Although the LEV and ZEV regulations were approved by the Office of Administrative Law (OAL) on 7 August 2012, and filed with the Secretary of State, ARB did not submit the amended CFO regulation to OAL by the 7 December 2012 statutory deadline.

ARB notes that there are proposals unders consideration in the state legislature that would extend incentive funding programs that could provide for a non-regulatory avenue for alternative fuel stations in general and targeted funding for hydrogen stations specifically. Should the legislation pass, ARB would no longer need this rulemaking amending the CFO regulation as the provisions of the legislation would meet the objective of ensuring adequate hydrogen fueling infrastructure to support the introduction and growth of ZEVs.

The proposed rulemaking, however, is an attempt to preserve a regulatory backstop should the legislation fail to pass. Should the legislation pass, the proposal would be rescinded.

The amendments to the CFO regulation are being proposed to address the gap in hydrogen fueling infrastructure that may occur when government-funded and other hydrogen stations are not adequate to meet fuel demands of growing numbers FCVs that automakers are producing to comply with the Zero Emission Vehicle (ZEV) mandate. The proposed amendments to CFO would:

• Apply only to ZEVs and ZEV fuels. Staff is proposing to change the types of AFVs subject to the regulation from all AFVs certified as low emission vehicles to only those certified as ZEVs when operating on the designated clean fuel.

• Add a regulatory review for plug-in electric vehicles. Electricity is currently excluded from the definition of a designated clean fuel in the regulation. Staff is proposing to add regulatory language that requires ARB to evaluate the development and usage of workplace and public charging infrastructure, and make recommendations for further actions two years following adoption of the regulation.

• Change the regulated party to be the major producer/importers of gasoline. In 2010, California’s 7 major petroleum companies supplied 93% of the gasoline consumed in California, while owning only 13% of the retail gasoline outlets. Changing the regulated party from owner/lessors of retail gasoline outlets to “major refiner/importers of gasoline,” evenly applies the requirement to build CFOs among the parties that continue to benefit financially from California’s use of gasoline.

• Modify calculations for determining the number of new CFOs and allocating responsibility among the regulated parties. Staff is proposing to modify how the number of required CFOs is calculated to account for the fuel requirements of hydrogen and FCVs. When determining how many CFOs each regulated party is responsible for, the proposed changes include allocating stations among each regulated party based on their share of the gasoline market, rather than the number of gasoline outlets each owns.

• Add a year to both fuel cell vehicle reporting requirements and the compliance timeframe. Staff is proposing to modify the AFV reporting requirements to make auto manufacturers report FCV production plans three model years into the future (the current requirement is two) and provide FCV placement numbers by air basin. This provides regulated parties with an additional year to locate, permit, and build CFOs.

• Add language that would allow the Executive Officer to adjust the required number of new CFOs downward if warranted by more recent vehicle projections. Increasing the time available to locate, permit and build CFOs also provides the opportunity to review auto manufacturer projections submitted the following year. If those projections indicate a decrease in vehicle numbers for a specific compliance year such that fewer CFOs would be required, this proposed amendment allows for making such an adjustment 19 months before stations are required to be operational.

• Add a lower regional activation trigger. Staff is proposing to add a 10,000 vehicle activation trigger that would apply to an air basin before the statewide trigger of 20,000 is reached. The lower trigger complements auto manufacturers’ early commercialization plans to market FCVs in regional clusters.

• Streamline the compliance requirements. The proposed amendments include modifying the compliance requirements to be less prescriptive and more like performance standards, giving the regulated party the flexibility to determine how best to meet the minimum requirements. Hydrogen infrastructure can be placed at an existing gasoline station or at a freestanding site.

• Lower the regulation sunset provision. Under the current regulation, the requirement to build CFOs ceases when the total number outlets offering a particular clean fuel equals ten percent of the total number of retail gasoline outlets. Staff is proposing to reduce this provision to five percent based on findings that hydrogen fueling infrastructure can achieve commercial viability at five percent saturation and, therefore, a mandate would no longer be necessary.

The proposal also no longer includes an auto manufacturer penalty for delivering fewer vehicles than projected because it was determined that the circumstances under which it could be proved that an automaker knowingly provided false information would be extremely difficult to substantiate.

Resources

• ARB staff report: Initial Statement of Reasons (ISOR)