
[Federal Register Volume 81, Number 215 (Monday, November 7, 2016)]
[Notices]
[Pages 78143-78149]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-26861]


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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OAR-2013-0573; FRL-9954-96-OAR]


California State Motor Vehicle Pollution Control Standards; 
Malfunction and Diagnostic System Requirements and Enforcement for 2004 
and Subsequent Model Year Passenger Cars, Light Duty Trucks, and Medium 
Duty Vehicles and Engines; Notice of Decision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of Decision.

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SUMMARY: The Environmental Protection Agency (EPA) is granting the 
California Air Resources Board's (``CARB'') request for a waiver of 
Clean Air Act preemption to enforce amendments to regulations entitled 
``Malfunction and Diagnostic System Requirements--2004 and Subsequent 
Model-Year Passenger Cars, Light-Duty Trucks and Medium-Duty Vehicles 
and Engines'' (``OBD II Requirements'') and amendments to CARB's 
regulations entitled ``Enforcement of Malfunction and Diagnostic 
Systems Requirements for 2004 and Subsequent Model-Year Passenger Cars, 
Light-Duty Trucks, and Medium-Duty Vehicles and Engines'' (``OBD II 
Enforcement Regulation''). This decision is issued under the authority 
of the Clean Air Act (``CAA'' or ``the Act'').

DATES: Petitions for review must be filed by January 6, 2017.

ADDRESSES: EPA has established a docket for this action under Docket ID 
EPA-HQ-OAR-2013-0573. All documents relied upon in making this 
decision, including those submitted to EPA by CARB, are contained in 
the public docket. Publicly available docket materials are available 
either electronically through www.regulations.gov or in hard copy at 
the Air and Radiation Docket in the EPA Headquarters Library, EPA West 
Building, Room 3334, 1301 Constitution Avenue NW., Washington, DC. The 
Public Reading Room is open to the public on all federal government 
working days from 8:30 a.m. to 4:30 p.m.; generally, it is open Monday 
through Friday, excluding holidays. The telephone number for the 
Reading Room is (202) 566-1744. The Air and Radiation Docket and 
Information Center's Web site is http://www.epa.gov/oar/docket.html. 
The email address for the Air and Radiation Docket is: a-and-r-docket@epa.gov, the telephone number is (202) 566-1742, and the fax 
number is (202) 566-9744. An electronic version of the public docket is 
available through the federal government's electronic public docket and 
comment system at http://www.regulations.gov. After opening the 
www.regulations.gov Web site, enter EPA-HQ-OAR-2013-0573 in the ``Enter 
Keyword or ID'' fill-in box to view documents in the record. Although a 
part of the official docket, the public docket does not include 
Confidential Business Information (``CBI'') or other information whose 
disclosure is restricted by statute.
    EPA's Office of Transportation and Air Quality (``OTAQ'') maintains 
a Web page that contains general information on its review of 
California waiver and authorization requests. Included on that page are 
links to prior waiver Federal Register notices, some of which are cited 
in today's notice; the page can be accessed at http://www.epa.gov/otaq/cafr.htm.

FOR FURTHER INFORMATION CONTACT: David Dickinson, Office of 
Transportation and Air Quality, U.S. Environmental Protection Agency, 
1200 Pennsylvania Ave. (6405J) NW., Washington, DC 20460. Telephone: 
(202) 343-9256. Fax: (202) 343-2800. Email: dickinson.david@epa.gov.

SUPPLEMENTARY INFORMATION: 

I. Background

    CARB initially adopted the OBD II regulation in July 1990 and has 
adopted a number of amendments subsequently. The OBD II regulation 
directs motor vehicle manufacturers to incorporate

[[Page 78144]]

