ENVIRONMENTAL QUALITY BOARD

[25 PA. CODE CHS. 121 AND 1261

Pennsylvania Clean Vehicles Program

[36 Pa.B. 7424]

[Saturday, December 9, 20061

The Environmental Quality Board (Board) amends Chapters 121 and 126 (relating to

general provisions; and motor vehicle and fuels programs). The final-form rulemaking

postpones the compliance date from model year (MY) 2006 to MY 2008 and updates

definitions in § 121.1 (relating to defmitions) for terms that are used in the substantive

provisions in Chapter 126, Subchapter D (relating to Pennsylvania Clean Vehicles

Program). The final-form rulemaking also clarifies the Pennsylvania Clean Vehicles

Program (Program) in Subchapter D and specifies in that subchapter a transition mechanism

for compliance with the Program.

This order was adopted by the Board at its meeting on September 19, 2006.

A. Effective Date

This final-form rulemaking will go into effect upon publication in the Pennsylvania

Bulletin.

B. Contact Persons

For further information, contact Arleen Shulman, Chief Mobile Sources Section, Bureau

of Air Quality, P. 0. Box 8468, Harrisburg, PA 17105-8468, (717) 772-3926; or Kristen M.

Campfield, Assistant Counsel, Bureau of Regulatory Counsel, P. 0. Box 8464, Harrisburg,

PA 17105-8464, (717) 787-7060. Persons with a disability may use the AT&T Relay

Service, (800) 654-5984 (TDD users) or (800) 654-5988 (voice users). This final- form

rulemaking is available on the Department of Environmental Protection’s (Department)website at www.depweb.state.pa.us (Quick Access: Public Participation).

C. Statutory Authority

The final-form rulemaking is being made under section 5 of the Air Pollution Control Act

(act) (35 P. S. § 4005), which in subsection (a)(1) grants the Board the authority to adopt

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manufacturers must come into compliance with the nonmethane organic gases (NMOG)

fleet average of the Program. Specifying an early-credit earning period is intended to

provide a transition mechanism from the National Low Emission Vehicle (NLEV) program

and to help ensure identicalityu with the California program. The purpose ofthis final-form

rulemaking is also to clarify the Program to reflect post-1998 amendments ofthe California

provisions incorporated by reference and to reflect the end ofthe NLEV compliance option.

By amending the regulations to reflect changes in the California requirements and by

providing flexibility for the vehicle manufacturers during implementation, citizens in this

Commonwealth can obtain the air quality benefits of this Program with a minimized impact.

Postponement of the Program from MY 2006 to MY 2008 does not significantly affectlong-term air quality and economic benefits. Cost savings for manufacturers and consumers

would also be realized with the delayed compliance schedule.

The Program does not mandate the sale or use of reformulated motor fuels that comply

with the specifications for reformulated motor fuels mandated by California. The courts

have held that a stat&s failure to adopt California fuel requirements does not violate the

requirement in section 177 of the CAA (42 U.S.C.A. § 7507) that state emission standardsbe identical to the California standards for which a waiver has been granted. Motor Vehicle

Manufacturers Association ofthe United States v. New York State Department of

Environmental Conservation, 17 F.3d 521 (2d Cir. 1994); American Automobile

Manufacturers Association v. Greenbaum, No. 93-10799-MA (D. Mass. Oct. 27, 1993)

aff’d., 31 F.3d 18 (1st Cir. 1994).

In addition, the Program does not incorporate the California zero emissions vehicle (ZEV)

provisions. Section 177 ofthe CAA does not require adoption of all of the California

standards; it only requires that if a state adopts motor vehicle standards, those standards be

identical to the California standards. The United States Environmental Protection Agency

(EPA) concludes that states adopting a Section 177 program need not adopt California’s

ZEV requirements to comply with the CAA requirements for identical standards under

section 177 of the CAA. See 60 FR 4712 (January 24, 1995).

Retaining and clarifying the California low emission vehicle (LEV) program requirements

in this Commonwealth are consistent with the actions of other northeastern states. Maine,

Massachusetts, New York and Vermont adopted the California LEV program in the first

instance, as did the Commonwealth, but they did not provide the NLEV compliance option

like the Commonwealth did. Those states have revised their regulations to incorporate the

California Low Emission Vehicle II (CA LEV II or California LEV II) provisions. Other

northeastern states adopted the California LEV program and the NLEV compliance optionin the first instance, like the Commonwealth did. Those states, namely Rhode Island,

Connecticut and New Jersey, have adopted regulations to implement the CA LEV II

program. Oregon and Washington have also adopted the CA LEV II program. The

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respiratory problems are most at risk, even healthy individuals may experience increasedrespiratory ailments and other symptoms when exposed to ambient ozone while engaged in

activities that involve physical exertion. Though the symptoms are often temporary,

repeated exposure could result in permanent lung damage. The implementation of measures

to address ozone air quality nonattainment in this Commonwealth is necessary to protect thepublic health.

Gasoline-powered motor vehicles primarily emit three pollutants: carbon monoxide,

volatile organic compounds (VOCs) and oxides of nitrogen (NO). Ozone is not directly

emitted by motor vehicles, but is created as a result ofthe chemical reaction ofNO and

VOCs, in the presence of light and heat, to form ozone in air masses traveling over long

distances. The formation of ozone is greater in the summer months because of the higher

temperatures. About 1/3 ofthis Commonwealth’s ozone-forming pollution comes frommotor vehicles.

In early 2007, the EPA is expected to finalize the PM25 implementation rule, which will

also identify NO emissions as one ofthe precursors to the formation ofPM25.Therefore,

this final-form rulemaking should also enable the Department to make progress in attaining

and maintaining the PM25 National Ambient Air Quality Standard (NAAQS) in

nonattainment areas, including 17 counties and 4 partial counties.

The CAA was amended in 1977 to allow States to adopt emission standards for motor

vehicles. Section 177 of the CAA authorizes states to adopt and enforce new motor vehicle

emission standards for any model year ifthe standards are identical to the California

standards and the states adopt the standards at least 2 years before the beginning of the

model year. California’s standards must also have been granted a waiver from the CAA’s

prohibition against state emission standards. See section 177 ofthe CAA. A Federal court

of appeals has ruled that states may adopt, but not enforce, California emissions standardsbefore the EPA has acted on California’s waiver request. Motor Vehicle Manufacturers

Association ofthe United States v. New York State Department ofEnvironmental

Conservation, 17 F.3d 521, 534 (2d Cir. 1994). If a state does not adopt California’s

standards, vehicle manufacturers and others are subject to the Federal emissions standardsestablished by the EPA.

Congress amended section 177 of the CAA in 1990 to prohibit states from taking action

that would have the effect of creating a motor vehicle or motor vehicle engine different

from a motor vehicle or motor vehicle engine certified in California under California

standards or otherwise create a “third vehicle.” Shortly thereafter, many states began to

consider clean vehicle or LEV programs as a control strategy to achieve and maintain the

NAAQS for ozone.

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agreed to manufacture LEVs for 49 states as an alternative to the California LEV program.

The Commonwealth and 8 other northeastern states, as well as 23 vehicle manufacturers,

opted into the NLEV program, effective in the OTC for MY 1999 and outside the OTC forMY 2001.

In the final-form rulemaking published at 28 Pa.B. 5873 (December 5, 1998), the

Commonwealth adopted the Pennsylvania Clean Vehicles Program under section 177 oftheCAA. In the same final-form rulemaking, the Commonwealth adopted the NLEV program

as a compliance alternative to the Pennsylvania Clean Vehicles Program. The PennsylvaniaClean Vehicles Program incorporated by reference the LEV program of California as a

‘backstop” to the NLEV program in the event a vehicle manufacturer opted out ofthe

NLEV program and at the conclusion ofthe NLEV program. The Pennsylvania Clean

Vehicles Program incorporated by reference the California emission standards for passenger

cars and light-duty trucks, except that it does not incorporate by reference the California

ZEV or emissions control warranty systems statement provisions. The Pennsylvania Clean

Vehicles Program did not restrict the incorporation-by-reference of the California program

to the California regulations as in force on the date of adoption in 1998 of the Pennsylvania

Clean Vehicles Program. Rather, the 1998 incorporation-by-reference included the

California regulations with all amendments and supplements to them over time, as in forceat the time of application ofthe Pennsylvania Clean Vehicles Program.

The Commonwealth’s participation in the NLEV program extended only until MY 2006,

at which time vehicle manufacturers were no longer able to use NLEV as a compliance

alternative to the Program. In practical terms, the NLEV program was replaced for MY2004 and later by the more stringent Federal Tier II vehicle emissions regulations. Vehicle

manufacturers operating under the NLEV program became temporarily subject to the Tier II

requirements. See 65 FR 6698 (February 10, 2000).

California adopted its original LEV regulations, known as CA LEV I, in 1991. The CA

LEV I requirements were generally applicable in California in MY 1994. The EPA granted

a waiver of Federal preemption for California’s LEV I program at 58 FR 4166 (January 13,

1993). California adopted revised LEV regulations, known as CA LEV II, in 1996 for MYs

2004 and later. The EPA granted a waiver of Federal preemption for the CA LEV II

program at 68 FR 19811 (April 22, 2003).

Since neither the Federal Tier II nor California LEV II standards had been established

when the Commonwealth adopted the Program in 1998, it was uncertain which program

would be more appropriate for this Commonwealth in the long run. Because ofthis, theBoard stated an intention in the final-form rulemaking published at 28 Pa.B. 5873, 5875 to

reassess the air quality needs and emission reduction potential of both programs in advance

of the end of the Commonwealth’s commitment to the NLEV program.

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Highway vehicles contribute significantly to the emissions that form ozone. Ground-level

ozone or smog affects the health ofmillions of citizens in this Commonwealth, in particular

children and those with existing respiratory diseases. The problem is still pervasive today

despite considerable progress, because the EPA has found that the standard then in place did

not adequately protect public health. More protective standards for ozone as well as for fineparticulates have been promulgated.

Consequently, today about 2/3 ofthe citizens in this Commonwealth live in counties that

do not attain the revised ozone standard. Without additional reductions in highway vehicleemissions, reductions will have to be obtained from industrial, commercial or other

consumer sources; these controls may not be as cost-effective as the Program. Therefore,failure to implement the Program would increase the likelihood that this Commonwealthwould not achieve and maintain the health-based 8-hour NAAQS for ground level ozone.Furthermore, ifthe standards are not attained and maintained in nonattainment areas, theseareas would be subject to additional requirements that could affect their

industrial/commercial facilities. Postponement of the Program from MY 2006 to MY 2008does not significantly affect long-term air quality and economic benefits.

The existing Program in Chapter 126, Subchapter D applies to vehicle manufacturers, new

vehicle dealers, leasing and rental agencies and other registrants. Under the Program, a

person may not sell, import, deliver, purchase, lease, rent, acquire, receive, title or register a

new passenger car or light-duty truck (with some exceptions) in this Commonwealth thathas not received certification from the California Air Resources Board (CARB) for

compliance with the California LEV program that is current at the time of sale, importation,delivery, purchase, lease, rental, acquisition, receipt, titling or registration. To receive

CARE certification for a vehicle make and model, a manufacturer must demonstrate toCARE that the vehicle test group associated with the specific make and model meetsspecified criteria pollutant standards and that the manufacturer’s low emission fleet as a

whole meets the NMOG fleet average standard.

In addition to requiring CARE certification, the Program requires that manufacturers

demonstrate that the California NMOG fleet average standard is met based on the numberof new light-duty vehicles delivered for sale in this Commonwealth.

California recently added a greenhouse gas (GHG) fleet average requirement to its LEV II

program beginning with MY 2009. California’s GHG program addresses emissions of

carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfurhexafluoride from LEVs offered for sale in California. California adopted a GHG fleet

average on the basis that GHGs trap atmospheric heat and contribute to global warming.

The GHG fleet average will have to be met in California to obtain CARB certification.

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found that California

s role in setting emission standards has been scientifically valid and

necessary to achieve clean air goals in parts of the country struggling to clean up the air.The report also found that the California standards have helped speed up technological air

pollution control innovations. The report found that the California LEV program has been

beneficial overall for air quality by improving mobile-source emissions control and

confirmed that California has usually led the EPA in establishing standards for light-duty

vehicles and small nonroad gasoline engines.

The Department consulted with the Air Quality Technical Advisory Committee (AQTAC)

on the final-form rulemaking on June 8, 2006. At that meeting, the AQTAC recommended

that the Department present the final-form rulemaking to the Board for adoption. The

Department has consulted with the Department of Transportation (DOT) during

development of the final-form rulemaking in accordance with section 5(a)(7) ofthe act. The

Department also consulted with the Citizens’ Advisory Council.

