Approval and Promulgation of State Implementation Plans; CaliforniaSouth Coast

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA-227-151; FRL-6355-9]

Approval and Promulgation of State Implementation Plans;

California--South Coast

AGENCY: Environmental Protection Agency (EPA).

[[Page 30277]]

ACTION: Proposed rule.

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

SUMMARY: EPA is concluding the Public Consultative Process (PCP) on

mobile source emission reductions needed for attainment of the 1-hour

ozone national ambient air quality standard (NAAQS) in the Los Angeles-

South Coast Air Basin Area (South Coast). EPA is proposing to approve

the State's update to the state implementation plan (SIP) for ozone in

the South Coast to reflect the outcome of this process and the

implementation status of some of the control measures. EPA is also

proposing to approve the State's joint commitment with EPA to issue

regulations to eliminate the remaining SIP shortfall as determined

appropriate for each agency. EPA is proposing these actions under

provisions of the Clean Air Act (CAA) regarding EPA action on SIP

submittals, SIPs for NAAQS, and plan requirements for nonattainment

areas.

DATES: Written comments must be received by June 21, 1999. On June 9,

1999, from 1 pm to 4 pm, EPA will hold a public meeting in Los Angeles

to discuss the Public Consultative Process, continuing Federal and

State mobile source responsibilities and commitments, and future

revisions to the ozone SIP.

ADDRESSES: Comments should be sent to Dave Jesson, Air Planning Office

(AIR-2), Environmental Protection Agency, Region IX, 75 Hawthorne

Street, San Francisco, CA 94105-3901, or [email protected].

The public meeting to discuss this proposed action will be held in

the Roybal Conference Room (Room 286) of the Roybal Federal Building,

255 East Temple Street, Los Angeles, CA.

The rulemaking docket for this notice is available for public

inspection at EPA's Region IX office during normal business hours. A

reasonable fee may be charged for copying parts of the docket.

Electronic availability: This document is also available as an

electronic file on EPA's Region 9 Web Page at http://www.epa.gov/

region09.

Copies of related materials are also available for inspection at

the following location: California Air Resources Board, 2020 L Street,

Sacramento, California.

FOR FURTHER INFORMATION CONTACT: Dave Jesson (415) 744-1288 or

[email protected].

SUPPLEMENTARY INFORMATION:

I. Background

A. 1994 Ozone SIP

This proposed action relates to the 1994 ozone SIP for the South

Coast Air Basin (``South Coast'') in California.1 In 1998,

the South Coast recorded 1-hour levels at or above the NAAQS for ozone

on 62 days, with a peak concentration of 0.244 parts per million (ppm),

twice the NAAQS.2 The area continues to have by far the

worst smog problem in the country.3

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

\1\ For a description of the boundaries of the Los Angeles-South

Coast Air Basin, see 40 CFR 81.305. The nonattainment area includes

all of Orange County and the more populated portions of Los Angeles,

San Bernardino, and Riverside Counties.

\2\ The 1-hour NAAQS for ozone is 0.12 ppm. Ground-level ozone

is formed when nitrogen oxides (NOX), volatile organic

compounds (VOCs), and oxygen react in the presence of sunlight,

generally at elevated temperatures. Strategies for reducing smog

typically require reductions in both VOC and NOX

emissions.

Ozone causes serious health problems by damaging lung tissue and

sensitizing the lungs to other irritants. When inhaled, even at very

low levels, ozone can cause acute respiratory problems; aggravate

asthma; cause temporary decreases in lung capacity of 15 to 20

percent in healthy adults, cause inflammation of lung tissue; lead

to hospital admissions and emergency room visits; and impair the

body's immune system defenses, making people more susceptible to

respiratory illnesses, including bronchitis and pneumonia. Children

are most at risk from exposure to ozone because they breathe more

air per pound of body weight than adults; their respiratory systems

are still developing and thus more susceptible to environmental

threats; and children exercise outdoors more than adults in the

high-ozone months of summer.

Direct exposure to NOX and VOCs also has adverse

public health consequences. Exposure to elevated NOX

concentrations can reduce breathing efficiency, increase lung and

airway irritation, and exacerbate symptoms of respiratory illness,

lung congestion, wheeze, and increased bronchitis in children. VOCs

include many toxic compounds (such as ()benzene), which can cause

respiratory, immunological, neurological, reproductive,

developmental, and mutagenic problems. Some VOCs have been

identified as probable or known human carcinogens.

\3\ According to preliminary information from EPA's AIRS

database, the areas with the highest peak 1-hour ozone concentration

for 1998 are: South Coast .244 ppm, Houston .230 ppm, Southeast

Desert (the area immediately to the east of the South Coast) .202

ppm, Ventura County .174 ppm, San Joaquin Valley .169 ppm, San Diego

County .164 ppm.

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

EPA approved the 1994 ozone SIP for the South Coast on January 8,

1997 (62 FR 1150-1187).4 In addition to aggressive State and

local control measures, the State's plan included seven ``Federal

measures,'' which the State believed EPA should adopt to control

national mobile sources. The State attributed to these measures the

following emission reductions in the South Coast in the year 2010: 109

tons per day (tpd) of NOX and 47 tpd of VOC.5

CARB calculated very much smaller emission reductions from the

``Federal measures'' in other ozone nonattainment areas of the State

(Ventura, Sacramento, Southeast Desert, San Joaquin, and San Diego).

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

\4\ The 1994 ozone SIP for the South Coast consists of two

plans: California's 1994 State Implementation Plan for Ozone, which

deals with the State's control measures, and the South Coast Air

Quality Management District's 1994 Air Quality Management Plan,

which includes all of the local control measures and other plan

elements. The State's plan is available electronically at the

California Air Resources Board's web site at www.arb.ca.gov/sip/

sip.htm.

\5\ The South Coast plan sometimes substitutes the term Reactive

Organic Gases (ROG) for VOC. These terms are essentially synonymous

and are used interchangeably throughout this document.

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

EPA did not agree that states have the authority to make these SIP

assignments, but the Agency agreed that the Federal government should

voluntarily help achieve emission reductions from sources beyond the

regulatory authority of the State, in view of the unique reduction

needs of the South Coast, the only ozone nonattainment area classified

as ``extreme'' under the 1990 CAA Amendments. With the assistance of

the State, EPA established a Public Consultative Process (PCP) to

identify future mobile source strategies to provide the remaining

reductions needed for attainment.

Both EPA and the California Air Resources Board (CARB) made

enforceable commitments to adopt additional controls to achieve

emission reductions determined to be appropriate at the end of the PCP.

40 CFR 52.238 and 40 CFR 52.220(c)(235)(I)(A)(I). EPA's final approval

of the 1994 ozone SIP for the South Coast included a projected schedule

for the PCP, with an initial meeting in July 1996 and a final meeting

in June 1997 (62 FR 1186).

B. Accomplishments in Reducing Emissions From Mobile Sources

1. Benefits of More Stringent Mobile Source Controls

After California adopted and submitted the South Coast 1994 ozone

SIP, CARB and EPA have undertaken stringent new controls for most

mobile source categories. It is important to note that these new mobile

source measures will bring multiple benefits not only to the South

Coast, but also to other areas of California and the nation.

First, the controls contribute emission reductions needed for

attainment of the Federal health-based NAAQS for ozone. Despite

significant progress over the past four decades, the South Coast

continues to have by far the worst ozone problem in the country. South

Coast's challenge in attaining the ozone NAAQS derives from the area's

meteorology and topography, on the one hand, and the area's large

population and industrial/commercial activity, on the other. As a

result, attainment of the ozone NAAQS in the South Coast requires

stringent

[[Page 30278]]

emissions reductions from every pollution source.

