State of California

AIR RESOURCES BOARD

STAFF REPORT: INITIAL STATEMENT OF REASONS

PROPOSAL TO CONSIDER REQUIRING CERTAIN FEDERAL LIGHTAND MEDIUM VEHICLES TO CERTIFY IN CALIFORNIA, AND THE

ADOPTION OF EXHAUST EMISSION STANDARDS FOR HEAVY-DUTY

GASOLINE VEHICLES AND ENGINES

Date of Release: October 20, 2000

Scheduled for Consideration: December 7, 2000

Mobile Source Control Division

9528 Telstar Avenue

El Monte, California 91731

This document has been reviewed by the staff of the California Air Resources Board. Publication does not

signify that the contents necessarily reflect the views and policies of the Air Resources Board.
TABLE OF CONTENTS

EXECUTIVE SUMMARY..................................................................................................I

I. INTRODUCTION ..................................................................................................1

II. PROPOSED LIGHT- AND MEDIUM-DUTY AMENDMENTS................................1

A. Background................................................................................................1

B. Rationale for Current Proposal...................................................................3

C. Summary Of Proposed Amendments.........................................................5

III. PROPOSED HEAVY-DUTY ENGINE AMENDMENTS ........................................7

A. Background................................................................................................7

B. Description Of The Proposal ......................................................................7

IV. AIR QUALITY, ENVIRONMENTAL AND ECONOMIC IMPACTS.........................8

A. Air Quality And Environmental Impacts......................................................8

B. Economic Impact........................................................................................8

V. REGULATORY ALTERNATIVES .......................................................................10

VI. STAFF RECOMMENDATION.............................................................................10
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EXECUTIVE SUMMARY

In 1998 California adopted the second phase of its Low-Emission Vehicle

program (LEV II) for light- and medium-duty vehicles. In 1999 the United States

Environmental Protection Agency (U.S. EPA) followed suit and adopted new emission

standards for light- and medium-duty passenger cars and trucks (Tier 2 standards) that

mirror the California standards. Earlier this year, U.S. EPA also adopted more stringent

standards for heavy-duty gasoline engines. The purpose of this rulemaking is to

incorporate portions of the recently promulgated federal programs into California’s

exhaust emission standards for light-, medium-, and heavy-duty vehicles and engines to

ensure that California continues to receive only the cleanest vehicles available in every

vehicle category.

Proposal for Light- and Medium-Duty Vehicles. While the California LEV II

standards are generally more stringent than the comparable federal requirements, there

are some features of the Tier 2 program that could result in manufacturers certifying

certain vehicle models to a more stringent federal exhaust emission standard than is

required in California. This can occur, for example, because LEV II program flexibilities

built into the phase-in years (2004 through 2006) for heavier light trucks do not require

full implementation until 2007. Thus, it is expected that manufacturers will certify some

of these vehicles to a cleaner intermediate federal standard before all California

vehicles in the category must meet the LEV II standards in 2007. In addition, U.S. EPA

does not require each larger sport utility vehicle model to meet the same emission

standards as passenger vehicles, as is the case in California. Rather, U.S. EPA allows

sport utility vehicles to certify to higher emission standards if manufacturers offset them

with other vehicles that are much cleaner. Some of the vehicles providing the offset

might be cleaner than required in California. Thus staff is proposing a requirement that

if a manufacturer certifies a cleaner federal vehicle model and offers an equivalent

model in California, the California model must be certified to the same federal exhaust

emission standards.

Proposal for Heavy-Duty Gasoline Engines. The standards being proposed

for heavy-duty gasoline engines are intended to align with the recently promulgated

federal standards. Although the current California standard (2.5 grams per brake

horsepower-hour (g/bhp-hr)) is more stringent than the current federal requirement (4.0

g/bhp-hr), U.S. EPA has recently adopted an even more stringent standard of 1.0 g/bhphr effective with the 2005 model year. Staff is proposing to harmonize with the recently

promulgated federal standards for heavy-duty Otto-cycle engines. This will allow

manufacturers to make one vehicle that meets both California and federal standards.

