Document ID: EPA-HQ-OAR-2011-0549-0040
Agency: epa
Document Type: Notice
Title: California State Nonroad Engine Pollution Control Standards; Commercial Harbor Craft Regulations; Notice of Decision
Posted Date: 2011-12-13T05:00Z

[Federal Register Volume 76, Number 239 (Tuesday, December 13, 2011)]
[Notices]
[Pages 77521-77528]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-31916]

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ENVIRONMENTAL PROTECTION AGENCY

[FRL-9503-5]

California State Nonroad Engine Pollution Control Standards; 
Commercial Harbor Craft Regulations; Notice of Decision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Decision.

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[[Page 77522]]

SUMMARY: EPA has granted the California Air Resources Board (CARB) its 
request for an authorization to adopt and enforce regulations for the 
control of emissions of particulate matter and oxides of nitrogen from 
new and in-use diesel-fueled engines on commercial harbor craft.

DATES: Petitions for review must be filed by February 13, 2012.

ADDRESSES: EPA has established a docket for this action under Docket ID 
EPA-HQ-OAR-2011-0549. All documents relied upon in making this 
decision, including those submitted to EPA by CARB, are contained in 
the public docket. Publicly available docket materials are available 
either electronically through www.regulations.gov or in hard copy at 
the Air and Radiation Docket in the EPA Headquarters Library, EPA West 
Building, Room 3334, located at 1301 Constitution Avenue NW., 
Washington, DC. The Public Reading Room is open to the public on all 
federal government working days from 8:30 a.m. to 4:30 p.m.; generally, 
it is open Monday through Friday, excluding holidays. The telephone 
number for the Reading Room is (202) 566-1744. The Air and Radiation 
Docket and Information Center's Web site is http://www.epa.gov/oar/docket.html. The electronic mail (email) address for the Air and 
Radiation Docket is: a-and-r-Docket@epa.gov, the telephone number is 
(202) 566-1742, and the fax number is (202) 566-9744. An electronic 
version of the public docket is available through the federal 
government's electronic public docket and comment system. You may 
access EPA dockets at http://www.regulations.gov. After opening the 
www.regulations.gov Web site, enter EPA-HQ-OAR-2011-0549 in the ``Enter 
Keyword or ID'' fill-in box to view documents in the record. Although a 
part of the official docket, the public docket does not include 
Confidential Business Information (``CBI'') or other information whose 
disclosure is restricted by statute.
    EPA's Office of Transportation and Air Quality (``OTAQ'') maintains 
a Web page that contains general information on its review of 
California waiver requests. Included on that page are links to prior 
waiver Federal Register notices, some of which are cited in today's 
notice. The page can be accessed at http://www.epa.gov/otaq/cafr.htm.

FOR FURTHER INFORMATION CONTACT: Kristien G. Knapp, Attorney-Advisor, 
Compliance Division, Office of Transportation and Air Quality, U.S. 
Environmental Protection Agency, 1200 Pennsylvania Avenue (6405J) NW., 
Washington, DC 20460. Telephone: (202) 343-9949. Fax: (202) 343-2800. 
Email: knapp.kristien@epa.gov.

SUPPLEMENTARY INFORMATION:

I. Background

A. California's Commercial Harbor Craft Regulations

    In a letter dated April 12, 2010, CARB submitted to EPA its request 
pursuant to section 209(e) of the Clean Air Act (``CAA'' or ``the 
Act''), regarding its regulations to enforce emission standards for new 
and in-use commercial harbor craft operated within California waters 
and twenty-four nautical miles of the California baseline (``commercial 
harbor craft regulations'').\1\ The CARB Board approved the commercial 
harbor craft regulations at its November 15, 2007 hearing (by 
Resolution 07-47).\2\ After making modifications, as directed by the 
Board, CARB's Executive Officer formally adopted the rulemaking in 
Executive Order R-08-007 on September 2, 2008.\3\ CARB's commercial 
harbor craft regulations became operative under California state law on 
November 19, 2008.\4\ The regulations are codified in title 13, 
California Code of Regulations (CCR), section 2229.5 and title 17, CCR 
section 93118.5.\5\
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    \1\ Letter from James Goldstene to Lisa P. Jackson, EPA-HQ-OAR-
2011-0549-0001.
    \2\ CARB, Resolution 07-47, EPA-HQ-OAR-2011-0549-0027.
    \3\ CARB, Executive Order R-08-007, EPA-HQ-OAR-2011-0549-0030.
    \4\ See CARB, Approval Notice, EPA-HQ-OAR-2011-0549-0035.
    \5\ See CARB, Final Regulation Order, EPA-HQ-OAR-2011-0549-0034.
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    California's commercial harbor craft regulations establish emission 
standards, requirements related to the control of emissions, and 
enforcement provisions. The requirements are applicable to diesel 
propulsion and auxiliary engines on new and in-use commercial harbor 
crafts, with some exceptions.\6\ Commercial harbor craft include a 
variety of different types of vessels, including ferries, excursion 
vessels, tugboats, towboats, and commercial and charter fishing boats. 
Approximately eighty percent of commercial harbor craft engines 
operating in California are previously unregulated diesel engines, 
accounting for approximately 3.3 tons per day (tpd) of diesel 
particulate matter (PM) and 73 tpd of oxides of nitrogen 
(NOX). California's commercial harbor craft regulations aim 
to reduce these emissions so that California can meet the 2014 National 
Ambient Air Quality Standards (NAAQS) deadline for PM2.5 in 
the South Coast Air Basin. The commercial harbor craft regulations 
apply separately to new and in-use engines used on harbor craft.\7\
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    \6\ See CARB, Authorization Support Document, p. 5, EPA-HQ-OAR-
2011-0549-0002 (hereinafter ``CARB Support Document'').
    \7\ CARB Support Document, pp. 2-6.
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    For new harbor craft, each propulsion and auxiliary diesel engine 
on the vessel is required to be certified to the most stringent federal 
new marine engine emission standards for that engine's power rating and 
displacement in effect at the time of sale, lease, rent, or 
acquisition.\8\ The regulation imposes additional requirements for 
larger new ferries (with the capacity to transport seventy-five or more 
passengers), either by using best available control technology 
(``BACT''),\9\ or by using a federal Tier 4 certified propulsion 
engine.
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    \8\ CARB Support Document at 2.
    \9\ BACT is the diesel emission control strategy (DECS) 
determined by CARB to be the greatest feasible reduction of 
NOX or PM.
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    For in-use harbor craft, new or in-use diesel engines may not be 
sold, offered for sale, leased, rented, or acquired unless the diesel 
propulsion or auxiliary engines are certified to at least the federal 
Tier 2 or Tier 3 marine emission standards for new engines of the same 
power rating and displacement.\10\ In-use emission requirements are 
imposed on Tier 0 and Tier 1 marine engines in ferries, excursion 
vessels, tugboats, towboats, push boats, and multipurpose harbor craft. 
Those harbor craft are required to meet emission limits equal to or 
cleaner than the federal new marine engine certification standards in 
effect for the year that in-use engine compliance is required.
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    \10\ CARB Support Document at 3.
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    California's commercial harbor craft regulations also impose 
requirements related to monitoring, reporting and recordkeeping of 
compliance on owners and operators of new and in-use harbor craft.\11\ 
Subject to CARB approval, harbor craft owners and operators may opt to 
meet requirements by implementing alternative emission control 
strategies.
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    \11\ CARB Support Document at 5.
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B. Clean Air Act Nonroad Engine and Vehicle Authorizations

