THIS IS A COURTESY COPY OF THIS RULE ADOPTION. THE OFFICIAL VERSION HAS BEEN PUBLISHED IN THE January 17, 2006 NEW JERSEY REGISTER AT 38 N.J.R. 497(b). SHOULD THERE BE ANY DISCREPANCIES BETWEEN THIS TEXT AND THE OFFICIAL VERSION OF THE ADOPTION, THE OFFICIAL VERSION WILL GOVERN.
OFFICE OF AIR QUALITY MANAGEMENT
Low Emission Vehicle (LEV) Program
Adopted Amendments: N.J.A.C. 7:27-26.1, 26.2, 26.3, 26.8 through 26.11, 26.15, 26.16, and 7:27A-3.10.
Adopted New Rules: N.J.A.C. 7:27-29.
Adopted Repeals: N.J.A.C. 7:27-26.3 through 26.7, and 26.12 through 26.14, and Appendix.
Proposed: August 1, 2005 as 37 N.J.R. 2762(a)
Adopted: November 28, 2005 by Bradley M. Campbell, Commissioner, Department of Environmental Protection.
Filed: December 19, 2005, as R.2006 d. 34 , with technical and substantive changes not requiring additional public notice and comment (See N.J.A.C. 1:30-6.3).
Authority: N.J.S.A 26:2C-1 et seq., particularly 26:2C-8.15 et seq., and 54:32B-8.55
DEP Docket Number: 24-05-06/460
Effective Date: January 17, 2006
Operative Date: January 27, 2006
Expiration Date: Exempt.
The Department of Environmental Protection (Department) has adopted new rules and amendments regarding the sale, for registration in New Jersey, of passenger cars and light-duty trucks delivered for sale in New Jersey on and after January 1, 2009.
The Department is amending N.J.A.C. 7:27-26, National Low Emission Vehicle (NLEV) and Heavy-Duty Diesel New Engine Requirements Program, to repeal the NLEV program portion of the rules. In addition, the Department is adopting a new Subchapter 29 to implement the California Low Emission Vehicle (LEV) program in New Jersey, as directed by N.J.S.A. 26:2C-8.15 et seq., and adding related penalties at N.J.A.C. 7:27A-3.10, Air Administrative Procedures and Penalties.
The comments the Department received on the proposed rulemaking are summarized and responded to below.
Summary of Hearing Officer’s Recommendations and Agency Responses:
Chris Salmi, Assistant Director of the Department’s Division of Air Quality, served as the Hearing Officer at the September 15, 2005 public hearing on the proposed rules and the proposed State Implementation Plan (SIP) revisions that the rules represent, held at the Trenton War Memorial, Memorial Drive, Trenton, New Jersey. The comment period for the proposal and the proposed SIP revision closed on September 30, 2005. The Hearing Officer recommended that the Department adopt the amendments, new rules and recodification as proposed, with the changes described below. The Department has accepted the Hearing Officer's recommendations. A record of the public hearing is available for inspection in accordance with applicable law by contacting:
Department of Environmental Protection
Office of Legal Affairs
ATTN: Docket No. 29-04-11/455
401 East State Street
PO Box 402
Trenton, New Jersey 08625-0402
This adoption document can also be viewed or downloaded from the Department's website at www.nj.gov/dep/aqm, where the Department has posted Air Quality Management rules, proposals, adoptions and SIP revisions.
Summary of Public Comments and Agency Responses:
The Department received oral and/or written comments on its proposed amendments from the following persons:
Thomas C. Austin, Sierra Research, Inc., at the request of the Alliance of Automobile Manufacturers
C. Dianne Black-Nixon, Aston Martin
Kelly Brown, Ford Motor Company
Kelly Brown, Large Volume Manufacturers
John Cabaniss, Jr., Association of International Automobile Manufacturers (AIAM)
Coralie Cooper, Northeast States for Coordinated Air Use Management (NESCAUM)
Gregory Dana, Alliance of Automobile Manufacturers
James S. Ehlmann, Large Volume Automobile Manufacturers
Christopher A. James, State of Connecticut, Dept. of Environmental Protection
Suzanne Leta, NJPIRG (New Jersey Public Interest Research Group)
Philip J. Morin III, Alliance of Automobile Manufacturers
Dena Mottola, NJPIRG; David Pringle, New Jersey Environmental Federation, Eric Stiles, NJ Audobon Society and Jeff Tittel, Sierra Club of NJ
Joseph S. Oswald, citizen
Dr. Kim M. Pacanovsky, citizen
Michael L. Pisauro, Jr., New Jersey Environmental Lobby (NJEL)
Gerald Plante, Subaru
David Pringle, himself and family, and New Jersey Environmental Federation (NJEF)
Theodore Spencer, Natural Resources Defense Council
Jeff Tittle, Sierra Club of New Jersey
Alan R. Weverstad, General Motors
Comments are arranged by section. If a comment does not pertain to a specific section of the rules, it has been placed under the “General Comments” category. The “General Comments” category has been grouped by topic. At the end of each comment, the specific commenter(s)is referenced by placing the above numbers in parentheses.
The comments are as follows:
General Comments Organized by Topic:
Comments in Support of Proposal
1. COMMENT: The LEV program is important for New Jersey, as the State’s air pollution is at the top of the list nationwide. Most importantly, adoption of the clean car program will give the biggest automakers in this nation the push they need to apply innovative research and development that could once and for all put our nation on the path to a zero emissions clean air future. Given the expected growth in automobile miles traveled in New Jersey in the next few decades, coupled with the need to protect our health and quality of life, a clean cars future is the only acceptable future.
Clean cars are not just critical to cleaning up unhealthy air pollution and global warming emissions, they also offer New Jersey consumers, business and government agencies the promise of energy security and financial stability in the face of tumultuous gas prices and world events.
The Department and the Codey Administration are to be applauded for moving forward with the adoption of the LEV program. Adopt these rules without delay, so that the rules may be in place by the end of the year and the program can follow in January of 2009. New Jersey’s citizenry can ill afford to wait any longer than they already have for the cleaner air, energy independence and economic security these cleaner cars can bring to us. (10, 14)
2. COMMENT: New Jersey simply cannot restore our air quality without adopting the strongest possible car emission standards (in addition to taking other steps). In addition to strengthening the limits on pollutants that cause substantial health and environmental harm, the LEV program ensures that New Jersey is using its buying power to encourage carmakers to bring cleaner advanced technology cars to the consumer market.
