[Federal Register Volume 63, Number 217 (Tuesday, November 10, 1998)]
[Rules and Regulations]
[Pages 62947-62955]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-29968]


-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[Region 2 Docket No. NJ29-2-185 FRL-6174-4]


Approval and Promulgation of Implementation Plans; State of New 
Jersey; Clean Fuel Fleet Opt Out

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Environmental Protection Agency (EPA) is approving the 
State Implementation Plan revision submitted by the State of New Jersey 
for the purpose of meeting the requirement to submit the federal Clean 
Fuel Fleet program (CFFP) or a substitute program that meets the 
requirements of the Clean Air Act (Act or CAA). EPA is approving the 
State's plan for implementing a substitute program to opt out of the 
federal CFFP.

EFFECTIVE DATE: This rule will be effective December 10, 1998.

ADDRESSES: Copies of the State submittals are available at the 
following addresses for inspection during normal business hours:

Environmental Protection Agency, Region 2 Office, Air Programs Branch, 
290 Broadway, 25th Floor, New York, New York 10007-1866
New Jersey Department of Environmental Protection, Bureau of Air 
Quality Planning, 401 East State Street, CN027, Trenton, New Jersey 
08625

FOR FURTHER INFORMATION CONTACT: Michael P. Moltzen, Air Programs 
Branch, Environmental Protection Agency, 290 Broadway, 25th Floor, New 
York, New York 10007-1866, (212) 637-4249.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 182(c)(4)(A) of the Clean Air Act requires states 
containing areas designated as severe ozone nonattainment areas, 
including New Jersey, to submit for EPA approval a state implementation 
plan (SIP) revision that includes measures to implement the federal 
Clean Fuel Fleet program (CFFP). Under this program, a specified 
percentage of vehicles purchased by covered fleet operators must meet 
emission standards that are more stringent than those that apply to 
conventional vehicles. Covered fleets are defined as having 10 or more 
vehicles that are centrally fueled or capable of being centrally 
fueled. A CFFP meeting federal requirements would be a state-enforced 
program which requires covered fleets to assure that an annually 
increasing percentage of new vehicle purchases are certified clean 
vehicles. In New Jersey, the program would apply in the State's portion 
of the New York-Northern New Jersey-Long Island ozone nonattainment 
area and in New Jersey's portion of the Philadelphia-Wilmington-Trenton 
ozone nonattainment area; thus all counties in New Jersey except for 
Warren, Atlantic and Cape May Counties would be covered under the 
federal CFFP.
    The federal CFFP is divided into two components. The first 
component is a light duty federal CFFP which applies to covered fleets 
of passenger cars and trucks of gross vehicle weight rating (GVWR) of 
6,000 pounds and less, and trucks between 6,000 and 8,500 pounds GVWR. 
Covered fleets which fall under the light duty federal CFFP are 
required

[[Page 62948]]

