[Federal Register Volume 78, Number 6 (Wednesday, January 9, 2013)]
[Notices]
[Pages 2111-2145]
[FR Doc No: 2013-00181]

Vol. 78

Wednesday,

No. 6

January 9, 2013

Part VI

Environmental Protection Agency

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California State Motor Vehicle Pollution Control Standards; Notice of
Decision Granting a Waiver of Clean Air Act Preemption for California's
Advanced Clean Car Program and a Within the Scope Confirmation for
California's Zero Emission Vehicle Amendments for 2017 and Earlier
Model Years; Notice

Federal Register / Vol. 78 , No. 6 / Wednesday, January 9, 2013 /
Notices

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ENVIRONMENTAL PROTECTION AGENCY

[FRL-9768-1]

California State Motor Vehicle Pollution Control Standards;
Notice of Decision Granting a Waiver of Clean Air Act Preemption for
California's Advanced Clean Car Program and a Within the Scope
Confirmation for California's Zero Emission Vehicle Amendments for 2017
and Earlier Model Years

SUMMARY: The Environmental Protection Agency (EPA) is granting the
California Air Resources Board's (CARB's) request for a waiver of Clean
Air Act preemption to enforce its Advanced Clean Car (ACC) regulations.
The ACC combines the control of smog and soot causing pollutants and
greenhouse gas (GHG) emissions into a single coordinated package of
requirements for passenger cars, light-duty trucks and medium-duty
passenger vehicles (and limited requirements related to heavy-duty
vehicles). The ACC program includes revisions to California's Low
Emission Vehicle (LEV) program as well as its Zero Emission Vehicle
(ZEV) program. By today's decision, EPA has also determined that CARB's
amendments to the ZEV program as they affect 2017 and prior model years
(MYs) are within the scope of previous waivers of preemption granted to
California for its ZEV regulations. In the alternative, EPA's waiver of
preemption for CARB's ACC regulations includes a waiver of preemption
for CARB's ZEV amendments as they affect all MYs, including 2017 and
prior MYs. In addition, EPA is including CARB's recently adopted
``deemed to comply'' rule for GHG emissions in today's waiver decision.
This decision is issued under section 209(b) of the Clean Air Act (the
``Act''), as amended.

DATES: Petitions for review must be filed March 11, 2013.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-HQ-OAR-2012-0562. All documents and public comments in the
docket are listed on the www.regulations.gov Web site. Publicly
available docket materials are available either electronically through
www.regulations.gov or in hard copy at the Air and Radiation Docket in
the EPA Headquarters Library, EPA West Building, Room 3334, 1301
Constitution Ave. NW., Washington, DC. The Public Reading Room is open
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding holidays.
The telephone number for the Reading Room is<PHONE_NUMBER>. The Air
and Radiation Docket and Information Center's Web site is http://www.epa.gov/oar/docket.html. The electronic mail (email) address for
the Air and Radiation Docket is<EMAIL_ADDRESS>the telephone
number is<PHONE_NUMBER> and the fax number is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Specific questions may be addressed to
David Dickinson, Office of Transportation and Air Quality, Compliance
Division (6405J-NLD), EPA, 1200 Pennsylvania Ave. NW., Washington, DC
20460, telephone:<PHONE_NUMBER>, email<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
II. Background
    A. California's Advanced Clean Cars Program for New Motor
Vehicles
    B. EPA's Consideration of CARB's Request
III. Analysis of Preemption Under Section 209 of the Clean Air Act
    A. Clean Air Act Preemption Provisions
    B. Deference to California
    C. Burden of Proof
    D. Comments Received on EPA's Application of the Section 209(b)
Criteria
IV. California's Within the Scope Request for Its Zero Emission
Vehicle Amendments
    A. Chronology
    B. CARB's ZEV Amendments
    C. EPA's Determination Regarding the Appropriateness of CARB's
Within the Scope Request for the 2012 ZEV Amendments
    D. Application of the Within the Scope Waiver Criteria to CARB's
2012 ZEV Amendments Regarding 2017 and Earlier MYs
    1. Public Health and Welfare
    2. Consistency With Section 202(a)
    3. New Issues
V. Consideration of the Advance Clean Car Regulations Under the Full
Waiver Criteria
    A. California's Protectiveness Determination
    1. Comments on CARB's Protectiveness Determination
    2. Is California's protectiveness determination arbitrary and
capricious?
    3. Section 209(b)(1)(A) Conclusion
    B. Does California need its standards to meet compelling and
extraordinary conditions?
    1. EPA's March 6, 2008 GHG Waiver Denial
    2. EPA's July 9, 2009 GHG Waiver
    3. Response to Comments Received
    4. CARB's GHG Emission Standards
    5. CARB's ZEV Emission Standards
    6. CARB's PM Emission Standards
    7. Section 209(b)(1)(B) Conclusion
    C. Are the California ACC standards consistent with section
202(a) of the Clean Air Act?
    1. Historical Approach
    2. LEV III Criteria Pollutant Standards
    a. Particulate Matter Standards
    b. EPA's Response to Comments
    3. LEV III Greenhouse Gas Emission Standards
    a. Comments on CARB's 2017 Through 2025 GHG Emission Standards
    b. EPA's Response to Comments
    4. California's ZEV Amendments as They Affect 2018 Through 2025
Model Years
    a. Comments on CARB's ZEV Amendments
    b. EPA's Response to Comments
    c. Conclusion on Technological Feasibility
    5. Consistency of Certification Test Procedures
    6. Relevance of the Energy Policy and Conservation Act (EPCA) to
the Waiver Decision
VI. Decision
VII. Statutory and Executive Order Reviews

I. Executive Summary

    Today, as Assistant Administrator of the EPA's Office of Air and
Radiation, I am granting California's request for a waiver of Clean Air
Act preemption for California's ACC that combines the control of smog
and soot causing pollutants and GHG emissions into a single coordinated
package of requirements for MY 2015 through 2025 passenger cars (PCs),
light-duty trucks (LDTs), medium-duty passenger vehicles (MDPVs), and
limited requirements related to heavy-duty vehicles (HDVs). The ACC
program regulations include revisions to both California's LEV and ZEV
programs. By letter dated June 27, 2012, CARB submitted a request (CARB
waiver request) that EPA grant a waiver of preemption under section
209(b) of the Clean Air Act (CAA), 42 U.S.C. 7543(b) for the revisions
to the LEV program (LEV III).\1\ CARB also sought confirmation that the
amendments to the ZEV program are within the scope of prior waiver
decisions issued by EPA, or in the alternative requested a waiver for
these revisions (the LEV III and ZEV amendments, together known as the
ACC, are considered as CARB's waiver request). By letter dated December
7, 2012, CARB submitted additional information (CARB supplemental
request) to EPA requesting that EPA consider as part of CARB's pending
ACC waiver request the CARB's Executive Officer adopted ``deemed to
comply'' regulation.\2\ CARB's ``deemed to comply'' regulation, adopted
by CARB's Board on November 15, 2012 and final action taken by CARB's
Executive Officer on December 6, 2012, allows automobile manufacturers
to demonstrate compliance with CARB's GHG standards by complying with

EPA's GHG standards which were published for those MYs.
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    \1\ CARB waiver request at EPA-HQ-OAR-2012-0562-0004. The cover
letter to CARB's Waiver Request is at EPA-HQ-OAR-2012-0562-0004.
    \2\ CARB supplemental request at EPA-HQ-OAR-2012-0562-0374.
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    By today's decision we are confirming that CARB's ZEV amendments,
as they affect 2017 and prior MYs are within the scope of previous ZEV
waivers. EPA also finds that the entire ACC program meets the criteria
for a waiver of Clean Air Act preemption and thus we are granting a
waiver for CARB's ACC program. Included in EPA's full waiver are CARB's
``deemed to comply'' regulations, and the ZEV regulations as they
affect 2017 and prior MYs.
    The legal framework for this decision stems from the waiver
provision first adopted by Congress in 1967, and later modified in
1977. Congress established that there would be only two programs for
control of emissions from new motor vehicles--EPA emission standards
adopted under the Clean Air Act, and California emission standards
adopted under state law. Congress accomplished this by preempting all
state and local governments from adopting or enforcing emission
standards for new motor vehicles, while at the same time providing that
California could receive a waiver of preemption for its emission
standards and enforcement procedures. Other states can only adopt
standards that are identical to California's standards. This struck an
important balance that protected manufacturers from multiple and
different state emission standards, and preserved a pivotal role for
California in the control of emissions from new motor vehicles.
Congress recognized that California could serve as a pioneer and a
laboratory for the nation in setting new motor vehicle emission
standards. Congress intentionally structured this waiver provision to
restrict and limit EPA's ability to deny a waiver. The provision was
designed to ensure California's broad discretion to determine the best
means to protect the health and welfare of its citizens.
    Section 209(b) specifies that EPA must grant California a waiver if
California determines that its standards are, in the aggregate, at
least as protective of the public health and welfare as applicable
federal standards. EPA may deny a waiver only if it makes at least one
of three findings specified under the Clean Air Act (including whether
California's ``protectiveness finding'' noted above is arbitrary and
capricious). Therefore, EPA's role upon receiving a request for waiver
of preemption from California is to determine whether it is appropriate
to make any of the three findings specified by the Clean Air Act and if
the Agency cannot make at least one of the three findings then the
waiver must be granted. The three waiver criteria are properly seen as
criteria for a denial--EPA must grant the waiver unless at least one of
three criteria for a denial is met. This is different from most waiver
situations before the Agency, where EPA typically determines whether it
is appropriate to make certain findings necessary for granting a
waiver, and if the findings are not made then a waiver is denied. This
reversal of the normal statutory structure embodies and is consistent
with the congressional intent of providing deference to California to
maintain its own new motor vehicle emissions program.
    The three criteria for denial of a waiver are: first, whether
California's determination that its standards are, in the aggregate, at
least as protective as applicable federal standards is arbitrary and
capricious (Section 209(b)(1)(A)); second, whether California has a
need for such standards to meet compelling and extraordinary conditions
(Section 209(b)(1)(B)); and third, whether California's standards are
consistent with Section 202(a) of the Clean Air Act (Section
209(b)(1)(C)). EPA and the Court of Appeals for the District of
Columbia Circuit have consistently interpreted section 209(b) as
placing the burden on the opponents of a waiver to demonstrate that one
of the criteria for a denial has been met.\3\
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    \3\ Motor and Equipment Manufacturers Ass'n v. EPA (MEMA I), 627
F.2d 1095, 1120-1121 (D.C. Cir. 1979).
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    If California acts to amend a previously waived standard or
accompanying enforcement procedure, the amendment may be considered
within the scope of a previously granted waiver provided that it does
not undermine California's determination that its standards in the
aggregate are as protective of public health and welfare as applicable
federal standards, does not affect its consistency with section 202(a)
of the Clean Air Act, and raises no new issues affecting EPA's previous
waiver decisions.\4\
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    \4\ Decision Documents accompanying within the scope of waiver
determinations in 66 FR 7751 (January 25, 2001) at p. 5 and 51 FR
12391 (April 10, 1986) at p. 2, see also, e.g., 46 FR 36742 (July
15, 1981).
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    In this case, California is combining three sets of motor vehicle
emission standards into a single ACC waiver request. The standards are
complimentary in the way they address interrelated ambient air quality
needs and climate change. EPA has previously granted a series of waiver
and within the scope decisions regarding CARB's LEV, ZEV and GHG
emission programs.\5\
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    \5\ EPA's LEV waiver decisions are found at 58 FR 4166 (January
13, 1993); 64 FR 42689 (August 5, 1999); 68 FR 19811 (April 22,
2003); 70 FR 22034 (April 28, 2005); and 75 FR 44951 (July 30,
2010). EPA's GHG waiver decisions are found at 73 FR 12156 (March 6,
2008) (GHG waiver denial); 74 FR 32744 (July 8, 2009) (GHG waiver);
and 76 FR 34693 (June 14, 2011) (This prior within the scope
decision included CARB's prior ``deemed to comply'' regulation for
the 2012-2016 MYs). EPA's most recent ZEV waiver decisions are found
at 71 FR 78190 (December 28, 2006); and 76 FR 61095 (October 3,
2011).
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    As part of EPA's public comment process for CARB's ACC waiver
request, we have received comments from: several states and
organizations representing states; health and environmental
organizations; industry; and other stakeholders.\6\ The vast majority
of comments EPA received were in support of the waiver. EPA received
opposition to certain elements of the waiver, including a joint comment
submitted by the Association of Global Automakers and the Alliance of
Automobile Manufacturers (Manufacturers or Manufacturers comment).\7\
We also received opposition to the ACC waiver request from the National
Automobile Dealers Association (NADA or Dealers, or NADA comment).\8\
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    \6\ EPA received support for CARB's waiver request, in the form
of oral testimony and/or written comment (all docket references are
to EPA-HQ-OAR-2012-0562-XXXX, with the last four numbers associated
with each comment) from: Environmental Defense Fund (EDF)--0025 and
0353, the National Association of Clean Air Agencies (NACAA)--0028,
American Lung Association--0029, Advanced Engine Systems Institute--
0030, Environment America--0031, Consumer Federation of America
(CFA)--0032, Manufacturers of Emission Control (MECA)--0033, Natural
Resources Defense Council (NRDC)--0347, South Coast Air Quality
Management District (SCAQMD)--0346, Sierra Club--0348, Northeast
States for Coordinated Air Uses Management (NESCAUM)--0350, New York
State Department of Environmental Conservation--0351, Consumers
Union--0354, and Union of Concerned Scientists--0355. EPA also
received similar comment at the waiver public hearing, transcript
found at EPA-HQ-OAR-2012-0562-0026.
    \7\ EPA-HQ-OAR-2012-0562-0349. EPA also received written comment
from Toyota Motor North America (Toyota) at EPA-HQ-OAR-2012-0562-
0372 which notes that ``Toyota could be forced to employ a variety
of costly marketing programs to ensure compliance if the market does
not accept ZEV technology in the volumes anticipated by
California.'' Toyota notes that its further concerns are expressed
in detail in the Manufacturers comments.
    \8\ EPA-HQ-OAR-2012-0562-0352.
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    After a thorough evaluation of the record, we have determined that
the waiver opponents have not met their burden of proof in order for us
to deny the CARB's waiver request under any of the three criteria in
section 209(b)(1). EPA also confirms that CARB's ZEV amendments, as
they affect the 2017 and earlier MYs are within the scope of previous
waivers of preemption. In the alternative, EPA's waiver of preemption
for CARB's ACC regulations includes a