Emission Impact. This proposal will reduce emissions by assuring that cleaner

light- or medium-duty federal vehicles with equivalent California models will be sold in

California. The emissions benefit from adoption of the federal heavy-duty gasoline

standards will also reduce emissions.
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I. INTRODUCTION

Since adoption of California’s second generation Low-Emission Vehicle (LEV II)

program in 1998, the federal government has adopted stringent exhaust emission

standards that affect the entire vehicle fleet, ranging from passenger cars and light- and

medium-duty vehicles to heavy-duty gasoline and diesel vehicles and engines. The

federal standards affecting light- and medium-duty vehicles (passenger cars, light trucks

and sport utility vehicles) are set forth in a portion of the federal Tier 2 standards. This

staff report contains proposals to modify the LEV II standards to take advantage of

some elements of the Tier 2 program where they would be beneficial to California.

U.S. EPA also finalized the heavy-duty Otto-cycle (gasoline) standards earlier this year.

Staff proposes that the federal standards for this category of vehicles and engines be

incorporated into the California program.

The proposed regulations affecting light- and medium-duty vehicles will be

reviewed first followed by a discussion of the proposed heavy-duty amendments.

II. PROPOSED LIGHT- AND MEDIUM-DUTY AMENDMENTS

A. Background

The Air Resources Board (ARB or Board) adopted the second phase of its LowEmission Vehicle program (LEV II) in November 1998. These regulations are a

continuation of the Low Emission Vehicle (LEV I) program originally adopted in 1990.

Both the LEV I and LEV II regulations include three primary elements: (1) tiers of

exhaust emission standards for increasingly more stringent categories of low-emission

vehicles, (2) a mechanism requiring each manufacturer to phase-in a progressively

cleaner mix of vehicles from year to year with the option of credit banking and trading,

and (3) a requirement that a specified percentage of passenger cars and lighter lightduty trucks be ZEVs, vehicles with no emissions.

The LEV I program established four low-emission vehicle categories to which a

car or light truck could be certified: Transitional Low-Emission Vehicle (TLEV), LowEmission Vehicle (LEV), Ultra Low-Emission Vehicle (ULEV) and ZEV. The mediumduty vehicle categories are LEV, ULEV, Super Ultra Low-Emission Vehicle (SULEV)

and ZEV. Vehicles could also be certified to the preexisting “Tier 1” exhaust emission

standards. Each low-emission vehicle category has a progressively more stringent

standard for exhaust emissions of nonmethane organic gas (NMOG), a precursor of

ozone pollution. For example, passenger car LEVs and ULEVs have to meet standards

for NMOG that are respectively about one-third and one-sixth of the corresponding 1994

Tier 1 standard. The identical LEV and ULEV standard for oxides of nitrogen (NOx)

represents a 50% reduction from the 1994 Tier 1 NOx standard.

All cars have been subject to the same low-emission vehicle standards,

regardless of weight. However, heavier light-duty trucks and medium-duty vehicles
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were allowed to have greater emissions for a given low-emission vehicle category.

There were two weight categories for light-duty trucks (LDT1 and LDT2) and four weight

categories for medium-duty vehicles (MDV2, MDV3, MDV4 and MDV5).

Under LEV I, each year a manufacturer may produce cars and LDT1s certified to

any combination of emission categories – TLEV, LEV, etc. – as long as its full model

line meets the annual NMOG fleet average requirement. The required fleet average

NMOG emissions level starts at the Tier 1 level for the 1994 model year. It then

becomes incrementally more stringent through the 2003 model year, when the level for

cars and LDT1s was derived from a potential mix of 75% LEVs, 15% ULEVs and 10%

ZEVs. The heavier light trucks in the LDT2 category are subject to numerically higher

fleet average NMOG emissions requirements reflecting the numerically higher TLEV,

LEV and ULEV standards and the absence of a ZEV requirement for these vehicles.

Medium-duty vehicles have separate requirements based on a percent phase-in

schedule.

Whereas the LEV I program set forth increasingly stringent vehicle tailpipe

emission standards from 1994 through 2003, LEV II continued that trend by setting even

more stringent emission requirements for 2004 through 2010. The State

Implementation Plan (SIP) for California was adopted by the Board in 1994 and

contains California’s blueprint for achieving healthful air quality in California by 2010.

The LEV II program was adopted with the intent of satisfying the requirements of

measure M2 of the SIP and a significant portion of the SIP’s so-called “black box” by

achieving a 57 ton per day reduction in ozone precursors in the South Coast Air Basin

by 2010.

