CALIFORNIA AIR RESOURCES BOARD

State Water Resources Control Board
Hearing Room
901 "P" Street
Sacramento, CA

July 25, 1985
1:30 p.m.

AGENDA

Page

85-11-1 Public Meeting to Consider a Status Report to 001
the Board Regarding the Impacts of the Program
for the Certification of Federally Certified
Light-Duty Vehicles for Sale in California.

85-11-2 Public Hearing to Consider Amendments to 017
Regulations Regarding the Certification of
Federally Certified Light-Duty Motor Vehicles
for Sale in California.

85-11-3 Public Hearing to Consider Adoption of Sections 047
90608-90611, Title 17, California Administrative
Code, Regarding the Acid Deposition Fee Program.

Other Business

a. Closed Session
1. Personnel (as authorized by State Agency Open Meeting
Act, Govt. Code Sec. 11126(a).)
2. Litigation (Pursuant to the attorney-client privilege,
Evidence Code Sec. 950-962, and Govt. Code Sec.
11126(q).)
b. Research Proposals
c. Delegations to Executive Officer

ITEM NO.: 85-11-1

Status Report to the Board Regarding the Impacts of the Program
for the Certification of Federally Certified Light-Duty Vehicles
for Sale in California.

BACKGROUND

In 1981, the California Legislature amended Health and Safety
Code Section 43102 (Stats. 1981, Ch 1185, AB 965) to allow the
sale of a limited number of federally-certified vehicles in
California. In response to the statute, the Board adopted
regulations implementing a one-year trial program for the 1983
model year. The initial program provided a mechanism for
offsetting oxides of nitrogen (NOx) emissions for passenger cars
(only the 1983 NOx standard was more stringent than the
corresponding federal standards), and hydrocarbon (HC), carbon
monoxide (CO), and NOx for light-duty trucks.

On July 28, 1983, the Board approved the extension of the program
through the 1987 model year. At the December 15, 1983 public
hearing, the Board extended the program to include trading of
particulate emissions for the 1985 model year only. In order to
monitor the manufacturers' use of the program and to ensure that
adverse impacts would continue to be minimal, the Board directed
the staff to prepare an annual status report.

SUMMARY OF THE STAFF'S FINDINGS ON THE EXPERIENCE WITH THE 1985
PROGRAM

In 1985, the manufacturers used the program on a limited basis.
Four of the thirteen manufacturers with unavailable 1985 models
applied for certification of federally-certified vehicles in
California under the program. They are Chrysler, Ford, General
Motors, and Toyota. To date, Toyota has not sold its unavailable
model in California. Bill Dovell Motor, Grumman Olson, Isuzu,
and Suzuki did not earn emission credits to offset unavailable
models and were not eligible to participate in the program. Five
eligible manufacturers which earned emission credits and have
unavailable models did not participate in the program. Present
production data indicate that manufacturers have not generated
enough NOx credit to allow the sale of unavailable diesel models.
In order to certify an unavailable diesel model through the
program, a manufacturer has to earn enough NOx emission credits
to offset NOx emissions of these models in excess of the Calmean.

In the 1985 model year, the total number of federal and
California passenger cars and light-duty truck models decreased
in the number of small pick-up truck models available and
discontinuation of some diesel models. Model unavailability for
both gasoline-powered passenger cars and light-duty trucks
increased between 1984 and 1985. The increase in unavailable
passenger cars was caused primarily by the differences in fuel
systems with some California models being limited to those
containing fuel- injected engines in place of carbureted engines.
For light-duty trucks, the greater selection of transmission
configurations and smaller engines available from
federally-certified models contributed to the increase in model
unavailability.

The regulatory provisions in the guidelines permitted Ford to use
the program extensively resulting in 3733 vehicle g/mi NOx
emission deficit for its light-duty trucks in 1983 and 1984 model
years. Ford cleared its NOx emission deficit by using 90 percent
of its 1985 NOx emission credits available. The staff is
currently proposing amendments to the regulations which would
prevent manufacturers from building up large emission deficits.

