### Attachment 1

Proposed 15-Day Amendments to th e Regulations for Fuel Sulfur and Other Operational Requirements fo r Ocean-Going Vessels within

California Waters and 24 nautical Miles of the California BaselineThis page is intentionally blankA - 1 Modified 15-Day Regulation Order

FUEL SULFUR AND OTHER OPERATIONAL REQUIREMENTS

FOR OCEAN-GOING VESSELS WITHIN CALIFORNIA WATERS AND

24 NAUTICAL MILES OF THE CALIFORNIA BASELINE

Note: Shown below are staff’s modifications to the originally proposed regulatory text set forth in Appendix A of t he Staff Report: Initial Stat ement of Reasons, released on May 5, 2011. Only those portions contai ning the modifications are included. This document is printed in a style to indica te changes from the originally proposed regulatory language. All originally proposed regulatory language is shown in underline

to indicate additions and strikeout to indica te deletions. Staff’s modifications to the original proposal are shown in double underline to indicate additions and double strikeout to indicate deletions. The symbol“* ****” indicates that regulatory language not being amended is not shown.

Amend section 2299.2, title 13, California Co de of Regulations (CCR), to read as

follows:

§2299.2. Fuel Sulfur and Other Oper ational Requirements for Ocean-Going

Vessels Within California Waters and 24 Na utical Miles of the California Baseline.

(a) Purpose.

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(b) Applicability.

(1) Except as provided in subsection (c ), this section applies to any person who owns, operates, charters, rents, or leas es any ocean-going vessel that operates in any of the Regulated California Waters, which include all of the following:

(A) all California internal waters; (B) all California estuarine waters; (C) all California ports, roadsteads, and termi nal facilities (collectively “ports”); (D) all waters within 3 nautical miles of the California baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; (E) all waters within 12 nautical miles of the California baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; and (F) all waters within 24 nautic al miles of the California baseline, starting at the California-Oregon border to 34.43 degr ees North, 121.12 degrees West and ending at the California-Mexico border at the Pacific Ocean, inclusive, except for the region wit hin the area defined by 34.8 degrees North, 121.14A - 2 degrees West, thence to 34.46 degrees North, 120.82 degrees West, thence to 34.36 degrees North, 120.82 degrees West, thence to 34.29 degrees North, 120.99 degrees West, and follo wing the boundary 24 nautical miles

from the California ba seline from 34.29 degrees North, 120.99 degrees West to 34.8 degrees North, 121.14 degrees West. ; and (G) all waters within the area, not in cluding islands, between the California baseline and a line starting at 34.43 degrees North, 121.12 degrees West; thence to 33.50 degrees North, 118. 58 degrees West; thence to 32.65 degrees North, 117.81 degrees West, and ending at the California-Mexico border at the Pacific Ocean, inclusive.

(2) Except as provided in subsection (c), this section applies to ocean-going vessels that are flagged in, registered in, entitled to fly the flag of, or otherwise operating under the authority of the United States (“U.S.-flagged ”) or any other country (“foreign-flagged”).

(3) Nothing in this section shall be cons trued to amend, repeal, modify, or change in any way any applicable U.S. Coast Guard requirements. Any person subject to this section shall be responsible for ensuring compliance with both U.S. Coast Guard regulations and the requi rements of this section, including but not limited to, obtaining any necessary approvals, exemptions, or orders from the

U.S. Coast Guard.

(c) Exemptions.

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(d) Definitions.

For purposes of this section, the following definitions apply:

(1) “Alternative fuel” means natural gas, propane, ethanol, methanol, hydrogen, electricity, or fuel cells. Alternativ e fuel also means any mixture that only

contains these fuels.

(2) “ASTM” means ASTM International.

(3) “Auxiliary boiler” means any fuel-fir ed combustion equipment designed primarily to produce steam for uses other than pr opulsion, including, but not limited to, heating of residual fuel and liquid car go, heating of water for crew and passengers, powering steam turbine di scharge pumps, freshw ater generation, and space heating of cabins. Exhaust gas economizers that exclusively use diesel engine exhaust as a heat source to produce steam are not auxiliary

boilers.A - 3 (4) “Auxiliary engine” means a diesel engine on an ocean-going vessel designed primarily to provide power for uses other than propulsion or emergencies, except that all diesel-electric engines shall be considered “auxiliary diesel engines” for purposes of this section.

(5) “Baseline” means the m ean lower low water line along the California coast, as shown on the following National Oceani c and Atmospheric Administration (NOAA) Nautical Charts as authored by the NOAA Office of Coast Survey, which are incorporated herein by reference:

(A) Chart 18600, Trinidad Head to Cape Blanco (January 2002); (B) Chart 18620, Point Arena to Trinidad Head (June 2002); (C) Chart 18640, San Francisco to Point Arena (August 2005); (D) Chart 18680, Point Sur to San Francisco (June 2005); (E) Chart 18700, Point Conception to Point Sur (July 2003); (F) Chart 18720, Point Dume to Purisima Point (August 2008); and (G) Chart 18740, San Diego to Santa Rosa Island (April 2005March 2007).

(6) “Diesel Engine” means an internal co mbustion, compression-ignition (CI) engine with operating characteristics significantly similar to the theoretical diesel combustion cycle. The regulat ion of power by controlling fuel supply in lieu of a

throttle is indicative of a compression ignition engine.

(7) “Diesel Particulate Matter” means the par ticles found in the exhaust of diesel engines, which may agglomerate and adsorb ot her species to form structures of complex physical and chemical properties.

(8) “Diesel-electric engine” means a dies el engine connected to a generator that is

used as a source of electricit y for propulsion or other uses.

(9) “Emergency Generator” means a dies el-electric engine operated only during emergencies or to perform maintenance and testing necessary to ensure readiness for emergencies.

(10) “Essential Modification” means the addition of new equipment, or the replacement of existing components with modified components, that can be demonstrated to be necessary to comply with this regulation. Essential modifications do not include: (1) changes that are made for convenience or

automation of fuel switchi ng; or (2) replacement of components that would be replaced in the absence of this regulat ion, based on measured component wear, visual inspection, or expected service lif e, even if accelerated due to the fuel requirements. Additional tankage is consider ed essential only if existing available tankage has less than the capacity requi red for a complete voyage within Regulated California Waters.A - 4 (11) “Estuarine Waters” means an arm of t he sea or ocean that extends inland to

meet the mouth of a river.

(12) “Executive Officer” means the execut ive officer of the Air Resources Board (ARB), or his or her designee.

(13) “Hydrocarbon (HC)” means the su m of all hydrocarbon air pollutants.

(14) “Internal Waters” means any navigable river or waterway within the State of

California.

(15) “IMO” means the Internat ional Maritime Organization.

(16) “ISO” means the Internati onal Organization for Standardization.

(17) “Main Engine” means a diesel engine on an ocean-going vessel designed primarily to provide propulsion, except t hat diesel-electric engines shall not be considered “main engines” for purposes of this section.

(18) “Marine Diesel Oil (MDO)” means any fuel that meets all the specifications for DMB grades as defined in Table I of Inte rnational Standard ISO 8217, as revised in 2005, which is incorporated herein by reference., or DMB grades as defined in

Table I of International Standard ISO 8217, as revised on June 15, 2010, which is incorporated herein by reference.

