BEFORE THE

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

In the Matter of California’s Request for

Waiver Action Pursuant to Clean Air Act Section 209(b) for Amendments to

California’s Zero Emission Vehicle Regulation and Low Emission Vehicle Regulation s

__________________________________ ) ) ) ) ) )

CLEAN AIR ACT § 209(b) WAIVER SUPPORT D OCUMENT SUBMITTED BY THE

CALIFORNIA AIR RESOURCES BOARD

May 2012

I. INTRODUCTION

California’s Air Resources Board ( C ARB or the Board ) has developed the Advanced

Clean Cars program, a pioneering approach of a “package‟ of regulations that , although separate in construction

, are related in terms of the synergy developed to address

interrelated ambient air quality needs and climate change.

The Advanced Clean Cars program combines the control of smog, soot causing pollutants and greenhouse gas emissions into a single coordinated package of requirements for model years (MY) 2015 through 2025 a nd assures the development of environmentally superior passenger vehicles . The Ad vanced Clean Cars package

includes amendments to three regulations: the Low Emission Vehicles regulation (LEV), the Zero Emission Vehicles regulation (ZEV), hereinafter “2012 ZEV /LEV
Amendments,” and the Clean Fuels Outlet regulation. Two of these regula tions, LEV and ZEV, require a federal waiver submittal under the Clean Air Act (CAA)

.

The earliest requirements of the LEV regulation as amended are set to affect MY 2014 vehicles. Consequently, manufacturers would benefit from the increased lead time that an expedited consideration of this waiver request would allow. The remainder of this support document provides background for California’s LEV and ZEV regulations,
details their recent amendments, and gives the basis for C ARB’s waiver or within the

s cope request for each.

II. ZEV REGULATION

A. BACKGROUND AND WAIVER HISTORY

In 1990, C ARB adopted an ambitious program to significantly reduce the environmental impact of light

- duty vehicles through the commercial introduction of ZEVs into the California

flee t. The ZEV program , which was a part of California’s first

- generation low

- emission2 vehicle regulation s (LEV I)

, has been modified five times since its inception

– in 1996,

199 8/1999 , 2001, 2003, 2008, and most recently in 2012

. 1

The 2012 ZEV amendments flow from the Board ’s 2008 direction to CARB staff to redesign the 2015 and subsequent MY requirements for the ZEV regulation. The Board directed its staff to strengthen the regulation above what was currently required and focus primarily on

zero emissio n drive, that is battery electric vehicle ( BEV ) , hydrogen fuel cell electric vehicle ( FCV ) , and plug

- in hybrid electric vehicle ( PHEV ) technologies. The goal of the Board

direction was to maintain California as the central location for moving advanced, lo w greenhouse gas (GHG) technology vehicles from the demonstration phase to

commercialization.

In 2009, CARB staff analy zed pathways to meeting California’s long term 2050 GHG reduction goals in th e light

- duty vehicle subsector. The analysis showed that ZEVs w ould need to reach nearly 100 percent of new vehicle sales between 2040 and 2050, with commercial markets for ZEVs launching in the 2015 to 2020 timeframe. The analysis concluded that even widespread adoption of advanced conventional technologies, like non

plug

- in hybrid electric vehicles ( HEV )

, would not be enough to meet the 2050 GHG targets. Staff presented its findings at the December 2009 Board hearing.

At the December 2009 hearing, the Board adopted Resolution 09

- 66, reaffirming its

commit ment to meeting California’s long term air quality and climate change reduction goals through commercialization of ZEV technologies. The Board further directed staff to consider shifting the focus of the ZEV regulation to both GHG and criteria pollutant

e mission reductions, commercializing ZEVs and PHEVs in order to meet the 2050 goals,

and to take into consideration the new LEV fleet standards and propose revisions to the ZEV regulation accordingly.

In addition to the Board’s directives, i n 2010, Pres ident Barack Obama directed the United States Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) to work with California to develop GHG fleet standards

for MY 2017 through 2025 LDVs. The Joint Technical Assess ment Report (TAR) , which was developed by EPA, NHTSA, and CARB, was released in September 2010. The report concluded “electric drive vehicles including hybrid(s)...battery electric vehicles...plug

- in hybrid(s)...and hydrogen fuel cell vehicles...can dramatically reduce petroleum consumption and GHG emissions compared to conventional technologies...

. The future rate of penetration of these technologies into the vehicle fleet is not only

related to future GHG and corporate average fuel economy (CAFE) standards, but also to future reductions in HEV/PHEV/EV [electric vehicle] battery costs, [and] the overall performance and consumer demand for the advanced technologies...

. ” 2 Manufacturers confirmed in meetings leading up to the release of the TAR their commitment to dev elop

1 A detailed account of these modifications, and their waiver history, can be found in 71 Fed Reg 78190

- 78191(Dec. 28, 2006) and 76 Fed Reg 61095

- 61096 (Oct 3, 2011).

2 EPA, 2010. United States Environmental Pr otection Agency, National Highway Safety and Traffic Administration and California Air Resources Board. September 2010. “ Interim Joint Technical Assessment Report: Light

- Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy St andards for Model Years

2017

- 2025” (p. vii)

.3 ZEV technologies. “...[A] number of the firms suggested that in the 2020 timeframe their U.S. sales of HEVs, PHEVs, and EVs [electric vehicle] combined could be on the

order of 15

- 20 percent of their production.” 3

For the California ZEV rulemakings de scribed above, the Board sought and obtained waivers of federal preemption from the EPA under Clean Air Act (CAA) section 209(b). EPA granted California an initial waiver of federal preemption for California’s original 1990 ZEV requirements in January 199 3 as part of the LEV I waiver. 4 In January 2001, it found that the Board’s 1996 ZEV amendments, which amended manufacturer ZEV production mandates for MY 1998 through 2002, were within the scope of the originally granted 1993 waiver. 5 In December 2006, E PA determined that the 1999, 2001, and 2003 ZEV amendments as they applied to 2007 and prior MY passenger cars and light

duty trucks equal to or less than 3

, 750 pounds loaded vehicle weight (LDT1) also fell within the scope of the 1993 waiver. 6 It further granted California a new waiver for MY 2007 through 2011 passenger cars and light

- duty trucks, including light

- duty trucks with a loaded vehicle weight greater than 3

, 750 pounds (LDT2). 7

In its December 2006 decision

, EPA expressly made no finding as t o MYs 2012 and

later. 8 In September 2009

, CARB submitted a Waiver request to EPA seeking confirmation that amendments to the ZEV regulation adopted in 2008, as they relate to the vehicles of 2011 and earlier MYs, were within the scope of EPA’s prior ZEV w aivers. Additionally, CARB sought confirmation that its 2008 ZEV amendments, as they relate to 2012 and later MYs, were within the scope of EPA’s prior waivers or otherwise met the criteria for a waiver of preemption. On October 3, 2011, EPA determined t hat amendments to the ZEV regulations, as they affected 2011 and prior MYs, were within the scope of previous waivers for the ZEV regulations (or in the alternative qualified for a new waiver). 9 At that time EPA also granted a waiver allowing California t o enforce the 2008 ZEV amendments as they affected 2012 and later MYs

. 10

B. 2012 ZEV AMENDMENTS

The subject amendments to California’s ZEV regulation are described below in two part s based on the time frame durin g which they apply. These time frames are : 1) MY 2012 through 2017 ; and 2) MY 2018 and beyond. The amendments identified in this section B. represent the most significant changes during each of these time frames.

3 Id . at pp. 2

- 5

. 4 58 Fed.Reg. 4166 (Jan. 13, 1993).

5 66 Fed.Reg. 7751 (Jan. 25, 2001). See section IV.A.1., infra , for discussion of EPA’s within the scope analysis.

6 71 Fed.Reg. 78190 (Dec. 28, 2006). In t he alternative, EPA found that the amendments affecting these vehicles also met the requirements for a granting of a full waiver. Id., Decision Document accompanying waiver decision at p. 61.

7 Id.

8 Id

. 9 76 Fed.Reg. 61095 (Oct. 3, 2011).

10 Id.4 1. 2009 through 2017 Model Year Amendments

C ARB ’s goal for amendments affecting the curre nt ZEV regulation through MY 2017

was to make minor mid

- course corrections and clarifications and to enable manufacturers to successfully meet 2018 and subsequent MY requirements. The se amendments include d :

a. Provi sion of Compliance Flexibility: Remove d c arry forward credit limitations
for ZEVs, allowing manufacturers to bank ZEV credits indefinitely for use in
later years. Slightly reduce d the 2015 through 2017 credit requirement for
intermediate volume manufacturers (IVM, less than 60,000 vehicles pr oduced
each year), to allow them to better prepare for requirements in 2018.

Extend ed the provision that allows ZEVs placed in any state that has adopted
the California ZEV regulation to count towards the ZEV requirement through
2017 (i.e. extending t he “travel provision” for BEVs through 2017).

b. Adjus tment of Credits and Allowances: Increase d credits for Type V (300
mile FCV) ZEVs to appropriately incentivize this longer

- term technology.

c. Add ition of New Vehicle Category: Add ed Type I.5x and Typ e IIx vehicles
(collectively “BEVx” vehicles) as a compliance option for manufacturers to
meet up to half of their minimum ZEV requirement. The proposed vehicle

types are closer to a BEV than to a PHEV , in that they are vehicles primarily
designed for zero

- emission operation but are equipped with a small non

ZEV fuel auxiliary power unit (APU) to be used only for limited range

extension if the zero

- emission capacity is depleted

.

2. 2018 and Subsequent Model Year Amendments

CARB ’s goal for amendments a ffecting 2018 and subsequent MY s is to ac hieve ZEV

and transitional zero

- emission vehicle (TZEV; most commonly a PHEV) commercialization through simplifying the regulation and pushing technology to higher volume production in order to achieve cost reductio ns. The amendments include d :

a. Increase d ZEV Requirement for 2018 and Subsequent MYs : Increase d
requirements which push ZEVs and TZEVs to over 15 percent of new sales
by 2025. This will ensure production volumes are at a level sufficient to bring

batt ery and fuel cell technology down the cost curve and reduce incremental
ZEV prices.

b. Regulation Focused on ZEVs and TZEVs : Remove d PZEV (near

- zero emitting conventional technologies) and advanced technology PZEV
(AT PZEV, typically non

- plug

- in HEVs) c redits as compliance options for5 manufacturers because these technologies are now commercialized and their
emissions are better reflected in the LEV III program. Allow ed manufacturers
to use banked PZEV and AT PZEV credits earned in 2017 and previous M Ys

, but discount the credits, and place a cap on usage in 2018 and subsequent

MYs . Focus ed the 2018 and subsequent MY requirements on ZEVs and

TZEVs

c. Amend ed Manufacturer Size Definitions, Ownership Requirements, and

Transitions : Amend ed IVM and la rge volume manufacturer (LVM) size
definitions to bring all but the smallest manufacturers under the full ZEV
requirements by MY 2018. Align ed LEV III and ZEV ownership
requirements, so that manufacturers who own more than 33.4 percent of each

other a re considered as the same manufacturer for determination of size.

Modif ied transition periods for manufacturers switching size categories.
These changes result in applying the ZEV regulation to manufacturers that

re present 97 percent of the light

- duty vehicle market.

d. Modif i ed Credit System : Base d credits for ZEVs on range, with

50 mile BEVs earning 1 credit each and 350 M ile FCVs earning 4 credits

each. Allow ed extended range BEVs (BEVx) which have a limited
combustion engine range extender to me et up to half of a manufacturer’s
minimum ZEV requirement . The range of credit reflect s the utility of the
vehicle (i.e. the zero emitting miles it may travel) and its expected timing for
commercialization. Simplif ied and streamline d TZEV credit s base d on the

vehicle’s zero

- emission range capability, and their ability to perform at least
10 miles on the more aggressive US06 drive schedule. In addition to
simplifying the program, reducing the spread of credits m akes the
technologies more evenly tre ated and reduces the var iation in compliance
outcomes (numbers of vehicles produced to meet the regulation
requirements).

e. Modif i ed Travel Provision: End ed the Travel Provision for BEVs after MY

2017. Extend ed the Travel Provision for FCVs until suffi cient
complementary polices are in place in states that have adopted the California
ZEV regulation. This will allow FCV technology to continue to mature and
provide time for S ection 177 s tates to build infrastructure and put in place

incentives to fos ter FCVs.

f. Added GHG

- ZEV Over

- Compliance Credits: Allow s manufacturers who
systematically over comply with the proposed LEV III GHG fleet standard to
offset a portion of their ZEV requirement in 2018 through 2021 MYs only.6 3. Effect of Amendments

As a result of the 2012 amendments , over 1.4 million ZEVs and TZEVs are expected to be produced cumulatively in California by 2025, with 500,000 of those vehicles being pure ZEVs (BEVs and FCVs) as represented in the top two wedges in the figure below

.