The benefits of the LEV program are well documented by the Department in this rule proposal, as well as by NESCAUM, and the other states that have adopted the program. The Department’s analysis of the positive benefits of the rules as outlined in the Social Impact and Environmental Impact is correct. Also, the Department’s analysis is correct in the Economic Impact section, finding that consumers would benefit economically and that the cost of compliance with the rules is negligible and not a burden to the State budget. The commenter submitted several reports in support of the rules: “Cars and Global Warming: Policy Options to Reduce New Jersey’s Global Warming Pollution from Cars and Light Trucks” and “Clearing the Air: The Low-Emission Vehicle II Program and Its Impacts on New Jersey.” (14)
3. COMMENT: The commenter supports the rules and the implementation of the LEV program in New Jersey. These rules reflect the intent of the Legislature and will carry out the mandate of the Legislature and Governor to come up with a program that will make New Jersey’s air cleaner. The State needs these rules to go forward, if it intends to maintain its air quality and look forward into the next century. (21)
4. COMMENT: The commenter very strongly supports this rule proposal, and the inclusion of the so-called Pavley amendments (amendments to the California law proposed by Assemblywoman Fran Pavley). The rules are especially pertinent in light of gas prices and the nation’s dependence on foreign oil and all the commensurate environmental and economic problems that come with it. (19)
5. COMMENT: It is important for the State to continue to move towards attainment of the National Ambient Air Quality Standards (NAAQS) and even to improve over that minimum standard. While not perfect, the LEV program that the Department seeks to implement is a useful tool to this end. (17)
6. COMMENT:The rules are a positive step toward controlling global warming emissions in New Jersey, and contribute significantly to nationwide goals. (20)
7. COMMENT: As Northeastern states assess the eight-hour ozone standard and the contribution of the mobile source sector to nonattainment areas, it is increasingly clear that mobile sources must be included in efforts to achieve and maintain healthy air for citizens. Further reductions in ozone precursors and toxic air emissions from motor vehicles in New Jersey will not only benefit the people of New Jersey, but will also benefit downwind states. As such, these reductions are crucial as states continue to work cooperatively towards meeting health-based air quality standards in our states and in the Northeast region. (9)
8.COMMENT: The reduction of criteria pollutant and greenhouse gas emissions is extremely important to Northeast state regulators and governors. States adopting the LEV program in lieu of the Federal Tier 2 program will realize an additional 10 percent reduction in NOx emissions from motor vehicles by 2020.
In terms of specific risks of climate change for the Northeast states, modeling suggests that average temperatures in New England could increase by 3.1 to 5.3 degrees centigrade by the year 2090, given increasing levels of greenhouse gases. Associated impacts on the region could include more frequent and intense storms, increased damage in coastal areas from flooding and erosion associated with sea level rises.
Given the current availability of technologies, the significant flexibility afforded to manufacturers in meeting the Zero Emission Vehicle (ZEV) program requirements, and the gradual ramp-up of the proposed greenhouse gas standards, the Northeast states believe the LEV criteria pollutant and greenhouse gas standards are fair and can be met in the timeframe set out in the rules. The commenter strongly supports New Jersey’s adoption of the LEV program. (6)
RESPONSE TO COMMENTS 1 THROUGH 8: The Department acknowledges the commenters’ support.
9. COMMENT: Since the President and Congress have done nothing to reduce our dependence on foreign oil, a change in the Corporate Average Fuel Economy (CAFE) standards would be a great way for states to take over that task, and ultimately save New Jersey residents many dollars on gas purchases. Gasoline prices will continue to be high, and United States’ consumption patterns will continue to threaten national security and fund terrorism. The Department should adopt California’s emissions standards. (16)
RESPONSE:The Department acknowledges the commenter’s support. The Department does not have authority to change the CAFE standards. That authority rests with the National Highway Traffic Safety Administration.
10. COMMENT: New Jersey has more vehicle miles traveled (VMT), more roads and streets per mile than any other state and drivers get stuck in traffic more. The reductions the State obtains from these rules are critically important. The Department should put this law into place sooner by advancing the starting date from 2009 to 2007 or 2008. In order to achieve greater reductions in emissions, the Department should also make the rules tougher and stronger and require even more Partial Zero Emission Vehicles (PZEVs) and Advanced Technology Partial Zero Emission Vehicles (ATPZEVs) and more, not fewer, Zero Emission Vehicles (ZEVs). (21)
RESPONSE: The Department agrees with the commenter that advancing the start date for the LEV program in New Jersey would provide greater emission reductions. However, the Department cannot advance the start date for two reasons. First, the authorizing statute prescribes a start date of January 1, 2009. Secondly, Section 177 of the Federal Clean Air Act Clean Air Act (42 U.S.C. §7507) requires that states adopting the California emission standards must provide automobile manufacturers with two model years of lead-time. Model year 2007 begins on January 2, 2006. As such, in order to comply with the two-model-year lead-time requirement, by adopting this rulemaking before January 2, 2006, the earliest that the Department can implement the LEV program is model year 2009. In regard to increasing the number of PZEVs, ATPZEVs and ZEVs, the Department cannot modify the required percentages of such vehicle classes in its rules because the Federal Clean Air Act permits the Department only to adopt rules identical to California's. The State can, however, take steps to encourage the sale of advanced technology vehicles through incentives. For example, the current sales tax exemption for ZEVs sold in New Jersey is one such incentive.
Greenhouse Gas Emission Standards Rules
11. COMMENT: New Jersey has clear authority under Section 177 of the Federal Clean Air Act to adopt the latest California emission standards for greenhouse gases. Global warming threatens the health, environment, and economic security. Rising temperatures will worsen smog levels; higher temperatures and higher pollution are a double danger to public health, especially for the elderly and the very young. Rising sea levels will eat away valuable coastal lands, increase flooding risks and force New Jersey taxpayers to bear billions of dollars in infrastructure rebuilding costs. (20)
RESPONSE: The Department acknowledges the commenter’s support.
12. COMMENT: Unless the Department adopts its separate rule proposal reclassifying carbon dioxide as an air contaminant, it lacks the authority to regulate carbon dioxide emissions from mobile sources and thus cannot promulgate rules limiting the emissions of greenhouse gases from automobiles.
The Legislature has required the Department to adopt California’s vehicle emissions standards, but the Legislature, when it enacted the current version of N.J.S.A. 26:2C-8.17 in 2003, could not have contemplated that greenhouse gas emissions would become part of California’s enactment of the LEV rules. (13, 22)
RESPONSE: The authorizing statute (N.J.S.A 26:2C-8.15 et seq.) requires the Department to adopt the LEV program. The greenhouse gas emission standards are part of the LEV program in California. Section 177 of the Federal Clean Air Act allows states to adopt the California emission standards provided such state standards are identical to California’s standards. As such, the Department has adopted the LEV program that includes the greenhouse gas rules.
The Department notes that it has adopted the rulemaking referred to by the commenter that reclassifies carbon dioxide as an air contaminant. (See 37 N.J.R. xxx(x), November xx, 2005.)
Furthermore, it is fair to assume that the Legislature in 2003 was sufficiently cognizant of the greenhouse gas problem to recognize the probability that greenhouse gas emission standards would become part of California’s LEV program. California legislative direction to CARB to include these standards in the LEV program occurred the previous year. As CARB relates in its ISOR (http://www.arb.ca.gov/cc/factsheets/cc_isor.pdf):
In 2002, recognizing that global warming would impose compelling and extraordinary impacts on California, the legislature adopted and the Governor signed AB 1493. That bill directs the California Air Resources Board (Board) to adopt regulations to achieve the maximum feasible and cost-effective reduction of greenhouse gas emissions from motor vehicles.