waiver of preemption for CARB's ZEV amendments as they affect all MYs,
including 2017 and prior MYs.

II. Background

A. California's Advanced Clean Car Program for New Motor Vehicles

    As further explained below, CARB has adopted amendments to title
13, California Code of Regulations (CCR), and has established a single
coordinated package that includes amendments to three sets of
regulations regulating emissions from new PCs, LDTs, MDPVs, and certain
HDVs: \9\ the LEV regulation which includes two components--standards
relating to criteria pollutants and standards to regulate GHG
emissions, and the ZEV program.
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    \9\ Medium-duty vehicles (MDVs) are vehicles in California's
regulations between 8,500 and 114,000 lbs GVWR that are also called
Class 2b/Class 3 vehicles. These vehicles are generally termed
Heavy-duty vehicles under EPA's regulations.
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    This single ACC program combines the control of smog-causing
pollutants and GHG emissions into a coordinated package of amendments
and requirements for MY 2015 through 2025 in order to address near and
long term smog issues within California and identified GHG emission
reduction goals. The program also includes amended ZEV regulations and
a Clean Fuels Outlet regulation. These additional program elements are
designed to address these goals as well.\10\ The ACC program, together,
provides the regulated manufacturers with the ability to plan and
integrate their product designs in order to meet applicable CARB
emission requirements.
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    \10\ CARB's Clean Fuel Outlet Regulation is not subject to
preemption under section 209 of the Clean Air Act.
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    In order to achieve further emission reductions from the light- and
medium-duty fleet, CARB adopted several amendments that represent a
strengthening of its ongoing LEV regulations, including: a reduction of
fleet average emissions of new PCs, LDTs, and MDPVs to super ultra-low-
emission vehicle (SULEV) levels by 2025; replacement of separate non-
methane organic gas (NMOG) and oxides of nitrogen (NOX)
standards with combined NMOG plus NOX standards, which
provides automobile manufacturers with additional flexibility in
meeting the new stringent standards; an increase of full useful life
durability requirements from 120,000 miles to 150,000 miles, which
guarantees vehicles sustain these extremely low emission levels longer;
a backstop to assure continued production of super-ultra-low-emission
vehicles after partial-zero-emission vehicles (PZEVs) as a category are
moved from the ZEV regulations to the LEV regulations in 2018; more
stringent particulate matter (PM) standards for light- and medium-duty
vehicles, which will reduce the health effects and premature deaths
associated with these emissions; zero fuel evaporative emission
standards for PCs and LDTs, and more stringent standards for medium-
and heavy-duty vehicles (MDVs); and, more stringent supplemental
federal test procedure (SFTP) standards for PC and LDTs, which reflect
more aggressive real world driving and, for the first time, require
MDVs to meet SFTP standards.
    The second component of CARB's LEV III regulations includes
amendments to its GHG emission standards. CARB's GHG standards for the
2017 through 2025 MYs are designed to respond to California's
identified goals of reducing GHG emissions to 80 percent below 1990
levels by 2050 and in the near term to reduce GHG levels to 1990 levels
by 2020. As such, CARB's GHG amendments: reduce new light-duty
CO2 emissions from new light-duty regulatory MY 2016 levels
by approximately 34 percent by MY 2025, and from about 251 grams of
CO2 per mile to 166 grams, based on the projected mix of
vehicles sold in California; set emission standards for CO2,
CH4, and N2O; establish footprint based
CO2 emission standards, as distinguished from the current
California GHG requirement of a fleet average GHG standard (this will
allow manufacturers' new vehicle fleet CO2 emissions to
fluctuate according to their car-truck composition and sales according
to vehicle footprint and will align the requirement with current
federal GHG requirements); provide credits toward the CO2
standard if a manufacturer reduces refrigerant emissions from the
vehicle's air conditioning system; provide credits toward the ZEV
standards if a manufacturer over complies with the LEV III GHG fleet
requirement; provide credits towards the CO2 standards if a
manufacturer produces full size pickups with high efficiency drive
trains; provide credits for deployment of technologies that reduce off-
cycle CO2 emissions; and require upstream emissions from
zero-emission vehicles to be counted towards a manufacturer's light-
duty vehicle GHG emissions. CARB's GHG emission regulations also
include an optional compliance path whereby manufacturers may
demonstrate compliance with CARB's GHG emission regulations by
complying with applicable EPA GHG emission requirements.
    Lastly, CARB's ACC regulations include amendments to its ZEV
regulations that can be described within two timeframes: (1) MY 2012
through 2017; and (2) MY 2018 and beyond. CARB's stated goal for
amendments to the current ZEV regulation through MY 2017 is to make
corrections and clarifications to its regulations and to enable
manufacturers to successfully meet the 2018 and later MY requirements.
These amendments include: A provision of compliance flexibility whereby
carry forward credit limitations for ZEVs were removed, allowing
manufacturers to bank ZEV credits indefinitely for use in later years
(the flexibility also included slightly reducing the 2015 through 2017
credit requirement for intermediate volume manufacturers (IVM, less
than 60,000 vehicles produced each year), to allow them to better
prepare for requirements in 2018, and included a provision that allows
ZEVs placed in any state that has adopted the California ZEV regulation
to count towards the ZEV requirement through 2017 (i.e. extending the
``travel provision'' for BEVs through 2017); an adjustment of credits
and allowances; and an addition of a new vehicle category (collectively
``BEVx'' vehicles) as a compliance option for manufacturers to meet up
to half of their minimum ZEV requirement.
    CARB's stated goal for its amendments affecting 2018 and subsequent
MYs is the commercialization of ZEVs and ``transitional zero-emission
vehicles (TZEV; commonly a plug-in hybrid electric vehicle--PHEV).
California would achieve this objective by simplifying its regulation
and pushing higher production volumes which in turn would achieve cost
reductions. These amendments include: an increased ZEV requirement for
2018 and subsequent MYs that pushes ZEVs and TZEVs to more than 15
percent of new sales by 2025; the removal of PZEV (near-zero emitting
conventional technologies) and advanced technology PZEV (AT PZEV,
typically non-plug-in HEVs) credits as compliance options for
manufacturers; an allowance for manufacturers to use banked PZEV and AT
PZEV credits earned in 2017 and previous MYs, but discount the credits,
and place a cap on usage in 2018 and subsequent MYs; amended
manufacturer size definitions that bring all but the smallest
manufacturers under the full ZEV requirements by MY 2018; a modified
credit system that bases credits for ZEVs on range, with 50 mile

BEVs earning 1 credit each and 350 Mile FCVs earning 4 credits each
(the range of credit reflects the utility of the vehicle (i.e. the zero
emitting miles it may travel) and its expected timing for
commercialization) along with a simplified and streamlined TZEV credits
system; a modified ``travel'' provision that ends the travel provision
for BEVs after MY 2017and extends the travel provision for FCVs; and
provisions allowing manufacturers who systematically over comply with
the LEV III GHG fleet standard to offset a portion of their ZEV
requirement in 2018 through 2021 MYs only.

B. EPA's Consideration of CARB's Request

    By letter dated June 27, 2012, CARB submitted a request (CARB
waiver request) seeking a waiver of Section 209(a)'s prohibition for
its ACC standards.\11\ On August 31, 2012, a Federal Register notice
(FR Notice) was published announcing an opportunity for hearing and
comment on CARB's request.\12\ EPA held a public hearing in Washington,
DC on September 19, 2012. The written comment period closed on October
19, 2012.
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    \11\ EPA-HQ-OAR-2012-0562-0004.
    \12\ 77 FR 53199 (August 31, 2012).
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    EPA's FR Notice on CARB's waiver request asked for comment on
several matters. Since CARB had submitted a within the scope request
for its ZEV amendments as they affect both the 2012-2017 MYs and 2018
and subsequent MYs, EPA invited comment on the following issues: first,
should California's ZEV amendments, as they affect the 2012-2017 MYs
and/or the 2018 and later MYs, be considered under the within the scope
criteria or should they be considered under the full waiver criteria?;
second, to the extent part or all of those ZEV amendments should be
considered as a within the scope request, do such amendments meet the
criteria for EPA to confirm that they are within the scope of prior
waivers? EPA also solicited comment in the event that EPA cannot
confirm that some or all of CARB's ZEV amendments are within the scope
of previous waivers. We also requested comment on all aspects of the
full waiver analysis with regard to the ACC program (the LEV III
criteria pollutant and GHG regulations, and the ZEV amendments to the
extent EPA does not consider them under the within the scope analysis
noted above). Therefore, we asked commenters to consider the following
three criteria: whether (a) California's determination that its motor
vehicle emission standards are, in the aggregate, at least as
protective of public health and welfare as applicable Federal standards
is arbitrary and capricious, (b) California needs such standards to
meet compelling and extraordinary conditions, and (c) California's
standards and accompanying enforcement procedures are consistent with
section 202(a) of the Clean Air Act.
    Because CARB noted (in its waiver request and in its incorporated
Board Resolution 12-11) its commitment to propose a ``deemed to
comply'' rule for its GHG standards shortly after EPA finalized its
light-duty vehicle GHG emission standards, EPA specifically invited
comment on CARB's waiver request in light of CARB's explicit plans
concerning adoption of a ``deemed to comply'' provision into its LEV
III GHG standards.

III. Analysis of Preemption Under Section 209 of the Clean Air Act

A. Clean Air Act Preemption Provisions

    Section 209(a) of the Act provides:

    No State or any political subdivision thereof shall adopt or
attempt to enforce any standard relating to the control of emissions
from new motor vehicles or new motor vehicle engines subject to this
part. No State shall require certification, inspection or any other
approval relating to the control of emissions from any new motor
vehicle or new motor vehicle engine as condition precedent to the
initial retail sale, titling (if any), or registration of such motor
vehicle, motor vehicle engine, or equipment.\13\
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    \13\ Clean Air Act (CAA) section 209(a), 42 U.S.C. Sec.
7543(a).

    Section 209(b)(1) of the Clean Air Act requires the Administrator,
after an opportunity for public hearing, to waive application of the
prohibitions of section 209(a) for any State that has adopted standards
(other than crankcase emission standards) for the control of emissions
from new motor vehicles or new motor engines prior to March 30, 1966,
if the State determines that its State standards will be, in the
aggregate, at least as protective of public health and welfare as
applicable Federal standards.\14\ However, no such waiver shall be
granted by the Administrator if she finds that: (A) The protectiveness
determination of the State is arbitrary and capricious; (B) the State
does not need such State standards to meet compelling and extraordinary
conditions; or (C) such State standards and accompanying enforcement
procedures are not consistent with section 202(a) of the Act. In
previous waiver decisions, EPA has stated that Congress intended EPA's
review of California's decision-making be narrow. This has led EPA to
reject arguments that are not specified in the statute as grounds for
denying a waiver:
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    \14\ CAA section 209(b), 42 U.S.C. Sec.  7543(b). California is
the only State which meets section 209(b)(1)'s requirement for
obtaining a waiver. See S. Rep. No. 90-403 at 632 (1967).

