State of California AIR RESOURCES BOARD

Resolution 04-43 December 9, 2004 Agenda Item No.: 04-11-4

WHEREAS, sections 39600 and 39601 of the Health and Safety Code authorize the Air Resources Board (the Board or ARB) to adopt standards, rules and regulations and to do such acts as may be necessary for t he proper execution of the powers and duties granted to and imposed upon the Board by law; WHEREAS, sections 43013, 43101, and 43104 of the Health and Safety Code authorize the Board to adopt emission standar ds and test procedures to control air pollution caused by motor vehicles; WHEREAS, section 43013(a) of the Health and Safety Code authorizes the Board to adopt and implement motor vehicle emi ssion standards and in-use performance standards for the control of air contaminants and sources of air pollution which the Board has found to be necessary, cost-effective and technologically feasible, unless preempted by federal law; WHEREAS, section 43013(b) of the Health and Safety Code requires the Board, consistent with section 43013(a), to adoptstandards and regulations for off-road or nonvehicle engine categories; WHEREAS, section 43013(c) of the Health and Safety Code requires the Board, prior to adopting standards and regulations for farm equipment, to find and determine that the standards and regulations are necessary, cost-e ffective, and technologically feasible; WHEREAS, section 43013(c) of the Health and Safety Code requires the Board to also consider the technological effects of em ission control standards on the cost, fuel consumption, and performance characte ristics of mobile farm equipment; WHEREAS, section 43018 of the Health and Safety Code directs the Board to endeavor to achieve the maximum degree of emission reduction possible from vehicular and other mobile sources in order to accomplish the attainment of the st ate ambient air quality standards at the earliest practicable date; WHEREAS, in 2000, the Board approved regu lations to further control exhaust emissions from new off-road comp ression-ignition (diesel) engines;Resolution 04-43 -2-

WHEREAS, exhaust emissions from off-road diesel engines continue to be a significant source of air pollution; WHEREAS, it has since become evident thatfurther reductions of oxides of nitrogen (NOx), particulate matter (PM), and non-me thane hydrocarbon (NMHC) emissions from new off-road engines operating within t he state are feasible and imperative; WHEREAS, in 2004, the United States En vironmental Protection Agency (U.S. EPA) promulgated new emission standards for nonroad diesel engines, along with changes to the existing test procedures, certific ation requirements, and compliance options including the renewal of the federal aver aging, banking, and trading program, and the equipment manufacturer flexibility program for the Tier 4 regulation; WHEREAS, in conjunction with a public hearing notice dated October 12, 2004, and errata posted October 26, 2004, the staff has proposed that the Board adopt amendments to the California Emissions Re gulation for Compression-Ignition Engines and Equipment, and the related compliance and test procedure sections of title 13, California Code of Regulations; WHEREAS, section 209(e)(1) of the federal Clean Air Act preempts the State of California and the local air districts from adopting or enforcing emission standards and other requirements relating to the control of emissions (other than in-use operational controls) from new nonroad engines smaller t han 175 horsepower primarily used in farm or construction equipment or vehicles; WHEREAS, section 209(e)(2) of the federal Clean Air Act requires that California seek authorization from the U.S. EPA prior to enforcing emission standards or other requirements relating to the control of emi ssion (other than in-use operational controls) from nonroad engines (of which off-road dies el engines are a subpart) not otherwise preempted by section 209(e)(1); WHEREAS, ARB staff and the U.S. EPA have worked together to develop a harmonized national program in order to attain the air quality goals of each agency; WHEREAS, the proposed amendments to existi ng California emission standards, compliance requirements, and test procedures are designed to harmonize as closely as possible with the federal progr am to minimize administr ative burden, complexity, and expenses that could result from differentstate and federal requi rements, while still maintaining the emission reduction be nefits of the Ca lifornia program; WHEREAS, the coordinated efforts of ARB, U.S. EPA, and the engine manufacturers to introduce lower-emitting off-road diesel engines nationwide will resultin substantial air quality benefits in California and the rest of the country;Resolution 04-43 -3-

