California State Nonroad Engine and Vehicle Pollution Control Standards; Decision ofthe Administrator; Authorization ofTier II Emission Standards for Marine InboardiSterndrive Spark-Ignition Engines

I. INTRODUCTION By this decision, issued under section 209(e) ofthe CleanAir Act, as amended (the "Act"), 42 U.S.C. section 7S43(e), the Environmental Protection Agency ("EPA") today is authorizing the State ofCaliforniato enforce regulations which establish a second tier (Tier II) of standards for spark-ignition inboard and sterndrive 

### (IBISD) marine engines. This action is the resolution ofEPA'sprior deferral ofauthorization ofthese Tier II 

### IB/SD standards, announced at the time EPA granted California authorization for its marine spark ignition engine regulations for outboard marine engines, personal watercraft engines, and Tier I ofthe California 

### IB/SD marine engine emission standards. l The CaliforniaAir Resources Board ("CARB")requested EPA authorization ofthe 

### IB/SD marine engine emission standards by letter dated March 2, 2004.2 As required by the Act, EPA offeredthe opportunity for a public hearing and requested public comments onthese new standards, as well as on earlierrequests for authorization ofoutboard marine engine standards and personal watercraft engine standards, bypublication ofa Federal Register notice to such effect on January 12,2005.3 EPA received a request for a hearing from the National Marine

1 72 FR 14546 (March 28, 2007). 2 Letter from Catherine Witherspoon, Executive Officer, CARB to Administrator, EPA regarding its Request for Authorization to Enforce California=s Emission Standards and Test Procedures for New 2003 and later Spark­ Ignition Inboard and Sterndrive Marine Engines, dated March 2, 2004 ("CARB IB/SD Request letter"), Docket Entry EPA-HQ-OAR-2004-0403-0018. The outboard marine engine and personal watercraft engine authorization requests were in earlier letters to EPA; see Docket Entries EPA-HQ-OAR-2004-0403-0002 and 0003. 3 70 FR 2151 (January 12, 2005). This hearing also covered two earlier CARB authorization requests for its marine spark-ignition outboard and personal watercraft engines. 

### 1Manufacturers Association (NMMA),4 and a hearing was held on February 28, 2005. 5 In addition, EPA received written comments from several commenters, including the U.S. Coast Guard, the Manufacturers ofEmissions Controls Association, NMMA, several engine manufacturers, Senator Herb Kohl (D-WI), SenatorJames Inhofe (R-OK), and a supplemental submission from CARB responding to matters raised at the public hearing. 6 While CARB and MECA supported this authorization, all other commenters were concerned whetherthe catalysts needed for marine engines to comply withthe CARB Tier II standards were safe and durable for saltwater operation. After ourreview ofthe information submitted by CARB in its requests, and the information presentedto the Agency atthe public hearing and in the comments received after the hearing, EPA granted authorization for the CARB emission regulations for marine spark-ignition outboard and personal watercraft engines in their entirety, and for the first Tier ofthe CARB regulations covering 

### IB/SD engines. 7 Forthe Tier I standards (as well as for the outboard and personal watercraft engines), EPA determined that CARB had successfully shown that these standards weretechnologically feasible, which is necessaryto meetthe authorization criterion of consistency with section 202(a). Regarding the Tier II 

### IB/SD emission standards, EPAdeferred authorization ofthese standards until the conclusion ofthen-ongoingjointtesting (by CARB, EPA, the U.S. Coast Guard andthe marine industry), to evaluate thetechnological feasibility of boththe CARB Tier II 

### IB/SD standards and Federal 

### IB/SD standards which, at thattime, were

4 See Letter from John McKnight, National Marine Manufacturers Association (NMMA), to Robert M. Doyle, USEPA, dated January 27, 2005, Docket Entry EPA-HQ-OAR-2004-0403-0030. 5 Written statements presented at this hearing and the hearing transcript appear in the Docket as Docket Entries 2004-0403-0031 through EPA-HQ-OAR-2004-0403-0036. 6 These comments can be found in the Docket as Docket entries EPA-HQ-OAR-2004-0037 through EPA-HQ-OAR2004-0047. 772 FR 14546 (March, 28, 2007). 2expected to be proposed in 2007 (and were proposed in May 2007).8 Shortly after the EPA IB/SD proposed standards were published, the NMMA wrote to EPA stating that "atthis stage ofcatalyst development, there is little orno additional datato be obtained by completingthe Goint testprogram)

.... NMMA agrees thatEPA and CARB can cancel the saltwatertestprogram." Additionally, NMMA dropped its objectionto the "waiver" ofthe CARB standards because "one manufactureris already in production with catalysts, and the others will be ready to meet the CARB standard in 2008.,,9 EPA issued its final 

### IB/SD standards in October 2008, after determining (among other things) that the use ofcatalysts on Marine IB/SD engines was technologically feasible with regard to safety and durability. 10 After ourreview ofthe information submitted by CARB in its 

### IB/SD request, the informationpresentedto the Agency at the public hearing and in the comments received after the hearing, and in the information received by EPA afterthe initial authorization, EPA grants authorization for CARB to enforce the second tier ofthe regulations for 

### IB/SD engines which set

a level of5.0 glkW-hrHC plus NOx and are implemented by a phase- in beginning with 45% of manufacturers' sales in 2007, 75% in 2008, and 100% in 2009 and beyond. Section 209(e)(1) ofthe Act addresses the permanent preemption ofany State, orpolitical subdivision thereof, from adopting or attempting to enforce any standard or other requirement relating to the control ofemissions for certain new nonroad engines orvehicles. I I Section