Second, the new mobile source standards also contribute reductions

of particulate matter (PM, or soot), both by reducing (in many cases)

emissions of primary particulate and by reducing gaseous PM precursors.

In the South Coast, NOX is one of the largest sources of PM,

and emissions of VOC and sulfur oxides also contribute to formation of

PM. The South Coast has one of the worst PM problems of urban areas in

the country.

Third, mobile sources are a contributor to urban air toxics levels.

For example, a number of adverse health effects have been associated

with exposure to diesel exhaust levels found in the ambient air.

Fourth, the new mobile source controls discussed below help achieve

parity of control, since many of the mobile source categories were

previously uncontrolled or undercontrolled compared to requirements

imposed on stationary industrial and commercial sources of pollution.

2. Overview of Federal Measures

The discussion below gives a brief overview of the State's

``assignments'' to EPA, followed by a description of promulgated or

pending Federal controls.6 Additional information on EPA's

national controls may be found at EPA's mobile source homepage

(www.epa.gov/omswww). More details on California's own mobile source

programs may be found in section I.E.1, and at CARB's homepage

(www.arb.ca.gov/msprog).

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

\6\ Although EPA determined that the Federal assignments were

not an approvable portion of the 1994 ozone SIP, EPA has

nevertheless taken action to regulate most of these sources under

the authority provided in the CAA.

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

a. Heavy-Duty Onroad Vehicles. Measure M6 of California's 1994

ozone SIP calls for adoption by EPA of a national standard for heavy-

duty diesel vehicles. CARB assumed that the NOX standard

would be 2.0 grams per brake horsepower-hour (g/bhp-hr) and would be

implemented starting in 2004.

Both EPA and CARB have issued a 2.4 g/bhp-hr combined emission

standard for NOX and nonmethane hydrocarbons (NMHC) for

model year 2004 and later heavy-duty diesel engines used in trucks and

buses.7 The new standards represent a 50 percent reduction

in NOX from the 1998 and later model year NOX

standard. EPA and CARB settlement agreements with manufacturers of

heavy-duty vehicles and engines require early introduction of the 2004

engines beginning in October 2002. This settlement is discussed in

section I.B.2.h, below. Finally, for the remaining heavy-duty on-road

categories (i.e., the otto-cycle engines), EPA currently intends to

propose within the next 60 days a stringent NOX plus NMHC

emission standard effective in the 2004 model year. EPA expects to take

final action on this proposal by the end of 1999.

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

\7\ The standard also allows manufacturers the option of

certifying to a 2.5 g/bhp-hr NOX plus NMHC standard, with

a limit of 0.5 g/bhp-hr on NMHC.

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

b. Diesel Nonroad Engines. California's Measure M10 calls for

adoption by EPA of a national standard for off-road diesel equipment.

CARB proposed that the NOX emission standard would be 2.5 g/

bhp-hr and would be implemented starting in 2005.

From 1994 through 1998, EPA has issued standards for most

categories of nonroad diesel engines, covering diverse equipment

applications including farm tractors, bulldozers, road graders,

excavators, forklifts, logging equipment, and portable generators. The

standards are progressively phased in over the period 1996 through

2008, depending on engine type and size and the stringency of the

standard. The new controls will reduce emissions by as much as two-

thirds.

c. Industrial Equipment. Measure M12 provides for adoption by EPA

of a national standard for off-road equipment rated between 25 and 175

horsepower (hp), and fueled with gasoline or liquid petroleum gas

(LPG). CARB proposed that the standard would reduce NOX

emissions by at least 50 percent and hydrocarbon (HC) emissions by 75

percent.

In October 1998, CARB adopted new emission standards for spark-

ignition engines above 25 hp. These engines are used in forklifts,

airport ground service equipment, sweepers, generators, compressors,

and other industrial applications, as well as recreational equipment,

such as go-carts, all-terrain vehicles, and snowmobiles. The CARB

controls will reduce NOX and HC emissions by over 65 percent

from all spark-ignition engines in 2010.

On February 8, 1999, EPA issued a proposed finding under CAA

section 213(a) that large spark-ignition engines cause or contribute to

air pollution. If EPA finalizes this determination, EPA must propose

regulations for such engines by September 28, 2000, and EPA must issue

final regulations by September 28, 2001, in order to comply with a

consent decree.8 While it is not possible to estimate with

precision the emission reduction benefits from this rulemaking, the

standards might be comparable to CARB's, although the compliance

schedules may be different.

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

\8\ Under a June 9, 1998 modification to the September 23, 1993

Partial Consent Decree in Sierra Club v. Browner (D.D.C., No. 93-

0124 (NHJ)), EPA has until September 29, 2000 to make a final

determination that large gasoline engines do cause or contribute to

air pollution within the meaning of CAA section 213(a)(3).

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

d. Marine Vessels. Measure M13 assumes adoption of national and

international standards that will reduce NOX emissions from

new ocean-going marine engines by 30 percent. CARB assumed some ambient

air quality contributions from movement of the shipping channel further

from shore. Finally, M13 also assigns to EPA responsibility for issuing

standards for new marine diesel engines used in vessels operating

primarily in domestic waters, to reduce NOX emissions by at

least 65 percent.

On October 23, 1998, EPA issued final regulations for marine diesel

engines rated less than 37 kilowatts (50 hp). EPA issued proposed

regulations for new compression ignition (CI) marine engines rated at

or above 37 kilowatts on December 11, 1998. Under the terms of a

consent decree, EPA must issue the final regulations by November 23,

1999.9 These regulations will apply to new engines used for

propulsion and auxiliary power on commercial vessels in a variety of

marine applications, including fishing boats, tug and towboats,

dredgers, coastal cargo vessels, and ocean-going vessels. The proposed

regulations, if finalized, would apply NOX limits that will

reduce emissions nationally by approximately one-third.10

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

\9\ Under an October 6, 1997 modification to the September 23,

1993 Partial Consent Decree in Sierra Club v. Browner (D.D.C., No.

93-0124 (NHJ)), EPA has until November 23, 1999, to take final

action on the EPA's marine vessel regulations, proposed in August

29, 1997 and supplemented with a December 11, 1998 proposal. Under a

November 30, 1998 modification to the same consent decree, EPA has

until November 23, 1999 to issue a supplemental proposal for

recreational diesel-fueled marine engines and until October 31, 2000

to take final action on this supplemental proposal.

\10\ The long life span of these engines delays the full

benefits of the regulations. EPA's estimate of national emission

inventory impacts is a 10 percent decrease in 2010, 28 percent in

2020, and 34 percent in 2030.

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

In addition, the International Maritime Organization (IMO) has

adopted emission limits for all marine diesel engines rated above 130

kilowatts (kw) ocean-going vessels. These limits are contained in

Regulation 13 of Annex VI of the International Convention on the

Prevention of Pollution from Ships (MARPOL), which was adopted at

Diplomatic Conference on September 26, 1997. The Annex will enter into

[[Page 30279]]

force, and the NOX limits will be enforceable, twelve months

after fifteen countries, the combined merchant fleets of which

constitute not less than fifty per cent of the gross tonnage of the

world's merchant shipping, have ratified it. Because this may take

several years, Regulation 13 was designed to ensure that benefits

associated with the NOX limits begin to accrue as early as

possible. Specifically, the Annex VI NOX limits will apply

to any new marine diesel engines installed on a ship constructed on or

after January 1, 2000, and to any marine diesel engine that undergoes a

major conversion 11 on or after January 1, 2000. By ensuring

that the NOX limits will be enforceable back to these

engines and vessels once the Annex goes into force, ship owners and

engine manufacturers are expected to comply with the requirements

beginning January 1, 2000. Nevertheless, due to the very long lives of

these engines, the full benefits of the MARPOL standards may not be

realized until 2030. For this reason, and because many vessels serving

the Ports of Long Beach and Los Angeles already meet the Annex VI

standards, EPA and CARB expect that the MARPOL Annex VI NOX

limits will only contribute minimal SIP reductions in the South Coast

by 2010. More meaningful reductions would be achieved by a further

strengthening of the MARPOL NOX limits, and the 1997

Conference adopted a resolution that would permit review of those

limits at five year intervals after the entry into force of the Annex.

