Approval and Promulgation of Implementation Plans; State of New Jersey; Clean Fuel Fleet Opt Out

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[Region 2 Docket No. NJ29-2-185 FRL-6174-4]

Approval and Promulgation of Implementation Plans; State of New

Jersey; Clean Fuel Fleet Opt Out

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is approving the

State Implementation Plan revision submitted by the State of New Jersey

for the purpose of meeting the requirement to submit the federal Clean

Fuel Fleet program (CFFP) or a substitute program that meets the

requirements of the Clean Air Act (Act or CAA). EPA is approving the

State's plan for implementing a substitute program to opt out of the

federal CFFP.

EFFECTIVE DATE: This rule will be effective December 10, 1998.

ADDRESSES: Copies of the State submittals are available at the

following addresses for inspection during normal business hours:

Environmental Protection Agency, Region 2 Office, Air Programs Branch,

290 Broadway, 25th Floor, New York, New York 10007-1866

New Jersey Department of Environmental Protection, Bureau of Air

Quality Planning, 401 East State Street, CN027, Trenton, New Jersey

08625

FOR FURTHER INFORMATION CONTACT: Michael P. Moltzen, Air Programs

Branch, Environmental Protection Agency, 290 Broadway, 25th Floor, New

York, New York 10007-1866, (212) 637-4249.

SUPPLEMENTARY INFORMATION:

I. Background

Section 182(c)(4)(A) of the Clean Air Act requires states

containing areas designated as severe ozone nonattainment areas,

including New Jersey, to submit for EPA approval a state implementation

plan (SIP) revision that includes measures to implement the federal

Clean Fuel Fleet program (CFFP). Under this program, a specified

percentage of vehicles purchased by covered fleet operators must meet

emission standards that are more stringent than those that apply to

conventional vehicles. Covered fleets are defined as having 10 or more

vehicles that are centrally fueled or capable of being centrally

fueled. A CFFP meeting federal requirements would be a state-enforced

program which requires covered fleets to assure that an annually

increasing percentage of new vehicle purchases are certified clean

vehicles. In New Jersey, the program would apply in the State's portion

of the New York-Northern New Jersey-Long Island ozone nonattainment

area and in New Jersey's portion of the Philadelphia-Wilmington-Trenton

ozone nonattainment area; thus all counties in New Jersey except for

Warren, Atlantic and Cape May Counties would be covered under the

federal CFFP.

The federal CFFP is divided into two components. The first

component is a light duty federal CFFP which applies to covered fleets

of passenger cars and trucks of gross vehicle weight rating (GVWR) of

6,000 pounds and less, and trucks between 6,000 and 8,500 pounds GVWR.

Covered fleets which fall under the light duty federal CFFP are

required

[[Page 62948]]

to assure that 30 percent of new purchases are clean vehicles in the

first year of the program, 50 percent in the second year and 70 percent

in the third and subsequent years.

The second component is a heavy duty (HD) federal CFFP which

applies to covered fleets of trucks over 8,500 pounds GVWR and below

26,000 pounds GVWR. The HD federal CFFP requires that 50 percent of

covered fleets' new purchases be clean fueled vehicles in the first and

subsequent years.

Under the federal CFFP, the vehicle exhaust emission standards for

light duty vehicles are equivalent to those established by the

California Air Resources Board (CARB) as light duty low emission

vehicles (LEVs), for use in the California LEV program. In addition to

LEVs, this certification exists for vehicles meeting four additional

levels of emissions stringency, including zero emission vehicles

(ZEVs). For further information regarding emission standards associated

with all of the clean fuel vehicles which are applicable under the LEV

program and the federal CFFP, the reader is referred to the federal

CFFP final rule, published on March 1, 1993 at 58 FR 11888.

Section 182(c)(4)(B) of the Act allows states to ``opt out'' of the

federal CFFP by submitting for EPA approval a SIP revision consisting

of a program or programs that will result in at least equivalent long

term reductions in ozone-producing and toxic air emissions as achieved

by the federal CFFP. The Clean Air Act directs EPA to approve a

substitute program if it achieves long term reductions in emissions of

ozone-producing and toxic air pollutants equivalent to those that would

have been achieved by the federal CFFP or the portion of the federal

CFFP for which the measure is to be substituted.

On February 15, 1996 New Jersey submitted its New Jersey Clean

Fleets (NJCF) program as a substitute for the federal CFFP. This

submittal, comprising the State's federal CFFP substitute which EPA is

now taking action to approve, was in addition to prior federal CFFP-

related submittals of November 1992 and May 1994. The reader is

referred to EPA's proposed approval of the NJCF program, published at

62 FR 61948 on November 20, 1997 for further detail on those previous

submittals. The NJCF program is an essentially voluntary mix of

incentive-based programs which are intended to spur public and private

fleets within New Jersey to purchase clean, alternatively fueled

vehicles (AFVs).

On March 29, 1996, and on March 6, 1997, New Jersey supplemented

the federal CFFP SIP revision with (1) a clarifying letter from New

Jersey Department of Environmental Protection (NJDEP) Commissioner

Shinn, and (2) with material from its October 21, 1996 public hearing,

respectively. The 1996 letter from Commissioner Shinn clarified that

the NJCF program substitution includes, to the extent necessary to meet

SIP obligations, New Jersey's LEV program (NJ LEV) which had been

adopted by that time. Because the emissions reductions relied upon in

the NJCF program will largely result from voluntary measures, the NJ

LEV program essentially serves the role of a ``backstop'' to the NJCF

program. This means that in the event the NJCF program fails to achieve

the emissions reductions claimed by the State, emission reductions

achieved with the separate LEV program will be used by the State to

account for those reductions that would have originally been realized

through the federal CFFP. In that event EPA would then recognize NJ LEV

as the effective opt out measure.

