1



## WAIVER AND AUTHORIZATION REQUEST

SUPPORT DOCUMENT

CALIFORNIA’S REGULATION FOR MOBILE CARGO HANDLING
EQUIPMENT AT PORTS AND INTERMODAL RAIL YARDS

(CHE REGULATION)

Submitted by the California Air Resources Board Pur suant to

Clean Air Act Section 209(b) and 209(e)(2)



## January 29, 20071

I. INTRODUCTION AND BACKGROUND

The California Air Resources Board (ARB or Board) r equests that the Administrator of the U.S. Environmental Protection Agency (U.S. EPA) confirm that certain requirements

of California’s Regulation for Mobile Cargo Handling Equipment at P orts and Intermodal

Rail Yards

( CHE Regulation ) be treated as if they fall within the scope of pr eviously granted waivers and authorizations under Clean Air Act (CAA) section 209(b) and 209(e)(2), 1 and grant a new authorization pursuant to CAA sect ion 209(e)(2) to adopt and enforce some of the elements of the regulation as they apply to nonroad 2 engines. Section II of this document describes the regulatio n in detail, and Section III describes the specifics and rationale for California’s reques t as it applies to the various elements of the regulation.

The Board approved the CHE Regulation at a public hearing on December 8, 2005, by Resolution 05-62 (enclosed herewith). At the direc tion of the Board, after making modifications to the regulation available on June 2 , 2006 for supplemental public comment, ARB’s Executive Officer formally adopted t he CHE Regulation by issuing Executive Order R-06-007 on October 17, 2006. (Bot h the modifications to the regulation and the Executive Order are enclosed her ewith.) The requirements are codified at title 13, California Code of Regulation s (CCR) section 2479. 3 The California Office of Administrative Law approved the regulatio n on December 6, 2006, and it became operative on December 31, 2006.

The regulation was adopted under California’s Air T oxics Program, set forth in Health and Safety Code (HSC) sections 39650 through 39675, and ARB’s general authority to adopt and implement regulations for on- and off-roa d motor vehicles. The Air Toxics Program mandates the identification and control of toxic air contaminants (TACs) in California. The identification phase of the Air To xics Program requires ARB, with participation of other state agencies such as the O ffice of Environmental Health Hazard Assessment, to evaluate the health impacts of, and exposure to, substances and to identify those substances that pose the greatest he alth threat as TACs. The ARB's evaluation is made available to the public and is f ormally reviewed by the Scientific Review Panel (SRP) established under HSC section 39 670. Following ARB's evaluation and the SRP's review, the Board may form ally identify a TAC at a public hearing. Following the identification of a substan ce as a TAC, Health and Safety Code sections 39658, 39665, 39666, and 39667 requir e ARB, with the participation of the air pollution control and air quality managemen t districts (districts), and in consultation with affected sources and interested p arties, to prepare a report on the need and appropriate degree of regulation for that substance.

In 1998, the Board identified diesel particulate ma tter (diesel PM) as a toxic air contaminant with no Board-specified threshold expos ure level. A needs assessment for diesel PM was conducted between 1998 and 2000, whic h resulted in ARB developing a

Risk Reduction Plan to Reduce Particulate Matter Em issions from Diesel-Fueled

1 In particular, the waiver for 2007 and subsequent model year heavy-duty diesel engine standards,

California State Motor Vehicle Pollution Control St andards; Waiver of Federal Preemption; Notice of

Decision , 70 Fed Reg. 50322 (August 26, 2005).

2 In this request, the federal term “nonroad” and th e California term “off-road” are used interchangeab ly.

3 Unless otherwise noted, all section references are to title 13, CCR.2

Engines and Vehicles (Diesel RRP). The Diesel RRP presented information that identified the available options for reducing diese l PM and recommended regulations to achieve further reductions. The scope of the Diese l RRP was broad, addressing all categories of engines, both mobile and stationary.

Once ARB has evaluated the need to regulate a TAC, HSC section 39667 requires that ARB adopt regulations to reduce emissions of the TA C from vehicular sources, such as mobile cargo handling equipment, to the lowest leve l achievable through the application of best available control technology (BACT) or a mo re effective control method, after consideration of cost, risk, environmental impacts, and other specified factors. In adopting the CHE Regulation , the Board considered all of the above.

The CHE Regulation

will reduce emissions of diesel PM and oxides of n itrogen (NOx). The regulation will also result in future reduction s of reactive organic gases because of requirements that accelerate turnover of the equipm ent. Diesel PM emission reductions are needed to reduce the potential cancer risk and other adverse impacts to the people who live in the vicinity of California’s major port s and intermodal rail yards. The CHE Regulation

will provide 865 tons of diesel PM emission reduct ions and 18,633 tons of NOx emission reductions throughout California betwe en the years of 2007 and 2020.

These emission reductions will occur in areas near ports and intermodal rail yards, many of which are non-attainment for the State and federal ambient air quality

standards for PM 10 , PM 2.5 and ozone.

II. SUMMARY OF THE MOBILE CARGO HANDLING REGULATION 4

A. Emission Standards

The CHE Regulation

is designed to use BACT to reduce the general publ ic’s exposure to diesel PM and NOx emissions from mobile cargo ha ndling equipment at ports and intermodal rail yards. Mobile cargo handling equip ment is any engine-propelled vehicle used to handle cargo at ports and intermodal rail f acilities and vehicles used to perform routine and predictable maintenance and repair acti vities and includes, but is not limited to, yard trucks, top handlers, side handlers, rubbe r-tired gantry (RTG) cranes, forklifts,
dozers, and loaders. 5 In addition to required performance standards, th e regulation includes record keeping and reporting requirements that will provide up-to-date information on cargo handling equipment and activit ies and aid in enforcement of the regulation.

4 A detailed discussion of the adopted Mobile Cargo Handling regulation is set forth in the Staff Repor t: Initial Statement of Reasons, a copy of which is en closed herewith.

5 The term “motor vehicle” used herein is more expan sive than the comparable federal term defined at 40 Code of Federal Regulations (CFR) Part 85 § 85.1703 . Under California Vehicle Code §§ 415 and 670, which are referenced in HSC §§ 39039 and 39059, def ine a motor vehicle as any vehicle capable of being propelled down a highway. In California, bot h on-road and off-road vehicles may be classified a s a motor vehicle.3

1. Newly Purchased, Leased, or Rented Equipment and Vehicles

The requirements for newly purchased, leased, or re nted equipment, as well as in-use equipment, affect owners and operators of mobile ca rgo handling equipment, as well as persons who sell, offer for sale, purchase, lease, or rent such equipment for use at ports or intermodal rail yards in California.

The CHE Regulation

requires, beginning January 1, 2007, that engines equipped in newly purchased, leased, or rented (jointly referre d to as newly acquired 6 ) mobile cargo handling equipment/vehicles meet specific performan ce standards. These standards vary depending on the classification of the newly a cquired equipment and vehicles (i.e., whether the engine is used in off-road equipment an d vehicles or registered as on-road motor vehicles), and the availability of certified on-road engines for use in off-road equipment and vehicle applications. The regulation specifically addresses yard trucks that are mobile utility vehicles, generally used of f-road at ports and intermodal rail yard facilities. They are used to carry cargo container s with or without chassis and are commonly referred to as utility tractor rigs, yard tractors, yard goats, yard hostlers, yard hustlers, or prime movers. They are very similar t o heavy-duty on-road truck tractors, except that the majority are equipped with off-road engines.

Some yard trucks are registered to operate on Calif ornia highways. For these vehicles, the regulation requires that if they are newly acqu ired after January 1, 2007, they must be equipped with engines that are certified to the on-road engine emission standards for the model year in which they are newly acquired. 7

For yard trucks that are not registered for on-road operation, the regulation requires that that they have engines that are either certified to the on-road emission standards for the model year in which a yard truck is newly acquired 8 or to the final Tier 4 off-road emission standards for the engine’s rated horsepowe r. 9

For mobile cargo handling equipment other than yard trucks (non-yard trucks), the regulation provides that these vehicles be treated similarly to yard trucks if they are registered for on-road use. That is, if a non-yard truck is newly acquired after January 1, 2007, and if it is registered for on-roa d operation, it must be equipped with an engine that that has been certified to meet the on-road emission standards for the model year in which the non-yard truck mobile cargo handling equipment was newly acquired. 10

If the non-yard truck is not registered for on-road use, its engine must – if technically feasible and available in the market for sale, leas e, or rental – meet one of the following

6 Acquired means the date that a purchase order, lea se, or rental agreement is signed, not the date tha t it arrives to be placed into service.

7 Section 2479(e)(1)(A)1.a., referencing title 13, C CR, § 1956.8. On-road registered yard trucks acqui red in 2007 would be required to have an engine that me ets the on-road emission certification standards fo r 2007 model year engines.

8 Id

. 9 Section 2479(e)(1)(A)1.b., referencing the state a nd federal final Tier 4 off-road certification stan dards set forth respectively at title 13, CCR, § 2423 and 40 CFR Part 89; see also 69 F.R. 38958, 39072-3 (June 29, 2004).

10 Section 2479(e)(1)(B)1.a

.4

two certification standards for the model year in w hich the equipment was newly acquired: the on-road engine certification standar ds or, alternatively, the off-road Tier 4 certification standards for the model year and rate d horsepower of the engine. 11 If neither of the first two options is feasible or ava ilable, the regulation requires the newly acquired non-yard truck be equipped with an engine that meets the most stringent certified off-road engine for the type of vehicle a nd application for the model year in which the vehicle is newly acquired. 12 Additionally, within one year of acquiring the ne w vehicle, the owner or operator must install the hig hest level verified diesel emission control strategy (VDECS) 13 available on the market. If no VDECS becomes avai lable by the end of the one-year period, the owner or operat or must install the highest level

VDECS within six months after one becomes available

. 14

2. In-Use Mobile Cargo Handling Equipment

a. Yard Trucks

The CHE Regulation

requires in-use yard trucks, whether registered or not, to meet performance standards based on BACT by choosing one of three options: (1) meet the 2007 or later model year certified on-road engine s tandards; (2) meet the certified Tier 4 off-road standards; or (3) apply VDECS that reduce emissions to levels that are at least as stringent as diesel PM and NOx emissions of a ce rtified final Tier 4 off-road diesel engine for the same horsepower rating. 15 Additionally, owners and operators are required to follow different compliance schedules f or meeting the in-use performance requirements depending upon the number of non-newly acquired yard trucks in their fleets, the model year of the trucks, whether the t rucks are equipped with on-road or offroad engines, and whether the engines were equipped with VDECS by December 31,

2006. 16 Owners and operators of fleets having three or fe wer vehicles must meet the following schedule:

11 Section 2479(e)(1)(B)1.b.

12 Section 2479(e)(1)(B)1.c.

13 Id. In 2003, ARB adopted Verification Procedure, Warranty and In-Use Complia nce Requirements for In-Use Strategies to Control Emissions from Diesel Engines ( Verification Procedure ), title 13, CCR, §§

2700-2710.