Developing the emission requirements for the LEV II program was a challenge to

ARB staff. One of the principal goals of the program was to ensure that the increasingly

popular sport utility vehicles and pickup trucks that are being used primarily as

passenger cars be required to meet the same emission requirements as passenger

cars. Thus all former light-duty trucks, and all former medium-duty vehicles having a

gross vehicle weight (GVW) of less than 8,500 pounds, will be subject to the LEV II

passenger car exhaust emission standards. Only vehicles having a GVW of 8,500-

14,000 pounds – the MDV4 and MDV5 categories – will remain as medium-duty

vehicles. Another goal of the program was to dramatically reduce NOx emissions for all

vehicles below 8,500 pounds to a level 75 percent below that allowed for passenger

cars in the LEV I program. The LEV II standards for the various vehicle emissions

categories are phased in during the 2004-2007 model years.

 ARB staff worked with catalytic converter suppliers to obtain the best

technology available to demonstrate that even the very large sport utility vehicles could

indeed meet very stringent passenger vehicle standards that were being proposed

under the LEV II program. The ARB staff conducted an extensive test program utilizing

some of the largest Ford sport utility vehicles (the best emission performance of sport

utility vehicles available in 1998) equipped with prototype catalytic converters and other
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modifications to demonstrate that the emission standards being proposed were indeed

feasible for all vehicles below 8,500 pounds GVW.

Subsequent to adoption of the LEV II program, ARB staff assisted the U.S. EPA

in developing a similar program for federal vehicles that would achieve maximum

emission reductions for vehicles in other states. ARB staff met with U.S. EPA staff to

review the engineering approach taken in our test program, provide them with emission

test data, loan them experimental catalysts, and provide other assistance. U.S. EPA

staff demonstrated that emission levels adopted in LEV II could also be achieved costeffectively on vehicles nationwide. The program that was subsequently adopted by the

U.S. EPA is referred to as the Tier 2 standards.

B. Rationale for Current Proposal

While Tier 2 was patterned after the LEV II program, it contains some unique

features and program elements that differ from the California program. Some of these

include setting a NOx fleet average requirement rather than an NMOG fleet average

requirement as in California, different rates of phasing-in new emission standards,

allowing diesel sport utility vehicles and pick-up trucks to emit at higher emission levels

than passenger vehicles as long as their emissions are offset by lower emissions from

other vehicles, and not including a zero-emission vehicle requirement. The Tier 2

regulations establish 10 different emission standard “bins” for cars and light trucks that

function in the same manner as the vehicle emission categories (e.g., LEV and ULEV)

in the California program. The emission levels for some federal bins fall between those

for California’s vehicle emission categories, and the least stringent bins allow emissions

greater than is allowed for any California LEV II emission category.

The differences in the federal Tier 2 emission standards and compliance

requirements could result in a higher-emitting model being produced for sale in

California than is sold in other states. This could occur in two primary ways: 1) some of

the vehicles that have been classified as medium-duty vehicles but will be light-duty

trucks under LEV II are allowed to certify to a less stringent LEV I emission standard in

California during model years 2004-2006 than is required under the federal Tier 2

standards; and 2) some cars may be certified federally to a more stringent standard

than is required in California in order to provide offsets that allow sale of a much higheremitting federal vehicle outside of California (e.g. a diesel SUV that cannot meet

California’s uniformly stringent NOx emission standards).

The staff’s proposal would change the LEV II regulations to require that a

manufacturer may not certify a California vehicle model to a California vehicle emissions

category that is less stringent than the federal emissions bin to which an equivalent

vehicle model has been federally certified. In such a circumstance, the manufacturer

would instead have to market in the state the model certified to the federal exhaust

emission standards. This will result in lower emissions in California. These situations

and how the proposed amendments will result in lower emissions are discussed in more

detail in the paragraphs that follow.
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Differences in light truck standards: The California LEV II and federal Tier 2

regulations typically provide a phase-in of new emission standards so that not all

models must be redesigned to comply with lower emission standards in a single model

year. The vehicle manufacturers’ lack of engineering and testing resources sufficient to

redesign hundreds of models in one year provides the rationale for providing a multiyear phase-in of more stringent emission standards.

The LEV II regulations require a phase-in of LEV II compliant cars and lighter

light-duty truck models beginning in the 2004 model year. All models must be compliant

with the LEV II requirements by 2007. However, the regulations do not require any

current medium-duty vehicles in the MDV2 and MDV3 categories to comply with the

LEV II passenger car standards until the 2007 model year. Because there are fewer

models in this heavier category, staff concluded a mandatory phase-in of a specified

percentage of models each year from 2004 to 2006 could eliminate flexibility that would

benefit individual manufacturers. Staff expected, however, that some phase-in would

occur naturally because of the engineering resource limitations mentioned above.