vehicle onboard diagnostic systems meeting particular requirements on 
all new passenger cars, light-duty trucks, and medium-duty vehicles and 
engines. Specifically, manufacturers are required to install OBD II 
systems that effectively monitor all emission-related components and 
systems on the motor vehicle for proper operation and for deterioration 
or malfunctions that cause emissions to exceed specific thresholds. The 
regulation also requires that OBD II systems provide specific 
diagnostic information in a standardized format through a standardized 
serial data link on-board the vehicles to ensure that service and 
repair technicians can properly and promptly repair identified 
malfunctions.
    EPA issued a waiver under section 209(b) of the CAA for the OBD II 
regulations, as last amended through 1995, on October 11, 1996.\1\ 
After the granting of the waiver, CARB adopted further amendments to 
the OBD II regulation in 1997 and 2003.\2\ CARB subsequently filed 
requests on December 24, 1997 and October 30, 2003, that the EPA 
respectively find the amendments to the OBD II Requirements adopted in 
1997 and 2003 be found to be within the scope of the previously granted 
OBD II waiver. The October 30, 2003, request further asked that OBD II 
Enforcement Regulation be found within the scope of the previously 
granted waivers for ``California's Enforcement of New and In-Use 
Vehicle Standards,'' title 13, Cal. Code Regs. Section 2100 et seq.\3\ 
EPA published a notice of opportunity for hearing and comment on the 
1997 and 2003 California requests on February 5, 2004.\4\
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    \1\ The decision was signed on October 2, 1996, and published at 
61 FR 53371 (October 11, 1996). Included in the waiver decision were 
the 1992, 1993, and 1995 amendments. CARB's initial OBD II 
regulations were codified at Title 13, California Code of 
Regulations (CCR), Section 1968.1
    \2\ The CARB Board (Board) initially approved the amendments at 
rulemakings held respectively on December 12, 1996 and April 25, 
2002. In 2003 (upon the final adoption of the amendments initially 
adopted in 2002), CARB codified the regulations at section 1968.2 
(this section carried over most of the monitoring requirements of 
section 1968.1, and apply to 2004 and subsequent model year 
vehicles). The 2003 amendments included several new provisions that 
expressly applied to vehicles after the date of the amendments. The 
2003 amendments also included OBD-II specific enforcement 
provisions, including requirements for post-assembly line evaluation 
of production vehicles (section 1968.2(j)) and in-use testing 
procedures at 1968.5
    \3\ See 61 FR 53371 (October 11, 1996), 43 FR 9344 (March 7, 
1978), and 43 FR 25729 (June 14, 1978) for grant of EPA's waivers 
for ``California's Enforcement of New and In-Use Vehicle Standards'' 
at title 13, CCR, section 2100 et seq. CARB's OBD II Requirements 
generally set monitoring requirements on various emission control 
components and the OBD II Enforcement Regulation generally sets 
forth the manufacturing testing requirements and expected follow up 
from manufacturers based on in-use testing results.
    \4\ See 69 FR 5542 (February 5, 2004). EPA has not issued a 
waiver determination regarding the 1997 and 2003 amendments.
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    On August 9, 2007, CARB adopted additional amendments to the OBD II 
Requirements and minor amendments to the OBD II Enforcement Regulation 
and to its emission warranty regulations. The 2007 OBD II Requirements 
amendments were made, inter alia, to address manufacturer compliance 
concerns and to align the monitoring requirements with those adopted by 
CARB in 2005 for heavy duty diesel engines.\5\ By letter dated January 
22, 2008, CARB requested that EPA find the 2007 amendments fall within 
the scope of the previous OBD II waiver.
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    \5\ Many of the amendments pertain to monitoring requirements 
for gasoline vehicles which CARB maintains were adopted to provide 
relief to manufacturers and to address their concerns about 
complying with the requirements. CARB also amended the OBD II 
requirements to address light- and medium-duty manufacturer concerns 
with complying with the malfunction thresholds for certain diesel 
emission controls and to better align the OBD II requirements with 
those that had been adopted for heavy-duty diesel engines in the HD 
OBD regulation. CARB also amended section 1968.5, including specific 
criteria in determining whether mandatory recall is appropriate for 
noncompliant OBD II systems that present valid testing of the 
affected vehicles in the California Smog Check program.
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    On April 5, 2010, CARB adopted additional amendments to the OBD II 
Requirements, but not to the OBD II Enforcement Regulation.\6\ The 2010 
OBD II Requirements amendments were made to primarily harmonize the 
medium-duty diesel vehicle requirements with revisions to monitoring 
requirements for heavy-duty diesel engines.\7\ By letter dated December 
15, 2010, CARB requested that EPA find that the 2010 OBD II 
Requirements amendments fall within the scope of the previous waiver or 
alternatively, that a new waiver be granted for the amendments.
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    \6\ The California Office of Administrative Law (OAL) approved 
the 2010 OBD II amendments on May 18, 2010 and the amendments 
primarily modify section 1968.2.
    \7\ The 2010 amendments include changes that relax the 
malfunction thresholds until the 2013 model year for three major 
emission controls: Particulate matter (PM) filters, oxides of 
nitrogen (NOX) catalysts, and NOX sensors.
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    On March 12, 2012, and on June 26, 2013, CARB adopted additional 
amendments to the OBD II Requirements and to the OBD II Enforcement 
Regulation. The 2012 OBD II Requirements amendments were primarily made 
to relax and/or clarify OBD II Requirements in response to manufacturer 
concerns. The 2013 OBD II Requirements amendments primarily affect 
medium-duty vehicles, to align the OBD II monitoring requirements with 
those adopted by CARB for heavy duty diesel engines. By letter dated 
February 12, 2014, CARB requested that EPA find that the 2012 and 2013 
OBD II amendments fall within the scope of the previous waiver or, 
alternatively, that a full waiver be granted for the amendments.
    The various amendments, noted above, to the OBD II Requirements are 
codified at title 13, California Code of Regulations, section 1968.2. 
The various amendments, noted above, to the OBD II Enforcement 
Regulations are codified at title 13, California Code of Regulations, 
section 1968.5. The scope of today's waiver specifically addresses the 
2007 through 2013 amendments, and sections 1968.2 and 1968.5.

II. Principles Governing this Review

A. Scope of Review

    Section 209(a) of the CAA provides:

    No State or any political subdivision thereof shall adopt or 
attempt to enforce any standard relating to the control of emissions 
from new motor vehicles or new motor vehicle engines subject to this 
part. No State shall require certification, inspection or any other 
approval relating to the control of emissions from any new motor 
vehicle or new motor vehicle engine as condition precedent to the 
initial retail sale, titling (if any), or registration of such motor 
vehicle, motor vehicle engine, or equipment.\8\
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    \8\ CAA Sec.  209(a). 42 U.S.C. 7543(a).

