[Federal Register Volume 78, Number 6 (Wednesday, January 9, 2013)]
[Notices]
[Pages 2112-2145]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-00181]
[[Page 2111]]
Vol. 78
Wednesday,
No. 6
January 9, 2013
Part VI
Environmental Protection Agency
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California State Motor Vehicle Pollution Control Standards; Notice of
Decision Granting a Waiver of Clean Air Act Preemption for California's
Advanced Clean Car Program and a Within the Scope Confirmation for
California's Zero Emission Vehicle Amendments for 2017 and Earlier
Model Years; Notice
Federal Register / Vol. 78 , No. 6 / Wednesday, January 9, 2013 /
Notices
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ENVIRONMENTAL PROTECTION AGENCY
[FRL-9768-1]
California State Motor Vehicle Pollution Control Standards;
Notice of Decision Granting a Waiver of Clean Air Act Preemption for
California's Advanced Clean Car Program and a Within the Scope
Confirmation for California's Zero Emission Vehicle Amendments for 2017
and Earlier Model Years
SUMMARY: The Environmental Protection Agency (EPA) is granting the
California Air Resources Board's (CARB's) request for a waiver of Clean
Air Act preemption to enforce its Advanced Clean Car (ACC) regulations.
The ACC combines the control of smog and soot causing pollutants and
greenhouse gas (GHG) emissions into a single coordinated package of
requirements for passenger cars, light-duty trucks and medium-duty
passenger vehicles (and limited requirements related to heavy-duty
vehicles). The ACC program includes revisions to California's Low
Emission Vehicle (LEV) program as well as its Zero Emission Vehicle
(ZEV) program. By today's decision, EPA has also determined that CARB's
amendments to the ZEV program as they affect 2017 and prior model years
(MYs) are within the scope of previous waivers of preemption granted to
California for its ZEV regulations. In the alternative, EPA's waiver of
preemption for CARB's ACC regulations includes a waiver of preemption
for CARB's ZEV amendments as they affect all MYs, including 2017 and
prior MYs. In addition, EPA is including CARB's recently adopted
``deemed to comply'' rule for GHG emissions in today's waiver decision.
This decision is issued under section 209(b) of the Clean Air Act (the
``Act''), as amended.
DATES: Petitions for review must be filed March 11, 2013.
ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-HQ-OAR-2012-0562. All documents and public comments in the
docket are listed on the www.regulations.gov Web site. 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, 1301
Constitution Ave. NW., Washington, DC. The Public Reading Room is open
from 8:30 a.m. to 4:30 p.m., 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: [email protected], the telephone
number is (202) 566-1742 and the fax number is (202) 566-9744.
FOR FURTHER INFORMATION CONTACT: Specific questions may be addressed to
David Dickinson, Office of Transportation and Air Quality, Compliance
Division (6405J-NLD), EPA, 1200 Pennsylvania Ave. NW., Washington, DC
20460, telephone: (202) 343-9256, email: [email protected].
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Executive Summary
II. Background
A. California's Advanced Clean Cars Program for New Motor
Vehicles
B. EPA's Consideration of CARB's Request
III. Analysis of Preemption Under Section 209 of the Clean Air Act
A. Clean Air Act Preemption Provisions
B. Deference to California
C. Burden of Proof
D. Comments Received on EPA's Application of the Section 209(b)
Criteria
IV. California's Within the Scope Request for Its Zero Emission
Vehicle Amendments
A. Chronology
B. CARB's ZEV Amendments
C. EPA's Determination Regarding the Appropriateness of CARB's
Within the Scope Request for the 2012 ZEV Amendments
D. Application of the Within the Scope Waiver Criteria to CARB's
2012 ZEV Amendments Regarding 2017 and Earlier MYs
1. Public Health and Welfare
2. Consistency With Section 202(a)
3. New Issues
V. Consideration of the Advance Clean Car Regulations Under the Full
Waiver Criteria
A. California's Protectiveness Determination
1. Comments on CARB's Protectiveness Determination
2. Is California's protectiveness determination arbitrary and
capricious?
3. Section 209(b)(1)(A) Conclusion
B. Does California need its standards to meet compelling and
extraordinary conditions?
1. EPA's March 6, 2008 GHG Waiver Denial
2. EPA's July 9, 2009 GHG Waiver
3. Response to Comments Received
4. CARB's GHG Emission Standards
5. CARB's ZEV Emission Standards
6. CARB's PM Emission Standards
7. Section 209(b)(1)(B) Conclusion
C. Are the California ACC standards consistent with section
202(a) of the Clean Air Act?
1. Historical Approach
2. LEV III Criteria Pollutant Standards
a. Particulate Matter Standards
b. EPA's Response to Comments
3. LEV III Greenhouse Gas Emission Standards
a. Comments on CARB's 2017 Through 2025 GHG Emission Standards
b. EPA's Response to Comments
4. California's ZEV Amendments as They Affect 2018 Through 2025
Model Years
a. Comments on CARB's ZEV Amendments
b. EPA's Response to Comments
c. Conclusion on Technological Feasibility
5. Consistency of Certification Test Procedures
6. Relevance of the Energy Policy and Conservation Act (EPCA) to
the Waiver Decision
VI. Decision
VII. Statutory and Executive Order Reviews
I. Executive Summary
Today, as Assistant Administrator of the EPA's Office of Air and
Radiation, I am granting California's request for a waiver of Clean Air
Act preemption for California's ACC that combines the control of smog
and soot causing pollutants and GHG emissions into a single coordinated
package of requirements for MY 2015 through 2025 passenger cars (PCs),
light-duty trucks (LDTs), medium-duty passenger vehicles (MDPVs), and
limited requirements related to heavy-duty vehicles (HDVs). The ACC
program regulations include revisions to both California's LEV and ZEV
programs. By letter dated June 27, 2012, CARB submitted a request (CARB
waiver request) that EPA grant a waiver of preemption under section
209(b) of the Clean Air Act (CAA), 42 U.S.C. 7543(b) for the revisions
to the LEV program (LEV III).\1\ CARB also sought confirmation that the
amendments to the ZEV program are within the scope of prior waiver
decisions issued by EPA, or in the alternative requested a waiver for
these revisions (the LEV III and ZEV amendments, together known as the
ACC, are considered as CARB's waiver request). By letter dated December
7, 2012, CARB submitted additional information (CARB supplemental
request) to EPA requesting that EPA consider as part of CARB's pending
ACC waiver request the CARB's Executive Officer adopted ``deemed to
comply'' regulation.\2\ CARB's ``deemed to comply'' regulation, adopted
by CARB's Board on November 15, 2012 and final action taken by CARB's
Executive Officer on December 6, 2012, allows automobile manufacturers
to demonstrate compliance with CARB's GHG standards by complying with
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EPA's GHG standards which were published for those MYs.
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\1\ CARB waiver request at EPA-HQ-OAR-2012-0562-0004. The cover
letter to CARB's Waiver Request is at EPA-HQ-OAR-2012-0562-0004.
\2\ CARB supplemental request at EPA-HQ-OAR-2012-0562-0374.
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By today's decision we are confirming that CARB's ZEV amendments,
as they affect 2017 and prior MYs are within the scope of previous ZEV
waivers. EPA also finds that the entire ACC program meets the criteria
for a waiver of Clean Air Act preemption and thus we are granting a
waiver for CARB's ACC program. Included in EPA's full waiver are CARB's
``deemed to comply'' regulations, and the ZEV regulations as they
affect 2017 and prior MYs.
The legal framework for this decision stems from the waiver
provision first adopted by Congress in 1967, and later modified in
1977. Congress established that there would be only two programs for
control of emissions from new motor vehicles--EPA emission standards
adopted under the Clean Air Act, and California emission standards
adopted under state law. Congress accomplished this by preempting all
state and local governments from adopting or enforcing emission
standards for new motor vehicles, while at the same time providing that
California could receive a waiver of preemption for its emission
standards and enforcement procedures. Other states can only adopt
standards that are identical to California's standards. This struck an
important balance that protected manufacturers from multiple and
different state emission standards, and preserved a pivotal role for
California in the control of emissions from new motor vehicles.
Congress recognized that California could serve as a pioneer and a
laboratory for the nation in setting new motor vehicle emission
standards. Congress intentionally structured this waiver provision to
restrict and limit EPA's ability to deny a waiver. The provision was
designed to ensure California's broad discretion to determine the best
means to protect the health and welfare of its citizens.
Section 209(b) specifies that EPA must grant California a waiver if
California determines that its standards are, in the aggregate, at
least as protective of the public health and welfare as applicable
federal standards. EPA may deny a waiver only if it makes at least one
of three findings specified under the Clean Air Act (including whether
California's ``protectiveness finding'' noted above is arbitrary and
capricious). Therefore, EPA's role upon receiving a request for waiver
of preemption from California is to determine whether it is appropriate
to make any of the three findings specified by the Clean Air Act and if
the Agency cannot make at least one of the three findings then the
waiver must be granted. The three waiver criteria are properly seen as
criteria for a denial--EPA must grant the waiver unless at least one of
three criteria for a denial is met. This is different from most waiver
situations before the Agency, where EPA typically determines whether it
is appropriate to make certain findings necessary for granting a
waiver, and if the findings are not made then a waiver is denied. This
reversal of the normal statutory structure embodies and is consistent
with the congressional intent of providing deference to California to
maintain its own new motor vehicle emissions program.
The three criteria for denial of a waiver are: first, whether
California's determination that its standards are, in the aggregate, at
least as protective as applicable federal standards is arbitrary and
capricious (Section 209(b)(1)(A)); second, whether California has a
need for such standards to meet compelling and extraordinary conditions
(Section 209(b)(1)(B)); and third, whether California's standards are
consistent with Section 202(a) of the Clean Air Act (Section
209(b)(1)(C)). EPA and the Court of Appeals for the District of
Columbia Circuit have consistently interpreted section 209(b) as
placing the burden on the opponents of a waiver to demonstrate that one
of the criteria for a denial has been met.\3\
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\3\ Motor and Equipment Manufacturers Ass'n v. EPA (MEMA I), 627
F.2d 1095, 1120-1121 (D.C. Cir. 1979).
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If California acts to amend a previously waived standard or
accompanying enforcement procedure, the amendment may be considered
within the scope of a previously granted waiver provided that it does
not undermine California's determination that its standards in the
aggregate are as protective of public health and welfare as applicable
federal standards, does not affect its consistency with section 202(a)
of the Clean Air Act, and raises no new issues affecting EPA's previous
waiver decisions.\4\
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\4\ Decision Documents accompanying within the scope of waiver
determinations in 66 FR 7751 (January 25, 2001) at p. 5 and 51 FR
12391 (April 10, 1986) at p. 2, see also, e.g., 46 FR 36742 (July
15, 1981).
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In this case, California is combining three sets of motor vehicle
emission standards into a single ACC waiver request. The standards are
complimentary in the way they address interrelated ambient air quality
needs and climate change. EPA has previously granted a series of waiver
and within the scope decisions regarding CARB's LEV, ZEV and GHG
emission programs.\5\
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\5\ EPA's LEV waiver decisions are found at 58 FR 4166 (January
13, 1993); 64 FR 42689 (August 5, 1999); 68 FR 19811 (April 22,
2003); 70 FR 22034 (April 28, 2005); and 75 FR 44951 (July 30,
2010). EPA's GHG waiver decisions are found at 73 FR 12156 (March 6,
2008) (GHG waiver denial); 74 FR 32744 (July 8, 2009) (GHG waiver);
and 76 FR 34693 (June 14, 2011) (This prior within the scope
decision included CARB's prior ``deemed to comply'' regulation for
the 2012-2016 MYs). EPA's most recent ZEV waiver decisions are found
at 71 FR 78190 (December 28, 2006); and 76 FR 61095 (October 3,
2011).
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As part of EPA's public comment process for CARB's ACC waiver
request, we have received comments from: several states and
organizations representing states; health and environmental
organizations; industry; and other stakeholders.\6\ The vast majority
of comments EPA received were in support of the waiver. EPA received
opposition to certain elements of the waiver, including a joint comment
submitted by the Association of Global Automakers and the Alliance of
Automobile Manufacturers (Manufacturers or Manufacturers comment).\7\
We also received opposition to the ACC waiver request from the National
Automobile Dealers Association (NADA or Dealers, or NADA comment).\8\
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\6\ EPA received support for CARB's waiver request, in the form
of oral testimony and/or written comment (all docket references are
to EPA-HQ-OAR-2012-0562-XXXX, with the last four numbers associated
with each comment) from: Environmental Defense Fund (EDF)--0025 and
0353, the National Association of Clean Air Agencies (NACAA)--0028,
American Lung Association--0029, Advanced Engine Systems Institute--
0030, Environment America--0031, Consumer Federation of America
(CFA)--0032, Manufacturers of Emission Control (MECA)--0033, Natural
Resources Defense Council (NRDC)--0347, South Coast Air Quality
Management District (SCAQMD)--0346, Sierra Club--0348, Northeast
States for Coordinated Air Uses Management (NESCAUM)--0350, New York
State Department of Environmental Conservation--0351, Consumers
Union--0354, and Union of Concerned Scientists--0355. EPA also
received similar comment at the waiver public hearing, transcript
found at EPA-HQ-OAR-2012-0562-0026.
\7\ EPA-HQ-OAR-2012-0562-0349. EPA also received written comment
from Toyota Motor North America (Toyota) at EPA-HQ-OAR-2012-0562-
0372 which notes that ``Toyota could be forced to employ a variety
of costly marketing programs to ensure compliance if the market does
not accept ZEV technology in the volumes anticipated by
California.'' Toyota notes that its further concerns are expressed
in detail in the Manufacturers comments.
\8\ EPA-HQ-OAR-2012-0562-0352.
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After a thorough evaluation of the record, we have determined that
the waiver opponents have not met their burden of proof in order for us
to deny the CARB's waiver request under any of the three criteria in
section 209(b)(1). EPA also confirms that CARB's ZEV amendments, as
they affect the 2017 and earlier MYs are within the scope of previous
waivers of preemption. In the alternative, EPA's waiver of preemption
for CARB's ACC regulations includes a
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waiver of preemption for CARB's ZEV amendments as they affect all MYs,
including 2017 and prior MYs.
II. Background
A. California's Advanced Clean Car Program for New Motor Vehicles
As further explained below, CARB has adopted amendments to title
13, California Code of Regulations (CCR), and has established a single
coordinated package that includes amendments to three sets of
regulations regulating emissions from new PCs, LDTs, MDPVs, and certain
HDVs: \9\ the LEV regulation which includes two components--standards
relating to criteria pollutants and standards to regulate GHG
emissions, and the ZEV program.
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\9\ Medium-duty vehicles (MDVs) are vehicles in California's
regulations between 8,500 and 114,000 lbs GVWR that are also called
Class 2b/Class 3 vehicles. These vehicles are generally termed
Heavy-duty vehicles under EPA's regulations.
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This single ACC program combines the control of smog-causing
pollutants and GHG emissions into a coordinated package of amendments
and requirements for MY 2015 through 2025 in order to address near and
long term smog issues within California and identified GHG emission
reduction goals. The program also includes amended ZEV regulations and
a Clean Fuels Outlet regulation. These additional program elements are
designed to address these goals as well.\10\ The ACC program, together,
provides the regulated manufacturers with the ability to plan and
integrate their product designs in order to meet applicable CARB
emission requirements.
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\10\ CARB's Clean Fuel Outlet Regulation is not subject to
preemption under section 209 of the Clean Air Act.
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In order to achieve further emission reductions from the light- and
medium-duty fleet, CARB adopted several amendments that represent a
strengthening of its ongoing LEV regulations, including: a reduction of
fleet average emissions of new PCs, LDTs, and MDPVs to super ultra-low-
emission vehicle (SULEV) levels by 2025; replacement of separate non-
methane organic gas (NMOG) and oxides of nitrogen (NOX)
standards with combined NMOG plus NOX standards, which
provides automobile manufacturers with additional flexibility in
meeting the new stringent standards; an increase of full useful life
durability requirements from 120,000 miles to 150,000 miles, which
guarantees vehicles sustain these extremely low emission levels longer;
a backstop to assure continued production of super-ultra-low-emission
vehicles after partial-zero-emission vehicles (PZEVs) as a category are
moved from the ZEV regulations to the LEV regulations in 2018; more
stringent particulate matter (PM) standards for light- and medium-duty
vehicles, which will reduce the health effects and premature deaths
associated with these emissions; zero fuel evaporative emission
standards for PCs and LDTs, and more stringent standards for medium-
and heavy-duty vehicles (MDVs); and, more stringent supplemental
federal test procedure (SFTP) standards for PC and LDTs, which reflect
more aggressive real world driving and, for the first time, require
MDVs to meet SFTP standards.
The second component of CARB's LEV III regulations includes
amendments to its GHG emission standards. CARB's GHG standards for the
2017 through 2025 MYs are designed to respond to California's
identified goals of reducing GHG emissions to 80 percent below 1990
levels by 2050 and in the near term to reduce GHG levels to 1990 levels
by 2020. As such, CARB's GHG amendments: reduce new light-duty
CO2 emissions from new light-duty regulatory MY 2016 levels
by approximately 34 percent by MY 2025, and from about 251 grams of
CO2 per mile to 166 grams, based on the projected mix of
vehicles sold in California; set emission standards for CO2,
CH4, and N2O; establish footprint based
CO2 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 CO2
standard if a manufacturer reduces refrigerant emissions 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 CO2 standards if a
manufacturer produces full size pickups with high efficiency drive
trains; provide credits for deployment of technologies that reduce off-
cycle CO2 emissions; and require upstream emissions from
zero-emission vehicles to be counted towards a manufacturer's light-
duty vehicle GHG emissions. CARB's GHG emission regulations also
include an optional compliance path whereby manufacturers may
demonstrate compliance with CARB's GHG emission regulations by
complying with applicable EPA GHG emission requirements.
Lastly, CARB's ACC regulations include amendments to its ZEV
regulations that can be described within two timeframes: (1) MY 2012
through 2017; and (2) MY 2018 and beyond. CARB's stated goal for
amendments to the current ZEV regulation through MY 2017 is to make
corrections and clarifications to its regulations and to enable
manufacturers to successfully meet the 2018 and later MY requirements.
These amendments include: A provision of compliance flexibility whereby
carry forward credit limitations for ZEVs were removed, allowing
manufacturers to bank ZEV credits indefinitely for use in later years
(the flexibility also included slightly reducing the 2015 through 2017
credit requirement for intermediate volume manufacturers (IVM, less
than 60,000 vehicles produced each year), to allow them to better
prepare for requirements in 2018, and included a 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 the
``travel provision'' for BEVs through 2017); an adjustment of credits
and allowances; and an addition of a new vehicle category (collectively
``BEVx'' vehicles) as a compliance option for manufacturers to meet up
to half of their minimum ZEV requirement.
CARB's stated goal for its amendments affecting 2018 and subsequent
MYs is the commercialization of ZEVs and ``transitional zero-emission
vehicles (TZEV; commonly a plug-in hybrid electric vehicle--PHEV).
California would achieve this objective by simplifying its regulation
and pushing higher production volumes which in turn would achieve cost
reductions. These amendments include: an increased ZEV requirement for
2018 and subsequent MYs that pushes ZEVs and TZEVs to more than 15
percent of new sales by 2025; the removal of PZEV (near-zero emitting
conventional technologies) and advanced technology PZEV (AT PZEV,
typically non-plug-in HEVs) credits as compliance options for
manufacturers; an allowance for manufacturers to use banked PZEV and AT
PZEV credits earned in 2017 and previous MYs, but discount the credits,
and place a cap on usage in 2018 and subsequent MYs; amended
manufacturer size definitions that bring all but the smallest
manufacturers under the full ZEV requirements by MY 2018; a modified
credit system that bases credits for ZEVs on range, with 50 mile
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BEVs earning 1 credit each and 350 Mile FCVs earning 4 credits each
(the range of credit reflects the utility of the vehicle (i.e. the zero
emitting miles it may travel) and its expected timing for
commercialization) along with a simplified and streamlined TZEV credits
system; a modified ``travel'' provision that ends the travel provision
for BEVs after MY 2017and extends the travel provision for FCVs; and
provisions allowing manufacturers who systematically over comply with
the LEV III GHG fleet standard to offset a portion of their ZEV
requirement in 2018 through 2021 MYs only.
B. EPA's Consideration of CARB's Request
By letter dated June 27, 2012, CARB submitted a request (CARB
waiver request) seeking a waiver of Section 209(a)'s prohibition for
its ACC standards.\11\ On August 31, 2012, a Federal Register notice
(FR Notice) was published announcing an opportunity for hearing and
comment on CARB's request.\12\ EPA held a public hearing in Washington,
DC on September 19, 2012. The written comment period closed on October
19, 2012.
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\11\ EPA-HQ-OAR-2012-0562-0004.
\12\ 77 FR 53199 (August 31, 2012).
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EPA's FR Notice on CARB's waiver request asked for comment on
several matters. Since CARB had submitted a within the scope request
for its ZEV amendments as they affect both the 2012-2017 MYs and 2018
and subsequent MYs, EPA invited comment on the following issues: first,
should California's ZEV amendments, as they affect the 2012-2017 MYs
and/or the 2018 and later MYs, be considered under the within the scope
criteria or should they be considered under the full waiver criteria?;
second, to the extent part or all of those ZEV amendments should be
considered as a within the scope request, do such amendments meet the
criteria for EPA to confirm that they are within the scope of prior
waivers? EPA also solicited comment in the event that EPA cannot
confirm that some or all of CARB's ZEV amendments are within the scope
of previous waivers. We also requested comment on all aspects of the
full waiver analysis with regard to the ACC program (the LEV III
criteria pollutant and GHG regulations, and the ZEV amendments to the
extent EPA does not consider them under the within the scope analysis
noted above). Therefore, we asked commenters to consider the following
three criteria: whether (a) California's determination that its motor
vehicle emission standards are, in the aggregate, at least as
protective of public health and welfare as applicable Federal standards
is arbitrary and capricious, (b) California needs such standards to
meet compelling and extraordinary conditions, and (c) California's
standards and accompanying enforcement procedures are consistent with
section 202(a) of the Clean Air Act.
Because CARB noted (in its waiver request and in its incorporated
Board Resolution 12-11) its commitment to propose a ``deemed to
comply'' rule for its GHG standards shortly after EPA finalized its
light-duty vehicle GHG emission standards, EPA specifically invited
comment on CARB's waiver request in light of CARB's explicit plans
concerning adoption of a ``deemed to comply'' provision into its LEV
III GHG standards.
III. Analysis of Preemption Under Section 209 of the Clean Air Act
A. Clean Air Act Preemption Provisions
Section 209(a) of the Act provides:
No State or any political subdivision thereof shall adopt or
attempt to enforce any standard relating to the control of emissions
from new motor vehicles or new motor vehicle engines subject to this
part. No State shall require certification, inspection or any other
approval relating to the control of emissions from any new motor
vehicle or new motor vehicle engine as condition precedent to the
initial retail sale, titling (if any), or registration of such motor
vehicle, motor vehicle engine, or equipment.\13\
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\13\ Clean Air Act (CAA) section 209(a), 42 U.S.C. Sec.
7543(a).
Section 209(b)(1) of the Clean Air Act requires the Administrator,
after an opportunity for public hearing, to waive application of the
prohibitions of section 209(a) for any State that has adopted standards
(other than crankcase emission standards) for the control of emissions
from new motor vehicles or new motor engines prior to March 30, 1966,
if the State determines that its State standards will be, in the
aggregate, at least as protective of public health and welfare as
applicable Federal standards.\14\ However, no such waiver shall be
granted by the Administrator if she finds that: (A) The protectiveness
determination of the State is arbitrary and capricious; (B) the State
does not need such State standards to meet compelling and extraordinary
conditions; or (C) such State standards and accompanying enforcement
procedures are not consistent with section 202(a) of the Act. In
previous waiver decisions, EPA has stated that Congress intended EPA's
review of California's decision-making be narrow. This has led EPA to
reject arguments that are not specified in the statute as grounds for
denying a waiver:
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\14\ CAA section 209(b), 42 U.S.C. Sec. 7543(b). California is
the only State which meets section 209(b)(1)'s requirement for
obtaining a waiver. See S. Rep. No. 90-403 at 632 (1967).
The law makes it clear that the waiver requests 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 with its cost or is 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 section 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.\15\
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\15\ 36 FR 17458 (Aug. 31, 1971). Note that the more stringent
standard expressed here, in 1971, was superseded by the 1977
amendments to section 209, which established that California must
determine that its standards are, in the aggregate, at least as
protective of public health and welfare as applicable Federal
standards.
Thus, my consideration of all the evidence submitted concerning a
waiver decision is circumscribed by its relevance to those questions
that I may consider under section 209(b).
B. Deference to California
In previous waiver decisions, EPA has recognized that the intent of
Congress in creating a limited review based on the section 209(b)(1)
criteria was to ensure that the federal government did not second-guess
state policy choices. This has led EPA to state:
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
promulgated standards. Such an approach * * * may be attended with
costs, in the shaped of 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 deference to
California's judgments on this score.\16\
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\16\ 40 FR 23103-23104; see also LEV I (58 FR 4166), January 13,
1993)Decision Document at 64.
EPA has stated that the text, structure, and history of the California
waiver provision clearly indicate both a congressional intent and
appropriate EPA practice of leaving the decision on ``ambiguous and
controversial matters of
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public policy'' to California's judgment.\17\
\17\ 40 FR 23104; 58 FR 4166.
