California State Nonroad Engine Pollution Control Standards; Small Off-Road Engines Regulations; Notice of Decision, 26041-26046 [2015-10610]

Agencies

• ENVIRONMENTAL PROTECTION AGENCY

[Federal Register Volume 80, Number 87 (Wednesday, May 6, 2015)]
[Notices]
[Pages 26041-26046]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-10610]


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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2014-0036; FRL-9927-31-OAR]


California State Nonroad Engine Pollution Control Standards; 
Small Off-Road Engines Regulations; Notice of Decision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of decision.

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SUMMARY: The Environmental Protection Agency (EPA) is confirming that 
the California Air Resources Board's (CARB) 2008 amendments to its 
Small Off-Road Engines (SORE) regulation (2008 Amendments) are within 
the scope of previous EPA authorizations. The 2008 Amendments modify 
provisions through which manufacturers may generate and use emission 
credits to comply with SORE emission standards, and establish an 
ethanol blend certification fuel option. CARB's SORE regulations apply 
to all small off-road engines rated at or below 19 kilowatts (kW) (25 
horsepower (hp)). This decision is issued under the authority of the 
Clean Air Act (CAA or Act).

DATES: Petitions for review must be filed by July 6, 2015.

ADDRESSES: EPA has established a docket for this action under Docket ID 
EPA-HQ-OAR-2014-0036. All documents relied upon in making this 
decision, including those submitted to EPA by CARB, are contained in 
the public docket. Publicly available docket materials are available 
either electronically through www.regulations.gov or in hard copy at 
the Air and Radiation Docket in the EPA Headquarters Library, EPA West 
Building, Room 3334, located at 1301 Constitution Avenue NW., 
Washington, DC. The Public Reading Room is open to the public on all 
federal government working days from 8:30 a.m. to 4:30 p.m.; generally, 
it is open Monday through Friday, excluding holidays. The telephone 
number for the Reading Room is (202) 566-1744. The Air and Radiation 
Docket and Information Center's Web site is https://www.epa.gov/oar/docket.html. The electronic mail (email) address for the Air and 
Radiation Docket is: a-and-r-Docket@epa.gov, the telephone number is 
(202) 566-1742, and the fax number is (202) 566-9744. An electronic 
version of the public docket is available through the federal 
government's electronic public docket and comment system. You may 
access EPA dockets at https://www.regulations.gov. After opening the 
www.regulations.gov Web site, enter EPA-HQ-OAR-2014-0036 in the ``Enter 
Keyword or ID'' fill-in box to view documents in the record. Although a 
part of the official docket, the public docket does not include 
Confidential Business Information (CBI) or other information whose 
disclosure is restricted by statute.
    EPA's Office of Transportation and Air Quality (OTAQ) maintains a 
Web page that contains general information on its review of California 
waiver and authorization requests. Included on that page are links to 
prior waiver Federal Register notices, some of which are cited in 
today's notice; the page can be accessed at https://www.epa.gov/otaq/cafr.htm.

FOR FURTHER INFORMATION CONTACT: Brenton Williams, Attorney-Advisor, 
Compliance Division, Office of Transportation and Air Quality, U.S. 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105. Telephone: (734) 214-4341. Fax: (734) 214-4053. Email: 
williams.brent@epa.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    CARB first adopted standards and test procedures applicable to SORE 
in 1992. In 1993, CARB amended these regulations to delay their 
implementation until 1995. EPA authorized these initial SORE 
regulations in 1995.\1\ California subsequently amended its regulations 
in 1994, 1995, and 1996 to clarify certification and implementation 
procedures, exempt military tactical equipment, and relax emissions 
standards for certain engines. EPA authorized these three amendment 
packages in 2000.\2\
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    \1\ 60 FR 37440 (July 20, 1995).
    \2\ 65 FR 69763 (November 20, 2000).
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    In 1998, CARB amended the SORE regulation to apply to all engines 
rated less than 19 kW used in off-road applications. The 1998 
amendments also revised the regulations to be based on engine 
displacement instead of whether the engine is used in a handheld or 
non-handheld application, delayed implementation of certain portions of 
the standards, and adopted new emission standards for new engines under 
19 kW, consistent with the ``Compression-Ignition Engine Statement of 
Principles'' jointly entered into by CARB, EPA, and engine 
manufacturers in August 1996.\3\ EPA found these amendments to be 
within the scope of the previously granted 1995 authorization.\4\
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    \3\ 62 FR 200 (January 2, 1997).
    \4\ 65 FR. 69767 (November 20, 2000).
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    In 2000, CARB amended the SORE regulations by recodifying the 
requirements applicable to certain new compression ignition (CI) 
engines. EPA found this amendment to be within the scope of the 
previously granted SORE authorization.\5\ In 2004, CARB amended its 
off-road CI regulations to match federal standards and exhaust 
emissions standards, and adopted evaporative emissions standards for 
spark-ignited (SI) small off-road engines rated at or below 19 kW. EPA 
granted full authorizations for these amendments in 2006.\6\
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    \5\ 75 FR 8056 (February 23, 2010).
    \6\ 71 FR 75536 (December 15, 2006).
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A. California's Authorization Request