    Section 209(e)(1) of the Act permanently preempts any State, or 
political subdivision thereof, from adopting or attempting to enforce 
any standard or other requirement relating to the control of emissions 
for certain new nonroad engines or vehicles. Section 209(e)(2) of the 
Act requires the Administrator to grant California authorization to 
enforce its own

[[Page 77523]]

standards for new nonroad engines or vehicles that are not listed under 
section 209(e)(1), subject to certain restrictions. On July 20, 1994, 
EPA promulgated a rule that sets forth, among other things, the 
criteria, as found in section 209(e)(2), which EPA must consider before 
granting any California authorization request for new nonroad engine or 
vehicle emission standards. On October 8, 2008, the regulations 
promulgated in that rule were moved to 40 CFR part 1074, and modified 
slightly.\12\ As stated in the preamble to the section 209(e) rule, EPA 
has historically interpreted the section 209(e)(2)(iii) ``consistency'' 
inquiry to require, at minimum, that California standards and 
enforcement procedures be consistent with section 209(a), section 
209(e)(1), and section 209(b)(1)(C) (as EPA has interpreted that 
subsection in the context of section 209(b) motor vehicle waivers).\13\
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    \12\ The applicable regulations, now in 40 CFR part 1074, 
subpart B, Sec.  1074.105, provide:
    (a) The Administrator will grant the authorization if California 
determines that its standards will be, in the aggregate, at least as 
protective of public health and welfare as otherwise applicable 
federal standards.
    (b) The authorization will not be granted if the Administrator 
finds that any of the following are true:
    (1) California's determination is arbitrary and capricious.
    (2) California does not need such standards to meet compelling 
and extraordinary conditions.
    (3) The California standards and accompanying enforcement 
procedures are not consistent with section 209 of the Act.
    (c) In considering any request from California to authorize the 
state to adopt or enforce standards or other requirements relating 
to the control of emissions from new nonroad spark-ignition engines 
smaller than 50 horsepower, the Administrator will give appropriate 
consideration to safety factors (including the potential increased 
risk of burn or fire) associated with compliance with the California 
standard.
    \13\ See 59 FR 36969 (July 20, 1994).
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    In order to be consistent with section 209(a), California's nonroad 
standards and enforcement procedures must not apply to new motor 
vehicles or new motor vehicle engines. To be consistent with section 
209(e)(1), California's nonroad standards and enforcement procedures 
must not attempt to regulate engine categories that are permanently 
preempted from state regulation. To determine consistency with section 
209(b)(1)(C), EPA typically reviews nonroad authorization requests 
under the same ``consistency'' criteria that are applied to motor 
vehicle waiver requests. Pursuant to section 209(b)(1)(C), the 
Administrator shall not grant California a motor vehicle waiver if she 
finds that California ``standards and accompanying enforcement 
procedures are not consistent with section 202(a)'' of the Act. 
Previous decisions granting waivers and authorizations have noted that 
state standards and enforcement procedures are inconsistent with 
section 202(a) if: (1) There is inadequate lead time to permit the 
development of the necessary technology giving appropriate 
consideration to the cost of compliance within that time, or (2) the 
federal and state testing procedures impose inconsistent certification 
requirements.

C. Burden of Proof

    In Motor and Equip. Mfrs Assoc. v. EPA, 627 F.2d 1095 (D.C. Cir. 
1979) (``MEMA I''), the U.S. Court of Appeals stated that the 
Administrator's role in a section 209 proceeding is to:

consider all evidence that passes the threshold test of materiality 
and * * * thereafter assess such material evidence against a 
standard of proof to determine whether the parties favoring a denial 
of the waiver have shown that the factual circumstances exist in 
which Congress intended a denial of the waiver.\14\
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    \14\ MEMA I, 627 F.2d at 1122.