8 The proposed standards were published at 72 FR28097 (May 18, 2007). 9 Letter from John McKnight, NMMA to Robert Doyle, EPA, dated May 11, 2007, Docket Entry EPA-HQ-OAR2004-0403-0042. 10 The NPRM is found at 72 FR 14546 (March 28, 2007), and the final regulations at 73 FR59034 (October 8, 2008). 11 Section 209(e)(1) ofthe Act provides: No State or any political subdivision thereofshall adopt or attempt to enforce any standard or other requirementrelating to the control ofemissions from either ofthe following new nonroad engines or nonroad vehicles subjectto regulation under this Act3209(e)(2) requires the Administrator, after notice and opportunity for public hearing, to authorize Californiato enforce standards and otherrequirements relating to emissions control ofnew engines not listed under section 209(e)(1), ifCaliforniameets certain criteria. 12 On July 20, 1994, EPA promulgated a regulationthat sets forth, among otherthings, the criteria, as found in section 209(e)(2), by which EPA must consider any California authorizationrequests for new nonroad engine or vehicle emission standards (section 209(e) rules).13 This regulation, codified at40 CFRPart 1074 provides: (a) The Administrator will grant the authorization ifCaliforniadetermines that its standards will be, inthe aggregate, at least as protective ofpublic health and welfare as otherwise applicable Federal standards. (b) The authorization will not be granted ifthe Administrator finds that any ofthe following are true: (1) California's determination is arbitrary and capricious; (2) California does notneed such standards to meet compelling and extraordinary conditions; or (3) The California standards and accompanying enforcement procedures are not consistent with section 209 ofthe ACt. 14 As stated in the preambleto the section 209(e) rule, EPAhas interpretedthe requirement regarding whether "California standards and accompanying enforcement procedures are not consistent with section 209" to mean that California standards and accompanying enforcement procedures must in particularbe consistent with section 209(a), section 209(e)(1), and section 209(b)(1)(C), as EPA has interpreted that subsection in the context ofmotor vehicle waivers. I 5

(A) New engines which are used in construction equipment orvehicles or used in farm equipment or vehicles and which are smallerthan 175 horsepower. (B) New locomotives ornew engines used in locomotives. Subsection (b) shall not apply for purposes ofthis paragraph. 12 As discussed above, states are permanently preempted from adopting orenforcing standards relating to the control ofemissions from new engines listed in section 209(e)(I). 13 See 59 FR 36969 (July 20, 1994). These regulations were subsequently moved to 40 CFRPart 1074 and modified slightly. See 73 FR59379 (October 8, 2008). 14See40CFR§ 1074.105(b), 15 See 59 FR 36969,36983 (July 20, 1994). 4In order to be consistent with section 209(a), California's nonroad standards and enforcement procedures must not apply to newmotor vehicles ornew motor vehicle engines. Secondly, California's nonroad standards and enforcementprocedures must be consistent with section 209(e)(l), which identifies the categories permanentlypreempted from state regulation. 16 California's nonroad standards and enforcement procedures would be considered inconsistent with section 209 ifthey applied to the categories ofengines or vehicles identified and preempted from State regulation in section 209( e)(1). Finally, because California's nonroad standards and enforcementprocedures mustbe consistent with section 209(b)(l)(C), EPA will review nonroad authorization requests under the

same "consistency" criteriathat are applied to motor vehicle waiverrequests. Cnder section 209(b)(1)(C), the Administrator shall not grant California a motor vehicle waiver ifshe finds that California's "standards and accompanying enforcement procedures are not consistent with section 202(a)" ofthe Act. Previous decisions granting waivers ofFederal preemption for motor vehicles have stated that State standards are inconsistent with section 202(a) ifthere is

]6 CAA section 209(e)(I); see40 CFR § 1074.10, which provides in applicable part: (a) States and localities are preempted from adopting or enforcing standards or other requirements relating to the control ofemissions from new engines smallerthan 175 horsepower that are primarily used in farm or construction equipment or vehicles, as defined in this part. For equipmentthat is used in applications in addition to farming orconstruction activities, ifthe equipment is primarily used as farm andlor construction equipment or vehicles (as defined in this part), it is considered farm or construction equipment orvehicles. (b) For nonroad engines or vehicles otherthan those described in paragraph (a) ofthis section, States and localities are preempted from enforcing any standards or otherrequirements relating to the control ofemissions from nonroad engines or vehicles except as provided in subpart B ofthis part. 40 CFR § 1074.5 provides definitions ofterms used in § 1074.10 and states in applicable part: Construction equipment or vehicle means any internal combustion engine-powered machine primarily used in construction and located on commercial construction sites. Farm Equipment or Vehicle means any internal combustion engine-powered machine primarily used in the commercial production andlor commercial harvesting offood, fiber, wood, or commercial organic products or for the processing ofsuch products for further use on the farm. Primarily used means used 51 percent ormore. 

### 5inadequate lead time to permitthe development ofthe necessary technology giving appropriate consideration to the cost ofcompliance within thattime period or ifthe Federal and State test procedures impose inconsistent certification requirements. 17 With regard to enforcement procedures accompanying standards, EPA must grant the requested authorization unless it finds that these procedures may cause the California standards, inthe aggregate, to be less protective ofpublic health and welfare thanthe applicable Federal standards promulgatedpursuant to section 213(a), orunless the Federal and California certificationtest procedures are inconsistent. 1s Once California has received an authorization for its standards and enforcement procedures for a certain group orclass ofnonroad equipment engines or vehicles, it may adopt other conditions precedent to the initial retail sale, titling orregistration ofthese engines or vehicles without the necessity ofreceiving an additional authorization. 19 

### IfCalifornia acts to amend a previously authorized standard oraccompanying enforcementprocedure, the amendment maybe considered within the scope ofa previously granted authorizationprovided that it does not undermine California=s determination that its standards inthe aggregate are as protective ofpublic health and welfare as applicable Federal standards, does not affect the consistency with section 209 ofthe Act, and raises no new issues