    On November 21, 2008, CARB approved three additional amendments

[[Page 26042]]

to its SORE regulations: \7\ (1) Modification of certification 
emissions credits to limit their lifetime to five years, and to allow 
electric equipment (zero-emissions equipment or ``ZEE'') to participate 
in the emission credits program; (2) modification of production 
emissions credits; and (3) establishment of an ethanol blend 
certification test fuel option, each of which will be addressed in 
turn.\8\ CARB seeks confirmation that the 2008 Amendments are within 
the scope of EPA's previous authorizations of CARB's SORE 
regulations.\9\
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    \7\ The specific regulatory text enacted by the 2008 amendments 
is set forth in California Code of Regulations (CCR), title 13, 
sections 2401, 2403, 2405, 2406, 2408, 2408.1 and 2409.
    \8\ CARB Authorization Support Document, December 2, 2013, EPA-
HQ-OAR-2014-0036-0003.
    \9\ Id. at 1.
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    According to CARB, the certification emissions credits program was 
established in 1998 to provide manufacturers with additional 
flexibility in certifying engines. The certification credits program 
enabled manufacturers to generate credits when they certified engines 
that were cleaner than the SORE emission standards, and use those 
credits to offset emissions from ``dirtier'' engine families that could 
otherwise not meet the standards. CARB expected that the program would 
help manufacturers comply with the new emission standards, while also 
encouraging early introduction of cleaner technologies.\10\ However, 
while this program gave manufacturers flexibility, it did not result in 
use of advanced technologies at the anticipated pace. Manufacturers 
accumulated large credit balances, in part because the certification 
emission credits did not expire. CARB states that manufacturers were 
able to use banked emissions credits to certify ``dirty'' engines and 
delay implementation of cleaner technology, instead of using catalysts 
and other emission control technologies to reduce emissions on the more 
challenging engine families. Thus, CARB found that the original design 
of the emissions credit program slowed rather than promoted progress 
toward cleaner engines.\11\ CARB's amendments to the certification 
emissions credits within the 2008 Amendments cause the credits to 
expire five years after their creation. The 2008 Amendments also modify 
the certification emissions credit program to allow electric equipment 
to participate for the first time. ZEE manufacturers will be allowed to 
generate emissions credits for equipment that meets certain performance 
and design requirements. CARB anticipates this change will encourage 
manufacturers to develop professional-grade ZEE and allow manufacturers 
greater flexibility in their introduction of such equipment.\12\
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    \10\ Id. at 4.
    \11\ Id. at 6.
    \12\ Id. at 10.
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    CARB states that the production emissions credits, which 
manufacturers could convert to certification emissions credits, also 
contributed to an overabundance of the latter form of credits.\13\ 
Under CARB's earlier SORE regulation, manufacturers could generate 
production emission credits when a production engine's emissions were 
below the applicable engine family emissions limit. CARB established 
the production credits program to help manufacturers offset compliance 
problems, but as of 2008, no manufacturer needed to use production 
credits for that purpose, using them instead to generate large 
certification emissions credit balances. The 2008 Amendments eliminated 
generation of production emission credits beginning in 2009, but 
allowed manufacturers to convert production emission credits to 
certification emission credits for an additional year.\14\
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    \13\ Id. at 11-12.
    \14\ Id. at 12.
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    Finally, CARB's amended SORE regulations permit manufacturers the 
option to use a certification fuel with up to ten percent ethanol 
content (commonly known as E10) if the same fuel is used for 
certification with EPA. CARB asserts that this will enhance 
harmonization with EPA's nonroad \15\ certification procedures, and 
could reduce testing costs for some manufacturers.\16\
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    \15\ The federal term ``nonroad'' and the California term ``off-
road'' are used interchangeably.
    \16\ Id. at 13.
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B. Clean Air Act Nonroad Engine and Vehicle Authorizations

