CALIFORNIA
ENVIRONMENTAL
PROTECTION
AGENCY
AIR
RESOURCES
BOARD
BASIS
FOR
CALIFORNIA'S
REQUEST
FOR
CLEAN
AIR
ACT
SECTION
209(
b)
WITHIN­
THE­
SCOPE
AND
NEW
WAIVER
DETERMINATIONS
FOR
THE
1999­
2003
AMENDMENTS
TO
THE
CALIFORNIA
ZERO­
EMISSION
VEHICLE
REGULATION
September
2004
I.
INTRODUCTION
During
1999­
2003,
the
California
Air
Resources
Board
(
ARB
or
Board)
adopted
four
sets
of
amendments
to
the
California
Zero
Emission
Vehicle
(
ZEV)
regulation.
ARB
is
requesting
that
the
Administrator
of
the
U.
S.
Environmental
Protection
Agency
(
U.
S.
EPA)
confirm
determinations
by
ARB
that
the
aggregated
amendments
resulting
from
the
four
rulemakings
as
they
affect
the
2006
and
previous
model
years
(
MYs)
are
within
the
scope
of
the
waiver
of
preemption
under
Clean
Air
Act
(
CAA)
section
209(
b)
for
the
original
ZEV
regulation
 
adopted
as
part
of
California's
first
generation
Low
Emission
Vehicle
(
LEV
I)
rulemaking.
ARB
is
also
requesting
that
the
Administrator
issue
a
new
waiver
of
preemption
for
the
1999­
2003
amendments
as
they
affect
the
2007
and
subsequent
MYs.

Notice
of
the
original
waiver
for
California's
ZEV
requirements
was
published
in
January
1993.1
On
January
25,
2001,
the
Assistant
Administrator
for
Air
and
Radiation
confirmed
the
ARB's
determination
that
the
ARB's
1996
amendments
postponing
the
start
of
California's
ZEV
requirements
from
MY
1998
to
MY
2003
were
within
the
scope
of
the
waiver
for
our
ZEV
regulation
as
originally
adopted.
2
Section
II
of
this
document
contains
a
brief
description
of
each
of
the
ARB's
four
1999­
2003
ZEV
rulemakings.
Section
III
describes
the
California
ZEV
requirements
before
adoption
of
the
1999
amendments.
Section
IV
presents
a
comprehensive
summary
of
the
California
ZEV
requirements
as
last
amended
in
2003.
Next,
Section
V
describes
the
criteria
for
determining
whether
California's
actions
on
its
motor
vehicle
emission
standards
qualify
for
a
waiver
of
preemption
or
are
within
the
scope
of
previous
waivers.
Section
VI
then
explains
why
the
amendments
to
the
ZEV
provisions
for
2006
and
earlier
MY
vehicles
are
within
the
scope
of
the
original
waiver
of
the
ZEV
regulation.
Section
VII
explains
why
the
amendments
to
the
ZEV
requirements
for
MYs
2007
and
subsequent
qualify
for
a
waiver
of
preemption.
Finally,
Section
VIII
provides
ARB's
conclusion.

1
58
F.
R.
4166
(
January
13,
1993).

2
66
F.
R.
7751.
2
II.
OVERVIEW
OF
THE
1999­
2003
ZEV
RULEMAKINGS
A.
The
1999
ZEV
Amendments
The
first
set
of
amendments
to
the
ZEV
regulation
covered
by
this
request
represented
a
limited
and
discrete
part
of
the
ARB's
second
generation
LEV
II
regulations,
which
were
adopted
in
a
1998­
1999
rulemaking.
In
April
2003,
the
Assistant
Administrator
granted
a
CAA
section
209(
b)
waiver
for
all
of
the
amendments
in
the
rulemaking
except
those
pertaining
to
ZEVs.
3
In
a
February
7,
2002
letter,
ARB
had
requested
that
U.
S.
EPA
confirm
the
ARB
Executive
Officer's
determination
that
the
limited
portion
of
the
LEV
II
amendments
pertaining
to
ZEVs
did
not
require
a
new
waiver
of
preemption
but
rather
was
within
the
scope
of
previously­
issued
waivers.
As
discussed
below,
a
July
1,
2002
letter
from
the
Executive
Officer
withdrew
the
request
for
confirmation
that
the
ZEV
elements
of
the
LEV
II
amendments
were
within
the
scope
of
earlier
waivers,
and
asked
that
the
Administrator
proceed
with
the
waiver
determination
for
all
elements
of
the
LEV
II
rulemaking
except
those
pertaining
to
ZEVs.
The
ZEV
elements
of
the
LEV
II
regulations
rulemaking
were
approved
by
the
Board
at
a
November
5,
1998
hearing,
were
formally
adopted
by
an
Executive
Order
issued
August
5,
1999,
and
were
approved
by
California's
Office
of
Administrative
Law
(
OAL)
on
October
28,
1999.
They
will
be
referred
to
as
the
"
1999
ZEV
Amendments."

Prior
to
the
1999
ZEV
amendments,
California's
ZEV
regulation
required
that
at
least
10
percent
of
a
manufacturer's
2003
and
subsequent
MY
passenger
cars
and
lightest
light­
duty
trucks
(
the
"
LDT1"
category)
delivered
for
sale
in
California
be
ZEVs
 
vehicles
with
no
emissions.
This
requirement
applied
to
all
but
small­
volume
manufacturers.
The
1999
ZEV
amendments
added
new
options
for
meeting
the
10
percent
ZEV
requirement.
Up
to
60
percent
of
the
ZEV
obligations
of
a
large­
volume
manufacturer
 
and
100
percent
of
the
obligations
of
an
intermediate­
volume
manufacturer
 
could
be
met
with
allowances
from
partial
ZEV
allowance
vehicles,
called
"
PZEVs".
While
not
qualifying
as
ZEVs,
PZEVs
had
emissions
so
low
that
they
were
thought
to
be
on
the
order
of
the
power
plant
emissions
that
occur
from
charging
battery­
powered
electric
vehicles
(
EVs).
The
amendments
specified
the
criteria
for
receiving
a
basic
PZEV
allowance
of
0.2,
as
well
as
additional
allowances
for
zeroemission
vehicle
miles
traveled
(
VMT)
and
a
low
fuel­
cycle
emissions
allowance.

B.
The
2001
ZEV
Amendments
The
second
set
of
amendments
to
the
ZEV
regulation
covered
by
this
request
was
the
subject
of
a
January
25,
2001
public
hearing
and
will
be
referred
to
as
the
2001
ZEV
amendments.
These
amendments
maintained
a
core
ZEV
component,
but
significantly
reduced
the
cost
of
the
program
 
primarily
by
reducing
the
numbers
of
vehicles
required
in
the
near­
term
and
broadening
the
scope
of
vehicle
technologies
allowed.
After
supplemental
comment
periods,
the
amendments
were
originally
adopted
by
Executive
Order
on
December
7,
2001
and
submitted
to
OAL
the
same
day.
On
3
68
F.
R.
19811
(
April
22,
2003).
3
January
23,
2002,
the
amendments
were
disapproved
by
OAL
on
the
ground
that
some
of
the
public
commenters
who
were
legally
entitled
to
receive
notices
of
supplemental
comment
periods
did
not
receive
these
notices
due
to
staff
miscommunications.
ARB
subsequently
provided
an
additional
supplemental
comment
period
for
these
parties,
and
responded
to
the
comments
they
submitted.
The
Executive
Officer
then
readopted
the
amendments
on
April
12,
2002
by
issuing
Executive
Order
G­
02­
009,
and
they
were
resubmitted
to
OAL
for
review
on
the
same
day.
OAL
approved
the
amendments
on
May
24,
2002.

In
a
May
21,
2002
letter,
ARB
requested
that
the
Administrator
confirm
that
the
2001
ZEV
amendments
were
within
the
scope
of
previous
waivers
of
preemption.
That
request
was
withdrawn
in
a
July
1,
2002
letter,
which
noted
that
on
June
11,
2002,
a
U.
S.
District
Court
in
Fresno
in
Central
Valley
Chrysler­
Plymouth
et
al.
v.
Michael
Kenny
(
E.
D.
Cal.
No.
F­
02­
05017)
had
issued
a
preliminary
injunction
directed
at
the
ARB's
Executive
Officer.
The
injunction
enjoined
the
Executive
Officer
from
enforcing
the
2001
ZEV
Amendments
with
respect
to
the
sale
of
new
motor
vehicles
in
the
2003
and
2004
model
years,
pending
final
resolution
of
the
litigation.
The
suit
 
brought
by
General
Motors,
DaimlerChrysler
and
several
Fresno­
area
car
dealers
 
was
based
on
the
claim
that
integral
elements
of
the
2001
ZEV
amendments
were
preempted
by
the
federal
statute
directing
the
National
Highway
Traffic
Safety
Administration
to
adopt
corporate
average
fuel
economy
(
CAFE)
standards.
4
As
a
result
of
the
preliminary
injunction,
ARB
ceased
enforcement
of
the
ZEV
regulation
with
respect
to
MYs
2003
and
2004
and
initiated
steps
towards
a
hearing
to
consider
amendments
to
the
California
ZEV
requirements
addressing
various
issues,
including
those
raised
in
the
federal
lawsuit
and
in
two
state
court
lawsuits
filed
by
some
of
the
same
plaintiffs.

C.
The
2003
ZEV
Amendments
The
third
set
of
amendments
to
the
ZEV
regulation
covered
by
this
request
was
the
subject
of
March
25­
26
and
April
24,
2003
public
hearings
and
will
be
referred
to
as
the
2003
ZEV
amendments.
These
amendments
delayed
the
start
of
the
percentage
ZEV
requirements
from
MY
2003
to
MY
2005,
established
an
alternative
compliance
path
for
large­
volume
auto
manufacturers
wishing
to
focus
on
the
development
of
fuel
cell
ZEVs,
eliminated
all
references
to
fuel
economy
and
vehicle
efficiency
that
had
been
added
by
the
2001
ZEV
amendments,
and
adjusted
the
credit
structure
for
the
various
vehicle
types.
After
two
supplemental
comment
periods,
the
amendments
were
adopted
by
Executive
Order
on
December
19,
2003,
and
were
approved
by
OAL
February
25,
2004.
The
2003
ZEV
Amendments
became
effective
for
purposes
of
state
law
March
26,
2004.
The
parties
to
the
litigation
challenging
the
2001
ZEV
amendments
agreed
to
dismissal
of
the
lawsuits
and
the
ARB's
appeal
of
the
federal
preliminary
injunction
once
the
2003
ZEV
amendments
became
operative.
To
date,
no
lawsuits
have
been
brought
challenging
implementation
of
the
current
ZEV
regulation
resulting
from
the
2003
amendments.

4
49
U.
S.
C.
§
§
32901­
32919;
see
preemption
provision
in
§
32919(
a).
4
D.
The
EV
Charger
Amendments
and
Limited
ZEV
Element
of
Second
Follow­
Up
LEV
II
Amendments
This
request
also
covers
a
regulatory
action
establishing
a
requirement
that
2006
and
later
MY
battery
EVs
other
than
NEVs
be
equipped
with
a
conductive
charger
inlet
port
and
an
on­
board
charger
with
a
minimum
output
of
3.3
kilovolt
amps.
The
amendments
in
this
rulemaking
were
approved
by
Board
at
a
June
28,
2001
hearing
and
formally
adopted
by
Executive
Order
02­
016
on
May
10,
2002.
They
were
approved
by
OAL
June
24,
2002
and
became
effective
under
state
law
July
24,
2002.
They
will
be
referred
to
as
the
"
EV
charger
amendments."
These
amendments
additionally
required
aggregation
of
the
vehicle
sales
volumes
of
two
manufacturers
in
determining
whether
either
manufacturer
is
a
small
or
intermediate­
volume
manufacturer
subject
to
no
or
less
stringent
ZEV
requirements,
whenever
one
has
a
majority
interest
in
the
other.

Finally,
this
request
includes
a
very
minor
element
of
ARB's
second
set
of
follow­
up
amendments
to
the
LEV
II
regulations,
which
were
generally
covered
by
ARB's
April
12,
2004
within­
the­
scope
request.
The
April
12,
2004
request
letter
noted
that
the
rulemaking
included
one
amendment
to
the
ZEV
regulation,
which
would
be
addressed
in
the
request
now
being
presented.
That
amendment
revised
the
standards
for
alternative
fuel
vehicles
qualifying
as
partial
ZEV
allowance
vehicles,
and
has
been
incorporated
in
the
amendments
for
which
we
seek
a
within­
the­
scope
confirmation.

III.
THE
ZEV
REQUIREMENTS
PRIOR
TO
THE
1998­
2003
ZEV
RULEMAKINGS
Prior
to
the
rulemaking
actions
covered
by
this
request,
ARB's
regulations
required
that,
starting
with
MY
2003,
10
percent
of
the
passenger
cars
and
LDT1s5
marketed
by
all
but
small
volume
manufacturers
be
ZEVs
 
vehicles
producing
zero
emissions
of
any
criteria
or
precursor
pollutant
under
any
and
all
possible
operational
modes
and
conditions.
These
requirements
had
originally
been
adopted
in
the
1990­
1991
California
Low­
Emission
Vehicle
(
LEV
I)
rulemaking,
and
as
discussed
later
were
covered
by
a
waiver
of
preemption
published
January
13,
1993.
The
original
requirements
also
included
percentage
ZEV
requirements
of
2
percent
for
the
1998­
2000
model
years
and
5
percent
for
the
2001­
2002
model
years,
applicable
to
the
seven
largest
automobile
manufacturers;
these
1998­
2002
requirements
were
eliminated
by
ARB
in
1996.
The
ZEV
program
has
also
included
a
marketable
credits
system.

In
order
to
incentivize
the
early
introduction
of
advanced­
battery
ZEVs,
pre­
2003
MY
ZEVs
could
receive
a
credit
multiplier
of
up
to
three
based
on
extended
range;
the
range
trigger
level
for
the
full
multiplier
of
three
increased
from
70
miles
for
MYs
1996­
1997
to
130
miles
for
MYs
1998­
1999
and
175
miles
for
MYs
2000­
2002.
As
an
alternative,
pre­
2003
ZEVs
could
qualify
for
a
credit
multiplier
of
up
to
three
based
on
the
specific
energy
of
the
battery.