    The law makes it clear that the waiver requests cannot be denied
unless the specific findings designated in the statute can properly
be made. The issue of whether a proposed California requirement is
likely to result in only marginal improvement in air quality not
commensurate with its cost or is otherwise an arguably unwise
exercise of regulatory power is not legally pertinent to my decision
under section 209, so long as the California requirement is
consistent with section 202(a) and is more stringent than applicable
Federal requirements in the sense that it may result in some further
reduction in air pollution in California.\15\
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    \15\ 36 FR 17458 (Aug. 31, 1971). Note that the more stringent
standard expressed here, in 1971, was superseded by the 1977
amendments to section 209, which established that California must
determine that its standards are, in the aggregate, at least as
protective of public health and welfare as applicable Federal
standards.

Thus, my consideration of all the evidence submitted concerning a
waiver decision is circumscribed by its relevance to those questions
that I may consider under section 209(b).

B. Deference to California

    In previous waiver decisions, EPA has recognized that the intent of
Congress in creating a limited review based on the section 209(b)(1)
criteria was to ensure that the federal government did not second-guess
state policy choices. This has led EPA to state:

    It is worth noting * * * I would feel constrained to approve a
California approach to the problem which I might also feel unable to
adopt at the federal level in my own capacity as a regulator. The
whole approach of the Clean Air Act is to force the development of
new types of emission control technology where that is needed by
compelling the industry to ``catch up'' to some degree with newly
promulgated standards. Such an approach * * * may be attended with
costs, in the shaped of reduced product offering, or price or fuel
economy penalties, and by risks that a wider number of vehicle
classes may not be able to complete their development work in time.
Since a balancing of these risks and costs against the potential
benefits from reduced emissions is a central policy decision for any
regulatory agency under the statutory scheme outlined above, I
believe I am required to give very substantial deference to
California's judgments on this score.\16\
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    \16\ 40 FR 23103-23104; see also LEV I (58 FR 4166), January 13,
1993)Decision Document at 64.

EPA has stated that the text, structure, and history of the California
waiver provision clearly indicate both a congressional intent and
appropriate EPA practice of leaving the decision on ``ambiguous and
controversial matters of

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public policy'' to California's judgment.\17\

    \17\ 40 FR 23104; 58 FR 4166.
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    The House Committee Report explained as part of the 1977 amendments
to the Clean Air Act, where Congress had the opportunity to restrict
the waiver provision, it elected instead to explain California's
flexibility to adopt a complete program of motor vehicle emission
controls. The amendment is intended to ratify and strengthen the
California waiver provision and to affirm the underlying intent of that
provision, i.e., to afford California the broadest possible discretion
in selecting the best means to protect the health of its citizens and
the public welfare.\18\
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    \18\ MEMA I, 627 F.2d at 1110 (citing H.R.Rep. No 294, 95 Cong.,
1st Sess. 301-02 (1977).
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C. Burden of Proof

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

consider all evidence that passes the threshold test of materiality
and * * * thereafter assess such material evidence against a
standard of proof to determine whether the parties favoring a denial
of the waiver have shown that the factual circumstances exist in
which Congress intended a denial of the waiver.\19\
---------------------------------------------------------------------------

    \19\ MEMA I, 627 F.2d at 1122.

The court in MEMA I considered the standards of proof under section 209
for the two findings necessary to grant a waiver for an ``accompanying
enforcement procedure'' (as opposed to the standards themselves): (1)
Protectiveness in the aggregate and (2) consistency with section 202(a)
findings. The court instructed that ``the standard of proof must take
account of the nature of the risk of error involved in any given
decision, and it therefore varies with the finding involved. We need
not decide how this standard operates in every waiver decision.'' \20\
---------------------------------------------------------------------------

    \20\ Id.
---------------------------------------------------------------------------

    The court upheld the Administrator's position that, to deny a
waiver, there must be `clear and compelling evidence' to show that
proposed procedures undermine the protectiveness of California's
standards.\21\ The court noted that this standard of proof also accords
with the congressional intent to provide California with the broadest
possible discretion in setting regulations it finds protective of the
public health and welfare.\22\
---------------------------------------------------------------------------

    \21\ Id.
    \22\ Id.
---------------------------------------------------------------------------

    With respect to the consistency finding, the court did not
articulate a standard of proof applicable to all proceedings, but found
that the opponents of the waiver were unable to meet their burden of
proof even if the standard were a mere preponderance of the evidence.
As we explained in the GHG waiver decision, although MEMA I did not
explicitly consider the standards of proof under section 209 concerning
a waiver request for ``standards,'' as compared to accompanying
enforcement procedures, there is nothing in the opinion to suggest that
the court's analysis would not apply with equal force to such
determinations. \23\ EPA's past waiver decisions have consistently made
clear that: ``[E]ven in the two areas concededly reserved for Federal
judgment by this legislation--the existence of compelling and
extraordinary' conditions and whether the standards are technologically
feasible--Congress intended that the standards of EPA review of the
State decision to be a narrow one.''\24\
---------------------------------------------------------------------------

    \23\ 74 FR 32748
    \24\ See, e.g., 40 FR 21102-103 (May 28, 1975).
---------------------------------------------------------------------------

    Finally, opponents of the waiver bear the burden of showing that
the criteria for a denial of California's waiver request has been met.
As found in MEMA I, this obligation rests firmly with opponents of the
waiver in a section 209 proceeding, holding that: ``[t]he language of
the statute and it's legislative history indicate that California's
regulations, and California's determinations that they must comply with
the statute, when presented to the Administrator are presumed to
satisfy the waiver requirements and that the burden of proving
otherwise is on whoever attacks them. California must present its
regulations and findings at the hearing and thereafter the parties
opposing the waiver request bear the burden of persuading the
Administrator that the waiver request should be denied.'' \25\
---------------------------------------------------------------------------

    \25\ MEMA I, 627 F.2d at 1121.
---------------------------------------------------------------------------

    The Administrator's burden, on the other hand, is to make a
reasonable evaluation of the information in the record in coming to the
waiver decision. As the court in MEMA I stated, Ahere, too, if the
Administrator ignores evidence demonstrating that the waiver should not
be granted, or if he seeks to overcome that evidence with unsupported
assumptions of his own, he runs the risk of having his waiver decision
set aside as `arbitrary and capricious.'' \26\ Therefore, the
Administrator's burden is to act ``reasonably.''\27\
---------------------------------------------------------------------------

    \26\ Id. at 1126.
    \27\ Id.
---------------------------------------------------------------------------

D. Comments Received on EPA's Application of the Section 209(b)
Criteria

    The Dealers provided a series of suggestions on several threshold
issues for how EPA should evaluate CARB's ACC waiver request. While the
ACC regulatory components are interrelated, the Dealers state that EPA
should evaluate them separately by applying each of the three waiver
criteria under section 209(b).\28\
---------------------------------------------------------------------------

    \28\ NADA does not address the application of the three waiver
criteria to CARB's LEV III criteria pollutant regulations .
---------------------------------------------------------------------------

    This commenter also suggests that it is CARB's burden to make a
determination that its standards are at least as protective of the
public health and welfare as any applicable federal standards, and to
determine that the standards are technologically feasible.\29\ This
commenter also suggests that Congress allowed for a limited waiver only
if California is able to show that its standards are necessary to
address ``the unique problems facing [the state] as a result of its
climate and topography.'' \30\
---------------------------------------------------------------------------

    \29\ NADA comment at 3.
    \30\ Id.
---------------------------------------------------------------------------

    In addition, the Dealers suggest that a decision to deny a CARB
waiver request only need meet a ``preponderance of the evidence''
standard. This commenter maintains that such a standard would preserve
the traditional presumption in favor of CARB's protectiveness
determination while affording EPA or those opposed to the waiver the
ability to uphold section 209's general preemption. The commenter
suggests that EPA mischaracterizes the MEMA decision within its prior
GHG waiver decision when EPA stated ``there is nothing in the opinion
to suggest that the court's analysis would not apply with equal force
to such determinations.'' \31\ The commenter states that because the
Court opined that the ``preponderance of the evidence standard governs
the inquiry into technological feasibility,'' and the Court determined
that the appropriate standard of proof ``must take into account the
nature of risk of error involved in any given decision'' it is
therefore appropriate that EPA must use its discretion to determine the
appropriate standard when evaluating a waiver request under each
element of

Section 209(b). To settle the question of the appropriate burden of
proof the commenter cites International Harvester v. Ruckelshaus
wherein the decision over burden of proof is informed by an analysis
that balances the cost of a wrong decision on feasibility against the
gains of a correct one: ``These costs include the risk of grave
maladjustments * * * and the impact on jobs and the economy from a
decision which is only partially accurate * * * against the
environmental savings.''
---------------------------------------------------------------------------

    \31\ 74 FR 32748. EPA notes that the language following this
statement, in the same paragraph of the GHG waiver decision, states
``EPA's past waiver decisions have consistently made clear that:
``[E]ven in the two area concededly reserved for Federal judgment by
this legislation--the existence of compelling and extraordinary
conditions and whether the standards are technologically feasible--
Congress intended that the standards of EPA review of the State
decision to be a narrow one.''
---------------------------------------------------------------------------

    With regard to the Dealers' first suggestion that EPA should
separately apply the waiver criteria to each of the ACC regulatory
components (e.g., GHG emission standards and ZEV), EPA notes that each
part of CARB's regulations are subject to EPA waiver review. As such,
by today's decision we address any adverse comments in that regard.
However (and as explained in further detail under EPA's analysis of
each waiver criteria below), we believe the Dealers fundamentally
misunderstand the specific language of the section 209(b), its
congressional history, and EPA's past administrative waiver practice.
For example, although EPA would typically examine whether CARB's
regulation of each pollutant is as stringent as any applicable federal
standard, we nevertheless recognize both the statutory language and
legislative history that requires EPA to consider the protectiveness of
a CARB standard ``in the aggregate'' of all emission standards covering
that particular industry category (e.g., light-duty vehicles, etc).
Furthermore, under the second waiver criterion of section 209(b), EPA
continues to evaluate whether those opposed to a waiver have
demonstrated that CARB no longer experiences compelling and
extraordinary conditions. As such, for any standard or set of standards
presented to EPA for waiver consideration, EPA's evaluation continues
to be whether CARB has a need for its motor vehicle emission program to
address the underlying compelling and extraordinary conditions. This is
further explained in our discussion of this waiver criterion.
Similarly, although the Dealers might suggest that EPA only be
obligated to determine whether each of CARB's ACC regulatory
components, in isolation, is consistent with section 202(a) we believe
the better approach is to determine the technological feasibility of
each standard in the context of the entire regulatory program for the
particular industry category. In this case, we believe CARB has in fact
recognized the interrelated, integrated approach the industry must take
in order to address the regulatory components of the ACC program. As
noted above, the House Committee Report explained as part of the 1977
amendments to the Clean Air Act that California was to be afforded
flexibility to adopt a complete program of motor vehicle emission
controls (emphasis added). As such, EPA believes that Congress intended
EPA to afford California the broadest possible discretion in selecting
the best means to protect the health of its citizens and the public
welfare.\32\ EPA believes this intent extends to CARB's flexibility in
designing its motor vehicle emission program and evaluating the
aggregate effect of regulations within the program.
---------------------------------------------------------------------------

    \32\ H.R. Rep No. 294, 95 Cong., 1st sess. 301-02 (1977).
---------------------------------------------------------------------------

    With regard to CARB's initial burden in submitting a waiver request
to EPA, we believe this commenter misreads both section 209(b) along
with the case law and legislative history it cites. California is only
required to make a protectiveness finding as a threshold matter before
submitting its waiver request to EPA. Section 209(b) of the Clean Air
Act plainly states that ``The Administrator shall, * * *, waive
application of this section* * *., if the State determines that the
State standards will be, in the aggregate, at least as protective of
public health and welfare as applicable Federal standards. No such
waiver shall be granted if the Administrator finds that * * *.''
Nothing on the face of section 209(b) requires California to make
affirmative findings or showings under section 209(b)(1)(B) or (C). The
MEMA I decision cited to by the commenter does not support the
suggestion that CARB must initially make an affirmative determination
or showing beyond the protectiveness determination. Of course, whether
or not CARB has such a burden, CARB has clearly provided in its initial
waiver request considerable support for its view that its waiver
request meets the requirements of section 209(b)(1)(B) and (C).\33\
---------------------------------------------------------------------------

    \33\ CARB waiver request and supporting attachments.
---------------------------------------------------------------------------

    EPA continues to believe that the burden of proof for each waiver
criteria lies on the opposing party. As earlier explained, this is
inherent in the statutory provision that requires EPA to grant a waiver
unless it makes one of the specific negative findings listed in section
209(b)(1).