to assure that 30 percent of new purchases are clean vehicles in the 
first year of the program, 50 percent in the second year and 70 percent 
in the third and subsequent years.
    The second component is a heavy duty (HD) federal CFFP which 
applies to covered fleets of trucks over 8,500 pounds GVWR and below 
26,000 pounds GVWR. The HD federal CFFP requires that 50 percent of 
covered fleets' new purchases be clean fueled vehicles in the first and 
subsequent years.
    Under the federal CFFP, the vehicle exhaust emission standards for 
light duty vehicles are equivalent to those established by the 
California Air Resources Board (CARB) as light duty low emission 
vehicles (LEVs), for use in the California LEV program. In addition to 
LEVs, this certification exists for vehicles meeting four additional 
levels of emissions stringency, including zero emission vehicles 
(ZEVs). For further information regarding emission standards associated 
with all of the clean fuel vehicles which are applicable under the LEV 
program and the federal CFFP, the reader is referred to the federal 
CFFP final rule, published on March 1, 1993 at 58 FR 11888.
    Section 182(c)(4)(B) of the Act allows states to ``opt out'' of the 
federal CFFP by submitting for EPA approval a SIP revision consisting 
of a program or programs that will result in at least equivalent long 
term reductions in ozone-producing and toxic air emissions as achieved 
by the federal CFFP. The Clean Air Act directs EPA to approve a 
substitute program if it achieves long term reductions in emissions of 
ozone-producing and toxic air pollutants equivalent to those that would 
have been achieved by the federal CFFP or the portion of the federal 
CFFP for which the measure is to be substituted.
    On February 15, 1996 New Jersey submitted its New Jersey Clean 
Fleets (NJCF) program as a substitute for the federal CFFP. This 
submittal, comprising the State's federal CFFP substitute which EPA is 
now taking action to approve, was in addition to prior federal CFFP-
related submittals of November 1992 and May 1994. The reader is 
referred to EPA's proposed approval of the NJCF program, published at 
62 FR 61948 on November 20, 1997 for further detail on those previous 
submittals. The NJCF program is an essentially voluntary mix of 
incentive-based programs which are intended to spur public and private 
fleets within New Jersey to purchase clean, alternatively fueled 
vehicles (AFVs).
    On March 29, 1996, and on March 6, 1997, New Jersey supplemented 
the federal CFFP SIP revision with (1) a clarifying letter from New 
Jersey Department of Environmental Protection (NJDEP) Commissioner 
Shinn, and (2) with material from its October 21, 1996 public hearing, 
respectively. The 1996 letter from Commissioner Shinn clarified that 
the NJCF program substitution includes, to the extent necessary to meet 
SIP obligations, New Jersey's LEV program (NJ LEV) which had been 
adopted by that time. Because the emissions reductions relied upon in 
the NJCF program will largely result from voluntary measures, the NJ 
LEV program essentially serves the role of a ``backstop'' to the NJCF 
program. This means that in the event the NJCF program fails to achieve 
the emissions reductions claimed by the State, emission reductions 
achieved with the separate LEV program will be used by the State to 
account for those reductions that would have originally been realized 
through the federal CFFP. In that event EPA would then recognize NJ LEV 
as the effective opt out measure.
    Unlike the federal CFFP, NJ LEV will impose requirements on auto 
manufacturers and their yearly vehicle sales. The adopted NJ LEV 
regulation states that New Jersey's primary intention is to participate 
in the National LEV (NLEV) program (discussed in more detail in section 
III. C. of this notice) as the preferred means of achieving cleaner 
vehicle sales throughout the State. The NJ LEV regulation also states 
that New Jersey would operate its own California LEV program if the 
NLEV program ultimately was not implemented (the reader is referred to 
the NJCF proposal at 62 FR 61948 for details regarding California LEV 
as it relates to the NJ LEV regulation). The NLEV regulation was 
designed with the understanding that EPA cannot require NLEV. NLEV must 
be mutually agreed upon by the participating states and the auto 
manufacturers because in the Clean Air Act, Congress disallows EPA from 
changing vehicle emission standards until at least model year 2004 (see 
CAA Sec. 202). However, during the time following EPA's proposed 
approval of the NJCF program as an opt-out substitute for the federal 
CFFP, EPA promulgated a supplemental final rule for NLEV (see 62 FR 
925, January 7, 1998). As per provisions of that final rule, with NLEV 
opt-in commitments from 9 of the 13 Ozone Transport Commission (OTC) 
States (including New Jersey) and the 23 major domestic and foreign 
auto manufacturers, on March 2, 1998, EPA officially found NLEV to be 
in effect.
    Therefore, as per its State-specific LEV regulation, and as 
indicated in a January 28, 1998 letter from New Jersey Governor 
Christine Todd Whitman to the EPA Administrator, the State will 
participate in NLEV and receive creditable emission reductions through 
the proscribed federal enforcement of NLEV. As stated in its 
regulation, with its decision to participate in NLEV, the State will 
not operate California LEV in New Jersey, at least until such time that 
EPA implements more stringent Tier 2 vehicle emission standards, which 
will not be sooner than model year 2004 (see CAA Sec. 202 and 63 FR 
925-987). Therefore NLEV is now the applicable enforceable backstop to 
the NJCF program.
    The NLEV program requires that auto manufacturers must meet an 
average vehicle emission standard, based on the certified emission 
standards of all annual vehicle sales. The annual average vehicle 
emission standard (referred to as the non-methane organic gas (NMOG) 
average) increases in stringency on an annual basis. Quantitatively, 
NLEV will achieve long term vehicle emission reductions which are far 
greater than what the federal CFFP could have achieved.
    The Clean Air Act requires states to observe certain procedural 
requirements in developing implementation plan revisions for submission 
to EPA. Sections 110(a)(2) and 172(c)(7) of the Act require states to 
provide reasonable notice and public hearing before adoption by the 
state and submission to EPA for approval. Section 110(1) of the Act 
also requires states to provide reasonable notice and hold a public 
hearing before adopting SIP revisions. EPA must also determine whether 
a state's submittal is complete before taking further action on the 
submittal. See section 110(k)(1). EPA's completeness criteria for SIP 
submittals are set out in 40 CFR Part 51, Appendix V (1993). New 
Jersey's SIP revision which EPA is approving in this notice has met all 
of the procedural requirements and completeness criteria.

II. State Submittal

    New Jersey submitted SIP revisions on February 15, 1996, March 29, 
1996 and March 6, 1997 which substitutes the State's NJCF program, 
backstopped by the enforceable NJ LEV program, for the federal CFFP.
    The NJCF program consists of the following four components: (1) 
Incentive Development program, (2) the Department of Energy's (DOE's) 
EPAct fleet requirements, (3) DOE's Clean

[[Page 62949]]

Cities program, and (4) the Advanced Technology Vehicle (ATV) agreement 
associated with the NLEV program. Components (1), (3) and (4) are 
voluntary in nature, while the second component, the EPAct fleet 
requirements, is a mandatory DOE program. However although the EPAct 
mandate requires purchases of alternative fuel vehicles (see Section C. 
2. for additional details), it does not require vehicle emissions 
standards to be met, as the federal CFFP does. New Jersey will track 
clean alternative fueled EPAct vehicle purchases as well as those from 
the other NJCF components in determining the degree to which its 
federal CFFP substitute is achieving equivalent reductions, and 
subsequently the amount of credit which will be needed from its 
backstop, the NLEV program.
    Because NLEV has been found to be in-effect by EPA, the State's 
regulation states that New Jersey will participate in the NLEV program 
(discussed in more detail in section III. C. of this notice). The NLEV 
program will begin with model year 1999 vehicle sales in the Northeast 
Trading Region (NTR), which is comprised of NLEV opt-in states 
Connecticut, Delaware, Maryland, New Jersey, New Hampshire, 
Pennsylvania, Rhode Island, Virginia and Washington, D.C. The NLEV 
program requires that those vehicles be certified to meet a specific 
NMOG standard when their total emissions are averaged as a fleet. 
Manufacturers must ensure that each model year of vehicles produced for 
sale meet a yearly NMOG fleet average over the entire NTR. The NLEV 
fleet-average NMOG standard will be 0.148 grams per mile for model year 
1999. The NMOG average becomes increasingly stringent annually, and for 
model year (MY) 2001 and later the standard is 0.075 grams per mile.

III. Analysis of State Submission

A. Opt Out Criteria and Requirements

    Section 182(c)(4) of the Clean Air Act, which allows states 
required to implement a federal CFFP to opt out of the program by 
submitting a SIP revision consisting of a substitute program, requires 
that the substitute program result in long term emission reductions 
equal to or greater than the federal CFFP. Also, EPA can only approve 
such substitute programs that consist exclusively of provisions other 
than those required under the Clean Air Act for the area. New Jersey's 
NLEV-backstopped NJCF program satisfies both of these requirements.