17 To be consistent, the California certification procedures need not be identical to the Federal certification procedures. California procedures would be inconsistent, however, ifmanufacturers would be unable to meetboth the state and the Federal requirement with the sametest vehicle in the course ofthe sametest. See, e.g., 43 FR 32182 (July 25, 1978). 18 See, e.g., Motor andEquipment ManufacturersAssociation, Inc. v. EPA, 627 F.2d 1095, 1111-14 (D.C. Cir. 1979), cert. denied, 446 U.S. 952 (1980) (MEMA I); 43 FR 25729 (June 14, 1978). While inconsistency with section 202(a) includes technological feasibility, lead time, and cost, these aspects are typically relevant only with regard to standards. The aspect ofconsistency with 202(a) which is ofprimary applicability to enforcementprocedures (especially testprocedures) is test procedure consistency. 19 See 43 FR 36679, 36680 (August 18, 1978). 6affecting EPA'sprevious authorization detennination?O 

### II. BACKGROUND Inits Marine IB/SD request CARB requested authorizationto enforce California's marine SI regulations affecting inboard and sterndrive engines for model years 2003 and beyond.21 EPA authorized the first tier ofregulations, for model year 2003 through 2008, which set a cap reflecting average emission levels of 16.0 grams per kilowatt hour (g/kW-hr) HC plus NOx whichmanufacturers can meet directly byengine family orbycorporate average. The second tier ofstandards

- the subjectoftoday's authorization sets a level of5.0 glkW-hr HC plus NOx and phases in beginningwith 45% ofmanufacturers' sales in 2007,75% in 2008 and 100% in 2009 and beyond. For 2007 and 2008, all engines subjectto the standard must comply directly withthe standard, with no option for sales weighted-averaging. Besides these new standards, other regulations establish requirements for certification, emission test procedures, emissions warranty, and emission certification labels and consumer/environmental awareness hang tag labels. In addition, the IB/SD regulations require on-board diagnostics for these engines. 

### III. DISCUSSION A. Protectiveness Under section 209(e)(2)(i) ofthe Act, EPA cannot authorize CARB to enforce its Marine Spark-IgnitionEngineregulations ifit finds that CARB was arbitrary and capricious in its

20 See, e.g., 51 FR 12391 (April 10, 1986) and 65 FR 69673,69674 (November 20,2000). The first within-the-scope detennination stated that a CARB request made subsequentto an EPA waiver, "exists within the meaning and intent ofthe waiver granted." 37 FR 14831 (July 25, 1972). 21 Inboard engines include a propeller shaftthat penetrates the hull ofthe marine vessel, while the engine and the remainder ofthe drive unit are internal to the hull ofthe marine watercraft. In sterndrive engines, the drive unit is external to the hull ofthe marine watercraft, while the engine is internal to the hull ofthe marine watercraft. CARB StaffReport, June 8, 2002, atpage 4, Docketentry EPA-HQ-OAR-2004-0403-0023. 7determination that its state standards are, in the aggregate, at least as protective ofpublic health and welfare as applicable Federal standards. Inthe 

### IB/SD Request letter, CARB referenced the determination from the July 2001 CARB meetingthat its 

### IB/SD marine engine standards will not

cause the Californiaemissions, inthe aggregate, to be less protective ofpublic health and welfare than applicable Federal standards. Atthattime, in fact, there were no final or proposed Federal emission standards for 

### IB/SD marine engines. At the time ofthe CARB 

### IB/SD request letter (March 2004), however, EPA had proposed Federal evaporative standards for SI marine engines, including 

### IB/SD engines.22 CARB noted that these proposed standards, iffinalized, would not apply until the model year 2008, and the CARB 

### IB/SD Tier One marine emission standards take effect in model year 2003. In model year 2008, CARB statedthat even ifthere

was a direct comparison ofemission reductions from California's InboardlSterndrive Regulations to reductions from California sales ofinboardlsterndrive meetingthe federal evaporative standards in 2008 and later, California's requirements would achieve substantially greater emission reductions inevery model year at issue. EPA has since issued final Federal evaporative standards for SI marine engines, including 

### IB/SD engines.23 Additionally, since CARB requested this authorization, EPAhas proposed and issued Federal exhaust emission standards for 

### IB/SD marine engines. The Federal standards are basically equivalentto the California

### IB/SD marine emission standards whichwere inplace whenthe Federal standards were proposed, except that the Federal standards were scheduled to

22 In August 2002, EPA proposed permeation and diurnal evaporative standards for fuel systems related to Marine SI engines (67 FR53050, (August 14,2002». EPA finalized otherportions ofthat proposal but chose to delay promulgation ofMarine SI evaporative standards, in orderto obtain more information and perform tests on new technologies related to Marine SI evaporative standards. EPA issued these Marine SI evaporative standards in 2008. 73 FR59194 (October 8,2008). 23 40 CFR § 1045.112, promulgated at 73 FR 59195 (October 8, 2008). 8begin several years after the initial California regulations. Finally, as CARB noted in its comments, no party submitted any information calling into question CARB's protectiveness determination?4 Atthe authorization hearing, there was no testimony from any industry party specifically addressing California'sprotectiveness determination for any ofthethree sets ofstandards. In post-hearing comments, neitherthe NMMA nor any other industry company commenter took opposition to CARB=:s protectiveness determination for these particular standards.25 Based onthe record associated with this request, EPA cannot find that California was arbitrary and capricious in finding that its Marine SI Engine emissionregulations for Tier II of the 

### SD/IB standards, in the aggregate, are at least as protective ofpublic health and welfare as applicable Federal standards. B. Compelling and Extraordinary Conditions Under section 209(e)(2)(ii) ofthe Act and 40 CFR section 85.1605(b)(2), EPA cannot grant California an authorization ifit finds that "California does not need such State standards to meet compelling and extraordinary conditions

..." As noted inthe preamble to the section 209(e) regulations, EPA intends to similarly interpret those parts ofsections 209(b) and 209(e) that are alike?6 Therefore, like we have done historically for motor vehicle waiverrequests, with respect to this part ofsection 209(e), EPA will restrict its inquiry into whether California needs its own nonroad equipment engine control programto meet compelling and extraordinary conditions. In

24 Letter from Catherine Witherspoon, Executive Officer, CARB to Administrator, EPA with post-hearing comments, dated March 28, 2005, page 18, note 3, Docket entry EPA-HQ-OAR-2004-0403-0045. 25 Letter from John McKnight, NMMA to Robert Doyle, EPA, dated March 28, 2005, with attached NMMA comments, page 2, Docket entry EPA-HQ-OAR-2004-0403-0044.