Expe cted ZEV Regulation Compliance for 2018 through 2025 Model Years

During this timeframe, the incremental price of a ZEV or TZEV is expected to rapidly decline, yet remain hig her than a conventional vehicle by approximately $10, 000 (high

end estimate in 2025 ).

The 2012 am endments will also result in a n emissions benefit as compared to the

earlier ZEV regulations and will likely provide benefits beyond one achieved by complying with the LEV III criteria pollutant standard with c onventional vehicles only. This is due to increased electricity and hydrogen use that is more than offset by decreased gasoline production and refinery emissions.7 III

. CALIFORNIA’S LOW EMISSION VEHICLE PROGRAM FOR LIGHT

- DUTY

VEHICLES

A. BACKGROUND

Despite significant progress in reducing smog

- forming and particulate matter criteria emissions from the passenger vehicle fleet, California needs further reductions in order to meet State and federal ambient air quality standards. Additionally , climate c hange continues to pose a serious threat to the economic well

- being, public health, natural resources, and environment of California. To address the challenge presented by climate change, vehicle GHG emissions must be drastically reduced to meet our state goal of an 80 percent reduction from 1990 levels by 2050. To address these issues

, CARB adopted its LEV III program as described below.

1. Criteria Emissions

In 1990, CARB established the LEV program that contained the most stringent exhaust

emission re gulations ever for light

- duty passenger cars and trucks. The regulations

in cluded three primary elements: 1) tiers of increasingly stringent exhaust emission

standards ; 2) a fleet

- average emission requirement for 1994

- 2003 that required

manufacturers to phase

- in a progressively cleaner mix of vehicles from year to year ; and 3) a requirement that a specified percentage of passenger cars and lighter light

duty trucks be ZEVs, vehicles with zero emissions of any pollutants. EPA granted

CARB ’s associated wai ver request on February 13, 1993. 11

In 1999, C ARB adopted the second phase of the LEV program. These amendments, known as LEV II, set more stringent fleet average non

- methane organic gas (NMOG) requirements for MY s 2004

- 2010 for passenger cars and light

- duty trucks and established a new more stringent super ultra

- low emission vehicle (SULEV) standard. In addition, a partial zero

- emission vehicle (PZEV) category was established for vehicles meeting the SULEV emission standard that also included extended 150,000

- mile durability, zero fuel evaporative emissions, and extended emission warranty requirements. PZEVs could be used to meet a portion of the zero

- emission vehicle requirement. The amendments also expanded the light

- duty truck category to include

t rucks and sports utility vehicles ( SUV ) up to 8,500 lbs . gross vehicle weight rating (GVWR) and required these vehicles to meet the same emiss ion standards as

passenger cars and extended full useful life from 100,000 miles to 120,000 miles. The

LEV II ame ndments also established more stringent emission standards for medium

duty vehicles (MDV) between 8,501

- 14,000 lbs. GVW. EPA granted C ARB’s associated waiver request on August 5, 1999. 12 EPA has also found that CARB’s other amendments to the LEV program w ere either within the scope of previous waivers or qualified for a waiver on their own. EPA took final action on these waiver requests on April 22, 2003 13 , April 28, 2005 14 , and July 30, 2010

. 15

11 58 Fed .Reg. 4166 (January 13, 1993).

12 64 Fed.Reg. 42689 (August 5, 1999).

13 68 Fed.Reg. 19811 (April 22, 2003).8 2. Greenhouse Gas Emissions

Recognizing the increasing threat of climate change to the well

- being of California’s citizens and the environment, in 2002 the legislature adopted and the Governor signed

A ssembly B ill (AB) 1493 (Chapter 200, Statutes 2002, Pavley). AB 1493 directed

C ARB to adopt the maximum feasible and c ost

- effective reductions in GHG emissions from light

- duty vehicles. Vehicle GHG emissions included carbon dioxide (CO 2 ), methane (CH 4 ), and nitrous oxide (N 2 O) that are emitted from the tailpipe, as well as emissions of HFC134a, the refrigerant then curre ntly used in most vehicle air conditioning systems.

As directed by AB 1493, C ARB adopted what is commonly referred to as the Pavley regulations, the first in the nation to require significant reductions of GHGs from motor vehicles. These regulations, c overing the 2009

- 2016 and later MY s, call for a 17
percent overall reduction in climate change emissions from the light

- duty fleet by 2020

and a 25 percent overall reduction by 2030. They also formed the foundation for the federal GHG program for light

- du ty vehicles for 2012

- 2016 MY s. EPA granted C ARB’s associated waiver request on July 8, 2009

. 16

After the Board adopted the Pavley regulations, the legislature adopted and the Governor signed AB 32, the California Global Warming Solutions Act (Chapter 488, Statutes 2006, Nuñez/Pavley). AB 32 charges C ARB with the responsibility of monitoring

, regulating , and reducing GHG emissions in the State. AB 32 also directed

CARB to prepare a Scoping Plan outlining the State’s strategy to achieve the maximum

feasibl e and cost

- effective reductions in furtherance of reducing GHG emissions to 1990 levels by 2020. Measure T1 of the Scoping Plan anticipates an additional 3.8 million metric tons carbon dioxide equivalent (MMTCO 2 e) reduction by 2020 from the subject regula tory amendments

, beyond the GHG reductions arising from the 2009

- 2016

AB 1493 standards.

In addition, in 2005, in order to mitigate the long

- term impacts of climate change, the

Governor issued Executive Order S

- 3

- 05. Among other actions, the Executive Or der called for reducing GHG emissions to 80 percent below 1990 levels by 2050. This ambitious yet achievable reduction path and goal are considered necessary to stabilize the long

- term climate. The subject amendments’ 2021

- 2025 MY requirements will

furth er both AB 32 and the 2050 reduction goal.

As mentioned earlier, in 2010, President Barack Obama directed the EPA and NHTSA to work with California to develop GHG fleet standards for MY 2017 through 2025

LDVs. 17 The resulting jointly developed report conc luded “electric drive vehicles

14 70 Fed.Reg. 22034 (April 28, 2005).

15 75 Fed.Reg. 44951 (July 30, 2010).

16 74 Fed.Reg. 32744 (July 8, 2009).

17 http://www.whitehouse.gov/the

- press

- office/presidential

- memorandum

- regarding

- fuel

- efficiency

standards9 including hybrid(s)...battery electric vehicles...plug

- in hybrid(s)...and hydrogen fuel cell vehicles...can dramatically reduce petroleum consumption and GHG emissions compared to conventional technologies.... The future rate of pene tration of these technologies into the vehicle fleet is not only related to future GHG and CAFE standards, but also to future reductions in HEV/PHEV/EV [electric vehicle] battery costs, [and] the overall performance and consumer demand for the advanced

tec hnologies....” 18 Following development of this report, NHTSA and EPA formally issued a Notice of Joint intent to develop strong greenhouse gas and fuel economy

stan dards for the 2017 to 2025 time frame, 19 and 14 automobile manufacturers have joined CARB in sub mitting letters to EPA committing to a continued national program of light

- duty GHG and CAFÉ standards 20

.

B. SUMMARY OF RECENT LEV III AMENDMENTS INCLUDING GHG

COMPONENTS

In order to achieve further emission reductions from the light

- and medium

- duty fleet, CARB adopted several amendments that together represent a significant strengthening of the LEV program. Specifically, the criteria emission requirements of the program are made substantially more stringent

, and the GHG requir ements are restructured to

pr ovide for later acceptance of the EPA and National Highway Traffic Safety Administration (NHTSA) proposed 2017

- 2025 federal GHG emission and fuel economy standards for light

- duty vehicles as compliance with CARB standards

. 21 Effectively,

these amendments w ill do the following :

Criteria Pollutants:

• Reduce fleet average emissions of new light

- duty vehicles to SULEV levels
by 2025, an approximate 75 percent reduction from 2010 levels ;

• Replace separate NMOG and oxides of nitrogen (NOx) standards with

combined NMOG plus NOx standards , in order to provide manufacturers
with compliance flexibility to more cost

- effectively meet SULEV emission
levels across their light

- duty fleets ;

• Establish additional emission standard categorie s, such as ULEV70,

ULEV50, and SULEV 2 0 in order to provide additional options for compliance
with the SULEV fleet average ;

• Eliminate intermediate useful life (50,000 miles) standards;

• Increase full useful life durability requirements from 120,000 miles to 150,000

miles;

18 EPA, 2010. United States Environmental Protection Agency, National Highway Safety and Traffic Administration and California Air Resources Board. September 2010. “ Interim Joint Technica l Assessment Report: Light

- Duty Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel Economy Standards for Model Years

2017

- 2025” (p. vii)

. 19 76 Fed.Reg. 48758 (August 9, 2011).

20 http://www.epa.gov/otaq/climate/letters.htm#2011al

21 CARB Re solution 12

- 11, January 26, 2012 (p. 6).10 • Provide a backstop to help ensure continued production of SULEVs after
PZEVs migrate from the ZEV program to the LEV program in 2018. Without
a backstop, beginning in 2018, manufacturers would not need to produce
SULEVs until 2023 in order to meet the fleet average requiremen t;

• Establish more stringent emission requirements for MDV s ;

• Require all MDVs between 8,501

- 10,000 lbs. , GVWR to certify on a chassis
dynamometer, which would greatly enhance the ability to perform in

- use compliance evaluation of these vehicles;

• Establish m ore stringent 3 mg/mi and 1 mg/mi particulate matter (PM)

standards for light

- duty vehicles and more stringent PM standards for

medium

- duty vehicles;

• Establish zero fuel evaporative emission standards for light

- duty vehicles

, and more stringent evaporativ e emission standards for medium

- , and heavy

duty vehicles;

• Establish more stringent supplemental federal test procedure (SFTP,
reflecting more aggressive driving) standards for light

- duty vehicles and, for
the first time, require medium

- duty vehicles to me et SFTP standards;

• Allow pooled fleet average NMOG plus NOx emissions from California and

the federal CAA Section 177 States that adopt the LEV III program; and

• Revise the NMOG Test Procedures.

Green h ouse Gases:

• R educe new light

- duty CO 2 emissions from new light

- duty re gulatory MY
2016 levels by approximately 34 percent by MY 2025, and from about 251
grams of CO 2 per mile to 166 g rams , based on the projected mix of vehicles

sold in California ;

• Set emission standards for CO 2 , CH 4 , and N 2 O;

• Establish footp rint based CO 2 emission standards, as distinguished from the
current California GHG requirement of a fleet average GHG standard. This

will allow manufacturers’ new vehicle fleet CO2 emissions to fluctuate
according to their car

- truck composition and sales according to vehicle
footprint and will align the requirement with current federal GHG
requirements;

• Provide credits toward the CO 2 standard if a manufacturer reduces
refrigerant e missions from the vehicle’s air

- conditioning system ;

• Provide credits toward the ZEV standards if a manufacturer over complies

with the LEV III GHG fleet requirement;

• Provide credits towards the CO 2 standards if a manufacturer produces full
size pickups with high efficiency drivetrains;11 • Provide credits for deployment of technologi es that reduce off

- cycle CO 2 emissions; and

• Unlike the proposed federal GHG program for 2017

- 2025, require upstream

emissions from zero

- emission vehicles to be counted towards a
manufacturer’s light

- duty vehicle GHG emission s

.