    Section 209(b)(1) of the Act requires the Administrator, after an 
opportunity for public hearing, to waive application of the 
prohibitions of section 209(a) for any state that has adopted standards 
(other than crankcase emission standards) for the control of emissions 
from new motor vehicles or new motor vehicle engines prior to March 30, 
1966, if the state determines that its state standards will be, in the 
aggregate, at least as protective of public health and welfare as 
applicable federal standards.\9\ However, no such waiver shall be 
granted if the Administrator finds that: (A) The protectiveness 
determination of the state is arbitrary and capricious; (B) the state 
does not need such state standards to meet compelling and extraordinary 
conditions; or (C) such state standards and accompanying enforcement 
procedures are not consistent with section 202(a) of the Act.\10\
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    \9\ CAA Sec.  209(b)(1). 42 U.S.C. 7543(b)(1). California is the 
only state that meets section 209(b)(1)'s requirement for obtaining 
a waiver. See S. Rep. No. 90-403 at 632 (1967).
    \10\ CAA Sec.  209(b)(1). 42 U.S.C. 7543(b)(1).

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[[Page 78145]]

    Key principles governing this review are that EPA should limit its 
inquiry to the specific findings identified in section 209(b)(1) of the 
Clean Air Act, and that EPA will give substantial deference to the 
policy judgments California has made in adopting its regulations. In 
previous waiver decisions, EPA has stated that Congress intended the 
Agency's review of California's decision-making to be narrow. EPA has 
rejected arguments that are not specified in the statute as grounds for 
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denying a waiver:

    The law makes it clear that the waiver requests cannot be denied 
unless the specific findings designated in the statute can properly 
be made. The issue of whether a proposed California requirement is 
likely to result in only marginal improvement in California air 
quality not commensurate with its costs or is otherwise an arguably 
unwise exercise of regulatory power is not legally pertinent to my 
decision under section 209, 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.\11\
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    \11\ ``Waiver of Application of Clean Air Act to California 
State Standards,'' 36 FR 17458 (Aug. 31, 1971). The more stringent 
standard expressed here, in 1971, was superseded by the 1977 
amendments to section 209, which established that California must 
determine that its standards are, in the aggregate, at least as 
protective of public health and welfare as applicable federal 
standards.
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    This principle of narrow EPA review has been upheld by the U.S. 
Court of Appeals for the District of Columbia Circuit.\12\ Thus, EPA's 
consideration of all the evidence submitted concerning a waiver 
decision is circumscribed by its relevance to those questions that may 
be considered under section 209(b)(1).
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    \12\ See, e.g., Motor and Equip. Mfrs Assoc. v. EPA, 627 F.2d 
1095 (D.C. Cir. 1979) (``MEMA I'').
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    If California amends regulations that were previously waived by 
EPA, California may ask EPA to determine that the amendments are within 
the scope of the earlier waiver. A within-the-scope determination for 
such amendments is permissible without a full authorization review if 
three conditions are met. First, the amended regulations must not 
undermine California's previous determination that its standards, in 
the aggregate, are as protective of public health and welfare as 
applicable federal standards. Second, the amended regulations must not 
affect consistency with section 202(a) of the Act, following the same 
criteria discussed above in the context of full waivers. Third, the 
amended regulations must not raise any ``new issues'' affecting EPA's 
prior waivers.\13\
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    \13\ See ``California State Motor Vehicle Pollution Control 
Standards; Amendments Within the Scope of Previous Waiver of Federal 
Preemption,'' 46 FR 36742 (July 15, 1981).
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B. Burden and Standard of Proof

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

[T]he language of the statute and its legislative history indicate 
that California's regulations, and California's determinations that 
they must comply with the statute, when presented to the 
Administrator are presumed to satisfy the waiver requirements and 
that the burden of proving otherwise is on whoever attacks them. 
California must present its regulations and findings at the hearing 
and thereafter the parties opposing the waiver request bear the 
burden of persuading the Administrator that the waiver request 
should be denied.\14\
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    \14\ MEMA I, note 19, at 1121.

    The Administrator's burden, on the other hand, is to make a 
reasonable evaluation of the information in the record in coming to the 
waiver decision. As the court in MEMA I stated: ``here, too, if the 
Administrator ignores evidence demonstrating that the waiver should not 
be granted, or if he seeks to overcome that evidence with unsupported 
assumptions of his own, he runs the risk of having his waiver decision 
set aside as `arbitrary and capricious.'' ' \15\ Therefore, the 
Administrator's burden is to act ``reasonably.'' \16\
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    \15\ Id. at 1126.
    \16\ Id. at 1126.
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    With regard to the standard of proof, the court in MEMA I explained 
that the Administrator's role in a section 209 proceeding is to:

[. . .]consider all evidence that passes the threshold test of 
materiality and . . . thereafter assess such material evidence 
against a standard of proof to determine whether the parties 
favoring a denial of the waiver have shown that the factual 
circumstances exist in which Congress intended a denial of the 
waiver.\17\
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    \17\ Id. at 1122.