(19) “Marine Gas Oil (MGO)” means any fuel that meets all the specifications for DMX or DMA grades as defined in Table I of International Standard ISO 8217, as revised in 2005, which is incorporated her ein by reference., or DMX, DMA, or DMZ grades as defined in Table I of Inte rnational Standard ISO 8217, as revised
on June 15, 2010, which is incor porated herein by reference.

(20) “Master” means the person who operates a vessel or is otherwise in charge of the vessel’s operations.

(21) “Military Vessel” means any ship, boat, watercraft, or other contrivance used for any purpose on water, and owned or operated by the armed services.

(22) “Nitrogen Oxides (NOx)” means compounds of nitric oxide (NO), nitrogen dioxide (NO2), and other oxides of nitrog en, which are typically created during combustion processes and are major cont ributors to smog formation and acid deposition.

(23) “Non-Methane Hydrocarbons (NMHC)” me ans the sum of all hydrocarbon air pollutants except methane.A - 5 (24) “Ocean-going Vessel (OGV)” means a commercial, government, or military vessel meeting any one of the following criteria:

(A) a non-tanker vessel greater than or equal to 400 feet in length overall (LOA) as defined in 50 CFR § 679. 2, as adopted June 19, 1996; (B) a non-tanker vessel great er than or equal to 10,000 gr oss tons (GT ITC) per the convention measurement (int ernational system) as defined in 46 CFR 69.51-.61, as adopt ed September 12, 1989; (C) a non-tanker vessel propelled by a ma rine compression ignition engine with a per-cylinder displacement of great er than or equal to 30 liters; or (D) a tanker that meets any one of the criteria in subsections (A)-(C).

For purposes of this section, “ocean- going vessel” does not include tugboats, towboats, or pushboats.

(25) “Operate” means steeri ng or otherwise running the vessel or its functions while the vessel is underway, moored, anchored, or at dock.

(26) “Own” means having all the incidents of ownership, including the legal title, of a vessel whether or not that person lends, rents, or pledges the vessel; having or being entitled to the possession of a vesse l as the purchaser under a conditional sale contract; or being the mortgagor of a vessel.

(27) “Particulate Matter” means any airborne finely divided material, except uncombined water, which exists as a liquid or solid at standard conditions (e.g., dust, smoke, mist, fumes or smog).

(28) “Person” includes all of the following:

(A) any person, firm, association, or ganization, partnership, business trust, corporation, limited liabili ty company, or company;

(B) any state or local governmental agency or public district, or any officer or employee thereof;

(C) the United States or its agencies, to the extent authoriz ed by federal law.

(29) “Port Visit” means any of the following:

(A) each separate and distinct entry of a vessel into a port, roadstead, or terminal facility (collectively “port”) in Regulated California Waters that results in the vessel stopping, docking, mooring, or otherwise dropping anchor (collectively “stopping”) at the port. The “port visit” continues if the

vessel moves to a different berth within the same port, but the “port visit”

ends when the vessel leaves for or is otherwise moved to another port withinA - 6 the same bay or any other port;

(B) except as provided in paragraph (C) below, each separate and distinct entry

of a vessel into an offshore location in Regulated California Waters away from a port that result s in the vessel stopping at that offshore location (e.g., Catalina Island or off Monterey). The “port visit” ends when the vessel

leaves for or is otherwise moved to a port or another offs hore location; or

(C) each separate and distinct entry of a vessel into an offshore location in Regulated California Waters away from a port that results in the vessel stopping, followed by entry into that por t, shall constitute one “port visit,” provided the offshore stop was conducted solely because the port could not accept the vessel as scheduled due to reasons beyond the reasonable

control of the vessel o perator or master.

(30) “Regulated California Waters ” means all of the following:

(A) all California internal waters; (B) all California estuarine waters; (C) all California ports, roadsteads, and termi nal facilities (collectively “ports”); (D) all waters within 3 nautical miles of the California baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; (E) all waters within 12 nautical miles of the California baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; and (F) all waters within 24 nautic al miles of the California baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive, except for the region within the area defined by 34.8 degrees North, 121.14 degrees We st, thence to 34.46 degrees North, 120.82 degrees West, thence to 34. 36 degrees North, 120.82 degrees West, thence to 34.29 degrees North, 120.99 degrees West, and following the boundary 24 nautical miles from the California baseline from 34.29 degrees North, 120.99 degrees West to 34.8 degrees North, 121.14 degrees West. to 34.43 degrees North, 1 21.12 degrees West, inclusive; and (G) all waters within the area, not including any islands, between the California baseline and a line starting at 34.43 degrees North, 121.12 degrees West; thence to 33.50 degrees North, 118.58 degrees West; thence to 32.65 degrees North, 117.81 degrees West; and endin g at the CaliforniaMexico border at the Paci fic Ocean, inclusive.

(31) “Roadstead” means any facility that is used for the loading, unloading, and anchoring of ships.

(32) “Steamship” means a se lf-propelled vessel in which the primary propulsion and electrical power are provided by steam boilers.A - 7 (33) “Slow Speed Engine” means an engine with a rated speed of 150 revolutions per

minute or less.

(34) “Sulfur Oxides” means compounds of sulfur dioxide (SO 2 ), and other oxides of sulfur, which are typically created during combustion of sulfur containing fuels.

(35) “Tanker” means a self-propelled vessel constructed or adapted primarily to carry, or that carries, oil or hazardous materi al in bulk as cargo or cargo residue.

(36) “Two-stroke Engine” means an inter nal combustion engine which operates on a two stroke cycle where the cycle of operat ion completes in one revolution of the

crankshaft.

(37) “Vessel” means any tugboat, tanker, fr eighter, passenger ship, barge, or other boat, ship, or watercraft, ex cept those used primarily fo r recreation and any of the following:

(A) a seaplane on the water; (B) a watercraft specifically designed to operate on a permanently fixed course,

the movement of which is restricted to a fixed track or arm to which the watercraft is attached or by whic h the watercraft is controlled.

(38) “Voyage” means each separate and dist inct journey that begins when a vessel reaches Regulated California Waters from a point beyond Regulated California Waters, includes at least one port visi t, and ends when the vessel departs from Regulated California Waters.

(e) Operational R equirements.

(1) Fuel Sulfur Content Limits.

(A) Auxiliary Diesel Engines: 1. Except as provided in subsec tions (c) and (h), beginning June 28,

2009, upon the effective dat e of this regulation as approved by the Office of Administrative Law, a pers on subject to this section shall operate any auxiliary diesel engine, while the vessel is operating in Regulated California Waters, with either marine gas oil (MGO), with a maximum of 1.5 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 perc ent sulfur by weight, rounded as specified in subsection (i)(3);

2. Except as provided in subsec tions (c) and (h), beginning August 1, 2012, a person subject to this sect ion shall operate any auxiliary diesel engine, while the vessel is operating in Regulated CaliforniaA - 8 Waters, with either marine gas o il (MGO), with a maximum of 1.0 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 percent sulfur by weight, rounded as specified in subsection (i)(3);

2.3. Except as provided in subsecti ons (c) and (h), beginning January 1, 20142, a person subject to th is section shall operate any auxiliary diesel engine, while the vessel is operating in Regulated California Waters, with marine gas oil (MGO) with a maximum of 0.1% sulfur by weight or mari ne diesel oil (MDO) with a maximum of 0.1% sulfur by weight, rounded as specified in subsection (i)(3).