The language of the statute and its legislative history indicate
that California's regulations, and California's determination that
they comply with the statute, when presented to the Administrator
are presumed to satisfy the waiver requirements and that the burden
of proving otherwise is on whoever attacks them. California must
present its regulations and findings at the hearing, and thereafter
the parties opposing the waiver request bear the burden of
persuading the Administrator that the waiver request should be
denied.\34\
---------------------------------------------------------------------------

    \34\ MEMA I, 627 F.2d at 1121.

    Further, pertinent legislative history evinces Congressional intent
to place the burden of proof on the party opposing a waiver. This
appears most dramatically from the debates on the floor of the House
over two alternative versions of the statutory language. One, sponsored
by the relevant legislative committee, would have permitted the federal
government, upon application showing by California, to set special
California standards if certain conditions were met. The second, which
was sponsored by the entire California delegation, see 113 Cong. Rec. H
14428 (Cong. Moss) (daily ed. Nov. 2, 1967), and eventually adopted on
the floor, would have required the federal government to waive
preemption of standards promulgated by California unless certain
findings were made. Despite the understandable efforts of some sponsors
of the committee language to portray the differences between the two
versions as purely verbal the majority of the House clearly disagreed.
113 Cong. Rec. H 14404 (Cong. Herlong); H 14432 (Cong. Rogers) (daily
ed. Nov. 2, 1967). Sponsors of the language eventually adopted (the
language sponsored by the California delegation) referred repeatedly to
their intent to make sure that no ``Federal bureaucrat'' would be able
to tell the people of California what auto emission standards were good
for them, as long as they were stricter than Federal standards. 113
Cong. Rec. H 14393 (Cong. Sess); H 14395 (Cong. Smith); H 14396 (Cong.
Holffield); H 14399 (Cong. Hosmer); H 14408 (Cong. Roybal); H 14409
(Cong. Reinicke); H 14429 (Cong. Wlson) (daily ed. Nov. 2, 1967). Thus,
at the close of the debate, the House rejected language that would have
imposed the burden of proof on California and instead accepted language
that which places the burden on those who allege, in effect, that EPA's
GHG emission standards are adequate to California's needs. They also
viewed the change as necessary to their intent to preserve the
California state auto emission control program in its original form,
see HR. Rep. No. 728, 90th Cong. 1st Se. 96-97 (1967) (separate views
of Congressmen Moss and Van Deerlin), 113 Cong. Rec. H 14415 (daily ed.
Nov. 2, 1967) (Cong.

Van Deerlin) and to continuing the national benefits that might flow
from allowing California to continue to act as a pioneer in this field.
113 Cong. Rec. H 14407 (Cong. Moss) (daily ed. Nov. 2, 1967); S 16395
(daily ed. Nov. 14, 1967) (Senator Murphy). These points had also
previously been made by the Senate Public Works Committee in reporting
out waiver language identical to that eventually adopted by the House.
S. Rep. No. 403, 90th Cong. 1st Sess. 32-33 (1967).
    As also explained in MEMA I:

Legislative history makes clear that the burden of proof lies with
the parties favoring denial of the waiver. Petitioners lost the
battle they now wage twelve years ago when Congress specifically
declined to adopt a provision which would have imposed on California
the burden to demonstrate that it met the waiver requirements. As
noted, the Senate version of the Air Quality Act of 1967 contained
the language which was ultimately adopted by Congress. It vested the
power to make the protectiveness determination in California and
sharply restricted the Secretary's role in a waiver proceeding. The
Senate Report explained that under the proposal the ``Secretary is
required to waive application unless he finds'' one of the factual
circumstances set out in section 209(b)(1)(A)-(C). S. Rep. No. 403,
90th Cong., 1st Sess. 33 (1967).

    Finally, with regard to the Dealers' arguments about the burden of
proof, we believe it necessary to differentiate between two separate
questions: 1) who has the burden of proof; and 2) what is the
appropriate level of proof? A discussion of who holds the burden of
proof is addressed above. Below is a discussion regarding the
appropriate ``level'' of proof. EPA agrees with the Dealers that EPA
has the discretion to determine the appropriate level of proof, and we
are guided by the language of the statute, relevant case law, and our
prior administrative practice.
    With regard to the standard of proof applicable to CARB's
protectiveness determination, EPA rejects any contention that the
standard should be anything other than ``clear and compelling
evidence.'' The language of section 209(b)(1)(A) requires that the
Administrator find that CARB's protectiveness determination is
``arbitrary and capricious'' suggesting that EPA or others that may
oppose the waiver must demonstrate that CARB's factual findings lacked
any acceptable reasoning. As noted above, the MEMA I court upheld the
Administrator's position that, to deny a waiver, there must be `clear
and compelling evidence' to show that proposed procedures undermine the
protectiveness of California's standards.\35\ The court noted that this
standard of proof also accords with the congressional intent to provide
California with the broadest possible discretion in setting regulations
it finds protective of the public health and welfare.\36\ EPA believes
there is no reason to jettison the precedent along with its past
administrative waiver practice merely because CARB seeks a waiver for
``standards'' as opposed to ``accompanying enforcement procedures.''
---------------------------------------------------------------------------

    \35\ Id.
    \36\ Id.
---------------------------------------------------------------------------

    With respect to the second and third waiver criteria of section
209(b); however, EPA is also guided by the principles of deference
noted above and by case law, as explained below in EPA's examination of
technological feasibility. As the commenter notes, in the GHG waiver
EPA reasoned that MEMA I's holding on the applicable standard of proof
should be extended to waiver of standards. EPA continues to believe
that it is appropriate to impose a standard of preponderance of
evidence on the proponent of denial of a waiver of standards, for the
second and third waiver criteria. This standard would also be similar
to the standard in civil matters. ``This view of the standard of proof
dictates the standard normally adopted in civil matters, a
preponderance of the evidence.'' \37\ EPA also believes that it should
apply such a standard in a way that accords with congressional intent
to provide California with the broadest possible discretion in setting
regulations that it finds protective of the public health and welfare
\38\ while limiting EPA's review to a narrow role that provides
substantial deference to the State.\39\
---------------------------------------------------------------------------

    \37\ International Harvester v. Ruckelshaus, 478 F 2d 615, 643
(D.C. Cir.) (International Harvester).
    \38\ MEMA I, 627 F. 2d at 1122.
    \39\ 40 FR 23103-104.
---------------------------------------------------------------------------

    Further, EPA agrees with the commenter that in making its
determination, EPA should be mindful of the risk of error involved.\40\
But this does not change the burden of proof. ``The Administrator is
not entitled to ignore the evidence adduced at the hearing. He must
consider all evidence that passes the threshold test of materiality and
he must thereafter assess such material evidence against a standard of
proof to determine whether the parties favoring a denial of the waiver
have shown that the factual circumstances exist in which Congress
intended denial of the waiver.'' \41\
---------------------------------------------------------------------------

    \40\ MEMA I, 627 F.2d at 1122.
    \41\ Id.
---------------------------------------------------------------------------

    In sum, based on the statutory structure of section 209(b)(1) and
legislative history, the burden of proof falls on those who wish EPA to
deny the waiver.

IV. California's Within the Scope Request for its Zero Emission Vehicle
Amendments

    CARB's waiver request sought confirmation from EPA that the ZEV
amendments (2012 ZEV Amendments), as they relate to 2017 and prior MYs
are within the scope of existing waivers. The ACC waiver request also
sought confirmation that the 2012 ZEV amendments as they relate to 2018
and later MYs are within the scope of existing waivers, or, in the
alternative, meets the criteria for a full waiver.

A. Chronology

    California's initial ZEV program was included as part of its first
low-emission vehicle program known as LEV I. The ZEV component of this
program had a ZEV sales requirement starting with the 1998 MY and
phasing in to a 10 percent sales requirement by the 2003 MY. EPA issued
a waiver of preemption for these regulations on January 13, 1993.\42\
CARB subsequently amended the ZEV regulations in March, 1996, by
eliminating the ZEV sales requirement for the 1998-2002 MYs and
retaining the 10 percent sales requirement for the 2003 and later MYs.
EPA issued a within the scope determination for these amendments on
January 5, 2001.\43\ CARB again amended the ZEV regulations in 1999,
2001, and 2003 and on December 21, 2006, EPA waived preemption for
these amendments through the 2011 MY.\44\ The 2006 EPA action included
a within the scope decision for certain components of the regulations
and a full waiver authorization for other components. Specifically, EPA
determined that certain provisions of the 1999-2003 amendments to the
ZEV regulations affecting 2006 and prior MYs were within the scope of
previous waivers of preemption. EPA's 2006 decision concurrently
granted California's request for a waiver of preemption to enforce
certain provisions of the ZEV regulations as they affected 2007 through
2011 MY vehicles. EPA also stated that that although we believed it
appropriate to grant a full waiver of preemption for the 2007 MY, we
also believed it appropriate to consider the 2007 MY regulations (with
one exception noted) as within the scope of previous waivers of
preemption, as they applied to certain vehicles that were

already subject to the pre-existing ZEV regulations. The 2006 waiver
decision did not make any findings or determinations with regard to
CARB's ZEV regulations as they pertained to the 2012 and later MYs. On
October 3, 2011, EPA determined that additional CARB amendments to the
ZEV regulations, as they affected 2011 and prior MYs, were within the
scope of previous waivers for the ZEV regulations (or in the
alternative qualified for a new waiver). At that time EPA also granted
a waiver allowing California to enforce the ZEV amendments as they
affected 2012 and later MYs.\45\
---------------------------------------------------------------------------

    \42\ 58 FR 4166 (January 13, 1993).
    \43\ 66 FR 7751 (January 25, 2001).
    \44\ 71 FR 78190 (December 28, 2006).
    \45\ 76 FR 61095 (October 3, 2011).
---------------------------------------------------------------------------