    In that decision, the court considered the standards of proof under 
section 209 for the two findings related to granting a waiver for an 
``accompanying enforcement procedure.'' Those findings involve: (1) 
Whether the enforcement procedures impact California's prior 
protectiveness determination for the associated standards, and (2) 
whether the procedures are consistent with section 202(a). The 
principles set forth by the court, however, are similarly applicable to 
an EPA review of a request for a waiver of preemption for a standard. 
The court instructed that ``the standard of proof must take account of 
the nature of the risk of error involved in any given decision, and it 
therefore varies with the finding involved. We need not decide how this 
standard operates in every waiver decision.'' \18\
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    \18\ Id.
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    With regard to the protectiveness finding, the court upheld the 
Administrator's position that, to deny a waiver, there must be ``clear 
and compelling evidence'' to show that proposed enforcement procedures 
undermine the protectiveness of California's standards.\19\ The court 
noted that this standard of proof also accords with the congressional 
intent to provide California with the broadest possible discretion in 
setting regulations it finds protective of the public health and 
welfare.\20\
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    \19\ Id.
    \20\ Id.
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    With respect to the consistency finding, the court did not 
articulate a standard of proof applicable to all proceedings, but found 
that the opponents of the waiver were unable to meet their burden of 
proof even if the standard were a mere preponderance of the evidence. 
Although MEMA I did not explicitly consider the standards of proof 
under section 209 concerning a waiver request for ``standards,'' as 
compared to a waiver request for accompanying enforcement procedures, 
there is nothing in the opinion to suggest that the court's analysis 
would not apply with equal force to such determinations. EPA's past 
waiver decisions have consistently made clear that: ``[E]ven in the two 
areas concededly reserved for Federal judgment by this legislation--the 
existence of `compelling and extraordinary' conditions and whether the 
standards are technologically feasible--Congress intended that the 
standards of EPA review of the State decision to be a narrow one.'' 
\21\
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    \21\ See, e.g., ``California State Motor Vehicle Pollution 
Control Standards; Waiver of Federal Preemption,'' 40 FR 23102 (May 
28, 1975), at 23103.
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C. Deference to California

    In previous waiver decisions, EPA has recognized that the intent of 
Congress in creating a limited review based on specifically listed 
criteria was to ensure that the federal government did not second-guess 
state policy choices. As the Agency explained in one prior waiver 
decision:

It is worth noting . . . I would feel constrained to approve a 
California approach to the problem which I might also feel unable to 
adopt at the federal level in my own capacity as a regulator.. . . 
Since a balancing of risks and costs against the potential

[[Page 78146]]

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.\22\
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    \22\ 40 FR 23102, 23103-04 (May 28, 1975).

    Similarly, EPA has stated that the text, structure, and history of 
the California waiver provision clearly indicate both a congressional 
intent and appropriate EPA practice of leaving the decision on 
``ambiguous and controversial matters of public policy'' to 
California's judgment.\23\ This interpretation is supported by relevant 
discussion in the House Committee Report for the 1977 amendments to the 
CAA. Congress had the opportunity through the 1977 amendments to 
restrict the preexisting waiver provision, but elected instead to 
expand California's flexibility to adopt a complete program of motor 
vehicle emission controls. The report explains that the amendment is 
intended to ratify and strengthen the preexisting California waiver 
provision and to affirm the underlying intent of that provision, that 
is, to afford California the broadest possible discretion in selecting 
the best means to protect the health of its citizens and the public 
welfare.\24\
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    \23\ 40 FR 23102, 23104 (May 28, 1975); 58 FR 4166 (January 13, 
1993).
    \24\ MEMA I, 627 F.2d at 1110 (citing H.R. Rep. No. 294, 95th 
Cong., 1st Sess. 301-02 (1977)).
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D. EPA's Administrative Process in Consideration of California's 
Requests

    On November 20, 2014, EPA published a notice of opportunity for 
public hearing and comment on California's waiver requests (November 
20, 2014 Notice). EPA scheduled a public hearing concerning CARB's 
request for January 14, 2015, and asked for written comments to be 
submitted by February 16, 2015.\25\ EPA's notice of CARB's requests 
invited public comment on the following: Whether CARB's 2007, 2010, 
2012, and 2013 OBD II amendments, individually or collectively 
assessed, should be considered under the within-the-scope analysis or 
under the ``full waiver criteria.'' To the extent such amendment(s) 
should be considered under the within-the-scope criteria, EPA requested 
comment on whether the amendment(s) ``(1) undermine California's 
previous determination that its standards, in the aggregate, are at 
least protective of public health and welfare as comparable Federal 
standards, (2) affect the consistency of California's requirements with 
section 202(a) of the Act, and (3) raise any ``new issue'' affecting 
EPA's previous waiver or authorization determinations.''
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    \25\ 79 FR 69106 (November 20, 2014).
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    To the extent any party believed that the 2007, 2010, 2012, or 2013 
OBD II amendments do not merit consideration as within-the-scope of the 
previous waiver, EPA also requested comment on whether those amendments 
meet the criteria for a full waiver, specifically ``Whether (a) 
California's determination that its motor vehicle emission standards 
are, in the aggregate, at least as protective of public health and 
welfare as applicable federal standards is arbitrary and capricious, 
(b) California needs such standards to meet compelling and 
extraordinary conditions, and (c) California's standards and 
accompanying enforcement procedures are consistent with section 202(a) 
of the Clean Air Act.''
    As noted above, EPA has previously given notice and taken comments 
on CARB's requests for within-the-scope determinations related to 
CARB's 1997 and 2003 OBD II amendments. Thus EPA sought additional 
comment on any relevant effects the more recent OBD II amendments may 
have on the prior 1997 and 2003 OBD II amendments. EPA received no 
comment or evidence suggesting that the more recent OBD II amendments, 
which are the subject of this waiver, would have any effect on them.
    Additionally, EPA received no requests for a public hearing, so EPA 
did not hold a hearing. EPA received no written comments on the 
November 20, 2014 Notice. EPA bases its waiver determination on the 
public record which in this instance consists of the waiver requests 
dated January 11, 2008, December 15, 2010, and February 12, 2014, and 
supporting materials submitted by CARB.