This final-form rulemaking is necessary to achieve and maintain the NAAQS. The finalform rulemaking will be submitted to the EPA as a revision to the State Implementation

Plan (SIP).E. Summary ofRegulatory Requirements and Major Changes to the Proposed Rulemaking

This final-form rulemaking deletes the definitions of “debit” and “ZEV--Zero-Emission

Vehicle” from § 121.1 because the terms are already defined in the California regulations

incorporated by reference in Chapter 126. The final-form rulemalcing deletes the definitions

of “NLEV” and “NLEV Program” because they are no longer relevant. The final-formrulemaking makes typographical corrections to the definitions of “fleet average” and “LDV

-light-duty vehicle” and amends the definition of “offset vehicle.” The definition “LDTlight-duty truck” is amended to incorporate a separate defmition of “light duty truck” used in

§ 129.52 (relating to surface coating processes) and, for purposes ofthis final-form

rulemaking, to be consistent with the California program. The separate definition of “light

duty truck” is deleted as it is incorporated into the definition of “LDT--light-duty truck.”

The final-form rulemaking amends the title of Chapter 126, Subchapter D to reflect the

cessation of the NLEV program. The final-form rulemaking deletes the NLEV provisions in

§ 126.401(b) (relating to purpose) and rescinds § 126.402.

Throughout Chapter 126, Subchapter D, cross-references to the California regulations are

updated to reflect the 1999 restructuring of California’s regulations. This final-form

rulemaking makes Subchapter D clearer and easier to understand. Since the 1998 adoption

ofthe California program automatically incorporated California’s regulatory restructuring,

these amendments are not necessary but are made for the purposes of clarity now and in the

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regulated under the CAA or other applicable Federal or State law or regulation.

The amendments to § 126.411(a) (relating to general requirements) postpone the model

year to which the Program will first apply from the model year beginning after December 5,

2000, to MY 2008.

Section 126.411(a) (relating to general requirements) is amended in the final-form

rulemaking to include “titled.” Now the Program will apply not only to all new passenger

cars and light-duty trucks sold, leased, offered for sale or lease, imported, delivered,

purchased, rented, acquired, received or registered in this Commonwealth, but also those

“titled” in this Commonwealth. In this Commonwealth, refusing titling for a non-CARBcertified vehicle offers the most equitable and effective way to enforce the vehicle

registration requirement, since a vehicle must be titled in this Commonwealth to beregistered in this Commonwealth. Prohibiting titling of vehicles not certified by CARB will

protect individuals from purchasing a vehicle, whether in-State or out-of-State, that cannot

be registered in this Commonwealth. Corresponding changes are made to §sS 126.412(a),

126.4 13(a)(1 1) and (b) and 126.431(a), (c) and (d) (relating to emission requirements;

exemptions; and warranty and recall). These amendments to the final-form rulemaking

work in tandem with the deletion of the proposed exemption from the Program in § 126.4 13

(a)(14) for vehicles purchased out-of-State, which is described as follows.

Amendments to § 126.411 (b)( 1) update the cross-reference to, and retain the

Commonwealth’s specific exclusion of, California’s ZEV program by replacing “ 1960.1(g)(2) (footnote 9)” with “ 1962.” This is an example of the cross-reference amendments

reflecting California’s 1999 regulatory restructuring.

The amendments to § 126.4 12(a) postpone the first model year for which a person is

prohibited from selling, importing, delivering, purchasing, leasing, renting, acquiring,

receiving or registering a vehicle subject to the Program ifthe vehicle has not received

CARB certification from the model year beginning after December 5, 2000, to MY 2008.

“Title” is added to the list, as previously described.

The amendments to § 126.4 12(b) change the first model year for which compliance with

the NMOG fleetwide average is required from the model year beginning after December 5,

2000, to MY 2008. Language regarding California’s ZEV program is deleted from

subsection (b) because CARE moved the ZEV provisions out of the cross-referencedsection. As previously discussed, the final-form rulemaking retains the Commonwealth’sspecific exclusion of California’s ZEV program in § 126.411(b)(1).

Section 126.4 12(d) specifies the 3-year early-credit earning period within which vehicle

manufacturers must come into compliance with the NMOG fleet average. The final-form

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to enforcement of the rules regarding daily lease and rental companies under the Program.

The final-form rulemaking includes an explanation in § 126.4 13(a)(6) that a light-duty

vehicle is deemed to be principally operated outside ofthis Commonwealth ifit is

registered outside of this Commonwealth in accordance with the rules ofthe InternationalRegistration Plan or a successor plan for registering vehicles internationally. Under theInternational Registration Plan, rental car companies cannot avoid registering a certainnumber of vehicles in this Commonwealth to avoid compliance with the Program.

The amendment to § 126.413(a)(11) conforms the model year registration cut-off for

vehicle exemption with the MY 2008 start date of CARB certification and NMOG fleet

average requirements. “Titled” is added to this paragraph, as previously described.

New § 126.4 13(a)(13) exempts vehicles transferred for the purpose ofsalvage. This

paragraph is added to ensure that salvage and metal scrap operations in this Commonwealth

may accept salvaged new motor vehicles that may not have CARB certification.

The final-form regulation deletes § 126.413(a)(14), which was included by the Board in

the proposed rulemaking. This amendment would have exempted vehicles purchased or

leased from an out-of-State dealer by a resident ofthis Commonwealth for the personal useofthe resident and not for immediate resale. The amendment was designed to reflect theintention ofthe Commonwealth not to deny registration of a non-CARE certified vehicle in

this situation. However, that is no longer the Commonwealth’s intention. The

Commonwealth will deny title and registration of non-CARE certified vehicles, regardlessof whether the vehicles are purchased in-State or out-of-State, thus ensuring equitable

treatment of in-State and out-of-State purchasers without the need for the proposed

exemption. Additionally, the proposed exemption would have complicated enforcement andincreased the possibility ofreduced emissions credit. Finally, the proposed exemption was

rejected by industry commentators. Hence, the final-form rulemaking deletes proposed

§ l26.413(a)(14).

Section 126.4 13(b) requires a person seeking to register an exempted vehicle to provide

satisfactory evidence demonstrating that the exemption is applicable. The final-form

rulemaking requires this to obtain title to an exempted vehicle for the reasons pertaining totitling previously described.

Amendments to the new motor vehicle testing provisions require vehicle manufacturers to

provide CARB testing determinations and findings to the Department upon request. The

final-form rulemaking requires that the Department’s request be in writing. The revisedsections are § 126.421(b), 126.422(b), 126.423(b), 126.424(b) and 126.425(b).

Section 126.431(b) requires each vehicle manufacturer to submit to the Department

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or lease or registered as a new motor vehicle in California. The purpose of § 126.43 1(c) is

to ensure full protection to consumers in this Commonwealth. For the sake of clarity, the

final-form rulemaking exempts motor vehicles from this requirement if, within 30 days of

CARE’s approval of the campaign, the manufacturer demonstrates in writing to the

Department’s satisfaction that the campaign is not applicable to vehicles sold, leased,

offered for sale or lease, titled or registered in this Commonwealth. An example of when a

recall campaign would not be applicable to vehicles in this Commonwealth would be if a

manufacturer demonstrated that the noncompliance was corrected for or did not occur in thefirst place in the vehicles sold, leased, offered for sale or lease or registered in this

Commonwealth.

New § 126.431(d) provides that an order issued by CARB or enforcement action taken by

CARB to correct noncompliance with any provision of Title 13 CCR, which results injhe

recall of any vehicle under Title 13 CCR, Chapter 2, shall be deemed to apply to all motor

vehicles sold, leased, offered for sale or lease or registered in this Commonwealth that

would be subject to the order or enforcement action if sold, leased, offered for sale or lease

or registered as a new motor vehicle in California. The purpose of § 126.431(d) is to ensure

full protection to consumers in this Conmionwealth. For the sake of clarity, the final-form

rulemaking exempts motor vehicles from this requirement if, within 30 days of the CARE

action, the manufacturer demonstrates in writing to the Department’s satisfaction that the

action is not applicable to vehicles sold, leased, offered for sale or lease, titled or registered

in this Commonwealth. An example of when a recall action would not be applicable to

vehicles in this Commonwealth would be if a manufacturer demonstrated that the

noncompliance was corrected for or did not occur in the first place in the vehicles sold,leased, offered for sale or lease or registered in this Commonwealth. V

Section 126.432(a) (relating to reporting requirements) requires that each vehicle

manufacturer submit annually to the Department, within 60 days of the end of each model

year, a report documenting the total deliveries for sale of vehicles in each engine family

over that model year in this Commonwealth for purposes of determining compliance with

the Program. The amendments change the first model year to which this requirement applies

from the model year beginning after December 5, 2000, to MY 2008. The amendments to

§ 126.432 change the term “engine family” to “test group” to conform to California’s change

in terminology. Subsection (d) requires that compliance with the NMOG fleet average forMYs 2008--2010 be demonstrated following the completion of MY 2010.

New vehicle dealer responsibilities are clarified in the amendments to § 126.44 1 (relating

to responsibilities of motor vehicle dealers), which reiterates the prohibition against a new

vehicle dealer selling, offering for sale or lease or delivering a vehicle subject to the

Program unless the vehicle has received the requisite CARE certification.

This fmal-form rulemaking adds § 126.45 1 (relating to responsibilities of the

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At the September 19, 2006, meeting, the Board approved an amendment to § 126.451 of the final-form rulemaking to add paragraph (3). Paragraph (3) requires the Department, in

conjunction with the DOT, to study and evaluate the feasibility of modifying the

Pennsylvania vehicle emission inspection program (JIM program). The I/M program is

different from the Program and is mandated by the CAA in 25 counties in thisCommonwealth. Section 126.45 1(3) requires that, in performing the study and evaluation,

the Department, in conjunction with the DOT, will consider the additional reductions in

NOR, VOCs and other pollutants to be achieved through implementation of Title 13 CCR,

Division 3, Chapter 1 and 2 requirements and to submit the findings and recommendations

to the Board within 9 months of the effective date of this fmal-form rulemaking.

At the same meeting, the Board approved another amendment to § 126.45 1 which requires

the Department to notify the Board as soon as possible, but no later than 6 months after the

effective date of this final-form rulemaking, of the specific reductions in NOR, VOCs,

carbon monoxide and other reductions approved by the EPA as a result ofthe incorporationofthe Program in the Commonwealths SIP. The report is to include a comparison of theincremental benefit reductions derived using EPA-approved methodology versus reductions

that would have been achieved under the Tier II standards.

F. Summary ofComments and Responses on the Proposed Rulemaking

The Board approved publication of the proposed rulemaking at its meeting on October 18,

2005. The proposed rulemaking was published at 36 Pa.B. 715 (February 11, 2006). Public

hearings were held on March 14 in Pittsburgh, March 20 in Harrisburg and March 28 in

Broomall (Philadelphia area). Comments were accepted from February 11, 2006, to May 8,2006.

The Board received a record number of comments--about 4,810 letters, postcards and e

mails--from approximately 4,400 commentators. The vast majority of commentators

supported the Program and the regulatory changes. Industry representatives generally

opposed the Program and some of the regulatory changes. Generally supportivecommentators included the Sierra Club, the American Lung Association, Citizens forPennsylvania’s Future, PennEnvironment, Group Against Smog and Pollution, the Leagueof Conservation Voters, numerous faith-based organizations, several thousand individuals,

Senators Joseph Conti, Jim Ferlo, Vincent Fumo and Constance Williams, and

Representatives Michael Gerber, Babette Josephs, Charles Mcllhenney, Phyllis Mundy,

Scott Petri and Josh Shapiro. Commentators who generally opposed the Program or

proposed rulemaking, or some aspect thereof, included the Alliance of Automobile

Manufacturers (Alliance), the Pennsylvania AAA Federation, the Pennsylvania AutomotiveAssociation (an automobile dealers association), the Pennsylvania Chamber of Business and

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DaimlerChrysler did not expressly state independently ofthe Alliance or Sierra Research

comment.

The Department has prepared a Comment and Response document in which the

Department responds to comments received during the public comment period. The

Comment and Response document is available on the Departments website at

www.depweb.state.pa.us (Quick Access: Public Participation) The Comment and Response

document provides detailed responses to these comments and explains the Department’s

position.

The following is a discussion ofthe comments received during the public comment period

organized according to subject matter. Comments regarding the regulatory language are

addressed and a summary of comments that address the Program as a whole are also

provided.