14 Section 2479(e)(1)(B)1.c.

15 Section 2479(e)(2)(A).

16 Section 2479(e)(2)(B), Table 1, Compliance Schedul e for In-Use Yard Truck Fleets of Three or Less..5

Off-road without VDECS Installed by December 31, 2006 Off-road with VDECS Installed by December 31, 2006

Model Year Compliance Deadline Model Year Compliance Deadline

Pre-2003 Dec. 31, 2007 Pre-2003 Dec. 31, 2008

2003 Dec. 31, 2010 2003 Dec. 31, 2011

2004 Dec. 31, 2011 2004 Dec. 31, 2012

2005 Dec. 31, 2012 2005 Dec. 31, 2013

2006 Dec. 31, 2013 2006 Dec. 31, 2014

On-road without VDECS Installed by December 31, 2006 On-road with VDECS Installed by December 31, 2006

Model Year Compliance Deadline Model Year Compliance Deadline

Pre-2000 Dec. 31, 2007 Pre-2000 Dec. 31, 2008

2000 Dec. 31, 2008 2000 Dec. 31, 2009

2001 Dec. 31, 2009 2001 Dec. 31, 2010

2002 Dec. 31, 2010 2002 Dec. 31, 2011

2003 Dec. 31, 2011 2003 Dec. 31, 2012

2004 Dec. 31, 2012 2004 Dec. 31, 2013

2005 Dec. 31, 2013 2005 Dec. 31, 2014

2006 Dec. 31, 2014 2006 Dec. 31, 2015

The regulation provides owners or operators that ha ve installed VDECS prior to December 31, 2006 to delay compliance one year. Fo r example, an owner or operator with a fleet of three or fewer in-use yard trucks w ith pre-2003 model-year certified or non-certified off-road engines, without VDECS, must comply with the in-use performance standards by December 31, 2007. By com parison, the owner or operator of three or fewer pre-2003 in-use vehicles with off -road engines that had VDECS installed before December 31, 2006 has until Decemb er 31, 2008 to comply.

The regulation provides owners or operators of larg er fleets with additional time by allowing them to phase-in compliance over several y ears. 17 The compliance schedule

is set forth below. As with smaller fleets of thre e or less, the compliance dates for fleets of four or more depend upon several factors: the m odel year of the vehicles within the fleet, whether the vehicles are equipped with on-ro ad or off-road engines, and whether the engines have had VDECS installed on or before D ecember 31, 2006. Similar to smaller fleets, owners and operators of fleets of f our or more are provided with an additional year before compliance if their fleets h ave been retrofitted with VDECS. In the first year that a fleet is required to comply, the owner or operator must bring at least

three of its vehicles from the entire fleet into co mpliance or a specified percentage of the group category (i.e., model-year off-road with or w ithout VDECS, model-year on-road with or without VDECS), whichever is greater. In s ubsequent years, the owner or operator must meet the compliance date and percenta ge for the specific category group of vehicles as set forth in the following table.

17 Section 2479(e)(2)(B) Table 2, Compliance Schedule for In-Use Yard Truck Fleets of Four or More.6

Off-road without VDECS Installed by December 31, 2006 Off-road with VDECS Installed by December 31, 2006

Model

Year % of Model Year Compliance

Deadline Model

Year % of Model Year Compliance

Deadline

Greater of 3 or 50% Dec. 31, 2007 Greater of 3 or 50% Dec. 31, 2008 Pre-2003 100% Dec. 31, 2008 Pre-2003 100% Dec. 31, 2009

Greater of 3 or 25% Dec. 31, 2010 Greater of 3 or 25% Dec. 31, 2011

50% Dec. 31, 2011 50% Dec. 31, 2012 2003

100% Dec. 31, 2012 2003

100% Dec. 31, 2013

Greater of 3 or 25% Dec. 31, 2011 Greater of 3 or 25% Dec. 31, 2012

50% Dec. 31, 2012 50% Dec. 31, 2013 2004

100% Dec. 31, 2013 2004

100% Dec. 31, 2014

Greater of 3 or 25% Dec. 31, 2012 Greater of 3 or 25% Dec. 31, 2013

50% Dec. 31, 2013 50% Dec. 31, 2014 2005

100% Dec. 31, 2014 2005

100% Dec. 31, 2015

Greater of 3 or 25% Dec. 31, 2013 Greater of 3 or 25% Dec. 31, 2014

50% Dec. 31, 2014 50% Dec. 31, 2015 2006

100% Dec. 31, 2015 2006

100% Dec. 31, 2016

On-road without VDECS Installed by December 31, 2006 On-road with VDECS Installed by December 31, 2006

Model

Year % of Model Year Compliance

Deadline Model

Year % of Model Year Compliance

Deadline

Greater of 3 or 25% Dec. 31, 2007 Greater of 3 or 25% Dec. 31, 2008

50% Dec. 31, 2008 50% Dec. 31, 2009 Pre-2000

100% Dec. 31, 2009 Pre-2000

100% Dec. 31, 2010

Greater of 3 or 25% Dec. 31, 2008 Greater of 3 or 25% Dec. 31, 2009

50% Dec. 31, 2009 50% Dec. 31, 2010 2000

100% Dec. 31, 2010 2000

100% Dec. 31, 2011

Greater of 3 or 25% Dec. 31, 2009 Greater of 3 or 25% Dec. 31, 2010

50% Dec. 31, 2010 50% Dec. 31, 2011 2001

100% Dec. 31, 2011 2001

100% Dec. 31, 2012

Greater of 3 or 25% Dec. 31, 2010 Greater of 3 or 25% Dec. 31, 2011

50% Dec. 31, 2011 50% Dec. 31, 2012 2002

100% Dec. 31, 2012 2002

100% Dec. 31, 2013

Greater of 3 or 25% Dec. 31, 2011 Greater of 3 or 25% Dec. 31, 2012

50% Dec. 31, 2012 50% Dec. 31, 2013 2003

100% Dec. 31, 2013 2003

100% Dec. 31, 2014

Greater of 3 or 25% Dec. 31, 2012 Greater of 3 or 25% Dec. 31, 2013

50% Dec. 31, 2013 50% Dec. 31, 2014 2004

100% Dec. 31, 2014 2004

100% Dec. 31, 2015

Greater of 3 or 25% Dec. 31, 2013 Greater of 3 or 25% Dec. 31, 2014

50% Dec. 31, 2014 50% Dec. 31, 2015 2005

100% Dec. 31, 2015 2005

100% Dec. 31, 2016

Greater of 3 or 25% Dec. 31, 2014 Greater of 3 or 25% Dec. 31, 2015

50% Dec. 31, 2015 50% Dec. 31, 2016 2006

100% Dec. 31, 2016 2006

100% Dec. 31, 20177

Several examples follow:

Example 1: An owner or operator has an in-use flee t of four vehicles with pre-2003 model-year certified off-road engines that have not been equipped with VDECS prior to December 31, 2006. The owner or operator would be required to bring three of its vehicles into compliance by December 31, 2007 and t he fourth vehicle by December 31,

2008.

Example 2: An owner or operator has an in-use flee t of four vehicles. Two of the vehicles are equipped with pre-2003 model-year cert ified off-road engines and were not equipped VDECS prior to December 31, 2006. The oth er two vehicles have pre-2000 model year certified on-road engines without VDECS. Again, the owner would be required to bring at least three vehicles into comp liance by December 31, 2007. In selecting the three vehicles to convert in 2007, th e owner or operator would be required to convert the two pre-2003 model-year off-road eng ines because the regulation requires that 50 percent of these vehicles come int o compliance by the end of 2007. The owner or operator would then have until Decembe r 31, 2009 to bring the last pre2000 model-year on-road vehicle into compliance.

Example 3: An owner or operator has an in-use flee t of eight vehicles. Two of the vehicles have pre-2003 model-year certified off-roa d engines that have not had VDECS installed prior to December 31, 2006. Two others a re 2001 model-year on-road engines that also did not have VDECS installed prior to Dec ember 31, 2006. The other four engines have had VDECS installed prior to December 31, 2006. Of these four, two are 2004 model-year off-road engines and two are 2005 o n-road engines. The regulation requires the owner or operator to bring the two pre -2003 off-road engines into compliance by December 31, 2007. It would also nee d to bring one additional vehicle from the other classifications into compliance on t hat date, because the regulation requires at least three vehicles from the entire fl eet be converted in the first year that an owner or operator commences compliance. If the own er or operator chose to convert one of the two 2001 on-road vehicles into complianc e in 2007, it would not need to bring the second into compliance until December 31, 2011, when 100 percent of that category must comply. It would then need to have one of the two 2004 vehicles with off-road engines equipped with VDECS converted by December 3 1, 2013 and the other by December 31, 2014. By December 31, 2015, one of the 2005 model year on-road engines would need to be in compliance, with the ot her brought into compliance by December 31, 2016.

b. Non-Yard Trucks

The CHE Regulation

also requires in-use (non-newly acquired) non-yard truck s to use BACT to meet specified performance standards based on the vehicle’s application. The regulation identifies three categories of non-yard trucks: basic container handling8

equipment, 18 bulk cargo handling equipment, and RTG cranes. As with yard trucks, the regulation sets forth a time table for compliance d epending upon the size and modelyear composition of the in-use fleet. 19

Compliance Date 20

Non-Yard Truck Fleets of 4 or More

Engine Model

Years Non-Yard Truck

Fleets of 3 or Fewer First 3 or 25% (whichever is greater) 50% 75% 100%

pre-1988 2007 2007 2008 2009 2010

1988-1995 2008 2008 2009 2010 2011

1996-2002 2009 2009 2010 2011 2012

2003-2006 2010 2010 2011 2012 2013

Fleets of three or fewer vehicles must be in full c ompliance by December 31 of the year designated for compliance for the model year of the vehicles’ engines. For example, an owner or operator has a fleet of three non-yard tru ck vehicles – one with a pre-1988 model-year engine, one with a 1990 model-year engin e, and one with a 2002 model year engine. The owner or operator must have the p re-1988 engine in compliance by December 31, 2007, the 1990 engine by the end of 20 08, and the 2002 engine by December 31, 2009.

Owners and operators of fleets of four or more vehi cles are allowed to phase-in the conversion of their fleets, providing them with mor e time in which to comply. In the first year in which compliance is required, the owner or operator must at least bring three vehicles or 25 percent of its fleet, whichever is g reater, into compliance. Increasing percentages of the fleet would have to be in compli ance over the next several years. Examples follow:

Example 1: The in-use non-yard fleet is comprised of 100 vehicles, all of which are equipped with pre-1988 model-year engines. The own er or operator of the fleet must bring 25 engines into compliance by December 31, 20 07, 25 more engines by December 31, 2008, 25 more engines by December 31, 2009, and the final 25 engines by December 31, 2010.

Example 2: The in-use non-yard fleet is comprised of 100 vehicles, 50 of which have pre-1988 model-year engines and 50 of which have 19 88-1995 model-year engines. The owner or operator would have to bring 13 pre-19 88 engines into compliance by December 31, 2007; 12 more pre-1988 engines and 13 1988-1995 engines by

18 While forklifts are used to handle both containeri zed and bulk cargo, for the purposes of this regula tion, they are considered to be part of the basic contain er handling equipment category.