III. Discussion

    As noted, EPA previously issued CARB a waiver for its OBD II 
Requirements for light- and medium-duty vehicles in 1996. Since that 
time EPA has offered an opportunity for public hearing and took public 
comment on CARB's 1997 and 2003 OBD II Requirements and Enforcement 
Regulation amendments, and EPA has received three additional waiver 
requests from CARB relating to its 2007, 2010, 2012, and 2013 OBD II 
amendments. EPA may evaluate CARB's waiver request under the within-
the-scope criteria if three criteria are met, including whether CARB's 
regulation or amendments raise any new issues. EPA has generally found 
``new issues'' to exist if CARB's regulatory amendments include new 
more stringent standards or require updated emission control technology 
or other requirements on manufacturers or fleet operators. EPA believes 
that new issues may also exist when EPA has adopted its own emission 
standards, for the regulated industry, in the intervening years between 
when EPA last considered CARB's regulatory program. In this instance, 
as a result of the significant evolution of CARB's OBD II regulatory 
program since 1996, the sheer number of amendments--some in part 
designed to address a variety of manufacturers concerns with the 
technological feasibility of complying with previous versions of the 
OBD II regulations, EPA has evaluated these requests under the full 
waiver criteria.\26\ Evaluating the amendments under the criteria for a 
full waiver has provided EPA and other stakeholders with a full 
opportunity to explore whether CARB's standards are as protective of 
public health and welfare, in the aggregate, as applicable federal 
standards and whether CARB's standards (as amended) are technologically 
feasible and otherwise consistent with section 202(a). Given that 
CARB's 2007 and later OBD II amendments significantly modify the OBD II 
program after the amendments of 1997 and 2003, EPA has considered, and 
applied the full waiver criteria to, CARB's regulations as of the date 
of the adoption of the 2007 amendments up through the adoption of the 
most recent amendments in 2013.
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    \26\ EPA notes that no comment suggested that the amendments do 
not meet the criteria for a within-the-scope determination. EPA is 
making no decision on whether the amendments do or do not meet the 
criteria for a within-the-scope determination.
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A. California's Protectiveness Determination

    Section 209(b)(1)(A) of the Act sets forth the first of the three 
criteria governing a waiver request--whether California was arbitrary 
and capricious in its determination that its state standards will be, 
in the aggregate, at least as protective of public health and welfare 
as applicable federal standards. Section 209(b)(1)(A) of the CAA 
requires EPA to deny a waiver if the Administrator finds that 
California's protectiveness determination was arbitrary and capricious. 
However, a finding that California's determination was arbitrary and 
capricious must be based upon clear and convincing evidence that 
California's finding was unreasonable.\27\
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    \27\ MEMA I, 627 F.2d at 1122, 1124 (``Once California has come 
forward with a finding that the procedures it seeks to adopt will 
not undermine the protectiveness of its standards, parties opposing 
the waiver request must show that this finding is unreasonable.''); 
see also 78 FR 2112, at 2121 (Jan. 9, 2013).

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[[Page 78147]]

