[Federal Register Volume 78, Number 183 (Friday, September 20, 2013)]
[Notices]
[Pages 58089-58121]
[FR Doc No: 2013-22930]

Vol. 78

Friday,

No. 183

September 20, 2013

Part IV

Environmental Protection Agency

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California State Nonroad Engine Pollution Control Standards; Off-Road
Compression Ignition Engines--In-Use Fleets; Notice of Decision; Notice

Federal Register / Vol. 78 , No. 183 / Friday, September 20, 2013 /
Notices

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2008-0691; FRL-9901-18-OAR]

California State Nonroad Engine Pollution Control Standards; Off-
Road Compression Ignition Engines--In-Use Fleets; Notice of Decision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of decision.

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SUMMARY: The Environmental Protection Agency (EPA) is granting the
California Air Resources Board's (CARB's) request for authorization of
California regulations applicable to in-use fleets that operate off-
road (nonroad or NR), diesel-fueled (compression-ignition or CI)
vehicles with engines 25 horsepower and greater. The regulations
require such fleets to meet fleet average emissions standards for
oxides of nitrogen (NOX) and particulate matter (PM), or,
alternatively, to comply with best available control technology (BACT)
requirements for the vehicles in those fleets. This decision is issued
under the authority of the Clean Air Act (CAA or Act).

DATES: Petitions for review must be filed by November 19, 2013.

ADDRESSES: EPA has established a docket for this action under Docket ID
EPA-HQ-OAR-2008-0691. All documents relied upon in making this
decision, including those submitted to EPA by CARB, are contained in
the public docket. Publicly available docket materials are available
either electronically through www.regulations.gov or in hard copy at
the Air and Radiation Docket in the EPA Headquarters Library, EPA West
Building, Room 3334, located at 1301 Constitution Avenue NW.,
Washington, DC. The Public Reading Room is open to the public on all
federal government working days from 8:30 a.m. to 4:30 p.m.; generally,
it is open Monday through Friday, excluding holidays. The telephone
number for the Reading Room is<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
(202) 566-1742, and the fax number is<PHONE_NUMBER>. An electronic
version of the public docket is available through the federal
government's electronic public docket and comment system. You may
access EPA dockets at http://www.regulations.gov. After opening the
www.regulations.gov Web site, enter EPA-HQ-OAR-2008-0691 in the ``Enter
Keyword or ID'' fill-in box to view documents in the record. Although a
part of the official docket, the public docket does not include
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute.
    EPA's Office of Transportation and Air Quality (OTAQ) maintains a
Web page that contains general information on its review of California
waiver requests. Included on that page are links to prior waiver
Federal Register notices, some of which are cited in today's notice;
the page can be accessed at http://www.epa.gov/otaq/cafr.htm.

FOR FURTHER INFORMATION CONTACT: David Dickinson, Attorney-Advisor,
Compliance Division, Office of Transportation and Air Quality, U.S.
Environmental Protection Agency, 1200 Pennsylvania Avenue (6405J) NW.,
Washington, DC 20460. Telephone:<PHONE_NUMBER>. Email:
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

I. Executive Summary
II. Background
    A. California's Nonroad CI In-Use Fleet Requirements
    B. Clean Air Act Nonroad Engine and Vehicle Authorizations
    C. Deference to California
    D. Burden and Standard of Proof
    E. EPA's Administrative Process in Consideration of California's
Nonroad CI In-Use Fleet Requirements
III. Discussion
    A. California Protectiveness Determination
    1. Based on EPA's Traditional Analysis, is California's
Protectiveness Determination Arbitrary and Capricious?
    2. Is CARB's Protectiveness Determination Arbitrary and
Capricious Based on Other Effects of California's Fleet
Requirements?
    3. Section 209 (e)(2)(A)(i) Conclusion
    B. Does California Need its Standards to Meet Compelling and
Extraordinary Conditions?
    1. Should EPA Review This Criterion Based on the Need for
California's Nonroad Program or the Need for the Fleet Requirements?
    a. Comment from Pacific Legal Foundation
    b. EPA Response
    2. Does California Need its Nonroad Program to Meet Compelling
and Extraordinary Conditions?
    3. In the Alternative, does California Need its Nonroad Fleet
Requirements to Meet Compelling and Extraordinary Conditions?
    a. California Air Quality Today and Moving Forward
    b. PM Health Effects
    c. Additional PM Comments
    4. Section 209(e)(2)(A)(ii) Conclusion
    C. Consistency with Section 209 of the Clean Air Act
    1. Consistency with Section 209(a)
    2. Consistency with Section 209(e)(1)
    3. Consistency with Section 209(b)(1)(C)
    a. Technological Feasibility
    b. Consistency of Certification Procedures
    D. Additional Issues Raised in Comment
    1. Request for a Public Hearing In California
    2. Request for EPA to Reopen the Comment Period
    3. Claims Outside the Scope of the Clean Air Act
    4. Constitutional Claims
    E. Authorization Determination for California's Fleet
Requirements
IV. Decision
V. Statutory and Executive Order Review

I. Executive Summary

    Today, the Environmental Protection Agency (EPA) is granting a
California Air Resources Board (CARB) request for authorization of
regulations designed to reduce PM and NOX emissions from in-
use nonroad diesel engines. The California In-Use Off-Road Diesel-
Fueled Fleets Regulation (Fleet Requirements) applies to fleets with NR
CI vehicles or equipment greater than 25 horsepower. The regulation
takes effect beginning as early as 2014, depending on fleet size. It
requires fleet operators to meet a progressively more stringent
combined PM and NOX standard, or to reduce emissions through
technology upgrades such as retrofit or replacement. Today's decision
pertains to CARB's request of March 1, 2012, for authorization of the
Fleet Requirements as amended in 2010.
    The legal framework for this decision stems from the provisions
first adopted by Congress in 1967, and later modified in 1977, with
respect to state emission requirements for motor vehicles and motor
vehicle engines; and from similar language adopted by Congress in 1990
with respect to preemption of state emission requirements for certain
nonroad vehicles and equipment. Section 209(e)(2) of the Act, 42 U.S.C.
7543(e)(2), specifies that EPA must authorize California to adopt and
enforce covered nonroad standards if California determines that its
standards are, in the aggregate, at least as protective of the public
health and welfare as applicable Federal standards, unless EPA makes
one of three findings specified under the Clean Air Act: (1) That
California's protectiveness finding is arbitrary and capricious; (2)
that California does not need such California standards to meet
compelling and extraordinary conditions; or (3) that California
standards and accompanying enforcement procedures are not consistent
with this section. As explained below, EPA interprets the

statutory language ``consistent with this section'' to mean consistent
with section 209 (e.g. section 209(a), section 209(e)(1), and section
209(b)(1)(C)) of the Act. EPA's role upon receiving an authorization
request is to determine whether it is appropriate to make any of these
three specified findings. Opponents of authorization bear the burden of
proving that at least one of the three bases for denial of
authorization has been satisfied. If the Agency cannot make at least
one of the three findings, then it must grant the requested
authorization. EPA has evaluated CARB's request with regard to each of
these three authorization criteria, in light of the evidence in the
public record, and is granting CARB its authorization request as
required under the Clean Air Act.
    This Notice of Decision provides a full discussion of EPA's
evaluation of each of the three criteria, including EPA's evaluation of
the record and its determination that those opposing the authorization
have not met their burden of proof with regard to any of the three
criteria in section 209(e)(2)(A).

II. Background

A. California's Nonroad CI In-Use Fleet Requirements

    CARB initially approved the Fleet Requirements on July 26, 2007.
CARB subsequently amended the regulation after the Board conducted
hearings in December 2008, January 2009, July 2009, and most recently
in December 2010. As explained below, the December 2010 amendments
significantly modified the regulation's compliance dates and in-use
performance requirements.
    The Fleet Requirements establish statewide in-use performance
standards applicable to any person, business, or government agency that
owns and operates in-use nonroad diesel vehicles in California with a
maximum power of 25 horsepower (hp) or greater. The regulation applies
to engines that are used to provide motive power, and in some cases
auxiliary power, to nonroad vehicles, which are defined as vehicles
that (1) cannot be registered and driven safely on-road, and (2) are
not implements of husbandry or recreational off-highway vehicles.
    The Fleet Requirements phase in according to fleet size as defined
by total fleet horsepower. Requirements begin for large fleets (greater
than 5,000 hp) in 2014; for medium fleets (2,500-5,000 hp) in 2017; and
for small fleets, 2,500 hp or less, in 2019. The regulation establishes
two general compliance pathways. Fleets may either (1) meet fleet
average emission targets (based on the combined horsepower of the
vehicles in the fleet) that become increasingly stringent over a ten-
year period, or (2) satisfy best available control technology (BACT)
requirements within a given compliance year. The BACT pathway requires
fleets to retire, repower, designate for low use, and/or retrofit a
certain percentage of the fleet's total horsepower each year. Fleets
demonstrate compliance for a given year by taking a sufficient number
of such actions in the prior year or by utilizing previously earned
BACT credits associated with these actions. For large fleets, the
annual BACT rates (demonstrated either through utilization of credits
or through action taken during the previous calendar year) start out at
4.8 percent of the fleet's total horsepower in 2014 and increase to 8
percent for each year from 2015 through 2017, and to 10 percent for
each year from 2018 through 2023. For medium fleets, the annual BACT
rate is 8 percent in 2017, increasing to 10 percent for each year from
2018 through 2023. Small fleets have an annual BACT rate of 10 percent
for each year from 2019 through 2028. After the final compliance year,
all fleets must continue to either (1) meet the fleet average emission
target rate for the final target year, or (2) satisfy the applicable
final annual BACT compliance rate (e.g. 10 percent) each year until the
fleet comes into compliance with the fleet average emission target. The
Fleet Requirements also restrict fleets from adding older dirtier
vehicles to their vehicle inventories.
    The regulation EPA is authorizing in this decision reflects
amendments that CARB adopted in 2010. Compared to the original Fleet
Requirements, the 2010 amendments delay the original compliance
schedule by four years. The 2010 amendments also simplified the annual
requirements so that in each compliance year a fleet must only meet a
single emissions target--a combined NOX plus PM standard--
rather than separate targets for each of these two pollutants. The
amendments reduced the annual BACT requirements from a 28 percent
turnover and retrofit requirement in the prior version of the
regulation, to a combined 4.8 percent to 10 percent requirement (as
outlined above). Finally, the amendments removed mandatory retrofitting
requirements so that retrofit is now a compliance option under the BACT
pathway rather than a mandate. Additional information about the
original and amended Fleet Requirements is provided below in the
section discussing the consistency of the Fleet Requirements with
section 202(a) of the Act.