B. Equivalency of Substitute

    The Clean Air Act requires that any substitute for the federal CFFP 
must provide equivalent long term emission reductions. In its SIP 
revision, the State estimated the emission reductions which would be 
attributable to operation of the federal CFFP in New Jersey. It is this 
amount of long term reduction, discussed below, which the State's 
substitute must achieve.
Light Duty Vehicle Analysis
    New Jersey first analyzed the potential for emissions reductions to 
result from long term compliance with the light duty vehicle portion of 
the federal CFFP in New Jersey. The light duty vehicle purchase 
requirements of the federal CFFP are intended to ensure a gradual 
turnover of conventional light duty fleet vehicles to clean light duty 
vehicles in covered fleets. Under the federal CFFP, in the long term a 
substantial portion of light duty vehicles in covered fleets would meet 
at least the LEV standard, where otherwise they would not have met 
those more stringent standards (i.e., if the State was not also 
operating a LEV program as described above). In its SIP revision 
however, New Jersey pointed out that the light duty vehicle portion of 
the federal CFFP, in the long term, would essentially duplicate the 
regional and Statewide, more comprehensive NLEV program which has 
already been adopted as part of the NJ LEV regulation [Adopted on 
November 22, 1995 at 27 N.J.R. 5016(a)(December 18, 1995), codified at 
N.J.A.C. 7:27-26]. EPA has determined that, in light of the NLEV 
program, operation of the light duty federal CFFP in New Jersey would 
yield essentially no benefit above that from the NLEV. For additional 
details regarding the light duty vehicle analysis, the reader is 
referred to EPA's November 20, 1997 proposed approval of NJCF as an 
opt-out substitute for the federal CFFP at 62 FR 61948 and to the 
Response to Comments section of this action.
Heavy Duty Vehicle Analysis
    The heavy duty vehicle portion of the federal CFFP requires that on 
an annual basis, 50 percent of heavy duty fleet vehicles purchased each 
year must meet clean fuel vehicle emission standards. Through 
appropriate modeling, New Jersey has determined that the estimated 
emission reduction benefit that would result from applying the federal 
CFFP's heavy duty vehicle requirements in New Jersey would be 
approximately 4.5 tons per day (tpd) of volatile organic compounds 
(VOC) and oxides of nitrogen (NOx) combined in 2010 (for additional 
details regarding modeling techniques and assumptions used to arrive at 
this figure, the reader is referred to EPA's November 20, 1997 NJCF 
proposal at 62 FR 61948). New Jersey's SIP submittal states that 
modeling emission reductions out to the year 2010 is adequate for the 
purpose of determining the long term reductions which could be expected 
of the heavy duty federal CFFP in New Jersey. EPA agrees with this 
reasoning. The NJCF program must achieve that amount of emission 
reductions within the same time frame in order to be an acceptable 
substitute for the federal CFFP. If it does not, as will be verified 
through the program emission reduction tracking system that the State 
committed to implement (described below), the State has also committed 
to use enforceable emission reduction credit generated from the NLEV 
program to make up any emission reduction shortfall which may result.

C. NJCF Program Details and Goals

    NJDEP has estimated that, in order to meet the Clean Air Act 
requirement of an approvable federal CFFP substitute, the NJCF program 
must provide emission reductions equivalent to those from approximately 
50,750 medium heavy duty certified clean fueled vehicles by 2010. NJDEP 
has determined that in order to contribute towards the emission 
reductions needed for a substitute program, a medium or heavy duty 
vehicle must be certified by CARB to meet LEV (or cleaner) standards.
1. Incentive Development Program
    The incentive development program was developed by a public/private 
workgroup which includes representatives of local and national fleet 
operators, municipalities, alternative and clean fuel providers, and 
government officials. The Workgroup's efforts are intended to spur use 
of clean alternative fuel vehicles. Major areas of focus for the 
Workgroup, as it implements its Action Plan, include development of a 
New Jersey alternative fuel mechanic training program and promotion of 
a State policy with legislative and regulatory support of the use of 
alternative fuels and AFVs. Examples of such legislation include a bill 
which would provide sales and use tax exemption for clean alternative 
fuel vehicle purchases in New Jersey.
2. EPAct Purchase Mandates
    The second component of the NJCF program is the alternative fuel 
vehicle purchase requirements under the federal EPAct, 42 U.S.C. 13201 
et seq. Under

[[Page 62950]]