Comments on the Proposed Regulatory Language in Annex A

The Pennsylvania Automotive Association and the Alliance commented that the proposed

amendment to § 126.4 13(a) exempting new vehicles purchased out-of-State by residents of

this Commonwealth would create an uneven marketplace. They noted that while there is

little or no price differential today, in the future after implementation ofthe GHG standards,

price could become an issue. They expressed concern that permitting residents to bring

noncompliant new vehicles into this Commonwealth could affect dealer sales in this

Commonwealth and sales tax revenues to State and local government. They suggested that

there should be the same level of emissions standards for new vehicles brought into this

Commonwealth by residents as for new vehicles sold by dealers in this Commonwealth.

They stated that the exemption would make it difficult to enforce the Program. These

commentators said that the emissions benefit could be reduced ifthis exemption were

adopted. The Alliance suggested that the exemption be removed and Programimplementation should be consistent with the EPA’s “Policy of Cross-Border Sales of

California Certified Vehicles for 2004 and Later Model Years,” which allows in-State and

out-of-State dealers to sell a California vehicle to any customer. The Alliance also

commented that the Commonwealth should establish a registration enforcement process.

The Department agrees that the proposed exemption should be deleted and is therefore

deleting proposed § 126.413(a)(14). The proposed amendment, which was added to the

proposed rulemaking by the Board on October 18, 2005, was offered to ensure equitable

vehicle registration requirements in this Commonwealth under the assumption that this

would reflect the anticipated DOT approach to registration. The Department agrees that

purchasers need to be treated similarly. Additionally, the exemption would have

complicated enforcement and increased the possibility of reduced emissions credit. Using

the titling process offers the most equitable and effective way to enforce the vehicle

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access to an MCO. The Commonwealth will require issuing agents to certify that the

vehicle complies based on the MCO. The Commonwealth will make a specific outreach

effort to advise dealers in the contiguous states about the Pennsylvania requirements. As

long as out-of-State dealers offer California LEV vehicles, residents of this Commonwealthwill be able to purchase vehicles from neighboring states.

Hertz commented on existing § 126.4 13(a)(6), which exempts from the Program a lightduty vehicle held for daily lease or rental to the general public that is registered and

principally operated outside ofthis Commonwealth. Hertz commented that because of the

uncertainty created in determining when a vehicle is “principally operated outside the

Commonwealth,” meeting this requirement would impose extreme burdens on the way

Hertz manages its vehicle fleet and severely restrict the vehicle choices available to the

renting public. Hertz requested a clarification regarding vehicles registered outside this

Commonwealth. Hertz suggested that rental vehicles engaged in interstate commerce shouldbe deemed to be principally operated outside ofthis Commonwealth and thus not subject to

the Program. Under the International Registration Plan formula, rental car companies

register a certain minimum number of vehicles in each state based on gross revenue in the

preceding year. The International Registration Plan is a registration reciprocity agreement

among states ofthe United States and provinces of Canada providing for payment of

registration fees on the basis of total distance operated in all jurisdictions. Additional

information about the International Registration Plan can be found at www.irponline.org.

The International Registration Plan is effective in the 48 contiguous states and 10 Canadian

provinces.

On this issue, IRRC asked whether the Board intended to require rental car companies to

ensure that any car that could possibly be used in this Commonwealth comply with CARBstandards or whether rental car companies would merely be required to have all vehicles

registered in this Commonwealth comply with the standards. IRRC asked that the Board

clearly delineate the requirements in the final-form rulemaking.

The Department agrees with Hertz’ suggested interpretation ofthe existing regulation. The

final-form rulemaking includes an amendment to § l26.413(a)(6) to clarify the intent oftheCommonwealth with respect to enforcement ofthe regulations regarding daily lease and

rental companies under the Program. The Department does not intend to require rental car

companies to ensure that any car that could possibly be used in this Commonwealthcomplies with CARE standards. The Department does not intend to interfere with thenormal business practices of National rental car companies. The International Registration

Plan ensures that rental car companies cannot avoid registering a certain number of vehicles

in this Commonwealth to avoid compliance with the Program. MY 2008 and later rental

vehicles registered in this Commonwealth must be certified by CARE. The final-formrulemaking includes an explanation in § 126.4 13(a)(6) that a light-duty vehicle is deemed tobe principally operated outside of this Commonwealth if it is registered outside ofthis

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requires new subject vehicles registered in this Commonwealth to be those certified by

CARE. The Commonwealth has consulted with the DOT on the registration enforcement

process. The DOT has recommended adding titling to the Department regulation because to

title

a vehicle, the issuing agent must have access to the MCO.

A vehicle must be titled in

this Commonwealth to be registered in this Commonwealth.

The Alliance questioned the legality ofthe delegation to CARB that § 126.43 1(d)

represents (pertaining to enforcement actions taken by CARE applying to Pennsylvania)

and suggested that it unlawfully strips manufacturers oftheir ability in a Pennsylvania court

to contest the validity at law of any CARE enforcement action as to vehicles in this

Commonwealth. The Alliance suggested that one way the Department could reduce the

practical concerns that the commentator suggested are associated with this issue would be to

adopt language similar to Rhode Island’s approach by adding the following clause to

proposed § 126.431(c) and (d): “except where the manufacturer demonstrates to the

Department’s satisfaction that said action is not applicable to said vehicle.’ The Departmentdoes not agree that there is

a legal issue as described by the commentator. The purpose of

§ 126.43 1(c) and (d) is to ensure full protection to consumers in this Commonwealth

pertaining to recall efforts taken by CARE or initiated by manufacturers for vehicles that

are sold, leased, offered for sale or lease, registered or titled in this Commonwealth. For the

sake of clarity, the final-form rulemaking adds language similar to that suggested by the

commentator to allow

a manufacturer the opportunity to demonstrate that an order issued or

enforcement action taken by CARB or a voluntary or influenced recall campaign to correctnoncompliance with

a provision of Title 13 CCR is not applicable to vehicles sold, leased,

offered for sale or lease or registered in this Commonwealth. An example might be if

a

manufacturer demonstrated that the noncompliance was corrected for or did not occur in the

first place in the vehicles sold, leased, offered for sale or lease or registered in this

Commonwealth.

IRRC noted that the Board indicates that § 126.412(d) is intended to allow manufacturers

to carry forward NMOG credits fully for

a 3-year period without a loss ofthose credits each

year. IRRC commented, however, that this is not clearly stated in this section. IRRC

suggested that this provision should be amended to clarify the Board’s intentions. The

Department agrees that § 126.4 12(d) allows manufacturers to carry forward NMOG credits

fully for a 3-year period without a loss ofthose credits each year. The fmal-form

rulemaking clarifies in § 126.412(d) that these credits may be carried forward without

diminution during the 3-year period (MYs 2008 through 2010).

The Alliance commented that the NMOG fleet average transition mechanism in the

proposed rulemaking was not adequate. The Alliance stated that other states, for example

Massachusetts, Vermont and New York, included

a transition mechanism that allowed

credits/debits to be earned during the transition period, which is the period required forcredits that were earned in California to completely expire (3 years). The Alliance

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required fleet average. Consequently, credits could be earned for only a small number of

vehicles. The Commonwealth is adopting a mechanism that allows credits to be earnedduring the transition period of MYs 2008 through 2010. While California discounts these

credits after the first year, the Commonwealth will allow full credit over MYs 2008 through

2010. Language clarifying this full credit has been added to the final-form rulemaking. Thisapproach does not present identicality issues.

The Alliance also commented that by adopting and attempting to enforce the California

Fleet NMOG average, the Commonwealth will violate the CAA. The Alliance said that

California’s fleet average scheme includes the opportunity for manufacturers to earn credits

in 1 year by having a lower fleet NMOG average than required and spend credits in a later

year by having a fleet NMOG average higher than otherwise required. The Alliance argued

that a manufacturer could have earned a substantial amount of credits in California during

2005 through 2007 and then use those credits in 2008 through 2010 to offset a higher thanotherwise required fleet NMOG, but that because the Commonwealth’s regulation did not

take effect until 2008, the manufacturer would not have earned any credits in this

Commonwealth in 2005 through 2007 and therefore accumulated significant debits in this

Commonwealth in 2008 through 2010 by selling the very same mix of vehicles as it sold inCalifornia those years. The Alliance concluded that this would lead to a lack of identicality

in 2011 as there would be two different standards as a result ofthe differences in creditcounting, violating section 177 of the CAA on its own and by requiring manufacturers to

limit the sales of California certified vehicles or to create a third vehicle. The Department

disagrees that the adoption or enforcement ofthe NMOG fleet average in thisCommonwealth will lead to a lack of identicality or otherwise violate the CAA. The reasons

are set forth in the preceding paragraph.

General Motors and the Alliance suggested requiring only NMOG fleet average reporting,

as opposed to compliance. They wrote that fleet average NMOG is determined by sales mixand that the sales mix in this Commonwealth is different than the sales mix in California

because of differences in consumer demand. These commentators said that to comply withthe fleet NMOG average, manufacturers may need to restrict sales of certain models in this

Commonwealth that are not restricted in California and that consumers would then keep

their older, higher emitting vehicles longer since they would be unable to purchase the newvehicles they wanted. The Department responds that it is unlikely that the sales mix in

California differs significantly overall from the sales mix in this Commonwealth. (This is

further described under Comments Regarding Economic Issues.) These commentators have

provided no evidence that certain models have been restricted in other states adopting the

California low emission program on any parameter of concern to purchasers. In many cases,

manufacturers make both a California and a Federal version of a specific engine family.

Many factors will influence purchase of new vehicles. These commentators have not

presented any evidence that consumers would keep older vehicles longer based on

differences due to NMOG fleet averages. Therefore, the requested change is not made in the

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requirement before implementation. The Department believes, given automakers

current

collective ability to comply with the NMOG fleet average in other states, that automakers

collectively can meet the requirement in this Commonwealth. Furthermore, based on

CARB’s analysis of its GHG provisions, the Department is confident automakers will be

able to comply with the Pennsylvania-specific NMOG fleet average requirement in the

future. The commentator provided no specific information on why it believes it cannot

comply with the NMOG fleet average in this Commonwealth. The Department adds that

requiring only reporting without enforcement would likely present problems for earning

emission reduction SIP credits from the EPA.

The Alliance stated that section 177 of the CAA problems (of identicality) do not arise if a

state only requires manufacturers to report fleet NMOG average. For the reasons previously

described, the Department disagrees that the Program or the final-form rulemaking raises

identicality problems.

IRRC commented that subsection (b) in § 126.42 1--126.425 (relating to applicable new

motor vehicle testing) requires a manufacturer to provide certain types ofinformation to the

Department “upon request.” IRRC asked under what circumstances the Department would

make the request. IRRC stated that the Board should clearly identify the type of request it

will make to the manufacturers and that the request should be in writing. The Departmentresponds by explaining that these sections assure that documents regarding the compliance

of vehicles throughout the entire production process (including documents ensuring that

vehicles are manufactured to meet the applicable certification standards throughout their

useful life) are available to the Commonwealth. The Department anticipates that these

requests will be infrequent. They could be triggered by reports from dealers, vehicle ownersor other states implementing the California program regarding specific makes or models.

Some of these documents are not directly obtainable from CARB because of confidentiality

agreements. The Department has the authority to enter into similar confidentiality

agreements with manufacturers, if necessary, to receive reports. The requests would be to

provide to the Commonwealth the specific kinds of documents already in existence relative

to a specific test group in California: for example, “new vehicle certification testing

determinations and fmdings made by CARB” under § 126.421(b). The Department added

language to each ofthese sections stating that these requests to the manufacturer will bemade in writing. The Department also added parallel “upon request” language to § 126.43 1

(b) because of comment during the proposed rulemaking.

The Alliance commented that the Commonwealth would not find reports of failures of

emission-related components required in § 126.43 1(b) of much value because theDepartment has already proposed to extend emission-related actions such as recalls

applicable in California to this Commonwealth. To save resources, the Alliance suggested

that these reports should be available only upon request and noted that this language hasbeen included in other states. The Department agrees to reduce the reporting requirements

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complying with either the CARB regulations or Tier II. IRRC continued that commentatorsfor the automobile industry also recommended that the Board adopt the Tier II program.

IRRC said the industry commentators claim it is a comparable, or an even better, programfor reducing air pollution and that the economic impacts on the automobile industry andconsumers will not be as great as those imposed by CARB regulations. IRRC stated that in

its response to these concerns, the Board needs to explain why and how the CARB

regulations address the issues of environmental protection and cost-effectiveness, and that

the Department should demonstrate how its regulation will generate greater benefits for

public health and this Commonwealth’s natural resources at a cost that is affordable,

reasonable and competitive with alternative regulatory approaches.