    Section 209(e)(1) of the Act permanently preempts any state, or 
political subdivision thereof, from adopting or attempting to enforce 
any standard or other requirement relating to the control of emissions 
for certain new nonroad engines or vehicles.\17\ For all other nonroad 
engines (including ``non-new'' engines), states generally are preempted 
from adopting and enforcing standards and other requirements relating 
to the control of emissions, except that section 209(e)(2)(A) of the 
Act requires EPA, after notice and opportunity for public hearing, to 
authorize California to adopt and enforce such regulations unless EPA 
makes one of three enumerated findings. Specifically, EPA must deny 
authorization if the Administrator finds that (1) California's 
protectiveness determination (i.e., that California standards will be, 
in the aggregate, as protective of public health and welfare as 
applicable federal standards) is arbitrary and capricious, (2) 
California does not need such standards to meet compelling and 
extraordinary conditions, or (3) the California standards and 
accompanying enforcement procedures are not consistent with section 209 
of the Act.
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    \17\ States are expressly preempted from adopting or attempting 
to enforce any standard or other requirement relating to the control 
of emissions from new nonroad engines which are used in construction 
equipment or vehicles or used in farm equipment or vehicles and 
which are smaller than 175 horsepower. Such express preemption under 
section 209(e)(1) of the Act also applies to new locomotives or new 
engines used in locomotives.
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    On July 20, 1994, EPA promulgated a rule interpreting the three 
criteria set forth in section 209(e)(2)(A) that EPA must consider 
before granting any California authorization request for nonroad engine 
or vehicle emission standards.\18\ EPA revised these regulations in 
1997.\19\ As stated in the preamble to the 1994 rule, EPA historically 
has interpreted the consistency inquiry under the third criterion, 
outlined above and set forth in section 209(e)(2)(A)(iii), to require, 
at minimum, that California standards and enforcement procedures be 
consistent with section 209(a), section 209(e)(1), and section 
209(b)(1)(C) of the Act.\20\
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    \18\ See ``Air Pollution Control; Preemption of State Regulation 
for Nonroad Engine and Vehicle Standards,'' 59 FR 36969 (July 20, 
1994).
    \19\ See ``Control of Air Pollution: Emission Standards for New 
Nonroad Compression-Ignition Engines at or Above 37 Kilowatts; 
Preemption of State Regulation for Nonroad Engine and Vehicle 
Standards; Amendments to Rules,'' 62 FR 67733 (December 30, 1997). 
The applicable regulations are now found in 40 CFR part 1074, 
subpart B, Sec.  1074.105.
    \20\ See supra note 12. EPA has interpreted 209(b)(1)(C) in the 
context of section 209(b) motor vehicle waivers.
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    In order to be consistent with section 209(a), California's nonroad 
standards and enforcement procedures must not apply to new motor 
vehicles or new motor vehicle engines. To be consistent with section 
209(e)(1), California's nonroad standards and enforcement procedures 
must not attempt to regulate engine categories that are permanently 
preempted from state regulation. To determine consistency with section 
209(b)(1)(C), EPA typically reviews nonroad authorization requests 
under the same ``consistency'' criteria that are applied to motor 
vehicle waiver requests under section 209(b)(1)(C). That provision 
provides that the Administrator shall not grant California