    CARB made protectiveness determinations in adopting each of the OBD 
II amendments, and found that the OBD II Requirements and OBD II 
Enforcement Regulation would not cause California motor vehicle 
emissions standards, in the aggregate, to be less protective of the 
public health and welfare than applicable federal standards.\28\
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    \28\ See CARB Board Resolutions 06-26, 09-37, 12-11, 12-21, and 
12-29.
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    In adopting the initial OBD II Requirements and subsequent 
amendments thereto in 1989 through 1994, CARB resolved that its 
standards, in the aggregate, were at least as protective of public 
health and welfare as the applicable federal standards, including 
federal OBD standards. In granting the 1996 waiver, the Administrator 
held that she could not find the CARB's determination was arbitrary and 
capricious.\29\
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    \29\ See OBD II Waiver Decision Document at 34.
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    CARB maintains that its most recent round of amendments (the 2012 
and 2013 Amendments) do not disturb the finding from 1996, even though 
EPA has since adopted amendments to its federal OBD requirements. ``The 
2012 amended OBD II requirements, considered as a whole, continue to be 
more stringent than the federal OBD regulation for light-duty vehicles 
and trucks and heavy-duty trucks (under the federal regulation) of the 
same vehicle weight rating as the California medium-duty vehicle 
category. The Board affirmed this determination in Resolutions 12-11 
and 12-21.'' \30\ Likewise, with regard to the 2013 Amendments 
pertaining to the OBD II requirements set forth in section 1968.2 of 
the CCR and the OBD II Enforcement Regulation set forth at 1968.5 of 
the CCR, CARB notes that in the adoption of Resolution 12-29, the Board 
``expressly found that the 2013 Amendments to the OBD II Requirements 
and related enforcement regulations (sections 1968.2 and 1968.5) do not 
undermine California's previous determinations that its standards are, 
in the aggregate, at least as protective of the public health and 
welfare as applicable federal standards.'' \31\
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    \30\ See 2014 Waiver Request Support Document at 63.
    \31\ Id. at 55.
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    In addition, CARB notes similar protectiveness findings with regard 
to its 2007 and 2010 amendments. In the context of its 2007 amendments, 
CARB notes that generally the California OBD II Requirements set forth 
that components be monitored to indicate malfunctions when component 
deterioration or failures cause emissions to exceed 1.5 times the 
applicable tailpipe emission standards and that the regulation also 
requires components be monitored for functional performance even if the 
failure of such components does not cause emissions to exceed 1.5 times 
the applicable standard threshold. In contrast, CARB notes that the 
federal requirements only require monitoring of the catalyst, engine 
misfire, evaporative emission control system and oxygen sensors, and 
that other emission control systems and components need only be 
monitored if by their malfunctioning the vehicle would exceed 1.5 times 
the applicable tailpipe standard (thus, not for functional 
performance). CARB notes ``The amended OBD II requirements, considered 
as a whole, continue to be more stringent than the federal OBD 
regulation for light-duty vehicles and trucks and heavy-duty trucks 
(under the federal regulation) of the same vehicle weight rating as the 
California medium-duty vehicle category. The Board affirmed this 
determination in Resolution 12-29.'' \32\
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    \32\ Id. at 56.
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    EPA received no comments or evidence suggesting that CARB's 
protectiveness determination is arbitrary and capricious. In 
particular, no commenter disputes that California standards, whether 
looking at the particular California standards analyzed in this 
proceeding or the entire suite of California standards applicable to 
light- and medium-duty motor vehicles, are at least as stringent, in 
the aggregate, as applicable federal standards.
    Because no commenters have presented evidence to show that CARB's 
protectiveness determinations are arbitrary and capricious, and EPA is 
not otherwise aware of such evidence, EPA cannot find that California's 
protectiveness determinations are arbitrary and capricious nor deny the 
waiver requests under this waiver criterion.

B. Whether the Standards Are Necessary To Meet Compelling and 
Extraordinary Conditions

    Section 209(b)(1)(B) instructs EPA not to grant a waiver if the 
Agency finds that California ``does not need such State standards to 
meet compelling and extraordinary conditions.'' EPA's inquiry under 
this second criterion has traditionally been to determine whether 
California needs its own mobile source pollution program (i.e. set of 
standards) to meet compelling and extraordinary conditions, and not 
whether the specific standards (i.e., OBD II Requirements and OBD II 
Enforcement Regulation) that are the subject of the waiver request are 
necessary to meet such conditions.\33\ In recent waiver actions, EPA 
again examined the language of section 209(b)(1)(B) and reiterated this 
longstanding traditional interpretation as the better approach for 
analyzing the need for ``such State standards'' to meet ``compelling 
and extraordinary conditions.'' \34\
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    \33\ See California State Motor Vehicle Pollution Control 
Standards; Notice of Decision Granting a Waiver of Clean Air Act 
Preemption for California's 2009 and Subsequent Model Year 
Greenhouse Gas Emission Standards for New Motor Vehicles,'' 74 FR 
32744 (July 8, 2009), at 32761; see also ``California State Motor 
Vehicle Pollution Control Standards; Waiver of Federal Preemption 
Notice of Decision,'' 49 FR 18887 (May 3, 1984), at 18889-18890.
    \34\ See 78 FR 2112, at 2125-26 (Jan. 9, 2013) (``EPA does not 
look at whether the specific standards at issue are needed to meet 
compelling and extraordinary conditions related to that air 
pollutant.'' See also EPA's July 9, 2009 GHG Waiver Decision wherein 
EPA rejected the suggested interpretation of section 209(b)(1)(B) as 
requiring a review of the specific need for California's new motor 
vehicle greenhouse gas emission standards as opposed to the 
traditional interpretation (need for the program as a whole) applied 
to local or regional air pollution problems.
---------------------------------------------------------------------------

    CARB confirmed in Resolutions 06-26 (2007 Amendments), 09-37 (2010 
Amendments) and 12-29 (2013 Amendments) that California continues to 
need its own motor vehicle program to meet serious ongoing air 
pollution problems.\35\ CARB asserted that ``[t]he geographical and 
climatic conditions and the tremendous growth in vehicle population and 
use that moved Congress to authorize California to establish vehicle 
standards in 1967 still exist today. EPA has long confirmed the ARB's 
judgment, on behalf of the State of California, on this matter . . . 
and therefore there can be no doubt of the continuing existence of 
compelling and extraordinary conditions justifying California's need 
for its own motor vehicle emissions control program.'' \36\ CARB also 
notes that ``[n]othing in these conditions has changed to warrant a 
change in EPA's confirmation, and therefore there can be no doubt of 
the continuing existence of compelling and extraordinary conditions 
justifying California's need for its own motor vehicle emission 
program.\37\
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    \35\ 2014 Waiver Request Support Document at 16-17.
    \36\ Id. at 17, 45 (citing 70 FR 50322, 50323 (August 26, 2005), 
77 FR 73459, 73461 (December 10, 2012).
    \37\ Id.
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    There has been no evidence submitted to indicate that California's 
compelling and extraordinary conditions do not continue to exist. 
California, particularly the South Coast and San Joaquin Valley air 
basins, continues to experience some of the worst air quality in the 
nation and continues to be in