The Department disagrees with the characterization that SB 1025 would have revived the

regulatory framework initiated in 1998. The voluntary NLEV program was adopted as an

opt-in program, that is, if a sufficient number ofstates and automakers opted in, compliancewith that program would be in place in the Ozone Transport Region beginning in MY 1999.

The NLEV program provided a complex system of adverse consequences for failing to

fulfill commitments. SB 1025, on the other hand, offers the auto industry the option ofcomplying with California standards or the less stringent Federal Tier II standards, with no

consequence to industry for choosing the less stringent standards. SB 1025 would also haveabrogated the existing Program and prohibited the Board from adopting vehicle emissionstandards established by CARB.

The Department adds that it is important to note that this final-form rulemaking does not

adopt the Program but makes changes to the already existing regulations to postpone the

Program compliance date from MY 2006 to MY 2008, specify the early credit earning

period for automobile manufacturers and update definitions and cross-references. In thepreamble to the 1998 rulemaking that incorporated the California standards by reference,

the Board stated its intention to reassess the air quality needs and emission reductionpotential of both programs.

Achieving and maintaining the health-based NAAQS for ground-level ozone remain

challenges for this Commonwealth, particularly in the Southeast. The EPA concluded that

there is an association between ambient ozone concentrations and increased hospital

admissions for respiratory ailments, such as asthma. Children, the elderly and those with

respiratory problems are most at risk, but healthy individuals may experience increased

respiratory ailments and other symptoms when they are exposed to ambient ozone while

engaged in activities that involve physical exertion.

Ozone is not directly emitted, but is created in the atmosphere as a result of the chemical

reaction ofNO and VOCs, in the presence of light and heat. The formation of ozone is

greater in the summer months because of the higher temperatures. Ground-level ozone and

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standards in this Commonwealth compared to participating in the Federal Tier II program.

This study (“Pennsylvania LEV II Air Quality Impacts,” November 2004) showed that by

2025, when full fleet turnover is expected, the California LEV II program will provide an

additional reduction of 2,850 to 6,170 tons per year of VOCs, 3,540 tons per year reduction

ofNO and 5% to 11% more reduction of six toxic air pollutants, including a 7% to 15%

additional benefit for benzene, a known carcinogen, when compared to the Federal Tier II

program. (A range is shown because the Commonwealth prepared analyses using

assumptions from the EPA as well as assumptions from the Northeast States Coordinated

Air Use Management (NESCAUM) study. The lower number uses the more conservative

EPA assumptions.) The Baker analysis used Pennsylvania-specific vehicle, travel, fuel and

other information.

CA LEV II and EPA’s Tier II use similar approaches in regulating emissions affecting

ozone and other criteria pollutants from new passenger cars and light-duty trucks, which

include vehicle-specific standards and manufacturer fleet averages. In both programs,

manufacturers may choose the technologies they use to meet the vehicle-specific emission

limits and may choose the mix of vehicles they offer for sale to meet the fleet averages.

A manufacturer may certify any particular type of vehicle to a category that limits

emissions of a number of pollutants. For CA LEV, the major categories include LEV, Ultra

Low Emission Vehicle and Super Ultra Low Emission Vehicle. For the Federal program,

there are eight “bins.” Bin 5 is considered equivalent to the least stringent California

standard. These vehicle-specific emission limitations affect both tailpipe and evaporative

emissions. Overall, the California program is more stringent. In addition, each manufacturer

must meet a fleet average for emissions of nonmethane organic compounds (equivalent of

VOCs) for California and a fleet average for emissions ofNO for the Federal program.

Overall, these fleet averages make the California program more stringent.

California has recently promulgated amendments to its regulations establishing its

California LEV II standards in Title 13 CCR, Division 3, Chapter 1 to include GHG

requirements. These GHG regulations are already incorporated by reference by the

Department’s regulations and are part ofthe Program. Under these regulations, Californiahas added a GHG fleet average requirement to its LEV II program for vehicles offered for

sale in California. This final-form rulemaking does not include a Pennsylvania GHG fleetaverage requirement. A vehicle offered for sale in this Commonwealth must simply be

CARB-certified. For a vehicle to be CARB-certified, the vehicle manufacturer must meetCalifornia’s GHG fleet average requirements based on sales of vehicles in California. The

Department does not believe that it needs to establish a GHG fleet average requirement forvehicles offered for sale in this Commonwealth to realize the GHG emission reductions in

this Commonwealth anticipated under the California LEV II program. Overall, the vehicle

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implementing Tier II could increase vehicle retail prices from $78 to $245 depending on theweight ofthe vehicle. Today, with both programs having been in place since MY 2004,

there appears to be little to no difference in vehicle retail price between CARE-certified andFederal-certified vehicles.

In September 2004, CARB estimated that by MY 2016 the operational efficiency savings

of vehicles meeting GHG requirements would provide vehicle owners an overall costsavings of $3.50 to $7 per month, assuming $1.74 per gallon of gasoline. These savings are

probably understated, since the price of gasoline is likely to remain higher than that used in

CARB’s analysis. CARE estimated the GHG-related initial investment costs, possibly

reflected in sticker prices, would start under $50 per vehicle for the first year of the

requirement, MY 2009, and be approximately $350 in 2012 and $1,000 in MY 2016.

Vehicle manufacturers disagree with CARB’s GHG estimate, citing initial costs of about$3,000 per vehicle. Vehicle manufacturers also believe that the cost savings will not be asgreat as CARE predicts.

In summary, there is a continuing need for additional reductions in ozone precursors

because of the challenge in achieving and maintaining the ground-level ozone standard;

there are additional benefits to health and the environment from obtaining reductions of

VOC, NO and GHG emissions that Federal new motor vehicle programs do not provide.

CARE standards cost consumers little or nothing in the short term and overall save

consumers money in the long term.

Summary ofComments Supporting Implementation ofthe Program

Over 4,000 commentators voiced their support for the Program and for the final-form

rulemaking. Their reasons were many, including health and environmental benefits,

economic issues and technology advances. Some commentators urged the Department toimplement the Program as quickly as possible. Other commentators saw value in the

postponement ofthe Program. The Department appreciates the support ofthese

commentators.

Summary ofComments Opposing the Program

Comments were received from roughly ten commentators opposing the LEV program

itself, which is already adopted in the current regulations, as opposed to this final-form

rulemaking, which postpones the Program compliance date from MY 2006 to MY 2008,

specifies the early credit earning period for automobile manufacturers and updatesdefinitions and cross-references. Although comments received on the LEV program are not

pertinent to this final-form rulemaking, the Department nonetheless addresses them here

and in more detail in the Comment and Response document.

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sell cars complying with Tier II rather than NLEV for MYs 2004 and 2006 due to the

language adopted as a condition of participation in NLEV, the California standards arecurrently incorporated by reference in the Commonwealth’s regulations. In a December 2,

2005, letter to Representative Richard Geist, EPA Region 3 Administrator Donald Welsh

stated that it is the EPA’s opinion that the CA LEV standards are “the legally effective

program for Pennsylvania” and underscored that the CA LEV standards are a “federally

enforceable part ofthe SIP.” The final-form rulemaking amends the existing regulations as

previously described.

Several industry commentators, the Pennsylvania AAA Federation and the two senators

commented that the California LEV standards will produce no air quality benefit relative to

the Tier II program. They wrote that the EPA has stated: “We estimated that LEV II willprovide about 1 percent additional reduction in mobile source VOC, and about 2 percent

reduction in air toxics, over Tier II in 2020 with the program starting in the 2004 model

year and lower with a later program start date.” They wrote that the EPA has cautioned

states against taking too much credit for the CA LEV program. The Department disagrees

with the characterization ofthe benefits of implementing the Program. The letter from the

EPA to NESCAUM regarding NESCAUM’s analysis of benefits was not a statement

pertaining to the benefits estimated by the Department. In fact, the EPA stated in a

December 2005 response to Representative Richard Geist regarding the issue of EPA

quantification of the emissions benefits from the implementation of the Program that “at

present, EPA has not performed such an analysis, although PADEP has done so. Section

177 of the [Clean Airj Act does not require a state to do such analysis prior to adoption of

CA LEV standards. However, such benefits would need to be quantified in order to rely on

associated emission reductions in a SIP [State Implementation Plan] submitted for EPAapproval.” The Department will submit its analysis to the EPA as part of a revision to its

SIP. With regard to the 2004 letter from the EPA to NESCAUM, the EPA also stated in the

same December 2005 letter to Representative Geist, “EPA commented in a March 26, 2004letter to NESCAUM on a White Paper NESCAUM prepared on methods quantifyingdifferences between federal Tier II and CA LEV II standards. EPA was concerned that

states use the proper methods in modeling both programs to ensure that incremental benefit

from LEV II is properly quantified, although EPA also provided a typical estimate for

incremental emissions benefits to be expected between the two programs. Pennsylvaniashould follow EPA’s guidelines when calculating incremental emissions benefits available

to Pennsylvania for CA LEV II versus Tier II.” The Department used EPA guidelines in

estimating the emissions benefits of implementing the amended Program regulations inadditional to using the NESCAUM method to establish range of potential benefits. The

Department intends to use the EPA methodology as part of its SIP submittal for the revised

Program.

Senators Madigan and White commented that a January 31, 2006, letter from the

Department dismissed as irrelevant arguments that the EPA has stated there is only a 1% to

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used to estimate these percentage reductions but by their statement about NESCAUM

s

analysis and that a realistic characterization would be an absolute comparison to a non-Tier

II baseline, the Department concluded the EPA made that comparison for estimating their

reductions, that is, by using the NLEV program as a baseline. The Department disagreesthat the NLEV program should be used as a baseline comparison for the purpose of

estimating the benefits of implementing the Program. NLEV is no longer an option for

automakers, as automakers were required to comply with the more stringent Tier II

standards beginning with MY 2004. The Department’s comparisons were to the only legal

alternative to CA LEV II standard--the Federal Tier II program.

The two senators commented that the Department stated that it has relied upon the

additional benefits of adopting CA LEV II as a means of achieving attainment. They said

that the Department failed to acknowledge that 31 counties are expected to come into

compliance with the 8-hour standard by 2009, and that none ofthe remaining counties’attainment strategy calls for utilizing projected benefits from CA LEV II. The senatorsstated that no documents provided to the General Assembly or the public by the Departmentactually show where the Department calculated and anticipated benefits. They stated that, to

the contrary, several documents, including the Department’s August 2003 recommendations

to the EPA for 8-hour ozone attaiimentJnonattainment areas (which makes no mention of

achieving future credit under CA LEV II), reflect the Department’s confidence that,

realizing the benefits of cleaner cars under Tier II, the Commonwealth can meet and

maintain Federal air quality standards. The Department responds that modeling prepared bythe EPA for the Clean Air Interstate Rule indicated that many ofthe current nonattainment

counties in this Commonwealth were expected to come into compliance with the 8-hourozone standard. However, based on studies subsequent to 2003, the Department does not

agree with all of the assumptions or conclusions in this modeling. The Commonwealth is,

therefore, working with other states in the Northeast, Mid-Atlantic and Midwest to consider

additional measures to meet the 8-hour standard. Public meetings were held in May 2006 todiscuss possible measures in addition to measures like the California LEV program that

have already been adopted by other states. The Department agrees that SIP revisions innonattainment areas submitted to the EPA to date have not assumed implementation of the

California program; these SIP revisions are primarily for attainment ofthe 1-hour ozonestandard. They were prepared before the designation of areas for the 8-hour standard

became final and the assessment of both benefits of and need for retaining the Californiaprogram was performed. After an area originally designated as nonattainment attains the

standard based on actual monitoring of air quality, the Commonwealth must demonstrate

that the area will maintain the standard for at least ten years by submitting a maintenance

plan as an SIP revision. Eight years after that, the Commonwealth will need to submit a

second 10-year maintenance plan as an SIP revision. In addition, as comments from the

American Lung Association emphasized, ifthe EPA revises the ozone standard again as the

result of the required 5-year review of health evidence, states will be required to prepare

SIPs to attain that standard. The EPA is in the process of that review at present, with some

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states would carry non-California cars primarily or exclusively. The Department responds

that one reason the Commonwealth proposed to postpone its enforcement of the Californiaprogram until MY 2008 was to better ensure vehicle availability. The EPA’s cross border

policy allows dealers in adjacent states to sell California vehicles. Ifthere is enough demand

for these interdealer trades, the postponement will give the market time to adjust to the

requirement.