The estimated adverse emission impact of the 1985 program based
on a worst case scenario, is 0.1 tons per day NOx, 0.14 tons per
day CO. 0.01 tons per day HC and 0.002 tons per day particulate.
Overall, the program was used by manufactures as intended by the
Board. It offered California customers a greater selection of
light-duty models at a minimal impact on air quality.

ITEM NO.: 85-11-2

Public Hearing to Consider Amendments to Regulations Regarding
Certification of Federally Certified Light-Duty Motor Vehicles
for Sale in California.

RECOMMENDATION

The staff recommends that the Board adopt regulatory amendments
for its program for certification of federally certified light-duty
vehicles for sale in California. The staff proposal is
designed to prevent manufacturers from building up excessive
emissions deficits due to overestimates of sales of California
vehicles. The amendments would prohibit a manufacturer from
selling federal vehicles in California for a minimum of 12 months
when the manufacturer has a year-end emissions deficit for two
consecutive model years. This prohibition would apply to
individual vehicle categories. For example, if a year end
deficit was incurred only for passenger cars, light-duty trucks
would be unaffected. The amendments would also require that the
deficit be cleared in the 12-month period, identify applicable
penalties for deficits which are not cleared in the period, and
make other related changes.

DISCUSSION

In 1981 the Legislature amended Section 43102 of the Health and
Safety Code to require the Board to establish a program allowing
a limited number of federal vehicles to be sold in California.
In response to the legislation, the Board adopted a one year
trial program for the 1983 model year. The program provided a
mechanism for the sale of new federal vehicle models, otherwise
unavailable in California, provided their excess emissions are
offset by California-certified vehicles with emissions below the
applicable standard. In July 1983 the Board extended the program
through the 1987 model year. At the same time, the Board
requested the staff to report annually on the impacts and
usefulness of the program.

The staff presented the first annual report at the July 26, 1984
public meeting. The report revealed that under the present
regulations a manufacturer could incur large emission deficits
resulting from overestimating sales of California vehicles.
although the program provides that such emissions deficits are to
be offset in the next model year, there are not sufficient
safeguards or penalty provisions to assure this occurs. The
Board therefore directed the staff to explore possible amendments
which would prevent manufacturers from carrying over emissions
deficits for successive model years.

The staff proposes regulatory amendments in response to the
Board's directive. Under the proposed amendments, a manufacturer
with an emissions deficit for a vehicle category at the end of
one model year, caused by misjudging sales of California
vehicles, would have to carry over and offset the deficit in the
next model year. If at the end of that second year the
manufacturer continued to have a deficit, the manufacturer could
not receive certification for federal vehicles in that vehicle
category for a subsequent 12-month period. The manufacturer
would be required to clear all emissions deficits in the 12-month
period. A manufacturer with a deficit remaining after the period
could not receive certification for federal vehicles in the
category until the deficit is cleared, and would be subject to a
$500 per vehicle penalty under Health and Safety Code Section
43016. Any sales of federal vehicles in a covered vehicle
category during the 12-month period, or thereafter until the
deficit is cleared, would subject the manufacturer to the
potential maximum per vehicle penalty of $5,000 applicable under
Health and Safety Code Section 43154 to sales of uncertified
vehicles. The amendments would make various additional technical
changes.

SUMMARY AND IMPACTS OF THE PROPOSED BOARD ACTION

The staff believes that the proposed amendments will prevent
manufacturers from building up excessive emissions deficits over
successive model years, while at the same time allowing
manufacturers adequate flexibility to adjust their sales
projections to changing market conditions. Clear identification
of the circumstances that will result in monetary penalties will
improve compliance with the program.

ITEM NO.: 85-11-3

Public Hearing to Consider the Adoption of Sections 90608-90611,
Title 17, California Administrative Code, Regarding the Acid
Deposition Fee Program.

RECOMMENDATION

Staff is recommending reestablishment of fee regulations for the
fiscal year 1985-86. No major changes are proposed in the new
1985-86 regulations compared to the existing regulations.