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The House Committee Report explained as part of the 1977 amendments
to the Clean Air Act, where Congress had the opportunity to restrict
the waiver provision, it elected instead to explain California's
flexibility to adopt a complete program of motor vehicle emission
controls. The amendment is intended to ratify and strengthen the
California waiver provision and to affirm the underlying intent of that
provision, i.e., to afford California the broadest possible discretion
in selecting the best means to protect the health of its citizens and
the public welfare.\18\
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\18\ MEMA I, 627 F.2d at 1110 (citing H.R.Rep. No 294, 95 Cong.,
1st Sess. 301-02 (1977).
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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.\19\
---------------------------------------------------------------------------
\19\ MEMA I, 627 F.2d at 1122.
The court in MEMA I considered the standards of proof under section 209
for the two findings necessary to grant 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.'' \20\
---------------------------------------------------------------------------
\20\ Id.
---------------------------------------------------------------------------
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.\21\ 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.\22\
---------------------------------------------------------------------------
\21\ Id.
\22\ Id.
---------------------------------------------------------------------------
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.
As we explained in the GHG waiver decision, 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. \23\ 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.''\24\
---------------------------------------------------------------------------
\23\ 74 FR 32748
\24\ See, e.g., 40 FR 21102-103 (May 28, 1975).
---------------------------------------------------------------------------
Finally, opponents of the waiver bear the burden of showing that
the criteria for a denial of California's waiver request has been met.
As found in MEMA I, this obligation rests firmly with opponents of the
waiver in a section 209 proceeding, holding that: ``[t]he language of
the statute and it's 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.'' \25\
---------------------------------------------------------------------------
\25\ MEMA I, 627 F.2d at 1121.
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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, Ahere, 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.'' \26\ Therefore, the
Administrator's burden is to act ``reasonably.''\27\
---------------------------------------------------------------------------
\26\ Id. at 1126.
\27\ Id.
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D. Comments Received on EPA's Application of the Section 209(b)
Criteria
The Dealers provided a series of suggestions on several threshold
issues for how EPA should evaluate CARB's ACC waiver request. While the
ACC regulatory components are interrelated, the Dealers state that EPA
should evaluate them separately by applying each of the three waiver
criteria under section 209(b).\28\
---------------------------------------------------------------------------
\28\ NADA does not address the application of the three waiver
criteria to CARB's LEV III criteria pollutant regulations .
---------------------------------------------------------------------------
This commenter also suggests that it is CARB's burden to make a
determination that its standards are at least as protective of the
public health and welfare as any applicable federal standards, and to
determine that the standards are technologically feasible.\29\ This
commenter also suggests that Congress allowed for a limited waiver only
if California is able to show that its standards are necessary to
address ``the unique problems facing [the state] as a result of its
climate and topography.'' \30\
---------------------------------------------------------------------------
\29\ NADA comment at 3.
\30\ Id.
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In addition, the Dealers suggest that a decision to deny a CARB
waiver request only need meet a ``preponderance of the evidence''
standard. This commenter maintains that such a standard would preserve
the traditional presumption in favor of CARB's protectiveness
determination while affording EPA or those opposed to the waiver the
ability to uphold section 209's general preemption. The commenter
suggests that EPA mischaracterizes the MEMA decision within its prior
GHG waiver decision when EPA stated ``there is nothing in the opinion
to suggest that the court's analysis would not apply with equal force
to such determinations.'' \31\ The commenter states that because the
Court opined that the ``preponderance of the evidence standard governs
the inquiry into technological feasibility,'' and the Court determined
that the appropriate standard of proof ``must take into account the
nature of risk of error involved in any given decision'' it is
therefore appropriate that EPA must use its discretion to determine the
appropriate standard when evaluating a waiver request under each
element of
[[Page 2117]]
Section 209(b). To settle the question of the appropriate burden of
proof the commenter cites International Harvester v. Ruckelshaus
wherein the decision over burden of proof is informed by an analysis
that balances the cost of a wrong decision on feasibility against the
gains of a correct one: ``These costs include the risk of grave
maladjustments * * * and the impact on jobs and the economy from a
decision which is only partially accurate * * * against the
environmental savings.''
---------------------------------------------------------------------------
\31\ 74 FR 32748. EPA notes that the language following this
statement, in the same paragraph of the GHG waiver decision, states
``EPA's past waiver decisions have consistently made clear that:
``[E]ven in the two area 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.''
---------------------------------------------------------------------------
With regard to the Dealers' first suggestion that EPA should
separately apply the waiver criteria to each of the ACC regulatory
components (e.g., GHG emission standards and ZEV), EPA notes that each
part of CARB's regulations are subject to EPA waiver review. As such,
by today's decision we address any adverse comments in that regard.
However (and as explained in further detail under EPA's analysis of
each waiver criteria below), we believe the Dealers fundamentally
misunderstand the specific language of the section 209(b), its
congressional history, and EPA's past administrative waiver practice.
For example, although EPA would typically examine whether CARB's
regulation of each pollutant is as stringent as any applicable federal
standard, we nevertheless recognize both the statutory language and
legislative history that requires EPA to consider the protectiveness of
a CARB standard ``in the aggregate'' of all emission standards covering
that particular industry category (e.g., light-duty vehicles, etc).
Furthermore, under the second waiver criterion of section 209(b), EPA
continues to evaluate whether those opposed to a waiver have
demonstrated that CARB no longer experiences compelling and
extraordinary conditions. As such, for any standard or set of standards
presented to EPA for waiver consideration, EPA's evaluation continues
to be whether CARB has a need for its motor vehicle emission program to
address the underlying compelling and extraordinary conditions. This is
further explained in our discussion of this waiver criterion.
Similarly, although the Dealers might suggest that EPA only be
obligated to determine whether each of CARB's ACC regulatory
components, in isolation, is consistent with section 202(a) we believe
the better approach is to determine the technological feasibility of
each standard in the context of the entire regulatory program for the
particular industry category. In this case, we believe CARB has in fact
recognized the interrelated, integrated approach the industry must take
in order to address the regulatory components of the ACC program. As
noted above, the House Committee Report explained as part of the 1977
amendments to the Clean Air Act that California was to be afforded
flexibility to adopt a complete program of motor vehicle emission
controls (emphasis added). As such, EPA believes that Congress intended
EPA to afford California the broadest possible discretion in selecting
the best means to protect the health of its citizens and the public
welfare.\32\ EPA believes this intent extends to CARB's flexibility in
designing its motor vehicle emission program and evaluating the
aggregate effect of regulations within the program.
---------------------------------------------------------------------------
\32\ H.R. Rep No. 294, 95 Cong., 1st sess. 301-02 (1977).
---------------------------------------------------------------------------
With regard to CARB's initial burden in submitting a waiver request
to EPA, we believe this commenter misreads both section 209(b) along
with the case law and legislative history it cites. California is only
required to make a protectiveness finding as a threshold matter before
submitting its waiver request to EPA. Section 209(b) of the Clean Air
Act plainly states that ``The Administrator shall, * * *, waive
application of this section* * *., if the State determines that the
State standards will be, in the aggregate, at least as protective of
public health and welfare as applicable Federal standards. No such
waiver shall be granted if the Administrator finds that * * *.''
Nothing on the face of section 209(b) requires California to make
affirmative findings or showings under section 209(b)(1)(B) or (C). The
MEMA I decision cited to by the commenter does not support the
suggestion that CARB must initially make an affirmative determination
or showing beyond the protectiveness determination. Of course, whether
or not CARB has such a burden, CARB has clearly provided in its initial
waiver request considerable support for its view that its waiver
request meets the requirements of section 209(b)(1)(B) and (C).\33\
---------------------------------------------------------------------------
\33\ CARB waiver request and supporting attachments.
---------------------------------------------------------------------------
EPA continues to believe that the burden of proof for each waiver
criteria lies on the opposing party. As earlier explained, this is
inherent in the statutory provision that requires EPA to grant a waiver
unless it makes one of the specific negative findings listed in section
209(b)(1).
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 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.\34\
---------------------------------------------------------------------------
\34\ MEMA I, 627 F.2d at 1121.
Further, pertinent legislative history evinces Congressional intent
to place the burden of proof on the party opposing a waiver. This
appears most dramatically from the debates on the floor of the House
over two alternative versions of the statutory language. One, sponsored
by the relevant legislative committee, would have permitted the federal
government, upon application showing by California, to set special
California standards if certain conditions were met. The second, which
was sponsored by the entire California delegation, see 113 Cong. Rec. H
14428 (Cong. Moss) (daily ed. Nov. 2, 1967), and eventually adopted on
the floor, would have required the federal government to waive
preemption of standards promulgated by California unless certain
findings were made. Despite the understandable efforts of some sponsors
of the committee language to portray the differences between the two
versions as purely verbal the majority of the House clearly disagreed.
113 Cong. Rec. H 14404 (Cong. Herlong); H 14432 (Cong. Rogers) (daily
ed. Nov. 2, 1967). Sponsors of the language eventually adopted (the
language sponsored by the California delegation) referred repeatedly to
their intent to make sure that no ``Federal bureaucrat'' would be able
to tell the people of California what auto emission standards were good
for them, as long as they were stricter than Federal standards. 113
Cong. Rec. H 14393 (Cong. Sess); H 14395 (Cong. Smith); H 14396 (Cong.
Holffield); H 14399 (Cong. Hosmer); H 14408 (Cong. Roybal); H 14409
(Cong. Reinicke); H 14429 (Cong. Wlson) (daily ed. Nov. 2, 1967). Thus,
at the close of the debate, the House rejected language that would have
imposed the burden of proof on California and instead accepted language
that which places the burden on those who allege, in effect, that EPA's
GHG emission standards are adequate to California's needs. They also
viewed the change as necessary to their intent to preserve the
California state auto emission control program in its original form,
see HR. Rep. No. 728, 90th Cong. 1st Se. 96-97 (1967) (separate views
of Congressmen Moss and Van Deerlin), 113 Cong. Rec. H 14415 (daily ed.
Nov. 2, 1967) (Cong.
[[Page 2118]]
Van Deerlin) and to continuing the national benefits that might flow
from allowing California to continue to act as a pioneer in this field.
113 Cong. Rec. H 14407 (Cong. Moss) (daily ed. Nov. 2, 1967); S 16395
(daily ed. Nov. 14, 1967) (Senator Murphy). These points had also
previously been made by the Senate Public Works Committee in reporting
out waiver language identical to that eventually adopted by the House.
S. Rep. No. 403, 90th Cong. 1st Sess. 32-33 (1967).
As also explained in MEMA I:
Legislative history makes clear that the burden of proof lies with
the parties favoring denial of the waiver. Petitioners lost the
battle they now wage twelve years ago when Congress specifically
declined to adopt a provision which would have imposed on California
the burden to demonstrate that it met the waiver requirements. As
noted, the Senate version of the Air Quality Act of 1967 contained
the language which was ultimately adopted by Congress. It vested the
power to make the protectiveness determination in California and
sharply restricted the Secretary's role in a waiver proceeding. The
Senate Report explained that under the proposal the ``Secretary is
required to waive application unless he finds'' one of the factual
circumstances set out in section 209(b)(1)(A)-(C). S. Rep. No. 403,
90th Cong., 1st Sess. 33 (1967).
Finally, with regard to the Dealers' arguments about the burden of
proof, we believe it necessary to differentiate between two separate
questions: 1) who has the burden of proof; and 2) what is the
appropriate level of proof? A discussion of who holds the burden of
proof is addressed above. Below is a discussion regarding the
appropriate ``level'' of proof. EPA agrees with the Dealers that EPA
has the discretion to determine the appropriate level of proof, and we
are guided by the language of the statute, relevant case law, and our
prior administrative practice.
With regard to the standard of proof applicable to CARB's
protectiveness determination, EPA rejects any contention that the
standard should be anything other than ``clear and compelling
evidence.'' The language of section 209(b)(1)(A) requires that the
Administrator find that CARB's protectiveness determination is
``arbitrary and capricious'' suggesting that EPA or others that may
oppose the waiver must demonstrate that CARB's factual findings lacked
any acceptable reasoning. As noted above, the MEMA I 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.\35\ 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.\36\ EPA believes
there is no reason to jettison the precedent along with its past
administrative waiver practice merely because CARB seeks a waiver for
``standards'' as opposed to ``accompanying enforcement procedures.''
---------------------------------------------------------------------------
\35\ Id.
\36\ Id.
---------------------------------------------------------------------------
With respect to the second and third waiver criteria of section
209(b); however, EPA is also guided by the principles of deference
noted above and by case law, as explained below in EPA's examination of
technological feasibility. As the commenter notes, in the GHG waiver
EPA reasoned that MEMA I's holding on the applicable standard of proof
should be extended to waiver of standards. EPA continues to believe
that it is appropriate to impose a standard of preponderance of
evidence on the proponent of denial of a waiver of standards, for the
second and third waiver criteria. This standard would also be similar
to the standard in civil matters. ``This view of the standard of proof
dictates the standard normally adopted in civil matters, a
preponderance of the evidence.'' \37\ EPA also believes that it should
apply such a standard in a way that accords with congressional intent
to provide California with the broadest possible discretion in setting
regulations that it finds protective of the public health and welfare
\38\ while limiting EPA's review to a narrow role that provides
substantial deference to the State.\39\
---------------------------------------------------------------------------
\37\ International Harvester v. Ruckelshaus, 478 F 2d 615, 643
(D.C. Cir.) (International Harvester).
\38\ MEMA I, 627 F. 2d at 1122.
\39\ 40 FR 23103-104.
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Further, EPA agrees with the commenter that in making its
determination, EPA should be mindful of the risk of error involved.\40\
But this does not change the burden of proof. ``The Administrator is
not entitled to ignore the evidence adduced at the hearing. He must
consider all evidence that passes the threshold test of materiality and
he must 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 denial of the waiver.'' \41\
---------------------------------------------------------------------------
\40\ MEMA I, 627 F.2d at 1122.
\41\ Id.
---------------------------------------------------------------------------
In sum, based on the statutory structure of section 209(b)(1) and
legislative history, the burden of proof falls on those who wish EPA to
deny the waiver.
IV. California's Within the Scope Request for its Zero Emission Vehicle
Amendments
CARB's waiver request sought confirmation from EPA that the ZEV
amendments (2012 ZEV Amendments), as they relate to 2017 and prior MYs
are within the scope of existing waivers. The ACC waiver request also
sought confirmation that the 2012 ZEV amendments as they relate to 2018
and later MYs are within the scope of existing waivers, or, in the
alternative, meets the criteria for a full waiver.
A. Chronology
California's initial ZEV program was included as part of its first
low-emission vehicle program known as LEV I. The ZEV component of this
program had a ZEV sales requirement starting with the 1998 MY and
phasing in to a 10 percent sales requirement by the 2003 MY. EPA issued
a waiver of preemption for these regulations on January 13, 1993.\42\
CARB subsequently amended the ZEV regulations in March, 1996, by
eliminating the ZEV sales requirement for the 1998-2002 MYs and
retaining the 10 percent sales requirement for the 2003 and later MYs.
EPA issued a within the scope determination for these amendments on
January 5, 2001.\43\ CARB again amended the ZEV regulations in 1999,
2001, and 2003 and on December 21, 2006, EPA waived preemption for
these amendments through the 2011 MY.\44\ The 2006 EPA action included
a within the scope decision for certain components of the regulations
and a full waiver authorization for other components. Specifically, EPA
determined that certain provisions of the 1999-2003 amendments to the
ZEV regulations affecting 2006 and prior MYs were within the scope of
previous waivers of preemption. EPA's 2006 decision concurrently
granted California's request for a waiver of preemption to enforce
certain provisions of the ZEV regulations as they affected 2007 through
2011 MY vehicles. EPA also stated that that although we believed it
appropriate to grant a full waiver of preemption for the 2007 MY, we
also believed it appropriate to consider the 2007 MY regulations (with
one exception noted) as within the scope of previous waivers of
preemption, as they applied to certain vehicles that were
[[Page 2119]]
already subject to the pre-existing ZEV regulations. The 2006 waiver
decision did not make any findings or determinations with regard to
CARB's ZEV regulations as they pertained to the 2012 and later MYs. On
October 3, 2011, EPA determined that additional CARB 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). At that time EPA also granted
a waiver allowing California to enforce the ZEV amendments as they
affected 2012 and later MYs.\45\
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\42\ 58 FR 4166 (January 13, 1993).
\43\ 66 FR 7751 (January 25, 2001).
\44\ 71 FR 78190 (December 28, 2006).
\45\ 76 FR 61095 (October 3, 2011).
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B. CARB's ZEV Amendments
CARB's stated goal for the 2012 ZEV amendments, as they affect the
ZEV regulation through MY 2017, was to make minor corrections and
clarifications and to enable manufacturers to successfully meet the
2018 and later MY ZEV requirements. As such, the 2012 ZEV amendments
included compliance flexibility provisions, adjustment of credits and
allowances, and the addition of a new vehicle category that can earn
credits to help manufacturers satisfy their sales requirement.
The compliance flexibility provisions include several modifications
to the ZEV program credit and travel provisions. The limitations on
carry forward credits for ZEVs are removed, allowing for indefinite
banking of ZEV credits. The travel provision for credits from ZEV sales
in Section 177 states is extended through 2017. Travel provision
credits limit the credits manufacturers need to generate to those
necessary for California, no matter how many states adopt the ZEV
program under Section 177. Vehicles sold in section 177 states generate
credits for California and vice versa under the travel provisions. The
travel provision amendments allow for the continued travel of ZEV
credits through MY 2017. Carry forward credits for ZEVs were previously
limited to two additional model years. This limitation is removed by
the 2012 amendments, allowing manufacturers to bank credits for all
future model years. This modification is a flexibility to enable
automakers to comply with the 2018 and later provisions.
In addition, the 2012 ZEV amendments provide for an adjustment of
credits and allowances to incentivize longer-term technology. For
example, the credits for Type V ZEVs (fuel cell vehicles with range of
300 miles or greater) are increased. Finally, the 2012 ZEV amendments
create the addition of a new vehicle category that includes two new
near-ZEV vehicle types: Type I.5x and Type IIx. These vehicles are
plug-in hybrid electric vehicles (PHEVs) with more capable electric
drive systems, but smaller engines that are not expected to be used
often and have diminished performance. These vehicles can be used to
meet up to one half of a manufacturer's minimum ZEV credit requirement.
These vehicles will be eligible for the same credits as current Type
I.5 (2.5 credits) and Type II (3 credits) and will qualify for travel
provision credits through 2017.
Separately, CARB's stated goal for its 2012 ZEV amendments, as they
affect 2018 and later MYs, is to achieve the commercialization of ZEVs
and near-ZEVs such as PHEVs (with sales of approximately 15 percent of
the new car market in California by 2025) by simplifying the regulation
and pushing technology to higher volume production in order to achieve
cost reductions. The amendments cover six major areas: increased ZEV
requirements phased-in through 2025; the removal of ``commercialized''
technology from the ZEV program; amended manufacturer size definitions,
ownership requirements and transitions; a modified credit system, a
modified travel provision; and a new opportunity for manufacturers to
generate additional ZEV credits via over compliance with applicable GHG
emission standards during this time period.
The increased ZEV credit requirements are equivalent to
approximately 15 percent ZEV and near-ZEV sales by 2025. This sales
level is deemed by CARB to be the threshold at which costs will
decrease due to volume effects. The credit requirement is being ramped
up from the current program's static level of 16 percent total, which
includes PZEVs and AT PZEVs. The new requirement consists of a 2
percent minimum ZEV and 2.5 percent minimum TZEV (4.5 percent total)
requirement, ramping up to 16 percent minimum ZEV and 6 percent minimum
TZEV (22 percent total) requirement in 2025 and beyond. The 2012 ZEV
amendment revisions to credit calculations for ZEVs and TZEVs result in
a projected market share of 15.4 percent of new sales in 2025.
Under the previous ZEV mandate, credits were allowed for PZEV-
certified vehicles and HEVs which are not plugged in. CARB is removing
these vehicle types from the credit scheme in MY 2018 and later.
Remaining credits that are banked can continue to be used, but with
discounts and caps applied.
Manufacturer size definitions have been amended to apply full ZEV
mandate to all but the smallest manufacturers. Manufacturer sales
volumes will be combined if joint ownership exceeds 33.4 percent and
the transition period for manufacturers changing size categories has
been modified. Under this system, 97 percent of the light-duty market
will be covered by the ZEV mandate.
Currently, manufacturers with sales volumes exceeding 60,000 units
in California are classified as large volume manufacturers (LVM). This
modification reduces the threshold to 20,000 units, which will bring
most manufacturers under the full ZEV mandate. This modification is
being made because many of these current intermediate vehicle
manufactures (IVMs) have a large market presence outside California.
Remaining IVMs will be allowed to comply with the ZEV mandate with no
restrictions on ZEV technology type, meaning an IVM can fully comply
with TZEVs, but not PZEVs or AT PZEVs.
Additionally, ownership thresholds for treatment of automakers as
one entity are being modified to more closely align them with GHG fleet
regulations and changes are being made to the lead time provisions as
manufacturers move between size classes.
CARB also modified its credit system. ZEV credits are based on
range and technology reflecting utility of the vehicle and expected
timing for commercialization. BEVs with a 50-mile range earn one credit
and FCVs with 350 miles of range earn four credits each. Up to half a
manufacturer's credit requirement may be met with more capable PHEVs
which are meant to operate mainly as EVs, but are equipped with a small
range-extending engine.
TZEVs, which are essentially PHEVs of the type available today such
as the Chevrolet Volt have simplified credits based on electric range
and a minimum requirement of 10 miles all-electric on the US06 test
cycle. The TZEV credit ranges from a minimum of 0.2 to a maximum of 1.3
with a greater than 80 mile range.
Excess credits earned and banked from PZEVs and AT PZEVs will be
discounted in 2018 and later years. Their use will then be limited to
25 percent of a manufacturer's TZEV requirement. No portion of the ZEV
requirement may be met with banked credits. Smaller manufacturers
(IVMs) will not have their credits capped for 2018 or 2019. In 2020 and
later, the IVM cap will be 25 percent, but applied to their combined
ZEV/TZEV requirement.
[[Page 2120]]
CARB has also modified the credit levels for various ZEV types. The
current tiered CARB system, which encouraged manufacturers to design
vehicles to meet a given range threshold is replaced with an equation
that calculates credits based on the UDDS electric driving range.
In addition, CARB has modified its ``travel provisions.'' The
travel provision, which allows for the sale of a qualifying vehicle in
a Section 177 state to count towards a manufacturer's credit
requirement in California, ends for BEVs after 2017. Since FCVs are far
behind BEVs in development and market penetration, travel credits are
extended for FCVs. California intends to extend travel credits until
sufficient refueling infrastructure exists to support FCVs in the
market.
Lastly, the 2012 ZEV amendments provide that automakers who over
comply with the LEVIII GHG standard may use the extra GHG reductions to
offset a portion of their ZEV requirement in MYs 2018 through 2021.
Manufacturers may offset 50 percent of their ZEV mandate in 2018,
ramping down to 30 percent in 2021, subject to certain requirements.
C. EPA's Determination Regarding the Appropriateness of CARB's Within
the Scope Request for the 2012 ZEV Amendments
CARB primarily relies upon EPA's prior waiver and within the scope
findings to demonstrate the appropriateness of applying the within the
scope criteria to its 2012 ZEV amendments. In EPA's 2006 waiver
determination, EPA stated that it will conduct a two-part inquiry when
considering whether CARB amendments to a previously waived regulation
fall within the scope of the previously granted waiver or whether the
amendments require a new waiver:
EPA believes it is important to distinguish between the
threshold issue of whether CARB'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.
In determining the threshold question, EPA will consider whether
the amendments make minor technical revisions or provide compliance
flexibility on the one hand or whether the amendments add new or
more stringent pollutant standards or new motor vehicle categories
on the other.\46\
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\46\ Decision Document accompanying waiver determination in 71
FR 78190 (December 28, 2006).
With regard to the 2017 and earlier MYs, following the precedent
noted above, CARB maintains that the 2012 ZEV amendments create no new
issues affecting the previous waiver determinations concerning the ZEV
program and that the 2012 ZEV amendments do not undermine CARB's
original protectiveness determination and the ZEV regulations remain
consistent with section 202(a). With regard to the 2018 and later MYs,
CARB maintains that the within the scope criteria are appropriate since
the overall ZEV credit requirement for MYs 2018 through 2022 is less
burdensome than the currently waived program.
EPA received comment from the Manufacturers stating agreement that
the amendments to the MYs 2009 through 2017 ZEV regulations qualify for
a within the scope determination since the amendments increase the
flexibility available to manufacturers to comply with those standards
and otherwise lessen the burdens placed on manufacturers. However, the
Manufacturers did not agree that the amendments to the ZEV regulation
for 2018 and later MYs properly fall under the within the scope review.
The commenter notes that in addition to the increase in the minimum ZEV
credit requirements in 2018 MY and beyond, the CARB amendments also
eliminate certain vehicle types (e.g., PZEVs and AT PZEVs) that were
previously accepted towards compliance with the ZEV requirements during
this time period. In addition, the Manufacturer notes that the changes
to CARB's travel provisions are significant and raise serious
compliance concerns.
The Dealers commented generally that the ZEV waiver should be
denied, but raised no specific concerns about a within-the-scope
determination for MYs 2012-2017.