This may not happen for several years, however, and it may be necessary

to find a way to encourage the IMO to review these important emission

limits before that time.

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

\11\ ``Major conversion'' is defined in Regulation 13 of Annex

VI as meaning an engine that is replaced by a new engine built on or

after January 1, 2000; is substantially modified; or whose maximum

continuous rating is increased by more than 10%.

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

Under the PCP, EPA has held a series of stakeholder meetings to

discuss strategies to reduce pollution associated with the marine

vessel sector. Three workgroups were formed to focus on deep sea

vessels, harborcraft, and port infrastructure.

Because of questions regarding the costs and the benefits of moving

the shipping channel, members of the deep sea vessel workgroup signed

an MOA to fund a $400,000 tracer study in 1997 to compare onshore

emissions under the current and proposed alternative shipping channel.

Participants include EPA, CARB, SCAQMD, Navy, the shipping industry,

and the ports. This complex study has not yet been finalized. The

working group is also reviewing draft results from a study contracted

by EPA to assess the benefits of future emission standards and

alternative strategies, including strategies to reduce ship speed and,

as a consequence, NOX emissions from the vessels. Finally,

CARB is leading a technical workgroup tasked with evaluating technical

issues associated with two alternative operational strategies for

ocean-going vessels, and issuing a report by the end of 1999.

The harborcraft workgroup has explored the possibility of an MOU,

under which the major tug operators might agree to a voluntary 20

percent reduction in NOX emissions. In 1997 EPA provided

$350,000 to the SCAQMD to help fund a tug retrofit demonstration

project. The project demonstrated the feasibility of a low-

NOX diesel engine capable of emitting at or below 5.5 g/bhp-

hr. Retrofits such as this may be subsidized under the Carl Moyer

Memorial Air Quality Standards Attainment Program, a $25 million clean

air measure enacted by the State of California in 1998. The State also

will receive $20 million in fines as a result of the settlement with

heavy-duty engine manufacturers for excess (off-cycle) emissions; some

of these funds may also be directed toward subsidies for cleaner

engines.

The Ports of Los Angeles and Long Beach have recently completed a

draft MOU on emission reductions from transportation infrastructure

improvements at the ports. These improvements have been accomplished in

recent years or will be completed over the next several years, and they

were generally not assumed in the 1994 ozone SIP. The port

modernizations will typically reduce truck emissions following

extension of the rail lines to the docks. Other infrastructure

improvements include road/rail grade separation projects, improved

navigational channels, and the Alameda Transportation Corridor Project.

e. Locomotives. Measure M14 assumes a two-thirds reduction in

locomotive NOX emissions by 2010 from the combination of

national locomotive standards and a clean locomotive fleet program in

the South Coast.

On April 16, 1998, EPA issued regulations for new and

remanufactured locomotives originally manufactured after 1972. The

regulations take effect in 2000 and will be fully phased in by 2005.

When full benefits from the standards are realized, the new standards

are expected to reduce NOX emissions by two-thirds and HC

and PM emissions by 50 percent. In order to accelerate benefits and

thereby achieve the SIP's 2010 emission reduction targets, California

and Class I freight railroads operating in the South Coast (i.e., Union

Pacific and Burlington Northern/Santa Fe) entered into an agreement for

a railroad fleet average emissions program (Memorandum of Mutual

Understandings and Agreements, South Coast Locomotive Fleet Average

Emissions Program, July 1998). In a Statement of Principles jointly

signed with CARB and the Class I railroads on May 14, 1997, EPA has

reserved its authority, in the event that the agreement fails to attain

its identified emission reductions, to assure that the reductions

called for in the agreement are achieved from the railroad sector and/

or, if necessary, from other national transportation sources.

f. Aircraft. Measure M15 calls for EPA to adopt commercial aircraft

engine standards that are 30 percent more stringent than existing

standards for VOC and NOX emissions.

(1) Emission Standards

Due to the international nature of the aviation industry, the

International Civil Aviation Organization (ICAO) has been the forum for

establishing international commercial aircraft engine standards. On May

8, 1997, EPA issued regulations reflecting the most recent standards

adopted by the ICAO's Committee on Aviation Environmental Protection

(CAEP). While these standards represent a 20 percent reduction from the

previous ICAO limits for NOX issued in 1981, no additional

emission reductions are anticipated, since virtually all new commercial

aircraft already are equipped with engines meeting the ICAO standards.

ICAO is not expected to issue new standards until early 2001.

(2) Voluntary Agreement To Reduce Emissions From Ground Service

Equipment (GSE)

EPA, CARB, SCAQMD, the Air Transport Association (ATA) and its

member airlines, the Federal Aviation Administration (FAA), local

commercial airports, environmental groups, and other stakeholders have

met during the Public Consultative Process to identify ways to achieve

additional reductions from the commercial aviation community. ATA is

drafting an MOU to achieve these reductions at the five major

commercial airports in the South Coast through use of cleaner GSE than

otherwise required by applicable emission standards. When implemented,

the MOU would yield small but important emission reductions through

options including increased fleet turnover, greater use of engines

employing alternative fuels, and electrification.

[[Page 30280]]

(3) Other Voluntary Initiatives

On March 24, 1998, EPA and FAA signed an agreement to coordinate

environmental matters regarding aviation. Among other measures, EPA and

FAA agreed to develop a voluntary engine emission kit retrofit program

and encourage the adoption of the voluntary program by the aviation

community. Since the execution of the agreement, the focus of the

voluntary process has broadened to consider a wider range of possible

options for emission reductions from aircraft and at airports. The EPA-

FAA agreement includes the following provision: ``If the voluntary

program is not successful, the parties agree to consider other

mechanisms within the authorities of the respective agencies to achieve

implementation of retrofit technologies in its fleet.''

ICAO's CAEP has also established an Emissions Technical Issues

Working Group with subgroups to develop: (1) best operating practices

to reduce emissions from aircraft, GSE, and auxiliary power units

(APUs); (2) market-based options (caps, charges, etc.) to provide

incentives for further reductions; and (3) approaches to secure air

quality benefits from improved air traffic management and airport

planning.

Beginning in 1998, EPA, FAA, and Department of Defense have been

working with industry and environmental groups in this country to

reduce pollution levels by means of advanced air traffic management

systems and related technologies.

EPA, SCAQMD, and the City of Los Angeles have worked with the

Budget rental car agency to establish at LAX in December 1998 the first

electric vehicle rental options in the country. Through cooperative

efforts with the SCAQMD and clean-fuel stakeholders, LAX and other

airports in the area have established other important programs for use

of clean alternative fuels in shuttles and delivery vehicles.

EPA has provided grants to support the Clean Airport Partnership.

Among other activities, the partnership holds national airport summit

meetings to find ways to reconcile airport growth and environmental

progress.