5
Under
ARB
regulations,
an
LDT1
is
a
light­
duty
truck
having
a
loaded
vehicle
weight
of
0­
3750
pounds.
5
The
emission
standards
for
passenger
car
and
light­
duty
truck
ZEVs
were
contained
in
the
table
in
title
13,
California
Code
of
Regulations
(
CCR),
section
1960.1(
g)(
1)
and
footnote
2.1
of
that
table;
the
emission
standards
for
medium­
duty
ZEVs
were
contained
in
the
table
in
section
1960.1(
h)(
1)
and
footnote
2.1
of
that
table.
The
percentage
ZEV
requirements
and
the
remainder
of
the
ZEV
provisions
were
contained
in
footnote
9
to
the
table
in
section
1960.1(
g)(
2).

IV.
THE
ZEV
REQUIREMENTS
AFTER
THE
2003
AMENDMENTS
California's
current
requirements
for
ZEVs
are
contained
almost
entirely
in
title
13,
CCR,
section
1962,
entitled
"
Zero­
Emission
Vehicle
Standards
for
2005
and
Subsequent
Model
Passenger
Cars,
Light­
Duty
Trucks,
and
Medium­
Duty
Vehicles,"
and
in
parts
of
an
ARB
document
incorporated
by
reference
in
section
1962(
h).
That
document,
which
pertains
both
to
ZEVs
and
hybrid­
electric
vehicles
(
HEVs),
is
titled
"
California
Exhaust
Emission
Standards
and
Test
Procedures
for
2005
and
Subsequent
Model
Zero­
Emission
Vehicles,
and
2001
and
Subsequent
Model
Hybrid
Electric
Vehicles,
in
the
Passenger
Car,
Light­
Duty
Truck
and
Medium­
Duty
Vehicle
Class"
(
the
"
ZEV
Standards
and
Test
Procedures").
6
Section
1962.1
contains
the
EV
charging
requirements,
and
a
few
pertinent
definitions
of
categories
of
manufacturers
are
contained
in
title
13,
CCR,
section
1900(
b)(
18)­(
21).

Attachment
1
shows
in
underline­
strikeout
format
the
current
California
ZEV
regulations
compared
to
the
regulations
as
they
existed
before
the
1999
ZEV
rulemaking.

A.
Overview
of
the
ZEV
Requirements
The
1999­
2003
ZEV
amendments
were
driven
by
three
primary
considerations.
First,
ARB
remains
committed
to
the
pursuit
of
widespread
ZEV
commercialization,
for
the
simple
reason
that
ZEVs
will
ultimately
be
necessary
to
meet
health­
based
air
quality
goals.
Second,
the
near­
term
commercial
viability
of
ZEV
technologies
in
the
volumes
required
under
the
pre­
1999
ZEV
requirements
became
extremely
problematical.
Battery
EVs,
while
technically
mature
and
well­
suited
from
a
performance
standpoint
for
many
applications,
face
severe
cost
challenges.
Based
on
an
assessment
by
the
Battery
Technology
Advisory
Panel
assembled
by
ARB
in
2000,
ARB
staff
estimated
the
near­
term
incremental
cost
for
battery
EVs
in
volume
production
at
roughly
$
8000
for
a
City
EV
and
$
17,000
for
a
full­
function
EV;
these
assessments
had
not
appreciably
changed
by
the
time
of
the
2003
ZEV
rulemaking.
And
while
fuel
cell
technologies
show
great
promise,
commercialization
is
several
years
away.
Third,
technologies
for
vehicles
with
near­
zero
emissions
have
advanced
more
rapidly
than
expected.
Integrating
these
vehicles
into
the
ZEV
program
enables
ARB
both
to
take
advantage
of
their
emission
benefits
and
to
help
build
the
manufacturing
and
supplier
base
for
componentry
that
will
eventually
be
used
in
pure
ZEVs.

6
The
LEV
II
waiver
covered
those
portions
of
the
ZEV
Standards
and
Test
Procedures
that
pertained
to
HEVs;
this
request
covers
all
of
the
ZEV
Standards
and
Test
Procedures
that
pertain
to
ZEVs
 
Sections
A,
B,
C,
D,
and
E.
1.­
E.
4.
6
These
considerations
led
to
amendments
that
maintain
and
ultimately
expand
the
ZEV
goals
of
the
original
regulation,
but
overlay
an
admittedly
complex
system
of
multipliers,
credits,
and
incentives
that
greatly
reduce
the
overall
number
of
ZEVs
needed
to
comply
in
the
near­
and
mid­
term.
Large
volume
manufacturers
are
also
provided
the
option,
originally
outlined
in
the
2001
amendments,
to
comply
with
a
mix
of
credits
from
three
categories
of
vehicles
 
initially
2
percent
from
"
gold"
pure
ZEVs,
2
percent
from
"
silver"
advanced
technology
PZEVs
(
AT
PZEVs),
and
6
percent
from
"
bronze"
PZEVs.
Under
the
alternative
compliance
path
added
by
the
2003
amendments,
a
manufacturer
may
meet
part
of
its
ZEV
requirement
by
producing
its
sales­
weighted
market
share
of
approximately
250
fuel
cell
ZEVs
by
the
2008
MY;
the
remainder
of
the
manufacturer's
ZEV
obligations
can
initially
be
achieved
with
a
credit
mix
6
percent
from
PZEVs
and
the
balance
from
AT
PZEVs.

There
is
no
doubt
that
the
AT
PZEV
and
PZEV
provisions
have
become
integral
parts
of
the
ZEV
program
and
play
an
essential
role
in
the
overall
technological
feasibility
of
the
regulation.
But
from
a
waiver
perspective,
it
is
important
to
recognize
that
the
1999­
2003
amendments
enable
a
manufacturer
to
comply
through
MY
2007
with
no
PZEVs
or
AT
PZEVs,
and
a
number
of
gold
ZEVs
that
is
an
order
of
magnitude
less
than
was
required
by
the
pre­
1999
ZEV
regulation.
The
potential
numbers
of
ZEVs
continue
to
be
lower
for
many
years
thereafter.

B.
The
Basic
ZEV
Percentage
Sales
Requirements
The
percentage
ZEV
requirements
for
MYs
2003
and
2004
have
been
deleted,
although
credits
and
allowances
from
pre­
2005
MY
vehicles
may
be
banked
and
used
starting
in
MY
2005.
There
continues
to
be
a
nominal
10
percent
ZEV
requirement
from
MYs
2005
through
2008
for
large­
and
intermediate­
volume
manufacturers.
The
percentage
ZEV
requirement
is
ramped
up
to
11
percent
for
MYs
2009­
2011,
12
percent
for
MYs
2012­
2014,
14
percent
for
MYs
2015­
2017,
and
16
percent
for
the
2018
and
subsequent
MYs.
This
ramp
up
will
further
encourage
the
commercialization
of
emerging
zero
emission
and
near
zero
emission
technologies
now
under
development.
As
has
always
been
the
case,
the
ZEV
requirements
do
not
apply
to
small­
volume
manufacturers.

ARB
is
also
phasing­
in
a
new
requirement
that
"
LDT2"
7
vehicles
be
included
in
the
base
for
determining
a
manufacturer's
full
percentage
ZEV
obligation,
along
with
the
passenger
cars
and
LDT1
vehicles
that
have
always
been
included.
The
LDT2
category
includes
most
sport
utility
vehicles
(
SUVs),
minivans,
and
larger
pickup
trucks.
The
addition
of
LDT2
vehicles
is
phased
in
beginning
in
MY
2007,
when
17
percent
of
a
manufacturer's
California
LDT2
production
would
be
counted.
The
percentage
increases
by
17
percent
increments
through
MY
2011,
with
a
100
percent
requirement
starting
in
MY
2012.
Full
inclusion
of
LDT2
vehicles
increases
the
base
across
all
manufacturers
by
an
average
of
about
70
percent,
although
the
impacts
differ
among
individual
manufacturers.
This
change
reflects
the
increasing
use
of
vehicles
in
the
7
An
LDT2
is
a
"
LEV
II"
light­
duty
truck
with
a
loaded
vehicle
weight
of
3751
pounds
to
a
gross
vehicle
weight
of
8500
pounds,
or
a
"
LEV
I"
light­
duty
truck
with
a
loaded
vehicle
weight
of
3751­
5750
pounds.
7
LDT2
category
for
personal
transportation
rather
than
work
purposes,
and
avoids
the
possibility
of
manufacturers
selling
more
large
vehicles
to
avoid
the
ZEV
obligations
triggered
by
smaller
vehicles.

C.
Permitted
Mixes
of
Credits
and
Allowances
From
Gold,
Silver,
and
Bronze
Vehicles
Instead
of
the
pre­
1999
requirement
that
a
manufacturer's
full
percentage
ZEV
requirement
be
met
with
gold
ZEVs,
intermediate­
volume
manufacturers
are
now
permitted
to
meet
all
of
their
percentage
requirements
with
silver
or
bronze
vehicles,
and
large­
volume
manufacturers
may
meet
most
of
their
requirement
with
such
vehicles.
With
respect
to
a
large­
volume
manufacturer's
mix
of
vehicles,
the
manufacturer
has
the
option
of
choosing
either
the
primary
compliance
path
 
largely
reflecting
the
requirements
adopted
in
the
2001
rulemaking
 
or
an
alternative
compliance
path
added
in
the
2003
rulemaking.

(
1)
The
Primary
Compliance
Path
Under
the
primary
compliance
path,
in
MYs
2005­
2008
a
large­
volume
manufacturer
may
meet
up
to
60
percent
of
its
percentage
ZEV
requirement
with
credits
from
bronze
PZEVs,
and
up
to
another
20
percent
with
credits
from
silver
AT
PZEVs.
Thus
at
least
20
percent
of
the
requirement
must
be
met
with
gold
ZEVs
or
credits
from
gold
ZEVs.
As
the
ZEV
requirement
increases
over
time
from
10
percent
in
MY
2005
to
16
percent
in
MYs
2018
and
subsequent,
the
maximum
portion
of
a
large
volume
manufacturer's
percentage
ZEV
requirement
that
may
be
satisfied
by
bronze
PZEVs
is
limited
to
6
percent
of
the
manufacturer's
applicable
California
PC,
LDT1,
and
LDT2
production
volume.
Silver
AT
PZEVs
or
credits
generated
by
such
vehicles
may
be
used
to
meet
up
to
one­
half
of
the
manufacturer's
remaining
ZEV
requirement.

(
2)
The
Alternative
Compliance
Path
Under
the
alternative
path,
a
manufacturer
is
allowed
to
meet
an
increasing
"
floor"
requirement
for
production
of
Type
III
ZEVs8
 
expected
to
be
fuel
cell
vehicles
 
during
four
multi­
year
stages
running
from
MYs
2005
through
2017.
Once
the
floor
requirement
for
a
stage
is
met,
the
manufacturer
may
meet
the
rest
of
its
gold
ZEV
requirement
with
credits
from
AT
PZEVs.
If
all
large­
volume
manufacturers
were
to
participate
in
the
alternative
path,
it
is
expected
that
the
following
numbers
of
Type
III
ZEVs
would
be
produced
in
the
various
stages:
250
in
MYs
2005­
2008,
2,500
in
MYs
2009­
2011,
25,000
in
MYs
2012­
2014,
and
50,000
in
MYs
2015­
2017.
The
requirements
resulting
in
the
specified
volumes
are
based
on
the
principle
that
early
production
for
new
types
of
vehicles
proceeds
in
stages
in
which
volumes
typically
grow
from
tens
to
hundreds
and
then
to
thousands.
The
alternative
compliance
path
allows
a
manufacturer
wishing
to
do
so
to
devote
its
entire
"
gold"
vehicle
focus
to
fuel
cell
vehicles,
while
helping
to
assure
that
a
minimum
number
of
new
ZEVs
continue
to
be
introduced.

8
The
five
types
of
ZEVs
identified
in
the
regulation
are
described
in
Section
IV.
F.
below.
8
A
large
volume
manufacturer
is
allowed
to
meet
up
to
one­
half
of
the
minimum
floor
requirements
with
credits
from
Type
I
City
EVs
and
Type
II
full­
function
EVs.
In
the
MY
2005­
2008
and
2009­
2011
periods,
20
Type
I
ZEVs,
or
10
Type
II
ZEVs,
would
equal
one
Type
III
ZEV.
For
2012
and
later,
that
10
Type
I
ZEVs,
or
5
Type
II
ZEVs
equal
one
Type
III
ZEV.
The
ratios
for
the
2009
and
subsequent
model
years
are
based
on
limited
cost
data,
and
those
ratios
may
need
to
be
amended
in
the
future.
In
addition,
credits
earned
by
extended
in­
use
Type
I
and
Type
II
ZEVs
in
MYs
2003­
2011
may
be
used
at
a
credit
ratio
of
33
lease­
years
to
1
fuel
cell
vehicle
towards
satisfaction
of
the
one­
half
of
the
minimum
floor
requirement
that
could
be
met
by
Type
I
and
Type
II
ZEVs.

A
large
volume
manufacturer
using
the
alternative
compliance
path
is
permitted
to
carry
over
excess
credits
from
Type
III
ZEVs
in
a
given
period
and
use
the
credits
towards
meeting
the
minimum
floor
level
in
a
subsequent
period.
The
value
of
the
carry
over
credits
will
be
based
on
the
model
year
in
which
the
credits
are
used.
Any
manufacturer
who
elects
to
be
subject
to
the
alternative
path
for
any
model
year
and
then
fails
to
meet
the
minimum
floor
level
requirements
for
Type
III
ZEVs
by
the
end
of
the
three
or
four
year
period
in
which
the
model
year
falls
will
be
treated
as
subject
to
the
primary
requirements
for
that
three
or
four
year
period.