Therefore, EPA has received no explicit comment suggesting that EPA
reject CARB's request for confirmation that EPA evaluate the 2012 ZEV
amendments as they affect the 2017 MY and earlier. EPA believes that it
is appropriate to evaluate such amendments (which provide compliance
flexibilities) under the within the scope criteria and applies such
criteria below. However, with respect to the 2018 and later MYs, EPA
agrees with the commenters that CARB's 2012 ZEV amendments have, in
total, added to the level of stringency and compliance obligations.
Therefore, EPA does not believe it is appropriate to apply within the
scope analysis to the ZEV amendments as they apply in the 2018 and
later MYs. As explained below, because EPA is applying the full waiver
criteria for the 2012 ZEV amendments as they pertain to the 2018 and
later MYS, EPA will in the alternative also examine the revisions for
the 2017 and earlier MYs using the full waiver criteria.
D. Application of the Within the Scope Waiver Criteria to CARB's 2012
ZEV Amendments Regarding 2017 and Earlier MYs
1. Public Health and Welfare
Under section 209(b)(1)(A) of the Act, EPA cannot grant a waiver if
the Agency finds that CARB was arbitrary and capricious in its
determination that its State standards are, in the aggregate, at least
as protective of public health and welfare as applicable federal
standards. Similarly, under the criteria for a within the scope
determination, the CARB amendments to an existing program may be
considered within-the-scope of a previously granted waiver provided
that the amendments do not undermine California's determination that
its standards in the aggregate are as protective of public health and
welfare as applicable Federal standards. Thus, in the within the scope
context CARB may rely on the ``protectiveness determination'' that the
Board made at the time of the initial regulations (the regulations
which subsequently received a waiver of federal preemption from EPA)
and then CARB must only demonstrate why the protectiveness
determination has not been undermined by CARB's amendments or any other
intervening events such as the adoption of EPA regulations since the
initial waiver of federal preemption.
CARB asserts that its 2012 ZEV amendments as applied to MYs 2009 to
2017 are a critical component of the ACC package that will result in
fleet standards that are at least as protective as would exist under
federal standards. The Board resolved ``that the Board hereby
determines that the proposed regulations approved for adoption herein
will not cause the California motor vehicle emission standards, in the
aggregate, to be less protective of public health and welfare than
applicable federal standards.'' \47\
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\47\ CARB Resolution 12-11 at EPA-HQ-OAR-2012-0562-0005.
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EPA received no comments suggesting that CARB's request should be
denied on the basis of CARB failing to meet its burden associated with
the protectiveness findings under section 209(b)(1)(A) of the Clean Air
Act.
Therefore, based on the record before us, we cannot find that
CARB's 2012 ZEV amendments, as the affect 2017 and earlier MYs, would
undermine CARB's prior protectiveness determinations nor would it cause
the California motor
[[Page 2121]]
vehicle emission standards, in the aggregate, to be less protective of
public health and welfare than applicable federal standards.
2. Consistency With Section 202(a)
Under section 209(b)(1)(C), EPA cannot grant California its waiver
request if the Agency finds that California standards and accompanying
enforcement procedures are not consistent with section 202(a) of the
Clean Air Act. Previous waivers of federal preemption have stated that
California's standards are not consistent with section 202(a) if there
is inadequate lead time to permit the development of technology
necessary to meet those requirements, given 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 inconsistent.
The scope of EPA's review of whether California's action is
consistent with section 202(a) is narrow. EPA has previously found that
the determination is limited to whether those opposed to the 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.\48\
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\48\ See MEMA I, at 1126.
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As previously noted, CARB maintains that the 2012 ZEV amendments,
as they pertain to the 2017 and previous MYs, provide manufacturers
with additional flexibility without increasing on balance the overall
stringency of the preexisting ZEV requirements. EPA has received no
comments explicitly questioning the feasibility of the amendments as
they apply to these MYs. In the discussion below, EPA addresses the
limited comments regarding the technological feasibility concerns with
regard to 2018 and later MYs and EPA provides further analysis of the
general technological feasibility concerns in the full waiver
discussion. With regard to whether test procedures are consistent, CARB
notes that the federal Tier 2 regulations require manufacturers to
measure emissions from ZEVs in accordance with the California test
procedures.\49\ In addition, EPA has not received comment suggesting
the test procedures are inconsistent. Therefore, based on the record
before us, we cannot deny CARB's within the scope request for 2017 and
prior MYs based on an inconsistency with section 202(a).
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\49\ CARB waiver request at 29, citing 40 CFR 86.1811-04(n).
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3. New Issues
As noted above, included in the within the scope criteria, is a
determination of whether the amendments raise new issues affecting the
previous waiver decisions. As previously noted, EPA examines any new
information when reviewing whether CARB's amendments affect the ZEV
program's consistency with section 202(a). If the amendments had
increased the stringency of the standards upon the manufacturers (for
the specific model years being reviewed in the within the scope
analysis), or if the amendments had regulated or subjected new types of
vehicles to be included in the ZEV program (or in this instance
regulated the same vehicle types but for model years not previously
waived by EPA), or added additional pollutants to the program, then
likely new issues would have been created. However, in this instance no
party has presented evidence that new issues exist for MYs 2017 and
earlier as a result of the 2012 ZEV amendments. Therefore, EPA cannot
deny CARB's request for a within the scope determination for MYs 2017
and earlier based on this criterion.
Therefore, based on the record before us, we cannot deny CARB's
request for confirmation that its 2012 ZEV amendments, as they affect
the 2017 and earlier MYs, are within the scope of previous waiver
determinations. As such, we confirm CARB's request regarding the 2012
ZEV amendments as they affect 2017 and earlier MYs.
V. Consideration of Advanced Clean Car Regulations Under the Full
Waiver Criteria
CARB's ACC program regulations include revisions to both
California's LEV and ZEV programs. CARB's request seeks a waiver of
preemption under section 209(b) of the Clean Air Act (CAA), 42 U.S.C.
7543(b) for the revisions to the LEV III program. CARB's request also
seeks a waiver for the ZEV amendments included in the ACC program
regulations. Subsequent to CARB's initial ACC waiver request, CARB's
Executive Officer took action to formally adopt a ``deemed to comply''
regulation affecting the GHG component of the ACC package. CARB
submitted this additional information to EPA and requested that EPA
consider the ``deemed to comply'' regulation as part of CARB's pending
ACC waiver request. EPA's application of the section 209(b) waiver
request, including the ``deemed to comply'' regulation, is set forth
below.
A. California's Protectiveness Determination
Section 209(b)(1)(A) of the Clean Air Act requires EPA to deny a
waiver if the Administrator finds that California was 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. EPA recognizes that the phrase ``States
standards'' means the entire California new motor vehicle emissions
program. Therefore, as explained below, when evaluating California's
protectiveness determination, EPA compares the California-to-Federal
standards. That comparison is undertaken within the broader context of
the previously waived California program, which relies upon
protectiveness determinations that EPA have previously found were not
arbitrary and capricious.\50\
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\50\ In situations where there are no Federal standards directly
comparable to the specific California standards under review, the
analysis then occurs against the backdrop of previous waivers which
determined that the California program was at least as protective of
the federal program ((LEV II + ZEV) + GHG). See 71 FR 78190
(December 28, 2006), Decision Document for Waiver of Federal
Preemption for California Zero Emission Vehicle (ZEV) Standards
(December 21, 2006).
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Traditionally, EPA has evaluated the stringency of California's
standards relative to comparable EPA emission standards.\51\ That
evaluation follows 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)].''
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\51\ 36 FR 17458 (Aug. 31, 1971). (``The law makes it clear that
the waiver requests cannot be denied unless the specific finding
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 with its cost
or is 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 section 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.''). The ``more stringent'' standard expressed here in
1971 was superseded by the 1977 amendments to section 209, which
established that California's standards must be, in the aggregate,
at least as protective of public health and welfare as applicable
Federal standards. The stringency standard remains, though, in
section 209(b)(2).
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To review California's protectiveness determination in light of
section 209(b)(2), EPA conducts its own analysis of the newly adopted
California standards to comparable applicable Federal standards. The
comparison quantitatively answers whether the new
[[Page 2122]]
standards are more or less protective than the Federal standards. That
comparison of the newly adopted California standards to the applicable
Federal standards is conducted in light of prior waiver determinations.
That is, the California-to-Federal analysis is undertaken within the
broader context of the previously waived California program, which
relies upon protectiveness determinations that EPA has not found
arbitrary and capricious.\52\
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\52\ In situations where there are no Federal standards directly
comparable to the specific California standards under review, the
analysis then occurs against the backdrop of previous waivers which
determined that the California program was at least as protective of
the federal program ((LEV II + ZEV) + GHG). See 71 FR 78190
(December 28, 2006), Decision Document for Waiver of Federal
Preemption for California Zero Emission Vehicle (ZEV) Standards
(December 21, 2006).
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A finding that California's determination was arbitrary and
capricious under section 209(b)(1)(A) must be based upon ```clear and
compelling evidence' to show that proposed [standards] undermine the
protectiveness of California's standards.'' \53\ Even if EPA's own
analysis of comparable protectiveness or that suggested by a commenter
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.\54\
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\53\ MEMA I, 627 F.2d at 1122.
\54\ ``Once California has come forward with a finding that the
procedures it seeks to adopt will not undermine the protectiveness
of its standards, parties opposing the waiver request must show that
this finding is unreasonable.'' MEMA I, 627 F.2d at 1124.
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CARB has made a series of protectiveness determinations with regard
to its ACC program. California made a protectiveness determination with
regard to the 2012 ZEV and LEV amendments in CARB's Resolution 12-11,
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.\55\ CARB
noted that this protectiveness determination is the logical extension
of the comparable findings that were found to be sufficient in the
analyses of California's previous protectiveness determinations for its
ZEV, LEV, and GHG regulations.\56\ As explained in CARB's waiver
request, the ACC program will result in reductions of both criteria
pollutants and GHG emissions that, in the aggregate, are more
protective than the pre-existing federal standards. CARB's Resolution
12-11 also sets forth the Board finding that ``It is appropriate to
accept compliance with the 2017 through 2025 MY National Program as
compliance with California's GHG emission standards up through the 2017
through 2025 MYs, once U.S. EPA issues their Final Rule on or after its
current July 2012 planned release, provided that the GHG reductions set
forth in U.S. EPA's December 1, 2011 Notice of Proposed Rulemaking for
2017 through 2025 model year passenger vehicles are maintained, except
that California shall maintain its own reporting requirements.''
Further, CARB's Resolution 12-21 sets forth that the CARB staff
``prepared three separate Regulatory Notices * * * for these amendments
[LEV III/GHG and ZEV] and presented them to the Board with a single
coordinated analysis of emissions, costs, and associated environmental
impacts and benefits.\57\ CARB's Resolution 12-21 also resolves that
the ``recitals and findings contained in Resolution 12-11, are
incorporated by reference herein.'' \58\
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\55\ See CARB's Resolution 12-11, EPA-HQ-OAR-2012-0562-0006 at
22. EPA notes that the CARB Board also resolved that it found that
separate California standards and test procedures are necessary to
meet compelling and extraordinary conditions. Id. at 23.
\56\ CARBS's waiver request at 13, citing 76 FR 61095 (October
3, 2011), 68 FR 19811 (April 22, 2003), and 74 FR 32744 (July 8,
2009), respectively.
\57\ CARB Resolution 12-21 at 7.
\58\ Id. at 10.
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In addition, at the time CARB adopted the ``deemed to comply''
regulation, the CARB Board found that such amendments do not undermine
the Board's previous determination that the regulation's emission
standards, other emission related requirements, and associated
enforcement procedures are, in the aggregate, at least as protective of
public health and welfare as applicable federal standards and are
consistent with section 209 of the Clean Air Act.\59\ Therefore,
subsequent to the finalization of EPA's GHG regulation (August 31,
2012), and as part of the CARB Board's adoption of the ``deemed to
comply'' rule on November 15, 2012, the Board resolved and determined
``that the proposed regulations approved for adoption herein will not
cause California motor vehicle emission standards, in the aggregate, to
be less protective of public health and welfare than applicable federal
standards.'' \60\
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\59\ See CARB's Resolution 12-35; EPA-HQ-OAR-2012-0562-0374.
\60\ Id. at p. 9.
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With regard to criteria pollutants, CARB notes that 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. CARB notes that this is clearly more stringent than
the current federal Tier 2 fleet average NOX emission
requirement with its implied fleet average NMOG and plus NOX
requirement. In addition, the LEV III PM standards 3 mg/mi and 1 mg/mi
are also significantly more stringent than the federal Tier 2 p.m.
standards. CARB also notes that while there is no criteria emissions
benefit with its ZEV requirements in terms of vehicle (tank-to-wheel--
TTW) emissions since the LEV III criteria pollutant fleet standard is
responsible for the emission reductions, but CARB notes that in terms
of upstream emission impacts (well-to-wheel--WTW) there are emission
reductions achieved from the ZEV requirements. There are no comparable
federal standards.
CARB also notes that with regard to GHG emissions, the ACC program
as a whole would provide major reductions in GHG emissions (e.g., by
2025 CO2 emissions would be reduced by almost 14 million
metric tonnes (MMT) per year, which is 12 percent from baseline
levels). CARB's ACC waiver request, notes that the federal GHG
standards do not become more stringent in the 2017-2025 MYs, as CARB's
do. However, CARB states that it understands more stringent standards
will ``soon be finalized.''
At the time the Board adopted the ``deemed to comply'' amendments
it had before it the ``Staff Report: Initial Statement of Reasons
demonstrating that if a National Program standard was theoretically
applied only to California new vehicle sales alone, it might create a
GHG deficit of roughly two million tons compared to the California
standards.\61\ CARB notes that there might be a GHG emission deficit if
the National Program applied in California, and thus CARB's GHG
emission standards are at least as stringent as the EPA GHG emission
standards.
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\61\ EPA-HQ-OAR-2012-0562-0374 at 3. CARB also notes that to the
extent a manufacturer chooses not to exercise their National Program
compliance option in California this would actually provide
additional GHG benefits in California, so compliance in California
can never yield fewer cumulative greenhouse gas reductions from the
industry wide fleet certified in California.
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1. Comments on CARB's Protectiveness Determination
The Dealers commented on CARB's protectiveness determinations for
both its GHG emission standards and its ZEV regulations. At the outset,
NADA claims that EPA must conduct a separate preemption waiver
evaluation for each set of standards in the ACC program
[[Page 2123]]
(e.g., LEV III criteria pollutants, GHG, and ZEV). EPA notes that NADA
did not address the preemption waiver request for the CARB LEV III
standards.
In the context of considering the ACC standards individually, NADA
states that EPA must reject CARB's GHG preemption waiver request
because CARB's finding is premature. NADA maintains that CARB has not
conducted the necessary investigation to support is protectiveness
determination because EPA has now finalized its GHG emission standards.
NADA claims that CARB's determination should measure the standards that
exist at the time EPA makes its waiver decision. NADA contends that
rather than allowing CARB to look at the program as a whole, CARB must
be required to examine each standard before the Agency, including the
GHG standards at issue. In the alternative, the commenter suggests that
CARB's protectiveness determination is arbitrary and capricious since
CARB itself cites the absence of the federal GHG standards as reason
for its protectiveness determination. Finally, the commenter argues
that CARB's conclusions are not backed by facts or analysis and
contradict the actuality that emissions from other parts of the world
and the United States affect global concentrations, and therefore
concentrations in California. The Dealers state that it therefore
follows that GHG concentrations in California will be reduced by a
greater amount if reductions occur on a nationwide basis, rather than
just statewide. Thus by definition, CARB standards for limiting GHG
emissions from California cars are less protective than the applicable
federal standards.
CARB's supplemental comments, in response to NADA's claims, note
that California demonstrated that it was reasonable for the Board to
determine that the California standards ``as submitted'' are, in the
aggregate, as or more stringent than the applicable federal
standards.\62\ CARB suggests this was a relatively simple determination
at the time of CARB's June 2012 waiver request because: (1) EPA's
proposed 2017-2025 MY GHG standards were not finalized; (2) EPA had not
proposed or finalized a 1 mg/mile PM standard and other criteria
pollutant improvements for 2015 and later MYs; and (3) EPA has no ZEV
program that may achieve an additional incremental wells-to-wheels
criteria pollutant reduction. CARB states that this prior and timely
Board determination remains sound despite the now finalized EPA GHG
standards because (2) and (3) remain true and because EPA GHG
standards: (1) do not account for upstream GHG emissions as does
California's GHG program; (2) include vehicle multipliers for natural
gas vehicles, effectively diluting federal standards vis a vis
California's; and (3) contains relaxed criteria for GHG credits for
mild hybrid-electric vehicle trucks, which also dilutes the federal
standard. CARB also notes that to the extent manufacturers choose the
EPA GHG standard compliance path to demonstrate compliance with
California standards that results in essentially equal reductions (as
stringent) of GHG emissions in California. Separately, CARB states that
NADA's attempt to exclude CARB's LEV III standards from the ``in the
aggregate'' protectiveness determination cannot be countenanced since
this would render the phrase ``in the aggregate'' superfluous.
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\62\ CARB submitted comment on November 14, 2012 (CARB
supplemental comment). EPA-HQ-OAR-2012-0562-0373.
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In addition, within CARB's Resolution 12-35, adopted on November
15, 2012, CARB addresses two issues raised by NADA's comments to EPA.
CARB's Resolution 12-35 notes the question of whether the CARB Board
failed to make a finding that California's passenger vehicle program
remains as protective as applicable federal standards given the
proposed ``deemed to comply'' rule on September 14, 2012 and also notes
the question whether California's program is no longer as protective
given the 2017 through 2025 MY National Program. First, it states that
it sufficiently addressed NADA's protectiveness issues in its November
14, 2012 supplemental submittal to EPA. Within this submission, CARB
noted that it was reasonable for the Board to determine that the
California standards as submitted are, in the aggregate, as or more
stringent that the applicable federal standards. CARB maintains that at
the time of its June 2012 waiver submittal its protectiveness
determination was a fairly simple one since EPA's 2017-2025 GHG
standards were not finalized, EPA had not proposed nor finalized a 1
mg/mile PM standard and other criteria pollutant improvements for 2015
and later MYs, and EPA has no ZEV program that may achieve an
additional incremental wells-to-wheels criteria pollutant reduction.
CARB notes that the Board's determination remains solid despite the now
finalized National Program rule because EPA still has no LEV III
criteria pollutant/PM equivalent requirements and because EPA's GHG
standards do not account for upstream GHG emissions as do California's,
and because the National Program includes vehicle multipliers for
natural gas vehicles and relax criteria for GHG credits for mild hybrid
electric vehicle trucks.
EPA also received comment regarding CARB's protectiveness
determination for its ZEV standards. The Dealers suggest that CARB
failed to adequately provide a protectiveness determination, and such a
determination is drawn into question given CARB's stated conclusions
that there is no TTW emission benefits from ZEV and that the ZEV
regulation does not provide any additional GHG emission reductions
beyond the GHG standards. The Dealers claim that CARB's failure to make
a protectiveness determination regarding its ZEV standard is inherently
arbitrary and capricious.
CARB states that contrary to NADA's assertion that it must make an
individual protectiveness determination regarding its ZEV amendments
CARB believes that requiring California to show that each standard
(including the ZEV standard) is at least as protective in the aggregate
would in effect ignore the phrase ``in the aggregate'' in section
209(b). CARB states that is why it made one protectiveness
determination. CARB notes that purpose of the ZEV regulation is to
commercialize the technologies needed to meet long term goals even
beyond the emission reductions anticipated by the LEV III program.\63\
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\63\ CARB's supplemental comments at 3-4. CARB also references
table 6.2 of its Initial Statement of Reasons (ISOR) that details
the well to wheel emissions benefits of the ZEV program compared to
the LEV III program. EPA-HQ-OAR-2012-0562-0008.
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2. Is California's protectiveness determination arbitrary and
capricious?
As described above, EPA's traditional analysis has been to evaluate
California's protectiveness determination by comparing the new
California standards, or amendments, to applicable EPA emission
standards for the same pollutants. EPA notes that the ``more
stringent'' standard expressed in 1971 was superseded by the 1977
amendments to section 209, which established that California's
standards must be, in the aggregate, at least as protective of public
health and welfare as applicable Federal standards. As noted above,
this was intended to afford California the broadest possible discretion
in designing is motor vehicle emission program. The comparison is
undertaken within the broader context of the previously waived
California program, which relies upon protectiveness determinations
that EPA have previously found were not arbitrary and capricious.
[[Page 2124]]
EPA believes that the Dealers misapply our prior statement, made in
EPA's 2009 GHG waiver decision, that the most straightforward reading
of the comparison called for by the statute, between California and
Federal standards, is an ``apples to apples'' comparison.\64\ The
stated purpose of the ``apples to apples'' phrase was to determine what
the ``applicable'' Federal standards are for purposes of evaluating a
protectiveness determination, in response to comments that the federal
CAFE standards adopted by NHTSA should be considered applicable federal
standards for purposes of this wavier criterion. EPA explained in the
GHG waiver decision that ``The term `applicable' has to refer to what
Federal standards apply, and the most straightforward meaning is that
they apply in the same way that the California standards apply, by
setting limits on emissions of air pollutants.'' Therefore, given the
uniqueness of a CARB waiver request that includes interrelated
standards applicable to the same vehicle category EPA believes CARB's
approach of making one protectiveness determination for its ACC program
is a reasonable approach permitted under section 209(b).\65\ Although
section 209(b)(2) informs EPA of the conclusion it must draw if each
standard is at least as stringent as the comparable federal standard,
EPA notes the protectiveness determination that CARB presents in a
waiver request typically includes an implicit or explicit in the
aggregate protectiveness determination since CARB typically examines
whether its new standards (plural) undermine previous protectiveness
determinations, which EPA evaluated in prior waiver decisions. In this
context, once CARB presents an in the aggregate protectiveness
determination EPA believes it appropriate to initially evaluate such
standards in a side-by-side comparison with applicable Federal
standards and then determine whether such standards are, in the
aggregate, as protective as applicable Federal standards.
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\64\ See 74 FR at 32750.
\65\ EPA also notes that CARB has provided complete information
and determinations that even in the context of comparing individual
standards their standards are as protective of public health and
welfare as applicable Federal standards.
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In the context of CARB's ACC standards this side-by-side analysis
is simple. EPA has already determined that California was not arbitrary
and capricious in its determination that the pre-existing California
standards for light-duty vehicles and trucks, known as LEV II, is at
least as protective as comparable federal standards, known as the Tier
II standards.\66\ In this instance, CARB has finalized new and more
stringent criteria pollutant standards (LEV III) while the Tier II
standards remain in place at the federal level. In the absence of newer
EPA standards since the time of its prior waiver for CARB's LEV II
standards there is a clear rational basis for CARB's determination that
its standards will be at least as protective of human health and
welfare as applicable federal standards.
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\66\ 68 FR 19811 (April 22, 2003) and Decision Document for
Waiver of Federal Preemption for Low Emission Vehicle Amendments
(LEV II) (April 11, 2003).
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The Dealer's comments assert that CARB's protectiveness
determination was premature because that assessment occurred before EPA
finalized its own GHG emission standards. However, EPA believes that
CARB's initial protectiveness determination (submitted to EPA in CARB's
June 2012 waiver request) was not premature and was appropriate given
the EPA standards in effect at that time. At the time CARB submitted
its waiver request, EPA's GHG emission standards for the 2017 through
2025 MYs were the same for those MYs as for MY 2016, while CARB's were
becoming more and more stringent over that period; therefore, CARB's
protectiveness finding was reasonable at that time.
Subsequent to EPA's promulgation of its final GHG standards, in the
context of CARB's ``deemed to comply'' regulation, CARB has provided an
updated protectiveness determination (see Resolution 12-35) regarding
the California GHG emission standards, in terms of the underlying
benefits of CARB's program. EPA finds California to be correct in its
determination that the ``deemed to comply'' regulation does not
undermine CARB's determination that its regulations are in the
aggregate as protective as EPA's standards. CARB's regulation will
achieve, in the aggregate, equal or even additional GHG emission
reductions in California relative to federal GHG standards, even if
manufacturers choose to comply with the California regulations by
complying with EPA's GHG emission standards. As noted above, EPA's
National Program standards do not account for upstream GHG emissions as
do California's and EPA's GHG standards includes vehicle multipliers
for natural gas vehicles and relax criteria for GHG credits for mild
hybrid electric vehicle trucks. EPA also believes that CARB correctly
notes that even with the ``deemed to comply'' amendments, one or more
manufacturers could still choose to continue demonstrating compliance
in California under the existing California regulations. To the extent
manufacturers choose EPA's GHG standards as the compliance path--in
California--the California standard, by definition would yield at
least, essentially equivalent GHG reductions, so California's standards
cannot be less stringent.
The Dealers seem to suggest that with EPA's GHG standards there
will be a greater reduction of GHG emissions compared to the California
GHG emission standards. California's protectiveness determination
applies only to the protectiveness of CARB's emission standards, in
California, compared to applicable federal standards. EPA believes that
the Dealers ignore the obvious, that all stakeholders, including
California, recognize the need for reductions of GHG emissions, as well
as emissions of other pollutants, on a national basis. The federal GHG
emission standards, applied in 50 states, will generally result in more
emission reductions than CARB standards applied solely in California.
If California were required to achieve equal emission results (with
reductions counted only in California) to a federal program this would
render 209(b) unusable. The relevant comparison is between the emission
reductions achieved in California under the California program versus
the emission reductions in California under the comparable federal
program. Emissions reductions in other states are not considered, which
is appropriate because the waiver decision affects only California's
emission standards, not the federal standards that exist regardless of
EPA's decision. EPA believes, and the record contains no evidence
otherwise, that the reductions due to CARB's GHG emission standards in
California versus the reductions of the comparable federal GHG emission
standards in California, demonstrates that CARB's GHG emission
standards are at least as protective as applicable federal standards.