In addition, N.J.S.A. 26:2C-8.17b clearly contemplates “major substantive change[s] to the LEV program ....” 13. COMMENT: When the effect of the greenhouse gas element of the LEV rules is properly accounted for, the Federal Tier 2 program will likely provide greater control of ozone precursors. The proposed greenhouse gas rules will actually increase ozone precursors over the Tier 2 program for two reasons: the rebound effect of increased VMTs and lower fleet turnover rate due to higher vehicle prices. The rebound effect is the increase in travel that results from lower vehicle operating costs. Fleet turnover is the replacement of older, higher emitting vehicles in the vehicle population that results from the purchase of newly manufactured vehicles. These effects will not be counterbalanced by a reduction in ambient temperatures (and lower ozone) or a reduction in upstream emissions from less crude oil importation and refining operations. (1, 12)
14. COMMENT: Adoption of the LEV rules with the greenhouse gas provisions in New Jersey will result in increased VOC and NOx emissions in both 2020 and 2030 relative to a baseline where the Federal Tier 2 emission standards apply, rather than decreased emissions as claimed by the Department. These emissions increases are expected to increase ambient ozone and PM2.5 concentrations. The small reductions in emissions due to reduced gasoline consumption (fuel cycle) are overwhelmed by the increase in emissions due to the rebound and fleet turnover effects.
The Department has estimated that adoption of the exhaust and evaporative emission standards that formed the basis of the LEV program prior to the adoption of the greenhouse gas rules will reduce VOC and NOx emissions from motor vehicles by 6.8 tons per day Statewide in 2017. However, in arriving at this estimate, the Department did not analyze the impact of the California greenhouse gas rules on emissions of criteria and ozone-precursor pollutants. Instead, the Department refers to the CARB draft document of June 14, 2004, which does not contain a complete analysis of the rebound effect, and which was subsequently modified several times to correct errors and other methodological issues. The commenter performed an analysis that quantifies the changes in precursor pollutant emissions that would result in New Jersey from the proposed action. The results show increases in emissions of precursor and criteria pollutants, which will have to be accounted for in the State’s planning to reduce ambient concentrations of ozone and PM2.5. Specifically, implementation of the LEV program with the greenhouse gas rules is projected to result in increased emissions of VOC and NOx in New Jersey by 18.2 tons per day in 2020 and 9.5 tons per day in 2030. Based on this analysis, the Department should not proceed with adoption of the California rules because it will substantially increase smog-forming emissions. (11)
RESPONSE TO COMMENTS 13 AND 14:The Department modeled the ozone-precursor benefits of the LEV program using the United States Environmental Protection Agency’s (USEPA’s) most current methodology and computer models. The Department did not model the speculative effects of the proposed rules on consumer behavior and buying patterns to which the commenters refer, that is, the “rebound effect” and effects on fleet turnover.
The Department has reviewed the studies submitted by the commenter entitled “Evaluation of New Jersey’s Adoption of California’s Greenhouse Gas Regulations on Criteria Pollutants and Precursor Emissions,” dated September 30, 2005, and takes issue with several of the underlying assumptions used in the commenter’s analyses.
In regard to the analyses of fleet turnover, the commenter suggests that the costs of various technologies used to meet the greenhouse gas requirements will cause a significant increase in the cost of new vehicles, which they claim will result in depressed new vehicle sales (slowing the rate of fleet turnover). Both CARB and the commenter rely on projected costs of vehicle technologies developed by MARTEC Consulting. CARB generally cites cost estimates made in the NESCAF report which are derived from MARTEC and are generally on the lower end of cost projections. Sierra generally uses the higher end cost projections for the same technologies. The Department has reviewed both of the analyses and agrees with the cost projections made by CARB’s staff and in the NESCAF report and believes that the Sierra study overestimates the price impact of the greenhouse gas rules. In projecting the fleet turnover rate, the Department has relied on the expertise of the CARB and NESCAF analyses and the historic innovation of American industry to minimize cost. Additionally, the Sierra study overestimates the price impacts of the greenhouse gas rules due, in part, to its failure to recognize either the fact that manufacturers are allowed to buy and sell emission reduction credits or the compliance flexibilities that CARB has built into the greenhouse gas rules. These failures lead to an overestimate of the average price increases for vehicles produced by each manufacturer. For example, the study assumed vehicle-manufacturer-specific average price increases ranging from about $1,600 to $7,500 per vehicle, with relatively small operating cost reductions.
In regard to the study’s analyses of the VMT rebound effect, the Department believes that the conclusion of a 15.7 percent long-term rebound effect for New Jersey is without merit. The commenter has treated the VMT rebound effect as independent of other fiscal influences on the consumer, resulting in an overstatement of the rebound effect. For example, the recent gasoline price increases were not reflected in the commenter’s analysis of the costs of driving.
In response to similar consumer-behavior-related issues raised in a study of CARB’s proposed greenhouse gas rules conducted by Sierra Research, CARB contracted with the University of California (Davis and Irvine) to evaluate these econometric parameters and published the results in the document entitled "ARB Staff Responses to Comments Raising Significant Environmental Issues Regarding the Proposed Regulations to Control Greenhouse Gas Emissions from Motor Vehicles," dated August 04, 2005 (CARB’s Supplemental Analyses, available at CARB’s website at http://www.arb.ca.gov/regact/grnhsgas/att3.pdf). The Department has reviewed CARB’s analyses and agrees with its conclusions. The study conducted for CARB by the University of California is a more robust study relative to the study conducted by the commenter. The CARB study looked at 1,785 data points from a cross-section of states for the period 1966 to 2001 and used a more complex approach to estimate the rebound effect. The CARB study also looked at other factors that affect VMT, such as travel congestion and income level. The study conducted by the commenter treats the rebound effect as independent of other fiscal influences on consumers and does not take into account other factors that influence VMT, such as seasonal driving patterns and homeland security concerns, that can result in increased VMT.
The CARB Supplemental Analyses found a rebound effect much lower than found in the analyses referred to by the commenters and found no significant effect on fleet turnover. CARB staff also reviewed Sierra Research’s findings regarding the “rebound effect” and concluded that the purported emission increase due to higher estimates of the rebound effect cannot be supported.
Regarding the overall effects of the proposed greenhouse gas regulations on criteria pollutant emissions, CARB concluded in its Supplemental Analyses that even taking all such factors into account, the net effect of the regulation would still be a reduction in criteria pollutant emissions.
As such, after reviewing the evaluations submitted by the commenter and after reviewing CARB’s responses to a similar evaluation performed by the commenter on California’s rule proposal, the Department believes its projected emission reduction benefits for the new rules were soundly derived and finds no basis to modify those projections. The Department will continue to evaluate the issues relevant to the greenhouse gas standards and share these evaluations with the Low Emission Vehicle Review Commission.
15. COMMENT: The greenhouse gas rules would impose substantial costs on New Jersey residents with no corresponding benefits. The average cost increase for vehicles will be more than $3,000 and the cost will not be fully recoverable by fuel cost savings. In exchange for these costs there will be no discernable effect on climate. (3, 4, 7, 13, 22)
RESPONSE: The Department finds the cost estimates made by CARB in support of its greenhouse gas rules to be reasonable and supportable. CARB’s cost estimates are much lower than those put forth by the commenters and CARB indicates the costs will be fully recoverable through fuel savings. Specifically, CARB estimated average cost increases for its near-term standards (2009-2012, yielding about a 22 percent reduction in greenhouse gas emissions compared to the 2002 fleet) as well as its mid-term standards (2013-2016, yielding about a 30 percent reduction). For the near-term standards, CARB states that the maximum cost increase would occur in 2012. CARB estimates that this 2012 cost increase would be an average of $367 for passenger cars and small trucks/sport utility vehicles (SUVs), and $277 for large trucks/SUVs. For the mid-term standards, CARB states that the maximum cost increase would occur in 2016. CARB estimates that this 2016 cost increase would be an average of $1,064 for passenger cars and small trucks/SUVs, and $1,029 for large trucks/SUVs. See CARB’s Final Statement of Reasons, August 4, 2005, http://www.arb.ca.gov/regact/grnhsgas/fsor.pdf. CARB concluded that the increased costs would be more than offset by operating cost savings over the lifetime of the vehicle. Rising fuel prices will shorten the payback time even further.