26 See, e.g., 49 FR 18887, 18889-90 (May 31, 1984). 9its 

### lB/SD request letter, CARB noted that California and the South Coast Air Basin, in particular, has experienced historically, and continues to experience, some ofthe worst air quality inthe nation. In the late 1980's, the California Legislature authorized CARB to consider adopting, among other steps, emission standards and regulations for nomoad engines as part ofthe overall state program. CARB responded by adopting emission standards for several types ofnomoad engines, and continuedto find previously uncontrolled nomoad engines, such as Marine SI engines, to be significant emission sources and added regulations covering these engines to its nomoad program. EPA has agreed with CARB, inthese earlier nomoad engine standards requests, that California's continuing extraordinary conditionsjustify California separate Californiaprograms. There was no information submittedby any party at the authorization hearing, or in any ofthe post-hearing comments, disputing CARB's view that ithad met the compelling and extraordinary need criterion ofthe authorization test. Therefore, based onthe record ofthis request, EPA cannot find that Californiadoes not need such state standards to meetthe compelling and extraordinary conditions in the state. 

### C. Consistency with Section 209 As discussed above, the section 209( e) rule states that the Administrator shall not grant authorization to California ifshe finds (among othertests) thatthe "California standards and accompanying enforcementprocedures are not consistent with section 209." EPA has interpretedthe requirementto meanthat California standards and accompanying enforcement procedures mustbe consistent with section 209(a), section 209(e)(1), and section 209(b)(l)(C),

as EPAhas interpreted that subsection in the context ofmotor vehicle waivers. No commenter
10has suggested any other portion ofsection 209 is relevant for this detennination. Thus, this can be viewed as a three-pronged test. 1) Consistency with Section 209(a) Under section 209(a) ofthe Act, EPA cannot authorize CARB to enforce any nonroad standards ifEPA finds that CARB is actually regulating newmotor vehicles ornew motor vehicle engines. This is because section 209(a) prohibits states or any political subdivisions of states from setting emission standards for newmotor vehicle or new motor vehicle engines (modified inturn by section 209(b) which allows Californiato set such standards ifother statutory requirements are met). In its 

### IB/SD request, CARB has statedthat thethese Marine SI regulations do not apply to new motor vehicles ormotor vehicle engines as defined in section 216(2) ofthe Act. Based

onEPA's review ofthe Marine 

### 1B/SD TierII emission standards, EPA agrees that these regulations apply only to nonroad engines and vehicles, and do not apply to motor vehicles or motor vehicle engines. Therefore, EPA finds thatthe Marine 

### IB/SD engine regulations are consistent with section 209(a) ofthe Act. 2) Consistency with Section 209(e)(1) Under section 209(e)(1) ofthe Act, EPA cannot authorize CARB to enforce any nonroad standards ifEPA finds that CARB is actually regulating any nonroad engines or vehicles which

are included in the nonroad categories specifically exempt from all state regulation because of the express prohibition ofthe Act. These specifically prohibited categories are: 1) new engines used in construction equipment orvehicles orin fann equipment orvehicles and which are smallerthan 175 horsepower and 2)new locomotives ornew engines used in locomotives.

11In its IB/SD request, CARB has stated thatthese Marine SI regulations cover engines which are not primarily used in farm and construction equipment ofany kind, much less farm and equipment smallerthan 175 horsepower, and not used innewlocomotives. Based on EPA's review ofthe IB/SD Marine engine emission standards, EPA agrees that these regulations do not apply to the specifically preempted categories ofsection 209( e). Therefore, EPA finds thatthe Marine SI Tier II engine regulations are consistent with section 209(e)(1) ofthe Act. 3) Consistency with Section 209(b) Under section 209(b)(1)(C) ofthe Act, EPA cannot authorize CARB to enforce any nonroad standards ifEPA finds thatthe standards are not consistent with section 202(a) ofthe Act. To determine this consistency, EPA has applied to Californianonroad standards the same test it has used previously for Californiamotor vehicle standards; namely, state standards are inconsistent with section 202(a) ifthere is inadequate leadtime to permitthe development ofthe necessary technology giving appropriate considerationto the cost ofcompliance within that time period or ifthe Federal and State testprocedures impose inconsistent certification requirements?7 Regarding the lead time and costrequirement ofthis test, EPA's review will be guided by the principles found in two key Federal court decisions which applied the requirements ofsection 202(a)(2) to proposed Federal standards: International Harvester v. Ruckelshaus, 478 F.2d 615 (D.C. Cir. 1973) ("International Harvester"), andNational Resources Defense Council v. US EPA, 655 F. 2d 318 (D.C. Cir. 1981) ("NRDC"). Boththese cases basically support the ideathat