The court in MEMA I considered the standards of proof under section 209 
for the two findings related to granting a waiver for an ``accompanying 
enforcement procedure'' (as opposed to the standards themselves): (1) 
Protectiveness in the aggregate and (2) consistency with section 202(a) 
findings. The court instructed that ``the standard of proof must take 
account of the nature of the risk of error involved in any given 
decision, and it therefore varies with the finding involved. We need 
not decide how this standard operates in every waiver decision.'' \15\
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    \15\ Id.
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    The court upheld the Administrator's position that, to deny a 
waiver, there must be ``clear and compelling evidence'' to show that 
proposed procedures undermine the protectiveness of California's 
standards.\16\ The court noted that this standard of proof also accords 
with the congressional intent to provide California with the broadest 
possible discretion in setting regulations it finds protective of the 
public health and welfare.\17\
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    \16\ Id.
    \17\ Id.
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    With respect to the consistency finding, the court did not 
articulate a standard of proof applicable to all proceedings, but found 
that the opponents of the waiver were unable to meet their burden of 
proof even if the standard were a mere preponderance of the evidence. 
Although MEMA I did not explicitly consider the standards of proof 
under section 209 concerning a waiver request for ``standards,'' as 
compared to accompanying enforcement procedures, there is nothing in 
the opinion to suggest that the court's analysis would not apply with 
equal force to such determinations. EPA's past waiver decisions have 
consistently made clear that: ``[E]ven in the two areas concededly 
reserved for Federal judgment by this legislation--the existence of 
`compelling and extraordinary' conditions and whether the standards are 
technologically feasible--Congress intended that the standards of EPA 
review of the State decision to be a narrow one.'' \18\
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    \18\ See, e.g., 40 FR 21102-103 (May 28, 1975).
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    Opponents of the waiver bear the burden of showing that the 
criteria for a denial of California's waiver request have been met. As 
found in MEMA I, this obligation rests firmly with opponents of the 
waiver in a section 209 proceeding:

[t]he language of the statute and its legislative history indicate 
that California's regulations, and California's determinations that 
they must comply with the statute, when presented to the 
Administrator 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 bear the 
burden of persuading the Administrator that the waiver request 
should be denied.\19\
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    \19\ MEMA I, 627 F.2d at 1121.

The Administrator's burden, on the other hand, is to make a reasonable 
evaluation of the information in the record in coming to the waiver 
decision. As the court in MEMA I stated: ``here, too, if the 
Administrator ignores evidence demonstrating that the waiver should not 
be granted, or if he seeks to overcome that evidence with unsupported 
assumptions of his own, he runs the risk of having his waiver decision 
set aside as `arbitrary and capricious.' '' \20\ Therefore, the 
Administrator's burden is to act ``reasonably.'' \21\
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    \20\ Id. at 1126.
    \21\ Id. at 1126.
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D. EPA's Administrative Process in Consideration of California's 
Commercial Harbor Craft Regulations

    Upon review of CARB's request, EPA offered an opportunity for a 
public hearing, and requested written comment on issues relevant to a 
full section 209(e) authorization analysis, by publication of a Federal 
Register notice on June 29, 2011.\22\ Specifically, we

[[Page 77524]]

requested comment on: (a) Whether CARB's determination that its 
standards, in the aggregate, are at least as protective of public 
health and welfare as applicable federal standards is arbitrary and 
capricious, (b) whether California needs such standards to meet 
compelling and extraordinary conditions, and (c) whether California's 
standards and accompanying enforcement procedures are consistent with 
section 209 of the Act.
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    \22\ 76 FR 38153 (June 29, 2011).
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    In response to EPA's June 29, 2011 Federal Register notice, EPA 
received two written comments. The written comments are from the 
American Waterways Operators (``AWO'') \23\ and K-Sea Transportation 
Partners L.P. (``K-Sea'').\24\ AWO initially requested a public 
hearing, and later withdrew that request. After the close of the 
comment period, EPA met with AWO to discuss comments from their 
members.\25\
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    \23\ The American Waterways Operators (``AWO''), Comments, EPA-
HQ-OAR-2011-0549-0038 (hereinafter ``AWO Comments'').
    \24\ K-Sea Transportation Partners L.P. (``K-Sea''), Comments, 
EPA-HQ-OAR-2011-0549-0037 (hereinafter ``K-Sea Comments'').
    \25\ EPA, ``Memorandum from Tayyaba Waqar to Docket EPA-HQ-OAR-
2011-0549,'' EPA-HQ-OAR-2011-0549-0039.
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    AWO comments that California does not need the new standards to 
meet compelling and extraordinary conditions. AWO also comments that 
California's standards and enforcement procedures are not consistent 
with the Clean Air Act section 209. Additionally, AWO expressed other 
concerns in their comments related to the commercial harbor craft 
regulation's compliance schedules.
    K-Sea comments that the new regulations are not consistent with 
section 202(a) of the Clean Air Act. K-Sea also comments that 
California does not need the new regulations to meet compelling and 
extraordinary conditions. Additionally, K-Sea does not believe that 
CARB adequately assessed the financial impacts and compliance costs 
associated with implementation of California's commercial harbor craft 
regulations.