The Pennsylvania Automotive Association commented that few if any consumers who are

not required to purchase a California vehicle will choose to pay the price premium for

a

vehicle that meets the California standards and that, to the extent that residents of other

states near this Commonwealth are not subject to the California rule, dealers in this

Commonwealth can expect to lose all or nearly all so-called “cross-border sales” once the

California rule comes into effect. They stated that those out-of-State consumers who want

vehicles with higher fuel economy will be able to purchase them from dealers located

outside this Commonwealth who currently, and in the future, will have an ample supply ofhigher-mileage vehicles for sale. The Department disagrees. This final-form rulemaking

does not adopt the California LEV program or require compliance with the California GHG

fleet average based on sales in this Commonwealth, but makes changes to the existing

regulations to postpone the Program compliance date from MY 2006 to MY 2008, specify

the early credit earning period for automobile manufacturers and update definitions and

cross-references. There is presently no price differential in states surrounding this

Commonwealth for California and non-California vehicles. Once the GHG provisions

become effective, CARB predicted that the cost differentials would start at less than $100 in

MY 2009 and rise to about $1,000 in 2016 when the most stringent GHG limit is imposed.The Department disagrees with the implication that dealers in this Commonwealth will

necessarily lose sales from residents in states that have not adopted the California

regulation. The Program does not require automakers to meet the GHG fleet average based

on sales in this Commonwealth. Since there is no per-vehicle GHG requirement, it is

expected that any differential costs for

a specific make or model will be

a minor concern in

the choice of noncitizens of this Commonwealth to purchase from

a dealership in this

Commonwealth.

Vehicles Types

Several commentators, including IRRC, expressed concern with the impact of the

proposed rulemaking on vehicles that operate on different types of fuels. They stated that

light-duty vehicles that operate on diesel are very popular. IRRC asked whether consumers

will still be able to purchase and operate these vehicles in this Commonwealth under CAREregulations. The Department responds that diesel vehicles presently comprise

a very small

percentage (0.09%) of passenger and light-duty vehicles in this Commonwealth. Based on

the Department’s analysis, it appears that automakers have not as yet been enthusiastic

about offering diesel light-duty vehicles in the United States and citizens in this

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diesel vehicles to the CARE standard and make them available in this Commonwealth.

Many large automakers have already publicly indicated they will be able to certify their

light duty diesel vehicles to the California standards once ULSD is widespread. The

industry has complied with CARB standards every time CARE has revised them since 1961

when California established the first auto emissions standards 2 years before the Federal

government. The Department believes that the automakers will seize the opportunity to

develop compliant vehicles ifthey are in demand by consumers in this Commonwealth and

the other states implementing the LEV program. At least one automaker, DaimlerChrysler,has already announced the availability of a MY 2007 light-duty diesel vehicle capable of

complying with LEV standards. (The company’s January 8, 2006, press release “NAIAS2006 Detroit: DaimlerCbrysler to Feature Technology for the Cleanest Diesel in the World”is available at www.daimler chrysler.com.)

Several industry commentators and the Pennsylvania AAA Federation called for

following the Federal Tier II program because they claim it can better accommodate diesels

by adding flexibility without sacrificing emissions benefits. The Department responds that

CARE, the EPA and the manufacturers share similar goals--to ensure that clean light-dutydiesels can be part ofthe vehicle mix in the United States. Postponement of theimplementation ofthe CA LEV program in this Commonwealth from MY 2006 until MY

2008 as provided for in this final-form rulemaking provides time for manufacturers to meet

the standards for vehicles anticipated to be sold in CA LEV states. The EPA’s recent Tier IIrule changes, published at 71 FR 16053 (March 30, 2006) direct final rule effective June 28,

2006, affect MYs 2007--2009 only. After that time, the EPA expects that manufacturers will

be able to meet the “remaining narrow challenges” facing diesel technology (71 FR at

16056).

IRRC commented that industry, Federal and State leaders have recently expressed support

for flexible fueled vehicles (FFV) that operate on fuels with a greater percentage of ethanol.

IRRC asked what the impact ofthis final-form rulemaking on the use of ethanol will be.The Department responds that ethanol can either be added to gasoline in amounts up to

10%, which can be accommodated in conventional vehicles, or in a blend called E85, which

is 85%--ethanol. A specially designed vehicle, known as an FFV, which can run onconventional gasoline or E85, is needed to accommodate E85 fuel. There will be no effect

on the use of ethanol in conventional vehicles from the Program. For E85 and new FFVs,

the postponement in compliance date in this final-form rulemaking will give the industrytime to respond to market situations. The decision by two manufacturers not to certify FFVs

in California for the coming model year (MY 2007) was a business decision, reportedly

based on the lack of E85 refueling stations. At least one other manufacturer, General

Motors, is continuing to certify FFVs in California for MY 2007. There are few E85

stations outside the Midwest. California has only one and, therefore, there is a small market.

As E85 stations become more common, it is anticipated that the demand for the vehicles

will increase and these manufacturers will again certify FFVs for use in CA LEV programs.

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This material has been drawn directly from the official Pennsylvania Bulletin full text

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Ca4fbrnia LEVAdoption

Senators Madigan and White asserted that the Department adopted a more stringent

(compared to Tier I) Federal option available at the time ofthe 1998 rulemaking, called

NLEV. The Department responds that Chapter 126, Subchapter D adopted in 1998,previously titled New Motor Vehicle Emissions Control Program, contained both NLEV

and Program provisions to enable the Commonwealth to participate in NLEV as well as the

Program, which incorporates the California LEV program.

Senators Madigan and White and several other commentators commented that the current

Department administration reversed course from its 1998 statements and now claims thatthe California vehicle emission standard is effective in this Commonwealth for MY 2006.They stated that ifthe Department’s current interpretation is to be believed, then theDepartment has offered no reason to substantiate why it is proposing to postponeimplementing the California standard when, per its own argument, the automobile industry

and consumers have had advance notice ofits effective date for nearly 8 years. They stated

their beliefthat the CA LEV program was intended solely as a “backstop” to NLEV/Tier II.They cited various statements attributed to the Department to support their belief. They also

stated that their beliefis that the Department has failed to revisit the current regulation in a

timely fashion to incorporate the Federal Tier II standards and that this rulemaking is

actually a conscious decision to codify the California standard in the Commonwealth’s

regulations. They stated the Department intentionally omitted in a January 31, 2006, letterto the General Assembly the context ofthe 1998 rulemaking as well as the Department’s

own stated intention to revise the regulation to incorporate Tier II when it was finalized.

Several industry commentators commented that the Program included adoption ofthe LEV

standards as a temporary measure or “backstop” in case the EPA’s NLEV program was not

implemented or if Federal standards cleaner than NLEV were not adopted. The Departmentresponds that the California standards were adopted in this Commonwealth to require

compliance ifthe auto manufacturers opted not to participate in the voluntary NLEV

program or after the end of the commitment to NLEV after MY 2005. This was stated

clearly in the preambles to the 1998 proposed and final-form rulemakings: “This program

will only be implemented if an auto manufacturer opts out ofthe NLEV program or at the

conclusion ofthe NLEVprogram.” (Emphasis added.) See the final-form rulemaking at 28

Pa. B. 5873, 5874. See also the proposed rulemaking at 27 Pa. B. 6303, 6305 (November

29, 1997). The preamble specified that NLEV was only a temporary measure: “The

Commonwealth’s NLEV program participation ends with model year 2006.” See 28 Pa. B.

5783, 5875. The 1998 regulation itself was and is clear. It expressly adopts and incorporates

by reference certain provisions ofthe California LEV program, Title 13, CCR in § 126.411,

requires CARB certification for vehicles sold, imported, delivered, purchased, leased,rented, acquired, received or registered in this Commonwealth in § 126.412(a) and requires

compliance with the California NMOG fleet average in this Commonwealth in § 126.4 12

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program, manufacturers may comply with the NLEV standards or equally stringent mandatory Federal standards in lieu of compliance with the Pennsylvania Clean Vehicles

Programestablished in

§ 126.411--126.441. .. .“ In 2004, the EPA established more

stringent Federal standards called Tier II. Hence, manufacturers were required to comply with Tier II, as part ofthe NLEV program, for MYs 2004 and 2005. Beginning with MY

2006, when the Commonwealth’s participation in the NLEV program ended, the California

program took effect. “Except as provided in subsections (a) and (c) [describing NLEV participation], the Pennsylvania Clean Vehicles Program applies to all new passenger cars, and light-duty trucks (if designed to operate on gasoline) sold, leased, offered for sale orlease, imported, delivered, purchased, rented, acquired, received or registered in this

Commonwealth starting with the model year beginning after December 5, 2000, and each

model year thereafter.” (Emphasis added.) See § 126.402(d). Hence, the current rulemaking is not an adoption or codification ofthe California program. The California program was

adopted, or codified, in the Commonwealth in 1998. The Department proposed postponing implementation ofthe Program in this final-form rulemaking to minimize any potential vehicle availability issues and to put in place a specific transition mechanism for

compliance.

Incorporation by Reference

The Alliance submitted several comments regarding the existing regulations’

incorporation by reference ofthe California program. It claimed that the Board and

Department have been ambiguous about whether they believe that the CA LEV II program is already the law ofthe Commonwealth and that there needs to be a legal basis for

a

conclusion that an incorporation by reference has already occurred. The Alliance claimed it

is highly unusual for the Board to claim it has the authority to adopt regulations that

automatically incorporate any amendments that are made to the California program. The

Department disagrees that the Board and Department have been ambiguous. The purpose of this final-form rulemaking is not to adopt CA LEV II because by virtue ofthe 1998

rulemaking, CA LEV II is already the legally effective program in this Commonwealth.

Situations in which cross-referenced statutory or regulatory provisions are later revised or

replaced are addressed in 1 Pa.C.S. Part

V (relating to Statutory Construction Act of 1972).

Pennsylvania courts have held that the act applies to regulations as well as to statutes. (See, for example, Highway New, Inc. v. Pennsylvania Department ofTransportation, 789 A.2d

802, 808 (Pa. Cmwlth. 2002).) Section 1937(a) ofthe Statutory Construction Act of 1972

(relating to references to statutes and regulations) states that “A reference in a statute to

a

statute or to

a regulation issued by a public body or public officer includes the statute or

regulation with all amendments and supplements thereto and any new statute or regulation substitutedfor such statute or regulation, as in force at the time of application ofthe

provision ofthe statute in which such reference is made, unless the specific language or the

context ofthe reference in the provision clearly includes only the statute or regulation as in

force on the effective date ofthe statute in which such reference is made.” (Emphasis

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amendments made to the California program delegates statutory implementation authority

in section 2(a) ofthe Regulatory Review Act (71 P. S. § 745.2(a)) to another state’s

regulatory authority in violation of Pa.Const. Art. II, § 1. The Department responds that the

current regulations and the final-form rulemaking are authorized under the act. TheCommonwealth, along with the other states that have adopted the California LEV program,

has the same ability to comment on changes to the California program as it has in

commenting on changes to the Federal new motor vehicle control program. Elected

representatives are part ofthe rulemaking process in the Commonwealth established by the

Regulatory Review Act (71 P. S. § 745.1--745.15). Additionally, the final-form

rulemaking requires the Department to monitor and advise the Board of proposed or final

CA LEV rulemaking under consideration by CARB, prepare a cost/benefit analysis to besubmitted to the Board and Chairpersons ofthe House and Senate Environmental Resourcesand Energy Committees (Committees) for each proposed or final CARB rulemalcing,evaluate and submit to the Board and the Chairpersons ofthe Committees the estimated

incremental cost to manufacture vehicles that comply with the CA LEV program comparedto the Federal program and submit comments on proposed or fmal CARB rulemakings on

behalf ofthe residents ofthis Commonwealth. Section 1937(a) of the Statutory

Construction Act of 1972 explicitly provides that “A reference in a statute [or regulation] to

a statute or to a regulation issued by a public body or public officer includes the statute or

regulation with all amendments and supplements thereto and any new statute or regulation

substituted for such statute or regulation, as in force at the time of application ofthe

provision ofthe statute [or regulation] in which such reference is made.. .“ Thus, the

automatic inclusion in the Commonwealth’s regulations of amendments and supplements to,and of any new statute or regulation substituted for a portion of; the California program arestatutorily sanctioned.