(B) Main Engines and Auxiliary Boilers 1. Except as provided in subsections (c) and (h), beginning July 1,

2009, a person subject to this sect ion shall operate any main engine or auxiliary boiler, while the vessel is operating in Regulated California Waters, with either marine gas oil (MGO), with a maximum of 1.5 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 perc ent sulfur by weight, rounded as specified in subsection (i)(3);

2. Except as provided in subsecti ons (c) and (h), beginning August 1,

2012, a person subject to this sect ion shall operate any auxiliary diesel engine, while the vessel is operating in Regulated California Waters, with either marine gas o il (MGO), with a maximum of 1.0 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 percent sulfur by weight, rounded as specified in subsection (i)(3);

2.3. Except as provided in subsecti ons (c) and (h), beginning January 1, 20142, a person subject to this section shall operate any main engine or auxiliary boiler, while t he vessel is operating in Regulated California Waters, with marine gas oil (MGO) with a maximum of 0.1% sulfur by weight or marine diesel oil (MDO) with a maximum of 0.1% sulfur by weight, rounded as specified in subsection (i)(3).

(2) Recordkeeping, Reporting, and Monitoring Requirements.

(A) Recordkeeping

Upon the effective date of this regulatio n, any person subject to this section

shall retain and maintain records in English that contain the following information for at least three years following the date when the records were

made:A - 9 1. The date, local time, and position (longitude and latitude) of the vessel for each entry into Regulated California Waters from waters outside Regulated California Waters, an d each departure from Regulated

California Waters to waters out side Regulated California Waters;

2. The date, local time, and position (longitude and latitude) of the vessel at the initiation and completion of any fuel switching procedures used to comply with subsection (e)(1) prior to entry into Regulated California Waters from waters outside Regulated California Waters;

3. The date, local time, and position (longitude and latitude) of the vessel at the initiation and completion of any fuel switching procedures within Regulated California Waters; comple tion of fuel switching procedures occurs the moment all engines subjec t to this section have completely transitioned from operation on one fuel to another fuel;

4. The type of fuel used (e.g., marine gas oil, marine diesel oil or heavy fuel oil) in each auxiliary engine, main engine, and auxiliary boiler operated in Regulated Cali fornia Waters; and

5. The types, amounts, and the actual percent by we ight sulfur content of all fuels purchased for use on the ve ssel, as reported by the fuel supplier or a fuel testing firm.

(B) Documentation of Fuel Switch Over Procedures.

Any person subject to this section that complies with the fuel sulfur contentlimits by switching fuels shall retain and maintain records in English onboard ship that contain the following in formation for auxiliary engines, main engines and auxiliary boilers:

1. A fuel system diagram that shows all storage, service, and mixing tanks, fuel handling, pumping, and proc essing equipment, valves, and associated piping. The diagram or other documentation shall list the fuel tank capacities and locations , and the nominal fuel consumption

rate of the machiner y at rated power;

2. Description of the fuel switch over procedure with detailed instructions

and clear identification of responsibilities; and

3. The make, model, rated power, and seri al numbers of all main engines, and auxiliary engines and make, m odel, rated output, and serial numbers of all auxiliary boilers subject to subsection (e)(1).A - 10 (C) Reporting and Monitoring.

1. Any person subject to this section s hall provide in writing the information specified in subsection (e)(2)(A) a nd (e)(2)(B) to the Executive Officer upon request, either within 24 hours or by a later date approved by the

Executive Officer. To the extent the person already collects the information specified in subsections (e)(2)(A) and (e)(2)(B) in English to comply with other regulatory requi rements or standard practices, the person may provide the requested information in a format consistent with those other regulatory requi rements or standard practices.

2. Any person subject to this section shall provide to the Executive Officer upon request additional information the Executive Officer determines to be necessary to determine compliance with this section.

3. Any person subject to this section shall provide to the Executive Officer access to the vessel for the purpose of determining compliance with the this section, including but not limit ed to, access to and review of records and information required under subsecti ons (e)(2)(A) and (e)(2)(B), and for the purpose of collecting fuel samples for testing and analysis.

(f) Violations.

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(g) Noncompliance for Vessels Based on t he Need for Essential Modifications.

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(h) Noncompliance Fee in Lieu of Meeting Subsection (e)(1).

The Executive Officer may permit a person (“person”) to pay noncompliance fees (“fees”) in lieu of meeting the requirements of subsection (e )(1). Payment of the fees notwithstanding, all other provisions of this section shall continue to apply. No person shall be permitted to pay the fees unless t he person meets the notif ication requirements in subsection (h)(1) and the requirements in eit her subsections (h)(2), (h)(3), or (h)(4), as specified below:

(1) Notification Requirements.

Before the person’s vessel enters Regulated California Waters from waters outside Regulated California Waters, the Executive Officer must receive notice that the person will not meet the requirements of subsection (e)(1) while operating within Regulated California Waters, but t he person will instead meet the requirements of this subs ection (h). If t he Executive Officer has not receivedA - 11 such notice and the person enters Regulat ed California Waters, the person will

be in violation of this section and will not be permitted to pay the fees in lieu of meeting the requirements of subsection (e)(1).

(2) Noncompliance for Reasons Beyond a Person’s Reasonable Control.

Any person wishing to pay the fees under this subsection (h)(2) shall meet the following criteria:

(A) Demonstration of Need.

The person shall, through adequate doc umentation, demons trate to the

Executive Officer’s satisfaction that the person’s noncompliance with the requirements of subsection (e)(1) is bey ond the person’s reasonable control. For the purposes of this paragraph, “beyond the person’s reasonable control” applies only when one or mo re of the following sets of circumstances (1, 2, or 3) applies:

1. Unplanned Redirection.

This provision applies only when all of the following criteria are met:

a. after leaving the last port of call, the person’s vessel was redirected from his/her original, officially l ogged, non-California destination to a California port, roadstead, or terminal facility (c ollectively “port”); and

b. the vessel does not contain a qu antity of fuel sufficient for the auxiliary engines, main engines, and auxiliary boilers to meet the requirements of subsection (e)(1).

2. Inadequate Fuel Supply.

This provision applies only when all of the following criteria are met:

a. the person made good faith effort s to acquire a quantity of fuel sufficient for the auxiliary engines, ma in engines, and auxiliary boilers to meet the requirements of subsection (e)(1); and

b. the person was unable to acquire f uel sufficient for auxiliary engines, main engines, and auxiliary boilers to meet the requirements of subsection (e)(1).

3. Inadvertent Purchase of Defective Fuel.

This provision applies only when all of the following criteria are met:A - 12 a. based on the fuel supplier’s certificat ion of the fuel specifications, the person reasonably believed, and relied on such belief, that the fuel the person purchased on the route fr om the vessel’s home port to California would enable the auxiliary engines, main engines, and auxiliary boilers to meet the r equirements of subsection (e)(1);

b. the person determined that the auxiliary engines, main engines, and auxiliary boilers in fact will not meet the requirements of subsection (e)(1) using any of the fuel purchased under paragraph 3.a; and

c. the vessel is already on its way to California, and there are no other ports of call on the vessel’s r oute where fuel can be purchased sufficient to meet the require ments of subsection (e)(1).