IV. WAIVER ANALYSIS

A. CRITERI A FOR DETERMINING WH ETHER AMENDMENTS QUA LIFY FOR A

WAIVER OF PREEMPTION OR ARE WITHIN THE SCOPE OF PREVIOUS

WAIVERS OF FEDERAL P REEMPTION

1. The C lean A ir A ct Section 209(b) Waiver Mechanism

CAA s ection 209(a) preempts s tates from adopting or enforcing any emission standard for new motor vehicles and from requiring certification, inspection, or any other approval relating to the control of emissions from any new motor vehicle as a condition of registration or titling in the s tate s . However, section 209(b) directs the Administrator to waive federal preemption for new motor vehicle emission standards adopted and enforced by California 22 if the State determines that the State standards will be, in the aggregate, at least as protective of public health and welfa re as applicable federal standards. The Administrator is to deny a waiver on a finding : (1) that the protectiveness determination of the State is arbitrary and capricious, (2) that California does not need separate State standards to meet compelling and extraordinary conditions, or (3) that the State standards and accompanying enforcement procedures

are not consistent with CAA section 202(a). With regard to the consistency criterion, the Administrator has stated that California’s standards and accompanyi ng test procedures are inconsistent with section 202(a) if: (1) there is inadequate lead time to permit the development of technology to meet those requirements, giving appropriate

consideration to the cost of compliance within that time frame, or (2) the federal and California test procedures impose inconsistent certification requirements so as to make manufacturers unable to meet both sets of requirements with the same vehicle. 23

For nearly 30 years, EPA has administered a mechanism under which, in app ropriate cases, no new waiver is needed for amendments to California’s motor vehicle emission control regulations for new motor vehicles because the amendments are within the

22 The section 209(b) waiver provisions apply to any state which has adopted standards (other than crankcase emission standards) for the control of emissions from new motor vehicles or motor vehicle engines prior to March 30, 1966. (Clean Air Act §209(b)(1).) California is the only state that meets this condition. (S. Rep. No. 403, 90th Cong. 1st Sess., 532 (1967); Motor and Equipment Manufacturers Ass'n v. EPA [MEMA I] , 627 F.2d 1095, 1100 note 1 (D.C.Cir. 1979). ).

23 See, e.g., 46 Fed.Reg. 26371 (May 12, 1981). Even where there is incompatibility between the California and federal test procedures, EPA has granted a waiver under circumstances where EPA accepts a demonstration of federal compliance based on Califor nia test results, thus obviating the need for two separate tests. (43 Fed.Reg. 1829, 1830 (Jan. 12, 1978); 40 Fed.Reg. 30311, 30314 (July 18, 1975).).12 scope of previously issued waivers. 24 As the Assistant Administrator stated in th e 2001 finding that repeal of the ZEV sales requirements for MYs 1998

- 2002 was within the scope of previous waivers

, a n amendment may be considered to be within the scope of a previously granted waiver if it does not undermine California’s determination th at its standards, in the aggregate, are at least as protective of public health and welfare as comparable Federal standards, does not affect the consistency of California’s requirement s with CAA section 202(a) , and raises no new issues affecting EPA’s

prev ious waiver determination. 25

The individual elements of section 209(b) are discussed below as follows. CARB’s protectiveness determination for the 2012 amendments to both the ZEV and LEV regulations is discussed below in Section IV. B . The necessity of t he amendments to both the ZEV and LEV regulations to meet compelling and extraordinary conditions is

discussed in Section IV. C . The ZEV amendments’ consistency with section 202(a) is

discussed in Section IV. D. and E. The ZEV amendments’ qualifications for a waiver if they are not deemed to qualify as within the scope are discussed in Section IV. F. T he

LEV amendments’ qualifications for a waiver are discussed in Section IV. G

.

2. The Scope of EPA’s Inquiry in a Waiver Proceeding I s Limited

The scope o f the Administrator’s inquiry in determining whether to deny a waiver or

within

- the

- scope request is limited by the express terms of CAA section 209(b). Thus, once California determines that its standards are, in the aggregate, at least as protective of p ublic health and welfare as applicable federal standards, the Administrator must grant the waiver request unless one of the three specified findings

can be made. As Administrator Ruckelshaus stated in a 1971 decision:

The law makes clear that the waiver request cannot 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 commensurate to its costs or

i s otherwise an arguably unwise exercise of regulatory power is not legally pertinent to my decision under Section 209, so long as the California requirement is consistent with S ection 202(a) and is more stringent than applicable Federal requirements in the sense that it may result in some further reduction in air pollution in California. 26

24 See, e.g., 46 Fed.Reg. 36742 (July 15, 1981); 51 Fed.Reg. 12391 (April 10, 1986).

25 Decision Document accompanying scope of waiver determination in 66 Fed.Reg. 7751 (Jan. 25, 2001)

at 9.

26 36 Fed.Reg. 17458 (Aug. 31, 1971), quoted on pp. 8

- 9 of the Decision Document accompanying

66 Fed.Reg. 7751 (Jan. 25, 2001), which notes that the “more stringent” termin ology reflected the

section 209(b) requirement before the 1977 amendments to the Clean Air Act substituted the reference to California standards that are, in the aggregate, at least as protective as comparable Federal standards.13 3. Deference Should be Given to California’s Policy Judgments

In granting waivers to California’s motor vehicle program, EPA has routinely deferred to the policy judgments of California’s decision makers. The agency has recognized that the intent of Congress in creating a limited review of California’s determinations that

California needs its own State separate standards was to ensure that the federal
government would not s econd

- guess the wisdom of S tate policy. 27 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 a n EPA practice of leaving the decis ion on ambiguous and controversial matters of public policy to California’s judgment.

* * * * * * It is worth noting . . . I would feel constrained to approve a California approach to the problem which I might also feel unable to adopt at the federal level in my own capacity as a regulator. The whole approach of the Clean Air Act is to force the development of new types of emission control technology where that is needed by compelling the industry to “catch up” to some degree with newly pr omulgated standards. Such an approach . . . may be attended with costs, in the shape of a reduced product offering, or price or fuel economy penalties, 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 these risks and costs against the potential benefits from reduced emissions is a central policy decision for any regulatory agency under the statutory scheme outlined above, I believe I am required to give very substantial de ference to California’s judgments on this score

. 28

In 2009

, EPA reiterated its recognition that Congress intended EPA to show great

deference to California’s decision making when analyzing a waiver request for

California’s GHG standards for new vehicles. 29 In that decision, the administrator

considered the fact that Congress had the opportunity to restrict CAA’s waiver provision as part of its 1977 amendments to the CAA and had instead elected to highlight the utility of California’s flexibility to adopt a complete program of motor vehicle emission controls as the state saw fit. The administrator interpreted Congress’ act as showing its intent “to afford California the broadest possible discretion in selecting the best means to protect the health of its cit izens and the public welfare.” 30

27 40 Fed.Reg. 23102, 23103 (May 28, 1975).

28 40 Fed.Reg. 23102, 23104 (May 28, 1975; emphasis added). See also Decision Document accompanying waiver determination in 58 Fed.Reg. 4166 (Jan. 13. 1993).

29 74 Fed.Reg. 32744 (July 8, 2009).

30 Id . at p. 32748.14 4. The Burden of Proof Is On Those Opposed to the Waiver Request

It is well settled that the burden to demonstrate that EPA should not grant a waiver is on the opponents of the waiver. The MEMA I Court expressly held that th e burden of proof to show that there is a basis for making one of the three findings is squarely on the opponents of a waiver:

It is not necessary for the Administrator affirmatively to find that these conditions do not exist before granting a waiver. T he statute does not say “the Administrator shall grant a waiver only if” he makes the negative of these findings. That he must deny a waiver if certain facts exist does not mean that he must independently proceed to make the opposite of those findings bef ore he grants the waiver regardless of the state of the record

. . . . The language of the statute and its legislative history indicate that California’s regulations, and California’s determination that they comply with the statute, when presented to the A dministrator are presumed to satisfy the waiver requirements and that the burden of proving otherwise is on whoever attacks them. California must present its regulations and findings at the hearing, and thereafter the parties opposing the waiver request b ear the burden of persuading the Administrator that the waiver request should be denied. 31

B. PROTECTIVENESS REQUI REMENT OF CLEAN AIR ACT SECTION 209

Section 209(b)(1)(A) of the CAA requires EPA to deny a waiver if the Administrator finds

that California w as arbitrary and capricious in its determination that its State standards will be, in the aggregate, at least as protective of public health and welfare as applicable

Federal standards. Historically, EPA has simply compare d the California standards to

any comparable Federal standard, and t hat comparison has been undertaken within the broader context of the previously waived California program, which relies upon protectiven ess determinations that EPA has previously found were not arbitrary and capricious. 32

Traditionally, EPA ’s evaluation of the stringency of California's standards relative to comparab le EPA emission standards has foll o wed the instruction of section 209(b)(2),

which states: “If each State standard is at least as stringent as the comparable applicable Federal standard, such State standard shall be deemed to be at least as protective of health and welfare as such Federal standards for purposes of [209(b)(1)].” 33 A finding that California's determination was arbitrary and capricious

under secti on 209(b)(1)(A) would need to be based upon “‘clear and compelling evidence’ to show that proposed [standards] undermine the protectiveness of

California's standards.” 34 Even if EPA's own analysis of comparable protectiveness or

31 MEMA I

, supra , 627 F.2d a t 1120

- 1121.

32 74 Fed.Reg. 32744, at p. 32749 (July 8, 2009).

33 Ibid

. 34 Ibid

.15 that suggested by a comment er might diverge from California's protectiveness finding, that is not a sufficient basis on its own for EPA to make a section 209(b)(1)(A) finding that California's protectiveness finding is arbitrary and capricious. 35

Additionally, in granting California ’s past waiver requests EPA has acknowledged that a given California standard may, by itself, be less protective than comparable f ederal standards so long as California’s regulations in the aggregate are at least as protective of comparable federal standar ds. 36 “California could enforce emission control standards

which it determined to be in its own best interest even if those standards were in some respects less stringent than comparable federal ones.” 37

1. PROTECTIVENESS OF ACC PACKAGE

Here, California made a protectiveness determination with regard to the 2012 ZEV and

LEV amendments in CARB’s Resolution 12

- 1 1, finding that the amendments would not cause the California motor vehicle emission standards, in the aggregate, to be less protective of public health and welfare than applicable federal standards. This protectiveness determination is the logical extension of the comparable findings that were found to be sufficient in the analysis of California’s previous protectiveness determinations for its ZEV regul ation 38 , its LEV regulation 39 , and its GHG regulation. 40
In analyzing CARB’s protectiveness finding for the 2012 ZEV and LEV amendments

, EPA should consider that

– as was the case with the granted waivers cited above

- there are either no comparable Federal standards or the Federal standards that exist are quantifiably less protective than those included in the 2012 ZEV and LEV

amendments.

Moreover, as detailed below

, the ACC program will result in reductions of both criteria pollutants and GHG emissions th at

, in the aggregate

, are more protective than the

federal standards that exist. Criteria pollutant emission benefits for the ACC program are fully realized in the 2035

- 2040 timeframe when nearly all vehicles operating in the fleet are expected to be comp liant with the proposed standards. By 2035

, reactive organic gas (ROG) emissions would be reduced by an additiona l 34 percent, and NOx

emissions by an additional 37 percent, compared to 2035 without the proposed ACC

rules. Under the amended rule, the new PM 2.5 standard is reduced to 3 mg/mi in 2020 and 1 mg/mi in 2028. With these standards, PM 2.5 emissions will be essentially unchanged between 2010 and 2040 despite growth in vehicle miles travel ed

.

There is no criteria emissions benefit from including t he ZEV proposal in terms of vehicle (tank

- to

- wheel or TTW) emissions. The LEV III criteria pollutant fleet standard is responsible for those emission reductions in the fleet; the fleet would become cleaner

35 Ibid

. 36 74 Fed.Reg. 32744, 32761 (July 8, 2009).

37 Motor & Equip. Mfrs. Ass'n v. Nichols , 142 F.3d 449, 464 (D.C. Cir. 1998, citation omitted)

. 38 76 Fed.Reg. 61095 (October 3, 2011).

39 68 Fed.Reg. 19811 (April 22, 2003).

40 74 Fed.Reg. 32744 (July 8, 2009).16 regardless of the ZEV regulation because manufact urers would adjust their compliance response to the standard by making less polluting conventional vehicles. However,

since upstream criteria and PM emissions are not captured in the LEV III criteria pollutant standard, net upstream emissions are reduced through the increased use of electricity and concomitant reductions in fuel production.

The table below presents the emissions impacts in well

- to

- wheel ( WTW ) criteria pollutant and PM emissions in 2030 due to the 2012 Amendments . 2030 was chosen

as a re ference year to account for a significant amount of fleet turn

- over.

Statewide Criteria and PM Emissions in 2030 (tons per day)

2030 ROG NMOG+

NOx PM

LEVIII fleet WTW emissions without new ZEV proposal 231 233 56.4

LEVIII fleet WTW emissions with new Z EV proposal 225 229.5 56.2

The upstream emissions from the production of hydrogen and electricity represent a very small fraction of the combined vehicle and upstream emissions impacts of the fleet,

and are far outweighed by the reduction in gasoline pro duction emissions

. Additionally, a portion of these upstream emissions are in non

- urban areas.