The Pennsylvania AAA Federation commented that the nature, severity and geography of

California’s air pollution problem drive California’s pollution reduction strategies. Thecommentator stated that California regions are in “extreme” nonattainment while regions in

this Commonwealth are defined as “moderate” or “marginal” and that California’s pollutionreduction strategies may not be appropriate for this Commonwealth. The Department agreesthat California’s ozone air pollution problem is worse than this Commonwealth’s. Thenature of California’s problem has resulted in a dedication oftechnical resources to air

quality problems unequalled in the world, including at the EPA. The Department agrees thatsome of California’s pollution reduction strategies may not be appropriate for this

Commonwealth. However, as motor vehicles will continue to contribute a significantamount of pollution in this Commonwealth, the Program is a cost-effective strategy tofurther reduce vehicle emissions.

Several commentators commented that adopting the CA LEV program ties the

Commonwealth to any and all changes made to the program by CARB, on which theCommonwealth (like other states) has no representation. The Department responds that this

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with the other states that have adopted the California LEV standards, has the same ability to

comment on changes to the California program as it has in commenting on changes to the

Federal new motor vehicle control program. Elected representatives are part ofthe

rulemaking process in the Commonwealth established by the Regulatory Review Act.

The Pennsylvania AAA Federation noted that California revises its standards more

frequently than the EPA. The Department agrees that California has revised its standards

more often than the EPA, which has amended its light-duty vehicle standards only when

explicitly directed by statute. The NRC recently found that the process by which California

revises its standards is scientifically and technically valid and is a benefit to the country.

Compared to the Federal government, the ability of California to respond better to changing

conditions, including technological advances, was viewed by the NRC as an advantage.

Most ofthe revisions to the California program were revisions to California’s ZEV program,which is excluded from adoption in the Program.

Stringency Requirement

The Alliance commented that the proposed rulemaking failed to satisfy the “stringency”

limitation in section 4.2 of the act (35 P. S. § 4004.2(b)), which requires rules to be no more stringent than those required by the CAA unless authorized or required by the act or

specifically required by the CAA. Section 4.2(b) ofthe act goes on to list certain exceptions

to this stringency limitation. The commentator asserts that none is applicable here. The

Department disagrees. The existing regulation automatically incorporates the current

California program, which at this time is CA LEV II, not CA LEV I. Section 4.2(b) ofthe

act is inapposite because this final-form rulemaking is not a rulemaking that adopts the

California standards, since they are already adopted. This final-form rulemaking postpones

the compliance date ofthe Program by 2 years. In this way, the final-form rulemaking is notmore stringent than the existing regulations. Furthermore, the Department disagrees with

the commentator’s characterization ofthe stringency provision ofthe act. Section 4.2 ofthe

act authorizes adoption ofregulations that are more stringent than Federal requirements if

they are reasonably necessary to achieve or maintain the ambient air quality standards.Adoption of the California program under section 177 ofthe CAA was reasonably

necessary to achieve and maintain the health-based 1-hour ozone ambient standard in this

Commonwealth and the successor 8-hour ozone ambient standard.

Stakeholder Process

Senators Madigan and White commented that the proposed rulemaking should not

proceed at this time. They stated that a stakeholder process (as included in SB 1025) should

be instituted to help analyze state options for meeting air quality standards. They stated that

SB 1025 also requires the Department to report back to the General Assembly by June 30,

2010. The Department does not agree. Neither a stakeholder process, nor the schedule in SB

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credit earning period for automobile manufacturers and update definitions and crossreferences.

Abrogation ofProgram

Senators Madigan and White commented that an October 28, 2005, letter from the

Department to members ofthe House ofRepresentatives stated that passage of HB 2141, a

bill to abrogate the Program, and repeal ofthe Clean Vehicles Program “puts us in violation

of federal law.” They state that subsequently, the Department changed its argument,

conceding that the Commonwealth can in fact maintain the Federal Tier II standards but in

the Department’s view would need additional reductions from stationary sources to meet airquality standards. The Department responds that the statement that repealing the Program

would violate Federal law and the statement that the Commonwealth has the option to

return to the Federal new motor vehicles program are not contradictory. The

Commonwealth adopted the Program in 1998 and submitted the regulation to the EPA as an

SIP revision. That SIP revision was effective February 28, 2000. Approval of an SIP by the

EPA makes the SIP Federally enforceable. In a December 2, 2005, letter to Representative

Richard Geist, EPA Region 3 Administrator Donald Welsh stated that it is the EPA’s

opinion that the CA LEV standards are “the legally effective program for Pennsylvania” and

underscored that the CA LEV standards are a “federally enforceable part ofthe SIP.” Thismeans that Federal law needs to be followed ifthis part ofthe Commonwealth’s SIP is to be

changed. The Commonwealth’s adoption of California emission standards could not be

revoked without holding public hearings on a proposed SIP revision to do so, responding to

comments received and submitting the proposed SIP revision to the EPA for approval. Justas the Department had the authority in 1998 to choose to adopt the California standards, the

Department has the authority to choose to participate in the Federal program, but only if

these steps are followed. The Commonwealth is required by the CAA to achieve andmaintain the NAAQS in all areas of this Commonwealth designated as nonattainment. The

available emission reduction options are “a shrinking slate,” as characterized by Mr. Welsh

in the December 2005 letter. Since states do not have many strategies regarding motor

vehicles available to them, most ofthe strategies are indeed reductions from stationary

sources.

The two senators commented that a November 1, 2005, e-mail from the Secretary of DOT

to the members ofthe General Assembly insinuates that passage of HB 2141 would

jeopardize $1.6 billion in Federal transportation funding. The senators stated that the e-mail

failed to include a detailed discussion ofthe implications of HB 2141, the likelihood of

whether the Commonwealth in fact would lose Federal funding, or whether the

Commonwealth actually relied upon the California vehicle emission standards as part ofits

SIP compliance strategy. The senators stated that a December 2005 letter from the EPA

Region 3 Administrator stated that he believed passage of the bill would not result in

application of Federal sanctions against the Commonwealth because at present, the

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to date, but the Department has included the benefits in its development of SIP revisions to attain and maintain the 8-hour standard. The Commonwealth will begin submitting these SIP revisions in the fall ofthis year.

NMOG Fleet Average

One commentator stated that by adopting and attempting to enforce the California fleet

NMOG average, the Commonwealth will violate the CAA. The commentator asserted that

since it is highly unlikely that a manufacturer will sell exactly the same products in exactly the same proportions in this Commonwealth as it will in California, and consumers in this

Commonwealth determine that

a particular manufacturer’s sales mix in Pennsylvania results in

a higher fleet NMOG average, the manufacturer may be required to artificially limit sales of certain CARB-certified cars to comply with this Commonwealth’s fleet average requirement. The commentator concluded that this would be an indirect limit on the sale of

a motor vehicle certified to California standards and thus would violate section 177 ofthe

CAA. The Department disagrees. This fmal-form rulemaking does not establish the

Program or adopt the NMOG fleet average, but makes changes to the already existing regulations which already incorporate by reference the NMOG fleet average. This fmal form rulemaking postpones the Program compliance date from MY 2006 to MY 2008,

specifies the early credit earning period for automobile manufacturers and updates definitions and cross-references. Even ifthis final-form rulemaking were adopting the California NMOG fleet average, adopting the fleet average would not violate section 177 of

the CAA. Section 177 ofthe CAA specifically authorizes states like the Commonwealth to

“adopt and enforce standards relating to control of emissions from new motor vehicles or

new motor vehicle engines” ifthe “standards are identical to the California standards for

which a waiver has been granted for such model year. . . .“ Courts accept California’s

NMOG fleet average as a “standard relating to control of emissions.” See, for example, Motor Vehicle Manifacturers Assoc. v. New York State Department ofEnvironmental

Conservation, 17 F.3d 521, 537 (2d Cir. 1994) (“It would be inappropriate to view the 1990 [CAA] amendments in a manner that would effectively prohibit any state from opting into the California program since Congress so obviously planned for the several states to have

that option.”); American Automobile Manufacturers Assoc. v. Cahill 152 F.3d 196, 200 (2d

Cir. 1998) (“For example, the LEV Program is clearly a ‘standard’.. .“). The EPA also accepts California’s NMOG fleet average as a “standard relating to control of emissions,” as

the EPA has approved the SIP revisions of at least three states that have adopted it, namely Maine, Massachusetts and New York. (70 FR 21959 (April 28, 2005) (Maine); 67 FR

78179 (December 23, 2002) (Massachusetts); and 70 FR 4773 (Jan. 31, 2005) (New York).)

Moreover, the Second Circuit Court of Appeals has stated that the purpose of the sales

limitation prohibition in section 177 ofthe CAA is to prohibit section 177 ofthe CAA opt- in states from attempting to regulate against the sale of a particular type, not number, of California-certified cars. Motor Vehicle Manufacturers Assoc., supra, 17 F.3d at 536. TheCAA does not require automakers to “sell exactly the same products in exactly the same

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GHG Provision ofCalfornia Program

Numerous comments from industry commentators and the two senators addressed

California’s GHG provisions.

Several ofthese commentators asserted that the smog-producing pollutants would be

increased because ofthe GHG regulations, since people would retain older vehicles with

higher emissions as the result of asserted increased price of new vehicles and people would

drive more miles if fuel efficiency were increased. To the contrary, the Department agreeswith CARB that the GHG provisions will provide an additional net decrease ofthe

emissions ofNO and reactive organic gases (an analog to VOC). The Department’s

analysis did not account for these additional benefits as neither the Commonwealth’sexisting regulations nor the fmal-form rulemaking requires the California GHG fleet

average requirement to be met based on sales in this Commonwealth. One commentator,

Sierra Research, whose analysis ofthe Program is relied upon by several others, focused its

analysis almost entirely on the GHG provisions and on the incorrect assumption that the

Commonwealth is proposing adoption of a GHG fleet average requirement based on sales in

this Commonwealth, resulting in erroneous conclusions that are not relevant. In addition,

the analysis provided no relevant information, analysis or data to specifically refute the

Department’s analysis ofthe emissions impact of postponing the compliance date ofthe

Commonwealth’s existing Program. The Department’s analysis is based on current EPA

guidance.

Furthermore, emission reductions that are to be achieved in California, this

Commonwealth or elsewhere from CARB’s GHG provisions are dependent upon the EPAgranting a waiver of preemption to CARE for the GHG emission standards. Under section209(b) ofthe CAA (42 U.S.C.A. § 7543(b)), California must first find that its standards are,

in the aggregate, at least as protective of public health and welfare as applicable Federal

standards. California has already made this determination. The EPA will then reviewCalifornia’s “protectiveness” finding and must deny a waiver ifit determines thatCalifornia’s finding was arbitrary and capricious, among other things. The commentator will

have the opportunity to present its analyses of CARE’s GHG emission standards to the EPA

during the EPA’s waiver decision making process, which includes Federal publication of a

proposed decision and a public comment period. Ifthe EPA (the agency that promulgated

the Tier II standards) grants CARE a waiver of preemption for the GHG standards, there

should be no question of whether CARE’s standards are as protective as Tier II.

Sierra Research and DaimlerChrysler asserted that adoption of CA LEV II with the GHG

provisions in this Commonwealth will result in increased VOC, NON, CO and PM25

emissions relative to a baseline where the Federal Tier II emissions standards apply. The

Department disagrees with the commentators’ analysis of the purported emissions increase.

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secondary effects ofthe GHG regulation described by the commentators, but the

commentators’ evaluation ofthe magnitude ofthese effects in this Commonwealth is flawed

given the commentators’ erroneous assumption regarding the GHG fleet average. In addition, the commentators’ underlying assumptions with regard to the resultant impact of these effects in California were successfully refuted by CARB in its Final Statement of

Reasons. The commentators provided little supporting data to allow the Department to replicate and quantitatively evaluate the commentators’ claims. The Department disagrees that the relative baseline for comparison of emissions, for the purpose ofthe commentator’s

analysis to evaluate the impacts of the California GHG provisions, is the Federal Tier II

program. The California standards are currently incorporated by reference in the

Commonwealth’s regulations. The purpose ofthis final-form rulemaking is to postpone the compliance date ofthe Program from MY 2006 to MY 2008 and specify a 3-year early- credit earning period within which vehicle manufacturers must come into compliance with the NMOG fleet average ofthe Program. The relative baseline, therefore, should be the CA

LEV II standards and not the Federal Tier II standards. The commentator did not provide

any comparison ofthe GHG provision impact to the existing regulations or the amendments

to the Program. The Department’s analysis estimates

a reduction of 7.8 to 16.9 tons per day of VOCs and 9.7 tons per day ofNO in 2025 by implementing the Program as set forth in

the preambles to the proposed and final-form rulemakings. The Department continues to

agree with CARE that there would be a slight decrease in NO and VOC emissions as a

result ofthe GHG provisions, but given that the Program does not require compliance with

a GHG fleet average based on sales in this Commonwealth and that automakers will still be

required to meet the NMOG fleet average based on sales in this Commonwealth (thus ensuring reductions over Tier II), these benefits would be secondary and are not included in

the Department’s analysis.