27 Tobe consistent, the California certification procedures need not be identical to the Federal certification procedures. California procedures would be inconsistent, however, ifmanufacturers would be unable to meet both the state and the Federal requirement with the same test vehicle in the course ofthe same test. See, e.g., 43 FR 32182 (July 25, 1978). 12the technology needed to comply with a proposed regulation doesn'tneed to be existing when the standards are set, butjustneeds to be reasonably likely to be completed beforethe standards become effective. As CARB notes in its request letters, the Court inNRDC gave EPAthe following roadmap to follow to showthat a regulations meets the lead time requirements ofsection 202(a)(2): We thinkthat the US EPA will have demonstrated the reasonableness ofits basis for prediction ifit answers any theoretical objections to the (projected control technology), identifies the major steps necessary inrefinement ofthe technology, and offers plausible reasons for the believing that each ofthose steps can be completed in the time available.28 a) Technological Feasibility Testimony from NMMA and marine engine manufacturers at the EPA hearing and the comments received after the hearing, focused onthree main issues relative to the technological feasibility ofthe IB/SD Tier II standards: 1) saltwater testing for catalyst feasibility, 2) engine distribution to meetthe 2007 Phase-in, and 3) on-board diagnostics feasibility. These issues will be discussed in turn. i) Saltwater Testing for Catalyst Feasibility For the Tier II standards, first effective in model year 2008, CARB received comment in its 2001 rulemaking from NMMA asking that manufacturers be givenrelieffrom the standards which wouldrequire catalysts because ofconcern over catalyst durability. CARB staff, in the Final Statement ofReasons, responded by stating that it:

... recognizes that some development and adaption work will have to be done to successfully transfer this technology (three-way catalysts and closed-loop electronic air-fuel control) from automobiles to boats. The ARB and US EPA

28 655 F.2d at 331-2. 13have cooperated withNMMA in demonstrating and evaluating catalyst/feedback control onboat engines inthe laboratory. To address concerns aboutpossible catalyst damage inthe marine environment, boattesting was also conducted (on water) to analyzethe causes ofwater ingestion. Staffis planning and organizing a cooperative in-boat demonstration and durability study to evaluate the manufacturers' concerns about catalystdurability and safety. The results should be available by the first Technology Review for inboard and stemdrive engines, scheduled for 2003.29 The Board supportedthe idea offurther testing, and directed the staffto undertake the joint developmental in-watertesting program, directing thatthe program include vessel operation in both fresh and salt water.30 This testing program was performed by the SouthwestResearch Institute (SwRI) from August 2002to September 2004, and included four boats (two inboards andtwo stemdrive), the engine in eachboat equipped with a catalyst. Eachboat accumulated 480 hours ofoperation over a period ofmonths (480 hours was used because this is the useful life for compliance testing inthe CARB IB/SD regulations). In October 2004, the CARB staff presentedthe Board a StaffReport onthe status ofthe testprogram. The StaffReport statedthat the test demonstration showedthat there were no heat-related safety issues that arose during the 480 hours testing for eachboat. Further, regarding durability, three ofthe four engines afterthe 480 hours ofoperation measuredbelowthe CARB TierII standard of5.0 g/kW-hr HC 

### + NOx standard. The fourth engine exceededthe standard by 15%, butthe Report explained the exceedance as a result ofexcessive fuel being deliveredto one engine bank, and one cylinder in that bank having low compression. The excessive fuel, andthe low compression and accompanying incomplete combustion will result in increased HC emissions, and increased oxygen levels inthe exhaust, significantly reducing the catalyst'sNO

### x reduction efficiency.3!

29 CARB Final Statement ofReasons, page 6, Docket entry EPA-HQ-OAR-2004-0403-0012. 30 CARB Resolution 01-03, Docket entry EPA-HQ-OAR-2004-0403-0020. 31 CARB StaffReport

- Status Report on Catalyst Testing ofSpark-Ignition IE/SO Pleasurecraft, Docket Entry 14CARB staffconcluded that "because ofthe successful outcome ofthetest program, (we believe) that the overall feasibility ofthe regulatory requirements have been reinforced." These results, however, were from engines that only were tested in a freshwater lake (Canyon Lake, Texas); the StaffReport stated that "because ofbudget constraints, vessel operation was limited to fresh water operation.,,32 CARB addressed the issue ofsaltwatertesting both at the February 2005 EPAAuthorizationhearing, and in its hearing follow-up comments submitted to the Docket inMarch 2005. At the hearing, CARB told the EPA panel that "staffinformed the Board (at the October 2004 hearing onthe test status report) that a future saltwatertesting program need not necessarily be a repeat ofthe fresh water program, but instead, should focus onexposing catalysts to salt water which could be conducted ina laboratory setting. To summarize the saltwater issue, the technical feasibility ofthe catalysts was first demonstrated in 2001. The Board's decisionto direct the on-water test program was to demonstrate that catalysts were safe and durable inthe marine environment, not to determine technical feasibility).,,33 In comments submitted to EPA after the hearing, CARB referenced testing performed for EPA by SwRI in 2002 which included saltwatertesting. CARB stated that "byremoving the catalyst-equipped engine from the boat and testing it on a dynamometer at the conclusion ofthe US EPA sponsored test program, SwRI confirmed that catalyst operation had not been compromised as a result of

EPA-HQ-OAR-2004-0403-0040. 32 CARE StaffReport Status Report on Catalyst Testing ofSpark-Ignition IB!SD Pleasurecraft, page 3, Docket Entry EPA-HQ-OAR-2004-0403-0040. In comments to the Docket afterthe hearing, CARB also noted that "in consideration oftheresources that were available, ARB and SwRl decided to maximize the testing effort on freshwater to ensure a sufficiently wide range ofdata accumulation, rather than to incorporate saltwatertesting at the expense offewer, and possibly inconclusive teat results." Letter from Catherine Witherspoon, Executive Director, CARE to Administrator, EPA, March 28, 2005 at pages 3-4, Docket entry EPA-HQ-OAR-2004-0403-0039. 33 Hearing Transcript, Testimony ofMike Carter, CARB, page 23, Docket entry EPA-HQ-OAR-2004-0403-0036. 15saltwater operation.,,34 The SwRi testing included only shortperiods ofoperation ofthe boat, not actual operation ofthe boat for a representative useful life period (480 hours). The saltwater testing issue was ofgreat importance to themarine industry parties who presented information atthe EPA hearing. NMMA stated it was concerned about "the problem ofmoving forward withthis rule, when the critical question ofthe technical feasibility ofcatalyst in salt waterhas not been answered. Our concern arises from the obvious fact that a significant number ofthese stern drive inboard boats operate in salt water ... The US Coast Guard and NMMA are nowready, willing and able to work with CARB staffand EPAto conduct salt water testing this summer in orderto determine the technological feasibility ofcatalyst equipped boats in saltwater operation. Only ifsalt watertesting is conducted in the summerof2005 will our members have the necessary salt water safety and durability information to begin producing product for model year2008.,,35 NMMA also submitted for the record an October 2004 letter from the U.S. Coast Guardto CARB atthe completion ofthe CARBISwRI testing stating that "it is nowtimeto focus onthe salt water and 'wintering' phase which may, in ourview, be even