Criteria and PM emission benefits will vary by region throughout the state depending on the location of emission sources. Refinery emission reductions will o ccur primarily in the east Bay Area and South Coast region where existing refinery facilities operate. As refinery operations reduce production and emissions, the input and output activities, such as truck and ship deliveries, will also decline. This inc ludes crude oil imported through the Los Angeles and Oakland ports, as well as pipeline and local gasoline truck

distribution state wide

.

As noted below in the discussion on the criteria emission element of LEV III (Section IV.G.3.a.(i)), the primary fleet average emission requirement, beginning in 2015, declines every year to a fleet average NMOG plus NOx emission standard of 0.030 g/mi in 2025. Clearly, this is significantly more stringent than the current federal Tier 2 fleet average NOx emission requir ement of 0.07 g/mi NOx 41 , with its implied fleet average NMOG plus NOx emission requirement of 160 g/mi (a 0.07 g/mi NOx emission level is equal to the NOx emission standard for Tier 2 Bin 5 (0.090 g/mi NMOG, 0.07 g/mi NOx) 42 , implying a Tier 2 NMOG plus NOx fleet average requirement of 0.160 g/mi). LEV III PM standards of 0.003 g/mi and 0.001 g/mi are also significantly more stringent than the Tier 2 PM standards of 0.02 g/mi and 0.01 g/mi 43

.

The ZEV regulation does not provide GHG emission reductions in ad dition to the

LEV III GHG regulation given that ZEV emissions are included in determining compliance with the GHG standard. Specifically, because the California GHG standard

41 40 C

. F

. R

. section 86.1811

- 04(d)

42 40 C

. F

. R

. section 86.1811(c)(6)

43 Id

.17 includes upstream emissions, in addition to the vehicle emissions, there is no di fference in GHG emissions under varying ZEV scenarios. However , the ACC program as a whole

– i.e. the California fleet

- would provide major reductions in GHG emissions. By 2025, CO 2 emissions would be reduced by almost 14 million metric tonnes (MMT) per year, which is 12 percent from baseline levels. The reduction increases in 2035 to 32 MMT which is a 27 percent reduction from baseline levels. By 2050, the proposed regulation will reduce emissions by more than 42MMT per year, which is a reduction of

3 3 percent from baseline levels. Currently, there are no federal GHG standards for

these 2017

- 2025 MYs, though CARB understands they will soon be finalized.

For these reasons it is clear that California’s fleet under these amendments will be at

least as protective as a comparably sized fleet of vehicles that only meet the existing

federal rules. Should CARB adopt an amendment later this year to allow federal GHG compliance to serve as compliance with California’s LEV (including GHG) standards,

Californi a’s program will be necessarily as protective as the federal program.

C. THE 2012 ZEV AND LEV AMENDMENTS ARE NECESSARY TO MEET

COMPELLING AND EXTRAORDINARY CONDITIONS

Under section 209(b)(1)(B) of the CAA

, the Administrator may not grant a waiver if they

fi nd that California “does not need such State standards to meet compelling and extraordinary conditions.” EPA has traditionally interpreted this provision to require a

consideration of whether California needs a separate motor vehicle program to meet

compe lling and extraordinary conditions. 44 In granting past waivers, EPA has noted that “Congress requires EPA to allow California to promulgate individual standards that, in and of themselves, might not be considered needed to meet compelling and extraordinary circumstances, but are part of California’s overall approach to reducing vehicle emissions to address air pollution problems.” 45 EPA has repeatedly determined that CARB has demonstrated the need for its motor vehicle program to address compelling and extr aordinary conditions in California and has based such determinations on the fact that California’s essential “geographic and climactic conditions” remained the same as they were under earlier determinations. 46

The relevant inquiry under this criterion is whether California needs its own motor vehicle pollution control program to meet compelling and extraordinary conditions, not whether any particular standards are necessary to meet such conditions. 47 The Administrator has determined that the phrase "compel ling and extraordinary conditions"

refers to:

... certain general circumstances, unique to California, primarily responsible for causing its air pollution problem [including] . . . geographical and climatic factors [as well as] ... the presence and growth

44 74 Fed.Reg. 32744, at p. 3275 9 (July 8, 2009)

. 45 Id . at p. 32761.

46 Id. at pp. 32761

- 32762.

47 See, e.g., 49 Fed.Reg. 18887, 18889

- 18890 (May 3, 1984).18 of California's vehicle population, whose emissions were thought to be responsible for ninety percent of the air pollution problem in certain parts

of California. 48

Thus, the Administrator has stated,

It is evident from [the legislative history of the Clean Air Act] that “compelling and extraordinary conditions” does [sic] not refer to levels of pollution directly, but primarily to the factors that tend to produce them: geographical and climatic conditions that, when combined with large numbers and high conc entrations of automobiles, create serious air pollution problems. 49

In granting previous waiver requests, EPA has noted that CARB has repeatedly demonstrated the need for its motor vehicle program to address compelling and extraordinary conditions in Calif ornia. 50 To explain this, EPA has previously referenced

the fact that California

— the South Coast and San Joaquin Air basins in particular

— continues to experience some of the worst air quality in the nation and that California

had an ongoing need for dramat ic emission reductions generally and from passenger vehicles specifically

. 51 EPA also referenced California’s unique geographical and climatic conditions and the tremendous growth in the vehicle population and use which had initially moved Congress to auth orize California to establish separate vehicle

standards in 1967

. 52 In granting previous waivers

, EPA has noted that

– as in 1967

- California then continued to have geographic and climatic conditions that, when combined with the large numbers and high con centrations of automobiles, created a serious pollution problem. 53

For purposes of the instant request for the 2012 ZEV and LEV amendments , CARB

submits that those same compelling and extraordinary conditions justifying previous

waivers continue to exist in California and so the requirements of section 209(b)(1)(B)

are satisfied.

48 49 Fed.Reg. at 18890.

49 Id

. 50 Id . at p. 32762.

51 Ibid

. 52 Id . at pp. 32762

- 327623.

53 Id . at p. 32763.19 D. THE 20 12 ZEV AMENDMENTS TO TH E REQUIREMENTS F OR 20 09

THROUGH 2017 MODEL YEARS ARE WITHIN THE SCOPE OF THE

PREVIOUS WAIVERS FOR CALIFORN IA’S ZERO

- EMISSION VEHICLE

STANDARDS 54

Fo r the reasons detailed below, CARB believes that the 2 0 12 ZEV amendments for MY

20 09 t h rough 2017 are within the scope of previous waivers. Specifically, the 20 12 ZEV

amendments related to MY 20 09 through 2017 fall within the scope of the waiver granted i n October 2011

. 55

Changed circumstances prompted California to amend the original ZEV requirements

since the Administrator’s issuance of the initial waiver of preemption in 1993. 56 Those change d circumstance s were the driving force behind the substantial changes C ARB made to the ZEV requirements in the 1999

- 2003 ZEV amendments and again in the more limited changes adopted in the 2008 ZEV amendments

.

Corresponding with C ARB’s amendments to the ZEV requirements , EPA has issued a

series of waiver determinat ions after its issuing of the original 1993 waiver

. Most recently, i n 20 11

, EPA determined that California’s ZEV standards for passenger cars and light

- duty trucks were either within the scope of earlier waivers or covered by a new waiver of preemption un der CAA section 209(b). 57

Past EPA waiver and within

- the

- scope finding s make it clear that the 20 12 ZEV

amendments fall within the scope of the previous waivers granted in 1993, 2006 , and

201 1

. In its 2006 waiver determination, EPA stated that it will c onduct a two

- part inquiry when considering whether CARB amendments to a previously waived regulation fall within the scope of the previously granted waiver or require a new waiver:

EPA believes it is important to distinguish between the threshold issue of

whether CAR B 's amendments should be subjected to either the within

- the

scope criteria or the full waiver, and separately determining whether the same amendments actually meet the applicable criteria for actually confirming the within

- the

- scope request or granting a full waiver of federal preemption. 58

In determining the threshold question, EPA will consider whether the amendments make minor technical revisions or provide compliance flexibility t o manufacturers on the one hand or whether the amendments

54 CARB respectfully submits that no reasonable basis exists for the Administrator not to confirm that the 2012 ZEV amendments as they apply to MYs 2012 through 2017 do not fall within the scope of the waivers previously granted in 1993, 2008, and 2011. If the Administrator determines otherwise, a new waiver should be granted for the reasons set forth in section IV. F.

55 76 Fed.Reg. 61095 (Oct. 3, 2011).

56 58 Fed.Reg. 4166 (Jan. 13, 1993).

57 76 Fed.Reg. 61095 (Oct. 3, 2011).

58 Decision Document accompanying waiver determination in 71 Fed.Reg. 78190 (Dec. 28, 2006), at 17.20 add new or more stringent pollutant standards or new motor vehicle categories on the other. 59

Following this precedence, the 20 12 ZEV amendments as applied to MYs 2009 to 2017 should be analyzed under the within

- the

- scope criteria

– that is, do the amendmen ts

undermine C ARB’s original p rotectiveness determination

, and, as amended

, does the regulation remain consisten t with CAA section 202(a) ? As described above

, the 2012 ZEV amendments as applied to MYs 2009 to 2017 are a critical component of the AC C packa ge which will result in fleet standards that are at least as protective as would exist

under federal standards

, so the protectiveness determination requirement should be

deemed satisfied. The 2012 ZEV amendments ’ consistency with section 202(a) is

discuss ed next

.

1. Consistency w ith CAA Section 202(a)

a. Effect of the Amendments on Lead Time Considerations

T he first prong of the two

- part consistency analysis require s those opposed to Californ ia obtaining a favorable within

- the

- scope determination to show th at the regulation, as amended, provides insufficient lead time to permit the development of technology to meet those requirements, giving appropriate consideration to the cost of compliance

within th e time provided for compliance. It is incontrovertible t hat if the amendments make compliance more feasible for a regulation for which EPA has already weighed feasibility and waived preemption then the amendments meet the lead

- time element of

the CAA section 202(a) consistency test applied to within

- the

- scope d etermination s

.

Even in situations where a regulatory amendment shortens lead time, EPA has found the amendments to be within the scope where there would be a “lengthy” time period (e.g. five years) before compliance was required, and CARB has addressed any theoretical objections claiming that the amendment was technologically infeasible

. 60

CARB ’s goal for amendments affecting the current ZEV regulation through 2017 was in part to make compliance with the regulation more feasible. Specifically, the rem oval of the limitations on carrying ZEV credits forward, the reduction of the credit requirements

for IVM s during MYs 2015 through 2017, and the extension of the section 177 state “travel provision” for BEVs through 2017 will make it more feasible for regu lated parties to comply. Additionally, the increase in credits for Type V (i.e. 300 or greater mile FCVs) vehicles and addition of two new types of qualifying ZEVs (i.e. Type I.5x and Type IIx vehicles) will create more favorable conditions for compliance

.

59 Id. at 18

- 19.

60 74 Fed.Reg. 3 2744, 32768 (July 8, 2009). Citing National Resources Defense Council v. EPA 655 F.2d 318, 331 (D.C. Cir.1981).21 Consequently, the amendments do not materially affect the lead time provided to manufacturers under earlier iterations of the ZEV program, which EPA has found to be

consistent with CAA section 202(a) in the 1993, 2006 , and 2011 waivers. 61

b. Test Proce dure Consistency

The second prong of the consistency criteri a requires that the federal and California test procedures not impose inconsistent certification requirements so as to make manufacturers unable to meet both sets of requirements with the same ve hicle. 62 The test procedures for certifying ZEVs are contained in the ZEV Standards and Test

Procedures document s incorporated by reference in section s 1962 .1 (h) and 1962

. 2 (h)

.

The 20 12 ZEV amendments primarily affect on ly the standards portions of the

in corporated document s and hence d o not generally change the pre

- existing testing requirements for certification

. Accordingly, there also are no inconsistencies in the

federal and California test procedures for PZEVs and AT P ZEVs that would preclude a

manuf acturer from conducting one set of tests to demonstrate compliance or would prohibit a confirmation that the 20 12 ZEV amendments are within the scope of 1993,

2006 , and 2011 waivers.

2. New Issues Affecting Previous Waiver Determination s

C ARB is not aware of any new issues affecting the previous waiver determinations that are raised by the 20 12 ZEV amendments as they affect MYs 200 9

- 201 7

.

