL 73/78 Protocol); the se would be incorporated to permit operators to submit engine test data measure d pursuant to the federal regulation and international treaty, respectively.

Violations

The proposal specifies a violations provision that provides, among other things, that any violation of any part of the regulation would const itute a single, separate violation for each hour that the violation occurs. The exception to this would be for violations of the11

recordkeeping and reporting requirements; a violati on of those provisions would constitute a single, separate violation for each da y that the violation occurs.

Severability

The proposed regulation states that if any part of the regulation is held to be invalid, the remainder of the regulation shall continue to be ef fective.

At the hearing, the Board may consider other elemen ts that provide additional flexibility to affected owners and operators. In addition, the Board may consider revisions to the staff’s proposal that result in requirements that a re more or less stringent to those whom the proposed regulation is applicable.

COMPARABLE FEDERAL REGULATIONS

No federal standards or control requirements have b een promulgated addressing emission reductions from at-berth ocean-going vesse l auxiliary engines. Under CAA section 213, U.S. EPA is without authority to a dopt in-use standards for nonroad engines, including marine engines.

California is the only governmental entity in the U nited States authorized by the CAA, in the first instance, to adopt emission requirements for in-use off-road engines. See Engine Manufacturers Association v. U.S. EPA (D.C. Cir. 1996) 88 F.3d 1075, 1089- 1091. Under CAA section 209(e)(2), California may adopt and enforce emission standards and other requirements for off-road engin es and equipment not conclusively preempted by section 209(e)(1), so long as Californ ia applies for and receives

authorization from the Administrator of U.S. EPA. To obtain authorization, the Board must make a finding that the California adopted req uirements will be, in the aggregate, at least as protective of public health and welfare as applicable federal standards. CAA section 209(e)(2)(A). The Administrator must grant a request for authorization from California unless he finds that ARB’s protectivenes s finding is arbitrary and capricious,

that California does not need the standards to meet compelling and extraordinary conditions, or that the standards and accompanying enforcement procedures are not

consistent with CAA section 209. Ibid.

AVAILABILITY OF DOCUMENTS AND AGENCY CONTACT PERSON S

As noted above, the Board staff has prepared two do cuments for the proposed regulatory action: a Staff Report, which includes a summary of the economic and environmental impacts of the proposal, and a Techni cal Support Document, which describes the basis of the proposed action in more detail. The Staff Report is entitled, “Staff Report: Initial Statement of Reasons for the Proposed Rulemaking – Regulations to Reduce Emissions from Diesel Auxiliary Engines o n Ocean-Going Ships while AtBerth at a California Port.” The Technical Support Document is entitled, “Technical Support Document: Technical Support for the Propose d Rulemaking – Regulations to12

Reduce Emissions from Diesel Auxiliary Engines on O cean-Going Ships while At-Berth

at a California Port.”

Copies of the Staff Report with the full text of th e proposed regulatory language and the Technical Support Document may be accessed on the A RB’s web site listed below, or may be obtained from the Public Information Office, Air Resources Board, 1001 I Street, Visitors and Environmental Services Center, 1 st Floor, Sacramento, CA 95814, (916) 322-2990 at least 45 days prior to the schedu led hearing on December 6, 2007.

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 the ARB’s web site listed below.

Inquiries concerning the substance of the proposed regulation may be directed to the designated agency contact persons, Mike Waugh, Mana ger of the Project Assessment Section, at (916) 445-6018, or by email at mwaugh@arb.ca.gov , or Grant Chin, Staff Air Resources Engineer, at (916) 327-5602, or by email at gchin@arb.ca.gov

.

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 Alexa Malik, Manager, Board Administration & Re gulatory Coordination Unit, (916) 322-4011, and Amy Whiting, Regulations Coordi nator, (916) 322-6533. The Board has compiled a record for this rulemaking act ion, which includes all the information upon which the proposal is based. This material is available for inspection upon request to the contact persons.

This notice, the Staff Report, Technical Support Do cument, and all subsequent regulatory documents, including the FSOR, when comp leted, are also available on the ARB Internet site for this rulemaking at www.arb.ca.gov/regact/2007/shorepwr07/shorepwr07.ht m

.

COSTS TO PUBLIC AGENCIES AND TO BUSINESSES AND PERS ONS AFFECTED

Costs to Businesses and Private Individuals

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.