19 Section 2479(e)(3), Table 3: Compliance Option Com pliance Schedule for Non-Yard Truck In-Use Mobile Cargo Handling Equipment.

20 Compliance date refers to December 31 st of the year indicated.9

December 31, 2008; 13 pre-1988 and 12 1988-1995 eng ines by December 31, 2009; the final 12 pre-1988 and 13 1988-1995 engines by D ecember 31, 2010; and the final 12 1988-1995 engines by December 31, 2011.

Example 3: The in-use non-yard fleet is comprised of 100 vehicles, 25 of which have pre-1988 model-year engines, 25 of which have 1988- 1995 model-year engines, and 50 of which have 1996-2002 model year engines. The ow ner or operator would have to bring six pre-1988 engines into compliance by Decem ber 31, 2007; seven more pre1983 engines and six 1988-1995 engines by December 31, 2008; six pre-1988, seven 1988-1995 engines, and 13 1996-2002 engines by Dece mber 31, 2009; the final 6 pre1988, six 1988-1995 engines, and 12 1996-2002 engin es by December 31, 2010; and the final six 1988-1995 engines and 13 1996-2002 en gines by December 31, 2011; and 12 1996-2002 engines by December 31, 2012.

Owners and operators of each category have three BA CT-based compliance options for meeting the in-use performance requirements for non -yard trucks. While some of the BACT options are the same for the different vehicle categories, others differ because of the types of vehicles in each category, which refle ct differences in design, engines used, operational variance, VDECS availability, abi lity to repower the equipment, average useful life of the vehicles and engines, th e level of diesel PM emission health risk posed, capital costs, and cost-effectiveness.

i. Basic Container Handling Equipment

Basic container handling equipment consist of top h andlers, side handlers, reach stackers, forklifts, straddle carriers, and any oth er equipment type (except RTG cranes) that handles cargo containers. The first complianc e option allows an owner or operator to use an engine or power system – including diesel , alternative fueled, or heavy-duty pilot ignition engine – certified to the 2007 or la ter model year on-road or the Tier 4 offroad engine standards for the rated horsepower and model year of the engine. 21 The second option allows an owner or operator to bring basic container handling equipment into compliance by using a pre-2007 model year cert ified on-road engine or a certified Tier 2 or Tier 3 off-road engine and applying the h ighest level VDECS available for the type of engine is used. But if no VDECS or a Level 1 VDECS is the highest level available, the owner or operator must also upgrade the vehicle’s engine to either a certified Tier 4 off-road engine or install a Level 3 VDECS by December 31, 2015. 22

The third option allows the owner or operator to us e a pre-Tier 1 or Tier 1 off-road engine equipped with the highest level VDECS availa ble. But, as with the second option, if no VDECS or if a Level 1 or 2 VDECS is t he highest level available, the owner or operator must upgrade the equipment’s engine to either a certified Tier 4 off-road engine or a Level 3 VDECS by December 31, 2015. 23

21 Section 2479(e)(3)(B)1.a.

22 Section 2479(e)(3)(B)1.b.

23 Section 2479(e)(3)(B)1.c.10 ii. Bulk Cargo Handling Equipment

Bulk cargo handling equipment consist of dozers, lo aders, excavators, mobile cranes, sweepers, railcar movers, aerial lifts, and any oth er equipment type (except forklifts) that handles non-containerized or bulk cargo. As with b asic container handling equipment,

the CHE Regulation requires the owner or operator to select one of thr ee BACT compliance options.

The first option is identical to that required for basic containerized equipment: use of engines certified to the 2007 or later model year o n-road engine standards or the Tier 4 off-road engine standards for the engine’s rated ho rsepower and model year. 24 While the 2007 model year certified on-road engine is not available in the higher horsepower ranges, it may be available for some of the equipme nt in this category in the lower horsepower ranges. The second option is also the s ame as that for container handling equipment: the owner or operator may use a pre-2007 model year certified on-road engine or a certified Tier 2 or 3 off-road engine f or the rated horsepower and model year of the engine, and the engine must be equipped with the highest level of VDECS available. Again, if no VDECS is available or if t he highest level VDECS available is only Level 1, then by December 31, 2015, the owner operator must either replace the engine with a Tier 4 certified off-road engine or h ave a Level 3 VDECS installed. 25 The third option allows the owner or operator use a pre -Tier 1 or certified Tier 1 off-road engine with the highest level VDECS available, but if no VDECS is available or if the highest available VDECS is only Level 1, the owner or operator must either replace the engine with a Tier 4 certified off-road engine or i nstall a Level 3 VDECS by December
31, 2015. 26

iii. RTG Cranes

RTG cranes are in a category of their own because o f their unique operation, size, costs, effective life, and retrofit options. While there is a limited selection of VDECS currently available for this category of equipment, ARB is coordinating a study to identify and demonstrate high efficiency retrofit emission c ontrol systems for RTG cranes (as well as for top handlers and side handlers) that sh ould soon lead to verification of

several models. 27

As with the other two categories of non-yard truck equipment, the CHE Regulation requires the owner or operator to select one of thr ee BACT compliance options. Like the previous two categories, the first option allow s the owner or operator to use an engine or power system certified to the 2007 or lat er model year on-road or Tier 4 offroad engine standards for the rated horsepower and model year of the engine. 28 While

24 Section 2479(e)(3)(B)2.a.

25 Section 2479(e)(3)(B)2.b.

26 Section 2479(e)(3)(B)2.c.

27 Additional information on this project is availabl e in Appendix H of the Staff Report.

28 Section 2479(e)(3)(B)3.a.11

2007 model-year certified on-road engines will not immediately be available for most RTG cranes because of their high horsepower ratings , they may be available for some of the smaller horsepower RTG cranes. The second o ption allows the owner or operator to use either a pre-2007 model year certif ied on-road or certified Tier 2 or 3 offroad engine equipped with the highest level VDECS a vailable. 29 The third option allows the owner or operator to use a pre-Tier 1 off-road engine or a certified Tier 1 off-road engine equipped with the highest level VDECS availa ble. If no VDECS is available or if the highest level VDECS available is a Level 1 or 2 , then the owner or operator must also have the engine either replaced with a Tier 4 certified off-road engine or have a Level 3 VDECS installed by either December 31, 2015 or the model year of the initially compliant engine plus 12 years, whichever is later. 30

B. Compliance Flexibility

In addition to the flexibility provided to owners a nd operators to achieve compliance with the emission standards through the various BACT opt ions, the CHE Regulation expressly provides other means to assist them in co mplying with the regulation.

1. Extensions

Owners and operators may be eligible to receive add itional time beyond the specified compliance dates set forth in the regulation. Ther e are five different types of compliance extensions available; they, however, may not be combined or used consecutively, unless expressly permitted. Owners and operators may apply for the following types of extensions: (1) a one year exten sion if an engine is within one year of retirement; 31 (2) an annual extension for up to two years for no n-yard truck mobile cargo handling equipment if no VDECS is available for the specific equipment; 32 (3) an annual extension, through December 31, 2005, for use of ex perimental diesel particulate matter emission control strategies if no VDECS is availabl e for a non-yard truck mobile cargo handling equipment engine or if the available VDECS is not feasible for a specific vehicle application; 33 (4) an extension excusing an owner or operator fro m compliance until receipt or installation of ordered complying product (i.e., new equipment, engine, VDECS) if the owner or operator had entered into a contractual order with an equipment, engine or VDECS manufacturer at least si x months prior to the compliance date of the regulation but has not received the com plying product by the compliance date because of manufacturer delays; 34 and (5) an extension for up to three years for yard trucks that have been retrofitted with VDECS p rior to December 31, 2005 by using incentive funding from public agencies (i.e., NOx a nd PM Bank or Carl Moyer Program)

29 Section 2479(e)(3)(B)3.b..

30 Section 2479(e)(3)(B)3.c..

31 Section 2479(f)(1).

32 Section 2479(f)(2).

33 Section 2479(f)(3).

34 Section 2479(f)(4).12

if the funding program stipulated minimum use requi rements that would expire after the required compliance date. 35

2. Alternative Compliance Plan for Non-Yard Truck Cargo Handling Equipment

The regulation includes an alternative compliance p lan (ACP) option for owners and operators of non-yard truck cargo handling equipmen t that would allow them to demonstrate that equivalent emission reductions can be achieved through the use of alternative strategies. 36 Alternative strategies can include equipment engi ne modifications, exhaust treatment control, engine re -powering, equipment replacement, the use of alternative fuels or fuel additives, and operational controls. Applications for the ACP must be approved by the Executive Officer, and until such approval is granted, the owner or operator would be required to meet the performance requirements in subsection (e)(3).

C. Other Requirements

1. In-Use Fuel Requirements

The CHE Regulation

requires owners and operators to use one of severa l specified fuels, including CARB diesel fuel, alternative fuel s, Executive Officer-approved alternative diesel fuel that has been approved unde r the Verification Procedure, CARB diesel fuel used in conjunction with fuel additives that have been approved under the Verification Procedure, or any combination of the a bove.

2. Record-Keeping and Reporting Requirements

For enforcement purposes, the CHE Regulation contains record-keeping and reporting requirements. Owners and operators are required fo r all mobile cargo handling equipment in their fleet to maintain records; affix a label (or an alternative method approved by the Executive Officer) to each vehicle with information regarding, among other things, the compliance strategy used or, alte rnatively, planned compliance date; submit a compliance plan and annual statement of co mpliance; and perform annual reporting by submitting to the ARB contact informat ion, location of their equipment, and equipment populations by model year group and type. These requirements will enable staff to monitor the implementation of the regulati on and provide more accurate estimates of pollutant reductions.

35 Section 2479(f)(5).

36 Section 2479(h).13

III. WAIVER/AUTHORIZATION ANALYSIS

A. Introduction

1. Waivers

Section 209(b) of the CAA sets forth the protocol f or granting California waivers to the general preemption of section 209(a), which prohibi ts states and their local subdivisions from adopting and enforcing standards and other req uirements relating to the control of

emissions from new motor vehicles and new motor veh icle engines. Under section 209(b), the Administrator must grant a waiver to Ca lifornia if the state has determined that its standards will be, in the aggregate, at le ast as protective of public health and welfare as applicable federal standards, unless the Administrator finds that (1) the state’s protectiveness determination is arbitrary a nd capricious, (2) California does not need separate state standards to meet compelling an d extraordinary conditions, or (3) the state’s standards and accompanying enforcem ent procedures are not consistent with section 202(a) of the CAA.

In considering whether to grant waivers for accompa nying enforcement procedures tied to standards for which a waiver has already been gr anted, the Administrator has long held that he will only address questions as to (1) whether the enforcement procedures are so lax that they threaten the validity of Calif ornia’s determination that its standards are as protective of public health and welfare as a pplicable federal standards and, (2) whether the enforcement procedures are consiste nt with section 202(a). 37

The Administrator has applied a similar analysis in finding that amendments to a standard or regulation are within the scope of a pr eviously granted waiver.