EPA notes that NADA raised similar arguments in the context of EPA's
within the scope waiver decision, issued on June 14, 2011, for CARB's
GHG emission amendments that included a ``deemed to comply'' provision
for GHG emission standards during the 2012 through 2016 MYs. EPA noted
``Thus, at the very least, compliance with California's GHG standards
under the revised regulations will result in the same, if not more,
emission reductions than would occur in the absence of the California
standards. NADA provides no evidence that CARB's standards are less
protective than the applicable Federal
[[Page 2125]]
standards. As such, NADA fails to present any evidence or make any
showing that the amendments undermine California's previous
determination that its standards, in the aggregate, are at least as
protective of public health and welfare as applicable Federal
standards.'' \67\
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\67\ 76 FR 34693, 34696 (June 14, 2011).
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With regard to CARB's ZEV amendments EPA believes that CARB has
provided a reasoned basis for their determination that the ZEV
regulations are as protective or public health and welfare as
comparable federal requirements, which for ZEV are nonexistent. In
EPA's 2006 ZEV waiver proceeding, EPA conducted its traditional
analysis to compare California's newly enacted ZEV standards to a
similar lack of applicable federal standards. At that time California
found, and EPA deemed reasonable, that the addition of the ZEV
standards did not render California's LEV II program, for which a
waiver had previously been granted, less protective than the federal
Tier II program. In addressing the Alliance of Automobile
Manufacturers' petition for reconsideration with respect to this issue,
EPA stated that ``the words `standards' and `in the aggregate' in
section 209(b)(1)(A) * * *, at minimum, include all the standards
relating to the control of emissions for a category of vehicles (e.g.,
passenger cars, etc.) subject to CARB regulation, particularly where
the standards are designed to respond to the same type of pollution.''
\68\ California's ZEV and GHG emission standards are an addition to its
LEV program. EPA has not received any comment to suggest that the
existence of either of these additional regulatory components
undermines the protectiveness of CARB's LEV III emission standards.
Although the Dealers suggest that ``consumers facing a CARB-constrained
mix at their local dealership may elect to buy a CARB-exempted brand,
to purchase a late-model used vehicle, or defer vehicle purchases
altogether,'' EPA believes that the Dealers have failed to present any
legal argument as to why EPA should take this into consideration within
the waiver criteria. We also find that the Dealers have failed to
provide evidence, under any standard of proof, as to whether such
outcomes would ultimately impair the protectiveness of CARB's emission
standards. EPA believes it is appropriate, and certainly reasonable,
for CARB to evaluate its standards in the aggregate when the nature of
its regulations are interrelated and the regulations are submitted to
EPA as one ACC program. Although NADA suggests that CARB failed to make
an individual protectiveness determination for its ZEV standards, EPA
believes this is of no significance in light of the overall
protectiveness of CARB's emission standards and the lack of an
applicable federal ZEV program. The Dealers mere contentions, which
CARB reasonably refutes in its supplement comments,\69\ that there is
no criteria emission benefit from the ZEV proposal in terms of TTW
emissions, and that the ZEV regulation does not provide GHG emission
reductions in addition to the LEV III GHG regulation, suggest no reason
to find that CARB's ACC program is any less protective of public health
and welfare because of the existence of such ZEV standards.
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\68\ Decision Document for Waiver of Federal Preemption for
California's Zero Emission Vehicle (ZEV) Standards (December 21,
2006) and EPA's August 13, 2008 Response to Petition for
Administrative Reconsideration of EPA's ZEV Waiver Decision (through
the 2011 Model Year) published on December 28, 2006.
\69\ See CARB supplemental comments at 3-4.
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3. Section 209(b)(1)(A) Conclusion
Based on the record before EPA, we cannot find that CARB was
arbitrary and capricious in its finding that the California ACC program
standards, including the LEV III criteria pollutant and GHG emission
standards along with its ZEV amendments are, in the aggregate, at least
as protective of public health and welfare as applicable federal
standards.
B. Does California need its standards to meet compelling and
extraordinary conditions?
Under section 209(b)(1)(B) of the Act, EPA cannot grant a waiver if
EPA finds that California ``does not need such State standards to meet
compelling and extraordinary conditions.'' EPA has traditionally
interpreted this provision as requiring a consideration of whether
California needs a separate motor vehicle program to meet compelling
and extraordinary conditions. However in EPA's March 6, 2008 denial of
CARB's GHG waiver request (GHG waiver denial), EPA limited this
interpretation to California's motor vehicle standards that are
designed to address local or regional air pollution problems. EPA
determined that the traditional interpretation was not appropriate for
standards designed to address a global air pollution problem and its
effects and that it was appropriate to address such standards
separately from the remainder of the program. EPA then found that
California did not need such standards to meet compelling and
extraordinary conditions. The interpretation adopted in the March 6,
2008 waiver denial was before EPA for reconsideration when CARB
resubmitted its GHG waiver request and EPA announced a new opportunity
for hearing and public comment on February 12, 2009.\70\
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\70\ 74 FR 7040 (February 12, 2009).
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Set forth below is a summary of EPA's departure from the
traditional interpretation of section 209(b)(1)(B) in the GHG waiver
denial along with EPA's return to the traditional interpretation
(confirmed today) in EPA's waiver of preemption of CARB's GHG standards
on July 8, 2009 (GHG waiver).\71\ Because EPA received comment
suggesting that CARB's GHG and ZEV standards do not meet the
requirements of section 209(b)(1)(B), EPA believes it useful to recount
the interpretive history associated with both GHGs and traditional
local and regional air pollutants to explain why EPA believes that
section 209(b)(1)(B) should be applied in the same manner for all air
pollutants.
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\71\ 74 FR 32744 (July 9, 2009).
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As explained below, EPA finds that the opponent of the ACC waiver
has not met its burden of demonstrating why CARB no longer has a need
for its motor vehicle emissions program under EPA's interpretation of
section 209(b)(1)(B). Although EPA is not adopting the Dealers
suggested interpretation, EPA also finds that the opponent of the
waiver has not met its burden of demonstrating that CARB does not have
the need for either its GHG or ZEV standards.
1. EPA's March 6, 2008 GHG Waiver Denial
In the March 6, 2008 waiver denial, EPA provided its reasoning for
changing its long-standing interpretation of this provision, as it
pertains to California standards designed to address global air
pollution. EPA described its longstanding interpretation in some
detail, stating that:
Under this approach EPA does not look at whether the specific
standards at issue are needed to meet compelling and extraordinary
conditions related to that air pollutant. For example, EPA reviewed
this issue in detail with regard to particulate matter in a 1984
waiver decision.\72\ In that waiver proceeding, California argued
that EPA is restricted to considering whether California needs its
own motor vehicle program to meet compelling and extraordinary
conditions, and not whether any given standard is necessary to meet
such conditions. Opponents of the waiver in that proceeding argued
that EPA was to consider whether California needed
[[Page 2126]]
these PM standards to meet compelling and extraordinary conditions
related to PM air pollution.
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\72\ 49 FR 18887 (May 3, 1984).
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The Administrator agreed with California that it was appropriate
to look at the program as a whole in determining compliance with
section 209(b)(1)(B). One justification of the Administrator was
that many of the concerns with regard to having separate state
standards were based on the manufacturers' worries about having to
meet more than one motor vehicle program in the country, but that
once a separate California program was permitted, it should not be a
greater administrative hindrance to have to meet further standards
in California. The Administrator also justified this decision by
noting that the language of the statute referred to ``such state
standards,'' which referred back to the use of the same phrase in
the criterion looking at the protectiveness of the standards in the
aggregate. He also noted that the phrase referred to standards in
the plural, not individual standards. He considered this
interpretation to be consistent with the ability of California to
have some standards that are less stringent than the federal
standards, as long as, per section 209(b)(1)(A), in the aggregate
its standards were at least as protective as the federal standards.
The Administrator further stated that in the legislative history
of section 209, the phrase ``compelling and extraordinary
circumstances'' refers to ``certain general circumstances, unique to
California, primarily responsible for causing its air pollution
problem,'' like the numerous thermal inversions caused by its local
geography and wind patterns. The Administrator also noted that
Congress recognized ``the presence and growth of California's
vehicle population, whose emissions were thought to be responsible
for ninety percent of the air pollution in certain parts of
California.'' \73\ EPA reasoned that the term compelling and
extraordinary conditions ``do not refer to the levels of pollution
directly.'' Instead, the term refers primarily to the factors that
tend to produce higher levels of pollution--``geographical and
climatic conditions (like thermal inversions) that, when combined
with large numbers and high concentrations of automobiles, create
serious air pollution problems.'' \74\
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\73\ Id. at 18890.
\74\ 73 FR 12156, 12159-60.
The Administrator summarized that under this interpretation the
question to be addressed in the second criterion is whether these
``fundamental conditions'' (i.e. the geographical and climate
conditions and large motor vehicle population) that cause air pollution
continued to exist, not whether the air pollution levels for PM were
compelling and extraordinary, or the extent to which these specific PM
standards will address the PM air pollution problem.\75\
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\75\ 73 FR at 12159-60.
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However in the GHG waiver denial, EPA limited this interpretation
to California's motor vehicle standards that are designed to address
local or regional air pollution problems. EPA determined that the
traditional interpretation was not appropriate for standards designed
to address a global air pollution problem and its effects.\76\
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\76\ EPA recently reaffirmed that the traditional interpretation
still applied for motor vehicle standards designed to address air
pollution problems that are local or regional in nature. 71 FR
78190, 78192 (December 28, 2008); see also 71 FR 78190 and Decision
Document for Waiver of Federal Preemption for California Zero
Emission Vehicle Standards, at 34.
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With respect to a global air pollution problem like elevated
concentrations of GHGs, EPA's GHG waiver denial found that the text of
section 209(b)(1)(B) was ambiguous and did not limit EPA to this prior
interpretation. In addition, EPA noted that the legislative history
supported a decision to ``examine the second criterion specifically in
the context of global climate change.'' The legislative history:
[I]ndicates that Congress was moved to allow waivers of
preemption for California motor vehicle standards based on the
particular effects of local conditions in California on the air
pollution problems in California. Congress discussed ``the unique
problems faced in California as a result of its climate and
topography.'' H.R. Rep. No. 728, 90th Cong. 1st Sess., at 21 (1967).
See also Statement of Cong. Holifield (CA), 113 Cong. Rec. 30942-43
(1967). Congress also noted the large effect of local vehicle
pollution on such local problems. See, e.g., Statement of Cong. Bell
(CA) 113 Cong. Rec. 30946. In particular, Congress focused on
California's smog problem, which is especially affected by local
conditions and local pollution. See Statement of Cong. Smith (CA)
113 Cong. Rec. 30940-41 (1967); Statement of Cong. Holifield (CA),
id. at 30942. See also, MEMA I, 627 F. 2d 1095, 1109 (DC Cir., 1979)
(noting the discussion of California's ``peculiar local conditions''
in the legislative history). Congress did not justify this provision
based on pollution problems of a more national or global nature in
justifying this provision.\77\
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\77\ 73 FR at 12161.
Relying on this, and without any further significant discussion of
either congressional intent or how this new approach properly furthered
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the goals of section 209(b), EPA determined that it was appropriate to:
[R]eview California's GHG standards separately from the
remainder of its motor vehicle emission control program for purposes
of section 209(b)(1)(B). In this context it is appropriate to give
meaning to this criterion by looking at whether the emissions from
California motor vehicles, as well as the local climate and
topography in California, are the fundamental causal factors for the
air pollution problem--elevated concentrations of greenhouse gases--
apart from the other parts of California's motor vehicle program,
which are intended to remediate different air pollution concerns.
EPA then applied this interpretation to the GHG standards at issue
in that waiver proceeding. Having limited the meaning of this provision
to situations where the air pollution problem was local or regional in
nature, EPA found that California's GHG standards do not meet this
criterion. EPA also found that the elevated concentrations of GHGs in
California are similar to concentrations elsewhere in the world, and
that local conditions in California such as the local topography and
climate and the number of motor vehicles in California are not the
determinant factors causing the elevated GHG concentrations found in
California and elsewhere. Thus, EPA found that California did not need
its GHG standards to meet compelling and extraordinary conditions, and
denied the GHG waiver.
EPA also considered an alternative interpretation, where EPA would
consider ``the effects in California of this global air pollution
problem in California in comparison to the rest of the country, again
addressing the GHG standards separately from the rest of California's
motor vehicle program.'' Under this alternative interpretation, EPA
considered whether the impacts of global climate change in California
were significant enough and different enough from the rest of the
country such that California could be considered to need its GHG
standards to meet compelling and extraordinary conditions. EPA
determined that the waiver should be denied under this alternative
interpretation as well.
2. EPA's July 9, 2009 GHG Waiver
In EPA's July 9, 2009 GHG waiver, the Agency determined that the
better approach was to review California's need for its new motor
vehicle emissions program as a whole to meet compelling and
extraordinary conditions, and not to apply this criterion to specific
standards, or to limit it to standards designed to address only local
or regional air pollution problems. EPA reasoned that the traditional
approach to interpreting this provision was the best approach for
considering a waiver directed to GHG emission standards, as well as a
waiver for standards directed to address local or regional air
pollution problems.\78\
[[Page 2127]]
Therefore, EPA rejected the interpretation that was applied in the
March 6, 2008 waiver denial and stated it should no longer be followed.
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\78\ The traditional interpretation of section 209(b)(1)(B) is
certainly not ``unambiguous precluded'' by the language of the
statute. See Entergy Corp. v. Riverkeeper, Inc., 129 S.Ct. 1498
(2009) (``That view governs if it is a reasonable interpretation of
the statute--not necessarily the only possible interpretation, nor
even the interpretation deemed most reasonable by the courts.
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837, 843-844 (1984).'') (``It seems to us, therefore, that the
phrase ``best available,'' even with the added specification ``for
minimizing adverse environmental impact,'' does not unambiguously
preclude cost-benefit analysis.''). Carrow v. Merit Systems
Protection Board, 564 F.3d 1359 (Fed. Cir. 2009) (``[W]e are
obligated to give controlling effect to [agency's] interpretation if
it is reasonable and is not contrary to the unambiguously expressed
intent of Congress'', citing Entergy Corp.).
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EPA reasoned that the traditional interpretation was the most
straightforward reading of the text and legislative history of section
209(b). 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, 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.
Further, we noted that EPA is to determine whether California's
protectiveness determination is arbitrary and capricious under section
209(b)(1)(A), and whether California does not need ``such State
standards'' to meet compelling and extraordinary conditions under
section 209(b)(1)(B). The natural reading of these provisions led EPA
to consider the same group of standards that California considered in
making its protectiveness determination. While the words ``in the
aggregate'' are not specifically mentioned in section 209(b)(1)(B), EPA
explained that it does refer to the need for ``such State standards,''
rather than ``each State standard'' or otherwise indicate a standard-
by-standard analysis.
We also noted that EPA's GHG waiver denial had determined that this
provision was appropriately interpreted to consider California's
standards as a group for standards designed to address local or
regional air pollution problems, but should be interpreted in the
opposite fashion for standards designed to address global air pollution
problems. The text of the provision, however, draws no such
distinction, and provides no indication other than Congress intended a
single interpretation for this provision, not one that varied based on
the kind of air pollution problem at issue.
EPA also explained that the GHG waiver denial had considered the
legislative history, and determined that Congress was motivated by
concern over local conditions in California that led to local or
regional air pollution problems, and from this EPA determined that
Congress intended to allow California to address these kinds of local
or regional air pollution problems, but no others. However, upon a
reexamination of the legislative history EPA found that the
determination noted above ignores the main thrust of the text and
legislative history of section 209(b), and improperly reads too much
into an absence of discussion of global air pollution problems in the
legislative history. The structure of section 209, both as adopted in
1967 and as amended in 1977, is notable in its focus on limiting the
ability of EPA to deny a waiver, and thereby preserves discretion for
California to construct its motor vehicle program as it deems
appropriate to protect the health and welfare of its citizens. The
legislative history indicates Congress quite intentionally restricted
and limited EPA's review of California's standards, and its express
legislative intent was to ``provide the broadest possible discretion
[to California] in selecting the best means to protect the health of
its citizens and the public welfare.'' \79\ The DC Circuit recognized
that ``[t]he history of the congressional consideration of the
California waiver provision, from its original enactment up through
1977, indicates that Congress intended the State to continue and expand
its pioneering efforts at adopting and enforcing motor vehicle emission
standards different from and in large measure more advanced than the
corresponding federal program. In short, to act as a kind of laboratory
for innovation. * * * For a court [to limit California's authority]
despite the absence of such an indication would only frustrate the
congressional intent.'' \80\
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\79\ H.R. Rep. No. 294, 95th Cong., 1st Sess. 301-302 (1977).
See MEMA I, 627 F. 2d at 1110-11.
\80\ MEMA I, 627 F. 2d at 1111.
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EPA also determined that it was fully consistent with the expressed
intention of Congress to interpret section 209(b)(1)(B) the same way
both for standards designed to address local and regional air pollution
problems, and standards designed to address global air pollution
problems. Congress intended to provide California the broadest possible
discretion to develop its motor vehicle emissions program. Neither the
text nor the legislative history of section 209(b) indicates that
Congress intended to limit this broad discretion to a certain kind of
air pollution problem, or to take away all discretion with respect to
global air pollution problems.\81\ In addition, EPA reasoned that
applying the traditional interpretation to GHG standards does not
change the basic nature of the compromise established by Congress--
California could act as the laboratory for the nation with respect to
motor vehicle emission control, and manufacturers would continue to
face just two sets of emissions standards--California's and EPA's.
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\81\ This broad interpretation of section 209(b) is similar to
the broad reading the Court provided to section 302(g) of the Clean
Air Act when it held that the term ``air pollutant'' included
greenhouse gases, rejecting among other things the argument that
Congress limited the term to apply only to certain kinds of air
pollution. Massachusetts v. EPA, 549 US 497, 532 (2007) (footnote
26).
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EPA further explained that this interpretation was consistent with
Congressional purpose, as compared to the interpretation adopted in the
GHG waiver denial relied on the discussion in the legislative history
of local conditions in California leading to air pollution problems
like ozone. While this was properly read to support the view that
section 209(b) should be interpreted to address California's need for a
motor vehicle program as a whole, the GHG waiver denial went further
and inferred that by discussing such local conditions, Congress also
intended to limit California's discretion to only these kinds of local
or regional air pollution problems. The GHG waiver denial pointed to no
particular language in the legislative history or the text of section
209(b) indicating such, instead, congressional intent to limit
California's discretion was inferred from the discussion of local
conditions. However, basing a limitation on such an inference is not
appropriate given the express indication that Congress intended to
provide California the ``broadest possible discretion'' in selecting
the best means to protect the health of its citizens and the public
welfare.
Additionally, EPA explained that the text of section 209(b) and the
legislative history, when viewed as a whole, led to the conclusion that
the interpretation adopted in the GHG waiver denial should be rejected.
The better way to interpret this provision is to apply the traditional
interpretation to the evaluation of California's GHG standards for
motor vehicles. If California needs a separate motor vehicle program to
address the kinds of compelling and extraordinary conditions discussed
in the traditional
[[Page 2128]]
interpretation, then Congress intended that California could have such
a program. Congress also intentionally provided California the broadest
possible discretion in adopting the kind of standards in its motor
vehicle program that California determines are appropriate to address
air pollution problems that exist in California, whether or not those
problems are local or regional in nature, and to protect the health and
welfare of its citizens. The better interpretation of the text and
legislative history of this provision is that Congress did not intend
this criterion to limit California's discretion to a certain category
of air pollution problems, to the exclusion of others. In this context
it is important to note that air pollution problems, including local or
regional air pollution problems, do not occur in isolation. Ozone and
PM air pollution, traditionally seen as local or regional air pollution
problems, occur in a context that to some extent can involve long range
transport of this air pollution or its precursors. This long-range or
global aspect of ozone and PM can have an impact on local or regional
levels, as part of the background in which the local or regional air
pollution problem occurs.
EPA further stated that this approach does not make section
209(b)(1)(B) a nullity, as some had suggested. EPA must still determine
whether California does not need its motor vehicle program to meet the
compelling and extraordinary conditions discussed in the legislative
history. If that is the case, then a waiver would be denied on those
grounds, but that was not the case at that point. EPA observed that
conditions in California may one day improve such that it no longer had
the need for a separate motor vehicle program and that the statute
contemplates that such improvement is possible. In addition, we noted
that the opponents of a waiver always have the ability to raise their
legal, policy, and other concerns in the State administrative process,
or through judicial review in State courts. We concluded, however, that
Congress provided EPA a much more limited role under section 209(b) in
considering objections raised by opponents of a waiver.
3. Response to Comments Received
CARB states in its Waiver Support Document that the relevant
inquiry under section 209(b)(1)(B) is whether California needs it own
motor vehicle pollution control program to meet compelling and
extraordinary conditions and not whether any particular standard is
needed to meet such conditions. CARB notes that EPA has consistently
determined that the phrase ``compelling and extraordinary conditions''
refers to:
* * * Certain general circumstances, unique to California, primarily
responsible for causing its air pollution [including] * * *
geographical and climate factors [as well as] * * * the presence and
growth 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.
CARB also submits that the 2012 ZEV and LEV amendments (the ACC
program) meet the same compelling and extraordinary conditions
justifying previous waivers (e.g., the South Coast and San Joaquin Air
basins continue to experience some of the worst air quality in the
nation and that California has an ongoing need for dramatic emission
reductions generally and from passenger cars specifically). CARB also
submits that as in 1967, EPA's previous waivers have noted that
California continued to have geographic and climatic conditions that,
when combined with the large numbers and high concentrations of
automobiles, created a serious air pollution problem.
EPA received only one comment requesting a denial of the waiver for
the GHG and ZEV standards based on the grounds of section
209(b)(1)(B)--that ``such State does not need such State standards to
met compelling and extraordinary conditions.'' This commenter raised
specific objections to both the GHG and ZEV elements of CARB's ACC
program but none of them addressed whether California's geographic,
climactic and air quality conditions remain the same as they were under
prior waiver determinations.\82\
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\82\ NADA at 7-9, 12-14.
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4. CARB's GHG Emission Standards
With regard to CARB's GHG standards, the Dealers state there is no
need and no discernible environmental benefit from such standards
because of EPA's GHG regulations for motor vehicles that CARB has
agreed to accept as compliance for its own program. According to the
commenter, this amounts to a legal admission that CARB does not need
its own GHG standards. In addition, because manufacturers are already
under a legal obligation to comply with the NHTSA/EPA 2017-2025 GHG
standards there is no environmental benefit associated with separate
CARB GHG standards. This commenter cited 1967 legislative history as
support that Congress decided that federal preemption of new vehicle
emission standards would be available for California but only where
California promulgated standards necessary to address ``the unique
problems facing the state.'' \83\ Had Congress intended to give
California discretion to adopt whatever standards it liked, without any
consideration as to whether these standard are `needed,' Congress would
have omitted Sec. 209(b)(1)(B) altogether.'' This commenter also
suggests that the ``alternative arguments'' in the 2009 GHG waiver
decision, wherein California's need for its GHG standards standing
alone was evaluated, should also be applied here. As such, this
commenter suggests that since CARB does not intend to rely on its own
regulations to meet environmental goals there can be no ``rational
connection'' between the CARB's regulation and the state's air quality
issues. Finally, the commenter notes that CARB's statement that a
waiver ``will remain an important backstop in the event the national
program is weakened or terminated'' is an identified ``political need''
outside the scope of Section 209.
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\83\ H.R. Rep. No. 90-728 (1967), at 22.
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CARB, in response to NADA's comments referenced above, states that
while there may not be binding precedent that requires EPA to treat
California's program as a whole in reviewing the need for specific
standards, it previously has demonstrated that EPA's longstanding
administrative practice to review the need for separate standard
standards in the context of the ongoing compelling and extraordinary
conditions justifying California's motor vehicle program remains sound.
CARB also notes that its commitment to accept compliance with the
federal GHG emission standards is no different from the numerous times
that EPA has followed California's lead--blazing a new trail as a
laboratory for innovation--by catching up to or harmonizing with
California's standards. In addition, rather than viewing CARB's actions
an impermissible political backstop, CARB maintains that its actions
are simply furthering the Congressional design of Section 209(b): to
ensure that California can protect public health and welfare by
ensuring its ability to separately implement and enforce necessary
emission reductions through its own regulatory mechanisms. Therefore
CARB can continue to set standards that in the first instance are more
stringent, then may become as stringent and subsequently--under the
NADA hypothetical--become more stringent should EPA lessen the
stringency of the
[[Page 2129]]
federal GHG emission standards. In addition, CARB points to NADA's
concession by acknowledging that CARB's standards must be as or more
stringent--i.e., as protective as--the federal standards.
As discussed above, EPA believes that the better interpretation of
the section 209(b)(1)(B) criterion is the traditional approach of
evaluating California's need for a separate motor vehicle emission
program to meet compelling and extraordinary conditions. Applying this
approach with the reasoning noted above, with due deference to
California, I cannot deny the waiver.
CARB has repeatedly demonstrated the need for its motor vehicle
program to address compelling and extraordinary conditions in
California. As discussed above, the term compelling and extraordinary
conditions ``does not refer to the levels of pollution directly.''