Unlike the federal CFFP, NJ LEV will impose requirements on auto

manufacturers and their yearly vehicle sales. The adopted NJ LEV

regulation states that New Jersey's primary intention is to participate

in the National LEV (NLEV) program (discussed in more detail in section

III. C. of this notice) as the preferred means of achieving cleaner

vehicle sales throughout the State. The NJ LEV regulation also states

that New Jersey would operate its own California LEV program if the

NLEV program ultimately was not implemented (the reader is referred to

the NJCF proposal at 62 FR 61948 for details regarding California LEV

as it relates to the NJ LEV regulation). The NLEV regulation was

designed with the understanding that EPA cannot require NLEV. NLEV must

be mutually agreed upon by the participating states and the auto

manufacturers because in the Clean Air Act, Congress disallows EPA from

changing vehicle emission standards until at least model year 2004 (see

CAA Sec. 202). However, during the time following EPA's proposed

approval of the NJCF program as an opt-out substitute for the federal

CFFP, EPA promulgated a supplemental final rule for NLEV (see 62 FR

925, January 7, 1998). As per provisions of that final rule, with NLEV

opt-in commitments from 9 of the 13 Ozone Transport Commission (OTC)

States (including New Jersey) and the 23 major domestic and foreign

auto manufacturers, on March 2, 1998, EPA officially found NLEV to be

in effect.

Therefore, as per its State-specific LEV regulation, and as

indicated in a January 28, 1998 letter from New Jersey Governor

Christine Todd Whitman to the EPA Administrator, the State will

participate in NLEV and receive creditable emission reductions through

the proscribed federal enforcement of NLEV. As stated in its

regulation, with its decision to participate in NLEV, the State will

not operate California LEV in New Jersey, at least until such time that

EPA implements more stringent Tier 2 vehicle emission standards, which

will not be sooner than model year 2004 (see CAA Sec. 202 and 63 FR

925-987). Therefore NLEV is now the applicable enforceable backstop to

the NJCF program.

The NLEV program requires that auto manufacturers must meet an

average vehicle emission standard, based on the certified emission

standards of all annual vehicle sales. The annual average vehicle

emission standard (referred to as the non-methane organic gas (NMOG)

average) increases in stringency on an annual basis. Quantitatively,

NLEV will achieve long term vehicle emission reductions which are far

greater than what the federal CFFP could have achieved.

The Clean Air Act requires states to observe certain procedural

requirements in developing implementation plan revisions for submission

to EPA. Sections 110(a)(2) and 172(c)(7) of the Act require states to

provide reasonable notice and public hearing before adoption by the

state and submission to EPA for approval. Section 110(1) of the Act

also requires states to provide reasonable notice and hold a public

hearing before adopting SIP revisions. EPA must also determine whether

a state's submittal is complete before taking further action on the

submittal. See section 110(k)(1). EPA's completeness criteria for SIP

submittals are set out in 40 CFR Part 51, Appendix V (1993). New

Jersey's SIP revision which EPA is approving in this notice has met all

of the procedural requirements and completeness criteria.

II. State Submittal

New Jersey submitted SIP revisions on February 15, 1996, March 29,

1996 and March 6, 1997 which substitutes the State's NJCF program,

backstopped by the enforceable NJ LEV program, for the federal CFFP.

The NJCF program consists of the following four components: (1)

Incentive Development program, (2) the Department of Energy's (DOE's)

EPAct fleet requirements, (3) DOE's Clean

[[Page 62949]]

Cities program, and (4) the Advanced Technology Vehicle (ATV) agreement

associated with the NLEV program. Components (1), (3) and (4) are

voluntary in nature, while the second component, the EPAct fleet

requirements, is a mandatory DOE program. However although the EPAct

mandate requires purchases of alternative fuel vehicles (see Section C.

2. for additional details), it does not require vehicle emissions

standards to be met, as the federal CFFP does. New Jersey will track

clean alternative fueled EPAct vehicle purchases as well as those from

the other NJCF components in determining the degree to which its

federal CFFP substitute is achieving equivalent reductions, and

subsequently the amount of credit which will be needed from its

backstop, the NLEV program.

Because NLEV has been found to be in-effect by EPA, the State's

regulation states that New Jersey will participate in the NLEV program

(discussed in more detail in section III. C. of this notice). The NLEV

program will begin with model year 1999 vehicle sales in the Northeast

Trading Region (NTR), which is comprised of NLEV opt-in states

Connecticut, Delaware, Maryland, New Jersey, New Hampshire,

Pennsylvania, Rhode Island, Virginia and Washington, D.C. The NLEV

program requires that those vehicles be certified to meet a specific

NMOG standard when their total emissions are averaged as a fleet.

Manufacturers must ensure that each model year of vehicles produced for

sale meet a yearly NMOG fleet average over the entire NTR. The NLEV

fleet-average NMOG standard will be 0.148 grams per mile for model year

1999. The NMOG average becomes increasingly stringent annually, and for

model year (MY) 2001 and later the standard is 0.075 grams per mile.

III. Analysis of State Submission

A. Opt Out Criteria and Requirements

Section 182(c)(4) of the Clean Air Act, which allows states

required to implement a federal CFFP to opt out of the program by

submitting a SIP revision consisting of a substitute program, requires

that the substitute program result in long term emission reductions

equal to or greater than the federal CFFP. Also, EPA can only approve

such substitute programs that consist exclusively of provisions other

than those required under the Clean Air Act for the area. New Jersey's

NLEV-backstopped NJCF program satisfies both of these requirements.

B. Equivalency of Substitute

The Clean Air Act requires that any substitute for the federal CFFP

must provide equivalent long term emission reductions. In its SIP

revision, the State estimated the emission reductions which would be

attributable to operation of the federal CFFP in New Jersey. It is this

amount of long term reduction, discussed below, which the State's

substitute must achieve.