EPAct, all state, federal, and fuel-provider fleets must ensure that a 
percentage of their new light duty vehicle purchases operate on 
alternative fuels. In the long term, 75% of new state and federal 
purchases and 90% of fuel-provider purchases must be AFVs. In its SIP 
submittal, New Jersey reported that at least 61 State vehicles run on 
clean alternative fuels as a result of EPAct compliance, and 
alternative fuel vehicles are available for purchase by public agencies 
through the State purchase contract.
3. New Jersey Clean Cities Program
    Clean Cities is a voluntary federal program designed to accelerate 
and expand the use of clean AFVs and related refueling infrastructure 
in communities throughout the country. In 1995 the State's Division of 
Energy initiated its North Jersey Clean Cities programs in the 
metropolitan areas of Elizabeth, Jersey City, Newark and Trenton; in 
1997 this program received official Clean Cities designation status 
from the U.S. Department of Energy (USDOE). New Jersey plans to expand 
this program in other areas of the State as well, and expects the 
program to have a significant long term emission reduction benefit.
4. Advanced Technology Vehicle Program
    The fourth component of the NJCF program is an Advanced Technology 
Vehicle (ATV) cooperative agreement between states and auto 
manufacturers which emerged during their negotiations on the NLEV 
program. The regulatory portion of the NLEV program does not address an 
agreement regarding advanced technology vehicles (ATV), and advancing 
technology is not a legally-required criterion of the NLEV program, 
however EPA recognizes that a separate agreement between states and 
auto manufacturers regarding an ATV component could be a useful means 
of achieving additional environmental benefits beyond the emissions 
reductions which will be achieved through NLEV. In EPA's June 6, 1997 
NLEV rulemaking, an ATV was defined as any vehicle certified by CARB or 
EPA that is either: (1) A dual-fuel, flexible-fuel, or dedicated 
alternatively fueled vehicle certified as a transitional low emission 
vehicle (TLEV), LEV, or ultra low emission vehicle (ULEV) when operated 
on the alternative fuel; (2) certified as a ULEV or ILEV; or (3) a 
dedicated or hybrid electric vehicle. As discussed in that rulemaking, 
EPA acknowledges the suggestion that advancing motor vehicle pollution 
control technology through a states-manufacturers partnership can be an 
important result of the basic NLEV agreement. Furthermore, EPA agrees 
with New Jersey's intention to use an ATV agreement with the auto 
manufacturers as part of its substitute (backstopped by the enforceable 
NLEV program) for the federal CFFP. The ATV program, as New Jersey and 
other states intend, would involve a cooperative effort among the NLEV 
opt-in states, EPA, DOE, fuel providers, aftermarket converters, fleet 
operators, and the full range of motor vehicle manufacturers to develop 
ways to increase use of ATVs. In its SIP submittal, the NJDEP stated it 
expects to begin implementing this ATV program, in cooperation with 
other states, the auto manufacturers, and fuel providers, soon after 
the NLEV program's implementation and agreement on an ATV component is 
reached.
    In order to facilitate implementation of the NJCF program, New 
Jersey has stated in its latest SIP submittal that it is relying on EPA 
to support the ATV initiative by approving emission reduction SIP 
credits, where appropriate, upon the introduction of ATVs into the 
fleet. EPA is prepared to assist the State in this manner (i.e. by 
allowing long term emission reductions generated by a cooperative ATV 
program to be used in part as a substitute SIP measure for the federal 
CFFP), provided emissions reductions from the ATV provision, along with 
those generated from the other NJCF program components, can be 
documented by the State. It is for this purpose that New Jersey has 
incorporated a planned system to track NJCF program emissions 
reductions.
    This system, described below, will serve to identify the need, if 
any should exist in the future, to utilize the credit from the backstop 
should the planned reductions not occur as intended with the voluntary 
NJCF program.
NJCF Program Backstop
    New Jersey, along with the states of Connecticut, Delaware, Rhode 
Island, Maryland, New Hampshire, Pennsylvania, Virginia, and 
Washington, D.C. have opted into the NLEV program. Upon its NLEV opt-
in, NLEV became the effective backstop to the NJCF, as discussed in 
section I. of this action.
    NLEV is a voluntary nationwide program to make new cars 
significantly cleaner emitting than today's current cars. NLEV, which 
began as the ``OTC-LEV'' program before it included provisions for 
cleaner vehicle sales for the entire nation, has also been referred to 
in the past as ``49-State LEV'' and ``the 49-State Car program.'' The 
NLEV program represents an alternative, more effective method of 
regulatory development through extensive interaction between EPA and 
stakeholders. NLEV will achieve substantial air pollution reductions 
nationwide while providing the automotive industry flexibility to meet 
the new requirements in the most efficient manner. The NLEV program 
requires that each model year of vehicles produced for sale in the 
Northeast opt-in states, beginning with model year 1999, be certified 
to meet a specific NMOG standard when their total emissions are 
averaged as a fleet. Manufacturers must ensure that each model year of 
vehicles produced for sale, meet a yearly NMOG fleet average which 
becomes increasingly more stringent annually, and for model year 2001 
and later the standard is 0.075 grams per mile. Manufacturers will meet 
the annual NMOG averages through a sales mix of vehicles certified to 
meet emission standards of varying stringency. Like CARB certified 
vehicles and as discussed earlier in section I. of this action, such 
standards exist for TLEVs, LEVs, ULEVs, ZEVs and the existing Tier I 
federal standards.
    On December 16, 1997 the EPA Administrator signed the final rule 
for NLEV and began the opt in clocks for the states of the Northeast, 
the auto manufacturers and EPA. According to the rule, those states had 
forty-five days to opt in, and the manufacturers had sixty days from 
the rule signature to make that decision. Nine northeastern states and 
23 major auto manufacturers took the opportunity to opt into the 
National LEV program within the specified time frames. New Jersey did 
so with a January 28, 1998 letter to the Administrator from Governor 
Whitman committing to the State to participation in the NLEV. EPA 
determined that the opt-ins from both sets of parties met the criteria 
necessary for the NLEV program to be in effect and enforceable, and on 
March 2, 1998, the EPA Administrator made the official finding that the 
NLEV program is in effect.
    NLEV will result in substantial reductions in NMOG and 
NOX, which contribute to ozone nonattainment in many states 
including New Jersey. Emission reduction estimates are based on a start 
date of MY 1999 in Northeast and MY 2001 nationwide. EPA estimates that 
nationally, by 2007, NOX will be reduced by 496 tons per day 
and NMOG will be reduced by 311 tons per day as a result of NLEV 
implementation. NLEV will also result in reductions in toxic air 
pollutants such as benzene, formaldehyde, acetaldehyde, and 1,3