Under
both
the
primary
and
alternative
compliance
paths,
credits
earned
by
"
excess"
PZEVs
in
MY
2003
and
2004
are
available
for
use
in
the
AT
PZEV
category
in
MYs
2005
and
2006.
Credits
from
MY
2003
and
2004
PZEVs
will
be
"
excess"
to
the
extent
they
exceed
the
number
of
credits
from
PZEVs
that
would
be
required
to
take
full
advantage
of
the
PZEV
option
in
each
year,
had
the
percentage
ZEV
requirements
been
applicable.

Resolution
03­
04,
by
which
the
Board
approved
the
2003
ZEV
amendments
at
the
conclusion
of
the
April
24,
2003
hearing,
expressed
the
Board's
intention
to
appoint
an
Independent
Expert
Review
Panel
to
report
to
the
Board
on
the
status
of
ZEV
technology
development.
The
report
is
to
be
presented
in
time
for
the
Board
to
consider
it
and
other
information
in
determining
the
appropriate
regulatory
approach
on
the
commercialization
of
pure
ZEVs
in
MYs
2009
and
subsequent.

D.
Generation
of
Credits
From
Bronze
PZEVs.

In
order
to
qualify
as
a
PZEV,
a
vehicle
must
meet
the
following
conditions:
(
1)
certification
to
the
150,000
mile
LEV
II
Super
Ultra
Low
Emission
Vehicle
(
SULEV)
exhaust
emission
standards;
(
2)
certification
to
the
"
zero"
evaporative
emission
standards
in
section
1976(
b)(
1)(
E)
(
both
of
these
standards
were
covered
by
the
LEV
II
waiver);
(
3)
certification
to
the
applicable
on­
board
diagnostic
requirements
for
150,000
miles;
and
(
4)
extension
of
the
performance
and
defects
emissions
warranty
period
to
15
years
or
150,000
miles,
whichever
occurs
first,
except
that
the
time
period
is
10
years
for
a
zero­
emission
energy
storage
device
used
for
traction
power,
such
as
a
battery.
9
Each
bronze
PZEV
generates
a
PZEV
allowance
of
0.2,
meaning
that
the
allowance
from
five
PZEVs
would
equal
the
credit
from
one
ZEV.
For
MYs
2000­
2005,
there
are
early­
introduction
phase­
in
multipliers
 
4.0
for
MYs
2000­
2003,
2.0
for
MY
2004,
and
1.33
for
MY
2005.
Thus
a
MY
2003
bronze
PZEV
would
generate
a
PZEV
allowance
of
0.8
after
the
multiplier
is
applied.

E.
Generation
of
Credits
From
Silver
AT
PZEVs
An
AT
PZEV
is
any
PZEV
that
generates
a
PZEV
allowance
of
greater
than
0.2
not
counting
phase­
in
multipliers.
Along
with
the
benefit
of
providing
a
higher
allowance,
allowances
from
silver
AT
PZEVs
can
be
used
to
satisfy
all
of
the
ZEV
obligations
of
a
manufacturer
using
the
alternative
compliance
path
 
other
than
the
Type
III
ZEV
minimum
floor
requirements.
For
a
manufacturer
using
the
primary
compliance
path,
AT
PZEVs
can
meet
one­
half
of
the
manufacturer's
obligations
that
could
otherwise
be
met
only
with
gold
ZEVs.
There
are
three
different
mechanisms
that
can
be
used
to
qualify
a
PZEV
as
an
AT
PZEV:
(
1)
the
zero­
emission
VMT
PZEV
allowance,
(
2)
the
fuel­
cycle
emissions
PZEV
allowance,
and
(
3)
the
advanced
componentry
allowance.

The
zero­
emission
VMT
allowance
is
available
to
specified
PZEVs
that
operate
part
of
the
time
in
zero­
emission
mode,
such
as
grid­
connected
HEVs
with
an
all­
electric
range
of
10
miles
or
more.
The
additional
allowance
for
these
vehicles
varies
from
about
0.4
to
2
depending
on
the
vehicle's
all­
electric
range.

The
fuel­
cycle
emissions
allowance
is
available
to
PZEVs
using
a
fuel
such
as
compressed
natural
gas
(
CNG)
with
very
low
fuel­
cycle
emissions.
The
additional
allowance
can
range
up
to
0.3,
depending
on
the
fuel­
cycle
emissions
of
the
particular
fuel.

As
discussed
below,
most
of
the
provisions
on
the
PZEV
allowance
for
advanced
ZEV
componentry
pertain
to
HEVs.
In
addition,
there
is
an
advanced
componentry
PZEV
allowance
of
0.2
for
a
PZEV
equipped
with
a
high
pressure
gaseous
fuel
storage
system
capable
of
refueling
at
3600
pounds
per
square
inch
or
more
and
operating
exclusively
on
this
gaseous
fuel.
A
PZEV
capable
of
operating
exclusively
on
hydrogen
stored
in
a
high
pressure
system
capable
of
refueling
at
3600
pounds
per
square
inch
or
more,
or
stored
in
nongaseous
form,
will
instead
qualify
for
an
advanced
componentry
PZEV
allowance
of
0.3.

At
least
in
the
near­
and
mid­
term,
ARB
expects
that
HEVs
such
as
the
Toyota
Prius,
the
Honda
Civic
hybrid,
and
the
Ford
Escape
hybrid
will
represent
most
of
the
AT
PZEVs
marketed
in
California.
The
California
ZEV
regulation
identifies
five
categories
of
HEVs
that
qualify
for
credits:

 
Type
A:
Low
voltage,
low
power
HEV
(<
60
volts,
minimum
4
kW
motor
power)
 
Type
B:
High
voltage,
low
power
HEV
(>
60
volts,
>
4
kW
­
<
10kW
motor
power)
 
Type
C:
Low
voltage,
medium
power,
advanced
energy
storage
HEV
(<
60
volts,
>
10
kW
motor
power)
10
 
Type
D:
High
voltage,
medium
power
HEV
(>
60
volts,
minimum
10
kW
motor
power
 
Type
E:
High
voltage,
high
power
HEV
(>
60
volts,
minimum
50
kW
motor
power)

Type
A
HEVs
do
not
receive
an
additional
advanced
componentry
credit,
but
the
base
0.2
PZEV
credit
earned
by
such
vehicles
will
be
available
for
use
in
the
AT
PZEV
category
through
MY
2008.
Type
B
HEVs
earn
an
additional
AT
PZEV
allowance
of
0.2
in
MYs
2008
and
earlier.
Type
C
HEVs
earn
an
additional
AT
PZEV
allowance
of
0.2
through
MY
2011.
Type
D
HEVs
qualify
for
an
advanced
ZEV
componentry
credit
of
0.4
for
MYs
2003
through
2011,
0.35
for
MYs
2012
through
2014,
and
0.25
for
MYs
2015
and
subsequent.
Type
E
HEVs
qualify
for
an
advanced
componentry
credit
of
0.5
for
MYs
2003
through
2011,
0.45
for
MYs
2012
through
2014,
and
0.35
for
MYs
2015
and
subsequent.
The
second
generation
MY
2004
Toyota
Prius
is
a
Type
E
HEV.

An
AT
PZEV
qualifying
for
both
the
zero
emission
VMT
credit
and
the
advanced
ZEV
componentry
credit
will
be
allowed
to
make
use
of
both
credits.
The
early
introduction
multiplier
and
the
zero
emission
range
multiplier
are
not
to
be
combined.
The
combined
credit
for
any
AT
PZEV
 
including
plug­
in
hybrids
that
earn
a
zero
emission
VMT
allowance
 
is
limited
to
no
more
than
that
earned
by
a
Type
III
ZEV
in
the
same
model
year.
In
addition,
there
is
a
cap
on
total
AT
PZEV
allowances
for
any
technology
type
of
3.0,
starting
in
MY
2012.

F.
Generation
of
Credits
From
Gold
ZEVs
(
1)
General
Credit
Structure
The
ZEV
regulation
as
amended
in
2003
allows
most
gold
ZEVs
(
other
than
NEVs)
to
generate
significantly
more
than
one
ZEV
credit
 
thus
significantly
reducing
the
total
number
of
ZEVs
needed
to
meet
the
overall
ZEV
requirements.
The
regulation
identifies
five
ZEV
"
types"
that
provide
the
basis
for
awarding
ZEV
credits
in
MYs
2003
and
subsequent:
NEVs,
Type
0
(
utility
low­
range
ZEVs),
Type
I
(
mid­
range
ZEVs
like
City
EVs),
Type
II
(
longer­
range
ZEVs
like
full­
function
battery
EVs)
and
Type
III
(
long
range,
fast­
refueling
ZEVs
like
fuel
cell
vehicles).
A
2003
and
subsequent
MY
ZEV,
other
than
a
NEV,
will
earn
1
ZEV
credit
when
it
is
produced
and
delivered
for
sale
in
California.
That
ZEV
will
earn
additional
credits
based
on
the
earliest
model
year
in
which
it
is
placed
in
service
(
not
earlier
than
the
ZEV's
model
year).
Table
1
shows
the
total
number
of
credits
the
ZEV
will
earn,
including
the
credit
not
contingent
on
placement
in
service,
if
it
is
placed
in
service
in
the
specified
model
year
or
by
June
30
after
the
end
of
the
model
year.
11
Table
1.
ZEV
Credits
for
MY
2003
and
Subsequent
ZEVs
Tier
Model
Year
in
Which
ZEV
is
Placed
in
Service
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012+

NEV
1.25
0.625
0.625
0.15
0.15
0.15
0.15
0.15
0.15
0.15
Type
0
(
Utility)
1.5
1.5
1.5
1.5
1.5
1.5
1
1
1
1
Type
1
(
City)
8
8
8
7
7
5
2
2
2
2
Type
II
12
12
12
10
10
7
3
3
3
3
Type
III
40
40
40
40
40
40
4
4
4
3
Each
2001
and
2002
model­
year
ZEV
that
was
placed
in
service
in
California
by
September
30,
2003
qualified
for
a
ZEV
phase­
in
multiplier
of
4.0.
A
2001
or
2002
model­
year
ZEV
that
is
placed
in
service
in
California
after
September
30,
2003
earns
credits
in
accordance
with
the
above
table.
Along
with
the
phase­
in
multiplier,
each
MY
2001
and
2002
ZEV
with
a
range
exceeding
50
miles
qualifies
for
an
extended
range
multiplier.
As
range
increases
from
50
miles
to
275
miles,
the
credit
increases
from
1
to
10.
Because
vehicles
with
a
refueling
time
of
less
than
10
minutes
earn
the
maximum
credit
regardless
of
range,
a
MY
2001­
2002
hydrogen
fuel
cell
vehicle
earns
10
credits,
not
including
any
phase­
in
multiplier.

In
order
to
incentivize
the
early
introduction
of
advanced­
battery
ZEVs,
pre­
2003
MY
ZEVs
could
receive
a
credit
multiplier
of
up
three
based
on
extended
range;
the
range
trigger
level
for
the
full
multiplier
of
three
increased
from
70
miles
for
MYs
1996­
1997
to
130
miles
for
MYs
1998­
1999
and
175
miles
for
MYs
2000­
2002.
As
an
alternative,
pre­
2003
ZEVs
could
qualify
for
a
credit
multiplier
of
up
to
three
based
on
the
specific
energy
of
the
battery.

MY
1996­
1998
ZEVs
continued
under
the
same
credit
structure
as
had
previously
applied.
MY
1999­
2000
ZEVs
with
an
all­
electric
range
of
100
miles
or
more
could
qualify
for
multipliers
of
6
to
10,
depending
on
the
vehicle's
specific
range;
MY
1999
ZEVs
could
optionally
receive
the
credits
applicable
prior
to
the
1999
ZEV
Amendments.

In
addition,
the
manufacturer
of
a
MY1997­
2003
ZEV,
other
than
a
NEV,
may
generate
ZEV
credits
by
leasing
the
ZEV
for
a
period
beyond
three
years.
The
credit
is
0.2
times
each
additional
year
covered
by
the
re­
lease
for
additional
years
of
service
starting
April
24,
2003
or
later,
and
0.1
times
each
additional
year
starting
before
that
time.
12
(
2)
Restricting
the
Future
Use
of
"
Banked"
Credits
Earned
by
NEVs
To
avoid
the
possibility
that
manufacturers
could
place
large
numbers
of
NEVs
in
the
early
years
and
thereby
amass
enough
credits
from
NEVs
alone
to
avoid
producing
ZEV
program
vehicles
for
a
number
of
years,
the
amendments
cap
the
use
of
such
credits
in
future
years.
Credits
from
MY
2001
through
2005
NEVs
may
only
be
used
to
satisfy
75
percent
of
a
manufacturer's
gold
ZEV
obligation
in
MY
2006
and
50
percent
in
MY
2007
and
beyond.
In
addition,
credits
from
MY
2001
through
2005
NEVs
may
only
be
used
to
satisfy
75
percent
of
a
manufacturer's
silver
AT
ZEV
obligation
in
MY
2009
and
50
percent
in
MY
2010
and
beyond.

G.
Calculating
Compliance
With
the
ZEV
Requirements
The
numerical
value
of
ZEV
credits
and
debits
is
expressed
in
grams
per
mile
of
nonmethane
organic
gases
(
g/
mi
NMOG)
and
is
linked
to
the
fleet
average
NMOG
requirement
under
the
LEV
program
for
the
model
year
in
question.
The
annual
fleet
average
NMOG
requirement
assures
that
the
mix
of
vehicles
marketed
by
each
manufacturer
becomes
incrementally
cleaner
each
model
year.
For
instance,
the
fleet
average
NMOG
requirement
for
a
manufacturer's
fleet
of
MY
2005
passenger
cars
and
LDT1s
is
0.049
g/
mi,
and
the
comparable
MY
2004
requirement
is
0.046
g/
mi.
A
manufacturer
that
produces
1000
extra
ZEVs
in
MY
2005
would
earn
49
g/
mi
ZEV
credits,
while
1000
extra
ZEVs
in
MY
2004
would
earn
46
g/
mi
ZEV
credits.
This
approach
equates
the
value
of
a
ZEV
with
the
displaced
emissions
of
an
average
non­
ZEV
in
the
same
model
year.
It
also
provides
an
incentive
for
manufacturers
to
produce
extra
ZEVs
(
or
AT
PZEVs
or
PZEVs)
in
the
earlier
model
years.