Three industry commentators claimed that the proposed rulemaking would have no

measurable impact on the global climate or the climate ofthis Commonwealth and that the

means for controlling GHG are being debated internationally and can only be addressed

effectively on a global basis. The Department responds that the Commonwealth expects that the existing regulations will make a contribution to the reduction of GHGs, which will help mitigate global warming and its public health and environmental effects.

A measurable

effect on temperatures or on ozone reduction based on effects on temperatures is not the

intent of this final-form rulemaking.

The Alliance commented that the California GHG regulations will not improve air quality because the regulations focus predominantly on controlling C0 2,an inert gas that is not

toxic to humans or animals. The commentator argues that control of GHG emissions is not a

pollution issue but is an energy issue. Whether GHGs, including C0 2,are a pollutant is an

issue currently in litigation. On November 29, 2006, the Supreme Court of the United States

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regulate vehicle fuel economy is currently being litigated in Federal court in California in

Central Valley Chrysler-Jeep, Inc. v. Catherine E. Witherspoon, 1 :04-cv-06663-AWI-LJO.

Ifthe California regulation is overturned in court, the Commonwealth will not realize GHG

benefits from California’s GHG provisions. The statements made by the National Highway

Traffic Safety Administration were made in a preamble, not a regulation, and do not carrythe authority oflaw.

Senators Madigan and White commented that the Department’s preamble touts the

California standard as a means of controlling carbon dioxide (GHG) emissions. They stated

that the Department fails to acknowledge that reduction ofCO2emissions is not arequirement ofthe SIP or the CAA. They said that the Department ignores a September2003 EPA General Counsel determination that the EPA does not have the authority underFederal law to regulate motor vehicle emissions ofCO2or other GHGs. The Department

responds that the preamble to the proposed rulemaking stated that California recently added

a GHG fleet average requirement to its LEV II program beginning with MY 2009, which

will have to be met in California to obtain CARB certification. The Department is notrequiring auto manufacturers to meet a fleet average for GHGs based on sales in this

Commonwealth, but, as stated in the preamble, the Department expects that theCommonwealth will realize the benefits of California’s GHG certified vehicles through theCommonwealth’s existing requirement that new vehicles have CARB certification. The

preamble explained that California estimates that the program, when fully phased-in, will

provide about a 30% reduction in GHG emissions from new vehicles required to comply

compared to the 2002 fleet. The Department anticipates that this Commonwealth willachieve similar results. The Department did not state or imply that reducing CO2emissions

in the Program is a requirement ofthe SIP or the CAA. The Department does not ignore the

September 2003 EPA General Counsel opinion regarding GHGs; to the contrary, the

preamble expressly acknowledged that California is currently defending its GHG

regulations against legal challenges filed by the auto industry. The EPA’s position onregulation of GHGs from motor vehicles is currently under review by the Supreme Court of

the United States in the case ofMassachusetts v. EPA, U.S., No. 05-1120.

The Pennsylvania AAA Federation and several industry commentators objected to the

costs of complying with the California GHG requirements. CARB has estimated theadditional price ofthe GHG provisions at over $1,000 per vehicle while the auto industry

believes the price of all new vehicles would increase about $3,000 on average per vehicle.

In MY 2009 and beyond, once the California GHG provisions take effect, the Department

agrees with CARB’s per vehicle cost estimate of approximately $1,000 by 2016 and withCARB’s estimate that this cost increase will be offset by savings to the consumer due toincreased operational efficiency ofthese vehicles. While CARB predicted that by 2016 the

operational efficiency of vehicles meeting GHG requirements might actually afford owners

an overall cost savings of $3.50 to $7 per month (assuming $1.74 per gallon of gasoline),

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historically, cost projections made by both industry and government (EPA and California)

tend to overstate actual costs.

The Alliance and the Pennsylvania AAA Federation commented that to meet what they referred to as the proposed “fuel efficiency” and emissions requirements of CA LEV II,

vehicle weight and size would be reduced, which would reduce consumer utility and

contribute to higher traffic fatalities. The Department responds as follows. As indicated by CARB in its Final Statement ofReasons, California law specifically prohibits CARB from

using weight reduction or vehicle class elimination as a mechanism to achieve compliance with the GHG provisions ofthe CARB standard. The Department believes that CARWs

analysis ofthe available technology options is sound and agrees that many ofthe proposed technologies are either in current production or are in late stage development by automakers. In addition, the GHG provisions provide sufficient lead-time for automakers to

cost-effectively integrate these existing technologies into production. The Departmentagrees with CARB’s analysis ofthe GHG provisions that weight reduction strategies are not

necessary. Weight reduction strategies that may be employed by automakers are business

decisions by individual automakers and not the result ofrequirements of either the CA LEV

II standards or the Program. The Department agrees that Federal motor vehicle safety standards will continue to apply to any vehicle introduced for sale into this Commonwealth.G. Benefits, Costs and Compliance

Benefits

The final-form rulemaking will save manufacturers, dealers and purchasers oflight-duty vehicles and trucks from incurring additional costs for CARB-certifled vehicles for 2 model

years. Implementation ofthe Program in accordance with the final-form rulemaking will

contribute to the attainment and maintenance ofthe health-based ozone NAAQS in this

Commonwealth due to emission reductions from the operation oflow emission passenger

cars and light-duty trucks. The Commonwealth’s analyses indicate that, by implementing the California LEV II program under the final-form rulemaking, the Commonwealth will

experience emission benefits when compared to the Federal program. By 2025, when full

fleet turnover is expected, the California LEV II program will provide an additional

reduction of 2,850 to 6,170 tons per year of VOCs, 3,540 tons per year reduction ofNO

and 5% to 11% more reduction of six toxic air pollutants, including a 7% to 15% additional

benefit for benzene, a known carcinogen. The Commonwealth will also realize the benefits

of California’s GHG certified vehicles. CARB estimates that the program, when fully phased-in, will provide about a 30% reduction in GHG emissions from new vehicles

required to comply compared to the 2002 fleet.

In addition, CARB predicted that by MY 2016 the operational efficiency savings of

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realized. The final-form rulemaking will apply to vehicle manufacturers, new vehicle

dealers, leasing and rental agencies and other registrants who sell, import, deliver, purchase,

lease, rent, acquire, receive, title or register light-duty automobiles or trucks in this

Commonwealth. No new costs will be incurred as a result ofthe final-form rulemaking

compared to the costs that would be experienced without the final-form rulemaking, since

the Program is already incorporated by reference in the Commonwealth’s regulations.

In September 2004, CARE estimated that by MY 2016 the operational efficiency savings

of vehicles meeting GHG requirements will provide vehicle owners an overall cost savings

of $3.50 to $7 per month, assuming $1.74 per gallon of gasoline. These savings are

probably understated, since the price of gasoline is likely to remain higher than that used in

CARB’s analysis. CARB estimated the GHG-related initial investment costs, possibly

reflected in sticker prices, will start under $50 per vehicle for MY 2009, be approximately

$350 in 2012 and $1,000 per vehicle in MY 2016. Vehicle manufacturers disagree with

CARB’s GHG estimate, citing initial costs of as much as $3,000 per vehicle.

The Commonwealth periodically offers rebates to consumers for the initial purchase of

hybrid electric vehicles. These rebates could offset additional initial costs that might bepassed on to consumers under the existing or amended Program.

Compliance Assistance Plan

Compliance assistance with the Program will be provided to affected parties, primarily

new vehicle dealers, through appropriate State trade organizations in the distribution of

information to their membership. Information concerning the Program will also be provided

to consumers through the media, Department publications, the Internet and appropriatemotorist and other organizations.

The Commonwealth offers rebates to consumers for the initial purchase of hybrid electric

vehicles. These incentives may help vehicle manufacturers meet their obligations underthe

Program.

Paperwork Requirements

No additional paperwork requirements will be imposed by the final-form rulemaking; the

Program already contains paperwork requirements. When the Program is implemented,

vehicle manufacturers will be required to submit paperwork demonstrating compliance with

the emission standards and other requirements of the Program. Motor vehicle dealers,

leasing and rental agencies and other registrants and persons seeking title of new motorvehicles must demonstrate to the DOT’s Bureau of Motor Vehicles that new vehicles subjectto the Program are those certified by California.

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savings to facilities that permanently achieve or move beyond compliance. This final-form

rulemaking incorporated the following pollution prevention provisions and incentives.

The existing regulations and the final-form rulemaking give vehicle manufacturers the

freedom to select technologies that prevent pollution. Similarly, vehicle manufacturers are

given the freedom to select exhaust treatment technologies to meet the requirements. Air

pollution will be reduced by requiring vehicle manufacturers to produce vehicles that lower

emissions at their source.

I. Sunset Review

These regulations will be reviewed in accordance with the sunset review schedule

published by the Department to determine whether the regulations effectively fulfill the

goals for which they were intended.

J. Regulatory Review

Under section 5(a) of the Regulatory Review Act (71 P. S. § 745.5(a)), on September 21, 2006, the Department submitted a copy of the notice of proposed rulemaking, published at

36 Pa.B. 715, to IRRC and the Chairpersons ofthe House and Senate Committees for

review and comment.

Under section 5(c) ofthe Regulatory Review Act, IRRC and the Committees were

provided with copies ofthe comments received during the public comment period, as well

as other documents when requested. In preparing the final-form rulemaking, the Department has considered all comments from IRRC, the House and Senate Committees and the public.

Under section 5.l(j.2) of the Regulatory Review Act (71 P. S. § 745.5a(j.2)), on November 1, 2006, the final-form rulemaking was deemed approved by the House and

Senate Committees. Under section 5.1(e) ofthe Regulatory Review Act, IRRC met on

November 2, 2006, and approved the final-form rulemaking.

K. Findings

The Board finds that:

(1) Public notice of proposed rulemaking was given under sections 201 and 202 ofthe act

ofJuly 31, 1968 (P. L. 769, No. 240) (45 P. 5. § 1201 and 1202) and regulations promulgated thereunder, 1 Pa. Code § 7.1 and 7.2.

(2) A public comment period was provided as required by law and all comments were

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(5) These regulations are necessary for the Commonwealth to achieve and maintain

ambient air quality standards and to satisfy related CAA requirements.

L. Order

The Board, acting under the authorizing statutes, orders that:

(a) The regulations ofthe Department, 25 Pa. Code Chapters 121 and 126, are amended

by amending § 121.1, 126.401, 126.411--126.413, 126.421--126.425, 126.431, 126.432

and 126.441; by deleting § 126.402; and by adding § 126.45 1 to read as set forth in Annex

A, with ellipses referring to the existing text of the regulations.

(b) The Chairperson ofthe Board shall submit this order and Annex A to the Office of

General Counsel and the Office of Attorney General for review and approval as to legality

and form, as required by law.

(c) The Chairperson ofthe Board shall submit this order and Annex A to IRRC and the

Senate and House Committees as required by the Regulatory Review Act.

(d) The Chairperson ofthe Board shall certify this order and Annex A and deposit them

with the Legislative Reference Bureau, as required by law.

(e) This order shall take effect immediately upon publication in the Pennsylvania

Bulletin.

KATHLEEN A. MCGINTY,

Chairperson

(Editor Note: For the text of the order ofthe Independent Regulatory Review

Commission, relating to this document, see 36 Pa. B. 7082 (November 18, 2006).)

Fiscal Note: Fiscal Note 7-3 98 remains valid for the final adoption ofthe subject

regulations.

Annex A

TITLE 25. ENVIRONMENTAL PROTECTION

PART I. DEPARTMENT OF ENVIRONMENTAL PROTECTION

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The definitions in section 3 ofthe act (35 P. S. § 4003) apply to this article. In addition, the following words and terms, when used in this article, have the following meanings, unless the context clearly indicates otherwise:

* * * * *

Dealer--A person who is engaged in the sale or distribution of new motor vehicles or new

motor vehicles to the ultimate purchaser as defined in section 216(4) ofthe Clean Air Act

(42 U.S.C.A. § 7550(4)).

De minimis emission increase--An increase in actual or potential emissions which is

below the threshold limits specified in § 127.203 (relating to facilities subject to special permit requirements).

* * * * *

Fleet average--For the purposes ofmotor vehicles subject to Pennsylvania’s Clean

Vehicles Program requirements, a motor vehicle manufacturer’s average vehicle emissions

of all NMOG emissions from vehicles which are produced and delivered for sale in this

Commonwealth in any model year.