(4) Research to Develop Cleaner Aircraft Engines

In the fall of 1998, EPA and the National Aeronautics and Space

Administration (NASA) signed an MOA to formalize working agreements on

aeronautical research and technology. NASA is continuing to explore the

potential for additional emission reductions that could be achieved

from technological improvements in the design of new and rebuilt

commercial aircraft engines.

g. Marine Pleasurecraft. Measure M16 assumes that EPA will issue

national standards to reduce HC emissions from marine pleasurecraft by

75 percent.

EPA has issued standards for recreational marine 2-stroke outboard

engines and personal watercraft (such as jet skis), effective July

1996. The standards are phased in over a 9-year period to achieve a 75

percent reduction in HC. EPA has begun rulemaking to set emission

limits for recreational 4-stroke sterndrive and inboard engines. These

rules, if finalized, would establish standards for both gasoline and

diesel recreational marine engines. However, the final implementation

schedule for any such standards may not allow for rapid enough fleet

turnover to accomplish all of the remaining 2 tpd of ROG emission

reductions targeted by M16.

h. Additional Reductions beyond the Federal Assignments.

(1) Heavy-Duty Diesel Off-Cycle Settlement

In late 1998, EPA and CARB announced settlements of enforcement

cases against manufacturers of heavy-duty diesel engines.12

Among the settlement provisions were agreements by the manufacturers to

introduce nationwide in October 2002, rather than 2004, engines meeting

the 2.4 g/bhp-hr combined NOX and NMHC standard, discussed

in section I.B.2.a., above. CARB assumes that 25 percent of vehicle

miles traveled (VMT) by heavy-duty diesel vehicles in the South Coast

in 2010 will be from out-of-state vehicles. As a result, the early

introduction of trucks meeting the new national standard will

contribute emission reductions toward attainment of the ozone standard.

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

\12\ On October 22, 1998, EPA and CARB announced settlement of

enforcement cases brought against Caterpillar, Cummins, Detroit

Diesel, Volvo, Mack Trucks/Renault and Navistar. These manufacturers

had equipped their engines with defeat devices that advanced the

fuel injection timing when vehicles were driven at steady highway

speeds, thereby improving fuel economy at the expense of increased

NOX emissions. The settlement also involves civil

penalties and agreements by the manufacturers to provide over $100

million in funding for environmental projects either identified in

the consent decrees or awarded to project applicants. California

will receive 25 percent of the penalty funds and 20 percent of the

project funds collected in the joint enforcement actions.

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

(2) National Tier 2 Motor Vehicle Standards

In November 1998, CARB adopted more stringent standards for light-

duty cars and trucks and medium-duty vehicles up to 14,000 lbs. gross

vehicle weight, as part of California's Low-Emission Vehicle (LEV)

regulations. These standards, known as LEV II, were primarily intended

to reduce NOX emissions, especially from sport utility

vehicles and light trucks. EPA is initiating rulemaking to promulgate

new ``Tier 2'' national vehicle standards that are comparable to

California's LEV II program. If finalized, EPA's standards would

provide benefits in the South Coast not anticipated in the 1994 ozone

SIP, by reducing the emissions of vehicles that have migrated into the

area from out of the state.13 The ozone SIP assumes that

230,000 vehicles in the categories affected by the Tier 2 standards

will travel 7.8 million miles in the South Coast in 2010.

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

\13\ Some additional benefits may be associated with future EPA

regulations restricting sulfur in gasoline, since the cleaner

gasoline would increase the durability of catalytic converters.

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

C. Remaining Shortfall

As shown in Table 1 below, CARB and EPA currently estimate that

final or pending Federal measures will achieve approximately the

following emission reductions in the South Coast in 2010: 94 tpd

NOX and 39 tpd VOC. This leaves a projected shortfall of

approximately 15 tpd NOX and 8 tpd VOC in the attainment

demonstration for the South Coast, based on emission factors, models,

and inventories consistent with those used in the 1994 ozone SIP.

Status of Federal Measures

[Tons per Day in the South Coast in 2010]

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

Assignment Achieved/pending

Measure ---------------------------------------------------------------

NOX ROG NOX ROG

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

M6--HD Diesel Onroad Vehicles................... 16 2 16 2

[[Page 30281]]

M10--Diesel Nonroad............................. 44 5 41 9

M12--Industrial Equipment \1\................... 13 25 6 18

M13--Marine Vessels............................. 9 .............. 2 ..............

M14--Locomotives................................ 23 .............. 23 ..............

M15--Aircraft................................... 4 3 .............. ..............

M16--Pleasure Craft............................. .............. 12 .............. 10

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

Total....................................... 109 47 88 39

National Tier 2 Standards \1\................... .............. .............. 4 ..............

Heavy-Duty Settlement........................... .............. .............. 2 ..............

===============================================================

Grand Total................................. 109 47 94 39

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

Shortfall................................... .............. .............. 15 8

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

\1\ The rulemakings for these standards have not been completed and, therefore, the reduction numbers are

projections.

Much of the shortfall is due to the State's expectation that EPA

would issue stringent standards for commercial aircraft engines and

ocean-going vessels, and that turnover in these engines would be rapid

enough to achieve substantial reductions by 2010. As noted above,

emissions standards for these categories have been established

internationally through organizations within the United Nations.

Unfortunately, the existing standards set by ICAO and the IMO will not

achieve significant reductions by 2010 from commercial aircraft and

ocean-going vessels, particularly due to the long lifespan of these

engines.

There are also small shortfalls associated with M10 (Diesel

Nonroad) and M16 (Pleasurecraft), and expected from forthcoming EPA

regulations for M12 (Industrial Equipment). This would result if the

national regulations establish standards or compliance schedules less

aggressive than CARB had assumed.

D. EPA Proposed Consent Decree and Settlement Agreement

When EPA took final action to approve the 1994 ozone SIP, EPA

expected to complete the PCP in June 1997. In lieu of approving the

Federal measure assignments, the final action approving the SIP

included commitments by EPA to undertake rulemaking at the PCP

conclusion to issue any controls that were determined to be appropriate

for EPA. EPA approved California's commitment to take the following

actions as appropriate after the PCP: (1) to revise the South Coast

attainment demonstration by December 31, 1997, to reflect the results

of the PCP; and (2) to issue regulations by December 31, 1999, to

accomplish those emission reductions determined to be appropriate for

CARB.

Difficult issues associated with aviation and shipping strategies

have required more time to resolve than EPA initially anticipated, and

EPA has not yet concluded the PCP. In 1998, the Coalition for Clean

Air, Natural Resources Defense Council, and Communities for a Better

Environment amended a complaint against EPA originally filed in 1997

(Coalition for Clean Air, et al. vs. SCAQMD, CARB, and USEPA, No. CV

97-6916 HLH (C.D. CA.)). The amended complaint sought relief against

EPA for failing to adopt Measure M13 (Marine Vessels) and Measure M15

(Aircraft) or substitutes with greater or equivalent emissions, failing

to conclude the PCP in June 1997, and failing to determine the

respective obligations of EPA and the State as to the additional

emission reductions needed.

Under a proposed consent decree with the environmental plaintiffs,

EPA has now committed to conclude the PCP. The proposed settlement was

signed by all parties and lodged with the Court on November 13, 1998,

in the form of a stipulation, consent decree, and settlement agreement.

EPA issued a notice of the pending settlement on December 9, 1998 (63

FR 67879), consistent with CAA section 113(g). Parties filed a motion

to enter the agreement on May 10, 1999.