[[Page 62951]]

butadiene. Benzene is classified as a human carcinogen, while the 
others are considered probable carcinogens.
    NLEV in New Jersey will assure reductions of ozone-forming and air 
toxics emissions that are at least equivalent to those that would be 
realized through the light duty portion of a federal CFFP; in the event 
that the NJCF program fails to reduce long term emissions to the level 
which would have been achieved by the federal CFFP, NLEV will make up 
the resultant shortfall.
Vehicle Tracking System
    In its most recent NJCF SIP revision submittals, New Jersey has 
committed to implement an automated tracking system to track clean 
fueled vehicle purchases and conversions associated with the NJCF 
program (detailed above) throughout the State beginning in 1998. The 
State will periodically track the variety of clean NJCF vehicles 
purchased in New Jersey, but most notably CARB and EPA certified LEVs 
(and vehicles certified to more stringent standards, such as ULEVs). 
The information gathered from the automated tracking system will 
provide an accurate indication of the number of vehicles purchased in 
New Jersey that are certified to meet the applicable LEV, etc. 
standards. In this manner the State will accumulate a database with 
which it can calculate emission reduction benefits associated with 
certified clean vehicle purchases resulting from the NJCF program, and 
determine if necessary the need to employ the LEV backstop discussed 
above. New Jersey further clarified the method it will employ to track 
these vehicle purchases as a means of assessing the NJCF program's long 
term effectiveness. Specifically, NJDEP will receive reports on at 
least an annual basis from the New Jersey Division of Motor Vehicles, 
the New Jersey Department of Treasury and the USDOE which will contain 
updates of the numbers of certified clean vehicles and AFVs purchased 
statewide in New Jersey.

IV. Public Comment

    EPA proposed to approve the New Jersey federal CFFP opt-out SIP 
revision on November 20, 1997, 62 FR 61948. Comments were received from 
one interested party. EPA evaluated the comments, which have been 
incorporated into the docket for the rulemaking. The comments were 
evaluated with respect to the proposed approval, and the summary of the 
comments and EPA's responses follow.
    Comment: New Jersey should move to supplement its mobile source 
reduction strategies as opposed to using reductions in place of the 
federal CFFP. The federal government conditionally leaves the option 
available to the State of New Jersey to find a substitute for the Clean 
Fuel Fleet Programs. New Jersey should use all available mobile source 
reduction strategies, including a LEV program combined with the NJCF 
program, in its effort to achieve attainment of the ozone standards.
    The commentor also asserts that New Jersey has completely abandoned 
any clean fuel requirements for heavy duty fleet vehicles. The 
commentor questions why emission reduction credits generated from the 
NJCF program or the NLEV program should be used for mobile sources, 
when New Jersey fails to control emissions from heavy duty trucks, 
which would be included in the Clean Fuel Fleet Program. If all 
vehicles and stationary sources are subject to emissions reductions, 
the commentor states that there seems to be a significant omission of 
the exercise of regulatory authority in disregarding heavy duty truck 
emissions.
    Response: The Clean Air Act allows states to opt out of the federal 
CFFP with an equivalent substitute, as the commentor points out. EPA is 
directed to approve the State's opt out SIP revision provided it meets 
the statutory requirements of equivalent long term reductions through a 
provision or provisions not otherwise required by Act, which New Jersey 
has done. In enforcing the requirements of the Clean Air Act, EPA 
consistently works to afford as much flexibility to states in meeting 
those requirements, and does not second-guess state policy choices 
regarding how to achieve attainment.
    Regarding the comment that New Jersey has abandoned clean fuel 
requirements for heavy duty fleet vehicles, again, EPA abstains as much 
as possible from dictating states' policy choices regarding which 
sources to regulate, as long as they meet requirements of Clean Air 
Act. This applies to the degree to which the substitute NJCF program 
does or does not target heavy duty fleet vehicles, as long as the 
program will achieve equivalent reductions, which EPA has determined 
that it will.
    Comment: NJDEP has not satisfied the federal criteria in Section 
182(C)(4)(B) of the Clean Air Act, which requires that ``the 
Administrator may approve of such revisions only if it consists 
exclusively of provisions other than those required under this Act for 
the area.'' The commentor asserts that the reason OTC-LEV fails as an 
adequate substitute is that the adoption of the OTC-LEV program was 
required throughout the Ozone Transport Region (OTR) in order to bring 
certain areas of the OTR into ozone attainment pursuant to Section 
184(c)(1) of the Clean Air Act. Therefore, the commentor wrote, New 
Jersey was compelled to adopt this LEV requirement, making such a LEV 
program a Clean Air Act requirement and unavailable for use as a 
substitute federal CFFP measure. The commentor further believes that 
comparison to OTC-LEV in an equivalency demonstration is misplaced 
because New Jersey anticipated participation in NLEV, employing OTC-LEV 
only as a fall-back measure if NLEV did not become effective. Lastly 
the commentor states that New Jersey cannot use OTC-LEV as a backstop 
because as adopted by the State, OTC-LEV can only become effective in 
New Jersey if a threshold of other state LEV programs is reached.
    Response: The Clean Air Act directs EPA to approve a substitute 
program if it achieves long-term reductions in emissions of ozone-
producing and toxic air pollutants equivalent to those that would have 
been achieved by the federal CFFP or the portion of the federal CFFP 
for which the measure is to be substituted, and is not otherwise 
required by the Clean Air Act. EPA maintains that both the NJCF 
program, and its backstop, the NLEV program will assure emissions 
reductions at least equivalent to the federal CFFP and neither program 
is otherwise required by the Clean Air Act.
    New Jersey originally intended to opt out of the federal CFFP with 
the LEV program in a submittal dated May 15, 1994. Although EPA could 
not take action to approve that submittal because the LEV regulation 
was only in the proposal stage at that time, New Jersey intended to 
adopt a LEV program and to use it as a federal CFFP opt out measure 
before it was compelled to adopt such a program for any other reason 
(see 62 FR 61948 under Section I. Background for further detail on the 
State's earlier submissions).
    Subsequent to New Jersey's original intended opt out with LEV, on 
December 19, 1994 EPA approved a petition by the OTC to require OTC-
LEV, or an equivalent substitute, e.g. NLEV, throughout the OTR. 
However, as stated in the November 20, 1997 Federal Register notice, a 
Federal Circuit Court has since remanded that requirement. [Virginia v. 
EPA, No. 95-1163 (D.C. Cir. March 11, 1997)]. The Court's vacatur of 
OTC-LEV, and the equivalent NLEV, as a SIP requirement of the OTR 
States effectively made these programs ``not otherwise required by the 
Act'' and thus eligible for use by the States as a