B. Clean Air Act Nonroad Engine and Vehicle Authorizations

    Section 209(e)(1) of the Act permanently preempts any state, or
political subdivision thereof, from adopting or attempting to enforce
any standard or other requirement relating to the control of emissions
for certain new nonroad engines or vehicles.\1\ For all other nonroad
engines (including ``non-new'' engines), states generally are preempted
from adopting and enforcing standards and other requirements relating
to the control of emissions, except that section 209(e)(2)(A) of the
Act requires EPA, after notice and opportunity for public hearing, to
authorize California to adopt and enforce such regulations unless EPA
makes one of three enumerated findings. Specifically, EPA must deny
authorization if the Administrator finds that (1) California's
protectiveness determination (that California standards will be, in the
aggregate, as protective of public health and welfare as applicable
federal standards) is arbitrary and capricious, (2) California does not
need such standards to meet compelling and extraordinary conditions, or
(3) the California standards and accompanying enforcement procedures
are not consistent with section 209 of the Act. Other states with state
air quality implementation plans may also adopt and enforce such
regulations if the standards are identical to California's standards.
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    \1\ States are expressly preempted from adopting or attempting
to enforce any standard or other requirement relating to the control
of emissions from new nonroad engines which are used in construction
equipment or vehicles or used in farm equipment or vehicles and
which are smaller than 175 horsepower. Such express preemption under
section 209(e)(1) of the Act also applies to new locomotives or new
engines used in locomotives.
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    On July 20, 1994, EPA promulgated a rule interpreting the three
criteria set forth in section 209(e)(2)(A) that EPA must consider
before granting any California authorization request for nonroad engine
or vehicle emission standards.\2\ EPA revised these regulations in
1997.\3\ As stated in the preamble to the 1994 rule, EPA historically
has interpreted the consistency inquiry under the third criterion
outlined above (set forth in section 209(e)(2)(A)(iii)) to require, at
minimum, that California standards and enforcement procedures be
consistent

with section 209(a), section 209(e)(1), and section 209(b)(1)(C) (as
EPA has interpreted that subsection in the context of section 209(b)
motor vehicle waivers) of the Act.\4\
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    \2\ 59 FR 36969 (July 20, 1994).
    \3\ See 62 FR 67733 (December 30, 1997). The applicable
regulations are now found in 40 CFR part 1074, subpart B, Sec.
1074.105.
    \4\ See 59 FR 36969 (July 20, 1994).
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    In order to be consistent with section 209(a), California's nonroad
standards and enforcement procedures must not apply to new motor
vehicles or new motor vehicle engines. To be consistent with section
209(e)(1), California's nonroad standards and enforcement procedures
must not attempt to regulate engine categories that are permanently
preempted from state regulation. To determine consistency with section
209(b)(1)(C), EPA typically reviews nonroad authorization requests
under the same ``consistency'' criteria that are applied to motor
vehicle waiver requests under section 209(b)(1)(C). That provision
provides that the Administrator shall not grant California a motor
vehicle waiver if she finds that California ``standards and
accompanying enforcement procedures are not consistent with section
202(a)'' of the Act. Previous decisions granting waivers and
authorizations have noted that state standards and enforcement
procedures will be found to be inconsistent with section 202(a) if: (1)
There is inadequate lead time to permit the development of the
necessary technology, giving appropriate consideration to the cost of
compliance within that time, or (2) the federal and state testing
procedures impose inconsistent certification requirements.
    In light of the similar language of sections 209(b) and
209(e)(2)(A), EPA has analyzed requests for California authorization of
standards for nonroad vehicles or engines under section 209(e)(2)(A)
using the same principles that it has historically applied in analyzing
requests for waivers of preemption for new motor vehicle or new motor
vehicle engine standards under section 209(b).\5\ These principles
include, among other things, that EPA should limit its inquiry to the
three specific authorization criteria identified in section
209(e)(2)(A),\6\ and that EPA will give substantial deference to the
policy judgments California has made in adopting its regulations. In
previous waiver decisions, EPA has stated that Congress intended EPA's
review of California's decision-making be narrow. EPA has rejected
arguments that are not specified in the statute as grounds for denying
a waiver:
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    \5\ See Engine Manufacturers Association v. EPA, 88 F.3d 1075
(D.C. Cir. 1996). ``. . . EPA was within the bounds of permissible
construction in analogizing Sec.  209(e) on nonroad sources to Sec.
209(a) on motor vehicles.''
    \6\ See EPA's Final 209(e) rulemaking at 59 FR 36969, 36983
(July 20, 1994).

    The law makes 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 costs or is otherwise an arguably unwise
exercise of regulatory power is not legally pertinent to my decision
under section 209, as 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.\7\
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    \7\ 36 FR 17458 (Aug. 31, 1971). Note that the more stringent
standard expressed here, in 1971, was superseded by the 1977
amendments to section 209, which established that California must
determine that its standards are, in the aggregate, at least as
protective of public health and welfare as applicable Federal
standards. In the 1990 amendments to section 209, Congress
established section 209(e) and similar language in section
209(e)(1)(i) pertaining to California's nonroad emission standards
which California must determine to be, in the aggregate, at least as
protective of public health and welfare as applicable Federal
standards.

    This principle of narrow EPA review has been upheld by the U.S.
Court of Appeals for the District of Columbia Circuit.\8\ Thus, EPA's
consideration of all the evidence submitted concerning an authorization
decision is circumscribed by its relevance to those questions that may
be considered under section 209(e)(2)(A).
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    \8\ See, e.g., Motor and Equip. Mfrs Assoc. v. EPA, 627 F.2d
1095 (D.C. Cir. 1979) (``MEMA I'').
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C. 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. As the agency explained in one prior waiver
decision:

    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 shape 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.\9\
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    \9\ 40 FR 23102, 23103-23104 (May 28, 1975).

    Similarly, EPA has stated that the text, structure, and history of
the California waiver provision clearly indicate both a congressional
intent and appropriate EPA practice of leaving the decision on
``ambiguous and controversial matters of public policy'' to
California's judgment.\10\ This interpretation is supported by relevant
discussion in the House Committee Report for the 1977 amendments to the
Clean Air Act.\11\ Congress had the opportunity through the 1977
amendments to restrict the preexisting waiver provision, but elected
instead to expand California's flexibility to adopt a complete program
of motor vehicle emission controls. The report explains that the
amendment is intended to ratify and strengthen the preexisting
California waiver provision and to affirm the underlying intent of that
provision, that is, to afford California the broadest possible
discretion in selecting the best means to protect the health of its
citizens and the public welfare.\12\
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    \10\ Id. at 23104; 58 FR 4166 (January 13, 1993).
    \11\ MEMA I, 627 F.2d at 1110 (citing H.R. Rep. No. 294, 95th
Cong., 1st Sess. 301-302 (1977)).
    \12\ Id.
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D. Burden and Standard of Proof

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

    [T]he language of the statute and its legislative history
indicate that California's regulations, and California's
determinations that they must comply with the statute, when
presented to the Administrator are presumed to satisfy the waiver
requirements and that the burden of proving otherwise is on whoever
attacks them. California must present its regulations and findings
at the hearing and thereafter the parties opposing the waiver
request bear the burden of persuading the Administrator that the
waiver request should be denied.\13\
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    \13\ Id.

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

capricious.''' \14\ Therefore, the Administrator's burden is to act
``reasonably.'' \15\
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    \14\ Id. at 1126.
    \15\ Id. at 1126.
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    With regard to the standard of proof, the court in MEMA I explained
that the Administrator's role in a section 209 proceeding is to:

    consider all evidence that passes the threshold test of
materiality and * * * thereafter assess such material evidence
against a standard of proof to determine whether the parties
favoring a denial of the waiver have shown that the factual
circumstances exist in which Congress intended a denial of the
waiver.\16\
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    \16\ Id. at 1122.

    In that decision, the court considered the standards of proof under
section 209 for the two findings related to granting a waiver for an
``accompanying enforcement procedure.'' Those findings involve: (1)
Whether the enforcement procedures impact California's prior
protectiveness determination for the associated standards, and (2)
whether the procedures are consistent with section 202(a). The
principles set forth by the court, however, are similarly applicable to
an EPA review of a request for a waiver of preemption for a standard.
The court instructed that ``the standard of proof must take account of
the nature of the risk of error involved in any given decision, and it
therefore varies with the finding involved. We need not decide how this
standard operates in every waiver decision.'' \17\
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    \17\ Id.
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    With regard to the protectiveness finding, the court upheld the
Administrator's position that, to deny a waiver, there must be ``clear
and compelling evidence'' to show that proposed enforcement procedures
undermine the protectiveness of California's standards.\18\ 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.\19\
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    \18\ Id.
    \19\ Id.
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    With respect to the consistency finding, the court did not
articulate a standard of proof applicable to all proceedings, but found
that the opponents of the waiver were unable to meet their burden of
proof even if the standard were a mere preponderance of the evidence.
Although MEMA I did not explicitly consider the standards of proof
under section 209 concerning a waiver request for ``standards,'' as
compared to a waiver request for accompanying enforcement procedures,
there is nothing in the opinion to suggest that the court's analysis
would not apply with equal force to such determinations. EPA's past
waiver decisions have consistently made clear that: ``[E]ven in the two
areas concededly reserved for Federal judgment by this legislation--the
existence of `compelling and extraordinary' conditions and whether the
standards are technologically feasible--Congress intended that the
standards of EPA review of the State decision to be a narrow one.''
\20\
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    \20\ See, e.g., 40 FR 21102-22103 (May 28, 1975).
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E. EPA's Administrative Process in Consideration of California's
Nonroad CI In-Use Fleet Requirements

    EPA has conducted three separate public notice and comment periods
associated with three successive versions of CARB's NR CI in-use Fleet
Requirements.
    On August 8, 2008, CARB requested that EPA authorize California to
enforce its original In-Use Off-Road Diesel-Fueled Fleets regulation
adopted at its July 26, 2007 public hearing.\21\ CARB's original
regulations required fleets that operate nonroad, diesel fueled
equipment with engines 25 hp and greater to meet separate fleet average
emission standards for NOX and PM, respectively.
Alternatively, the regulations required the vehicles in those fleets to
comply with BACT requirements. Based on this request, EPA noticed and
conducted a public hearing on October 27, 2008, and provided an
opportunity to submit written comment through December 19, 2008.\22\
CARB amended the regulations between December 2008 and mid-2009. On
February 11, 2010 CARB requested that EPA grant California
authorization to enforce its In-Use Off- Road Diesel-Fueled Fleets
regulation as amended.\23\ Based on CARB's February 11, 2010 request,
EPA noticed and conducted a public hearing on April 14, 2010, and
provided an opportunity to submit written comment through May 18,
2010.\24\
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    \21\ See CARB Resolution 07-19) and subsequently modified after
supplemental public comment by CARB's Executive Officer by the In-
Use Regulation in Executive Order R-08-002 on April 4, 2008 (these
regulations are codified at Title 13, California Code of Regulations
sections 2449 through 2449.3).
    \22\ See 73 FR 58585 (October 7, 2008) and 73 FR 67509 (November
14, 2008).
    \23\ CARB's amendments included those of December 2008 (and
formally adopted in California on October 19, 2009); January 2009
(and formally adopted in California on December 31, 2009); and, a
certain subset of amendments adopted by the Board in July 2009 in
response to California Assembly Bill 8 2X (and formally adopted on
December 3, 2009). In CARB's February 11, 2010 request letter to EPA
it also noted additional amendments adopted in July 2009 and not yet
formally adopted by California's Office of Administrative Law. Once
this last subset of amendments was formally adopted CARB planned to
submit them to EPA for subsequent consideration.
    \24\ See 75 FR 11880 (March 12, 2010).
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    CARB again amended its regulations in December 2010 and these
amendments were formally adopted in California on December 14, 2011--
resulting in the current version of the Fleet Requirements which are
the subject of this authorization decision. On March 1, 2012, CARB
submitted a request that EPA grant California authorization to enforce
its Fleet Requirements as most recently amended (Authorization
Request).\25\ Based on CARB's Authorization Request, on August 21, 2012
EPA invited comment on whether (a) CARB's determination that its
standards, in the aggregate, are at least as protective of public
health and welfare as applicable federal standards is arbitrary and
capricious, (b) California needs separate standards to meet compelling
and extraordinary conditions, and (c) California's standards and
accompanying enforcement procedures are consistent with section 209 of
the Act.\26\ The Federal Register notice stated that EPA would only
consider testimony and comment submitted in response to the current
request for comment because the CARB regulations were substantially
amended in December 2010.\27\ EPA conducted a hearing on the
Authorization Request on September 20, 2012, in Washington, DC.\28\ The
written