II. Discussion

A. California's Protectiveness Determination

    Section 209(e)(2)(i) of the Act instructs that EPA cannot grant an 
authorization if the agency finds that CARB was arbitrary and 
capricious in its determination that its standards are, in the 
aggregate, at least as protective of public health and welfare as 
applicable federal standards. CARB's Board made a protectiveness 
determination in Resolution 07-47, finding that California's commercial 
harbor craft regulation will not cause the California emission 
standards, in the aggregate, to be less protective of public health and 
welfare than applicable federal standards.\26\ CARB asserts that EPA 
has no basis to find that the CARB Board's determination is arbitrary 
or capricious.\27\ CARB points out that most of the commercial harbor 
craft requirements (for new diesel engines in newly acquired harbor 
craft and ferry propulsion engines) are identical to the federal 
requirements for those engines. CARB also highlights that its 
requirements for new propulsion diesel engines in larger new ferries 
are more stringent that federal standards because they additionally 
require BACT technology. With respect to the commercial harbor craft 
regulation's in-use requirements, CARB additionally asserts that its 
requirements are more stringent than applicable federal regulations 
because EPA does not have the authority to regulate in-use nonroad 
engines.
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    \26\ ``BE IT FURTHER RESOLVED that the Board hereby determines, 
in accordance with section 209(e)(2) of the CAA, that to the extent 
the regulation approved herein affects nonroad engines as defined in 
CAA section 216(10) and (11), the emission standards and other 
requirements related to the control of emissions in the regulation 
approved herein are, in the aggregate, at least as protective of 
public health and welfare as applicable federal standards; 
California needs its nonroad emission standards to meet compelling 
and extraordinary conditions; and the standards and accompanying 
enforcement procedures approved herein are consistent with CAA 
section 209.'' CARB Resolution 07-47, EPA-HQ-OAR-2011-0549-0028.
    \27\ CARB Support Document at 7-8.
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    No commenter expressed an opinion or presented evidence suggesting 
that CARB was arbitrary and capricious in making its above-noted 
protectiveness findings or that CARB's requirements are not, in the 
aggregate, as stringent as applicable federal standards. Therefore, 
based on the record before us, EPA finds that opponents of the 
authorization have not shown that California was arbitrary and 
capricious in its determination that its standards are, in the 
aggregate, at least as protective of public health and welfare as 
applicable federal standards.

B. Need for California Standards to Meet Compelling and Extraordinary 
Conditions

    Section 209(e)(2)(ii) of the Act instructs that EPA cannot grant an 
authorization if the agency finds that California ``does not need such 
California standards to meet compelling and extraordinary conditions.'' 
This criterion restricts EPA's inquiry to whether California needs its 
own mobile source pollution program to meet compelling and 
extraordinary conditions, and not whether any given standards are 
necessary to meet such conditions.\28\ As discussed above, for over 
forty years CARB has repeatedly demonstrated the need for its motor 
vehicle emissions program to address compelling and extraordinary 
conditions in California. In its Resolution 07-47, CARB re-affirmed its 
longstanding position that California continues to need its nonroad 
emission standards to meet its serious air pollution problems. 
Likewise, EPA has consistently recognized that California continues to 
have the same ``geographical and climatic conditions that, when 
combined with the large numbers and high concentrations of automobiles, 
create serious pollution problems.'' \29\
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    \28\ See 74 FR 32744, 32761 (July 8, 2009); 49 FR 18887, 18889-
18890 (May 3, 1984).
    \29\ 49 FR 18887, 18890 (May 3, 1984); see also 76 FR 34693 
(June 14, 2011), 74 FR 32744, 32763 (July 8, 2009), and 73 FR 52042 
(September 8, 2008).
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    AWO asserts that California does not need the commercial harbor 
craft regulations to meet compelling and extraordinary conditions. AWO 
focuses on California's goal of improving upon the South Coast Air 
Basin's non-attainment status by reducing NOX and 
PM2.5 levels. AWO states that there is no justification for 
CARB to adopt statewide regulations of NOX and 
PM2.5 in order to meet the 2014 NAAQS deadline for 
PM2.5 in the South Coast Air Basin. AWO reviewed CARB's 
Initial Statement of Reasons (``ISOR'') and believes that the ISOR does 
not provide sufficient detail to explain the relationship between 
pollutant exceedances and commercial harbor craft emissions. 
Additionally, AWO believes that the data CARB used from 2006 and 
earlier for its analysis of commercial harbor craft's contribution to 
NOX and PM2.5 levels is inaccurate and outdated 
in that it does not represent the most current operation of tugboats in 
California waters. AWO also points to CARB's statements regarding 
decrease in emissions for diesel NOX and PM2.5 
because of other effects and factors. Further, in comparing data for 
emission reductions with and without the proposed standards, AWO 
concludes that CARB's emission reduction goals would be met without 
implementing the commercial harbor craft regulation.
    K-Sea also asserts that California does not need the commercial 
harbor craft regulation to meet compelling and extraordinary 
conditions. K-Sea argues that California used data from 2006 and 
earlier in its rulemaking, which is

[[Page 77525]]

outdated and inaccurate. K-Sea bases that argument on its belief that 
because of the recession, which started in 2008, emissions have already 
been in decline. K-Sea also states that the data CARB used to assess 
harbor craft emissions from tugboats in coastwise service did not 
accurately capture their duty cycles or operations within the 24-mile 
zone of the California regulated waters.
    AWO and K-Sea have both presented arguments and information 
suggesting that California does not need its commercial harbor craft 
regulations to meet compelling and extraordinary conditions. However, 
as discussed above, EPA's inquiry under the section 209(e)(2)(ii) 
criterion restricts EPA's inquiry to whether California needs its own 
mobile source air pollution program to meet compelling and 
extraordinary conditions, and not whether any given standards are 
necessary to meet such conditions.\30\ Congress decided in 1977 to 
allow California to promulgate individual standards that are not as 
stringent as comparable federal standards, as long as the standards are 
``in the aggregate, at least as protective of public health and welfare 
as applicable federal standards.'' This decision by Congress requires 
EPA to allow California to promulgate individual standards that are 
part of California's overall approach to reducing mobile source 
emissions to address air pollution problems. Congress intended to 
provide California the ``broadest possible discretion'' in selecting 
the best means to protect its citizens and the public welfare and did 
not intend for EPA to weigh which particular regulations are most 
appropriate for California to implement to protect public health and 
welfare. Consequently, Congress provided EPA a much more limited role 
in considering objections raised by opponents of the waiver.
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    \30\ See 74 FR 32744, 32761 (July 8, 2009); 49 FR 18887, 18889-
18890 (May 3, 1984).
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    Although AWO and K-Sea believe that California does not need its 
commercial harbor craft regulations to meet compelling and 
extraordinary conditions, CARB has provided evidence that it does. In 
the California rulemaking, CARB explained its need for the commercial 
harbor craft regulation.\31\ Regarding the comment that California's 
air quality problems are limited to the South Coast Air Basin, EPA has 
never suggested in previous authorization or waiver proceedings that 
localized air quality concerns are not sufficient to receive 
authorization under this criterion. However, even if EPA were to accept 
this comment for the sake of argument, CARB has explained that it has 
statewide goals and federal Clean Air Act requirements to reduce 
NOX and PM2.5 emissions. CARB explained that 
NOX and PM2.5 reductions are necessary because of 
the relationship between those pollutants and the federal non-
attainment status in both the South Coast and San Joaquin Valley air 
basins:
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    \31\ CARB, Technical Support Document, EPA-HQ-OAR-2011-0549-
0007, pp. I-1-I-3.