(B) Payment of Fees.

Upon meeting the requirem ents of paragraph (A) in this subsection (h)(2), the person shall pay the fees for every port visit, as specified in subsection (h)(5) below.

(C) Executive Officer Review.

For the purposes of verifying the dem onstration of need as specified in paragraph (A) above, the Executive Offi cer may consider and rely on any

facts or circumstances the Execut ive Officer believes are appropriate, including but not limited to: the fuel s upplier’s ability or failure to provide adequate fuel ordered by the person; any material misrepresentation by the fuel supplier concerning the fuel spec ifications; the r easonableness of the person’s reliance on fuel suppliers with a history of supplying fuel inadequate for meeting t he requirements of subs ection (e)(1); and force majeure.

(3) Noncompliance for Vessels to Be Ta ken Out of Service for Modifications.

If a person cannot meet the requirement s of subsection (e)(1) without vessel modifications, and elects not to comply under section (g), and such modifications cannot be completed prior to the effe ctive date of subsection (e)(1), the Executive Officer may permit the person to pay the fees as specified in this subsection. The vessel must be scheduled to complete the necessary modifications (e.g. during a dry dock operat ion) as soon as possible, but no later
than December 31, 2014. For this provision to apply, the person shall meet all of the following criteria:

(A) Demonstration of Need.A - 13 The person shall provide the Executiv e Officer a Compliance Report, signed by the Chief Engineer of t he person’s vessel, which:

1. identifies the specific vessel m odifications (“modifi cations”) (e.g.,

installation of additional fuel tan ks, fuel cooling systems) the person plans to use for meeting the requi rements of subsection (e)(1);

2. identifies the specific date by whic h the modifications will be completed (i.e., while the vessel is in dry dock); and

3. demonstrates to the satisfaction of the Executive Officer that the

modifications will be made at the earlie st possible date (e.g., the vessel

has been scheduled for the earliest av ailable dry dock appointment).

(B) Payment of Fees.

Upon meeting the requirem ents of paragraph (A) in this subsection (h)(3), the person shall pay the fees for every port visit, as specified in subsection (h)(5) below.

(C) Proof of Modifications Actually Performed.

Within ten (10) business days after t he scheduled or actual completion of the modifications, whichever occurs fi rst, the person shall provide written

certification to the Executive Officer that the modificati ons specified under this subsection (h)(3) have been completed. If the modifications have not been completed, the person shall cert ify which modifications have been completed, which have not, and the anticipated completion date for the remaining modifications. The notific ation requirement specified in this paragraph, the notification requirements in subsection (h)(1) above, and the fee provisions in subsection (h )(5) below shall apply until all the modifications have been completed.

(4) Noncompliance Based on Infrequent Vi sits and Need for Vessel Modifications.

If a person cannot meet the require ments of subsection (e)(1) without modifications for the vessel at issue, and el ects not to comply under section (g),

and that vessel will make no more than two California voyages per calendar year, and no more than 4 California voyages after the effective date of the regulation, during the life of the vessel, the Exec utive Officer may permi t the person to pay the fees as specified in this subsection. This provision terminates on December 31, 2014.

(A) Demonstration of Need.A - 14 The person shall demonstrate to the satisf action of the Executive Officer that

modifications to the vessel are necessa ry to meet the requirements of subsection (e)(1), and that the vesse l shall meet the visitation limits specified in this subsection (h)(4).

(B) Payment of Fees.

Upon meeting the requirements of par agraph (A) above, the person shall pay the fees for every port visit as s pecified in subsection (h)(5) below.

(5) Calculation and Payment of Fees.

Fees will be calculated based on the number of port visits made by a person using fuel that does not comply with s ubsection (e)(1). Fo r each port visit, the person who elects to pay t he fees pursuant to this subsection (h) shall pay the applicable fees shown in Table 1 prior to leaving the California port or by a later date approved by the Executive Officer. For persons that purchase fuels complying with subsection (e)(1) during t heir California port visit, and use these complying fuels during their port visit and upon departure, the fees specified in Table 1 shall be halved. The person s hall deposit the fees in the port’s Noncompliance Fee Settlement and Air Qua lity Mitigation Fund. If no such port fund exists, the person shall deposit the f ees into the California Air Pollution Control Fund, as directed by the Execut ive Officer. Port visits shall be cumulative for all non-compliant port visits over the life of the vessel. For the purposes of this paragraph, any port visit where the non-compliance fee is

waived shall not be included in the cumulative total.

(A) Noncompliance Fee Schedule.

Table 1: Noncompliance Fee Schedule, Per Vessel

(B) The fees shown in Table 1 shall be assessed by the Executive Officer at the time of the port visit. For the purposes of assessing fees under subsection (h), offshore anchorages made in conj unction with a port visit shall not be considered as a separate port visit.

(C) For subsection (h)(2), beginning J anuary 1, 20142, the fee will be waived once per vessel during each calendar year until December 31, 2014, when Port Visit Per-Port Visit Fee

1 s t Port Visited $45,500

2 n d Port Visited $45,500 $91,000

3 r d Port Visited $91,000$136,500

4 th Port Visited $136,500 $182,000

5 th or more Port Visited $182,000 $227,500A - 15 all of the following are met:

1. a person acquires fuel and meets t he requirements of subsection (e)(1) prior to leaving the first port vi sited during the voyage and meets the requirements of (e)(1 ) for the remainder of the voyage; and

2. during any non-compliant portion of the voyage, a person operates each auxiliary engine, main engine, and auxil iary boiler with either marine gas oil (MGO), with a maximum of 1.5 1. 0 percent sulfur by weight, or marine diesel oil (MDO), with a maxi mum of 0.5 percent sulfur by weight, rounded as specified in subsection (i)(3).

(D) The Executive Officer may enter into enforceable agreem ents with each port that will receive the fees. The agreem ents shall require that the fees be used by the ports only to fund projec ts that will substantially reduce emissions of diesel PM, NOx, and SOx from on-site sources, sources within 2 miles of port boundaries, or oc ean-going vessels operated within the Regulated California Waters, except t hat the fees shall not be used to fund projects on vessels from which nonc ompliance fees were paid. Fees intended for ports that do not have such agreements at the time the fees are paid shall be deposited into the Calif ornia Air Pollution Control Fund.

(E) If for any reason the person is not not ified by the Execut ive Officer of the assessed fee by the end of the port visit, the person shall nevertheless be responsible for payment of the appropriate fee as specified in this subsection (h) prior to leaving the Californ ia port or by a later date approved by the Executive Officer.

(i) Test Methods.

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(j) Sunset, Baseline, and Test Method Review.

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(k) Severability.