During the 2004-2006 period, those models not certified to the LEV II standards remain

subject to the LEV I standards.

In Tier 2, U.S. EPA chose to require a phase-in of the heavier light trucks.

During the phase-in, which starts in the 2004 model year, any model not yet complying

with the new Tier 2 standards must meet an interim NOx fleet average standard. This

standard is more stringent than the California LEV I standard. Also, Tier 2 imposes a

cap on NOx emissions from vehicles in this weight category that is more stringent than

the LEV I NOx limits for vehicles in the current MDV3 category. Thus it is expected that

in some instances during the 2004-2006 model years, manufacturers will market outside

of California heavier light trucks that are cleaner than the equivalent models sold in

California. The proposed changes to the LEV II regulations will prevent this from

occurring by requiring manufacturers to sell the cleaner federal model in California.

Other cleaner federal vehicles: As noted above, the federal Tier 2 program has

ten different standards categories (“emissions bins”), some of which allow much higher

emissions than the California LEV program standards. The principal reason for this is

U.S. EPA wanted to provide categories with NOx standards lax enough that diesel

engines used in large pick-up trucks and SUVs could meet. The Board rejected higher

emitting standards categories when it adopted the LEV II program in 1998. To sell a

significant number of vehicles certified to the federal higher-emitting categories, a

manufacturer must also sell vehicles certified to much lower standards, in order to

comply with the NOx fleet average requirement. This could result in some cleaner

models being sold outside of California, while a higher-emitting identical model is sold

here. The cleaner federal model would not need to be sold in California because the

higher emitting models it is offsetting federally can not be sold here, eliminating the

need for offsets. To enable California to benefit from these lower emitting models, the

proposed amendments would require manufacturers to offer for sale the cleanest model

in California.
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The Tier 2 regulations also establish a new vehicle category called “medium-duty

passenger vehicle,” or MDPV, which is a complete vehicle (it comes directly from the

factory fully assembled) and has a GVW between 8,500 and 10,000 pounds. This

category was specifically designed by U.S. EPA to include the heaviest SUVs such as

the Ford Excursion. The Tier 2 program groups these vehicles with the heavier light

trucks and makes them subject to a stringent interim fleet average NOx standard

starting in the 2004 model year. California has LEV II emission standards for these

vehicles, but compliance is not required completely until the 2007 model year. Vehicles

in the MDPV category would be subject to the proposed amendments, thus assuring

that cleaner federal MDPVs are also marketed in California.

A summary of the original LEV I and LEV II programs and the federal Tier 2

program is contained in Appendix B to this Staff Report.

C. Summary Of Proposed Amendments

The amendments proposed by staff would be triggered whenever a manufacturer

federally-certifies a 2004 or subsequent model-year passenger car, light-duty truck or

medium-duty vehicle model to a federal Tier 2 emissions bin that is more stringent than

an applicable California emissions category. In this circumstance, the equivalent model

in California would have to be certified either to (i) the California standards for a vehicle

emissions category that are at least as stringent as the standards for the corresponding

federal emissions bin, or (ii) the federal exhaust emission standards to which the federal

model is certified. However, where the federal exhaust emission standards for the

particular emissions bin and the California standards for a vehicle emissions category

are equally stringent, the California model could only be certified to either the California

standards for that vehicle emissions category or more stringent California standards.

Model equivalency would be determined based on whether the federal vehicle is

identical to the California model in the following respects:

(A) Vehicle manufacturer;

(B) Vehicle make and model;

(C) Cylinder block configuration (L-6, V-8, and so forth);

(D) Displacement;

(E) Combustion cycle; and

(F) Transmission class.

The new vehicle fleet composition is not expected to differ significantly between

California and the rest of the nation and, furthermore, it is reasonable to assume that

manufacturers will make few California specific models other than those used to satisfy

the California ZEV requirements. Therefore, staff expects that under this proposal

manufacturers will make available in California the same vehicle models offered

nationwide that meet any cleaner standards required under Tier 2. California would

accordingly receive the benefits from the cleanest vehicle models available.
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In order to assist staff in administering these requirements, the manufacturer

would be required, prior to vehicle certification, to submit information sufficient to enable

the Executive Officer to determine whether there is a federally-certified vehicle model

for the model year that is equivalent to the California model in question, based on the

criteria set forth above. If the Executive Officer determines that there is an equivalent

federal model, then the next step would be to compare the stringency of the federal and

corresponding California exhaust emission standards. This is done by comparing the

sum of the 100,000, 120,000 or 150,000 mile NMOG and NOx gram per mile emission

standard values of the federal standard with that of the California 100,000, 120,000 or

150,000 mile NMOG plus NOx gram per mile standards.