The greenhouse gas emission reductions in New Jersey will contribute to regional and national efforts to reduce greenhouse gas emissions. See Response to Comments 29 through 32 for a discussion of the positive effect that these rules will have on climate in New Jersey by reducing greenhouse gas emissions.
16. COMMENT: The Department should not accept CARB’s assumptions that the industry would pursue nationwide deployment of the greenhouse gas technologies, and it should develop more accurate estimates of the costs of compliance with the regulation for residents of New Jersey. (13, 22)
RESPONSE: The Department has reviewed CARB’s assessment made on page 4 of its Final Statement of Reasons (FSOR) in the section entitled “Fiscal Impacts,” and agrees with its conclusions, incorporated herein by reference. (CARB did not assume nationwide deployment of the greenhouse gas technologies in its proposal.) CARB reaches the following conclusions in that section:
In general, the steps that manufacturers will need to take to comply with the regulatory standards are expected to lead to price increases for new light duty passenger vehicles. Many of the technological options that manufacturers will choose to comply with the regulation are also expected to reduce operating costs.
(CARB’s FSOR is available at http://www.arb.ca.gov/regact/zev2001/fsor.pdf.) The staff analysis concludes that over the lifecycle of the vehicle the reduction in operating costs will more than offset the increased initial cost, resulting in a net savings to vehicle owners. As CARB states on page 156 of its FSOR:
“The rulemaking is not based an assumption that greenhouse gas technologies would migrate to vehicles nationwide. As noted in the ISOR (p. 81), staff expects that due to voluntary agreements and regulations already in force in Canada, Europe and Japan, as well as adoption of California’s greenhouse gas requirements by states in the northeast and elsewhere, there will be plenty of demand for high volume production of greenhouse gas reduction technologies anticipated in the ISOR.”
Furthermore, the Department has reviewed CARB’s cost estimates for the greenhouse gas rules and believes they are representative and will apply to new vehicles offered for sale in New Jersey, yielding a net savings for New Jersey’s new car buyers.
17. COMMENT: The proposed rules restrict the amount of carbon dioxide a vehicle may emit, which is directly proportional to the amount of fuel the vehicle consumes. Therefore, this proposal is equivalent to the establishment of new vehicle fuel economy standards for the State of New Jersey. Federal law clearly states that only the National Highway Traffic Safety Administration is authorized to regulate fuel economy. (2, 3, 4, 5, 7, 12, 13, 17, 18, 22)
RESPONSE: The greenhouse gas emission standards are part of the LEV program in California. The authorizing statute (N.J.S.A 26:2C-8.15 et seq.) requires the Department to adopt the LEV program. As such, the Department has adopted the LEV program that includes the greenhouse gas rules. CARB, in its rulemaking process, has responded to comments regarding the issue of Federal preemption of fuel economy standards. While improving fuel economy will contribute to the reduction of greenhouse gas emissions from motor vehicles, it is not the only means of doing so. New Jersey, like California, seeks to reduce carbon dioxide equivalent emissions from motor vehicles by implementing these greenhouse gas emission standards. The Department has reviewed CARB’s responses on this issue and agrees with its conclusions. See CARB, Regulations to Control Greenhouse Gas Emissions From Motor Vehicles, Final Statement of Reasons (FSOR), in the section entitled "The Federal Fuel Economy Program," beginning on page 358 and ending on page 368, (August 4, 2005), incorporated herein by reference. (Throughout this document the Department has referred to and incorporated by reference portions of the CARB FSOR. Accordingly, the Department has appended the relevant portions to this document.)
18. COMMENT: Control of greenhouse gases requires coordinated international efforts, using policies set for this country at the national level, rather than through a patchwork of state regulations. The commenter supports the worldwide effort to reduce energy consumption and address the issue of climate change and calls on New Jersey and California to focus their efforts in support of existing national programs. (12)
RESPONSE: The Department agrees that coordinated international efforts are critical, but such international and national efforts are not enough and waiting for them would represent a lost opportunity to make real advances on the state and regional level. As several new states in the Northeast and the Northwest exercise their rights under the Federal Clean Air Act to adopt the California emission standards, the magnitude of the greenhouse gas emission reductions grows substantially.
The Department has developed a Greenhouse Gas Action Plan. This plan identifies strategies to achieve the goal of a 3.5 percent reduction in New Jersey's greenhouse gas emissions below 1990 levels by 2005. In addition, New Jersey is an active participant in the Regional Greenhouse Gas Initiative (RGGI), joining Connecticut, Delaware, Maine, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont in talks about developing a “cap-and-trade” program for greenhouse gas emissions from electric generation units.
19. COMMENT: The California motor vehicle greenhouse gas regulation is invalid under the Dormant Commerce Clause of the U.S. Constitution because it excessively burdens interstate commerce in “relation to [its] putative local benefits.” Pike vs. Bruce Church, Inc. 397 U.S. 137, 142 (1970). (13, 22)
RESPONSE: CARB received similar comments during its rulemaking process and addressed the issue in its Final Statement of Reasons. The Department has reviewed CARB’s responses on this issue and agrees with its conclusions and responses to these comments. SeeCARB, Regulations to Control Greenhouse Gas Emissions from Motor Vehicles, FSOR, specifically the section entitled "The Federal Commerce Clause" that begins on page 372 and ends on page 373 (Aug. 4, 2005), incorporated herein by reference. (See Appendix.)
20. COMMENT: The California standards applicable to passenger cars and light-duty trucks are a package, and Section 177 of the Federal Clean Air Act requires a state to opt for either the entire California package or the applicable Federal standards. Starting in model year 2009, the current California package will also include its greenhouse gas emission standards. If New Jersey adopts those standards by January 2, 2006, then its standards will continue to track California’s identically. If New Jersey were not to adopt the California greenhouse gas standards by this date, New Jersey could be forced to revert to the Federal standards for model year 2009. In addition to losing the greenhouse gas emission reductions and other benefits (reduced net ownership and operating costs) of the California standards, New Jersey would also lose the reductions in smog-forming pollutants provided by the California standards. (20)
RESPONSE: The Department acknowledges the commenter’s support. In response to the commenter’s statement regarding being forced to revert to the Federal standards, it should be noted that there are no comparable Federal standards for greenhouse gases.