    The South Coast and San Joaquin Valley air basins are the two 
areas in the State that exceed the annual PM2.5 
standards. These areas are required by federal law to develop State 
Implementation Plans (SIPs) describing how they will attain the 
standards by 2015. The U.S. EPA further requires that all necessary 
emission reductions be achieved one calendar year sooner--by 2014--
in recognition of the annual average form [sic] the standard. 
NOX emission reductions are needed because NOX 
leads to formation in the atmosphere of both ozone and 
PM2.5; diesel PM emission reductions are needed because 
diesel PM contributes to ambient concentrations of PM2.5. 
San Joaquin Valley and South Coast air basins are also in non-
attainment for the federal ozone standard.* * *
    While all sources of NOX emissions are important, 
marine vessels, which include commercial harbor craft engines, are 
one of several key contributors to PM2.5 that will 
determine whether California is able to meet the 2014 deadline for 
PM2.5 attainment in the South Coast air basin.
    * * * Staff projects that the regulation would reduce in-use 
harbor craft diesel PM emissions about 70 percent and NOX 
emissions about 60 percent from the 2004 baseline by 2020. These 
emission reductions would occur in areas along waterways, near 
ports, and in those communities surrounding these areas, as well as 
further inland.
    The regulation would also reduce diesel PM and NOX 
emissions that contribute to exceedances throughout the State of 
ambient air quality standards for both PM2.5 and ozone. 
These reductions would assist California in its goal of achieving 
state and federal air quality standards.
    The emission reductions from the proposed regulation would 
result in lower ambient PM levels and reduced exposure to diesel PM. 
Staff estimates that approximately 310 premature deaths statewide 
would be avoided by year 2025 from implementation of the proposed 
regulation. The estimated cost benefit of the avoided premature 
deaths and other health benefits due to the emission reductions are 
estimated to range from $1.3 to $2.0 billion.\32\

    \32\ Id.
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Thus, contrary to AWO's argument, CARB presents that it does need 
statewide commercial harbor craft regulations, because NOX 
and PM pollution problems affect the entire state.
    Although AWO and K-Sea claim that California's 2006 data is 
outdated, because emissions have decreased since 2008 due to the 
recession and other emission reduction strategies, they have not 
presented evidence proving this to be the case. EPA must rely on the 
record in front of us. Moreover, while both AWO and K-Sea suggest that 
California may have overstated the emission contributions from harbor 
craft, they do not show that harbor craft do not contribute to 
emissions that affect California's air quality. While the level of air 
pollution may go to the overall benefits of the program, it is not 
relevant for determining the need for California's nonroad engine 
program. Indeed, AWO's comments make clear that the harbor craft 
regulations will result in emission reductions.\33\
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    \33\ For example, AWO analyzed CARB's ISOR, and found that 
California's commercial harbor craft regulation would achieve ``only 
10 percent'' of California's total estimated statewide PM emission 
reductions and ``only 6 percent'' of California's total estimated 
statewide NOX reductions.
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    Moreover, AWO's argument relies on California's other emission 
reduction strategies to make its case, but it is inappropriate for EPA 
to decide which California regulations are needed, and which are not. 
CARB presented that they expect the emission reductions from the 
commercial harbor craft regulation to benefit the entire state in 
meeting federal standards and reaching their statewide emission 
reduction goals. While AWO believes California's state goals will be 
met without the commercial harbor craft regulation, they do not present 
evidence to support that belief, nor do they suggest that the San 
Joaquin or South Coast air basins would actually meet federal ozone and 
PM standards without the commercial harbor craft regulation. Nor would 
it be appropriate for EPA to decide that the other emission controls on 
which AWO relies are necessary but the controls on commercial harbor 
craft are not. Aside from the fact that all sources of pollution could 
argue that other sources should be regulated instead of them, EPA's 
review is not intended to replace the policy decisions of California in 
determining the appropriate emission control strategies it will use to 
meet its air quality needs.
    Based on the above, those opposing the authorization have not met 
the burden of proof necessary for EPA to find that California no longer 
needs a separate mobile source emissions program to address compelling 
and extraordinary conditions in California. Therefore, EPA has 
determined that we cannot deny California authorization for its 
commercial harbor craft regulations under section 209(e)(2)(ii).