more challengingthanthe fresh waterphase. The Coast Guardremains concerned about the durability ofcatalyst systems andthe effect ofthis durability on the safety inthe marine environment.,,36 A representative from Indmar Products, a marine manufacturer, also offered testimony to emphasize the need for in-water salt watertesting. He explained that "water reversion"- a

34 Letter from Catherine Witherspoon, Executive Director, CARE to Administrator, EPA, March 28,2005, page 3, Docket entry EPA-HQ-OAR-2004-0403-0039. 35 Statement ofJohn McKnight, NMMA, at EPA Marine Rule Authorization Hearing, page 2, Docket entry EPA­ HQ-OAR-2004-0403-0032. 36 Statement ofJohn McKnight, NMMA, at EPA Marine Rule Authorization Hearing, attached letter from Captain S.H. Evans, Chief, Office ofBoating Safety, US Coast Guardto Chairman, CARB, dated October 20, 2004, Docket entry EPA-HQ-OAR-2004-0404-0032. 16**---------------~** ---­

phenomenon where water in the marine engine exhaust system flows back up the tailpipe all the way to the exhaust manifold

- is believed bythe marine manufacturers to harm a catalyst added to the marine exhaust system. He statedthat "the fresh watertest (the SWRI

- CARB testing) did notprove that water reversion was notpresent, but only that any fresh waterthat was exposed to the catalyst did not cause any significant deterioration. Tests (discussed in a 1995 technical paper) showed that catalytic converters that come in contact with salt water will degrade the efficiency due to salt adhering to the catalyst surface

.... Itis absolutely necessary that salt watertesting be conducted to prove technical feasibility and boater safety underthese conditions. Mypersonal experience at General Motors working with all the marine manufacturers leads me to believe that we will have water reversion causing some problems with the catalyst. How severe the problems will be I can only guess until the tests are run.,,37 NMMA and Indmar Products also submitted written comments to EPAto supplement and amplify its hearingtestimony onthe saltwater testing issue. NMMA explained thatthe water present in marine engine exhaust systems is generated bythree sources: condensation, water reversion and water ingestion. Althoughcondensation canbe addressed by heated manifolds, water inversion (explained above) and water ingestion are problematic. (Water ingestion occurs when water is forced up into the exhaust system when a boat is exposedto extended periods of

waves and sloshing.) NMMA noted that, in the SwRl fresh watertesting, some ofthe catalysts showed signs ofphysical deterioration on the outlet face, which canbe caused by water inversion. Also, the tests showed loss in catalytic converter efficiency overthe 480hour period, greaterthan what is experienced inthe automotive context, whichcan be causedby water

37 Testimony ofRichard Waggoner, Indmar Products, Inc., at EPA Marine Rule Authorization Hearing, pages 1-2, Docket entry EPA-HQ-OAR-2004-0404-0033. 17damage from reversion. Regarding water ingestion, NMMA observed that water ingestion can lead to salt accumulation onthe catalyst can lead to plugging ofthe exhaust system which, besides the adverse effect onthe emissionreduction ability ofthe catalyst, could cause exhaust leakage into the boat compartment, and could cause the engine to stop running, both ofthese being "real and legitimate safety issues for boaters and more thanjustifythe need for real world safety tests.,,38 Indmar Products noted that "whentheideato put catalytic converters on marine 

### SD/I engines was proposed Indmar and all otherNMMAmembers believed that the water reversion could harm the catalyst." Like NMMA, Indmar also pointed to possible safety concern ofwater inversion causing salt deposits which could plug the catalysts?9 Beside the comments on saltwatertesting offered byNMMA and Indmar Products, EPA also received additional comments urging EPA to defer any decision onthe authorizationrequest for the IB/SD requirements until the completion and evaluation ofthe saltwatertesting. These letters were received from several NMMAmember company marine manufacturers, from the Unites States Coast Guard, and from U.S. Senators James M. Inhofe and Herb KohL4o As noted earlier, when EPA authorized the CARB Tier One 

### IB/SD standards, it deferred authorization ofthe Tier II standards until the conclusion ofthen-ongoingjoint testing (by CARB, EPA, the U.S. Coast Guard andthe industry), to evaluate the technological feasibility of

38 Letter from John McKnight, NMMA to Robert Doyle, EPA dated March 28, 2005, with attached NMMA comments, pages 14-15, Docket entry EPA-HQ-OAR-2004-0403-0044. 39 Letter from Richard 1. Wagoner, Indmar Products to Robert Doyle, EPA, dated March 28, 2005, with attached comments, Docket entry EPA-HQ-OAR-2004-0403-0046. 40 These comments are the following Docket entries: 2004-0403-0038 U. S. Coast Guard 2004-0403-0039 Senator James M. lnhofe 2004-0404-0040 Marine Power 2004-0404-0041 Pleasure Engine Group 2004-0404-0042 Volvo Penta 2004-0404-0043 Mercury Marine 2004-0404-0047 Senator Herb Kohl 18boththe CARB Tier II 

### IB/SD standards and Federal 

### IB/SD standards which, at that time, were expected to beproposed in2007 (and were proposed in May 2007). Southwest Research Institute ("SwRI") withthe participation ofthe above parties conductedthis saltwater demonstration testing onthree engines with catalysts operating in saltwater for extended period. As summarized by EPA (whenthe EPA 