comment period closed on October 22, 2012.\29\ In addition, to provide
further opportunity to submit direct verbal comment for affected
parties who could not participate in the public hearing, EPA conducted
an informal teleconference on October 19, 2012.\30\
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    \25\ See EPA-HQ-OAR-2008-0691-0270.
    \26\ 77 FR 50500 (August 21, 2012).
    \27\ ``Therefore, EPA will not be considering oral testimony or
written comments based on the prior Federal Register notices, since
CARB's December 2010 amendments are likely to affect many of these
prior comments. To the extent any entity believes that its prior
comments remain pertinent then EPA is requiring such comments be
resubmitted or incorporated into new comments.'' Id. at 50502. EPA
did not receive any adverse comment or suggestions that it is
inappropriate to exclude comments submitted prior to the August 12,
2012 Federal Register notice. As noted by AGC, ``While the Clean Air
Act has not changed, and the questions that EPA must address are one
and the same, the rule that CARB now seeks the authority to enforce
is very different from the rule that CARB originally submitted to
EPA.'' See EPA's Hearing transcript at 84 (EPA-HQ-OAR-2008-0691-
0298). CARB reincorporated by reference all of its prior submissions
regarding the Fleet Requirements.
    \28\ The written transcript of this hearing is at EPA-HQ-OAR-
2008-0691-0298 (Hearing Transcript). EPA received testimony from
CARB, the Pacific Legal Foundation (PLF), the American Road and
Transportation Builders Association (ARTBA), the Manufacturers of
Emission Controls Association (MECA), the Associated General
Contractors of America (AGC), the Construction Industry Air Quality
Association (CIAQC), and the California Construction Trucking
Association (CCTA).
    \29\ EPA received written comment from: Airlines for America
(A4A)--EPA-HQ-OAR-2008-0691-0297; Manufacturers of Emission Controls
Association (MECA) (Copy of oral testimony)--EPA-HQ-OAR-2008-0691-
0300; Steve Milloy (Copy of oral testimony)--EPA-HQ-OAR-2008-0691-
0301; Pacific Legal Foundation (PLF) (copy of oral testimony)--EPA-
HQ-OAR-2008-0691-0302; Associated General Contractors of America
(AGC) (Copy of oral testimony)--EPA-HQ-OAR-2008-0691-0303; PLF--EPA-
HQ-OAR-2008-0691-0304; Altfillisch Contractors (ACI)--EPA-HQ-OAR-
2008-0691-0305; Savala Equipment Company--EPA-HQ-OAR-2008-0691-0306;
Dr. Matthew Malkan--EPA-HQ-OAR-2008-0691-0307; Dr. James Enstrom--
EPA-HQ-OAR-2008-0691-0308; Dr. Phalen--EPA-HQ-OAR-2008-0691-0313;
California Construction Trucking Association (CCTA)--EPA-HQ-OAR-
2008-0691-0309; American Road & Transportation Builders Association
(ARTBA)--EPA-HQ-OAR-2008-0691-0310; Bay Cities Paving and Grading
(Bay Cities)--EPA-HQ-OAR-2008-0691-0311; Nick Silicz--EPA-HQ-OAR-
2008-0691-0313; Granite Rock--EPA-HQ-OAR-2008-0691-0314; Delta
Construction--EPA-HQ-OAR-2008-0691-0315; United Contractors--EPA-HQ-
OAR-2008-0691-0316; Construction Industry Air Quality Coalition
(CIAQC)--EPA-HQ-OAR-2008-0691-0317; California Air Resources Board--
EPA-HQ-OAR-2008-0691-0318 (CARB Written Comments) and EPA-HQ-OAR-
2008-0691-0319 (CARB Supplemental Comments); PLF Request to Reopen
Comment Period, etc--EPA-HQ-OAR-2008-0691-0320.
    \30\ EPA-HQ-OAR-2008-0691-0321. As discussed below, EPA believes
that interested parties have adequate opportunity to present their
views through both the public hearing and by submitting written
comment.
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III. Discussion

A. California's Protectiveness Determination

    Section 209(e)(2)(A)(i) of the Act sets forth the first of the
three criteria governing a request for authorization of relevant
standards--providing that EPA cannot grant the request if the agency
finds that California was arbitrary and capricious in its determination
that California standards will be, in the aggregate, at least as
protective of public health and welfare as applicable federal
standards.\31\
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    \31\ As explained above, EPA's authorization analysis is guided
by precedent related to both section 209(e)(2) and to section
209(b), which contains similar, and in some cases identical,
language. See Engine Manufacturers Ass'n v. EPA (EMA), 88 F.3d 1075,
1085-87 (D.C. Cir. 1996).
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    EPA maintains that the phrase ``California standards'' means
California's entire group of standards (i.e. the overall program) that
is applicable to nonroad engine emissions. As explained below, while
evaluating California's protectiveness determination, EPA compares
California's standards to applicable federal standards. That comparison
is undertaken within the broader context of the California program
applicable to nonroad vehicles and engines, for which EPA previously
has granted authorization and which relies upon protectiveness
determinations that EPA in its authorization decisions found not to be
arbitrary and capricious.\32\
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    \32\ 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. In a prior EPA waiver pertaining to
California's zero-emission vehicle program (ZEV) for which there are
no comparable Federal standards, EPA also took into consideration
California's existing low-emission vehicle program (LEV II) and
greenhouse gas emission standards (GHG) applicable to light-duty
vehicles. ((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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    As noted above, EPA is guided in its interpretation of the section
209(e)(2) authorization criteria by the similar language in section
209(b) pertaining to waivers of preemption for new motor vehicle
standards. Therefore, the evaluation of the protectiveness of CARB's
nonroad standards under section 209(e)(2)(A)(i) 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)].''
EPA evaluates the stringency of California's standards relative to
comparable EPA emission standards. To review California's
protectiveness determination under section 209(e)(2)(A)(i), EPA
conducts its own analysis comparing the newly adopted California
standards to comparable applicable Federal standards. EPA traditionally
makes a quantitative comparison of relevant numeric emission standards
to determine whether the California standards are more or less
protective than the Federal standards.\33\
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    \33\ 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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    As explained above in the section on burden and standard of proof,
any 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.'' \34\ Accordingly, even if
EPA's own analysis of comparable protectiveness, or one submitted by a
commenter, might diverge from California's analysis, that alone would
not provide a sufficient basis for EPA to make a section 209(b)(1)(A)
finding that California's protectiveness finding is arbitrary and
capricious.
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    \34\ MEMA I, 627 F.2d at 1122.
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1. Based on EPA's Traditional Analysis, is California's Protectiveness
Determination Arbitrary and Capricious?
    In adopting the initial version of the Fleet Requirements, CARB
approved Resolution 07-19, in which it declared:

    Be it further resolved that the Board hereby determines, in
accordance with CAA section 209(e)(2), that to the extent the
regulations approved herein affect nonroad vehicles or nonroad
engines as defined in CAA section 216(10) and (11), the emission
standards and other requirements related to the control of emissions
in the regulations approved herein are, in the aggregate, at least
as protective of public health and welfare as applicable federal
standards, California needs its nonroad emission standards to meet
compelling and extraordinary conditions, and the standards and
accompanying enforcement procedures approved herein are consistent
with CAA section 209.\35\
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    \35\ CARB Authorization Request at 17.

    With the most recent Fleet Requirements amendments in 2010, the
Board reaffirmed its protectiveness finding in Resolution 10-47.\36\
CARB maintains that there is no basis for EPA to find the Board's
determination (which applies solely to standards for in-use nonroad
engines) is arbitrary and capricious since EPA's authority, under the
CAA, is limited to new engines, vehicles, and equipment. As a result,
EPA has not adopted any federal standards or requirements for in-use
nonroad engines. CARB notes that there is no question that its Fleet
Requirements are at least as protective of public health and welfare as

applicable federal standards, given the lack of any comparable EPA
standards.\37\
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    \36\ ``BE IT FURTHER RESOLVED that the Board hereby determines,
in accordance with CAA section 209(e)(2), that the proposed
amendments as they affect nonroad vehicles or nonroad engines as
defined in CAA section 216 (10) and (11), do not undermine the
Board's previous determination that the regulation's emission
standards, other emissions related requirements, and associated
enforcement procedures are, in the aggregate, at least as protective
of public health and welfare as applicable federal standards, are
necessary as part of ARB's off-road emission program to meet
compelling and extraordinary conditions existing in the state, and
are consistent with CAA section 209.'' CARB Resolution 10-47EPA-HQ-
OAR-2008-0691-0283.
    \37\ Authorization Request at 18, citing Engine Manufacturers
Association v. EPA, (D.C. Cir. 1996) 88 F.3d at 1075, 1089-1090.
---------------------------------------------------------------------------

    As described above, EPA's traditional analysis has been to evaluate
California's protectiveness determination by comparing the newly
adopted California standards to applicable EPA emission standards for
the same pollutants from the industry sector. CARB is correct that
EPA's authority to adopt emission standards and other requirements
related to the control of nonroad emissions is limited to new engines,
vehicles, and equipment,\38\ and that as a result EPA has not adopted
any standards or requirements for in-use nonroad engines.
---------------------------------------------------------------------------

    \38\ See 42 U.S.C. 7547 (Section 213 of Clean Air Act).
---------------------------------------------------------------------------

    EPA already has determined that California was not arbitrary and
capricious in its determination that California standards applicable to
new nonroad CI engines are at least as protective as comparable Federal
standards.\39\ The in-use Fleet Requirements will achieve emission
reductions in addition to those achieved by the previously authorized
new nonroad engine standards, for which CARB made a protectiveness
finding that EPA found not to be arbitrary and capricious. According to
CARB, the Fleet Requirements are expected to result in a reduction of
0.5 tons/day of NOX in the South Coast and 0.3 tons/days in
San Joaquin Valley in 2014, along with 3.2 tons/day and 1.9 tons/day in
these respective areas in 2023.\40\ As such, the Fleet Requirements
achieve additional emission reductions beyond those attained under CARB
emission standards applicable to new nonroad CI engines, which EPA has
already determined to be as protective, in the aggregate, as applicable
federal standards. Accordingly, there is no basis for determining that
CARB's protectiveness finding with regard to the in-use Fleet
Requirements is arbitrary and capricious.
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    \39\ 75 FR 8056 (February 23, 2010).
    \40\ CARB Written Comments at 10.
---------------------------------------------------------------------------

    Further, as noted above, EPA is guided in its interpretation of
209(e)(2)(A)(i) by section 209(b)(2). Section 209(b)(2) 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 public health and welfare as such Federal
standards for purposes of paragraph (1).'' In this instance there is no
comparable applicable Federal standard for in-use nonroad CI engines
and thus there is no basis for determining the CARB's protectiveness
finding is arbitrary and capricious through the application of section
209(b)(2).
    Finally, EPA received no comments or evidence suggesting that
CARB's protectiveness determination, under EPA's traditional analysis,
is arbitrary and capricious. In particular, no commenter disputes that
California standards, whether looking at the particular California
standards being authorized in this proceeding or the entire suite of
California standards for nonroad engines, are at least as stringent, in
the aggregate, as applicable federal standards.
    In light of the foregoing, EPA finds that CARB's Fleet Requirements
achieve additional emission reductions beyond CARB's requirements
applicable to new nonroad CI engines, and further finds that the
opponents of authorization have not presented evidence to show that
CARB's protectiveness determination is arbitrary and capricious.
Accordingly, applying the traditional comparative analysis, we cannot
find that CARB's protectiveness determination is arbitrary and
capricious.
2. Is CARB's Protectiveness Determination Arbitrary and Capricious
Based on Other Effects of California's Fleet Requirements?
    Having addressed the protectiveness inquiry under EPA's traditional
analysis, we turn now to the question whether we should use a different
analytical approach and, if so, whether a different approach would
yield a different outcome. EPA received one comment suggesting that
EPA's analysis under section 209(e)(2)(A)(i) should be based on a
broader inquiry into the effects of CARB's Fleet Requirements.\41\
Relatedly, EPA received one other comment specifically questioning
whether CARB's Fleet Requirements are as protective of applicable
Federal requirements in light of the Fleet Requirements' alleged
adverse impacts on needed transportation and infrastructure development
across the country as well as in California.\42\ The latter commenter
suggested, for example, that CARB's rule ``could'' severely impact
efforts at improving the nation's infrastructure because transportation
projects by necessity involve moving construction equipment across
state lines. The commenter stated that equipment associated with such
national projects would necessarily have to meet CARB's Fleet
Requirements, increasing costs, unless fleet operators were able to
differentiate such equipment that would only be used for California
projects.\43\ The commenter argues that increased costs as a result of
the Fleet Requirements could in turn prevent or delay needed
construction of infrastructure such as roads, schools, housing and
levees, and that such delay or prevention could adversely affect public
health and safety impacts in California and in other states.\44\ EPA
received further comment suggesting that CARB is prioritizing one
public health issue (air quality) over another (safe roads and
infrastructure improvements) and thus California's protectiveness
determination is ``arbitrary and capricious.'' \45\
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    \41\ See Delta Construction.
    \42\ See Hearing Transcript and written comment (ARTBA).
    \43\ Id.
    \44\ Id.
    \45\ Id.
---------------------------------------------------------------------------