Light Duty Vehicle Analysis

New Jersey first analyzed the potential for emissions reductions to

result from long term compliance with the light duty vehicle portion of

the federal CFFP in New Jersey. The light duty vehicle purchase

requirements of the federal CFFP are intended to ensure a gradual

turnover of conventional light duty fleet vehicles to clean light duty

vehicles in covered fleets. Under the federal CFFP, in the long term a

substantial portion of light duty vehicles in covered fleets would meet

at least the LEV standard, where otherwise they would not have met

those more stringent standards (i.e., if the State was not also

operating a LEV program as described above). In its SIP revision

however, New Jersey pointed out that the light duty vehicle portion of

the federal CFFP, in the long term, would essentially duplicate the

regional and Statewide, more comprehensive NLEV program which has

already been adopted as part of the NJ LEV regulation [Adopted on

November 22, 1995 at 27 N.J.R. 5016(a)(December 18, 1995), codified at

N.J.A.C. 7:27-26]. EPA has determined that, in light of the NLEV

program, operation of the light duty federal CFFP in New Jersey would

yield essentially no benefit above that from the NLEV. For additional

details regarding the light duty vehicle analysis, the reader is

referred to EPA's November 20, 1997 proposed approval of NJCF as an

opt-out substitute for the federal CFFP at 62 FR 61948 and to the

Response to Comments section of this action.

Heavy Duty Vehicle Analysis

The heavy duty vehicle portion of the federal CFFP requires that on

an annual basis, 50 percent of heavy duty fleet vehicles purchased each

year must meet clean fuel vehicle emission standards. Through

appropriate modeling, New Jersey has determined that the estimated

emission reduction benefit that would result from applying the federal

CFFP's heavy duty vehicle requirements in New Jersey would be

approximately 4.5 tons per day (tpd) of volatile organic compounds

(VOC) and oxides of nitrogen (NOx) combined in 2010 (for additional

details regarding modeling techniques and assumptions used to arrive at

this figure, the reader is referred to EPA's November 20, 1997 NJCF

proposal at 62 FR 61948). New Jersey's SIP submittal states that

modeling emission reductions out to the year 2010 is adequate for the

purpose of determining the long term reductions which could be expected

of the heavy duty federal CFFP in New Jersey. EPA agrees with this

reasoning. The NJCF program must achieve that amount of emission

reductions within the same time frame in order to be an acceptable

substitute for the federal CFFP. If it does not, as will be verified

through the program emission reduction tracking system that the State

committed to implement (described below), the State has also committed

to use enforceable emission reduction credit generated from the NLEV

program to make up any emission reduction shortfall which may result.

C. NJCF Program Details and Goals

NJDEP has estimated that, in order to meet the Clean Air Act

requirement of an approvable federal CFFP substitute, the NJCF program

must provide emission reductions equivalent to those from approximately

50,750 medium heavy duty certified clean fueled vehicles by 2010. NJDEP

has determined that in order to contribute towards the emission

reductions needed for a substitute program, a medium or heavy duty

vehicle must be certified by CARB to meet LEV (or cleaner) standards.

1. Incentive Development Program

The incentive development program was developed by a public/private

workgroup which includes representatives of local and national fleet

operators, municipalities, alternative and clean fuel providers, and

government officials. The Workgroup's efforts are intended to spur use

of clean alternative fuel vehicles. Major areas of focus for the

Workgroup, as it implements its Action Plan, include development of a

New Jersey alternative fuel mechanic training program and promotion of

a State policy with legislative and regulatory support of the use of

alternative fuels and AFVs. Examples of such legislation include a bill

which would provide sales and use tax exemption for clean alternative

fuel vehicle purchases in New Jersey.

2. EPAct Purchase Mandates

The second component of the NJCF program is the alternative fuel

vehicle purchase requirements under the federal EPAct, 42 U.S.C. 13201

et seq. Under

[[Page 62950]]

EPAct, all state, federal, and fuel-provider fleets must ensure that a

percentage of their new light duty vehicle purchases operate on

alternative fuels. In the long term, 75% of new state and federal

purchases and 90% of fuel-provider purchases must be AFVs. In its SIP

submittal, New Jersey reported that at least 61 State vehicles run on

clean alternative fuels as a result of EPAct compliance, and

alternative fuel vehicles are available for purchase by public agencies

through the State purchase contract.

3. New Jersey Clean Cities Program

Clean Cities is a voluntary federal program designed to accelerate

and expand the use of clean AFVs and related refueling infrastructure

in communities throughout the country. In 1995 the State's Division of

Energy initiated its North Jersey Clean Cities programs in the

metropolitan areas of Elizabeth, Jersey City, Newark and Trenton; in

1997 this program received official Clean Cities designation status

from the U.S. Department of Energy (USDOE). New Jersey plans to expand

this program in other areas of the State as well, and expects the

program to have a significant long term emission reduction benefit.