[[Page 26043]]

a motor vehicle waiver if she finds that California ``standards and 
accompanying enforcement procedures are not consistent with section 
202(a)'' of the Act. Previous decisions granting waivers and 
authorizations have noted that state standards and enforcement 
procedures will be found to be inconsistent with section 202(a) if (1) 
there is inadequate lead time to permit the development of the 
necessary technology, giving appropriate consideration to the cost of 
compliance within that time, or (2) the federal and state testing 
procedures impose inconsistent certification requirements.
    In light of the similar language of sections 209(b) and 
209(e)(2)(A), EPA has reviewed California's requests for authorization 
of nonroad vehicle or engine standards under section 209(e)(2)(A) using 
the same principles that it has historically applied in reviewing 
requests for waivers of preemption for new motor vehicle or new motor 
vehicle engine standards under section 209(b).\21\ These principles 
include, among other things, that EPA should limit its inquiry to the 
three specific authorization criteria identified in section 
209(e)(2)(A),\22\ and that EPA should give substantial deference to the 
policy judgments California has made in adopting its regulations. In 
previous waiver decisions, EPA has stated that Congress intended EPA's 
review of California's decision-making be narrow. EPA has rejected 
arguments that are not specified in the statute as grounds for denying 
a waiver:
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    \21\ See Engine Manufacturers Association v. EPA, 88 F.3d 1075, 
1087 (D.C. Cir. 1996): ``. . . EPA was within the bounds of 
permissible construction in analogizing Sec.  209(e) on nonroad 
sources to Sec.  209(a) on motor vehicles.''
    \22\ See supra note 12, at 36983.

    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 California air 
quality not commensurate with its costs 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.\23\
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    \23\ ``Waiver of Application of Clean Air Act to California 
State Standards,'' 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. In the 1990 amendments to section 209, Congress 
established section 209(e) and similar language in section 
209(e)(1)(i) pertaining to California's nonroad emission standards 
which California must determine to be, in the aggregate, at least as 
protective of public health and welfare as applicable federal 
standards.

This principle of narrow EPA review has been upheld by the U.S. Court 
of Appeals for the District of Columbia Circuit.\24\ Thus, EPA's 
consideration of all the evidence submitted concerning an authorization 
decision is circumscribed by its relevance to those questions that may 
be considered under section 209(e)(2)(A).
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    \24\ See, e.g., Motor and Equip. Mfrs Assoc. v. EPA, 627 F.2d 
1095 (D.C. Cir. 1979) (``MEMA I'').
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C. Within-the-Scope Determinations

    If California amends regulations that were previously authorized by 
EPA, California may ask EPA to determine that the amendments are within 
the scope of the earlier authorization. A within-the-scope 
determination for such amendments is permissible without a full 
authorization review if three conditions are met. First, the amended 
regulations must not undermine California's previous determination that 
its standards, in the aggregate, are as protective of public health and 
welfare as applicable federal standards. Second, the amended 
regulations must not affect consistency with section 209 of the Act, 
following the same criteria discussed above in the context of full 
authorizations. Third, the amended regulations must not raise any ``new 
issues'' affecting EPA's prior authorizations.\25\
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    \25\ See ``California State Motor Vehicle Pollution Control 
Standards; Amendments Within the Scope of Previous Waiver of Federal 
Preemption,'' 46 FR 36742 (July 15, 1981).
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D. 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.\26\
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    \26\ 40 FR 23103-23104 (May 28, 1975); see also LEV I Decision 
Document at 64 (58 FR 4166 (January 13, 1993)).

    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 public policy'' to 
California's judgment.\27\
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    \27\ 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.\28\
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    \28\ MEMA I, 627 F.2d at 1110 (citing H.R. Rep. No. 294, 95 
Cong., 1st Sess. 301-02 (1977).
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E. Burden and Standard of Proof

    As the U.S. Court of Appeals for the D.C. Circuit has made clear in 
MEMA I, opponents of a waiver request by California bear the burden of 
showing that the statutory criteria for a denial of the request have 
been met:

    [T]he language of the statute and its legislative history 
indicate that California's regulations, and California's 
determinations that they must comply with the statute, when 
presented to the Administrator are presumed to satisfy the waiver 
requirements and that the burden of proving otherwise is on whoever 
attacks them. California must present its regulations and findings 
at the hearing and thereafter the parties opposing the waiver 
request bear the burden of persuading the Administrator that the 
waiver request should be denied.\29\
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    \29\ MEMA I, supra note 19, at 1121.