21. COMMENT: New Jersey’s background documents for this rulemaking suggest that opt-in states like New Jersey must adopt California’s vehicle greenhouse gas regulations in order to keep the LEV rules. But this is not the case – New Jersey is not required to take California’s greenhouse gas program. This is because the California program for controlling smog-forming vehicle emissions can be segregated from the greenhouse gas program and still be fully functional and enforceable, thereby complying with the “identicality” requirement of the Federal Clean Air Act. Like the ZEV mandate, the greenhouse gas rules are severable from the LEV program, and their adoption is not necessary for New Jersey to retain the LEV standards for tailpipe pollutants. (3, 4)
RESPONSE: The authorizing statute (N.J.S.A 26:2C-8.15 et seq.) requires the Department to adopt the LEV program to provide for greater reductions in pollutants relative to the Federal vehicle emissions standard program. The greenhouse gas emission standards are part of the LEV program and will reduce greenhouse gas emissions, while also helping to reduce ozone formation and impede the formation of particulate matter. As such, the Department’s adoption of the LEV emission standards is consistent with the New Jersey Legislature’s findings.
22. COMMENT: Adoption of the California greenhouse gas rules would not serve the best interests of New Jersey consumers or the New Jersey economy. The analysis offered to support the rule is deeply flawed and needs the Department’s independent review. The Department should carefully consider all the relevant issues before it decides whether to remain in the California program or to rely on the Federal motor vehicle fuel economy and emissions rules. (12)
RESPONSE: The Legislature directed the Department to promulgate rules to adopt the LEV program. The LEV program’s emission standards include the greenhouse gas emission standards. The Department has evaluated the impacts of the rules for New Jersey from economic, social and environmental perspectives and concluded that the LEV program will provide New Jersey with significant environmental benefits at a reasonable cost. As such, the Department has proceeded with adoption of these rules consistent with the legislative findings and its statutory authorization. The Department’s evaluations of the impacts of the new rules are set forth in the Summary section of the proposal, at 37 N.J.R. 2762.
23. COMMENT: Manufacturers will eventually be forced to limit the availability of certain vehicles, which will harm New Jersey’s dealers and reduce consumer choice. (3, 4)
24. COMMENT: Adoption of these rules will result in restrictions in the number and types of new vehicles that the commenter will be able to offer its dealers for sale in New Jersey. Product restrictions and higher vehicle prices will lead to large employment losses in the United States. Consequently, the Department should use the discretion that it has under the Federal Clean Air Act and not adopt the separate and severable California greenhouse gas regulation. (22)
25. COMMENT: The auto industry has spent the past three and a half decades improving the fuel economy of vehicles. Consumers, not the government, should be the ones to decide how much they value fuel economy relative to other factors such as performance or cargo-carrying capability. The proposed greenhouse gas rules fail to account for consumer preferences and have the effect of limiting consumer choice. (3, 4, 7, 13, 22)
26. COMMENT: The proposed rules set fuel economy levels that cannot be achieved using technology in the time periods required, without significant reductions in product offerings for New Jersey consumers. Programs, like California’s, that disrupt normal and competitive market cadences, impede the effort to bring new products to market in a manner that allows the industry to use its resources efficiently, and thus best serve our customers. The customers of full-line manufacturers, whose market mix is focused towards larger vehicles, would be the most negatively affected by the proposed rules. The Department should independently assess how the California rules will affect product offerings and costs in New Jersey. (12)
RESPONSE to COMMENTS 23 through 26:The Department believes that these adopted rules represent an emissions reduction strategy that provides demonstrable economic benefits to individual citizens as well as the general public and the environment. Given the gradual ramp-up of the proposed greenhouse gas emission standards and the current availability of technologies, the Department believes the standards are fair and can be met in the timeframe set out in the LEV rules. Furthermore, the rules will reduce greenhouse gas emissions, ozone-precursor emissions and air toxic emissions. For example, a Northeast States Center for a Clean Air Future (NESCCAF) study released in September 2004 (“Reducing Greenhouse Gas Emissions from Light-Duty Motor Vehicles”), found that the greenhouse gas emission standards implemented in the 2009 to 2015 timeframe would save consumers $300.00 to $2,200 over the life of the vehicle. These savings assumed a gasoline cost of $2.00 per gallon and a vehicle life of 150,000 miles. (The NESSCAF study is available from the NESCAUM website at http://bronze.nescaum.org/committees/mobile/rpt040923ghglightduty.pdf.)
Regarding model availability and consumer choice, the greenhouse gas rules were specifically developed by CARB under statutory requirements not to limit consumer choice as to type, performance, or weight. Under the greenhouse gas emissions standard requirements, the manufacturer’s obligation is to have its overall fleet mix meet an annual greenhouse gas emissions average standard. This standard gradually declines and is set based on the manufacturer with the least-developed technology. There is no requirement to develop a specific type of vehicle. The Department has no reason to believe that model availability will be constrained under these rules.
27. COMMENT: A study prepared by Harbour Consulting on July 15, 2005, entitled The Effects of AB 1493 on U.S. Employment in the Automotive Manufacturing Industry, concluded that the proposed rules, when fully implemented, would reduce employment in the automobile industry nationwide at manufacturing, supplier and distribution facilities. The commenter has more than 1600 employees, 132 dealers, and 217 suppliers in New Jersey.
The commenter is disproportionately penalized because of its model mix. Supporters of the California rules in New Jersey, along with the Department, in its Economic and Jobs Impact Statements, appear to assume that New Jersey dealers will be able to continue to sell the same number of vehicles to New Jersey residents and to residents of other states, regardless of whether the CARB rules apply in New Jersey. Such an assumption is unrealistic. The higher prices required for California-compliant vehicles will reduce demand for new vehicles within New Jersey. CARB has conceded this point for the California new-vehicle market; the only issue is how much vehicle sales in the regulated areas will decline.
Few if any consumers who are not required to purchase a California vehicle will choose to pay the price premium for a vehicle that meets the California standards. To the extent that residents of other states near New Jersey are not subject to the California rules, New Jersey dealers can expect to lose all or nearly all so-called “cross-border sales” once the California rules comes into effect. Those out-of-State consumers who want vehicles with higher fuel economy will be able to purchase them from dealers located outside New Jersey, who now and in the future will have an ample supply of higher-mileage vehicles for sale. (12)
28. COMMENT: The Department does not provide any estimated “pay-back period” over which it predicts that consumers will recover the costs of vehicles designed to meet the California standards. (13, 22)
RESPONSE to COMMENTS 27 and 28: The conclusions in the study submitted by the commenter are based on an overriding premise that passenger car and light-duty truck sales would be reduced by 75 percent as a result of the greenhouse gas rules. The study surmises that the effects of these lost vehicle sales would be felt throughout the automobile industry as lost jobs. The CARB, on the other hand, based on its staff analysis, concluded that there would be no significant adverse impact on California’s economy due to the greenhouse gas rules. (CARB, ISOR, August 6, 2004, available from CARB’s website at http://www.arb.ca.gov/regact/zev2001/isor.pdf). The CARB’s staff assessment found that the reduced operating costs resulting from the greenhouse gas rules would be sufficiently attractive to new car buyers to compensate for the vehicle price increase, so that vehicle sales volumes would not change from the levels expected without the rules. In direct disagreement with the results of the study submitted by the commenter, the CARB staff report concludes that the net results of increased new vehicle prices and lower operating costs is a tendency to increase sales in the near term, and to slightly decrease sales in the longer term as the more stringent second step of the rules is fully phased in.