A
manufacturer
that
produces
and
delivers
for
sale
in
California
fewer
ZEVs
than
required
in
a
given
year
must
make
up
the
deficit
by
the
end
of
the
next
model
year,
except
that
credits
generated
from
PZEVs
may
be
used
to
offset
deficits
for
two
model
years.

Up
to
one­
tenth
of
a
manufacturer's
ZEV
obligation
in
any
given
model
year
through
2011
may
be
satisfied
with
additional
credits
generated
by
transportation
systems
using
ZEVs,
AT
PZEVs,
and
PZEVs.
The
system
must
at
a
minimum
demonstrate
(
1)
shared
use
of
the
vehicles,
and
(
2)
the
application
of
"
intelligent"
new
technologies
such
as
reservation
management,
card
systems,
depot
management,
location
management,
charge
billing
and
real­
time
wireless
information
systems.
Linkage
to
transit
can
generate
additional
credits.

H.
Section
177
State
"
Travel"
Provisions
New
York,
Massachusetts
and
Vermont
currently
require
compliance
with
the
California
ZEV
requirements
pursuant
to
CAA
section
177.
The
amendments
provide
that
Type
III
ZEVs
placed
in
any
state
that
has
adopted
California's
ZEV
program
be
allowed
to
count
towards
California's
ZEV
requirement,
including
the
requirements
for
a
minimum
floor
for
production
of
Type
III
ZEVs
under
the
alternative
compliance
path
through
MY
13
2011.
Similarly,
under
identical
programs
adopted
by
section
177
states,
Type
III
ZEVs
placed
in
California
are
required
to
count
towards
the
ZEV
requirement
in
those
other
states.
The
effect
of
this
provision
is
that
during
the
MY
2005­
2008
and
MY
2009­
2011
periods
in
which
the
target
numbers
of
alternative
path
Type
III
ZEVs
are
250
and
2500
respectively,
those
numbers
would
essentially
apply
on
a
combined
basis
in
California
and
all
section
177
states
administering
a
California
ZEV
program.

I.
Dismissal
of
Lawsuits
On
August
12,
2003,
the
ARB,
DaimlerChrysler
Corporation,
General
Motors
(
GM),
Isuzu
Motors
Limited,
and
several
motor
vehicle
dealers
jointly
announced
an
agreement
bringing
an
end
to
the
three
lawsuits
challenging
the
ZEV
regulation
as
amended
in
2001.
The
August
12
agreement
was
among
the
attorneys
for
all
of
the
parties
to
the
lawsuits,
since
additional
time
was
needed
to
obtain
final
agreement
and
signatures
of
the
numerous
principals.
The
last
of
the
parties
signed
on
December
19,
2003,
at
which
time
the
agreement
of
the
parties
took
effect.
Following
the
approval
of
the
2003
ZEV
amendments
by
OAL,
the
three
lawsuits
were
dismissed
by
stipulation.
No
lawsuits
have
been
filed
challenging
the
2003
ZEV
amendments.

J.
EV
Charger
Requirements
An
on­
board
conductive
charging
system
will
have
to
be
used
on
most
new
battery
EVs
and
some
new
HEVs,
starting
with
MY
2006.
NEVs,
and
other
battery
EVs
only
capable
of
Level
1
charging,
will
not
be
subject
to
the
requirements.
Similarly,
the
requirements
will
not
apply
to
HEVs
that
are
only
capable
of
Level
1
charging
with
the
most
common
grounded
receptacle,
or
are
not
grid­
connect.
Any
MY
2006
or
subsequent
vehicle
subject
to
the
requirements
will
have
to
be
equipped
with
a
conductive
charger
port
that
meets
all
of
the
specifications
in
the
Society
of
Automotive
Engineers
(
SAE)
Surface
Vehicle
Recommended
Practice
J1772,
REV
NOV
2001,
"
SAE
Electric
Vehicle
Conductive
Charge
Coupler."

K.
Comparison
of
Estimated
Impact
of
Pre­
1999
and
Current
ZEV
Requirements
on
Vehicle
Production
Volumes
Under
the
California
ZEV
requirements
that
existed
before
the
1999
ZEV
amendments
 
and
that
are
expressly
covered
by
U.
S.
EPA's
1993
ZEV
waiver
 
there
was
essentially
only
one
option
for
meeting
the
requirements
with
MY
2003
and
subsequent
vehicles.
Ten
percent
of
a
large­
or
intermediate­
volume
manufacturer's
passenger
cars
and
LDT1s
had
to
be
ZEVs.
The
only
multipliers
applied
to
MY
2002
and
earlier
ZEVs,
which
could
receive
a
multiplier
no
higher
than
three
for
extended
range
or
a
high
specific
energy.
Thus
it
is
quite
straightforward
to
identify
the
estimated
numbers
and
kinds
of
vehicles
that
manufacturers
would
have
to
produce
to
meet
the
pre­
1999
requirements.
The
only
variables
would
be
the
number
of
pre­
2003
ZEVs
manufacturers
might
have
produced,
and
the
size
of
the
sales
fleet.
14
In
comparison,
there
are
substantial
uncertainties
involved
with
any
projection
of
the
mix
of
vehicles
that
may
be
produced
under
the
ZEV
regulation
as
amended
in
2003.
The
regulation
provides
manufacturers
with
considerable
flexibility.
A
manufacturer
can
choose
its
mix
of
vehicles
certified
as
ZEVs,
AT
PZEVs
and
PZEVs,
and
different
types
of
ZEVs
generate
different
amounts
of
credits.
Moreover,
each
manufacturer
is
in
a
unique
situation.
Some
have
small
numbers
of
banked
credits
(
credits
earned
from
vehicle
placements
prior
to
the
effective
date
of
the
regulation)
while
others
have
credits
sufficient
for
a
number
of
years.
Some
manufacturers
have
both
NEV
and
non­
NEV
credits
(
which
are
treated
differently
under
the
regulation)
while
others
do
not.
In
addition,
manufacturers
differ
in
the
status
of
fuel
cell
development,
the
availability
of
PZEV
or
AT
PZEV
products
in
the
near
term,
and
the
technologies
to
be
emphasized
in
their
corporate
strategy.
All
of
these
factors
affect
each
manufacturer's
compliance
status
and
the
compliance
pathways
they
will
pursue.
Due
to
these
factors,
it
is
impossible
to
predict
with
accuracy
the
number
of
vehicles
in
each
category
that
will
actually
be
produced.

To
provide
a
context
for
the
evaluation
of
program
alternatives,
ARB
staff
developed
a
"
base
case"
estimate
of
the
number
of
vehicles
that
manufacturers
will
produce.
The
base
case
is
not
a
prediction
of
actual
production,
but
rather
a
scenario
based
on
a
consistent
set
of
assumptions
that
can
be
used
to
track
the
effect
of
various
program
changes.
It
is
particularly
noteworthy
that
the
base
case
estimate
methodology
does
not
take
into
account
the
effect
of
banked
credits.

The
base­
case
scenario
for
pure
ZEV
production
assumes
that
all
manufacturers
choose
the
alternative
path.
If
so,
the
industry­
wide
totals
under
the
adopted
2003
amendments
are
250
fuel
cell
vehicles
for
MYs
2001
through
2008,
2,500
fuel
cell
vehicles
for
MYs
2009
through
2011,
25,000
fuel
cell
vehicles
for
MYs
2012
through
2014,
and
50,000
fuel
cell
vehicles
for
MYs
2015
through
2017.
Note,
however,
that
some
manufacturers
have
accumulated
banked
credits
sufficient
to
ensure
compliance
on
the
base
path
through
2008.
Thus
it
is
unlikely
that
all
manufacturers
will
choose
the
alternative
path,
at
least
in
the
early
years.
This
would
result
in
fewer
fuel
cell
vehicles
than
the
numbers
listed
above,
to
the
extent
that
manufacturers
on
the
base
path
produce
fewer
fuel
cell
vehicles
than
would
have
been
required
on
the
alternative
path.
On
the
other
hand,
the
regulation
also
allows
manufacturers
on
the
alternative
path
to
substitute
larger
numbers
of
battery
EVs
for
a
portion
of
the
required
fuel
cell
production.
If
pursued,
this
option
would
increase
the
number
of
ZEVs
produced.

The
likely
number
of
AT
PZEVs
also
is
highly
uncertain.
There
are
several
different
types
of
AT
PZEVs
that
manufacturers
could
build,
each
of
which
earns
a
different
amount
of
ZEV
credit.
Manufacturers
also
may
choose
to
build
additional
AT
PZEVs
to
offset
a
portion
of
their
ZEV
obligations.
The
ARB
staff's
base­
case
projection
for
AT
PZEVs
assumes
the
following:

 
Manufacturers
build
AT
PZEVs
with
characteristics
similar
to
the
2003
Prius
or
Civic
hybrids.
 
Manufacturers
do
not
use
banked
credits
to
offset
any
AT
PZEV
production.
15
 
Manufacturers
all
choose
the
alternative
path,
and
take
full
advantage
of
the
option
to
use
AT
PZEVs
to
satisfy
the
remaining
pure
ZEV
obligation.
 
In
the
early
years,
not
all
manufacturers
are
able
to
take
full
advantage
of
the
AT
PZEV
option.

The
estimates
of
PZEV
production
are
more
certain
than
the
estimates
for
ZEVs
or
AT
PZEVs.
The
PZEV
portion
of
the
regulation
has
fewer
variables,
and
it
is
clear
already
that
manufacturers
will
have
the
technical
capability
to
take
full
advantage
of
the
PZEV
option.
In
fact,
PZEV
production
is
already
well
underway.
Numerous
models
have
been
certified,
and
staff
expects
that
MY
2003
sales
of
PZEVs
in
California
will
total
about
140,000
vehicles.
These
vehicles
are
already
making
a
significant
contribution
to
California's
air
quality.

Table
2
shows
the
combined
production
of
ZEV
program
vehicles
(
ZEVs,
AT
PZEVs,
and
PZEVs)
that
would
result
from
the
scenarios
described
above,
compared
to
the
required
production
of
ZEVs
under
the
ZEV
program
before
the
1999
amendments.

Table
2:
Comparison
of
Impacts
of
Pre­
1999
ZEV
Requirements
and
Current
ZEV
Requirements
Where
No
Banked
Credits
Are
Assumed
Number
of
New
Vehicles
By
Technology
Type
Pre­
1999
ZEV
Requirements
Current
ZEV
Requirements
Model
Year
ZEV
ZEV
AT
PZEV
PZEV
2003
102,500
None
None
None
2004
102,500
None
None
None
2005
102,500
63
42,852
274,601
2006
102,500
63
64,197
410,237
2007
102,500
63
72,728
460,835
2008
102,500
63
81,259
511,433
2009
102,500
833
111,890
575,954
2010
102,500
833
122,553
627,773
2011
102,500
833
133,217
679,592
2012
102,500
8,333
148,528
742,756
2013
102,500
8,333
148,528
742,756
2014
102,500
8,333
148,528
742,756
2015
102,500
16,667
205,009
777,640
2016
102,500
16,667
205,009
777,640
2017
102,500
16,667
205,009
777,640
2018
102,500
29,636
197,575
812,524
2019
102,500
29,636
197,575
812,524
2020
102,500
29,636
197,575
812,524
16
V.
Criteria
for
Determining
Whether
Amendments
Qualify
for
a
Waiver
of
Preemption
and
Are
Within
the
Scope
of
Previous
Waivers
of
Federal
Preemption
A.
The
CAA
Section
209(
b)
Waiver
Mechanism
Section
209(
a)
of
the
CAA
preempts
States
from
adopting
or
enforcing
any
emission
standard
for
new
motor
vehicles,
and
from
requiring
certification,
inspection,
or
any
other
approval
relating
to
the
control
of
emissions
from
any
new
motor
vehicle
as
a
condition
of
registration
or
titling
in
the
State.
However,
section
209(
b)
directs
the
Administrator
to
waive
federal
preemption
for
new
motor
vehicle
emission
standards
adopted
and
enforced
by
California9
if
the
State
determines
that
the
State
standards
will
be,
in
the
aggregate,
at
least
as
protective
of
public
health
and
welfare
as
applicable
federal
standards.
The
Administrator
is
to
deny
a
waiver
only
if
he
finds:
(
1)
that
the
protectiveness
determination
of
the
State
is
arbitrary
and
capricious,
(
2)
that
California
does
not
need
separate
State
standards
to
meet
compelling
and
extraordinary
conditions,
or
(
3)
that
the
State
standards
and
accompanying
enforcement
procedures
are
not
consistent
with
CAA
section
202(
a).
With
regard
to
the
consistency
criterion,
the
Administrator
has
stated
that
California's
standards
and
accompanying
test
procedures
are
inconsistent
with
section
202(
a)
if:
(
1)
there
is
inadequate
lead
time
to
permit
the
development
of
technology
to
meet
those
requirements,
giving
appropriate
consideration
to
the
cost
of
compliance
within
that
time
frame,
or
(
2)
the
federal
and
California
test
procedures
impose
inconsistent
certification
requirements
so
as
to
make
manufacturers
unable
to
meet
both
sets
of
requirements
with
the
same
vehicle.
10
For
more
than
twenty
years,
U.
S.
EPA
has
administered
a
mechanism
under
which,
in
appropriate
cases,
no
new
waiver
is
needed
for
amendments
to
California's
motor
vehicle
emission
control
regulations
for
new
motor
vehicles
because
the
amendments
are
within
the
scope
of
previously­
issued
waivers.
11
As
the
Assistant
Administrator
recently
stated
in
finding
that
repeal
of
the
ZEV
sales
requirements
for
MYs
1998­
2002
was
within
the
scope
of
previous
waivers:

[
A]
n
amendment
may
be
considered
to
be
within
the
scope
of
a
previously
granted
waiver
if
it
does
not
undermine
California's
determination
that
its
9
The
section
209(
b)
waiver
provisions
apply
to
any
state
which
has
adopted
standards
(
other
than
crankcase
emission
standards)
for
the
control
of
emissions
from
new
motor
vehicles
or
motor
vehicle
engines
prior
to
March
30,
1966.
(
CAA
§
209(
b)(
1).)
California
is
the
only
state
that
meets
this
condition.
(
S.
Rep.
No.
403,
90th
Cong.
1st
Sess.,
532
(
1967);
Motor
and
Equipment
Manufacturers
Ass'n
v.
EPA
[
MEMA
I],
627
F.
2d
1095,
1100
note
1
(
D.
C.
Cir.
1979).)