The Administrator's burden, on the other hand, is to make a reasonable 
evaluation of the information in the record in coming to the waiver 
decision. As the court in MEMA I stated: ``here, too, if the 
Administrator ignores evidence demonstrating that the waiver should not 
be granted, or if he seeks to overcome that evidence with unsupported 
assumptions of his own, he runs the risk of having his waiver decision 
set aside as `arbitrary and

[[Page 26044]]

capricious.' '' \30\ Therefore, the Administrator's burden is to act 
``reasonably.'' \31\
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    \30\ Id. at 1126.

    \31\ Id. at 1126.
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    With regard to the standard of proof, the court in MEMA I explained 
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.\32\
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    \32\ Id. at 1122.

In that decision, the court considered the standards of proof under 
section 209 for the two findings related to granting a waiver for an 
``accompanying enforcement procedure.'' Those findings involve: (1) 
Whether the enforcement procedures impact California's prior 
protectiveness determination for the associated standards, and (2) 
whether the procedures are consistent with section 202(a). The 
principles set forth by the court, however, are similarly applicable to 
an EPA review of a request for a waiver of preemption for a standard. 
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 
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standard operates in every waiver decision.'' \33\

    \33\ Id.
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    With regard to the protectiveness finding, the court upheld the 
Administrator's position that, to deny a waiver, there must be ``clear 
and compelling evidence'' to show that proposed enforcement procedures 
undermine the protectiveness of California's standards.\34\ 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.\35\
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    \34\ Id.
    \35\ Id.
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    With respect to the consistency finding, the court did not 
articulate a standard of proof applicable to all proceedings, but found 
that the opponents of the waiver were unable to meet their burden of 
proof even if the standard were a mere preponderance of the evidence. 
Although MEMA I did not explicitly consider the standards of proof 
under section 209 concerning a waiver request for ``standards,'' as 
compared to a waiver request for accompanying enforcement procedures, 
there is nothing in the opinion to suggest that the court's analysis 
would not apply with equal force to such determinations. EPA's past 
waiver decisions have consistently made clear that: ``[E]ven in the two 
areas concededly reserved for Federal judgment by this legislation--the 
existence of `compelling and extraordinary' conditions and whether the 
standards are technologically feasible--Congress intended that the 
standards of EPA review of the State decision to be a narrow one.'' 
\36\
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    \36\ See, e.g., ``California State Motor Vehicle Pollution 
Control Standards; Waiver of Federal Preemption,'' 40 FR 23102 (May 
28, 1975), at 23103.
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F. EPA's Administrative Process in Consideration of California's SORE 
Amendment Requests for Authorization

    On May 28, 2014, EPA published a Federal Register notice announcing 
its receipt of California's authorization request. In that notice, EPA 
invited public comment on each of the 2008 amendments and an 
opportunity to request a public hearing.\37\
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    \37\ See ``California State Nonroad Engine Pollution Control 
Standards; Small Off-Road Engines; Request for Within-the-Scope and 
Full Authorization; Opportunity for Public Hearing and Comment,'' 79 
FR 30610 (May 28, 2014).
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    First, EPA requested comment on the 2008 amendments, as follows: 
(1) Should California's 2008 SORE amendments be considered under the 
within-the-scope analysis, or should they be considered under the full 
authorization criteria?; (2) If those amendments should be considered 
as a within-the-scope request, do they meet the criteria for EPA to 
grant a within-the-scope confirmation?; and (3) If the amendments 
should not be considered under the within-the-scope analysis, or in the 
event that EPA determines they are not within the scope of the previous 
authorization, do they meet the criteria for making a full 
authorization determination?
    EPA received one anonymous written comment that opposed ``any new 
Regulation or Rule promulgated by EPA on California State Non Road 
Engine Pollution Control Standards: Small off-Road Engines 
Regulations.'' \38\ EPA is not promulgating any regulations or rules 
regarding California's SORE regulations, but rather is adjudicating 
whether or not the amendments that CARB made to its own SORE 
regulations are within the scope of previous authorizations granted by 
EPA or fulfill the criteria for a full authorization under the Clean 
Air Act. EPA received no requests for a public hearing. Consequently, 
EPA did not hold a public hearing.
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    \38\ See EPA-HQ-OAR-2014-0036-0016.
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II. Discussion