Furthermore, CARB found that savings from reduced vehicle operating costs would end up as expenditures for other goods and services, thus having a positive impact on the economy. CARB concluded that these expenditures would flow through the economy, causing expansion or creation of new businesses in several sectors of the economy. The CARB staff analysis concluded that at a fuel price of $1.74 per gallon the greenhouse gas reduction technologies would more than pay for themselves over the life of the vehicle, and the rules as a whole would have small but overall positive effects on the California economy. At current fuel price levels, the net benefits increase both for individual consumers and for the New Jersey economy as a whole.
The Department does not share the commenter’s concern regarding the loss of cross-border sales. Many of New Jersey’s neighboring states have adopted the LEV program, which they are expected to implement by model year 2009 or sooner. In addition, dealers in New Jersey will not lose sales to non-LEV states as N.J.A.C. 7:27-29.3(a) prohibits the registration of non-compliant vehicles in the State. See also CARB’s Final Statement of Reasons, comment numbers 247 through 250, the responses to which are incorporated herein by reference. (See Appendix.) The Department has reviewed CARB’s responses to these comments and agrees with its conclusions.
As regards a payback period, CARB has estimated that projected operating cost savings of the greenhouse gas standards are estimated to yield payback periods well short of the assumed average vehicle lifetimes. CARB estimates that the near-term standard (for model year 2012) is estimated to result in a two-year payback period and the mid-term (model year 2016) will result in a five-year payback. (See CARB’s FSOR, page 165, incorporated herein by reference.) (See Appendix.)
29. COMMENT: The proposed rules would have no measurable impact on the global climate or the climate of New Jersey, or on the public health concerns and issues described in the Regulatory Impact Statement that accompanied the rulemaking proposal. (12)
30. COMMENT: These proposed rules would impose significant costs on society, particularly consumers, dealers, and manufacturers, with no measurable positive impact on air quality, health issues, or global climate change. (3, 4)
31. COMMENT: There will be no measurable environmental benefits from the California greenhouse gas rules and the impacts on human health and the environment can even be expected to be negative. In view of these considerations, New Jersey should not adopt the California motor vehicle greenhouse gas rules. (22)
32. COMMENT: The Department cannot attribute any significant reduction in global warming, or any other discrete impact on climate, to the implementation of the California greenhouse gas rules in New Jersey. (13, 22)
RESPONSE to COMMENTS 29 through 32:NESCAUM recently completed a study to estimate the greenhouse gas emissions reductions that could be achieved for each Northeast state. (This study is available from NESCAUM’s website at http://bronze.nescaum.org/committees/mobile/summary051018ghg.pdf.) Because the study was only recently completed, the Department did not consider it at the time of this rulemaking. However, it is worth noting that the study lends further support to the Department’s position that the greenhouse gas rules will significantly reduce greenhouse gas emissions in New Jersey. The results of the NESCAUM study for New Jersey are a reduction of 24 percent in motor vehicle carbon dioxide equivalent emissions or 18.4 million tons of carbon dioxide equivalent emissions in New Jersey in 2030.
In New Jersey, the largest collective source of greenhouse gas emissions is from the transportation sector. While the overall impact on climate may initially be small, the impacts will grow with the implementation of additional greenhouse gas emission-reduction strategies. The Regional Greenhouse Gas Initiative will provide policy for further greenhouse gas reductions on a regional basis. In the aggregate, with the anticipated reductions from the three West Coast states (California, Oregon and Washington) and the minimum of six states in the Northeast that have adopted or recently proposed the LEV program, including its greenhouse gas component, the aggregated reductions in greenhouse gas emissions will be significant.
33. COMMENT: It is prudent for New Jersey to await the outcome of on-going California LEV/ZEV and greenhouse gas litigation and any resultant rulemaking by CARB before adopting such standards. California standards in this area have a complex and variable history that has created confusion and required new rounds of regulatory action when states have prematurely adopted California standards. New Jersey would benefit from California’s experience as it develops its own plan. (18)
RESPONSE: The authorizing statute specifies a start date of January 1, 2009. Even if the Department had the discretion to delay implementation of the program, doing so would mean a significant loss in the air quality benefits the State could otherwise realize from this program.
34. COMMENT: CARB’s engineering and financial evaluations are flawed. To the extent the Department’s proposed adoption of the California greenhouse gas rules is predicated on these fatally-flawed CARB findings, the Department’s proposal for New Jersey is similarly flawed. Accordingly, the Department should withdraw its proposal, and New Jersey should align itself with the Federal regulatory programs related to emissions and fuel economy. (22)
RESPONSE: The Department has adopted the greenhouse gas standards because they are part of the California LEV program, which the New Jersey Legislature has directed the Department to implement. Additionally, the Department does not find merit in the commenter’s challenge to CARB’s evaluations. CARB responded to the issues raised by the commenter in detail during its rulemaking process. The Department has reviewed and agrees with CARB’s responses to these comments, incorporated herein by reference. The CARB’s detailed responses to the issues raised by the commenter can be found in CARB’s report entitled “Regulations to Control Greenhouse Gas Emissions from Motor Vehicles, Final Statement of Reasons,” (Aug. 4, 2005) (CARB’s FSOR is available at http://www.arb.ca.gov/regact/zev2001/fsor.pdf.). The Department incorporates CARB’s responses to the commenter on this same issue, set forth at Sections III A and B of CARB’s FSOR, by reference. (See Appendix.)
35. COMMENT: The greenhouse gas rules would compromise traffic safety. Reductions in vehicle weight have in the past been shown to reduce vehicle crashworthiness. (13, 22)
RESPONSE: Please see CARB’s responses to comments numbered 191 through 193 on pages 133 and 134 in CARB’s Final Statement of Reasons (FSOR) for CARB’s response to this issue. The Department has reviewed and agrees with CARB’s responses on this issue, incorporated herein by reference. (See Appendix.) Briefly summarized, the greenhouse gas rules can be implemented without any negative effect on vehicle safety. The technology exists today to comply with the greenhouse gas rules while maintaining vehicle safety and a wide variety of vehicle choices. With today’s vehicle technologies, vehicle safety is a function of design and not vehicle weight. No one element is a guarantor of safety. Finally, it should be noted that the greenhouse gas emission standards neither require nor encourage downsizing of vehicles.
36.COMMENT: In its rules, CARB lists alternative compliance mechanisms that it suggests manufacturers could employ to comply with the greenhouse gas rules. The reality is that many of these mechanisms are not generally available to the regulated community. The Department should show what types of alternative compliance plans are economically practicable and approvable. In regard to grid-connected hybrid vehicles (GHEVs), the Department should explain why it believes that GHEVs will be a significant factor in compliance plans, or state that they will not be. (13, 22)
RESPONSE: The alternative compliance mechanisms available to manufacturers under CARB’s rules are also available in New Jersey for those manufacturers wishing to employ them. An example of an alternative compliance mechanism would be alternative fuel projects for fleets that use fuels that result in a decrease in greenhouse gas emissions relative to conventional fuel blends. A manufacturer employing such alternative compliance mechanism would earn greenhouse gas reduction credits that could be applied towards compliance with the greenhouse gas standards. The Department has reviewed CARB’s responses on the issue of alternative compliance plans and agrees with its conclusions. See CARB, Regulations to Control Greenhouse Gas Emissions From Motor Vehicles, Final Statement of Reasons (FSOR), Section 6.6, entitled “Alternative Compliance Strategies,” starting on page 221 and ending on page 223, (August 4, 2005), incorporated herein by reference. (See Appendix.)