If California acts to amend a previously waived sta ndard or accompanying enforcement procedure, the change may be included w ithin the scope of the previous waiver if it does not undermine Califo rnia’s determination that its standards, in the aggregate, are as protective of public health and welfare as comparable Federal standards, does not a ffect the consistency of California’s requirements with section 202(a) of the [CAA], and raises no new issues affecting the Administrator’s previou s waiver

determination. 38

37 Motor and Equipment Manufacturers Association v. EP A (MEMA) (D.C. Cir. 1979) 627 F.2. 1095, 1111,

1113.

38 Decision Document accompanying scope of waiver det ermination in 51 Fed.Reg. 12391 (April 10, 1986), at p. 2 (footnotes omitted); see also 46 Fed .Reg. 36742 (July 15, 1981).14 2. Authorizations

Section 209(e)(2) of the CAA sets forth the protoco l for the Administrator granting California authorization to adopt and enforce stand ards and other requirements relating to controlling emissions from new and in-use nonroa d engines that are not otherwise specifically preempted from under section 209(e)(1) – new engines less than 175 hp used in farm and construction equipment and vehicle s and new engines used in new locomotives and locomotive engines. Closely tracki ng the new motor vehicle waiver process, section 209(e)(2) directs the Administrato r to grant the authorization to California for all other nonroad engines if Califor nia determines that the state’s standards will be, in the aggregate, at least as pr otective of public health and welfare as applicable federal standards, unless he finds that: (1) the protectiveness finding of the state is arbitrary and capricious; (2) California d oes not need separate state standards to meet compelling and extraordinary conditions; or (3) the state standards and accompanying enforcement procedures are not consist ent with CAA section 209.

Section 209(e)(2) of the CAA, like section 209(b), requires California to obtain the Administrator’s approval (i.e., waiver or authoriza tion). In reviewing a California request for authorization under section 209(e)(2), the Admi nistrator must consider nearly identical criteria as under section 209(b). In lig ht of these almost identical protocols, U.S. EPA has confirmed that it would similarly inte rpret sections 209(b) and (e) where the language is similar. 39

One deviation in language is that CAA section 209(e )(2) requires that the Administrator must consider not only consistency with CAA section 202(a) – as required under section 209(b)(1)(C) – but also other subsections of sectio n 209. In its 209(e) Final Rule, U.S. EPA interpreted this provision to require that Cali fornia’s standards and accompanying enforcement provisions must also be consistent with sections 209(a) and 209(e)(1). 40

As the Administrator stated in a recent authorizati on:

In [o]rder to be consistent with section 209(a), Ca lifornia’s [nonroad] standards and enforcement procedures must not apply to new motor vehicles or new motor vehicle engines. Secondly, C alifornia’s nonroad standards and enforcement procedures must be consis tent with section 209(e)(1), which identifies the categories permanen tly preempted from state regulation. California’s nonroad standards a nd enforcement procedures would be considered inconsistent with se ction 209 if they applied to the categories of engines or vehicles id entified and preempted from State regulation in section 209(e)(1). Finall y, and most importantly in terms of application to nonroad [authorization requ ests], California’s nonroad standards and enforcement procedures must b e consistent with

39 Air Pollution Control; Preemption of State Regulati on for Nonroad Engine and Vehicle Standards (Final 209(e) Rule) , 59 Fed. Reg. 36969, 36981 (July 20, 1994); see al so Utility Authorization, Decision Document, at p. 11; see also 65 Fed.Reg. 69763, 697 63-69764 (November 20, 2000).

40 59 Fed.Reg. 36969, 36983 (July 20, 1994).15

section 209(b)(1)(C). EPA will review nonroad auth orization requests under the same “consistency” criteria that are appl ied to motor vehicle waiver requests. Under section 209(b)(1)(C), the A dministrator shall not grant California’s motor vehicle waiver if she find s that California standards and accompanying enforcement procedures a re not consistent with section 202(a)” of the [CAA]. 41

As indicated in the above quotation, the Administra tor has applied a similar analysis in finding that amendments to a standard or regulation are within the scope of a previously granted authorization. 42

B. Principles Followed in Granting CAA Section 209 (b) Waivers and 209(e)

Authorizations

1. The Burden Is on Those Who Challenge the Reque st

In considering a waiver, authorization, or a within the scope request, California’s regulation and protectiveness determination are pre sumed to satisfy the criteria for granting a waiver or authorization, and the burden to show otherwise is on those persons challenging the waiver request. 43 As held by the court in MEMA and long followed by U.S. EPA:

The language of the statute and its legislative his tory indicate that California’s regulations and California’s determina tion that they comply with the statute, when presented to the Administrat or are presumed to satisfy the waiver requirements and that the burden of proving otherwise is on whoever attacks them. [It is they who] bear the burden of persuading the Administrator that the waiver request should be denied. 44

2. The Scope of the Waiver/Authorization Hearing Sh ould Be Limited

As indicated above, the scope of the Administrator’ s inquiry in determining whether to deny a waiver or authorization request is limited b y the express terms of CAA sections 209(b)(1) and (e)(1). Once California det ermines that its standards are, in the aggregate, at least as protective of public health and welfare as applicable federal standards, the Administrator must grant the waiver or authorization unless one of the three specified findings can be made.

This reading of the statute is consistent with the decision in MEMA and prior U.S. EPA waiver decisions interpreting CAA section 209(b), w hich hold that the review of

41 65 Fed.Reg. 69763, 69764 (November 20, 2000).

42 Id., 69763-69764

. 43 Motor Equipment Manufacturers Association v. EPA (MEMA) (D.C. Cir. 1979) 627 F.2d 1095, 1121

. 44 Id .; See also Decision Document accompanying OBD II W aiver Determination, at p. 15-16.16

California’s decision to adopt separate standards i s a narrow one. 45 In granting the waiver for the OBD II regulation in 1996, Administr ator Carol Browner concluded that she must grant a waiver if she could not find suffi cient evidence in the record to support any of the above listed criteria that would dictate not granting the waiver. 46 Much earlier

Administrator William D. Ruckleshaus stated:

The law makes it clear that the waiver request cann ot be denied unless the specific findings designated in the statute can properly be made. The issue of whether a proposed California requirement is likely to result in only marginal improvement in air quality not commen surate with its cost or is otherwise an arguably unwise exercise of regulat ory power is not legally pertinent to my decision under section 209 . . . . 47

3. Deference Must Be Given to California’s Policy J udgments

As indicated in the waiver decisions cited above, i n granting waivers to California’s motor vehicle program, U.S. EPA has routinely defer red to the policy judgments of California’s decision-makers. U.S. EPA has recogni zed that the intent of Congress in creating a limited review of California’s determina tions regarding its need for separate standards was to ensure that the federal government did not second-guess the wisdom of state policy. 48 Administrators have recognized that the deference is wide-ranging:

The structure and history of the California waiver provision clearly indicate both a Congressional intent and an U.S. EPA practic e of leaving the decision on ambiguous and controversial matters of public policy to California’s judgment.

* * * * * *

It is worth noting . . . I would feel constrained t o approve a California approach to the problem which I might also feel una ble to adopt at the federal level in my own capacity as a regulator. T he whole approach of the Clean Air Act is to force the development of ne w types of emission control technology where that is needed by compelli ng the industry to “catch up” to some degree with newly promulgated st andards. Such an approach . . . may be attended with costs, in the s hape of a reduced product offering, or price or fuel economy penaltie s, and by risks that a wider number of vehicle classes may not be able to complete their development work in time. Since a balancing of the se risks and costs

45 See 40 Fed.Reg. 23102, 23103 (May 28, 1975).

46 61 Fed.Reg. 53371 (October 11, 1996).

47 36 Fed.Reg. 17158 (August 31, 1971). See also 40 Fed.Reg. 23102, 23104; 58 Fed.Reg. 4166 (January 7, 1993), Decision Document, at p. 20.

48 40 Fed.Reg. 23102, 23103.17

against the potential benefits from reduced emissio ns is a central policy decision for any regulatory agency under the statut ory scheme outlined above, I believe I am required to give very substan tial deference to California’s judgments on this score. 49

C. The Requirements for Newly Acquired Yard Trucks Registered for On-Road Operation Are Covered by the Previously Granted Wai ver for 2007 Heavy-Duty

Diesel Vehicles

To the extent the requirements for newly acquired y ard trucks registered for on-highway operation requires the purchase, lease, or rental o f new on-road motor vehicle engines and vehicles, the requirements are covered by the w aiver granted by U.S. EPA for California’s regulations establishing emission stan dards for 2007 and subsequent model year on-road heavy-duty diesel engines. 50 The CHE Regulation requires that on or after January 1, 2007, newly acquired yard trucks r egistered for highway operation must be equipped with new 2007 or subsequent model year on-road heavy-duty engines. To meet the requirements in the first year, most owner s and operators will likely have to acquire new motor vehicles and engines, and such re quirements arguably fall under the preemption of CAA section 209(a), for which Califor nia must obtain a waiver. 51 If a waiver is required, the Administrator should confir m that it falls within the scope of the previously granted waiver.

1. Protectiveness

In adopting Resolution 05-62, the Board expressly f ound that the requirements for newly acquired registered yard trucks fall within the sco pe of the 2007 heavy-duty diesel engine waivers in that the requirements applicable to such vehicles do not undermine the Board’s previous determination that its emissio n standards, in the aggregate, are as protective of public health and welfare as comparab le federal standards; do not affect the consistency of California’s requirements with s ection 202(a) of the CAA; and raise no new issues affecting the Administrator’s previou s waiver determination.

49 40 Fed.Reg. 23102, 23104 (emphasis added). See a lso 58 Fed.Reg. 4166, Decision Document, at p. 64.

50 California State Motor Vehicle Pollution Control St andards; Waiver of Federal Preemption; Notice of

Decision , 70 Fed Reg. 50322 (August 26, 2005).

51 See EMA v. South Coast Air Quality Management District (2004) 541 U.S. 246, holding that requirements regarding the acquisition of vehicles by a vehicle fleet operator do not escape CAA section 209(a) preemption just because they address the purchase of vehicles rather than their manufacture or sale. In later years, the need to p urchase new engines and vehicles under the CHE Regulation

becomes increasingly less necessary as an owner or operator should be able to purchase non-new model year engines and vehicles so long as they meet the 2007 model year emission standards. To the extent the in-use performance standards appl y to non-new yards trucks registered for on-road operation, a waiver is not required. CAA section 2 09(a) only preempts states from adopting or attempt ing to enforce standards relating to the control of emi ssions from new motor vehicles or new motor vehicle
engines

. If the requirements do not apply to new engines and vehicles, they do not require a waiver under CAA section 209(b).18

In reviewing California’s protectiveness finding, t he Administrator may not deny a waiver on protectiveness grounds unless he or she finds th at those challenging the waiver have presented clear and convincing evidence that t he Board’s protectiveness finding is arbitrary and capricious. 52 This standard is in accord with “the congressiona l intent to provide California with the broadest possible discr etion in setting regulations it finds protective of the public health and welfare.” 53 There is no question that the Board’s finding is justified and correct in that ARB adopte d heavy-duty engine standards that parallel the federal 2007 heavy-duty emission stand ards, 54 and the mobile cargo handling requirements for newly acquired registered yard trucks do not modify those requirements. Accordingly, California was neither arbitrary nor capricious in finding that the adopted requirements for registered yard trucks are, in the aggregate, at least as stringent as comparable federal regulations.