E. THE 20 12 ZEV AMENDMENTS TO TH E REQUIREMENTS F OR 20 18 AND

LATER M ODEL

- Y EAR VEHICLES ARE WITHIN THE SCOPE OF EXISTING

WAIVERS FOR CALIFORN IA’S ZERO

- EMISSION VEHICLE STA NDARDS

1. Consideration of the Amendments Applicable to 201 8 and Later

Model

- Year Vehicles as Within the Scope of Existing Waivers

In light of EPA ’s earlier decisions waiv ing preemption of the ZEV standards

, the

20 12 ZEV amendments are also with in the scope of the previous waivers 63 as they apply to 20 18 and later MY vehicles because the standards contained in the 2012

amendments are at least as protective as those in earlier versions of the waived ZEV

standa rds

. 64 In those earlier versions

, manufacturers’ 2018 and subsequent MY ZEV

61 58 Fed.Reg. 4166 (Jan. 13, 1993), 71 Fed.Reg. 78190 (Dec. 28, 2006), 76 Fed.Reg. and 61095 (Oct. 3, 2011).

62 Id.

63 58 Fed.Reg. 4166 (January 13, 1993) and 71 Fed.Reg. 78190 (Dec. 28, 2006), and , and 76 Fed.Reg. 61095 (Oct. 3, 2011).

64 There is one aspect of the 2012 ZEV amendments as applied to MYs 2018 and later that opponents could argue is not within the scope of earlier waivers. Specific ally, t here is a group of current IVMs that will become subject to LVM requirements in 2018, due to the 2012 amendments to the definition thresholds. Some of these current IVMs are closer to becoming an LVM under the current definition of
60,000 vehicles sold, and others will only become an LVM due to the amended definition changes. The22 requirements were held at the same percentage each year, as shown in the t able

below.

2018 and Subsequent ZEV Credit Requirement **Before** 2012 Amendments Credit Category Credit Req uirement

Minimum ZEV 5.0%

Maximum TZEV* 3.0%

Maximum AT PZEV* 2.0%

Maximum PZEV 6.0%
Total ZEV Requirement 16.0%
*The regulation did not specify the split between TZEVs and AT PZEVs. For this analysis, staff assumed AT PZEV and TZEV credit requireme nt s would remain the same from the 2015 through 2 017 requirements

. T he PZEV and AT PZEVs (highlighted in grey) were moved to the LEV III program so the remaining ZEV requirement under the current regulation would be 8 percent

.

To address one of the progr am’s primary objectives ( i.e. ZEV technology commercialization and long

- term GHG and criteria emission goals), CARB ’s 2012 ZEV

amendments increased each manufacturer’s compliance requirements for 2018 and subsequent MY s, ultimately reaching credit requirem ents of 6 percent for TZEVs and

16 percent for pure ZEVs in 2025. This increase is outlined in the table below.

ZEV Credit Requirement for 2018 and Subsequent **After** 2012 Amendments

Model Year 2018 2019 2020 2021 2022 2023 2024 2025 and Subsequent

Overa ll ZEV Requirement 4.5% 7.0% 9.5% 12.0% 14.5% 17.0% 19.5% 22.0%

Min. ZEV 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%

Max. TZEV 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

As shown in the post

- 2012 Amendment table above, while the overall ZEV credit require ment between MY 2018 and MY 2022 i s less than the current program, CARB

has revised the number of credits earned per vehicle (typically by one half), and PZEVs and AT PZEVs no longer count towards meeting a manufacturer’s ZEV obligation. Accordingly, it i s more illustrative to compare the actual number of ZEVs required to be produced given the current and proposed creditin g structure. This is shown in the figure

below.

purpose of the 2012 amendments is to bring a larger percentage of manufacturers under the full ZEV requirements. This amendment to the lead time provision ensures a leve l playing field, making manufacturers close to the current definition thresholds (60,000 vehicles per year), subject to LVM requirements at the same time as manufacturers a ffected by staff’s proposed definition change

. CARB agrees that this aspect of the 2012 ZEV amendments can be analyzed as qualifying for a new waiver as detailed in the alternative analysis below in section IV. F.23 2012 Ame ndments vs. Earlier Regulation

– Annual Sales Requirements

2. 2012 ZEV Amendment ’s Protectiveness for Model Years 2018 and Later

As described above

, the 2012 ZEV A mendments as applied to MYs 2018 and later are a critical component of the ACC package which will be at least as protective as federal

standards

, so the protectiveness dete rmination requirement should be deemed satisfied. The 2012 ZEV amendment’s consistency with section 202(a) is discussed immediately below.

3. Consistency with CAA 202(a)

– Effect of the Amendments on Lead

- T ime

Considerations and on Test Procedure Con s istenc y

The 2012 A mendments do not affect lead time except as described below. Before the

2012 A mendments , manufacturers were given five years of lead time when transitioning into a larger size definition. For example, if a manufacturer were to increase i ts s ales, such that their 2011 through 2013 sales average exceeded the current LVM threshold of 60,000 sales, the manufacturer would be subject to the full ZEV requirements in MY

2019. With the 2012 amendments, manufacturers starting their transition before 2 018 will be subject to full ZEV requirements starting in the 2018 MY . This means, for example, if a manufacturer’s 2013 through 2015 sales average (for the first time) is 61,000 vehicles, then instead of being subject to LVM requirements in 2021, the

manu facturer will be subject to LVM requirements in 2018.24 These facts are relevant to the analysis EPA has previously applied in similar

situations. 65 Specifically , the lack of objections from the regulated parties and the regulated parties’ announcement of their planned ability to comply, show that the 2012 Amendment’s decrease in lead time should not stand in the way of EPA determining that CAA 202(a) is satisfied.

The federal Tier 2 regulations require manufacturers to measure emissions from ZEVs

in accor dance with the California test procedures. 66 Accordingly, a manufacturer’s

adherence to the California test procedures will allow them to use the same test results to demonstrate compliance with federal certi fication emission standards, so there are

effect ively no inconsistencies between the federal and California test procedures.

4. New Issues Affecting Previous Waiver Determination

C ARB is not aware of any new issues affecting the previous waiver determinations that are raised by the 20 12 ZEV A mendments as they affect MYs 2018 and later.

F. CONSIDERATION OF THE 2012 ZEV AMENDMENTS APPLICABLE TO 2018

AND LATER MODEL

- YEAR VEHICLES AS MEETING THE CRITERIA FOR A

WAIVER OF FEDERAL PREEMPTION

Should EPA determine that a new waiver is needed for the 2012 ZEV Amen dments as applied to 2018 and later MY vehicles , what follows is a discussion of how the 2012

ZEV A mendments meet the requirements for a waiver

.

1. Public Health and Welfare

– C ARB’s Protectiveness Determination Is Not Arbitrary or Capricious

As deta iled in section IV. B., the Board found that that the ACC program was at least as protective as any applicable Federal standards

2. California Continues to Need Separate Emission Standards for New Motor Vehicles In Order to Meet Compelling and Extraordinary

Conditions

As detailed in section IV. C. above, California continues to need separate emission standards for new motor vehicles in order to meet compelling and extraordinary

conditions in the state.

65 74 Fed.Reg. 32744, 32768 (July 8, 2009). Citing National Resources Defense Council v. EPA 655 F.2d 318, 331 (D.C. Cir.198 1).

66 40 C.F.R § 86.1811

- 04(n).25 3. The 20 12 ZEV Amendments to the Requirements f or 20 18 and Later

M odel

- Y ear Vehicles Are Consistent With C lean A ir A ct Section 202(a)

a. Technological Feasibility in Consideration of the Cost of Compliance

w ithin the Lead Time Provided

i. The Technological Feasibility Test

As discussed below, the technol ogical feasibility of the standards for PZEVs and

AT PZEVs has already been abundantly demonstrated in commercially available

, California

- certified vehicles. W here substantial lead time is available, standards are

considered technologically feasible and c onsistent with C AA section 2 02(a)

. 67 In granting past waiver requests, EPA has noted that the “whole approach of the Clean Air Act is to force development of new types of emission control technology,” and to that end “California must be given substantial d eference when adopting motor vehicle emission standards which may require new and/or improved technology to meet challenging levels of compliance.” 68 It is well established that EPA will find a regulation

to be technically feasible if “a reasonable basis [ exists] that a new technology will be

avai l able and economically achievable” in the time provided for compliance. 69 To this end, EPA has followed the D.C. Circuit’s analysis that the time provided is reasonable if:

[the agency adopting the regulation] answers any theoretical objections to

the [to the projected control technology] , identifies the major steps necessary in refinement of the [technology] , and offers plausible re a sons for believing that each of those steps can be completed in the time

availa ble

. 70

As a rule, greater deference will be accorded when a regulation provides substantial lead time for development before manufacturers must commit themselves to mass production of a chosen prototype. 71 Such lead time gives the agency greater leeway to modify its standards if the actual future course of technology diverges from expectation. 72

The only relevance of costs in a S ection 209(b) waiver proceeding is in the context of technological feasibility. Past EPA waiver determinations have made clear that for the cost of compliance to be found excessive it would need to be “very high” such that the

67 74 Fed.Reg. 32744, 32777 (July 8, 2009)

68 Id . at p. 32768 (citations omitted).

69 Natural Resources Defense Council v. U.S. EPA , 655 F.2d 318, 331

- 2 (D.C. Cir., 1981) ( NRDC)

. 70 See Decision Document accompanying EPA’s gr anting California a waiver for its OBD II regulation (61 Fed.Reg. 53371 (Oct. 11, 1996)), at 73.

71 NRDC , 655 F.2d at 329.

72 Id.26 cost to consumers who purchased a complying vehicle would be doubled or tripled. 73
Additionally, the relevance of the cost of compliance analysis is limit ed to the question of whether such costs will adversely affect the timing of an emission standard. 74

ii. Technological Feasibility of the ZEV Requirements for MY 2018

and Later

In granting earlier waivers

, the administrator found the requirements of earl ier versions of the ZEV regulation to be technologically feasible. As described below, manufacturers

have been able to adopt technologies satisfying the earlier ZEV requirements, and the recent changes will allow manufacturers greater technological flexib ility in meeting the ZEV requirements ; this will presumably only increase the technological feasibility of the regulation.

The four categories of vehicles used to meet the ZEV regulation are ZEVs, TZEVs,

AT PZEV, and PZEV. Table 1.2, below, shows the cu mulative number of vehicles placed in compliance with the ZEV regulation through MY 2010.

Table 1.2: Cumulative Vehicle Placement Through Model Year 2010 ZEV Credit Category Technology Type Quantity of

Vehicles

ZEV Fuel Cell 350 Battery Electric 5,200 Neighborhood Electric 28,800

AT PZEV Hybrid or Compressed Natural

Gas 380,000

PZEV Conventional Gas 1,750,000

*On

- road number is less for FCVs and NEV s.

**Manufacturer Compliance Status and Near** 

**- term**  **Production Plans**

All manufacturers have complied with ZEV regulation requirements. For the 2012 MY

, six LVM s are required to comply with the entire regulation, meaning these manufacturers must produce pure ZEVs: Chrysler, Ford Motor Company, General Motors, Honda, Nissan, and Toyota. Ten IVM s have th e option to meet their entire requirement with credits from PZEV. These ten manufacturers include: BMW, Hyundai, Jaguar

- Land Rover, Kia, Mazda, Mercedes Benz, Subaru, Volkswagen and Volvo.

Most manufacturers have near

- term production plans to meet o r over comply with the regulatory requirements through MY 2017. Additionally, several other non

- regulated

73 74 Fed.Reg. 32744, 32774 (July 8, 2009, citations omitted).

74 MEMA I, supra , 627 F.2d at 1105, 1114 n. 40 (“[T]he ‘cost of compliance’ consideration relates to the timing of standards and procedures.”) U.S. EPA has recognized that the only relevance of costs is there impact on timing, e.g. “Manufacturers do not contend that the cost of compliance will be significantly

red uced by extending lead time beyond the minimal period required for compliance.” (36 Fed.Reg. 17459 (Aug. 31, 1971)).27 manufacturers are actively producing ZEVs and neighborhood electric vehicles (NEV) and earning ZEV credits. This means there will be a sufficient nu mber of credits available to those regulated manufacturers that are still developing technologies to comply with the ZEV regulation requirements.

Recently, a number of manufacturers have announced aggressive production plans for

PHEVs and BEVs for the ne xt three MY s. These announcements reflect technological

advancement in lithium

- ion battery technology and a general shift in customer demand and corporate environmental stewardship. The following table provides a summary of

manufacturers’ current ZEV and TZEV program commitments, by technology category, as publicly stated.