B. CARB's ZEV Amendments

    CARB's stated goal for the 2012 ZEV amendments, as they affect the
ZEV regulation through MY 2017, was to make minor corrections and
clarifications and to enable manufacturers to successfully meet the
2018 and later MY ZEV requirements. As such, the 2012 ZEV amendments
included compliance flexibility provisions, adjustment of credits and
allowances, and the addition of a new vehicle category that can earn
credits to help manufacturers satisfy their sales requirement.
    The compliance flexibility provisions include several modifications
to the ZEV program credit and travel provisions. The limitations on
carry forward credits for ZEVs are removed, allowing for indefinite
banking of ZEV credits. The travel provision for credits from ZEV sales
in Section 177 states is extended through 2017. Travel provision
credits limit the credits manufacturers need to generate to those
necessary for California, no matter how many states adopt the ZEV
program under Section 177. Vehicles sold in section 177 states generate
credits for California and vice versa under the travel provisions. The
travel provision amendments allow for the continued travel of ZEV
credits through MY 2017. Carry forward credits for ZEVs were previously
limited to two additional model years. This limitation is removed by
the 2012 amendments, allowing manufacturers to bank credits for all
future model years. This modification is a flexibility to enable
automakers to comply with the 2018 and later provisions.
    In addition, the 2012 ZEV amendments provide for an adjustment of
credits and allowances to incentivize longer-term technology. For
example, the credits for Type V ZEVs (fuel cell vehicles with range of
300 miles or greater) are increased. Finally, the 2012 ZEV amendments
create the addition of a new vehicle category that includes two new
near-ZEV vehicle types: Type I.5x and Type IIx. These vehicles are
plug-in hybrid electric vehicles (PHEVs) with more capable electric
drive systems, but smaller engines that are not expected to be used
often and have diminished performance. These vehicles can be used to
meet up to one half of a manufacturer's minimum ZEV credit requirement.
These vehicles will be eligible for the same credits as current Type
I.5 (2.5 credits) and Type II (3 credits) and will qualify for travel
provision credits through 2017.
    Separately, CARB's stated goal for its 2012 ZEV amendments, as they
affect 2018 and later MYs, is to achieve the commercialization of ZEVs
and near-ZEVs such as PHEVs (with sales of approximately 15 percent of
the new car market in California by 2025) by simplifying the regulation
and pushing technology to higher volume production in order to achieve
cost reductions. The amendments cover six major areas: increased ZEV
requirements phased-in through 2025; the removal of ``commercialized''
technology from the ZEV program; amended manufacturer size definitions,
ownership requirements and transitions; a modified credit system, a
modified travel provision; and a new opportunity for manufacturers to
generate additional ZEV credits via over compliance with applicable GHG
emission standards during this time period.
    The increased ZEV credit requirements are equivalent to
approximately 15 percent ZEV and near-ZEV sales by 2025. This sales
level is deemed by CARB to be the threshold at which costs will
decrease due to volume effects. The credit requirement is being ramped
up from the current program's static level of 16 percent total, which
includes PZEVs and AT PZEVs. The new requirement consists of a 2
percent minimum ZEV and 2.5 percent minimum TZEV (4.5 percent total)
requirement, ramping up to 16 percent minimum ZEV and 6 percent minimum
TZEV (22 percent total) requirement in 2025 and beyond. The 2012 ZEV
amendment revisions to credit calculations for ZEVs and TZEVs result in
a projected market share of 15.4 percent of new sales in 2025.
    Under the previous ZEV mandate, credits were allowed for PZEV-
certified vehicles and HEVs which are not plugged in. CARB is removing
these vehicle types from the credit scheme in MY 2018 and later.
Remaining credits that are banked can continue to be used, but with
discounts and caps applied.
    Manufacturer size definitions have been amended to apply full ZEV
mandate to all but the smallest manufacturers. Manufacturer sales
volumes will be combined if joint ownership exceeds 33.4 percent and
the transition period for manufacturers changing size categories has
been modified. Under this system, 97 percent of the light-duty market
will be covered by the ZEV mandate.
    Currently, manufacturers with sales volumes exceeding 60,000 units
in California are classified as large volume manufacturers (LVM). This
modification reduces the threshold to 20,000 units, which will bring
most manufacturers under the full ZEV mandate. This modification is
being made because many of these current intermediate vehicle
manufactures (IVMs) have a large market presence outside California.
Remaining IVMs will be allowed to comply with the ZEV mandate with no
restrictions on ZEV technology type, meaning an IVM can fully comply
with TZEVs, but not PZEVs or AT PZEVs.
    Additionally, ownership thresholds for treatment of automakers as
one entity are being modified to more closely align them with GHG fleet
regulations and changes are being made to the lead time provisions as
manufacturers move between size classes.
    CARB also modified its credit system. ZEV credits are based on
range and technology reflecting utility of the vehicle and expected
timing for commercialization. BEVs with a 50-mile range earn one credit
and FCVs with 350 miles of range earn four credits each. Up to half a
manufacturer's credit requirement may be met with more capable PHEVs
which are meant to operate mainly as EVs, but are equipped with a small
range-extending engine.
    TZEVs, which are essentially PHEVs of the type available today such
as the Chevrolet Volt have simplified credits based on electric range
and a minimum requirement of 10 miles all-electric on the US06 test
cycle. The TZEV credit ranges from a minimum of 0.2 to a maximum of 1.3
with a greater than 80 mile range.
    Excess credits earned and banked from PZEVs and AT PZEVs will be
discounted in 2018 and later years. Their use will then be limited to
25 percent of a manufacturer's TZEV requirement. No portion of the ZEV
requirement may be met with banked credits. Smaller manufacturers
(IVMs) will not have their credits capped for 2018 or 2019. In 2020 and
later, the IVM cap will be 25 percent, but applied to their combined
ZEV/TZEV requirement.

    CARB has also modified the credit levels for various ZEV types. The
current tiered CARB system, which encouraged manufacturers to design
vehicles to meet a given range threshold is replaced with an equation
that calculates credits based on the UDDS electric driving range.
    In addition, CARB has modified its ``travel provisions.'' The
travel provision, which allows for the sale of a qualifying vehicle in
a Section 177 state to count towards a manufacturer's credit
requirement in California, ends for BEVs after 2017. Since FCVs are far
behind BEVs in development and market penetration, travel credits are
extended for FCVs. California intends to extend travel credits until
sufficient refueling infrastructure exists to support FCVs in the
market.
    Lastly, the 2012 ZEV amendments provide that automakers who over
comply with the LEVIII GHG standard may use the extra GHG reductions to
offset a portion of their ZEV requirement in MYs 2018 through 2021.
Manufacturers may offset 50 percent of their ZEV mandate in 2018,
ramping down to 30 percent in 2021, subject to certain requirements.

C. EPA's Determination Regarding the Appropriateness of CARB's Within
the Scope Request for the 2012 ZEV Amendments

    CARB primarily relies upon EPA's prior waiver and within the scope
findings to demonstrate the appropriateness of applying the within the
scope criteria to its 2012 ZEV amendments. In EPA's 2006 waiver
determination, EPA stated that it will conduct a two-part inquiry when
considering whether CARB amendments to a previously waived regulation
fall within the scope of the previously granted waiver or whether the
amendments require a new waiver:

    EPA believes it is important to distinguish between the
threshold issue of whether CARB's amendments should be subjected to
either the within-the-scope criteria or the full waiver, and
separately determining whether the same amendments actually meet the
applicable criteria for actually confirming the within-the-scope
request or granting a full waiver of federal preemption.
    In determining the threshold question, EPA will consider whether
the amendments make minor technical revisions or provide compliance
flexibility on the one hand or whether the amendments add new or
more stringent pollutant standards or new motor vehicle categories
on the other.\46\
---------------------------------------------------------------------------

    \46\ Decision Document accompanying waiver determination in 71
FR 78190 (December 28, 2006).

    With regard to the 2017 and earlier MYs, following the precedent
noted above, CARB maintains that the 2012 ZEV amendments create no new
issues affecting the previous waiver determinations concerning the ZEV
program and that the 2012 ZEV amendments do not undermine CARB's
original protectiveness determination and the ZEV regulations remain
consistent with section 202(a). With regard to the 2018 and later MYs,
CARB maintains that the within the scope criteria are appropriate since
the overall ZEV credit requirement for MYs 2018 through 2022 is less
burdensome than the currently waived program.
    EPA received comment from the Manufacturers stating agreement that
the amendments to the MYs 2009 through 2017 ZEV regulations qualify for
a within the scope determination since the amendments increase the
flexibility available to manufacturers to comply with those standards
and otherwise lessen the burdens placed on manufacturers. However, the
Manufacturers did not agree that the amendments to the ZEV regulation
for 2018 and later MYs properly fall under the within the scope review.
The commenter notes that in addition to the increase in the minimum ZEV
credit requirements in 2018 MY and beyond, the CARB amendments also
eliminate certain vehicle types (e.g., PZEVs and AT PZEVs) that were
previously accepted towards compliance with the ZEV requirements during
this time period. In addition, the Manufacturer notes that the changes
to CARB's travel provisions are significant and raise serious
compliance concerns.
    The Dealers commented generally that the ZEV waiver should be
denied, but raised no specific concerns about a within-the-scope
determination for MYs 2012-2017.
    Therefore, EPA has received no explicit comment suggesting that EPA
reject CARB's request for confirmation that EPA evaluate the 2012 ZEV
amendments as they affect the 2017 MY and earlier. EPA believes that it
is appropriate to evaluate such amendments (which provide compliance
flexibilities) under the within the scope criteria and applies such
criteria below. However, with respect to the 2018 and later MYs, EPA
agrees with the commenters that CARB's 2012 ZEV amendments have, in
total, added to the level of stringency and compliance obligations.
Therefore, EPA does not believe it is appropriate to apply within the
scope analysis to the ZEV amendments as they apply in the 2018 and
later MYs. As explained below, because EPA is applying the full waiver
criteria for the 2012 ZEV amendments as they pertain to the 2018 and
later MYS, EPA will in the alternative also examine the revisions for
the 2017 and earlier MYs using the full waiver criteria.

D. Application of the Within the Scope Waiver Criteria to CARB's 2012
ZEV Amendments Regarding 2017 and Earlier MYs

1. Public Health and Welfare
    Under section 209(b)(1)(A) of the Act, EPA cannot grant a waiver if
the Agency finds that CARB was arbitrary and capricious in its
determination that its State standards are, in the aggregate, at least
as protective of public health and welfare as applicable federal
standards. Similarly, under the criteria for a within the scope
determination, the CARB amendments to an existing program may be
considered within-the-scope of a previously granted waiver provided
that the amendments do not undermine California's determination that
its standards in the aggregate are as protective of public health and
welfare as applicable Federal standards. Thus, in the within the scope
context CARB may rely on the ``protectiveness determination'' that the
Board made at the time of the initial regulations (the regulations
which subsequently received a waiver of federal preemption from EPA)
and then CARB must only demonstrate why the protectiveness
determination has not been undermined by CARB's amendments or any other
intervening events such as the adoption of EPA regulations since the
initial waiver of federal preemption.
    CARB asserts that its 2012 ZEV amendments as applied to MYs 2009 to
2017 are a critical component of the ACC package that will result in
fleet standards that are at least as protective as would exist under
federal standards. The Board resolved ``that the Board hereby
determines that the proposed regulations approved for adoption herein
will not cause the California motor vehicle emission standards, in the
aggregate, to be less protective of public health and welfare than
applicable federal standards.'' \47\
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    \47\ CARB Resolution 12-11 at EPA-HQ-OAR-2012-0562-0005.
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    EPA received no comments suggesting that CARB's request should be
denied on the basis of CARB failing to meet its burden associated with
the protectiveness findings under section 209(b)(1)(A) of the Clean Air
Act.
    Therefore, based on the record before us, we cannot find that
CARB's 2012 ZEV amendments, as the affect 2017 and earlier MYs, would
undermine CARB's prior protectiveness determinations nor would it cause
the California motor

vehicle emission standards, in the aggregate, to be less protective of
public health and welfare than applicable federal standards.
2. Consistency With Section 202(a)
    Under section 209(b)(1)(C), EPA cannot grant California its waiver
request if the Agency finds that California standards and accompanying
enforcement procedures are not consistent with section 202(a) of the
Clean Air Act. Previous waivers of federal preemption have stated that
California's standards are not consistent with section 202(a) if there
is inadequate lead time to permit the development of technology
necessary to meet those requirements, given appropriate consideration
to the cost of compliance within that time. California's accompanying
enforcement procedures would also be inconsistent with section 202(a)
if the federal and California test procedures were inconsistent.
    The scope of EPA's review of whether California's action is
consistent with section 202(a) is narrow. EPA has previously found that
the determination is limited to whether those opposed to the waiver
have met their burden of establishing that California's standards are
technologically infeasible, or that California's test procedures impose
requirements inconsistent with the federal test procedure.\48\
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    \48\ See MEMA I, at 1126.
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    As previously noted, CARB maintains that the 2012 ZEV amendments,
as they pertain to the 2017 and previous MYs, provide manufacturers
with additional flexibility without increasing on balance the overall
stringency of the preexisting ZEV requirements. EPA has received no
comments explicitly questioning the feasibility of the amendments as
they apply to these MYs. In the discussion below, EPA addresses the
limited comments regarding the technological feasibility concerns with
regard to 2018 and later MYs and EPA provides further analysis of the
general technological feasibility concerns in the full waiver
discussion. With regard to whether test procedures are consistent, CARB
notes that the federal Tier 2 regulations require manufacturers to
measure emissions from ZEVs in accordance with the California test
procedures.\49\ In addition, EPA has not received comment suggesting
the test procedures are inconsistent. Therefore, based on the record
before us, we cannot deny CARB's within the scope request for 2017 and
prior MYs based on an inconsistency with section 202(a).
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    \49\ CARB waiver request at 29, citing 40 CFR 86.1811-04(n).
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3. New Issues
    As noted above, included in the within the scope criteria, is a
determination of whether the amendments raise new issues affecting the
previous waiver decisions. As previously noted, EPA examines any new
information when reviewing whether CARB's amendments affect the ZEV
program's consistency with section 202(a). If the amendments had
increased the stringency of the standards upon the manufacturers (for
the specific model years being reviewed in the within the scope
analysis), or if the amendments had regulated or subjected new types of
vehicles to be included in the ZEV program (or in this instance
regulated the same vehicle types but for model years not previously
waived by EPA), or added additional pollutants to the program, then
likely new issues would have been created. However, in this instance no
party has presented evidence that new issues exist for MYs 2017 and
earlier as a result of the 2012 ZEV amendments. Therefore, EPA cannot
deny CARB's request for a within the scope determination for MYs 2017
and earlier based on this criterion.
    Therefore, based on the record before us, we cannot deny CARB's
request for confirmation that its 2012 ZEV amendments, as they affect
the 2017 and earlier MYs, are within the scope of previous waiver
determinations. As such, we confirm CARB's request regarding the 2012
ZEV amendments as they affect 2017 and earlier MYs.