Instead, the term refers primarily to the factors that tend to produce
higher levels of pollution--geographical and climatic conditions (like
thermal inversions) that, when combined with large numbers and high
concentrations of automobiles, create serious air pollution problems.
California still faces such conditions. For example, as stated in
CARB's waiver request and additional written comment, California and
particularly the South Coast and San Joaquin Valley Air Basins continue
to experience some of the worst air quality in the nation and continue
to be in non-attainment with national ambient air quality standards
(NAAQS) for PM2.5 and ozone.\84\ In its recent announcement
of new PM2.5 ambient air quality standards, EPA projected
that only seven of approximately 3,000 counties in the country may
require state or local action to reduce fine particle pollution in
order to meet the new standards by 2020. All seven counties are in
California.
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\84\ 76 FR 40652, 40654 (July 11, 2011).
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Further, EPA has not received any adverse comments suggesting that
California no longer needs a separate motor vehicle emissions program
to address the various conditions that lead to serious and unique air
pollution problems in California.
Based on the record, I am unable to identify any change in
circumstances or any evidence to suggest that the conditions that
Congress identified as giving rise to serious air quality problems in
California no longer exist. Therefore, using the traditional approach
of reviewing the need for a separate California program to meet
compelling and extraordinary conditions, I cannot deny the ACC waiver
request (including the GHG and ZEV components, along with LEV III
criteria pollutants) based on this criterion.
To the extent that it is appropriate to examine the need for CARB's
GHG standards to meet compelling and extraordinary conditions, as EPA
discussed at length in its 2009 GHG waiver decision, California does
have compelling and extraordinary conditions directly related to
regulations of GHG. EPA's prior GHG waiver contained extensive
discussion regarding the impacts of climate change in California.\85\
In addition, CARB has submitted additional evidence in comment on the
ACC waiver request that evidences sufficiently different circumstances
in California.\86\ CARB notes that ``Record-setting fires, deadly heat
waves, destructive storm surges, loss of winter snowpack--California
has experienced all of these in the past decade and will experience
more in the coming decades. California's climate--much of what makes
the state so unique and prosperous--is already changing, and those
changes will only accelerate and intensify in the future. Extreme
weather will be increasingly common as a result of climate change. In
California, extreme events such as floods, heat waves, droughts and
severe storms will increase in frequency and intensity. Many of these
extreme events have the potential to dramatically affect human health
and well-being, critical infrastructure and natural systems.'' \87\
CARB provides a summary report on the third assessment from the
California Climate Change Center (2012) \88\ which describes dramatic
sea level rises and increases in temperatures. The Commenter does not
take issue with that analysis, but instead relies on the existence of
the federal GHG standards and the ``deemed to comply'' language to
claim that there is no need for CARB's GHG standards. Separate from
EPA's stated interpretation and determinations noted above, EPA
believes that the commenter does not appropriately appreciate the role
that Congress envisioned California to play as an innovative laboratory
that may set standards that EPA may ultimately harmonize with or that
California or EPA may otherwise accept compliance with the others
emission program as compliance with their own. EPA's longstanding
interpretation of section 209(b)(1)(B) is that EPA does not look at
whether the specific standards at issue are needed to meet compelling
and extraordinary conditions related to that air pollutant. As
explained above, EPA reviewed this issue in some detail in both EPA's
2008 GHG waiver denial and subsequent 2009 GHG waiver decision and EPA
continues to believe that our traditional interpretation is
appropriate. The structure of section 209, both as adopted in 1967 and
as amended in 1977, is notable in its focus on limiting the ability of
EPA to deny a waiver, and thereby preserves discretion for California
to construct it motor vehicle program as it deems appropriate to
protect the health and welfare of its citizens.\89\ EPA has previously
considered NADA's argument that CARB no longer has a need for its GHG
emission standards once CARB adopts a ``deemed to comply'' provision.
In EPA's within the scope decision in 2011, where EPA considered CARB's
previous ``deemed to comply'' provision applicable to the 2012 through
2016 MYs, EPA stated:
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\85\ 74 FR 32744, 32764-7265.
\86\ EPA-HQ-OAR-2012-0562-0371.
\87\ Id.
\88\ Our Changing Climate 2012 Vulnerability & Adaptation to the
Increasing Risks from Climate Change in California. Publication
CEC-500-2012-007. Posted: July 31, 2012; available at
http://www.climatechange.ca.gov/adaptation/third_assessment/.
\89\ See H.R. Rep. No. 294, 95th Cong., 1st Sess. 301-302
(1977).
NADA's comments do not indicate that, as a result of the
amendments, California no longer needs a separate motor vehicle
emissions program to address compelling and extraordinary conditions
in California, or provide any indication that EPA's prior
determination on this issue is undermined in any way. Therefore, its
comments do not show that California's amendments raise any new
issues relevant to EPA's initial waiver decision.
Moreover, although NADA's comments reference the words of the
section 209(b)(1)(B), ``need * * * to meet compelling and
extraordinary circumstances'' criterion, they do not appear to be
directed towards the geographical or climatological conditions that
are being referred to by the words ``compelling and extraordinary
circumstances.'' Instead, NADA's comments appear to be directed at
the stringency of the greenhouse gas standards. The stringency of
California's standards is at issue in section 209(b)(1)(A), where
Congress addressed the comparison of California standards to federal
standards, but it is not an issue under section 209(b)(1)(B). As
noted in EPA's underlying waiver decision, section 209(b)(1)(A)
calls for a review of California standards ``in the aggregate,'' and
EPA can only deny a waiver if it finds that California was arbitrary
and capricious in its finding that ``its standards will be, in the
aggregate, at least as protective of public health and welfare as
applicable Federal standards.'' EPA notes that the language of
section 209(b)(1)(A) clearly indicates Congress's determination that
EPA review the effect of stringency on the protectiveness of
California's standards ``in
[[Page 2130]]
the aggregate,'' and that EPA cannot deny a waiver on the grounds of
protectiveness if California standards are at least equally
protective as Federal standards. ``Redundancy'' is not the
criterion; it is whether California's standards are, in the
aggregate, at least as protective as applicable Federal standards.
Furthermore, NADA does not address California's standards ``in the
aggregate'' and, as noted above, does not provide any evidence to
suggest, even with regard to California's greenhouse gas standards,
that California was arbitrary and capricious in its finding that its
standards are at least as protective as comparable federal
standards. The stringency issue raised by NADA is not relevant under
section 209(b)(1)(B), and it would be inconsistent with the intent
of Congress to deny a waiver or a within-the-scope determination
based on section 209(b)(1)(B) for reasons Congress clearly addressed
and clearly determined should not be the basis for a denial under
section 209(b)(1)(A). NADA's comments, therefore, do not raise any
new issues regarding our preexisting waiver for California
greenhouse gas emission standards.\90\
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\90\ 76 FR 34693, 34697-34698 (June 14, 2011).
EPA believes this interpretation of section 209(b)(1)(B) continues
to be appropriate and therefore finds that CARB's GHG emission
standards cannot be denied a waiver based on NADA's argument that there
is no need for such standards given the existence of EPA GHG emission
standards.
5. CARB's ZEV Emission Standards
The Dealers also requested that EPA deny a waiver of CARB's ZEV
standards for MY 2018 and beyond because they were not necessary to
meet compelling and extraordinary circumstances, under the section
209(b)(1)(B) criterion.\91\ According to the commenter, the
``compelling and extraordinary conditions'' in California today are
nothing like they were when Congress first enacted section 209. In
addition, the commenter notes that CARB claims no criteria emissions
benefit from the ZEV standards in terms of vehicle TTW emissions and
subsequently notes several problems with CARB's upstream WTW emissions
analysis and projected benefits. For example, the commenter disputes
CARB's assumptions that reductions of fuel production by refineries
will result from reductions in fuel consumption by the vehicle fleet in
California. According to the commenter, refineries in California could
simply shift fuel production to address either off-shore or out-of
state needs. The commenter further states that CARB has not and cannot
show that its ZEV standards will achieve any reductions in criteria
pollutants. With respect to the relationship between the GHG and ZEV
programs, the commenter also states that the ZEV standards do not
provide any additional GHG emission benefits beyond the underlying GHG
standards and the ZEV standards are therefore not necessary to meet any
potential compelling and extraordinary conditions associated with GHG
emissions from new motor vehicles. In addition, the commenter suggests
that because CARB is providing a variety of compliance flexibilities,
including over compliance with GHG standards producing ZEV credits and
other alternative compliance path options, confirms that the underlying
ZEV mandates are not ``necessary.''
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\91\ NADA at 13.
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CARB notes in its written response that to the extent commenters
question California's need for additional criteria pollutant reductions
from its new motor vehicle fleet, there remains no question that such
reductions are essential to meet federal health-based ambient air
quality standards. CARB notes that California and particularly the
South Coast and San Joaquin Valley Air Basins continue to experience
some of the worst air quality in the nation and continue to be in non-
attainment with national ambient air quality standards (NAAQS) for
PM2.5 and ozone.\92\ California's unique geographical and
climatic conditions, and the tremendous growth in its on- and off-road
vehicle population, which moved Congress to authorize the state to
establish separate on-road motor vehicle standards in 1967 and off-road
engine standards in 1990, still exist today.\93\ In addition, CARB
provides extensive evidence of its current and serious air quality
problems and the increasingly stringent health-based air quality
standards and federally required state planning efforts to meet those
standards firmly in order to establish the need for the additional
emission reductions from its motor vehicle emissions program.\94\
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\92\ 76 FR 40652, 40654 (July 11, 2011). CARB waiver request at
17-18.
\93\ 74 FR 32744, 32762 (July 8, 2009); 76 FR 77515, 77518
(December 13, 2011).
\94\ EPA-HQ-OAR-2012-0562-0371.
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As stated above, EPA believes that the better interpretation of the
section 209(b)(1)(B) criterion is the traditional approach of
evaluating California's need for a separate motor vehicle emission
program to meet compelling and extraordinary conditions. The issue of
whether any particular standard provides comparable emission reductions
is not a relevant criterion under section 209(b)(1)(B). Applying this
approach with the reasoning noted above, with due deference to
California, I cannot deny the waiver.
As discussed in their written comments, CARB has repeatedly
demonstrated the need for its motor vehicle program to address
compelling and extraordinary conditions in California. As discussed
above, the term compelling and extraordinary conditions ``does not
refer to the levels of pollution directly. Instead, the term refers
primarily to the factors that tend to produce higher levels of
pollution--geographical and climatic conditions (like thermal
inversions) that, when combined with large numbers and high
concentrations of automobiles, create serious air pollution problems.
California still faces such conditions. For example, California and
particularly the South Coast and San Joaquin Valley Air Basins continue
to experience some of the worst air quality in the nation and continue
to be in non-attainment with national ambient air quality standards
(NAAQS) for PM2.5 and ozone.\95\ In addition, EPA believes,
and the record does not otherwise indicate, the underlying geographical
and climatic conditions continue to exist in California and continue to
give rise to serious air quality problems.
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\95\ 76 FR 40652, 40654 (July 11, 2011).
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EPA has not received any adverse comments suggesting that
California no longer needs a separate motor vehicle emissions program
to address the various conditions that lead to serious and unique air
pollution problems in California.
Based on the record, I am unable to identify any change in
circumstances or any evidence to suggest that the conditions that
Congress identified as giving rise to serious air quality problems in
California no longer exist. Therefore, using the traditional approach
of reviewing the need for a separate California program to meet
compelling and extraordinary conditions, I cannot deny the ACC waiver
request (including the GHG and ZEV components, along with LEV III
criteria pollutants) based on this criterion.
As CARB notes in its waiver request, the goal of the CARB Board in
directing CARB staff to redesign the ZEV regulation was to focus
primarily on zero emission drive--that is BEV, FCV, and PHEVs in order
to move advanced, low GHG vehicles from demonstration phase to
commercialization. CARB also analyzed pathways to meeting California's
long term 2050 GHG reduction targets in the light-duty vehicle sector
and determined that ZEVs would need to reach nearly 100 percent
[[Page 2131]]
of new vehicle sales between 2040 and 2050. CARB also notes that the
``critical nature of the LEV III regulation is also highlighted in the
recent effort to take a coordinated look at strategies to meet
California's multiple air quality and climate goals well into the
future. This coordinated planning effort, Vision for Clean Air: A
Framework for Air Quality and Climate Planning (Vision for Clean Air)
\96\ demonstrates the magnitude of the technology and energy
transformation needed from the transportation sector and associated
energy production to meet federal standards and the goals set forth by
California's climate change requirements. In addition to considering
the level of change needed to implement the current SIP and reduce GHG
emissions by 80 percent below 1990 levels by 2050, the 2032 attainment
date for the 0.075 ppm standard set in 2008 was used as an interim
target. Adopted or pending rules, such as the LEV III regulation, were
considered essential as baseline reductions assumed for the future, yet
California identified still more transformative changes to achieve the
2032 and 2050 targets. The Vision for Clean Air effort illustrates that
in addition to the cleanup of passenger vehicles (at issue here) as
soon as possible as required in the LEV III regulation, transition to
zero- and near-zero emission technologies in all on- and off-road
engine categories is necessary to achieve the coordinated goals.
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\96\ EPA-HQ-OAR-2012-0562-0371 at 5-6, citing Vision for Clean
Air: A Framework for Air Quality and Climate Planning, June 27,
2012,
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Therefore, EPA believes that CARB's 2018 and later MY ZEV standards
represent a reasonable pathway to reach these longer term goals. Under
EPA's traditional practice of affording CARB the broadest discretion
possible, and deferring to CARB on its policy choices, we believe there
is a rational connection between California ZEV standards and its
attainment of long term air quality goals. Whether or not the ZEV
standards achieve additional reductions by themselves above and beyond
the LEV III GHG and criteria pollutant standards, the LEV III program
overall does achieve such reductions, and EPA defers to California's
policy choice of the appropriate technology path to pursue to achieve
these emissions reductions. The ZEV standards are a reasonable pathway
to reach the LEV III goals, in the context of California's longer term
goals.
6. CARB's PM Standards
EPA received comments suggesting that the PM standards promulgated
within California's LEV III regulation were infeasible. The
Manufacturers in particular commented that the technological
feasibility of the one milligram per mile PM standard, that commences
its phase in starting with the 2025 MY, has not been demonstrated (this
issue is discussed below in the Section VI). The Manufacturers appear
to raise issue with whether additional PM emission reductions from
light-duty vehicles are needed since they represent so small a fraction
of the PM inventory in California. CARB's supplemental comments assert
that ``while PM emission from LDVs are not a major contributor to the
inventory, they are a significant contributor to urban pollution and
human exposure, particularly near heavily travelled roadways, many of
which are located in major urban centers in areas classified as non-
attainment for health based PM ambient air quality standards.'' CARB
also notes that the exact amount of pollution reduced through any given
emission standard and the cost-effectiveness of any particular
California standards are not waiver criteria and therefore not relevant
to EPA's determination.
EPA does not believe that it is necessarily the Manufacturers'
contention that the PM standards are not needed to meet compelling and
extraordinary conditions. Nevertheless, EPA believes it appropriate to
note, once again, that the compelling and extraordinary conditions
Congress identified as giving rise to serious air quality problems
continue to give rise to the need for a separate California new motor
vehicle emissions program. EPA believes this includes CARB's serious PM
air quality problems. EPA agrees that the PM standards will result in
reductions in PM emissions, however small. It is not appropriate for
EPA to second-guess CARB's policy choices, including how best to
address their air quality concerns.
7. Section 209(b)(1)(B) Conclusion
With respect to the need for California's state standards to meet
compelling and extraordinary conditions, I continue to apply the
traditional interpretation of the waiver provision. As stated in the
GHG waiver decision,\97\ the best way to interpret this provision is to
determine whether California continues to have compelling and
extraordinary conditions giving rise to a need for its own new motor
vehicle emission program. Congress did not use this criterion to limit
California's discretion to a certain category of air pollution
problems, nor does EPA believe this criterion limits California's
discretion to adopt or retain emission standards that are similar to
EPA's standards. In addition, it is inappropriate for EPA to second
guess CARB's policy choices and objectives in adopting ZEV standards
designed to achieve long term emission benefits as well as projected to
reasonably achieve some reduction in criteria pollutant emissions.
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\97\ 74 FR 32766. EPA incorporates this prior GHG waiver
decision, and associated reasoning and interpretations, into today's
waiver decision.
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Under this interpretation and application of this criterion, EPA
cannot find that the opponents of the waiver have demonstrated that
California does not need its state standards to meet compelling and
extraordinary conditions. The opponents of the waiver have not
adequately demonstrated that California no longer has a need for its
motor vehicle emission program. Therefore, I determine that I cannot
deny CARB's ACC waiver request under section 209(b)(1)(B).
C. Are the California ACC standards consistent with Section 202(a) of
the Clean Air Act?
EPA has reviewed the information submitted to the record of this
proceeding to determine whether the parties opposing, or seeking a
deferral of, this waiver request have met their burden to demonstrate
that the ACC standards are not consistent with section 202(a). In its
initial Waiver Request, CARB submitted information and argument that
the ACC standards are consistent with section 202(a). CARB notes that
in developing the LEV III requirements it considered several factors
(e.g., technical feasibility, lead time available to meet the
requirements, and the cost of compliance and the technical and resource
challenges manufacturers face in complying with the requirement to
simultaneously reduce criteria and GHG emissions). CARB notes that that
criteria emissions elements of LEV III occur over an 11-year period
(2015 through 2025) while the GHG emission element is implemented over
a 9-year period from 2017 through 2025. CARB sets forth its belief that
both the stringency and implementation schedules for its PM standards
are technologically feasible within the available lead time. With
regard to LEV III GHG regulations, CARB noted that California
coordinated with the EPA and NHTSA on technical and economic areas, and
CARB has
[[Page 2132]]
moved in parallel with the federal rulemaking in terms of stringency of
the standards and lead time for compliance. CARB maintains that the
standards and lead time are technologically feasible ``even before CARB
proposes to amend its LEV III GHG regulations to allow National Program
compliance to serve as compliance in California. It will be undeniably
true should California adopt its ``deemed to comply'' rule as
planned.'' \98\ With regard to the ZEV amendments, CARB noted the lack
of objections from the regulated parties during CARB's rulemaking and
the regulated parties' announcements of their planned ability to
comply.
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\98\ At the time of CARB's waiver request EPA's GHG emission
rule had not yet been finalized. Subsequent to EPA's final rule CARB
has adopted the deemed to comply and has provided the regulation for
EPA's consideration. See also CARB Resolution 12-11 at 20.
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The Manufacturers have submitted information and argument that
their members see no way to measure and meet the 1 mg/mile PM standard
beginning in 2025 (as part of the LEV III standards) and ask EPA to
withhold issuing a waiver for this standard at this time. The
Manufactures have commented that they do not oppose California's GHG
emission standards for the 2017 through 2025 MYs but suggests that EPA
should grant California's waiver request after CARB has finalized its
regulatory amendments to allow for a national compliance option.\99\
Finally, while the Manufacturers agree that CARB's ZEV amendments, as
they affect 2017 and earlier MYs, are within the scope of existing
waivers, they are opposed to granting the waiver for the ZEV program
past the 2017 MY based on argument that those standards will not be
feasible either in California or in the individual Section 177 States
given the status of the infrastructure and the level of consumer demand
for ZEVs.
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\99\ The Manufacturers note that both the federal and the
California GHG emission standards provide for a comprehensive mid-
term evaluation of the MYs 2022-2025. Therefore, the Manufacturers
clearly state that ``Any amendments to California's GHG emission
standards made as a result of the mid-term evaluation will require
analysis to determine whether the amendments fall within the scope
of this waiver, or, if not, whether they qualify for a separate
waiver under Section 209(b) of the Clean Air Act.
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EPA also received comment from the Dealers suggesting that EPA
should not grant California a waiver for its GHG emission standards
past MY 2021 since the technical capabilities after that time are
uncertain. In addition, like the Manufacturers, NADA does not oppose
CARB's ZEV amendments through the 2017 MY. However, NADA believes
CARB's ZEV amendments, as they affect 2018 and later MYs, raise serious
technological feasibility concerns including their economic feasibility
(including their marketability when compared to non-ZEV vehicles).
EPA's analysis of the consistency of the CARB standards with section
202(a) of the Act follows.
1. Historical Approach
Under section 209(b)(1)(C), EPA must deny California's waiver
request if the Agency finds that California standards and accompanying
enforcement procedures are not consistent with section 202(a) of the
Act. The scope of EPA's review under this criterion is narrow. EPA has
previously stated that the determination is limited to whether those
opposed to the 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.\100\ Previous waivers of federal preemption
have stated that California's standards are not consistent with section
202(a) 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.\101\
California's accompanying enforcement procedures would be inconsistent
with section 202(a) if the federal and California test procedures
conflict, i.e., if manufacturers would be unable to meet both the
California and federal test requirements with the same test
vehicle.\102\
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\100\ MEMA I, 627 F.2d at 1126.
\101\ See e.g., 38 FR 30136 (November 1, 1973) and 40 FR 30311
(July 18, 1975).
\102\ To be consistent, the California certification test
procedures need not be identical to the Federal test procedures.
California procedures would be inconsistent, however, if
manufacturers would be unable to meet both the state and Federal
test requirements with the same test vehicle in the course of the
same test. See, e.g., 43 FR 32182, (July 25, 1978).
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EPA does not believe that there is any reason to review these
criteria any differently for EPA's evaluation of California's ACC
program request. There is nothing inherently different about how ACC
control technologies should be reviewed when making a determination
about technological feasibility or consistency of test procedures.
In the ACC waiver proceeding, opponents of the waiver have
presented evidence for EPA's consideration which they believe will
require EPA to make the finding of inconsistency with section 202(a),
and therefore require EPA to deny or defer granting all or parts of the
waiver request (e.g., a deferral on the 2025 and later MY phase-in of
the 1 mg/mile PM standard of LEV III, a denial of the GHG emission
standards for MY 2022 and later, and a denial of the 2018 through 2025
MY ZEV requirements or a deferral on the 2021 and later MYs). As noted
above, the commenters believe this finding should be made on one or
more grounds, including: there exists either a lack of information or
certainty of technological solutions based on the remoteness in time
from the implementation of the standards; that there are questions of
economic feasibility and marketability, including consumer demand; that
technological consistency must include consideration of feasibility in
section 177 states; and, that either the cost effectiveness of certain
standards is unreasonable or that the standards are not needed for air
quality purposes. EPA's process for evaluating lead time is discussed
immediately below and in subsequent parts of this section. The industry
opponents also raise arguments based on the cost of compliance with the
standards (including cost-effectiveness), which will be discussed below
and in other parts of this section. To the extent the commenters raise
questions about the need for CARB's PM standards and that it could be
the basis for EPA's waiver consideration, we address such concerns in
the discussion above concerning section 209(b)(1)(B). EPA has already
addressed the Dealers suggestions that CARB's ZEV requirements are not
needed within the same discussion.
Regarding lead time, EPA historically has relied on two decisions
from the U.S. Court of Appeals for the D.C. Circuit for guidance
regarding the lead time requirements of section 202(a). Section 202(a)
provides that an emission standard 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. In Natural Resources Defense
Council v. EPA (NRDC), 655 F.2d 318 (DC Cir. 1981), the court reviewed
claims that EPA's PM standards for diesel cars and light trucks were
either too stringent or not stringent enough. In upholding the EPA
standards, the court concluded:
Given this time frame [a 1980 decision on 1985 model year
standards]; we feel that there is substantial room for deference to
the EPA's expertise in projecting the likely course of development.
The essential question in this case is the pace of that development,
and absent a revolution in the study of industry, defense of such a
projection can never possess the inescapable
[[Page 2133]]
logic of a mathematical deduction. We think that the EPA will have
demonstrated the reasonableness of its basis for projection if it
answers any theoretical objections to the [projected control
technology], identifies the major steps necessary in refinement of
the technology, and offers plausible reasons for believing that each
of those steps can be completed in the time available (emphasis
added).\103\
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\103\ Natural Resources Defense Council v. EPA, 655 F.2d 318,
331. (emphasis added)
Another key case addressing the lead time requirements of section
202(a) is International Harvester v. Ruckelshaus (International
Harvester), 478 F 2.d 615 (DC Cir. 1979). In International Harvester,
the court reviewed EPA's decision to deny applications by several
automobile and truck manufacturers for a one-year suspension of the
1975 emission standards for light-duty vehicles. In the suspension
proceeding, the manufacturers presented data which, on its face, showed
little chance of compliance with the 1975 standards, but which, at the
same time, contained many uncertainties and inconsistencies regarding
test procedures and parameters. In a May 1972 decision, the
Administrator applied an EPA methodology to the submitted data, and
concluded that ``compliance with the 1975 standards by application of
present technology can probably be achieved,'' and so denied the
suspension applications.\104\ In reviewing the Administrator's
decision, the court found that the applicants had the burden of coming
forward with data showing that they could not comply with the
standards, and if they did, then EPA had the burden of demonstrating
that the methodology it used to predict compliance was sufficiently
reliable to permit a finding of technological feasibility. In that
case, EPA failed to meet this burden.
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\104\ International Harvester v. Ruckelshaus, 478 F 2d. 615,
626.