2. Consistency with CAA Section 202(a)

The requirement that registered yard trucks use 200 7 and subsequent model-year onroad engines is consistent with section 202(a) of t he CAA. U.S. EPA has historically interpreted consistency with section 202(a) under a two-prong test: (1) that there is sufficient lead time to permit the development of t echnology necessary to meet the standards and other requirements, giving appropriat e consideration to the cost of compliance in the time frame provided, and (2) that the California and federal test procedures are sufficiently compatible to permit ma nufacturers to meet both the state and federal test requirements with one test vehicle or engine. 55

Yard trucks registered for on-road operation are ri ghtfully already subject to ARB’s onroad heavy-duty exhaust emission standards codified at title 13, CCR, section 1856.8, and all trucks registered for on-road operation are required to be equipped with certified engines. The CHE Regulation is intended to ensure that any yard truck – regard less of model year – newly acquired, on or after January 1, 2007, be equipped with a 2007 or subsequent certified model year on-road engine. Th e technological feasibility for applying these engines to yard trucks is not at iss ue. There is no dispute that certified on-road engines have been used in yard truck applic ations for years. No stakeholder, including engine or vehicle manufacturers or end us ers of the vehicles, have disputed this or have raised any concerns regarding the feas ibility of using certified engines in yard truck applications.

The CHE Regulation does not modify the test procedures for certificati on of the California 2007 and subsequent model-year heavy-dut y engines. Accordingly, the

52 See MEMA, 627 F.2d at 1120-1122.

53 Id. , at 1122.

54 40 CFR Part 86, § 86.007 et seq.

55 See 61 Fed.Reg. 53371, 53372 (October 11, 1996); Decision Document at p.2 ( OBD II Waiver

Decision ).19

Administrator’s determination in granting the waive r of California’s 2007 heavy-duty

emission standards is not affected.

For the foregoing reasons, the Administrator should confirm that the CHE Regulation requirements for newly acquired yard trucks falls w ithin the scope of the previously granted 2007 and subsequent model-year heavy-duty e ngine emission standards

waiver.

D. The Requirements for Newly Acquired Non-Yard Tru cks Registered for Operation on Public Roadways Are Similarly Covered by the Pre viously Granted Waiver for 2007 Heavy-Duty Diesel Vehicles

As with newly acquired yard trucks, the CHE Regulation requires that, on or after January 1, 2007, newly acquired non-yard trucks tha t are registered for on-highway operation must be equipped with an on-road engine m eeting the 2007 and subsequent model year on-road emission standards. 56 Being registered for on-road operation, these vehicles should already be subject to the 200 7 on-road heavy-duty regulation, but to the extent that they have been mistakenly regist ered with certified off-road engines, this regulation will clear up any confusion. As w ith on-road yard trucks, the requirements effectively mandate in the first year of the regulation that newly purchased, leased, and rented vehicles be equipped with new 2007 model-year engines. Such requirements arguably fall within t he scope of the CAA section 209(a) preemption and would require ARB to obtain a waiver under CAA section 209(b). To the extent that this is the case, the requirements reasonably fall within the scope of the 2007 on-road heavy-duty diesel waiver. 57

E. The Requirements for Newly Acquired Off-Road Yar d Trucks Should Be Analyzed Similarly to a Within-the-Scope Authorization Reque st

The CHE Regulation

requires that on or after January 1, 2007, newly a cquired off-road yard trucks must be equipped with a 2007 or subsequ ent model year on-road heavyduty engine or an off-road engine certified to meet the final Tier 4 off-road emission standards for the rated horsepower. 58 ARB respectfully requests that the Administrator analyze these options in a manner similar to a “wit hin the scope” of a preexisting CAA section 209 determination. The special circumstanc es, which are explained below, surrounding the adopted emission standard options f or newly acquired off-road yard trucks suggest that such an analysis be applied her e.

56 Section 2479(e)(1)(B)1.a.

57 See discussion above in section III.C. regarding r egistered on-road yard trucks.

58 Section 2479(e)(1)(B), referencing the on-road emi ssion standards at title 13, CCR, section 1956.8 an d the off-road emission standards at title 13, CCR, s ection 2423.20

1. The Administrator Should Confirm that Option 1, Use of a Certified On-Road Engine, Falls within the Scope of a Preexisting Wai ver

As stated above, ARB and U.S. EPA adopted parallel emission standards for 2007 and subsequent model-year on-road heavy-duty diesel eng ines. And, the CHE Regulation requires that all yard trucks registered for on-roa d operation that are newly acquired after January 1, 2007 be equipped with 2007 and sub sequent model year certified onroad engines.

Like on-road yard trucks, off-road yard trucks can be readily equipped with on-road heavy-duty engines. Indeed, since at least the 200 0 model year, yard truck manufacturers have provided buyers with the option of equipping their off-road vehicles with on-road engines. 59 The primary difference between on-road and off-ro ad yard trucks is that off-road vehicles are typically equi pped with governors to regulate their speed and do not have all the requisite safety devi ces to allow them to operate on public highways. Except to the extent that yard tr ucks registered for on-road operation do operate to some extent on public roadways, the t ypical operational environment for both on- and off-road yard trucks is on paved surfa ces at port and intermodal rail yard

facilities.

A literal reading of CAA section 209(e) would requi re that California obtain a new authorization for option 1, even though EPA has alr eady issued a waiver for 2007 and subsequent model year heavy-duty engines. ARB beli eves that such a literal reading is unduly rigid and restrictive and would serve no ben eficial purpose while unjustifiably delaying ARB enforcement of this regulatory option. As recognized by U.S. EPA, a subsequently adopted California regulation or amend ments to an existing regulation may fall within the scope of a previously granted w aiver if the regulation/amendments do not undermine California’s initial protectivenes s determination, are consistent with the technical feasibility requirements of CAA secti on 202(a), 60 and raise no new issues not previously considered.

Here, although Option 1 technically falls under the authority of CAA section 209(e), all of the criteria for a within the scope finding are met . First, and foremost, U.S. EPA has granted a waiver under section 209(b) for the emiss ion standards and other requirements for 2007 and subsequent model-year on- road heavy-duty diesel engines. Option 1 allows owners and operators of off-road ya rd trucks to meet the requirements of section 2479(e)(1)(B)1.b. by purchasing vehicles equipped with certified on-road engines that are covered by the 2007 heavy-duty wai ver issued by U.S. EPA.

59 Staff Report at p. V-3.

60 To the extent that the Administrator believes that since the option applies to nonroad vehicles, he m ust also consider whether the requirement is fully cons istent with CAA section 209, no inconsistencies ex ist. Option 1, on its face, does not apply to motor vehi cles as defined in 40 CFR §85.1703 or CAA section 209(e)(1) preempted new nonroad engines under 175 h orsepower used in farm or construction vehicles or equipment or new locomotives and locomotive engi nes.21 a. Protectiveness

In Resolution 05-62, the Board found that to the ex tent the CHE Regulation affects nonroad vehicles or nonroad engines as defined in C AA section 216(10) and (11), the emission standards and other requirements related t o the control of emissions in the regulation approved herein are, in the aggregate, a t least as protective of public health and welfare as applicable federal standards. The r equirements do not undermine previous protectiveness findings made by ARB in ado pting its Tier 4 off-road CI emission standards in 2005, or the 2007 model-year heavy-duty on-road diesel emission standards adopted in 2003. By requiring n ewly acquired off-road vehicles to be equipped with 2007 and later on-road heavy-duty diesel engines -- with emission standards significantly more stringent than present ly required for new off-road engines – Option 1 does not undermine ARB’s previous protecti veness determinations.

b. Consistency

The requirements of section 2479(e)(1)(A)1.b. are n ot inconsistent with CAA section 209. By their terms the requirements apply to neither motor vehicles preempted under CAA section 209(a) nor nonroad engines preemp ted under CAA section 209(e)(1). 61 Further, the requirements are consistent with CAA section 202(a) as required by 209(b)(1)(C). As stated, manufacturers of off-road yard trucks have been offering the option of installing on-road engines i n off-road yard trucks since at least 2000. Neither vehicle nor engine manufacturers hav e raised any concerns that 2007 on-road engines cannot be used in 2007 off-road yar d trucks or that 2007 on-road engines will not be available for such applications on or before January 1, 2007. Being that the 2007 on-road engines must be certified as on-road engines, ARB and U.S. EPA will be certifying the engines using the same test procedures that are used for all other on-road engines. Thus, no issue regarding inconsis tent test procedures exists. Finally, since the on-road engines required for off-road yar d trucks are identical to all other certified on-road engines, no new issues exist that were not considered in granting the 2007 and subsequent model year waiver. The fact th at the CHE Regulation applies to purchasers of newly acquired off-road yard trucks a nd not to manufacturers should not affect the above analysis. The crux of the analysi s is whether sufficient lead time exists for development and availability of the new engines , giving appropriate consideration to costs. A key element in considering costs to the m anufacturer is the increased cost to the manufacturer that will be passed onto the consu mer. Accordingly, having found that the emission standards for new on-road engines are technologically feasible for the manufacturer, a similar finding should be made here as it applies to the purchaser.

For the foregoing reasons and for purposes of admin istrative efficiency, the Administrator should find that Option 1 falls withi n the scope of the previously granted waiver for 2007 and subsequent model-year heavy-dut y diesel engines.

61 See section 2479(e)(1)(B), which makes it clear th at these engines are not used in motor vehicles as defined by U.S. EPA in 40 CFR §85.1703) or engines under 175 hp used in farm and construction equipment and vehicles or engines used in locomotiv es.22 c. No New Issues

For the reasons discussed above, the inclusion of O ption 1 under the existing 2007 heavy-duty diesel waiver would raise no issues that were not previously considered in granting the waiver. As stated, engine manufacture rs have readily made available onroad engines for off-road yard truck applications. And stakeholders have raised no objection to the inclusion of Option 1 in this regu lation, even though Option 1 may be the only feasible option in the early years of impl ementation.

2. The Administrator Should Confirm that Option 2, Use of Final Tier 4 Off-Road Emission Standards, Be Treated Similarly to a Withi n the Scope Authorization

Under Option 2, owners and operators may, alternati vely, elect to equip off-road yard trucks with engines certified to the final Tier 4 o ff-road emission standards. For this requirement, as well as similar requirements for ot her off-road engines subject to the CHE Regulation, ARB respectfully requests that the Administrator ap ply the administrative construct that ARB first proposed fo r granting authorizations in its Request for Authorization Determination Pursuant to Clean Air Act Section 209(e) for

Amendments to California’s Emission Standards and T est Procedures for New 1996 and Later Off-Road Compression-Ignition Engines , dated July 16, 2004.