Table 1.3: Manufacturer ZEV and TZEV Announcements

Manufacturer Model Type Timeframe Reference

BMW ActiveE BEV 2011 BMW, 2011a

i3 BEV 2013 BMW, 2011b

i3 Rex PHEV BMW, 2011c

i8 PHEV 2014 BMW, 2011b

BYD e6 BEV 2012 BYD, 2010

CODA ( unknown) BEV 2011 PopularMechanics, 2011

Chrysler Fiat 500 EV BEV 2012 Chrysler, 2010

Fisker Karma PHEV 2011 Fisker, 2011

Ford C

- MAX Energi PHEV 2012 Ford, 2011a

Focus Electric BEV 2011 Ford, 2 011b

Transit

Connect

Electric BEV in production n/a

GM Cadillac ELR PHEV (unknown) GM, 2011a

Spark BEV 2012 GM, 2011b

Volt PHEV in production n/a

(unknown) FCV 2015 USA TODAY, 2010

Honda Fit EV BEV 2012 Honda, 2011 (unknown) PHEV 2012

Clarit y FCX FCV in production n/a

Hyundai Tucson IX FCV 2015 Bloomberg, 2010

Mercedes Benz (unknown) BEV 2012 Mercedes , 2011

F

- Cell FCV in production Autobloggreen, 2010

Mitsubishi i BEV in production n/a

Outlander PHEV 2013 Motor Trend , 2011

Nissan LEAF BEV in production n/a

Smart fortwo ED BEV in production n/a

Tesla Model S BEV 2012 Tesla , 2011

Think City BEV in production n/a

Toyota Prius Plug

- In PHEV 2012 Toyota , 2011b

RAV

- 4 EV BEV 2012 Toyota , 2011c Scion iQ

- EV BEV 201228 Manufacturer Model Type Timeframe Reference

(unknown) FCV 2015 Toyota , 2011d

Volkswagen e

- up! BEV 2013 Volkswagen , 2011

Wheego Whip LiFe BEV in production n/a

The table reveals that nearly every manufacturer will be introducing production BEV and PHEV products within the next one to three years, and five manufact urers will commercially introduce FCVs by 2015. If manufacturers produce TZEVs and ZEVs at production levels announced in the table above, the requirements for MY 2012 through

2017 are therefore also feasible.

The technological sophistication of ZEVs c urrently being produced is anticipated to continue to advance, making commercial production and compliance of these vehicles by MY 2018 and later more feasible. Additionally in MYs 2018 and later, manufacturers are allowed to comply with any type of ZEV, meaning BEV or FCV, making compliance

still more feasible. As noted above , during the rulemaking proceedings for the adoption of the 2012 ZEV amendments, CARB did not receive any comments questioning the overall technological feasibility of the amended st andards. For these reasons, the finding of technological feasibility of the ZEV requirements within the lead time in

MYs 201 8 and later is well supported and a finding of inconsistency with CAA

section 202(a) is not warranted.

4. Consistency of Certificatio n Procedures

T he test procedures for certifying ZEVs, AT PZEVs, and PZEVs are contained in the

ZEV and LEV Standards and Test Procedures incorporated by reference in

s ections 1962 .1 (h) and 1962. 2 (h) and are largely un

- amended by the 2012 ZEV

R ulemaking. The federal Tier 2 regulations require manufacturers to measure emissions from ZEVs in accordance with the California test procedures. 75 Further,

t here are no inconsistencies in the test procedures for PZEVs and AT PZEVs that would justify the denial of a waiver. A ccordingly , there are no inconsistenc ies between the federal and California test procedures that would preclude a manufacturer from conducting one set of tests to demonstrate compliance with the federal and California

certification emission stand ards for ZEVs

, TZEVs , AT PZEVs, and PZEVs

.

G. THE 2012 AMENDMENTS TO THE CALIFORNIA’S LOW

- EMISSION VEHICLE

REGULATION MEET THE CRITERIA FO R A WAIVER OF FEDERAL

PREEMPTION 76

As noted above, in Resolution 12

- 11 the Board found that the 2012 LEV amendmen ts do not cause the California motor vehicle emission standards, in the aggregate, to be less protective of public health and welfare than applicable federal standards, are

75 40 C.F.R. section 86.1811

- 04(n).29 needed to meet compelling and extraordinary conditions, and do not cause the

Cali fornia requirements to be inconsistent with CAA section 202(a ). Each of the required elements for a waiver under section 209(b) is addressed in turn below.

1. Public Health and Welfare

– CARB’s Protectiveness Determination Is Not Arbitrary or Caprici ous

In Resolution 12

- 11, the Board made the determinations section 209 requires, finding that the ACC program was at least as protective as any applicable Federal standards. The basis for this protectiveness determination is detailed in section IV. B. ab ove.

2. California Continues to Need Separate Emission Standards for New Motor Vehicles In Order to Meet Compelling and Extraordinary

Conditions

As detailed in section IV. C. above, California continues to need separate emission

standards for new motor ve hicles in order to meet compelling and extraordinary

conditions in the state.

3. Consistency w ith CAA Section 202(a)

The Administrator has stated that California’s standards and accompanying test procedures are inconsistent with section 202(a) if: 1) there is inadequate lead time to permit the development of technology to meet those requirements, giving appropriate consideration to the cost of compliance within that timeframe; or 2) the federal and California test procedures impose inconsistent certificatio n requirements so as to make manufacturers unable to meet both sets of requirements with the same vehicle. 77 As the following discussion demonstrates, the LEV III amendments are fully consistent with section 202(a) of the CAA.

a. Technological Feasibilit y and Lead Time Considerations

In developing the LEV III emission requirements CARB considered several factors that would impact a manufacturer’s ability to meet the requirements. These factors include technical feasibility, lead time available to meet t he requirements, cost of compliance

and the technical and resource challenge s manufacturers face in complying with the requirement to simultaneously reduce criteria and GHG emissions. Regarding technical feasibility, ARB considered emission control techno logies that are currently deployed on

77 ”Neither the court nor the agency has ever interpreted compliance with section 202(a) to require mo re.”

MEMA II , 142 F.3d at 463 (citations omitted). See also 46 Fed.Reg. 26371 (May 12, 1981). Even where there is incompatibility between the California and federal test procedures, EPA has granted a waiver under circumstances where EPA accepts a demons tration of federal compliance based on California test results, thus obviating the need for two separate tests. (43 Fed.Reg. 1829, 1830 (January 12, 1978); 40 Fed.Reg. 30311, 30314 (July 18, 1975).).30 vehicles manufactured today. CARB also anticipated continuing improvements in these deployed technologies, and in technologies already under development by vehicle manufacturers or component suppliers for future veh icle applications.

Concerning lead time, CARB considered the pace of implementation manufacturers would need in order to incorporate these technologies across their model lines. Implementation for the criteria emission element of LEV III occurs over an 11

- year period from 2015 through 2025, while the GHG emission element is implemented over a

9

- year period from 2017 through 2025. This extended implementation period provides manufacturers with regulatory certainty and lead time to incorporate new techno logies across their vehicle models at a pace consistent with normal vehicle development and production. In addition to an extended implementation period and lead time, LEV III also provides manufacturers with significant compliance flexibility that will a ssist them in managing their resources when implementing new requirements to reduce both criteria

and GHG emissions in the same timeframe.

T he LEV III standards should be deemed technologically feasible and consistent with CAA section 202(a) if the CARB i dentifies or predicts the technology that can be used to comply with the standards, “answers any theoretical objections to the [projected control technology], identifies the major steps necessary for the refinement of the [technology], and offers plausible reasons for believing that each of these steps can be completed in

the time available.” 78

(i) Criteria Pollutant Emission Standards.

What follows in Section (A) is a discussion of technologies, while section (B) is a

discussion of lead times for those te chnologies.

( A ) Technological Feasibility

T he re are two key elements of the criteria pollutant emissions portion of the LEV III

program : 1) proposed amendments to California’s exhaust emission standards and 2) proposed amendments to California’s evapora tive emission standards.

Exhaust Emission Standards Generally :

The technological feasibility demonstration for the exhaust emission requirements is set

forth in Section II.A.3 of the Staff Report ( p p. 29

- 37 ) . The technological feasibility

demonstratio n for the e vapora t ive emission requirements is set forth in Section II.B.3 of the Staff Report ( p p. 5 2

- 54)

. While e missi on control technology has under gone dramatic improvement over the last decade and is well understood by the industry, we provide a brie f discussion of the technology and recent advancements that have been made by both vehicle manufacturers and emission control component suppliers.

78 Natural Resources Defense Council v. U.S. EPA , 655 31 8, 331

- 2 (D.C. Cir., 1981).31 The emission control technologies that can be used to meet the LEV III criteria pollutant

standards for ligh t

- and medium

- duty vehicles consist of technologies that have already been developed for use in complying with the LEV II standards and expected improvements to mature LEV II technologies that will help assure compliance with the

LEV III criteria pollutant standards. In its Staff Report, staff identified and discussed 16

different low

- emission technologies that are currently available to reduce exhaust emissions (p p. 29

- 37) and three different strategies/technologies that are currently

available to reduce evaporative emissions (p p. 52

- 54) ; although, it is unlikely any single vehicle will feature all of these improvements. These currently

- available LEV II technologies fall into four basic categories

– improvements to the fuel control system, improvements in fuel atomization and delivery, improvements in catalyst performance, and methods to reduce engine

- out emissio n levels. Many of the technologies discussed in the Staff Report are already in use on selected vehicle models , and during the

California rulemak ing no affected manufacturer questioned the overall technological feasibility of these standards

. The additional improvements that are expected to be employed to comply with LEV III include increased catalyst volume and substrate cell density, increased c atalyst loading and improved washcoats, and improved catalyst light

- off with secondary air injection and retarded spark timing.

CARB also recognize d that achieving SULEV emission levels across the light

- duty fleet presents a significant challenge to vehic le manufacturers and

, therefore

, incorporated the provisions described below to provide compliance flexibility without compromising

needed emission reductions.

NMOG and NOx Standards :

LEV III replace s separate NMOG and NOx emission standards with combine d NMOG plus NOx standard s . These standards were combined in part because of the inherent challenge to achiev e SULEV emission levels for larger vehicles with larger displacement engines. Specifically, achieving very low levels of NMOG is more problematic for vehicles equipped with larger displacement engines than achieving very low levels of

NOx

. By providing an opportunity to offset marginal increases in NMOG emissions with

lower NOx emissions , a combined NMOG plus NOx standard enable s manufacturers to

m ore cost

- effectively tailor their emission control systems while still achieving SULEV emission levels across their light

- duty fleet. In contrast, vehicles with smaller engines tend to be easier to control for NMOG emissions, but with more stringent GHG

s tandards, these smaller engines will be under higher average loads, making NOx emission reductions comparatively more challenging. Second, LEV III establishes three additional light

- duty vehicle emission standards (ULEV70, ULEV50, and SULEV20) to

which ma nufacturers may certify their vehicles when meeting the fleet average emission requirement. Combined with an extended phase

- in period and combined NMOG plus NOx emission standards, providing these additional emission standards will allow

manufacturers to phase

- in additional emission componentry across their fleet more

cost

- effective ly

.32 Particulate Matter Standards

In the CARB rulemaking

, s ome manufacturers commented that the 3 mg/mi and

1 mg/mi PM standards are technically infeasible and that current tes t procedures are inadequate for measuring PM emissions at these low levels. CARB believes that both the stringency and implementation schedules for the 3 mg/mi PM standard and the

1 mg/mi PM standard are technologically feasible within the proposed timefr ame. (See

the Staff Report and its Appendix P: Technical Support Document

– Development of PM Standards for further discussion.) C ARB test data have demonstrated PM levels from current port fuel injected (PFI) engines below 1 mg/mi and from late model

g asoline direct injection engines (GDI) approaching 1 mg/mi. Staff expects that further technical improvements in GDI engines during the lead time provided will enable GDI engines to achieve parity with PFI engines in terms of their PM emissions. However, it is staff’s intent, in accordance with the Board’s direction (Resolution 12

- 11 , p. 21 ), to conduct a review of the 1 mg/mi PM standard in the 2015 timeframe and report back to

the Board on the results. If the outcome of that review indicates that modif ications to the 1 mg/mi PM standard are warranted, staff will return to the Board soon after to

propose changes to the standard and/or the implementation schedule. If instead the results of that review are inconclusive, staff will continue to monitor manu facturers’ technical progress and measurement capabilities towards meeting the 1 mg/mi PM standard and report back to the Board at such time as more information becomes

available.