A. California's 2008 SORE Amendments

    The 2008 amendment package contains three amendments: (1) The 
modification of certification emission credits and creation of ZEE 
certification emissions credits; (2) the modification of production 
emission credits; and (3) the addition of an ethanol blend 
certification fuel option.
1. Modification of Certification Emission Credits and Creation of ZEE 
Certification Emissions Credits
    California's request for authorization of the amendments limiting 
the lifetime of certification emissions credits to five years and 
permitting emissions credit generation for ZEE are interrelated, and 
therefore will be treated together in this discussion. As explained by 
CARB in its 2013 authorization request, certification emissions credits 
under the pre-2008 regime ``continued in existence even after the 
engines that had generated the emission credits had been taken out of 
service.'' Thus, ``[i]nstead of using catalysts and other advanced 
technologies on the more challenging engine families, a small number of 
manufacturers have often been able to use banked credits to . . . delay 
implementation of cleaner technology.'' \39\ CARB found that the 
certification emissions credit program achieved only mixed results in 
promoting the development of lower-emissions engines. Certification 
emissions credits were generated at an unexpectedly high rate, and, 
because the credits did not expire, they could be banked for an 
indefinite period of time. In sum, CARB determined that the program 
failed to meet its goal of providing incentives to create advanced, 
low-emissions engine technology.\40\
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    \39\ 2013 Request, supra note 1, at 8-9.
    \40\ Id. at 7-8.
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    Similarly, CARB found that its SORE regulation, prior to the 
amendments, did not appropriately incentivize the creation of 
professional grade ZEE.\41\ As a result, CARB's 2008 Amendments 
introduced emissions credit generation for ZEE technology. These 
credits must also be used within five years of generation, and cannot 
be used to certify engines that exceed the relevant emissions standard 
by more than 40 percent.\42\ California requested that these amendments 
be treated as within

[[Page 26045]]