10
See,
e.
g.,
46
F.
R.
26371
(
May
12,
1981).
Even
where
there
is
incompatibility
between
the
California
and
federal
test
procedures,
EPA
has
granted
a
waiver
under
circumstances
where
EPA
accepts
a
demonstration
of
federal
compliance
based
on
California
test
results,
thus
obviating
the
need
for
two
separate
tests.
(
43
F.
R.
1829,
1830
(
January
12,
1978);
40
F.
R.
30311,
30314
(
July
18,
1975).)

11
See,
e.
g.,
46
F.
R.
36742
(
July
15,
1981);
51
F.
R.
12391
(
April
10,
1986)
17
standards,
in
the
aggregate,
are
as
protective
of
public
health
and
welfare
as
comparable
Federal
standards,
does
not
affect
the
consistency
of
California's
requirement
with
Section
202(
a)
of
the
Act,
and
raises
no
new
issues
affecting
EPA's
previous
waiver
determination.
12
For
the
reasons
detailed
below,
ARB
believes
that
the
1999­
2003
ZEV
Amendments
are
within
the
scope
of
previous
waivers,
at
least
through
MY
2006.
Since
LDT2s
become
subject
to
the
ZEV
requirements
under
the
five
year
phase­
in
starting
in
MY
2007,
ARB
is
choosing
to
request
a
new
waiver
for
the
1999­
2003
ZEV
Amendments
as
they
affect
MY
2007
and
subsequent
MYs.

B.
The
Scope
of
U.
S.
EPA's
Inquiry
In
A
Waiver
Proceeding
is
Limited
The
scope
of
the
Administrator's
inquiry
in
determining
whether
to
deny
a
waiver
or
within­
the­
scope
request
is
limited
by
the
express
terms
of
section
209(
b).
Thus,
once
California
determines
that
its
standards
are,
in
the
aggregate,
at
least
as
protective
of
public
health
and
welfare
as
applicable
federal
standards,
the
Administrator
must
grant
the
waiver
request
unless
one
of
the
three
specified
findings
can
be
made.
As
Administrator
Ruckelshaus
stated
in
a
1971
decision:

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
to
its
costs
or
is
otherwise
an
arguably
unwise
exercise
of
regulatory
power
is
not
legally
pertinent
to
my
decision
under
Section
209,
so
long
as
the
California
requirement
is
consistent
with
section
202(
a)
and
is
more
stringent
than
applicable
Federal
requirements
in
the
sense
that
it
may
result
in
some
further
reduction
in
air
pollution
in
California.
13
C.
Deference
Should
be
Given
to
California's
Policy
Judgments
In
granting
waivers
to
California's
motor
vehicle
program,
U.
S.
EPA
has
routinely
deferred
to
the
policy
judgments
of
California's
decision
makers.
The
agency
has
recognized
that
the
intent
of
Congress
in
creating
a
limited
review
of
California's
determinations
that
California
needs
its
own
separate
standards
was
to
ensure
that
the
federal
government
not
second­
guess
the
wisdom
of
state
policy.
14
Administrators
have
recognized
that
the
deference
is
wide­
ranging:

12
Decision
Document
accompanying
scope
of
waiver
determination
in
66
F.
R.
7751
(
January
25,
2001)
at
9.

13
36
F.
R.
17458
(
August
31,
1971),
quoted
on
pp.
8­
9
of
the
Decision
Document
accompanying
66
F.
R.
7751
(
January
25,
2001),
which
notes
that
the
"
more
stringent"
terminology
reflected
the
section
209(
b)
requirement
before
the
1977
amendments
to
the
CAA
substituted
the
reference
to
California
standards
that
are,
in
the
aggregate,
at
least
as
protective
as
comparable
Federal
standards.

14
40
F.
R.
23102,
23103
(
May
28,
1975).
18
The
structure
and
history
of
the
California
waiver
provision
clearly
indicate
both
a
Congressional
intent
and
a
U.
S.
EPA
practice
of
leaving
the
decision
on
ambiguous
and
controversial
matters
of
public
policy
to
California's
judgment.

*
*
*
*
*
*
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
a
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.
15
D.
The
Burden
of
Proof
Is
On
Those
Opposed
to
the
Waiver
Request
It
is
well
settled
that
the
burden
to
demonstrate
that
the
U.
S.
EPA
should
not
grant
a
waiver
is
on
the
opponents
of
the
waiver.
The
MEMA
I
Court
expressly
held
that
the
burden
of
proof
to
show
that
there
is
a
basis
for
making
one
of
the
three
findings
is
squarely
on
the
opponents
of
a
waiver:

It
is
not
necessary
for
the
Administrator
affirmatively
to
find
that
these
conditions
do
not
exist
before
granting
a
waiver.
The
statute
does
not
say
"
the
Administrator
shall
grant
a
waiver
only
if"
he
makes
the
negative
of
these
findings.
That
he
must
deny
a
waiver
if
certain
facts
exist
does
not
mean
that
he
must
independently
proceed
to
make
the
opposite
of
those
findings
before
he
grants
the
waiver
regardless
of
the
state
of
the
record
.
.
.
The
language
of
the
statute
and
its
legislative
history
indicate
that
California's
regulations,
and
California's
determination
that
they
comply
with
the
statute,
when
presented
to
the
Administrator
are
presumed
to
satisfy
the
waiver
requirements
and
that
the
burden
of
proving
otherwise
is
on
whoever
attacks
them.
California
must
present
its
regulations
and
findings
at
the
hearing,
and
thereafter
the
parties
opposing
the
waiver
15
40
F.
R.
23102,
23104
(
May
28,
1975;
emphasis
added).
See
also
Decision
Document
accompanying
waiver
determination
in
58
F.
R.
4166
(
January
13.
1993).
19
request
bear
the
burden
of
persuading
the
Administrator
that
the
waiver
request
should
be
denied.
16
VI.
The
1999­
2003
ZEV
Amendments
to
the
Requirements
For
2006
and
Earlier
MY
Vehicles
Are
Within
the
Scope
of
the
Original
Waiver
for
California's
LEV/
ZEV
Program,
and
the
LEV
II
Waiver
In
2003,
the
Assistant
Administrator
granted
a
waiver
of
preemption
for
the
California
LEV
II
exhaust
and
evaporative
emission
standards
for
passenger
cars,
light­
duty
trucks,
and
medium­
duty
vehicles,
without
taking
into
account
any
health
and
welfare
impacts
of
California's
ZEV
requirements.
17
Before
that,
the
Administrator
had
issued
a
waiver
covering
the
LEV
I
regulations
as
they
apply
to
passenger
cars
and
light­
duty
trucks,
18
and
to
medium­
duty
vehicles,
19
and
amendments
to
the
California
mediumduty
vehicle
standards
adopted
in
1990.20
Several
other
waivers
applicable
to
these
classes
of
vehicles
have
been
issued
as
well.
21
The
LEV
I
regulations
for
which
the
1993
waiver
was
granted
included
the
original
ten
percent
ZEV
requirement
that
applied
beginning
in
MY
2003,
as
well
as
the
requirements
for
more
limited
percentages
starting
in
MY
1998.
In
2001,
the
Assistant
Administrator
issued
confirmation
that
our
1996
deletion
of
the
ZEV
requirements
for
MYs
1998­
2002
was
within
the
scope
of
previous
waivers.
22
In
Resolution
03­
4,
the
Board
found
that
the
2003
ZEV
amendments
do
not
cause
the
California
motor
vehicle
emission
standards,
in
the
aggregate,
to
be
less
protective
of
public
health
and
welfare
than
applicable
federal
standards,
do
not
cause
the
California
requirements
to
be
inconsistent
with
section
202(
a)
of
the
CAA,
and
raise
no
new
issues
affecting
previous
waiver
determinations
of
the
Administrator.
These
findings
were
incorporated
in
Executive
Order
G­
03­
069,
with
which
the
Executive
Officer
formally
adopted
the
2003
ZEV
amendments
December
19,
2003.
In
addition,
in
Executive
16
MEMA
I,
supra,
627
F.
2d
at
1120­
1121.

17
68
F.
R.
19811
(
April
22,
2003).

18
58
F.
R.
4166
(
January
13,
1993).

19
63
F.
R.
18403
(
April
15,
1998).

20
59
F.
R.
48625
(
September
22,
1994).

21
57
F.
R.
38503
(
August
25,
1992)
(
standards
for
methanol
vehicles);
51
F.
R.
2430
(
January
16,
1986)
(
standards
for
vehicles
fueled
with
natural
gas
or
LPG);
55F.
R.
43029
(
October
25,
1990)
(
0.25
g/
mi
NMHC
standards
for
1993
and
subsequent
model
light­
duty
vehicles);
49
F.
R.
18887
(
May
5,
1984)
(
particulate
matter
standards
for
1985
and
subsequent
model­
year
diesel
light­
duty
vehicles);
47
F.
R.
1015
(
January
8,
1982);
46
F.
R.
36327
(
July
14,
1981);
46
F.
R.
23671
(
May
12,
1981);
45
F.
R.
77509
(
November
24,
1980);
44
F.
R.
38660
(
July
2,
1979);
43
F.
R.
29615
(
July
10,
1978);
43
F.
R.
25729
(
June
14,
1978);
43
F.
R.
15490
(
April
13,
1978);
43
F.
R.
1829
(
January
12,
1978);
42
F.
R.
31637
(
June
22,
1977);
42
F.
R.
1503
(
January
7,
1977);
and
40
F.
R.
23101
(
May
28,
1975).

22
66
F.
R.
7751
(
January
25,
2001).
20
Order
G­
04­
062
the
Executive
Officer
reaffirms
that,
compared
to
the
California
program
with
the
ZEV
requirements
applicable
prior
to
1999,
the
1999­
2003
amendments
to
the
ZEV
regulation
as
they
apply
to
MY
2006
and
earlier
vehicles
do
not
undermine
the
ARB's
protectiveness
determinations
in
the
original
ZEV
waiver
or
the
LEV
II
waiver,
do
not
cause
the
California
requirements
to
be
inconsistent
with
section
202(
a)
of
the
CAA,
and
raise
no
new
issues
affecting
previous
waiver
determinations
of
the
Administrator.
The
1999­
2003
ZEV
Amendments
accordingly
fall
within
the
scope
of
the
previous
waivers.
Each
of
the
scope­
of­
the­
waiver
criteria
is
discussed
below.

A.
Consideration
of
the
Amendments
Applicable
to
MY
2006
and
Earlier
Vehicles
as
Within
the
Scope
of
Previous
Waivers
There
is
no
doubt
that
circumstances
have
changed
substantially
since
adoption
of
the
original
ZEV
requirements
and
issuance
of
the
waiver
covering
those
requirements
in
1993.
Circumstances
have
also
changed
since
adoption
of
the
LEV
II
regulations
in
1998­
1999.
Those
changes
were
the
driving
force
behind
the
substantial
changes
ARB
has
made
to
the
ZEV
requirements
in
the
1999­
2003
ZEV
amendments.
Some
parties
asserted
in
the
2003
ZEV
rulemaking
that,
given
the
existing
circumstances,
the
2003
ZEV
amendments
were
not
technologically
feasible
within
the
available
lead
time.
We
expect
that
these
parties
may
argue
to
U.
S.
EPA
that
the
cumulative
amendments
reflected
in
the
2003
ZEV
amendments
are
not
within
the
scope
of
previous
waivers
 
either
because
the
current
ZEV
requirements
assertedly
are
not
feasible
given
currently
available
lead
time,
or
because
they
present
feasibility
issues
not
explored
in
the
adoption
of
the
original
ZEV
requirements
and
U.
S.
EPA's
waiver
decision.

We
believe
that
U.
S.
EPA's
precedents
on
the
within­
the­
scope
mechanism
make
clear
that
these
claims
would
not
justify
refusal
to
treat
the
ZEV
amendments
as
within
the
scope
of
previous
waivers,
at
least
through
MY
2006.
This
is
because
the
within­
thescope
inquiry
is
limited
to
an
evaluation
of
the
effect
of
ARB's
amendments
on
ARB's
original
protectiveness
determination
and
on
the
consistency
of
the
original
regulations
with
CAA
section
202(
a).
The
within­
the­
scope
inquiry
does
not
involve
a
fresh
evaluation
of
the
original
waiver
in
light
of
changed
circumstances
apart
from
the
amendments,
or
an
evaluation
whether
the
amended
regulation
independently
meets
the
waiver
criteria
(
in
which
case
there
would
be
no
difference
between
the
within­
thescope
inquiry
and
the
inquiry
in
a
new
waiver
proceeding).
If
it
is
more
feasible
for
manufacturers
to
comply
with
amended
requirements
than
it
is
for
them
to
comply
with
the
originally
waived
requirements,
the
amendments
meet
the
lead
time
element
of
the
consistency
test
for
a
within­
the­
scope
determination.
This
is
all
the
Administrator
looks
at
in
determining
whether
"
an
amendment
.
.
.
does
not
affect
the
consistency
of
California's
requirement
with
Section
202(
a)
of
the
Act."
23
This
does
not
mean
that
interested
parties
have
no
avenue
to
raise
claims
that
the
current
ZEV
requirements
no
longer
meet
the
statutory
waiver
criteria
due
to
changes
in
23
Decision
Document
accompanying
scope
of
waiver
determination
in
66
F.
R.
7751
(
January
25,
2001)
at
9.
21
circumstances
that
have
arisen
since
the
original
waiver
was
granted.
If
it
wishes
to,
a
party
may
ask
the
Administrator
to
reconsider
the
waiver
covering
the
ZEV
regulations.
While
U.
S.
EPA
would
be
under
no
obligation
to
conduct
a
hearing
to
consider
such
a
request,
the
agency
has
the
discretion
to
do
so
and
in
fact
has
conducted
hearings
to
consider
such
requests
in
the
past.
24
But
we
emphasize
that
the
issues
before
U.
S.
EPA
in
deciding
whether
to
reconsider
the
waiver
for
the
ZEV
regulations
 
and
any
final
determination
in
such
a
reconsideration
 
are
independent
of
the
issues
before
U.
S.
EPA
in
responding
to
the
within­
the­
scope
request
ARB
is
now
presenting.