* * * * *

LDT--light-duty truck

(i) For purposes of § 129.52 (relating to surface coating processes), a light-duty truck is a

motor vehicle rated at 8,500 pounds gross vehicle weight or less which is designed

primarily for purposes of transportation or major components ofthe vehicle, including, but

not limited to, chassis, frames, doors and engines.

(ii) For purposes of Chapter 126, Subchapter D (relating to the Pennsylvania Clean

Vehicles Program), a light-duty truck is a motor vehicle rated at 8,500 pounds gross vehicleweight or less which is designed primarily for purposes of transportation of property or is a

derivative of such a vehicle, or is available with special features enabling off-street or offhighway operation and use.

LDV--light-duty vehicle--A passenger car or light-duty truck.

* * * * *

Lease custody transfer--The transfer of produced crude oil or condensate, after processing

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NETS-NO 1Emissions Tracking System--The computerized system used to track NO

emissions from NO affected sources.

NMOG--Nonmethane organic gases.

* * * * *

Offset vehicle--A light-duty vehicle which has been certified by California as set forth in

Title 13 CCR, Division 3, Chapter 1.

* * * * *

York air basin--The political subdivisions in York County of Manchester Township,

North York Borough, Spring Garden Township, Springettsbury Township, West

Manchester Township, West York Borough and City of York.

CHAPTER 126. MOTOR VEHICLE AND FUELS PROGRAMS

Subchapter D. PENNSYLVANIA CLEAN VEHICLES PROGRAM

GENERAL PROVISIONS

§ 126.401. Purpose.

(a) This subchapter establishes a clean vehicles program under section 177 ofthe Clean

Air Act (42 U.S.C.A. § 7507) designed primarily to achieve emission reductions oftheprecursors of ozone and other air pollutants from new motor vehicles.

(b) The subchapter adopts and incorporates by reference certain provisions ofthe

California Low Emission Vehicle Program.

(c) The subchapter also exempts certain new motor vehicles from the Pennsylvania Clean

Vehicles Program.

(d) The Department may not implement or enforce any vehicle emission standard which

is not legally permitted to be regulated under the Clean Air Act or other applicable Federal

or State law or regulation.

§ 126.402. (Reserved).

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(b) The provisions ofthe California Low Emission Vehicle Program, Title 13 CCR,

Division 3, Chapters 1 and 2, are adopted and incorporated herein by reference, and apply

except for the following:

(1) The zero emissions vehicle percentage requirement in Title 13 CCR, Division 3,

Chapter 1, § 1962.

(2) The emissions control system warranty statement in Title 13 CCR, Division 3,

Chapter 1, § 2039.

§ 126.412. Emission requirements.

(a) Starting with the model year 2008, a person may not sell, import, deliver, purchase,

lease, rent, acquire, receive, title or register a new light-duty vehicle, subject to the

Pennsylvania Clean Vehicles Program requirements, in this Commonwealth that has not

received a CARB Executive Order for all applicable requirements ofTitle 13 CCR,incorporated herein by reference.

(b) Starting with the model year 2008, compliance with the NMOG fleetwide average in

Title 13 CCR, Division 3, Chapter 1, § 1961 shall be demonstrated for each motor vehicle manufacturer based on the number of new light-duty vehicles delivered for sale in this

Commonwealth.

(c) Credits and debits for calculating the NMOG fleet average shall be based on the

number of light-duty vehicles delivered for sale in this Commonwealth and may be accrued

and utilized by each manufacturer according to procedures in Title 13 CCR, Division 3,

Chapter 1.

(d) NMOG fleet average credits generated during the 2008, 2009 and 2010 model years

may be applied toward any ofthe model years 2008 through 2010 for the purpose of

demonstrating compliance with subsections (b) and (c). The credits generated during this

period may be applied at full value for any ofthe Model Years 2008--2010.

(e) New motor vehicles subject to this subchapter must possess a valid emissions control

label which meets the requirements ofTitle 13 CCR, Division 3, Chapter 1.

§ 126.413. Exemptions.

(a) The following new motor vehicles are exempt from the Pennsylvania Clean Vehicles

Program requirements of this subchapter:

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(5) A light-duty vehicle granted a National security or testing exemption under section

203(b)(1) ofthe Clean Air Act (42 U.S.C.A. § 7522(b)(l)).

(6) A light-duty vehicle held for daily lease or rental to the general public which is

registered and principally operated outside ofthis Commonwealth. For purposes ofthisparagraph, a light-duty vehicle is deemed to be principally operated outside ofthis

Commonwealth if it is registered outside ofthis Commonwealth in accordance with the

Inter-Jurisdictional Agreement on Apportioning Vehicle Registration Fees developed under

the Intermodal Surface Transportation and Efficiency Act of 1991 (Pub. L. 102-240, 105

Stat. 1914), and known as the International Registration Plan, or a successor plan for

apportioning vehicle registration fees internationally.

(7) A light-duty vehicle engaged in interstate commerce which is registered and

principally operated outside ofthis Commonwealth.

(8) A light-duty vehicle acquired by a resident ofthis Commonwealth for the purpose of

replacing a vehicle registered to the resident which was damaged, or became inoperative,

beyond reasonable repair or was stolen while out ofthis Commonwealth ifthe replacement

vehicle is acquired out ofthis Commonwealth at the time the previously owned vehicle was

either damaged or became inoperative or was stolen.

(9) A light-duty vehicle transferred by inheritance or court decree.

(10) A light-duty vehicle defined as a military tactical vehicle or engines used in military

tactical vehicles including a vehicle or engine excluded from regulation under 40 CFR

85.1703 (relating to application ofsection 216(2)).

(11) A light-duty vehicle titled or registered in this Commonwealth before December 9,

2006.

(12) A light-duty vehicle having a certificate of conformity issued under the Clean Air

Act and originally registered in another state by a resident ofthat state who subsequently

establishes residence in this Commonwealth and upon registration of the vehicle providessatisfactory evidence to the Department of Transportation ofthe previous residence and

registration.

(13) A vehicle transferred for the purpose ofsalvage.(b) To title or register an exempted vehicle, the person seeking title or registration shall

provide satisfactory evidence, as determined by the Department of Transportation,

demonstrating that the exemption is applicable.

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(b) For purposes of complying with subsection (a), new vehicle certification testing determinations and fmdings made by CARB are applicable and shall be provided by motor vehicle manufacturers to the Department upon a written request.

§ 126.422. New motor vehicle compliance testing.

(a) Prior to being offered for sale or lease in this Commonwealth, new motor vehicles

subject to the Pennsylvania Clean Vehicles Program requirements ofthis subchapter must be certified as meeting the motor vehicle requirements of Title 13 CCR, Division 3, Chapter 1, § 1961, as determined by New Vehicle Compliance Testing, conducted in accordance

with Title 13 CCR, Division 3, Chapter 2.

(b) For purposes of complying with subsection (a), new vehicle compliance testing determinations and fmdings made by CARB are applicable and shall be provided by motor vehicle manufacturers to the Department upon a written request.

§ 126.423. Assembly line testing.

(a) Each manufacturer of new motor vehicles subject to the Pennsylvania Clean Vehicles

Program requirements ofthis subchapter, certified by CARE and sold or leased in this

Commonwealth, shall conduct inspection testing and quality audit testing in accordance

with Title 13 CCR, Division 3, Chapter 2.

(b) For purposes of complying with subsection (a), inspection testing and quality audit

testing determinations and findings made by CARE are applicable and shall be provided bymotor vehicle manufacturers to the Department upon a written request.

(c) If a motor vehicle manufacturing facility which manufactures vehicles for sale in this

Commonwealth certified by CARB is not subject to the inspection testing and quality audit testing requirements of CARE, the Department may, after consultation with CARB, require testing in accordance with Title 13 CCR, Division 3, Chapter 2. Upon a manufacturer’s

written request and demonstration of need, functional testing under the procedures incorporated in Title 13 CCR, Division 3, Chapter 2, of a statistically significant sample,

may substitute for the 100% testing rate required in Title 13 CCR, Division 3, Chapter 2, with the written consent of the Department.

§ 126.424. In-use motor vehicle enforcement testing.

(a) For purposes of detection and repair ofmotor vehicles subject to the Pennsylvania Clean Vehicles Program requirements which fail to meet the motor vehicle emission

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emission test conducted under 67 Pa. Code Chapter 177 (relating to enhanced emission

inspection).

§ 126.425. In-use surveillance testing.

(a) For purposes oftesting and monitoring the overall effectiveness ofthe Pennsylvania

Clean Vehicles Program in controlling emissions, the Department may conduct in-usesurveillance testing after consultation with CARB.

(b) For purposes of program planning and analysis, in-use surveillance testing

determinations and fmdings made by CARB are applicable and shall be provided by motor

vehicle manufacturers to the Department upon a written request.

(c) The results ofin-use surveillance testing conducted under this section will not affect

the result of any emission test conducted under 67 Pa. Code Chapter 177 (relating to

enhanced emission inspection).

MOTOR VEHICLE MANUFACTURERS’ OBLIGATIONS

§ 126.43 1. Warranty and recall.

(a) A manufacturer of new motor vehicles subject to the Pennsylvania Clean Vehicles

Program requirements ofthis subchapter which are sold, leased, offered for sale or lease,titled or registered in this Commonwealth, shall warrant to the owner that each vehicle must

comply over its period of warranty coverage with the requirements of Title 13 CCR,

Division 3, Chapter 1, § 2035--2038, 2040 and 2041.

(b) Each motor vehicle manufacturer shall, upon a written request, submit to the

Department failure of emission-related components reports, as defined in Title 13 CCR,Division 3, Chapter 2, for motor vehicles subject to the Pennsylvania Clean VehiclesProgram in compliance with the procedures in Title 13 CCR, Division 3, Chapter 2. For

purposes of compliance with this subsection, a manufacturer may submit copies ofthe

reports submitted to CARB.

(c) For motor vehicles subject to the Pennsylvania Clean Vehicles Program, any

voluntary or influenced emission-related recall campaign initiated by any motor vehiclemanufacturer under Title 13 CCR, Division 3, Chapter 2, shall extend to all motor vehicles

sold, leased, offered for sale or lease, titled or registered in this Commonwealth that would

be subject to the recall campaign ifsold, leased, offered for sale or lease or registeid as a

new motor vehicle in California, unless within 30 days of CARB approval ofthe recall

campaign, the manufacturer demonstrates, in writing, to the Department’s satisfaction that

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new motor vehicle in California, unless within 30 days ofissuance ofthe CARB action, the

manufacturer demonstrates, in writing, to the Department’s satisfaction that the action is not

applicable to vehicles sold, leased, offered for sale or lease, titled or registered in this Commonwealth.

§ 126.432. Reporting requirements.

(a) For the purposes of determining compliance with the Pennsylvania Clean Vehicles

Program, commencing with the 2008 model year, each manufacturer shall submit annually

to the Department, within 60 days ofthe end of each model year, a report documenting the total deliveries for sale of vehicles in each test group over that model year in this Commonwealth.

(b) For purposes of determining compliance with the Pennsylvania Clean Vehicles

Program, each motor vehicle manufacturer shall submit annually to the Department, by March 1 ofthe calendar year following the close ofthe completed model year, a report of the fleet average NMOG emissions of its total deliveries for sale of LDVs in each test group for Pennsylvania for that particular model year. The fleet average report, calculating compliance with the fleetwide NMOG exhaust emission average, shall be prepared according to the procedures in Title 13 CCR, Division 3, Chapter 1.

(c) Fleet average reports must, at a minimum, identify the total number of vehicles,

including offset vehicles, sold in each test group delivered for sale in this Commonwealth,

the specific vehicle models comprising the sales in each state and the corresponding certification standards, and the percentage of each model sold in this Commonwealth in

relation to total fleet sales.

(d) Compliance with the NMOG fleet average for the 2008, 2009 and 2010 model years

must be demonstrated following the completion ofthe 2010 model year.

MOTOR VEHICLE DEALER RESPONSIBILITIES

§ 126.441. Responsibilities of motor vehicle dealers.

A dealer may not sell, offer for sale or lease, or deliver a new motor vehicle subject to this subchapter unless the vehicle has received the certification described in § 126.421 and 126.422 (relating to new motor vehicle certification testing; and new motor vehicle

compliance testing), and conforms to the following standards and requirements contained in Title 13 GJOR, Division 3, Chapter 2, § 2151:

(1) Ignition timing is set to manufacturer’s specification with an allowable tolerance of

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