the scope of EPA's prior authorizations of the SORE program.
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    \41\ Id. at 9-10.
    \42\ Id. at 10.
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    California asserted that the amendments met all three within-the-
scope criteria, i.e. that the amendments: (1) Do not undermine the 
original protectiveness determination underlying California's SORE 
regulations; (2) do not affect the consistency of the SORE regulations 
with section 202(a); and (3) do not raise any new issues affecting the 
prior authorizations.\43\ We received no adverse comments or evidence 
suggesting a within-the-scope analysis is inappropriate, or that the 
2008 Amendments fail to meet any of the three criteria for within-the-
scope confirmation.
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    \43\ Id. at 16.
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    In regard to the first within-the-scope criterion, California 
asserts that the amendment establishing a five-year restriction on 
certification emissions credits did not undermine the original 
protectiveness determination underlying California's SORE regulations 
because it does not modify the emissions standards applicable to 
engines, but rather only the credit program which is ancillary to these 
standards.\44\ Limiting the lifespan of certification emissions credits 
reduces the ability of manufacturers to use banked credits from one 
engine family to certify another, dirtier engine family. EPA finds that 
because California's pre-2008 certification emissions credit program 
was at least as protective as the applicable federal standards, so too 
is the less generous certification emissions credit policy, as 
established by the 2008 Amendments.
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    \44\ Id.
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    EPA also finds that permitting the creation of emissions credits 
through ZEE technology, particularly given the five year credit 
expiration and limitation on the purposes for which the credits can be 
used, will promote advanced technology. We cannot therefore find that 
limiting the lifespan of certification emissions credits and extending 
emissions credits to ZEE products undermines the protectiveness 
determination that EPA found in its previous SORE authorizations not to 
be arbitrary and capricious.
    In regard to the second within-the-scope criterion, this amendment 
did not attempt to regulate new motor vehicles or motor vehicles 
engines and so is consistent with section 209(a). It likewise did not 
attempt to regulate any of the permanently preempted engines or 
vehicles, and so is consistent with section 209(e)(1). Finally, it did 
not cause any technological feasibility issues for manufacturers or 
cause inconsistency between state and federal test procedures, per 
section 209(b)(1)(C). Most manufacturers have been able to meet the 
requirements of CARB's SORE amendments using widely available 
technologies, and no evidence has been offered that any manufacturer 
would experience significant compliance issues because the credits will 
be limited to five years.\45\ The amendment allowing manufacturers to 
generate emissions credits through ZEE technology will provide 
additional compliance options, thus posing no barrier to compliance.
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    \45\ Id. at 19.
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    In regard to the third within-the-scope criterion, California 
stated that no new issues exist, and EPA has received no evidence to 
the contrary.\46\ Limiting the lifespan of certification emissions 
credits and permitting the creation of credits through ZEE technology 
does not modify emissions requirements, but instead makes changes to 
the alternate means used for compliance. We therefore do not find any 
new issues raised by the amendments limiting the lifespan of 
certification emissions credits and permitting the creation of 
emissions credits through ZEE technology.
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    \46\ Id. at 20.
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    Having received no contrary evidence regarding these amendments, we 
find that California has met the three criteria for a within-the-scope 
authorization approval, and the modification of certification emission 
credits and creation of ZEE certification emissions credits amendments 
are confirmed as within the scope of previous EPA authorizations of 
California's SORE regulations.
2. Modification of Production Emissions Credits
    Another California 2008 SORE amendment eliminated production 
emissions credits. These credits were generated when a manufacturer 
produced an engine whose production line test result was below the 
applicable engine family emission limit. Through these credits, CARB 
intended to permit manufacturers to ``certify engine families as well 
as to offset production line testing exceedances of another engine 
family.'' \47\ CARB states that production emissions credits were 
implemented in anticipation of EPA's adoption of a similar program.\48\ 
EPA ultimately decided not to implement production emissions credits. 
Thus elimination of this program through the 2008 Amendments will more 
closely harmonize California's regulations with federal standards.
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    \47\ Id. at 11.
    \48\ Id.; see also 64 FR 15208 (March 30, 1999) and 73 FR 59034 
(October 8, 2008).
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    The production emissions credit program permitted manufacturers to 
convert production emissions credits into certification emissions 
credits. CARB found that some manufacturers accumulated a large amount 
of production emissions credits and converted them into certification 
emissions credits.\49\ This unexpectedly resulted in the continued 
production of engines that did not comply with otherwise applicable 
emissions standards.\50\ CARB's 2008 Amendments eliminated the 
production emissions credits program, but permitted manufacturers one 
year to use their production credits or convert them to certification 
emissions credits.\51\ EPA received no adverse comments or evidence 
contradicting California's request to consider this amendment as within 
the scope of previous authorizations.
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    \49\ 2013 Request, supra note 1, at 12.
    \50\ Id. at 12.
    \51\ Id.
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    In regard to the first within-the-scope criterion, California found 
that the elimination of production emissions credits did not undermine 
the original protectiveness determination regarding its SORE 
regulations because it increases harmony with the federal system.\52\ 
Based on the evidence before the Agency and in the absence of any 
evidence to the contrary, we cannot find that California's 
protectiveness determination regarding the elimination of production 
emissions credits is arbitrary or capricious.
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    \52\ Id. at 11.
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    In regard to the second within-the-scope criterion, this amendment 
did not attempt to regulate new motor vehicles or motor vehicles 
engines, and thus is consistent with section 209(a). It similarly did 
not attempt to regulate any of the permanently preempted engines or 
vehicles, and so is consistent with section 209(e)(1). It did not cause 
any technological feasibility issues for manufacturers or cause 
inconsistency between state and federal test procedures, per section 
209(b)(1)(C). CARB stated that no manufacturer has relied upon 
production emissions credits to comply with applicable emissions 
standards since 2008.\53\ As no contrary evidence has been offered, we 
do not find the amendment is inconsistent with section 209 of the Act.
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    \53\ Id. at 12.
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    In regard to the third within-the-scope criterion, CARB stated that 
it was not