    EPA also received a series of comments from general contracting
companies and others that highlighted what they believe to be the
adverse economic impacts of the Fleet Requirements. For example,
several commenters stated that the regulation would have some
combination of the following impacts: Significant layoffs, increased
unemployment, and disadvantage to family-owned and other small
businesses. Such impacts, the commenters argue, would have negative
rather than the intended positive effects on public health.\46\ One
commenter asserted that the correlation between poor health and poverty
or lack of employment is much stronger than the correlation between
poor health and air pollution. The commenter claims that because of
such economic and social impacts, regulations such as the Fleet
Requirements will be harmful to California's citizens and that the
health benefits from CARB's regulation are dubious if not
counterproductive.\47\ These comments, by and large, do not refer
specifically to CARB's protectiveness determination or section
209(e)(2)(A)(i) and it is not clear whether commenters are referring to
EPA's analysis under that section.
---------------------------------------------------------------------------

    \46\ Id, see also CCTA, Savala Equipment Rentals, Delta
Construction.
    \47\ See Delta Construction. This comment is also addressed
below under the second authorization criterion of whether California
needs its standards to meet compelling and extraordinary conditions.
---------------------------------------------------------------------------

    Finally, EPA received comment that does refer to CARB's
protectiveness determination, suggesting it was arbitrary and
capricious, but basing this claim on a variety of concerns that do not
directly relate to CARB's actual protectiveness determination (e.g.

alleged flaws in CARB's emission modeling--including CARB's estimates
of economic recovery scenarios--as well as concerns with the alleged
impact of the Fleet Requirements on fleet operator assets leading to
more unemployment and associated poor health, and concerns related to
the health effects of PM2.5).\48\
---------------------------------------------------------------------------

    \48\ See CCTA.
---------------------------------------------------------------------------

    CARB's written comments note that the Board has repeatedly
determined that its in-use off-road regulations are, in the aggregate,
at least as protective of public health and welfare as applicable
federal standards. In addition to the fact that EPA only has authority
to adopt standards related to the control of emissions for new nonroad
engines, CARB notes that EPA has previously stated that the phrase
``state standards'' as used in the protectiveness determination means
the entire California set of standards (i.e. program) applicable to the
relevant category of vehicles or engines. Further, CARB asserts that
EPA has previously granted authorization to California's emission
standards for new nonroad engines, and the in-use Fleet Requirements
will yield emission reductions in addition to the new nonroad engine
standards that were the subject of prior protectiveness findings, thus
ensuring that the Fleet Requirements are of necessity more stringent
than those covered by federal new engine emission standards alone.\49\
---------------------------------------------------------------------------

    \49\ See CARB's Written Comments.
---------------------------------------------------------------------------

    CARB responds to criticisms that it prioritized air quality health
benefits and did not consider dis-benefits (e.g. increased costs for,
and possible delay of, needed highway safety projects and improvements
or other infrastructure) by stating that the latter set of concerns
falls outside the scope of a section 209 protectiveness determination.
CARB maintains that the plain language and intent of section
209(e)(2)(A)(i) is that review of California's protectiveness
determination should be based exclusively on whether its ``standards
will be, in the aggregate, at least as protective of public health and
welfare as applicable Federal standards.'' Since this language is
almost identical to the protectiveness criterion language in section
209(b)(1), CARB maintains that EPA should thus follow the directive of
Congress in section 209(b)(2) that:

    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 purpose of paragraph (1).

    CARB points to EPA's 2009 waiver of California's light-duty
greenhouse gas standards (EPA's 2009 GHG Waiver) where EPA concluded
that, in considering whether California's protectiveness determination
is arbitrary and capricious under section 209(b)(1)(A), the agency
``has always interpreted `applicable Federal Standards' as limiting
EPA's inquiry to motor vehicle emission standards established by EPA
under the Clean Air Act that apply to the same cars and the same air
pollutants or group of pollutants as considered by California's
aggregate protectiveness finding.'' \50\ CARB argues that same analysis
should apply to nonroad authorizations. CARB maintains that if EPA were
to require the Board to consider factors other than aggregate emission
standards in making the Board's protectiveness determination, this
would undermine the broad discretion that Congress intended to provide
California in making policy decisions on how best to address
California's severe air pollution.\51\
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    \50\ See EPA's greenhouse gas waiver decision issued in 2009
(2009 GHG Waiver Decision) at 74 FR 32743 (July 8, 2009).
    \51\ Id. at 4-5 (citing MEMA I, 627 F.2d at 1122
[``(C)ongressional intent to provide California with the broadest
discretion in setting regulations it finds protective of the public
health and welfare.'']); see also 40 FR 23102, 23104 (May 28, 1975).
---------------------------------------------------------------------------

    CARB also disagrees with opponents' arguments that the Fleet
Requirements will delay highway safety improvements. CARB notes that,
even before the 2010 amendments, the regulations' expected maximum
costs were projected to be so small (less than one percent) compared to
overall construction spending, that they would not be expected to
decrease or delay constructions projects. With the 2010 amendments,
CARB expects compliance costs to be significantly lower and even less
likely to delay construction projects, including highway safety
projects.\52\
---------------------------------------------------------------------------

    \52\ Id.
---------------------------------------------------------------------------

    EPA agrees that the phrase ``California standards'' means the
entire California nonroad emissions program (i.e. the set of all
nonroad standards), or at the very least all of California's standards
for nonroad CI engines, which is the category of engines being
regulated by California in the Fleet Requirements. Therefore, as
explained above, when evaluating California's protectiveness
determination, EPA compares the California requirements to federal
standards applicable to the relevant category of engines. Again, that
comparison is undertaken within the broader context of the previously
authorized California standards for the relevant category of engines,
which rely upon protectiveness determinations that EPA previously has
found were not arbitrary and capricious. Finally, as discussed above,
no commenter disputes that California standards, whether looking at the
particular standards being authorized in this proceeding or the entire
suite of standards for nonroad engines, are more stringent than federal
standards.
    The only issue in dispute is whether other information provided by
commenters, outlined at the beginning of this section, provides clear
and compelling evidence that California was arbitrary and capricious in
finding its standards are in the aggregate at least as protective of
public health and welfare as applicable federal standards.
    EPA previously has considered whether its traditional analysis is
sufficient to properly review CARB's protectiveness determination with
regard to the ``in-use effects'' of CARB's regulations. Analysis of
such in-use effects remained focused on the actual emission reductions/
benefits expected from CARB's regulation.\53\ In EPA's 2009 GHG Waiver
Decision granting a waiver of preemption for CARB's greenhouse gas
(GHG) standards for light duty vehicles, we noted that, given the
legislative history and text of section 209(b)(2), EPA would need a
concrete factual basis to examine the in-use effect of California's GHG
standards on its broader LEV II program as compared to the Federal Tier
II program. EPA did not take a position as to the validity of the
suggestion that the type of analysis discussed in EPA's traditional
protectiveness analysis is insufficient. Rather, EPA reached the
conclusion that commenters who opposed the GHG waiver did not meet
their burden of proof in presenting clear and compelling factual
evidence (in the context of the regulatory effect on real-world in-use
emissions) that CARB's protectiveness determination was arbitrary and
capricious.
---------------------------------------------------------------------------

    \53\ See (2009 GHG Waiver Decision) at 74 FR 32743, 32758.
---------------------------------------------------------------------------

    We recount this history to contrast it with the comments received
opposing the Fleet Requirements authorization on the basis of various
safety, economic, and health arguments. In the instant proceeding, EPA
received no comments indicating why EPA's review of CARB's
protectiveness determination with regard to the Fleet Requirements
should be broader than past reviews, and/or should be based on anything
other than an examination of the stringency of comparable applicable
federal standards.

    Further, the opponents of the Authorization Request provide no
analysis of the statutory language or history of section
209(e)(2)(A)(i) to support their view that the review of the
``protectiveness'' finding should be broader than EPA's traditional
review. Nor do they provide any significant analysis or calculus as to
how EPA should or would weigh these competing interests (i.e. those
that go beyond the comparative stringency of applicable state and
federal emission standards) in making its determination. While EPA
recognizes that commenters have expressed significant concerns
regarding the potential business impacts of the Fleet Requirements on
individual contractors and on employment, a review of CARB's
protectiveness determination based upon such factors would be
inconsistent with the broad discretion that Congress intended to
provide California in making policy decisions on how best to address
California's severe air pollution.\54\ As EPA has previously concluded:
---------------------------------------------------------------------------

    \54\ See MEMA I, 627 F.2d at 1122 [``(C)ongressional intent to
provide California with the broadest possible discretion in setting
regulations it finds protective of the public health and
welfare.'']; see also 40 FR 23102, 23104 (May 28, 1975).

    [Congressional] sponsors of the (waiver) language eventually
adopted 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 the Federal standards.\55\
---------------------------------------------------------------------------

    \55\ 40 FR 23101, 23102 (May 28, 1975).

    In our view, the statutory language of section 209(e)(2)(A)(i)--
both on its face and as read together with 209(b)(2)--reflects
Congress's intention that EPA evaluate only the comparative stringency
of the relevant California and EPA emission standards. As discussed
above, the text, structure, and history of the California waiver
provision clearly indicate a congressional intent that EPA leave the
decision on ``ambiguous and controversial matters of public policy'' to
California's judgment. That has been EPA's consistent practice under
section 209. As the court stated in MEMA I, Congress's intent in
amending the protectiveness determination language in 1977 was to
afford California the broadest possible discretion in selecting the
best means to protect the health of its citizens. EPA therefore
considers it inappropriate, in the context of reviewing CARB's
protectiveness determination, to second-guess CARB's policy choices or
to weigh competing health and welfare interests that are best left to
California.
    As explained below under the third authorization criterion--
consistency with section 209 (including consistency with 202(a))--EPA
interprets the ``cost of compliance'' in section 202(a) to refer to the
direct economic costs of CARB's standards and the timing of a
particular emission control regulation rather than to its social
implications.\56\ Similarly, EPA believes it appropriate to limit our
examination for purposes of the protectiveness comparison to the
specific effects the California and EPA emission standards have on
emissions rather than performing an analysis of social impacts or other
secondary implications. Policy decisions with regard to how various
potential non-emissions impacts of an emission regulation can or should
be weighed against one another is inherently and properly within the
sphere of the state regulatory authority promulgating the regulation.
Such decisions should not be made or reviewed by EPA, which Congress
has given the limited role of reviewing the regulations based on the
three specified and relatively narrow statutory criteria, consistent
with Congress's intent to uphold California's broad regulatory
discretion in this sphere.
---------------------------------------------------------------------------