4. Advanced Technology Vehicle Program

The fourth component of the NJCF program is an Advanced Technology

Vehicle (ATV) cooperative agreement between states and auto

manufacturers which emerged during their negotiations on the NLEV

program. The regulatory portion of the NLEV program does not address an

agreement regarding advanced technology vehicles (ATV), and advancing

technology is not a legally-required criterion of the NLEV program,

however EPA recognizes that a separate agreement between states and

auto manufacturers regarding an ATV component could be a useful means

of achieving additional environmental benefits beyond the emissions

reductions which will be achieved through NLEV. In EPA's June 6, 1997

NLEV rulemaking, an ATV was defined as any vehicle certified by CARB or

EPA that is either: (1) A dual-fuel, flexible-fuel, or dedicated

alternatively fueled vehicle certified as a transitional low emission

vehicle (TLEV), LEV, or ultra low emission vehicle (ULEV) when operated

on the alternative fuel; (2) certified as a ULEV or ILEV; or (3) a

dedicated or hybrid electric vehicle. As discussed in that rulemaking,

EPA acknowledges the suggestion that advancing motor vehicle pollution

control technology through a states-manufacturers partnership can be an

important result of the basic NLEV agreement. Furthermore, EPA agrees

with New Jersey's intention to use an ATV agreement with the auto

manufacturers as part of its substitute (backstopped by the enforceable

NLEV program) for the federal CFFP. The ATV program, as New Jersey and

other states intend, would involve a cooperative effort among the NLEV

opt-in states, EPA, DOE, fuel providers, aftermarket converters, fleet

operators, and the full range of motor vehicle manufacturers to develop

ways to increase use of ATVs. In its SIP submittal, the NJDEP stated it

expects to begin implementing this ATV program, in cooperation with

other states, the auto manufacturers, and fuel providers, soon after

the NLEV program's implementation and agreement on an ATV component is

reached.

In order to facilitate implementation of the NJCF program, New

Jersey has stated in its latest SIP submittal that it is relying on EPA

to support the ATV initiative by approving emission reduction SIP

credits, where appropriate, upon the introduction of ATVs into the

fleet. EPA is prepared to assist the State in this manner (i.e. by

allowing long term emission reductions generated by a cooperative ATV

program to be used in part as a substitute SIP measure for the federal

CFFP), provided emissions reductions from the ATV provision, along with

those generated from the other NJCF program components, can be

documented by the State. It is for this purpose that New Jersey has

incorporated a planned system to track NJCF program emissions

reductions.

This system, described below, will serve to identify the need, if

any should exist in the future, to utilize the credit from the backstop

should the planned reductions not occur as intended with the voluntary

NJCF program.

NJCF Program Backstop

New Jersey, along with the states of Connecticut, Delaware, Rhode

Island, Maryland, New Hampshire, Pennsylvania, Virginia, and

Washington, D.C. have opted into the NLEV program. Upon its NLEV opt-

in, NLEV became the effective backstop to the NJCF, as discussed in

section I. of this action.

NLEV is a voluntary nationwide program to make new cars

significantly cleaner emitting than today's current cars. NLEV, which

began as the ``OTC-LEV'' program before it included provisions for

cleaner vehicle sales for the entire nation, has also been referred to

in the past as ``49-State LEV'' and ``the 49-State Car program.'' The

NLEV program represents an alternative, more effective method of

regulatory development through extensive interaction between EPA and

stakeholders. NLEV will achieve substantial air pollution reductions

nationwide while providing the automotive industry flexibility to meet

the new requirements in the most efficient manner. The NLEV program

requires that each model year of vehicles produced for sale in the

Northeast opt-in states, beginning with model year 1999, be certified

to meet a specific NMOG standard when their total emissions are

averaged as a fleet. Manufacturers must ensure that each model year of

vehicles produced for sale, meet a yearly NMOG fleet average which

becomes increasingly more stringent annually, and for model year 2001

and later the standard is 0.075 grams per mile. Manufacturers will meet

the annual NMOG averages through a sales mix of vehicles certified to

meet emission standards of varying stringency. Like CARB certified

vehicles and as discussed earlier in section I. of this action, such

standards exist for TLEVs, LEVs, ULEVs, ZEVs and the existing Tier I

federal standards.

On December 16, 1997 the EPA Administrator signed the final rule

for NLEV and began the opt in clocks for the states of the Northeast,

the auto manufacturers and EPA. According to the rule, those states had

forty-five days to opt in, and the manufacturers had sixty days from

the rule signature to make that decision. Nine northeastern states and

23 major auto manufacturers took the opportunity to opt into the

National LEV program within the specified time frames. New Jersey did

so with a January 28, 1998 letter to the Administrator from Governor

Whitman committing to the State to participation in the NLEV. EPA

determined that the opt-ins from both sets of parties met the criteria

necessary for the NLEV program to be in effect and enforceable, and on

March 2, 1998, the EPA Administrator made the official finding that the

NLEV program is in effect.

NLEV will result in substantial reductions in NMOG and

NOX, which contribute to ozone nonattainment in many states

including New Jersey. Emission reduction estimates are based on a start

date of MY 1999 in Northeast and MY 2001 nationwide. EPA estimates that

nationally, by 2007, NOX will be reduced by 496 tons per day

and NMOG will be reduced by 311 tons per day as a result of NLEV

implementation. NLEV will also result in reductions in toxic air

pollutants such as benzene, formaldehyde, acetaldehyde, and 1,3

[[Page 62951]]

butadiene. Benzene is classified as a human carcinogen, while the

others are considered probable carcinogens.

NLEV in New Jersey will assure reductions of ozone-forming and air

toxics emissions that are at least equivalent to those that would be

realized through the light duty portion of a federal CFFP; in the event

that the NJCF program fails to reduce long term emissions to the level

which would have been achieved by the federal CFFP, NLEV will make up

the resultant shortfall.

Vehicle Tracking System

In its most recent NJCF SIP revision submittals, New Jersey has

committed to implement an automated tracking system to track clean

fueled vehicle purchases and conversions associated with the NJCF

program (detailed above) throughout the State beginning in 1998. The

State will periodically track the variety of clean NJCF vehicles

purchased in New Jersey, but most notably CARB and EPA certified LEVs

(and vehicles certified to more stringent standards, such as ULEVs).

The information gathered from the automated tracking system will

provide an accurate indication of the number of vehicles purchased in

New Jersey that are certified to meet the applicable LEV, etc.

standards. In this manner the State will accumulate a database with

which it can calculate emission reduction benefits associated with

certified clean vehicle purchases resulting from the NJCF program, and

determine if necessary the need to employ the LEV backstop discussed

above. New Jersey further clarified the method it will employ to track

these vehicle purchases as a means of assessing the NJCF program's long

term effectiveness. Specifically, NJDEP will receive reports on at

least an annual basis from the New Jersey Division of Motor Vehicles,

the New Jersey Department of Treasury and the USDOE which will contain

updates of the numbers of certified clean vehicles and AFVs purchased

statewide in New Jersey.