While the proposal’s engine shutdown requirement do es not require vessels, ports, or terminals to install or modify any equipment, we an ticipate vessel owners, operators, ports, and terminals will elect to install equipmen t that will allow vessels to use shore power while the auxiliary engines are shut down at berth. Assuming operators, ports, and terminals will make such investments, we estima te the total cost of regulatory compliance to be about $1.8 billion in 2006 expendi ture-equivalent dollars (2006 dollars). This represents the total cost of the re gulation if all money required to comply13

with the proposed regulation were spent in 2006. T his cost includes both capital and annual recurring costs. These costs would be spread over the years 2009 to 2020 for passenger ships and reefers and to 2030 for contain er ships. Two-thirds of this cost is the capital cost to add shore-power equipment to ve ssels. Annually, the costs are expected to vary from $15 million to $120 million. The total statewide annual costs to private business include recovery of capital expend itures, both aboard the ships and at the ports, and operating costs, which are labor cos ts and net energy costs, if any.

The total costs to a typical vessel operator comply ing with the proposed regulation, including capital costs, are estimated to be about $34 million. This cost would be distributed over a 22-year period, from 2009 to 203 0. About 40 percent of the cost is associated with modifying additional vessels to rep lace vessels that have been redeployed away from California ports. Annual costs would vary between $700,000 and $3 million per year, with the average cost of $1.7 million per year over this time period.

Similarly, the total costs to a typical terminal op erator complying with the proposed regulation, including capital and ongoing costs are estimated to be about $17 million.

About half of the cost is attributed to labor costs and the other half is for capital costs. This cost would be distributed over an 11-year peri od, from 2009 to 2020. Annual costs would vary between $500,000 and $1.7 million per ye ar, with the average cost of $1.4 million per year over this time period. With 31 terminals and 35 vessel fleets affected by the proposed regulation, the cost to a typical business would be $26 million.

Vessel owners or operators, terminals, and ports wo uld have additional recurring costs associated with recordkeeping and reporting. Repor ting requirements begin July 1, 2009, and recordkeeping requirements begin January 1, 2010. For the vessel owner or operator, the costs associated with reporting and r ecordkeeping will vary between $600 and $12,000 annually. The higher cost for reportin g and recordkeeping is based on the vessel owner or operator choosing to comply with th e emission reduction option of the proposed regulation, and the lower end of the range represents the costs for vessel owners or operators complying with the limited auxi liary engine operation requirement. For the terminal operators and ports, the costs ass ociated with reporting and recordkeeping are about $800 annually.

Staff estimates the cost-effectiveness of the propo sed regulations, in terms of dollars per ton of PM emission reduction, to be is about $6 90,000 per ton if the total annualized cost is attributed solely to the PM reduction. Sta ff estimates the cost-effectiveness of the proposed regulation, in terms of dollars per to n of NOx emission reduction, to be about $12,800 per ton, if the total cost is attribu ted solely to the NOx emission reductions. Because the proposed regulation reduce s significant amounts of both NOx and PM, staff also evaluated cost-effectiveness by attributing half the total annualized

cost to the PM emission reductions and half to the NOx emission reductions. The resulting cost effectiveness values using that meth od are $6,400 per ton of NOx reduced and $345,000 per ton of PM reduced.14

The Executive Officer has made an initial determina tion that the proposed regulatory action will not have a significant statewide advers e economic impact directly affecting businesses, including the ability of California bus inesses to compete with businesses in

other states. The ARB staff has considered proposed alternatives that would lessen any adverse economic impact on businesses and invit es you to submit proposals. Submissions may include the following approaches fo r consideration:

(i) Establishment of differing compliance or report ing requirements or timetables

that take into account the resources available to b usinesses. (ii) Consolidation or simplification of compliance and reporting requirements for

businesses. (iii) Use of performance standards rather than pres criptive standards. (iv) Exemption or partial exemption from the regula tory requirements for

businesses.

Alternatives that staff considered are described in more detail in the Staff Report.