For purposes of determining compliance with NMOG fleet average requirements,

phase-in requirements, and calculating vehicle emission credits (VECs), California

vehicles certified to the federal exhaust emission standards for a particular emissions

bin would be considered to be certified to the next higher applicable Low Emission

Vehicle standard category (based on the sum of the NMOG and NOx emission

standards), where applicable. For example, a federal vehicle certified to a combined

0.110 gram per mile NMOG plus NOx standard would be considered to be certified to

the LEV II program ULEV (0.125 g/mi NMOG + NOx) category, which is the next highest

California emission category. Requiring certification to the next highest LEV program

emission category rather than to the federal bin level incentivizes manufacturers to

introduce new advanced technologies more rapidly in California. This is because the

declining fleet average NMOG requires increasing numbers of ULEVs and SULEVs

whereas the additional credits obtained by allowing the federal bin emission levels in the

fleet average would allow manufacturers to delay introduction of ULEVs and SULEVs in

California.

The manufacturer would have to provide evidence of federal exhaust emission

certification, including compliance with the standards for the particular emissions bin,

federal SFTP emissions, cold carbon monoxide (CO) emissions, and highway NOx

emissions. Manufacturers would still be required to meet other applicable California

emission and phase-in requirements such as applicable evaporative emissions

standards, emission warranty, and California label requirements and would also be

required to obtain a California Executive Order.

Staff is also proposing several minor amendments to the LEV II provisions to

correct errors and update the certification language consistent with the Tier 2

requirements. For example, proposed amendments would eliminate unintended

instances where requirements for small volume manufacturers are more stringent than

those for other manufacturers. As with LEV I, small volume manufacturers would be

allowed to delay implementation until the end of the phase-in years. These proposed

amendments are described in Attachment C.
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III. PROPOSED HEAVY-DUTY ENGINE AMENDMENTS

A. Background

On July 31, 2000, U.S. EPA adopted new regulations designed to reduce

emissions of non-methane hydrocarbons (NMHC) and NOx from heavy-duty Otto-cycle

(gasoline) engines (over 8,500 pounds GVW) from 4.0 grams per brake horsepowerhour (g/bhp-hr) to 1.0 g/bhp-hr. The regulations were published in the October 6, 2000

Federal Register (65 F.R. 59896). In its analysis, U.S. EPA estimates that the emission

inventory for heavy-duty gasoline vehicles will increase by 43 percent and 14 percent

nationwide for NOx and NMHC, respectively, between 2005 and 2030 if additional

controls are not required. Although current California regulations are more stringent

(2.5 g/bhp-hr) than the current federal standards, California would further benefit from

the 1.0 g/bhp-hr standard adopted by U.S. EPA. Therefore, staff is proposing to

harmonize California’s regulations with the more stringent emission standards now

being required for federally-certified vehicles and engines.

B. Description Of The Proposal

The U.S. EPA regulations are structured to reduce exhaust emissions from

heavy-duty Otto-cycle engines and vehicles through adoption of new exhaust emission

standards for both chassis- and engine-certified vehicles in this category, on-board

diagnostic requirements (OBD) for vehicles 8,500 to 14,000 pounds GVW, and onboard refueling vapor recovery (ORVR) requirements. The only element of this federal

rulemaking that staff is proposing be adopted for California is the exhaust NMHC + NOx

standards for heavy-duty Otto-cycle engines above 8,500 pounds GVW. This is

because California already has stringent exhaust emission standards for complete

vehicles, and OBD II systems and ORVR controls are already required as well.

There are three compliance options in the federal rule that allow a manufacturer

to select the best approach for its product line. Option 3 has been designated as the

primary standard at 1.0 g/bhp-hr and is scheduled for introduction with the 2005 model

year. The other two options allow manufacturers to delay compliance with this standard

by certifying to an interim emission level earlier (either 2003 or 2004) than under Option

3 but at a less stringent level of 1.5 g/bhp-hr. Staff is proposing adoption of all of these

options with a few minor adjustments.