IV. Public Comment

EPA proposed to approve the New Jersey federal CFFP opt-out SIP

revision on November 20, 1997, 62 FR 61948. Comments were received from

one interested party. EPA evaluated the comments, which have been

incorporated into the docket for the rulemaking. The comments were

evaluated with respect to the proposed approval, and the summary of the

comments and EPA's responses follow.

Comment: New Jersey should move to supplement its mobile source

reduction strategies as opposed to using reductions in place of the

federal CFFP. The federal government conditionally leaves the option

available to the State of New Jersey to find a substitute for the Clean

Fuel Fleet Programs. New Jersey should use all available mobile source

reduction strategies, including a LEV program combined with the NJCF

program, in its effort to achieve attainment of the ozone standards.

The commentor also asserts that New Jersey has completely abandoned

any clean fuel requirements for heavy duty fleet vehicles. The

commentor questions why emission reduction credits generated from the

NJCF program or the NLEV program should be used for mobile sources,

when New Jersey fails to control emissions from heavy duty trucks,

which would be included in the Clean Fuel Fleet Program. If all

vehicles and stationary sources are subject to emissions reductions,

the commentor states that there seems to be a significant omission of

the exercise of regulatory authority in disregarding heavy duty truck

emissions.

Response: The Clean Air Act allows states to opt out of the federal

CFFP with an equivalent substitute, as the commentor points out. EPA is

directed to approve the State's opt out SIP revision provided it meets

the statutory requirements of equivalent long term reductions through a

provision or provisions not otherwise required by Act, which New Jersey

has done. In enforcing the requirements of the Clean Air Act, EPA

consistently works to afford as much flexibility to states in meeting

those requirements, and does not second-guess state policy choices

regarding how to achieve attainment.

Regarding the comment that New Jersey has abandoned clean fuel

requirements for heavy duty fleet vehicles, again, EPA abstains as much

as possible from dictating states' policy choices regarding which

sources to regulate, as long as they meet requirements of Clean Air

Act. This applies to the degree to which the substitute NJCF program

does or does not target heavy duty fleet vehicles, as long as the

program will achieve equivalent reductions, which EPA has determined

that it will.

Comment: NJDEP has not satisfied the federal criteria in Section

182(C)(4)(B) of the Clean Air Act, which requires that ``the

Administrator may approve of such revisions only if it consists

exclusively of provisions other than those required under this Act for

the area.'' The commentor asserts that the reason OTC-LEV fails as an

adequate substitute is that the adoption of the OTC-LEV program was

required throughout the Ozone Transport Region (OTR) in order to bring

certain areas of the OTR into ozone attainment pursuant to Section

184(c)(1) of the Clean Air Act. Therefore, the commentor wrote, New

Jersey was compelled to adopt this LEV requirement, making such a LEV

program a Clean Air Act requirement and unavailable for use as a

substitute federal CFFP measure. The commentor further believes that

comparison to OTC-LEV in an equivalency demonstration is misplaced

because New Jersey anticipated participation in NLEV, employing OTC-LEV

only as a fall-back measure if NLEV did not become effective. Lastly

the commentor states that New Jersey cannot use OTC-LEV as a backstop

because as adopted by the State, OTC-LEV can only become effective in

New Jersey if a threshold of other state LEV programs is reached.

Response: The Clean Air Act directs EPA to approve a substitute

program if it achieves long-term reductions in emissions of ozone-

producing and toxic air pollutants equivalent to those that would have

been achieved by the federal CFFP or the portion of the federal CFFP

for which the measure is to be substituted, and is not otherwise

required by the Clean Air Act. EPA maintains that both the NJCF

program, and its backstop, the NLEV program will assure emissions

reductions at least equivalent to the federal CFFP and neither program

is otherwise required by the Clean Air Act.

New Jersey originally intended to opt out of the federal CFFP with

the LEV program in a submittal dated May 15, 1994. Although EPA could

not take action to approve that submittal because the LEV regulation

was only in the proposal stage at that time, New Jersey intended to

adopt a LEV program and to use it as a federal CFFP opt out measure

before it was compelled to adopt such a program for any other reason

(see 62 FR 61948 under Section I. Background for further detail on the

State's earlier submissions).

Subsequent to New Jersey's original intended opt out with LEV, on

December 19, 1994 EPA approved a petition by the OTC to require OTC-

LEV, or an equivalent substitute, e.g. NLEV, throughout the OTR.

However, as stated in the November 20, 1997 Federal Register notice, a

Federal Circuit Court has since remanded that requirement. [Virginia v.

EPA, No. 95-1163 (D.C. Cir. March 11, 1997)]. The Court's vacatur of

OTC-LEV, and the equivalent NLEV, as a SIP requirement of the OTR

States effectively made these programs ``not otherwise required by the

Act'' and thus eligible for use by the States as a

[[Page 62952]]

substitute measure, as permitted under Section 182(c)(4) of the Clean

Air Act.

EPA rejects the assertion that the proposed approval's comparison

to OTC-LEV in an equivalency demonstration is misplaced. Rather, EPA

believes that the equivalency demonstration, and the analysis of the

demonstration, was appropriate. The analysis examined the effect of

federal CFFP operation concurrent to operation of either OTC-LEV (also

referred to as the State LEV and ``California'' LEV program) or NLEV,

in recognition that one or the other would be in effect through the

long term. Results of the examination yielded the quantity of emissions

reductions necessary to be achieved by the substitute (or its backstop)

for it to be equivalent to the federal CFFP. The substitute meets the

equivalency requirement because New Jersey has committed to bring about

the sale of additional clean vehicles which will reduce as much

emissions as the federal CFFP would have, to track those reductions on

a regular basis and to substitute emission reductions from the backstop

NLEV program if necessary.