B.
Public
Health
and
Welfare
 
Effect
of
the
Amendments
on
the
ARB's
Prior
Protectiveness
Findings
One
of
the
criteria
for
determining
that
an
amendment
to
a
California
motor
vehicle
emissions
standard
or
enforcement
procedure
is
within
the
scope
of
a
previously
granted
waiver
is
that
the
amendment
must
not
undermine
California's
previous
determination
that
the
waived
standards,
in
the
aggregate,
are
at
least
as
protective
of
public
health
and
welfare
as
the
comparable
federal
standards.
As
discussed
above,
in
1996
ARB
amended
the
ZEV
regulations
to
eliminate
the
ZEV
percentage
sales
requirements
for
MYs
1998­
2002.
In
2001,
the
Assistant
Administrator
determined
that
the
1996
amendment
was
within
the
scope
of
the
original
LEV
waiver.
25
In
reaching
this
conclusion,
the
Assistant
Administrator
observed
that
even
without
the
ZEV
provisions,
the
fleet
average
NMOG
requirement
in
the
waived
California
LEV
regulations
imposes
more
stringent
emission
standards
than
the
comparable
federal
standards.

When
U.
S.
EPA
granted
the
LEV
II
waiver
last
year,
it
did
so
without
considering
added
emission
benefits
that
may
result
from
California's
ZEV
requirements.
Just
as
was
the
case
with
elimination
of
the
ZEV
percentage
sales
requirements
for
MYs
1998­
2003,
none
of
the
changes
embodied
in
the
2003
ZEV
requirements
compared
to
the
pre­
1999
ZEV
requirements
affect
the
fleet
average
NMOG
requirements
in
the
California
LEV
I
or
LEV
II
programs.
Therefore
the
logic
of
the
Assistant
Administrator's
January
25,
2001
conclusion
that
deletion
of
the
MY
1998­
2002
ZEV
percentage
sales
requirements
did
not
undermine
our
previous
protectiveness
determinations
compels
an
identical
conclusion
with
respect
to
amendments
reflected
in
the
2003
ZEV
program.

24
U.
S.
EPA
conducted
a
hearing
to
reconsider
whether
ARB's
protectiveness
determination
regarding
motorcycle
emission
standards
was
still
not
arbitrary
or
capricious
in
light
of
the
subsequent
promulgation
of
federal
motorcycle
emission
standards
(
43
F.
R.
998
(
January
5,
1978).)
Similarly,
U.
S.
EPA
conducted
a
hearing
on
its
reconsideration
of
a
prior
waiver
of
federal
preemption
for
California
to
enforce
its
"
Specifications
for
Fill­
Pipes
and
Openings
of
Motor
Vehicle
Fuel
Tanks"
as
they
apply
to
motorcycles,
due
to
subsequent
actions
of
ARB
that
allegedly
called
into
question
findings
regarding
technological
feasibility
the
Administrator
had
made
in
the
prior
waiver
decision;
the
Acting
Administrator
concluded
that
he
could
not
make
the
findings
required
to
vacate
the
previous
waiver
and
accordingly
affirmed
the
prior
decision.
(
47
F.
R.
7306
(
February
18,
1982).)

25
66
F.
R.
7751
(
January
25,
2001).
22
Of
course
the
1999­
2003
ZEV
amendments
do
not
simply
suspend
implementation
of
the
ZEV
program,
except
for
the
2003­
2004
model
years.
In
the
2003
rulemaking
we
demonstrated
that
the
ZEV
program
as
amended
in
that
rulemaking
will
achieve
real
air
quality
benefits.

In
our
2001
and
2003
ZEV
rulemakings,
some
parties
asserted
that
the
regulations
put
in
place
will
ultimately
increase
rather
than
decrease
emissions.
They
claimed
this
would
happen
because
assumed
increases
in
the
prices
of
new
California
cars
and
light
trucks
resulting
from
the
ZEV
regulations
would
depress
sales
of
new
vehicles,
to
the
extent
that
emission
increases
from
the
greater
number
of
higher­
emitting
older
vehicles
on
the
road
due
to
reduced
"
fleet
turnover"
will
more
than
offset
the
emission
decreases
attributable
to
ZEVs
(
and
PZEVs
and
AT
PZEVs)
in
the
new
vehicle
fleet.
In
both
rulemakings
ARB
presented
substantial
analyses
disputing
these
assertions,
and
concluded
that
the
ZEV
program
will
not
increase
emissions.
26
But
from
a
waiver
perspective,
the
2003
version
of
the
ZEV
regulation
is
compared
not
to
"
no
ZEV
program,"
but
to
the
ZEV
program
before
the
1999
amendments
 
that
is,
a
strict
10
percent
ZEV
sales
requirement.
Under
the
analyses
presented
by
National
Economic
Research
Associates
and
Sierra
Research
(
the
primary
proponents
of
the
fleet
turnover
arguments,
hereafter
NERA/
Sierra),
the
asserted
"
fleet
turnover
effect"
from
a
10
percent
ZEV
sales
requirement
would
necessarily
be
greater
than
the
fleet
turnover
effect
from
the
ZEV
requirements
as
amended
in
2003.

C.
Consistency
With
Section
202(
a)

(
1)
Effect
of
the
Amendments
on
Lead
Time
Considerations
Because
the
recent
amendments
result
in
a
ZEV
program
that
is
implemented
in
various
stages
over
a
period
of
many
years,
it
is
useful
to
evaluate
lead
time
on
a
model
year
by
model
year
basis.

(
a)
MY
2003­
2004
Requirements
The
2003
ZEV
amendments
remove
all
percentage
sales
requirements
for
MYs
2003
and
2004,
thus
providing
additional
lead
time
before
compliance
with
ZEV
sales
requirements
is
mandated
starting
in
MY
2005.
In
the
2001
within­
the­
scope
determination
for
the
1996
ZEV
amendments,
the
Assistant
Administrator
concluded
that
the
elimination
of
the
MY
1998­
2002
ZEV
percentage
sales
requirement
did
not
adversely
affect
the
technological
feasibility
finding
in
the
original
ZEV
waiver.
Since
the
situation
with
respect
to
the
recent
elimination
of
the
MY
2003­
2004
ZEV
requirements
is
identical
to
the
situation
regarding
elimination
of
the
MY
1998­
2002
ZEV
requirements,
the
conclusion
on
consistency
should
be
identical
as
well.
In
26
See
ARB
Staff
Review
of
Report
Entitled
"
Impacts
of
Alternative
Sales
Mandates
on
California
Motor
Vehicle
Emissions:
A
Comprehensive
Study"
(
October
31,
2001);
Final
Statement
of
Reasons
for
2001
ZEV
Amendments,
pp.
80­
108;
);
Initial
Statement
of
Reasons
for
2003
ZEV
Amendments,
pp.
46­
49;
Final
Statement
of
Reasons
for
2003
ZEV
Amendments,
pp.
57­
62.
23
characterizing
elimination
of
the
ZEV
percentage
sales
requirements
for
MYs
1998­
2002,
the
Assistant
Administrator
stated,
"
CARB
did
not
change
the
fleet
average
NMOG
requirement
so
that
the
reduction
or
elimination
of
ZEVs
from
the
fleet
mix
does
not
change
the
finding
that
CARB's
emission
standards
are
at
least
as
stringent
as
EPA's."
27
The
1999­
2003
ZEV
amendments
similarly
did
not
change
the
LEV
I
or
LEV
II
fleet
average
NMOG
requirements.

(
b)
MY
2005
Requirements
For
MY
2005,
the
recent
amendments
maintain
a
nominal
ten
percent
ZEV
sales
requirement
but
provide
various
options
under
which
an
individual
ZEV
will
receive
substantially
more
credit
than
under
the
pre­
1999
ZEV
requirements,
and
very
clean
non­
ZEVs
may
satisfy
60
percent
or
more
of
a
manufacturer's
ZEV
requirement.
In
fact,
there
appears
to
be
only
one
respect
in
which
a
MY
2005
or
earlier
vehicle
will
earn
less
credit
under
the
current
ZEV
requirements
than
under
the
pre­
1999
requirements
 
MY
2004
and
2005
NEVs
are
subject
to
a
multiplier
of
0.625,
reducing
their
value
to
62.5
percent
of
their
value
under
the
pre­
1999
regulation.
However,
there
are
any
number
of
reasons
why
this
one
element
does
not
disqualify
the
MY
2005
requirements
from
being
within
the
scope
of
the
previous
waivers,
including
the
following:

 
The
original
ZEV
requirements
were
premised
on
manufacturers
complying
by
producing
and
marketing
full­
function
EVs.
Under
the
current
ZEV
regulation,
each
MY
2005
Type
II
full
function
EV
generates
12
ZEV
credits.
This
means
that
a
manufacturer
can
comply
with
the
MY
2005
requirements
by
producing
and
distributing
only
one­
twelfth
(
8.3
percent)
of
the
number
of
full­
function
EVs
needed
to
comply
with
the
pre­
1999
ZEV
requirements.

 
With
elimination
of
the
MY
2003­
2004
percentage
ZEV
sales
requirements,
manufacturers
have
been
able
to
accrue
ZEV
credits
and
allowances
from
MY
2003
and
2004
vehicles
 
often
with
substantial
multipliers
 
and
use
them
to
meet
the
ZEV
sales
requirements
for
MY
2005
vehicles.

 
There
is
no
indication
that
the
possible
production
of
NEVs
was
in
any
way
taken
into
consideration
in
the
consistency
determinations
of
the
original
ZEV
regulation.

 
The
additional
benefits
that
a
manufacturer
receives
under
the
ZEV
amendments
from
MY
2001­
2003
NEVs
 
a
phase­
in
multiplier
of
4.0
compared
to
no
multiplier
under
the
pre­
1999
ZEV
regulation
 
far
outweighs
the
partial
loss
of
credits
accruing
from
MY
2004­
2005
NEVs.
Clearly
there
were
no
technological
infeasibility
considerations
that
precluded
manufacturers
from
distributing
substantial
numbers
of
credit­
multiplying
MY
2001­
2002
NEVs
as
opposed
to
less
valuable
2004­
2005
NEVs.
This
is
best
illustrated
by
the
fact
that
manufacturers
have
reported
the
placement
of
roughly
21,000
MY
2001­
2002
NEVs
in
California.
With
the
applicable
27
Decision
Document
accompanying
scope
of
waiver
determination
in
66
F.
R.
7751
(
January
25,
2001)
at
17.
24
multiplier,
these
placements
would
generate
approximately
84,000
ZEV
credits
 
four
times
as
many
as
would
be
generated
under
the
pre­
1999
ZEV
regulation.

 
Under
the
ZEV
requirements
as
amended
in
2003,
not
only
may
bronze
PZEVs
satisfy
up
to
60
percent
of
a
large
volume
manufacturer's
percentage
ZEV
sales
requirement,
but
MY
2000­
2003
PZEVs
are
entitled
to
a
multiplier
of
4.0,
MY
2004
PZEVs
are
entitled
to
a
multiplier
of
2.0,
and
MY
2005
PZEVs
are
entitled
to
a
multiplier
of
1.33.
As
discussed
below,
manufacturers
have
reported
that
approximately
95,000
bronze
MY
2003
and
earlier
PZEVs
have
been
delivered
for
sale
in
California.
The
ZEV
credits
generated
by
these
vehicles
exceed
the
number
of
ZEV
credits
needed
to
comply
with
the
pre­
1999
ZEV
requirements
for
MY
2005.

(
c)
MY
2006
Requirements
Manufacturers
will
continue
to
qualify
for
a
variety
of
previously
unavailable
compliance
options
in
meeting
the
percentage
ZEV
sales
requirements
for
MY
2006,
with
very
few
restrictions
that
had
not
applied
under
the
ZEV
regulation
as
it
existed
before
the
1998­
1999
rulemaking.
The
only
added
restrictions
relate
to
NEVs
 
the
multiplier
of
0.625
for
MY
2004­
2005
NEVs
discussed
above,
a
multiplier
of
0.15
for
MY
2006
and
later
NEVs,
and
a
restriction
that
only
75
percent
of
a
manufacturer's
MY
2006
"
gold"
ZEV
requirement
can
be
met
with
credits
from
MY
2001
through
2005
NEVs.

The
elements
of
the
amended
ZEV
regulation
listed
above
that
make
it
easier
for
manufacturers
to
comply
now
than
under
the
pre­
1999
regulation
generally
apply
to
the
2006
model
year.
Although
there
is
a
slight
diminution
of
the
credits
for
full­
function
EVs
compared
to
MY
2005,
each
MY
2006­
2008
Type
II
full­
function
EV
placed
in
service
will
still
generate
10
ZEV
credits
 
a
full
order
of
magnitude
greater
than
under
the
pre­
1999
ZEV
regulation.