[[Page 62952]]

substitute measure, as permitted under Section 182(c)(4) of the Clean 
Air Act.
    EPA rejects the assertion that the proposed approval's comparison 
to OTC-LEV in an equivalency demonstration is misplaced. Rather, EPA 
believes that the equivalency demonstration, and the analysis of the 
demonstration, was appropriate. The analysis examined the effect of 
federal CFFP operation concurrent to operation of either OTC-LEV (also 
referred to as the State LEV and ``California'' LEV program) or NLEV, 
in recognition that one or the other would be in effect through the 
long term. Results of the examination yielded the quantity of emissions 
reductions necessary to be achieved by the substitute (or its backstop) 
for it to be equivalent to the federal CFFP. The substitute meets the 
equivalency requirement because New Jersey has committed to bring about 
the sale of additional clean vehicles which will reduce as much 
emissions as the federal CFFP would have, to track those reductions on 
a regular basis and to substitute emission reductions from the backstop 
NLEV program if necessary.
    The commentor's assertion that New Jersey cannot use OTC-LEV as a 
backstop because its effectiveness is dependant on a certain threshold 
of other state LEV programs is invalidated because NLEV is the 
effective backstop (see section I. of this action), and does not rely 
on such a threshold.
    Comment: The commentor asserts that NJDEP's LEV program lacks State 
enforceability because the NJLEV rule excludes from enforcement action 
any failure to comply with the fleet average requirement.
    Response: New Jersey had indicated that if it had eventually 
operated the OTC-LEV program, active program enforcement would have 
been provided if it was determined necessary for compliance subsequent 
to implementation. However, this issue is now moot since New Jersey has 
opted into NLEV (see the above response to comment and also section I. 
of this approval).
    Comment: NJDEP has not adequately documented an equivalency 
demonstration for the long-term emission reductions which would have 
been associated with a light duty federal CFFP. Although NJDEP stated, 
and EPA agreed in its proposed approval, that an explicit demonstration 
was unnecessary because of the duplicative nature LEV program 
operation, the commentor states that the Clean Air Act does not make 
this exception to the State's duty to establish the equivalency of any 
substitute program. New Jersey is ``guesstimating'' that it will 
achieve the equivalent reductions. There are no quantifiable methods 
established to demonstrate that there will be ``equivalent'' 
reductions.
    Response: Clean Air Act section 182(c)(4)(B) states that the EPA 
Administrator shall approve a federal CFFP substitute measure ``that in 
the Administrator's judgement will achieve long-term reductions in 
ozone-producing and toxic air emissions equal to those achieved under 
part C of title II, or the percentage thereof attributable to the 
portion of the clean-fuel vehicle program for which the revision is to 
substitute.'' Thus the Clean Air Act does not explicitly require the 
State to document an equivalency demonstration, as the commentor 
asserts, but rather defers to EPA's judgement of the long-term 
equivalency of the substitute measure. In judging the equivalency of 
the NJCF, for the purpose of comparison, EPA (and the State) set out to 
determine the long-term emissions reductions which would have been 
achieved by operation of the light duty federal CFFP in New Jersey. EPA 
concluded that those reductions would be negligible to zero because 
light duty federal CFFP purchase requirements would duplicate existing, 
further reaching NLEV sales requirements in New Jersey (vehicle 
emission standard requirements of both programs are essentially 
identical). Therefore, since in EPA's judgement the amount of long-term 
reductions attributable to the light duty federal CFFP would be zero, a 
demonstration that the light duty federal CFFP portion of the 
substitute program will achieve at least zero reductions would be 
superfluous and is unnecessary.
    The commentor asserts that there are no quantifiable methods 
established to demonstrate that there will be equivalent reductions. 
However, as detailed in EPA's proposed NJCF Program approval at 62 FR 
61961, New Jersey performed a modeling analysis which determined that 
the federal CFFP substitute must achieve approximately 4.5 tons per day 
of NOx and VOC combined by 2010 in order to achieve equivalent 
reductions. The State further determined that the requisite reductions 
can be achieved through acquisition of 50,750 medium heavy duty clean 
vehicles by 2010. As detailed above, New Jersey has initiated an 
automated tracking system to track clean fueled vehicle purchases and 
conversions associated with the NJCF program throughout the State 
beginning in 1998. The reader is referred to the subsection titled 
``Vehicle Tracking System'' under section III. C. of this notice, and 
to the proposal at 62 FR 61952 for further information on the tracking 
system. The State has committed in its SIP submittal that it will 
monitor its progress toward procurement of that number and type of 
vehicles on a regular basis, and will backstop any shortfall with NLEV 
emission reductions if that goal is not reached by 2010.
    Comment: Regarding claims that the NJCF Program will still create a 
shortfall as compared to the light duty federal CFFP, New Jersey 
believes that any loss of emission reduction benefits that would occur 
from gasoline powered LEVs operated on Federal RFG rather than the fuel 
that they were certified to operated on (e.g., California RFG) would be 
relatively small in the long-term. There is no basis other than the 
anticipation by NJDEP that in the long-term, more vehicles will be 
operating on alternative fuels and to support that assertion. The 
commentor requests that this basis for satisfying this shortfall in 
needed emissions reduction, be further explained.
    Response: The commentor is referring to New Jersey's further 
examination of the relative effects of programs associated with the 
Light Duty Vehicle Analysis, discussion of which can be found under 
section III. B. of EPA's February 20, 1997 proposed approval (see 62 FR 
61948). As explained above, EPA has judged that light duty federal CFFP 
emissions reductions would be at most negligible due to concurrent 
operation of NLEV in New Jersey. However, in its SIP submittal, New 
Jersey went further to discuss qualitatively the potential effects of 
operation of LEVs on Federal RFG vs. California RFG. California RFG is 
the fuel for which gasoline-powered CARB LEVs are certified to operate 
on. New Jersey stated, and EPA agreed, that in the aggregate, long-term 
loss of emissions benefit from operating CARB certified LEVs on Federal 
RFG would likely be small, if any. EPA believes this is especially true 
when considering that in the long term, Federal RFG phase 2 (effective 
throughout New Jersey on January 1, 2000) will be in place. Federal RFG 
phase 2 will be substantially cleaner than both conventional gasoline 
and Federal RFG phase 1, and closer in composition to California RFG, 
specifically with respect to sulfur levels. Sulfur in gasoline inhibits 
the performance of catalytic converters, which are used on all current 
gasoline-fueled vehicles to reduce VOCs, carbon monoxide and NOx. EPA 
may soon propose gasoline sulfur standards which would result in sulfur 
levels lower than Federal RFG phase 2 levels, to be implemented in the 
long term.