[[Page 78148]]

non-attainment with national ambient air quality standards for fine 
particulate matter and ozone.\38\ As previously stated, according to 
California ``nothing in [California's unique geographic and climatic] 
conditions has changed to warrant a change in this determination.'' 
\39\
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    \38\ 74 FR 32744, 32762-63 (July 8, 2009).
    \39\ 74 FR 32744, 32762 (July 8, 2009); 76 FR 77515, 77518 
(December 13, 2011).
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    Based on the record before us, EPA is unable to identify any change 
in circumstances or evidence to suggest that the conditions that 
Congress identified as giving rise to serious air quality problems in 
California no longer exist. Therefore, EPA cannot deny the waiver 
requests based on this waiver prong.

D. Consistency With Section 202(a)

    For the third and final criterion, EPA evaluates the OBD II 
Requirements and OBD II Enforcement Regulation that are subject to this 
waiver request for consistency with section 202(a) of the CAA. Under 
section 209(b)(1)(C) of the CAA, EPA must deny California's waiver 
request if EPA finds that California's standards and accompanying 
enforcement procedures are not consistent with section 202(a). Section 
202(a) requires that regulations ``shall take effect after such period 
as the Administrator finds necessary to permit the development and 
application of the relevant technology, considering the cost of 
compliance within that time.''
    EPA has previously stated that the determination is limited to 
whether those opposed to the waiver have met their burden of 
establishing that California's standards are technologically 
infeasible, or that California's test procedures impose requirements 
inconsistent with the federal test procedure. Infeasibility is shown by 
demonstrating that there is inadequate lead time, from the time of 
CARB's adoption, to permit the development of technology necessary to 
meet the OBD II Requirements and OBD II Enforcement Regulation that are 
subject to the waiver request, giving appropriate consideration to the 
cost of compliance within that time.\40\ California's accompanying 
enforcement procedures would also be inconsistent with section 202(a) 
if the federal and California test procedures conflicted, i.e., if 
manufacturers would be unable to meet both the California and federal 
test requirements with the same test vehicle.\41\
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    \40\ See, e.g., 38 FR 30136 (November 1, 1973) and 40 FR 30311 
(July 18, 1975).
    \41\ See, e.g., 43 FR 32182 (July 25, 1978).
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    EPA has reviewed the information submitted to the record by CARB to 
determine whether the parties opposing the waiver (no comments opposing 
the waiver have been submitted) requests have met their burden to 
demonstrate that the OBD II Requirements and OBD II Enforcement 
Regulation subject to the waiver requests are not consistent with 
section 202(a). Regarding potential test procedure conflict, as CARB 
notes, there is no issue of test procedure inconsistency because the 
federal regulations provide that manufacturers of engines and vehicles 
certified to California's OBD II Requirements are allowed to 
demonstrate compliance with the federal standards due to the ``deemed 
to comply'' provisions of EPA's standards.\42\ EPA has received no 
adverse comment or evidence of test procedure inconsistency. Therefore, 
EPA cannot deny the waiver on the grounds of test procedure 
inconsistency.
---------------------------------------------------------------------------