### IB/SD final standards were published), early in the program, two ofthe three exhaust manifolds (where the catalyst was installed) experienced corrosion in the saltwater environment resulting in water leaks and damage to the catalyst. After rebuilding ofthe manifolds (with guidance from industry experts), additional testing hours were accumulated onthe boats; although the hours did not reach the representative useful life of480 hours, the operation completed showed no visible evidence ofwater inversion or damage to the catalysts.41 After this showing, the NMMA, noted that "thoughthe SwRI tests never proved catalyst feasibility in salt water, our members believe that, at this stage ofcatalyst development, there is little or no additional datato be obtained by completing the tests (i.e., reaching the 480 hour mark), and agreed thatEPA and CARB could stop the test program." Additionally, because its members had developed their owncompliance plans that include designs that appear to withstand saltwater operation, NMMA dropped its prior objections to the CARB waiver request based onthe industry concerns oncatalyst durability.42 CARB, which consistently argued that its standards were technologically feasible for saltwater operation, noted its position "was confirmed by industry'S recent request to voluntarily terminate the saltwater demonstration

41 From preamble discussion in EPA publication ofFinal Rules for Marine IB/SD Engine Emission Standards, 73 FR 59034, 59061-2 (October 8, 2008). 42 Letter from John McKnight, National Marine Manufacturers Association (NMMA), to Robert M. Doyle, USEPA, dated May 11,2007, Docket Entry EPA-HQ-OAR-2004-0403-0044. The NMMA statement on member compliance was borne out by the fact that by October 2008, when EPA published its Final Rule for Marine IB/SD Emission Standards, three marine manufacturers had certified IB/SD engines with CARB. 73 FR59034,59061 (October 8, 2008). 19program ... and the current availability ofcatalyst-equipped saltwater engines inthe marketplace.,,43 Therefore, based onthe record ofthis proceeding regarding catalyst performance in saltwater operation, EPA cannot deny California's authorization based on technological feasibility. ii) Engine Distribution To Meet the 2007 Phase-In Atthe hearing and in almost all the comments received from NMMA member companies, the industry parties basically asserted that the Californiaphase-in ofthe Tier II standards overthe 2007 through 2009 time frame was not realistic. The industry explained that afterthe engine manufacturers sell engines to independentbuyer groups orto custom/independentboat builders, they have no further control over where its engines will end up. Therefore, according to the industry, to meet the CARB standards, manufacturers will be compelled to manufacture their entire lines in 2007 as catalyzed engines, rather than the 45% CARB phase-in requirement.44 To frame this assertion in terms oftechnological feasibility, the manufacturers claimed in 2005 that the standards whichthey do notbelieve canbe determined technologically feasible atthattime because ofthe incomplete saltwatertesting

- the Tier II standards in effecthave no phase-inbecause the manufacturers mustproduce 100% Tier II beginning with MY 2007 due to distribution factors. CARB noted that otherregulated industries will routinely track the California sales and distribution oftheir engines, such as the small off-road SI engines and the large off-road SI engines. In these industries, likethe marine industries, the engine manufacturers do not

43 Letter from James N. Goldstene, Executive Officer, CARB to Administrator, EPA, February 7, 2008, March 28, 2005 at page 2, Docket entry EPA-HQ-OAR-2004-0403-0040. 44 The Tier II regulations for IB/SD engines set a level of5.0 glkW-hr HC plus NOx and are implemented by a phase- in beginning with 45% ofmanufacturers' sales in 2007, 75% in 2008, and 100% in 2009 and beyond. 20manufacture the completed product or equipment that contains the engine, but have taken necessary steps to ensure that their engines meeting California standards are sold in California, and CARB averred that the marine industry can do the same. CARB also noted that the industry did not raise this "de facto national standard" during the 2001 Californiarulemaking, but in fact supported the phase-in beginning in 2007. Nevertheless, CARB continued to work with manufacturers to address these concerns, and in fact amended its regulations to offer more flexibility to manufacturers. The amended regulations offered manufacturers the option to avoid the 45% sales compliance for 2007 ifthey agreed to 100% compliance in 2008 (an increase from the prior 75% requirement), in effect granting manufacturers an additional year ofrelief. These amendments were supported by Industry.45 EPA believes that, with respect to the CARB phase-in ofthe Tier II standards, the industry information provided has not shown that CARB failed to meetthe technological feasibility testhere. CARB has responded successfullyto the industry assertions by showing that it is reasonable to believe thatthe marine manufacturers cantake necessary steps to provide California-compliant engines to the California market in the time frames directed bythe Californiaregulations. Therefore, based on the record ofthis proceeding regarding the CARB phase-in ofthe Tier II standards, EPAcannot deny California's authorization based on technological feasibility. iii) On-Board Diagnostics Feasibility Atthe hearing, industry parties expressed concern about compliance with the CARB OBD-marine (OBD-M) requirements. The NMMArepresentative noted that the post45 Letter from James N. Goldstene, Executive Officer, CARB to Administrator, EPA, February 7, 2008, March 28, 2005 at page 2, Docket entry EPA-HQ-OAR-2004-0403-0040. 21catalyst oxygen sensor that CARB will require "simply will not survive in a marine environment