(
2)
Test
Procedure
Consistency
The
test
procedures
for
certifying
ZEVs
are
contained
in
the
ZEV
Standards
and
Test
Procedures
document
incorporated
by
reference
in
section
1962(
h),
title
13,
CCR.
The
federal
Tier
2
regulations
require
manufacturers
to
measure
emissions
from
ZEVs
in
accordance
with
the
California
test
procedures.
28
There
accordingly
is
no
inconsistency
between
the
federal
and
California
test
procedures
that
would
preclude
a
manufacturer
from
conducting
one
set
of
tests
to
demonstrate
compliance
with
the
federal
and
California
certification
emission
standards
for
ZEVs.

Adoption
of
the
exhaust
emission
SULEV
standards
and
the
zero­
fuel
evaporative
emissions
standards
 
elements
of
the
requirements
for
PZEVs
and
AT
PZEVs
 
was
covered
by
the
LEV
II
waiver
published
April
22,
2003.
The
Assistant
Administrator
in
that
waiver
proceeding
identified
no
test
procedure
inconsistencies
that
would
provide
a
basis
for
denying
a
waiver.

28
40
C.
F.
R
§
86.1811­
04(
n).
25
D.
New
Issues
Affecting
Previous
Waiver
Determination
ARB
is
not
aware
of
any
new
issues
affecting
the
previous
waiver
determinations
that
are
raised
by
the
1999­
2003
ZEV
amendments
as
they
affect
the
2006
and
earlier
MYs.
Some
manufacturers
argued
that
some
of
the
options
pertaining
to
AT
PZEVs
added
by
the
2001
ZEV
Amendments
are
federally
preempted
by
the
Energy
Policy
and
Conservation
Act
of
1975
(
EPCA)
because
they
allegedly
relate
to
fuel
economy
standards.
29
All
references
to
fuel
economy
were
removed
in
the
2003
ZEV
Amendments.
In
any
event,
EPCA
is
administered
not
by
U.
S.
EPA
but
by
NHTSA.
Arguments
raising
constitutional
claims
and
preemption
issues
not
involving
the
CAA
are
beyond
the
scope
of
the
Administrator's
review
and
a
waiver
or
scope­
of­
the­
waiver
proceeding
is
not
the
proper
forum
for
such
claims.
30
VII.
The
1999­
2003
ZEV
Amendments
to
the
Requirements
For
2007
and
Later
MY
Vehicles
Meet
The
Criteria
for
a
Waiver
of
Federal
Preemption
The
five­
year
phase­
in
of
the
percentage
ZEV
requirements
for
vehicles
in
the
LDT2
class
begins
in
MY
2007,
when
17
percent
of
the
LDT2s
produced
and
delivered
for
sale
in
California
by
a
manufacturer
are
subject
to
the
ZEV
requirements.
The
applicability
of
the
ZEV
requirements
to
LDT2s
increases
in
17
percent
increments
through
MY
2011,
and
LDT2
are
fully
phased
in
starting
with
MY
2012.
Because
LDT2s
were
not
subject
to
the
ZEV
requirements
when
U.
S.
EPA
took
its
prior
waiver
actions,
ARB
has
decided
to
request
a
new
waiver
of
preemption
for
the
ZEV
requirements
as
they
apply
to
2007
and
subsequent
MY
vehicles.

As
noted
above,
in
Resolution
03­
4
the
Board
found
that
the
2003
ZEV
amendments
do
not
cause
the
California
motor
vehicle
emission
standards,
in
the
aggregate,
to
be
less
protective
of
public
health
and
welfare
than
applicable
federal
standards,
and
do
not
cause
the
California
requirements
to
be
inconsistent
with
section
202(
a)
of
the
CAA.
The
Board
also
found
that
separate
California
emission
standards
and
test
procedures
are
necessary
to
meet
compelling
and
extraordinary
conditions.
These
findings
were
incorporated
in
Executive
Order
G­
03­
069
formally
adopting
the
2003
ZEV
amendments
in
Executive
Order
G­
03­
069.
In
addition,
the
Executive
Officer
has
reaffirmed
in
Executive
Order
G­
04­
062
that
the
California
emission
standards
for
2007
and
subsequent
model­
year
passenger
cars
and
light­
duty
trucks
with
the
1999­
2003
ZEV
amendments
are,
in
the
aggregate,
at
least
as
protective
of
public
health
and
welfare
as
applicable
federal
standards,
that
the
1999­
2003
ZEV
amendments
do
not
cause
the
California
requirements
to
be
inconsistent
with
section
202(
a)
of
the
CAA,
and
that
29
This
claim
was
the
focus
of
federal
district
court
lawsuit
filed
January
3,
2002
by
General
Motors,
DaimlerChrysler,
and
various
car
and
truck
dealers.
(
Central
Valley
Chrysler­
Plymouth,
Inc.
et
al.
v.
Michael
P.
Kenny
(
U.
S.
D.
C.,
E.
D.
CA,
Case
No.
CIV
F­
02005017
REC
SMS.)

30
43
F.
R.
32182,
32185
(
July
25,
1978);
42
F.
R.
2337,
2339
(
January
11,
1977);
44
F.
R.
61096,
61101
(
October
23,
1979).
26
separate
California
emission
standards
continue
to
be
necessary
to
meet
compelling
and
extraordinary
conditions.

A.
Public
Health
and
Welfare
 
ARB's
Protectiveness
Determination
Is
Not
Arbitrary
or
Capricious
California's
ZEV
program
requirements
as
last
amended
in
2003
clearly
reduce
emissions
when
compared
to
a
"
no
ZEV
program"
scenario.
The
ARB
staff's
March
2003
report
on
staff's
additional
proposed
modifications
provides
estimates
of
the
summertime
direct
emissions
impact
of
the
staff's
modified
proposal
in
the
South
Coast
Air
Basin
in
2010
and
2020.
In
2010,
compared
to
no
ZEV
program,
the
modified
requirements
reduce
ROG,
NOx
and
CO
by
0.38,
1.02,
and
3.75
tons
per
day.
In
2020,
the
reductions
for
ROG,
NOx
and
CO
are
estimated
at
3.28,
2.23,
19.88
tpd
respectively.
The
modifications
to
the
supplemental
proposal
that
are
reflected
in
the
final
2003
amendments
do
not
appreciably
change
the
March
2003
emissions
analysis.

As
noted
above,
in
the
2001
and
2003
ZEV
rulemakings,
NERA/
Sierra
submitted
extensive
analyses
claiming
to
demonstrate
that
the
ZEV
regulation
as
amended
in
these
rulemakings
actually
increases
emissions
due
to
the
"
fleet
turnover
effect."
ARB
staff
carefully
analyzed
these
claims
and
ultimately
concluded
that
there
is
minimal
risk
that
the
ZEV
regulation
as
amended
in
2003
will
increase
emissions
in
California
or
in
the
South
Coast
Air
Basin.
The
ARB
analyses
of
the
NERA/
Sierra
assertions
regarding
the
fleet
turnover
effect
are
contained
in
the
October
2001
"
ARB
Staff
Review
of
Report
Entitled
`
Impacts
of
Alternative
Sales
Mandates
on
California
Motor
Vehicle
Emissions:
A
Comprehensive
Study,'"
the
January
10,
2003
Staff
Report:
Initial
Statement
of
Reasons
for
the
proposed
2003
ZEV
amendments
(
pp.
46­
49),
and
the
January
2004
Final
Statement
of
Reasons
for
the
2003
ZEV
amendments
(
pp.
57­
62).
These
analyses
provide
substantial
support
for
the
ARB's
protectiveness
determinations.

B.
California
Continues
to
Need
Separate
Emission
Standards
for
New
Motor
Vehicles
In
Order
to
Meet
Compelling
and
Extraordinary
Conditions
Compelling
and
extraordinary
conditions
continue
to
warrant
establishment
of
separate
standards
for
California.
The
relevant
inquiry
under
this
criterion
is
whether
California
needs
its
own
motor
vehicle
pollution
control
program
to
meet
compelling
and
extraordinary
conditions,
not
whether
any
particular
standards
are
necessary
to
meet
such
conditions
(
see,
e.
g.,
49
F.
R.
18887,
18889­
18890
(
May
3,
1984)).
The
Administrator
has
determined
that
the
phrase
"
compelling
and
extraordinary
conditions"
refers
to:

".
.
.
certain
general
circumstances,
unique
to
California,
primarily
responsible
for
causing
its
air
pollution
problem
[
including]
.
.
.
geographical
and
climatic
factors
[
as
well
as]
.
.
.
the
presence
and
growth
of
California's
vehicle
population,
whose
emissions
were
thought
to
be
27
responsible
for
ninety
percent
of
the
air
pollution
problem
in
certain
parts
of
California."
31
Thus,
the
Administrator
has
stated:

"
It
is
evident
.
.
.
that
'
compelling
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."
32
California,
and
the
South
Coast
air
basin
in
particular,
continues
to
experience
the
worst
air
quality
in
the
nation.
The
unique
geographical
and
climatic
conditions,
and
the
tremendous
growth
in
the
vehicle
population
and
use
which
moved
Congress
to
authorize
California
to
establish
separate
vehicle
standards
in
1967,
are
still
in
existence
today.
Based
on
the
foregoing,
we
believe
that
California
has
demonstrated
the
continuing
existence
of
compelling
and
extraordinary
conditions
justifying
the
need
for
its
own
motor
vehicle
pollution
program.

C.
The
1999­
2003
ZEV
Amendments
to
the
Requirements
For
2007
and
Later
MY
Vehicles
Are
Consistent
With
CAA
Section
202(
a)

(
1)
Technological
Feasibility
in
Consideration
of
the
Cost
of
Compliance
Within
the
Lead
Time
Provided
(
a)
The
Technological
Feasibility
Test
As
discussed
below,
the
technological
feasibility
of
the
standards
for
PZEVs
and
AT
PZEVs
has
already
been
demonstrated
in
commercially
available
vehicles.
Manufacturers
have
more
lead
time
before
they
would
need
to
produce
fuel
cell
ZEVs
on
a
widespread
commercial
basis.
Where
substantial
lead
time
is
available,
standards
are
technologically
feasible
and
consistent
with
CAA
section
202(
a)
if
the
agency
identifies
or
predicts
the
technology
that
can
be
used
to
comply
with
the
standards,

.
.
.
answers
any
theoretical
objections
to
the
[
projected
control
technology],
identifies
the
major
steps
necessary
for
the
refinement
of
the
[
technology],
and
offers
plausible
reasons
for
believing
that
each
of
these
steps
can
be
completed
in
the
time
available.
33
31
49
F.
R.
at
18890.

32
Id.

33
Natural
Resources
Defense
Council
v.
U.
S.
EPA,
655
318,
331­
2
(
D.
C.
Cir.,
1981).
28
When
U.
S.
EPA's
adoption
of
a
motor
vehicle
emission
standard
providing
substantial
lead
time
is
reviewed
by
a
court,
greater
deference
is
accorded
because
[
T]
he
presence
of
substantial
lead
time
for
development
before
manufacturers
will
have
to
themselves
to
mass
production
of
a
chosen
prototype
gives
the
agency
greater
leeway
to
modify
its
standards
if
the
actual
future
course
of
technology
diverges
from
expectation.
34
The
only
relevance
of
costs
in
a
section
209(
b)
waiver
proceeding
is
in
the
context
of
technological
feasibility.
Consistency
is
required
with
CAA
section
202(
a),
which
provides
that
U.
S.
EPA's
vehicle
emission
standards:

shall
take
effect
after
such
period
as
the
Administrator
finds
necessary
to
permit
the
development
and
application
of
the
requisite
technology,
giving
appropriate
consideration
to
the
cost
of
compliance
within
such
period.

(
emphasis
added).
Thus
costs
are
only
relevant
as
they
affect
the
timing
of
emission
standards.
35
(
b)
PZEVs
The
first
California
PZEVs
were
certified
in
MY
2002
 
the
Honda
Civic
GX
fueled
with
compressed
natural
gas
and
the
gasoline­
fueled
Nissan
Sentra
CA.
In
MY
2003,
7
engine
families
comprising
11
different
models
produced
by
7
different
manufacturers
were
certified
as
bronze
PZEVs.
For
MY
2004,
there
were
12
bronze
PZEV
engine
families
comprising
33
models
produced
by
11
different
manufacturers:
36
 
BMW
325i,
(
Coupe,
Sedan
and
Sports
Wagon),
2.5L
 
DaimlerChrysler
Chrysler
Sebring
and
Dodge
Stratus,
2.4L
 
Ford
Focus
(
LX,
SE
Sedan,
SE
Wagon,
ZTS
Sedan,
ZTW
Wagon,
ZX3.
and
ZX5),
2.3L
 
Honda
Accord
(
EX
and
LX
Sedans),
2.4L
 
Hyundai
Elantra
GLS,
2.0L
 
Mitsubishi
Galant
DE
and
ES,
2.4L
 
Nissan
Altima
2.5,
2.5L
 
Nissan
Sentra
1.8
and
1.8S,
1.8L
34
Id.
at
329.
35
MEMA
I,
supra,
627
F.
2d
at
1105,
1114
n.
40
("[
T}
he
`
cost
of
compliance'
consideration
relates
to
the
timing
of
standards
and
procedures.")
U.
S.
EPA
has
recognized
that
the
only
relevance
of
costs
is
there
impact
on
timing,
e.
g.
"
Manufacturers
do
not
contend
that
the
cost
of
compliance
will
be
significantly
reduced
by
extending
leadtime
beyond
the
minimal
period
required
for
compliance"
(
36
F.
R.
17459
(
August
31,
1971).)
36
Air
Resources
Board,
Cleaner
Car
Buyer's
Guide,
2004
Zero
Emission
and
PZEV
Credit
Vehicles,
http://
www.
arb.
ca.
gov/
msprog/
ccvl/
2004sulevpzevlist.
htm;
DRIVECLEAN.
ca.
gov
list
of
MY
2004
PZEVs,
AT
PZEVs
and
ZEVs.
http://
www.
driveclean.
ca.
gov
29
 
Subaru
Legacy
2.5
GT
Sedan,
2.5
GT
Wagon,
L
Sedan/
35th
Anniv.
Ed.,
L
Wagon/
35th
Anniv.
Ed.;
Subaru
Legacy
Outback
Limited
Sedan,
Limited
Wagon,
and
Wagon,
2.5L
 
Toyota
Camry
LE,
SE,
and
XLE,
2.4L
 
Volkswagen
Jetta
Sedan
GL
or
GLS
2.0L
 
Volvo
S60
2.4
S60
Sedan
and
2.4
V70
Wagon
These
are
primarily
four
cylinder
engines,
with
one
in­
line
five
cylinder
and
one
in­
line
six
cylinder
model.
Displacements
range
from
1.8
to
2.5
liters.
By
the
end
of
2004,
ARB
expects
there
will
be
more
than
140,000
PZEVs
on
California's
roads.