In regard to GHEVs, the Department believes that the revisions that CARB made to its rules regarding credits for GHEVs will provide further incentive for manufacturers to employ this technology in their compliance plans. Also, please see CARB’s responses to this issue on pages 331 through 334 of its FSOR. (See Appendix.) The Department has reviewed CARB’s responses on the issue of credits for GHEVs and agrees with its conclusions, which it incorporates herein by reference.
CARB has modified its rules to remove disincentives for manufacturers to earn credits for employing grid-connected hybrid electric vehicle technologies. Manufacturers can now earn greenhouse gas emission credits for the first model year in which the grid-connected hybrid vehicle is produced and delivered for sale. CARB previously did not allow manufacturers to earn credits for the first model year of introduction.
The Department believes that grid-connected hybrid vehicle technology offers a promising technology for consumers and the environment. The Department is aware of consumer interest in the automotive aftermarket for converting existing hybrid electric vehicles to grid-connected hybrid technology.
37. COMMENT: The California LEV greenhouse gas rules are applicable to large-volume manufacturers beginning in 2009 model year, but are delayed until 2016 for small and intermediate-volume manufacturers. The companies that fall into the small and intermediate threshold include major global companies such as Volkswagen and BMW that have no inherent weaknesses that would justify this degree of regulatory preference. This creates a competitive disadvantage and is unfair to large-volume domestic manufacturers in particular. New Jersey should not give the same unfair advantage to the small and intermediate-volume manufacturers.
RESPONSE: The New Jersey Legislature has directed the Department to implement California’s LEV program, which includes the greenhouse gas emission standards. Accordingly, the Department does not have the discretion to depart from CARB’s program in the way suggested by the commenter. Please also see CARB’s responses to comment number 530 on pages 321 and 322 in CARB’s Final Statement of Reasons (FSOR) for CARB’s response to the issues raised by the commenter. The Department has reviewed and agrees with CARB’s responses on this issue, incorporated herein by reference. (See Appendix.)
LEV Program Benefits 38. COMMENT: The USEPA has estimated that implementation of the LEV program in New Jersey would, in 2020, reduce VOC emissions only by about one percent and reduce air toxics emissions only by about two percent. (1)
39. COMMENT: Adoption of the LEV standards provides no significant environmental benefit over Tier 2 standards. (2)
40. COMMENT: The LEV program will not make as much of an impact on VOC and NOx emissions as stated in the proposal. The Federal program will probably end up resulting in the same or greater reductions. (7)
41. COMMENT: Adoption of the LEV standards will provide no additional environmental benefits to the State of New Jersey. In the past, several states have relied on information reported in 2003 by NESCAUM. NESCAUM performed a re-analysis that reflected some but not all of USEPA’s criticisms of the previous modeling. The new NESCAUM analysis predicts only a three-percent emissions benefit for hydrocarbon emissions and nitrogen oxide emissions for the LEV program versus the Federal Tier 2 program based on implementation in model year 2004. Later implementation, such as in the 2009 model year as proposed by New Jersey, would provide even smaller emission benefits. Furthermore, these emission benefit projections fail to consider changes currently under consideration in the Federal program, such as air toxics standards and more stringent vehicle emission standards, likely to be in effect in the 2009 to 2010 time frame. These standards would reduce, if not totally offset, any emission benefits of the LEV program over the Federal program. In fact, for some states the Federal program with these changes may provide better emissions benefits than the LEV program. (5, 18)
RESPONSE to COMMENTS 38 through 41: The Department modeled the benefits of the LEV program for New Jersey using the USEPA’s approved mobile source emissions model and approved methodologies. The Department’s analyses show a reduction of 6.8 tons per day of VOC and NOx in 2017 for adoption of the LEV program in 2009 versus the Federal Tier 2 program. In conducting these analyses, the Department modeled the current Federal Tier 2 program. The Department believes it would be inaccurate to compare the adopted LEV program to future, speculative changes to the Federal Tier 2 program.
LEV Review Commission 42. COMMENT: The legislation mandating the adoption of the LEV program required the establishment of a review commission on the LEV issue. Proposing rules prior to convening the commission is contrary to the law. (3, 4, 7)
RESPONSE: The functions and powers of the LEV Review Commission are enumerated in the authorizing statute. Those functions include studying advancements made in ZEV and ATPZEV technologies, the adequacy of incentives to encourage the purchase of ZEVs and the feasibility of the ZEV requirement. The authorizing statute does not preclude the promulgation of the LEV program rules prior to the Commission’s formation and meeting.
Public Process 43. COMMENT: The Department has skipped the important steps of developing data and hearing presentations from various experts. (3, 4, 7)
RESPONSE: The Department met with representatives of the automobile industry and environmental groups prior to formulating the regulatory proposal. The Department also relied on data developed by CARB and the USEPA, and where necessary, extrapolated from this data to conform to New Jersey-specific conditions and other circumstances.
44. COMMENT: The proposed State greenhouse gas standards for motor vehicles are inconsistent with section 177 of the Federal Clean Air Act, which provides that eligible states may adopt only “California standards for which a waiver has been granted” by the USEPA under section 209 of the Federal Clean Air Act. At this time the USEPA has not granted, or even considered, a section 209 waiver for California’s vehicle greenhouse gas standards, and, in fact, California has not yet requested such a waiver. Any action by New Jersey is premature at this time. (2, 5, 18)
RESPONSE: Section 177 of the Federal Clean Air Act states that eligible states may only “adopt and enforce . . . California standards for which a waiver has been granted” by the USEPA under section 209. 42 U.S.C. § 7507 (emphasis added). The Second Circuit has held that “the waiver is a precondition to enforcement of the standard that has been adopted. Motor Vehicles Mfrs Ass’n v. New York State Dept. of Envtl. Conservation, 17 F.3d 521, 534 (2d Cir. 1994). Accordingly, a state may adopt California’s emission standards before the USEPA grants a waiver, “so long as [the state] makes no attempt to enforce the plan prior to the time when the waiver is actually obtained.” Ibid. Thus, New Jersey may adopt California’s greenhouse gas emission standards prior to the time that the USEPA grants a waiver and still meet the requirements of section 177. Alternatively, to the extent that the greenhouse gas emission standards are within the scope of an existing waiver granted by USEPA under section 209 of the Federal Clean Air Act, enforcement of such standards adopted under 177 need not await USEPA’s grant of further waiver.
Comments Organized by Rule Section
N.J.A.C. 7:27-29.1 Definitions 45. COMMENT: The Department should clarify a few of the definitions in Section 7:27-29.1 to ensure that the intention of the rules is met. The definitions of the terms “intermediate volume manufacturer” and “large volume manufacturer” seem inconsistent. Also, the definition of “small volume manufacturer” is missing. The definition of “test vehicle” should be modified to indicate that a test vehicle in New Jersey would not require a California Executive Order (EO). It is unlikely that CARB would issue an EO for a test vehicle that is only being operated in New Jersey. “Vehicle equivalent credit” is a term used by California to define medium-duty vehicle credits and to calculate compliance with the medium-duty vehicle requirements. The term “vehicle equivalent credit” for ZEVs should be modified to “vehicle equivalent ZEV credit” to avoid any confusion with the California medium-duty vehicle term. (3, 4)
RESPONSE: The Department agrees that the definitions of “intermediate volume manufacturer” and “large volume manufacturer” need to be clarified due to an inconsistency in the wording. Therefore, the Department has modified on adoption the definition of “large volume manufacturer” by adding the phrase “means a manufacturer that has been designated by CARB as a large volume manufacturer” to be consistent with the definition of “intermediate volume manufacturer.” The definition of “small volume manufacturer” is not included in the rules because this term is not used in the rules.