WHEREAS, the California Envi ronmental Quality Act and Boar d regulations require that no project which may have significant adver se environmental impacts be adopted as originally proposed if feasible alternatives or mitigation measures are available to reduce or eliminate such impacts; WHEREAS, the Board has considered the effects of the prop osed standards on the economy of the state; WHEREAS, a public hearing and other administrative proceedings have been held in accordance with the provisions of Chapter 3.5 (commenci ng with section 11340), Part 1, Division 3, Title 2 of the Government Code; WHEREAS, the Board finds that: Despite advances in reducing emissions from motor vehicles, California still has the most severe air pollution problem in the United States; Reducing the public’s exposure to PM emissions from diesel exhaust is of paramount importance for the protection of public health;

To meet federal and California Clean Ai r Act emissions reduction requirements, ARB must continue to seek proportional and incremental reductions from all sources under its authority, incl uding off-road diesel engines; Adoption of emission standards and requi rements for durability, maintenance intervals, recordkeeping, warranties, testprocedures, certification test fuel, and engine useful life in alignment with U.S. EPA emission standards and requirements will simplify the processe s of certification and production line testing for industry; Adoption of Not-To-Exceed limits will guarantee the emissions performance of Tier 4 engines in-use during all modes of operation, not just those encountered during certification testing; Allowing engine manufacturers to participat e in the federal Tier 4 Averaging, Banking, and Trading (ABT) program will prov ide industry with gr eater flexibility in complying with the emission standards while achieving the overall emission reduction goals of the pr oposed amended regulations; Adoption of Tier 4 implement ation flexibilities, in a ccordance with the allocations provided under the federal program, will provide equipment manufacturersResolution 04-43 -4-

additional flexibility in the transition to more stringent emission standards and newer technologies; Allowing industry to voluntarily certif y engines to optional emissions standards (“Blue Sky Series”) that are more st ringent than required and to promote that more stringent certification levels fo r equipment can aid consumers seeking lower emitting engines and can aid in reducing emissions; Providing engine and equipmentmanufacturers with incentives to produce and use cleaner engines earlier than required can aid in the generation of additional short term emission reductions while preserving long-term emission and health benefits; Allowing California to continue adminis tering its own in-use compliance program for nonpreempt off-road diesel engines has the potential to provide a greater degree of emission benefits by allowing the State to addr ess violations of the regulation in an appropriate and timely manner independently, or in cooperation with, the federal government; The economic and cost impacts of the amendments have been analyzed as required by California law, and the c onclusions and supporting documentation for this analysis are set forth in t he Initial Statement of Reasons; The cost of control under the proposed regulations would be at worst case about $0.58 per pound of ozone precursors reduced and $7.55 per pound of PM reduced;

The cost-effectiveness values cited above are consistent with the values applicable to California, based on the U. S. EPA’s estimates for its Tier 4 rulemaking, and similar to the values associated with other control measures adopted in furtherance of Health & Safety Code sections 43013 and 43018; and The proposed off-road diesel regulati ons – emission standards, compliance requirements, and test procedures – are necessary, appropriate, and technologically feasible to carry out t he purposes of the state and federal clean air laws; and Pursuant to section 43013(c) of the Heal th and Safety Code, the proposed offroad diesel regulations are necessary, co st-effective, and technologically feasible for farm equipment, and the Board consi dered the technological effects of emission control standards on the cos t, fuel consumption, and performance characteristics of mobile farm equipment.Resolution 04-43 -5-