... members' (experience) to date, and we've done testing onthis

... shows that the life expectancy ofa post-catalyst oxygen sensor is measured in terms ofa few hours, not years." Forthis reason, according to NMMA, "itis critical that the OBD requirements in this Rule be harmonized with whatthe EPA Office ofTransportation and Air Quality has told us they are considering for the EPA stemdrive/inboards rule.,,46 Othermanufacturers supportedthis position. CARB, in its submissionresponding to the issues discussed at the hearing,47 noted that the manufacturers had numerous issues associated withthe OBD requirements initially proposed for this Rule, so CARB revised the requirements substantially during the rulemaking to reduce compliance burdens onthe engine manufacturers. The result was that the manufacturers basically nowhave only a single issue remaining the catalyst monitor durability. CARB has taken steps to address this issue also. First, CARB notes that it redesigned the catalyst monitoring requirements to accommodate "uncomplicated temperature-based algorithms" (although manufacturers would retainthe optionto use oxygen sensors ifpreferred). CARB has identified some technical research onthis method ofcatalyst monitoring for autos, and believes that the technology could be suitable for marine engines because ofthe less-stringent (comparedto autos) catalyst monitoring requirements for the marine engines.48

46Testimony ofJohn McKnight, NMMA, at EPA Marine Rule Authorization Hearing, page 51, Docket entry EPA­ HQ-OAR-2004-0404-0033. 47 Letter from Catherine Witherspoon, Executive Officer, CARE to Administrator, EPA, March 28,2005, Docket entry EPA-HQ-OAR-2004-0403-0040. 48 Letter from Catherine Witherspoon, Executive Officer, CARB to Administrator, EPA, March 28, 2005, at page 5, Docket entry EPA-HQ-OAR-2004-0403-0040. 

### 22Second, CARB cites the results from the 2005 testing conducted by SwRI (for CARB and EPA) showing upstream oxygen sensors and catalysts to be durable for at least 480 hours in marine applications. CARB believes that "itis therefore reasonable that an oxygen sensorplaced betweenthe bricks ofa catalyst (mid-bed) would be protected for from water reversion, and could be used to satisfy the catalyst monitoring requirements ofthe CARB OBD-M regulation.,,49 Finally, CARB believes that some industry members may be mistaken aboutthe scope of the OBD requirements and believe thatthe monitors must detect all failures ofthe catalyst under all operating conditions. CARB stresses thatthe requirements actually provide the manufacturer with a generous amount offlexibility to define a window-of-operation during which the monitor only has to be able to determine ifthe catalyst is operating at a temperature (or oxygen sensor ratio) that correlates to a reasonable increase in emissions. CARB refers to this as a "functional check" meant to verify thatthe catalyst is operational, and not necessarily to verify its performance. 50 Additionally, since the EPA proceeding, CARB continued to workwith manufacturers to address these concerns, and in fact amended its regulations to offer more flexibility to manufacturers. Like it did for the phase-in compliance requirements, CARB delayed the OBDM requirements for manufacturers who chose the optional phase-in compliance, thus giving manufacturers an additional year oflead time.51

49 Letter from Catherine Witherspoon, Executive Officer, CARB to Administrator, EPA, March 28,2005, at page 6, Docket entry EPA-HQ-OAR-2004-0403-0040. 50Letter from Catherine Witherspoon, Executive Officer, CARB to Administrator, EPA, March 28, 2005, Docket entry EPA-HQ-OAR-2004-0403-0040. 5J Letter from Catherine Witherspoon, Executive Officer, CARB, to Administrator, EPA, March 28, 2005, atpage 6, Docket entry EPA-HQ-OAR-2004-0403-0040. 23EPA believes that, withrespect to the OBD-M requirements, the industry information provided has not shownthat CARB failed to meetthe technological feasibility test here. This is because CARB has demonstrated that eitherthe necessary technology presently exists to meet the established standards orhas specifically identified the projected control technology, answered objections raised by the industry regarding that technology, and has explained its

reasons for believingthat each ofthe steps can be competed inthe time available. Withrespect to the technological feasibility ofthe CARB Tier II 

### IB/SD standards, based

onthe record before me, I cannot find that California's standards are inconsistent with section 202(a) ofthe Act, as discussed above. Therefore, I cannot deny California's authorization request for the Tier II 

### IB/SD regulations based ontechnological feasibility. b) Consistency ofTestProcedures As stated earlier, California's standards and accompanying enforcementprocedures would be inconsistent with section 202(a) ifthe Californiatest procedures were to impose certification requirements inconsistent with the Federal test requirements. Such inconsistency

means that manufacturers would be unable to meet boththe California and Federal testing requirements using the same engine or vehicle.52 Regarding the test for consistency ofthe certificationtestprocedures between EPA and CARB for Marine 

### IB/SD engines, CARB stated during this proceeding that the consistency requirements are satisfied because at thattime, there

were no Federal 

### IB/SD certification test requirements against which California=s requirements could be inconsistent.53 EPA has since issued Marine SI 

### IB/SD emission standards including certificationtestprocedures. These EPAtestprocedures for 

### IB/SD engines are generally the

52 See, e,g" 43 FR 32182 (July 25, 1978). 53 CARB IB/SD Request letter, page 22, Docket entry EPA-HQ-OAR-2004-0403-0018. 

### 24same as the EPA test procedures for OB and PWC engines. 54 At the EPAhearing, and inthe post-hearing comments, the industry participants did not object onconsistency grounds to the Californiatestprocedures for IB/SD engines. Therefore, based onthe record before me, I cannot find that California's certification testing procedures are inconsistent with section 202(a), andthus cannot deny CARB's authorizationrequestbased onthis criterion.

54 73 FR 59034,59055 (October 8, 2008). 25

### IV. DETERMINATION The Administrator has delegated to the Assistant Administratorfor Air and Radiation the authority to grant California an authorization, under section 209(e) ofthe Act. Basedupon the above discussion and findings, I cannotmakethe determinations required for a denial ofthis authorization under section 209(e) ofthe Act, and therefore, I authorize Californiato adopt and enforce its regulations for its secondtier ofstandards for marine IB/SD engines, inthe "California Regulations for New 2001 and Later Spark Ignition Marine Engines," Title 13, California Code ofRegulations (CCR) section 2440 et seq., and the testprocedures incorporated byreferenced therein (Marine SI Test Procedures).

in McCarthy stant Administrator Office ofAir and Radiation

26