[[Page 62953]]

    The commentor asserts that the only basis for the assumption that 
in the long term more vehicles will be operating on alternative fuels 
(and thus reduce the number of cleaner gasoline-powered vehicles) is 
New Jersey's anticipation of such. EPA disagrees with this assertion, 
and further believes that the State has thoroughly established that 
basis through the provision of the NJCF Program elements. The NJCF 
Program will both assure and encourage alternative fuel and AFV 
development and use through elements such as EPAct purchase mandates 
and the Incentive Development Program. The reader is referred to 
section III. C. of this notice and the proposed approval at 62 FR 61951 
for further detail regarding the NJCF Program elements. Additionally 
since the publication of the NJCF Program proposed approval, New Jersey 
supplemented its SIP revision with a March 30, 1998 letter from NJDEP 
which details further enhancements to the NJCF program. These include: 
an ATV Incentive Plan which will encourage the purchase of ULEV and 
cleaner technology vehicles; plans for a Mobile Source Outreach 
Strategy for the Northeast, which includes a LEV component; and a 
broadening of State alternative fueling station use to include access 
by local governments, contingent on NJCF Program approval in the SIP.
    Comment: The State did not properly preserve its right to Opt Out 
of the federal CFFP as it did not indicate any specific substitute 
measures that would be used to achieve the required reductions. The 
NRDC Appellate Court Decision does not allow any preservation of this 
option.
    Response: The commentor is asserting that failure to specify an opt 
out program prior to May 1992 means that the State can no longer opt 
out of the federal CFFP. EPA has interpreted that states' continued 
ability to opt out now does not depend on them having submitted such a 
specification prior to May of 1992. As stated in EPA's proposed 
approval of the NJCF program published on November 20, 1997 at 62 FR 
61948, in its decision that EPA's conditional approval policy was 
contrary to law [NRDC v. EPA, 22 F.3d. 1125 (D.C. Cir. 1994)], the 
court did not want to penalize states for their reliance on EPA's 
actions. Therefore, EPA is considering all relevant submissions made 
thus far by the State that are intended to substitute for the federal 
CFFP. Moreover, EPA has interpreted that the May 1992 deadline is a 
deadline without a consequence, and therefore there is no time 
constraint regarding EPA's approval of such an opt out program.

V. Summary of Action

    In this final rule, EPA is approving New Jersey's SIP revision 
submitted to fulfill the federal Clean Fuel Fleet requirements of the 
Clean Air Act. EPA believes New Jersey's Clean Fleet program, 
backstopped by the adopted New Jersey LEV program implementing NLEV is 
an adequate substitute for the federal Clean Fuel Fleet program under 
section 182(c)(4).

VI. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order (E.O.) 12866, entitled 
``Regulatory Planning and Review.''

B. Executive Order 12875

    Under E.O. 12875, EPA may not issue a regulation that is not 
required by statute and that creates a mandate upon a state, local, or 
tribal government, unless the Federal government provides the funds 
necessary to pay the direct compliance costs incurred by those 
governments. If the mandate is unfunded, EPA must provide to the Office 
of Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected state, local, and tribal 
governments, the nature of their concerns, copies of written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, E.O. 12875 requires EPA to 
develop an effective process permitting elected officials and other 
representatives of state, local, and tribal governments ``to provide 
meaningful and timely input in the development of regulatory proposals 
containing significant unfunded mandates.''
    Today's rule does not create a mandate on state, local or tribal 
governments. The rule does not impose any enforceable duties on these 
entities. Accordingly, the requirements of section 1(a) of E.O. 12875 
do not apply to this rule.

C. Executive Order 13045

    Protection of Children from Environmental Health Risks and Safety 
Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is 
determined to be ``economically significant'' as defined under E.O. 
12866, and (2) concerns an environmental health or safety risk that EPA 
has reason to believe may have a disproportionate effect on children. 
If the regulatory action meets both criteria, the Agency must evaluate 
the environmental health or safety effects of the planned rule on 
children, and explain why the planned regulation is preferable to other 
potentially effective and reasonably feasible alternatives considered 
by the Agency.
    This rule is not subject to E.O. 13045 because it does not involve 
decisions intended to mitigate environmental health or safety risks.