Although the federal regulations treat all heavy-duty engines as one category

over 8,500 pounds GVW, California has existing regulations that divide these engines

into two categories – one for engines used in incomplete medium-duty gasoline vehicles

8,500 to 14,000 pounds GVW and another for engines used in all gasoline vehicles over

14,000 pounds GVW. The proposed federal standards would apply to both categories

of engines for NMHC and NOx; however, staff is proposing that the existing mediumduty carbon monoxide (CO) standard of 14.4 g/bhp-hr for ULEVs be kept and is
8

proposing new standards (which are not required) for medium-duty SULEV engines of

0.5 g/bhp-hr NMHC + NOx; 7.2 g/bhp-hr CO; and 0.025 g/bhp-hr formaldehyde.

Staff also does not expect to see any major hurdles to achieving these

requirements. It is expected that many of the technologies currently being used for

light- and medium-duty gasoline vehicles will be the basis for achieving compliance with

the standards. Technology changes expected to occur as a result of the new

regulations include: improved durability catalysts with increased precious metal loading,

optimization of the catalyst and fuel metering systems (including improved fuel injection

and heated oxygen sensors), increased use of air injection and retarded spark timing to

control cold start emissions, and improved exhaust gas recirculation for better NOx

control.

U.S. EPA estimates that the purchase price of a heavy-duty Otto-cycle engine

will increase by $256 for 2010 and subsequent model years due to the proposed

regulations. However, staff does not anticipate increased costs to certify these vehicles

for sale in California.

IV. AIR QUALITY, ENVIRONMENTAL AND ECONOMIC IMPACTS

A. Air Quality And Environmental Impacts

Staff anticipates that California will obtain emission benefits from the three

elements of this proposal. First, when the air quality benefit of the LEV II program was

estimated 1998, staff believed that the large number of engine families and vehicles in

the medium-duty vehicle category (sport utility vehicles and large trucks) would cause

manufacturers to phase-in some of these vehicles early. Given the large workload and

limited engineering resources available to revise the numerous vehicle platforms in this

category, staff believes this remains a reasonable assumption. However, due to

flexibility in the LEV II program, manufacturers do not have to phase these vehicles into

the LEV II requirements until 2007. Should manufacturers choose a more relaxed

phase-in schedule, this proposal will ensure that California benefits by requiring the

cleaner interim Tier 2 vehicles produced prior to 2007 to also be marketed here.

Second, due to the built-in flexibility of the Tier 2 program, manufacturers may decide

beyond 2007 to produce very clean passenger cars and light-duty trucks to offset their

heavier sport utility vehicles and trucks meeting higher emission standards than

permitted in California. Should this occur, California would benefit by requiring these

cleaner light-duty vehicles to also be sold here. Third, the emission benefit realized by

alignment with federal standards for heavy-duty Otto-cycle engines will be

approximately one tpd reactive organic gas (ROG) plus NOx.

B. Economic Impact

The staff expects that the proposed amendments will not have a significant cost

impact on directly affected persons or businesses. With regard to the LEV II

amendments, the requirements would only apply to vehicles that have already been
9

certified to the federal standards; they accordingly do not independently require any

California model to be certified to a new standard. Since the models will already have

been federally-certified, the additional costs from marketing the vehicles should be

minimal. With regard to the heavy-duty standards, U.S. EPA estimated that the new

federal standards will result in a less than $300 cost increase for heavy-duty Otto-cycle

engines by 2010. Since a manufacturer will already have to incur these costs for

engines sold in the rest of the country, and there are significant costs incurred in

certifying federal and California engines to different standards, adoption of the

standards for California should not result in increased costs for manufacturers.

Since only those qualifying vehicles that have already been federally certified

would be required to be sold in California, the technical feasibility and cost-effectiveness

of these vehicles have already been demonstrated under the federal Tier 2 program and

in the heavy-duty Otto-cycle rulemaking. In fact, U.S. EPA relied on much of the

emission test data and cost information developed in support of the California LEV II

program to demonstrate the technical feasibility and cost-effectiveness of the Tier 2 and

heavy-duty standards. Except for some minor differences, the federal and California

emission requirements are fairly well harmonized in the 2004 and beyond time frame.

Therefore, staff believes that manufacturers would not incur any additional cost in

making these vehicles available in California and there would be no noticeable impact in

California employment, business status, and competitiveness.