The commentor's assertion that New Jersey cannot use OTC-LEV as a

backstop because its effectiveness is dependant on a certain threshold

of other state LEV programs is invalidated because NLEV is the

effective backstop (see section I. of this action), and does not rely

on such a threshold.

Comment: The commentor asserts that NJDEP's LEV program lacks State

enforceability because the NJLEV rule excludes from enforcement action

any failure to comply with the fleet average requirement.

Response: New Jersey had indicated that if it had eventually

operated the OTC-LEV program, active program enforcement would have

been provided if it was determined necessary for compliance subsequent

to implementation. However, this issue is now moot since New Jersey has

opted into NLEV (see the above response to comment and also section I.

of this approval).

Comment: NJDEP has not adequately documented an equivalency

demonstration for the long-term emission reductions which would have

been associated with a light duty federal CFFP. Although NJDEP stated,

and EPA agreed in its proposed approval, that an explicit demonstration

was unnecessary because of the duplicative nature LEV program

operation, the commentor states that the Clean Air Act does not make

this exception to the State's duty to establish the equivalency of any

substitute program. New Jersey is ``guesstimating'' that it will

achieve the equivalent reductions. There are no quantifiable methods

established to demonstrate that there will be ``equivalent''

reductions.

Response: Clean Air Act section 182(c)(4)(B) states that the EPA

Administrator shall approve a federal CFFP substitute measure ``that in

the Administrator's judgement will achieve long-term reductions in

ozone-producing and toxic air emissions equal to those achieved under

part C of title II, or the percentage thereof attributable to the

portion of the clean-fuel vehicle program for which the revision is to

substitute.'' Thus the Clean Air Act does not explicitly require the

State to document an equivalency demonstration, as the commentor

asserts, but rather defers to EPA's judgement of the long-term

equivalency of the substitute measure. In judging the equivalency of

the NJCF, for the purpose of comparison, EPA (and the State) set out to

determine the long-term emissions reductions which would have been

achieved by operation of the light duty federal CFFP in New Jersey. EPA

concluded that those reductions would be negligible to zero because

light duty federal CFFP purchase requirements would duplicate existing,

further reaching NLEV sales requirements in New Jersey (vehicle

emission standard requirements of both programs are essentially

identical). Therefore, since in EPA's judgement the amount of long-term

reductions attributable to the light duty federal CFFP would be zero, a

demonstration that the light duty federal CFFP portion of the

substitute program will achieve at least zero reductions would be

superfluous and is unnecessary.

The commentor asserts that there are no quantifiable methods

established to demonstrate that there will be equivalent reductions.

However, as detailed in EPA's proposed NJCF Program approval at 62 FR

61961, New Jersey performed a modeling analysis which determined that

the federal CFFP substitute must achieve approximately 4.5 tons per day

of NOx and VOC combined by 2010 in order to achieve equivalent

reductions. The State further determined that the requisite reductions

can be achieved through acquisition of 50,750 medium heavy duty clean

vehicles by 2010. As detailed above, New Jersey has initiated an

automated tracking system to track clean fueled vehicle purchases and

conversions associated with the NJCF program throughout the State

beginning in 1998. The reader is referred to the subsection titled

``Vehicle Tracking System'' under section III. C. of this notice, and

to the proposal at 62 FR 61952 for further information on the tracking

system. The State has committed in its SIP submittal that it will

monitor its progress toward procurement of that number and type of

vehicles on a regular basis, and will backstop any shortfall with NLEV

emission reductions if that goal is not reached by 2010.

Comment: Regarding claims that the NJCF Program will still create a

shortfall as compared to the light duty federal CFFP, New Jersey

believes that any loss of emission reduction benefits that would occur

from gasoline powered LEVs operated on Federal RFG rather than the fuel

that they were certified to operated on (e.g., California RFG) would be

relatively small in the long-term. There is no basis other than the

anticipation by NJDEP that in the long-term, more vehicles will be

operating on alternative fuels and to support that assertion. The

commentor requests that this basis for satisfying this shortfall in

needed emissions reduction, be further explained.

Response: The commentor is referring to New Jersey's further

examination of the relative effects of programs associated with the

Light Duty Vehicle Analysis, discussion of which can be found under

section III. B. of EPA's February 20, 1997 proposed approval (see 62 FR

61948). As explained above, EPA has judged that light duty federal CFFP

emissions reductions would be at most negligible due to concurrent

operation of NLEV in New Jersey. However, in its SIP submittal, New

Jersey went further to discuss qualitatively the potential effects of

operation of LEVs on Federal RFG vs. California RFG. California RFG is

the fuel for which gasoline-powered CARB LEVs are certified to operate

on. New Jersey stated, and EPA agreed, that in the aggregate, long-term

loss of emissions benefit from operating CARB certified LEVs on Federal

RFG would likely be small, if any. EPA believes this is especially true

when considering that in the long term, Federal RFG phase 2 (effective

throughout New Jersey on January 1, 2000) will be in place. Federal RFG

phase 2 will be substantially cleaner than both conventional gasoline

and Federal RFG phase 1, and closer in composition to California RFG,

specifically with respect to sulfur levels. Sulfur in gasoline inhibits

the performance of catalytic converters, which are used on all current

gasoline-fueled vehicles to reduce VOCs, carbon monoxide and NOx. EPA

may soon propose gasoline sulfur standards which would result in sulfur

levels lower than Federal RFG phase 2 levels, to be implemented in the

long term.