Some manufacturers have also commented that the supplemental federal test

p rocedure (SFTP) PM standard is infeasible, particularly for vehicles with low power to weight ratios. The SFTP PM standards were based on testing of a wide range of vehicles, including high mileage, older vehicles with direct injected engines , a technolog y projected to dominate powertrains in the near future that are known to have high PM emissions. Based on the test data, CARB is confident that manufacturers will

not have difficulty meeting the proposed 10 mg/mi standard. Thus, despite the fact that

a s mall number of manufacturers have raised the concern that potential future vehicles with low power

- to

- weight ratios may not be able to meet the proposed standard, based on testing and discussions with other manufacturers, CARB firmly believes that with

pro perly designed engines the 10 mg/mi standard is achievable.

Evaporative Emission Standards

T he emission control technologies that can be used to meet the LEV III evaporative

emission standards for most vehicles consist of technologies that have already b een developed for use in complying with the LEV II optional zero

- evaporative standards

. These technologies can be grouped into three basic strategies

- improvements to the carbon canister system, improvements to the fuel storage/delivery system, and additi on of air intake system evaporative controls. In t he Staff Report

, CARB described the

various technologies that fall into these three basic strategies, from which

manufacturers can choose to comply with the LEV III requirements. Hybrid vehicles

may requi re some additional technology to meet the proposed canister bleed emission33 standard, because they have less available purge to regenerate the carbon canister. A partially pressurized fuel tank and heated purge are both examples of technology which

could be employed to compensate for a hybrid vehicle’s reduced purge.

CARB recognize d that achieving the LEV III objective of zero

- evaporative emiss ion

levels across the fleet presents a significant challenge to vehicle manufacturers and

, therefore

, incorporat ed provisions to provide compliance flexibility without compromising

needed emission reductions. One such provision is the availability of two compliance options for LEV III. Option 1 is essentially a duplicate of the LEV II zero

- evaporative standards, w hereas in Option 2, the fuel system rig test of Option 1 is omitted to address manufacturers’ concern regarding the rig test’s burden. Option 2 instead has a slightly lower whole vehicle standard as well as the canister bleed emission test/standard, which is a condensed version of the rig test. In order to provide additional flexibility, LEV III Option 2 allow s manufacturers to demonstrate compliance with the proposed diurnal plus hot soak emission s tandard through fleet averaging. In contrast,

the LEV I I evaporative emission standards do not have a fleet averaging option. The various compliance options inherent in the LEV III evaporative emission program will

enable manufacturers to achieve the standards in a more cost

- effective manner.

( B ) Lead Time C onsiderations

Exhaust Emission Standards (excluding particulate standards)

As noted above, implementation of the exhaust emission requirements for LEV III

occurs over an 11

- year period from 2015 through 2025. While LEV III implementation is

scheduled t o start within two MYs, the percentage emission reduction required by the exhaust fleet average emission requirement for LEV III is relatively minor in the first years of implementation. In addition, LEV III provides considerable compliance flexibility to manufacturers towards meeting the fleet average requirement by incorporating a combined NMOG plus NOX fleet average requirement, expanding the

credit mechanism to a five

- year carry forward and three

- year carry back mechanism, providing additional emission standards and providing interim in

- use emission standards for these additional standards. Therefore, manufacturers will need to incorporate only minor emission control improvements to their vehicles in the early years of LEV III. In fact, several manufa cturers have indicated that they wish to take advantage of the early
opt

- in provision for LEV III by meeting the fleet average requirement for MY 2015 with

their MY 2014 vehicles 79 ; this is an important reason for EPA to act on this waiver

submission before the end of 2012.

Specifically, m anufacturers must phase

- in vehicles certified to the LEV III criteria pollutant exhaust emission standards ULEV70, ULEV50, SULEV30 and SULEV20

79 While CARB is generally requesting that a new waiver be granted for the 2012 LEV Amendments, there is one portion of the amendments that is no more stringent than the earlier standards and so might be considered as being w ithin the scope of previous waivers. Specifically, the 2014 LEV Criteria provisions could be considered as within the scope of EPA’s April 22, 2003 waiver of preemption (68 Fed.Reg. 19811 (April 22, 2003).).34 beginning with the 2015 MY. All other vehicles, including SULEV30 vehicles th at are certified using “carryover” of emission test data from a previous MY can certify to LEV II requirements. In MY 2020, all vehicles must be fully phased

- in to LEV III requirements (i.e., E10 certification fuel, 150,000 mile full useful life, 50 o F em ission standards). The LEV III standards are listed in the following table.

Exhaust Federal Test Procedure Emission Standards for New 2015 and Subsequent Model Year LEV III Passenger Cars and Light

- Duty Trucks

LEV III Exhaust Mass Emission Standards for New 2015 and Subsequent Model Passenger Cars, Light

- Duty Trucks, and Medium

- Duty Passenger Vehicles

Vehicle Type Durability

Vehicle Basis (mi) Vehicle

Emission Category NMOG +

Oxides

of Nitrogen

(g/mi) Carbon

Monoxide

(g/mi) Formaldehyde (mg/mi)

All PCs ; LDTs 8500 lbs. GVWR or less; and

MDPVs

Vehicles in this category

are tested at their loaded vehicle weight 150,000 LEV160 0.160 3.4 4

ULEV125 0.125 1.7 4

ULEV70 0.070 1.7 4

ULEV50 0.050 1.7 4

SULEV30 0.030 1.0 4

SULEV20 0.020 1.0 4

In addition, the fleet average NMOG plus NOx standards for passenger cars, light

- duty trucks, and medium

- duty passenger vehicles become incrementally more stringent each

MY from 2015 through 2025 as shown in the following table

.

Fleet Average NMOG Plus NOx Exhaust Emission Requirements fo r Light

- Duty Vehicles (150,000 M ile Durability Basis)

Model Year Fleet Average NMOG plus NOx (grams per mile)

All PCs; LDT1s LDT2s; MDPV

2015 0.100 0.119

2016 0.093 0.110

2017 0.086 0.101

2018 0.079 0.092

2019 0.072 0 .083

2020 0.065 0.074

2021 0.058 0.065

2022 0.051 0.056

2023 0.044 0.047

2024 0.037 0.038

2025 0.030 0.03035 Since small volume manufacturers are more resource limited than large volume manufacturers, LEV III provides these smaller manufacturers with slightly less stringent emission standards and a delayed phase

- in period. Specifically, beginning in 2022

, small volume manufacturers must meet a fleet average requirement equal to LEV III ULEV125 and, beginning in 2025, a fleet average requirement equal to LEV III ULEV70.

In the case of medium

- duty vehicles, a manufacturer w ould be required to certify

20 percent of its fleet to the LEV III ULEV250 or ULEV400 standards in the 2016 MY

. For each subsequent MY , an increasing percentage of a manufacturer’s medium

- duty

vehicle fleet must be certified to increasingly more stringent LEV III criteria pollutant exhaust emission standards. For the 2022 and subsequent MY s, all medium

- duty

vehicles must be certified to LEV III standards. The table below lists the emission

standards for MD V s.

Medium

- Duty Vehicles 8,500

- 14,000 lbs. GVWR Federal Test Procedure Exhaust Emission Standards (150,000 Mile Durability Basis)

Vehicle Type Durability

Vehicle

Basis (mi) Vehicle

Emission Category 2 NMOG +

Oxides of Nitrogen

(g/mi) Carbon

Monoxide

(g/mi) Formaldehyde (mg/mi)

MDVs

8501

- 10,000 lbs.

GVWR

Vehicles in this category

are tested at their adjusted loaded vehicle weight 150,000 LEV395 0.395 6.4 6

ULEV340 0.340 3.2 6

ULEV250 0.250 2.6 6

ULEV200 0.200 2.6 6

SULEV170 0.170 1.5 6

SULEV150 0.150 1.5 6

MDVs
10,001

- 14,000 lbs.

GVWR

Vehicles in this category

are tested at their adjusted loaded vehicle weight 150,000 LEV630 0.630 7.3 6

ULEV570 0.570 3.7 6

ULEV400 0.400 3.0 6

ULEV270 0.270 3.0 6

SULEV230 0.230 1.7 6

SULEV200 0.200 1.7 6

Particulate Matter Standards

Substantial lead time has been provided toward compliance for the LEV III particulate matter (PM) standards of 3 mg/mi and 1 mg/mi. Specifically, for the 2017

- 2021 MYs, a
percent age of each manufacturer’s passenger car, light

- duty truck, and medium

- duty passenger vehicle fleet must comply with the LEV III 3 mg/mi particulate matter standards. From 2025 through 2028 MYs, a percentage of each manufacturer’s36 passenger car, light

- dut y truck, and medium

- duty passenger vehicle fleet must comply with the LEV III 1 mg/mi particulate matter standards. Recognizing that improvements to current engine technology are needed to meet the 1 mg/mi standard, a four year period of stability is prov ided before phase

- in of the standard begins in 2025 in order to provide manufacturers time to deploy low PM engine technology across their fleet. The phase

- in schedule for these standards is as follows.

LEV III Particulate Emission Standard Values

and Ph ase

- in for Passenger Cars, Light

- Duty Trucks, and Medium

- Duty Passenger Vehicles

Model

Year % of vehicles

certified to a 3 mg/mi

standard % of vehicles

certified to a 1 mg/mi

standard

2017 10 0

2018 20 0

2019 40 0

2020 70 0

2021 100 0

2022 100 0

20 23 100 0

2024 100 0

2025 75 25

2026 50 50

2027 25 75

2028 and subsequent 0 100

For the 2017 and subsequent MYs, a percentage of each manufacturer’s fleet of

medium

- duty vehicles, other than the medium

- duty passenger fleet, must comply with

the LEV III 8 mg/mi particulate matter standard (for medium

- duty vehicles 8,501

- 10,000 lbs. GVWR) or 10 mg/mi particulate matter standard (for medium

- duty vehicles 10,001

- 14,000 lbs. GVWR), as applicable. Manufacturers must phase in vehicles meeting the

LEV III particulate matter standards between the 2017 and 2021 MYs at a rate of at

least 10 percent in 2017, 20 percent in 2018, 40 percent in 2019, 70 percent in 2020,

and 100 percent in 2021 and subsequent MYs.

Evaporative Emission Standards

Manufacturers mus t phase in vehicles meeting the LEV I I I evaporative emission

standards between the 2015 and 2022 MY s. For the 2015

- 2017 MY s, a manufacturer would be required to certify the same percentage of vehicles to the zero

- evaporative emission standards each year t hat it certified to these standards in the 2012

- 2014 MY s. Since LEV III allows for carry over and carry across of LEV II certification data for these vehicles, compliance to LEV III evaporative requirements is not expected to present a compliance problem for manufacturers. Since LEV III requires manufacturers to certify37 a set percentage of their fleets to LEV III evaporative emissions standards at a rate of at

least 60 percent in 2018 and 2019, 80 percent in 2020 and 2021, and 100 percent in

2022 and subs equent MYs, substantial lead time is provided before manufacturers will need to certify the majority of their vehicles to the new evaporative emission requirements.

(ii)

. Greenhouse Gas Emission Standards.

Throughout the development of the LEV III GHG r egulations, California coordinated with

the EPA and NHTSA on technical and economic areas, and CARB has moved in parallel with the federal rulemaking in terms of stringency of the standards and lead time for compliance

. Given this coordination, EPA clearl y cannot determine that the LEV III GHG regulations are technologically infeasible or that the lead time provide d is inadequate. This is true now, even before CARB proposes to amend its LEV III GHG regulations to allow National Program 80 compliance to serv e as compliance in California. It will be undeniably true should California adopt its “deemed to comply” rule as planned. ( Resolution 12

- 11. p. 20

. ) However, the following discussion presents an

overview of these issues. Additional information can be f ound in the LEV III Staff Report for this rulemaking.