1. Legal requirement. Section 11346.3 of the Government Code requires

State agencies to assess the potential for adverse economic impacts on California

business enterprises and individuals when proposing to adopt or amend any

administrative regulation. The assessment includes a consideration of the impact of the

proposed regulation on California jobs, business expansion, elimination, or creation,

and the ability of California business to compete.

State agencies are required to estimate the cost or savings to any state or local

agency, and school districts. The estimate is to include any nondiscretionary cost or

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

2. Affected businesses. Any business involved in manufacturing or

purchasing passenger cars, light-duty trucks, medium-duty vehicles or heavy-duty

engines or vehicles could be affected by the proposed amendments. There are 34

companies worldwide that manufacture California-certified light- and medium-duty

vehicles and heavy-duty gasoline engines. Only one motor vehicle manufacturing plant

is located in California, the NUMMI facility, which is a joint venture between GM and

Toyota.

3. Potential impact on manufacturers and consumers. The proposed

California requirements are not expected to impact automobile manufacturers

significantly, since manufacturers are only being required to certify vehicles to standards

that their federal vehicles will have already met. Manufacturers also experience some
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economies when producing “50-state” vehicles. The impact on consumers is also

expected to be minimal.

4. Potential impact on business competitiveness. The proposed

amendments would have no adverse impact on the ability of California businesses to

compete with businesses in other states because we are proposing to allow certain

federal vehicles to be sold in California and to harmonize with the federal standards for

heavy-duty engines. The requirements will also apply to manufacturers nationwide if

the manufacturers sell vehicles in California.

5. Potential impact on employment. The proposed amendments are not

expected to cause a noticeable change in California employment because all but a very

small portion of automobile manufacturing is conducted in other states.

6. Potential impact on business creation, elimination or expansion. The

proposed amendments are not expected to affect business creation, elimination or

expansion.

7. Potential costs to local and state agencies. The proposed

amendments are not expected to have a fiscal impact on state and local agencies or on

funding to state agencies.

V. REGULATORY ALTERNATIVES

Staff considered the following regulatory alternatives to the proposed

amendments.

1. Do not amend current California LEV program. The recently

promulgated federal standards present California with the opportunity to help ensure

achieving the full expected emission benefit of LEV II by requiring manufacturers to sell

a federal vehicle in California, if it is cleaner than required by California. In the absence

of a regulation, emission reductions would be lost. These are needed to help assure

implementation of the California SIP. For heavy-duty vehicles, we would be losing

emission benefit by not requiring the more stringent federal standard.

2. Adopt the federal program in its entirety. Many aspects of the

California LEV regulations are more stringent than their federal counterpart. Examples

include more stringent hydrocarbon exhaust emission requirements for all vehicle

categories, more stringent evaporative emission standards, and the zero-emission

vehicle program. Accordingly, adoption of the Tier 2 standards in place of the LEV II

program would provide less emission benefit.

VI. STAFF RECOMMENDATION

For the reasons stated above, staff recommends that the Board adopt the

proposals set forth in this staff report.
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REFERENCES

1. Staff Report: Initial Statement of Reasons, “Proposed Amendments to California

Exhaust and Evaporative Emission Standards and Test Procedures for Passenger

Cars, Light-Duty Trucks and Medium-Duty Vehicles “LEV II” and Proposed

Amendments to California Motor Vehicle Certification, Assembly Line and In-Use Test

Requirements “CAP 2000”,” California Air Resources Board September 18, 1998,

2. Final Statement of Reasons, “”LEV II” and “CAP 2000” Amendments to the

California Exhaust and Evaporative Emission Standards and Test Procedures for

Passenger cars, Light-Duty Trucks and Medium-Duty Vehicles, and to the Evaporative

Emission Requirements for Heavy-Duty Vehicles,” California Air Resources Board,

September 1999.

3. Preamble and Final Rule, “Control of Air Pollution From New Motor Vehicles: Tier

2 Motor Vehicle Emissions Standards and Gasoline Sulfur Control Requirements; Final

Rule,” Federal Register, Vol. 65, No. 28, Thursday, February 10, 2000 pp 6698-6870.

4. Preamble and Final Rule, “Emissions Control, Air Pollution From 2004 and later

Model year Heavy-Duty Highway Engines and vehicles; Light-Duty On-Board

Diagnostics Requirements, Revision; Final Rule,” Federal Register, Vol. 65, No. 195,

Friday, October 6, 2000 pp 59896-59978.