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With respect to lead time, the court in NRDC pointed out that the
court in International Harvester ``probed deeply into the reliability
of EPA's methodology'' because of the relatively short amount of lead
time involved (a May 1972 decision regarding 1975 MY vehicles, which
could be produced starting in early 1974), and because ``the hardship
resulting if a suspension were mistakenly denied outweigh the risk of a
suspension needlessly granted.'' \105\ The NRDC court compared the
suspension proceedings with the circumstances concerning the diesel
standards before it: ``The present case is quite different; `the base
hour' for commencement of production is relatively distant, and until
that time the probable effect of a relaxation of the standard would be
to mitigate the consequences of any strictness in the final rule, not
to create new hardships.'' \106\ The NRDC court further noted that
International Harvester did not involve EPA's predictions of future
technological advances, but an evaluation of presently available
technology.
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\105\ NRDC, 655 F.2d 318, 330.
\106\ Id. The ``hardships'' referred to are hardships that would
be created for manufacturers able to comply with the more stringent
standards being relaxed late in the process.
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EPA also evaluates CARB's request in light of congressional intent
regarding the waiver program generally. This is consistent with the
motivation behind section 209(b) to foster California's role as a
laboratory for motor vehicle emission control, in order ``to continue
the national benefits that might flow from allowing California to
continue to act as a pioneer in this field.'' \107\
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\107\ 40 FR 23102, 23103 (waiver decision citing views of
Congressman Moss and Senator Murphy) (May 28, 1975).
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For these reasons, EPA believes that California must be given
substantial deference when adopting motor vehicle emission standards
which may require new and/or improved technology to meet challenging
levels of compliance. This deference was discussed in an early waiver
decision when EPA approved the waiver request for California's 1977 MY
standards:
Even on this issue of technological feasibility 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 promulgated standards. Such an approach to
automotive emission control might 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 deference to
California's judgment on that score.'' \108\
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\108\ Id. at 23103.
CARB, while maintaining that the NRDC approach is the correct
measurement here, commented that the technological sophistication of
ZEVs currently being produced is anticipated to continue to advance,
making commercial production and compliance of these vehicles by MY
2018 and later more feasible. CARB also notes that the only relevance
of costs in a section 209(b) waiver proceeding is in the context of
technological feasibility. ``Past 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 cost to customers who purchased a
complying vehicle would be doubled or tripled.\109\ Additionally, the
relevance of the cost of compliance analysis is limited to the question
of whether such costs will adversely affect the timing of an emission
standard.'' \110\
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\109\ 74 FR 32744, 32774 (July 8, 2009).
\110\ CARB's waiver request at 25-26. MEMA I, 627 F.2d at 1105,
1114 n. 40 (``[T]he `cost of compliance' consideration relates to
the timing of standards and procedures.'') CARB notes that EPA has
recognized that the only relevance of costs is their impact on
timing, e.g. ``Manufacturers do not contend that the cost of
compliance will be significantly reduced by extending lead time
beyond the minimal period required for compliance.'' (36 FR 17459
(August 31, 1971)).
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Under NRDC, when compliance with CARB standards is phased-in over a
lengthy time period, the reasonableness of a projection of
technological feasibility can be based on answering any theoretical
objections to the projected control technology; identifying the major
steps necessary in refinement of the technology; and offering plausible
reasons for believing that each of those steps can be completed in the
time available.\111\ EPA's review of the evidence on the technological
feasibility of CARB's ACC standards, in particular the standards which
EPA received comment, follows.
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\111\ NRDC, 655 F.2d 318, 331.
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Congress has stated that the consistency requirement of section
202(a) relates to technological feasibility.\112\ 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 relevant
technology, considering the cost of compliance within that time.''
Section 202(a) thus requires the Administrator to first review 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.
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\112\ H.R. Rep. No. 95-294, 95th Cong., 1st Sess. 301 (1977).
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In MEMA I, the court addressed the cost of compliance issue at some
length in reviewing a waiver decision. According to the court:
Section 202's cost of compliance concern, juxtaposed as it is
with the requirement that the Administrator provide the requisite
lead
[[Page 2134]]
time to allow technological developments, refers to the economic
costs of motor vehicle emission standards and accompanying
enforcement procedures. See S. Rep. No. 192, 89th Cong., 1st Sass.
5-8 (1965); H.R. Rep. No. 728 90th Cong., 1st Sass. 23 (1967),
reprinted in U.S. Code Cong. & Admin. News 1967, p. 1938. It relates
to the timing of a particular emission control regulation rather
than to its social implications. Congress wanted to avoid undue
economic disruption in the automotive manufacturing industry and
also sought to avoid doubling or tripling the cost of motor vehicles
to purchasers. It, therefore, requires that the emission control
regulations be technologically feasible within economic parameters.
Therein lies the intent of the cost of compliance requirement
(emphasis added).\113\
\113\ MEMA I at 1118 (emphasis added). See also id. at 1114 n.
40 (A[T]he `cost of compliance' criterion relates to the timing of
standards and procedures.).
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Previous waiver decisions are fully consistent with MEMA I, which
indicates that the cost of compliance must reach a very high level
before the EPA can deny a waiver. Therefore, past decisions indicate
that the costs must be excessive to find that California's standards
are inconsistent with section 202(a).\114\ It should be noted that, as
with other issues related to the determination of consistency with
section 202(a), the burden of proof regarding the cost issue falls upon
the opponents of the grant of the waiver.
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\114\ See, e.g., 47 FR 7306, 7309 (Feb. 18, 1982), 43 FR 25735
(Jun. 14, 1978), and 46 FR 26371, 26373 (May 12, 1981).
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Consistent with MEMA I, the Agency has evaluated costs in the
waiver context by looking at the actual cost of compliance in the time
provided by the regulation, not the regulation's cost-effectiveness.
The appropriate level of cost-effectiveness is a policy decision of
California that is considered and made when California adopts the
regulations, and EPA, historically, has deferred to these policy
decisions. EPA has stated in this regard, ``the law makes it clear that
the waiver request cannot be denied unless the specific findings
designated in the statute can be made. The issue of whether a proposed
California requirement is likely to result in only marginal improvement
in air quality not commensurate with its cost or is otherwise an
arguably unwise exercise of regulatory power is not legally pertinent
to my decision under section 209 * * *.'' \115\ Thus, EPA will look at
the compliance costs for manufacturers in developing and applying the
technology and not at cost effectiveness when making a waiver decision.
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\115\ 36 FR 17158 (August 31, 1971). See also 40 FR 23102,
23104; 58 FR 4166 (January 7, 1993), LEV Waiver Decision Document at
20.
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2. LEV III Criteria Pollutant Standards
California has adopted new standards for exhaust emissions of non-
methane organic gases (NMOG), NOX, and PM, as well as
evaporative emissions standards. These standards phase in beginning
with MY 2015. The LEV III standards are similar, in many respects, in
structure to those in the existing federal Tier 2 program. As with the
Tier 2 program, the proposed standards would apply to all light-duty
vehicles (LDVs, or passenger cars, light-duty trucks (LDT1s, LDT2s,
LDT3s, and LDT4s)) below 8,500 pounds GVWR (Gross Vehicle Weight
Rating), and Medium-Duty Passenger Vehicles, or MDPVs (8,500 to 10,000
lbs GVWR). Based on our review of the LEV III criteria pollutant
standards, and because EPA did not receive any comments objecting to
CARB's LEV III criteria pollutant standards, with the exception of the
PM standard issue discussed below, we find it unnecessary to provide a
full written review whether such standards are consistent with section
202(a), as those opposing the waiver have clearly not met their burden
regarding the issue, and we otherwise cannot make a finding that such
standards are inconsistent with section 202(a).
a. Particulate Matter Standards
The Manufacturers generally note that testing for and complying
with the revised particulate matter standards will present significant
burdens on the industry. In short, the Manufacturers recommend that EPA
withhold issuing a waiver for the MY 2025 PM standard. While noting
that the phase in of the 3 mg/mile FTP PM standard beginning in MY 2017
will be very challenging, they nevertheless state that the
Manufacturers are optimistic that vehicles will achieve this level with
time. Recognizing that there are long lead time changes, the
Manufacturers appear to be agreeing with CARB's planned phased-in
approach starting in the 2017 MY. Also, the Manufacturers are not
objecting to EPA issuing a waiver for the 3 mg/mile PM standards based
on their stated testing concerns.
However, the Manufacturers believe the 1 mg/mile PM standard, which
begins its phase-in starting in the 2025 MY, raises further feasibility
issues. Based on their knowledge of PM measurement and vehicle PM
control technology, the Manufacturers state that their members ``see no
way to both measure and meet this standard.'' The Manufacturers believe
that setting a standard that is unachievable today is inappropriate,
and they do not believe EPA should issue a waiver for these standards
at this time.
Finally, the Manufacturers note that there is ample time to revisit
the waiver request without interfering with CARB's implementation of
standards should they be deemed feasible (during CARB's planned review
of the standard).
CARB's supplemental comments note that the LEV III PM standards are
based on a particular concern for their impact on public health and
safety. As noted in their LEV III Technical Support Document, CARB
acknowledges that while PM emissions from LDVs are not a major
contributor to the inventory, they are a significant contributor to
urban pollution and human exposure. CARB also notes that the exact
amount of pollution reduced and the cost-effectiveness of particular
California standards is not relevant to EPA's waiver determination.
What is relevant, CARB maintains, is that thirteen years of lead
time (from the date of its adopted regulations to the first model year
of the phase-in standards in 2025) are provided to improve the test
procedure and for industry to incorporate needed improvements to their
engines and fuel systems. CARB maintains that it has consistently
demonstrated PM measurement capability at 1 mg/mi using new test
procedures under development by EPA under 40 CFR Part 1066.\116\ CARB
suggests that EPA apply the rationale of NRDC and find that CARB has
identified barriers to implementation of needed technologies and a
viable path to overcome these barriers. For example, CARB states test
data that they have presented demonstrates PM levels from current port
fuel injected (PFI) engines below 1 mg/mi and from late model gasoline
direct injection engines (GDI) approaching 1 mg/mi. CARB expects
further technical improvements over the extensive lead time
provided.\117\ CARB has also identified that some of the low carbon
technologies with proven track records that are most likely to be used
(to meet GHG emission requirements) are: Advanced port fuel injection
engines, GDI engines, boosted and downsized engines, clean diesel
engines, hybrid, and plug-in hybrid technology among others. CARB notes
[[Page 2135]]
that each of these technologies will have a particular impact on PM
emissions. CARB notes that many of these technologies may be able to
currently meet 2025 MY PM standards and that further improvements are
reasonable. For example: (1) CARB's Technical Support Document states
``Some current, well-maintained PFI-equipped LDVs emit PM mass levels
below 1 mg/mi. For example, published research reports PM emissions
rates for both PFI ULEV and SULEV vehicles of approximately 0.7 mg/mi
or much less over the Federal Test Procedure (FTP or FTP-75) cycle''
and (2) ``Car makers who choose to pursue gasoline-fueled,
CO2 friendlier GDI internal combustion engines for their
future vehicles will have two principal technical solutions for further
reduction of PM mass emissions. One solution can utilize next
generation state-of-the-art engines (e.g., start-stop system where the
ICE automatically shuts down and starts up at idle) with optimized fuel
injection strategies (e.g., spray-guided central injector) at nearly no
net cost increase. The second solution employs post-combustion control
in the form of the gasoline particle filter (GPF) at an additional
cost.'' \118\
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\116\ CARB notes that EPA has identified areas of improvement to
Part 1066 it intends to evaluate in cooperation with CARB and
industry (see pp. 54-59 of CARB's Technical Support Document at:
http://www.arb.ca.gov/regact/2012/leviiighg2012/levappp.pdf).
\117\ Id. at P-8 through P-20. CARB's Board has provided
direction to its staff (Resolution 12-11 at 21) to conduct a review
of the 1 mg/mi PM standard in the 2015 timeframe and report back to
the Board its results.
\118\ Id.
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b. EPA's Response to Comments
As explained below, EPA believes CARB presents a proper view of how
lead time should be evaluated, for purposes of waiver review by EPA,
and that CARB has provided reasonable responses to any theoretical
objections to the projected control technology; identified the major
steps necessary in refinement of the technology; and offered plausible
reasons for believing that each of those steps can be completed in the
time available.
We also believe that CARB has properly set forth the role of EPA in
reviewing California standards which require new and/or improved
technology to meet challenging levels of compliance. EPA is not setting
its own standards under section 202(a) of the Clean Air Act, rather
EPA's role within its waiver review is more limited and takes place in
the context of deference that Congress envisioned for California. This
deference was discussed in an early waiver decision when EPA approved
the waiver request for California's 1977 model year standards:
Even on this issue of technological feasibility 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 promulgated standards. Such an approach to
automotive emission control might 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 deference to
California's judgment on that score.\119\
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\119\ 40 FR 23102, 23103 (May 28, 1975).
Regarding the feasibility of the CARB 1 mg/mile PM standard that
commences its phase-in starting with the 2025 MY, EPA believes that it
is proper to review this through the NRDC prism. In other words, EPA
believes it appropriate to provide substantial room for deference to
CARB's projections. Although the Manufacturers have raised a variety of
concerns they have not provided any data or other information to
demonstrate why the pathways and steps identified by CARB are
unreasonable. EPA believes having given appropriate deference that CARB
has reasonably projected possible pathways to address the theoretical
concerns with the 2025 phased-in PM standard, including concerns
relating to testing capability. The Manufacturers have provided no data
or other information to demonstrate why CARB's identified path of
improvements in testing technology and procedures is not feasible in
the lead time provided. Similarly, the Manufacturers have provided no
data or other information to demonstrate why CARB's identified
technology solutions and possible refinements are infeasible,
especially given the amount of lead time provided. Given the amount of
lead time provided by CARB and their identified paths for improvements,
EPA believes the opponents to the waiver have not met their burden of
proof in regards to the PM standards commencing in MY 2025.
Therefore, based on the record before us, EPA cannot find that the
opponents of the PM standard in 2025 have met their requisite burden of
proof to demonstrate that such standards are inconsistent with section
202(a). Thus EPA cannot deny CARB's ACC waiver request on this basis.
3. LEV III GHG Emission Standards
CARB has worked closely with EPA and NHTSA throughout the
development of the MY 2017-2025 GHG emission standards and has moved in
parallel with the agencies in setting standards that are essentially
equivalent in terms of lead time and stringency. CARB projects that its
GHG emissions standards for MYs 2017-2025 will reduce fleet average
CO2 levels by about 34 percent from MY 2016 levels of 251 g/
mile down to about 166 g/mile, based on the projected mix of vehicles
sold in California. The basic structure of the GHG standards is
consistent with that of EPA's GHG standards. CARB uses two vehicle
categories, passenger cars and light trucks. CARB projects that the
standards will reduce car CO2 emissions by approximately
4.9%/year, reduce truck CO2 emissions by approximately 4.1%/
year (the truck CO2 standard target curves move downward at
approximately 3.5%/year through the 2016-2021 period and about 5%/year
from 2021-2025), and reduce combined light-duty CO2
emissions by approximately 4.5%/year from 2016 through 2025.
CARB notes that the CO2 emission reduction estimates are
approximate because the required emission level to achieve compliance
with the standards for each vehicle manufacturer depends on each
manufacturer's ultimate sales mix of vehicles.\120\ Within the two
categories, the CO2 standard targets for vehicle models sold
by each automaker are indexed to the vehicles' footprint, which is
calculated as each vehicle model`s wheelbase times its average track
width. As a result of this regulatory structure, the precise
CO2 emission rates that will result from the standards in
each year from 2017 through 2025 will depend on the ultimate sales-
weighted mix of vehicles (i.e., according to vehicle sales in each
category and the footprint of the models) sold in each year.
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\120\ EPA-HQ-OAR-2012-0562-0011 at ES-6.
---------------------------------------------------------------------------
CARB also adopted separate nitrous oxide (N2O) and
methane (CH4) standards that are harmonized with the
standards EPA first adopted in the MY 2012-2016 rulemaking. As with the
EPA program, manufacturers may use CO2 credits to meet the
N2O and CH4 standards on a CO2-
equivelent basis.
CARB includes most of the flexibilities established by EPA for MYs
2017-2025. CARB includes averaging, banking, and trading provisions
which allow for 5-year credit carry-forward and 3-year credit carry-
back and credit trading between manufacturers. Manufacturers may
generate air conditioning system credits through system efficiency
improvements, low refrigerant leakage designs, and use of low global
warming potential
[[Page 2136]]
refrigerants. Manufacturers may generate up to 18.8 g/mile
CO2-equivalent credit for cars and 24.4 g/mile
CO2-equivelent credits for trucks from air conditioning
system improvements. CARB also moved to harmonize air conditioning
system test procedures with EPA, replacing the A/C idle test
requirement with the AC17 test procedure.
In addition CARB adopted off-cycle credits provisions similar to
those adopted by EPA, which provide credits to manufacturers based on
real world improvements in CO2 emissions not captured on the
2-cycle test procedure. CARB adopted a list of pre-approved credits
that manufacturers may claim by using pre-approved technologies. As
with the EPA program, off-cycle credits based on the pre-approved
credits list is capped at 10 g/mile. CARB also provides full-size
pickup truck technology credits of 10 or 20 g/mile per vehicle
depending on the level of technology employed, similar to the EPA
program. Manufacturers may generate technology incentive credits by
using hybrid technologies or by meeting performance-based criteria over
a specified minimum percentage of full size pickup truck production.
The EPA and CARB programs differ in their treatment of advanced
technology vehicles, specifically plug-in hybrids, battery electric
vehicles, and fuel cell vehicles. EPA's program encourages the
production of these advanced technology vehicles in two ways; by
providing incentive multipliers for these technologies and by not
counting the upstream emissions associated with electric operation for
the first several model years of the program.\121\ CARB does not
provide a multiplier incentive or allow for the use of a 0 g/mile
compliance value. CARB explains that incentives are not needed for
plug-in hybrids, battery electric vehicles, and fuel cell vehicles
under their GHG program because the California ZEV program requires
manufacturers to produce vehicles using these technologies.
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\121\ EPA allows a 0 g/mile compliance value to be used for
vehicles sold in MY2017-2021 and caps the cumulative number of
vehicles that a manufacturer may use the 0 g/mile compliance value
for in MYs 2022-2025.
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In its Final Statement of Reasons, CARB reiterated its commitment,
as directed by Board Resolution 12-11, to accept compliance with EPA's
GHG emission standards for MY 2017-2025 as compliance with California's
GHG standards if CARB determines that EPA's final rule preserves the
GHG reduction benefits set forth in EPA's proposed rule.\122\ CARB also
notes their plan to adopt a ``deemed to comply'' rule within their
waiver request to EPA. EPA stated in the Federal Register notice
announcing the opportunity for hearing and comment on CARB's June 27,
2012 ACC waiver request that ``EPA invites comment on all aspects of
CARB's waiver request, and specifically invites comment on CARB's
waiver request in light of CARB's plans concerning adoption of a
``deemed to comply'' provision into its LEV III GHG standards. This
will allow EPA to consider any ``deemed to comply'' provision and
comments on it when taking action on CARB's request for a waiver.''
\123\
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\122\ California Air Resources Board, EPA-HQ-OAR-2012-0562-0021,
at 16.
\123\ 77 FR 53199, 53200 (August 31, 2012).
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On September 14, 2012, CARB proposed amendments to their program to
permit compliance based on compliance with EPA's GHG standards. In its
discussion of the differences between the EPA and CARB programs with
regard to the treatment of advanced technology vehicles, CARB notes
that manufacturers will have the option to comply with the federal
program and utilize the EPA accounting provisions for these
vehicles.\124\ On November 15, 2012, the Air Resources Board agreed to
accept compliance with federal standards as equivalent to compliance
with California's, approving the amendment for ``deemed to comply.''
\125\ On December 7, 2012, CARB submitted additional information to EPA
noting that CARB had approved further amendments to the ACC program,
including the ``deemed to comply'' regulation, and therefore California
has met its commitment to the National Program. CARB requested that EPA
consider and take action on these amendments concurrent with the
request set forth in CARB's June 27, 2012 ACC waiver request.\126\
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\124\ Air Resources Board, EPA-HQ-OAR-2012-0562-0011, at 135.
\125\ CARB Resolution 12-35 (November 15, 2012).
\126\ EPA-HQ-OAR-2012-0562-0374.
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a. Comments on CARB's 2017 Through 2025 GHG Emission Standards
CARB's waiver request notes that in 2010, President Barack Obama
directed EPA and NHTSA to work with California to develop GHG fleet
standards for MY 2017 through 2025 light-duty vehicles. In response,
the three agencies developed the Interim Joint Technical Assessment
Report (TAR), released in September 2010. The TAR was major milestone
in the technical work done collaboratively by EPA, NHTSA, and CARB.
CARB held four public technical workshops covering topics of
efficiency, mass-reduction, and safety technology; collaborative
technical contract work (e.g., with FEV, Ricardo, Lotus); and extensive
meetings with a wide range of stakeholders to gather input. This
collaboration ensured that the three agencies had a common set of
technical information on which to inform their proposals, allowing the
agencies to develop standards that are harmonized in terms of their
stringency.
CARB further notes that the feasibility analysis underlying its
standards is based on several existing and emerging technologies that
increase engine and transmission efficiency, reduce vehicle energy
loads, improve auxiliary and accessory efficiency, and that would
increasingly electrify vehicle subsystems with hybrid and electric
drivetrains. The technology assessment conducted by CARB for the MY
2017-2025 standards builds on the original technical basis established
in the previous rulemakings for California's MY 2009-2016 and federal
MY 2012-2016 standards. CARB notes that several individual technologies
offer substantial CO2 reduction potential and that many of
the technologies have only seen limited deployment in new vehicle
models.\127\
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\127\ California Air Resources Board, EPA-HQ-OAR-2012-0562-0011,
at 102-103.
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In its Initial Statement of Reasons staff report, CARB highlights
several CO2 reduction technologies that manufacturers can
employ to meet the standards.\128\ The list of technologies cited by
CARB is very similar to the list of technologies considered by EPA and
NHTSA in evaluating standards for MYs 2017-2025.\129\ Vehicle road load
and accessory energy loads can be improved, for example, through mass
reduction, improved accessories, electric power steering, improved
aerodynamics, and low rolling resistance tires. CARB notes several
considerable opportunities for engine efficiency improvements. Engine
efficiency technologies include turbo charging and downsizing, gasoline
direct injection, continuously variable valve lift, cylinder
deactivation, and diesel-fueled engines. CARB also describes
transmission efficiency improvements important in allowing the
operation of the engine in its lowest fuel consumption operating points
more frequently. These include more gears
[[Page 2137]]
(e.g., 8 speed transmissions), closer gear ratio spacing, optimized
controls, and dual clutch transmissions that allow essentially the same
efficiency as manual transmissions.
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\128\ California Air Resources Board, EPA-HQ-OAR-2012-0562-0011,
at 103-108.
\129\ Joint Technical Support Document: Final Rulemaking for
2017-2025 Light-duty Vehicle Greenhouse Gas Emission Standards and
Corporate Average Fuel Economy Standards, Chapter 3, EPA-420-R-12-
901, August 2012.
---------------------------------------------------------------------------
CARB's analysis also includes various hybrid systems that offer
significant potential CO2 reductions through the elimination
of engine idling, reduction in fuel consumption during deceleration,
reduction of acceleration power requirement through launch assist, and
the recovery of vehicle energy losses through regenerative braking
during deceleration. Finally, CARB also includes emerging electric
drive technologies including plug-in hybrids, electric, and hydrogen
fuel cell vehicles.
EPA received several comments on CARB's waiver request generally
supporting the California GHG standards as feasible and consistent with
CAA section 202(a). The Environmental Defense Fund (EDF) and the
Natural Resources Defense Council (NRDC) commented that CARB
coordinated with EPA and NHTSA in the development of the GHG standards
and the California GHG standards are aligned with the federal GHG
standards in terms of stringency and lead time. EDF further commented
that EPA received letters from 13 automakers supporting the federal GHG
standards, and based on this coordination and support EPA can only
determine that the CARB GHG standards are feasible.\130\
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\130\ EDF's comment at EPA-HQ-OAR-2012-0562-0025 and 0353; and
NRDC's comment at EPA-HQ-OAR-2012-0562-0347.
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EPA received comments from the Dealers that EPA should not provide
a waiver to California for the MY 2022-2025 GHG standards because the
standards for these years are not consistent with CAA section 202(a).
The commenter states that by committing to a mid-term evaluation in its
own GHG program, EPA has already determined that ``technological
capabilities after MY 2022 are too remote to be accurately predicted.''
The commenter argues that it is inappropriate for CARB to obtain a
waiver for years where it cannot demonstrate technological feasibility
regardless of the fact that California has agreed to participate in the
mid-term review. The Dealers assert that by agreeing to participate in
the mid-term evaluation, CARB ``has admitted that the technological
feasibility of its GHG standards for MYs 2022-2025 is not knowable at
this time.''
As part of the waiver decision process, CARB's supplemental
comments provided a response to comments submitted by NADA, including a
response to NADA's comments regarding the feasibility of the MY 2022-
2025 standards.\131\ CARB comments that NADA concerns are not supported
by relevant case law and should be dismissed. CARB comments that NADA
is disregarding decades of precedent that clearly sets out the
appropriate ``technological feasibility'' analysis under section
202(a). Citing Natural Resources Defense Council v. U.S. Environmental
Protection Agency, (1981) 655 F.2d 318, 331, CARB notes CAA section
202(a) has historically been interpreted to allow for projections of
likely future technological development. Such projections do not need
to ``possess the inescapable logic of a mathematical deduction.''