Off-road yard trucks are typically equipped with en gines greater than 175 horsepower (hp) (130 kilowatts (kW) per hour). As explained i n ARB’s July 2004 authorization request new off-road CI engines, U.S. EPA granted i nitial authorization to California on September 21, 1995, to adopt and enforce emission s tandards and test procedures for heavy-duty CI engines equal to or greater than 175 hp. 62 The authorized regulation established two tiers of emission standards for eng ines between 175 hp and 750 hp, and a single tier of standards for engines greater than 750 hp.

Subsequent to issuance of the authorization, U.S. E PA, ARB, and the Engine Manufacturers Association signed a Statement of Principles ( SOP ) in 1996 to establish national emission standards for CI engines. Pursua nt to the goals set forth in the SOP

, U.S. EPA adopted emission control regulations for n ew nonroad CI engines on October
23, 1998. 63 ARB subsequently adopted comparable emission stand ards for California at a public hearing on January 28, 2000. In those ame ndments, the Board harmonized its

emission standards to the federal nonroad diesel st andards establishing three tiers of emission standards. In harmonizing with the federa l regulation, ARB effectively delayed implementation of the previously adopted and author ized second tier of emission standards that were to be implemented in 1999. The amendments also established, in accord with the federal nonroad regulation, a third tier of emission standards for new

62 60 Fed.Reg. 48981 (September 21, 1995).

63 63 Fed.Reg. 56968 (October 23, 1998).23

engines starting in 2006. In July 2004, ARB reques ted that the Administrator confirm that these amendments were within the scope of the 1995 heavy-duty CI authorization.

In June 2004, U.S. EPA adopted a fourth tier of emi ssion standards for new nonroad engines. 64 ARB then adopted, in December 2004,Tier 4 emission standards for new offroad CI engines that align with the federal nonroad emission standards. ARB is presently finalizing a letter requesting that the A dministrator also confirm that these amendments fall within the scope of the previously granted 1995 authorization.

As set forth in the July 2004 authorization request , ARB believes that that the 2000 amendments (as well as the 2005 amendments) fall wi thin the scope of the previously granted waiver – even though the amended emission s tandards are, in part, more stringent than the presently authorized standards. Importantly, these California standards are not more stringent than the adopted f ederal nonroad standards to which they are aligned, and also are in accord with the 1 996 SOP . A finding that the amendments are within-the-scope of the previously i ssued authorization would provide administrative efficiency and flexibility to ARB wh ile providing fairness to regulated

manufacturers. ARB would be able to enforce its re gulations fully and effectively, while minimum burdens would be placed on manufacturers th at must in any event meet the federal regulations. As explained in the July 2004 authorization request and will be explained in the Tier 4 authorization request, the 2000 and 2005 amendments meet the criteria for confirming that an amendment is within the scope of a previously granted authorization: the amended standards are, in the ag gregate, at least as protective of public health and welfare as applicable federal reg ulations, the California regulations are consistent with CAA section 202(a), and no new issues are presented that were not considered in U.S. EPA’s promulgation of its regula tion.

For similar reasons, the Administrator should find that the CHE Regulation’s optional requirement that owners and operators of newly acqu ired off-road yard trucks meet the final Tier 4 emission standards is within the scope of the previously granted 1995

authorization.

a. Protectiveness

As stated above, in Resolution 05-62 the Board foun d that to the extent the CHE Regulation

affects nonroad vehicles or nonroad engines as def ined in CAA section 216(10) and (11), the emission standards and other requirements related to the control of emissions in the regulation approved herein are, in the aggregate, at least as protective of public health and welfare as applicab le federal standards. As with the Tier 1 through Tier 3 emission standards covered in the ARB’s July 2004 request for authorization, the Board adopted Tier 4 emission st andards in 2005 for off-road CI engines that align with the federal Tier 4 nonroad diesel emission standards. 65 Being

64 Control of Emissions of Air Pollution from Nonroad Diesel Engines and Fuel , 69 Fed.Reg. 38957 (June 29, 2004).

65 Section 2423, amended December 7, 2005.24

that the federal and State Tier 4 emission standard s are identical and that other requirements of the federal and state regulations c losely parallel one another, the California standards and accompanying enforcement p rocedures are, in the aggregate, at least as protective as applicable federal provis ions. 66 As stated above, to the extent

that the CHE Regulation applies to purchasers of new engines, that element should not should not affect this analysis.

b. Consistency

As stated above, the requirements for newly acquire d off-road yard trucks, on their face, make it clear that they apply to neither on-road mo tor vehicles preempted under CAA section 209(a) nor nonroad engines preempted un der CAA section 209(e)(1). Moreover, in adopting the federal nonroad diesel Ti er 4 emission standards, the Administrator has fully considered and found that t he subject engines meet the CAA section 202(a) requirements for sufficient lead -time for development and application of the requisite technology, giving app ropriate consideration to costs. As indicated, the analysis should be the same for purc hasers of new engines as for manufacturers. The costs passed on to purchasers b y manufacturers are subsumed in

the initial consideration of the costs to manufactu rers. Additionally, the fact that such engines are not presently available should not dete r from this analysis. Owners and operators have the alternative option of purchasing new on-road engines for newly acquired off-road yard trucks; and, as stated above , those engines are presently available for purchase.

3. Alternatively, the Administrator Must Grant Ca lifornia a New Authorization for Options 1 and 2, If He Does Not Find a Within-the-S cope Type Construct Appropriate

In the alternative, if the Administrator were to fi nd that he cannot apply the suggested administrative construct to Options 1 and 2, ARB re quests that he grant California a new authorization for the optional requirements.

a. Protectiveness

For the reasons previously stated, it cannot be rea sonably challenged that the requirements as they apply to newly acquired off-ro ad vehicles are at least as protective as applicable federal standards or that the Board’s determination was arbitrary or capricious. As stated, the requirements for newly acquired off-road yard trucks respectively parallel existing federal standards fo r heavy-duty on-road engines and nonroad CI engines and do not undermine the Board’s pr evious protectiveness findings.

66 The one true difference between the federal and st ate regulations – ARB’s in-use enforcement protocol – is at least as stringent as applicable federal pr ocedures.25 b. The Requirements are Necessary to Meet Compellin g and Extraordinary

Circumstances

In Resolution 05-62, the Board reaffirmed its longs tanding position that California continues to need its own nonroad engine and vehicl e program to meet serious air pollution problems unique to the State. The Admini strator has previously and consistently recognized California’s unique needs w hen granting waivers for motor vehicles under CAA section 209(b) and authorization for California’s nonroad regulations under section 209(e).

The relevant inquiry under CAA section 209(e)(2)(A) (ii) is whether California needs its own emission control program to meet compelling and extraordinary conditions, not whether any given standard is necessary to meet suc h conditions. 67 In approving waivers under section 209(b), the Administrator has determined that:

“[C]ompelling and extraordinary conditions” does no t refer to levels of pollution directly, but primarily to the factors th at tend to produce them: geographical and climatic conditions that, when com bined with large numbers and high concentrations of automobiles, cre ate serious air pollution problems. 68

California and the South Coast and San Joaquin Vall ey air basins in particular continue to experience some of the worst air quality in the nation. 69 The unique geographical and climatic conditions, and the tremendous growth in v ehicle population and use that moved Congress to authorize California to establish separate vehicle standards in 1967, still exist today. I note that U.S. EPA recently c onfirmed the ARB’s judgment, on behalf of the State of California, on this matter. 70

In the California Clean Air Act of 1988, the Califo rnia Legislature found that:

[D]espite the significant reductions in vehicle emi ssions which have been achieved in recent years, continued growth in popul ation and vehicle miles traveled throughout California have the potential n ot only to prevent

67 49 Fed. Reg. 18887, 18892 (May 3, 1984).)

68 Id

. 69 See e.g. Approval and Promulgation of State Implementation P lans; California – South Coast

, 64 Fed.Reg.1770, 1771 (January 12, 1999).

70 California State Motor Vehicle Pollution Control St andards; Waiver of Federal Preemption – Notice of Decision, 68 Fed.Reg.19811,19812 (April 22, 2003).26

attainment of the state standards, but in some case s, to result in worsening of air quality. 71

In response to the undisputed severe air quality pr oblems in California, the California Legislature authorized ARB to consider adopting, inter alia , standards and regulations for nonroad engines. 72 Given the serious air pollution problems Californ ia faces and the

resultant need to achieve the maximum reductions in emissions, the California Legislature and the ARB believe it is necessary to develop emission controls for

nonroad sources as well as for motor vehicles. 73 The ARB continues to find such previously uncontrolled nonroad engines to be signi ficant emission sources for which controls are necessary to meet federal and state ai r quality standards. 74

By adding federal and state authority to regulate n onroad engines, Congress and California’s Legislature, respectively, acknowledge d the increasing importance of reducing emissions from all mobile sources, includi ng nonroad engines. The Administrator has repeatedly agreed with the ARB th at California’s continuing extraordinary conditions justify separate Californi a nonroad programs. 75 Nothing in these conditions has changed to warrant a change in this determination. Accordingly, for all the aforementioned reasons, there can be no doubt of the continuing existence of compelling and extraordinary conditions justifying California’s need for its own nonroad vehicle and engine emissions control program.

c. Consistency

For the reasons set forth above, requirements of se ction 2479(e)(1)(A)b. are fully

consistent with CAA section 209.

F. The Administrator Should Find that Options 1 an d 2 of the New Requirements for Newly Acquired Non-Yard Trucks Not Registered for O n-Road Operation Are Within the Scope of Previously Granted Waivers and Authorizations and Should Grant a New Authorization for Option 3

On or after January 1, 2007, newly acquired non-yar d trucks that are used exclusively off-road must be equipped with engines meeting one of the following options:

Option 1: that have been certified to meet the on-r oad emission standards as specified in title 13, CCR, section 1956.8 for the model year in which the non-yard truck mobile cargo handling equipment and engines were newly pur chased, leased, or rented; or

71 California Health and Safety Code section 43000.5

. 72 California Health and Safety Code sections 43013 and 43018.