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NOTE: Authority cited: Sections 39600, 39601, 39650, 39658, 39659, 39666, and 41511, Health and Safety Code. Referenc e: Sections 39650, 39658, 39659, 39666,
41510, and 41511, Health and Safety Code.A - 16 Proposed Regulation Order

FUEL SULFUR AND OTHER OPERATIONAL REQUIREMENTS

FOR OCEAN-GOING VESSELS WITHIN CALIFORNIA WATERS AND

24 NAUTICAL MILES OF THE CALIFORNIA BASELINE

Note: Shown below are staff’ s modifications to the originally proposed regulatory text set forth in Appendix A of t he Staff Report: Initial Stat ement of Reasons, released on May 5, 2011. Only those portions contai ning the modifications are included. This document is printed in a style to indica te changes from the originally proposed regulatory language. All originally proposed regulatory language is shown in underline

to indicate additions and strikeout to indica te deletions. Staff’s modifications to the original proposal are shown in double underline to indicate additions and double strikeout to indicate deletions. The symbol“* ****” indicates that regulatory language not being amended is not shown.

Amend section 93118.2, title 17, California Code of Regulations (CCR), to read as

follows:

§93118.2. Airborne Toxic Control Measure for Fuel Sulfur and Other Operational Requirements for Ocean-Going Vessels Within California Waters and 24 Nautical

Miles of the California Baseline.

(a) Purpose.

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(b) Applicability.

(1) Except as provided in subsection (c ), this section applies to any person who owns, operates, charters, rents, or leas es any ocean-going vessel that operates in any of the Regulated California Waters, which include all of the following:

(A) all California internal waters; (B) all California estuarine waters; (C) all California ports, roadsteads, and terminal facilities (collectively “ports”); (D) all waters within 3 nautical miles of the California baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; (E) all waters within 12 nautical miles of the California baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; and (F) all waters within 24 nautical miles of the California baseline, starting at the California-Oregon border to 34 .43 degrees North, 121.12 degreesA - 17 West and ending at the Calif ornia-Mexico border at the Pacific Ocean, inclusive, except for the region wit hin the area defined by 34.8 degrees North, 121.14 degrees West, thence to 34.46 degrees North, 120.82 degrees West, thence to 34.36 degr ees North, 120.82 degrees West, thence to 34.29 degrees North, 120. 99 degrees West, and following the boundary 24 nautical miles from t he California baseline from 34.29 degrees North, 120.99 degrees West to 34.8 degrees North, 121.14 degrees West. ; and (G) all waters within the area, not in cluding islands, between the California baseline and a line starting at 34. 43 degrees North, 121.12 degrees West; thence to 33.50 degrees North, 118.58 degrees West; thence to 32.65 degrees North, 117.81 degrees West, and ending at the

California-Mexico border at t he Pacific Ocean, inclusive.

(2) Except as provided in subsection (c), this section applies to ocean-going vessels that are flagged in, registered in, entitled to fl y the flag of, or otherwise operating under the authority of the United States (“U .S.-flagged”) or any other country (“foreign-flagged”).

(3) Nothing in this section shall be co nstrued to amend, repeal, modify, or change in any way any applicable U.S. Coast G uard requirements. Any person subject to this section shall be responsible for ensuring compliance with both U.S. Coast Guard regulations and the requirement s of this section, including but not limited to, obtaining any necessary approv als, exemptions, or orders from the

U.S. Coast Guard.

(c) Exemptions.

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(d) Definitions.

For purposes of this section, the following definitions apply:

(1) “Alternative fuel” means natural gas, propane, ethanol, methanol, hydrogen, electricity, or fuel cells. Alternativ e fuel also means any mixture that only

contains these fuels.

(2) “ASTM” means ASTM International.

(3) “Auxiliary boiler” means any fuel-fir ed combustion equipment designed primarily to produce steam for uses other than pr opulsion, including, but not limited to, heating of residual fuel and liquid car go, heating of water for crew and passengers, powering steam turbine di scharge pumps, freshw ater generation, and space heating of cabins. Exhaust gas economizers that exclusively useA - 18 diesel engine exhaust as a heat source to produce steam are not auxiliary

boilers.

(4) “Auxiliary engine” means a diesel engine on an ocean-going vessel designed primarily to provide power for uses other than propulsion or emergencies, except that all diesel-electric engines shall be c onsidered “auxiliary diesel engines” for purposes of this section.

(5) “Baseline” means the m ean lower low water line along the California coast, as shown on the following National Oceani c and Atmospheric Administration (NOAA) Nautical Charts as authored by the NOAA Office of Coast Survey, which are incorporated herein by reference:

(A) Chart 18600, Trinidad H ead to Cape Blanco (January 2002); (B) Chart 18620, Point Arena to Trinidad Head (June 2002); (C) Chart 18640, San Franci sco to Point Arena (August 2005); (D) Chart 18680, Point Sur to San Francisco (June 2005); (E) Chart 18700, Point Conc eption to Point Sur (July 2003); (F) Chart 18720, Point Dume to Purisima Point (August 2008); and (G) Chart 18740, San Diego to Sant a Rosa Island (April 2005March 2007).

(6) “Diesel Engine” means an internal co mbustion, compression-ignition (CI) engine with operating characteristics significantly similar to the theoretical diesel combustion cycle. The regulat ion of power by controlling fuel supply in lieu of a

throttle is indicative of a compression ignition engine.

(7) “Diesel Particulate Matter” means the par ticles found in the exhaust of diesel engines, which may agglomerate and adsorb ot her species to form structures of complex physical and chemical properties.

(8) “Diesel-electric engine” means a dies el engine connected to a generator that is

used as a source of electricit y for propulsion or other uses.

(9) “Emergency Generator” means a dies el-electric engine operated only during emergencies or to perform maintenance and testing necessary to ensure readiness for emergencies.

(10) “Essential Modification” means the addition of new equipment, or the replacement of existing components with modified components, that can be demonstrated to be necessary to comply with this regulation. Essential modifications do not include: (1) changes that are made for convenience or

automation of fuel switchi ng; or (2) replacement of components that would be replaced in the absence of this regulat ion, based on measured component wear, visual inspection, or expected service lif e, even if accelerated due to the fuel requirements. Additional tankage is consider ed essential only if existing availableA - 19 tankage has less than the capacity requi red for a complete voyage within Regulated California Waters.

(11) “Estuarine Waters” means an arm of t he sea or ocean that extends inland to

meet the mouth of a river. (12) “Executive Officer” means the execut ive officer of the Air Resources Board (ARB), or his or her designee.

(13) “Hydrocarbon (HC)” means the su m of all hydrocarbon air pollutants.

(14) “Internal Waters” means any navigable river or waterway within the State of

California.

(15) “IMO” means the Internat ional Maritime Organization.

(16) “ISO” means the Internati onal Organization for Standardization.

(17) “Main Engine” means a diesel engine on an ocean-going vessel designed primarily to provide propulsion, except t hat diesel-electric engines shall not be considered “main engines” for purposes of this section.

(18) “Marine Diesel Oil (MDO)” means any fuel that meets all the specifications for DMB grades as defined in Table I of Inte rnational Standard ISO 8217, as revised in 2005, which is incorporated herein by reference., or DMB grades as defined in

Table I of International Standard ISO 8217, as revised on June 15, 2010, which is incorporated herein by reference.