[[Page 77526]]

C. Consistency With Section 209 of the Clean Air Act

    Section 209(e)(2)(iii) of the Act instructs that EPA cannot grant 
an authorization if California's standards and enforcement procedures 
are not consistent with section 209. As described above, EPA has 
historically evaluated this criterion for consistency with sections 
209(a), 209(e)(1), and 209(b)(1)(C).
1. Consistency With Section 209(a)
    To be consistent with section 209(a) of the Clean Air Act, 
California's commercial harbor craft regulations must not apply to new 
motor vehicles or new motor vehicle engines. California's commercial 
harbor craft regulations apply to nonroad engines, not on-highway motor 
vehicles or engines. CARB states that the new vessel requirements 
regulate new diesel engines, and apply only to nonroad engines that are 
neither new motor vehicles nor new motor vehicle engines. No commenter 
presented otherwise; therefore, EPA cannot deny California's request on 
the basis that California's commercial harbor craft regulations are not 
consistent with section 209(a).
2. Consistency With Section 209(e)(1)
    To be consistent with section 209(e)(1) of the Clean Air Act, 
California's commercial harbor craft regulations must not affect new 
farming or construction vehicles or engines that are below 175 
horsepower, or new locomotives or their engines. CARB presents that 
commercial harbor craft engines are not used in locomotives and are not 
primarily used in farm and construction equipment vehicles. No 
commenter presented otherwise; therefore, EPA cannot deny California's 
request on the basis that California's commercial harbor craft 
requirements are not consistent with section 209(e)(1).
3. Consistency With Section 209(b)(1)(C)
    The requirement that California's standards be consistent with 
section 209(b)(1)(C) of the Clean Air Act effectively requires 
consistency with section 202(a) of the Act. California standards are 
inconsistent with section 202(a) of the Act if there is inadequate 
lead-time to permit the development of technology necessary to meet 
those requirements, giving appropriate consideration to the cost of 
compliance within that time. California's accompanying enforcement 
procedures would also be inconsistent with section 202(a) if the 
federal and California test procedures were not consistent. The scope 
of EPA's review of whether California's action is consistent with 
section 202(a) is narrow. The determination is limited to whether those 
opposed to the authorization or waiver have met their burden of 
establishing that California's standards are technologically 
infeasible, or that California's test procedures impose requirements 
inconsistent with the federal test procedure.\34\
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    \34\ MEMA I, 627, F.2d at 1126.
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a. Technological Feasibility
    Congress has stated that the consistency requirement of section 
202(a) relates to technological feasibility.\35\ Section 202(a)(2) 
states, in part, that any regulation promulgated under its authority 
``shall take effect after such period as the Administrator finds 
necessary to permit the development and application of the requisite 
technology, giving appropriate consideration to the cost of compliance 
within such period.'' Section 202(a) thus requires the Administrator to 
first determine whether adequate technology already exists; or if it 
does not, whether there is adequate time to develop and apply the 
technology before the standards go into effect. The latter scenario 
also requires the Administrator to decide whether the cost of 
developing and applying the technology within that time is feasible. 
Previous EPA waivers are in accord with this position.\36\ For example, 
a previous EPA waiver decision considered California's standards and 
enforcement procedures to be consistent with section 202(a) because 
adequate technology existed as well as adequate lead-time to implement 
that technology.\37\ Subsequently, Congress has stated that, generally, 
EPA's construction of the waiver provision has been consistent with 
congressional intent.\38\
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    \35\ H.R. Rep. No. 95-294, 95th Cong., 1st Sess. 301 (1977).
    \36\ See, e.g., 49 FR 1887, 1895 (May 3, 1984); 43 FR 32182, 
32183 (July 25, 1978); 41 FR 44209, 44213 (October 7, 1976).
    \37\ 41 FR 44209 (October 7, 1976).
    \38\ H.R. Rep. No. 95-294, 95th Cong., 1st Sess. 301 (1977).
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    CARB presents that the technological feasibility of most of the 
commercial harbor craft requirements are ``clearly technologically 
feasible'' because they mirror requirements that EPA has already 
adopted and determined were technologically feasible after considering 
cost of compliance when setting its Tier 2, 3, and 4 emission 
standards.\39\ Such is the case for the new vessel engine requirements, 
for which compliance is based on meeting applicable federal Tier 2, 3, 
or 4 emission standards. Larger new ferry propulsion engines must 
similarly meet applicable federal standards, with those that meet Tier 
2 or 3 federal standards also required to be equipped with BACT. CARB 
states that the BACT requirement is technologically feasible because a 
BACT determination is made on a case-by-case assessment of 
technological availability for each specific ferry application. If no 
BACT is available for a specific ferry application, compliance with 
federal Tier 2 or 3 standards is all that is required. This aspect of 
California's commercial harbor craft regulations is the only aspect 
which does not rely upon compliance with a federal standard; for this 
aspect, CARB contends that the cost of compliance on ferry owners and 
operators will largely be passed along to customers without significant 
economic disruption. CARB's in-use requirements also rely on compliance 
with federal emission standards and includes four compliance options: 
(1) Engine replacement with new federal Tier 2 or 3 compliant engines, 
(2) demonstrating compliance with federal Tier 2 or 3 standards (e.g., 
rebuilding), (3) demonstrating that a vessel will not operate more than 
three hundred hours in a compliance year, and (4) flexibility through 
exemptions and compliance extensions.
---------------------------------------------------------------------------

    \39\ CARB Support Document at 9-13.
---------------------------------------------------------------------------