V. Consideration of Advanced Clean Car Regulations Under the Full
Waiver Criteria

    CARB's ACC program regulations include revisions to both
California's LEV and ZEV programs. CARB's request seeks a waiver of
preemption under section 209(b) of the Clean Air Act (CAA), 42 U.S.C.
7543(b) for the revisions to the LEV III program. CARB's request also
seeks a waiver for the ZEV amendments included in the ACC program
regulations. Subsequent to CARB's initial ACC waiver request, CARB's
Executive Officer took action to formally adopt a ``deemed to comply''
regulation affecting the GHG component of the ACC package. CARB
submitted this additional information to EPA and requested that EPA
consider the ``deemed to comply'' regulation as part of CARB's pending
ACC waiver request. EPA's application of the section 209(b) waiver
request, including the ``deemed to comply'' regulation, is set forth
below.

A. California's Protectiveness Determination

    Section 209(b)(1)(A) of the Clean Air Act requires EPA to deny a
waiver if the Administrator finds that California was arbitrary and
capricious in its determination that its State standards will be, in
the aggregate, at least as protective of public health and welfare as
applicable Federal standards. EPA recognizes that the phrase ``States
standards'' means the entire California new motor vehicle emissions
program. Therefore, as explained below, when evaluating California's
protectiveness determination, EPA compares the California-to-Federal
standards. That comparison is undertaken within the broader context of
the previously waived California program, which relies upon
protectiveness determinations that EPA have previously found were not
arbitrary and capricious.\50\
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    \50\ In situations where there are no Federal standards directly
comparable to the specific California standards under review, the
analysis then occurs against the backdrop of previous waivers which
determined that the California program was at least as protective of
the federal program ((LEV II + ZEV) + GHG). See 71 FR 78190
(December 28, 2006), Decision Document for Waiver of Federal
Preemption for California Zero Emission Vehicle (ZEV) Standards
(December 21, 2006).
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    Traditionally, EPA has evaluated the stringency of California's
standards relative to comparable EPA emission standards.\51\ That
evaluation follows the instruction of section 209(b)(2), which states:
``If each State standard is at least as stringent as the comparable
applicable Federal standard, such State standard shall be deemed to be
at least as protective of health and welfare as such Federal standards
for purposes of [209(b)(1)].''
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    \51\ 36 FR 17458 (Aug. 31, 1971). (``The law makes it clear that
the waiver requests cannot be denied unless the specific finding
designated in the statute can properly be made. The issue of whether
a proposed California requirement is likely to result in only
marginal improvement in air quality not commensurate with its cost
or is otherwise an arguably unwise exercise of regulatory power is
not legally pertinent to my decision under section 209, so long as
the California requirement is consistent with section 202(a) and is
more stringent than applicable Federal requirements in the sense
that it may result in some further reduction in air pollution in
California.''). The ``more stringent'' standard expressed here in
1971 was superseded by the 1977 amendments to section 209, which
established that California's standards must be, in the aggregate,
at least as protective of public health and welfare as applicable
Federal standards. The stringency standard remains, though, in
section 209(b)(2).
---------------------------------------------------------------------------

    To review California's protectiveness determination in light of
section 209(b)(2), EPA conducts its own analysis of the newly adopted
California standards to comparable applicable Federal standards. The
comparison quantitatively answers whether the new

standards are more or less protective than the Federal standards. That
comparison of the newly adopted California standards to the applicable
Federal standards is conducted in light of prior waiver determinations.
That is, the California-to-Federal analysis is undertaken within the
broader context of the previously waived California program, which
relies upon protectiveness determinations that EPA has not found
arbitrary and capricious.\52\
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    \52\ In situations where there are no Federal standards directly
comparable to the specific California standards under review, the
analysis then occurs against the backdrop of previous waivers which
determined that the California program was at least as protective of
the federal program ((LEV II + ZEV) + GHG). See 71 FR 78190
(December 28, 2006), Decision Document for Waiver of Federal
Preemption for California Zero Emission Vehicle (ZEV) Standards
(December 21, 2006).
---------------------------------------------------------------------------

    A finding that California's determination was arbitrary and
capricious under section 209(b)(1)(A) must be based upon ```clear and
compelling evidence' to show that proposed [standards] undermine the
protectiveness of California's standards.'' \53\ Even if EPA's own
analysis of comparable protectiveness or that suggested by a commenter
might diverge from California's protectiveness finding, that is not a
sufficient basis on its own for EPA to make a section 209(b)(1)(A)
finding that California's protectiveness finding is arbitrary and
capricious.\54\
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    \53\ MEMA I, 627 F.2d at 1122.
    \54\ ``Once California has come forward with a finding that the
procedures it seeks to adopt will not undermine the protectiveness
of its standards, parties opposing the waiver request must show that
this finding is unreasonable.'' MEMA I, 627 F.2d at 1124.
---------------------------------------------------------------------------

    CARB has made a series of protectiveness determinations with regard
to its ACC program. California made a protectiveness determination with
regard to the 2012 ZEV and LEV amendments in CARB's Resolution 12-11,
finding that the amendments would not cause the California motor
vehicle emission standards, in the aggregate, to be less protective of
public health and welfare than applicable federal standards.\55\ CARB
noted that this protectiveness determination is the logical extension
of the comparable findings that were found to be sufficient in the
analyses of California's previous protectiveness determinations for its
ZEV, LEV, and GHG regulations.\56\ As explained in CARB's waiver
request, the ACC program will result in reductions of both criteria
pollutants and GHG emissions that, in the aggregate, are more
protective than the pre-existing federal standards. CARB's Resolution
12-11 also sets forth the Board finding that ``It is appropriate to
accept compliance with the 2017 through 2025 MY National Program as
compliance with California's GHG emission standards up through the 2017
through 2025 MYs, once U.S. EPA issues their Final Rule on or after its
current July 2012 planned release, provided that the GHG reductions set
forth in U.S. EPA's December 1, 2011 Notice of Proposed Rulemaking for
2017 through 2025 model year passenger vehicles are maintained, except
that California shall maintain its own reporting requirements.''
Further, CARB's Resolution 12-21 sets forth that the CARB staff
``prepared three separate Regulatory Notices * * * for these amendments
[LEV III/GHG and ZEV] and presented them to the Board with a single
coordinated analysis of emissions, costs, and associated environmental
impacts and benefits.\57\ CARB's Resolution 12-21 also resolves that
the ``recitals and findings contained in Resolution 12-11, are
incorporated by reference herein.'' \58\
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    \55\ See CARB's Resolution 12-11, EPA-HQ-OAR-2012-0562-0006 at
22. EPA notes that the CARB Board also resolved that it found that
separate California standards and test procedures are necessary to
meet compelling and extraordinary conditions. Id. at 23.
    \56\ CARBS's waiver request at 13, citing 76 FR 61095 (October
3, 2011), 68 FR 19811 (April 22, 2003), and 74 FR 32744 (July 8,
2009), respectively.
    \57\ CARB Resolution 12-21 at 7.
    \58\ Id. at 10.
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    In addition, at the time CARB adopted the ``deemed to comply''
regulation, the CARB Board found that such amendments do not undermine
the Board's previous determination that the regulation's emission
standards, other emission related requirements, and associated
enforcement procedures are, in the aggregate, at least as protective of
public health and welfare as applicable federal standards and are
consistent with section 209 of the Clean Air Act.\59\ Therefore,
subsequent to the finalization of EPA's GHG regulation (August 31,
2012), and as part of the CARB Board's adoption of the ``deemed to
comply'' rule on November 15, 2012, the Board resolved and determined
``that the proposed regulations approved for adoption herein will not
cause California motor vehicle emission standards, in the aggregate, to
be less protective of public health and welfare than applicable federal
standards.'' \60\
---------------------------------------------------------------------------

    \59\ See CARB's Resolution 12-35; EPA-HQ-OAR-2012-0562-0374.
    \60\ Id. at p. 9.
---------------------------------------------------------------------------

    With regard to criteria pollutants, CARB notes that the primary
fleet average emission requirement, beginning in 2015, declines every
year to a fleet average NMOG plus NOX emission standard of
0.030 g/mi in 2025. CARB notes that this is clearly more stringent than
the current federal Tier 2 fleet average NOX emission
requirement with its implied fleet average NMOG and plus NOX
requirement. In addition, the LEV III PM standards 3 mg/mi and 1 mg/mi
are also significantly more stringent than the federal Tier 2 p.m.
standards. CARB also notes that while there is no criteria emissions
benefit with its ZEV requirements in terms of vehicle (tank-to-wheel--
TTW) emissions since the LEV III criteria pollutant fleet standard is
responsible for the emission reductions, but CARB notes that in terms
of upstream emission impacts (well-to-wheel--WTW) there are emission
reductions achieved from the ZEV requirements. There are no comparable
federal standards.
    CARB also notes that with regard to GHG emissions, the ACC program
as a whole would provide major reductions in GHG emissions (e.g., by
2025 CO2 emissions would be reduced by almost 14 million
metric tonnes (MMT) per year, which is 12 percent from baseline
levels). CARB's ACC waiver request, notes that the federal GHG
standards do not become more stringent in the 2017-2025 MYs, as CARB's
do. However, CARB states that it understands more stringent standards
will ``soon be finalized.''
    At the time the Board adopted the ``deemed to comply'' amendments
it had before it the ``Staff Report: Initial Statement of Reasons
demonstrating that if a National Program standard was theoretically
applied only to California new vehicle sales alone, it might create a
GHG deficit of roughly two million tons compared to the California
standards.\61\ CARB notes that there might be a GHG emission deficit if
the National Program applied in California, and thus CARB's GHG
emission standards are at least as stringent as the EPA GHG emission
standards.
---------------------------------------------------------------------------

    \61\ EPA-HQ-OAR-2012-0562-0374 at 3. CARB also notes that to the
extent a manufacturer chooses not to exercise their National Program
compliance option in California this would actually provide
additional GHG benefits in California, so compliance in California
can never yield fewer cumulative greenhouse gas reductions from the
industry wide fleet certified in California.
---------------------------------------------------------------------------

1. Comments on CARB's Protectiveness Determination
    The Dealers commented on CARB's protectiveness determinations for
both its GHG emission standards and its ZEV regulations. At the outset,
NADA claims that EPA must conduct a separate preemption waiver
evaluation for each set of standards in the ACC program

(e.g., LEV III criteria pollutants, GHG, and ZEV). EPA notes that NADA
did not address the preemption waiver request for the CARB LEV III
standards.
    In the context of considering the ACC standards individually, NADA
states that EPA must reject CARB's GHG preemption waiver request
because CARB's finding is premature. NADA maintains that CARB has not
conducted the necessary investigation to support is protectiveness
determination because EPA has now finalized its GHG emission standards.
NADA claims that CARB's determination should measure the standards that
exist at the time EPA makes its waiver decision. NADA contends that
rather than allowing CARB to look at the program as a whole, CARB must
be required to examine each standard before the Agency, including the
GHG standards at issue. In the alternative, the commenter suggests that
CARB's protectiveness determination is arbitrary and capricious since
CARB itself cites the absence of the federal GHG standards as reason
for its protectiveness determination. Finally, the commenter argues
that CARB's conclusions are not backed by facts or analysis and
contradict the actuality that emissions from other parts of the world
and the United States affect global concentrations, and therefore
concentrations in California. The Dealers state that it therefore
follows that GHG concentrations in California will be reduced by a
greater amount if reductions occur on a nationwide basis, rather than
just statewide. Thus by definition, CARB standards for limiting GHG
emissions from California cars are less protective than the applicable
federal standards.
    CARB's supplemental comments, in response to NADA's claims, note
that California demonstrated that it was reasonable for the Board to
determine that the California standards ``as submitted'' are, in the
aggregate, as or more stringent than the applicable federal
standards.\62\ CARB suggests this was a relatively simple determination
at the time of CARB's June 2012 waiver request because: (1) EPA's
proposed 2017-2025 MY GHG standards were not finalized; (2) EPA had not
proposed or finalized a 1 mg/mile PM standard and other criteria
pollutant improvements for 2015 and later MYs; and (3) EPA has no ZEV
program that may achieve an additional incremental wells-to-wheels
criteria pollutant reduction. CARB states that this prior and timely
Board determination remains sound despite the now finalized EPA GHG
standards because (2) and (3) remain true and because EPA GHG
standards: (1) do not account for upstream GHG emissions as does
California's GHG program; (2) include vehicle multipliers for natural
gas vehicles, effectively diluting federal standards vis a vis
California's; and (3) contains relaxed criteria for GHG credits for
mild hybrid-electric vehicle trucks, which also dilutes the federal
standard. CARB also notes that to the extent manufacturers choose the
EPA GHG standard compliance path to demonstrate compliance with
California standards that results in essentially equal reductions (as
stringent) of GHG emissions in California. Separately, CARB states that
NADA's attempt to exclude CARB's LEV III standards from the ``in the
aggregate'' protectiveness determination cannot be countenanced since
this would render the phrase ``in the aggregate'' superfluous.
---------------------------------------------------------------------------