D. Executive Order 13084

    Under E.O. 13084, EPA may not issue a regulation that is not 
required by statute, that significantly affects or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments. If the mandate is unfunded, 
EPA must provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected and other representatives of 
Indian tribal governments ``to provide meaningful and timely input in 
the development of regulatory policies on matters that significantly or 
uniquely affect their communities.''
    Today's rule does not significantly or uniquely affect the 
communities of Indian tribal governments. This action does not involve 
or impose any requirements that affect Indian Tribes Accordingly, the 
requirements of section 3(b) of E.O. 13084 do not apply to this rule.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements unless the agency certifies 
that the rule will not have a significant economic impact on a 
substantial number of small entities. Small entities include small 
businesses, small not-for-profit enterprises, and small governmental 
jurisdictions. This final rule will not have a significant impact on a 
substantial number of small entities because SIP approvals under 
section 110 and subchapter I, part D of the Clean Air Act do not create 
any new requirements but simply approve requirements that the State is 
already

[[Page 62954]]

imposing. Therefore, because the Federal SIP approval does not create 
any new requirements, I certify that this action will not have a 
significant economic impact on a substantial number of small entities. 
Moreover, due to the nature of the Federal-State relationship under the 
Clean Air Act, preparation of flexibility analysis would constitute 
Federal inquiry into the economic reasonableness of state action. The 
Clean Air Act forbids EPA to base its actions concerning SIPs on such 
grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 
42 U.S.C. 7410(a)(2).

F. Unfunded Mandates

    Under section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a Federal mandate that may result in estimated 
annual costs to State, local, or tribal governments in the aggregate, 
or to private sector, of $100 million or more. Under section 205, EPA 
must select the most cost-effective and least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 203 requires EPA to establish a plan 
for informing and advising any small governments that may be 
significantly or uniquely impacted by the rule.
    EPA has determined that the approval action proposed does not 
include a Federal mandate that may result in estimated annual costs of 
$100 million or more to either State, local, or tribal governments in 
the aggregate, or to the private sector. This Federal action approves 
pre-existing requirements under State or local law, and imposes no new 
requirements. Accordingly, no additional costs to State, local, or 
tribal governments, or to the private sector, result from this action.

D. Submission to Congress and the Comptroller General

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. This rule is not a 
``major'' rule as defined by 5 U.S.C. 804(2).

H. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by January 11, 1999. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Nitrogen dioxide, Ozone, Volatile organic compounds.

    Dated: September 30, 1998.
William J. Muszynski,
Acting Regional Administrator, Region III.

    Part 52, chapter I, title 40 of the Code of Federal Regulations is 
amended as follows:

PART 52--[AMENDED]

    1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart FF--New Jersey

    2. Section 52.1570 is amended by adding new paragraph (c)(65) to 
read as follows:


Sec. 52.1570  Identification of plan.

* * * * *
    (c) * * *
    (65) Revision to the New Jersey State Implementation Plan (SIP) for 
ozone, submitting a New Jersey Clean Fleets program with Ozone 
Transport Commission Low Emission Vehicle (OTC-LEV) program as an 
effective backstop, substituted for the Clean Fuel Fleet program, dated 
February 15, 1996, March 29, 1996, and March 6, 1997, submitted by the 
New Jersey Department of Environmental Protection (NJDEP).
    (i) Incorporation by reference. Title 7, Chapter 27, Subchapter 26, 
``Ozone Transport Commission Low Emission Vehicles Program,'' effective 
December 18, 1995.
    (ii) Additional material.
    (A) Letter dated February 15, 1996 from NJDEP Commissioner Shinn to 
Region 2 Administrator Jeanne M. Fox transmitting first version of NJCF 
program.
    (B) Letter dated March 29, 1996 from NJDEP Commissioner Shinn to 
Region 2 Administrator Jeanne M. Fox supplementing February 15, 1996 
submittal.
    (C) ``SIP Revision for the Attainment and Maintenance of the Ozone 
National Ambient Air Quality Standards, New Jersey Clean Fleets (NJCF) 
SIP,'' March 6, 1997.
    (1) NJCF Appendix D: ``New Jersey Clean Fleets (NJCF) Program (1996 
Action Plan Recommendations).''
    (2) NJCF Appendix H: Response to Public Comments, NJCF Program, 
dated February 14, 1997.
    (3) February 20, 1998 letter from Sharon Haas, Principal 
Environmental Specialist, NJDEP, to George Krumenacker, Transportation 
Services Specialist I, Bureau of Transportation Services, New Jersey 
Department of Treasury.
    (4) March 25, 1998 Memo from Colleen Woods, Acting Director, Motor 
Vehicle Services, to Sharon Haas, Principal Environmental Specialist, 
NJDEP.
    3. In Sec. 52.1605 the table is amended by adding a new entry for 
Subchapter 26 under the heading ``Title 7, Chapter 27'' to the table in 
numerical order to read as follows:


Sec. 52.1605  EPA-approved New Jersey regulations.

----------------------------------------------------------------------------------------------------------------
                                     State
        State regulation           effective         EPA  approved  date                    Comments
                                      date
----------------------------------------------------------------------------------------------------------------
*                  *                  *                  *                  *                  *
                                                        *
Title 7, Chapter 27

[[Page 62955]]

*                  *                  *                  *                  *                  *
                                                        *
    Subchapter 26, ``Ozone           12/18/95  Nov. 10, 1998, 63 FR 62955....  Approves Subchapter 26 ``OTC-LEV
     Transport Commission Low                                                   program'' which as adopted
     Emission Vehicles Program''.                                               states that New Jersey will not
                                                                                implement its California LEV
                                                                                program in the event that EPA
                                                                                finds National LEV to be ``in-
                                                                                effect.'' EPA's March 2, 1998
                                                                                National LEV in-effect finding
                                                                                thus makes National LEV the
                                                                                effective program contained in
                                                                                Subchapter 26. Subchapter 26 is
                                                                                approved here as an effective
                                                                                enforceable backstop to
                                                                                voluntary New Jersey Clean
                                                                                Fleets program.
----------------------------------------------------------------------------------------------------------------

* * * * *
[FR Doc. 98-29968 Filed 11-9-98; 8:45 am]
BILLING CODE 6560-50-U