(19) “Marine Gas Oil (MGO)” means any fuel that meets all the specifications for DMX or DMA grades as defined in Table I of International Standard ISO 8217, as revised in 2005, which is incorporated her ein by reference., or DMX, DMA, or DMZ grades as defined in Table I of Inte rnational Standard ISO 8217, as revised
on June 15, 2010, which is incor porated herein by reference.

(20) “Master” means the person who operates a vessel or is otherwise in charge of the vessel’s operations.

(21) “Military Vessel” means any ship, boat, watercraft, or other contrivance used for any purpose on water, and owned or operated by the armed services.

(22) “Nitrogen Oxides (NOx)” means compounds of nitric oxide (NO), nitrogen dioxide (NO2), and other oxides of nitrog en, which are typically created during combustion processes and are major cont ributors to smog formation and acid deposition.

(23) “Non-Methane Hydrocarbons (NMHC)” me ans the sum of all hydrocarbon air pollutants except methane.A - 20 (24) “Ocean-going Vessel (OGV)” means a commercial, government, or military vessel meeting any one of the following criteria:

(A) a non-tanker vessel greater than or equal to 400 feet in length overall (LOA) as defined in 50 CFR § 679. 2, as adopted June 19, 1996; (B) a non-tanker vessel great er than or equal to 10,000 gr oss tons (GT ITC) per the convention measurement (int ernational system) as defined in 46 CFR 69.51-.61, as adopt ed September 12, 1989; (C) a non-tanker vessel propelled by a ma rine compression ignition engine with a per-cylinder displacement of great er than or equal to 30 liters; or (D) a tanker that meets any one of the criteria in subsections (A)-(C).

For purposes of this section, “ocean- going vessel” does not include tugboats, towboats, or pushboats.

(25) “Operate” means steeri ng or otherwise running the vessel or its functions while the vessel is underway, moored, anchored, or at dock.

(26) “Own” means having all the incidents of ownership, including the legal title, of a vessel whether or not that person lends, rents, or pledges the vessel; having or being entitled to the possession of a vesse l as the purchaser under a conditional sale contract; or being the mortgagor of a vessel.

(27) “Particulate Matter” means any airborne finely divided material, except uncombined water, which exists as a liquid or solid at standard conditions (e.g., dust, smoke, mist, fumes or smog).

(28) “Person” includes all of the following:

(A) any person, firm, association, or ganization, partnership, business trust, corporation, limited liabili ty company, or company;

(B) any state or local governmental agency or public district, or any officer or employee thereof;

(C) the United States or its agencies, to the extent authorized by federal law.

(29) “Port Visit” means any of the following:

(A) each separate and distinct entry of a vessel into a port, roadstead, or terminal facility (collectively “port”) in Regulated California Waters that results in the vessel stopping, docking, mooring, or otherwise dropping anchor (collectively “stopping”) at the port. The “port visit” continues if the

vessel moves to a different berth within the same port, but the “port visit”

ends when the vessel leaves for or is otherwise moved to another portA - 21 within the same bay or any other port;

(B) except as provided in paragraph (C ) below, each separate and distinct entry of a vessel into an offshore loca tion in Regulated California Waters away from a port that results in t he vessel stopping at that offshore location (e.g., Catalina Isl and or off Monterey). T he “port visit” ends when

the vessel leaves for or is otherwis e moved to a port or another offshore location; or

(C) each separate and distinct entry of a vessel into an offshore location in Regulated California Waters away from a port that results in the vessel stopping, followed by entry into that por t, shall constitute one “port visit,” provided the offshore stop was conduct ed solely because the port could not accept the vessel as scheduled due to reasons beyond the reasonable

control of the vessel o perator or master.

(30) “Regulated California Waters ” means all of the following:

(A) all California internal waters; (B) all California estuarine waters; (C) all California ports, roadsteads, and terminal facilities (collectively “ports”); (D) all waters within 3 nautical miles of the California baseli ne, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; (E) all waters within 12 n autical miles of the Califo rnia baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive; and (F) all waters within 24 n autical miles of the Califo rnia baseline, starting at the California-Oregon border and ending at the California-Mexico border at the Pacific Ocean, inclusive, ex cept for the region within the area defined by 34.8 degrees North, 121. 14 degrees West, thence to 34.46 degrees North, 120.82 degrees West, thence to 34.36 degrees North, 120.82 degrees West, thence to 34. 29 degrees North, 120.99 degrees West, and following the boundary 24 nautical miles from the California baseline from 34.29 degrees North, 120.99 degrees West to 34.8 degrees North, 121.14 degrees West. to 34.43 degrees North, 121.12 degrees West, inclusive; and (G) all waters within the area, not including any islands, between the

California baseline and a line star ting at 34.43 degrees North, 121.12 degrees West; thence to 33.50 degr ees North, 118.58 degrees West; thence to 32.65 degrees North, 117. 81 degrees West; and ending at the

California-Mexico border at t he Pacific Ocean, inclusive.

(31) “Roadstead” means any facility that is used for the loading, unloading, and anchoring of ships.A - 22 (32) “Steamship” means a se lf-propelled vessel in which the primary propulsion and electrical power are provided by steam boilers. (33) “Slow Speed Engine” means an engine with a rated speed of 150 revolutions per

minute or less.

(34) “Sulfur Oxides” means compounds of sulfur dioxide (SO 2 ), and other oxides of sulfur, which are typically created during combustion of sulfur containing fuels.

(35) “Tanker” means a self-propelled vessel constructed or adapted primarily to carry, or that carries, oil or hazardous materi al in bulk as cargo or cargo residue.

(36) “Two-stroke Engine” means an inter nal combustion engine which operates on a two stroke cycle where the cycle of operat ion completes in one revolution of the

crankshaft.

(37) “Vessel” means any tugboat, tanker, fr eighter, passenger ship, barge, or other boat, ship, or watercraft, ex cept those used primarily fo r recreation and any of the following:

(A) a seaplane on the water; (B) a watercraft specifically desi gned to operate on a permanently fixed course, the movement of which is re stricted to a fixed track or arm to which the watercraft is attached or by which the watercraft is controlled.

(38) “Voyage” means each separate and dist inct journey that begins when a vessel reaches Regulated California Waters from a point beyond Regulated California Waters, includes at least one port visi t, and ends when the vessel departs from Regulated California Waters.

(e) Operational R equirements.

(1) Fuel Sulfur Content Limits.

(A) Auxiliary Diesel Engines: 1. Except as provided in subsec tions (c) and (h), beginning June 28, 2009, upon the effective dat e of this regulation as approved by the Office of Administrative Law, a pers on subject to this section shall operate any auxiliary diesel engine, while the vessel is operating in Regulated California Waters, with either marine gas oil (MGO), with a maximum of 1.5 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 perc ent sulfur by weight, rounded as specified in subsection (i)(3);A - 23 2. Except as provided in subsecti ons (c) and (h), beginning August 1, 2012, a person subject to this sect ion shall operate any auxiliary diesel engine, while the vessel is operating in Regulated California Waters, with either marine gas o il (MGO), with a maximum of 1.0 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 percent sulfur by weight, rounded as specified in subsection (i)(3);

2.3. Except as provided in subsecti ons (c) and (h), beginning January 1, 20142, a person subject to this se ction shall operate any auxiliary diesel engine, while the vessel is operating in Regulated California Waters, with marine gas oil (MGO) with a maximum of 0.1% sulfur by weight or marine diesel oil (M DO) with a maximum of 0.1% sulfur by weight, rounded as specified in subsection (i)(3).