No change to the definition of “test vehicle” is needed because the Department is following the process as outlined in CARB’s Manufacturer’s Advisory Correspondence in regard to test vehicle designation. As such, no change was made on adoption. There is also no need to change the definition of “vehicle equivalent credit.” Although the commenter is correct that the term is also used in regard to medium-duty vehicles, the Department believes the definition is clear in stating that the definition applies to ZEV credits.
46. COMMENT: It is imperative that the Department adopt Alternative 1, which provides for proportional credits. If the Department does not adopt Alternative 1, manufacturers would be forced to produce unique vehicles in order to comply in New Jersey, which is prohibited by the Federal Clean Air Act. All of the other states that have recently adopted the ZEV regulations have adopted proportional credit provisions. (3, 4, 7)
RESPONSE: The Department has adopted Alternative 1 and did not adopt Alternative 2. The Department has adopted Alternative 1 because it believes the proportional crediting process is appropriate to assist the automobile manufacturers in transitioning into the ZEV sales requirement in New Jersey. As such, the Department has adopted the definitions included under “Alternative 1” at N.J.A.C. 7:27-29.1 for “California credit balance” and “California credit ratio.” In addition, the Department has adopted N.J.A.C. 7:27-29.7(l) and (m), proposed as “Alternative 1” (the Department had proposed ending N.J.A.C. 7:27-29.7 after (k) as “Alternative 2”).
N.J.A.C. 7:27-29.2 Purpose and 7:27-29.3 Applicability—LEV Program
47. COMMENT: The proposed approach of starting the program on January 1, 2009 does not work for the fleet average and ZEV requirements that are based on full model year compliance. Manufacturers determine fleet average compliance based on model year, not calendar year. The proposed start date will also be confusing for manufacturers, dealers, customers, and the Motor Vehicle Commission in terms of determining which vehicles can and cannot be sold, purchased and registered in New Jersey. January 1, 2009 is in the middle of the 2009 model year. The next full model year would be 2010, which begins as early as January 2, 2009. As such, the program should be effective with the 2010 model year. (3, 4, 7, 17)
48. COMMENT: The concept of a “split model year” was considered and rejected in Motor Vehicle Manufacturers Association v. New York DEC, 17 F. 3d 521 (2nd Cir. 1994). In that case, the issue was the application of the two-year lead-time provision in Section 177 of the CAA. New York adopted the California standards on May 28, 1992, and it sought to begin enforcing those standards in May 1994 for the 1995 model year. Automobile manufacturers objected on the grounds that the 1995 model year commenced prior to May 1994. The U.S. District Court for the Northern District of New York held that the model year 1995 standards were not enforceable against any manufacturer that commenced production of 1995 model year vehicles prior to May 28, 1994 (MVMA v NYDEC, 831 F. Supp. 57 (1993)). (8)
RESPONSE to COMMENTS 47 and 48: The Department has adopted January 1, 2009 as the start date for implementing the LEV program in New Jersey as mandated by P.L. 2003, c. 266. (See N.J.S.A. 26:2C-8.15 and -8.17a). The Department recognizes that several commenters are critical of this start date, characterizing it as a "split model year” concept. The Department does not concur in commenters' assertions that the court's rejection of the, in the commenter’s words, "split model year” concept in Motor Vehicle Manufacturers Association v. New York DEC, 17 F.3d 521 (2d Cir. 1994), focusing on the adequacy of lead times prior to USEPA rule adoption of the definition for "model year," is applicable to the current rulemaking. These New Jersey rules are timely adopted to provide the adequate lead time for notice required under the Federal Clean Air Act (42 U.S.C. §7401 et seq., at §7507) for the 2009 model year, which may commence as early as January 2, 2008. Further, they apply uniformly, industry-wide, to all manufacturers and to all models or engine families, designated as model years 2009 or subsequent. The rules do not differentiate manufacturers based on when each commences production. While the rules, on their face, may require the manufacturers to achieve fleet average emissions for the vehicles that are produced and delivered for sale or lease in New Jersey on or after January 1, 2009, nothing precludes any manufacturer from electing to offset these 2009 model year fleet average emissions with all 2009 model year vehicles that it produced and delivered for sale or lease in New Jersey on or after January 2, 2008, and before January 1, 2009. Any complication to a manufacturer's fleet averaging plans should be significantly less under these rules than those previously considered by the Second Circuit. Clearly, an earlier start date for the program of January 1, 2009 would be in compliance with the Air Pollution Control Act (APCA), N.J.S.A. 26:2C-1 et seq., and would further the Legislature's interest in reducing emissions. That is, if the Department began this program with model year 2010, the program requirements would not apply to any model year 2009 vehicle delivered for sale on or after January 1, 2009. The State would thus lose the emission reduction benefits it would otherwise gain from including these vehicles, which would remain a higher-emitting part of the New Jersey fleet for many years.
The Department will work with manufacturers prior to model year 2009 to resolve any reporting issues that may arise in the 2009 model year.
49. COMMENT: Proposed N.J.A.C. 7:27-29.3(c)(7) seems to serve no purpose other than providing a loophole for dealers to significantly circumvent the requirements under these rules. (17)
RESPONSE: The provision at N.J.A.C. 7:27-29.3(c)(7) is intended to allow new car dealers to exchange stock freely. However, all subsequent sales of such vehicles by dealers offering new vehicles for sale in New Jersey can only be California-certified vehicles after the implementation date. As such, the provision does not provide a loophole for dealers to circumvent the requirements of the rules. The Department has adopted N.J.A.C. 7:27-29.3(c)(7) as proposed.
50. COMMENT: In the spirit of leading by example, it would seem that excluding the government from the requirements of this act for emergency or test vehicles sends the wrong message. There may, in fact, be no emergency vehicles that could meet the LEV requirements, but to the extent that the vehicles do exist or become available while these rules are in effect, government should lead by example and be required to give these vehicles preference over non-LEV vehicles. (17)
RESPONSE: The exemption at N.J.A.C. 7:27-29.3(c)2 for “test vehicles” is an exemption granted by CARB to manufacturers to allow them to conduct experiments with prototype vehicles on the highway. These exemptions are very limited in scope and are intended to result in longer-term emission reductions through the development of advanced emission control technologies. In regard to emergency vehicles, the commenter is correct; currently emergency vehicles do not meet the LEV emission standards and are not CARB-certified. As such, the exemption in the rules is to allow for unrestricted sales of these special purpose vehicles intended for emergency use. Nonetheless, as technology advances and these vehicles can be certified to LEV emission standards, the Department will consider removing the exemption from the rules. The Department has adopted N.J.A.C. 7:27-29.3(c)2 as proposed.