    \56\ See S. Rep. No. 192, 89th Cong., 1st Sess. 5-8 (1965); H.R.
Rep. No. 728, 90th Cong., 1st Sess. 23 (1967), U.S. Code Cong. &
Admin. News 1967, p. 1938.
---------------------------------------------------------------------------

    For all these reasons, EPA declines to depart from its traditional
analysis of the protectiveness criterion under section 209(e)(2)(A)(i),
as discussed above. Even if there were a valid basis for considering
the types of non-air quality impacts alleged by the opponents of the
Authorization Request, the opponents did not meet their burden to
provide clear and convincing evidence that CARB's analysis of the
effects of the Fleet Requirements is unreasonable. For EPA to make a
section 209(e)(2)(A)(i) finding that California's protectiveness
determination is arbitrary and capricious, it is not enough for
authorization opponents to provide competing analysis or alternative
policy considerations and arguments. To support a denial of
authorization under this criterion, commenters must show that
California's analysis, or the assumptions on which California relied to
support its protectiveness determination, were arbitrary and
capricious. In this instance, the opponents of the authorization have
suggested that CARB's Fleet Requirements could make construction
projects more expensive and this could lead to delays. But they have
not introduced any actual evidence that such projects will be suspended
due to the costs associated with the Fleet Requirements, and certainly
not that the projected increase in costs, as estimated by CARB after
the 2010 amendments, will be significant enough to delay or prevent
such projects. Similarly, the opponents of the waiver have not
introduced substantial evidence that the Fleet Requirements
themselves--as opposed to a host of other factors, including the
economic downturn, that have affected the economy over the last several
years--will result in a loss in the number of employees or actual
business. In the absence of any such evidence, EPA could not find
California's protectiveness determination to be arbitrary and
capricious even if these alleged impacts were an appropriate subject
for analysis under section 209(e)(2)(A)(i).
    Regarding the comment that CARB's regulation could adversely affect
health and welfare in other states, EPA does not find the comment to be
a basis for judging California's protectiveness determination to be
arbitrary and capricious for two reasons. First, a change in emissions
outside of California would not lead to a different conclusion
regarding the relative protectiveness of the Fleet Requirements to
federal requirements within California. Second, the commenters do not
provide any substantive or factual evidence to show significant
emissions impacts in other states. We would also note that other states
may decide independently to adopt California's regulations.
    In response to the comment that California's regulations are
arbitrary and capricious, we note that EPA's sole review under section
209(e)(2)(A)(i) is whether California's protectiveness determination
was arbitrary and capricious. Congress did not give EPA wide-ranging
authority to examine the overall reasonableness of California's
regulations. As discussed above, the policy decisions made by CARB in
enacting its regulations are not reviewed generally by EPA, and, as
Congress intended, EPA leaves such policy decisions to California.
3. Section 209(e)(2)(A)(i) Conclusion
    In light of the foregoing, based on the record before us, EPA finds
that opponents of the authorization have not shown that California was
arbitrary and capricious in its determination that its standards 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?

    Section 209(e)(2)(A)(ii) instructs that EPA cannot grant an
authorization if the Agency finds that California ``does not need such
California standards to meet compelling and extraordinary conditions .
. ..'' EPA's inquiry under this second criterion (found both in
paragraphs 209(b)(1)(B) and 209(e)(2)(A)(ii)) has been to determine
whether California needs its own mobile source pollution program (i.e.
set of standards) for the relevant class or category of vehicles or
engines to meet compelling and extraordinary conditions, and not
whether the specific standards that are the subject of the
authorization or waiver request are necessary to meet such
conditions.\57\ In a 2009 waiver action, for example, EPA examined the
language of section 209(b)(1)(B) and reiterated its longstanding
traditional interpretation that the better approach for analyzing the
need for ``such State standards'' to meet ``compelling and
extraordinary conditions'' is to review California's need for its
program (i.e. set of standards) as a whole, for the class or category
of vehicles being regulated, as opposed to its need for the individual
standards that are the subject of a waiver or authorization
request.\58\
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    \57\ See 74 FR 32744, 32761 (July 8, 2009); 49 FR 18887, 18889-
18890 (May 3, 1984).
    \58\ See EPA's 2009 GHG Waiver Decision wherein EPA rejected the
suggested interpretation of section 209(b)(1)(B) as requiring a
review of the specific need for California's new motor vehicle
greenhouse gas emission standards as opposed to the traditional
interpretation (need for the program as a whole) applied to local or
regional air pollution problems.
---------------------------------------------------------------------------

    As noted above, CARB first adopted its Fleet Requirements in 2007.
CARB designed the 2007 regulation to address its determination that
legacy fleets--and particularly nonroad CI vehicles--were responsible
for significant PM and NOX emissions. CARB's Initial
Statement of Reasons (ISOR) states, in part:

    Off-road vehicles are a significant source of diesel particulate
matter, as well as NOX emissions that lead to ozone and
ambient PM. Statewide, they are responsible for nearly a quarter of
the total PM emissions from mobile diesel sources and nearly a fifth
of the total NOX emissions from mobile diesel sources.
Although increasingly stringent new engine standards are reducing
emissions from off-road diesel vehicles over time, because of their
durability, most vehicles operate for several decades before being
retired. Thus, in-use off-road diesel vehicles would continue to
pose significant health risk for many years if this proposed
regulation is not adopted. . . . without reductions from this large
source category, the South Coast and San Joaquin Valley would be
unable to attain the federal ambient air quality standards.
    . . . [E]missions would trend naturally down as the fleet
gradually turned over to newer, cleaner engines. However, these
reductions are not sufficient for many areas of the state to meet
clean air standards. Because of this, the proposed regulation
accelerates this anticipated reduction in emissions.\59\

    \59\ See STAFF REPORT: INITIAL STATEMENT OF REASONS FOR PROPOSED
RULEMAKING (ISOR) at EPA-HQ-OAR-2008-0691-0002, attachment A at 7-
10. EPA notes that while CARB has incorporated by reference its
earlier submissions to EPA docket EPA-HQ-OAR-2008-0691 we recognize
that CARB has modified its emission inventory modeling.
Nevertheless, the NR CI legacy fleet in California continues to
present California with serious air quality issues according to
CARB.
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    The 2010 amendments affirmed CARB's longstanding position that
California continues to need its own nonroad engine and vehicle program
to address serious air pollution problems the state still
confronts.\60\ CARB's Authorization Request notes that California and
particularly the South Coast and San Joaquin Valley air basins continue
to experience some of the worst air quality in the nation and continue
to be in non-attainment with national ambient air quality standards
(NAAQS) for fine particulate matter (PM2.5) and ozone.\61\
``The unique geographical and climatic conditions, and the tremendous
growth in California's on- and off-road vehicle population, which moved
Congress to authorize the State to establish on-road motor vehicle
standards in 1970 and off-road engine standards in 1990, still exist
today. . . . Nothing in these conditions has changed to warrant a
change in this determination. Accordingly, there can be no doubt of the
continuing existence of compelling and extraordinary conditions
justifying California's need for its own mobile source emissions
control program.'' \62\
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    \60\ See CARB Resolution 10-47 at EPA-HQ-OAR-2008-0691-0283.
Specifically, the Board stated, in part:
    WHEREAS, in-use off-road diesel vehicles operating in the state,
as a class, continue to be a significant source of air pollution
emissions in California that contribute to continuing violations of
the national ambient air quality standards (NAAQS) for both
particulate matter (PM) less than 2.5 microns (PM2.5) and
ozone, and to continuing localized health risk, including premature
death, associated with exposure to PM2.5;
    WHEREAS, Staff Report 2007 further discussed the results of ARB
staff's evaluations of the non-cancer health effects of exposure to
primary and secondary PM emissions from the vehicles subject to the
initially proposed Off-Road regulation, and these evaluations
indicated that exposure to these emissions can be associated with
premature deaths and other non-cancer health impacts;
    WHEREAS, the United States Environmental Protection Agency (U.S.
EPA) in a recently published review of the PM-related health science
literature, which is the first part of an ongoing review of the
national ambient air quality standards for PM, concluded that long-
term exposure to PM2.5 is causally associated with
premature mortality, and that premature deaths caused by
PM2.5 occur at levels as low as 5.8 micrograms per cubic
meter, which is considerably lower than the current national
standard of 15 micrograms per cubic meter;
    WHEREAS, the U.S. EPA risk assessment methodology is the basis
for ARB's estimate that 9,200 (7,300 to 11,000, 95 percent
confidence interval) premature deaths occur annually in California
and that reducing emissions to meet the Federal standard would
result in 2,700 fewer premature deaths annually;
    WHEREAS, the Board further finds based on its independent
judgment and analysis of the entire record before it that:
    In-use off-road diesel vehicles and engines that operate in the
State--whether based in California or not--continue to be
significant contributors of diesel PM and NOX emissions,
which California must reduce to attain the ozone and
PM2.5 NAAQS and to reduce the health risks associated
with such pollutants;
    Even with the amendments and economic relief proposed, the
proposed amended regulation would significantly reduce diesel PM and
NOX emissions and associated cancer, premature mortality,
and other adverse health effects statewide, such that emission
reductions from the proposed amended regulation are expected to
prevent 470 premature deaths from 2014 to 2029.
    \61\ CARB Authorization Request at 18, citing 7 FR 4052, 4054
(July 11, 2011).
    \62\ CARB Authorization Request at 18, citing 74 FR 32744, 32762
(July 8, 2009); 76 FR 77515, 77518 (December 13, 2011).
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    CARB's Authorization Request also notes the continuing importance
and need to address the NAAQS for pollutants considered to be harmful
to public health, including PM2.5 and ozone.\63\ For areas
in California that exceed the NAAQS, CARB is responsible under CAA
section 110 for developing a State Implementation Plan (SIP) that
describes how the state will attain the standards by certain deadlines.
The South Coast Air Basin and the San Joaquin Valley Air Basin are in
nonattainment for both PM2.5 and the 8-hour ozone standard.
Significant reductions in NOX emissions are needed to attain
the standards because NOX leads to formation in the
atmosphere of both ozone and PM2.5. Diesel PM emissions
reductions are also needed because diesel PM contributes to ambient
concentrations of PM2.5. The South Coast and San Joaquin
Valley air basins are both required to be in attainment with the
PM2.5 standard by 2014. The San Joaquin Valley and South
Coast air basins are required to be in

attainment of the 8-hour ozone standard by 2023.\64\
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    \63\ CARB notes: Ambient PM2.5 is associated with
premature mortality, aggravation of respiratory and cardiovascular
disease, asthma exacerbation, chronic and acute bronchitis and
reductions in lung function. Ozone is a powerful oxidant. Exposure
to ozone can result in reduced lung function, increased respiratory
symptoms, increased airway hyper-reactivity, and increased airway
inflammation. Exposure to ozone is also associated with premature
death, hospitalization for cardiopulmonary causes, and emergency
room visits for asthma.
    \64\ CARB Authorization Request at 3-4.
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    The SIP for the South Coast and San Joaquin air basins demonstrates
attainment of the PM2.5 standard by 2014, but only based on
projected achievement of PM2.5 emission reductions of nearly
15 percent in the South Coast Air Basin and 25 percent in the San
Joaquin Valley Air Basin. CARB's Authorization Request states that
NOX emissions must be reduced by approximately 50 percent to
meet the PM2.5 standard in the South Coast and the San
Joaquin Valley air basins. Even greater NOX reductions, on
the order of 75 to 88 percent, will be needed to achieve the 8-hour
ozone standard by 2023. California's 2007 SIP included the initial
version of the Fleet Requirements as a control measure. CARB's legal
commitment to achieve the emission reductions specified in the SIP
relies upon the emission reductions from the Fleet Requirements
regulation in the South Coast and the San Joaquin Valley.\65\ In its
ISOR, CARB notes ``Despite the major economic recession and revisions
to the off-road regulation inventory, the in-use off-road diesel
vehicle category remains an important source of emissions. In 2010,
staff estimates the off-road vehicles subject to the off-road
regulation are the fourth largest source of diesel PM in California (7
percent of total) and the sixth largest source of NOX from
all sources (4 percent of total).'' \66\
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    \65\ Id.
    \66\ EPA-HQ-OAR-2008-0691-0002 Attachment A, at 13.
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1. Should EPA Review this Criterion Based on the Need for California's
Nonroad Program or the Need for the Fleet Requirements?
    In addressing whether California needs ``such State standards to
meet compelling and extraordinary conditions,'' we must first address
the question whether it is appropriate for EPA to evaluate this
criterion based on California's need for its nonroad emission program
as a whole, or whether we instead should evaluate only the particular
standards being addressed in this authorization proceeding.
    As noted above, CARB maintains that the relevant inquiry is whether
California needs its own emission control program as opposed to the
need for any given standard as necessary to meet compelling and
extraordinary conditions. CARB notes that in prior decisions the
Administrator has determined that:

    ``[C]ompelling and extraordinary conditions'' does not refer to
levels of pollution directly, but primarily to the factors that tend
to produce them: Geographical and climatic conditions that, when
combined with large numbers and high concentrations of automobiles
create serious air pollution problems.\67\
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    \67\ CARB Authorization Request at 18.