    \62\ CARB submitted comment on November 14, 2012 (CARB
supplemental comment). EPA-HQ-OAR-2012-0562-0373.
---------------------------------------------------------------------------

    In addition, within CARB's Resolution 12-35, adopted on November
15, 2012, CARB addresses two issues raised by NADA's comments to EPA.
CARB's Resolution 12-35 notes the question of whether the CARB Board
failed to make a finding that California's passenger vehicle program
remains as protective as applicable federal standards given the
proposed ``deemed to comply'' rule on September 14, 2012 and also notes
the question whether California's program is no longer as protective
given the 2017 through 2025 MY National Program. First, it states that
it sufficiently addressed NADA's protectiveness issues in its November
14, 2012 supplemental submittal to EPA. Within this submission, CARB
noted that it was reasonable for the Board to determine that the
California standards as submitted are, in the aggregate, as or more
stringent that the applicable federal standards. CARB maintains that at
the time of its June 2012 waiver submittal its protectiveness
determination was a fairly simple one since EPA's 2017-2025 GHG
standards were not finalized, EPA had not proposed nor finalized a 1
mg/mile PM standard and other criteria pollutant improvements for 2015
and later MYs, and EPA has no ZEV program that may achieve an
additional incremental wells-to-wheels criteria pollutant reduction.
CARB notes that the Board's determination remains solid despite the now
finalized National Program rule because EPA still has no LEV III
criteria pollutant/PM equivalent requirements and because EPA's GHG
standards do not account for upstream GHG emissions as do California's,
and because the National Program includes vehicle multipliers for
natural gas vehicles and relax criteria for GHG credits for mild hybrid
electric vehicle trucks.
    EPA also received comment regarding CARB's protectiveness
determination for its ZEV standards. The Dealers suggest that CARB
failed to adequately provide a protectiveness determination, and such a
determination is drawn into question given CARB's stated conclusions
that there is no TTW emission benefits from ZEV and that the ZEV
regulation does not provide any additional GHG emission reductions
beyond the GHG standards. The Dealers claim that CARB's failure to make
a protectiveness determination regarding its ZEV standard is inherently
arbitrary and capricious.
    CARB states that contrary to NADA's assertion that it must make an
individual protectiveness determination regarding its ZEV amendments
CARB believes that requiring California to show that each standard
(including the ZEV standard) is at least as protective in the aggregate
would in effect ignore the phrase ``in the aggregate'' in section
209(b). CARB states that is why it made one protectiveness
determination. CARB notes that purpose of the ZEV regulation is to
commercialize the technologies needed to meet long term goals even
beyond the emission reductions anticipated by the LEV III program.\63\
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    \63\ CARB's supplemental comments at 3-4. CARB also references
table 6.2 of its Initial Statement of Reasons (ISOR) that details
the well to wheel emissions benefits of the ZEV program compared to
the LEV III program. EPA-HQ-OAR-2012-0562-0008.
---------------------------------------------------------------------------

2. Is California's protectiveness determination arbitrary and
capricious?
    As described above, EPA's traditional analysis has been to evaluate
California's protectiveness determination by comparing the new
California standards, or amendments, to applicable EPA emission
standards for the same pollutants. EPA notes that the ``more
stringent'' standard expressed in 1971 was superseded by the 1977
amendments to section 209, which established that California's
standards must be, in the aggregate, at least as protective of public
health and welfare as applicable Federal standards. As noted above,
this was intended to afford California the broadest possible discretion
in designing is motor vehicle emission program. The comparison is
undertaken within the broader context of the previously waived
California program, which relies upon protectiveness determinations
that EPA have previously found were not arbitrary and capricious.

    EPA believes that the Dealers misapply our prior statement, made in
EPA's 2009 GHG waiver decision, that the most straightforward reading
of the comparison called for by the statute, between California and
Federal standards, is an ``apples to apples'' comparison.\64\ The
stated purpose of the ``apples to apples'' phrase was to determine what
the ``applicable'' Federal standards are for purposes of evaluating a
protectiveness determination, in response to comments that the federal
CAFE standards adopted by NHTSA should be considered applicable federal
standards for purposes of this wavier criterion. EPA explained in the
GHG waiver decision that ``The term `applicable' has to refer to what
Federal standards apply, and the most straightforward meaning is that
they apply in the same way that the California standards apply, by
setting limits on emissions of air pollutants.'' Therefore, given the
uniqueness of a CARB waiver request that includes interrelated
standards applicable to the same vehicle category EPA believes CARB's
approach of making one protectiveness determination for its ACC program
is a reasonable approach permitted under section 209(b).\65\ Although
section 209(b)(2) informs EPA of the conclusion it must draw if each
standard is at least as stringent as the comparable federal standard,
EPA notes the protectiveness determination that CARB presents in a
waiver request typically includes an implicit or explicit in the
aggregate protectiveness determination since CARB typically examines
whether its new standards (plural) undermine previous protectiveness
determinations, which EPA evaluated in prior waiver decisions. In this
context, once CARB presents an in the aggregate protectiveness
determination EPA believes it appropriate to initially evaluate such
standards in a side-by-side comparison with applicable Federal
standards and then determine whether such standards are, in the
aggregate, as protective as applicable Federal standards.
---------------------------------------------------------------------------

    \64\ See 74 FR at 32750.
    \65\ EPA also notes that CARB has provided complete information
and determinations that even in the context of comparing individual
standards their standards are as protective of public health and
welfare as applicable Federal standards.
---------------------------------------------------------------------------

    In the context of CARB's ACC standards this side-by-side analysis
is simple. EPA has already determined that California was not arbitrary
and capricious in its determination that the pre-existing California
standards for light-duty vehicles and trucks, known as LEV II, is at
least as protective as comparable federal standards, known as the Tier
II standards.\66\ In this instance, CARB has finalized new and more
stringent criteria pollutant standards (LEV III) while the Tier II
standards remain in place at the federal level. In the absence of newer
EPA standards since the time of its prior waiver for CARB's LEV II
standards there is a clear rational basis for CARB's determination that
its standards will be at least as protective of human health and
welfare as applicable federal standards.
---------------------------------------------------------------------------

    \66\ 68 FR 19811 (April 22, 2003) and Decision Document for
Waiver of Federal Preemption for Low Emission Vehicle Amendments
(LEV II) (April 11, 2003).
---------------------------------------------------------------------------

    The Dealer's comments assert that CARB's protectiveness
determination was premature because that assessment occurred before EPA
finalized its own GHG emission standards. However, EPA believes that
CARB's initial protectiveness determination (submitted to EPA in CARB's
June 2012 waiver request) was not premature and was appropriate given
the EPA standards in effect at that time. At the time CARB submitted
its waiver request, EPA's GHG emission standards for the 2017 through
2025 MYs were the same for those MYs as for MY 2016, while CARB's were
becoming more and more stringent over that period; therefore, CARB's
protectiveness finding was reasonable at that time.
    Subsequent to EPA's promulgation of its final GHG standards, in the
context of CARB's ``deemed to comply'' regulation, CARB has provided an
updated protectiveness determination (see Resolution 12-35) regarding
the California GHG emission standards, in terms of the underlying
benefits of CARB's program. EPA finds California to be correct in its
determination that the ``deemed to comply'' regulation does not
undermine CARB's determination that its regulations are in the
aggregate as protective as EPA's standards. CARB's regulation will
achieve, in the aggregate, equal or even additional GHG emission
reductions in California relative to federal GHG standards, even if
manufacturers choose to comply with the California regulations by
complying with EPA's GHG emission standards. As noted above, EPA's
National Program standards do not account for upstream GHG emissions as
do California's and EPA's GHG standards includes vehicle multipliers
for natural gas vehicles and relax criteria for GHG credits for mild
hybrid electric vehicle trucks. EPA also believes that CARB correctly
notes that even with the ``deemed to comply'' amendments, one or more
manufacturers could still choose to continue demonstrating compliance
in California under the existing California regulations. To the extent
manufacturers choose EPA's GHG standards as the compliance path--in
California--the California standard, by definition would yield at
least, essentially equivalent GHG reductions, so California's standards
cannot be less stringent.
    The Dealers seem to suggest that with EPA's GHG standards there
will be a greater reduction of GHG emissions compared to the California
GHG emission standards. California's protectiveness determination
applies only to the protectiveness of CARB's emission standards, in
California, compared to applicable federal standards. EPA believes that
the Dealers ignore the obvious, that all stakeholders, including
California, recognize the need for reductions of GHG emissions, as well
as emissions of other pollutants, on a national basis. The federal GHG
emission standards, applied in 50 states, will generally result in more
emission reductions than CARB standards applied solely in California.
If California were required to achieve equal emission results (with
reductions counted only in California) to a federal program this would
render 209(b) unusable. The relevant comparison is between the emission
reductions achieved in California under the California program versus
the emission reductions in California under the comparable federal
program. Emissions reductions in other states are not considered, which
is appropriate because the waiver decision affects only California's
emission standards, not the federal standards that exist regardless of
EPA's decision. EPA believes, and the record contains no evidence
otherwise, that the reductions due to CARB's GHG emission standards in
California versus the reductions of the comparable federal GHG emission
standards in California, demonstrates that CARB's GHG emission
standards are at least as protective as applicable federal standards.
EPA notes that NADA raised similar arguments in the context of EPA's
within the scope waiver decision, issued on June 14, 2011, for CARB's
GHG emission amendments that included a ``deemed to comply'' provision
for GHG emission standards during the 2012 through 2016 MYs. EPA noted
``Thus, at the very least, compliance with California's GHG standards
under the revised regulations will result in the same, if not more,
emission reductions than would occur in the absence of the California
standards. NADA provides no evidence that CARB's standards are less
protective than the applicable Federal

standards. As such, NADA fails to present any evidence or make any
showing that the amendments undermine California's previous
determination that its standards, in the aggregate, are at least as
protective of public health and welfare as applicable Federal
standards.'' \67\
---------------------------------------------------------------------------

    \67\ 76 FR 34693, 34696 (June 14, 2011).
---------------------------------------------------------------------------

    With regard to CARB's ZEV amendments EPA believes that CARB has
provided a reasoned basis for their determination that the ZEV
regulations are as protective or public health and welfare as
comparable federal requirements, which for ZEV are nonexistent. In
EPA's 2006 ZEV waiver proceeding, EPA conducted its traditional
analysis to compare California's newly enacted ZEV standards to a
similar lack of applicable federal standards. At that time California
found, and EPA deemed reasonable, that the addition of the ZEV
standards did not render California's LEV II program, for which a
waiver had previously been granted, less protective than the federal
Tier II program. In addressing the Alliance of Automobile
Manufacturers' petition for reconsideration with respect to this issue,
EPA stated that ``the words `standards' and `in the aggregate' in
section 209(b)(1)(A) * * *, at minimum, include all the standards
relating to the control of emissions for a category of vehicles (e.g.,
passenger cars, etc.) subject to CARB regulation, particularly where
the standards are designed to respond to the same type of pollution.''
\68\ California's ZEV and GHG emission standards are an addition to its
LEV program. EPA has not received any comment to suggest that the
existence of either of these additional regulatory components
undermines the protectiveness of CARB's LEV III emission standards.
Although the Dealers suggest that ``consumers facing a CARB-constrained
mix at their local dealership may elect to buy a CARB-exempted brand,
to purchase a late-model used vehicle, or defer vehicle purchases
altogether,'' EPA believes that the Dealers have failed to present any
legal argument as to why EPA should take this into consideration within
the waiver criteria. We also find that the Dealers have failed to
provide evidence, under any standard of proof, as to whether such
outcomes would ultimately impair the protectiveness of CARB's emission
standards. EPA believes it is appropriate, and certainly reasonable,
for CARB to evaluate its standards in the aggregate when the nature of
its regulations are interrelated and the regulations are submitted to
EPA as one ACC program. Although NADA suggests that CARB failed to make
an individual protectiveness determination for its ZEV standards, EPA
believes this is of no significance in light of the overall
protectiveness of CARB's emission standards and the lack of an
applicable federal ZEV program. The Dealers mere contentions, which
CARB reasonably refutes in its supplement comments,\69\ that there is
no criteria emission benefit from the ZEV proposal in terms of TTW
emissions, and that the ZEV regulation does not provide GHG emission
reductions in addition to the LEV III GHG regulation, suggest no reason
to find that CARB's ACC program is any less protective of public health
and welfare because of the existence of such ZEV standards.
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    \68\ Decision Document for Waiver of Federal Preemption for
California's Zero Emission Vehicle (ZEV) Standards (December 21,
2006) and EPA's August 13, 2008 Response to Petition for
Administrative Reconsideration of EPA's ZEV Waiver Decision (through
the 2011 Model Year) published on December 28, 2006.
    \69\ See CARB supplemental comments at 3-4.
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3. Section 209(b)(1)(A) Conclusion
    Based on the record before EPA, we cannot find that CARB was
arbitrary and capricious in its finding that the California ACC program
standards, including the LEV III criteria pollutant and GHG emission
standards along with its ZEV amendments are, in the aggregate, at least
as protective of public health and welfare as applicable federal
standards.