[[Page 26046]]

aware of any new issues presented by the elimination of production 
emissions credits, and we have received no evidence to the contrary. We 
therefore do not find any new issues raised by the elimination of 
production emissions credits.
    Having received no contrary evidence regarding this amendment, we 
find that California has met the three criteria for a within-the-scope 
authorization approval, and the modification of production emissions 
credits amendment is confirmed as within the scope of previous 
authorizations of California's SORE regulations.
3. Ethanol Blend Certification Fuel Option
    Finally, one of the 2008 Amendments granted manufacturers the 
option to ``use a certification fuel with up to ten percent ethanol 
content when that same fuel is used for certification with the EPA.'' 
\54\ EPA received no adverse comments or evidence contradicting 
California's request to consider this amendment as within the scope of 
previous authorizations.
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    \54\ Id. at 13.
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    In regard to the first within-the-scope criterion, CARB stated that 
this amendment would increase ``harmonization of California's SORE 
certification procedures with EPA's nonroad engine certification 
procedures, and could reduce the testing cost for some manufacturers.'' 
\55\ Based on the record before us and in the absence of any evidence 
to the contrary, we cannot find that California's protectiveness 
determination regarding the implementation of an ethanol blend 
certification fuel option is arbitrary or capricious.
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    \55\ Id.
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    In regard to the second within-the-scope criterion, California 
found that the amendment does not affect consistency with section 209 
of the Act.\56\ This amendment does not regulate emissions from new 
motor vehicles or new motor vehicle engines, and thus is not 
inconsistent with 209(a). Similarly, it did not attempt to regulate any 
of the permanently preempted engines or vehicles, and so is consistent 
with section 209(e)(1). This amendment expands rather than limits the 
means by which manufacturers can certify fuels, and thus poses no lead-
time or technological feasibility problems. We therefore find no 
evidence that this amendment is inconsistent with section 209 of the 
Act.
---------------------------------------------------------------------------

    \56\ Id. at 17-18.
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    In regard to the third within-the-scope criterion, California 
stated that the ethanol blend certification fuel option raised no new 
issues.\57\ EPA similarly finds no new issues arising from the 
amendment.
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    \57\ Id. at 20.
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    Having received no contrary evidence regarding this amendment, we 
find that California has met the three criteria for a within-the-scope 
authorization approval, and the ethanol blend certification fuel option 
amendment is confirmed as within the scope of previous authorizations 
of California's SORE regulations.

III. Decision

    The Administrator has delegated the authority to grant California 
section 209(e) authorizations to the Assistant Administrator for Air 
and Radiation. After evaluating the 2008 Amendments to CARB's SORE 
regulations described above and CARB's submissions for EPA review, EPA 
is taking the following actions.
    First, EPA confirms that California's amendment modifying 
certification emissions credits and permitting emissions credit 
generation for ZEE is within the scope of prior authorizations. Second, 
EPA confirms that California's amendment eliminating production credit 
generation is within the scope of prior authorizations. Third, EPA 
confirms that California's amendment permitting certification with 
fuels with up to ten percent ethanol content provided that the same 
fuel is used for certification with EPA is within the scope of prior 
authorizations.
    This decision will affect persons in California and those 
manufacturers and/or owners/operators nationwide who must comply with 
California's requirements. In addition, because other states may adopt 
California's standards for which a section 209(e)(2)(A) authorization 
has been granted if certain criteria are met, this decision would also 
affect those states and those persons in such states. See CAA section 
209(e)(2)(B). For these reasons, EPA determines and finds that this is 
a final action of national applicability, and also a final action of 
nationwide scope or effect for purposes of section 307(b)(1) of the 
Act. Pursuant to section 307(b)(1) of the Act, judicial review of this 
final action may be sought only in the United States Court of Appeals 
for the District of Columbia Circuit. Petitions for review must be 
filed by July 6, 2015. Judicial review of this final action may not be 
obtained in subsequent enforcement proceedings, pursuant to section 
307(b)(2) of the Act.

IV. Statutory and Executive Order Reviews

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

    Dated: April 29, 2015.
Janet G. McCabe,
Acting Assistant Administrator, Office of Air and Radiation.
[FR Doc. 2015-10610 Filed 5-5-15; 8:45 am]
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