(B) Main Engines and Auxiliary Boilers 1. Except as provided in subsections (c) and (h), beginning July 1, 2009, a person subject to this se ction shall operate any main engine or auxiliary boiler, while t he vessel is operating in Regulated California Waters, with either marine gas oil (MGO), with a maximum of 1.5 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 perc ent sulfur by weight, rounded as specified in subsection (i)(3);

2. Except as provided in subsecti ons (c) and (h), beginning August 1, 2012, a person subject to this sect ion shall operate any auxiliary diesel engine, while the vessel is operating in Regulated California Waters, with either marine gas o il (MGO), with a maximum of 1.0 percent sulfur by weight, or marine diesel oil (MDO), with a maximum of 0.5 percent sulfur by weight, rounded as specified in subsection (i)(3);

2.3. Except as provided in subsecti ons (c) and (h), beginning January 1, 20142, a person subject to this section shall operate any main engine or auxiliary boiler, while t he vessel is operating in Regulated California Waters, with marine gas oil (MGO) with a maximum of 0.1% sulfur by weight or mari ne diesel oil (MDO) with a maximum of 0.1% sulfur by weight, rounded as specified in subsection (i)(3).

(2) Recordkeeping, Reporting, and Monitoring Requirements.

(A) Recordkeeping.

Upon the effective date of this regulatio n, any person subject to this section

shall retain and maintain records in English that contain the followingA - 24 information for at least three years following the date when the records were

made:

1. The date, local time, and position (longitude and latitude) of the vessel for each entry into Regulated California Waters from waters outside Regulated California Waters, an d each departure from Regulated

California Waters to waters out side Regulated California Waters;

2. The date, local time, and position (longitude and latitude) of the vessel at the initiation and completion of any fuel switching procedures used to comply with subsection (e)(1) prior to entry into Regulated California Waters from waters outside Regulated California Waters;

3. The date, local time, and position (longitude and latitude) of the vessel at the initiation and completion of any fuel switching procedures within Regulated California Waters; comple tion of fuel switching procedures occurs the moment all engines subjec t to this section have completely transitioned from operation on one fuel to another fuel;

4. The type of fuel used (e.g., marine gas oil, marine diesel oil or heavy fuel oil) in each auxiliary engi ne, main engine, and auxiliary boiler operated in Regulated Cali fornia Waters; and

5. The types, amounts, and the actual percent by we ight sulfur content of all fuels purchased for use on the ve ssel, as reported by the fuel supplier or a fuel testing firm.

(B) Documentation of Fuel Switch Over Procedures.

Any person subject to this section that complies with the fuel sulfur contentlimits by switching fuels shall retain and maintain records in English onboard ship that contain the following in formation for auxiliary engines, main engines and auxiliary boilers:

1. A fuel system diagram that shows all storage, service, and mixing tanks, fuel handling, pumping, and proc essing equipment, valves, and associated piping. The diagram or other documentation shall list the fuel tank capacities and locations , and the nominal fuel consumption

rate of the machiner y at rated power;

2. Description of the fuel switch over procedure with detailed instructions

and clear identification of responsibilities; and

3. The make, model, rated power, and seri al numbers of all main engines, and auxiliary engines and make, m odel, rated output, and serial numbers of all auxiliary boilers subject to subsection (e)(1).A - 25 (C) Reporting and Monitoring.

1. Any person subject to this section s hall provide in writing the information specified in subsection (e)(2)(A) a nd (e)(2)(B) to the Executive Officer upon request, either within 24 hours or by a later date approved by the

Executive Officer. To the extent the person already collects the information specified in subsections (e)(2)(A) and (e)(2)(B) in English to comply with other regulatory requi rements or standard practices, the person may provide the requested information in a format consistent with those other regulatory requi rements or standard practices.

2. Any person subject to this section shall provide to the Executive Officer upon request additional information the Executive Officer determines to be necessary to determine compliance with this section.

3. Any person subject to this section shall provide to the Executive Officer access to the vessel for the purpose of determining compliance with the this section, including but not limit ed to, access to and review of records and information required under subsecti ons (e)(2)(A) and (e)(2)(B), and for the purpose of collecting fuel samples for testing and analysis.

(f) Violations.

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(g) Noncompliance for Vessels Based on t he Need for Essential Modifications.

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(h) Noncompliance Fee in Lieu of Meeting Subsection (e)(1).

The Executive Officer may permit a person (“person”) to pay noncompliance fees (“fees”) in lieu of meeting the requirements of subsection (e )(1). Payment of the fees notwithstanding, all other provisions of this section shall continue to apply. No person shall be permitted to pay the fees unless t he person meets the notif ication requirements in subsection (h)(1) and the requirements in eit her subsections (h)(2), (h)(3), or (h)(4), as specified below:

(1) Notification Requirements.

Before the person’s vessel enters Regulated California Waters from waters outside Regulated California Waters, the Executive Officer must receive noticeA - 26 that the person will not meet the requirements of subsection (e)(1) while operating within Regulated California Waters, but t he person will instead meet the requirements of this subs ection (h). If t he Executive Officer has not received such notice and the person enters Regulat ed California Waters, the person will

be in violation of this section and will not be permitted to pay the fees in lieu of meeting the requirements of subsection (e)(1).

(2) Noncompliance for Reasons Beyond a Person’s Reasonable Control

Any person wishing to pay the fees under this subsection (h)(2) shall meet the following criteria:

(A) Demonstration of Need.

The person shall, through adequate doc umentation, demons trate to the

Executive Officer’s satisfaction that the person’s noncompliance with the requirements of subsection (e)(1) is bey ond the person’s reasonable control. For the purposes of this paragraph, “beyond the person’s reasonable control” applies only when one or mo re of the following sets of circumstances (1, 2, or 3) applies:

1. Unplanned Redirection.

This provision applies only when all of the following criteria are met:

a. after leaving the last port of call, the person’s vessel was redirected from his/her original, officially l ogged, non-California destination to a California port, roadstead, or terminal facility (c ollectively “port”); and

b. the vessel does not contain a qu antity of fuel sufficient for the auxiliary engines, main engines, and auxiliary boilers to meet the requirements of subsection (e)(1).

2. Inadequate Fuel Supply.

This provision applies only when all of the following criteria are met:

a. the person made good faith effort s to acquire a quantity of fuel sufficient for the auxiliary engines, ma in engines, and auxiliary boilers to meet the requirements of subsection (e)(1); and

b. the person was unable to acquire f uel sufficient for auxiliary engines, main engines, and auxiliary boilers to meet the requirements of subsection (e)(1).

3. Inadvertent Purchase of Defective Fuel.A - 27 This provision applies only when all of the following criteria are met:

a. based on the fuel supplier’s certificat ion of the fuel specifications, the person reasonably believed, and relied on such belief, that the fuel the person purchased on the route fr om the vessel’s home port to California would enable the auxiliary engines, main engines, and auxiliary boilers to meet the r equirements of subsection (e)(1);

b. the person determined that the auxiliary engines, main engines, and auxiliary boilers in fact will not meet the requirements of subsection (e)(1) using any of the fuel purchased under paragraph 3.a; and

c. the vessel is already on its way to California, and there are no other ports of call on the vessel’s r oute where fuel can be purchased sufficient to meet the require ments of subsection (e)(1).