[[Page 62953]]

The commentor asserts that the only basis for the assumption that

in the long term more vehicles will be operating on alternative fuels

(and thus reduce the number of cleaner gasoline-powered vehicles) is

New Jersey's anticipation of such. EPA disagrees with this assertion,

and further believes that the State has thoroughly established that

basis through the provision of the NJCF Program elements. The NJCF

Program will both assure and encourage alternative fuel and AFV

development and use through elements such as EPAct purchase mandates

and the Incentive Development Program. The reader is referred to

section III. C. of this notice and the proposed approval at 62 FR 61951

for further detail regarding the NJCF Program elements. Additionally

since the publication of the NJCF Program proposed approval, New Jersey

supplemented its SIP revision with a March 30, 1998 letter from NJDEP

which details further enhancements to the NJCF program. These include:

an ATV Incentive Plan which will encourage the purchase of ULEV and

cleaner technology vehicles; plans for a Mobile Source Outreach

Strategy for the Northeast, which includes a LEV component; and a

broadening of State alternative fueling station use to include access

by local governments, contingent on NJCF Program approval in the SIP.

Comment: The State did not properly preserve its right to Opt Out

of the federal CFFP as it did not indicate any specific substitute

measures that would be used to achieve the required reductions. The

NRDC Appellate Court Decision does not allow any preservation of this

option.

Response: The commentor is asserting that failure to specify an opt

out program prior to May 1992 means that the State can no longer opt

out of the federal CFFP. EPA has interpreted that states' continued

ability to opt out now does not depend on them having submitted such a

specification prior to May of 1992. As stated in EPA's proposed

approval of the NJCF program published on November 20, 1997 at 62 FR

61948, in its decision that EPA's conditional approval policy was

contrary to law [NRDC v. EPA, 22 F.3d. 1125 (D.C. Cir. 1994)], the

court did not want to penalize states for their reliance on EPA's

actions. Therefore, EPA is considering all relevant submissions made

thus far by the State that are intended to substitute for the federal

CFFP. Moreover, EPA has interpreted that the May 1992 deadline is a

deadline without a consequence, and therefore there is no time

constraint regarding EPA's approval of such an opt out program.

V. Summary of Action

In this final rule, EPA is approving New Jersey's SIP revision

submitted to fulfill the federal Clean Fuel Fleet requirements of the

Clean Air Act. EPA believes New Jersey's Clean Fleet program,

backstopped by the adopted New Jersey LEV program implementing NLEV is

an adequate substitute for the federal Clean Fuel Fleet program under

section 182(c)(4).

VI. Administrative Requirements

A. Executive Order 12866

The Office of Management and Budget (OMB) has exempted this

regulatory action from Executive Order (E.O.) 12866, entitled

``Regulatory Planning and Review.''

B. Executive Order 12875

Under E.O. 12875, EPA may not issue a regulation that is not

required by statute and that creates a mandate upon a state, local, or

tribal government, unless the Federal government provides the funds

necessary to pay the direct compliance costs incurred by those

governments. If the mandate is unfunded, EPA must provide to the Office

of Management and Budget a description of the extent of EPA's prior

consultation with representatives of affected state, local, and tribal

governments, the nature of their concerns, copies of written

communications from the governments, and a statement supporting the

need to issue the regulation. In addition, E.O. 12875 requires EPA to

develop an effective process permitting elected officials and other

representatives of state, local, and tribal governments ``to provide

meaningful and timely input in the development of regulatory proposals

containing significant unfunded mandates.''

Today's rule does not create a mandate on state, local or tribal

governments. The rule does not impose any enforceable duties on these

entities. Accordingly, the requirements of section 1(a) of E.O. 12875

do not apply to this rule.

C. Executive Order 13045

Protection of Children from Environmental Health Risks and Safety

Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is

determined to be ``economically significant'' as defined under E.O.

12866, and (2) concerns an environmental health or safety risk that EPA

has reason to believe may have a disproportionate effect on children.

If the regulatory action meets both criteria, the Agency must evaluate

the environmental health or safety effects of the planned rule on

children, and explain why the planned regulation is preferable to other

potentially effective and reasonably feasible alternatives considered

by the Agency.

This rule is not subject to E.O. 13045 because it does not involve

decisions intended to mitigate environmental health or safety risks.

D. Executive Order 13084

Under E.O. 13084, EPA may not issue a regulation that is not

required by statute, that significantly affects or uniquely affects the

communities of Indian tribal governments, and that imposes substantial

direct compliance costs on those communities, unless the Federal

government provides the funds necessary to pay the direct compliance

costs incurred by the tribal governments. If the mandate is unfunded,

EPA must provide to the Office of Management and Budget, in a

separately identified section of the preamble to the rule, a

description of the extent of EPA's prior consultation with

representatives of affected tribal governments, a summary of the nature

of their concerns, and a statement supporting the need to issue the

regulation. In addition, Executive Order 13084 requires EPA to develop

an effective process permitting elected and other representatives of

Indian tribal governments ``to provide meaningful and timely input in

the development of regulatory policies on matters that significantly or

uniquely affect their communities.''

Today's rule does not significantly or uniquely affect the

communities of Indian tribal governments. This action does not involve

or impose any requirements that affect Indian Tribes Accordingly, the

requirements of section 3(b) of E.O. 13084 do not apply to this rule.

E. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency

to conduct a regulatory flexibility analysis of any rule subject to

notice and comment rulemaking requirements unless the agency certifies

that the rule will not have a significant economic impact on a

substantial number of small entities. Small entities include small

businesses, small not-for-profit enterprises, and small governmental

jurisdictions. This final rule will not have a significant impact on a

substantial number of small entities because SIP approvals under

section 110 and subchapter I, part D of the Clean Air Act do not create

any new requirements but simply approve requirements that the State is

already

[[Page 62954]]

imposing. Therefore, because the Federal SIP approval does not create

any new requirements, I certify that this action will not have a

significant economic impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-State relationship under the

Clean Air Act, preparation of flexibility analysis would constitute

Federal inquiry into the economic reasonableness of state action. The

Clean Air Act forbids EPA to base its actions concerning SIPs on such

grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976);

42 U.S.C. 7410(a)(2).

F. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA

must prepare a budgetary impact statement to accompany any proposed or

final rule that includes a Federal mandate that may result in estimated

annual costs to State, local, or tribal governments in the aggregate,

or to private sector, of $100 million or more. Under section 205, EPA

must select the most cost-effective and least burdensome alternative

that achieves the objectives of the rule and is consistent with

statutory requirements. Section 203 requires EPA to establish a plan

for informing and advising any small governments that may be

significantly or uniquely impacted by the rule.

EPA has determined that the approval action proposed does not

include a Federal mandate that may result in estimated annual costs of

$100 million or more to either State, local, or tribal governments in

the aggregate, or to the private sector. This Federal action approves

pre-existing requirements under State or local law, and imposes no new

requirements. Accordingly, no additional costs to State, local, or

tribal governments, or to the private sector, result from this action.

D. Submission to Congress and the Comptroller General

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the

Small Business Regulatory Enforcement Fairness Act of 1996, generally

provides that before a rule may take effect, the agency promulgating

the rule must submit a rule report, which includes a copy of the rule,

to each House of the Congress and to the Comptroller General of the

United States. EPA will submit a report containing this rule and other

required information to the U.S. Senate, the U.S. House of

Representatives, and the Comptroller General of the United States prior

to publication of the rule in the Federal Register. This rule is not a

``major'' rule as defined by 5 U.S.C. 804(2).

H. Petitions for Judicial Review

Under section 307(b)(1) of the Clean Air Act, petitions for

judicial review of this action must be filed in the United States Court

of Appeals for the appropriate circuit by January 11, 1999. Filing a

petition for reconsideration by the Administrator of this final rule

does not affect the finality of this rule for the purposes of judicial

review nor does it extend the time within which a petition for judicial

review may be filed, and shall not postpone the effectiveness of such

rule or action. This action may not be challenged later in proceedings

to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Incorporation by

reference, Nitrogen dioxide, Ozone, Volatile organic compounds.

Dated: September 30, 1998.

William J. Muszynski,

Acting Regional Administrator, Region III.

Part 52, chapter I, title 40 of the Code of Federal Regulations is

amended as follows:

PART 52--[AMENDED]

1. The authority citation for part 52 continues to read as follows:

Authority: 42 U.S.C. 7401 et seq.

Subpart FF--New Jersey

2. Section 52.1570 is amended by adding new paragraph (c)(65) to

read as follows:

Sec. 52.1570 Identification of plan.

* * * * *

(c) * * *

(65) Revision to the New Jersey State Implementation Plan (SIP) for

ozone, submitting a New Jersey Clean Fleets program with Ozone

Transport Commission Low Emission Vehicle (OTC-LEV) program as an

effective backstop, substituted for the Clean Fuel Fleet program, dated

February 15, 1996, March 29, 1996, and March 6, 1997, submitted by the

New Jersey Department of Environmental Protection (NJDEP).

(i) Incorporation by reference. Title 7, Chapter 27, Subchapter 26,

``Ozone Transport Commission Low Emission Vehicles Program,'' effective

December 18, 1995.

(ii) Additional material.

(A) Letter dated February 15, 1996 from NJDEP Commissioner Shinn to

Region 2 Administrator Jeanne M. Fox transmitting first version of NJCF

program.

(B) Letter dated March 29, 1996 from NJDEP Commissioner Shinn to

Region 2 Administrator Jeanne M. Fox supplementing February 15, 1996

submittal.

(C) ``SIP Revision for the Attainment and Maintenance of the Ozone

National Ambient Air Quality Standards, New Jersey Clean Fleets (NJCF)

SIP,'' March 6, 1997.

(1) NJCF Appendix D: ``New Jersey Clean Fleets (NJCF) Program (1996

Action Plan Recommendations).''

(2) NJCF Appendix H: Response to Public Comments, NJCF Program,

dated February 14, 1997.

(3) February 20, 1998 letter from Sharon Haas, Principal

Environmental Specialist, NJDEP, to George Krumenacker, Transportation

Services Specialist I, Bureau of Transportation Services, New Jersey

Department of Treasury.

(4) March 25, 1998 Memo from Colleen Woods, Acting Director, Motor

Vehicle Services, to Sharon Haas, Principal Environmental Specialist,

NJDEP.

3. In Sec. 52.1605 the table is amended by adding a new entry for

Subchapter 26 under the heading ``Title 7, Chapter 27'' to the table in

numerical order to read as follows:

Sec. 52.1605 EPA-approved New Jersey regulations.

----------------------------------------------------------------------------------------------------------------

State

State regulation effective EPA approved date Comments

date

----------------------------------------------------------------------------------------------------------------

* * * * * *

*

Title 7, Chapter 27

[[Page 62955]]

* * * * * *

*

Subchapter 26, ``Ozone 12/18/95 Nov. 10, 1998, 63 FR 62955.... Approves Subchapter 26 ``OTC-LEV

Transport Commission Low program'' which as adopted

Emission Vehicles Program''. states that New Jersey will not

implement its California LEV

program in the event that EPA

finds National LEV to be ``in-

effect.'' EPA's March 2, 1998

National LEV in-effect finding

thus makes National LEV the

effective program contained in

Subchapter 26. Subchapter 26 is

approved here as an effective

enforceable backstop to

voluntary New Jersey Clean

Fleets program.

----------------------------------------------------------------------------------------------------------------

* * * * *

[FR Doc. 98-29968 Filed 11-9-98; 8:45 am]

BILLING CODE 6560-50-U