73 See California Health and Safety Code sections 4 1750, 41754, 43000.5, 43013 and 43018.

74 Resolution 03-37. See also Staff Report at Chap ter II.

75 Utility Authorization , Decision Document, at p. 33; OHRV Authorization , Decision Document, at pp. 27-29; and HDOR Authorization , Decision Document, at pp. 16-18.27

Option 2: that have been certified to meet the Tier 4 off-road emission standards for the model year and rated horsepower of the newly purcha sed, leased, or rented non-yard truck mobile cargo handling equipment engines; or

Option 3: if Options 1 and 2 are not available for a specific application and equipment type, the newly acquired non-yard truck must be equ ipped with engines that have been certified to meet the highest available level off-r oad diesel engine emission standards as specified in title 13, CCR, section 2423 for the ra ted horsepower and model year in which the equipment were newly purchased, leased, o r rented, provided the owner or operator must install the highest level VDECS avail able within one year after the purchase, lease, or rental of the equipment, or, if a VDECS is not available by that date,

within six months of when a VDECS becomes available

. 76

1. To the Extent that New On-Road Heavy-Duty Engine s May Be Used in NonYard Truck Applications, Option 1 Falls Within the Scope of a Previously

Granted Waiver

ARB respectfully requests that to the extent that c ertified on-road heavy-duty engines may be used in off-road non-yard truck application s, the Administrator should find that the Option 1 falls within the scope of the recently granted waiver for 2007 and later model-year heavy-duty engines, for the reasons disc ussed above in section III.E.1. 77

2. To the Extent that Option 2 Applies to New CI En gines Equal to or Greater than 175 hp, It Falls Within the Scope of a Previou sly Granted Authorization

Similarly, for the reasons discussed above in secti on III.E.2., 78 to the extent that off-road non-yard trucks use off-road CI engines equal to or greater than 175 hp, Option 2 falls within the scope of the 1995 off-road heavy-duty au thorization.

3. To the Extent that Option 2 Applies to New CI En gines Less than 175 hp, the Administrator Should Apply a New Construct Similar to a Within-the-Scope

Determination

It its July 2004 authorization request, ARB respect fully requested that the Administrator develop a new administrative construct for reviewin g and applying authorization requests for regulations that harmonize and align w ith federal requirements. As stated, such a construct would allow California to fully im plement and enforce its regulations to ensure the greatest emission benefits of the regula tion. An approach that allows California to fully administer its program from the beginning rather than having a bifurcated system under which federal administratio n of the program would be handed off to California once the authorization is granted makes for a more efficient and fair process. Allowing ARB to assume immediate responsi bility for administration of its own

76 Section 2479(e)(1)(B)1.b.

77 Supra. , p. 21.

78 Supra. , p. 23.28

program should also prove advantageous for all stak eholders who, from a business perspective, would benefit from consistent applicat ion and approach of a state-administered program.

ARB renews that request here. Although no authoriz ation has previously been granted to California for CI engines less than 175 hp, the criteria for granting a within-the-scope determination are fully satisfied. First, the emis sion standards for new CI engines less than 175 hp are, in the aggregate, at least as stri ngent as comparable federal regulations for such engine ratings. Consistent wi th the 1996 SOP, ARB adopted the

standards to harmonize with federal emission standa rds. Second, for the reasons set forth by U.S. EPA in adopting the federal Tier 4 st andards, the standards are technologically feasible given the lead time provid ed and the costs incurred to comply. Third, the CHE Regulation does not modify the test procedures for certificati on of federal and state Tier 4 engines. The procedures a re effectively identical and thus are not incompatible. Finally, no new issues are prese nted, even though the instant regulation is addressed to purchasers of non-yard t rucks with CI engines installed and not the manufacturers of such engines. As previous ly stated, the same issues were fully explored and discussed in U.S. EPA’s consider ation of technical feasibility for manufacturers in promulgating the federal standards

.

As discussed above, such a construct would allow Ca lifornia to fully implement and enforce its regulations to ensure the greatest emis sion benefits of the regulation. An approach that allows California to fully administer its program from the beginning rather than having a bifurcated system under which federal administration of the program

would be handed off to California once the authoriz ation is granted makes for a more efficient and fair process. Allowing ARB to assume immediate responsibility for administration of its own program should also prove advantageous for all stakeholders who, from a business perspective, would benefit fro m consistent application and approach of a state-administered program.

4. If Options 1 And 2 Are Not Available for Non-Yar d Truck Off-Road Applications, ARB Requests that the Administrator G rant a New Authorization for Option 3, and for Options 1 and 2 if He Cannot Confirm that the Latter Options Fall Within “Within-the-Scope” Type Constru cts

If Options 1 and 2 are not available for certain ne w non-yard truck off-road applications, ARB requests that the Administrator grant a new aut horization for Option 3. Although ARB requested authorization for Tier 1, 2, and 3 em ission standards in July 2004, it has not previously requested authorization for applicat ion of verified retrofit technologies (i.e., VDECS), nor has U.S. EPA considered VDECS in the context of non-yard truck applications. No basis exists for the Administrato r to deny this request.

ARB further requests that the Administrator issue a new authorization for Options 1 and 2, if he cannot apply the within-the-scope type con structs as requested by ARB in sections III.F.1. through 3. above.29

a. Protectiveness

As stated, in adopting Resolution 05-62 the Board f ound that to the extent the CHE Regulation

affects off-road vehicles or engines, the emission standards and other requirements related to the control of emissions ar e, in the aggregate, at least as protective of public health and welfare as applicab le federal standards. Federal and California emission standards for 2007 and subseque nt model-year on-road heavy-duty engines are aligned as are federal and state Tier 4 emission standards for off-road CI engines. As described above, there should be no qu estion that Options 1 and 2 are, in the aggregate, at least as stringent as federal emi ssion standards for new on-road and nonroad vehicle engines. To the extent that Option 3 is the only available option for certain non-yard truck applications prior to introd uction of new Tier 4 off-road engines, the requirements of Option 3 are more stringent tha n applicable federal regulations, which do not require VDECS for lower tier certifie d engines.

b. The Requirements are Necessary to Meet Compellin g and Extraordinary

Circumstances 79

For the reasons set forth in section III.E.3.b., 80 the Administrator cannot find that California does not need the adopted emission requi rements for newly acquired nonyard off-road vehicles to meet compelling and extra ordinary conditions.

c. Consistency

The requirements of title 13, CCR, section 2479(e)( 1)(B) are fully consistent with CAA section 209. First, by its terms, the requirements only apply to off-road sources, and not motor vehicles as defined by 40 CFR section 85.1703 . Second, the options do not apply to new nonroad engines under 175 hp used in f arm and construction vehicles or

to locomotives. 81 The options are also fully consistent with CAA se ction 202(a).

i. Option 1

Option 1 is consistent with section 202(a) in that the required technology is feasible given the lead time provided and the costs of compl iance. As stated, engine manufacturers will be producing engines meeting the 2007 on-road heavy-duty emission standards starting by January 2007. Moreo ver, Option 1 is only one of several options that an owner or operator may elect to use to comply with the regulation; to the extent that a non-yard, off-road vehicle can be equ ipped with an on-road engine, engines will be available at a compliance cost near that which is available for on-road vehicles. If an on-road engine cannot be used in a particular non-yard truck application, the owner and operator may elect to use one of the other two options.

79 see supra, at pp. 25-26.

80 Supra , at pp. 25-26.

81 CAA § 209(e)(1).30 ii. Option 2

In promulgating its nonroad Tier 4 emission standar ds, U.S. EPA fully considered and found the standards were achievable through applica tion of technology which the

Administrator determined will be available for the engines and vehicles to which such standards apply, giving appropriate consideration t o the cost of applying such technology within the period of time available to m anufacturers for compliance. 82 While

certification of interim Tier 4 standards for new o ff-road engines is not required prior to 2008 and will be phased in for most engine categori es over a four-year period, it is anticipated that some interim-certified Tier 4 engi nes will be available for purchase in 2007. To the extent that such engines are availabl e in the timeframes considered by U.S. EPA, Option 2 is consistent with CAA section 2 02(a). Indeed, the option does not accelerate compliance in that the CHE Regulation allows owners and operators to comply with the requirements by electing to use Opt ion 3 if Tier 4 engines are not available before the compliance dates under the res pective federal and state Tier 4 regulations.

iii. Option 3

As stated, Option 3 provides additional compliance flexibility by allowing the owner or operator to use a lower certified tier engine if ne ither Options 1 nor 2 are available. 83
Under the regulation, in such an event, the owner o r operator must install the highest available certified tier engine on newly acquired n on-yard trucks. If an owner or operator so elects, he must additionally commit to install the highest level of VDECS available within one year after the vehicle is acqu ired or, if a VDECS is not available by that date, within six months of a VDECS becoming av ailable. 84

As can be seen, Option 3 does not prohibit the acqu isition or use of equipment for which no VDECS technology exists. Owners and operators a re obligated to install such VDECS only upon the VDECS becoming available. As d iscussed in the Staff Report, ARB found that “[t]here are various advanced exhaus t aftertreatment technologies commercially available that can provide significant reductions in diesel PM, particularly

when combined with ultra low-sulfur diesel fuel.” 85 The principal technologies that have been successfully used to reduce diesel PM are dies el oxidation catalysts (DOCs), emulsified diesel fuel, and diesel particulate filt ers (DPFs). To date, several of these technologies have been verified as VDECS for certai n non-yard truck applications and can be used to meet the performance requirements of the proposed regulation. By providing such compliance flexibility, the requirem ents of Option 3 meet the consistency criteria of section 202(a).

82 CAA § 213(a)(3).

83 Section 2479(1)(B)1.c.

84 Id.

85 Staff Report, at V-4.31

G. In-Use Performance Standards for Yard Trucks

As discussed Part II of this document, the CHE Regulation requires that between December 31, 2007 and December 31, 2017, owners and operators convert their existing in-use yard truck fleet to vehicles having engines:

• certified to 2007 or later on-road emission standa rds for the model year of the year purchased as specified in title 13, CCR, secti on 1956.8; or

• certified to final Tier 4 off-road emission standa rds for the rated horsepower; or

• equipped with a VDECS that results in emissions le ss than or equal to the diesel

PM and NOx emission standards for a certified final Tier 4 off-road diesel engine of the same horsepower rating. 86

1. In-Use Yard Trucks Registered for On-Road Oper ation Do Not Require a

Waiver

To the extent the in-use performance standards appl y to non-new yards trucks registered for on-road operation, a waiver is not r equired. CAA section 209(a) preempts states from adopting or attempting to enforce stand ards relating to the control of

emissions from new motor vehicles or new motor vehi cle engines. By its terms, section 2459(e)(2) applies only to in-use (i.e., no n-new) motor vehicles.

2. The Administrator Must Grant California’s Reques t for Authorization for the Fleet Requirements for Non-New Off-Road Yard Trucks

a. Protectiveness

It cannot be disputed that the adopted in-use emiss ion requirements for the off-road yard truck fleet are at least as protective as publ ic health and welfare as applicable federal regulations. This is because the CAA does not invest U.S. EPA with authority to adopt regulations for non-new nonroad engines. 87 Consequently, since there are no applicable federal regulations for non-new nonroad engines, California’s requirements are, undisputedly, more stringent.