Instead, such a projection is considered sufficient if it ``answers any
theoretical objections to the [projected technology], identifies the
major steps necessary in refinement of the technology, and offers
plausible reasons for believing that each of those steps can be
completed in the time available.'' Moreover, where the requirements of
a standard are phased in over a lengthy period of time it bears on the
likelihood of a proper finding of technological feasibility. CARB notes
that the great length of time provided--until after MY 2022--supports a
finding of technological feasibility under NRDC, and would be in line
with past EPA waiver decisions.
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\131\ EPA-HQ-OAR-2012-0562-0373 at 8.
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b. EPA Response to Comments
EPA disagrees with NADA's characterization of the mid-term review
as it relates to the technological feasibility of the standards for MYs
2022-2025. As discussed in the final rule for the EPA's GHG emission
standards, EPA has found that its standards are technologically
feasible under CAA section 202(a), based on available information
regarding technology and costs.\132\ EPA could not have adopted the
standards for MYs 2022-2025 if it did not find the standards to be
consistent with CAA section 202(a) which requires EPA to consider
issues of technological feasibility, cost, and available lead-
time.\133\ As EPA discusses in the final rule in response to comments,
``EPA does not agree that the mid-term evaluation is legally required,
or that the standards adopted today would be arbitrary and capricious
or without substantial evidence to support them absent such a mid-term
evaluation. The final rule and supporting information and analysis
amply justify the reasonableness and appropriateness of the final GHG
standards adopted by EPA, irrespective of the provisions for a mid-term
evaluation.'' \134\ EPA is committed to conducting a mid-term
evaluation for MYs 2022-2025 in close coordination with NHTSA and CARB
given the long time frame in implementing standards out to MY 2025 and
given NHTSA's obligation to conduct a separate rulemaking in order to
establish final standards for vehicles for those years.\135\ With
respect to the waiver, however, EPA believes that NADA's reference to
the mid-term review does not demonstrate technological infeasibility
(or any requisite level of uncertainty) or that the CARB standards are
inconsistent with section 202(a), particularly given that the CARB
standards are closely aligned to those adopted by EPA. In addition,
compliance with EPA's GHG standards will be deemed to be compliance
with CARB's GHG standards. EPA agrees with CARB's response to the NADA
concerns and believes that a reasonable technology path forward has
been projected in support of the MY 2022-2025 standards, which is
further supported by the substantial amount of lead-time provided for
these standards. EPA believes that the substantial amount of lead-time
provided also accords with a finding of technological feasibility under
NRDC, and would be in line with past EPA waiver decisions.
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\132\ 77 FR 62880-62882 and 62777.
\133\ See 77 FR 62671-62673 for discussion on EPA statutory
authority.
\134\ 77 FR 62786.
\135\ 77 FR 62784-62788.
---------------------------------------------------------------------------
EPA did not receive any additional comments on the waiver decision
regarding the technology assessment or cost analysis done by CARB in
support of their GHG standards. CARB has adopted GHG standards that are
closely aligned to those adopted by EPA for MYs 2017-2025. In EPA's
final rule establishing the MY 2017-2025 standards, EPA concluded that
the standards are feasible in the lead time provided and the costs are
reasonable, as required under Section 202(a) of the CAA.\136\ The
technical basis for the standards was developed jointly by EPA, NHTSA,
and CARB. The methodology and underlying data used by CARB to assess
technologies and costs, as summarized above, are very similar and in
many cases the same as those used by EPA to assess the standards.\137\
The extended lead time
[[Page 2138]]
provides the necessary time for manufacturers to combine individual
technologies, many of which are currently available, into optimized
packages and apply them across their vehicle fleets.
---------------------------------------------------------------------------
\136\ 77 FR 62624.
\137\ See 77 FR 62702-62713 for a description of the EPA and
NHTSA joint technology and cost assessment. More detail is provided
in the joint Technical Support Document for the rule.
---------------------------------------------------------------------------
It is also important to note that the EPA and CARB GHG programs are
very similar in terms of the structure of the programs and
flexibilities contained in the programs. The CO2 standards
are attribute-based fleet average standards, based on vehicle footprint
curves that are identical. The programs include averaging, banking, and
trading provisions. Both GHG programs offer credits for air
conditioning system improvements, off-cycle CO2 reductions,
and full-size pickup truck technology incentives. Both GHG programs
contain the same N2O and CH4 standards and
essentially the same provisions for small volume manufacturer and small
businesses.
There are some aspects of the CARB program that differ from the EPA
program but, as discussed below, EPA does not believe that these
differences change the feasibility of the standards in any significant
way. CARB has explained in detail how these standards can be met using
technologies that are reasonably expected to be available in the
regulatory timeframe. NADA does not substantially undermine this
explanation.
CARB estimated an average per vehicle cost in MY 2025 of $1,340
without the new ZEV requirements and $1,840 with the new ZEV
requirements. In its final rule, EPA estimated an average per vehicle
cost of about $1,800 in MY 2025 for the EPA GHG standards. Both
agencies conclude that these up-front per vehicle costs will be more
than offset by consumer fuel savings over the life of the vehicles.
Perhaps the most significant differences between the CARB and EPA
vehicle programs involve the new California ZEV requirements which
mandate use of ZEV-type technologies for a portion of a manufacturer's
fleet, and therefore may alter the technology pathways that
manufacturers might otherwise choose to meet the GHG standards. EPA has
reviewed the consistency of the ZEV requirements with section 202(a)
separately below
The CARB and EPA programs also differ in the treatment of vehicles
capable of electric operation. EPA provides an advanced technology
incentive multiplier through MY 2021 to encourage the increased sales
of plug-in hybrids (PHEVs), electric vehicles (BEVs), and fuel cell
vehicles (FCVs). CARB does not provide advanced technology incentive
credits for these vehicles because these types of vehicles are required
under the ZEV program and an incentive is not necessary. CARB also
accounts for upstream emissions from electric operation starting in MY
2017 while EPA phases in upstream accounting for MY 2022-2025 vehicles
after vehicle sales thresholds are exceeded. These differences mean
that PHEVs, BEVs, and FCVs do not receive as much credit in the CARB
program compared to the EPA program. However, these vehicles still
offer significantly lower CO2 levels in the CARB program
compared to more conventional technologies, lowering a manufacturer's
CO2 fleet average.
There are other minor differences between the CARB and EPA programs
but EPA does not believe the differences have a significant impact on
feasibility. Many of the differences in the programs arise from changes
EPA made to various provisions between the proposal and final rules in
response to comments. CARB delineates these minor differences in the
Initial Statement of Reasons for their proposal to accept compliance
with EPA's GHG emission standards as compliance with California's GHG
emission standards (aka ``deemed to comply'').\138\ These include
revisions to the off-cycle credits, air conditioning system credits,
and full-size pick-up credits. While most of the changes made by EPA in
its final rule directionally provide somewhat more flexibility to
manufacturers, the changes do not ultimately change the level of
credits potentially available. CARB concludes and EPA agrees that the
programs remain sufficiently comparable.
---------------------------------------------------------------------------
\138\ EPA-HQ-OAR-2012-0562-0374 at 6-13.
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Finally, as discussed below, most if not all manufacturers will
very likely opt to comply with the California program by complying with
the EPA GHG emission standards, as permitted by the ``deemed to
comply'' regulation. Therefore, the small differences between the
programs will not in such cases have any practical implications for
manufacturers. As CARB notes in its waiver request, ``Throughout the
development of the LEV III GHG regulations, 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,
commenters have not shown that the LEV III GHG regulations are
technologically infeasible or that the lead time provided is
inadequate.
The Manufacturers note that they do not oppose California's request
for a Section 209(b) waiver for its GHG emission standards but state
that it would not be appropriate for the waiver to be granted until
after California has finalized its regulatory amendments to allow for a
national compliance option.\139\ ``This national compliance option is
integral to the commitment letters the industry and California signed
in July 2011 and to the single national GHG/fuel economy program all
stakeholders sought to achieve.''
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\139\ The Manufacturers note that California does not believe
that another waiver request is necessary once the amendments are
finalized, further supporting its request to wait until after CARB
finalizes its rule.
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As noted above, CARB notified EPA by letter dated December 7, 2012
that CARB has approved further amendments to its ACC program, including
the ``deemed to comply'' regulation.\140\ Included in CARB's December
7, 2012 letter to EPA is CARB's ``Final `Clean' Version of California's
2017-2025 Advanced Clean CAR Program, including its Passenger Vehicle
Greenhouse Gas Regulations and LEV/GHG Test Procedures, and its ZEV
regulations and Test Procedures'' all as amended December 6, 2012.\141\
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\140\ See CARB's Resolution 12-35 (November 15, 2012) at EPA-HQ-
OAR-2012-0562-0374 (attachment 64), Executive Order R-12-016
(December 6, 2012) at EPA-HQ-OAR-2012-0562-0374 (attachment 66).
\141\ See EPA-HQ-OAR-2012-0562-0374 (attachment 65).
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EPA has not received any comment, based on its August 31, 2012
Federal Register Notice, that CARB's ``deemed to comply'' regulation
raises any issues regarding technological feasibility. EPA did receive
comment from the Manufacturers requesting that EPA not grant CARB a
waiver for its GHG emission standards until after CARB has finalized
their ``deemed to comply'' regulations. Today's waiver applies to
CARB's final regulation as adopted on December 6, 2012.
After review of the information in this proceeding, EPA believes
that those opposing the waiver have not met their burden of showing
that compliance with California's GHG standards is infeasible, even
without the deemed to comply provision, based upon the current and
future availability of the described technologies in the lead-time
provided and considering the cost of compliance. The CARB technical
information presented in this record clearly indicates that these
requirements are feasible. In addition, California's regulations
include a ``deemed to comply'' provision which provides further strong
support for this view. EPA therefore determines that those opposing the
waiver have not met the
[[Page 2139]]
burden of producing the evidence necessary for EPA to find that
California's GHG standards, including the ``deemed to comply''
provision, are not consistent with Section 202(a).
4. California's ZEV Amendments as They Affect 2018 Through 2025 Model
Years
As noted above, after a thorough review of CARB's ZEV amendments,
we have determined that such amendments, as they affect 2017 and
earlier MYs, are within the scope of previous waivers of preemption.
However, EPA recognizes that such amendments add significant new
requirements, as they affect 2018 and later MYs, and therefore such
amendments are reviewed under the full waiver criteria.
a. Comments on CARB's ZEV Amendments
CARB notes in its waiver request that to date, all vehicle
manufacturers operating in California are in full compliance with the
ZEV mandate. Nearly 5,600 ZEVs (BEVs and FCVs) are in operation
statewide and 380,000 AT PZEVs are also in operation. Fuel cell vehicle
and infrastructure is progressing with several automakers moving toward
commercialization sometime after 2015. Cumulatively, automakers plan to
have 50,000 FCVs operational in California by 2017, according to
CARB.\142\ CARB also notes that most manufacturers have near-term
production plans to meet or over comply with the regulatory
requirements through MY 2017. In addition, recently a number of
manufacturers have announced aggressive production plans for PHEVs and
BEVs for the next three MYs. CARB maintains that these announcements
reflect technological advancement in lithium-ion battery technology and
a general shift in customer demand and concern about environmental
stewardship. CARB provides a table in its waiver request that
summarizes manufacturers' current ZEV and TZEV program commitments, by
technology category and as publicly stated.\143\ CARB suggests that the
table reveals that nearly every manufacturer will be introducing BEV
and PHEV products within the next one to three years, and five
manufacturers will commercially introduce FCVs by 2015. CARB states
that the technological sophistication of ZEVs currently being produced
is anticipated to advance, making commercial production and compliance
of these vehicles by MY 2018 and later more feasible. A new feature of
the ZEV amendments is that manufacturers will be allowed to use a
variety of battery and fuel cell vehicle technologies to comply with
the ZEV requirement, making compliance still more feasible. Finally,
CARB notes that during its rulemaking proceedings for the adopting of
the 2012 ZEV amendments they did not receive any comments questioning
the overall technological feasibility of the amended standards.
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\142\ See CARB's Initial Statement of Reasons (ISOR), EPA-HQ-
OAR-2012-0562-0008 at 11.
\143\ CARB waiver request at 27-28.
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With regard to the manufacturer costs associated with the ZEV
emission requirements CARB states that the ``ZEV regulation must be
considered in conjunction with the proposed LEV III amendments.
Vehicles produced as a result of the ZEV regulation are part of a
manufacturer's light-duty fleet and are therefore included when
calculating fleet averages for compliance with the LEV III GHG
amendments. Because the ZEVs have ultra-low GHG emission levels that
are far lower than non-ZEV technology, they are a critical component of
automakers' LEV III GHG standard compliance strategies. As such the ZEV
program cost is considered as the difference in complying with the LEV
III GHG fleet standard without the proposed amendments to the ZEV
regulation versus with the proposed amendments to the ZEV regulation.
Assuming that all of the associated direct manufacturing and ICMs are
passed on to consumers, the average incremental price increase that
results from the proposed LEV III GHG fleet standards and proposed ZEV
regulation over the 2017 through 2025 timeframe will differ from the
average increase resulting from compliance with only the LEV III GHG
amendments. The average incremental vehicle price due to proposed LEV
III GHG standards, but with no amendments to the current ZEV
regulation, in 2025 is expected to be $1,340. The average incremental
vehicle price considering the proposed LEV III GHG fleet standards and
the proposed ZEV requirements in 2025 MY increases to $1,840, a $500
incremental increase. * * * In the broader context of the overall
fleet, the ultra-low GHG ZEV technology is a major component of
compliance with the LEV III GHG fleet standards for the overall light
duty fleet. In that fleet context, the overall cost of the ZEV program
is the difference in costs between the ``GHG-plus-ZEV'' and the ``GHG
only'' scenarios.'' \144\
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\144\ CARB's ISOR at pp. 62-63.
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EPA has also received comment from several consumer and
environmental groups that support CARB's ZEV amendments. The Consumer
Federation of America (CFA) provided comment that ``California's
ability to set these strong standards is vitally important to the
advancement of the auto industry and for meeting consumer demand for
cleaner and more efficient cares in states across the nation. Consumers
understand the benefits and have consistently voiced support for
California's leadership on clean car standards. In fact, CFA's latest
poll on the subject found that ``more than 70% of Americans support
states being allowed to continue setting tailpipe emission standards
that, as a result, increase fuel economy for motor vehicles.'' This
commenter also provides the latest from a Consumer Reports poll on the
subject, including ``Seventy-five percent of California consumers think
California should require automakers to build fleets that include
increasing numbers of zero emission vehicles including electric and
hydrogen fuel cell cars.'' \145\ EPA received comment from Consumer
Reports/Consumers Union (Consumer Reports) in support of CARB's ACC
program and notes the survey above. In addition, Consumer Reports notes
that vehicle manufacturers are already offering plug-in hybrids and
BEVs, with new models appearing all the time. ``Consumers, particularly
in California, are very open to buying alt-fuel vehicles. Importantly,
some of the cleanest vehicles or alt-fuel vehicles are also proving
very satisfying to vehicle owners.'' \146\ EPA also received oral
testimony from Calvert Investments noting that CARB's ACC program will
help drive innovation, investment, and job creation and thus they
strongly support both the LEV III (including GHG standards) and ZEV
requirements in the ACC program. ``Customers want and in an increasing
number of countries require cleaner cars and trucks, to go further on
every gallon of gas, while cutting back on GHG emissions that
contribute to climate change. Companies that fail to embrace relevant
new technologies, from improving mileage for conventional internal
combustion engines to developing hybrid, electric, and fuel cell
vehicles, are putting themselves at risk.'' \147\
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\145\ EPA-HQ-OAR-2012-0562-0032.
\146\ EPA-HQ-OAR-2012-0562-0354.
\147\ EPA Hearing Transcript at 83. EPA-HQ-OAR-2012-0562-0026.
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In addition, EPA received comment from NRDC that provided specific
input on the criterion for consistency with CAA Section 202(a). NRDC
states that the forecasted ZEV sales in California exceed ZEV
requirements. In a report jointly published with NRDC, auto industry
analysts Baum and Associates
[[Page 2140]]
projected potential ZEV sales from 2015 to 2020. The 2012 ZEV
amendments expect ZEV sales of about 75,000 vehicles in MY 2018 and
130,000 vehicles in 2020. The Baum Associates assessment, conducted
before the ZEV amendments were proposed, projected ZEV sales of as much
as 160,000 in MY 2018 and 180,000 in MY 2020. Baum and Associates also
forecasts on an ongoing basis for the introduction of new ZEV models
into the marketplace in the next few years, demonstrating the technical
feasibility of ZEV technologies today. The Baum and Associates
forecasts are based on detailed information about supplier and OEM
production plans. NRDC compared the Baum and Associates forecast for
BEVs, PHEVs, and FCVs to the ZEV and TZEV production announcements
included by CARB in their waiver request. NRDC found that there are
even more models that will be introduced than identified by CARB.\148\
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\148\ EPA-HQ-OAR-2012-0562-0347. See Baum and Mui, ``The Zero
Emission Vehicle Program: An Analysis of Industry's Ability to Meet
the Standards'', May 2010. Available at http://docs.nrdc.org/energy/files/ene_10070701a.pdf.
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EPA received comment both from the Manufacturers and the Dealers
stating their objections to CARB's ZEV amendments as they affect 2018
and later MYs. The Manufacturers provide essentially three arguments
for their assertion that the ZEV regulations are infeasible,
particularly when applied individually in section 177 States. (The
Manufacturers state that the amendments before EPA require an
increasing number of ZEVs in California and each of the section 177
States.) \149\ The Manufacturers claim that: 1) the infrastructure for
BEVs will not be sufficient by MY 2018 to support increased sales of
BEVS and that CARB has not explained how it determined that the
infrastructure and the level of consumer demand in the Section 177
States will be sufficient to justify the ending of the travel
provisions for ZEVs after MY 2017; 2) the cost of the ZEV program far
exceeds its environmental benefits, especially when compared to the LEV
III and GHG programs in terms of cost per ton of CO2
removed: and 3) the current data on consumer demand for ZEVs indicates
that it will not be feasible to meet the sales requirements for 2018 MY
and beyond. In conjunction with this third argument the Manufacturers
contend that the market for these types of vehicles has not developed
as quickly as anticipated and therefore there is no basis to conclude
that BEV sales will reach required levels by 2025. (The Manufacturers
also state that it is ``highly unlikely that the required
infrastructure and level of consumer demand for ZEVs will be sufficient
by MY 2018 in either California or in the individual Section 177 States
to support the ZEV sales requirements mandated by CARB.) Because of
these concerns the Manufacturers suggest that EPA deny the ZEV waiver
for 2018 and later MYs, or at least defer the program for MY 2021 and
later, until California, EPA, and the auto industry have conducted a
mid-term review of ZEV similar to the GHG program.
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\149\ EPA believes the Manufacturers have mischaracterized the
nature of CARB's waiver request. CARB has only submitted its own ACC
regulations to EPA and it has not submitted, nor has any other State
submitted, section 177 state regulations.
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As noted above, the Manufacturers provide EPA with current vehicle
sales and registration data. These data include current sales figures
for hybrids (approximately 3% of annual sales nationally and
approximately 6.1% in California according to registration data). The
Manufacturers note that registration of hybrids in section 177 states
is far lower. The Manufacturers maintain that the low sales numbers are
due substantially to the increased cost relative to traditional
vehicles, and that the demand for BEVs in section 177 States is
particularly ``sluggish.'' However, the comments EPA received did not
include forecasts, projections, data, or other evidence to support the
Manufacturer's conclusions about future ZEV sales, or in particular, to
demonstrate that the CARB ZEV requirements are infeasible.
The Dealers maintain that technological feasibility requires that
not only certain technologies be possible, but they also be
``economically achievable.'' \150\ The Dealers maintain that in order
for ZEV vehicles to be marketable they must: (1) Be at least as safe as
comparable conventionally-fueled vehicles, (2) offer a range comparable
to conventionally-fueled vehicles, (3) offer a refueling time
comparable to conventionally-fueled vehicles, (4) offer similar
performance and capacities, and (5) come to market at a cost comparable
to conventionally-fueled vehicles. The Dealers maintain that CARB's
estimates that ZEVs and TZEVs that will cost approximately $10,000 more
than comparable traditional vehicles, with at best no performance
advantages, are by definition not feasible as they will be unable to
compete in the marketplace.
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\150\ NADA points to CARB's waiver request at 25 wherein CARB
states ``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 available and economically achievable.'' However,
NADA fails to reference CARB's subsequent (and EPA believe the
appropriate view of cost) statement on the same page: ``The only
relevance of costs in a Section 209(b) waiver proceeding is in the
context of technological feasibility. Past 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 cost to
consumers when purchased a complying vehicle would be doubled or
tripled.''
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CARB provides several responses to the comments submitted by the
Manufacturers. In terms of the applicability of section 177 within
EPA's section 209 waiver deliberations, and consideration of the
technological feasibility of CARB's amendments adopted in such states,
CARB notes that the proper scope of EPA's inquiry is limited by the
express terms of section 209(b). This is well illustrated both in past
waiver determinations and in case law.\151\ While CARB discredits the
view that EPA should consider the feasibility of ZEV in other states,
it also notes that charging infrastructure in states other than
California does not seem to be a concern as both Nissan and General
Motors are currently marketing advanced technology vehicles nationally,
and Ford will begin 50-state marketing in early 2013. EPA notes that
although it is unclear whether the Manufacturers are contesting the
current or future adequacy of infrastructure in California (other than
a sentence that states it is ``highly unlikely''), CARB nevertheless
sets forth that there is much activity in the field of electric vehicle
charging infrastructure, and that public charging programs are being
funded by the California Energy Commission, U.S. DOE EV Everywhere
program, the U.S. DOE EV Project, and other programs to address the
needs of plug in vehicles. CARB also states that it appears that
charging infrastructure is sufficient and efforts underway to address
infrastructure needs (through the programs noted above and CARB's own
ZEV Executive Order) are focused on highest priority charging
locations, namely multi-family dwellings and workplace charging.
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\151\ CARB's supplemental comments at 6. See 49 FR 18887, 18889
(May 3, 1984) and 58 FR 4166 (January 7, 1993). See also MEMA I 627
F.2d 1095, 1114-20 (Administrator properly declined to review
potential anti-trust and constitutional implications of CARB
regulations under 209(b)).
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CARB also responds to concerns expressed about the feasibility of
ZEV vehicles in terms of consumer demand. They note that current sales
data for plug in vehicles show sales growing rapidly--faster than
conventional hybrids grew when they were first launched. CARB states
that these early sales data, aggressive programs for community
readiness, public education, infrastructure development and
[[Page 2141]]
incentives are in place to support as much as possible consumer
acceptance and adoption of ZEV technologies. CARB also notes that the
Dealers comments in this regard can be addressed by examining relevant
case law and EPA's past application of the law. CARB notes that the
Dealers' statement that it is inappropriate for EPA to grant a waiver
unless the Agency can ``demonstrate technological feasibility for all
the years in which those standards would be in effect'' is disregarding
decades of waiver precedent that clearly sets out the appropriate
``technological feasibility'' analysis under section 202(a).'' Section
202(a) has historically been interpreted to allow for projections of
likely future technological development. Such projections do not need
to `possess the inescapable logic of a mathematical deduction.'
Instead, such a projection is considered sufficient if it ``answers any
theoretical objections to the [projected technology], identifies the
major steps necessary in refinement of the technology, and offers
plausible reasons for believing that each of those steps can be
completed in the time available.'' \152\
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\152\ CARB supplemental comments at 8, citing NRDC v EPA, 655
F.2d 318, 331.
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CARB also addresses the Dealers' stated concerns about the
marketability of ZEVs.\153\ CARB notes that a more appropriate measure
of ZEV market success and growth potential is to examine the recent
years when ZEVs have actually been available to consumers. In the last
two years, with the introduction of Nissan Leaf, Ford Focus EV, Honda
Fit EV, Mitsubishi IMiEV, and others, BEV sales have grown 228
percent.\154\ As discussed below, CARB also points to the Joint
Technical Assessment Report (TAR), which was developed by EPA, NHTSA,
and CARB, and released in September 2010.
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\153\ CARB notes that it is important to recognize that the ZEV
regulations do not place requirements on dealers to offer for sale
or sell ZEVs; rather the requirement is on the automakers. Since the
obligation to sell and place ZEVs in service falls to the
automakers, it is the automakers' responsibility to make the subject
cars marketable and sellable by the dealers.
\154\ CARB supplemental comments at 11, citing Natural Resources
Defense Council post (October 31, 2012) attached as item 52 to
supplemental comments.
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CARB states that the Dealers disregard well established law and
create their own definition of ``technological feasibility'' in
suggesting that EPA consider in its assessment a comparison of ZEVs and
conventional vehicles on cost, safety, and performance features such as
range and refueling time. CARB relies upon cost (MEMA I at 1118),
performance (International Harvester at 641-647), and durability (NRDC
at 333-335). CARB states:
The ZEVs produced for the regulation will meet the same safety
requirements that conventionally fueled vehicles meet. They already
achieve acceleration and power characteristics expected on
traditional vehicles and have demonstrated adequate durability.
Range and refueling times are characteristics not traditionally
taken into consideration. The automakers are targeting range for
battery electric vehicles that match up with the vast majority of
daily driving needs or most consumers (typical trips and typical
daily needs are under 30 miles). For fuel cell vehicles, automakers
have demonstrated range capability equal to or greater than
conventionally fueled vehicles. With regard to refueling time, BEV
drivers look at refueling differently; 30 seconds a day at home to
plug in (with charging occurring overnight or while at work) and
have a full range daily instead of visiting a gasoline station
weekly is characterized as much more convenient. Fuel cell vehicles
refuel in about the same amount of time as a gasoline car. By all of
these measures ZEVs are more than technologically feasible for
commercialization, certainly so with the abundant nine to 12 years
of lead time for the 2022-2025 model years that are the focus of the
comments.\155\
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\155\ CARB's supplemental comments at 12.