(A)

. Technological Feasibility

In May of 2010, a Presidential Memorandum directed EPA and NHTSA to work jointly to develop continuing GHG standards for MY s 2017

- 2025

. The Memorandum requested

that EPA and NHTSA work closely with CARB on a technical assessment that would assess technologies and costs to achieve varying levels for GHG emission reduction through MY 2025. The result was a September 2010 Interim Technical Assessment Report 81 (TAR)

, jointl y authored by EPA, NHTSA, and C ARB. The TAR relied on an extended series of meetings by the agencies with vehicle manufacturers, component suppliers, environmental organizations and the United Autoworkers Union. Subsequent

to that collaborative technical work, CARB closely monitored the work of EPA and NHTSA, and the agencies continued to jointly hold meetings with stakeholders,

examine d updated technical materials, and develop ed consistent technology assumptions. In November 2011, EPA and NHTSA propo sed 2017

- 2025 federal standards for light

- duty GHG emissions and fuel economy , respectively 82 . The relevant GHG technologies that CARB and the federal agencies identified for reducing GHG

emissions are briefly described below.

The LEV III greenhouse standard s are predicated on many existing and emerging technologies that increase engine and transmission efficiency, reduce vehicle energy loads, improve auxiliary and accessory efficiency, and incorporate increasingly electrified vehicle subsystems with hybrid a nd electric drivetrains. A comprehensive list of these technologies and the GHG reductions they provide can be found in Table III

- A

-

80 http://www.epa.gov/oms/climate/regulations/ldv

- ghg

- tar.pdf

81 Id

. 82 76 Fed.Reg. 74854 (December 1, 2011).38 4

- 8 of the ISOR. The previous GHG rulemakings (i.e., California’s 2009

- 2016 MY and

federal 2012

- 2016 MY standards) establi shed an original technical basis for the proposed greenhouse standards. The LEV III GHG regulations build on this existing technical foundation with new technical data and understanding of evolving state

- of

- the

art engine, transmission, hybrid, and electr ic

- drive technologies.

Several technologies particularly stood out as providing significant emission reductions at favorable costs. These include dual cam phasing, turbocharging with engine downsizing, automated manual transmissions, and cam

- less valve actuation. Potential improvements in the air

- conditioning system include an improved variable displacement compressor with revised controls, reduced leakage systems, and the use of an alternative refrigerant (e.g. HFO

- 1234yf). The table below lists the technologies examined and their GHG reduction potentials.

CO 2 reduction from individual technologies from 2008 reference

Area Technology Small

car Mid

- size

car Small light

- duty

truck Large light

- duty

truck Engine Engine friction reduction 3.5% 4.5% 3.4% 4.2% technologies Cylinder deactivation

- 6.1% 4.7% 5.7%

Dual cam phasing (DCP) 4.1% 5.2% 4.1% 4.9% Discrete variable valve lift (DVVL) 4.1% 5.2% 4.0% 4.9% sGDI (18

- bar, 33% downsize) 12.2% 14.2% 12.1% 13.6% sGDI+DCP+DVVL (18

- bar, 33% TDS ) 14.9% 17.5% 14.8% 16.8% cEGR sGDI+DCP+DVVL (27

- bar, 56% TDS) 21.4% 24.3% 21.2% 23.5% Compression

- ignition DCP diesel 19.8% 21.3% 19.1% 21.3%

Transmission Torque convertor lock

- up 0.4% 0.5% 0.5% 0.5% technologies Aggressive shift logic 2.0% 2.5% 1 .9% 2.4% High efficiency gearbox 3.3% 3.9% 3.8% 4.3% Optimized shifting 5.2% 6.6% 5.1% 6.2%

6

- speed automatic 1.8% 2.2% 1.7% 2.1%

8

- speed automatic 6.5% 7.8% 6.8% 7.8%

Wet dual clutch 8

- speed 9.7% 11.5% 10.5% 11.9% Dry dual clutch 8

- speed 10.3% 12.2% 11.1% 12.6% Continuously variable 11.0% 6.3% 6.0%

- Vehicle load Low drag brakes 0.8% 0.8% 0.8% 0.8% and accessory Secondary axle disconnect 1.2% 1.4% 1.4% 1.6% technologies Electric power steering 1.5% 1.3% 1.2% 0.8% Improved accesso ry efficiency 3.3% 3.0% 2.6% 3.5% Mass reduction (

- 10% curb mass) 5.1% 5.1% 5.1% 5.1% Mass reduction (

- 20% curb mass) 10.4% 10.4% 10.4% 10.4% Tire low rolling resistance (

- 10% C

rr ) 1.9% 1.9% 1.9% 1.9% Tire low rolling resistance (

- 20% C

rr ) 3.9% 3.9% 3.9% 3.9% Aerodynamics (

- 10% C d A ) 2.3% 2.3% 2.3% 2.3% Aerodynamics (

- 20% C d A ) 4.7% 4.7% 4.7% 4.7% Hybrid system 12V stop

- start 6.1% 6.8% 5.6% 6.5% technologies High

- voltage belt

- alternator system 7.4% 7.6% 6.8% 8.0% Parallel hybrid (23

- 40 kW) 34.3% 34.6% 32.8% 31.9%

Reference Test weight (lb) 2625 3625 4000 6000

vehicle Rated power (hp) 106 158 169 300

characteristics Rated torque (ft

- lb) 103 161 161 365 Notes: All potential CO2 improvements are from 2008 US baseline technology based on the combined US test procedure (55% UDDS, 45% highway); sGDI= stoichiometric gasoline direct injection; DCP=dual cam phasing; DVVL=discrete variable valve lift; TDS = turbocharged downsize; cEGR= cooled exhaust gas recirculation; DCT = dual clutch transmi ssion39 The rulemaking demonstrates that packages containing these and other technologies can provide substantial emission reductions at prices that typically deliver net cost savings to vehicle consumers in most cases within one to three years

.

Estimat es of Total Annualized Incremental Costs of the Proposed Advanced Clean Cars Program for 2015 through 2030 (millions of 2009 Dollars)

Year Annualized

GHG Costs

to PC

Consumers Annualized

GHG Costs

to LDT

Consumers Annualized

Criteria

Pollutant

Costs to LD V

Consumers Annualized

Criteria pollutant

Costs to

MDV

Consumers Total

Annualized Compliance

Costs Cumulative

Annualized

Incremental

Cost

2015 $0 $0 $1 $0 $1 $1

2016 $0 $0 $2 $0 $2 $4

2017 $16 $9 $4 $0 $29 $33

2018 $48 $15 $5 $0 $ 67 $100

2019 $98 $20 $6 $0 $124 $225

2020 $134 $25 $8 $0 $166 $392

2021 $176 $32 $9 $0 $217 $609

2022 $213 $36 $10 $0 $259 $868

2023 $244 $40 $11 $0 $295 $1,163

2024 $276 $44 $12 $0 $331 $1,495

2025 $270 $49 $ 13 $1 $332 $1,827

2026 $264 $49 $13 $0 $325 $2,153

2027 $262 $48 $12 $0 $322 $2,475

2028 $260 $48 $12 $0 $320 $2,796

2029 $258 $48 $12 $0 $318 $3,114

2030 $256 $47 $12 $0 $316 $3,430

Note: Sum of individual columns m ay not match totals due to rounding.

Nearly all technology combinations modeled provide reductions in lifetime operating costs that greatly exceed the r etail price of the technologies (Staff Report pp. 194

- 196)

.

(B)

. Lead Time Considerations

As note d above, LEV III provides manufacturers an extended lead time to phase in their light

- duty vehicles to the LEV III GHG emission requirements over the 2017

- 2025 MYs

, and as noted repeatedly throughout the rulemaking documents, the LEV III GHG regulations re ly less on traditional “technology

- forcing” than on repackaging a

combination of “off

- the

- shelf” technologies to meet the adopted standards. With few exceptions, lead time to develop these individual technologies is simply not an issue.

The issue is whet her they can be combined in time across manufacturer fleets to meet the standards. There is abundant evidence in the record showing that they can. 83 Also

, during the rulemaking proceedings for the adoption of the 2012 LEV amendments,

CARB did not receive any significant comments questioning the overall technological feasibility of the amended standards.

83 http://www.epa.gov/oms/climate/regulations/ldv

- ghg

- tar.pdf40 (C)

. Test Procedure Consistency

We are not aware of any instances in which a manufacturer is precluded from conducting one set of tests on a motor vehic le to determine compliance with both California and federal procedures for both criteria and GHG emissions. As part of the LEV II rulemaking formally adopted by Executive Order G

- 99

- 059 on August 5, 1999,

CARB adopted federal Compliance Assurance Program (CAP) 2000 requirements virtually identical to those adopted by EPA (64 Fed

. Reg

. 23906, May 4, 1999), significantly reducing any test inconsistencies between the two agencies.

There, however, remain differences for exhaust and evaporative emission test ing under California and federal programs. LEV III vehicles are required to certify to exhaust emission standards using a certification fuel containing 10 percent ethanol. In addition, for evaporative emission testing, EPA requires a more volatile gasoli ne test fuel with an ethanol content of zero (E0) and a lower test temperature profile, while LEV III requires a lower volatile gasoline test fuel with an ethanol content of 10 percent (E10) and a higher temperature test temperature profile. However, it i s CARB’s intention to evaluate whether manufacturers could conduct both exhaust and evaporative testing using federal test fuel and procedures when EPA finalizes its Tier 3 program.

To conclude the consistency discussion, th en, neither of the two consid erations EPA may consider in reviewing consistency with section 202(a) applies here. There is adequate lead time giving appropriate consideration to costs, and there are no inconsistent test procedures. Thus, there is no basis for the Administrator to de ny California’s waiver request for inconsistency with CAA section 202(a).

V

. CONCLUSION

For the reasons set forth in this document, the Administrator should confirm C ARB’s

determination that the 20 12 ZEV and LEV amendments are respectively within the

sco pe of the previous waivers of preemption or otherwise qualify for a waiver of preemption.

In support of the CARB’s request, the following documents pertaining to the ACC Package are enclosed on compact disc:

1. Board Resolution 12

- 11

, January 26, 2012

.

2

. Board Resolution 12

- 21, March 22, 2012

.

3

. Notice of Public Hearing to Consider Adoption of the 2012 California Zero Emission Vehicle Regulation, issued November 29, 2011

.

4. Initial Statement of Reasons for A mendments to the C alifornia Z ero E missio n Vehicle Regulation, issued December 7, 2011

, (and associated appendixes)

.41 5. Notice of Availability of Modified Text for Amendments to the California Zero Emission Vehicle Regulation , issued February 22, 2012

, (and associated attachments)

.

6

. Notice o f Public Hearing to Consider Adoption of the 2012 California Low Emission Vehicle Regulation, issued December 7 , 2011

.

7

. Initial Statement of Reasons for A mendments to the C alifornia Low E mission Vehicle Regulation, issued December 7, 2011

, (and assoc iated appendixes)

.

8

. Notice of Availability of Modified Text for Amendments to the California Low Emission Vehicle Regul ation, issued February 22, 2012

, (and associated enclosures)

.

9

. Form 400 Notice of Filing Adopted Regulations with California’s Offi ce of

Administrative Law June 25, 2012, for ZEV . Under California Government Code section 11349.3 the Office of Administrative law must take action on the adopted regulations

– see Final Regulation Order s in Items 11, 12, 13, 14, and 15 below

–

no later th an August 7, 2012

.

10

. Form 400 Notice of Filing Adopted Regulations with California’s Office of

Administrative Law June 25, 2012, for L EV. Under California Government Code section 11349.3 the Office of Administrative law must take action on the adopted regulations

– see Final Regulation Order in Item 16 below

– no later than August
7, 2012

.

1 1

. Final Regulation Order: Section 1962.1 Zero Emission Vehicle Standards for 2009 through 2017 Model Year Passenger Cars, Light

- Duty Trucks, and

Medium

- Duty Vehi cle

.

1 2

. Final Test Procedure: California Exhaust Emission Standards and Test Procedures for 2009 through 2017 Model Zero

- Emission Vehicles and Hybrid Electric Vehicles, in the Passenger Car, Light

- Duty Truck and Medium

- Duty

Vehicle Classes

.

13

. Final Re gulation Order: Section 1962.2 Zero Emission Vehicle Standards for 2018 and subsequent Model Year Passenger Cars, Light

- Duty Trucks, and

Medium

- Duty Vehicles

.

14

. Final Test Procedure: California Exhaust Emission Standards and Test

Procedures for 2018 and Subsequent Model Zero

- Emission Vehicles and Hybrid Electric Vehicles, in the Passenger Car, Light

- Duty Truck and Medium

- Duty

Vehicle Classes

.

1 5

. Final Regulation Order: Section 1962.3 California Vehicle Charging Requirements

.42 1 6

. Final Regulation Order : California Low Emission Vehicle Standards

.