1. Consent Decree

The proposed consent decree includes the following EPA commitments:

1. EPA shall, pursuant to the Clean Air Act and 40 CFR 52.238,

conclude the South Coast mobile source public consultative process by

determining by July 1, 1999:

a. What, if any, Volatile Organic Compounds (``VOC'') and Nitrogen

Oxides (``NOX'') mobile source controls, including

associated emissions reductions, are needed to attain the 1-hour ozone

National Ambient Air Quality Standard (``NAAQS'') in the South Coast

Air Basin by no later than November 15, 2010 and are appropriate for

EPA to promulgate;

b. EPA's rulemaking schedule for the controls identified in

subparagraph 1(a). In determining such schedule, EPA will attempt to

propose as many such measures as feasible by no later than December 31,

2000 and to promulgate final measures by no later than December 31,

2001;

c. What, if any, VOC and NOX mobile source emission

reductions are needed to attain the 1-hour ozone NAAQS in the South

Coast Air Basin by no later than November 15, 2010 and are appropriate

for the State of California to achieve through enforceable measures;

and

d. The schedule for the State to submit to EPA a revised

demonstration to attain the 1-hour NAAQS in the South Coast Air Basin

by no later than November 15, 2010.

2. 40 CFR 52.220(c)(235)(I)(A)(1) contains a State commitment to

submit control measures to achieve emission reductions determined to be

appropriate, if any, by December 31, 1999. However, prior to July 1,

1999, EPA will discuss with the State whether the deadline in such

commitment is still appropriate.

EPA is proposing to take the actions described in Section II of

this document to comply with these provisions in the pending consent

decree.

[[Page 30282]]

2. Settlement Agreement

Accompanying the consent decree is a proposed settlement agreement,

in which EPA agrees to undertake various additional activities as part

of its efforts to ensure that the Federal government does its share in

helping to solve the ozone problem in the South Coast. The proposed

settlement agreement commits EPA to the following specific actions. The

terms of the settlement agreement are reproduced for informational

purposes and are not proposed for public comment, although EPA does

invite suggestions from the public on the best ways for the Agency to

implement its commitments.

a. Federal Agencies. EPA Region 9 will, in consultation with the

General Services Administration (GSA) and the Department of Energy

(DOE), promote the purchase and use of low-emitting motor vehicles and

other emission reduction and pollution prevention activities by Federal

agencies located in the South Coast. With respect to the purchase of

low-emitting motor vehicles, EPA will, in consultation and coordination

with GSA and DOE, promote efforts of Federal agencies located in the

South Coast to meet or exceed the alternative-fuel vehicle purchase

requirements contained in the Energy Policy and Conservation Act and

Executive Order 13031, including the requirements that, starting on

July 1, 1999 and thereafter, at least 75 percent of the new vehicle

purchases by the Federal agencies for use in the South Coast be

alternative-fueled vehicles and that all Federal agencies located in

the South Coast take steps to maximize the emission reductions achieved

under this program.

b. Aircraft, Airport, Ocean-Going Vessels, and Ports. EPA will

continue to provide forums and staff and management support for

negotiating agreements to achieve feasible reductions in the South

Coast from these categories, through operational strategies. EPA will

also continue to work with lead Federal agencies negotiating

international controls on aircraft engines and ocean-going vessels to

achieve the greatest feasible emissions reduction benefits. Whenever

possible, EPA will involve CARB, SCAQMD, and the environmental groups

in these activities. EPA will provide to the public information on

actions taken by the airline industry pursuant to the FAA-EPA

agreement, and the emissions reductions achieved by these actions, and

will involve the public, as feasible and appropriate, in the

development and implementation of future agreements on voluntary

retrofit programs and other voluntary programs. Within 90 days of

issuing the final rulemaking on marine vessel engines, EPA will

complete an assessment of the feasibility of establishing incentive

programs designed to increase the number of lower emitting engines in

fleets which operate exclusively in the South Coast.

c. National Standards for Onroad Heavy-Duty Diesel-Cycle Engines.

During the public comment period following issuance of the proposed

1999 review to reassess the appropriateness of the year 2004 HDDV

standards, EPA will hold a public meeting in the Los Angeles area to

present information on the impacts of the HDDV standards on the South

Coast and any measures available and consistent with the Clean Air Act

to assure the maximum emission reductions from the HDDV rule in the

South Coast. Information from this meeting and other outreach efforts

relating to the South Coast will be considered in the final

determination made pursuant to the 1999 review.

d. Retrofit requirements for onroad and nonroad vehicles and

engines in the South Coast Air Basin. EPA will provide technical

assistance to CARB to use the State's authority to require retrofitting

of used nonroad engines. If CARB decides to provide incentives to

stimulate retrofit rather than to require it, EPA will provide

assistance in the State's efforts to comply with applicable Clean Air

Act requirements for approval and credit of such measures.

e. Concentration of Cleaner Preempted Engines (Farm and

Construction Equipment 14

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

\14\ EPA adopted the completeness criteria on February 16, 1990

(55 FR 5830) and, pursuant to section 110(k)(1)(A) of the CAA,

revised the criteria on August 26, 1991 (56 FR 42216).

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

1. Report on the Status of CARB Adoption of Control Measures in the

1994 Ozone SIP Submittal

CARB's report reviews the CARB and EPA accomplishments over the

past four years in adopting controls which CARB committed to adopt or

``assigned'' to the Federal government. The report also provides

references to adopted CARB regulations and associated emission

reductions which fulfill the majority of CARB's near-term obligations

under the 1994 ozone plan. The report uses the 1994 ozone SIP's

currency, i.e., the emissions factors and emissions inventories

consistent with those used in the 1994 ozone SIP, rather than improved

inventories. The report also uses the term Reactive Organic Gases (ROG)

in lieu of the Federal terminology, VOC.

The CARB update includes a table showing the status of CARB

measures in the 1994 ozone SIP (``CARB Progress toward 1994 SIP

Commitments'').

[[Page 30283]]

CARB Progress Toward 1994 SIP Commitments

[Tons per day in South Coast in 2010]

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

1994 SIP commitment Adopted or planned (Shortfall)

-------------------------------- rule -------------------------------

Source category and CARB measure ----------------------

ROG NOX ROG NOX ROG NOX

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

Passenger Cars and Light-Duty Trucks:

M1: Car Scrappage............................................. 14 11 0 0 (14) (11)

M2: Advanced Technology....................................... 10 15 7 25 (3) 10

Medium- and Heavy-Duty Gasoline Trucks:

M3: Accelerated emission standard............................. 3 33 3 27 0 (6)

M8: Emission standard......................................... 0 3 0 3 0 0

Heavy-Duty Diesel Trucks & Buses:

M4: Cleaner engine incentives................................. 0 1 0 1 0 0

M5: 2004 std plus early reductions............................ 5 56 5 51 0 (5)

New: Off-cycle diesel settlement.............................. .............. .............. 0 5 0 5

Off-Road Diesel Equipment:

M9: Emission standard--adopt 1999............................. 3 34 3 34 0 0

Off-Road Gasoline and LPG Equipment:

M11: Emission standard........................................ 23 12 25 7 2 (5)

Off-Road Motorcycles:

New: Emission standard........................................ .............. .............. 0.8 0.3 0.8 0.3

Marine Pleasurecraft

New: Emission standard beyond M16............................. .............. .............. 4 0 4 0

Cleaner-Burning Gasoline:

New: Combustion chamber deposits.............................. .............. .............. 0 10 0 10

Small Off-Road Engines:

Baseline: Changes to emission std............................. .............. .............. (2) 0 (2) 0

Consumer Products:

CP2: Mid-term measures........................................ 36 0 9 0 (27) 0

Aerosol Paints:

CP3: Aerosol paints standards................................. 7 0 5 0 (2) 0

CARB Settlement Commitments:

New: Measures adopted by 12/99................................ .............. .............. 12 0 12 0

New: Measures adopted by 12/00................................ .............. .............. 14 2 14 2

New: Measures adopted by 12/01................................ .............. .............. 16 0 16 0

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

Total for Measures due by 12/01........................... 101 165 101 165.3 0 0

.8

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

The following discussion summarizes the State's update with respect

to each CARB and EPA control measure identified in the State's 1994

submittal.

a. Light- and Medium-Duty Vehicles (State Measure M1--Accelerated

Retirement of Light-Duty Vehicles, and State Measure M2--Improved

Control Technology for Light-Duty Vehicles) Measure M1 called for

accelerated retirement of cars and light trucks. CARB expects to need

to pursue alternatives to the scrap program because of the lack of a

funding mechanism. Measure M2 provided for additional emission

reductions from cars and light trucks through more stringent emission

standards beginning in 2004. The Low-Emission Vehicle II (LEV II)

regulations implementing M-2 were adopted in November 1998 and achieved

52 tpd of emission reductions: 7 tpd of ROG and 45 tpd of

NOX. LEV II will provide 30 tpd of NOX reductions

beyond the M-2 commitment, and the State is applying 20 tpd toward the

long-term mobile source measure for advanced control technologies or

techniques (known as the ``Black Box'').15 LEV II also left

a 3 tpd ROG shortfall which must be made up through new measures.

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

\15\ CAA section 182(e)(5) authorizes EPA to approve long-term,

conceptual measures that rely on new technologies as part of the

attainment demonstration for the South Coast, the only ozone

nonattainment area classified as ``extreme'' under the CAA.

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

In 1998, CARB adopted a new measure calling for tighter emission

standards for on-road motorcycles to take effect beginning in 2000. The

emission reductions associated with this measure were not included in

the SIP, and provide additional reductions toward the CARB's overall

commitments.

b. Medium- and Heavy-Duty Gasoline Trucks (State Measure M3--

Accelerated Ultra-Low Emitting Vehicle Requirement for Medium-Duty

Vehicles; State Measure M8--Heavy-Duty Gasoline Vehicles; Lower

Emission Standards in California). Measure M3 was adopted in 1995, but

a calculation error in the 1994 SIP resulted in a shortfall in the

associated emission reductions even though the regulation achieved the

performance standard specified in the SIP. Measure M8 for heavy-duty

gasoline trucks was also adopted in 1995, and achieved the performance

standard in the SIP.

c. Heavy-Duty Trucks and Buses (State Measure M4--Heavy-Duty Diesel

Vehicles; Early Introduction of 2.0 g/

[[Page 30284]]

bhp-hr NOX Engines in Fleets through Incentives; State

Measure M5--Heavy-Duty Diesel Vehicles; additional NOX

Reductions in California; State Measure M7--Accelerated Retirement of

Heavy-Duty Vehicles). CARB is currently implementing M4 through the

Carl Moyer program and the State is also working to secure continuing

funding for the Carl Moyer program. Measure M5 required a California

emission standard for heavy-duty diesel trucks and buses that would

parallel national standards to be implemented in 2004. California

adopted the national standard in 1998, achieving over 90 percent of the

M5 commitment. This measure also assumed that California would

implement the new national standard for diesel trucks and buses two

years early (in 2002). However, based upon further analysis, CARB

concluded that a California-only standard could harm the state's

economy without providing any emission benefits if truck operators

simply based their operations out of state. The 5 tpd of emission

benefits associated with an early California-only standard will be

achieved through the diesel off-cycle settlement, discussed above in

section I.B.2.h.

Measure M7 in the original 1994 SIP was replaced with measure M-17

in 1998. Measure M-17 is a long-term commitment to reduce emissions

from heavy-duty diesel engines through in-use compliance programs and

possibly further incentives.

d. Off-Road Equipment (State Measure M9--Off-Road Diesel

Equipment--2.5 g/bhp-hr NOX Standard; State Measure M11--

Industrial Equipment, Gas & LPG). CARB is currently developing a

regulation to implement measure M9 to reduce emissions from off-road

diesel equipment. Under the terms of a 1996 agreement between CARB,

EPA, and the engine manufacturers, emission standards for off-road

diesel engines will phase-in beginning in 2001--four years earlier than

expected in the SIP. This measure is in development and will be

considered by the Board in 1999.

Under measure M11, CARB adopted new emission standards for off-road

equipment (like forklifts) powered by spark-ignition engines. The

adopted regulation provides 2 additional tpd of ROG emissions, but

falls 5 tpd short of the NOX commitment.

In 1998, CARB modified existing emission standards for small off-

road engines, such as those used in lawn and garden equipment, to

address technical feasibility concerns and higher than expected

deterioration in emission performance. The modified regulations focus

on reducing deterioration. However, because deterioration emissions

were not included in the 1994 SIP inventory, there is no credit in 1994

SIP currency for these reductions. The 2 tpd shortfall resulting from

the regulatory changes must be made up through other strategies.

In 1998, CARB also adopted new emission standards for marine

pleasurecraft, such as outboard motors, personal watercraft, and small

jet boats. In the process of improving the emission inventory, CARB

found that emissions from marine pleasurecraft were much higher than

assumed in the 1994 SIP. The new emission standards will achieve

significant real emission reductions. However, because the marine

pleasurecraft inventory in the 1994 SIP is modest, the emission

reductions in SIP currency are relatively small. Nevertheless, the new

marine pleasurecraft standards provide additional reductions in 2010.

When the statewide SIP strategy is revised in 2000, CARB will update

the marine pleasurecraft inventory and take full credit for the

benefits of the new regulation.

e. Mobile Source Fuels. With the introduction of cleaner-burning

gasoline in 1996, gasoline refiners also introduced additives to reduce

combustion chamber deposits. The decrease in combustion chamber

deposits led to an unexpected additional decrease in NOX

emissions. In 1998, CARB adopted regulations to require the use of such

additives to ``lock in'' the NOX benefits already realized.

The emission benefits of this regulation will decrease over time,

providing 10 tpd of additional NOX reductions in the South

Coast in 2010.

f. Consumer Products and Aerosol Paints. The 1994 SIP called for 43

tpd of ROG reductions from consumer products and aerosol paints

measures to be adopted by 1997. Adopted measures thus far have achieved

14 tpd of emission reductions, leaving a shortfall of 29 tpd. The State

believes that additional reductions from consumer products are

achievable, but at a lower level of effectiveness than called for in

the SIP. As a result, CARB expects to look to other source categories

to provide supplemental emission reductions in the near-term, and re-

evaluate the appropriate level for long-term commitments for consumer

products in the next comprehensive SIP update in 2000.

g. State Actions to Eliminate Near-Term Emissions Reduction

Shortfall. The State's SIP update acknowledges that the total near-term

reductions achieved fall short of CARB's SIP goal. In SIP currency,

CARB has a near-term shortfall of 42 tpd of ROG and 2 tpd of

NOX. The State presents the following description of its

activities in the future to address this shortfall:

We recognize our responsibility to eliminate these deficits so

that the ozone standard can be attained by the statutory deadline.

Over the next three years, ARB has agreed to adopt and implement

measures to eliminate the near-term shortfall. Toward that end, we

are planning to develop and propose a number of new regulatory

measures in 1999 and 2000, and to take further steps to address the

deficit.

ARB staff has pledged to consider, develop, and propose

regulations to reduce emissions associated with gasoline refueling,

revisit medium- and heavy-duty gasoline truck standards, reduce the

emission standard for heavy-duty buses, require the use of clean

diesel fuel in locomotives, adopt a suggested control measure for

architectural coatings, and pursue additional emission reductions

from consumer products. Additional or alternate measures may be

added or substituted so long as the aggregate emission reductions

are achieved.