    EPA has also consistently held that the phrase ``the need for
California emission standards'' refers to the need for California's
program (i.e. set of standards) applicable to the relevant category of
vehicles or engines, and not the need for the particular standards that
are the subject of an authorization request. In the instant proceeding,
EPA received comments disputing this approach, which we discuss below.
a. Comment From Pacific Legal Foundation
    EPA received comment from the Pacific Legal Foundation (PLF)
challenging both California's and EPA's interpretation of the
``compelling and extraordinary conditions'' criterion in section
209(e)(2)(A)(ii). PLF asserts that based on both the plain language of
the provision and its legislative history, the word ``standards''
should be read to refer only to particular standards, and not to the
entire California program for the relevant category of engines or
vehicles.\68\
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    \68\ As explained below, EPA believes it important to examine
the language of section 209(e)(2)(A)(ii) precisely as Congress set
it forth. Therefore, to be clear, the phrase ``the need for
California emission standards'' does not appear in this section.
Rather, the language is ``No such authorization shall be granted if
the Administrator determines that--(ii) California does not need
such California standards to meet compelling and extraordinary
conditions.'' EPA's interpretation of this section includes an
examination of the significance of the word ``such'' before
``California standards.''
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    PLF contends that California must apply for a waiver or
authorization on a case-by-case basis \69\ and that the Clean Air Act
requires EPA not grant California any waiver or authorization unless
California makes a showing that it has ``compelling and extraordinary
conditions'' necessitating the particular standards for which a waiver
or authorization is sought. PLF argues that CARB has put little
evidence in the record about the need for the Fleet Requirements.
Further, PLF asserts that ``Congress intended the word `standard' in
section 209 to mean quantitative level of emissions'' \70\ and that
there is no indication in the text or legislative history that by using
the term ``standard'' Congress really meant ``program'' or anything
other than ``standard.'' PLF states that Congress could have used the
term ``program'' rather than the term ``standards'' in the statute and
delegated to EPA the responsibility to make case by case decisions on
whether a particular standard was required or needed.
---------------------------------------------------------------------------

    \69\ PLF at 1.
    \70\ PLF cites MEMA I at 1112-1113.
---------------------------------------------------------------------------

    In addition, PLF cites the legislative history of section 209 to
support its position that standards need to be justified on an
individual basis. Specifically, PLF cites the Senate Committee report
for the 1967 legislation, which in discussing section 208 (the
predecessor to what is now section 209) refers to California's
``compelling and extraordinary circumstances'' that are ``sufficiently
different from the nation as a whole to justify standards . . . [that]
may, from time to time, need to be more stringent than national
standards.'' \71\ PLF argues that this language indicates that Congress
intended California to justify specific standards ``from time to
time,'' and that it intended EPA to deny a waiver if California does
not require or need particular standards. PLF claims that if Congress
wanted to apply a need tests based on California's need for a program
as a whole then it could have stated so.
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    \71\ S Rep No 90-403 at 33 (1967) (emphasis added).
---------------------------------------------------------------------------

    PLF further contends that in 1977, when Congress amended section
209(b)--Congress continued to focus on ``standards'' but with two
important additions. First, Congress amended the language relating to
the protectiveness determination to clarify that California's standards
need only be at least as protective as federal standards ``in the
aggregate''--making clear that California did not need to determine
that each individual standard would be more protective or stringent
than applicable federal standards. PLF asserts that this clarification,
however, applied only to the protectiveness determination. Second,
Congress tightened section 209(b)(1)(B) to provide that ``no such
waiver shall be granted if EPA finds that California . . . does not
need such standards to meet compelling and extraordinary conditions . .
..'' (emphasis added). PLF asserts that the preexisting 1967 language
had provided that EPA ``shall'' grant a waiver unless it finds
California did ``not require'' the underlying standards, whereas the
1977 amendments expressly prohibited EPA from granting a waiver where
California did not ``need'' a particular emissions standard. Based on
the foregoing, PLF argues that the 1977 amendments created two separate
tests for ``standards.'' The ``protectiveness'' test (under the first
waiver criterion), which

applies to the protectiveness of California's aggregate set of
standards, and the ``needs'' test (under the second waiver criterion),
which is based on a need for the particular standards for which a
waiver is sought and focuses on whether there are compelling conditions
in the state necessitating that particular standard.
    PLF also maintains that EPA's traditional interpretation is
contrary to plain meaning of the CAA. PLF asserts that the term
``program'' is not used in section 209 and that the phrase ``such
California standards'' in 209(e)(2)(A)(ii) does not refer to the entire
California mobile source emissions program. PLF states that the phrase
``in the aggregate'' appears only once in section 209 and only under
the first waiver prong added in the 1977 amendments. ``In the
aggregate'' is set off by commas, PLF argues, providing evidence that
it pertains only to protectiveness under the first waiver criterion,
and does not apply to the ``needs'' inquiry under the second waiver
criterion. PLF maintains that the outcome of the protectiveness test
depends on California making a determination, whereas the outcome of
the needs tests depends on EPA making a finding. Further, PLF argues
that the protectiveness test affirmatively mandates that EPA approve
the waiver application if California makes the protectiveness
determination, while the ``needs test'' expressly prohibits EPA from
granting a waiver if EPA makes the requisite finding. Thus, PLF argues,
the first prong is written to broaden the likelihood of issuing a
waiver, whereas the second prong is written to narrow it.
    PLF maintains that the two waiver prongs were intended to address
entirely different issues. Congress gave EPA greater authority to
approve waivers under the first prong, PLF asserts, but lesser
authority to approve waivers under the independent needs test. PLF
highlights that the sentence regarding ``protectiveness'' applies to
both ``standards and other requirements,'' whereas the sentence
establishing the needs test refers only to standards. This makes sense,
according to PLF, because Congress intended EPA to look holistically at
protectiveness and not at whether an individual standard was as
protective. To ensure CARB did not abuse the privilege, PLF argues,
Congress provided under the ``needs'' criterion that California could
not adopt any standard that it did not need or that was not
specifically designed to address California's ``peculiar'' conditions.
    Finally, PLF maintains that EPA's traditional interpretation leads
to absurd results. PLF states that EPA itself has acknowledged that
conditions in California may improve, thereby eliminating the need for
the authority to waive preemption of California standards.\72\ Under
EPA's traditional interpretation, PLF argues, EPA would be forced to
deny a waiver request based on a finding that there is no longer a need
for the California program. PLF argues that such a finding would put in
jeopardy past waivers, as the positive (program-wide) ``needs'' finding
underpinning those past waivers would no longer be valid. PLF further
comments that a broad negative finding with regard to ``needs'' would
eliminate CARB's ability to maintain its own mobile source emission
standards program, separate from the federal program. In such
circumstances, PLF argues, EPA would be substituting its policy
judgment for that of Congress. If one interpretation leads to absurd
results and another does not, PLF argues, then the former must be
rejected.
---------------------------------------------------------------------------

    \72\ See 74 FR 32744, 32762 (July 8, 2009).
---------------------------------------------------------------------------

b. EPA Response
    EPA examined these same issues at length in the Agency's 2009
decision granting California's request for a waiver of preemption of
its GHG standards for light duty vehicles.\73\ Consistent with that
examination, EPA continues to believe that the traditional approach to
the compelling and extraordinary conditions criterion is appropriate.
That is, EPA believes it is proper to review California's need for its
emission program (i.e. set of standards) applicable to the relevant
category of vehicles or engines as a whole, rather than to follow an
interpretation that applies this criterion to specific standards that
are the subject of an authorization request.
---------------------------------------------------------------------------

    \73\ 74 FR 32744, 32759-32762 (July 8, 2009).
---------------------------------------------------------------------------

    EPA's traditional interpretation is the most straightforward
reading of the text and legislative history of section 209(b) and
section 209(e). First, EPA disagrees with PLF's assertions regarding
the original language of the preemption provision promulgated in 1967.
The critical language in section 208(b) of the 1967 legislation
required that EPA`s predecessor department grant California a waiver of
section 208(a) preemption unless it found that California ``does not
require standards more stringent than applicable Federal standards to
meet compelling and extraordinary conditions . . ..'' This language did
not suggest a searching review of every California standard. Rather, it
required a waiver of preemption unless the agency determined that
California did not require more stringent ``standards''--a term that is
both general and plural--to meet compelling and extraordinary
conditions. This language is fully consistent with a review of
California's general need for more stringent standards and thus for its
own program (i.e. its own set of standards).
    PLF's emphasis on the word ``standards,'' as opposed to ``program''
in this section is inapposite. EPA's use of the word ``program'' in
this context is simply meant to describe the group of standards
applicable to the engines and vehicles in question under California's
regulatory program, compared to those under the federal program. The
``program'' in this context is merely the standards being considered
together. It is fully consistent with the language of the statute to
review the need for the program (i.e. the set of relevant standards) as
a whole, rather than the need for individual standards. PLF's reference
to legislative history is consistent with EPA's view that the relevant
issue in determining whether a waiver is justified is California's
``circumstances'' being ``sufficiently different'', rather than the
specific need for any particular standard.\74\
---------------------------------------------------------------------------

    \74\ PLF at 4.
---------------------------------------------------------------------------

    Beginning prior to the 1977 amendments, EPA has consistently
interpreted the ``compelling and extraordinary conditions'' criterion
to apply to the full California program (i.e. set of standards).\75\
When Congress re-evaluated this provision in 1977, it could have
revised the criterion to make clear that California must show each
standard is necessary. Instead, as discussed below, Congress went out
of its way to indicate that California is to be given even more
flexibility in designing its own motor vehicle program.\76\
---------------------------------------------------------------------------

    \75\ See 38 FR 30136 (November 1, 1973).
    \76\ MEMA I, 627 F.2d at 1110.
---------------------------------------------------------------------------

    PLF, moreover, does not take proper account of the critical
statutory change Congress made in 1977, which allowed 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 waive preemption
of individual California 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.
    Although PLF is correct that the 1977 amendments formally separated
the ``protectiveness'' criterion from the ``need'' criterion, the
latter continues to

refer back to the language regarding protectiveness, by using the term
``such state standards.'' In addition, contrary to PLF's comments, the
creation of the ``in the aggregate'' test for protectiveness is
supportive of the argument that EPA is not to look at the need for each
individual standard. If EPA were required to look independently at the
need for each individual standard, any individual standard that was
less stringent than a federal standard might be considered unnecessary.
This would obviate the rationale for looking at the protectiveness of
California's standards ``in the aggregate'' under the first criterion--
effectively requiring EPA to give back in the second criterion what
Congress explicitly gave California in its revision to the first
criterion. Finally, it bears emphasis that the 1977 amendments
continued to require that EPA grant a waiver of preemption unless it
makes one of the findings in section 209(b)(1), thus continuing to put
the burden of proof on those opposing the waiver.\77\
---------------------------------------------------------------------------