    EPA did not receive any comments suggesting that California's 
commercial harbor craft regulations are technologically infeasible. EPA 
did receive comments--from AWO and K-Sea--suggesting that CARB did not 
adequately address the cost of compliance within the lead-time 
provided.
    AWO asserts that California's commercial harbor craft regulations 
are inconsistent with section 202(a) because there has been inadequate 
lead-time to permit the development and widespread commercial 
availability of the technology necessary to comply, and CARB has not 
given appropriate consideration to the cost of compliance within the 
lead-time provided. AWO further asserts that approximately four-fifths 
of the towing vessel fleet is equipped with pre-Tier 1 or Tier 1 
certified engines, and current regulations only require use of an EPA-
approved kit, if available; California's commercial harbor craft 
regulations, on the other hand, will require these vessels to rebuild 
with a Tier 2 kit or completely repower. AWO also asserts that CARB 
does not address the cost of a retrofit versus the cost of replacement; 
this, AWO believes, is a failure to provide adequate lead-time, ``with 
appropriate consideration to the cost of compliance.'' AWO emphasizes 
that its

[[Page 77527]]

members cannot afford these costs, particularly because ninety percent 
of the towing industry is comprised of small businesses. Additionally, 
AWO stresses that these cost concerns (e.g., vessel downtime required 
during drydocks, the residual value of engine replacement, cost of 
installation and maintenance, equipment and shipyard availability) were 
not given full consideration by CARB. AWO believes that many towing 
companies may be forced to cease operations in California. Furthermore, 
even though California provides funding options, AWO asserts that such 
funding is largely unavailable for AWO members because they do not 
primarily operate within California. AWO believes that the cost 
increases associated with the commercial harbor craft regulation will 
drive up the cost of waterways transportation.
    K-Sea also believes that CARB did not adequately assess the 
financial impacts and cost of compliance. K-Sea emphasizes that out of 
its 18 tugs, they would need to replace 13. K-Sea informs EPA that they 
cannot afford this, and will be forced to either make a radical capital 
investment to comply, or cease operating in California. K-Sea 
represents that they cannot obtain CARB funding because it does not 
operate primarily in California. K-Sea also states that they could 
relocate compliant vessels to California, which would merely shift 
pollution out of state. K-Sea believes this renders the ``necessity of 
the regulation to be `arbitrary and capricious' * * *''
    EPA's review with regard to cost of compliance occurs within the 
context of its review of whether California's commercial harbor craft 
regulations are consistent with section 202(a) of the Clean Air Act. As 
described above, EPA's review here is narrow. That is, section 202(a) 
consistency calls for a limited review of technological feasibility, 
including analysis of the cost of new technology, if technology does 
not currently exist. Section 202(a) does not allow EPA to conduct a 
more searching review of whether the costs are outweighed by the 
overall benefits of the California regulations. In this case, no party 
has objected to CARB's demonstration that technologies are in existence 
and are being used in actual operation; AWO and K-Sea only challenge 
the cost of compliance. EPA's traditional review of costs considers 
whether the cost of compliance per engine would render the regulation 
cost prohibitive and thus infeasible. Here, CARB understands that there 
are significant costs associated with compliance, but it expects those 
costs to eventually be passed on to the consumer, without significant 
impact on the industry. AWO and K-Sea, on the other hand, present that 
compliance with the commercial harbor craft regulations would impose 
unreasonable costs that could lead operators to cease operations in 
California. AWO and K-Sea did not further express that the costs 
associated with compliance would render compliance entirely infeasible. 
Notably, CARB responded to similar if not identical concerns from 
industry--including comments from AWO--during the California 
rulemaking.\40\ In response to comments with respect to the significant 
costs of compliance and impact on the industry, CARB stood by its 
rulemaking findings. CARB addressed the many points AWO and K-Sea now 
raise in this proceeding. Specifically, CARB stated, among other 
things, that it does not believe the commercial harbor craft regulation 
will have significant economic impacts; that the potential impacts on 
affected tugboat and towboat businesses will, on average, decrease a 
business's return on investment by 3.6 and 0.5 percent, respectively; 
that engine replacement is the most expensive compliance option, but 
there may be other less costly options, including rebuilding, employing 
emission control technologies, applying for approval of alternative 
control of emissions plan, or applying for compliance extensions; that 
tugboats will be able to pass on the added compliance costs to their 
customers; that the regulation will not result in job losses or 
significant impact on tugboat businesses because they provide a 
necessary service that will continue to be in high demand; and that 
CARB has given six years of lead-time for businesses to plan for 
compliance in which they may apply for incentive funds or choose other 
less costly compliance options. In previous waiver and authorization 
determinations, EPA has consistently given California substantial 
deference on its policy judgments, including those related to the costs 
associated with compliance. For example, in a previous authorization 
determination where cost of compliance was an issue, EPA stated: 
``CARB's regulations are feasible with respect to cost objectively; 
i.e., all fleet operators face the same cost per unit to comply. While 
this cost may have different impacts on fleets of varying sizes, EPA 
recognizes that it is up to CARB to choose who it will regulate under 
its standards.'' \41\ Similarly here, EPA is in no position to second-
guess CARB's regulatory choices. Because the cost of compliance is not 
so burdensome to render compliance options out of reach, the fact that 
some operators may have difficulties with the cost of compliance does 
not render the program infeasible.
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    \40\ CARB, ``Final Statement of Reasons for Rulemaking,'' EPA-
HQ-OAR-2011-0549-0032, pp. 57-67.
    \41\ EPA, Authorization of In-Use Emission Standards for 
Transport Refrigeration Unit Engines,'' January 9, 2009, at 63.
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    Therefore, based on the record before us, EPA finds that opponents 
of the authorization have not met their burden of proof. Consequently, 
EPA cannot deny California's authorization based on technological 
infeasibility.
b. Consistency of Certification Procedures
    California's standards and accompanying enforcement procedures 
would also be inconsistent with section 202(a) if the California test 
procedures were to impose certification requirements inconsistent with 
the federal certification requirements. Such inconsistency means that 
manufacturers would be unable to meet both the California and federal 
testing requirements using the same test vehicle or engine.\42\
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    \42\ See, e.g., 43 FR 32182 (July 25, 1978).
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    CARB presents that none of the commercial harbor craft requirements 
pose any inconsistency as between California and federal test 
procedures. CARB asserts that the compliance methods for new vessel 
engines are EPA's Tier 2, 3, or 4 federal marine engine test 
procedures. For larger new ferries, CARB also relies on federal marine 
engine test procedures, and asserts that the added BACT requirement is 
not inconsistent with federal procedures because EPA has no comparable 
requirement. The regulation's in-use requirements also rely on federal 
marine engine test procedures. CARB further presents that the in-use 
requirements are not inconsistent with federal requirements because EPA 
does not have any comparable in-use standards and test procedures.
    EPA received no comments suggesting that CARB's commercial harbor 
craft requirements pose a test procedure consistency problem. 
Therefore, based on the record, EPA cannot find that CARB's testing 
procedures are inconsistent with section 202(a). Consequently, EPA 
cannot deny CARB's request based on this criterion.