In
evaluating
the
emission
control
systems
on
PZEVs
certified
to
date,
it
is
clear
that
some
manufacturers
have
been
able
to
simplify
and
reduce
cost
more
effectively
than
others.
ARB
staff
estimates
that
in
a
few
years,
manufacturers
will
converge
on
optimized
designs
as
experience
increases.

Honda's
PZEV
Accord
utilizes
one
under­
floor
catalyst,
two
oxygen
sensors
and
exhaust
gas
recirculation.
The
Nissan
Sentra
utilizes
a
warm­
up
and
under­
floor
catalyst,
two
oxygen
sensors,
but
no
exhaust
gas
recirculation.
The
Toyota
Camry
utilizes
a
warm­
up
and
under­
floor
catalyst,
three
oxygen
sensors
and
no
exhaust
gas
recirculation.
Other
PZEVs
utilize
various
combinations
of
multiple
catalysts,
several
oxygen
sensors,
exhaust
gas
recirculation,
and
an
air
pump.

Initially,
Honda
submitted
a
SULEV
application
for
the
2003
Accord
4­
cylinder.
Subsequently,
Honda
modified
its
application
to
a
PZEV.
Doing
so
required
Honda
to
increase
the
emission
warranty
to
150,000
miles
and
to
add
a
zero
evaporative
emission
control
system.
No
additional
hardware
changes
were
required
for
this
SULEV
to
qualify
as
a
PZEV
(
even
though
PZEVs
are
required
to
meet
the
tailpipe
standard
for
15
years
or
150,000
miles
instead
of
120,000
miles).
Honda's
SULEV
had
minimal
deterioration
and
a
large
enough
compliance
margin
that
no
hardware
or
catalyst
loading
changes
were
required
for
the
vehicle
to
qualify
as
a
PZEV.

Honda
also
certified
an
identical
2004
Accord
as
a
LEV
vehicle
for
sale
in
California.
In
examining
the
emission
control
hardware,
it
appears
that
the
basic
architecture
is
identical
for
both
the
LEV
and
the
PZEV.
The
catalyst
loading
is
increased
to
achieve
the
lower
emission
level.
Staff
obtained
the
difference
in
price
for
this
vehicle
and
the
identical
PZEV
model
for
2003.
For
a
4­
door
Accord
EX
with
automatic
transmission,
the
LEV
model
price
is
$
22,860
while
the
same
model
PZEV
is
$
23,010,
a
difference
of
$
150.
While
pricing
may
not
necessarily
reflect
the
actual
costs
of
a
model,
it
can
provide
some
basis
for
gauging
the
relative
cost
of
one
emission
control
system
versus
another
when
the
basic
hardware
is
the
same.
In
this
case,
staff
estimates
that
the
incremental
cost
covers
only
the
additional
precious
metal
content
of
the
catalyst
in
the
PZEV.
Therefore,
it
appears
that
Honda
is
not
charging
significantly
more
for
the
improved
warranty
(
and
staff
continues
to
believe
that
zero
evaporative
emission
control
costs
about
$
10
based
on
our
earlier
analysis).
30
Toyota
also
sells
the
same
model
Camry
as
both
a
ULEV
and
a
PZEV,
without
any
cost
differential.
This
may
be
because
the
dominant
sales
package
is
expected
to
be
the
PZEV
whereas
in
the
case
of
Honda,
the
LEV
and
PZEV
models
are
expected
to
be
produced
in
similar
volumes.

Given
the
further
progress
in
producing
simpler
PZEVs,
and
the
apparent
similarity
of
the
tailpipe
emission
control
systems
in
terms
of
architecture
and
catalyst
loadings
in
the
case
of
the
Honda
SULEV
and
PZEV
applications,
plus
no
apparent
attempt
to
recover
warranty
costs
in
the
case
of
the
PZEV
Accord,
ARB
staff
now
estimates
that
the
incremental
cost
of
PZEVs
relative
to
SULEVs
is
likely
to
be
less
than
$
100
as
vehicles
are
optimized
in
the
next
few
years.
The
additional
cost
would
cover
some
improvement
in
components
should
manufacturers
design
for
less
than
a
150,000
mile
life
currently
(
manufacturers
would
design
for
the
same
failure
rate,
but
at
a
higher
mileage
so
warranty
costs
themselves
shouldn't
increase
much),
and
an
additional
$
10
for
zero
evaporative
emission
control
system
upgrades.

Overall,
as
in
the
past,
the
automotive
industry
continues
to
significantly
exceed
expectations
in
terms
of
their
ability
to
simplify,
refine,
and
reduce
the
costs
of
their
emission
control
systems.
The
ARB
staff
estimates
reflect
the
expected
long­
term,
learned­
out
of
high­
volume
production.
Consistent
with
past
practices,
they
are
based
on
the
staff's
estimates
of
the
long­
term
costs
technologies
identified
by
manufacturers;
the
manufacturers
have
generally
projected
higher
costs.

(
c)
AT
PZEVs
The
first
AT
PZEVs
certified
in
California
were
the
MY
2003
Honda
Civic
Hybrid
and
Honda
Civic
GX
(
fueled
with
CNG).
Those
two
AT
PZEVs
were
also
offered
in
MY
2003,
as
was
the
AT
PZEV
Toyota
Prius
Hybrid.
ARB
recently
certified
the
MY
2005
Ford
Escape
Hybrid,
and
several
other
AT
PZEV
hybrids
are
expected
to
be
certified
in
the
coming
months
 
the
2005
Lexus
RX400H
Hybrid,
the
2005
Honda
Accord
Hybrid,
the
2005
Toyota
Highlander
Hybrid.
Nissan
plans
to
have
an
Altima
Hybrid
available
in
2005.

Toyota's
2004
U.
S.
sales
of
the
AT
PZEV
Prius
have
totaled
over
27,000,
and
it
plans
in
the
first
half
of
2005
to
boost
total
production
of
the
Prius
from
10,000
to
15,000
per
month.
With
this
increase
and
the
introduction
of
the
hybrid
Lexus
and
Highlander
SUVs,
Toyota
has
a
goal
to
produce
300,000
HEVs
worldwide
in
2005.37
Ford
has
begun
production
of
its
Escape
Hybrid,
and
plans
to
build
20,000
in
MY
2005.38
In
the
2003
ZEV
rulemaking,
ARB
staff
estimated
that
the
incremental
cost
for
an
AT
PZEV
is
$
3,300
in
Stage
I
(
MYs
2003­
2005),
$
1,500
in
Stage
II
(
MYs
2006­
2008),

37
"
Toyota
Sets
an
Ambitious
Goal
for
Next
Year's
Hybrid
Sales,"
August
5,
2004
Wall
Street
Journal,
p.
5;
"
Prius
Is
Put
on
Fast
Track,"
August
5,
2004
Los
Angeles
Times,
p.
C­
1.

38
"
Escape
hybrid
SUV
goes
into
production,"
August
6,
2005
San
Diego
Union­
Tribune,
p.
C­
4.
31
$
1,200
in
Stage
III
(
MYs
2009­
2011)
and
$
700
in
MYs
2012
and
beyond.
The
AT
PZEV
incremental
costs
for
MY
2012
and
beyond
are
based
on
the
long­
term
estimates
prepared
by
ARB
and
California
Energy
Commission
staff
as
part
of
the
Assembly
Bill
2076
report
on
reducing
petroleum
dependency.
39
Estimates
for
earlier
years
are
based
on
staff's
understanding
of
current
and
projected
incremental
costs
for
various
production
HEVs.

These
estimates
do
not
take
into
account
the
fact
that
AT
PZEVs
that
make
use
of
hybrid
electric
drive
will
have
vehicle
attributes
(
such
as
increased
performance
or
reduced
operating
cost,
or
in
some
cases
4­
wheel
drive)
that
are
of
value
to
customers.
Thus,
customers
might
be
expected
to
pay
a
premium
for
such
vehicles,
and
in
fact
the
hybrids
on
sale
in
the
market
today
sell
for
a
premium
compared
to
their
conventional
counterparts.

The
October
31,
2001
ARB
Staff
Review
of
Report
Entitled
"
Impacts
of
Alternative
ZEV
Sales
Mandates
on
California
Motor
Vehicle
Emissions:
A
Comprehensive
Study"
includes
a
discussion
of
the
valuation
of
HEV
operating
cost
savings.
That
report
noted
that
an
analysis
cited
by
the
automakers
estimated
a
lifetime
operating
cost
savings
of
$
350
for
each
10
percent
efficiency
improvement,
using
a
gasoline
price
of
$
1.30
per
gallon.
Using
a
staff
methodology,
the
ARB
Staff
Review
estimated
that
the
net
present
value
of
lifetime
operating
cost
savings
for
passenger
vehicles
with
a
50
percent
efficiency
improvement
was
approximately
$
1,600,
using
a
fuel
price
of
$
1.75
per
gallon.

The
hybrid
vehicles
on
the
market
today
achieve
efficiency
improvements
of
from
25
percent
to
50
percent
or
more.
Assuming
an
efficiency
improvement
of
30
percent
on
average
results
in
a
lifetime
operating
cost
savings
net
present
value
of
about
$
1,040
under
the
staff
methodology
or
$
1,050
under
the
methodology
cited
by
the
automakers.
These
values
appear
to
be
conservative
in
light
of
current
fuel
prices.
Use
of
these
values
would
result
in
a
"
negative"
incremental
cost
in
MY
2012
and
beyond
 
in
other
words
the
HEV
is
estimated
to
be
less
expensive
to
own
and
operate
over
its
lifecycle
than
a
conventional
vehicle.

(
d)
Type
III
ZEVs
 
Fuel
Cell
Vehicles
Vehicle
manufacturers
have
chosen
to
pursue
proton
exchange
membrane
(
PEM)
fuel
cells
for
vehicle
applications
due
to
their
low
temperature
operation
and
potential
for
low­
cost
manufacturing.
Over
the
last
decade,
industry
has
made
impressive
advances
in
hydrogen­
air
PEM
fuel
cell
stack
technology.
As
a
result,
several
manufacturers
are
now
placing
the
first
prototype
vehicles
into
research
and
demonstration
applications,
and
almost
all
large
automakers
are
committed
to
demonstration
fuel
cell
fleets
over
the
next
several
years.

While
technical
challenges
remain
to
integrate
all
essential
components
into
a
complete
system
that
provides
acceptable
weight,
volume
and
operating
characteristics,
the
most
39
http://
www.
energy.
ca.
gov/
reports/
2003­
08­
14_
600­
03­
005.
pdf
32
daunting
challenge
is
to
significantly
reduce
cost.
Widespread
introduction
of
the
technology
will
be
possible
only
when
the
technology
can
be
produced
and
sold
at
a
price
comparable
to
that
of
today's
conventional
vehicles.
Although
prototypes
are
being
placed
in
research
programs,
considerable
time
is
still
needed
for
engineering
development
and
for
achieving
the
necessary
cost
reductions.
Projections
regarding
the
pace
of
commercialization
of
fuel
cells,
which
were
expected
to
provide
a
second
ZEV
technology
late
in
this
decade,
have
become
less
certain,
although
automakers
remain
fully
committed
and
continue
to
invest
heavily
in
the
technology.
Based
on
the
most
recent
information
and
announcements
regarding
technology
development,
in
the
2003
ZEV
rulemaking
ARB
staff
estimated
that
a
true
commercial
introduction
will
not
occur
before
2011.
The
amended
regulation
reflects
this
expectation
and
provides
regulatory
incentives
based
on
two
stages
of
development
prior
to
a
third
stage
commencing
in
MY
2012.
If
all
manufacturers
were
to
use
the
alternative
compliance
path,
it
is
expected
that
250
fuel
cell
vehicles
would
be
introduced
in
MYs
2005­
2008,
2,500
in
MYs
2009­
2011,
and
25,000
in
MYs
2012­
2014.
Each
stage
is
designed
to
foster
the
placement
of
vehicles
in
order
to
push
toward
viable
commercialization
as
quickly
as
possible.

The
ARB's
commitment
to
appoint
an
Independent
Expert
Review
Panel
to
report
to
the
Board
on
the
status
of
ZEV
technology
development
is
an
important
element
of
the
phase­
in
provisions
for
fuel
cell
vehicles.
This
establishes
a
mechanism
assuring
that
the
requirements
for
MYs
2009­
2011
will
be
evaluated
in
time
that
mid­
course
corrections
can
be
made
if
necessary.

(
2)
Consistency
of
Certification
Procedures
For
the
reasons
provided
in
Section
V.
C.
2,
there
are
no
inconsistencies
between
the
federal
and
California
test
procedures
that
would
preclude
a
manufacturer
from
conducting
one
set
of
tests
to
demonstrate
compliance
with
the
federal
and
California
certification
emission
standards
for
ZEVs.
There
also
are
no
inconsistencies
in
the
test
procedures
for
PZEVs
and
AT
PZEVs
that
would
justify
denial
of
a
waiver.

VIII.
Conclusion
For
the
reasons
set
forth
in
this
document,
U.
S.
EPA
should
confirm
ARB's
determination
that
the
1999­
2003
ZEV
amendments
as
they
affect
the
2006
and
previous
model
years
are
within
the
scope
of
the
previous
waivers
of
preemption
for
the
LEV
I
and
LEV
II
regulations.
U.
S.
EPA
should
further
issue
a
waiver
of
preemption
applicable
to
the
1999­
2003
ZEV
amendments
as
they
affect
the
2007
and
subsequent
model
years.