    \77\ Id.
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    Congress, in 1990, added language in section 209(e)(2)(A) creating
criteria for EPA authorization of California nonroad engine standards
that are essentially identical to the criteria for EPA waiver of
preemption of California's standards for new motor vehicles in section
209(b). In particular, Congress provided California with the discretion
to create a broad emissions program (i.e. ``California standards'')
that needs only to be as stringent as applicable EPA standards, in the
aggregate. Further, section 209(e)(2)(A)(ii) refers to whether ``such
California standards'' are needed to meet compelling and extraordinary
conditions, referring back to the general and plural term ``California
standards'' in the protectiveness finding.
    The language of section 209(e)(2)(A) regarding the
``protectiveness'' determination by California refers only to
``California standards,'' not to each California standard individually.
Moreover, the use of the term ``in the aggregate'' makes clear that the
set of standards to be reviewed is the aggregate set of standards
applicable to the engines and vehicles being regulated. EPA is to
determine whether California's determination is arbitrary and
capricious under section 209(e)(2)(A)(i), and is to determine whether
California does not need ``such California standards'' to meet
compelling and extraordinary conditions. The natural reading of these
provisions leads EPA, in addressing the ``needs'' criterion, to
consider the same group of standards that California considered in
making its protectiveness determination. While the words ``in the
aggregate'' are not specifically applicable to section
209(e)(2)(A)(ii), this criterion does refer to the need for ``such
California standards,'' rather than ``each California standard'' or
otherwise indicate a standard-by-standard analysis. The text thus
indicates that the proper analysis is to review the aggregate set of
standards (i.e. the program) applicable to the regulated vehicles and
engines.\78\
---------------------------------------------------------------------------

    \78\ To the extent the provision is ambiguous, EPA's
interpretation is, at minimum, one that is reasonable and entitled
to deference under Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837 (1984). It certainly is not
``unambiguously 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.).
---------------------------------------------------------------------------

    PLF's discussion of case law interpreting the term ``standard'' is
inapposite. For example, although PLF points to both MEMA I and EMA,
those decisions address an entirely different issue relevant to section
209--i.e., whether the regulation set by California is, in fact, a
``standard,'' as opposed to another type of provision, like an
enforcement provision. These cases do not illuminate the issue of
whether EPA reviews each standard individually under sections
209(b)(1)(B) and 209(e)(2)(A)(ii), or whether it reviews California's
standards as a group (i.e. California's program for such engines) under
those provisions.
    EPA's 2009 decision waiving preemption of California's GHG
standards for light duty vehicles considered the plain language and
legislative history of section 209(b)(1)(B) and determined that for all
pollutants, it was appropriate to review section 209(b)(1)(B) by
reviewing the need for California's motor vehicle program, rather than
individual standards. We incorporate that discussion into this decision
by reference because, as explained above, the language of section
209(e)(2)(A)(ii) is substantively the same as that in section
209(b)(1)(B) on this issue.
    The 2009 GHG waiver decision included the following discussion,
which in particular addressed a 1984 decision waiving preemption for
earlier California PM standards:

    [I]n 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.'' 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.''
    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.\79\

    \79\ 74 FR 32744, 32759 (July 8, 2009) (citations omitted).

    The structure of section 209, as adopted in 1967 and as amended in
1977 and 1990, is notable in its focus on limiting the ability of EPA
to deny a waiver or authorization. This limitation preserves discretion
for California to construct its motor vehicle and nonroad programs as
it deems appropriate to protect the health and welfare of its citizens.
The legislative history indicates Congress quite intentionally
restricted and limited EPA's review of California's standards, and that
its express legislative intent was to ``provide the broadest possible
discretion [to California] in selecting the best means to protect the
health of its citizens and the public welfare.'' \80\ The D.C. Circuit
recognized that ``[t]he history of the congressional consideration of
the California waiver provision, from its original enactment up through
1977, indicates that Congress intended the State to continue and expand
its pioneering efforts at adopting and enforcing motor vehicle emission
standards different from and in large measure more advanced than the
corresponding federal program. In short to act as a kind of laboratory
for innovation. * * * For a court [to limit

California's authority] despite the absence of such an indication would
only frustrate the congressional intent.'' \81\
---------------------------------------------------------------------------

    \80\ 105 H.R. Rep. No. 294, 95th Cong., 1st Sess. 301-302
(1977). See MEMA, 627 F.2d at 1110-11.
    \81\ MEMA, 627 F. 2d at 1111.
---------------------------------------------------------------------------

    In this context, it is fully consistent with the expressed
intention of Congress to interpret section 209(e)(2)(A)(ii) in a manner
that allows California the policy discretion to set its emission
program as it sees fit, subject to the limitation that its standards
remain, in the aggregate, as protective of public health and welfare as
applicable federal standards and that California continue to experience
compelling and extraordinary conditions. Congress intended to provide
California the broadest possible discretion to develop its nonroad
emissions program. Neither the text nor the legislative history of
section 209(b) or 209(e) indicates that Congress intended to limit this
broad discretion by requiring EPA to determine, on a case-by-case
basis, whether each specific standard is necessary or appropriate for
California. EPA's longstanding interpretation, accordingly, is directly
in line with the purpose of Congress.
    This approach does not make section 209(b)(1)(B) or section
209(e)(2)(A)(ii) a nullity. EPA must still determine whether opponents
of authorization have met their burden to establish that California
does not need its nonroad program to meet the compelling and
extraordinary conditions. As discussed below, EPA does not believe that
burden has been met in this instance. We acknowledge, however, that
conditions in California may one day improve such that it no longer has
the need for a separate nonroad program to address certain air quality
problems. The statute contemplates that such improvement is possible.
PLF is incorrect in concluding that EPA's approach would lead to an
absurd outcome. EPA would not deny an authorization request under
section 209(e)(2)(A)(ii) unless it determined that the regulatory
program was not needed because compelling and extraordinary conditions
no longer exist in California. Furthermore, the basis for previously
waived or authorized standards would remain valid unless EPA determined
that the compelling and extraordinary conditions would not exist even
without those standards in place. This is consistent with the intent of
Congress to permit California to maintain separate emission standards
when compelling and extraordinary conditions exist. Thus, there would
be no absurd results regarding such standards.
    Congress has directed EPA to exercise its technical judgment with
regard to all three authorization criteria, but has not authorized EPA
to substitute its policy judgment for California's judgment with regard
to which of its specific standards are or are not needed to meet its
compelling and extraordinary conditions. Those who oppose California
regulations for reasons other than the three criteria that Congress
specified in the statute have the ability to raise their legal, policy,
and other concerns in the state administrative process, or through
judicial review of the regulations themselves.
    For these reasons, EPA believes that the better approach for
analyzing the need for ``such State standards'' to meet ``compelling
and extraordinary conditions'' is to review California's need for its
program, as a whole, for the class or category of vehicles being
regulated, as opposed to its need for the individual standards that are
the subject of an authorization request.
2. Does California Need its Nonroad Program to Meet Compelling and
Extraordinary Conditions?
    Applying the traditional approach to application of the compelling
and extraordinary circumstances criterion under section
209(e)(2)(A)(ii), EPA cannot deny the authorization of the Fleet
Requirements on this basis.
    CARB has repeatedly demonstrated the need for its nonroad program
to address compelling and extraordinary conditions in California. As
noted above, in its Authorization Request, CARB stated that the unique
geographical and climatic conditions and the tremendous growth in
California's onroad and nonroad vehicle population, giving rise to
serious air quality problems and NAAQS nonattainment in California,
still exist today and that nothing in these conditions has changed to
warrant a change in this determination. As such CARB notes that there
can be no doubt of the continuing existence of compelling and
extraordinary conditions justifying California's need for its own
mobile source emissions control program.
    EPA received some comment from those that otherwise oppose the
authorization but implicitly recognize the underlying compelling and
extraordinary conditions in California. For example, the American Road
and Transportation Builders Association (ARTBA) notes that it is ``very
supportive of both EPA and ARB's goal of reducing PM and NOX
emissions,'' but ``does not believe ARB has considered fully some of
the air quality improvements already occurring in California and the
nation. These improvements in air quality undercut the need for a
measure as severe as the ARB proposal.'' \82\ ARTBA notes that the air
quality is significantly improving without the Fleet Requirements.\83\
However, EPA received no evidence to suggest that California's air
quality is improving to the point that it will attain the NAAQS for PM
and ozone without the Fleet Requirements or that California continues
to experience serious air quality concerns based on continuing
compelling and extraordinary conditions, as EPA and CARB have outlined
in this and previous actions. Based on the record, EPA is unable to
identify any change in circumstances or any evidence to suggest that
the conditions that Congress identified as giving rise to serious air
quality problems in California no longer exist. As noted by CARB, there
continue to be underlying compelling conditions in California giving
rise to a significant number of California air basins that continue to
be in nonattainment with NAAQS for PM2.5 and ozone.
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    \82\ ARTBA at 2.
    \83\ Id.
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    To the degree that commenters question the stringency of the Fleet
Requirements or whether the emission reductions projected from this
rule are needed, EPA received no comment that addressed the fundamental
question of whether California continues to experience compelling and
extraordinary conditions giving rise to the need of a nonroad emissions
program. The design, or stringency of such an emission program, is
irrelevant to EPA's review of section 209(e)(2)(A)(ii). Such review
would be inconsistent with the express indication from Congress to
provide California with the ``broadest possible discretion'' in
selecting the best means to protect the health of its citizens and the
public welfare. Accordingly, applying the traditional approach of
reviewing the need for a separate California nonroad program to meet
compelling and extraordinary conditions, EPA cannot deny the
authorization based on this criterion.
3. In the alternative, does California need its nonroad Fleet
Requirements to meet compelling and extraordinary conditions?
    As discussed above, EPA is maintaining its interpretation of
section 209(e)(2)(A)(ii) as requiring a review of whether compelling
and extraordinary conditions give rise to a need for a California
nonroad emission program. Nevertheless, because EPA received