WHEREAS, the Board further finds that: The proposed amendments to the regulat ions and procedures will adequately enforce the emissions standards and test procedures of the off-road compression-ignition engine regulations , and will independently help to reduce emissions from such engines; The proposed amendments to the regulations establish uniform, consistent, and reasonable emission standards for off-road diesel engines and equipment; Adoption of the proposed standards and te st procedures, along with nonroad engine regulations promulgated by the U.S. EPA, will result in a reduction of approximately 72.8 tons per day of NOx, 3.0 tons per day of NMHC, and 6.9 tons per day of PM emissions statewide in 2020; The amended regulations will have no adverse impact on the environment; The amended regulations will not affect the creation or e limination of jobs within the State of California, the creation of new busine sses or the elimination of existing businesses within California, the expansion of businesses currently doing business within California, or the ability of California businesses to compete with businesses in other states; The regulatory action will have no notic eable impact on California businesses, including small business, because the costs of complying with the federal nonroad regulation already take into accountthe costs to comply in California; and

No alternative considered would be more effective in carrying out the purpose for which the regulation is proposed or woul d be as effective or less burdensome to affected private persons. NOW, THEREFORE, BE IT RESOLVED t hat the Board hereby approves amendments to sections of title 13, California Code of Regulations, and the documents incorporated by reference therein: sections and subs ections of 2420, 2421, 2423, 2424, 2425, and 2427; and “California Exhaust Emission St andards and Test Procedures for New 1996 and Later Tier 1, Tier 2, and Tier 3 O ff-Road Compression-Ignition Engines,” and “California Exhaust Emission Standards and Test Procedures for New 2000 and Later Tier 1, Tier 2, and Tier 3 Off-Road Compression-Ignition Engines,” which are incorporated by reference in section 2423, and approves "California Exhaust Emission Standards and Test Procedures for New 2008 and Later Tier 4 Off-Road Compression-Ignition Engines" to be incorpor ated by reference in section 2421, all as set forth in Attachment A hereto.Resolution 04-43 -6-

BE IT FURTHER RESOLVED that the Board di rects the Executive Officer to adopt the above amendments as set forth in Attachment A hereto, with the modifications set forth in Attachment B hereto and such other conforming modifications and technical amendments as may be appropriate, after ma king the modified regulatory language and additional supporting documents and informati on available for public comment for a period of 15 days, provided that the Execut ive Officer shall consider such written comments regarding the modification and additional supporting documents and information as may be submitted during this per iod, shall make modifications as may be appropriate in light of the comments received, and shall present the regulations to the Board for further consideration if s he determines that this is warranted.

BE IT FURTHER RESOLVED that the Board hereby determines that the regulations approved herein will not cause the Californi a emission standards, in the aggregate, to be less protective of public health and we lfare than applicable federal standards.

BE IT FURTHER RESOLVED that the Board hereby finds that separate California emission standards and test procedures ar e necessary to meet compelling and extraordinary conditions.

BE IT FURTHER RESOLVED that the Board finds that the California emission standards and test procedures as approved herein will not cause the California requirements to be inconsist ent with federal Clean Air Act section 209(e)(1) and raise no new issues affecting previous authoriz ations of the Administrator of the U.S. EPA issued pursuant to federal Clean Air Act section 209(e)(2).

BE IT FURTHER RESOLVED that the Exec utive Officer shall, upon adoption, forward the regulations to the U.S. EPA with a request for authorizati on or confirmation that the regulations are within the scope of an existi ng authorization pursuant to Federal Clean Air Act section 209(e)(2), as appropriate. I hereby certify that the above is a true And correct copy of Resolution 04-43, as Adopted by the Air Resources Board.

___________________ ____________ Lori Andreoni, Clerk of the BoardResolution 04-43 December 9, 2004

Identification of Attachments to the Resolution

Attachment A: Proposed amendments to the Ca lifornia Off-Road Emissions Regulation for Compression-Ignition Engines and Equipment, as set forth in Attachments 1-4 to the Initial Statement of Reasons, released October 22, 2004

Attachment B: Staff’s Suggested Changes to the Original Proposal (distributed at the Board hearing on December 9, 2004)