B. Does California need its standards to meet compelling and
extraordinary conditions?

    Under section 209(b)(1)(B) of the Act, EPA cannot grant a waiver if
EPA finds that California ``does not need such State standards to meet
compelling and extraordinary conditions.'' EPA has traditionally
interpreted this provision as requiring a consideration of whether
California needs a separate motor vehicle program to meet compelling
and extraordinary conditions. However in EPA's March 6, 2008 denial of
CARB's GHG waiver request (GHG waiver denial), EPA limited this
interpretation to California's motor vehicle standards that are
designed to address local or regional air pollution problems. EPA
determined that the traditional interpretation was not appropriate for
standards designed to address a global air pollution problem and its
effects and that it was appropriate to address such standards
separately from the remainder of the program. EPA then found that
California did not need such standards to meet compelling and
extraordinary conditions. The interpretation adopted in the March 6,
2008 waiver denial was before EPA for reconsideration when CARB
resubmitted its GHG waiver request and EPA announced a new opportunity
for hearing and public comment on February 12, 2009.\70\
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    \70\ 74 FR 7040 (February 12, 2009).
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    Set forth below is a summary of EPA's departure from the
traditional interpretation of section 209(b)(1)(B) in the GHG waiver
denial along with EPA's return to the traditional interpretation
(confirmed today) in EPA's waiver of preemption of CARB's GHG standards
on July 8, 2009 (GHG waiver).\71\ Because EPA received comment
suggesting that CARB's GHG and ZEV standards do not meet the
requirements of section 209(b)(1)(B), EPA believes it useful to recount
the interpretive history associated with both GHGs and traditional
local and regional air pollutants to explain why EPA believes that
section 209(b)(1)(B) should be applied in the same manner for all air
pollutants.
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    \71\ 74 FR 32744 (July 9, 2009).
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    As explained below, EPA finds that the opponent of the ACC waiver
has not met its burden of demonstrating why CARB no longer has a need
for its motor vehicle emissions program under EPA's interpretation of
section 209(b)(1)(B). Although EPA is not adopting the Dealers
suggested interpretation, EPA also finds that the opponent of the
waiver has not met its burden of demonstrating that CARB does not have
the need for either its GHG or ZEV standards.
1. EPA's March 6, 2008 GHG Waiver Denial
    In the March 6, 2008 waiver denial, EPA provided its reasoning for
changing its long-standing interpretation of this provision, as it
pertains to California standards designed to address global air
pollution. EPA described its longstanding interpretation in some
detail, stating that:

    Under this approach EPA does not look at whether the specific
standards at issue are needed to meet compelling and extraordinary
conditions related to that air pollutant. For example, EPA reviewed
this issue in detail with regard to particulate matter in a 1984
waiver decision.\72\ In that waiver proceeding, California argued
that EPA is restricted to considering whether California needs its
own motor vehicle program to meet compelling and extraordinary
conditions, and not whether any given standard is necessary to meet
such conditions. Opponents of the waiver in that proceeding argued
that EPA was to consider whether California needed

these PM standards to meet compelling and extraordinary conditions
related to PM air pollution.
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    \72\ 49 FR 18887 (May 3, 1984).
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    The Administrator agreed with California that it was appropriate
to look at the program as a whole in determining compliance with
section 209(b)(1)(B). One justification of the Administrator was
that many of the concerns with regard to having separate state
standards were based on the manufacturers' worries about having to
meet more than one motor vehicle program in the country, but that
once a separate California program was permitted, it should not be a
greater administrative hindrance to have to meet further standards
in California. The Administrator also justified this decision by
noting that the language of the statute referred to ``such state
standards,'' which referred back to the use of the same phrase in
the criterion looking at the protectiveness of the standards in the
aggregate. He also noted that the phrase referred to standards in
the plural, not individual standards. He considered this
interpretation to be consistent with the ability of California to
have some standards that are less stringent than the federal
standards, as long as, per section 209(b)(1)(A), in the aggregate
its standards were at least as protective as the federal standards.
    The Administrator further stated that in the legislative history
of section 209, the phrase ``compelling and extraordinary
circumstances'' refers to ``certain general circumstances, unique to
California, primarily responsible for causing its air pollution
problem,'' like the numerous thermal inversions caused by its local
geography and wind patterns. The Administrator also noted that
Congress recognized ``the presence and growth of California's
vehicle population, whose emissions were thought to be responsible
for ninety percent of the air pollution in certain parts of
California.'' \73\ EPA reasoned that the term compelling and
extraordinary conditions ``do not refer to the levels of pollution
directly.'' Instead, the term refers primarily to the factors that
tend to produce higher levels of pollution--``geographical and
climatic conditions (like thermal inversions) that, when combined
with large numbers and high concentrations of automobiles, create
serious air pollution problems.'' \74\
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    \73\ Id. at 18890.
    \74\ 73 FR 12156, 12159-60.

    The Administrator summarized that under this interpretation the
question to be addressed in the second criterion is whether these
``fundamental conditions'' (i.e. the geographical and climate
conditions and large motor vehicle population) that cause air pollution
continued to exist, not whether the air pollution levels for PM were
compelling and extraordinary, or the extent to which these specific PM
standards will address the PM air pollution problem.\75\
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    \75\ 73 FR at 12159-60.
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    However in the GHG waiver denial, EPA limited this interpretation
to California's motor vehicle standards that are designed to address
local or regional air pollution problems. EPA determined that the
traditional interpretation was not appropriate for standards designed
to address a global air pollution problem and its effects.\76\
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    \76\ EPA recently reaffirmed that the traditional interpretation
still applied for motor vehicle standards designed to address air
pollution problems that are local or regional in nature. 71 FR
78190, 78192 (December 28, 2008); see also 71 FR 78190 and Decision
Document for Waiver of Federal Preemption for California Zero
Emission Vehicle Standards, at 34.
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    With respect to a global air pollution problem like elevated
concentrations of GHGs, EPA's GHG waiver denial found that the text of
section 209(b)(1)(B) was ambiguous and did not limit EPA to this prior
interpretation. In addition, EPA noted that the legislative history
supported a decision to ``examine the second criterion specifically in
the context of global climate change.'' The legislative history:

    [I]ndicates that Congress was moved to allow waivers of
preemption for California motor vehicle standards based on the
particular effects of local conditions in California on the air
pollution problems in California. Congress discussed ``the unique
problems faced in California as a result of its climate and
topography.'' H.R. Rep. No. 728, 90th Cong. 1st Sess., at 21 (1967).
See also Statement of Cong. Holifield (CA), 113 Cong. Rec. 30942-43
(1967). Congress also noted the large effect of local vehicle
pollution on such local problems. See, e.g., Statement of Cong. Bell
(CA) 113 Cong. Rec. 30946. In particular, Congress focused on
California's smog problem, which is especially affected by local
conditions and local pollution. See Statement of Cong. Smith (CA)
113 Cong. Rec. 30940-41 (1967); Statement of Cong. Holifield (CA),
id. at 30942. See also, MEMA I, 627 F. 2d 1095, 1109 (DC Cir., 1979)
(noting the discussion of California's ``peculiar local conditions''
in the legislative history). Congress did not justify this provision
based on pollution problems of a more national or global nature in
justifying this provision.\77\
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    \77\ 73 FR at 12161.

    Relying on this, and without any further significant discussion of
either congressional intent or how this new approach properly furthered
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the goals of section 209(b), EPA determined that it was appropriate to:

    [R]eview California's GHG standards separately from the
remainder of its motor vehicle emission control program for purposes
of section 209(b)(1)(B). In this context it is appropriate to give
meaning to this criterion by looking at whether the emissions from
California motor vehicles, as well as the local climate and
topography in California, are the fundamental causal factors for the
air pollution problem--elevated concentrations of greenhouse gases--
apart from the other parts of California's motor vehicle program,
which are intended to remediate different air pollution concerns.

    EPA then applied this interpretation to the GHG standards at issue
in that waiver proceeding. Having limited the meaning of this provision
to situations where the air pollution problem was local or regional in
nature, EPA found that California's GHG standards do not meet this
criterion. EPA also found that the elevated concentrations of GHGs in
California are similar to concentrations elsewhere in the world, and
that local conditions in California such as the local topography and
climate and the number of motor vehicles in California are not the
determinant factors causing the elevated GHG concentrations found in
California and elsewhere. Thus, EPA found that California did not need
its GHG standards to meet compelling and extraordinary conditions, and
denied the GHG waiver.
    EPA also considered an alternative interpretation, where EPA would
consider ``the effects in California of this global air pollution
problem in California in comparison to the rest of the country, again
addressing the GHG standards separately from the rest of California's
motor vehicle program.'' Under this alternative interpretation, EPA
considered whether the impacts of global climate change in California
were significant enough and different enough from the rest of the
country such that California could be considered to need its GHG
standards to meet compelling and extraordinary conditions. EPA
determined that the waiver should be denied under this alternative
interpretation as well.
2. EPA's July 9, 2009 GHG Waiver
    In EPA's July 9, 2009 GHG waiver, the Agency determined that the
better approach was to review California's need for its new motor
vehicle emissions program as a whole to meet compelling and
extraordinary conditions, and not to apply this criterion to specific
standards, or to limit it to standards designed to address only local
or regional air pollution problems. EPA reasoned that the traditional
approach to interpreting this provision was the best approach for
considering a waiver directed to GHG emission standards, as well as a
waiver for standards directed to address local or regional air
pollution problems.\78\

Therefore, EPA rejected the interpretation that was applied in the
March 6, 2008 waiver denial and stated it should no longer be followed.
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    \78\ The traditional interpretation of section 209(b)(1)(B) is
certainly not ``unambiguous precluded'' by the language of the
statute. See Entergy Corp. v. Riverkeeper, Inc., 129 S.Ct. 1498
(2009) (``That view governs if it is a reasonable interpretation of
the statute--not necessarily the only possible interpretation, nor
even the interpretation deemed most reasonable by the courts.
Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467
U.S. 837, 843-844 (1984).'') (``It seems to us, therefore, that the
phrase ``best available,'' even with the added specification ``for
minimizing adverse environmental impact,'' does not unambiguously
preclude cost-benefit analysis.''). Carrow v. Merit Systems
Protection Board, 564 F.3d 1359 (Fed. Cir. 2009) (``[W]e are
obligated to give controlling effect to [agency's] interpretation if
it is reasonable and is not contrary to the unambiguously expressed
intent of Congress'', citing Entergy Corp.).
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    EPA reasoned that the traditional interpretation was the most
straightforward reading of the text and legislative history of section
209(b). Congress decided in 1977 to allow California to promulgate
individual standards that are not as stringent as comparable federal
standards, as long as the standards are ``in the aggregate, at least as
protective of public health and welfare as applicable federal
standards.'' This decision by Congress requires EPA to allow California
to promulgate individual standards that, in and of themselves, might
not be considered needed to meet compelling and extraordinary
circumstances, but are part of California's overall approach to
reducing vehicle emissions to address air pollution problems.
    Further, we noted that EPA is to determine whether California's
protectiveness determination is arbitrary and capricious under section
209(b)(1)(A), and whether California does not need ``such State
standards'' to meet compelling and extraordinary conditions under
section 209(b)(1)(B). The natural reading of these provisions led EPA
to consider the same group of standards that California considered in
making its protectiveness determination. While the words ``in the
aggregate'' are not specifically mentioned in section 209(b)(1)(B), EPA
explained that it does refer to the need for ``such State standards,''
rather than ``each State standard'' or otherwise indicate a standard-
by-standard analysis.
    We also noted that EPA's GHG waiver denial had determined that this
provision was appropriately interpreted to consider California's
standards as a group for standards designed to address local or
regional air pollution problems, but should be interpreted in the
opposite fashion for standards designed to address global air pollution
problems. The text of the provision, however, draws no such
distinction, and provides no indication other than Congress intended a
single interpretation for this provision, not one that varied based on
the kind of air pollution problem at issue.
    EPA also explained that the GHG waiver denial had considered the
legislative history, and determined that Congress was motivated by
concern over local conditions in California that led to local or
regional air pollution problems, and from this EPA determined that
Congress intended to allow California to address these kinds of local
or regional air pollution problems, but no others. However, upon a
reexamination of the legislative history EPA found that the
determination noted above ignores the main thrust of the text and
legislative history of section 209(b), and improperly reads too much