In accordance with Government Code section 11346.3, the Executive Officer has determined that the proposed regulatory action may affect the creation or elimination of jobs within the State of California, the creation o f new businesses or elimination of existing businesses within the State of California, or the expansion of businesses currently doing business within the State of Califo rnia. Businesses may be created in

California that install electrical infrastructure a t ports, sell emission control technologies that reduce NOx or PM from auxiliary engines, or pr ovide distributed energy, due to the regulatory requirements.

The Executive Officer has also determined, pursuant to title 1, CCR, section 4, that the proposed regulatory action would not affect small b usinesses; due to the large capital and operating costs associated with vessel operatio ns, we do not anticipate any small businesses would be affected by the proposal.

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.

Before taking final action on the proposed regulato ry action, the Board must determine that no reasonable alternative considered by the Bo ard 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 action is proposed or would be as effective and less burdensome to affected private persons than the pro posed action.

Costs to Local and State Government Agencies

Pursuant to Government Code sections 11346.5(a)(5) and 11346.5(a)(6), the Executive Officer has determined that the proposed regulatory action will not create costs or15

savings to any state agency or in federal funding t o the state, costs or mandate to any local agency or school district whether or not reim bursable by the state pursuant to Part 7 (commencing with section 17500), Division 4, Title 2 of the Government Code, except as discussed below, or other nondiscretionar y savings to state or local agencies.

The governmental agencies affected by the proposed regulation are the port authorities, which are branches of the local city governments. The ports affected by the proposed regulation include the ports of Hueneme, Long Beach , Los Angeles, Oakland, San Diego, and San Francisco. In addition, the cruise terminal at the Port of Long Beach is owned by the City of Long Beach. The total costs t o be expended by the port authorities to add shore-power equipment to their f acilities range from $4 million to $86 million. Staff anticipates that the port autho rities would begin to make payments during fiscal years 2008/2009 and 2009/2010 for the necessary shore-power equipment to satisfy the 2014 shore-power requirements. The estimated fiscal costs for the ports range from $600,000 to $7.4 million for fiscal year s 2007/2008 and 2009/2010.

A detailed assessment of the economic impacts of th e proposed regulatory action can be found in the Staff Report.

SUBMITTAL OF COMMENTS Interested members of the public may also present c omments orally or in writing at the meeting, and in writing or by e-mail before the mee ting. To be considered by the Board, written comments submissions not physically submitt ed at the meeting must be

received no later than 12:00 noon, Pacific Standard Time, De cember 5, 2007, and addressed to the following:

• Postal mail: Clerk of the Board, Air Resources B oard

1001 I Street, Sacramento, California 95814

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

• Facsimile submittal: (916) 322-3928

Please note that under the California Public Record s Act (Government Code section 6250 et seq.), your written and oral commen ts, attachments, and associated contact information (e.g., your address, phone, ema il, etc.) become part of the public record and can be released to the public upon reque st. Additionally, this information may become available via Google, Yahoo, and other s earch engines.

The Board requests but does not require that 30 cop ies 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

This regulatory action is proposed under the author ity granted to ARB in Health and Safety Code sections 38560, 38560.5, 39600, 39601, 39650, 39658, 39659, 39666, 41511, 43013, and 43018. This action is proposed t o implement, interpret, or make specific Health and Safety Code sections 38560, 385 60.5, 39000, 39001, 39515,

39516, 39650, 39658, 39659, 39666, 41510, 41511, 43 013, 43016, and 43018; and Western Oil and Gas Ass’n v. Orange County Air Poll ution Control District , (1975) 14 Cal.3rd 411, 121 Cal.Rptr. 249.

HEARING PROCEDURES

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

the Government Code.

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 that the regulatory language as mo dified could result from the proposed regulatory action. In the event that such modifications are made, the full regulatory text, with the modifications clearly ind icated, will be made available to the public for written comment at least 15 days before it is adopted.

The public may request a copy of the modified regul atory text from the ARB’s Public Information Office, Air Resources Board, 1001 I Str eet, Visitors and Environmental Services Center, 1 st Floor, Sacramento, CA 95814, (916) 322-2990.

CALIFORNIA AIR RESOURCES BOARD

/s/

Tom Cackette Acting Executive Officer

Date: October 9, 2007

The energy challenge facing California is real. Ev ery Californian needs to take immediate action to r educe energy consumption. For a list of simple ways you can red uce demand and cut your energy costs see our Websit e at

www.arb.ca.gov

.