EPA agrees with the State that this commitment reflects expeditious

action to achieve the reductions required in the 1994 ozone SIP.

h. Long-Term Measures. As discussed earlier, the SIP also commits

CARB to achieve 102 tpd of ROG and 30 tpd of NOX in the

long-term. The remaining long-term NOX commitment has been

reduced to 10 TPD because 20 TPD of the additional NOX

reductions from LEV II have been applied to the mobile source ``Black

Box.''

Among the long-term commitments is measure M17, a replacement

measure submitted to EPA in 1998 to substitute for measure M7,

accelerated retirement program for heavy-duty trucks. M17 relies on an

expanded in-use compliance program, which may include in-use

NOX testing plus supplementary incentives. The SIP submittal

identifies an adoption date of 2004, with implementation beginning in

2005. Under the terms of the State's settlement with the Natural

Resources Defense Council, Coalition for Clean Air, and Communities for

a Better Environment (Coalition for Clean Air, et al. vs. SCAQMD, CARB,

and USEPA, No. CV 97-6916 HLH (C.D. CA.)), CARB agreed to accelerate

the adoption of M17 to 2003, if technically feasible.

The remaining long-term commitments were not specifically addressed

in the lawsuit settlement. However, CARB will host a New Technologies

Symposium in October 1999 to explore technologies capable of achieving

zero and near-zero emissions, assess the feasibility of developing new

regulations based on the technologies, and preview CARB's latest

approaches

[[Page 30285]]

to making up the remaining SIP shortfalls.

2. CARB Review of Federal Actions That Contribute Emission Reductions

The State's report notes that EPA has made significant progress

toward reducing emissions from federal sources. The following section

summarizes the State's review of progress toward the Federal measures

for each source category.

a. Heavy-Duty Diesel Trucks and Buses. The State notes that EPA's

adoption of new national standards in 1997 achieved the Federal

emission reductions from heavy-duty diesel vehicles in Measure M6 of

the 1994 ozone SIP submittal. In addition, the State calculates an

additional 2 tpd of NOX emission reductions from the

settlement of the off-cycle enforcement action against diesel engine

manufacturers.

b. Off-Road Equipment. CARB states that EPA's 1998 national

standards for diesel engines used in off-road equipment implements

Measure M10 in the 1994 ozone SIP submittal. Under the terms of a 1996

agreement between CARB, EPA, and the engine manufacturers, emission

standards for off-road diesel engines will phase in beginning in 2001--

four years earlier than expected in the SIP. The adopted regulation

provides 4 tpd of ROG beyond the reductions assumed in the 1994 ozone

SIP submittal, but falls 3 tpd short in NOX reductions.

c. Marine Pleasurecraft. The State's report indicates that the 1994

ozone SIP submittal reflected EPA's original intent to control stern

drive engines, but EPA's 1995 emissions standards did not do so,

resulting in a shortfall of 2 tpd of ROG reductions compared to Measure

M16.

d. Locomotives. CARB concludes that EPA's stringent emission

standards for new and re-built locomotives, coupled with CARB's

Memorandum of Agreement with rail operators in the South Coast, are

together expected to achieve the full emission reductions from Measure

M14 in the 1994 ozone SIP submittal.

e. Marine Vessels. The State observes that marine vessels are among

the most challenging categories from which to obtain emission

reductions because emission standards are established through an

international process. CARB's report estimates that new IMO emission

standards that take effect in 2000 will provide 1.1 tpd of

NOX reductions. EPA's own emission standards for the captive

fleet of diesel marine engines provide an additional 0.5 TPD of

NOX reductions. Additional reductions of 7 TPD of

NOX would still need to be achieved to meet the target in

M13.

f. Aircraft. Regarding Measure M15, aircraft emission standards

have traditionally been set by ICAO. CARB states that, because EPA

preferred to work through the ICAO process to pursue aircraft engine

emission standards, the consultative process has focused on voluntary

strategies to reduce emissions from airport ground access

transportation and ground support equipment. EPA and FAA have also

convened a stakeholder process with state air agencies, airlines,

engine manufacturers, and other interested parties to try to develop a

national voluntary agreement for emission reductions from aircraft and

related sources. Since none of these approaches have been finalized,

there are no creditable emission reductions from aircraft or airports

yet.

3. CARB Recommendations for Near-Term Federal Initiatives

Based on EPA's completed rulemakings and initiatives that CARB

expects EPA to complete shortly, CARB concludes that the total

reductions fall short of the emission reductions called for from

Federal measures in the 1994 ozone SIP submittal by 8 tpd of ROG and 15

tpd of NOX. The State expresses its belief that new measures

under development or consideration by EPA, plus longer-term strategies,

offer the opportunity for significant additional emission reductions

from Federal sources to decrease or eliminate the remaining shortfall.

CARB observes that, in the near-term, EPA could develop various

strategies, which have the potential to help make up shortfalls. The

State identified the following possible Federal initiatives as under

development.

a. Light- and Medium-Duty Vehicles. CARB discusses potential Tier 2

standards for passenger cars and light trucks nationwide, which were

not anticipated in the 1994 SIP. The State already credits EPA with 4

tpd of NOX reduction in its shortfall analysis, and notes

that additional reductions might be achieved if the heavier sport-

utility vehicles are subject to an interim NOX standard in

the national program. In commenting on EPA's accompanying proposal to

limit sulfur in gasoline to levels currently required in California,

CARB notes that the sale of lower sulfur gasoline nationwide will

contribute to the success of the State's LEV II program by allowing

Californians to travel out of state without fear that dirtier gasoline

will poison the catalytic converter or degrade the emission control

system in their vehicles.

b. Heavy-Duty Gas Trucks. CARB notes that new national emission

standards for heavy-duty gasoline trucks might be issued in the near

future, providing additional benefits beyond CARB's M8 commitment for

reducing emissions from heavy-duty gasoline trucks.

c. Off-Road Spark-Ignition Equipment. The State discusses reduction

estimates from potential EPA regulations for off-road spark-ignition

engines. CARB estimates an emission reduction shortfall of 7 tpd ROG

and 7 tpd NOX, assuming that the regulations will be based

on California's standards but would be implemented in 2004 instead of

2001, due to EPA resource limitations.

d. Marine Pleasurecraft. CARB references national emission

standards for inboard engines used in marine pleasurecraft engines in

1999, with implementation beginning in 2004. CARB discusses the

possibility that in this rulemaking EPA may issue emissions standards

for recreational diesel marine engines, in the same timeframe as the

gasoline engines. The State believes that these sets of standards could

remedy the 2 tpd shortfall in ROG reductions that resulted from the

changes EPA made in its proposed marine pleasurecraft regulations when

the rules were finalized in 1995.

e. Marine Vessels. The State's update reports on the prospect of

final national emission standards for marine diesel engines. The State

discusses a technical workgroup that is evaluating technical issues

associated with potential operational strategies for deep sea marine

vessels (i.e., moving the shipping channel and/or speed reduction). The

working group expects to complete its technical assessment of the two

alternatives by the end of 1999. Assuming that an appropriate

operational strategy is selected in 2000, the State estimates that

implementation could begin in the 2000-2003 time frame depending on

which strategy is chosen. Additional time may be needed depending on

the level of coordination and involvement of other organizations such

as the U.S. Navy, U.S. Coast Guard, and IMO. CARB also encourages EPA

to work with the U.S. Coast Guard to encourage IMO to adopt more

stringent second tier standards earlier than currently scheduled.