    \42\ See 40 CFR 1806-05(j).
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    EPA did not receive comments arguing that the OBD II Requirements 
and OBD II Enforcement Regulation were infeasible when reviewed purely 
as a matter of technology or cost.
    In the context of CARB's 2007 amendments, CARB notes that ``[a]s 
set forth in detail in the ISORs [Initial Statement of Reasons] and the 
Final Statement of Reasons for the 2003 and 2007 amendments . . ., and 
in the ISOR and Final Statement of Reasons for the HD OBD rule . . ., 
CARB has identified specific technologies for near-term implementation 
dates for the amended monitoring requirements as they apply to gasoline 
and diesel light- and medium-duty vehicles. Consistent with EPA's 
continuum analysis for determining technical feasibility, all 
monitoring requirements that manufacturers are required to implement in 
the near term have been required since adoption of the 2003 amendments 
and sufficient lead time has been provided. Among other things, the 
amendments have provided additional lead time and phase-in schedules 
for several gasoline engine monitors (e.g., catalyst monitoring) and 
nearly all diesel engine monitors and have relaxed requirements for 
other monitors (e.g. secondary air system, monitoring on gasoline 
vehicles).'' \43\ CARB also notes the 2007 amendments specifically 
address concerns that were raised about the feasibility of the 2003 OBD 
II amendments as applied to light- and medium duty diesel vehicles 
beginning in model year 2004, including by providing higher interim 
malfunction thresholds through the 2012 model year for both light- and 
medium-duty vehicles and permanent malfunction thresholds for medium-
duty diesel engines starting with the 2013 model year.\44\
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    \43\ 2007 Waiver Support Document at 33.
    \44\ Id. at 33-34.
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    As previously explained, in the context of the November 20, 2014 
Notice, EPA requested and received no comments stating that the 2003 
OBD amendments when read together with the 2007 OBD amendments create 
requirements that are technologically infeasible. As noted above, CARB 
has provided additional lead time and phase-in schedules for several of 
their gasoline engine monitors (e.g., catalyst monitoring) 
requirements, and nearly all of CARB's diesel engine monitors 
requirements, and they have relaxed requirements for other monitors 
(e.g. secondary air system) on gasoline vehicles.
    CARB also addresses the technological feasibility of the new 
monitoring requirements associated with the 2007 amendments. CARB 
states and EPA agrees that most of the 2012 and 2013 amendments either 
relax or clarify existing provisions and therefore, largely provide 
additional compliance flexibility to the regulated industry. For 
example, CARB identified the use of front and rear oxygen sensor 
signals in order for manufacturers to monitor air-fuel ratios, and 
provided manufacturers with approximately five years of lead time and a 
phase-in of the requirement for most vehicles between the 2011 and 2013 
model years, along with the use of a higher interim threshold during 
the phase-in period. CARB also identified similar compliance 
flexibilities for diesel vehicles starting with the 2007 model year and 
based on CARB's HD OBD regulatory experience.\45\ CARB makes similar 
arguments with regards to its 2010 and later amendments. EPA also did 
not receive any comments arguing that the new monitoring requirements 
contained in the 2007 Amendments, and the additional requirements found 
in the 2010, 2012, and 2013 OBD Amendments were technologically 
infeasible or that the cost of compliance would be excessive, such that 
California's standards might be inconsistent with section 202(a).\46\ 
In EPA's review of the 2007, 2010, 2012 and 2013 OBD Amendments, we 
likewise cannot identify any requirements that appear technologically 
infeasible or excessively expensive for manufacturers to

[[Page 78149]]

implement within the timeframes provided by California at the time of 
adoption of the amendments. EPA therefore cannot find that the OBD II 
Requirements and OBD II Enforcement Regulations do not provide adequate 
lead time or are otherwise not technically feasible. In summary, no 
evidence is in the record to show that the OBD II Requirements and OBD 
II Enforcement Regulation are technologically infeasible, considering 
costs of compliance. Indeed, such a finding is particularly unlikely 
where CARB has continued to delay and phase-in the monitoring 
requirements and in some instances adjust the malfunction thresholds to 
be less burdensome. As such, the record does not support a finding that 
the OBD II Requirements and OBD II Enforcement Regulation are 
inconsistent with Section 202(a).
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    \45\ Id.
    \46\ See, e.g., 78 FR 2134 (Jan. 9, 2013), 47 FR 7306, 7309 
(Feb. 18, 1982), 43 FR 25735 (Jun. 17, 1978), and 46 FR 26371, 26373 
(May 12, 1981).
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IV. Decision

    The Administrator has delegated the authority to grant California 
section 209(b) waivers to the Assistant Administrator for Air and 
Radiation. After evaluating CARB's amendments to the OBD II 
Requirements and OBD II Enforcement Regulation described above and 
CARB's submissions for EPA review, EPA is hereby granting a waiver for 
California's 2007, 2010, 2012, and 2013 amendments to its OBD II 
Requirements and OBD II Enforcement Regulation.
    This decision will affect not only persons in California, but also 
manufacturers nationwide who must comply with California's 
requirements. In addition, because other states may adopt California's 
standards for which a section 209(b) waiver has been granted under 
section 177 of the Act if certain criteria are met, this decision would 
also affect those states and those persons in such states. For these 
reasons, EPA determines and finds that this is a final action of 
national applicability, and also a final action of nationwide scope or 
effect for purposes of section 307(b)(1) of the Act. Pursuant to 
section 307(b)(1) of the Act, judicial review of this final action may 
be sought only in the United States Court of Appeals for the District 
of Columbia Circuit. Petitions for review must be filed by January 6, 
2017. Judicial review of this final action may not be obtained in 
subsequent enforcement proceedings, pursuant to section 307(b)(2) of 
the Act.

V. Statutory and Executive Order Reviews

    As with past waiver decisions, this action is not a rule as defined 
by Executive Order 12866. Therefore, it is exempt from review by the 
Office of Management and Budget as required for rules and regulations 
by Executive Order 12866.
    In addition, this action is not a rule as defined in the Regulatory 
Flexibility Act, 5 U.S.C. 601(2). Therefore, EPA has not prepared a 
supporting regulatory flexibility analysis addressing the impact of 
this action on small business entities.
    Further, the Congressional Review Act, 5 U.S.C. 801, et seq., as 
added by the Small Business Regulatory Enforcement Fairness Act of 
1996, does not apply because this action is not a rule for purposes of 
5 U.S.C. 804(3).

    Dated: October 24, 2016.
Janet McCabe,
Acting Assistant Administrator, Office of Air and Radiation.
[FR Doc. 2016-26861 Filed 11-4-16; 8:45 am]
 BILLING CODE 6560-50-P