CARB also relies upon the projections and explanations submitted
with its initial waiver request and notes that the Dealers are taking
issue with standards that do not come into effect until after a lengthy
lead time. In addition to CARB's waiver request projections and
explanations noted at the outset of this section CARB also provides an
explanation of the Joint Technical Assessment Report (TAR), which was
developed by EPA, NHTSA, and CARB, and 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 battery
costs, [and] the overall performance and consumer demand for the
advance technologies * * *.'' \156\ CARB notes that the TAR stated that
``* * * [A] number of the firms suggested that in the 2020 timeframe
their U.S. sales of HEVs, PHEVs, and EVs combined could be on the order
of 15-20 percent of their production.'' \157\
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\156\ EPA, 2010. United States Environmental Protection 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 Standards for Model
Years 2017-2025'' (p. vii). http://www.epa.gov/otaq/climate/regulations/ldv-ghg-tar.pdf.
\157\ Id. at 2-5.
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Lastly, CARB addresses the Manufacturers' comments regarding the
cost-effectiveness of CARB ZEV amendments, in terms of cost per ton of
CO2 removal, in a manner similar to its response to the
section 177 arguments--that such comments are irrelevant to EPA's
209(b) waiver consideration. CARB notes EPA's 2009 GHG waiver decision
wherein EPA described the appropriate cost of compliance analysis under
section 202(a): ``Consistent with MEMA I, the Agency has to evaluate
costs in the waiver context by looking at the actual cost of compliance
in the time provided by the regulation, not the regulation's cost
effectiveness. Cost effectiveness is a policy decision of California
that is considered and made when California adopts the regulations, and
EPA, historically, has deferred to these policy decision * * *.The
issue of whether a proposed California requirement is likely to result
in only marginal improvement in air quality not commensurate with its
cost or is otherwise an arguably unwise exercise of regulatory power is
not legally pertinent to my decision under section 209.''\158\
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\158\ CARB's supplemental comments at 9, citing 74 FR 32744,
32775 (July 8, 2009). CARB provides additional information
explaining how the ZEV program was considered in conjunction with
the LEV program and that the ZEV regulation remains an important
part of California's plans to reach attainment of health based air
quality standards.
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In addition to the above facts, we believe additional information
can help inform our review of the required increases in the sale of
PHEVs, BEVS, and FCVs in California during the 2018 through 2025
timeframe.
EPA reviewed two additional studies of the market potential of ZEVs
from the Electric Power Research Institute (EPRI) and the U.S. Energy
Information Administration's Annual Energy Outlook (AEO) that are
relevant to CARB's ZEV mandate. EPRI, a leading electric utility
research organization published a July 2011 technical report,
Transportation Electrification, A Technology Overview,\159\ which
presents three market projection scenarios for EVs and PHEVs. The
scenarios project a range of Low, Medium, and High sales volumes. The
[[Page 2142]]
EPRI projection for national EV and PHEV sales in 2018 ranges from a
low of 500,000 vehicles to a high of 1,920,000 vehicles. In 2025, the
EPRI projections range from a low of 1,144,000 to a high of 5,073,000
vehicles. The Low projection mimics the historical market penetration
of HEVs from 2000 through 2008, applying their rate of sales growth to
PHEVs and EVs. The Medium projection is based on a ``ground up''
analysis of sales projections derived from PHEV and EV product
announcements and production estimates. These projections are
extrapolated past 2015 based on the aforementioned product
announcements and the past sales performance of HEVs. The High
projection is based on the average of the top third (more optimistic)
of publicly available sales projections from several sources. In each
of EPRI's three cases, projected PHEV and EV national sales far exceed
CARB's ZEV mandate. EPA acknowledges that the EPRI study did not
specifically project California sales but we believe it reasonable to
assume that the supply of and demand for such vehicles will be
significantly greater in California (and to some extent in section 177
states with ZEV programs) than it will be in states without a ZEV
mandate. The EPRI study indicates that it would take less than 25
percent of the total national sales of ZEV in the Low scenario in order
to exceed the necessary ZEV sales percentages during the 2018 through
2025 timeframe in California.
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\159\ EPRI, Transportation Electrification, A Technology
Overview, 2011 Technical Report, EPRI 1021334, July 2011. Http://www.epri.com/abstracts/pages/productabstract.aspx?ProductID=000000000001021334.
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The U.S. Energy Information Administration (AEO) also analyzed two
scenarios of market penetration for PHEVs and EVs in their Annual
Energy Outlook 2012 (AEO2012).\160\ AEO's reference case indicates a
national market potential of around 165,000 EVs and PHEVs in 2018 which
is more than twice the CARB ZEV requirement. In 2025, the AEO reference
case indicates a national market potential of 283,000 ZEVs, which still
exceeds CARB's proposed ZEV requirement of nearly 271,000. AEO's
reference case assumes EV technology cost, especially batteries,
remains high through 2030. AEO's High Technology Battery case, assumes
the Department of Energy's (DOE) battery cost goals are met in 2015.
Generally, these battery costs are more comparable to battery costs
used by CARB and EPA in the 2010 Joint Technical Assessment Report
(TAR) \161\ than those used in the reference case. The AEO High
Technology Battery case indicates a market potential of ZEVs in 2018 as
805,000 units, increasing to 1,394,000 in 2025. As with the EPRI study
above, using the projections of the AEO High Technology Battery case,
it would take less than 25 percent of the total national sales of ZEV
to exceed the necessary ZEV sales percentages during the 2018 through
2025 timeframe in California.
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\160\ U.S. Energy Information Administration, Annual Energy
Outlook 2012, Data Tables, Table 57 accessed 12/13/12 at http://www.eia.gov/oiaf/aeo/tablebrowser/#release=AEO2012&subject=0-AEO2012&table=48-AEO2012®ion=1-0&cases=hp2012-d022112a.
\161\ ``Interim Joint Technical Assessment Report: Light-Duty
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel
Economy Standards for Model Years 2017-2025,'' September 2010.
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While both the EPRI and AEO market projections are for national
sales, EPA believes it is reasonable to assume that a significant
percentage of these vehicles will be sold in California as has been the
past practice with HEVs and EVs.
b. EPA's Response to Comments
After a review of the information in this proceeding, EPA has
determined that the opponents of the ZEV standards have not
demonstrated that the necessary increase in PHEV and ZEV sales
necessary to meet the ZEV standards in the 2018 through 2025 MYs is
infeasible. A review of the record, indicates that compliance with the
ZEV standards, as they affect the 2018 through 2025 MYs, is feasible
giving consideration to cost and lead time available. CARB has answered
any theoretical objections to the projected technology, identified the
major steps necessary in refinement of the technology, and offers
plausible reasons for believing that each of those steps can be
completed in the time available. This assessment is based upon the
current technology available along with projected improvements in
technology and expected cost reductions (in addition to continuing
increases in consumer demand in response to preferences for advance
technologies, fuel savings, available and improved infrastructure,
incentives, regulatory mandates, etc) and given the significant lead
time provided. As discussed in detail below, EPA cannot find that those
opposing the waiver request have met their burden of showing that
California's regulations are inconsistent with section 202(a).
Therefore, we cannot deny the waiver on that ground.
Basic Feasibility of ZEV Technology
At the outset we note that manufacturers are meeting the ZEV
requirements today. As CARB noted in its waiver request, most
manufacturers have near-term production plans to meet or over comply
with regulatory requirements through 2017. More importantly, a number
of manufacturers have clearly demonstrated the feasibility of ZEV
technology with in-production or planned PHEV, BEV and FCV models
within the next few years. Manufacturers are also afforded the
flexibility to determine the appropriate mix between BEVs and FCVs. We
note that no commenter suggested that the underlying technology is not
available today nor is there any evidence in the record that
contradicts CARB's assertions that improvements and technology path
moving forward will continue in the ZEV area in regards to range and
other capabilities. The objections raised by those opposing the waiver
on this point have to do less with the basic feasibility of ZEVs than
with their acceptability/marketability, supporting infrastructure, and
cost.
Regarding the lead time provided by California to meet the ZEV
phase-in requirements, the commenters have not met their burden to show
that the lead time is insufficient. While the commenters noted general
concerns about marketability, infrastructure and cost they made no
claims that inadequate lead time exists or that CARB's requirements
would be feasible if more lead time were provided.
Regarding the cost component of the technological feasibility test,
EPA believes that the opponents of the waiver have not met their burden
to show that the ZEV standards are not technologically feasible because
of excessive cost. As noted above, EPA has traditionally examined
whether the necessary technology exists today, and if not, what is the
cost of developing and implementing such technology. To the extent it
is appropriate for EPA to continue to examine the cost of implementing
ZEV technology, CARB estimates that by 2025 the incremental cost of a
ZEV or TZEV is expected to rapidly decline, yet remain approximately
$10,000 (high end estimate) higher than a conventional vehicle.\162\
The Manufacturers note that CARB's analysis provides an incremental
cost of $12,900 in MY 2020.\163\ Under EPA's traditional analysis of
cost in the waiver context, because such cost does not represent a
``doubling or tripling'' of the vehicle cost, such cost is not
excessive nor does it represent an infeasible standard.\164\ Moreover,
though EPA believes that it is not necessary or appropriate for EPA to
evaluate how manufacturers choose to
[[Page 2143]]
allocate the incremental costs of ZEVs over their respective California
fleets. CARB has identified one methodology of speeding the cost over
the entire fleet with a resulting incremental cost of approximately
$500, which is well within acceptable cost levels. EPA notes that
manufacturers and dealers have many possible strategies available to
spread the cost of the ZEV requirement beyond ZEV purchasers, but that
such strategies are within the market choices of the manufacturers and
dealers. Although EPA received comment that a manufacturer may have to
employ costly marketing strategies if consumers do not otherwise accept
ZEV vehicles, we do not believe such statements evidence standards that
are infeasible. EPA also notes the likely existence of additional
incentive programs that will further enable the marketability of ZEV
vehicles from a cost perspective.
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\162\ CARB waiver request at 6.
\163\ Manufacturers' comments at 16.
\164\ MEMA I at 1118.
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Relevance of Section 177 States on Consistency Analysis
The opponents of CARB's ZEV amendments, as they affect 2018 and
later MYs, rely upon the implications of the adoption of CARB's ZEV
amendments in section 177 states and resulting feasibility concerns.
EPA's longstanding interpretation of section 209(b) and its
relationship with section 177, is that it is not appropriate under
section 209(b)(1)(C) to review California regulations, submitted by
CARB, through the prism of adopted or potentially adopted regulations
by section 177 states. EPA believes the language of section 209(b) is
intended to apply solely to whether California's regulations can be
denied a waiver under the criteria of section 209(b). State regulations
promulgated under section 177, which are promulgated by separate state
agencies under their own authority, and which have not been submitted
to EPA for waiver review, are not a proper focus of review for our
determination regarding whether California's state regulations meet the
requirements under section 209(b). Section 177, and the state statutes
authorizing state action under section 177, is separate provisions with
their own requirements, and those opposed to state regulations
promulgated under section 177 would need to take action under those
provisions in those states.
An issue that arose during EPA's consideration of California's
waiver request for its 1990 LEV standards was whether EPA could
consider in its waiver decision the impact and implications of other
states adopting the California standards under section 177. EPA
concluded that section 209(b) does not authorize the agency to consider
the impacts of actions or potential actions taken by other states under
section 177 in reviewing a waiver request by California for its state
standards.\165\ EPA also received comment, during a 1978 waiver review
that EPA must consider each of the criteria of section 209(b) of the
Act in light of the possibility that eligible States may impose the
emission control requirements, for which a waiver has been granted,
under section 177. A commenter further argued that EPA could not grant
a waiver unless and until we could make an affirmative finding that the
basic market demand could be satisfied in all States eligible to adopt
and enforce the California standards under section 177. We did not
agree with the commenters' interpretation of EPA's responsibilities
under section 209(b). ``That section authorizes me to deny California a
waiver only if I have determined that California does not meet the
given criteria; it does not require me in granting a waiver to consider
the impacts of actions taken by other States under section 177* * *''
EPA continued ``The legislative history behind the Clean Air Act
Amendments of 1977 [the amendments that added section 177] contains no
statement to the contrary.'' \166\ More significantly, the legislative
history behind the amendments to section 209(b) specifically states
that the intent of these amendments was * * * ``to ratify and
strengthen the California waiver provision and to affirm the underlying
intent of that provision, i.e. to afford California the broadest
possible discretion in selecting the best means to protect the health
of its citizens and the public welfare.'' \167\ EPA also determined
that Congress already had balanced the burdens on manufacturers by
selecting the language they did for section 177 and believed that such
authority should not place an undue burden on the vehicle
manufacturers. EPA is also guided by the District of Columbia Circuit's
discussion of section 177 and section 209: ``Rather than being faced
with 51 different standards, as they had feared, or with only one as
they had sought, manufacturers must cope with two regulatory standards
under the legislative compromise embodied in section 209(a).\168\
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\165\ 58 FR 4166 (January 13, 1993), and LEV Decision Document
at pp. 185-186. See ``State and Federal Standards of Mobile Source
Emissions: Published by the National Research Council, 2006 at 81,
83. ``In contrast to section 209(b) in which Congress explicitly
assigned EPA the role of approving waiver of federal preemption for
California standards, in section 177, Congress did not assign EPA
any role in approving adoption of California by other states. As EPA
itself stated, `language requiring that other States request and
receive authorization from EPA is noticeable absent.''
\166\ See H.R. Rep. No. 95-294, 95th Cong. 1st Sess. 14, 23, 26,
207-217, 301-302, 209-311 (1977); H.R. Rep. No. 95-564, 95th Cong.,
1st Sess. 156, 158, 170 (1977).
\167\ 43 FR 1829 (January 12, 1978), citing H.R. Rep No. 95-294,
95th Cong., 1st Sess. 301-302 (1977).
\168\ Engine Manufacturers Association v EPA, 88 F3d 1075, 1080
(DC Cir. 1996).
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EPA also believes it important to clarify that the record and the
comments do not indicate that the CARB Board based its technological
feasibility analysis, in order to determine the ability of
manufacturers to meet CARB's standards within California, on the
existence of any travel provisions or other regulatory provisions which
may allow a manufacturer to take credit for certain ZEV sales outside
of California.
Manufacturer Contentions Regarding Cost-Effectiveness
With regard to the Manufacturers' contention that CARB's ZEV
regulation is not cost-effective in terms of the cost per ton of
removing CO2, EPA agrees with California's argument that
case law clearly precludes EPA's consideration of this issue within the
waiver context. Consistent with the court in MEMA I, the Agency has
previously evaluated costs in the waiver context by looking at the
actual cost of compliance in the lead time provided by the regulation,
not the regulation's cost effectiveness.\169\ As noted previously, EPA
has clearly stated that ``The issue of whether a proposed California
requirement is likely to result in only marginal improvement in air
quality not commensurate with its cost or is otherwise an arguably
unwise exercise of regulatory power is not legally pertinent to my
decision under section 209 * * *.'' \170\ EPA has consistently afforded
deference to CARB's policy judgments and has recognized that ``The
structure and history of the California waiver provision clearly
indicate both a Congressional intent and an EPA practice of leaving the
decision on ambiguous and controversial matters of public policy to
California's judgment.'' \171\ To the extent the Manufacturers are
raising general concerns regarding the cost associated with the ZEV
technology and meeting applicable ZEV requirements, EPA has addressed
this above.
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\169\ 36 FR 17158 (August 31, 1971). See also 74 FR 3232744,
32775 (July 8, 2009).
\170\ Id.
\171\ 40 FR 23102, 23104 (May 18, 1975). See also Decision
Document accompanying waiver determination in 58 FR 4166 (January
13, 1993).
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[[Page 2144]]
Consumer Demand
With respect to the consumer demand issues raised, we note that the
record, based on comment from the Manufacturers and the Dealers, is
insufficient to meet the burden of proof to counter the current and
projected consumer demand evidence supplied by CARB and the other
commenters supporting the waiver. EPA did not receive any evidence or
data from commenters to refute the projections made by CARB or other
commenters. Although the Dealers maintain that CARB's point that BEV
and even FCVs are being marketed today is not sufficient to demonstrate
the demand for hundreds of thousands of ZEVs that will be required to
be produced by 2025, the Dealers only turn to the history of the ZEV
program. We believe such history is instructive. However, it does not
meet the burden of proof required to demonstrate that the ZEV
requirements are technologically infeasible looking forward, given the
substantial amount of lead time before the standards take effect and
the steps that manufacturers and dealers can take to facilitate
compliance with these standards (e.g. rebates and other incentives). In
addition, we note that PHEV and ZEV costs are projected to decrease as
demand increases and regulatory floors are established. EPA believes
CARB easily meets the historical test of whether their emission
standards result in ``doubling or tripling'' of costs as applied in
MEMA I noted above. EPA has heard directly from consumer groups that
express confidence that demand for advance technology vehicles exists
today and continues to grow. In addition to this evidence, EPA also
believes that the analyses of future ZEV market potential, noted above,
provide additional evidence that CARB's projections are supportable.
Moreover, while marketability is an important issue for Manufacturers
and Dealers, it is questionable how relevant it is to basic
technological feasibility. As discussed above, there is no real
question about the basic feasibility of this technology, and that the
cost of each vehicle, if carried across a Manufacturer's entire sales
line, is not as high as to implicate basic feasibility. That matter of
how Manufacturers and Dealers choose to market these vehicles is one of
market choice, as Manufacturers and Dealers attempt to maximize sales
at the expense of other Manufacturers and Dealers. That the industry as
a whole will experience increased costs, and that such increased costs
will create marketability issues, is clear. But these are not so
significant to implicate the technological feasibility of the vehicles
for purposes of a waiver determination.
Infrastructure
The Manufacturers' recommendation that EPA deny a waiver for the
2018 and later ZEV amendments is based largely on an argument
surrounding lack of market demand (discussed above) and infrastructure
in the section 177 states. The comments state, ``* * * while
California's infrastructure and consumer market may be developing to
the point where at some time in the future the introduction of the
number of ZEVs required under the California regulations may be
feasible in that State, the same is not true of all the Section 177
States that have adopted ZEV.'' \172\
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\172\ Manufacturers comment at 13.
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However, as explained above, EPA has determined in previous waiver
actions that section 209(b) does not authorize the Agency to consider
the impacts of actions or potential actions taken by other states under
section 177 in reviewing a waiver request. CARB provided considerable
evidence of state and federal efforts and programs underway to ensure
that the infrastructure needed for the ZEV program in California is
available. The Manufacturers and Dealers do not take issue specifically
with CARB's assertions regarding the infrastructure that has been, and
will be, put in place to meet these requirements in California.
Therefore, based on the record before me those opposing the waiver on
this basis have not met their burden of proof.
Dealers' List of Feasibility Criteria
Lastly, EPA responds to the laundry list of requirements that the
Dealers maintain is required in order for ZEVs to be marketable and
thus for the ZEV regulations to be technologically feasible. The
Dealers fail to provide any evidence to support their assertions nor do
they refute the legal arguments and evidence otherwise in the record.
For example, the Dealers fail to provide any evidence that ZEV vehicles
are not as safe as the conventionally-fueled (conventional) vehicles of
the same size. EPA agrees with CARB's statements that ZEV vehicles will
meet the same safety requirements that conventional vehicles must meet.
In any case, while EPA takes safety into consideration when examining
the feasibility of emission standards, this basic feasibility does not
require an examination of the relative safety of each vehicle.
With regard to performance--many ZEVs already achieve acceleration
and power characteristics expected on conventional vehicles. In
addition, the Dealers provide no evidence that ZEVs lack performance
characteristics that are essential for basic feasibility of the
vehicle. ZEVs on the market today span a wide range of performance
capability. The Mitsubishi iMiEV is a small four seat electric city
car.\173\ Nissan's Leaf offers 5 seats and a size comparable to a
Nissan Versa.\174\ Tesla's Model S is a larger sedan with luxury and
performance comparable to other luxury sedans. Tesla's Roadster is a
high performance two-seater EV.\175\ Finally, Toyota's RAV4 EV is an
electric version of their popular RAV4 SUV.\176\ All these vehicles are
designed to compete favorably on a performance basis with conventional
cars in the same class.
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\173\ http://www.mitsubishicars.com/MMNA/jsp/imiev/12/trims.do.
\174\ http://www.nissanusa.com/leaf-electric-car/key-features.
\175\ http://www.teslamotors.com/goelectric#.
\176\ http://www.toyota.com/rav4ev/specs.html.
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EPA has not historically taken into consideration the range and
refueling times. Moreover, NADA does not present any evidence or data
to suggest necessary ranges and refueling times deemed essential by
consumers. Nor do the Dealers provide evidence that BEVs are not now,
and cannot be in the lead time permitted, be manufactured in a manner
to be above these necessary ranges and times. Evidence in the record
suggests that many consumers average drive trips and refueling
expectations are well within the capacity of current ZEV technology.
EPRI analyzed a ``National Household Travel Survey'' that found: about
95% of daily driving is under 90 total miles; about 80% of daily
driving is under 40 total miles; about 65% of daily driving is under 20
miles; and, there seems to be little variation in daily driving habits
between many factors such as weekday/weekend, seasons, rural/urban,
income, etc.\177\
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\177\ EPRI: Transportation Statistics Analysis for Electric
Transportation, Technical Update EPRI 1021848, Dec 2011.
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EPA also notes that additional lead time is abundant, from nine to
twelve years for the 2022-2025 timeframe for further developments to
technology that can reasonably be expected.
c. Conclusion on Technological Feasibility
After its review of the information in this proceeding, EPA has
determined that the industry opponents have not met the burden of
producing the evidence necessary for EPA to find that California's LEV
III/GHG standards and ZEV emission standards (as finalized on
[[Page 2145]]
December 6, 2012) are not consistent with Section 202(a).
5. Consistency of Certification Test Procedures
CARB notes that the test procedures for certifying ZEVs, AT PZEVs,
and PZEVs are contained in the ZEV and LEV Standards and Test
Procedures incorporated by reference in section 1962.1(h) and 1962.2(h)
and are largely un-amended by the 2012 ZEV rulemaking. The federal Tier
2 regulations require manufacturers to measure emissions from ZEVs in
accordance with the California test procedures. Accordingly there are
no inconsistencies between the federal and California test procedures
that would preclude a manufacturer from conducting one set of tests to
demonstrate compliance with federal and California certification
requirements. EPA has received no adverse comment or evidence of test
procedure inconsistency and therefore we cannot deny the waiver on this
basis.
6. Relevance of the Energy Policy and Conservation Act (EPCA) to the
Waiver Decision
EPA received comment from the Dealers that CARB's waiver request
for its GHG emission standards should be denied because CARB's
standards are in direct conflict with EPCA. The Dealers note ``EPCA
expressly preempts state GHG emission standards because such laws
relate to fuel economy standards.'' \178\
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\178\ Dealers at 10.
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As EPA has stated on numerous occasions, section 209(b) of the
Clean Air Act limits our authority to deny California's requests for
waivers to the three criteria therein, and EPA has refrained from
denying California's requests for waivers based on any other criteria.
Where the Court of Appeals for the District of Columbia Circuit 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.\179\
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\179\ See Motor and Equipment Manufacturers Ass'n v. Nichols,
142 F.3d 449, 462-63, 466-67 (DC Cir. 1998), MEMA I at 1111, 1114-
20.
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Evaluation of whether California's GHG standards are preempted,
either explicitly or implicitly, under EPCA, is not among the criteria
listed under section 209(b). EPA may only deny waiver requests based on
the criteria in section 209(b), and inconsistency with EPCA is not one
of those criteria. In considering California's request for a waiver, I
therefore have not considered whether California's standards are
preempted under EPCA. As in previous waiver decisions, the decision on
whether to grant the waiver is based solely on the criteria in section
209(b) of the Clean Air Act and this decision does not attempt to
interpret or apply EPCA or any other statutory provision.
VI. Decision
The Administrator has delegated the authority to grant California
section 209(b) waivers of preemption to the Assistant Administrator for
Air and Radiation. After review of the information submitted by CARB
and other parties to this Docket, I find that those opposing the waiver
request have not met the burden of demonstrating that California's
regulations do not satisfy one or more of the three statutory criteria
of section 209(b). For this reason, I am granting California's waiver
request to enforce its ACC emission regulations, including the ``deemed
to comply'' rule for GHG emissions. EPA also determines that CARB's
amendments to the ZEV program as they affect 2017 and prior MYs are
within the scope of previous waivers of preemption granted to
California for its ZEV regulations. In the alternative, EPA's waiver of
preemption for CARB's ACC regulations includes a waiver of preemption
for CARB's ZEV amendments as they affect all MYs, including 2017 and
prior MYs.
My decision will affect not only persons in California but also
persons outside the State who would need to comply with California's
GHG emission regulations. For this reason, I hereby determine and find
that this is a final action of national applicability.
Under 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
March 11, 2013. Under section 307(b)(2) of the Act, judicial review of
this final action may not be obtained in subsequent enforcement
proceedings.
VII. Statutory and Executive Order Reviews
As with past 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 27, 2012.
Gina McCarthy,
Assistant Administrator, Office of Air and Radiation.
[FR Doc. 2013-00181 Filed 1-8-13; 8:45 am]
BILLING CODE 6560-50-P