f. Clean Diesel Fuel. CARB notes that EPA is beginning a process

that may lead to new nationwide specifications in 2000 for fuel used in

on-road vehicles and potentially off-road equipment as well. If

promulgated, the State assumed that the Federal requirements for low-

[[Page 30286]]

sulfur diesel fuel would result in lower emissions from vehicles,

trucks and locomotives that cross into California from other states.

g. Federal Incentives. The State indicates that Federal financial

incentives could support cost-effective programs that directly reduce

emissions by accelerating the move to cleaner engines in school and

transit buses, as well as mobile sources under federal control like

locomotives, farm and construction equipment, harborcraft, ships, and

aircraft. CARB believes that California's Carl Moyer program for heavy-

duty diesel engines provides a successful model. In partnership with

CARB and local districts, EPA could target incentives to accelerate the

replacement of the dirty engines that run for decades (20 to 40 years

or more in some cases) with much cleaner models that reduce ozone-

forming emissions (plus air toxics) at a relatively low cost. The State

believes that these types of incentives would be an ideal use for the

proposed $200 million Clean Air Partnership Fund. According to the

State, the Federal government could also take a stronger leadership

role in accelerating the turnover of its own vehicle fleet to cleaner

models, including expanded use of alternative-fueled vehicles.

4. CARB Recommendations for Longer-Term EPA Actions

CARB encourages EPA to evaluate the strategies described below for

technical feasibility, air quality benefits, and cost-effectiveness.

a. Heavy-Duty Diesel Vehicle Emission Standards. As part of the

1995 Statement of Principles, EPA, CARB, and engine manufacturers

agreed to evaluate whether emission standards for heavy-duty diesel

vehicles can be tightened beginning in 2008. Further lowering the

NOX and particulate matter emission standards from heavy-

duty diesel vehicle in concert with cleaner diesel fuel would reduce

emissions and significantly reduce public exposure to particulate

diesel exhaust.

b. In-Use Compliance Program for Heavy-Duty Diesel Vehicles.

California's report encourages EPA to rely on CARB's ongoing work (SIP

measure M17) to develop an in-use compliance program for NOX

emissions from heavy-duty diesel vehicles as the basis for a national

program.

c. Aircraft Engines. As part of the effort to pursue all possible

approaches to reducing airport and aircraft-related emissions, the

State urged EPA to: work with engine manufacturers to encourage the

development and commercialization of aircraft engines that emit less

NOX; work with airlines on voluntary programs to achieve an

increasingly cleaner aircraft fleet; work with FAA to pursue ICAO

aircraft engine emission standards that, at a minimum, reflect the

lowest emitting currently available aircraft engines; and pursue where

necessary regulations to ensure emission reductions from aircraft

operations.

II. Proposed EPA Action

A. Commitment To Eliminate Remaining Shortfall

EPA, CARB, and affected stakeholders, including the South Coast Air

Quality Management District (SCAQMD) and the environmental plaintiffs,

have met during the PCP and have identified various approaches,

particularly for the aviation and marine vessel categories, that have

the potential to contribute additional reductions that could reduce or

eliminate the remaining shortfall. The PCP participants generally

agree, however, that it is not possible to identify specific emission

reduction measures for these difficult source categories by the July 1,

1999 deadline for concluding the PCP, since more time will be required

to resolve technical issues relating to the benefits and feasibility of

control options.

Therefore, EPA and CARB intend to continue a focused cooperative

effort to review these remaining questions and agree upon the best

approach for achieving the relatively small balance of reductions still

unaccomplished. CARB has committed to continue working with EPA and

affected parties to achieve the emission reduction commitments in the

SIP for Federal measures, and to adopt by December 31, 2001, control

measures needed to achieve any additional emission reductions which are

determined to be appropriate for CARB. EPA proposes to assume

responsibility for identifying appropriate Federal measures, which

would be adopted as expeditiously as possible but no later than

December 31, 2001. Whenever feasible, any Federal measures would be

proposed by December 31, 2000.

EPA proposes to complete any actions identified as appropriate for

EPA rulemaking under the Agency's enforceable commitment, promulgated

at the time of the 1994 ozone SIP approval, ``to undertake rulemaking,

after the South Coast mobile source public consultative process, to

promulgate any VOC and NOX mobile source controls which are

determined to be appropriate for EPA and needed for ozone attainment in

the Los Angeles-South Coast Air Basin Area.'' 40 CFR 52.238. EPA

believes that this approach is consistent with the EPA commitments

under sections I.1(a) and I.1.(b) of the proposed consent decree,

quoted above, although EPA notes that actions taken to reduce emissions

might not be limited to controls on mobile sources and fuels.

EPA is currently considering various options including the projects

discussed in the overview of Federal Measures in section I.B.2, and

CARB's suggested list of Federal initiatives in sections I.E.3 and

I.E.4, that may achieve all or portions of the remaining reductions.

Once EPA decides which options to pursue, the Agency will undertake

formal rulemaking, with public notice and comment opportunities. EPA

will inform and involve State and local stakeholders in this process.

Finally, EPA intends to set expeditious implementation dates for

any resulting national regulations consistent with the Agency's CAA

authority, to help South Coast achieve, at a minimum reductions needed

to reach attainment by 2010.

B. Approval of SIP Update

EPA is also proposing to approve the update to the South Coast

ozone SIP submitted by CARB on May 20, 1999. As noted above, the update

consists of a report on the status of implementation of CARB's

committal measures in the 1994 ozone SIP, along with a report on

emission reductions from EPA national mobile source regulations, in the

context of the South Coast ozone SIP attainment demonstration.

As discussed above, EPA and CARB have agreed that controls will be

identified and adopted by the appropriate agencies by December 31, 2001

to eliminate the shortfall, currently estimated to be 8 tpd VOC and 15

tpd NOX. CARB has made such an enforceable commitment as a

replacement for the existing State commitment (40 CFR 52.220(c)(235)).

CARB also committed to revise the South Coast ozone attainment

demonstration by December 31, 2000. EPA proposes to approve Executive

Order G-99-037, dated May 20, 1999, and submitted on May 20, 1999,

which updates the timelines in Executive Order G-96-031. EPA believes

that this approach is consistent with sections I.1.(c) and I.1.(d) of

the proposed consent decree.

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future request for

revision to any state implementation plan. Each request for revision to

the state implementation plan shall be considered separately in light

of specific technical, economic, and environmental factors and in

[[Page 30287]]

relation to relevant statutory and regulatory requirements.

III. Administrative Requirements

A. Executive Order 12866

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

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

Planning and Review.

B. Executive Order 12875

Under Executive Order 12875, Enhancing the Intergovernmental

Partnership, 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, or

EPA consults with those governments. If EPA complies by consulting,

Executive Order 12875 requires EPA to 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 any written

communications from the governments, and a statement supporting the

need to issue the regulation. In addition, Executive Order 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 Executive Order 13084, Consultation and Coordination with

Indian Tribal Governments, EPA may not issue a regulation that is not

required by statute, that significantly 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, or EPA consults with those

governments. If EPA complies by consulting, Executive Order 13084

requires EPA to 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 officials 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. 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 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 this action 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 proposes to approve 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.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Intergovernmental

relations, Oxides of nitrogen, Ozone, Particulate matter, Reporting and

recordkeeping requirements, Volatile organic compounds.

Dated: May 26, 1999.

Felicia Marcus,

Regional Administrator, Region IX.

[FR Doc. 99-14317 Filed 6-4-99; 8:45 am]

BILLING CODE 6560-50-P