comment urging an alternative interpretation (based on a review of
whether the Fleet Requirements are per se needed to meet compelling and
extraordinary conditions) and because we received other comments
concerning the specific need for or benefits of the Fleet Requirements,
EPA has also evaluated this criterion in the alternative by reviewing
the Fleet Requirements separately.
    Although EPA received a wide variety of comments questioning the
``need'' for CARB's Fleet Requirements, we did not receive any comments
or explanation as to how an evaluation of ``need'' should be performed
by EPA. As discussed below, in light of the lack of criteria by which
to judge such need (including how to weigh or balance evidence and
provide CARB with the requisite policy deference described above), the
lack of any explanation of the relevant facts that EPA must or could
consider, and the failure of commenters to satisfy their burden of
proof to overcome CARB's stated need for its Fleet Requirements, even
if EPA were to apply the alternative interpretation proposed by
commenters, the agency would be unable to make an affirmative finding
under section 209(e)(2)(A)(ii). Therefore, EPA is unable to deny CARB's
request on this basis.
a. California's Air Quality Today and Moving Forward
    The Agency received a number of comments suggesting that
California's air quality is improving on its own. ARTBA notes that
levels of PM2.5 and NOX have declined
significantly since 1980 and since 2001, while numerous economic
indicators have increased. The Associated General Contractors of
America (AGC) note the significant decline in emissions from off-road
diesel equipment due to a decline in activity and other factors. The
Construction Industry Air Quality Coalition (CIAQC) claims that
emissions from the existing fleet are naturally declining and that
additional regulation is not needed to reach the emission levels CARB
attributes to implementation of the Fleet Requirements. The California
Construction Trucking Association (CCTA) and CIAQC state that CARB's
emission modeling was overstated and continues to be inaccurate because
it presumes too optimistic a scenario of economic recovery and
therefore more activity and emissions from nonroad fleets than there
actually has been. We also received comments that the cost of CARB's
regulation compared to the benefits supports a finding that such
standards are not needed, and that the health benefits are either
overstated or non-existent. In related comments, commenters stated that
the Fleet Requirements are likely to do harm to the public health of
Californians and that the economic impacts of the regulation are likely
to lead to significant adverse health effects.\84\ We also received
comment from Altfillisch Contractors (ACI) suggesting that the
California Environmental Quality Act (CEQA) renders the Fleet
Requirements unnecessary.
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    \84\ These comments are addressed in the ``protectiveness'' or
section 209(e)(2)(i) discussion above. As discussed in that section,
the Agency believes it appropriate to limit our examination to the
specific effects the California and EPA emission standards have on
emissions rather than performing an analysis of social impacts or
other secondary implications. The determination of how numerous
possible impacts of emission regulation can or should be weighed in
determining public policy is one inherently directed to the
regulatory authority promulgating the regulation, not to an
authority whose limited role is to review the regulations based on
three narrow criteria and who has been directed by Congress to
provide broad discretion in its review.
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    CARB explains in its comments that for areas that exceed the NAAQS,
California is responsible under the CAA section 110 for developing a
state implementation plan (SIP) that describes how the state will
attain the standards by certain deadlines.
    CARB notes that its Fleet Requirements are part of an integral
strategy to attain the NAAQS in both the San Joaquin Valley Air Basin
and South Coast Air Basin. CARB notes there is no question that areas
of California continue to be in nonattainment for PM2.5, as
well as for ozone, and that the Fleet Requirements and other
regulations and incentives are needed to achieve attainment.\85\
Additionally, CARB states that despite the economic recession and
downward revisions to the in-use off-road emissions inventory, off-road
diesel vehicles remain a significant source of emissions.\86\ Thus,
CARB states, there continues to be a strong need for further regulation
of all emission source categories, including off-road vehicles. ``As
EPA has long-confirmed, questions of what sources to regulate and how
to regulate them are policy questions that Congress has determined is
best left to the State.'' \87\
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    \85\ CARB notes in its Authorization Request that two air basins
in California--South Coast Air Basin and San Joaquin Valley Air
Basin--are in nonattainment for both PM2.5 and the 8-hour
ozone standard. This nonattainment is based on the 2006 NAAQS for PM
(71 FR 61144, October 17, 2006) and which EPA has subsequently made
more stringent in 2012 (78 FR 3086, January 15, 2013). The
nonattainment for ozone is based on EPA's 2008 NAAQS 8-hour ozone
standard (73 FR 16436, March 27, 2008). CARB notes that significant
emission reductions of NOX are needed because it leads to
formation in the atmosphere of ozone and PM2.5, and that
diesel PM emission reductions are also needed because diesel PM
contributes to ambient concentrations of PM2.5.
    California submitted a revision to its SIP (State Strategy) in
2007 for the South Coast and San Joaquin Valley Air Basins that
demonstrates attainment of the PM2.5 standard by 2014
(needed by 2015), but only after achieving significant reductions of
PM2.5 (and NOX). In addition, additional
reductions of NOX emissions are needed to achieve the 8-
hour ozone standard by 2023. EPA approved the Stated Strategy for
both PM2.5 and NOX for the South Coast and San
Joaquin Air Basins on November 9, 2011 and March 1, 2012,
respectively. CARB projects that the Fleet Regulations will achieve
a 17 percent reduction in NOX emissions and a 21 percent
reduction in PM2.5 emissions in 2023 that would not occur
without the regulation and that Fleet Requirements are an integral
part of the SIP and are laid out in EPA's proposed rulemaking to
approve the State Strategy and that no ``margin of safety''
otherwise exists.
    \86\ CARB notes in its Written Comments at 10-11 that the Fleet
Requirements are part of the approved SIP for the South Coast and
San Joaquin valley, both extreme nonattainment areas for ozone and
nonattainment for PM2.5 and that specific emission
benefits from the Fleet Requirements are laid out in EPA's proposed
rulemaking to approve the State Strategy.
    \87\ CARB Written Comments at 12-13.
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    CARB also notes, and the EPA agrees, that the CEQA does not render
the Fleet Requirements unnecessary. The purposes of the CEQA and the
Fleet Requirements are different. The CEQA, which is applied in only a
few air districts, is essentially designed to identify when projects
will result in significant harm and to mitigate that harm (to make sure
air quality does not worsen), whereas the Fleet Requirements are
proactive measures applicable statewide as part of coordinated strategy
designed to improve air quality throughout the state.
    EPA believes that CARB's initial filings and additional submissions
to the record, responding to arguments that the Fleet Requirements are
not needed because of the economic downturn and because of CARB's
overestimation of inventory and emissions, are reasonable. Mere
assertions by commenters that CARB's most recent emission modeling is
inaccurate do not meet the burden of proof to demonstrate otherwise. As
noted above, CARB has submitted updated estimates of projected emission
reductions expected from the Fleet Requirements, and there is no
evidence in the record to demonstrate that CARB's projections are
unreasonable. EPA further finds that the opponents have not met their
burden of demonstrating that such considerations would render the Fleet
Requirements unnecessary. In adopting the 2010 amendments, CARB
acknowledged that past and future emissions from in-use nonroad CI
vehicles were significantly lower than originally projected, and CARB
states that the amendments for

which authorization is requested provide economic relief to fleets
while still achieving the emission reductions necessary to attain
federal ambient air quality standards (NAAQS). CARB indicates that
despite the smaller inventory contribution from in-use nonroad CI
engines than CARB projected in the initial rulemaking, emissions from
these engines still represent a significant portion of the overall
emissions inventory. The opponents provide no evidence to refute CARB's
assertion that despite the economic recession and revised inventory,
the in-use nonroad CI fleet remains a significant source of emissions.
    Moreover, as CARB notes, there continues to be a strong need for
emission reductions from all emission categories, including the in-use
nonroad CI fleet, to meet the PM2.5 and ozone NAAQS. As CARB
notes, it is not for EPA to decide which types of sources to regulate
and in what manner to do so.\88\ Congress intended to leave such policy
questions in the hands of the state. As discussed below, EPA finds that
CARB has promulgated the Fleet Requirements, in part, to satisfy its
PM2.5 and 8-hour ozone NAAQS requirements and no evidence
exists in the record to explicitly demonstrate why the emission
reductions projected by CARB are not needed in order to meet
California's NAAQS obligations.
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    \88\ Consistent with MEMA I, the Agency has evaluated costs in
this authorization in the evaluation of the technological
feasibility below. The Agency looks at the actual cost of compliance
in the time provided by the regulation, not the regulation's cost-
effectiveness. The appropriate cost-effectiveness for a regulation
is a policy decision of California that is considered and made when
California adopts the regulations, and EPA, historically, has
deferred to these policy decisions. EPA has stated in this regard,
``the law makes it clear that the waiver request cannot be denied
unless the specific findings designated in the statute can be made.
The issue of whether a proposed California requirement is likely to
result in only marginal improvement in air quality not commensurate
with its cost or is otherwise an arguably unwise exercise of
regulatory power is not legally pertinent to my decision under
section 209. Therefore, EPA declines to review CARB's Fleet
Requirements for their cost-effectiveness or the cost-benefits of
the regulation in the context of any of the authorization criteria
set forth in section 209(e)(2).
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    Lastly, CARB restates its legal obligation to achieve PM emission
reductions and the expected benefits associated with the Fleet
Requirements:

    ARB adopted the Off-Road regulation, in part, to meet
California's legal obligations under federal law to achieve
attainment with the NAAQS for PM2.5 by 2014. The emission
reductions in the regulation are critical to attaining federally
mandated air quality standards. Primary diesel PM emissions are a
significant contributor to overall PM2.5. In 2008, 20,600
tons of diesel PM were emitted in California. The present amendments
to the Off-Road regulation have been adopted to accommodate the
economic hardship of affected businesses while still meeting the
legal requirements and protecting the public health of all
Californians.\89\
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    \89\ Id.

    In order to properly evaluate whether California has a need for its
Fleet Requirements under the alternative approach to section
209(e)(2)(A)(ii) described above, EPA believes it would be necessary
only to examine whether the identified ``compelling and extraordinary
conditions'' in California are giving rise to an air quality problem
that CARB seeks to address with the Fleet Requirements. EPA has
received no comment suggesting that EPA's historically recognized
``conditions'' in California (e.g. geographic and climatic conditions,
number of vehicles operating in California, etc.) do not continue to
give rise to elevated concentrations of particulate matter and
NOX. In addition, EPA has received no comment rebutting
CARB's statement that it is legally required to demonstrate compliance
with the CAA's NAAQS requirements (for PM2.5 and 8-hour
ozone) and that CARB is currently committed to achieve such compliance
in part through the promulgation of emission standards such as its
Fleet Requirements. As noted by CARB, the Fleet Requirements were
initially set in response to the NAAQS requirements for
PM2.5 and the 8-hour ozone set in 2006 and 2008,
respectively. The state of California has a greater level of
nonattainment under those NAAQS than other states. Since that time, EPA
in 2012 has completed review of the PM NAAQS and has strengthened the
primary annual standard for PM2.5, and California continues
to set regulations in response to such requirements.\90\ EPA believes
that to the extent that a review of the need for the Fleet Requirements
(as opposed to CARB's nonroad program) is required, that CARB has
reasonably demonstrated such need due to its obligation to comply with
federal law (including section 110 of the CAA); CARB needs its Fleet
Requirements and a host of other regulatory measures in order to
adequately meet its SIP obligations. Because EPA has received
additional comment suggesting that the PM conditions in California are
not a serious air quality issue the Agency addresses those comments
below.
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    \90\ 78 FR 3086 (January 15, 2013).
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b. PM Health Effects
    EPA received several comments that question the public health
benefits associated with the Fleet Requirements. EPA received comment
stating that PM2.5, and specifically PM2.5 from
diesel combustion, does not present a public health risk in
general,\91\ and that there is no measurable or detectable relationship
between PM2.5 and mortality.\92\ Separately EPA also
received comment that PM2.5 from diesel combustion located
in California does not present a public health risk.
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    \91\ EPA received only one comment suggesting that
NOX and ozone do not pose a public health issue. This
comment did not include any data or other evidence to support this
assertion. See Milloy written testimony.
    \92\ See Milloy. EPA notes that Mr. Milloy, who submitted
comment on behalf of the California Construction Trucking
Association, separately brought litigation against EPA in which he
signed a sworn declaration comparing exposure of human test subjects
being voluntarily exposed to forms of particulate matter to Nazi
death camp experimentation. Declaration of Steven J Milloy in Case
1:12-cv-01066-AJT-TCB pp. 2-3; see also the complaint in the same
matter which states that such studies ``ris[k] the lives and health
of human study subjects'' and that ``Mr. Milloy is appalled by this
inhumanity''(complaint para. 15). These sworn statements are
diametrically at odds with Mr. Milloy's presentation and testimony
here that exposure to particulate matter does not pose a public
health concern. Needless to say, when a commenter publically
espouses positions that are at a 180 degree remove from each other,
the credibility of the assertions is greatly diminished. This
lawsuit was dismissed as lacking any legal basis. Dr. Enstrom states
in his comment ``There is now overwhelming epidemiologic evidence
that PM2.5 and diesel PM are not related to total
mortality in California. This evidence has most recently been
summarized in my thirteen-page September 28, 2012 paper,
``Particulate Matter is Not Killing Californians. This paper was
presented on August 1, 2012 at the American Statistical Association
Joint Statistical Meeting in San Diego. It is currently posted