(B) Payment of Fees.

Upon meeting the requirem ents of paragraph (A) in this subsection (h)(2), the person shall pay the fees for every port visit, as specified in subsection (h)(5) below.

(C) Executive Officer Review.

For the purposes of verifying the dem onstration of need as specified in paragraph (A) above, the Executive Offi cer may consider and rely on any

facts or circumstances the Execut ive Officer believes are appropriate, including but not limited to: the fuel s upplier’s ability or failure to provide adequate fuel ordered by the person; any material misrepresentation by the fuel supplier concerning the fuel spec ifications; the r easonableness of the person’s reliance on fuel suppliers with a history of supplying fuel inadequate for meeting t he requirements of subs ection (e)(1); and force majeure.

(3) Noncompliance for Vessels to Be Ta ken Out of Service for Modifications.

If a person cannot meet the requirement s of subsection (e)(1) without vessel modifications, and elects not to comply under section (g), and such modifications cannot be completed prior to the effe ctive date of subsection (e)(1), the Executive Officer may permit the person to pay the fees as specified in this subsection. The vessel must be scheduled to complete the necessary modifications (e.g. during a dry dock operat ion) as soon as possible, but no later
than December 31, 2014. For this provision to apply, the person shall meet all of the following criteria:A - 28 (A) Demonstration of Need.

The person shall provide the Executiv e Officer a Compliance Report, signed by the Chief Engineer of t he person’s vessel, which:

1. identifies the specific vessel m odifications (“modifi cations”) (e.g., installation of additional fuel tanks, fuel cooling systems) the person plans to use for meeting the require ments of subsection (e)(1);

2. identifies the specific date by whic h the modifications will be completed (i.e., while the vessel is in dry dock); and

3. demonstrates to the satisfaction of the Executive Officer that the

modifications will be made at the earlie st possible date (e.g., the vessel

has been scheduled for the earliest av ailable dry dock appointment).

(B) Payment of Fees.

Upon meeting the requirem ents of paragraph (A) in this subsection (h)(3), the person shall pay the fees for every port visit, as specified in subsection (h)(5) below.

(C) Proof of Modifications Actually Performed.

Within ten (10) business days after t he scheduled or actual completion of the modifications, whichever occurs fi rst, the person shall provide written

certification to the Executive Officer that the modificati ons specified under this subsection (h)(3) have been completed. If the modifications have not been completed, the person shall cert ify which modifications have been completed, which have not, and the anticipated completion date for the remaining modifications. The notific ation requirement specified in this paragraph, the notification requirements in subsection (h)(1) above, and the fee provisions in subsection (h )(5) below shall apply until all the modifications have been completed.

(4) Noncompliance Based on Infrequent Vi sits and Need for Vessel Modifications.

If a person cannot meet the require ments of subsection (e)(1) without modifications for the vessel at issue, and el ects not to comply under section (g),

and that vessel will make no more than two California voyages per calendar year, and no more than 4 California voyages after the effective date of the regulation, during the life of the vessel, the Exec utive Officer may permit the person to pay the fees as specified in this subsection. This provision terminates on December 31, 2014.

(A) Demonstration of Need.A - 29 The person shall demonstrate to the sa tisfaction of the Executive Officer

that modifications to the vessel are nec essary to meet the requirements of subsection (e)(1), and that the vesse l shall meet the visitation limits specified in this subsection (h)(4).

(B) Payment of Fees.

Upon meeting the requirements of par agraph (A) above, the person shall pay the fees for every port visit as specified in subsection (h)(5) below.

(5) Calculation and Payment of Fees.

Fees will be calculated based on the number of port visits made by a person using fuel that does not comply with s ubsection (e)(1). Fo r each port visit, the person who elects to pay t he fees pursuant to this subsection (h) shall pay the applicable fees shown in Table 1 prior to leaving the California port or by a later date approved by the Executive Officer. For persons that purchase fuels complying with subsection (e)(1) during t heir California port visit, and use these complying fuels during their port visit and upon departure, the fees specified in Table 1 shall be halved. The person s hall deposit the fees in the port’s Noncompliance Fee Settlement and Air Qua lity Mitigation Fund. If no such port fund exists, the person shall deposit the f ees into the California Air Pollution Control Fund, as directed by the Execut ive Officer. Port visits shall be cumulative for all non-compliant port visits over the life of the vessel. For the purposes of this paragraph, any port visit where the non-compliance fee is

waived shall not be included in the cumulative total.

(A) Noncompliance Fee Schedule.

Table 1: Noncompliance Fee Schedule, Per Vessel

(B) The fees shown in Table 1 shall be assessed by the Executive Officer at the time of the port visit. For the purposes of assessing fees under subsection (h), offshore anchorages made in conj unction with a port visit shall not be considered as a separate port visit.

(C) For subsection (h)(2), beginning J anuary 1, 20142, the fee will be waived once per vessel during each calendar year until December 31, 2014, when Port Visit Per-Port Visit Fee

1 s t Port Visited $45,500

2 n d Port Visited $45,500 $91,000

3 r d Port Visited $91,000$136,500

4 th Port Visited $136,500 $182,000

5 th or more Port Visited $182,000 $227,500A - 30 all of the following are met:

1. a person acquires fuel and meets t he requirements of subsection (e)(1) prior to leaving the first port vi sited during the voyage and meets the requirements of (e)(1 ) for the remainder of the voyage; and

2. during any non-compliant portion of the voyage, a person operates each auxiliary engine, main engine, and auxil iary boiler with either marine gas oil (MGO), with a maximum of 1.5 1. 0 percent sulfur by weight, or marine diesel oil (MDO), with a maxi mum of 0.5 percent sulfur by weight, rounded as specified in subsection (i)(3).

(D) The Executive Officer may enter into enforceable agreem ents with each port that will receive the fees. The agreem ents shall require that the fees be used by the ports only to fund projec ts that will substantially reduce emissions of diesel PM, NOx, and SOx from on-site sources, sources within 2 miles of port boundaries, or oc ean-going vessels operated within the Regulated California Waters, except t hat the fees shall not be used to fund projects on vessels from which nonc ompliance fees were paid. Fees intended for ports that do not have such agreements at the time the fees are paid shall be deposited into the California Air Pollution Control Fund.

(E) If for any reason the person is not not ified by the Execut ive Officer of the assessed fee by the end of the port visit, the person shall nevertheless be responsible for payment of the appropriate fee as specified in this subsection (h) prior to leaving the Californ ia port or by a later date approved by the Executive Officer.

(i) Test Methods.

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(j) Sunset, Baseline, and Test Method Review.

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(k) Severability.

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NOTE: Authority cited: Sections 39600, 39601, 39650, 39658, 39659, 39666, and 41511, Health and Safety Code. Referenc e: Sections 39650, 39658, 39659, 39666,
41510, and 41511, Health and Safety Code.