D. Other Issues

    AWO requests that the compliance dates for the affected vessels be 
reset

[[Page 77528]]

according to the date that EPA approves California's authorization 
request to facilitate compliance. AWO also expressed concerns about 
inconsistent regulation for vessels engaged in interstate commerce. K-
Sea echoed a similar concern, stating that the regulations will shift 
the burden of dealing with emissions to other states because companies 
may choose to relocate a non-CARB compliant engine to operations 
elsewhere. With respect to AWO's request for a delayed compliance 
schedule, EPA cannot change an aspect of California's regulation. EPA 
is only authorized to review California's standards to determine 
compliance with section 209. It is not authorized to change 
California's regulations. With respect to the AWO and K-Sea comments 
regarding the interstate implications of California's commercial harbor 
craft regulations, that issue is also beyond the scope of EPA's review 
under the three section 209(e)(2) criteria. As EPA has stated on 
numerous occasions, sections 209(b) and 209(e) of the Clean Air Act 
limit our authority to deny California requests for waivers and 
authorizations to the three criteria listed therein. As a result, EPA 
has consistently refrained from denying California's requests for 
waivers and authorizations based on any other criteria.\43\ In 
instances where the U.S. Court of Appeals has reviewed EPA decisions 
declining to deny waiver requests based on criteria not found in 
section 209(b), the Court has upheld and agreed with EPA's 
determination.\44\ Neither of these other issues AWO and K-Sea raises 
is among--or fits within the confines of--the criteria listed under 
section 209(e).\45\ It is clear that Congress intended that California 
have the ability to promulgate standards that are more stringent than 
those that would otherwise apply to mobile sources under federal 
regulations. Indeed, other states could also promulgate such standards 
if they are identical to California's. Therefore, in considering 
California's commercial harbor craft regulations, EPA may not deny 
authorization based on these issues.
---------------------------------------------------------------------------

    \43\ See, e.g., 74 FR 32744, 32783 (July 8, 2009).
    \44\ See Motor and Equipment Manufacturers Ass'n v. Nichols, 142 
F.3d 449, 462-63, 466-67 (DC Cir. 1998), Motor and Equipment 
Manufacturers Ass'n v. EPA, 627 F.2d 1095, 1111, 1114-20 (DC Cir. 
1979).
    \45\ AWO and K-Sea may raise these issues in a direct challenge 
to California's regulations in other forums, but these issues are 
not relevant to EPA's limited review under section 209.
---------------------------------------------------------------------------

E. Authorization Determination for California's Commercial Harbor Craft 
Regulations

    After a review of the information submitted by CARB and other 
parties to this proceeding, EPA finds that those opposing California's 
request have not met the burden of demonstrating that an authorization 
for California's commercial harbor craft regulations should be denied 
based on any of the three statutory criteria of section 209(e)(2). For 
this reason, EPA finds that an authorization for California's 
commercial harbor craft regulations should be granted.

III. Decision

    The Administrator has delegated the authority to grant California 
section 209(b) waivers of preemption and section 209(e) authorizations 
to the Assistant Administrator for Air and Radiation. After evaluating 
California's commercial harbor craft regulations, CARB's submissions, 
and the public comments from AWO and K-Sea, EPA is granting an 
authorization to California for its commercial harbor craft 
regulations.
    My decision will affect not only persons in California, but also 
entities outside the State who must comply with California's 
requirements. For this reason, I determine and find that this is a 
final action of national applicability for purposes of section 
307(b)(1) of the Act. Pursuant to section 307(b)(1) of the Act, 
judicial review of this final action may be sought only in the United 
States Court of Appeals for the District of Columbia Circuit. Petitions 
for review must be filed by February 13, 2012. Judicial review of this 
final action may not be obtained in subsequent enforcement proceedings, 
pursuant to section 307(b)(2) of the Act.

IV. Statutory and Executive Order Reviews

    As with past authorization and waiver decisions, this action is not 
a rule as defined by Executive Order 12866. Therefore, it is exempt 
from review by the Office of Management and Budget as required for 
rules and regulations by Executive Order 12866.
    In addition, this action is not a rule as defined in the Regulatory 
Flexibility Act, 5 U.S.C. 601(2). Therefore, EPA has not prepared a 
supporting regulatory flexibility analysis addressing the impact of 
this action on small business entities.
    Further, the Congressional Review Act, 5 U.S.C. 801, et seq., as 
added by the Small Business Regulatory Enforcement Fairness Act of 
1996, does not apply because this action is not a rule for purposes of 
5 U.S.C. 804(3).

    Dated: December 5, 2011.
Gina McCarthy,
Assistant Administrator, Office of Air and Radiation.
[FR Doc. 2011-31916 Filed 12-12-11; 8:45 am]
BILLING CODE 6560-50-P