86 Section 2479(e)(2).

87 CAA § 213(a)(3) provides in pertinent part: “[T]he Administrator shall . . . promulgate (and from tim e to tie revise) regulations containing standards applic able to emissions from those classes or categories of

new nonroad engines and new nonroad vehicles. . . .” (Emphasis added.) See also Engine

Manufacturers Association v. U.S. EPA (D.C. Cir. 1996) 88 F.3d 1075.32 b. Extraordinary and Compelling Circumstances

For the reasons set forth in section III.E.3.b., 88 the Administrator cannot find that California does not need the adopted emission requi rements for non-new off-road yard to meet compelling and extraordinary conditions.

c. Consistency with CAA Section 209

By its terms, the CHE Regulation applies to off-road yard trucks and thus do not ap ply

to motor vehicles as defined in 40 CFR section 85.1 703, which are preempted under CAA section 209(a), or to nonroad engines preempted under CAA section 209(e)(1) – new nonroad engines under 175 hp used in farm and c onstruction equipment and vehicles and new engines used in locomotives. The optional requirements are also consistent with CAA sections 209(b)(1)(C) and 202(a ).

i. Option 1

In the first years of the regulation’s implementati on, it is expected that most, if not all owners and operators will elect the first option: r eplacing late model off-road yard trucks with vehicles equipped with certified 2007 and subs equent model year on-road heavyduty engines or re-powering such older vehicles wit h new certified on-road engines. As explained above, no technical feasibility issue exi sts with regard to availability of certified 2007 and subsequent year heavy-duty on-ro ad engines. 89 If owners and operators choose to comply by replacing or re-power ing with certified on-road engines, such engines should be readily available by the reg ulation’s initial compliance date, December 31, 2007. Turnover of most yard truck fle ets is fairly high, and since ARB has estimated that owners and operators of off-road yard trucks will incur little incremental cost in purchasing on-road engines in l ieu of off-road engines, the compliance costs should not be significant.

ii. Option 2

The Tier 4 standards are scheduled to be phased in starting in 2011 for most heavyduty engine horsepower ratings. In promulgating it s Tier 4 nonroad diesel regulation, U.S. EPA found that compliance was feasible by 2011 . Although some Tier 4 engines might be available in earlier years, it is not anti cipated that most owners and operators will avail themselves of this option during the fir st years of implementation, when they are required to begin updating the emission standar ds of their in-use fleets.

88 Supra , at p. 25.

89 See discussion supra at III.E.1, p. 20 and III.F.3.a., pp. 26-28.33 iii. Option 3

As stated, 2007 and later certified on-road engines should be readily available for owners and operators to convert their fleets to low er emitting engines by December 31, 2007. If they are not, the regulation provides a t hird option for compliance. However, this option may also not be available during the fi rst year of implementation. The first year of fleet conversion requires owners and operat ors to reduce emissions on pre2003 off-road yard trucks by December 31, 2007. By this date, ARB does not expect any VDECS to be verified that are capable of reduci ng pre-2003 engines (engines that

are either uncertified or certified to Tier 1 emiss ion standards) to at least final Tier 4 standards. Nonetheless, this is not expected to be a real-world problem because most yard trucks have a high turnover rate, and on-road engines under Option 1 are readily available. Further flexibility is provided by allo wing owners and operators to receive a compliance extension of up to one year for engines near retirement.

In later years, as the compliance schedule requires converting newer model-year vehicles that have engines certified to Tier 3 emis sion levels, VDECS will be available that will achieve the lower emissions equal to Tier 4 engine emission levels. For example, Huss Umwelttechnik has had a DPF verified as a Level 3 VDECS that will achieve at least 85 percent emission reductions on a Tier 3 engine, resulting in emissions equal to or less than Tier 4 emission sta ndards. ARB fully expects more

DPFs will be verified that will achieve such emissi on reductions in the coming months and years.

H. The Administrator Must Grant California’s Reques t for Authorization for Its Fleet Requirements for Off-Road Non-Yard Trucks

As explained above, 90 depending upon the category of non-new non-yard tr ucks (i.e., bulk container handling, bulk cargo handling, or ru bber-tired gantry cranes), the CHE Regulation requires that owners and operators convert their fl eet to lower emitting vehicles between December 31, 2007 and December 31, 2013. As with emission requirements for non-new yard trucks, California is not preempted by CAA section 209(a) from establishing emission standards for non-new, non-yard trucks and consequently does not have to receive a waiver from U.S. EPA. Recognizing, however,

that California must obtain an authorization for no n-new nonroad engines, ARB respectfully requests that the Administrator grant its request.

1. Protectiveness and Compelling and Extraordinary Need

For the reasons previously presented for granting a n authorization for the off-road yard truck fleet requirements, 91 the Administrator should similarly grant authoriza tion for the non-new non-yard truck fleet requirements. The Bo ard’s determination that the

90 Supra , pp. 8-12.

91 Supra , section III.F.34

adopted standards are at least as stringent as comp arable federal regulations is undisputedly neither arbitrary nor capricious. U.S . EPA does not have authority to adopt emission standards for non-new, nonroad engin es. 92 Moreover, it cannot be disputed that California has an extraordinary and c ompelling need for its own in-use fleet emission reduction program. 93

2. Consistency

The requirements for off-road non-yard truck fleets are consistent with CAA section 209. By the requirements’ terms, they do not apply to mo tor vehicles as defined by U.S. EPA and are, therefore, not preempted by CAA section 20 9(a). Moreover, the regulation is not intended to apply to new nonroad engines under 175 hp used in farm and construction equipment and vehicles or to those use d in locomotives, which are wholly preempted under CAA section 209(e)(1). Finally, th e regulations are consistent with CAA section 209(b)(1)(C) in that they are technolog ically feasible given the time for compliance after considering the cost of compliance

. 94

The regulation provides owners and operators of the various types of non-yard trucks with significant flexibility in complying with the fleet conversion requirements. As stated, they may elect any of three options for phasing in compliance of their fleets. In summary, they may replace or re-power existing vehi cles with 2007 and subsequent model-year certified on-road heavy-duty engines or certified Tier 4 off-road engines or retrofit earlier model-year certified on-road engin es or certified Tier 1 through 3 off-road engines or non-certified off-road engines with the highest level of VDECS available on the market at the time compliance is required. 95 Depending on the non-yard truck category and the level of VDECS initially used for compliance, the owner or operator may have additional compliance requirements to furt her upgrade or retrofit the engines to Tier 4 emission standards or to Level 3 VDECS by December 31, 2015.

In adopting these options, ARB recognized that 2007 model year on-road engines, Tier 4 off-road engines, and higher level of VDECS may not be available for all non-yard truck applications in the early years of the fleet conversion requirement. To that end, the regulation makes the options contingent upon av ailability, fully anticipating that some vehicle engines may not be able to achieve max imum emission reductions immediately. However, as previously presented, in the year since the regulation’s adoption, one manufacturer, Huss Umwelttechnik, has had a DPF verified as a Level 3 VDECS for use on all on-road and off-road engines t hrough the 2006 model year. 96 If for some reason VDECS are not presently applicable, the regulation effectively provides

92 CAA § 213.

93 see supra , section III.E.3.b.

94 CAA § 202(a).

95 Non-certified engines are engines that were manufa ctured prior to the effective date requiring certification on new off-road engines under title 1 3 CCR, section 2423.

96 See ARB Verification Program web page at http://ww w.arb.ca.gov/diesel/verdev/level3/level3.htm35

more than 11 years, to December 31, 2015, for full compliance to the maximum

emission reduction levels.

Beyond the flexibility provided directly by the opt ions, an owner or operator, if necessary, may apply for various compliance extensi ons. 97 They also may request that the Executive Officer approve alternative complianc e plans that will ensure comparable emission reductions but provide owners and operator s with additional flexibility in how they wish to operate their fleets. 98

Finally, no issue regarding compatibility of federa l and state certification procedures for on-road or off-road engines exists.

I. In-Use Fuel Requirements

Under the CAA and U.S. EPA’s regulations, Californi a does not need to obtain a waiver or authorization from U.S. EPA for requirements per taining to fuel specification standards. As the regulation applies to on-road mo tor vehicles, CAA section 211(c)(4)(B) provides that “[a]ny State for which a pplication of section 209(a) has at any time been waived under section 209(b) may at any ti me prescribe and enforce, for the purpose of motor vehicle emission control, a contro l or prohibition respecting any fuel or fuel additive.” Moreover, in the 2004 federal rule establishing Tier 4 emission standard for nonroad engines, U.S. EPA opined that the preem ption prohibiting states from adopting fuel specification standards and enforceme nt procedures for motor vehicles does not apply to nonroad engines. 99

J. Record-Keeping Requirements

The record-keeping requirements of the CHE Regulation are intended to ensure compliance and effective enforcement of the incorpo rated emission standards. The requirements are thus accompanying enforcement prov isions, which do not undermine the Board’s determination that the regulation, in t he aggregate, is as protective of public health and welfare as applicable federal regulation s. In adopting the record-keeping provision, the Board made a further finding that th e requirements were necessary to protect public health, safety and welfare of reside nts of the state. 100 No issue regarding the costs of compliance with the record-keeping req uirements was raised during the rulemaking process.

97 See summary, supra , at II.B., pp. 12-13.

98 Supra , p.13.

99 Control of Emissions of Air Pollution From Nonroad Diesel Engines and Fuel , 69 Fed.Reg 38958 (June 29, 2004) [“today's action does not preempt state c ontrols or prohibitions respecting characteristics or components of fuel or fuel additives used in nonroa d [engines].”] See also U.S. EPA’s direct final r ule,

Control of Air Pollution: Emission Standards for Ne w Nonroad Compression-Ignition Engines at or Above 37 Kilowatts; Preemption of State Regulation for No nroad Engine and Vehicle Standards; Amendments to

Rules , 62 Fed.Reg.67733, fn 128 (December 30, 1997), ame nding Appendix A [section 209 does not preempt states from “regulating the use and operati on of nonroad engines, such as sulfur limits on fue l.”]

100 Resolution 05-62.36

To the extent the record-keeping requirements help enforce elements for which we seek confirmation that the elements are within the scope of previous waivers or authorizations, we request the confirmation decisio n include the record-keeping requirements. To the extent they help enforce elem ents for which we seek a new authorization, we similarly request that the author ization include the record-keeping requirements.

IV. CONCLUSION

Based on the foregoing, ARB respectfully requests t hat the Administrator grant California’s request for waiver and authorization a ctions pursuant to CAA section 209. To assist you in reviewing the regulation, ARB is e nclosing the following documents that it is incorporating into the record of this waiver proceeding.

1. Notice of Public Hearing to Consider the Adoptio n of a Proposed Regulation for Mobile Cargo Handling Equipment at P orts and Intermodal Rail Yards, Issued October 11, 2005.

2. Staff Report: Initial Statement of Reasons for P roposed Rulemaking, with Appendices issued October 11, 2005,.

3. Resolution 05-62, dated December 8, 2005.

4. Notice of Availability of Modified Text, issued May 17, 2006.

6. Executive Order G-05-010, dated October 17, 2 006.

7. Final Statement of Reasons for Rulemaking Includ ing Summary of Comments and Agency Response.

8. Final Regulation Order for title 13, California Code of Regulations,

section 2479.

ARB Contacts:

Technical questions or requests for additional tech nical information on this item should be directed to Dan Donohoue, Chief of ARB’s Emissio ns Assessment Branch, Stationary Source Division, at (916) 322-6023.

Legal questions should be directed to Michael Terri s, ARB’s Office of Legal Affairs, at (916) 445-9815.